<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission File Number
0-27678
TRIDENT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-6403301
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1114 Federal Road, Brookfield, Connecticut 06804
(Address of principal executive offices) (Zip Code)
(203) 740-9333
(Registrant's telephone number, including area code)
(not applicable)
(Former name,former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of the registrant's Common Stock, par value
$.01 per share, as of January 31, 1998, exclusive of treasury shares was
6,649,251.
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TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1997................... 3
Condensed Consolidated Statements of Operations
for the three months ended December 31, 1996
and 1997................................................... 4
Condensed Consolidated Statements of Cash Flows
for the three months ended December 31, 1996 and
1997....................................................... 5
Notes to Condensed Consolidated Financial Statements......... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................. 12
Signatures................................................... 12
<PAGE> 3
PART 1. FINANCIAL INFORMATION
This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Company's actual results could differ materially from those set
forth in the forward-looking statements. Factors that might cause such a
difference are discussed in the section entitled "Business Environment and
Future Results" on page 10 of this Form 10-Q.
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's Omitted)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1997
------------------ -----------------
ASSETS (Unaudited)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents ..................................... $ 7,065 $ 1,635
Marketable securities ......................................... 12,728 17,234
Accounts receivable, net ...................................... 4,385 4,954
Inventories ................................................... 1,745 1,999
Deferred income taxes ......................................... 465 456
Other current assets .......................................... 148 150
------- -------
Total current assets ................................. 26,536 26,428
LEASEHOLD IMPROVEMENTS AND EQUIPMENT, net ......................... 1,924 2,226
DEFERRED INCOME TAXES .............................................. 704 657
INTANGIBLE ASSETS, net ............................................. 11,743 11,542
------- -------
Total assets ......................................... $40,907 $40,853
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................. $ 1,540 $ 1,201
Accrued expenses ............................................. 1,067 1,014
Income taxes payable ......................................... 411 1,276
------- -------
Total current liabilities ............................ 3,018 3,491
------- -------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 30,000,000
shares authorized; 7,167,981 and 7,172,251 ................ 72 72
shares issued at September 30, 1997 and
December 31, 1997
Additional paid-in capital ................................... 40,146 40,164
Retained earnings ............................................ 3,346 5,174
------- -------
43,564 45,410
Less - Treasury stock at cost, 345,000 and 510,000 shares
at September 30, 1997 and December 31, 1997, respectively 5,675 8,048
------- -------
Total stockholders' equity ........................... 37,889 37,362
------- -------
Total liabilities and stockholders equity ............ $40,907 $40,853
======= =======
</TABLE>
See accompanying notes
3
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TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(000's Omitted, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
December 31, 1996 December 31, 1997
----------------- -----------------
<S> <C> <C>
NET SALES ................................... $ 6,544 $ 7,757
COST OF SALES ............................... 2,220 2,824
----------- -----------
Gross profit .............................. 4,324 4,933
----------- -----------
OPERATING EXPENSES:
Marketing and selling ..................... 441 709
Research and development .................. 612 860
General and administrative ................ 478 536
Amortization of intangibles ............... 201 201
----------- -----------
Total operating expenses ................ 1,732 2,306
----------- -----------
Operating income ...................... 2,592 2,627
OTHER INCOME:
Interest income ........................... (236) (275)
----------- -----------
Income before income taxes .............. 2,828 2,902
PROVISION FOR INCOME TAXES .................. 1,089 1,074
----------- -----------
NET INCOME .................................. $ 1,739 $ 1,828
=========== ===========
BASIC EARNINGS PER COMMON SHARE ............. $ 0.25 $ 0.27
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING FOR BASIC EARNINGS PER SHARE . 7,022,221 6,736,820
=========== ===========
DILUTED EARNINGS PER COMMON SHARE ........... $ 0.24 $ 0.27
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING FOR DILUTED EARNINGS PER SHARE 7,219,985 6,828,947
=========== ===========
</TABLE>
See accompanying notes.
4
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TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's Omitted)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
December 31, 1996 December 31, 1997
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income .......................................................... $ 1,739 $ 1,828
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization ....................................... 278 306
Deferred income taxes ............................................... 40 56
Changes in operating assets and liabilities:
Accounts receivable, net ......................................... 316 (569)
Inventories ...................................................... (351) (254)
Other current assets ............................................. 81 (2)
Accounts payable and accrued expenses ............................ (403) (392)
Income taxes payable ............................................. 802 865
-------- --------
Net cash provided by operating activities .................... 2,502 1,838
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities, net ........................... -- (4,506)
Purchases of leasehold improvements and equipment, net .............. (83) (407)
-------- --------
Net cash used in investing activities ........................ (83) (4,913)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock .............................. -- 15
Proceeds from exercise of warrants and options ...................... -- 3
Purchases of treasury stock ......................................... -- (2,373)
-------- --------
Net cash used in financing activities ........................ -- (2,355)
-------- --------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ...................... 2,419 (5,430)
CASH AND CASH EQUIVALENTS, beginning of period ......................... 17,349 7,065
-------- --------
CASH AND CASH EQUIVALENTS, end of period ............................... $ 19,768 $ 1,635
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for-
Income taxes ........................................................ $ 247 $ 153
======== ========
</TABLE>
See accompanying notes.
5
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TRIDENT INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Business:
Trident International, Inc. (the Company) designs, manufactures and
markets impulse ink jet subsystems, including printheads, inks and other
consumables, and related components for the industrial market. The
Company markets its products worldwide principally to original equipment
manufacturers (OEMs), who integrate the products into systems which are
then sold to end-users directly or via distributors. The largest market
segment currently addressed by the Company's products is that of printing
onto shipping cartons. Other industrial market segments in which the
Company's products are currently being utilized include check coding,
addressing and imprinting business forms, postal bar coding and stamp
cancellation and plotting garment patterns.
The interim financial statements reflect all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary to a fair statement of the results for the interim periods
presented. These interim financial statements should be read in
conjunction with the financial statements and notes included in the
Company's Form 10-K.
The foregoing interim results are not necessarily indicative of the
results of operations for the full fiscal year ending September 30, 1998.
2. Inventories:
Inventories consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1997
------ ------
<S> <C> <C>
Raw materials $ 943 $1,299
Work-in process 511 450
Finished goods 291 250
------ ------
$1,745 $1,999
====== ======
</TABLE>
3. Contingency:
In connection with the prior acquisition (Acquisition), the Company
undertook an environmental compliance audit, which identified certain
environmental deficiencies on properties leased by the Company. The site
of one of the Company's leased facilities was contaminated due to prior
uses by a prior occupant and may require remedial action. Although the
Company obtained an indemnification agreement in connection with the
Acquisition with respect to such prior contamination, if the Company is
found to be liable as a result of any contamination of the site, there
can be no assurance that such indemnification will be available or that,
if available, it will be sufficient. While the ultimate results of future
claims, if any, against the Company with regard to these matters cannot
be determined, management does not anticipate that these matters will
have a material adverse impact on the consolidated results of operations
or financial position of the Company.
6
<PAGE> 7
4. Earnings Per Share:
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share" which superseded Accounting Principles Board Opinion
No. 15. This new standard replaces the computation of primary earnings
per share with a new computation of "basic earnings per share". The
Company has adopted this standard effective October 1, 1997. As a result,
the Company's recorded earnings per share for the three months ended
December 31, 1996 were restated from $0.24 per share to $0.25 per share.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company designs, manufactures and markets impulse ink jet subsystems,
including printheads, inks and other consumables, and related components for the
industrial market. The Company markets its products worldwide principally to
OEMs, who integrate the products into systems which are then sold to end-users
directly or via distributors. The largest market segment currently addressed by
the Company's products is that of printing onto shipping cartons. Other
industrial market segments in which the Company's products are currently being
utilized include check coding, addressing and imprinting business forms, postal
bar coding and stamp cancellation and plotting garment patterns.
The Predecessor was founded in 1989 as Trident, Inc. Shortly after its
incorporation, a majority interest in the Predecessor was purchased by JWA
through JWA's direct subsidiary, Porelon. At that time, the Predecessor also
obtained the Dataproducts License from Dataproducts Corporation, which gave the
Predecessor exclusive rights to a series of liquid ink jet technology patents
for use in the "industrial marking field." The technology covered by the
Dataproducts License is at the core of the Company's current line of industrial
printing subsystems. In December 1992, Porelon purchased the remaining minority
interests in the Predecessor and the Predecessor became a wholly-owned
subsidiary of Porelon.
On June 24, 1994, the Company acquired all of the capital stock of the
Predecessor (the 1994 Acquisition). The aggregate cash consideration paid by the
Company in the 1994 Acquisition was approximately $19.9 million, including $1.0
million for a consulting agreement. The 1994 Acquisition has been accounted for
as a purchase and, accordingly, the total consideration has been allocated to
the assets acquired and liabilities assumed based on their estimated fair value
at the date of the 1994 Acquisition. The excess of the purchase price over the
fair value of the net assets acquired ($13.9 million) is being amortized over 20
years. Periodically, the Company evaluates the realizability of this asset based
upon expectations of undiscounted cash flows and operating income. Based upon
its most recent analysis, the Company believes that no impairment of the current
net book value of this asset exists. The $1.0 million payment made by the
Company under the consulting agreement was being amortized. The services
provided under the consulting agreement largely related to transition services
in connection with the establishment of stand-alone operations and assistance in
preparation for an initial public offering. Other long-term assets acquired in
the 1994 Acquisition are being depreciated over their respective useful lives of
5 years.
In February 1996, the Company completed the initial public offering of its
common stock, which provided proceeds, after underwriting discounts and
commissions, of $28.3 million. The Company used approximately $10.8 million to
repay the outstanding indebtedness under its credit facility and $4.5 million to
retire all of the $5.0 million in principal amount of the zero coupon notes
issued by the Company for $1.9 million in connection with the 1994 Acquisition.
8
<PAGE> 9
RESULTS OF OPERATIONS
Net Sales. Net sales increased $1.2 million, or 20% to $7.8 million for the
three months ended December 31, 1997 from $6.5 million for the three months
ended December 31, 1996. Net sales of printheads increased by approximately
$319,000 or 10% in the three months ended December 31, 1997 as compared to the
same quarter in the prior fiscal year due primarily to an increase in printhead
unit sales. Sales of ink products increased by $758,000 or 28% in the three
months ended December 31, 1997 as compared to the same quarter in the prior
fiscal year due to the expanding installed base of printheads. Net sales to
international customers increased by $562,000, or 30% for the three months ended
December 31, 1997 as compared to the three months ended December 31, 1996.
Gross Profit. Gross profit increased $609,000, or 14% to $4.9 million for
the three months ended December 31, 1997 from $4.3 million for the three months
ended December 31, 1996. Gross profit as a percentage of net sales decreased
from 66 % for the three months ended December 31, 1996 to 63.6% for the three
months ended December 31, 1997. The decrease in gross profit as a percentage of
net sales was due to higher average printhead costs and lower average ink
products selling prices.
Marketing and Selling Expenses. Marketing and selling expenses increased
$268,000, or 61% to $709,000 for the three months ended December 31, 1997 from
$441,000 for the three months ended December 31, 1996 due to the addition of
sales personnel and associated travel expenses and marketing support. As a
percentage of net sales, these expenses increased to 9.1% for the three months
ended December 31, 1997 from 6.7% for the three months ended December 31, 1996.
Research and Development Expenses. Research and development expenses
increased $248,000 , or 40% to $860,000 for the three months ended December 31,
1997 from $612,000 for the three months ended December 31, 1996 due principally
to the addition of engineering personnel as well as increases in research
project materials and supplies. As a percentage of net sales, these expenses
increased to 11% for the three months ended December 31, 1997 from 9.4% for the
three months ended December 31, 1996.
General and Administrative Expenses. General and administrative expenses
increased $58,000, or 12% to $536,000 for the three months ended December 31,
1997 from $478,000 for the three months ended December 31, 1996. The increase in
expenses is due to additional insurance costs, legal fees, and consulting fees.
As a percentage of net sales, these expenses decreased to 6.9% for the three
months ended December 31, 1997 from 7.3% for the three months ended December 31,
1996 due to higher net sales.
Amortization of Intangibles. The amortization amounts for the excess of
purchase price over the fair market value of net assets acquired and other
intangibles of $201,000 in both periods did not vary in amount for the three
months ended December 31, 1997 as compared to the three months ended December
31, 1997.
Interest Income. Interest income was $275,000 for the three months ended
December 31, 1997 as compared to $236,000 for the three months ended December
31, 1996.
Provision for Income Taxes. The provision for income taxes for the three
months ended December 31, 1997 and December 31, 1996 was $1.1 million on income
before income taxes of $2.9 million and $2.8 million respectively. The effective
tax rate for the three months ended December 31, 1997 and December 31, 1996
differed from the statutory rate principally due to the non-deductibility of
amortization costs related to the excess of the purchase price over fair value
of net assets acquired and state income taxes.
9
<PAGE> 10
BUSINESS ENVIRONMENT AND FUTURE RESULTS
The industrial printing industry is highly competitive and the Company
believes it will need to continue to develop new products and applications in
order to remain competitive. Several of the Company's competitors are larger and
have greater financial, research and development, marketing and other resources
than the Company. For example Nu-Kote Holdings, Inc. released a piezoelectric
printhead intended for use in industrial and other applications. No assurance
can be given that the Company will be able to compete successfully against
current or future competitors or that the competitive pressures faced by the
Company will not adversely affect its results of operations. The Company is
aware that manufacturers of certain ink products are claiming that their inks
could be utilized with certain of the Company's impulse ink jet printheads.
Although the use of such other inks will void the Company's warranties on its
printheads, and could, in the Company's judgment, result in inferior performance
and permanent damage to its printheads, there can be no assurance that the
introduction and sale of such other inks will not have a material adverse effect
on the Company's financial condition or results of operations or that end users
will continue to purchase their ink requirements from the Company.
The markets for the Company's products are characterized by changing
technology, evolving industry standards and changing customer needs. The
Company's future success will depend in part on its ability to enhance its
current products and to develop new products on a timely and cost-effective
basis in order to respond to technological developments and changing customer
needs. There can be no assurance that the Company will be successful in
developing new products or enhancing its existing products on a timely or
cost-effective basis.
New products could also have the effect of decreasing customer demand for
the Company's current products. Although the Company historically has not
experienced any material adverse impact on its business attributable to delays
in the introduction of new products, there can be no assurance that delays will
not occur in the future. The Company expects a component of its growth strategy
to be the acquisition of new technologies, whether through entering into
licensing arrangements, acquiring businesses owning desirable technology, or
otherwise. An example of this is the new solid ink jet printing technology.
There can be no assurance that the Company's investments in new technologies,
including solid ink, will lead to the successful development of new products.
The Company's net sales are dependent upon the ability of its OEM customers
to develop and sell products that incorporate the Company's impulse ink jet
products. Factors such as economic conditions, inventory positions, limited
marketing resources and other factors affecting these OEM customers could have a
substantial impact upon the Company's financial results. No assurances can be
given that the Company's OEM customers will not experience financial or other
difficulties that could adversely affect their operations and, in turn, the
results of operations of the Company.
For the three months ended December 31, 1997, approximately 79% of the
Company's net sales were to its top ten OEM customers, while approximately 21%
and 12% of the Company's net sales for this period were to two OEM customers,
Marsh Company and Foxjet, Inc., respectively. A significant diminution in the
sales to or loss of any of the Company's major customers would have a material
adverse effect on the Company's results of operations.
For the three months ended December 31, 1997, approximately 70% of the
Company's net sales were derived from carton coding and the Company anticipates
that carton coding will continue to account for a substantial portion of the
Company's total net sales. A reduction in demand for carton coding systems would
have a material adverse effect on the Company's business, results of operations
and financial condition.
The Company's annual and quarterly operating results may fluctuate due to
factors such as the timing of new product announcements and introductions by the
Company and its competitors, market acceptance of new or enhanced versions of
the Company's products, changes in product mix, changes in manufacturing costs
or other expenses, competitive pricing pressures, the gain or loss of
significant customers, increased research and development expenses and general
economic conditions.
10
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The trading price of the Company's Common Stock could be subject to wide
fluctuations in response to quarterly variations in the Company's operating
results, shortfalls in such operating results from levels forecast by securities
analysts and other events or factors. In addition, the stock market has, from
time to time, experienced extreme price and volume fluctuations that have often
been unrelated to the operating performance of the affected companies.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had working capital of $22.9 million
compared to $23.5 million at September 30, 1997. At December 31, 1997, the
Company has cash and marketable securities of $18.9 million.
The primary investing and financing cash flows activity for the three months
ended December 31, 1997 was the purchase of treasury stock of $2.4 million. Cash
flows from operations of $1.8 million results primarily from net income of $1.8
million plus depreciation and amortization of $300,000 offset by increases in
inventories and accounts receivable. The Company also has a line of credit with
Fleet Bank, which allows them to borrow up to $1,000,000. There were no
borrowings under this line at December 31, 1997.
The Company's long-term capital requirements will depend on numerous factors
including the rate at which the Company identifies, evaluates and acquires new
technologies, whether through entering into licensing arrangements or acquiring
businesses, the timing of the expansion of the Company's facilities and the
purchase of additional factory automation equipment. The Company believes that
it has sufficient cash resources to meet its anticipated needs for working
capital and capital expenditures through at least the next 12 months.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits:
The following exhibits are filed as a part of this report:
Exhibit Number Title
10.1 Employment Agreement between the company and Elaine
A. Pullen dated as of November 1, 1997
10.10 Form of Third Amended and Restated 1994 Stock Option
and Grant Plan.
27 Financial Data Schedule
b. Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended December 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 10, 1998
Trident International, Inc.
(Registrant)
/S/ Elaine A. Pullen
-------------------------------------
Elaine A. Pullen
President and Chief Executive Officer
/S/ J. Leo Gagne
-------------------------------------
J. Leo Gagne
Vice President and Chief
Financial Officer
12
<PAGE> 1
EXHIBIT 10.1
TRIDENT INTERNATIONAL, INC.
THIRD AMENDED AND RESTATED 1994 STOCK OPTION AND GRANT PLAN
1. PURPOSE
This Third Amended and Restated 1994 Stock Option and Grant Plan (the
"Plan"), which was first adopted as the 1994 Stock Option and Grant Plan
effective as of October 27, 1994, is intended as a performance incentive for
officers, employees, consultants, directors and other key persons of Trident
International, Inc. (formerly, Trident Holding Corp.) (the "Company") or its
Subsidiaries (as hereinafter defined) to enable the persons to whom options are
granted (the "Optionees") to acquire or increase a proprietary interest in the
success of the Company. The Company intends that this purpose will be effected
by the granting of incentive stock options ("Incentive Options") as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
nonqualified stock options ("Nonqualified Options"). The term "Subsidiaries"
includes any corporations in which stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock is owned directly or
indirectly by the Company.
2. OPTIONS TO BE GRANTED; ADMINISTRATION OF THE PLAN
(a) Options granted under the Plan may be either Incentive
Options or Nonqualified Options, and shall be designated as such at the
time of grant. To the extent that any option intended to be an
Incentive Option shall fail to qualify as an Incentive Option under the
Code, such option shall be deemed to be a Nonqualified Option. Each
option granted hereunder shall be embodied in a written agreement, as
described in Section 4 hereof, that is signed by the Optionee and an
authorized officer of the Company.
(b) The Plan shall be administered either by the Board of
Directors of the Company (the "Board of Directors") or by a committee
(the "Option Committee") of not fewer than two directors of the Company
appointed by the Board of Directors (in either case, the
"Administrator"). None of the members of the Option Committee shall be
an officer or other full-time employee of the Company. It is the
intention of the Company that each member of the Option Committee shall
be a "Non-Employee Director" as that term is defined and interpreted
pursuant to Rule 16b-3(b)(3)(i) or any successor rule thereto
promulgated under the Securities Exchange Act of 1934, as amended (the
"Act"), and that, on and after the date the Plan becomes subject to
Section 162(m) of the Code, each member of the Option Committee shall
be an "outside director" as that term is defined and interpreted
pursuant to Section 162(m) of the Code and the regulations promulgated
thereunder. Subject to the foregoing requirements of Section 2(b), the
Compensation Committee of the Board of Directors may serve as the
Option Committee. Action by the Option Committee shall require the
affirmative vote of a majority of all its members.
2
<PAGE> 2
(c) Subject to the terms and conditions of the Plan, the
Administrator shall have the power:
(i) To determine from time to time the options to be
granted to eligible persons under the Plan and to prescribe
the terms and provisions (which need not be identical) of
options (including, without limitation, the number of shares
subject to each such option, the effects upon such options of
any change in control of the Company and any vesting
provisions with respect to such options) granted under the
Plan to such persons;
(ii) To construe and interpret the Plan and grants
thereunder and to establish, amend, and revoke rules and
regulations for administration of the Plan (including to
correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, in any option agreement, or in any
related agreements, in the manner and to the extent the
Administrator shall deem necessary or expedient to make the
Plan fully effective);
(iii) To amend from time to time, as the
Administrator may determine is in the best interests of the
Company, the terms of any outstanding options, including
without limitation, to modify the vesting schedule, exercise
price or expiration date thereof in a manner not inconsistent
with the terms of the Plan; and
(iv) Generally, to exercise such powers and to
perform such acts as are deemed necessary or expedient to
promote the best interests of the Company with respect to the
Plan.
All decisions and determinations by the Administrator in the exercise
of these powers shall be final and binding upon the Company and the
Optionees.
(d) Delegation of Authority to Grant Options. The
Administrator, in its discretion, may delegate to the Chief Executive
Officer of the Company or any Subsidiary all or part of the
Administrator's authority and duties with respect to Options, including
the granting thereof, to individuals who are not subject to the
reporting and other provisions of Section 16 of the Act and, on and
after the date the Plan becomes subject to Section 162(m) of the Code,
who also are not "covered employees" within the meaning of Section
162(m) of the Code. The Administrator may revoke or amend the terms of
a delegation at any time, but such action shall not invalidate any
prior actions of the Administrator's delegate or delegates that were
consistent with the terms of the Plan.
3. STOCK SUBJECT TO THE OPTIONS
The stock granted under the Plan, or subject to the options granted
under the Plan, shall be shares of the Company's authorized but unissued Common
Stock, par value $.01 per share (the
3
<PAGE> 3
"Common Stock"), which may either be authorized but unissued shares or treasury
shares or shares previously reserved for issuance upon exercise of options under
the Plan, and allocable to one or more options (or portions of options) which
have expired or been canceled or terminated (other than by exercise). The total
number of shares that may be issued under the Plan shall not exceed an aggregate
of 1,000,000 shares of Common Stock. Options with respect to no more than
250,000 shares of Common Stock may be granted to any one individual during any
one calendar year period. Such number of shares shall be subject to adjustment
as provided in Section 7 hereof.
4. ELIGIBILITY
(a) Incentive Options may be granted only to employees of the
Company or its Subsidiaries, including members of the Board of
Directors who are also employees of the Company or its Subsidiaries,
who are eligible to receive an Incentive Option under the Code.
Nonqualified Options may be granted to officers, other employees and
directors of the Company or its Subsidiaries, and to consultants and
other key persons who provide services to the Company or its
Subsidiaries (regardless of whether they are also employees) and to
such other persons as the Administrator may select from time to time,
provided, however, that no Nonqualified Options may be granted under
the Plan to any non-employee Directors of the Company except as
provided in Section 4(d) hereof.
(b) No person shall be eligible to receive any Incentive
Option under the Plan if, at the date of grant, such person
beneficially owns stock representing in excess of ten percent of the
voting power of all outstanding capital stock of the Company, unless
notwithstanding anything in this Plan to the contrary (i) the purchase
price for Common Stock subject to such option is at least 110% of the
fair market value of such Common Stock at the time of the grant and
(ii) the option by its terms is not exercisable more than five years
from the date of grant thereof.
(c) Notwithstanding any other provision of the Plan, the
aggregate fair market value (determined as of the time the option is
granted) of the Common Stock with respect to which Incentive Options
are exercisable for the first time by any individual during any
calendar year (under all plans of the Company) shall not exceed
$100,000. Any option granted under the Plan in excess of the foregoing
limitations shall be deemed to be a Nonqualified Option.
(d) Each person who first becomes a non-employee member of the
Board of Directors of the Company on or after December 1, 1995 shall
automatically be granted on the date such person first becomes a
director a Nonqualified Option to purchase up to 5,000 shares of Common
Stock, which option shall become exercisable on the first anniversary
of the date of grant so long as such person continues to serve as a
director of the Company on such anniversary date. Commencing after
September 30, 1996, each non-employee member of the Board of Directors
shall receive, on the first business day following January 1 of each
year following such person's election as a director, an option
4
<PAGE> 4
to purchase up to 8,000 shares of Common Stock, which option shall
become exercisable on the first anniversary of the date of grant so
long as such person continues to serve as a director of the Company on
such anniversary date; provided, that no such grant shall be made to
any person first elected or appointed to the Board of Directors of the
Company within six months prior to any such grant date. In addition to
the foregoing, non-employee members of the Board of Directors shall be
entitled to elect to convert all of their annual cash director
compensation (their "Director Fee") into an option to purchase up to
such number of shares of Common Stock as is equal to the quotient of
(a) three times the Director Fee, divided by (b) the fair market value
of the Common Stock (determined by reference to the provisions of
Section 5(c) hereof) on the date of such election. Options granted
pursuant to such an election shall become exercisable on the first
anniversary of the date of grant so long as such person continues to
serve as a director of the Company on such anniversary date. Any such
election shall be made on the first business day following January 1 of
each year, shall be effective as to the entire Director Fee for such
year, and shall be irrevocable.
(i) The purchase price per share of Common Stock of
each Nonqualified Option granted to a non-employee member of
the Board of Directors pursuant to this Section 4(d) shall be
the fair market value of the Common Stock on the date the
option is granted.
(ii) Options granted under this Section 4(d) shall
expire no later than the tenth anniversary of the grant date.
(iii) The provisions of this Section 4(d) shall apply
only to grants of Nonqualified Options to non-employee
directors, and shall not be deemed to modify, limit or
otherwise apply to any other provisions of the Plan or to any
option granted thereunder to any other person.
5. TERMS OF THE OPTION AGREEMENTS
Subject to the terms and conditions of the Plan, each option agreement
shall contain such provisions as the Administrator shall from time to time deem
appropriate. Option agreements need not be identical, but each option agreement
by appropriate language shall include the substance of all of the following
provisions:
(a) Expiration; Termination of Employment. Notwithstanding any
other provision of the Plan or of any option agreement, each option
shall expire on the date specified in the option agreement, which date
in the case of any Incentive Option shall not be later than the tenth
anniversary of the date on which the option was granted. If an
Optionee's employment with the Company terminates for any reason, the
Administrator may in its discretion provide, at any time, that any
outstanding option granted to such Optionee under the Plan shall be
exercisable for such period following termination of
5
<PAGE> 5
employment as may be specified by the Administrator, subject to the
expiration date of such option; provided that no Incentive Options
shall be exercisable more than 90 days after the termination of the
applicable Optionee's employment with the Company and its Subsidiaries.
(b) Exercise. Each option shall be exercisable in such
installments (which need not be equal) and at such times as may be
designated by the Administrator. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part,
at any time after becoming exercisable, but not later than the date the
option expires.
(c) Purchase Price. The purchase price per share of Common
Stock subject to each option shall be determined by the Administrator;
provided, however, that the purchase price per share of Common Stock
subject to each Incentive Option shall be not less than the fair market
value of the Common Stock on the date such Incentive Option is granted.
For the purposes of the Plan, the fair market value of the Common Stock
shall be determined in good faith by the Administrator; provided,
however, that (i) if the Common Stock is admitted to quotation on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") Small-Cap Market on the date the option is granted, the fair
market value shall not be less than the average of the highest bid and
lowest asked prices of the Common Stock on NASDAQ reported for such
date or, if no prices were reported for such date, for the last date
preceding such date for which prices were reported, (ii) if the Common
Stock is admitted to trading on a national securities exchange or the
NASDAQ National Market on the date the option is granted, the fair
market value shall not be less than the closing price reported for the
Common Stock on such exchange or system for such date or, if no sales
were reported for such date, for the last date preceding such date for
which a sale was reported, and (iii) the fair market value of the
Common Stock on the effective date of the registration statement for
the Company's initial public offering shall be the initial offering
price.
(d) Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any shares of Common Stock subject to any
option unless and until (i) the option shall have been exercised
pursuant to the terms thereof, (ii) all requirements under applicable
law and regulations shall have been complied with to the satisfaction
of the Company, (iii) the Company shall have issued and delivered the
shares to the Optionee, and (iv) the Optionee's name shall have been
entered as a stockholder of record on the books of the Company.
Thereupon, the Optionee shall have full voting, dividend and other
ownership rights with respect to such shares of Common Stock.
(e) Transfer. No option granted hereunder shall be
transferable by the Optionee other than by will or by the laws of
descent and distribution, and such option may be exercised during the
Optionee's lifetime only by the Optionee, or his or her guardian or
legal representative. Notwithstanding the foregoing, the Administrator
may permit an optionee to transfer, without consideration for the
transfer, a Nonqualified Option to
6
<PAGE> 6
members of his immediate family, to trusts for the benefit of such
family members, to partnerships in which such family members are the
only partners, or to charitable organizations, provided that the
transferee agrees in writing with the Company to be bound by all of the
terms and conditions of this Plan and the applicable option agreement.
(f) Minimum Shares Exercisable. Option agreements may in the
discretion of the Administrator set forth a minimum number of shares
with respect to which an option may be exercised at any one time.
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
(a) Any option granted under the Plan may be exercised by the
Optionee in whole or in part by delivering to the Company on any
business day a written notice specifying the number of shares of Common
Stock the Optionee then desires to purchase (the "Notice").
(b) Payment for the shares of Common Stock purchased pursuant
to the exercise of an option shall be made either: (i) in cash, or by
certified or bank check or other payment acceptable to the Company,
equal to the option exercise price for the number of shares specified
in the Notice (the "Total Option Price"); (ii) if authorized by the
applicable option agreement and if permitted by law, by delivery of
shares of Common Stock that the optionee may freely transfer having a
fair market value, determined by reference to the provisions of Section
5(c) hereof, equal to or less than the Total Option Price, plus cash in
an amount equal to the excess, if any, of the Total Option Price over
the fair market value of such shares of Common Stock; or (iii) by the
Optionee delivering the Notice to the Company together with irrevocable
instructions to a broker to promptly deliver the Total Option Price to
the Company in cash or by other method of payment acceptable to the
Company; provided, however, that the Optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity
or other agreements as the Company shall prescribe as a condition of
payment under this clause (iii).
(c) The delivery of certificates representing shares of Common
Stock to be purchased pursuant to the exercise of an option will be
contingent upon the Company's receipt of the Total Option Price and of
any written representations from the Optionee required by the
Administrator, and the fulfillment of any other requirements contained
in the option agreement or applicable provisions of law (including
payment of any amount required to be withheld by the Company pursuant
to applicable law).
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
(a) If the shares of the Company's Common Stock as a whole are
increased, decreased, changed into or exchanged for a different number
or kind of shares or securities
7
<PAGE> 7
of the Company, whether through reorganization, recapitalization,
reclassification, stock dividend, stock split, combination of shares,
exchange of shares, change in corporate structure or the like, an
appropriate and proportionate adjustment shall be made in the number
and kind of shares subject to the Plan, and in the number, kind, and
per share exercise price of shares subject to unexercised options or
portions thereof granted prior to any such change. In the event of any
such adjustment in an outstanding option, the Optionee thereafter shall
have the right to purchase the number of shares under such option at
the per share price, as so adjusted, which the Optionee could purchase
at the total purchase price applicable to the option immediately prior
to such adjustment.
(b) Adjustments under this Section 7 shall be determined by
the Administrator and such determinations shall be conclusive. The
Administrator shall have the discretion and power in any such event to
determine and to make effective provision for acceleration of the time
or times at which any option or portion thereof shall become
exercisable. No fractional shares of Common Stock shall be issued under
the Plan on account of any adjustment specified above.
8. EFFECT OF CERTAIN TRANSACTIONS
In the case of (i) the dissolution or liquidation of the Company, (ii)
a reorganization, merger, consolidation or other business combination in which
the Company is acquired by another entity (other than a holding company formed
by the Company) or in which the Company is not the surviving entity, or (iii)
the sale of greater than 50% of the fair market value of the assets of the
Company to another entity, the Plan and the options issued hereunder shall
terminate upon the effectiveness of any such transaction or event, unless
provision is made in connection with such transaction for the assumption of
options theretofore granted, or the substitution for such options of new options
of the successor entity or parent thereof, with appropriate adjustment as to the
number and kind of shares and the per share exercise prices, as provided in
Section 7. In the event of such termination, all outstanding options shall be
exercisable in full for at least fifteen days prior to the date of such
termination whether or not otherwise exercisable during such period.
9. TAX WITHHOLDING
(a) Payment by Optionee. Each Optionee shall, no later than
the date as of which the value of any option granted hereunder or of
any Common Stock issued upon the exercise of such option first becomes
includible in the gross income of the Optionee for federal income tax
purposes (the "Tax Date"), pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of any federal,
state, or local taxes of any kind required by law to be withheld with
respect to such income. In the event that an Optionee has not made the
arrangements described in this Section 9(a) and has not made an
election under Section 9(b) on or before the Tax Date, the Company is
hereby authorized to withhold the amount of any federal, state or local
taxes of any kind required by law with respect to such income from any
payment otherwise due to the Optionee.
8
<PAGE> 8
(b) Payment in Shares. Subject to approval by the
Administrator, an Optionee may elect to have such tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the
Company to withhold from shares of Common Stock to be issued pursuant
to an option exercise a number of shares with an aggregate fair market
value (determined by the Administrator in accordance with Section 5(c)
as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company shares of
Common Stock owned by the Optionee with an aggregate fair market value
(determined by the Administrator in accordance with Section 5(c) as of
the date the withholding is effected) that would satisfy the
withholding amount due.
10. AMENDMENT OF THE PLAN
The Board of Directors may discontinue the Plan or amend the Plan at
any time, and from time to time, subject to any required regulatory approval,
provided that any such amendment is also approved by the stockholders of the
Company if it would materially increase the benefits accruing to Optionees under
the Plan, or to the extent required by the Code to ensure that Incentive Options
granted under the Plan are qualified under Section 422 of the Code or if
determined by the Administrator to be necessary or advisable for purposes of the
Act or otherwise. Except as otherwise provided, an amendment shall be binding
upon options previously granted under the Plan unless the amendment adversely
affects the rights of an Optionee, in which event the consent of the Optionee
shall be required with respect to any portion of such amendment having such
effect.
11. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock or stock options otherwise than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases. Neither the Plan nor any option granted hereunder shall be
deemed to confer upon any employee any right to continued employment with the
Company.
12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW
(a) The obligation of the Company to sell and deliver shares
of Common Stock with respect to options granted under the Plan shall be
subject to all applicable laws, rules and regulations, including all
applicable federal and state securities laws, and the obtaining of all
such approvals by governmental agencies as may be deemed necessary or
appropriate by the Administrator.
(b) The Plan shall be governed by Delaware law, except to the
extent that such law is preempted by federal law.
9
<PAGE> 9
13. EFFECTIVE DATE OF THE PLAN; STOCKHOLDER APPROVAL
The Plan shall become effective upon the date that it is approved by
the Board of Directors of the Company; provided, however, that the Plan shall be
subject to the approval of the Company's stockholders in accordance with
applicable laws and regulations within twelve months of such effective date. No
options granted under the Plan prior to such stockholder approval may be
exercised until such approval has been obtained. No options may be granted under
the Plan after the tenth anniversary of the effective date of the Plan.
* * *
APPROVED BY BOARD OF DIRECTORS: DECEMBER 12, 1995
APPROVED BY STOCKHOLDERS: JANUARY 15, 1996; JANUARY 29, 1998
AMENDED BY THE BOARD OF DIRECTORS: FEBRUARY 26, 1997; NOVEMBER 20, 1997
10
<PAGE> 1
Exhibit 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
between
TRIDENT INTERNATIONAL, INC.
and
ELAINE A. PULLEN
<PAGE> 2
AGREEMENT made as of and effective on November 1, 1997 by and between TRIDENT
INTERNATIONAL, INC., a Delaware corporation with its principal offices at 1114
Federal Road, Brookfield, Connecticut ("the Company") and ELAINE A. PULLEN
residing at 62 Cobbler Lane, Southbury, Connecticut ("the Executive")
W I T N E S S E T H:
WHEREAS, the Company and the Executive signed an Agreement made as of
August 22, 1994 ("the Original Agreement") defining the relationship between
them; and
WHEREAS, the Executive now holds the position of President and Chief
Executive Officer ("the Position") of the Company; and
WHEREAS, the Original Agreement terminated on November 1, 1997; and
WHEREAS, the Company and the Executive wish to extend the term of the
Original Agreement and to provide for contingencies and other eventualities
specified herein, by entering into this Agreement ("this Agreement");
NOW, THEREFORE, the parties agree as follows:
1. For performance of the Services during the Calendar Year 1997, the Executive
shall be granted Present Options to purchase Ten Thousand Shares of the common
stock of the Company. All terms of the prior options, copies of which were
attached or were to be attached to the Original Agreement as Schedule B-1 and
Schedule B-2 respectively ( the "Prior Options"), shall remain in full force and
effect and shall be incorporated in this Agreement.
2. The Company will retain the Executive in the Position for a period of three
(3) years
<PAGE> 3
from November 1, 1997, except as otherwise specified in this Agreement, provided
that: (a) A commercially satisfactory number of business performance goals, if
any, established by the Board of Directors of the Company ("the Board"),
(whether in consultation with the Executive or not), in connection with
performance of the Services have, in the Board's judgment, been attained; (b)
the obligations of Confidentiality set forth in Schedule C of this Agreement
have been maintained by the Executive; and (c) notwithstanding the attainment of
goals set forth in subparagraph (a) of this paragraph 2, there are no grounds
for termination of this Agreement by the Company due to the Executive's breach
of the Agreement, or conduct by the Executive demonstrably detrimental to the
Company, its employees or to the full, faithful, and proper performance of the
Services.
3. The Executive will perform the Services subject to the provisions for
compensation set forth in Schedule A attached to and made a part of this
Agreement. It shall be the responsibility of the Chairman and the Board (as may
be allocated between them from time to time in the sole discretion of the Board)
to further define the nature of the Position and Services, and to modify any
such definition, as they deem appropriate. Absent any such further definition,
the Services shall encompass the planning, development, and implementation of
corporate strategy for the Company, in consultation with the Chairman and the
Board, and the management of employees to further such strategies on a
day-to-day basis. No further definition of the Services which is within the
general concept of corporate strategy as set forth in the preceding sentence, or
which includes the function of Chief Executive Officer as that term is
customarily understood, shall be considered to be a revision, modification,
extension, or termination of this Agreement entitling the Executive to greater
or lesser benefits, except as expressly agreed in writing between the Executive
and the Company and attached to this Agreement.
4. During the performance of the Services, and thereafter if the Executive
vacates the Position for any reason (or for no stated reason), the Executive
will not compete against the Company as further defined in Schedule B attached
to and made a part of this Agreement for the periods specified in that Schedule.
If the Executive leaves the Company
<PAGE> 4
and finds a consulting or employment opportunity during the non-competition
period which may not, in business fact, be competitive with the products or
business of the Company, even though it is so under the definitions in Schedule
B, the Executive may request waiver from the Company of the definitions for that
opportunity. The Company will not unreasonably withhold such a waiver.
5. The Executive shall be entitled to all other benefits generally available to
employees of the Company upon the completion of customary formalities involved
in the application of and for such benefits. The Executive shall further be
entitled to a four week's paid vacation period each year during the term of this
Agreement. The period may be utilized in segments as well as in sequence, but
unused vacation time may not be carried forward. The Executive shall continue to
have the right to participate in the 401(k) Plan of the Company as Plan rules
and applicable law permit.
6. The Board has determined that it is in the best interests of the Company and
its shareholders, in order to assure continuity in the management of the
Company's administration and operations, to enter into this Agreement with the
Executive which is intended to encourage the Executive to continue a career with
the Company and to enable the Executive to work free from distraction in the
face of uncertainty and unsettling circumstances that arise from the possibility
of a Change in Control of the Company.
A. In consideration of the Company's agreement to provide the Executive
with the severance benefits set forth herein, the Executive hereby agrees that,
in the event the Board determines that a potential change in control of the
Company has occurred (such determination to be based upon the provisions set
forth below in this paragraph 6, and constituting a "Change in Control" for
purposes of this Agreement), the Executive will continue in the employ of the
Company with continuing responsibility for the business operations for which the
Services are presently rendered by the Executive (the "Position"), at a
compensation level at least equivalent to that received by the Executive at the
time of Change in Control.
<PAGE> 5
B. In consideration thereof, the Company agrees, that in the event of
Involuntary Termination, it shall provide the following severance benefits:
(i) The present value equivalent (on a ten percent discounted basis)
of: (a) salary continuation for 3 years in an annual amount equal to the Base
Salary in effect on the date of Involuntary Termination; (b) the ordinary and
customary additional elements of Compensation (except for options contemplated
in subparagraph 6.B. (iii)) attendant to the Position as set forth in Schedule
A.
(ii) Coverage for 3 years under all Company perquisites and benefit
plans including: 401k savings plan; medical, life and disability insurance
plans; use of a Company automobile or a leased vehicle equivalent to such
automobile; and the like, in the same manner as if the Executive were an active
employee.
(iii) An immediate right to exercise any outstanding and unexercised
stock options previously granted under any Company stock option plans, including
any such options not otherwise vested under the terms of the plan or grant,
unless provision is made in connection with such transaction for the assumption
of options theretofore granted, or the substitution for such options or new
options of the successor entity or parent thereof, with appropriate adjustment
as to the number and kind of shares and the per share exercise prices,
specifically including but not limited to the Present Options and the Prior
Options.
(iv) Employment search assistance through a professional out placement
organization and office and secretarial support for up to one year.
C. As used herein, Involuntary Termination shall mean any termination
of the Executive's employment by the Company, its successor or one of its
subsidiaries, within two years following a Change in Control of the Company;
provided, however, such term shall not include a termination for serious,
willful misconduct in respect of the Executive's
<PAGE> 6
obligations to the Company, its successors or its subsidiaries, including
commission of a felony or perpetration of a common law fraud which has or is
likely to result in material economic damage to the Company or any of its
subsidiaries, or failure to comply with a specific directive given to the
Executive by the Board.
D. In addition to actual termination of employment, the following shall
be deemed an Involuntary Termination:
(i) A reduction in Base Salary, or the ordinary and customary
additional elements of Compensation attendant to the Position as set forth in
Schedule A, or both, other than in connection with an across-the-board reduction
similarly affecting all executives of the Company, or a material and objectively
demonstrable failure of the Executive to meet the performance goals contemplated
by paragraph 2 as in effect immediately prior to a Change in Control of the
Company;
(ii) A material reduction in the functions, duties or responsibilities
of the Position;
(iii) A reassignment to another geographic location more than 50 miles
from the Executive's current place of employment;
(iv) A liquidation, dissolution, consolidation or merger of the
Company, or transfer of all or substantially all of its assets, unless a
successor assumes the Company's obligations under this Agreement; or
(v) A breach of this Agreement by the Company.
E. Notwithstanding the foregoing, failure to object in writing to the
changes listed above within 180 days of any such change following a Change in
Control of the Company shall constitute a waiver of such change being deemed an
Involuntary Termination.
<PAGE> 7
F. For the purposes of this Agreement, the term "Change of Control of
the Company" shall mean the happening of any one of the following:
(i) The acquisition by any party or related or affiliated parties or
parties acting as a group of the beneficial ownership of 50 percent or more of
the voting shares of the Company;
(ii) The occurrence of a transaction requiring shareholders' approval
for the acquisition of the Company through purchase of stock or assets; or by
merger or pooling of interests; or by any other lawful means customary at the
time to effect a substantial change in the controlling ownership of the Company;
(iii) The election, during any period of 24 months or less, of 30
percent or more of members of the Board of Directors without the approval of a
majority of the Board members as constituted at the beginning of the period.
(iv) The assignment by the Company of its rights under this Agreement
in a manner which substantially alters the provisions of this Agreement for the
benefit the Executive in case of a Change of Control.
G. The Executive shall not be required to mitigate the amount of any
payment or benefit provided for in this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Agreement be reduced by any compensation earned by the Executive as a result of
employment by another employer or by retirement benefits after termination, or
otherwise.
7. The provisions of this Agreement shall be enforceable notwithstanding the
existence of any claim or cause of action of the Executive against The Company
whether predicated on this Agreement or otherwise.
<PAGE> 8
8. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or three (3) days after
mailing if mailed by registered or certified mail with postage and fees prepaid,
addressed to the other party at the address first recited in this Agreement, or
at such other address as such party may designate.
9. This Agreement is entered into by the Company in The State of Connecticut and
shall be governed by and construed in accordance with the internal laws and
decisions of Connecticut. All provisions of this Agreement are intended to be
interpreted and construed in a manner to make such provisions valid, legal, and
enforceable. The invalidity or unenforceability of any phrase or provision shall
in no way affect the validity or enforceability of any other portion of this
Agreement, which shall be deemed modified, restricted, or omitted to the extent
necessary to make the Agreement enforceable.
10. The Company may assign its rights under this Agreement and this Agreement
shall inure to the benefit of the successors and assigns of the Company and,
subject to the restrictions on transfer herein set forth, be binding upon the
Executive, and the heirs, executors, administrators, guardians, and successors
of the Executive, except that, in the case of the death of the executive, the
Executive's estate shall only be entitled to the amount which would be due the
Executive pursuant to paragraph 3 of Schedule A of this Agreement, together with
the right to immediate exercise of any Options (whether Present Options or Prior
Options) as if such Options had vested in the Executive at death, and any
vacation pay rights accrued during the year of death. Since the Services are
personal to the Executive, the Executive may not assign rights or obligations
under this Agreement.
11. Any dispute or controversy with respect to this Agreement shall be settled
by arbitration in accordance with the rules of the American Arbitration
Association then in effect. In the event of any such dispute, a party prevailing
with respect to a claim shall be reimbursed by the other party for all legal
fees and expenses with respect such claim, as delineated by the arbitrator or
arbitrators.
<PAGE> 9
12. This Agreement represents the entire understanding of the parties with
respect to the specific subject matter of this Agreement and supersedes all
previous understandings, written or oral between the parties with respect to
that subject matter. This Agreement may only be amended with the written consent
of the parties or their successors or, where permitted, assigns, and no oral
waiver or amendment shall be effective under any circumstances whatsoever.
Failure by The Company to insist upon The Executive's compliance with any
provision in this Agreement shall not be deemed a waiver of such provision.
13. The Company may, upon termination of this Agreement, notify any person,
natural or legal, engaging the services of the Executive after such termination
of the existence, provisions, and binding nature of the confidentiality and
non-competition schedules of the Agreement.
IN WITNESS WHEREOF, the Company and the Executive have signed this Agreement
as indicated.
TRIDENT INTERNATIONAL, INC.
By /s/ R. Hugh Van Brimer By /s/ Elaine A. Pullen
- ---------------------------- -----------------------------------
R. Hugh van Brimer, Chairman Elaine A. Pullen, President and CEO
Date: January 8, 1998 Date: January 5, 1998
---------------------- -----------------
Witness: /s/ Marcia McLaughlin Witness: /s/ Barbara Koger
--------------------- -----------------
<PAGE> 10
SCHEDULE A
1. Base Salary shall be $160,000 per annum beginning with the January 1, 1998
Calendar Year of the Company.
2. As adjusted from year to year by the Chairman and the Compensation Committee
of the Board, Compensation shall include, in addition to Base Salary, the
following ordinary and customary elements:
(a) all exercisable options, including maintenance of Prior Options and Present
Options;
(b) bonus shall be deemed to equal fifty percent (50%) of Base Salary.
(c) earned component of any system then in effect for the pertinent class of
employee which provides such employee with an interest in a share of profit or
incremental gain in sales, income, or profit of the Company.
(d) any other benefits contemplated by paragraph 5 of this Agreement to which
the Executive is entitled.
3. In consideration for the Executive's continuing adherence to the obligations
of confidentiality and non-competition contained in the Agreement upon the
expiry or termination of such Agreement, or upon the leaving by the Executive of
the employ of the Company, the Company will pay to the Executive an amount
equivalent to one year of Compensation, determined at the time of expiry,
termination, or leaving, within thirty (30) days of the date of such expiry,
termination, or leaving.
<PAGE> 11
SCHEDULE B
NON-COMPETITION
A. Both during performance of the Services and for a period of one (1) year
after such performance terminates for any reason (with or without the statement
or expression of a reason), the Executive shall not, either directly or
indirectly: (1) solicit, service, obtain, or accept orders for products or
services competitive with those of the Company from any of the Company's actual
or prospective customers; (2) commence, engage in, or participate in any
business competitive with that of the Company within the geographic area in
which the Company does business, or engage in or provide technical or marketing
consulting with or to such a competitive business; (3) solicit, divert, take
away, interfere with, or attempt to induce any employee or agent of the Company
to leave such person's employ or other relationship with the Company in order to
participate in any business competitive with the Company; or (4) use any
Confidential Information or Invention in connection with such competitive
business. During performance of the Services for the Company, the Executive
shall not take any steps or make any plans whatsoever to commence or join any
person or entity in any activity in competition with the Company.
B. A product competitive with those of the Company shall mean any device, part,
or unit involved in the printing on a surface of text, number, character,
design, symbol, word, or other image involving ink or colorant in any form which
is expelled or extracted from an orifice or an aperture and propelled to a
receiving surface without contact between the device and the receiving surface.
A business or activity competitive or in competition with that of the Company or
the Services shall be the design, manufacture, assembly, use, sale, marketing,
purchase, installation, or repair of such a product and any management of such
business or activity.
C. The Executive acknowledges that disclosure of Confidential Information or
breach of the provisions contained in section A of this Schedule B may give rise
to irreparable injury to the Company or to the owner of such Confidential
Information which may be inadequately compensable in damages. Accordingly, the
Company or such owner may seek and obtain injunctive relief against the breach
or threatened breach of the foregoing undertakings, in addition to any other
legal remedies which may be available. The Executive expressly acknowledges
that, if this Agreement is terminated: the provisions of Schedule A will protect
the ability of the Executive to maintain a suitable standard of living while
refraining from competitive activity; the covenants contained herein are
necessary for the protection of the Company's legitimate business interests; and
such covenants are reasonable in scope and content.
<PAGE> 12
SCHEDULE C
CONFIDENTIAL INFORMATION
A. The Executive recognizes that the Company is engaged in a continuous program
of research, development, and production respecting its business, present and
future, including fields generally related to its business and that the
Executive and/or the Company possess and will possess in the future confidential
information that has been created, discovered, or developed by the Executive or
by the Company (including, without limitation, information created by,
discovered or developed by the Executive, or made known to the Executive by the
Company during the period of or arising out of the Executive's performance of
the Services) and/or confidential information which has been assigned or
otherwise conveyed to the Company and is of commercial or other value to the
business in which the Company is engaged ("Confidential Information"). By way of
illustration, but not limitation, Confidential Information includes trade
secrets, processes, formulae, data and know-how, software, documentation,
program files, flow/charts, drawings, techniques, source and object code,
standards, specifications improvements, inventions, techniques, customer
information, accounting data, statistical data, research projects, development
and marketing plans, strategies, forecasts, computer programs, and customer
lists.
B. The Executive understands that acceptance of the Position and the performance
of the Services creates a relationship of confidence and trust between the
Executive and the Company with respect to any Confidential Information which
pertains to the business of the Company, or to the business of any actual or
potential client or customer of the Company, and which may be made known to the
Executive by the Company, or by any client or customer of the Company, or
learned or developed by the Executive during the period of performance of the
Services.
C. The Executive, except as directed by the Company or as to the subordinates of
the Executive in the ordinary course of business, will not at any time during or
after the term of this Agreement disclose any Confidential Information to any
person whatsoever, or permit any person whatsoever to examine, make copies of,
electronically store, or otherwise reproduce any reports, source code, or
documents prepared by, in the possession of, under the control of, or otherwise
available to the Executive by reason of the performance of the duties of the
Position, or otherwise. In the case of subordinates, any disclosure as
contemplated by this paragraph C shall be made in confidence and the Executive
shall use best efforts to assure that such subordinates are bound under and will
maintain an obligation of confidentiality substantially the same as that
contained in this Agreement.
D. (1) All Confidential Information shall be the sole and exclusive property of
the Company and its assigns, and the Company and its assigns shall be the sole
owner of all trademarks, trade names, service marks, trade dress, copyrights,
patents, and other rights ("Intellectual Property Rights") developed from or
used in connection with such Confidential
<PAGE> 13
Information. The Executive hereby assigns to the Company any rights, including
Intellectual Property Rights, that the Executive may have or acquire in such
Confidential Information. At all times, both during the Executive's performance
of the Services and after the termination of the services represented by such
performance, the Executive will keep in confidence and trust all Confidential
Information, and the Executive will not use or disclose any Confidential
Information or anything relating to it without the written consent of the
Company, except as may be necessary in the ordinary course of performing the
Services.
(2) All documents, records, apparatus, equipment, and other physical
property, whether or not pertaining to Confidential Information, furnished to
the Executive by the Company or produced by the Executive or others in
connection with the Executive's performance of the Services shall be and remain
the sole property of the Company and shall be returned to the Company
immediately as and when requested by the Company. Even if the Company does not
so request, the Executive shall return and deliver all such property upon
termination of the Executive's services for the Company for any reason, and the
Executive will not retain any such property or any reproduction of such
property, regardless of the manner by which such reproduction is effected, upon
such termination. This paragraph shall not be deemed to apply to any physical
property which is clearly and unambiguously a gift to the Executive and is
expressly so stated to be a gift at the time it is furnished to the Executive.
(3) The Executive will promptly disclose to the Company or any persons
designated by it, all improvements, inventions, formulas, ideas, designs,
concepts, processes, techniques, know-how, software programs, information, and
data ("Inventions"), whether or not perfectable as an Intellectual Property
Right, made or conceived or reduced to practice or learned by the Executive,
either alone or jointly with others, during the term of the Executive's
performance of the Services. The Company shall receive such disclosures in
confidence, and the disclosure, regardless of how made and whether or not so
identified, shall be deemed to be Confidential Information and the creation of
Confidential Information under the terms of this Agreement.
(4) All Inventions that the Executive develops (in whole or in part,
either alone or jointly with others) and (i) which arise out of use of
equipment, supplies, facilities, or Confidential Information of the Company or
(ii) were developed in whole or in part during the performance of the Services
for which the Executive was compensated by the Company or (iii) which relate to
the business of the Company or to its actual or demonstrably anticipated
research and development or (iv) which result, in whole or in part, from work
performed by the Executive for the Company shall be the sole property of the
Company and its assigns, and the Company and its assigns shall be the sole
owner(s) of all Intellectual Property Rights and other rights in connection with
those Inventions.
(5) The Executive by execution of this Agreement hereby expressly
assigns to the Company any rights, including Intellectual Property Rights, the
Executive may have or acquire in such Inventions. The Executive will, regarding
all such Inventions, assist The
<PAGE> 14
Company in every proper way (but at the Company's expense) to obtain and from
time to time enforce Intellectual Property Rights on said Inventions in any and
all countries. To that end the Executive will execute all documents for use in
applying for and obtaining and enforcing such Intellectual Property Rights as
the Company may desire, together with any assignments of Intellectual Property
Rights to the Company or persons designated by it.
(6) The Executive's obligation to assist the Company in obtaining and
enforcing Intellectual Property Rights for such Inventions in any and all
countries shall continue beyond the termination of The Executive's performance
of the Services. The Company shall, however, compensate the Executive at a
reasonable rate, which shall in no case be less than that calculated by
reference to the Executive's Base Salary as defined in Schedule D of this
Agreement, after such termination for time actually spent by the Executive at
the Company's request on such assistance. In the event that the Company is
unable for any reason whatsoever to secure the Executive's signature to any
lawful and necessary document required to apply for or execute any Intellectual
Property Rights or other application with respect to such an Invention
(including renewals, extensions, continuations, divisions, or continuations in
part of the Invention), the Executive hereby irrevocably designates and appoints
Norman Norris, Esquire of Woodcock, Washburn, Kurtz, MacKiewicz, Norris, One
Liberty Place, Philadelphia, PA 19103 as the Executive's agents and
attorneys-in-fact to act for and in the Executive's behalf and to execute and
file any such application and to do all other lawfully permitted acts to further
the prosecution of the application with the same legal force and effect as if
executed by the Executive.
(7) As a matter of record, the Executive attaches to this Agreement a
complete list of all inventions or improvements relevant to the subject matter
of the Executive's performance of Services that have been made or conceived or
first reduced to practice by the Executive alone or jointly with others prior to
the date of this Agreement or outside its scope and that the Executive desires
to remove from the operation of this Agreement.
(8) The Executive represents that performance of all the terms of this
Agreement will not breach any agreement to keep in confidence proprietary
information acquired by the Executive in confidence or in trust prior to
performance of the Services. The Executive has not entered into, and will not
enter into, any agreement whether written or oral in conflict with this
Agreement.
(9) Nothing contained in this Schedule is intended to limit the
Executive's professional development, either during or subsequent to employment
by the Company or to prohibit the Executive the normal application of skills
acquired or improved during employment consistent with the protection of the
Confidential Information.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED DECEMBER 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,635
<SECURITIES> 17,234
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<ALLOWANCES> 300
<INVENTORY> 1,999
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<PP&E> 3,202
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<TOTAL-ASSETS> 40,853
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0
0
<COMMON> 72
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<TOTAL-LIABILITY-AND-EQUITY> 40,853
<SALES> 7,757
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