<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRANSACT TECHNOLOGIES INCORPORATED
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:......
2) Aggregate number of securities to which transaction applies:.........
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):..........
4) Proposed maximum aggregate value of transaction:.....................
5) Total fee paid:......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No:
3) Filing Party:
4) Date Filed:
<PAGE> 2
TRANSACT TECHNOLOGIES INCORPORATED
7 LASER LANE
WALLINGFORD, CONNECTICUT 06492
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 6, 1999
Notice is hereby given that the 1999 Annual Meeting of Shareholders (the
"Annual Meeting") of TransAct Technologies Incorporated (the "Company"), a
Delaware corporation, will be held on Thursday, May 6, 1999, at 10:00 a.m.
Eastern Daylight Savings Time, at The Ramada Plaza Hotel, 275 Research Parkway,
Meriden, CT 06450 for the following purposes, all of which are more completely
set forth in the accompanying Proxy Statement:
(1) To elect two directors to serve until the 2002 Annual Meeting of
Shareholders or until their successors have been duly elected and
qualified;
(2) To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent accountants for 1999; and
(3) To transact such other business as may legally come before the Annual
Meeting.
Shareholders of record at the close of business on March 19, 1999 are
entitled to notice of and to vote at the Annual Meeting. The transfer books will
not be closed for the Annual Meeting.
By Order of the Board of Directors,
RICHARD L. COTE
Secretary
Wallingford, Connecticut
April 5, 1999
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, THE COMPANY REQUESTS THAT YOU
FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY. A RETURN ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR THAT
PURPOSE. IF YOU DO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN
PERSON. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION IS APPRECIATED.
<PAGE> 3
TRANSACT TECHNOLOGIES INCORPORATED
7 LASER LANE
WALLINGFORD, CONNECTICUT 06492
PROXY STATEMENT FOR ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD ON MAY 6, 1999
This Proxy Statement is being furnished to the shareholders of TransAct
Technologies Incorporated (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Shareholders of the Company to be held on May 6, 1999, and any adjournments
or postponements thereof (the "Annual Meeting"). This Proxy Statement, the
foregoing Notice of Annual Meeting, the enclosed form of proxy and the Company's
1998 Annual Report to Shareholders are first being mailed or given to
shareholders on or about April 5, 1999.
SOLICITATION AND REVOCATION OF PROXY
Any shareholder who executes and returns the enclosed proxy has the power
to revoke the same anytime prior to it being voted. The shares represented by
the proxy will be voted unless the proxy is mutilated or otherwise received in
such form or at such time as to render it not votable. The proxy is in ballot
form so that a specification may be made to grant or withhold authority to vote
for the election of directors and to indicate separate approval or disapproval
as to the other matter presented to shareholders. All of the proposals will be
presented by the Board of Directors. The shares represented by the proxy will be
voted for the election of the directors named thereon, unless authority to do so
is withheld. With respect to the other proposal presented to shareholders by the
Board of Directors, the shares represented by the proxy will be voted in
accordance with the specifications made. Where a choice is not so specified, the
shares represented by the proxy will be voted for the proposal.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record on March 19, 1999 are entitled to cast one vote for
each share of common stock held by them on March 19, 1999. There were 5,558,700
shares of common stock issued and outstanding and entitled to vote at the close
of business on March 19, 1999. A majority of the shares entitled to vote,
present in person or represented by proxy, will constitute a quorum to transact
business at the Annual Meeting.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to the Company
regarding the beneficial ownership of the Company's common stock as of March 19,
1999 by: (i) each person known by the Company to own beneficially more than five
percent of the Company's issued and outstanding common stock; (ii) each director
or nominee for director of the Company; (iii) each executive officer of the
Company named in the Summary Compensation Table; and (iv) all directors and
executive officers of the Company as a group. Except as otherwise indicated,
each of the persons named in the table has sole voting power and sole investment
power with respect to the shares set forth opposite their name.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED CLASS
- ------------------------------------ ------------ ----------
<S> <C> <C>
Bart C. Shuldman (1) .............................. 216,917 3.8%
Graham Y. Tanaka (2) .............................. 112,533 2.0%
Richard L. Cote (3) ............................... 64,946 1.1%
Charles A. Dill (4) ............................... 40,971 *
Michael S. Kumpf (5) .............................. 31,620 *
Lucy H. Staley (6) ................................ 29,907 *
Thomas R. Schwarz (7) ............................. 20,037 *
David A. Ritchie (8) .............................. 14,205 *
All directors and executive officers
as a group (10 persons) (9) ..................... 555,775 9.8%
Awad Asset Management, Inc. (10) .................. 700,825 12.6%
250 Park Avenue, 2nd Floor
New York, NY 10177
</TABLE>
- -----------------------------------
* Less than 1% of the outstanding Common Stock.
(1) Includes 108,523 shares owned jointly with Mr. Shuldman's spouse, 1,000
owned by his spouse in an individual retirement account, 60,560 unvested
shares of restricted stock of the Company and 44,120 shares subject to
options exercisable within 60 days of March 19, 1999 granted under the
Company's 1996 Stock Plan.
(2) Includes 5,500 shares subject to options exercisable within 60 days of
March 19, 1999 granted under the Company's Non-Employee Directors' Stock
Plan and 2,010 shares deemed beneficially owned by Mr. Tanaka for the
benefit of his children.
(3) Includes 27,130 shares owned jointly with Mr. Cote's spouse, 9,280 unvested
shares of restricted stock of the Company and 23,200 shares subject to
options exercisable within 60 days of March 19, 1999 granted under the 1996
Stock Plan.
(4) Includes 5,500 shares subject to options exercisable within 60 days of
March 19, 1999 granted under the Non-Employee Directors' Stock Plan. Also
includes 13,814 shares deemed beneficially owned by Mr. Dill for the
benefit of his parents, as to which shares he disclaims beneficial
ownership.
(5) Includes 4,000 unvested shares of restricted stock of the Company and
10,800 shares subject to options exercisable within 60 days of March 19,
1999 granted under the 1996 Stock Plan.
(6) Includes 4,000 unvested shares of restricted stock of the Company and
10,800 shares subject to options exercisable within 60 days of March 19,
1999 granted under the 1996 Stock Plan.
(7) Includes 4,000 unvested shares of restricted stock of the Company granted
under the 1996 Stock Plan and 5,500 shares subject to options exercisable
within 60 days of March 19, 1999 granted under the Non-Employee Directors'
Stock Plan. Also includes 1,000 shares deemed to be
2
<PAGE> 5
beneficially owned by Mr. Schwarz in his capacity as trustee of a trust for
the benefit of his granddaughter and 1,000 shares beneficially owned by his
daughter, as to which shares he disclaims beneficial ownership.
(8) Includes 1,605 shares owned jointly with Mr. Ritchie's spouse, 2,400
unvested shares of restricted stock of the Company and 10,200 shares
subject to options exercisable within 60 days of March 19, 1999 granted
under the 1996 Stock Plan.
(9) Includes 88,240 unvested shares of restricted stock of the Company and
130,420 shares subject to options exercisable within 60 days of March 19,
1999 granted under the 1996 Stock Plan and Non-Employee Directors' Stock
Plan.
(10) Based on information provided in Schedule 13G filed with the Securities and
Exchange Commission on February 12, 1999.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and persons who
beneficially own more than 10% of the Company's common stock to file with the
Securities and Exchange Commission and the Nasdaq National Market reports of
ownership and reports of changes in ownership of common stock and other equity
securities of the Company and to furnish the Company with copies of all such
reports they file. To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company, or written representations that
no other reports were required for those persons, the Company believes that,
during the fiscal year ended December 31, 1998, all such reports were timely
filed, except that a Form 3 reporting the appointment of Steven A. DeMartino as
Corporate Controller was filed late.
1. ELECTION OF DIRECTORS
At the Annual Meeting, two persons are to be elected to hold office as
directors until the 2002 Annual Meeting of Shareholders or until their
successors are duly elected and qualified. In the absence of instructions to the
contrary, the persons named in the accompanying proxy will vote such proxy "FOR"
the election of the nominees named below. Should a nominee become unavailable,
which is not anticipated, it is intended that proxies will be voted for the
election of such other person as the Board of Directors may recommend in place
of such nominee.
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTOR
Thomas R. Schwarz, 62, Chairman of the Board, has been a director of
the Company since its formation in June 1996. Mr. Schwarz was Chairman and Chief
Executive Officer of Grossman's Inc., a retailer of building materials, from
1990 until his retirement in 1994. From 1980 to 1990, he was President, Chief
Operating Officer and a director of Dunkin' Donuts Incorporated, a food service
company. Mr. Schwarz is a director of Tridex Corporation ("Tridex"), Foilmark,
Tanaka Growth Fund, Lebhar-Friedman Publishing Company and A & W Restaurants.
Bart C. Shuldman, 41, has been Chief Executive Officer, President and a
director of the Company since its formation in June 1996. Previously, Mr.
Shuldman was Vice President of Sales and Marketing of Magnetec Corporation, a
former subsidiary of Tridex, from April 1993 to August 1993, and served as
President of Magnetec and later the combined operations of Magnetec and Ithaca
Peripherals Incorporated, another former Tridex subsidiary, from August 1993 to
June 1996. Prior to joining Magnetec, he held several management positions with
Mars Electronics International, a division of Mars, Incorporated, from 1989 to
1993, including serving as Business Manager for the North American Amusement,
Gaming and Lottery operations. From 1979 to 1989, he held manufacturing and
sales management positions with General Electric Company.
3
<PAGE> 6
VOTE REQUIRED
The election of Messrs. Schwarz and Shuldman as directors of the Company
requires the affirmative vote of the holders of a plurality of the shares of
common stock present in person or represented by proxy and entitled to vote.
Abstentions by holders of such shares and broker non-votes with respect to the
election of directors will be included in determining the presence of a quorum
at the Annual Meeting but will not be included in determining whether nominees
have received the vote of such plurality.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" ELECTION OF
MESSRS. SCHWARZ AND SHULDMAN AS DIRECTORS OF THE COMPANY.
INFORMATION CONCERNING DIRECTOR WHOSE TERM WILL EXPIRE AT THE 2000 ANNUAL
MEETING
Charles A. Dill, 59, has been a director of the Company since its formation
in June 1996. Mr. Dill has been a General Partner of Gateway Associates, a
venture capital firm, since 1996. From 1991 to 1995, Mr. Dill served as
President, Chief Executive Officer and a director of Bridge Information Systems,
Inc. Mr. Dill currently serves as a director of Zoltek Companies, Stifel
Financial Corp., Pinnacle Automation (Alvey Systems) and DT Industries.
INFORMATION CONCERNING DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2001 ANNUAL
MEETING
Graham Y. Tanaka, 51, has been a director of the Company since its
formation in June 1996. Mr. Tanaka has been President of Tanaka Capital
Management, Inc., an investment management firm, since 1986. From 1989 until
1996, Mr. Tanaka was a limited partner of McFarland Dewey & Co., a financial
advisor to the Company and Tridex. He is a director of Tridex.
Richard L. Cote, 57, has been Executive Vice President, Chief Financial
Officer, Treasurer, Secretary and a director of the Company since its formation
in June 1996. Prior thereto, he served as Senior Vice President and Chief
Financial Officer of Tridex from September 1993 to June 1996 and as Vice
President of Tridex from June 1993 to September 1993. From October 1991 to March
1993, he was a self-employed management consultant. Previously, Mr. Cote held
management positions with Wang Laboratories, Inc., Emhart Corporation, Xerox
Corporation and Price Waterhouse LLP.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended December 31, 1998, the Board of Directors held 13
meetings. Each director attended all meetings of the Board of Directors and of
the committees of the Board of Directors on which such director served.
The standing committees of the Board of Directors are the Audit Committee,
the Compensation Committee and the Nominating Committee.
The Audit Committee is currently comprised of Messrs. Thomas R. Schwarz,
Graham Y. Tanaka and Charles A. Dill, with Mr. Dill serving as Chairman. The
functions of the Audit Committee are to recommend the firm to be appointed as
independent accountants to audit the Company's financial statements and to
perform services related to the audit, review the scope and results of the audit
with the independent accountants, review with management and the independent
accountants the Company's year-end operating results, consider the adequacy of
the Company's internal accounting and control procedures, review the non-audit
services to be performed by the independent accountants and consider the effect
of such performance on the accountants' independence, as well as such other
matters relating to the Company's financial and accounting practices as the
Audit Committee deems appropriate. The Audit Committee met twice during 1998.
4
<PAGE> 7
The Compensation Committee is currently comprised of Messrs. Thomas R.
Schwarz, Graham Y. Tanaka and Charles A. Dill, with Mr. Schwarz serving as
Chairman. The Compensation Committee is responsible for reviewing and
recommending the compensation arrangements for all directors and officers of the
Company, approving such arrangements for other senior level employees and
administering and taking such other action as may be required in connection with
certain compensation plans of the Company. The Compensation Committee met three
times during 1998.
The Nominating Committee consists of the full Board of Directors, with Mr.
Tanaka as Chairman. The Nominating Committee is responsible for recommending to
the Board of Directors nominees for election to the Board. The Nominating
Committee will also consider nominees recommended by shareholders in accordance
with proper nomination procedures specified in the Company's By-laws. The
Nominating Committee did not meet during 1998.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1998, each outside director of the
Company received as compensation for services rendered and expenses incurred (i)
$2,000 for each fiscal quarter served as director, (ii) $750 for each Board of
Directors meeting attended, (iii) $300 for each Board of Directors committee
meeting attended, and (iv) $250 for each telephonic meeting. Chairs of
committees received $600 for each committee meeting. The Chairman also received
as compensation $7,500 for each fiscal quarter served as Chairman.
Pursuant to the terms of the Company's Non-Employee Directors' Stock Plan,
each director who is not an employee of the Company receives an annual grant of
non-qualified options to purchase 2,500 shares of common stock. In addition,
each non-employee director also receives a non-qualified option to purchase
5,000 shares of common stock upon his or her initial election to the Board of
Directors. Each option is granted at an exercise price equal to 100% of the fair
market value of the common stock on the date of grant, expires ten years from
the date of grant, and becomes exercisable at a rate of 20% per year on the
first through fifth anniversaries of the date of grant. In the event of a
change-in-control, stock options awarded under the Non-Employee Directors' Stock
Plan not previously exercisable shall become fully exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to a promissory note dated February 23, 1999, the Company loaned
Bart C. Shuldman, the Chief Executive Officer, President and a director of the
Company, $330,000 to fund his purchase of 104,000 shares of the Company's common
stock. Mr. Shuldman pledged the 104,000 shares purchased with the loan proceeds
and 50,000 additional shares of the Company's common stock as security for the
promissory note. The principal and any unpaid interest under the note is due in
a balloon payment five years after the date of execution of the note. The
interest rate on the note will be calculated based on the Company's average
variable lending rate under its primary credit facility for each of its fiscal
years. Interest payments will be payable in arrears by Mr. Shuldman shortly
after the close of each of the fiscal years.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following tables set forth information concerning the compensation
earned by the Company's Chief Executive Officer and each of the other four most
highly compensated executive officers in 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------
AWARDS
----------------------- ALL
ANNUAL COMPENSATION RESTRICTED SECURITIES OTHER
------------------------------ STOCK UNDERLYING COMPEN-
FISCAL SALARY(1) BONUS(2) AWARDS(3) OPTIONS(4) SATION (5)
NAME AND PRINCIPAL POSITIONS YEAR ($) ($) ($) (#) ($)
- ---------------------------- ------ -------- --------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Bart C. Shuldman....................... 1998 $245,000 - $228,125 25,000 $6,159
President and Chief Executive Officer 1997 210,000 $67,200 566,125 70,000 4,137
1996 64,038 70,000 - 52,800 1,085
Richard L. Cote ....................... 1998 170,000 - - 45,000 8,768
Executive Vice President, Chief 1997 160,000 44,800 143,875 17,500 3,800
Financial Officer, Treasurer and 1996 51,923 35,000 - 33,000 1,235
Secretary
David A. Ritchie ...................... 1998 118,333 32,178 - 24,500 4,794
Executive Vice President -- Sales 1997 105,000 69,792 35,625 10,000 2,019
Michael S. Kumpf....................... 1998 129,913 - - 22,500 4,395
Senior Vice President -- Engineering 1997 125,050 10,995 59,375 2,000 3,345
1996 42,231 31,863 - 20,000 1,409
Lucy H. Staley......................... 1998 126,505 - - 22,500 4,395
Senior Vice President -- General 1997 121,770 10,707 59,375 2,000 3,384
Manager (Ithaca, NY facility) 1996 41,123 29,700 - 20,000 3,186
</TABLE>
- -------------------
(1) The amounts for 1996 reflect compensation paid to Messrs. Shuldman, Cote
and Kumpf and Ms. Staley by the Company for the period from August 22,
1996, the date of the Company's initial public offering, through December
31, 1996. Mr. Ritchie was not an executive officer in 1996. Neither the
Chief Executive Officer nor any of the other executive officers named in
the table received perquisites or other personal benefits in an amount
which exceeded 10% of their salary plus bonus during any fiscal year.
(2) The bonus amounts were paid pursuant to the Company's Incentive
Compensation Plan, except that the bonuses paid to Mr. Ritchie represent
commissions on sales by the Company and the bonus amounts paid to Messrs.
Shuldman and Cote in 1996 were paid at the discretion of the Compensation
Committee of the Board of Directors and not pursuant to the Incentive
Compensation Plan.
(3) All restricted stock awards were granted under the Company's 1996 Stock
Plan. The value of the restricted stock awards is based on the closing
market price of the Company's common stock on the date of grant. At the end
of fiscal year 1998, the number of shares of common stock subject to
restricted awards and the value of such shares, based on the closing price
of the Company's common stock on such date, were as follows: Mr. Shuldman:
60,560 shares and $200,605; Mr. Cote: 9,280 shares and $30,740; Mr.
Ritchie: 2,400 shares and $7,950; Mr. Kumpf: 4,000 shares and $13,250; and
Ms. Staley: 4,000 shares and $13,250. All grants of shares of restricted
stock vest in five equal installments beginning on the first anniversary of
the date of grant, except with respect to 50,000 shares awarded to Mr.
Shuldman and 4,000 shares awarded to Mr. Cote, which vest 100% at the end
of five years from the date of grant. Currently, no dividends may be paid
on shares of the Company's common stock.
(4) All options were granted under the Company's 1996 Stock Plan.
(5) For all the executive officers named in the table, these amounts consist of
Company contributions under the Company's 401(k) Plan and other benefits
such as life insurance.
6
<PAGE> 9
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------ ANNUAL RATE OF STOCK
NUMBER OF PERCENT OF TOTAL PRICE APPRECIATION
SECURITIES UNDER- OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(2)
LYING OPTIONS EMPLOYEES IN THE PRICE EXPIRATION -------------------
NAME GRANTED (#) (1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ---------------- ------------------ --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bart C. Shuldman.... 25,000 10.5% $9.125 5/7/08 $143,375 $363,625
Richard L. Cote..... 25,000 10.5 9.125 5/7/08 143,375 363,625
20,000 8.4 3.625 12/28/08 45,500 115,500
David A. Ritchie.... 12,000 5.1 9.125 5/7/08 68,820 174,540
12,500 5.3 3.625 12/28/08 28,438 72,188
Michael S. Kumpf.... 10,000 4.2 9.125 5/7/08 57,350 145,450
13,500 5.7 3.625 12/28/08 30,713 77,963
Lucy H. Staley...... 10,000 4.2 9.125 5/7/08 57,350 145,450
12,500 5.3 3.625 12/28/08 28,438 72,188
</TABLE>
- -------------------
(1) All options were granted under the Company's 1996 Stock Plan. In general,
options granted under the 1996 Plan have an exercise price equal to 100% of
the fair market value of the common stock on the date of grant, expire ten
years from the date of grant, and become exercisable at a rate of 20% per
year on the first through fifth anniversaries of the date of grant. In the
event of a change-in-control of the Company, stock options awarded under
the 1996 Stock Plan not previously exercisable shall become fully
exercisable.
(2) The potential realizable value portion of the foregoing table illustrates
the value that might be realized upon exercise of the options immediately
prior to the expiration of their term, assuming the specified compared
rates of appreciation on the Company's common stock over the term of the
options. This hypothetical value is based entirely on assumed annual growth
rates of 5% and 10% in the value of the Company's stock price over the term
of the options. The assumed rates of growth were selected by the Securities
and Exchange Commission for illustration purposes only, and are not
intended to predict future stock prices, which will depend upon market
conditions and the Company's future performance and prospects. These
numbers do not take into account provisions of certain options providing
for termination of the option following termination of employment,
non-transferability or vesting over various periods.
AGGREGATED OPTION EXERCISES IN 1998 AND FISCAL YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT OPTIONS AT
ACQUIRED ON REALIZED FISCAL YEAR-END (#) FISCAL YEAR-END ($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Bart C. Shuldman.... 0 0 39,120 / 108,680 $0 / $0
Richard L. Cote..... 0 0 18,200 / 77,300 0 / 0
David A. Ritchie.... 0 0 7,800 / 38,700 0 / 0
Michael S. Kumpf.... 0 0 8,800 / 36,700 0 / 0
Lucy H. Staley...... 0 0 8,800 / 36,700 0 / 0
</TABLE>
7
<PAGE> 10
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Under the terms of an Employment Agreement dated July 31, 1996 between Bart
C. Shuldman and the Company, Mr. Shuldman serves as President and Chief
Executive Officer at the pleasure of the Board of Directors. If Mr. Shuldman's
employment is terminated other than for cause, Mr. Shuldman shall be entitled to
continue to receive (i) his annual base salary and all other benefits for a
period of two years from the date of termination and (ii) a pro rata portion of
his annual target bonus amount for the year of termination. If Mr. Shuldman's
employment is terminated other than for cause, or if Mr. Shuldman resigns for
specified reasons, within one year of a change-in-control of the Company, Mr.
Shuldman shall be entitled to continue to receive his annual base salary, annual
target bonus and all benefits for a period of three years from the date of
termination. In addition, the Company shall cause the immediate vesting of all
stock options granted to Mr. Shuldman under the 1996 Stock Plan. Mr. Shuldman's
annual base salary was $245,000 for the fiscal year ended December 31, 1998 and
will remain at $245,000 for fiscal 1999.
Under the terms of an Employment Agreement dated July 31, 1996 between
Richard L. Cote and the Company, Mr. Cote serves as Executive Vice President and
Chief Financial Officer. If Mr. Cote's employment is terminated other than for
cause, Mr. Cote shall be entitled to continue to receive his annual base salary,
a pro rata portion of the annual target bonus for the year of termination and
all benefits for one year from the date of termination. If Mr. Cote's employment
is terminated other than for cause, or if Mr. Cote resigns for specified
reasons, within one year of a change-in-control of the Company, Mr. Cote shall
be entitled to continue to receive his annual base salary, annual target bonus
and all benefits for a period of two years from the date of termination. In
addition, the Company shall cause the immediate vesting of all options granted
to Mr. Cote under the 1996 Stock Plan. Mr. Cote's base salary for the fiscal
year ended December 31, 1998 was $170,000 and will remain at $170,000 for fiscal
1999.
Under the terms of Severance Agreements between the Company and each of
David A. Ritchie, Michael S. Kumpf and Lucy H. Staley, dated July 1, 1997,
September 4, 1996, and September 4, 1996, respectively, if Messrs. Ritchie's,
Kumpf's or Ms. Staley's employment is terminated other than for cause, each
executive shall be entitled to continue to receive, for six months following the
date of termination, the annual base salary, a pro rata portion of the annual
target bonus for the year of termination and all benefits which would otherwise
have been payable to each of them. If the employment of Messrs. Ritchie, Kumpf
or Ms. Staley is terminated other than for cause, or if they resign for
specified reasons, within one year of a change-in-control of the Company, each
shall be entitled to continue to receive his or her annual base salary, annual
target bonus and all benefits for a period of one year from the date of
termination. In addition, the Company shall cause the immediate vesting of all
stock options granted under the 1996 Stock Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is comprised of non-employee directors of
the Company, is responsible for administering the Company's executive
compensation policies. In connection with such responsibilities, the
Compensation Committee establishes the general compensation policies for the
Company, approves the hiring and firing of all executive officers and any staff
reporting directly to the Chief Executive Officer of the Company and approves
the compensation plans and specific compensation levels for all executive
officers and any staff reporting directly to the Chief Executive Officer of the
Company. The Compensation Committee also approves the issuance of all awards to
employees of the Company and its subsidiaries under the Company's 1996 Stock
Plan.
Compensation Policies and Goals
The primary goals of the Company's compensation policies are to attract,
retain, motivate and reward management of the Company and its operating units,
while, at the same time, aligning their interests closely with those of the
Company and its shareholders. The Company seeks to attract and retain management
by offering a competitive total compensation package. To align the interests of
management more closely with those of the Company as a whole and reward
individual initiative and effort, the Company
8
<PAGE> 11
seeks to promote performance-based compensation where contribution to the
Company as a whole is rewarded. Through the use of performance-based plans that
reward attainment of operating unit or Company goals, the Company seeks to
foster an attitude of teamwork. The Company also believes that the use of equity
ownership is an important tool to ensure that the efforts of management are
consistent with the objectives of its shareholders and seeks to promote
increased ownership by management of the Company through the use of stock
awards.
The Compensation Committee has tried to achieve the above goals utilizing
publicly available information regarding competitive compensation. The
Compensation Committee utilizes an independent consultant to ensure that
compensation for the Company's management is competitive, meets the above-stated
objectives and is consistent for all members of management of the Company and
its operating units.
Compensation Components
At present, the compensation of the executive officers of the Company
consists of a combination of salary, cash bonuses, stock options, restricted
stock and participation in the Company's 401(k) plan, as well as the provision
of medical and other personal benefits typically offered to corporate
executives. The executive officers of the Company are parties to agreements
which provide for severance payments under certain circumstances. These
agreements for the executive officers listed in the Summary Compensation Table
are described above under "Employment Contracts, Termination of Employment and
Change-In-Control Arrangements."
Salaries: At January 1, 1998, base salaries were fixed for the subsequent
twelve months based on the Compensation Committee's assessment of competitive
base salaries. The Compensation Committee targets the Chief Executive Officer's
salary at the mean of that for the Company's peer group. For 1998, Bart C.
Shuldman, President and Chief Executive Officer of the Company, earned an annual
base salary of $245,000. Mr. Shuldman's base salary will remain the same for
1999.
Cash Bonuses: The Company maintains an Incentive Compensation Plan for all
salaried employees of the Company and its operating units, including key
executives, which provides for the payment of cash bonuses. Under the plan, an
incentive target, as well as individual goals and objectives, are fixed for each
employee at the beginning of the year and bonuses are paid shortly after the end
of the year. In order to earn any incentive compensation under the plan, certain
financial goals, principally operating income for employees of operating units
and earnings per share for corporate executives, must be met. The percentage of
the incentive target to be paid varies based on the level of attainment of the
financial goals; the incentive target range is from 35% to 150%. Other
components of the award calculation include the individual incentive target,
which currently ranges from 20% to 45% of base salary for key employees, and a
rating of the participant's performance versus individual objectives during the
plan period. For 1998, no bonuses were paid to executive officers pursuant to
the Incentive Compensation Plan.
Stock Awards: Under the Company's 1996 Stock Plan, stock options and
restricted stock are granted by the Compensation Committee. All salaried
employees are granted an initial award of stock options on their date of hiring
for a fixed number of shares depending on their level, which vests over five
years. In each year following the initial award, eligible employees may be
granted an annual award in varying amounts depending on their level and
individual performance. During 1998, a total of 177,000 stock options were
granted to executive officers of the Company, of which Bart C. Shuldman received
stock options for 25,000 shares. Also, during 1998, a total of 25,000 shares of
restricted stock were granted to Mr. Shuldman. No other executive officer
received restricted stock in 1998.
9
<PAGE> 12
Other Benefit Plans: Executive officers of the Company may participate in
the Company's nondiscriminatory 401(k) Retirement Plan.
COMPENSATION COMMITTEE
Thomas R. Schwarz, Chairman
Graham Y. Tanaka
Charles A. Dill
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
common stock from August 22, 1996, the effective date of its initial public
offering, through December 31, 1998, with the CRSP Total Return Index for the
Nasdaq Stock Market (US) and the Nasdaq Computer Manufacturer Stocks. The graph
assumes that $100 was invested on August 22, 1996 in each of the Company's
common stock, the CRSP Total Return Index for the Nasdaq Stock Market (US) and
the Nasdaq Computer Manufacturer Stocks and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
TRANSACT TECHNOLOGIES INCORPORATED COMMON STOCK,
THE CRSP TOTAL RETURN INDEX FOR THE NASDAQ STOCK MARKET (US),
AND THE NASDAQ COMPUTER MANUFACTURER STOCKS
[LINE GRAPH]
<TABLE>
<CAPTION>
8/22/96 12/31/96 12/31/97 12/31/98
------- -------- -------- --------
<S> <C> <C> <C> <C>
TransAct Technologies Incorporated Common Stock $100.00 $122.06 $130.88 $ 38.97
CRSP Total Return Index for the Nasdaq Stock Market (US) $100.00 $112.69 $138.34 $194.14
Nasdaq Computer Manufacturer Stocks $100.00 $117.96 $142.69 $309.88
</TABLE>
10
<PAGE> 13
2. RATIFICATION OF SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS FOR 1999
The Board of Directors has selected PricewaterhouseCoopers LLP as
independent accountants to audit the financial statements of the Company for the
1999 fiscal year. This selection is being presented to the shareholders for
ratification at the Annual Meeting. PricewaterhouseCoopers LLP has audited the
Company's financial statements since the Company's formation.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting, will have the opportunity to make a statement, and is
expected to be available to respond to appropriate questions.
VOTE REQUIRED
The ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants for 1999 requires the affirmative vote of a majority of
the shares of common stock present in person or represented by proxy and
entitled to vote. Abstentions by holders of such shares with respect to voting
on this matter will have the effect of a negative vote; broker non-votes with
respect to voting on this matter will have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" RATIFICATION OF
THE SELECTION OF PRICEWATERHOUSECOOPERS LLP
AS INDEPENDENT ACCOUNTANTS FOR 1999.
SECURITY HOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholder proposals for inclusion in next year's proxy materials must be
received by the Secretary of the Company on or before December 7, 1999.
Shareholder proposals submitted to be considered at the 2000 Annual Meeting
without inclusion in next year's proxy materials must be received by the Company
no later than February 21, 2000. If the Company is not notified of a shareholder
proposal by February 21, 2000, then proxies held by management of the Company
may provide the discretion to vote against such shareholder proposal, even
though such proposal is not discussed in the Proxy Statement. Proposals should
be addressed to TransAct Technologies Incorporated, 7 Laser Lane, Wallingford,
Connecticut 06492, Attention: Corporate Secretary. Shareholders may nominate
candidates for election to the Board of Directors if the proper nomination
procedure specified in the Company's By-Laws are followed. All nominations by
shareholders must be delivered to or mailed and received at the principal
executive offices of the Company not less than 30 nor more than 60 days prior to
the meeting at which election of directors will take place. The notice must set
forth in writing (i) for each person proposed to be nominated, all information
relating to each such person that is required to be disclosed in solicitations
of proxies for election of directors pursuant to Regulation 14A under the
Exchange Act, including such person's written consent to be named in the proxy
and to serving as a director, and (ii) for the shareholder giving notice, the
(x) name and address of such shareholder as they appear on the Company's books
and (y) the class and number of shares of the Company beneficially owned by such
shareholder.
ANNUAL REPORT
A COPY OF THE COMPANY'S SECURITIES AND EXCHANGE COMMISSION ANNUAL REPORT ON
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, WILL BE
FURNISHED WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST. REQUESTS
SHOULD BE ADDRESSED TO: TRANSACT TECHNOLOGIES INCORPORATED, SHAREHOLDER
RELATIONS DEPARTMENT, 7 LASER LANE, WALLINGFORD, CONNECTICUT 06492.
11
<PAGE> 14
GENERAL
The accompanying proxy will be voted as specified thereon. Unless otherwise
specified, proxies will be voted for the directors nominated by the Board of
Directors and for ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants for 1999. The Board of Directors is not aware of any
matter which is to be presented for action at the Annual Meeting other than the
matters set forth herein. Should any other matter requiring a vote of the
shareholders arise, the proxies confer upon the persons named in the
accompanying proxy the authority to vote in respect of any such other matter in
accordance with the recommendation of the Board of Directors.
A shareholder who has given a proxy may revoke it at any time prior to its
exercise at the Annual Meeting by (i) giving written notice of revocation to the
Secretary of the Company, (ii) properly submitting to the Company a duly
executed proxy bearing a later date, or (iii) voting in person at the Annual
Meeting. All written notices of revocation and other communications with respect
to revocation of proxies should be addressed to the Company, as follows:
TransAct Technologies Incorporated, 7 Laser Lane, Wallingford, Connecticut
06492, Attention: Corporate Secretary. A proxy appointment will not be revoked
by death or supervening incapacity of the shareholder executing the proxy
unless, before the shares are voted, notice of such death or incapacity is filed
with the Company's Corporate Secretary or other person responsible for
tabulating votes on behalf of the Company.
The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit proxies otherwise than by use of
the mail, in that certain officers and regular employees of the Company, without
additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. The Company will also request persons, firms and
corporations holding shares in their names, or owned by others, to send this
proxy material to and obtain proxies from such beneficial owners and will
reimburse such holders for their reasonable expenses in doing so. The Company
has retained Innisfree M&A Incorporated to assist in the solicitation of
proxies, for an estimated fee of $25,000, plus reimbursement of certain
out-of-pocket expenses.
SHAREHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. PROMPT RESPONSE IS HELPFUL
AND YOUR COOPERATION IS APPRECIATED.
April 5, 1999
12
<PAGE> 15
TRANSACT TECHNOLOGIES INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD THURSDAY, MAY 6, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF TRANSACT TECHNOLOGIES INCORPORATED
The undersigned shareholder of TransAct Technologies Incorporated (the
"Company"), does hereby nominate, constitute and appoint Graham Y. Tanaka and
Charles A. Dill, or either of them, with full power to act alone, my true and
lawful attorney with full power of substitution, for me and in my name, place
and stead to vote all of the shares of Common Stock of the Company standing in
my name on its books on March 19, 1999, at the Annual Meeting of its
shareholders to be held at The Ramada Plaza Hotel, 275 Research Parkway,
Meriden, CT 06450 on Thursday, May 6, 1999 at 10:00 a.m., or at any adjournment
thereof, with all powers the undersigned would possess if personally present as
follows:
(TO BE SIGNED ON REVERSE SIDE)
PLEASE SIGN, DATE AND MAIL YOUR PROXY CARD BACK AS SOON AS POSSIBLE!
<PAGE> 16
PLEASE MARK YOUR
VOTE AS IN THIS EXAMPLE /X/
FOR WITHHOLD
ALL NOMINEES ALL NOMINEES NOMINEES: Thomas R. Schwarz
Bart C. Shuldman
1. ELECTION OF
DIRECTORS / / / /
FOR ALL NOMINEES EXCEPT:
- ------------------------------------------------
To withhold authority to vote for any individual nominee,
write that nominee's name in the space above.
FOR AGAINST ABSTAIN
2. RATIFICATION of selection of / / / / / /
PricewaterhouseCoopers LLP as
independent accountants for 1999.
In their discretion, the Proxies, or either of them, are authorized to vote upon
such other business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED ON BEHALF OF THE UNDERSIGNED
AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, AND 2.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE
ENCLOSED POSTAGE-PAID ENVELOPE.
DATE........................................
SIGNATURE...................................
SIGNATURE...................................
(SIGNATURE IF HELD JOINTLY)
NOTE: Please sign exactly as name appears on
the mailing label. When shares are held by
joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. If signing on
behalf of a corporation, please sign the
full corporate name by president or other
authorized officer. If signing on behalf of
a partnership, please sign the partnership
names by authorized person.
