<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 June 30, 1998
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 July 31, 1998 was 6,551,783.
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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 June 30, 1998......................... 3
Condensed Consolidated Statements of Operations for the three
months and nine months ended June 30, 1997
and 1998...................................................... 4
Condensed Consolidated Statements of Cash Flows
for the nine months ended June 30, 1997 and
1998.......................................................... 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 5. Other Information............................................... 13
Item 6. Exhibits and Reports on Form 8-K................................ 13
Signatures...................................................... 14
<PAGE> 3
PART I. 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 11 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 June 30, 1998
------------------ -------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .............................................. $ 7,065 $ 7,174
Marketable securities .................................................. 12,728 12,219
Accounts receivable, net ............................................... 4,385 5,960
Inventories ............................................................ 1,745 2,007
Deferred income taxes .................................................. 465 518
Other current assets .................................................... 148 467
------- -------
Total current assets .......................................... 26,536 28,345
LEASEHOLD IMPROVEMENTS AND EQUIPMENT, net .................................. 1,924 2,465
DEFERRED INCOME TAXES ....................................................... 704 522
INTANGIBLE ASSETS, net ...................................................... 11,743 11,166
------- -------
Total assets ................................................... $40,907 $42,498
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ...................................................... $ 1,540 $ 1,237
Accrued expenses ...................................................... 1,067 1,178
Income taxes payable .................................................. 411 652
------- -------
Total current liabilities ....................................... 3,018 3,067
------- -------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 30,000,000 shares authorized; 7,167,981 and
7,179,783 shares issued and outstanding at September 30, 1997
and June 30, 1998 .................................................... 72 72
Additional paid-in capital .............................................. 40,146 40,205
Retained earnings ....................................................... 3,346 9,084
------- -------
43,564 49,361
Less - Treasury stock at cost, 345,000 and 628,000 shares
at September 30, 1997 and June 30, 1998, respectively ............... 5,675 9,930
------- -------
Total stockholders' equity ....................................... 37,889 39,431
------- -------
$40,907 $42,498
======= =======
</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 Nine Months Ended
--------------------------------- ---------------------------------
June 30, 1997 June 30, 1998 June 30, 1997 June 30, 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES ............................... $ 8,069 $ 8,972 $ 22,356 $ 25,140
COST OF SALES ........................... 2,878 3,235 7,860 9,117
----------- ----------- ----------- -----------
Gross profit ......................... 5,191 5,737 14,496 16,023
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Marketing and selling ................ 580 747 1,606 2,239
Research and development ............. 813 1,114 2,184 2,859
General and administrative ........... 606 788 1,620 2,087
Amortization of intangibles .......... 200 175 600 576
----------- ----------- ----------- -----------
Total operating expenses ....... 2,199 2,824 6,010 7,761
----------- ----------- ----------- -----------
Operating income ............... 2,992 2,913 8,486 8,262
OTHER INCOME:
Interest income ................... (284) (289) (779) (843)
----------- ----------- ----------- -----------
Income before income taxes ..... 3,276 3,202 9,265 9,105
PROVISION FOR INCOME TAXES .............. 1,216 1,183 3,567 3,367
----------- ----------- ----------- -----------
NET INCOME .............................. $ 2,015 $ 2,019 $ 5,698 $ 5,738
=========== =========== =========== ===========
BASIC EARNINGS PER COMMON SHARE ......... $ 0.28 $ 0.31 $ 0.81 $ 0.86
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING FOR BASIC EARNINGS PER
SHARE ............................. 7,093,126 6,606,636 7,070,566 6,652,460
=========== =========== =========== ===========
DILUTED EARNINGS PER COMMON SHARE ....... $ 0.28 $ 0.30 $ 0.79 $ 0.85
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING FOR DILUTED EARNINGS PER
SHARE .............................. 7,223,593 6,736,560 7,194,538 6,775,835
=========== =========== =========== ===========
</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>
Nine Months Ended
------------------------------
June 30, 1997 June 30, 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ..................................................... $ 5,698 $ 5,738
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ............................ 853 925
Deferred income taxes .................................... 111 129
Changes in operating assets and liabilities:
Accounts receivable, net ....................................... 15 (1,575)
Inventories .................................................... (55) (262)
Other current assets ........................................... 17 (319)
Accounts payable and accrued expenses .......................... (12) (192)
Income taxes payable ........................................... 247 241
-------- --------
Net cash provided by operating activities ......... 6,874 4,685
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sales (purchases) of marketable securities, net ............... -- 509
Purchases of leasehold improvements and
equipment, net ............................................ (447) (889)
-------- --------
Net cash used in investing activities ............ (447) (380)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock ......................... 41 59
Exercise of warrants and options ............................... 20 --
Purchases of treasury stock .................................... (2,364) (4,255)
-------- --------
Net cash provided by (used in) financing activities (2,303) (4,196)
-------- --------
INCREASE (DECREASE) IN CASH AND EQUIVALENTS ......................... 4,124 109
CASH AND CASH EQUIVALENTS, beginning of period ....................... 17,349 7,065
-------- --------
CASH AND CASH EQUIVALENTS, end of period ............................. $ 21,473 $ 7,174
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for-
Income taxes ................................................. $ 3,209 $ 2,983
======== ========
</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. Cash and cash equivalents:
For purposes of the consolidated statements of cash flows, the Company
considers all investment instruments purchased with a maturity of three
months or less to be cash equivalents.
3. Marketable securities:
The Company invests in marketable securities of highly rated financial
institutions and investment grade debt instruments and limits the amount
of credit exposure in any one entity. The Company has classified its
marketable securities as "available for sale" and accordingly carries
such securities at aggregate fair value. Unrealized gains or losses are
included in stockholders' equity as a component of additional paid-in
capital. At June 30, 1998, the fair value of the Company's marketable
securities approximated its cost.
4. Inventories:
Inventories consisted of the following:
<TABLE>
<CAPTION>
September 30, June 30,
1997 1998
------------- --------
<S> <C> <C>
Raw materials $ 943 $1,241
Work-in process 511 507
Finished goods 291 259
------ ------
$1,745 $2,007
====== ======
</TABLE>
6
<PAGE> 7
5. 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. Earning Per Share:
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings Per Share" which superceded 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 nine months ended June
30, 1997 were restated from $0.79 primary earnings per share to $0.81
basic earnings 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.
RESULTS OF OPERATIONS
Net Sales. Net sales increased $903,000, or 11% to $9.0 million for the
three months ended June 30, 1998 from $8.1 million for the three months ended
June 30, 1997. Net sales of printheads decreased by approximately $120,000 or 3%
in the three months ended June 30, 1998 as compared to the same quarter in the
prior fiscal year due primarily to a reduction in printhead unit sales. Sales of
ink products increased by $1.1 million or 39% in the three months ended June 30,
1998 as compared to the same quarter in the prior fiscal year due to the
increased volume of ink sold. Net sales to international customers decreased by
$431,000, or 18% for the three months ended June 30, 1998 as compared to the
three months ended June 30, 1997 due to a decline in sales of approximately
$359,000 to customers located in Europe.
8
<PAGE> 9
Net Sales. Net sales increased $2.8 million, or 12% to $ 25.1 million for
the nine months ended June 30, 1998 from $22.4 million for the nine months ended
June 30, 1997. Net sales of printheads increased by approximately $272,000 or 2%
in the nine months ended June 30, 1998 as compared to the same period in the
prior fiscal year due primarily to an increase in average selling price of
printheads. Sales of ink products increased by $2.6 million or 31% in the nine
months ended June 30, 1998 as compared to the same period in the prior fiscal
year due to increased volume of ink sold. Net sales to international customers
increased by $59,000, or 1% for the nine months ended June 30, 1998 as compared
to the nine months ended June 30, 1997.
Gross Profit. Gross profit increased $546,000, or 11% to $5.7 million for
the three months ended June 30, 1998 from $5.2 million for the three months
ended June 30, 1997. Gross profit as a percentage of net sales decreased from
64.3% for the three months ended June 30, 1997 to 63.9% for the three months
ended June 30, 1998. The decrease in gross profit as a percentage of net sales
was due to higher average printhead costs.
Gross Profit. Gross profit increased $1.5 million or 10% to $16.0 million
for the nine months ended June 30, 1998 from $14.5 million for the nine months
ended June 30, 1997. Gross profit as a percentage of net sales decreased from
64.8% for the nine months ended June 30, 1997 to 63.7% for the nine months ended
June 30, 1998. The decrease in gross profit as a percentage of net sales was due
to higher average printhead costs.
Marketing and Selling Expenses. Marketing and selling expenses increased
$170,000, or 29% to $747,000 for the three months ended June 30, 1998 from
$580,000 for the three months ended June 30, 1997 due to the addition of sales
personnel and associated recruiting cost. As a percentage of net sales, these
expenses increased to 8.3% for the three months ended June 30, 1998 from 7.2%
for the three months ended June 30, 1997.
Marketing and Selling Expenses. Marketing and selling expenses increased
$633,000, or 39% to $2.2 million for the nine months ended June 30, 1998 from
$1.6 million for the nine months ended June 30, 1997 due to the addition of
sales personnel and associated recruiting cost and travel expenses and increased
advertising expenses. As a percentage of net sales, these expenses increased to
8.9% for the nine months ended June 30, 1998 from 7.2% for the nine months ended
June 30, 1997.
Research and Development Expenses. Research and development expenses
increased $301,000, or 37% to $1.1 million for the three months ended June 30,
1998 from $813,000 for the three months ended June 30, 1997 due principally to
the addition of engineering personnel and associated recruiting costs as well as
increases in research project materials and supplies. As a percentage of net
sales, these expenses increased to 12.4% for the three months ended June 30,
1998 from 10.1% for the three months ended June 30, 1997.
Research and Development Expenses. Research and development expenses
increased $675,000, or 31% to $2.9 million for the nine months ended June 30,
1998 from $2.2 million for the nine months ended June 30, 1997 due principally
to the addition of engineering personnel and associated recruiting costs as well
as increases in research project materials and supplies partially offset by a
reduction in outside contract services. As a percentage of net sales, these
expenses increased to 11.4% for the nine months ended June 30, 1998 from 9.8%
for the nine months ended June 30, 1997.
General and Administrative Expenses. General and administrative expenses
increased $182,000, or 30% to $788,000 for the three months ended June 30, 1998
from $606,000 for the three months ended June 30, 1997. The increase in expenses
is due to additional legal fees arising from the legal proceedings described in
the Company's Form 10-Q for the quarter ended March 31, 1998, consulting fees
and payroll expense. As a percentage of net sales, these expenses increased to
8.8% for the three months ended June 30, 1998 from 7.5% for the three months
ended June 30, 1997.
9
<PAGE> 10
General and Administrative Expenses. General and administrative expenses
increased $467,000, or 29% to $2.1 million for the nine months ended June 30,
1998 from $1.6 million for the nine months ended June 30, 1997. The increase in
expenses is due to additional legal fees, consulting fees, training, and
insurance expenses. As a percentage of net sales, these expenses increased to
8.3% for the nine months ended June 30, 1998 from 7.2% for the nine months ended
June 30, 1997.
Amortization of Intangibles. The amortization amounts for the excess of
purchase price over the fair market value of net assets acquired and other
intangibles decreased from $200,000 for the three months ended June 30, 1997 to
$175,000 for the three months ended June 30, 1998 due to certain intangible
assets becoming fully amortized.
Amortization of Intangibles. The amortization amounts for the excess of
purchase price over the fair market value of net assets acquired and other
intangibles decreased from $600,000 for the nine months ended June 30, 1997 to
$575,000 for the nine months ended June 30, 1998 due to certain intangible
assets becoming fully amortized.
Interest Income. Interest income was $289,000 for the three months ended
June 30, 1998 as compared to $284,000 for the three months ended June 30, 1997.
Interest Income. Interest income was $843,000 for the nine months ended June
30, 1998 as compared to $779,000 for the nine months ended June 30, 1997.
Provision for Income Taxes. The provision for income taxes for the three
months ended June 30, 1998 was $1.2 million on income before income taxes of
$3.2 million. The effective tax rate for the three months ended June 30, 1998
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.
Provision for Income Taxes. The provision for income taxes for the nine
months ended June 30, 1998 was $3.4 million on income before income taxes of
$9.1 million. The effective tax rate for the nine months ended June 30, 1998
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.
10
<PAGE> 11
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. Also, Markem
Corporation has introduced a solid inkjet printer targeted for carton marking
and coding 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. In December, 1997 the Company filed a civil action charging
several such manufacturers with infringing two of the Company's patents (see
"Legal Proceedings" in the Company's Form 10-Q for the quarter ended March 31,
1998). This has resulted in counterclaims by two defendants that include patent
invalidity and antitrust violations. No assurance can be given that the
Company's litigation in this area will result in a favorable decision, or that
any adverse decision on the counterclaims could not have a material adverse
effect on the Company's results of operations.
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.
11
<PAGE> 12
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 June 30, 1998, approximately 82% of the Company's
net sales were to its top ten OEM customers, while approximately 35% of the
Company's net sales for this period were to Marsh Company. 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 June 30, 1998, approximately 73% 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.
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 June 30, 1998, the Company had working capital of $25.3 million compared
to $23.5 million at September 30, 1997. At June 30, 1998, the Company has cash
and cash equivalents of $19.4 million.
The primary financing cash flows activity for the nine months ended June 30,
1998 was the purchase of treasury stock of $4.3 million. The major investing
cash flow activities for the nine months ended June 30, 1998 included $889,000
in purchases of leasehold improvements and equipment. Cash flows from operations
of $4.7 million results primarily from net income of $5.7 million plus
depreciation and amortization of $925,000 offset by increases in inventories,
accounts receivable and other assets. The Company also has a line of credit with
Fleet Bank, which allows it to borrow up to $1,000,000. There were no borrowings
under this line at June 30, 1998.
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.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Securities and Exchange Commission recently adopted certain
amendments to its rules governing the submission by stockholders of proposals
intended to be represented at meetings of stockholders. These amendments, which
became effective on June 29, 1998, included granting the Company the right to
exercise discretionary voting authority with respect to certain stockholder
proposals that the Company did not have notice of within a specified time period
prior to the meeting. Due to the "advance notice" provisions contained in the
Company's By-law's, the amendments relating to discretionary voting authority
will not affect the timing or treatment of stockholder proposals intended to be
presented at the Company's 1999 Annual Meeting of Stockholders.
Thus, as disclosed in the Company's 1998 Proxy Statement, any
stockholder proposals submitted pursuant to Exchange Act Rule 14a-8 and intended
to be presented at the Company's 1999 Annual Meeting of Stockholders must be
received by the Company on or before September 2, 1998 to be eligible for
inclusion in the proxy statement and form of proxy to be distributed by the
Board of Directors in connection with such meeting. Any stockholder proposals
submitted pursuant to Exchange Act Rule 14a-8, must be received by the Company
no later than November 15, 1998, nor prior to October 1, 1998, together with all
supporting documentation required by the Company's By-laws.
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
-------------- -----
10.2 Consulting Agreement between the Company and R. Hugh
Van Brimer dated as of July 1, 1998.
10.8 Lease by and between Oskar G. Rogg and Trident, Inc.
for premises located at 1114 Federal Road,
Brookfield, Connecticut dated as of June 30, 1998.
10.9 Lease by and between Oskar G. Rogg and Trident, Inc.
for premises located at 1112 Federal Road,
Brookfield, Connecticut dated as of June 30,1998.
10.19 Employment agreement between the Company and J. Leo
Gagne dated as of June 1, 1998.
10.20 Letter of addendum to the leases for the premises
located at 1114 Federal Road and 1112 Federal Road,
Brookfield, Connecticut dated July 20, 1998.
27.1 Financial Data Schedule.
b. Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended June 30, 1998.
13
<PAGE> 14
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: July 31, 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
14
<PAGE> 1
EXHIBIT 10.2
CONFIDENTIAL
CONSULTING AGREEMENT
AGREEMENT dated as of July 1, 1998 by and between Trident International,
Inc. a Delaware corporation (the "Company"), and R. Hugh Van Brimer of 119
Woodhall Spa, Williamsburg, Virginia 23188 ("Consultant").
WHEREAS, Consultant has been the President and Chief Executive Officer
of Trident, a predecessor company, and
WHEREAS, the Company desires to assure itself of the continued services
of Consultant;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the Company and Consultant agree as follows:
1. Employment and Term. The Company agrees to employ Consultant and
Consultant hereby agrees to work for the Company and any other subsidiary of the
Company as directed by the Company in the capacity of a consultant for a period
commencing on the date of 1 July, 1998 and ending on 30 June, 1999, subject to
renewal and termination as set forth in Section 5 hereof. The Company shall
engage Consultant as a consultant to the Company for a minimum of ten days per
quarter and a maximum of 20 days per quarter at a rate of $1,000 per day.
Employment in excess of 20 days per quarter is permitted by consent of both
parties at the same per diem rate. Such consulting arrangements shall terminate
no earlier than 30 June, 1999. During the period that Consultant is providing
consulting services to the Company, he shall be entitled to reimbursement for
his reasonable out-of-pocket expenses incurred in the performance of such
consulting services, including, without limitation, air travel in accordance
with Company travel policy between Williamsburg, Virginia and the principal
offices of the Company, transportation, lodging and meals, subject to the
Company's procedures regarding substantiation and documentation of such
expenses.
During Consultant's employment, the Company agrees that it will assign
Consultant duties consistent with his current duties as Consultant. The Company
will provide temporary office accommodation while Consultant is engaged in work
for the Company in Connecticut, and will provide accommodations and assistance
in Williamsburg required to perform consulting assignments.
2. Compensation. Consultant's compensation for the period commencing on
1 July, 1998 to the expiration of the Employment Term will be at the rate of one
thousand dollars
<PAGE> 2
($1,000.00) per day. Said fee shall be payable in arrears in monthly
installments. In the event that any salary or other payments due Consultant
under this Agreement are not made within 30 days after the date such
compensation or other payments are due, such unpaid compensation or other
payments shall bear interest at the rate of 10% per annum from the date such
amount was due to be paid to Consultant until the date on which payment in full
is made.
3. Benefits. Consultant will be entitled to health and hospitalization
insurance benefits at least comparable to the benefits of a senior professional
employee of the Company in accordance with the terms and descriptions of such
plans and benefits as in effect from time to time. Consultant shall be
reimbursed for his reasonable out-of-pocket expenses incurred in the performance
of his duties hereunder, including, without limitation, air travel between
Williamsburg, Virginia and the principal offices of the Company or other
business venue transportation, lodging and meals, subject to the Company's and
Trident's procedures regarding substantiation and documentation of such
expenses.
4. Extent of Service. During Consultant's employment hereunder,
Consultant shall, subject to the discretion and supervision of the Chief
Executive of the Company, devote his business time, best efforts and business
judgement, skill and knowledge to the advancement of the Company's interests and
to the discharge of Consultant's duties and responsibilities hereunder.
Consultant shall not engage in any other business activity, except as may be
approved by the Board of Directors of the Company, provided, however, that
nothing herein shall prevent Consultant from:
(a) Investing Consultant's assets in a manner not prohibited by that
certain Non-Competition Agreement between Consultant and the Company (the
"Non-Competition Agreement"), and in such form or manner as shall not require
Consultant to render any material services with respect to the operations or
affairs of any company or other entity in which such investments are made;
(b) Serving on the Board of Directors of any company or any
committee thereof, subject to the prohibition set forth in the Non-Competition
Agreement and provided that Consultant is not required to render any material
services with respect to the operations or affairs of any such company other
than attendance at meetings of the board of directors or committees thereof of
such company; or
(c) Engaging in religious, charitable or other community or
non-profit activities which do not impair Consultant's ability to fulfill his
duties and responsibilities under the Agreement.
<PAGE> 3
5. Renewal; Termination
(a) General. Except as otherwise provided herein, this Agreement
shall terminate on 30 June, 1999 unless renewed by the mutual written consent of
the parties hereto. This Agreement and Consultant's employment hereunder may be
terminated at any time by the mutual consent of the parties hereto.
(b) Termination by the Company for Cause. Notwithstanding the
provisions of Section 1 hereof, Consultant's employment hereunder may be
terminated for cause without further liability (except for amounts payable
pursuant to Section 5 (f) (i) hereof) on the part of the Company effective
immediately by a vote of a majority of the Board of Directors of the Company
after the Company has provided written notice to the Consultant setting forth in
reasonable detail the nature of such cause and given Consultant the opportunity
to be heard by the Board of Directors of the Company. Only the following shall
constitute "cause" for such termination:
(i) Conviction of Consultant of a crime involving moral
turpitude, deceit, dishonesty or fraud;
(ii) Material failure to perform a substantial portion of
Consultant's duties and responsibilities hereunder, which failure
continues after written notice given to Consultant by the Board of
Directors of the Company;
(iii) Gross negligence or willful misconduct of Consultant with
respect to the Company or any subsidiary or affiliate thereof; and
(iv) Breach of Consultant's obligations under the
Non-Competition Agreement.
(c) Termination by Consultant. Consultant's employment hereunder may
be terminated by Consultant by written notice to the Board of Directors of the
Company at least six months prior to such termination.
(d) Termination by the Company Without Cause. Subject to the payment
of termination benefits pursuant to Section 5 (f) (i), Consultant's employment
with the Company may be terminated by the Company without cause by a vote of a
majority of the Board of Directors of the Company on written notice to
Consultant.
(e) Other Termination Events.
(i) Consultant's employment under this Agreement will terminate
upon his death.
<PAGE> 4
(ii) In the event of Consultant's permanent physical or mental
disability or incapacity, as evidenced by a certificate of a physician
licensed to practice in any state in the United States, this Agreement
may be terminated by the Company. Upon any termination under this
subsection (e)(ii), Consultant will be subject to and entitled to
benefits under the Company's disability plan, if any, as then in effect.
(f) Rights of Termination.
(i) In the event of termination of Consultant's employment with
the Company pursuant to Section 5(d), (i) the Company shall continue to
pay Consultant a monthly minimum consulting fee and provide other
benefits to which he may be entitled for the remainder of the term of
this Agreement, said consulting fees to be made on the same periodic
dates as such payments would have been made to Consultant had
Consultant's employment not been terminated.
(ii) In the event of termination of Consultant's employment with
the Company pursuant to Section 5 (e)(i), the Company shall pay to
Consultant's wife or estate, as the case may be, a lump sum equal to
Consultant's one minimum quarterly consulting fee at the rate in effect
immediately prior to Consultant's death.
(g) Set-off. Any amounts otherwise payable to Consultant under
Section 5 (f) shall be subject to reduction in the amount of any cash
compensation received by Consultant from other employment or self-employment for
services performed during the period in which amounts are payable under such
Section, provided that the Company shall not be entitled to set-off any amounts
otherwise payable to Consultant under Section 5 (f) (i) against cash
compensation received by Consultant for services approved in advance by the
Board of Directors of the Company, which approval shall not be unreasonable
withheld. Consultant shall inform the Company of any such amounts of cash
compensation and shall refund to the Company any amounts which the Company has
paid which exceed the amounts due from the Company after application of the
provisions of this paragraph.
(h) Litigation and Regulatory Cooperation. To the extent reasonably
requested by the Company, Consultant shall cooperate fully with the Company in
the defense or prosecution of any claims or actions now in existence or which
may be brought in the future against or on behalf of the Company which relate to
events or occurrences that transpired while Consultant was employed by the
Company. Consultant's full cooperation in connection with such claims or actions
shall include, but not be limited to, being available to meet with counsel to
prepare for discovery or trial and to act as a witness on behalf of the Company
at mutually convenient times. To the extent reasonably requested by the Company,
Consultant shall also cooperate fully with the Company in connection with any
examination or review of any federal, state or local regulatory authority with
respect to events or
<PAGE> 5
occurrences that transpired while Consultant was employed by the company. The
Company shall compensate Consultant for such cooperation with the Company at
rate of $1,000 per day, payable monthly in arrears, and will reimburse
Consultant for any reasonable out-of-pocket expenses, including, without
limitation, air travel between Williamsburg, Virginia and the principal offices
of the Company or other required venues, transportation, lodging and meals,
incurred in connection therewith.
6. Remedies for Breach. In the event that Consultant brings a legal
action against the Company to enforce his rights under this Agreement and
Consultant prevails on the merits of such action, the Company shall reimburse
Consultant the cost of his legal fees in connection with such action.
7. Change of Control. Prior to the termination of Consultant's
employment hereunder, in the event that within 90 days following the completion
of any transaction or series of transactions in which all of the Company's
outstanding capital stock is sold to an unaffiliated third party or upon the
sale of all or substantially all of the assets of the Company to an unaffiliated
third party or upon the sale of greater than 50% of the Company's outstanding
capital stock to any person or persons acting as a group (a "Change of Control")
there occurs a change in Consultant's duties, responsibilities, status or
position with the Company which, in Consultant's reasonable judgement, does not
represent a promotion from or maintaining of Consultant's duties,
responsibilities, status or position as in effect immediately prior to the
Change of Control, or any removal of Consultant from or any failure to reappoint
or re-elect Consultant to such position, except in connection with the
termination of Consultant's employment for cause, disability, retirement or
death, Consultant shall be entitled to terminate this Agreement and the Company
shall continue to pay Consultant a consulting fee and provide other benefits to
which he may be entitled for the remainder of the term of this Agreement, said
compensation to be made on the same periodic dates as such payments would have
been made to Consultant had Consultant's employment not been terminated.
8. Waiver. The failure of the Company to require the performance of any
term or obligation provided for herein, or the waiver by the Company of any
breach of this Agreement, shall not prevent enforcement of such term or
obligation, or be deemed a waiver of any subsequent breach.
9. Binding Effect. This Agreement will be binding upon Consultant and
his heirs, executors, administrators and legal representatives and will be
binding upon and inure to the benefit of the Company and any other subsidiary of
the Company, and its and their respective successors and assigns.
10. Enforceability. If any portion or provision of this Agreement is to
any extent declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of
<PAGE> 6
this Agreement, or the application of such portion or provision in circumstances
other than those as to which it is so declared illegal or unenforceable, will
not be affected thereby, and each portion and provision of this Agreement shall
be valid and enforceable to the fullest extent permitted by law.
11. Entire Agreement. This Agreement constitutes the entire agreement
between the Company and Consultant with respect to the subject matter hereof,
and supersedes all prior representations and agreements with respect to such
subject matter. This Agreement may not be amended, modified or waived except by
a written instrument duly executed by the person against whom enforcement of
such amendment, modification or waiver is sought. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, in any particular case will
not prevent any subsequent enforcement of such term or obligation or to be
deemed a waiver of any separate or subsequent breach.
12. Notices. Any notices, requests, demands and other communications
provided for by this Agreement will be sufficient if in writing and delivered in
person or sent be registered or certified mail, postage prepaid, to Consultant
at the last address which Consultant has filed in writing with the Company or,
in the case of any notice to the Company, at their main offices, to the
attention of the Chief Executive Officer, with a copy to the Treasurer.
13. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Connecticut, without regard to the conflicts of
laws provision thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first set for above.
TRIDENT INTERNATIONAL, INC.
By: /s/ Elaine A. Pullen
----------------------
Elaine A. Pullen
President and C.E.O.
CONSULTANT
By: /s/ R. Hugh Van Brimer
----------------------
R. Hugh Van Brimer
<PAGE> 1
EXHIBIT 10.8
AGREEMENT of LEASE made as of the 30th day of June, 1998, BETWEEN OSKAR
G. ROGG of 586 Danbury Road, New Milford, Connecticut (hereinafter called
"LESSOR"), and TRIDENT INCORPORATED, a Connecticut corporation authorized to do
business in the State of Connecticut, with an office located at 1114 Federal
Road, Brookfield, Connecticut, 06804 (hereinafter called "LESSEE"):
W I T N E S S E T H:
That the LESSOR does hereby lease to the said LESSEE certain premises
located at 1114 Federal Road, Brookfield, Connecticut, which leased premises
consist of Lot 1114, a building of approximately 20,000 SQUARE feet of first
floor space, parking, and use of auxiliary facilities, specifically water and
refuse storage, as shown on a map entitled, "SITE PLAN LOT 1114 MAP PREPARED FOR
OSKAR G. ROGG 1106-1134 FEDERAL ROAD, TOWN OF BROOKFIELD, COUNTY OF FAIRFIELD,
STATE OF CONNECTICUT, scale 1 (inch) = 50 (inches) August 1977, and revised May
18, 1978", (hereinafter referred to as "Exhibit A"), a copy of which is attached
hereto and made a part hereof.
The term of this Lease shall be for a period of five (5) years
commencing July 1, 1998 and ending on June 30, 2003. LESSEE shall pay rent to
LESSOR at an annual rental rate of Eighty Thousand ($80,000.00) dollars, payable
in monthly advance payments of Six Thousand Six Hundred Sixty Six and 67/100
($6,666.67) dollars, payable on the first day of each month. The monthly rent
shall be payable at the office of the LESSOR, located at 586 Danbury Road, New
Milford, Connecticut.
Access to the property shall be over the road as shown on Exhibit A.
The LESSOR expressly covenants that he has good right and title to grant such
access over the designated access road running from Federal Road to said Lot
1114.
The LESSEE shall have the option to renew this Lease for a further
term of three (3) years commencing on July 1, 2003 at the then prevailing market
rates for similar commercial space. In the event that the LESSEE shall desire to
exercise the option to renew as hereinbefore set forth, written
1
<PAGE> 2
notice shall be given to the LESSOR by registered mail, postage prepaid, at
least six (6) months before expiration of the original term of this lease.
It is agreed between the parties hereto that within One Hundred Twenty
(120) days of the termination date of the Lease, the LESSOR is permitted to show
the interior of the building to prospective tenants during reasonable times by
prior appointment, permission not to be unreasonably withheld.
The LESSEE agrees that it shall pay, in addition to the rental
hereinbefore set forth, the following charges and expenses:
(a) All charges for utilities, including but not limited to heat
and electricity, and all costs of routine maintenance used by
it or its business on the premises.
(b) All charges for the removal of LESSEE'S refuse.
(c) All personal property taxes, of whatever nature, chargeable as
against fixtures, equipment, inventory or other personalty
kept, used or maintained on leased premises.
(d) It is agreed and understood between the parties that during
the term of this Lease, all real property taxes and sewer use
charges assessed against the leased premises and improvements
thereon, shall be paid by the LESSEE as follows: The LESSOR
shall present to the LESSEE the receipted tax bill, or
certification by the bank that taxes have been paid,
representing the town of Brookfield's assessment against said
Lot 1114, and the LESSEE shall reimburse the LESSOR within
thirty (30) days thereafter the amount which has been paid by
said LESSOR. The taxes in Brookfield are payable in January
and July of each year for the advance six (6) month period. In
the event that the Lease expires during
2
<PAGE> 3
any one of the tax periods, the LESSEE shall be obligated to
pay only that portion of the tax which represents the period
covering the remaining term of the Lease.
The LESSEE agrees that it will make no structural alteration of, or
addition to the leased premises without the written consent of the LESSOR, which
consent shall not be unreasonably withheld. Any personal property installed by
the LESSEE or at the LESSEE'S expense in the leased premises may be removed by
the LESSEE at the expiration of this Lease or any renewal period thereof. No
part of the leased premises shall be subject to restoration at LESSEE'S expense,
however, LESSEE agrees to repair any damage to the building if caused by the
removal of personal property from the premises at the end of the lease term or
any extensions thereof.
The LESSEE shall have the right to erect one or more suitable exterior
sign(s) with the prior written approval of the LESSOR, which approval will not
be unreasonably withheld.
The LESSEE agrees that it, its agents, employees, or invitees shall not
block the access road in any way between Route 7 and the leased premises which
are located at the end of the said access road.
And the said LESSOR covenants with the said LESSEE that he has good
right to lease said premises in the manner aforesaid, and that he will suffer
and permit said LESSEE (it keeping all covenants on its part, as hereinafter
contained) to occupy, possess and enjoy said premises during the term aforesaid,
without hinderance or molestation from him or any person claiming by, from or
under him.
And the said LESSEE covenants with the said LESSOR to hire said
premises and to pay the rent therefore as aforesaid, that it will commit no
waste, nor suffer the same to be committed thereof, nor injure nor misuse the
same; and also that it will not assign this Lease nor underlet a part or the
3
<PAGE> 4
whole of said leased premises, nor make alterations therein, nor use the same
for any purpose but that hereinafter authorized, without written permission of
said LESSOR, which permission shall not be unreasonably withheld, but will
deliver up the same at the expiration or sooner termination of its tenancy in as
good condition as they are now in, ordinary wear, fire and other unavoidable
casualties excepted.
PROVIDED, however, and it is further agreed that if the said rent and
taxes shall remain unpaid for fifteen (15) days after the same shall become
payable as aforesaid, or if the said LESSEE shall assign the Lease, or underlet
or otherwise dispose of the whole or any part of said demised premises, or use
the same for any purpose but that hereinafter authorized or structural
alteration therein without the consent of the LESSOR in writing, or shall commit
waste or suffer the same to be committed on said premises, or injure or misuse
the same, then this Lease shall thereupon, by virtue of this express stipulation
therein, provided LESSOR has served LESSEE or LESSEE'S designated agent with
notice of such default and such default is not cured in fifteen (15) days,
expire and terminate, and the LESSOR may, at any time thereafter, re-enter said
premises, and the same have and possess as of his former estate, and without
such re-entry, may recover possession thereof in the manner prescribed by the
statute relating to summary process.
No holding over by said LESSEE shall operate to renew this Lease
without such written consent of said LESSOR.
And it is further agreed between the parties hereto, that the LESSEE is
to comply with, and to conform to all the Laws of the State of Connecticut, and
the by-laws, rules and regulations of the Town within which the premises hereby
leased are situated, relating to Health, Environment, Nuisance, Fire, Highways
and Sidewalks, so far as the premises hereby leased are, or may be concerned;
and to save the LESSOR harmless from all fines, penalties and costs for
violation of or non-compliance with the same, which are due to acts of
commission or omission of said LESSEE. Said premises except areas designated by
LESSEE as private shall be at all reasonable times open in times of emergencies
or by prior appointment.
4
<PAGE> 5
And it is further agreed between the parties to these presents, that in
case the building or buildings erected on the premises hereby leased shall be
partially damaged by fire or otherwise, the same shall be repaired as quickly as
possible at the expense of the LESSOR: that in case the damage shall be so
extensive as to render the building or demised premises untenantable for LESSEE
to conduct its business, the rent shall cease until such time as the building
shall be put in complete repair and if LESSEE'S premises and reasonable access
thereto will not be substantially restored to their original condition within 75
days subsequent to said casualty then LESSEE shall have the right to terminate
this Lease without penalty upon written notice from LESSEE to LESSOR. In the
case of the total destruction of the premises, by fire or otherwise, the rent
shall be paid up to the time of such destruction and then from thenceforth this
Lease shall cease or come to an end.
If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this Lease shall cease and terminate from the
date of title vesting in such proceeding and the LESSEE shall have no claim
against the LESSOR for the value of any unexpired term of said Lease. LESSOR
shall reimburse LESSEE for the net book value of any leasehold improvements made
to the premises. Said improvements shall be depreciated over 72 months using the
straight-line method. Said reimbursement shall not exceed 25% of the proceeds
LESSOR receives if premises are acquired or condemned.
And LESSEE further covenants and agrees that no unreasonable
accumulation of boxes, barrels, packages, waste paper, or other articles, either
in quantity or duration of time, shall be permitted in or upon the premises.
And the LESSEE covenants that in the event the LESSOR is required to
employ an attorney in order to enforce a provision of this Lease, the LESSEE
shall pay a reasonable attorney's fee not to exceed Fifteen Hundred ($1,500.00)
Dollars, in addition to any Court costs and sheriff fees if
5
<PAGE> 6
LESSOR is the prevailing party.
And the LESSOR covenants that in the event the LESSEE is required to
employ an attorney in order to enforce a provision of this Lease, the LESSOR
shall pay a reasonable attorney's fee not to exceed Fifteen Hundred ($1,500.00)
Dollars, in addition to any Court costs and sheriff fees if LESSEE is the
prevailing party.
LESSEE represents that LESSEE has dealt with no broker in connection
with negotiations for and the execution of this Lease.
The LESSEE further agrees that the leased premises will be used for
general offices, sales, research, development and manufacture of printing
components, consumables such as ink, printing systems and related devices and no
other purpose unless the prior written consent of the LESSOR is obtained, which
consent will not be unreasonably withheld.
The LESSEE shall at all times during the term of this Lease procure and
maintain general liability insurance for injury to persons or damage to property
arising out of the use of the said premises with companies duly authorized to
write such insurance in the State of Connecticut. The minimum policy limits
shall be One Million ($1,000,000.00) Dollars, combined single limit for bodily
injury and/or property loss. All such insurance shall name LESSEE as insured and
certificates thereof shall be left in the possession of the LESSOR. The LESSEE
shall furnish to the LESSOR insurance required to be carried by the LESSEE and
shall name as insureds the LESSOR and the holder of any fee mortgage as their
interest may appear. The LESSEE shall furnish to the LESSOR and, upon request,
the holder of any mortgage, certificates, evidencing all such insurance policies
and renewals thereof at least ten (10) days prior to the expiration of any
similar policy then expiring. Said policies shall provide that they shall not be
cancelable by the insurer without thirty (30) days prior notice to the LESSOR
and the holder of any mortgage. Should the LESSEE fail to provide or pay for any
of the insurance as required above, or should any such policy of insurance
obtained by LESSEE be allowed to lapse for any reason whatsoever, the LESSOR may
at the LESSOR'S option,
6
<PAGE> 7
obtain such insurance. In such event, the premiums paid by the LESSOR shall be
additional rent and shall be due and payable with interest thereon at ten (10%)
percent, immediately or at any time thereafter at the option of the LESSOR,
provided that LESSOR has obtained such insurance.
The LESSOR will obtain Fire Insurance on the structure in the amount of
Five Hundred Thousand ($500,000.00) Dollars, prior to LESSEE taking actual
possession. In the event that the cost for said insurance is increased as a
result of the nature of material stored or manufactured by the LESSEE other than
that aforementioned above, the LESSEE agrees to pay the increased costs of
insurance. LESSEE agrees to carry its own insurance covering fire damage to any
of its personal property, fixtures, equipment and further agrees to hold LESSOR
harmless from any claims or losses arising as the result of fire damage and/or
destruction.
The LESSEE agrees the property herein demised shall be in no event
security for any claim for work, labor, services or materials connected with or
incident to any installation, alteration, or repair made at the insistence of
the LESSEE in and to the said property, and further that the LESSEE will pay and
indemnify the LESSOR against all legal costs and charges including counsel fees
reasonably incurred in and about the defense of any suit in discharging the said
premises, or in proceedings by the LESSOR, with respect to any lien, judgment or
encumbrance, caused by the LESSEE. Nothing contained in this Agreement, or
incident to the tenancy hereby created shall be interpreted as authorizing the
LESSEE to pledge the credit of the LESSOR with respect to any cost of any
installation, alteration or repair.
The parties further agree and the LESSEE expressly covenants that no
industrial process wastes, which may be incompatible with the municipal sewer
system, shall be discharged into the system located upon the serving and demised
premises, but shall be hauled away at the LESSEE'S
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<PAGE> 8
expense. The LESSEE will be responsible for the normal upkeep of the sewer pump
station.
The matter of maintenance, repair, alteration, distribution of
electrical power from the electrical panel to any of the LESSEE'S equipment,
shall be the sole responsibility and cost of the LESSEE and such installation
shall be done only by a licensed electrician and certificates of electrical
inspection shall be issued upon completion and a copy thereof filed with the
LESSOR.
The LESSOR shall, at the LESSOR'S expense, if required, make all
necessary major structural, roof and road repairs.
The LESSOR agrees to execute any and all consents and formal documents
that may be submitted to it in order to accomplish the purposes of the Lease.
The parties agree that all machinery, equipment and fixtures of the
LESSEE shall remain the personal property of the LESSEE and be deemed as
personal property.
The lease and all rights of LESSEE hereunder are and shall be subject
and subordinate to the lien of any first mortgage which may hereafter affect the
fee title of the demised premises and to any modification, renewals, extensions
or replacements thereof and which shall contain a provision that notwithstanding
any default in the mortgage and any foreclosure thereof or the enforcement by
the holder thereof of any rights or remedies thereunder or otherwise, this Lease
shall remain in full force and effect and the LESSEE shall be permitted to
remain in quiet and peaceful possession of the demised premises throughout the
term thereof and any extension or renewal thereof.
The LESSEE shall, upon demand, at any time or times, execute,
acknowledge and deliver to LESSOR, without expense to LESSOR, any instruments
that may be reasonably necessary or proper to subordinate this Lease and all
rights hereunder to the lien of any such first mortgage and each such renewal,
modification, consolidation, replacement and extension.
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<PAGE> 9
The LESSEE is to be responsible for the periodic servicing of and
normal wear and tear upon plumbing, heating and air conditioning equipment
installed by the LESSOR; LESSOR is to be responsible for major repairs to
plumbing, heating and air conditioning equipment; the LESSEE to assume all costs
of repair to all systems and/or fixtures installed by the LESSEE or at the
LESSEE'S expense.
The LESSEE shall be responsible for maintenance involving the exterior
of the leased building due to normal wear and tear. The LESSEE shall be
responsible for window washing, all summer grounds maintenance, and snow removal
from sidewalks, parking and loading areas, access road and entrance ways, at the
LESSEE'S expense. All interior maintenance will be the sole responsibility of
the LESSEE and at the LESSEE'S expense.
Nothing contained herein shall be construed to require the LESSOR to
furnish to the LESSEE as part of the consideration for rental reserved herein;
heat, cleaning, electricity, nor any other service whatsoever, except that
expressly stated herein.
LESSOR shall provide parking spaces for a minimum of hundred (100)
cars.
LESSEE shall save LESSOR harmless from, and defend and indemnify LESSOR
against, any and all injury, loss or damage, or claims for injury, loss or
damage, of whatever nature, to any person or property caused by or resulting
from any breach of a covenant of this lease by LESSEE, any act, omission or
negligence of LESSEE or any subtenant or concessionaire of LESSEE or any
employee or agent of LESSEE or any subtenant or concessionaire of LESSEE. It is
a condition of this save harmless and indemnification that LESSEE shall receive
prompt notice of any such claim against LESSOR.
LESSOR shall save LESSEE harmless from, and defend and indemnify LESSEE
against, any and all injury, loss or damage, or claims for injury, loss or
damage, of whatever nature, to any
9
<PAGE> 10
person or property caused by or resulting from any breach of a covenant of this
lease by LESSOR, any act, omission or negligence of LESSOR or its employees or
agents. It is a condition of this save harmless and indemnification that LESSOR
shall receive prompt notice of any such claim against LESSEE.
All notices required or desired to be given hereunder by either party
to the other shall be given by certified or registered mail. Notices to the
respective parties shall be addressed as follows:
If to the LESSOR: Oskar G. Rogg
586 Danbury Road
New Milford, CT 06776
If to the LESSEE: J. Leo Gagne
Trident Incorporated
1114 Federal Road
Brookfield, CT 06804
Either party may, by written notice, designate a new address to which such
notices thereafter shall be directed.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals, and to a duplicate of the same tenor and date, as of the date first
written above.
WITNESS LESSOR
/s/ Mary Hendrix /s/ Oskar G. Rogg
- ---------------- -----------------
OSKAR G. ROGG
WITNESS
/s/ Barbara Koger
- -----------------
10
<PAGE> 11
LESSEE
TRIDENT INTERNATIONAL, INCORPORATED
/s/ J. Leo Gagne
- ----------------
J.LEO GAGNE
11
<PAGE> 1
EXHIBIT 10.9
AGREEMENT of LEASE made as of the 30th day of June, 1998, BETWEEN OSKAR
G. ROGG of 586 Danbury Road, New Milford, Connecticut (hereinafter called
"LESSOR"), and TRIDENT INCORPORATED, a Connecticut corporation authorized to do
business in the State of Connecticut, with an office located at 1114 Federal
Road, Brookfield, Connecticut, 06804 (hereinafter called "LESSEE"):
W I T N E S S E T H:
That the LESSOR does hereby lease to the said LESSEE certain premises
located at 1112 Federal Road, Brookfield, Connecticut, which leased premises
consist of Lot 1112, a building of approximately 15,000 SQUARE feet of first
floor space, parking, and use of auxiliary facilities, specifically water and
refuse storage, as shown on a map entitled, "SITE PLAN LOT 1112 MAP PREPARED FOR
OSKAR G. ROGG 1106-1134 FEDERAL ROAD, TOWN OF BROOKFIELD, COUNTY OF FAIRFIELD,
STATE OF CONNECTICUT, scale 1"=50" August 1977, and revised May 18, 1978",
(hereinafter referred to as "Exhibit A"), a copy of which is attached hereto and
made a part hereof.
The term of this Lease shall be for a period of five (5) years
commencing July 1, 1998 and ending on June 30, 2003. LESSEE shall pay rent to
LESSOR at an annual rental rate of Sixty Thousand ($60,000.00) dollars, payable
in monthly advance payments of Five Thousand Five ($5,000.00) dollars, payable
on the first day of each month. The monthly rent shall be payable at the office
of the LESSOR, located at 586 Danbury Road, New Milford, Connecticut. The LESSEE
may cancel this lease at any time if the LESSEE purchases property from LESSOR
located at 600 Old Danbury Road, New Milford, CT.
Access to the property shall be over the road as shown on Exhibit A.
The LESSOR expressly covenants that he has good right and title to grant such
access over the designated access road running from Federal Road to said Lot
1112.
The LESSEE shall have the option to renew this Lease for a further
term of three (3) years commencing on July 1, 2003 at the then prevailing market
rates for similar commercial space. In the event that the LESSEE shall desire to
exercise the option to renew as hereinbefore set forth, written
1
<PAGE> 2
notice shall be given to the LESSOR by registered mail, postage prepaid, at
least six (6) months before expiration of the original term of this lease.
It is agreed between the parties hereto that within One Hundred Twenty
(120) days of the termination date of the Lease, the LESSOR is permitted to show
the interior of the building to prospective tenants during reasonable times by
prior appointment, permission not to be unreasonably withheld.
The LESSEE agrees that it shall pay, in addition to the rental
hereinbefore set forth, the following charges and expenses:
(a) All charges for utilities, including but not limited to heat
and electricity, and all costs of routine maintenance used by
it or its business on the premises.
(b) All charges for the removal of LESSEE'S refuse.
(c) All personal property taxes, of whatever nature, chargeable as
against fixtures, equipment, inventory or other personalty
kept, used or maintained on leased premises.
(d) It is agreed and understood between the parties that during
the term of this Lease, all real property taxes and sewer use
charges assessed against the leased premises and improvements
thereon, shall be paid by the LESSEE as follows: The LESSOR
shall present to the LESSEE the receipted tax bill, or
certification by the bank that taxes have been paid,
representing the town of Brookfield's assessment against said
Lot 1112, and the LESSEE shall reimburse the LESSOR within
thirty (30) days thereafter the amount which has been paid by
said LESSOR. The taxes in Brookfield are payable in January
and July of each year for the advance six (6) month period. In
the event that the Lease expires during
2
<PAGE> 3
any one of the tax periods, the LESSEE shall be obligated to
pay only that portion of the tax which represents the period
covering the remaining term of the Lease.
The LESSEE agrees that it will make no structural alteration of, or
addition to the leased premises without the written consent of the LESSOR, which
consent shall not be unreasonably withheld. Any personal property installed by
the LESSEE or at the LESSEE'S expense in the leased premises may be removed by
the LESSEE at the expiration of this Lease or any renewal period thereof. No
part of the leased premises shall be subject to restoration at LESSEE'S expense,
however, LESSEE agrees to repair any damage to the building if caused by the
removal of personal property from the premises at the end of the lease term or
any extensions thereof.
The LESSEE shall have the right to erect one or more suitable exterior
sign(s) with the prior written approval of the LESSOR, which approval will not
be unreasonably withheld.
The LESSEE agrees that it, its agents, employees, or invitees shall not
block the access road in any way between Route 7 and the leased premises which
are located at the end of the said access road.
And the said LESSOR covenants with the said LESSEE that he has good
right to lease said premises in the manner aforesaid, and that he will suffer
and permit said LESSEE (it keeping all covenants on its part, as hereinafter
contained) to occupy, possess and enjoy said premises during the term aforesaid,
without hinderance or molestation from him or any person claiming by, from or
under him.
And the said LESSEE covenants with the said LESSOR to hire said
premises and to pay the rent therefore as aforesaid, that it will commit no
waste, nor suffer the same to be committed thereof, nor injure nor misuse the
same; and also that it will not assign this Lease nor underlet a part or the
whole of said leased premises, nor make alterations therein, nor use the same
for any purpose but
3
<PAGE> 4
that hereinafter authorized, without written permission of said LESSOR, which
permission shall not be unreasonably withheld, but will deliver up the same at
the expiration or sooner termination of its tenancy in as good condition as they
are now in, ordinary wear, fire and other unavoidable casualties excepted.
PROVIDED, however, and it is further agreed that if the said rent and
taxes shall remain unpaid for fifteen (15) days after the same shall become
payable as aforesaid, or if the said LESSEE shall assign the Lease, or underlet
or otherwise dispose of the whole or any part of said demised premises, or use
the same for any purpose but that hereinafter authorized or structural
alteration therein without the consent of the LESSOR in writing, or shall commit
waste or suffer the same to be committed on said premises, or injure or misuse
the same, then this Lease shall thereupon, by virtue of this express stipulation
therein, provided LESSOR has served LESSEE or LESSEE'S designated agent with
notice of such default and such default is not cured in fifteen (15) days,
expire and terminate, and the LESSOR may, at any time thereafter, re-enter said
premises, and the same have and possess as of his former estate, and without
such re-entry, may recover possession thereof in the manner prescribed by the
statute relating to summary process.
No holding over by said LESSEE shall operate to renew this Lease
without such written consent of said LESSOR.
And it is further agreed between the parties hereto, that the LESSEE is
to comply with, and to conform to all the Laws of the State of Connecticut, and
the by-laws, rules and regulations of the Town within which the premises hereby
leased are situated, relating to Health, Environment, Nuisance, Fire, Highways
and Sidewalks, so far as the premises hereby leased are, or may be concerned;
and to save the LESSOR harmless from all fines, penalties and costs for
violation of or non-compliance with the same, which are due to acts of
commission or omission of said LESSEE. Said premises except areas designated by
LESSEE as private shall be at all reasonable times open in times of emergencies
or by prior appointment.
4
<PAGE> 5
And it is further agreed between the parties to these presents, that in
case the building or buildings erected on the premises hereby leased shall be
partially damaged by fire or otherwise, the same shall be repaired as quickly as
possible at the expense of the LESSOR: that in case the damage shall be so
extensive as to render the building or demised premises untenantable for LESSEE
to conduct its business, the rent shall cease until such time as the building
shall be put in complete repair and if LESSEE'S premises and reasonable access
thereto will not be substantially restored to their original condition within 75
days subsequent to said casualty then LESSEE shall have the right to terminate
this Lease without penalty upon written notice from LESSEE to LESSOR. In the
case of the total destruction of the premises, by fire or otherwise, the rent
shall be paid up to the time of such destruction and then from thenceforth this
Lease shall cease or come to an end.
If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this Lease shall cease and terminate from the
date of title vesting in such proceeding and the LESSEE shall have no claim
against the LESSOR for the value of any unexpired term of said Lease. LESSOR
shall reimburse LESSEE for the net book value of any leasehold improvements made
to the premises. Said improvements shall be depreciated over 72 months using the
straight-line method. Said reimbursement shall not exceed 25% of the proceeds
LESSOR receives if premises are acquired or condemned.
And LESSEE further covenants and agrees that no unreasonable
accumulation of boxes, barrels, packages, waste paper, or other articles, either
in quantity or duration of time, shall be permitted in or upon the premises.
And the LESSEE covenants that in the event the LESSOR is required to
employ an attorney in order to enforce a provision of this Lease, the LESSEE
shall pay a reasonable attorney's fee not to exceed Fifteen Hundred ($1,500.00)
Dollars, in addition to any Court costs and sheriff fees if LESSOR is the
prevailing party.
5
<PAGE> 6
And the LESSOR covenants that in the event the LESSEE is required to
employ an attorney in order to enforce a provision of this Lease, the LESSOR
shall pay a reasonable attorney's fee not to exceed Fifteen Hundred ($1,500.00)
Dollars, in addition to any Court costs and sheriff fees if LESSEE is the
prevailing party.
LESSEE represents that LESSEE has dealt with no broker in connection
with negotiations for and the execution of this Lease.
The LESSEE further agrees that the leased premises will be used for
general offices, sales, research, development and manufacture of printing
components, consumables such as ink, printing systems and related devices and no
other purpose unless the prior written consent of the LESSOR is obtained, which
consent will not be unreasonably withheld.
The LESSEE shall at all times during the term of this Lease procure and
maintain general liability insurance for injury to persons or damage to property
arising out of the use of the said premises with companies duly authorized to
write such insurance in the State of Connecticut. The minimum policy limits
shall be One Million ($1,000,000.00) Dollars, combined single limit for bodily
injury and/or property loss. All such insurance shall name LESSEE as insured and
certificates thereof shall be left in the possession of the LESSOR. The LESSEE
shall furnish to the LESSOR insurance required to be carried by the LESSEE and
shall name as insureds the LESSOR and the holder of any fee mortgage as their
interest may appear. The LESSEE shall furnish to the LESSOR and, upon request,
the holder of any mortgage, certificates, evidencing all such insurance policies
and renewals thereof at least ten (10) days prior to the expiration of any
similar policy then expiring. Said policies shall provide that they shall not be
cancelable by the insurer without thirty (30) days prior notice to the LESSOR
and the holder of any mortgage. Should the LESSEE fail to provide or pay for any
of the insurance as required above, or should any such policy of insurance
obtained by LESSEE be allowed to lapse for any reason whatsoever, the LESSOR may
at the LESSOR'S option, obtain such insurance. In such event, the premiums paid
by the LESSOR shall be additional rent and shall be due and payable with
interest thereon at ten (10%) percent, immediately or at any time
6
<PAGE> 7
thereafter at the option of the LESSOR, provided that LESSOR has obtained such
insurance.
The LESSOR will obtain Fire Insurance on the structure in the amount of
Five Hundred Thousand ($500,000.00) Dollars, prior to LESSEE taking actual
possession. In the event that the cost for said insurance is increased as a
result of the nature of material stored or manufactured by the LESSEE other than
that aforementioned above, the LESSEE agrees to pay the increased costs of
insurance. LESSEE agrees to carry its own insurance covering fire damage to any
of its personal property, fixtures, equipment and further agrees to hold LESSOR
harmless from any claims or losses arising as the result of fire damage and/or
destruction.
The LESSEE agrees the property herein demised shall be in no event
security for any claim for work, labor, services or materials connected with or
incident to any installation, alteration, or repair made at the insistence of
the LESSEE in and to the said property, and further that the LESSEE will pay and
indemnify the LESSOR against all legal costs and charges including counsel fees
reasonably incurred in and about the defense of any suit in discharging the said
premises, or in proceedings by the LESSOR, with respect to any lien, judgment or
encumbrance, caused by the LESSEE. Nothing contained in this Agreement, or
incident to the tenancy hereby created shall be interpreted as authorizing the
LESSEE to pledge the credit of the LESSOR with respect to any cost of any
installation, alteration or repair.
The parties further agree and the LESSEE expressly covenants that no
industrial process wastes, which may be incompatible with the municipal sewer
system, shall be discharged into the system located upon the serving and demised
premises, but shall be hauled away at the LESSEE'S expense. The LESSEE will be
responsible for the normal upkeep of the sewer pump station.
The matter of maintenance, repair, alteration, distribution of
electrical power from the electrical panel to any of the LESSEE'S equipment,
shall be the sole responsibility and cost of the LESSEE and such installation
shall be done only by a licensed electrician and certificates of electrical
inspection shall be issued upon completion and a copy thereof filed with the
LESSOR.
7
<PAGE> 8
The LESSOR shall, at the LESSOR'S expense, if required, make all
necessary major structural, roof and road repairs.
The LESSOR agrees to execute any and all consents and formal documents
that may be submitted to it in order to accomplish the purposes of the Lease.
The parties agree that all machinery, equipment and fixtures of the
LESSEE shall remain the personal property of the LESSEE and be deemed as
personal property.
The lease and all rights of LESSEE hereunder are and shall be subject
and subordinate to the lien of any first mortgage which may hereafter affect the
fee title of the demised premises and to any modification, renewals, extensions
or replacements thereof and which shall contain a provision that notwithstanding
any default in the mortgage and any foreclosure thereof or the enforcement by
the holder thereof of any rights or remedies thereunder or otherwise, this Lease
shall remain in full force and effect and the LESSEE shall be permitted to
remain in quiet and peaceful possession of the demised premises throughout the
term thereof and any extension or renewal thereof.
The LESSEE shall, upon demand, at any time or times, execute,
acknowledge and deliver to LESSOR, without expense to LESSOR, any instruments
that may be reasonably necessary or proper to subordinate this Lease and all
rights hereunder to the lien of any such first mortgage and each such renewal,
modification, consolidation, replacement and extension.
The LESSEE is to be responsible for the periodic servicing of and
normal wear and tear upon plumbing, heating and air conditioning equipment
installed by the LESSOR; LESSOR is to be responsible for major repairs to
plumbing, heating and air conditioning equipment; the LESSEE to assume all costs
of repair to all systems and/or fixtures installed by the LESSEE or at the
LESSEE'S expense.
8
<PAGE> 9
The LESSEE shall be responsible for maintenance involving the exterior
of the leased building due to normal wear and tear. The LESSEE shall be
responsible for window washing, all summer grounds maintenance, and snow removal
from sidewalks, parking and loading areas, access road and entrance ways, at the
LESSEE'S expense. All interior maintenance will be the sole responsibility of
the LESSEE and at the LESSEE'S expense.
Nothing contained herein shall be construed to require the LESSOR to
furnish to the LESSEE as part of the consideration for rental reserved herein;
heat, cleaning, electricity, nor any other service whatsoever, except that
expressly stated herein.
LESSOR shall provide paved parking spaces for a minimum of sixty (60)
cars.
LESSEE shall save LESSOR harmless from, and defend and indemnify LESSOR
against, any and all injury, loss or damage, or claims for injury, loss or
damage, of whatever nature, to any person or property caused by or resulting
from any breach of a covenant of this lease by LESSEE, any act, omission or
negligence of LESSEE or any subtenant or concessionaire of LESSEE or any
employee or agent of LESSEE or any subtenant or concessionaire of LESSEE. It is
a condition of this save harmless and indemnification that LESSEE shall receive
prompt notice of any such claim against LESSOR.
LESSOR shall save LESSEE harmless from, and defend and indemnify LESSEE
against, any and all injury, loss or damage, or claims for injury, loss or
damage, of whatever nature, to any person or property caused by or resulting
from any breach of a covenant of this lease by LESSOR, any act, omission or
negligence of LESSOR or its employees or agents. It is a condition of this save
harmless and indemnification that LESSOR shall receive prompt notice of any such
claim against LESSEE.
All notices required or desired to be given hereunder by either party
to the other shall be given by certified or registered mail. Notices to the
respective parties shall be addressed as follows:
9
<PAGE> 10
If to the LESSOR: Oskar G. Rogg
586 Danbury Road
New Milford, CT 06776
If to the LESSEE: J. Leo Gagne
Trident International, Incorporated
1114 Federal Road
Brookfield, CT 06804
Either party may, by written notice, designate a new address to which such
notices thereafter shall be directed.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seals, and to a duplicate of the same tenor and date, as of the date first
written above.
WITNESS LESSOR
/s/ Mary Hendrix /s/ Oskar G. Rogg
- ---------------- -----------------
OSKAR G. ROGG
WITNESS
/s/ Barbara Koger
- -----------------
LESSEE
TRIDENT INTERNATIONAL, INCORPORATED
/s/ J. Leo Gagne
- ----------------
J. LEO GAGNE
<PAGE> 1
EXECUTIVE EMPLOYMENT AGREEMENT
between
TRIDENT INTERNATIONAL, INC.
and
J. LEO GAGNE
<PAGE> 2
AGREEMENT made as of and effective on June 1, 1997 by and between TRIDENT
INTERNATIONAL, INC., a Delaware corporation with its principal offices at 1114
Federal Road, Brookfield, Connecticut ("the Company") and J. LEO GAGNE residing
at 125 Stockings Brook Road, Kensington, Connecticut ("the Executive")
WITNESSETH:
WHEREAS, by letter dated February 5, 1996 (the "Letter"), the Company
offered the Executive a position with the Company as Vice President and Chief
Financial Officer, and the Executive accepted that offer; and
WHEREAS, the Executive continues to hold the position of Vice
President and Chief Financial Officer (here and in paragraph 6.A.,"the
Position") of the Company, while also acting as Secretary and Treasurer of the
Company; and
WHEREAS, the Company granted to the Executive certain Incentive
Options pursuant to the Company's Amended and Restated 1994 Stock Option and
Grant Plan under dates of February 26, 1996, January 29, 1997, and January 2,
1998 (the "Options"); and
WHEREAS, the Company and the Executive wish to further formalize the
relationship between them and provide for contingencies and other eventualities
specified herein, by entering into this Agreement ("this Agreement");
NOW, THEREFORE, the parties agree as follows:
<PAGE> 3
1. All terms of the Letter not inconsistent with this Agreement, and of the
Options, copies of which are attached hereto as Schedule A-1 and A-2
respectively, 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 two (2)
years from June 1, 1998, except as otherwise specified in this Agreement,
provided that: (a) A commercially satisfactory number of business performance
goals, if any, established by the President and CEO, or the Board of Directors
of the Company ("the Board"), or both (whether in consultation with the
Executive or not), in connection with performance of the Services have, in the
judgment of the President and CEO, 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 D attached to and made a part of this
Agreement. It shall be the responsibility of the President and CEO, 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 financial strategy
<PAGE> 4
for the Company, in consultation with the President and CEO, and the Board;
direction and supervision of appropriate staff with respect to the keeping and
administration of records and accounts of the Company; and counsel to the
President and CEO concerning management of employees to further such strategies
and recordkeeping on a day-to-day basis. No further definition of the Services
which is within the general concept of financial strategy or administration as
set forth in the preceding sentence, or which includes the function of Chief
Financial 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 and finds a consulting or employment
opportunity or a board position 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
<PAGE> 5
in the application of and for such benefits. The Executive shall further be
entitled to a three (3) 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 President and CEO, and Board, have 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> 6
B. In consideration of the Executive's agreement to continue in the
employ of the Company after a Change in Control, the Company agrees that, in the
event of Involuntary Termination, it shall provide the following severance
benefits:
(i) (a) Salary continuation for two (2) years in an annual amount
equal to the Base Salary in effect on the date of Involuntary Termination; and
(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 D. The foregoing salary continuation and customary
additional elements shall be limited by the amount of equivalent base salary,
fees, and other compensation elements the Executive may receive from -any
employment, consultancy, board services or other similar business arrangement
secured with another party during the two year continuation period, and the
Company shall only be obligated to pay the difference between the aggregate of
such salary continuation and elements, and the value of compensation received
from another party, if less. If the value of such compensation shall exceed such
amount of equivalent base salary and other compensation elements payable by the
Company hereunder, the Company shall have no obligation to Executive under this
paragraph 6.B.(i).
(ii) Coverage for two (2) years under all Company perquisites and
benefit plans including: 401k savings plan; medical, life and disability
insurance plans; and the like, in the same manner as if the Executive were an
active employee, subject to the same limitation with respect to comparable
benefits offered by another party in paragraph 6.B.(i).
(iii) An immediate right to exercise any outstanding and unexercised
stock
<PAGE> 7
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 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 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:
<PAGE> 8
(i) A reduction in Base Salary, or the ordinary and customary
additional elements of Compensation attendant to the Position as set forth in
Schedule D, 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, not in the ordinary course of
temporary and customary relocation for audit, supervisory, training, or similar
purposes, for a period of more than four (4) continuous months;
(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> 9
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, in case of a Change of Control, of
its rights under this Agreement in a manner which substantially alters, impairs,
or otherwise negatively affects the provisions of this Agreement customarily
considered beneficial to the Executive.
G. The Executive shall use his best efforts to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or equivalent consulting opportunities or arrangements.
<PAGE> 10
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.
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
<PAGE> 11
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 D of this Agreement, together with
the right to immediate exercise of any options, including the 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.
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
<PAGE> 12
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/ Elaine A. Pullen By /s/ J. Leo Gagne
Elaine A. Pullen, President and CEO J. Leo Gagne, Vice President and CFO
Date: May 29, 1997 Date: June 1, 1998
Witness: /s/ Barbara S. Koger Witness: /s/ Dianne R. Veley
<PAGE> 13
SCHEDULE A
<PAGE> 14
Schedule A-1
TRIDENT INC.
1114 Federal Road
Brookfield, CT 06804-1140
Telephone: (203)740-9333
Fax: (203) 775-9660
February 5, 1996
Mr. Leo Gagne
125 Stocking Brook Road
Kensington, CT 06037
Dear Leo:
It is with a great deal of pleasure that I offer you the position of Vice
President and Chief Financial Officer at Trident, Inc., with a starting date of
February 26, 1996. This position reports directly to me. Your annual salary will
be $140,000. As with all Trident employees, you will be eligible to participate
in the profit incentive program which can also provide some additional income on
a quarterly basis depending on the profitability of the company. Your
eligibility for this program will begin April 1, 1996. You will be eligible for
participation in the discretionary management bonus plan beginning October 1,
1996 with the potential of a 20% (of base pay) bonus if earned. In addition, a
sign on bonus of $10,000 will be paid to you after six months of employment
based upon satisfactory performance and achievement of selected goals. You will
be granted 10,000 stock options on the date you join Trident with vesting at 25%
ratably over four years. Your employment with Trident is "at will" , meaning
that you will be able to resign at any time for any reason and the Company may
terminate your employment at any time for any reason.
Please review the summary of benefits and feel free to call if you have any
questions. You will be awarded three (3) weeks of vacation upon your hire date.
You will be scheduled for a physical and drug screening during your first week
of employment at our company physician in Danbury.
This offer is contingent upon your signing a confidentiality and non-compete
agreement.
Leo, I am confident that you will make a great contribution to the Trident
management team and personally look forward to a strong working partnership. I
look forward to your acceptance of this offer by signing below and returning to
me as soon as possible.
Sincerely,
/s/ Elaine A. Pullen
Elaine A. Pullen
President and CEO Accepted by:
/s/ J. Leo Gagne 2/9/96
J. Leo Gagne
<PAGE> 15
SCHEDULE A-2
TRIDENT INTERNATIONAL, INC.
AMENDED AND RESTATED 1994 STOCK OPTION AND GRANT PLAN
INCENTIVE STOCK OPTION AGREEMENT
10,000 Shares February 26, 1996
Pursuant to its Amended and Restated 1994 Stock Option and Grant Plan
(the "1994 Plan"), Trident International, Inc. (the "Company") hereby grants to
J. Leo Gagne (the "Optionee") an Option to purchase on or prior to February 26,
2006 (the "Expiration Date") all or any part of 10,000 shares of Common Stock of
the Company, par value $0.01 per share ("Option Shares") at a price of $12.00
per share in accordance with the schedule set forth in Section 1 hereof and
subject to the terms and conditions set forth hereinafter and in the 1994 Plan.
This Option shall be construed in a manner to qualify it as an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and shall be governed by the laws of Delaware.
1. Vesting Schedule. Subject to the provisions of Section 4, hereof
and Section 4 of the 1994 Plan, this Option shall become vested and exercisable
with respect to the following whole number of Option Shares according to the
timetable set forth below:
<TABLE>
<CAPTION>
Percentage of Cumulative
Number of Years Shares Becoming Percentage
After Date of Grant Available for Exercise Available
------------------- ---------------------- ---------
<S> <C> <C>
Less than 1 year 0% 0%
At least 1 year 25% 25%
At least 2 years 25% 50%
At least 3 years 25% 75%
At least 4 years 25% 100%
</TABLE>
2. Manner of Exercise. The Optionee may exercise this Option only in
the following manner: from time to time on or prior to the Expiration Date of
this Option, the Optionee may give written notice to the Company's Option
Committee (the "Committee") of his election to purchase some or all of the
vested Option Shares purchasable at the time of such notice. This notice shall
specify the number of shares to be purchased.
Payment of the purchase price for the Option Shares may be made by one or more
of the following methods: (a) in cash, by certified or bank check or other
instrument acceptable to the Committee; (b) in the form of shares of Common
Stock, par value $0.01 per share, of the Company ("Common Stock") that are not
then subject to restrictions under any Company plan and that have been held by
the Optionee for at least six (6) months; (c) by the Optionee
<PAGE> 16
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company to pay the option purchase price,
provided that in the event the Optionee chooses to pay the option purchase price
as so provided, the Optionee and the broker shall comply with such procedures
and enter into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure; or (d) a
combination of (a), (b) and (c) above. Payment instruments will be received
subject to collection.
The delivery of certificates representing the Option Shares will be
contingent upon the Company's receipt from the Optionee of full payment for the
Option Shares, as set forth above, and any agreement, statement or other
evidence that the Company may require to satisfy itself that the issuance of
Option Shares to be purchased pursuant to the exercise of Options under the 1994
Plan and any subsequent resale of the shares will be in compliance with
applicable laws and regulations.
If requested upon the exercise of this Option, certificates for shares
may be issued in the name of the Optionee jointly with another person or in the
name of the executor or administrator of the Optionee's estate.
Notwithstanding any other provision hereof or of the 1994 Plan, no
portion of this Option shall be exercisable after the Expiration Date hereof.
3. Non-transferability of Option. This Option shall not be
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution and this Option shall be exercisable, during the Optionee's
lifetime, only by the Optionee.
4. Termination of Employment. If the Optionee's employment by the
Company or any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities, beginning with the Company if
each of the corporations or entities (other than the last corporation or entity
in the unbroken chain) owns stock or other interests possessing 50 % or more of
the economic interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in the chain (a
"Subsidiary") is terminated, the extent to which and the period within which the
Option may be exercised shall be as set forth below.
(a) Termination Due to Death. If the Optionee's employment
terminates by reason of death, any Option held by the
Optionee may be exercised, to the extent exercisable at the
date of death, by the Optionee's legal representative or
legatee for a period of one (1) year from the date of death
or until the Expiration Date, if earlier.
<PAGE> 17
(b) Termination Due to Disability. If the Optionee's
employment terminates by reason of Disability (as defined in
Section 22(e)(3) of the Code), any Option held by the
Optionee may be exercised, to the extent exercisable on the
date of termination, for a period of one (1) year from the
date of termination or until the Expiration Date, if
earlier. The death of the Optionee during the twelve (12)
month period provided in this Section 4(b) shall extend such
period for six (6) months from the date of death or until
the Expiration Date, if earlier.
(c) Termination for Cause. If the Optionee's employment
terminates for Cause (defined as a vote of the Board of
Directors of the Company resolving that the Optionee should
be dismissed as a result of (i) any material breach by the
Optionee of any agreement to which the Optionee and the
Company are parties, (ii) any act (other than retirement) or
omission to act by the Optionee which may have a material
and adverse effect on the business of the Company or any
Subsidiary or on the Optionee's ability to perform services
for the Company or any Subsidiary, including, without
limitation, the commission of any crime (other than ordinary
traffic violations), or (iii) any material misconduct or
neglect of duties by the Optionee in connection with the
business or affairs of the Company or any Subsidiary), any
Option held by the Optionee shall immediately terminate and
be of no further force and effect.
(d) Other Termination. If the Optionee's employment
terminates for any reason other than death, Disability or
Cause, any Option held by the Optionee may be exercised, to
the extent exercisable on the date of termination, for a
period of three (3) months from the date of termination or
until the Expiration Date, if earlier.
For this purpose, neither a transfer of employment from the Company to a
Subsidiary (or from a Subsidiary to the Company) nor an approved leave of
absence shall be deemed a "termination of employment."
5. Option Shares. The Option Shares are shares of Common Stock as
constituted on the date of this Option, subject to adjustment as provided in
Section 7 of the 1994 Plan.
6. No Special Employment Rights. This Option will not confer upon the
Optionee any right with respect to continuance of employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee's
employer to terminate the optionee's employment at any time.
7. Rights as a Shareholder . The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock that may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided in the 1994 Plan, no
<PAGE> 18
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such share certificate is issued.
8. Qualification under Section 422. It is understood and intended that
the Option granted hereunder SHALL qualify as an "incentive stock option" as
defined in Section 422 of the Code. Accordingly, the Employee understands that
in order to obtain the benefits of an incentive stock option under Section 422
of the Code, no sale or other disposition may be made of any Option Shares
acquired upon exercise of the Option within the one-year period beginning on the
day after the day of the transfer of such Option Shares to him or her, nor
within the two-year period beginning on the day after the grant of the Option.
If the Employee intends to dispose or does dispose (whether by sale, gift,
transfer or otherwise) of any such Option Shares within these periods, he or she
will notify the Company within thirty (30) days after such disposition.
Share Options which become exercisable for the first time by the
Optionee during any calendar year will only qualify as incentive stock options
under Section 422 of the Code to the extent that the aggregate fair market value
of the Option Shares underlying such Share Options as of the date of grant does
not exceed $100,000. Any such Share Options relating to Option Shares in excess
of $100,000 will be treated as nonqualified stock options under the Code.
9. Tax Withholding. No later than the date as of which part or all of
the value of any shares of Common Stock received under the 1994 Plan first
becomes includible in the Optionee's gross income for Federal tax purposes, the
Optionee shall make arrangements with the Company in accordance with Section 9
of the 1994 Plan regarding the payment of any federal, state or local taxes
required to be withheld with respect to such income.
10. The 1994 Plan. In the event of any discrepancy or inconsistency
between this Agreement and the 1994 Plan, the terms and conditions of the 1994
Plan shall control.
11. Miscellaneous. Notices hereunder shall be mailed or delivered to
the Company at its principal place of business and shall be mailed or delivered
to Optionee at the address set forth below or, in either case, at such other
address as one party may subsequently furnish to the other party in writing.
TRIDENT INTERNATIONAL, INC.
By /s/ David Hundt
Name
<PAGE> 19
Receipt of the foregoing Option is acknowledged and its terms and
conditions are hereby agreed to:
Date: 2/94
/s/ J. Leo Gagne
J. Leo Gagne, Optionee
<PAGE> 20
TRIDENT INTERNATIONAL, INC.
AMENDED AND RESTATED 1994 STOCK OPTION AND GRANT PLAN
INCENTIVE STOCK OPTION AGREEMENT
10,000 Shares January 29, 1997
Pursuant to its Amended and Restated 1994 Stock Option and Grant Plan
(the "1994 Plan"), Trident International, Inc. (the "Company") hereby grants to
J. Leo Gagne (the "Optionee") an Option to purchase on or prior to January 29,
2007 (the "Expiration Date") all or any part of 10,000 shares of Common Stock of
the Company, par value $0.01 per share ("Option Shares") at a price of $20.125
per share in accordance with the schedule set forth in Section I hereof and
subject to the terms and conditions set forth hereinafter and in the 1994 Plan.
This Option shall be-construed in a manner to qualify it-as an incentive stock
option under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and shall be governed by the laws of Delaware.
1. Vesting Schedule. Subject to the provisions of Section 4 hereof and
Section 4 of the 1994 Plan , this Option shall become vested and exercisable
with respect to the following whole number of Option Shares according to the
timetable set forth below:
<TABLE>
<CAPTION>
Percentage of Cumulative
Number of Years Shares Becoming Percentage
After Date of Grant Available for Exercise Available
------------------- ---------------------- ---------
<S> <C> <C>
Less than 1 year 0% 0%
At least 1 year 25% 25%
At least 2 years 25% 50%
At least 3 years 25% 75%
At least 4 years 25% 100%
</TABLE>
2. Manner of Exercise. The Optionee may exercise this Option only in
the following Manner: from time to time on or prior to the Expiration Date of
this Option, the Optionee may give written notice to the Company's Option
Committee (the "Committee") of his election to purchase some or all of the
vested Option Shares purchasable at the time of such notice. This notice shall
specify the number of shares to be purchased.
Payment of the purchase price for the Option Shares may be made by one
or more Of the following methods: (a) in cash, by certified or bank check or
other instrument acceptable to the Committee; (b) in the form of shares of
Common Stock, par value $0.01 per share, of the Company ("Common Stock") that
are not then subject to restrictions under any Company plan and that have been
held by the Optionee for at least six (6) months; (c) by the Optionee
<PAGE> 21
delivering to the Company a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company cash or
a check payable and acceptable to the Company to pay the option purchase price,
provided that in the event the Optionee chooses to pay the option purchase price
as so provided, the Optionee and the broker shall comply with such procedures
and enter into such agreements of indemnity and other agreements as the
Committee shall prescribe as a condition of such payment procedure; or (d) a
combination of (a), (b) and (c) above. Payment instruments win be received
subject to collection.
The delivery of certificates representing the Option Shares will be
contingent upon the Company's receipt from the Optionee of full payment for the
Option Shares, as set forth above, and any agreement, statement or other
evidence that the Company may require to satisfy itself that the issuance of
Option Shares to be purchased pursuant to the exercise of Options under the 1994
Plan and any subsequent resale of the shares will be in compliance with
applicable laws and regulations.
If requested upon the exercise of this Option, certificates for shares
may be issued in the name of the Optionee jointly with another person or in the
name of the executor or administrator of the Optionee's estate.
Notwithstanding any other provision hereof or of the 1994 Plan, no
portion of this Option shall be exercisable after the Expiration Date hereof.
3. Non-transferability of Option. This Option shall not be
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution and this Option shall be exercisable, during the Optionee's
lifetime, only by the Optionee.
4. Termination of Employment. If the Optionee's employment by the
Company or any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities, beginning with the Company if
each of the corporations or entities (other than the last corporation or entity
in the unbroken chain) owns stock or other interests possessing 50% or more of
the economic interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in the chain (a
"Subsidiary") is terminated, the extent to which and the period within which the
Option may be exercised shall be as set forth below.
(a) Termination Due to Death. If the Optionee's employment terminates
by reason of death, any Option held by the Optionee may be exercised,
to the extent exercisable at the date of death, by the Optionee's legal
representative or legatee for a period of one (1) year from the date of
death or until the Expiration Date, if earlier.
<PAGE> 22
(b) Termination Due to Disability. If the Optionee's employment
terminates by reason of Disability (as defined in Section 22(e)(3) of
the Code), any option held by the Optionee may be exercised, to the
extent exercisable on the date of termination, for a period of one (1)
year from the date of termination or until the Expiration Date, if
earlier. The death of the Optionee during the twelve (12) month period
provided in this Section 4(b) shall extend such period for six (6)
months from the date of death or until the Expiration Date, if earlier.
(c) Termination for Cause. If the Optionee's employment terminates for
Cause (defined as a vote of the Board of Directors of the Company
resolving that the Optionee should be dismissed as a result of (i) any
material breach by the Optionee of any agreement to which the Optionee
and the Company are parties, (ii) any act (other than retirement) or
omission to act by the Optionee which may have a material and adverse
effect on the business of the Company or any Subsidiary or on the
Optionee's ability to perform services for the Company or any
Subsidiary, including, without limitation, the commission of any crime
(other than ordinary traffic violations), or (iii) any material
misconduct or neglect of duties by the Optionee in connection with the
business or affairs of the Company or any Subsidiary), any Option held
by the Optionee shall immediately terminate and be of no further force
and effect.
(d) Other Termination. If the Optionee's employment terminates for any
reason other than death, Disability or Cause, any Option held by the
Optionee may be exercised, to the extent exercisable on the date of
termination, for a period of three (3) months from the date of
termination or until the Expiration Date, if earlier.
For this purpose, neither a transfer of employment from the Company to a
Subsidiary (or from a Subsidiary to the Company) nor an approved leave of
absence shall be deemed a "termination of employment."
5. Option Shares. The Option Shares are shares of Common Stock as
constituted on the date of this Option, subject to adjustment as provided in
Section 7 of the 1994 Plan.
6. No Special Employment Right . This Option will not confer upon the
Optionee any right with respect to continuance of employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee's
employer to terminate the Optionee's employment at any time.
7. Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock that may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided in the 1994 Plan, no
<PAGE> 23
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such share certificate is issued.
8. Qualification under Section 422. It is understood -and intended
that the Option granted hereunder shall qualify as an "incentive stock option"
as defined in Section 422 of the Code. Accordingly, the Employee understands
that in order to obtain the benefits of an incentive stock option under Section
422 of the Code, no sale or other disposition may be made of any Option Shares
acquired upon exercise of the Option within the one-year period beginning on the
day after the day of the transfer of such Option Shares to him or her, nor
within the two-year period beginning on the day after the grant of the Option.
If the Employee intends to dispose or does dispose (whether by sale, gift,
transfer or otherwise) of any such Option Shares within these periods, he or she
will notify the Company within thirty (30) days after such disposition.
Share Options which become exercisable for the first time by the
Optionee during any calendar year will only qualify as incentive stock options
under Section 422 of the Code to the extent that the aggregate fair market value
of the Option Shares underlying such Share Options as of the date of grant does
not exceed $100,000. Any such Share Options relating to Option Shares in excess
of $100,000 will be treated as nonqualified stock options under the Code.
9. Tax Withholding. No later than the date as of which part or all of
the value of any shares of Common Stock received under the 1994 Plan first
becomes includible in the Optionee's gross income for Federal tax purposes, the
Optionee shall make arrangements with the Company in accordance with Section 9
of the 1994 Plan regarding the payment of any federal, state or local taxes
required to be withheld with respect to such income.
10. The 1994 Plan. In the event of any discrepancy or inconsistency
between this Agreement and the 1994 Plan, the terms and conditions of the 1994
Plan shall control.
11. Miscellaneous. Notices hereunder shall be mailed or delivered to
the Company at its principal place of business and shall be mailed or delivered
to Optionee at the address set forth below or, in either case, at such other
address as one party may subsequently furnish to the other party in writing.
TRIDENT INTERNATIONAL, INC.
By/s/ David A. Hundt
<PAGE> 24
Receipt of the foregoing Option is acknowledged and its terms and
conditions are hereby agreed to:
/s/ J. Leo Gagne
J. Leo Gagne
Date: 1/30/98
<PAGE> 25
TRIDENT INTERNATIONAL, INC.
AMENDED AND RESTATED 1994 STOCK OPTION AND GRANT PLAN
INCENTIVE STOCK OPTION AGREEMENT
10,000 Shares January 2, 1998
Pursuant to its Amended and Restated 1994 Stock Option and Grant Plan
(the "1994 Plan"), Trident International, Inc. (the "Company") hereby grants to
J. LEO GAGNE (the "Optionee") an Option to purchase on or prior to January 2,
2008 (the "Expiration Date") all or any part of 10,000 shares of Common Stock of
the Company, par value $0.01 per share ("Option Shares") at a price of $13.00
per share in accordance with the schedule set forth in Section I hereof and
subject to the terms and conditions set forth hereinafter and in the 1994 Plan.
This Option shall be construed in a manner to qualify it as an incentive stock
option under Section 422 of the Internal Revenue Code Of 1986, as amended (the
!Code"), and shall be governed by the laws of Delaware.
1. Vesting Schedule. Subject to the provisions of Section 4 hereof
and Section 4 of the 1994 Plan, this Option shall become vested and exercisable
with respect to the following whole number of Option Shares according to the
timetable set forth below:
<TABLE>
<CAPTION>
Percentage of Cumulative
Number of Years Shares Becoming Percentage
After Date of Grant Available for Exercise Available
- ------------------- ---------------------- ---------
<S> <C> <C>
Less than 1 year 0% 0%
At least 1 year 25% 25%
At least 2 years 25% 50%
At least 3 years 25% 75%
At least 4 years 25% 100%
</TABLE>
2. Manner of Exercise . The Optionee may exercise this Option only in
the following manner: from time to time on or prior to the Expiration Date of
this Option, the Optionee may give written notice to the Company's Option
Committee (the "Committee") of his election to purchase some or all of the
vested Option Shares purchasable at the time of such notice. This notice shall
specify the number of shares to be purchased
Payment of the purchase price for the option Shares may be made by one
or more of the following methods: (a) in cash, by certified or bank check or
other instrument acceptable to the Committee; (b) in the form of shares of
Common Stock, par value $0.01 per share, of the Company ("Co n Stock") that are
not then subject to restrictions under any Company Plan and that have been held
by the Optionee for at least six (6) months; (c) by the Optionee delivering to
the Company a properly executed exercise notice together with irrevocable
instructions to a
<PAGE> 26
broker to promptly deliver to the Company cash or a check payable and acceptable
to the Company to pay the option purchase price, provided that in the event the
Optionee chooses to pay the option purchase price as so provided, the Optionee
and the broker shall comply with such procedures and enter into such agreements
of indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure; or (d) a combination of (a), (b) and (c)
above. Payment instruments will be received subject to collection.
The delivery of certificates representing the Option Shares will be
contingent upon the Company's receipt from the Optionee of full payment for the
Option Shares, as set forth above, and any agreement, statement or other
evidence that the Company may require to satisfy itself that the issuance of
Option Shares to be purchased pursuant to the exercise of Options under the 1994
Plan and any subsequent resale of the shares will be in compliance with
applicable laws and regulations.
If requested upon the exercise of this Option, certificates for shares
may be issued in the name of the Optionee jointly with another person or in the
name of the executor or administrator of the Optionee's estate.
Notwithstanding any other provision hereof or of the 1994 Plan, no
portion of this Option shall be exercisable after the Expiration Date hereof
3. Non-transferability of Option . This Option shall not be
transferable by the Optionee otherwise than by will or by the laws of descent
and distribution and this Option shall be exercisable, during the Optionee's
lifetime, only by the Optionee.
4. Termination of Employment. If the Optionee's employment by the
Company or any corporation or other entity (other than the Company) in any
unbroken chain of corporations or other entities, beginning with the Company if
each of the corporations or entities (other than the last corporation or entity
in the unbroken chain) owns stock or other interests possessing 50% or more of
the economic interest or the total combined voting power of all classes of stock
or other interests in one of the other corporations or entities in the chain (a
"Subsidiary") is terminated, the extent to which and the period within which the
Option may be exercised shall be as set forth below.
(a) Termination Due to Death. If the Optionee's employment
terminates by reason of death, any Option held by the Optionee
may be exercised, to the extent exercisable at the date of
death, by the Optionee's legal representative or legatee for a
period of one (1) year from the date of death or until the
Expiration Date, if earlier.
(b)Termination Due to Disability. If the Optionee's employment
terminates by reason of Disability (as defined in Section
22(e)(3) of the Code), any Option held by the Optionee may be
exercised, to the extent exercisable on the date of
termination, for a period of one (1) year from the date of
termination or until the
<PAGE> 27
Expiration Date, if earlier. The death of the Optionee during
the twelve (12) month period provided in this Section 4(b)
shall extend such period for six (6) months from the date of
death or until the Expiration Date, if earlier.
(c) Termination for Cause. If the Optionee's employment
terminates for Cause (defined as a vote of the Board of
Directors of the Company resolving that the Optionee should be
dismissed as a result of (1) any material breach by the
Optionee of any agreement to which the Optionee and the
Company are parties, (ii) any act (other than retirement) or
omission to act by the Optionee which may have a material and
adverse effect on the business of the Company or any
Subsidiary or on the Optionee's ability to perform services
for the Company or any Subsidiary, including, without
limitation, the commission of any crime (other than ordinary
traffic violations), or (iii) any material misconduct or
neglect of duties by the Optionee in connection with the
business or affairs of the Company or any Subsidiary), any
Option held by the Optionee shall immediately terminate and be
of no further force and effect.
(d) Other Termination. If the Optionee's employment terminates
for any reason other than death, Disability or Cause, any
Option held by the Optionee may be exercised, to the extent
exercisable on the date of termination, for a period of three
(3) months from the date of termination or until the
Expiration Date, if earlier.
For this purpose, neither a transfer of employment from the Company to a
Subsidiary (or from a Subsidiary to the Company) nor an approved leave of
absence shall be deemed a "termination of employment."
5. Option Shares. The. Option Shares are shares of Common Stock as
constituted on the date of this option, subject to adjustment as provided in
Section 7 of the 1994 Plan.
6. No Special Employment Rights. This Option will not confer upon the
Optionee any right with respect to continuance of employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee's
employer to terminate the Optionee's employment at any time.
7. Rights as a Shareholder . The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock that may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such shares are duly issued and delivered to the Optionee. Except
as otherwise expressly provided in the 1994 Plan, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such share certificate is issued.
8. Qualification under Section 422. It is understood and intended that
the Option granted hereunder shall qualify as an "incentive stock option" as
defined in Section 422 of the
<PAGE> 28
Code. Accordingly, the Employee understands that in order to obtain the benefits
of an incentive stock option under Section 422 of the Code, no sale or other
disposition may be made of any Option Shares acquired upon exercise of the
Option within the one-year period beginning on the day after the day of the
transfer of such Option Shares to him or her, nor within the two-year period
beginning on the day after the grant of the Option. If the Employee intends to
dispose or does dispose (whether by sale, gift, transfer or otherwise) of any
such Option Shares within these periods, he or she will notify the Company
within thirty (30) days after such disposition.
Share Options which become exercisable for the first time by the
Optionee during any calendar year will only qualify as incentive stock options
under Section 422 of the Code to the extent that the aggregate fair market value
of the Option Shares underlying such Share Options as of the date of grant does
not exceed $ 100,000. Any such Share Options relating to Option Shares in excess
of $ 100,000 will be treated as nonqualified stock options under the Code.
9. Tax Withholding No later than the date as of which part or all of
the value of any shares of Common Stock received under the 1994 Plan first
becomes includible in the Optionee's gross income for Federal tax purposes, the
Optionee shall make arrangements with the Company in accordance with Section 9
of the 1994 Plan regarding the payment of any federal, 'state or local taxes
required to be withheld with respect to such income.
10. The 1994 Plan. In the event of any discrepancy or inconsistency
between this Agreement and the 1994 Plan, the terms and conditions of the 1994
Plan shall control.
11. Miscellaneous. Notices hereunder shall be mailed or delivered to
the Company at its principal place of business and shall be mailed or delivered
to Optionee at the address set forth below or, in either case, at such other
address as one party may subsequently furnish to the other party in writing.
TRIDENT INTERNATIONAL, INC.
By: /s/ Elaine A. Pullen
Name
<PAGE> 29
Receipt of the foregoing Option is acknowledged and its terms and
conditions are hereby agreed to:
/s/ J. Leo Gagne
J. Leo Gagne,
Optionee
Date 2/9/98
<PAGE> 30
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; (4) use any
Confidential Information or Invention in connection with such competitive
business; or (5) serve on the Board of Directors of any other for-profit company
or organization, whether or not directly competitive with the Company. During
performance of the Services for the Company, the Executive shall not take any
steps or make any plans 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 D 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> 31
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, financial and 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
<PAGE> 32
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 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, famished 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 famished 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 perfectible 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.
<PAGE> 33
(4) All Inventions that the Executive develops (in whole or in part,
either alone or jointly with others) and (1) 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 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.
<PAGE> 34
(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.
<PAGE> 35
SCHEDULE D
1. Base Salary shall be $155,000 per annum beginning June 1, 1998.
2. As adjusted from year to year by the President 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 the Options;
(b) bonus of thirty percent (30%) 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, also subject to the
aforesaid limitation;
(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 (except in cases of a Change of
Control), or upon the voluntary 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, in
lieu of any and all other termination rights and benefits provided to the
Executive hereunder.
<PAGE> 1
EXHIBIT 10.20
July 20, 1998
Mr. and Mrs. Oskar G. Rogg
586 Danbury Road
New Milford, Connecticut 06776
Re: Removal of Earth Products from Property on U.S. Route 7, New Milford,
Connecticut
Dear Mr. and Mrs. Rogg:
We understand that you desire to remove certain earth products from your
property on U. S. Route 7 in New Milford, Connecticut. However, as all of the
land use approvals for that property are currently in our name, the New Milford
Zoning Commission is requiring that we sign the application prior to issuing you
a permit. We have advised you that we are willing to do so, but only on the
condition that you agree to complete the work in accordance with all applicable
laws, regulations and ordinances, and that you further agree to indemnify us in
the event you fail to do so. Accordingly, this letter is an addendum to our
leases for 1114 Federal Road and 1112 Federal Road, Brookfield, Connecticut and
is to confirm our understanding that, in consideration of our signing the
application to remove certain earth products from your property, you will (a)
complete all work in accordance with all applicable federal, state or local
laws, regulations and ordinances to the full satisfaction of the New Milford
Zoning Commission and/or other applicable federal, state, or local governmental
authorities and (b) indemnify and hold us harmless to our full satisfaction from
and against any and all claims, damages, losses, costs, expenses, actions,
suits, proceedings and/or any other liability asserted against us in connection
with or as a result of your removal of earth products from your property
including, without limitation, our attorneys" fees and other costs.
In the event any liability is asserted against us in connection with or as a
result of your removal of earth products form your property, and you fail to
indemnify and hold us harmless to our full satisfaction as provided above, then
we may take whatever action we believe is necessary or appropriate to extinguish
that liability, and you will reimburse us on demand for the cost and expense of
our doing so. If you fail to so reimburse us on demand, then we may set-off that
amount against rent and additional rent falling due under any lease or rental
agreement that is then in effect between you and us. Rent, so offset, will be
limited to 50% of monthly payments. However, if such amounts in total will not
satisfy obligation amounts offset will be increased
<PAGE> 2
correspondingly. All amounts which you may owe us under this letter agreement
will bear interest at the rate of 1.09% per month for each month or portion of a
month that they remain unpaid and, in the event we take legal action to collect
any such amounts, you will reimburse us for our collection costs including,
without limitation, out attorneys fees and other costs.
If the above represents our understanding, please sign this letter agreement in
the spaces provided below and return it to us.
Sincerely,
/s/ J. Leo Gagne
J. Leo Gagne
Vice-President
and Chief Financial Officer
Agreed:
/s/ Oskar G. Rogg
- -----------------
Oskar G. Rogg
/s/ Anne Wynne Rogg
- -------------------
Anne Wynne Rogg
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED JUNE 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<S> <C>
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<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,174
<SECURITIES> 12,219
<RECEIVABLES> 6,260
<ALLOWANCES> 300
<INVENTORY> 2,007
<CURRENT-ASSETS> 28,345
<PP&E> 3,684
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0
0
<COMMON> 72
<OTHER-SE> 39,359
<TOTAL-LIABILITY-AND-EQUITY> 42,498
<SALES> 25,140
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<CGS> 9,117
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<INCOME-TAX> 3,367
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