<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.
<TABLE>
<S> <C>
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:.............................................................................
</TABLE>
[ ] 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 11, 2000
Notice is hereby given that the 2000 Annual Meeting of Shareholders
(the "Annual Meeting") of TransAct Technologies Incorporated (the "Company"), a
Delaware corporation, will be held on Thursday, May 11, 2000, at 10:00 a.m.
Eastern Daylight Savings Time, at The Ramada Plaza Hotel, 275 Research Parkway,
Meriden, Connecticut 06450 for the following purposes, all of which are more
completely set forth in the accompanying Proxy Statement:
(1) To elect one director to serve until the 2003 Annual Meeting
of Shareholders or until his successor has been duly elected
and qualified;
(2) To approve an amendment to the Company's 1996 Stock Plan to
increase the number of shares of common stock available for
issuance thereunder by 250,000 shares, to an aggregate of
1,150,000 shares;
(3) To approve an amendment to the Company's Non-Employee
Directors' Stock Plan to increase the number of shares of
Common Stock available for issuance thereunder by 70,000
shares, to an aggregate of 130,000 shares;
(4) To approve the Company's 2000 Employee Stock Purchase Plan;
(5) To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent accountants for 2000; and
(6) To transact such other business as may legally come before the
Annual Meeting.
Shareholders of record at the close of business on March 31, 2000 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 13, 2000
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL 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 ANNUAL 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 11, 2000
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 11, 2000, 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
1999 Annual Report to Shareholders are first being mailed or given to
shareholders on or about April 13, 2000.
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 a director and to indicate separate approval or disapproval
as to the other matters 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 director named thereon, unless authority to do so
is withheld. With respect to the other proposals 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 proposals.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record on March 31, 2000 are entitled to cast one vote
for each share of common stock held by them on March 31, 2000. There were
5,582,000 shares of common stock issued and outstanding and entitled to vote at
the close of business on March 31, 2000. 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 31,
2000 by: (i) each person known by the Company to own beneficially more than 5%
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 current 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) ............................... 252,177 4.3%
Graham Y. Tanaka (2) ............................... 167,948 2.9%
Charles A. Dill (3) ................................ 105,671 1.8%
Richard L. Cote (4) ................................ 84,046 1.4%
Thomas R. Schwarz (5) .............................. 43,537 *
Michael S. Kumpf (6) ............................... 40,720 *
Lucy H. Staley (7) ................................. 38,807 *
David A. Ritchie (8) ............................... 19,905 *
All current directors and executive officers
as a group (13 persons) (9) ...................... 841,430 14.4%
Pequot Capital Management, Inc. (10) ............... 475,400 8.5%
500 Nyala Farm Road
Westport, CT 06880
</TABLE>
- ----------
* Less than 1% of the outstanding Common Stock.
(1) Includes 113,877 shares owned jointly with Mr. Shuldman's spouse, 1,000
shares owned by his spouse in an individual retirement account, 3,200
shares owned by his minor children, 2,500 shares owned by his mother,
57,920 unvested shares of restricted stock of the Company and 73,680
shares subject to options exercisable within 60 days of March 31, 2000
granted under the Company's 1996 Stock Plan.
(2) Includes 9,000 shares subject to options exercisable within 60 days of
March 31, 2000 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 9,000 shares subject to options exercisable within 60 days of
March 31, 2000 granted under the Non-Employee Directors' Stock Plan.
Also includes 53,814 shares deemed beneficially owned by Mr. Dill for
the benefit of his parents and 1,000 shares owned by his spouse, as to
which shares he disclaims beneficial ownership.
(4) Includes 7,960 unvested shares of restricted stock of the Company and
42,300 shares subject to options exercisable within 60 days of March
31, 2000 granted under the 1996 Stock Plan.
(5) Includes 3,000 unvested shares of restricted stock of the Company
granted under the 1996 Stock Plan and 9,000 shares subject to options
exercisable within 60 days of March 31, 2000 granted under the
Non-Employee Directors' Stock Plan. Also includes 1,000 shares deemed
to be 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.
(6) Includes 3,000 unvested shares of restricted stock of the Company and
19,900 shares subject to options exercisable within 60 days of March
31, 2000 granted under the 1996 Stock Plan.
(7) Includes 3,000 unvested shares of restricted stock of the Company and
19,700 shares subject to options exercisable within 60 days of March
31, 2000 granted under the 1996 Stock Plan.
(8) Includes 17,100 shares subject to options exercisable within 60 days of
March 31, 2000 granted under the 1996 Stock Plan.
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<PAGE> 5
(9) Includes 94,480 unvested shares of restricted stock of the Company and
252,980 shares subject to options exercisable within 60 days of March
31, 2000 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 10, 2000.
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, 1999, all such reports were timely
filed, except that two Forms 4 for Graham Tanaka, each reporting one
transaction, were filed late.
1. ELECTION OF DIRECTOR
The Board of Directors currently consists of six directors and is
divided into three classes. Five of the directors are elected by the holders of
the Company's common stock to serve three year terms. The sixth director is
appointed by the holders of the Company's Series B Preferred Stock.
At the Annual Meeting, one person is to be elected to hold office as a
director until the 2003 Annual Meeting of Shareholders or until his successor is
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 nominee named below. Should the 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 NOMINEE FOR ELECTION AS DIRECTOR
Charles A. Dill, 60, 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., Tanaka Funds, Inc. and DT Industries.
VOTE REQUIRED
The election of Charles A. Dill as a director 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 the nominee has received
the vote of such plurality.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
ELECTION OF CHARLES A. DILL AS A DIRECTOR OF THE COMPANY.
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<PAGE> 6
INFORMATION CONCERNING DIRECTOR APPOINTED BY HOLDERS OF SERIES B PREFERRED STOCK
Jeffery T. Leeds,44, will be appointed a director of the Company in
April 2000. Mr. Leeds has been a principal of Advance Capital Management L.L.C,
a private investment firm, since November 1995. He has also been a principal of
Leeds Associates L.L.C., a private investment firm, since April 1999, and has
served a President of Leeds Group Inc., an investment banking firm, since
January 1993. Mr. Leeds serves on the Board of Directors of Edison Schools Inc.,
RealPage, Inc., Elsinore Corporation and several non-profit organizations,
including the Cooper-Hewitt, National Design Museum in New York.
INFORMATION CONCERNING DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2001 ANNUAL
MEETING
Graham Y. Tanaka, 52, 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, 58, 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.
INFORMATION CONCERNING DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2002 ANNUAL
MEETING
Thomas R. Schwarz, 63, 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,
Inc., Tanaka Funds, Inc., Lebhar-Friedman Publishing Company and Yorkshire
Restaurants.
Bart C. Shuldman, 42, 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.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended December 31, 1999, the Board of Directors held
ten 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
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<PAGE> 7
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 1999.
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 twice
during 1999.
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 1999.
COMPENSATION OF DIRECTORS
During the year ended December 31, 1999, 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 (the "Directors' 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
Directors' 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, $330,000 to fund his purchase of 104,000 shares of the Company's
common stock. Mr. Shuldman pledged the 104,000 shares purchased with the loan
proceeds and 50,000 additional shares of the Company's common stock as security
for the promissory note. The principal and any unpaid interest under the note is
due in a balloon payment five years after the date of execution of the note. The
interest rate on the note will be calculated based on the Company's average
variable lending rate under its primary credit facility for each of its fiscal
years. Interest payments will be payable in arrears by Mr. Shuldman shortly
after the close of each of the fiscal years.
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<PAGE> 8
EXECUTIVE COMPENSATION
The following tables set forth information concerning the compensation
earned by the Company's Chief Executive Officer and each of the other four most
highly compensated executive officers in 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------
AWARDS
------------------------- ALL
ANNUAL COMPENSATION RESTRICTED SECURITIES OTHER
------------------------ STOCK UNDERLYING COMPEN-
FISCAL SALARY(1) BONUS(2) AWARDS(3) OPTIONS(4) SATION (5)
NAME AND PRINCIPAL POSITIONS YEAR ($) ($) ($) (#) ($)
- ---------------------------- ------ --------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bart C. Shuldman ...................... 1999 245,000 10,000 -- 25,000 6,653
President and Chief Executive Officer 1998 245,000 -- 228,125 25,000 6,159
1997 210,000 67,200 566,125 70,000 4,137
Richard L. Cote ....................... 1999 170,000 -- -- -- 9,382
Executive Vice President, Chief 1998 170,000 -- -- 45,000 8,768
Financial Officer, Treasurer and 1997 160,000 44,800 143,875 17,500 3,800
Secretary
David A. Ritchie (6) .................. 1999 120,000 49,377 -- -- 5,322
Executive Vice President -- Sales 1998 118,333 32,178 -- 24,500 4,794
1997 105,000 69,792 35,625 10,000 2,019
Michael S. Kumpf ...................... 1999 130,686 -- -- -- 5,170
Senior Vice President -- Engineering 1998 129,913 -- -- 22,500 4,395
(Ithaca, NY facility) 1997 125,050 10,995 59,375 2,000 3,345
Lucy H. Staley ........................ 1999 127,258 -- -- -- 4,279
Senior Vice President -- General 1998 126,505 -- -- 22,500 4,395
Manager (Ithaca, NY facility) 1997 121,770 10,707 59,375 2,000 3,384
</TABLE>
(1) 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 bonus paid to Mr. Shuldman in 1999
was a special bonus and the bonuses paid to Mr. Ritchie represent
commissions on sales by the Company.
(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 1999, 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: 57,920 shares and $438,020; Mr. Cote: 7,960 shares and
$60,198; Mr. Ritchie: 3,800 shares and $28,738; Mr. Kumpf: 3,000 shares
and $22,688; and Ms. Staley: 3,000 shares and $22,688. All grants of
shares of restricted stock vest in five equal installments beginning on
the first anniversary of the date of grant, except with respect to
50,000 shares awarded to Mr. Shuldman and 4,000 shares awarded to Mr.
Cote, which vest 100% at the end of five years from the date of grant.
Currently, no dividends may be paid on shares of the Company's common
stock.
(4) All options were granted under the Company's 1996 Stock Plan.
(5) For all the executive officers named in the table, these amounts
consist of Company contributions under the Company's 401(k) Plan and
other benefits, such as life insurance.
(6) Mr. Ritchie resigned as Executive Vice President - Sales in February
2000.
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<PAGE> 9
<TABLE>
<CAPTION>
OPTION GRANTS IN 1999
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------------------------------- ANNUAL RATE OF STOCK
NUMBER OF PERCENT OF TOTAL PRICE APPRECIATION
SECURITIES UNDER- OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(2)
LYING OPTIONS EMPLOYEES IN THE PRICE EXPIRATION --------------------
NAME GRANTED (#) (1) FISCAL YEAR ($/SHARE) DATE 5% 10%
- ----------- ----------------- ------------------ --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Bart C. Shuldman.... 25,000 23.9% $6.25 8/24/09 $98,250 $249,000
</TABLE>
- ----------
(1) All options were granted under the Company's 1996 Stock Plan. In
general, options granted under the 1996 Plan have an exercise price
equal to 100% of the fair market value of the common stock on the date
of grant, expire ten years from the date of grant, and become
exercisable at a rate of 20% per year on the first through fifth
anniversaries of the date of grant. In the event of a change-in-control
of the Company, stock options awarded under the 1996 Stock Plan not
previously exercisable shall become fully exercisable.
(2) The potential realizable value portion of the foregoing table
illustrates the value that might be realized upon exercise of the
options immediately prior to the expiration of their term, assuming the
specified compared rates of appreciation on the Company's common stock
over the term of the options. This hypothetical value is based entirely
on assumed annual growth rates of 5% and 10% in the value of the
Company's stock price over the term of the options. The assumed rates
of growth were selected by the Securities and Exchange Commission for
illustration purposes only, and are not intended to predict future
stock prices, which will depend upon market conditions and the
Company's future performance and prospects. These numbers do not take
into account provisions of certain options providing for termination of
the option following termination of employment, non-transferability or
vesting over various periods.
AGGREGATED OPTION EXERCISES IN 1999 AND FISCAL YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT OPTIONS AT
ACQUIRED ON REALIZED FISCAL YEAR-END (#) FISCAL YEAR-END ($)
NAME EXERCISE (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Bart C. Shuldman.... 0 0 64,680 / 108,120 $ 0 / $32,813
Richard L. Cote..... 0 0 35,800 / 59,700 15,750 / 63,000
David A. Ritchie.... 0 0 16,100 / 30,400 9,844 / 39,375
Michael S. Kumpf.... 0 0 17,500 / 28,000 10,631 / 42,525
Lucy H. Staley...... 0 0 17,300 / 27,200 9,844 / 39,375
</TABLE>
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, 1999 and
has been increased to $270,000 for fiscal 2000.
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
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<PAGE> 10
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 annual base
salary was $170,000 for the fiscal year ended December 31, 1999 and has been
increased to $180,000 for fiscal 2000.
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 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.
- 8 -
<PAGE> 11
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, 1999, 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
1999, Bart C. Shuldman, President and Chief Executive Officer of the Company,
earned an annual base salary of $245,000. Mr. Shuldman's base salary has been
increased to $270,000 for 2000.
Cash Bonuses: The Company generally 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, the Board of Directors fixes an incentive target, as well as
individual goals and objectives, for each employee at the beginning of the year
and bonuses are paid shortly after the end of the year. The Board of Directors
did not establish an annual incentive compensation plan for 1999; however, a
special bonus of $10,000 was paid to Mr. Shuldman for 1999. The Board of
Directors has established an incentive compensation plan for cash bonuses which
may be earned during 2000.
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 1999, a total of 25,000 stock options were
granted to executive officers of the Company, all of which were granted to Mr.
Shuldman.
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
- 9 -
<PAGE> 12
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, 1999, 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
[BAR CHART]
<TABLE>
<CAPTION>
8/22/96 12/31/96 12/31/97 12/31/98 12/31/99
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
TransAct Technologies Incorporated Common Stock $ 100.00 $ 122.06 $ 130.88 $ 38.97 $ 88.97
CRSP Total Return Index for the Nasdaq ........ $ 100.00 $ 112.69 $ 138.34 $ 194.14 $ 351.49
Stock Market (US)
Nasdaq Computer Manufacturer Stocks ........... $ 100.00 $ 117.96 $ 142.69 $ 309.88 $ 657.50
</TABLE>
- 10 -
<PAGE> 13
2. AMENDMENT OF 1996 STOCK PLAN
The Board of Directors has unanimously adopted and recommends that the
shareholders consider and approve an amendment to the 1996 Stock Plan to
increase the number of shares of common stock which may be subject to awards
granted under the 1996 Stock Plan.
The purpose of the 1996 Stock Plan is to provide a way for the Company
to attract and retain the best available talent and encourage the highest level
of performance by employees and other persons who perform services for the
Company. By affording eligible persons the opportunity to acquire proprietary
interests in the Company and by providing them incentives to put forth maximum
efforts for the success of the Company's business, the 1966 Stock Plan is
expected to serve the best interests of the Company and its shareholders.
The 1996 Stock Plan authorizes the issuance of up to 900,000 shares of
common stock pursuant to awards granted under the 1996 Stock Plan. As of March
31, 2000, 115,000 shares of common stock have been issued pursuant to the grant
of restricted stock awards and 18,300 shares of common stock have been issued
pursuant to the exercise of options granted under the 1996 Stock Plan. In
addition, options to purchase an additional 751,980 shares have been granted and
were outstanding under the 1996 Stock Plan. Therefore, only 14,720 shares were
available for future grant under the 1996 Stock Plan.
To assure that sufficient shares are available to provide incentives to
those employees, directors, officers and consultants of the Company and any
subsidiaries who will be responsible for the Company's future growth and
continued success, and to attract new employees, the Board of Directors has
adopted the amendment to the 1996 Stock Plan. The amendment increases by 250,000
shares, to 1,150,000 shares, the number of shares of common stock which may be
issued pursuant to awards granted under the 1996 Stock Plan.
A discussion of the material features of the 1996 Stock Plan follows,
which discussion is subject to and qualified by the complete text of the 1996
Stock Plan.
ADMINISTRATION
The 1996 Stock Plan is administered by the Compensation Committee of
the Board of Directors of the Company. Among other things, the Compensation
Committee has the authority to determine employees and other persons to whom
options and other awards will be granted, whether options will be designated as
incentive stock options or non-qualified options, to determine the terms of any
option agreement or other award, to interpret the 1996 Stock Plan, to prescribe,
amend and rescind rules and regulations, and to make all other determinations in
connection with the 1966 Stock Plan.
ELIGIBILITY
Awards will be limited to officers and key employees of the Company and
its subsidiaries, and except in the case of incentive stock options, any other
non-employees who may provide services to the Company or its subsidiaries (all
such eligible individuals are hereinafter referred to as "employees"). The
Compensation Committee will base its selection of award recipients, and its
determination of the number of shares or units to be covered by each award, on
the employee's duties, his or her present and potential contributions to the
Company's success and such other factors as the Compensation Committee deems
relevant in connection with accomplishing the purposes of the 1996 Stock Plan. A
director of the Company or of a subsidiary who is not also an employee of the
Company will not be eligible to participate in the 1996 Stock Plan. As of March
31, 2000, approximately 102 persons were eligible to participate in the 1996
Stock Plan. The selection of participants in, and the nature and size of grants
under, the 1996 Stock Plan are wholly within the discretion of the Compensation
Committee.
- 11 -
<PAGE> 14
The table below shows the number of awards granted and outstanding
under the 1996 Stock Plan to the persons or groups listed in such table from its
inception through March 31, 2000.
<TABLE>
<CAPTION>
NUMBER SHARES OF
NAME AND PRINCIPAL POSITIONS OF OPTIONS RESTRICTED STOCK
- ---------------------------- ---------- ----------------
<S> <C> <C>
Bart C. Shuldman.................................................... 172,800 63,200
President and Chief Executive Officer
Richard L. Cote..................................................... 95,500 10,600
Executive Vice President, Chief Financial Officer, Treasurer and
Secretary
David A. Ritchie.................................................... 17,100 1,200
Executive Vice President - Sales
Lucy H. Staley...................................................... 44,500 5,000
Senior Vice President - General Manager (Ithaca, NY facility)
Michael S. Kumpf.................................................... 45,500 5,000
Senior Vice President - Engineering (Ithaca, NY facility)
All current executive officers as a group........................... 526,400 110,000
All current directors who are not executive officers, as a group.... 0 5,000
All current employees, excluding executive officers, as a group..... 225,580 0
</TABLE>
AWARDS UNDER THE 1996 STOCK PLAN
Awards under the 1996 Stock Plan may be granted in the form of
incentive stock options ("Incentive Stock Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
non-qualified stock options ("Non-Qualified Stock Options") (unless otherwise
indicated, references herein to "Options" include both Incentive Stock Options
and Non-Qualified Stock Options), stock appreciation rights accompanying Options
or granted separately ("Rights"), limited stock appreciation rights accompanying
Options ("Limited Rights"), restricted shares ("Restricted Shares"), or
restricted units that entitle the holder thereof to acquire shares ("Restricted
Units"). Awards may be granted singly, in combination or in tandem and may be
made in combination or in tandem with, in replacement of, or as alternatives to,
awards or grants under any other employee plan maintained by the Company and its
present and future subsidiaries.
Options
Options will have terms determined by the Compensation Committee, but
no Incentive Stock Option may be granted after July 30, 2006, or have a term
exceeding ten years from the date of the grant (five years in the case of an
Incentive Stock Option granted to an employee holding 10% or more of the voting
stock of the Company). Options will become vested and exercisable at such times,
in installments or otherwise, as determined by the Compensation Committee and
set forth in a written agreement evidencing the grant of Options. The
Compensation Committee may accelerate the exercisability of any Option at any
time. In addition, the Compensation Committee may provide in any option
agreement that the Option shall become immediately exercisable in full as to all
shares of common stock remaining subject to the Option upon certain changes in
control. See "Change in Control" below.
The option price will be determined by the Compensation Committee, but
in the case of an Incentive Stock Option, the option price will not be less than
100% of the fair market value of the common stock (110% of the fair market value
in the case of an Incentive Stock Option granted to an employee holding 10% or
more of the voting stock of the Company) on the date on which the Option is
granted. Fair
- 12 -
<PAGE> 15
market value means the closing price of the common stock as quoted by the Nasdaq
National Market System for the date on which the Option is granted, or if there
are no sales on such date, on the next preceding day on which there were sales
(the "Market Value").
An Option can be exercised by paying the option price either in cash,
which may be paid by check or other instrument acceptable to the Company, or
subject to the approval of the Compensation Committee, in already owned shares
of common stock, or both. Already owned shares of common stock shall be valued
at the Market Value on the date of exercise, or if there were no sales on such
date, on the next preceding day on which there were sales. The option price may
also be paid by surrendering any outstanding awards under the 1996 Stock Plan,
or a portion of the shares of common stock that otherwise would be distributed
upon exercise of the Option. In addition, any amount necessary to satisfy
applicable Federal, state or local tax requirements shall be paid promptly upon
notification of the amount due.
The Compensation Committee may, in lieu of delivering all or a portion
of the shares of common stock as to which an Option has been exercised, pay the
employee the appreciation value in cash or in shares of common stock or, in the
case of a Non-Qualified Stock Option, defer payment and credit the amount of the
appreciation value to the account of the employee on the Company's books and (i)
treat the amount credited to such account as if it had been invested in the
manner from time to time determined by the Compensation Committee, with
dividends or other income thereon being deemed to have been so reinvested, or
(ii) for the Company's convenience, contribute the amount credited to such
account to a trust, which may be revocable by the Company, that would invest for
the participants in a manner determined by the Compensation Committee and set
forth in the instrument creating such trust.
Rights
A Right may be awarded in connection with any Option granted under the
1996 Stock Plan, either at the time of grant or subsequently until any time
prior to the exercise, termination or expiration of the Option ("Tandem Right").
A Tandem Right will be subject, in general, to the same terms and conditions as
the related Option and shall be exercisable only to the extent the Option is
exercisable. A right may also be awarded separately (a "Free-Standing Right").
The term of each Free-Standing Right shall be determined by the Compensation
Committee. Free-Standing Rights will become vested and exercisable at such
times, in installments or otherwise, as determined by the Compensation Committee
and set forth in a written agreement evidencing the grant of the Free-Standing
Right. The Compensation Committee may accelerate the exercisability of any
Free-Standing Right at any time. In addition, the Compensation Committee may
provide in any agreement covering a Free-Standing Right that the Free-Standing
Right shall become immediately exercisable in full upon certain changes in
control. See "Change in Control" below. The price per share specified in a
Free-Standing Right will not be less than the closing price of the common stock
averaged over a period determined by the Compensation Committee not exceeding 30
days and ending on the date of the grant.
Upon exercise of a Right (subject in the case of a Tandem Right to the
surrender of the unexercised related Option or a portion thereof), the holder
will be entitled to receive cash, shares of common stock or such combination
thereof as the holder may elect, in an amount equal to the excess of the Market
Value of the common stock over the option price or the price specified in the
Right with respect to which the Right is exercised. An officer or director of
the Company may be restricted from exercising a Right for cash in certain
circumstances. The Compensation Committee shall have sole discretion as to the
timing of such payments, whether in one lump sum or in annual installments or
otherwise deferred. If neither the Right nor (in the case of a Tandem Right) the
related Option is exercised within the period of exercisability, the Right will
be deemed exercised at the end of such period, and an appropriate payment will
be made to the employee in cash.
The 1996 Stock Plan authorizes the Compensation Committee to grant
Limited Rights with respect to all or any portion of the shares of common stock
covered by Options. Limited Rights may be exercised only during the 90 days
immediately following an occurrence of certain events involving a change in
control of the Company, but may not be exercised by an officer or director of
the Company within six months
- 13 -
<PAGE> 16
following the date of grant. See "Change in Control" below. Limited Rights are
exercisable only if, and to the extent that, the related Option is exercisable
and, in the case of a Limited Right granted in respect of an Incentive Stock
Option, only when the Market Value per share of the common stock exceeds the
option price per share. Upon exercise, the holder of Limited Rights will receive
for each share for which a Limited Right is exercised an amount in cash equal to
the excess, if any, of (A) the greater of (x) a per share price determined by
reference to the change in control event, and (y) the highest Market Value of a
share of common stock during the 90-day period ending on the date the Limited
Right is exercised, over (B) the exercise price per share of the Option to which
the Limited Right relates.
When Rights or Limited Rights are exercised, the Option to which they
relate will cease to be exercisable to the extent of the number of shares with
respect to which the Rights or Limited Rights are exercised, but will be deemed
to have been exercised for purposes of determining the number of shares
available for the grant of further awards under the 1996 Stock Plan.
Restricted Shares and Units
Awards of Restricted Shares or Restricted Units may be made in lieu of
or in addition to awards of Options, Rights and Limited Rights under the 1966
Stock Plan. At the time an award of Restricted Shares or Restricted Units is
made, the Compensation Committee will establish a period of time (the "Award
Period") applicable to such award. Awards may provide for the incremental lapse
or termination of restrictions during the Award Period or for an accelerated
termination of the Award Period on certain conditions, including an event
involving a change in control of the Company. See "Change in Control" below. The
Compensation Committee may also, in its discretion, shorten or terminate the
Award Period or waive any conditions for the lapse or termination of
restrictions with respect to all or any of the Restricted Shares or Restricted
Units.
At the time an award of Restricted Shares is made, a certificate for
the number of Restricted Shares will be issued in the name of the employee
without the payment of any cash consideration by the employee, but the
certificate will be held in custody by the Company for the employee's account.
The shares of common stock evidenced by such certificate may not be sold,
transferred, otherwise disposed of or pledged prior to the termination of the
Award Period. The Compensation Committee, in its sole discretion, will determine
whether cash and stock dividends with respect to Restricted Shares will be paid
currently to the employee or withheld for the employee's account and whether and
on what terms dividends withheld may bear interest. Subject to the foregoing
restrictions, the employee will have, commencing on the date of grant, all
rights and privileges of a shareholder as to such shares of common stock.
With respect to Restricted Units, no shares of common stock will
actually be issued to an employee at the time an award of Restricted Units is
made. Rather, the Company will establish a separate account for the employee and
will record in such account the number of Restricted Units awarded to the
employee. The Compensation Committee, in its sole discretion, will determine
whether to credit to the account of, or to pay currently to, each recipient of
Restricted Units amounts equal to any cash or stock dividend paid with respect
to the common stock ("Dividend Equivalents"). The employee will be entitled to
receive, on the termination of the Award Period, one share of common stock for
each Restricted Unit with respect to which the restrictions have lapsed then
credited to the recipient's account (or, at the discretion of the Compensation
Committee, cash in lieu thereof) plus cash equal to the Dividend Equivalent
credits with respect to each such vested Restricted Unit and any interest
thereon. An employee will be entitled upon a change in control event to a
payment in cash, common stock, or a combination thereof, as determined by the
Compensation Committee, equal to the product of the number of vested Restricted
Units credited to the account of such employee multiplied by the greater of (x)
the highest Market Value of common stock during a 90-day period selected by the
Compensation Committee ending before 90 days after the change in control event,
and (y) a per share price determined by reference to the change in control
event. See "Change in Control" below. The Compensation Committee may, upon the
recipient's request, permit deferral of payment of vested Restricted Units and
Dividend Equivalents.
- 14 -
<PAGE> 17
TERMINATION OF EMPLOYMENT
Upon any termination of employment of an employee for cause, all
Options, Rights and Limited Rights held by the employee under the 1966 Stock
Plan will terminate to the extent not theretofore exercised. Unless the
Compensation Committee determines otherwise, and subject to such restrictions as
may be imposed by the Code in the case of any Incentive Stock Option, if
employment is otherwise terminated, except by reason of death or total
disability, an Option, Right or Limited Right may be exercised at any time
within three months (or, in the case of retirement on or after age 55, within
one year) after such termination to the extent the employee was entitled to do
so at the date of termination of employment, but in no event later than the date
on which the Option, Right or Limited Right terminates. Subject to such
restrictions as may be imposed by the Code in the case of any Incentive Stock
Option, in the case of the death or total disability of an employee while
employed or during such three-month or one-year period following termination of
employment (other than for cause), the employee, the employee's legal guardian
(unless such exercise would disqualify an Option as an Incentive Stock Option),
or the employee's legatees, distributees or personal representatives, whichever
is applicable, may exercise an Option, Right or Limited Right to the extent the
employee was entitled to do so at the termination of employment, but in any case
within a period of one year after the employee's death or total disability as to
all shares remaining subject to the Option, Right or Limited Right and in no
event later than the date on which the Option, Right or Limited Right
terminates.
Unless the Compensation Committee determines otherwise, an employee
will forfeit all rights in Restricted Shares and Restricted Units upon
termination of employment for any reason, other than death or total disability,
prior to the expiration or termination of the Award Period and the satisfaction
of any other conditions prescribed by the Compensation Committee. In the case of
the death or total disability of an employee, all restrictions on Restricted
Shares or Restricted Units will immediately lapse.
NON-TRANSFERABILITY
Options, Rights and Limited Rights will not be transferable otherwise
than by will or the laws of descent and distribution and may be exercised during
the employee's lifetime only by the employee or the employee's guardian or legal
representative (unless exercise would disqualify an Option as an Incentive Stock
Option). Restricted Shares and Restricted Units may not be sold, transferred,
otherwise disposed of or pledged prior to the termination of the Award Period.
CHANGE IN CONTROL
For purposes of the 1966 Stock Plan, a change in control event means
(i) the first purchase of shares of common stock pursuant to a tender offer or
exchange offer (other than an offer by the Company or any of its subsidiaries)
for all, or any part of, the common stock (an "Offer"), (ii) a change in control
of the Company (as defined below), (iii) approval by the Company's shareholders
of a merger in which the Company does not survive as an independent,
publicly-owned corporation, a consolidation, or a sale, exchange or other
disposition of all or substantially all the Company's assets, or (iv) a change
in the composition of the Board of Directors during any period of two
consecutive years such that individuals who at the beginning of such period were
members of the Board of Directors cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by the
Company's shareholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period. A "change in control" is deemed to occur at the time of
any acquisition of voting securities of the Company by any person or group (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), but
excluding (i) the Company or any of its subsidiaries, (ii) any person who was an
officer or director of the Company on the day immediately prior to July 30,
1996, or (iii) any savings, pension or other benefits plan for the benefit of
employees of the Company or any of its subsidiaries, which theretofore did not
beneficially own voting securities representing more than 30% of the voting
power of all outstanding voting securities of the Company, if such acquisition
results in such entity, person or group owning beneficially securities
representing more than 30% of the voting power of all
- 15 -
<PAGE> 18
outstanding voting securities of the Company. As used herein, "voting power"
means ordinary voting power for the election of directors of the Company.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
The Compensation Committee may make such adjustments to the 1996 Stock
Plan, to the number and class of shares of available thereunder or to any
outstanding awards as it deems appropriate to prevent dilution or enlargement of
rights, including adjustment in the event of distributions to holders of common
stock other than a normal cash dividend, changes in the outstanding common stock
by reason of stock dividends, split-ups, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, separations,
reorganizations, liquidations and the like. In the event of any offer to holders
of common stock generally relating to the acquisition of their shares, the
Compensation Committee may make such adjustments as it deems equitable in
respect of outstanding awards, including, in the Compensation Committee's
discretion, revision of outstanding awards, so that they may be exercisable for
or payable in the consideration payable in the acquisition transaction. No
adjustment shall be made in respect of an Incentive Stock Option if such
adjustment would disqualify such option as an Incentive Stock Option under
Section 422 of the Code and the existing regulations thereunder. No adjustment
shall be made in the minimum number of shares with respect to which an Option
may be exercised at any time. Any fractional shares resulting from such
adjustments to any award shall be eliminated.
TERMINATION AND AMENDMENT
The Board may suspend, terminate, modify or amend the 1996 Stock Plan
provided, however, that any amendment that would increase the aggregate number
of shares of common stock that may be issued, materially increase the benefits
accruing to participants, or materially modify the requirements as to
eligibility for participation will be subject to the approval of the Company's
shareholders to the extent required by Rule 16b-3 promulgated under Section
16(b) of the Exchange Act, applicable law or any other governing rules or
regulations, except that any such increase or modification that may result from
adjustments authorized as described in the preceding paragraph does not require
such approval. No suspension, termination, modification or amendment of the 1996
Stock Plan may, without the consent of an employee, adversely affect the
employee's rights under an award theretofore granted.
FEDERAL INCOME TAX CONSEQUENCES
Based on current provisions of the Code, and the existing regulations
thereunder, certain anticipated Federal income tax consequences with respect to
the several types of awards are described below.
Non-Qualified Stock Options
There will be no Federal income tax consequences to either the employee
or the Company on the grant of a Non-Qualified Stock Option. Upon the exercise
of a Non-Qualified Stock Option using cash only in payment, or upon such
exercise of an Incentive Stock Option that does not qualify for the tax
treatment described below under "Incentive Stock Options," the employee has
taxable ordinary income equal to the excess of the fair market value of the
shares of common stock received on the exercise date over the option price of
the shares. The employee's aggregate tax basis for the shares of common stock
received upon exercise of the Option will be equal to the amount taken into
ordinary income by the employee plus the amount of cash paid by the employee
upon exercise of the Option. Upon exercise of a Non-Qualified Stock Option using
shares of common stock already held by the employee in whole or partial payment,
or upon such exercise of an Incentive Stock Option that does not qualify for the
tax treatment described below under "Incentive Stock Options," the employee has
taxable ordinary income equal to the fair market value of the common stock less
the amount of cash, if any, paid by the employee in payment of a portion of the
purchase price plus the fair market value of the common stock surrendered as a
payment of the purchase price. The employee's aggregate tax basis for any shares
of common stock received in addition to the number of shares surrendered upon
exercise of the Option will be equal to the amount taken into ordinary income by
the employee plus the amount of any cash paid by the employee upon exercise of
the Option. (This discussion
- 16 -
<PAGE> 19
assumes that the shares surrendered were not previously acquired by exercising
an Incentive Stock Option, or if so, were held for the required period;
otherwise, gain would be realized upon surrender.) The Company will be entitled
to a Federal income tax deduction in an amount equal to the amount taken into
income by the employee, and the Company will be required to comply with
applicable Federal income tax withholding requirements with respect to the
amount taken into income by the employee. Upon a subsequent sale or taxable
exchange of shares acquired upon exercise of an Option, the employee will
recognize long-term or short-term capital gain or loss equal to the difference
between the amount realized on the sale and the tax basis of such shares.
Incentive Stock Options
No income is recognized by the employee when an Incentive Stock Option
is granted or exercised. If the common stock obtained upon exercise is sold more
than one year after exercise and two years after grant, the difference between
the option price and the amount realized on the sale is taxable to the employee
as a capital gain. The Company is not entitled to a deduction as a result of the
grant or exercise of an Incentive Stock Option or the sale of the stock acquired
upon exercise if the stock is held by the employee for the requisite periods.
If, however, the stock acquired upon exercise of an Incentive Stock
Option is sold less than one year after exercise or less than two years after
grant, an amount equal to the lessor of (i) the difference between the fair
market value on the date of exercise and the option price or (ii) the amount
realized on the sale is taxable to the employee as ordinary income, and the
Company is entitled to a corresponding deduction. The excess of the amount
realized on the sale over the fair market value on the date of exercise, if any,
is taxable as a capital gain.
The excess of the fair market value of the stock over the option price
on the date of exercise of an Incentive Stock Option is generally included in
the employee's alternative minimum taxable income, which, in certain instances,
may result in an alternative minimum tax. Liability for the alternative minimum
tax is complex and depends upon an individual's overall tax situation.
Exercise of Options with Common Stock
An employee may, with the consent of the Compensation Committee, be
permitted to deliver common stock already owned in payment of the option price.
For any shares of common stock so delivered, an amount equal to the fair market
value thereof on the date tendered will be credited against the option price.
In the event common stock is used to pay the option price, gain or loss
is not normally recognized in connection with such exchange (although in the
case of a Non-Qualified Stock Option, the employee will still have taxable
ordinary income equal to the excess of the fair market value of the shares of
common stock received upon exercise over the option price of such shares). To
the extent that the number of shares of stock received on exercise does not
exceed the number of shares surrendered, the employee's basis in these shares is
equal to the basis of the stock surrendered and the employee's holding period
therefor is the same holding period as for the stock surrendered. To the extent
the employee receives an amount of shares in excess of the number of shares
surrendered, the employee's basis in such additional shares is zero (plus any
cash paid in connection with the exercise) and the holding period for such
additional shares will begin from the date of such exchange.
If common stock acquired upon the exercise of an Incentive Stock Option
is delivered in payment of the option price upon the exercise of a second
Incentive Stock Option before the common stock was held for the requisite
holding periods, then the common stock so delivered will not be accorded
tax-free treatment. As a result, the employee generally will be required to
recognize ordinary income at the time of delivery equal to the difference
between the fair market value of the common stock on the date of exercise of the
first Option and the option price of the first Option. If the fair market value
of the common stock on the date of delivery is lower than the fair market value
on the date of exercise of the first Option, then the ordinary
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<PAGE> 20
income generally will be measured by the difference between the fair market
value of the common stock on the date of delivery and the option price of the
first Option.
Rights
There will be no Federal income tax consequences to either the employee
or the Company on the grant of a Right or Limited Right or during the period
that the unexercised Right or Limited Right remains outstanding. On the exercise
of a Right or Limited Right, the amount that the employee is paid, whether in
common stock or cash, is taxable to the employee as ordinary income and the
Company is entitled to a corresponding deduction.
Restricted Shares and Units
An employee will not realize taxable income and the Company will not be
entitled to a deduction upon the grant of Restricted Shares, until the shares
are no longer subject to a substantial risk of forfeiture (as defined in the
Code), at which time the employee will realize taxable ordinary income in an
amount equal to the fair market value for such number of shares of common stock
at that time, and the Company will be entitled to a deduction in the same
amount. However, an employee may make an election to recognize taxable ordinary
income in the year the Restricted Shares are awarded in an amount equal to their
fair market value at the time of the award, determined without regard to the
restrictions and, in that event, the Company will be entitled to a deduction in
such year in the same amount.
An employee receiving Restricted Units will not have taxable income
when the Restricted Units or the Dividend Equivalents are credited to the
employee's account. The employee will recognize ordinary income equal to the
fair market value of the common stock delivered (or the amount of cash paid in
lieu of such shares) plus the amount of cash credited to the employee's account
as Dividend Equivalents when the shares and/or cash are delivered or paid. The
Company will generally be entitled to a deduction for the year in which and to
the extent that the employee has ordinary income.
VOTE REQUIRED
The adoption of the amendment to the 1996 Stock Plan 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" ADOPTION
OF THE AMENDMENT TO THE COMPANY'S 1996 STOCK PLAN.
3. AMENDMENT OF NON-EMPLOYEE DIRECTORS' STOCK PLAN
The Board of Directors has unanimously adopted and recommends that the
shareholders consider and approve an amendment to the Directors' Plan to
increase the number of shares of common stock which may be subject to options
under the Directors' Plan.
The purpose of the Directors' Plan is to promote the interests of the
Company by attracting and retaining qualified persons who are neither employees
nor officers of the Company to serve on the Company's Board of Directors. The
Directors' Plan is intended to further align the interests of outside directors
with shareholders.
The Directors' Plan authorizes the issuance of up to 60,000 shares of
common stock pursuant to the exercise of options granted under the Directors'
Plan. As of March 31, 2000, options to purchase 52,500 shares have been granted
and were outstanding under the Directors' Plan. Therefore, only 7,500 shares
were available for future grant under the Directors Plan.
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<PAGE> 21
To assure that sufficient shares are available to continue the
Directors' Plan and to provide incentives to current directors and attract
future directors, the Board of Directors has adopted the amendment to the
Directors' Plan. The amendment increases by 70,000 shares, to 130,000 shares,
the number of shares of common stock which may be issued pursuant to the
exercise of options granted under the Directors' Plan.
ADMINISTRATION
The Directors' Plan is administered by an administrator appointed by
the Board of Directors of the Company. The Administrator has the authority to
establish rules and regulations that are necessary to administer the Directors'
Plan and to make determinations and take actions in connection with the
Directors' Plan that the Administrator deems necessary or advisable.
ELIGIBILITY
Only Directors who are not otherwise regular employees or officers of
the Company are eligible to participate in the Directors' Plan.
OPTIONS GRANTED UNDER THE DIRECTORS' PLAN
Pursuant to the terms of the Directors' Plan, non-employee directors
who were directors at the time of the Company's initial public offering received
Non-Qualified Stock Options to purchase 10,000 shares of common stock. Each
non-employee director who is subsequently elected to the Board of Directors for
the first time will be granted Non-Qualified Stock Options to purchase 5,000
shares of common stock. In addition, each non-employee director receives an
annual grant of Non-Qualified Stock Options to purchase 2,500 shares of common
stock. All options granted under the Directors' Plan are granted at 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.
TERMINATION OF DIRECTORSHIP
If a non-employee director ceases to be a director of the Company for
any reason other than death or disability, all options granted under the
Director's Plan which are not exercisable on such date will terminate
immediately, and any remaining options will terminate if not exercised before 30
days following such termination as a director, but not after the tenth
anniversary of the date of grant. If a non-employee director ceases to be a
director by reason of death or disability, all options granted under the
Director's Plan which are not exercisable on such date will become immediately
exercisable, and may be exercised by the non-employee director's representative
at any time before the expiration of twelve months following the date of death
or disability, but not after the tenth anniversary of the date of grant.
NON-TRANSFERABILITY
Options granted under the Directors' Plan will not be transferable
otherwise than by will or the laws of descent and distribution and may be
exercised during the non-employee director's lifetime only by the director.
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<PAGE> 22
CHANGE IN CONTROL
All options granted under the Directors' Plan become immediately
exercisable in the event of a "change in control" of the Company. For purposes
of the Directors' Plan, a "change in control" means (i) approval by the
Company's shareholders of a merger in which the Company does not survive as an
independent, publicly owned corporation, a consolidation, or a sale, exchange or
other disposition of all or substantially all of the Company's assets, or (ii)
any acquisition of voting securities of the Company by any person or group (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), but
excluding (a) the Company or any of its subsidiaries, (b) any person who was an
officer or director of the Company on the day immediately prior to July 30,
1996, or (c) any savings, pension or other benefits plan for the benefit of
employees of the Company or any of its subsidiaries, which theretofore did not
beneficially own voting securities representing more than 30% of the voting
power of all outstanding voting securities of the Company, if such acquisition
results in such entity, person or group owning beneficially securities
representing more than 30% of the voting power of all outstanding voting
securities of the Company. "Voting power" means ordinary voting power for the
election of directors of the Company.
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the Company's common stock as a result of
any stock split, stock dividend, combination or exchange of shares, or any other
similar capital adjustment, equitable proportionate adjustments shall
automatically be made in the number of shares available for award under the
Directors' Plan, the number of shares subject to options granted under the
Directors' Plan and the exercise price of options granted under the Directors'
Plan.
TERMINATION AND AMENDMENT
The Board of Directors may suspend, terminate, modify or amend the
Directors' Plan provided, however, that any amendment that would increase the
aggregate number of shares of common stock that may be issued, materially
increase the benefits accruing to non-employee directors, or materially modify
the requirements as to eligibility for participation will be subject to the
approval of the Company's shareholders to the extent required by Rule 16b-3
promulgated under Section 16(b) of the Exchange Act, applicable law or any other
governing rules or regulations, except that any such increase or modification
that may result from adjustments authorized as described in the preceding
paragraph does not require such approval. If the Directors' Plan is terminated,
any unexercised option shall continue to be exercisable in accordance with its
terms.
FEDERAL INCOME TAX CONSEQUENCES
All options granted under the Directors' Plan are Non-Qualified Stock
Options. As a result, based on current provisions of the Code, and the existing
regulations thereunder, the anticipated Federal income tax consequences with
respect to options granted under the Directors' Plan are as follows:
There will be no Federal income tax consequences to either the
non-employee director or the Company on the grant of a Non-Qualified Stock
Option. Upon the exercise of a Non-Qualified Stock Option using cash only in
payment, the non-employee director has taxable ordinary income equal to the
excess of the fair market value of the shares of common stock received on the
exercise date over the option price of the shares. The non-employee director's
aggregate tax basis for the shares of common stock received upon exercise of the
option will be equal to the amount taken into ordinary income by the
non-employee director plus the amount of cash paid by the non-employee director
upon exercise of the option. Upon exercise of a Non-Qualified Stock Option using
shares of common stock already held by the non-employee director in whole or
partial payment, the non-employee director has taxable ordinary income equal to
the fair market value of the common stock less the amount of cash, if any, paid
by the non-employee director in payment of a portion of the purchase price plus
the fair market value of the common stock surrendered as a payment of the
purchase price. The non-employee director's aggregate tax basis for any shares
of common stock received in addition to the number of shares surrendered upon
exercise of the option will be equal to the
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<PAGE> 23
amount taken into ordinary income by the non-employee director plus the amount
of any cash paid by the non-employee director upon exercise of the option. The
Company will be entitled to a Federal income tax deduction in an amount equal to
the amount taken into income by the non-employee director and the Company will
be required to comply with applicable Federal income tax withholding
requirements with respect to the amount taken into income by the non-employee
director. Upon a subsequent sale or taxable exchange of shares acquired upon
exercise of an option, the non-employee director will recognize long-term or
short-term capital gain or loss equal to the difference between the amount
realized on the sale and the tax basis of such shares.
VOTE REQUIRED
The adoption of the amendment to the Directors' Plan 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" ADOPTION
OF THE AMENDMENT TO THE COMPANY'S NON-EMPLOYEE DIRECTORS' STOCK PLAN.
4. 2000 EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has unanimously adopted and recommended that the
stockholders consider and approve the Company's 2000 Employee Stock Purchase
Plan (the "Purchase Plan"), under which an aggregate of 50,000 shares will be
reserved for issuance.
The following constitutes a brief discussion of the material features
of the Purchase Plan and is qualified in its entirety by reference to the
Purchase Plan, the full text of which is attached hereto as Appendix A and is
incorporated herein by reference. All stockholders of the Company are urged to
read Appendix A in its entirety.
PURPOSE
The purpose of the Purchase Plan is to provide employees (including
officers) of the Company and subsidiaries designated by the Board of Directors
(each a "Designated Subsidiary") with an opportunity to purchase Common Stock of
the Company through payroll deductions and to assist the Company in attracting,
retaining and motivating valued employees.
ADMINISTRATION
The Purchase Plan may be administered by the Board of Directors or the
Compensation Committee or other committee appointed by the Board of Directors
and consisting of at least two directors. All questions of interpretation or
application of the Purchase Plan will be determined by the Board of Directors or
its committee, and its decisions will be final, conclusive and binding upon all
participants.
SHARES SUBJECT TO THE PURCHASE PLAN
The stock to be offered under the Purchase Plan consists of shares of
the Company's common stock. The total number of shares of common stock reserved
for issuance under the Purchase Plan is 50,000 shares (subject to adjustment for
stock splits, stock dividends, stock combinations, recapitalizations and the
like).
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<PAGE> 24
ELIGIBILITY
Each employee (including officers) of the Company (or a Designated
Subsidiary) who has been employed by the Company or a Designated Subsidiary for
at least 90 days except for employees who are scheduled to work less than 30
hours per week or less than five months per calendar year, is eligible to
participate in an offering under the Purchase Plan, subject to certain
limitations imposed by Section 423 of the Code, and subject to limitations on
stock ownership as set forth in the Purchase Plan. Eligible employees become
participants in the Purchase Plan by filing with the payroll office of the
Company an enrollment form authorizing payroll deductions prior to the
applicable offering date. As of March 31, 2000, there were approximately 207
employees eligible to participate in the Purchase Plan.
PARTICIPATION IN AN OFFERING
Each offering of Common Stock under the Purchase Plan extends for a
period of six months ("Offering Period"), unless the participant withdraws or
terminates employment earlier. The Board of Directors or its committee may
change the length of Offering Periods without shareholder approval. To
participate in the Purchase Plan, each eligible employee must authorize payroll
deductions pursuant to the Purchase Plan. Such payroll deductions must be at
least 1%, and may not exceed 10% of a participant's regular salary, base gross
earnings and payments for overtime. Once an employee becomes a participant in
the Purchase Plan, the employee will automatically participate in each
successive Offering Period until such time as the employee withdraws from the
Purchase Plan or the employee's employment terminates.
GRANT OF PURCHASE RIGHT
At the beginning of each Offering Period, each participant is
automatically granted a purchase right to purchase shares of the Company's
common stock. The purchase right is exercised at the end of each Offering Period
to the extent of the payroll deductions accumulated during such Offering Period.
PURCHASE PRICE
Shares of Common Stock may be purchased under the Purchase Plan at a
price equal to 85% of the lesser of the fair market value of the Common Stock on
(i) the first day of the Offering Period or (ii) the last day of the Offering
Period. The fair market value of the common stock on any relevant date will be
equal to (i) the closing sale price of the common stock for the last trading day
prior to the relevant date as quoted on the principal national securities
exchange or national market system, including the Nasdaq National Market, or
(ii) the average of the closing bid and asking price of the common stock on the
last trading day prior to the relevant date if the common stock is quoted on
Nasdaq (but not the Nasdaq National Market) or is regularly quoted by a
recognized securities dealer, each as reported in The Wall Street Journal. The
last sale price for the Company's common stock as reported by the Nasdaq
National Market on April 5, 2000 was $9 3/8.
SHARES PURCHASED
The number of shares of common stock a participant purchases in an
Offering Period is determined by dividing the total amount of payroll deductions
withheld from the participant's compensation during that Offering Period by the
purchase price determined as described above. Any payroll deductions not applied
to the purchase of shares will generally be applied to the purchase of shares in
subsequent Offering Periods. In addition to the limitation on the maximum
payroll deduction, the purchase right granted to the participant may not give a
participant the right to purchase shares under the Purchase Plan at a rate per
calendar year in excess of $25,000 (based on the market price on the first day
of an Offering Period).
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<PAGE> 25
TERMINATION OF EMPLOYMENT
Termination of a participant's employment for any reason, including
retirement or death, or the failure of the participant to remain in the
continuous scheduled employ of the Company or a Designated Subsidiary for at
least 30 hours per week (or five months per year) during the applicable Offering
Period, cancels his or her purchase right and participation in the Purchase Plan
immediately. In such event, the payroll deductions credited to the participant's
account will be returned to him or her or, in the case of death, to the person
or persons entitled thereto as provided in the Purchase Plan.
WITHDRAWAL
A participant may withdraw from an Offering Period at any time without
affecting his or her eligibility to participate in future Offering Periods.
However, once a participant withdraws from a particular Offering Period, that
participant may not participate again in the same Offering Period.
CHANGES IN CAPITAL
In the event any change is made in the Company's capitalization during
an Offering Period, such as a stock split, stock combination or stock dividend,
which results in an increase or decrease in the number of shares of common stock
outstanding without receipt of consideration by the Company, appropriate
adjustment shall be made in the purchase price and in the number of shares
subject to purchase rights under the Purchase Plan.
AMENDMENT AND TERMINATION OF PLAN
The Board of Directors may at any time and for any reason terminate or
amend the Purchase Plan, except that without the approval of the stockholders of
the Company, the Board of Directors may not (i) increase the number of shares of
common stock available for sale under the Purchase Plan or (ii) materially
modify the eligibility for participation in the Purchase Plan. Termination of
the Purchase Plan shall not affect purchase rights previously granted, except in
the case of an acquisition of the Company.
FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan and the right of participants to make purchases
thereunder are intended to qualify under the provisions of Section 423 of the
Code. Under these provisions, no income will be taxable to a participant until
the shares purchased under the Purchase Plan are sold or otherwise disposed of.
Upon sale or other disposition of the shares, the participant will generally be
subject to tax, and the amount of the tax will depend upon the holding period.
If the shares are sold or otherwise disposed of more than two years from the
first day of the Offering Period and one year from the date the shares are
purchased, the participant will recognize ordinary income measured as the lesser
of (a) the excess of the fair market value of the shares at the time of such
sale or disposition over the purchase price, or (b) an amount equal to 15% of
the fair market value of the shares as of the first day of the Offering Period.
Any additional gain will be treated as long-term capital gain. If the shares are
sold or otherwise disposed of before the expiration of these holdings periods,
the participant will recognize ordinary income generally measured as the excess
of the fair market value of the shares on the date the shares are purchased over
the purchase price. Any additional gain or loss on such sale or disposition will
be long-term or short-term capital gain or loss, depending on the holding
period. The Company is not entitled to a deduction for amounts taxed as ordinary
income or capital gain to a participant except to the extent of ordinary income
recognized by participants upon a sale or disposition of shares prior to the
expiration periods described above.
Because the tax consequences to a participant may vary depending upon
the participant's individual situation, and because such tax consequences are
subject to change due to changes in tax laws or regulations, each participant
should consult his or her personal tax advisor regarding the federal, and any
state, local or foreign, tax consequences to the participant.
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<PAGE> 26
VOTE REQUIRED
The approval of the Purchase Plan will require the affirmative vote of
the holders 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" APPROVAL
OF THE COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN.
5. RATIFICATION OF SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS FOR 2000
The Board of Directors has selected PricewaterhouseCoopers LLP as
independent accountants to audit the financial statements of the Company for the
2000 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 2000 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 2000.
SECURITY HOLDER PROPOSALS FOR 2001 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 14, 2000.
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 27, 2001. If the Company is not notified of a shareholder
proposal by February 27, 2001, 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.
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<PAGE> 27
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.
GENERAL
The accompanying proxy will be voted as specified thereon. Unless
otherwise specified, proxies will be voted for the director nominated by the
Board of Directors and for ratification of the selection of
PricewaterhouseCoopers LLP as independent accountants for 2000. 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.
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 13, 2000
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<PAGE> 28
APPENDIX A
TRANSACT TECHNOLOGIES INCORPORATED
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock Purchase Plan
of TransAct Technologies Incorporated.
1. Purpose of the Plan
The purpose of the Plan is to provide eligible employees of
the Company and its Designated Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll
deductions. It is the intention of the Company to have the Plan qualify
as an "Employee Stock Purchase Plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation
in a manner consistent with the requirements of that section of the
Code.
2. Definitions
2.1 "Administrator" shall mean the Board or a compensation
committee or other committee consisting of two or more Board members
appointed by the Board to administer the Plan.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Plan" shall mean this 2000 Employee Stock Purchase Plan.
2.4 "Code" shall mean the Internal Revenue Code of 1986, as
amended or as it may be amended from time to time.
2.5 "Common Stock" shall mean the common stock of the Company.
2.6 "Company" shall mean TransAct Technologies Incorporated
and any Subsidiary of the Company.
2.7 "Compensation" shall mean all base gross earnings and
overtime earnings, excluding payments for commissions, incentive
compensation, bonuses and any other special payments.
2.8 Designated Subsidiaries" shall mean the Subsidiaries which
have been designated by the Board from time to time in its sole
discretion as eligible to participate in the Plan.
2.9 "Employee" shall mean any person who is customarily
employed on a full-time or part-time basis by the Company and (i) is
regularly scheduled to work more than 30 hours per week, (ii) is
regularly scheduled to work more than five (5) months in any calendar
year and (iii) has completed 90 days of continuous employment with the
Company prior to a given Enrollment Date. For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the
Company. Where the period of leave exceeds 90 days and the individual's
right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated
on the 91st day of such leave.
2.10 "Enrollment Date" shall mean the first day of each
Offering Period.
2.11 "Exercise Date" shall mean the last day of each Offering
Period.
<PAGE> 29
2.12 "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without
limitation the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation
("NASDAQ") System, its Fair Market Value shall be the closing
sale price for the Common, as quoted on such exchange or
system for the last Trading Day prior to the time of
determination as reported in The Wall Street Journal or such
other source as the Administrator deems reliable, or;
(ii) If the Common Stock is quoted on the NASDAQ system
(but not on the National Market System thereof) or is
regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the
mean of the closing bid and ask prices for the Common Stock
for the last Trading Day prior to the time of determination,
as reported in The Wall Street Journal or such other source as
the Administrator deems reliable, or;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Administrator.
2.13 "Offering Period" shall have the meaning set forth in
Section 4 of this Plan.
2.14 "Participant" shall mean an Employee who has met the
eligibility requirements of Section 3 and who has elected to
participate pursuant to an election under Section 5(a).
2.15 "Plan" shall mean this 2000 Employee Stock Purchase Plan.
2.16 "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or
on the Exercise Date, whichever is lower.
2.17 "Reserved Shares" shall mean the number of shares of
Common Stock covered by each purchase right under the Plan which have
not yet been exercised and the number of shares of Common Stock which
have been authorized for issuance under the Plan but not yet placed
under a purchase right.
2.18 "Subsidiary" shall mean a corporation, domestic or
foreign, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary which would be a
"subsidiary corporation" of the company as such term is defined in
section 424(f) of the Code or any successor provision thereto.
2.19 "Trading Day" shall mean a day on which national stock
exchanges and the NASDAQ System are open for trading.
3. Eligibility
3.1 Any employee (as defined in Section 2.8), who shall be
employed by the Company on a given Enrollment Date shall be eligible to
participate in the Plan.
3.2 Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted a purchase right under
the Plan (i) to the extent, immediately after the grant, such Employee
(or any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own capital stock of the
Company and/or hold outstanding purchase rights to purchase such stock
possessing five percent (5%) or more of the total combined voting power
or value of all classes of the capital stock of the Company or of any
Subsidiary, or (ii) to the extent his
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<PAGE> 30
or her rights to purchase stock under all employee stock purchase plans
of the Company and its Subsidiaries accrue at a rate which exceeds
twenty-five thousand dollars ($25,000) worth of stock (determined at
the Fair Market Value of the shares at the time such purchase right is
granted) for each calendar year in which such purchase right is
outstanding at any time. If an Employee's payroll deductions during an
Offering Period exceed the purchase price for the maximum number of
shares of Common Stock that may be purchased under a purchase right
outstanding in any calendar year, the excess shall be retained in such
Employee's account and applied in the next Offering Period.
4. Offering Periods
The Plan shall be implemented by consecutive six-month periods
("Offering Periods") with a new Offering Period commencing on the first
Trading Day on or after June 1 and December 1 each year, or on such
other date as the Administrator shall determine, and continuing
thereafter until terminated in accordance with Section 19 hereof. The
Administrator shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) with respect to
future offerings without stockholder approval if such change is
announced at least fifteen (15) days prior to the scheduled beginning
of the first Offering Period to be affected thereafter.
5. Participation
5.1 An eligible Employee may become a Participant in the Plan
by completing a subscription agreement authorizing payroll deductions
in the form of Exhibit A to this Plan and filing it with the Company's
Human Resources Department at least ten (10) business days prior to the
applicable Enrollment Date.
5.2 Payroll deductions for a Participant shall commence on the
first payroll following the Enrollment Date and shall end on the last
payroll in the Offering Period to which such authorization is
applicable, unless sooner terminated by the Participant as provided in
Section 10 hereof.
5.3 A Participant's subscription agreement shall remain in
effect for successive Offering Periods unless terminated as provided in
Section 10 hereof or modified as provided in Section 6 hereof.
6. Payroll Deductions
6.1 At the time a Participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on
each pay day during the Offering Period in a amount, in whole
percentages, not less than one percent (1%) and not exceeding five
percent (5%) of the Compensation which he or she receives on each pay
day during the Offering Period.
6.2 All payroll deductions made for a Participant shall be
credited to his or her account under the Plan and will be withheld in
whole percentages only. A Participant may not make any additional
payments into such account.
6.3 A Participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof. A Participant may increase
or decrease the rate of his or her payroll deductions only on the
Enrollment Date by completing or filing with the Company a new
subscription agreement authorizing a change in payroll deduction rate.
6.4 Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3.2 hereof, a
Participant's payroll deductions may be decreased to 0% at such time
during any Offering Period which is scheduled to end during the current
calendar year (the "Current Offering Period") that the aggregate of all
payroll deductions which were previously used to purchase stock under
the Plan in any and all prior Offering Periods which ended during that
calendar year plus all payroll deductions accumulated with respect to
the Current Offering Period equal $25,000. Payroll deductions shall
recommence at the rate provided in such
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<PAGE> 31
Participant's subscription agreement at the beginning of the first
Offering Period which is scheduled to end in the following calendar
year, unless terminated by the Participant as provided in Section 10
hereof.
6.5 At the time the purchase right is exercised, in whole or
in part, or at the time some or all of the Company's Common Stock
issued under the Plan is disposed of, the Participant must make
adequate provision for the Company's federal, state, or other tax
withholding obligations, if any, which arise upon the exercise of the
purchase right or the disposition of the Common Stock. At any time, the
Company may, but will not be obligated to, withhold from the
Participant's compensation the amount necessary for the Company to meet
applicable withholding obligations, including any withholding required
to make available to the Company any tax deductions or benefits
attributable to sale or early disposition of Common Stock by the
Employee.
7. Grant of Purchase Right
On the Enrollment Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted a
purchase right to purchase on the Exercise Date of such Offering Period
(at the applicable Purchase Price) up to a number of shares of the
Company's Common Stock determined by dividing such Employee's payroll
deductions accumulated prior to such Exercise Date and retained in the
Participant's account as of the Exercise Date by the applicable
Purchase Price, provided that such purchase shall be subject to the
limitations set forth in Sections 3.2 and 12 hereof. Exercise of the
purchase right shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof, and shall
expire on the last day of the Offering Period.
8. Exercise of Purchase Right
Unless a Participant withdraws from the Plan as provided in
Section 10 hereof, his or her purchase right for the purchase of shares
will be exercised automatically on the Exercise Date, and the maximum
number of full shares subject to his or her purchase right shall be
purchased for such Participant at the applicable Purchase Price with
the accumulated payroll deductions in his or her account. No fractional
shares will be purchased. Any payroll deductions accumulated in a
Participant's account which are not sufficient to purchase a full share
shall be retained in the Participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the Participant as
provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
Participant. During a Participant's lifetime, a Participant's purchase
right to purchase shares hereunder is exercisable only by him or her.
9. Delivery
As promptly as practicable after each Exercise Date on which a
purchase of shares occurs, the Company shall arrange the delivery to
each Participant, as appropriate, of a certificate representing the
shares purchased upon exercise of his or her purchase right.
10. Withdrawal
10.1 A Participant may withdraw all, but not less than all,
the payroll deductions credited to his or her account and not yet used
to exercise his or her purchase right under the Plan at any time by
giving written notice to the Company in the form of Exhibit B to this
Plan. All of the Participant's payroll deductions credited to his or
her account will be paid to such participant promptly after receipt of
notice of withdrawal and such Participant's purchase right for the
Offering Period will be automatically terminated, and no further
payroll deductions for the purchase of shares will be made during the
Offering Period. If a Participant withdraws from an Offering Period,
payroll deductions will not resume at the beginning of the succeeding
Offering Period unless the Participant delivers to the Company a new
subscription agreement.
10.2 Upon a Participant's ceasing to be an Employee (as
defined in Section 2.8 hereof), for any reason, he or she will be
deemed to have elected to withdraw from the Plan and the payroll
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<PAGE> 32
deductions credited to such Participant's account during the Offering
Period but not yet used to exercise the purchase right will be returned
to such Participant or, in the case of his or her death, to the person
or persons entitled thereto under Section 14 hereof, and such
participant's purchase right will be automatically terminated.
10.3 A Participant's withdrawal from an Offering Period will
not have any effect upon his or her eligibility to participate in any
similar plan which may hereafter be adopted by the Company or in
succeeding Offering Periods which commence after the termination of the
Offering Period from which the Participant withdraws.
11. Interest
No interest shall accrue on the payroll deductions of a Participant in
the Plan.
12. Stock
12.1 The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be
50,000 shares, subject to adjustment upon changes in capitalization of
the Company as provided in Section 18 hereof. If on a given Exercise
Date the number of shares with respect to which purchase rights are to
be exercised exceeds the number of shares then available under the
Plan, the Company shall make a pro rata allocation of the shares
remaining available for purchase.
12.2 The Participant will have no interest or voting right in
shares covered by his or her purchase right until such purchase right
has been exercised.
12.3 Shares to be delivered to a participant under the Plan
will be registered in the name of the Participant or in the name of the
Participant and his or her spouse.
13. Administration
13.1 The Plan shall be administered by the Administrator. The
Administrator shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine
eligibility and to adjudicate all disputed claims filed under the Plan.
Every finding, decision and determination made by the Administrator
shall, to the full extent permitted by law, be final and binding upon
all parties.
13.2 Notwithstanding the provisions of Subsection (a) of this
Section 13, in the event that Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
any successor provision ("Rule 16(b)") provides specific requirements
for the administrators of plans of this type, the Plan shall be only
administered by such body and in such a manner as shall comply with the
applicable requirements of Rule 16b-3. Unless permitted by Rule 16b-3,
no discretion concerning decisions regarding the Plan shall be afforded
to person who is not a "non-employee director" as that term is used in
Rule 16b-3.
14. Designation of Beneficiary
14.1 A Participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
Participant's account under the Plan in the event of such Participant's
death subsequent to an Exercise Date on which the purchase right is
exercised but prior to delivery to such Participant of such shares and
cash. In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant's account
under the Plan in the event of such Participant's death prior to
exercise of the purchase right. If a Participant is married and the
designated beneficiary is not the spouse, spousal consent shall be
required for such designation to be effective.
14.2 Such designation of beneficiary may be changed by the
Participant at any time by written notice. In the event of the death of
a Participant and in the absence of a beneficiary validly
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<PAGE> 33
designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such shares and/or cash
to the executor or administrator of the estate of the Participant, or
if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents
or relatives of the Participant, or if no spouse, dependent or relative
is known to the Company, then to such other person as the Company may
designate.
15. Transferability
Neither payroll deductions credited to a Participant's account
nor any rights with regard to the exercise of a purchase right or to
receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of
descent and distribution or as provided in Section 14 hereof) by the
Participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be without effect except that the Company may treat
such act as an election to withdraw funds from an Offering Period in
accordance with Section 10 hereof.
16. Use of Funds
All payroll deductions received or held by the Company under
the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. Reports
Individual accounts will be maintained for each Participant in
the Plan. Statements of account will be given to participating
Employees at lease annually, which statements will set forth the
amounts of payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization
18.1 Subject to any required action by the stockholders of the
Company, the Reserved Shares as well as the price per share of Common
Stock covered by each purchase right under the Plan which has not yet
been exercised shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from
a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease
in the number of shares of Common Stock effected without receipt of
consideration by the Company, provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number
or priced of shares of Common Stock subject to a purchase right.
18.2. In the event of the proposed dissolution or liquidation
of the Company, the Offering Period will terminate immediately prior to
the consummation of such proposed action, unless otherwise provided by
the Board.
18.3 In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or
into another corporation, each purchase right under the Plan shall be
assumed or an equivalent purchase right shall be substituted by such
successor corporation or a parent or subsidiary of such successor
corporation, unless the Board determines, in the exercise of its sole
discretion and in lieu of such assumption or substitution, to shorten
the Offering Period then in progress by setting a new Exercise Date
(the "New Exercise Date") or to cancel each outstanding right to
purchase and refund all sums collected from Participants during the
Offering Period then in progress. If the Board shortens the Offering
Period then in progress in lieu of
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<PAGE> 34
assumption or substitution in the event of a merger or sale of assets,
the Board shall notify each Participant in writing, at lease ten (10)
business days prior to the New Exercise Date and that his or her
purchase right will be exercised automatically on the New Exercise
Date, unless prior to such date he or she has withdrawn from the
Offering Period as provided in Section 10 hereof. For purposes of this
paragraph, a purchase right granted under the Plan shall be deemed to
be assumed if, following the sale of assets or merger, the purchase
right confers the right to purchase, for each share of purchase right
stock subject to the purchase right immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other
securities or property) received in the sale of assets or merger by
holders of Common Stock for each share of Common Stock held on the
effective date of the transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock),
provided, however, that if such consideration received in the sale of
assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code),
the Board may, with the consent of the successor corporation, provide
for the consideration to be received upon exercise of the purchase
right to be solely common stock of the successor corporation or its
parent equal in fair market value to the per share consideration
received by the holders of Common Stock and the sale of assets or
merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserved Shares, as
well as the price per share of Common Stock covered by each outstanding
purchase right, in the event the Company effects one or more
reorganizations, recapitalization, rights offerings or other increases
or reductions of shares of its outstanding Common Stock, and in the
event of the Company being consolidated with or merged into any other
corporation.
19. Amendment or Termination
19.1 The Board may at any time and for any reason terminate or
amend the Plan, except that without the approval of the stockholders of
the Company, the Board may not (i) increase the number of shares
available for sale under the Plan (except for permissible adjustments
provided in the Plan), or (ii) materially modify the requirements as to
eligibility for participation in the Plan. Except as provided in
Section 18 hereof, no such termination can affect purchase rights
previously granted. Except as provided in Section 18 hereof, no
amendment may make any change in any purchase right theretofore granted
which adversely affects the rights of any Participant. To the extent
necessary to comply with Rule 16b-3 or under Section 423 of the Code
(or any successor rule or provision or any other applicable law or
regulation), the Company shall obtain stockholder approval in such a
manner and to such a degree as required.
19.2 Without stockholder consent and without regard to whether
any Participant rights may be considered to have been "adversely
affected," the Board or the Administrator shall be entitled to change
the Offering Periods, establish the exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, permit payroll
withholding in excess of the amount designated by a Participant in
order to adjust for delays or mistakes in the Company's processing or
properly completed withholding elections, establish reasonable waiting
and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for
each Participant properly correspond with amounts withheld from the
Participant's Compensation, and establish such other limitations or
procedures as the Board or the Administrator determines in its sole
discretion advisable which are consistent with the Plan.
20. Notices
All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at
the location, or by the person, designated by the Company for the
receipt thereof.
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<PAGE> 35
21. Conditions Upon Issuance of Shares
Shares shall not be issued with respect to a purchase right
unless the exercise of such purchase right and the issuance and
delivery of such shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended (the "Securities
Act"), the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the
shares may then be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
As a condition to the exercise of a purchase right, the
Company may require the person exercising such purchase right to
represent and warrant at the time of any such exercise that the shares
are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Effective Date and Term of Plan
22.1 The Plan shall become effective on June 1, 2000, upon the
adoption and approval by the Board, provided no purchase rights granted
under the Plan shall be exercised, and no shares of Common Stock shall
be issued hereunder, until (i) the Plan shall have been approved by the
stockholders of the Company on or before May 15, 2000 and (ii) the
Company shall have complied with all applicable requirements of the
Securities Act (including the registration of the shares of Common
Stock issuable under the Plan on a Form S-8 registration statement
filed with the Securities and Exchange Commission), all applicable
listing requirements of any stock exchange on which the Common Stock is
listed for trading and all other applicable requirements established by
law or regulation. In the event such stockholder approval is not
obtained, or such compliance is not effected, within twelve (12) months
after the date on which the Plan is adopted by the Board, the Plan
shall terminate and have no further force or effect, and all sums
collected from Participants during the initial Offering Periods
hereunder shall be refunded.
22.2 Unless sooner terminated by the Board, the Plan shall
terminate upon the earlier of (i) May 31, 2005, or (ii) the date on
which all shares available for issuance under the Plan have been sold
pursuant to purchase rights exercised under the Plan. No further
purchase rights shall be granted or exercised, and no further payroll
deductions shall be collected, under the Plan following its
termination.
23. General Provisions
23.1 All costs and expenses incurred in the administration of
the Plan shall be paid by the Company
23.2 Nothing in the Plan shall confer upon the Participant any
right to continue in the employment of the Company for any period of
specific duration or interfere with or otherwise restrict in any way
the rights of the Company or of the Participant, which rights are
hereby expressly reserved by each, to terminate such person's
employment at any time for any reason, with or without cause.
23.3 The provisions of the Plan shall be governed by the laws
of the State of Delaware, without resort to that state's
conflict-of-laws rules.
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<PAGE> 36
TRANSACT TECHNOLOGIES INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, MAY 11, 2000
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 Thomas R. Schwarz and
Bart C. Shuldman, 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 31, 2000, at the Annual Meeting of its
shareholders to be held at The Ramada Plaza Hotel, 275 Research Parkway,
Meriden, CT 06450 on Thursday, May 11, 2000 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)
<PAGE> 37
PLEASE SIGN, DATE AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
TRANSACT TECHNOLOGIES INCORPORATED
MAY 11, 2000
[DOWN [DOWN
ARROW Please Detach and Mail in the Envelope Provided ARROW
GRAPHIC] GRAPHIC]
PLEASE MARK YOUR
A [X] VOTES AS IN THIS
EXAMPLE.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR WITHHOLD
NOMINEE FOR NOMINEE FOR AGAINST ABSTAIN
1. ELECTION OF [ ] [ ] Nominee: Charles A. Dill 2. APPROVAL of amendment to Company's [ ] [ ] [ ]
DIRECTOR. 1996 Stock Plan to increase the number
of shares of Common Stock subject
thereto.
3. APPROVAL of amendment to Company's [ ] [ ] [ ]
Non-Employee Directors' Stock Plan to
increase the number of shares of Common
Stock subject thereto.
4. APPROVAL of Company's 2000 Employee [ ] [ ] [ ]
Stock Purchase Plan.
5. RATIFICATION of selection of [ ] [ ] [ ]
PricewaterhouseCoopers LLP as
independent accountants for 2000.
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, 2, 3, 4 AND 5.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD
USING THE ENCLOSED POSTAGE PAID ENVELOPE.
SIGNATURE DATE SIGNATURE DATE
------------------------------- --------------- ---------------------------- ------------------
(SIGNATURE IF HELD JOINTLY)
</TABLE>
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 name by authorized
person.
