<PAGE> 1
REGISTRATION STATEMENT NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
REGISTRATION STATEMENT
ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
------------------------
TRIDEX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
CONNECTICUT 06-0682273
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
61 WILTON ROAD, WESTPORT, CT 06880
(203)226-1144
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
SETH M. LUKASH
CHIEF EXECUTIVE OFFICER
61 WILTON ROAD, WESTPORT, CT 06880
(203) 226-1144
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
STEPHEN J. CARLOTTI, ESQ.
HINCKLEY, ALLEN & SNYDER
1500 FLEET CENTER
PROVIDENCE, RHODE ISLAND 02903
(401) 274-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of the Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box [ ].
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
<TABLE>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
TITLE OF EACH CLASS OF MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, without par value........ 693,184 shares $12.375(1) $8,578,152(2) $2,600
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) The closing sale price of the Common Stock on October 28, 1996.
(2) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED OCTOBER 29, 1996
PROSPECTUS
TRIDEX CORPORATION
693,184 SHARES OF COMMON STOCK (NO PAR VALUE PER SHARE)
------------------------
This Prospectus relates to the offering for sale (the "Offering") of a
total of 693,184 shares (the
"Shares") of Common Stock, no par value per share (the "Common Stock"), of
Tridex Corporation ("Tridex" or the "Company"). All of the Shares were issued or
are issuable upon the conversion or exercise of the Company's outstanding 10.5%
Senior Subordinated Convertible Debentures due December 31, 1997 (the
"Debentures"), the Company's outstanding convertible 8% Promissory Notes due
December 31, 1997 (the "Ultimate Notes"), warrants to purchase Common Stock
issued to the initial purchasers of the Debentures (the "Placement Warrants"),
warrants to purchase Common Stock issued to the Placement Agent of the
Debentures (the "Agent Warrants"), and warrants to purchase Common Stock issued
to certain of the Company's Directors (the "Directors' Warrants"). The Shares
also include shares of Common Stock previously issued upon conversion of the
convertible 10% Promissory Notes (the "Ithaca Notes") of the Company's
subsidiary Ithaca Peripherals Incorporated ("Ithaca"). The holders of the Shares
and the Debentures, the Ultimate Notes, the Placement Warrants, the Agent
Warrants, and the Directors' Warrants are sometimes hereinafter referred to
collectively as the "Selling Securityholders".
For a description of the recent reorganization of certain subsidiaries of
the Company and the initial public offering of the common stock of its
subsidiary Transact Technologies Incorporated, see "The Company".
The Common Stock is traded on the Nasdaq National Market under the symbol
"TRDX." On October 28, 1996, the last reported sale price of the Common Stock
was $12.375. The Selling Securityholders intend to sell the Shares in market
transactions on a continuous or delayed basis, subject to certain limitations
imposed by federal and state securities laws, at market prices from time to
time. In connection with sales, it is expected that the Selling Securityholders
may incur a standard commission charge. The selling price of the Shares cannot
be determined at this time.
SEE "INVESTMENT CONSIDERATIONS" FOR A DISCUSSION OF CERTAIN FACTORS WHICH
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT
IN THE SHARES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996.
<PAGE> 3
AVAILABLE INFORMATION
The Company and its 80.3% owned subsidiary Transact Technologies
Incorporated ("Transact") are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, (the "Exchange Act") and in
accordance therewith file reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New
York, New York 10098 and 500 West Madison Street, Suite 1400, Chicago, Illinois
60621. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Such reports and other information concerning the Company and Transact
can also be inspected at the offices of the Nasdaq National Market, 1735 K
Street, NW, Washington, DC 20006.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus omits certain of the information contained in
the Registration Statement, and reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the Offering. Any statements contained herein
concerning the provisions of any document are not necessarily complete, and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the Exchange
Act with the Commission are incorporated herein by reference:
(1) The Company's Annual (Transition) Report on Form 10-K for the
transition period from April 2, 1995 through December 31, 1995.
(2) The Company's Quarterly Report on Form 10-Q for the period ended
March 30, 1996.
(3) The Company's Quarterly Report on Form 10-Q for the period ended
June 29, 1996.
(4) The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form 8-A filed August 8, 1995.
The following documents, or identified sections thereof, heretofore filed
by Transact with the Commission are incorporated herein by reference:
(1) The sections under the following captions of Transact's
Prospectus, dated August 22, 1996 and filed as part of its Registration
Statement on Form S-1 (No. 333-06895) under the Securities Act: (a) Risk
Factors; (b) Business; and (c) Management.
(2) Current Report on Form 8-K under the Exchange Act, filed September
11, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the Offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. All
documents filed by Transact pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus and prior to the date
of the Distribution (as defined herein) shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed documents which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference herein other than exhibits to such documents
(unless such exhibits are specifically incorporated by reference herein).
Requests for such copies should be directed to: Tridex Corporation, 61 Wilton
Road, Westport, Connecticut 06880, Attention: George T. Crandall, Secretary;
telephone (203) 226-1144.
2
<PAGE> 4
THE OFFERING
THE ISSUER
Tridex Corporation ("Tridex" or the "Company"), through its wholly-owned
subsidiaries, Ultimate Technology Corporation ("Ultimate") and Cash Bases GB
Limited ("Cash Bases"), through its Tridex Ribbons division and through its
80.3% owned subsidiary, Transact Technologies Incorporated ("Transact") is a
leading designer, manufacturer, integrator and marketer of high quality,
specialized systems and peripheral devices used in the retail point-of-sale
("POS"), gaming and lottery, financial service and kiosk markets and other
transaction based applications. See "The Company."
SECURITIES OFFERED
Securities Offered.............. 693,184 shares of Common Stock, issued or
issuable upon conversion of the Debentures,
the Ultimate Notes and the Ithaca Notes and
upon the exercise of the Placement Warrants,
the Agent Warrants, and the Directors'
Warrants.
Common Stock Outstanding(1)..... 3,989,753 shares
Common Stock to be Outstanding
after the Offering(2)........... 5,281,571 shares
- ---------------
(1) As of September 28, 1996, including 55,240 of the shares being registered
hereunder
(2) Includes Shares being registered hereunder and 653,874 additional shares
acquirable upon the exercise of options granted under the Company's 1989
Long Term Incentive Plan (the "1989 Plan").
PLAN OF DISTRIBUTION
The Company's Common Stock is quoted on the Nasdaq National Market. The
distribution of the shares of Common Stock offered hereby by the Selling
Securityholders may be effected from time to time in one or more transactions
(which may involve block transactions) on the Nasdaq National Market, in
negotiated transactions, through the writing of options or shares (whether such
options are listed on an options exchange or otherwise), or a combination of
such methods of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. The Selling
Securityholders may effect such transactions by selling shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders and/or
purchasers of shares for whom they may act as agent (which compensation may be
in excess of customary commissions).
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares. In
the case of Shares acquired by Selling Securityholders through the exercise of
options and warrants, the Company will have received payment of the exercise
price thereunder. In the case of conversion of Debentures or Ultimate Notes, the
Company will have received no additional consideration, but such conversions
have reduced and will reduce the outstanding principal amount of Debentures or
Ultimate Notes.
3
<PAGE> 5
INVESTMENT CONSIDERATIONS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, AMONG OTHER FACTORS, THE
FOLLOWING MATTERS BEFORE INVESTING:
RISK OF NON-COMPLETION OF THE DISTRIBUTION TRANSACTION
In June 1996, Tridex filed with the Internal Revenue Service (the "IRS") an
application for a ruling that the distribution (the "Distribution") to holders
of Tridex common stock, on an approximately one-to-one basis, of the 5,400,000
shares of Transact common stock owned by Tridex will constitute a tax free
reorganization for purposes of the Internal Revenue Code of 1986, as amended
(the "Code"). If Tridex receives a favorable ruling from the IRS, it intends to
complete the Distribution as early as practicable in 1997. However, no assurance
can be given as to whether or when the IRS will issue a favorable ruling or that
the Distribution will occur. The business of Tridex after the Distribution, its
results of operations and its financial condition will be substantially
different from its historical business, results of operations and financial
condition. See "The Company" and "Relationship Between Tridex and Transact."
If the IRS issues a favorable ruling and certain other conditions are
satisfied, Tridex will proceed with the Distribution, after which the 5,400,000
shares of common stock of Transact owned by Tridex prior to the Distribution
will be owned by the holders of Tridex Common Stock as of the record date for
the Distribution (the "Record Date") , and Transact will no longer be a
subsidiary of Tridex. If the IRS does not issue a favorable ruling, Tridex may
either request reconsideration, resubmit its request based on changes in facts
and circumstances, if any, or abandon the Distribution. If Tridex abandons the
Distribution, it may either maintain ownership of Transact as a consolidated
subsidiary or sell shares of Transact common stock in subsequent public
offerings or private sales. Although Tridex expects to effect the Distribution,
it is possible that the Distribution will not occur within the time frame
contemplated, or at all.
TRIDEX AFTER THE DISTRIBUTION
Assuming that the Distribution occurs, Tridex would be comprised of its
wholly-owned subsidiaries Ultimate and Cash Bases and its Tridex Ribbons
division. Assuming that the Distribution occurred as of September 28, 1996, that
all 910,206 options and warrants outstanding as of that date (including options
granted under the 1989 Plan, Placement Warrants, Agent Warrants and Directors'
Warrants, but excluding 47,700 previously exercised Directors' Warrants) were
exercised (with a weighted average exercise price of $7.38), all $2,460,000 of
the Debentures (which are convertible at $12.00 per share) and all $1,299,000 of
the Ultimate Notes (which are convertible at $12.00 per share) outstanding as of
that date were converted in accordance with their respective terms, and that
Transact repaid its $1.0 million subordinated note to Tridex due March 1, 1998,
Tridex would have minimal, if any, debt and approximately $10 million in cash
and cash equivalents. Also, management of Tridex expects that Ultimate, Cash
Bases and the Tridex Ribbons division will have total revenue of approximately
$35 million for 1996 and will be profitable for the foreseeable future. However,
no assurance can be given that all outstanding options and warrants will be
exercised or that all the Debentures and Ultimate Notes will be converted, and
no assurance can be given regarding the future results of operations or
financial condition of Tridex. After the Distribution, the Company will have
fewer product lines and, therefore, will be more susceptible to the adverse
effects of a downturn or disruption in the demand for any single product line.
As part of its business strategy, the Company intends (i) to focus on
internal growth through the development of products that broaden and extend the
business of providing integrated systems and peripheral devices to the
point-of-sale ("POS"), financial services and other transaction based markets
and (ii) to pursue joint ventures, strategic alliances or other transactions to
complement its existing products and markets, acquire new product lines or enter
new markets. Implementation of this strategy may require substantial capital
expenditures. There can be no assurance that the Company will be able to
successfully implement its strategy, or that the Company can successfully manage
any new operations.
Demand for the Company's products, including POS systems and custom cash
drawers, is dependent on the economic and financial well being of the retail
industry which in turn is affected by the overall level of
4
<PAGE> 6
consumer demand and growth in the general economy. Any economic slowdown or
contraction of the general economy could have a materiel adverse effect on
retail sales and therefore adversely affect the demand for the Company's
products. See "The Company -- Tridex After the Distribution."
CAPITAL REQUIREMENTS
Until the initial public offering of Transact in August 1996 (the "Transact
Offering"), Transact participated in the Tridex centralized cash management
system. At the time of the Transact Offering, Transact established a separate
cash management system. Although the consolidated financial statements of Tridex
will reflect the financial condition and results of operations of Transact until
the Distribution is effected, Tridex does not anticipate receiving dividends or
other future payments from Transact, except for payments described under
"Relationship Between Tridex and Transact". Tridex's financing with its senior
lender, which includes a $2,000,000 working capital revolving credit facility,
currently scheduled to expire June 30, 1998. Tridex may be required to draw upon
this facility to provide funds for the Company's continued operations as a going
concern. If Tridex elects to exercise its right to redeem the $2.4 million of
outstanding Debentures prior to any record date established for the
Distribution, and holders of the Debentures do not elect to convert their
Debentures into shares of Tridex Common Stock, Tridex will be required to
utilize cash on hand to redeem the Debentures, thereby decreasing its cash on
hand and increasing the potential need to borrow for short term working capital
needs. If Tridex is required to use cash on hand to redeem the Debentures and
its existing bank financing or comparable financing is not available to the
Company, it would have an adverse effect on the Company and its financial
condition or results of operation.
DEPENDENCE ON CERTAIN CUSTOMERS
The Company has certain customers, the loss of which, if not replaced by
sales to other customers, could have an adverse effect on the Company. In any
single year or series of consecutive years, sales by Ultimate to a single
customer may exceed 10% of Ultimate's total net sales. As customers complete the
installation of new POS systems, sales by Ultimate to these customers decline,
so that the identity of Ultimate's largest customers changes in the ordinary
course of its business. During the nine months ended December 31, 1995, Advanced
Auto Parts, Barnes & Noble, Inc. and Quiktech Corporation accounted for
approximately 20.0%, 12.3% and 11.4%, respectively, of Ultimate's net sales. As
individual large customers complete installations, Ultimate must obtain orders
of comparable size from new customers to sustain revenues. No single customer of
Cash Bases accounted for 10% of its net sales in 1995. A material portion of
Transact's sales are to certain distributors, value added resellers ("VARs"),
systems integrators and OEM customers. During the nine months ended December 31,
1995, Indiana Cash Drawer, GTECH Holdings Corporation and Ultimate accounted for
8.6%, 12.4% and 9.2%, respectively, of Transact's sales. Based on agreements
signed in September and October 1996, Tridex expects each of GTECH and ICL
Pathway, Ltd., a division of ICL Fijitsu, to account for significant amounts of
Transact's sales in 1997 and 1998.
COMPETITORS WITH GREATER FINANCIAL STRENGTH
The Company faces significant and aggressive competition in all of its
markets. Many of the Company's current and potential competitors are large
multi-national enterprises with extensive experience and resources in designing,
manufacturing and marketing a wide range of printers and other peripheral
devices and systems. Ultimate competes with other POS systems integrators,
including NCR and IBM, and manufacturers of terminals, keyboards and pole
displays. Cash Bases competes with other manufacturers of cash drawers,
primarily in Europe. Transact competes with Epson America, Inc. and Star
Micronics America, Inc., which together control approximately 50% to 60% of the
United States market for POS printers, and with Axiohm Incorporated,
Citizen -- CBM America Corporation and DH Technology Incorporated.
5
<PAGE> 7
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
Assuming that the Distribution occurs, a higher percentage of the Company's
sales will be international sales, principally through Cash Bases. International
sales are subject to inherent risks, including fluctuations in local economies,
fluctuating exchange rates, greater difficulty in accounts receivable
collection, costs and risks associated with localizing products for foreign
countries, unexpected changes in regulatory requirements, tariffs and other
trade barriers and burdens of complying with a variety of foreign laws. There
can be no assurance that these factors will not have a material adverse impact
on the Company's ability to increase or maintain its international sales or on
its results of operations.
UNCERTAINTIES REGARDING INTELLECTUAL PROPERTY RIGHTS
The Company regards certain hardware designs and software incorporated into
its products as proprietary and attempts to protect them with a combination of
copyright, trademark and trade secret laws, employee and third party
nondisclosure agreements and similar means. It may be possible for unauthorized
third parties to copy certain portions of the Company's products or to reverse
engineer or otherwise obtain and use, to the Company's detriment, information
that the Company regards as proprietary. Moreover, the laws of some foreign
countries do not afford the same protection to the Company's proprietary rights
as do United States laws. There can be no assurance that legal protections
relied upon by the Company to protect its proprietary rights will be adequate or
that the Company's competitors will not independently develop products that are
substantially equivalent or superior to the Company's. In addition, some of the
intellectual property used by Ultimate is not proprietary. No assurance can be
given that such intellectual property will not be used by Ultimate's
competitors.
VOLATILITY OF STOCK PRICE; DEPRESSIVE EFFECT OF FUTURE SALES OF COMMON STOCK
The trading price of the Common Stock has been subject to wide
fluctuations. If and when the Distribution occurs, the trading price of the
Common Stock will decline sharply. The Company cannot otherwise predict the
effect that trading or sales of outstanding shares of Common Stock, whether in
connection with the proposed Distribution, or following the conversion of
convertible indebtedness or exercise of options or warrants, may have on the
then prevailing market price of the Common Stock. The sale of a substantial
number of shares of Common Stock, however, could have a depressive effect on the
market price of the Common Stock.
ABSENCE OF DIVIDENDS
The Company has not paid any dividends on its Common Stock in the last five
years and currently has no plans to pay dividends. The Company's agreement with
its senior lender prohibits the payment of cash dividends for the term of the
agreement. The indenture covering the Company's 10.5% Debentures limits the
payment of cash dividends to 50% of aggregate consolidated net income earned
after December 27, 1992 for so long as any of the debentures are outstanding.
The Company is permitted by the indenture to pay dividends in Common Stock.
CONCENTRATION OF OWNERSHIP
As of September 28, 1996 the Company's directors and management owned
559,408 shares (or approximately 14.0%) of the Company's issued and outstanding
shares of Common Stock and have the right to acquire 278,200 additional shares
(for a total of approximately 20.0%) of Common Stock pursuant to the exercise of
presently exercisable options and warrants and the conversion of the Ultimate
Notes and the Debentures.
DEPENDENCE ON KEY PERSONNEL
The Company's future success will depend in significant part upon the
continued service of certain key management and other personnel and the
Company's continuing ability to attract and retain highly qualified managerial,
technical and sales and marketing personnel. There can be no assurance that the
Company will be
6
<PAGE> 8
able to recruit and retain such personnel. The loss of key employees could have
a material adverse affect on the Company's results of operations.
ENVIRONMENTAL MATTERS
Allu Realty Trust ("Allu"), a Massachusetts business trust, with
transferable shares, all of which are owned by Tridex, is the former owner of
land improved with a manufacturing-warehouse building located at 100 Foley
Street, Somerville, Massachusetts (the "Site"). Although Allu has sold the
property to 100 Foley Street Incorporated ("Foley"), an unrelated entity, Allu
and Tridex remain responsible for certain environmental problems associated with
the Site.
During July 1984, Allu and Tridex disclosed to Massachusetts Department of
the Attorney General the existence of chromium, oil and grease at the Site. As a
result, the Environmental Protection Division of the Department of the Attorney
General and the Massachusetts Department of Environmental Protection ("MDEP")
conducted an investigation of the Site. At MDEP's request, the Company retained
an environmental engineering firm which completed a Phase II investigation study
of the Site. The Company has conducted further studies to more specifically
characterize and assess the Site and to determine appropriate long term clean-up
measures.
In January 1993, the Company entered into an agreement with Foley pursuant
to which Tridex and Foley agreed to pay 75% and 25%, respectively, of the costs
incurred after January 1, 1992 in connection with the investigation and
remediation of the Site (the "Site Participation Agreement"). The Site
Participation Agreement also provides that, to the extent there are available
proceeds from the sale of the Site or, if not sold, from the operation of the
Site after January 1, 1997, Tridex shall be reimbursed for all or a portion of
the $260,000 it expended in connection with the Site prior to January 1, 1992.
Under the terms of an Escrow Agreement entered into by Tridex and Foley
simultaneously with the Site Participation Agreement (the "Escrow Agreement"),
Tridex and Foley each placed $125,000 into escrow to fund the payment of their
obligations under the Site Participation Agreement. Under the terms of the
Escrow Agreement, Tridex has provided $85,000 and is obligated to provide an
additional $15,000 in escrow at the request of the Escrow Agent and thereafter
the amount of any additional funds required to be placed in escrow by the Escrow
Agent shall be contributed 75% by Tridex and 25% by Foley. Approximately $3,500
was being held in escrow as of September 28, 1996, all of which was contributed
by Foley.
As of September 28, 1996, the Company had spent approximately $664,000 in
connection with the Site. Of this amount, approximately $491,000 relates to
investigation or remediation costs incurred at the Site. Although it is
difficult to distinguish between amounts spent for investigation and
remediation, the Company estimates that approximately $393,000 has been spent in
connection with investigation and approximately $98,000 has been spent in
connection with remediation of the Site. The Company estimates that it may spend
approximately $100,000 to $300,000 in connection with the Site during 1996 and
1997, including expenditures from the escrow account.
Based upon preliminary estimates provided by a consulting environmental
engineer and based upon the likely future uses of the property as of September
28, 1996, the Company had accrued $322,000 for liabilities associated with the
Site, which represents the currently estimated minimum cost of remediation,
after considering the cost sharing arrangement discussed above. Accordingly,
although no assurances can be given regarding the materiality of the total costs
which may be incurred, the Company does not believe at this time that the
remediation of the Site is reasonably likely to have a material effect on the
Company's financial condition, results of operations or liquidity. Due to
ongoing negotiations regarding the possible sale and development of the Site for
commercial uses, the timing of the incurrence of remediation expenses has been
difficult to anticipate. The Company is not a direct party to the negotiations.
However, based in part upon communications with Foley and the nature of the
development planned by the potential purchaser of the Site, the Company has
postponed remediation because the potential purchaser may prefer to control that
process and may qualify for significant regulatory relief. Pending the outcome
of these negotiations, which have been lengthy and which are continuing, the
Company expects that, as in the past, funds being held in escrow, cash
7
<PAGE> 9
from operations and the Company's credit facilities will be sufficient to pay
the costs of remediation without a material effect on the Company's operations.
The Company has also been notified by an adjacent property owner, Cooper
Industries ("Cooper"), that certain petroleum products that may have migrated
from the Site have been detected in a monitoring well located on Cooper's
property. The Company and Foley are investigating possible oil contamination
along the border between the Site and the property owned by Cooper.
In connection with the Plan of Reorganization, the Company agreed to
indemnify Transact from any liabilities, including certain environmental
liabilities, which could arise in connection with a manufacturing facility owned
by the Company and formerly operated by a Magnetec Corporation ("Magnetec"), a
subsidiary of Transact. Based on the level of historical environmental costs
associated with this property, the Company does not anticipate that the
indemnity granted to Transact will have a material adverse impact on the
Company's results of operation or financial condition.
FORWARD LOOKING STATEMENT AND ASSOCIATED RISKS
This Prospectus contains certain forward looking statements, including,
among others: (i) the profitability and financial condition of the Company after
the Distribution; and (ii) the expectation that the Company will effect the
Distribution. These forward looking statements are based largely on the
Company's current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from these forward looking
statements. In addition to the other risks described in this "Investment
Considerations" discussion, important factors to consider in evaluating such
forward looking statements include: (i) unanticipated working capital or other
cash requirements: (ii) changes in the Company's business strategy or an
inability to execute its strategy due to unanticipated changes in the Company's
markets; and (iii) various competitive factors that may prevent the Company from
competing successfully. In light of these risks and uncertainties, there can be
no assurance that the forward looking statements contained in this Prospectus
will in fact transpire.
8
<PAGE> 10
THE COMPANY
Tridex, through its wholly-owned subsidiaries, Ultimate and Cash Bases,
through its Tridex Ribbons division and through its 80.3% owned subsidiary,
Transact, is a leading designer, manufacturer, integrator and marketer of high
quality, specialized systems and peripheral devices used in the POS, gaming and
lottery and financial services and kiosk markets and other transaction based
applications.
In November 1995, the Board of Directors of Tridex approved a plan to
combine the business operations of two subsidiaries then wholly-owned by the
Company, Magnetec and Ithaca Peripherals Incorporated ("Ithaca"). In May 1996,
the Board of Directors of Tridex approved the merger of Ithaca into Magnetec, as
a step toward effecting the Transact Offering and the subsequent Distribution,
to holders of Tridex Common Stock, on an approximately one-to-one basis, of the
5,400,000 shares of Transact common stock owned by Tridex after the Transact
Offering (the "Distribution"). The Transact Offering was completed in September
1996, with 1,322,500 shares of Transact common stock sold at $8.50 per share.
Assuming the Distribution does occur, Tridex would be comprised of its
subsidiaries, Ultimate and Cash Bases, and the Tridex Ribbons division.
The Company's stock is quoted on the Nasdaq National Market under the
trading symbol "TRDX". The Company's executive offices are at 61 Wilton Road,
Westport, Connecticut 06880, telephone: (203) 226-1144.
ULTIMATE
Ultimate is a leading United States designer, manufacturer and system
integrator and VAR of POS equipment, including terminals, keyboards, customer
displays, printers, cash drawers and bar code scanning devices. Ultimate's
product designs, based on an "open system" philosophy, focus on providing
functionality and flexibility for individual applications. Ultimate's POS
terminals offer system solutions in a variety of hardware and software
configurations. The Model 1 is an on-line TWINAX terminal for use with the IBM
AS400/System 3X. It is the only POS specific, fully integrated TWINAX terminal
available on the market. The Model 2/2B is a serial POS terminal for RS232
connection to any multi-user host system. The Model 2B features a built-in POS
application and can store SKU files in memory for use in "host down" situations.
The Model 3 is a PC-based POS "front-end" platform for connection to a PC via
the keyboard port. The Model 3 provides full POS peripheral functionality while
retaining the flexibly and serviceability of a separate dedicated PC.
In addition to its terminals, Ultimate offers the Series 500, an advance
POS keyboard for use with PCs or ASCII terminals, offering programming
capabilities, control of attached peripheral devices, such as printers, pole
displays, scanners and cash drawers, and flexibility in keyboard layout. When
attached to a PC or terminal and connected with peripheral devices, the Series
500 provides the basis for a true modular "open system" POS configuration,
enabling the retailer to select and combine system components with the features
and functions required in their business. Ultimate also manufactures a broad
line of alpha numeric customer pole displays, with a variety of size and display
mode features.
Ultimate products, sold directly to end users and to distributors, system
integrators and VARs, are installed in a wide range of retail environments,
including apparel, automotive parts, book stores, convenience stores and gas
stations, fast food outlets, restaurants, movie theaters, hardware and home
centers, grocery stores, and specialty stores, as well as in government offices.
In addition to the family of POS terminals, POS keyboards, customer displays and
other products manufactured by Ultimate, it offers customers a full system
integration service, providing total POS systems including cash drawers,
transaction printers, bar code scanners and printers, touch screens, monitors
and other peripheral devices.
CASH BASES
Cash Bases, headquartered in Newhaven, United Kingdom, manufactures custom
fabricated cash drawers for use in POS systems, primarily in Europe. Retailers'
requirements for enhanced checkout design, ergonomics, security, aesthetics and
employee productivity coupled with frequent changes in the design of
9
<PAGE> 11
currency and coins, especially in Europe, has created increasing demand for
customized cash drawers. Building on its core product line of basic models, Cash
Bases' production capabilities enable it to provide custom cash drawers to all
its customers with order lead time and pricing similar to that of off-the-shelf
products. Cash Bases has developed over 9,000 discrete products in its 15 years
of operation.
TRIDEX RIBBONS
Tridex Ribbons, formerly a division of Magnetec, manufactures and
distributes printer ribbons used primarily in certain printers manufactured and
sold by Transact.
TRANSACT
Transact designs, develops, manufactures and markets transaction based
printers and related products under the ITHACA and MAGNETEC brand names.
Transact's printers are used to provide transaction records such as receipts,
tickets, coupons, register journals and other documents. Transact focuses on
four vertical markets: POS; gaming and lottery; financial services; and kiosks.
The Company sells its products directly to end users, OEMs, VARs and selected
distributors, primarily in the United States and Canada.
Transact manufactures and sells customizable and custom dot matrix and
thermal printers for applications requiring up to 60 character columns in each
of its four vertical markets. The Company also sells an 80 column laser printer
for kiosk applications. The Company's customizable products include several
series of printers which offer customers the ability to choose from a variety of
features and functions. Options typically include different printing
technologies, print speeds, paper handling capacities and numbers of print
stations. In addition to its customizable printers, Transact manufactures custom
printers for certain OEM customers. In collaboration with these customers, the
Company provides engineering and manufacturing expertise for the design and
development of specialized printers.
A fuller description of the Transact business appears in the Prospectus of
Transact dated August 22, 1996, which was included in the Registration Statement
(No. 333-06895) filed for the Transact initial public offering. See "Available
Information" and "Incorporation by Reference".
TRIDEX AFTER THE DISTRIBUTION
As of the date of this Prospectus, management of Tridex expects Cash Bases,
Ultimate and the Tridex Ribbons division to be profitable for the foreseeable
future, with combined revenues of approximately $35 million in 1996. Using funds
made available from Transact's repayment of intercompany debt after the Transact
Offering, Tridex repaid all of its bank indebtedness outstanding at the closing
of the Transact Offering (approximately $5.3 million) and revised its bank
credit facility to provide up to $2,000,000 for working capital. In connection
with the proposed Distribution, Tridex also intends to accelerate the
exercisability of outstanding options and warrants and may exercise its right to
redeem outstanding Debentures. After the planned Distribution, Tridex expects to
have a balance sheet with little or no debt and sufficient cash and cash
equivalents for its short and intermediate term requirements. Assuming that the
Distribution occurred as of September 28, 1996, that all 910,206 options and
warrants outstanding as of that date (including options granted under the 1989
Plan, Placement Warrants, Agent Warrants and Directors' Warrants, but excluding
47,700 previously exercised Directors' Warrants) were exercised (with a weighted
average exercise price of $7.38), all $2,460,000 of the Debentures (which are
convertible at $12.00 per share) and all $1,299,000 of the Ultimate Notes (which
are convertible at $12.00 per share) outstanding as of that date were converted
in accordance with their respective terms, and that Transact repaid its $1.0
million subordinated note to Tridex due March 1, 1998, Tridex would have
minimal, if any, debt and approximately $10 million in cash and cash
equivalents. Based on the operating profit of its remaining business and minimal
debt after the Distribution, Tridex intends to pursue a growth strategy. See
"Investment Considerations -- Tridex After the Distribution".
The timing of any acceleration of the vesting of unvested options or
warrants will depend primarily on the receipt by Tridex of a favorable ruling
from the IRS regarding the tax-free nature of the Distribution. No assurance can
be given with respect to the timing of such ruling or that such ruling, when
issued, will be
10
<PAGE> 12
favorable. Also, the decision by holders of vested options and warrants and by
holders of Debentures and Ultimate Notes to exercise or convert their existing
securities for shares of Tridex Common Stock will depend upon factors including
the market price of Tridex Common Stock and the date of expiration or maturity
of such options, warrants, Debentures and Ultimate Notes.
RELATIONSHIP BETWEEN TRIDEX AND TRANSACT
PLAN OF REORGANIZATION
On June 25, 1996, Tridex, Transact, Magnetec and Ithaca entered into a Plan
of Reorganization which, among other things, provided for: (i) the merger of
Ithaca into Magnetec; (ii) the transfer by Transact to Tridex of the assets used
in the Tridex Ribbons division, which was completed as of September 28, 1996;
(iii) the issuance by Transact of 5,400,000 shares of Transact common stock to
Tridex in exchange for all of the outstanding shares of capital stock of
Magnetec; (iv) the initial public offering of Transact; (v) the payment by
Transact of approximately $8.5 million of indebtedness to Tridex with a portion
of the proceeds of initial public offering of Transact; (vi) the execution by
Transact and Tridex of the agreements described below under "Corporate Services
Agreement," "Tax Sharing Agreement," "Printer Supply Agreement" and "Agreement
Regarding Ribbon Business"; (vii) an undertaking by Tridex to apply for a ruling
from the IRS that the Distribution would be tax-free to such stockholders from
federal income tax purposes; and (viii) an undertaking by Tridex to effect the
Distribution upon the satisfaction of certain conditions precedent, including
the successful completion of this Offering, the completion of the transaction
described under "Agreement Regarding Ribbon Business" and the receipt of a
favorable ruling from the IRS. If Tridex receives a favorable ruling from IRS in
time to do so, in intends to complete the Distribution as early as practicable
in 1997.
In June 1996, Tridex filed with the IRS an application for a ruling that
the Distribution will constitute a tax-free reorganization for federal income
tax purposes. If Tridex receives a favorable ruling from the IRS it intends to
complete the Distribution as early as practicable in 1997. Until such time as
the Distribution is effected, Transact will be a subsidiary of Tridex and will
be consolidated in the Tridex affiliated group for purposed of Section 1504 of
the Code.
The Company and Transact have undertaken as part of the Plan of
Reorganization to conduct their affairs during the period after the Transact
public offering on a reasonable arms-length basis pursuant to certain written
agreements. In the Plan of Reorganization, Tridex also agreed, for five years
after the completion of the Distribution, not to compete with Transact in the
design, manufacture or sale of transaction based printers for the POS, gaming
and lottery, financial services and kiosk markets in any geographic market in
which Transact is then doing business. The Plan of Reorganization may be amended
only by the agreement of Transact and Tridex.
PROMISSORY NOTE
Pursuant to the Plan of Reorganization, Transact has repaid $7.5 million of
the $8.5 million intercompany indebtedness owned to Tridex and issued a $1.0
million subordinated note to Tridex for the balance. This note matures on March
1, 1998, requires monthly payments of interest at the rate charged by Tridex's
bank under Tridex's revolving line of credit, currently the prime rate or 8.25%
as of September 28, 1996, and payment of the principal amount at maturity.
CORPORATE SERVICES AGREEMENT
As provided in the Plan of Reorganization, Tridex and Transact have entered
into a Corporate Services Agreement (the "Services Agreement"), under which
Tridex and its subsidiaries (other than Transact) will provide certain services,
including certain employee benefit administration, human resource and related
services, administrative services, risk management, regulatory compliance,
preparation of tax returns, and certain financial and other services to
Transact. The Services Agreement provides for a transition by Transact to
independent corporate administrative and financial staffing. During the term of
the Services Agreement it is
11
<PAGE> 13
expected that Transact will complete its own corporate staffing to the extent
necessary, and Tridex does not anticipate extending the Services Agreement.
Designated Tridex employees are to be made available for stated percentages of
their working time to the Company through different dates, ending on December
31, 1997. During the term of the agreement, Transact will make available to
Tridex the services of Richard L. Cote, the former Senior Vice President and
Chief Financial Officer of Tridex, who now serves as the Executive Vice
President and Chief Financial Officer of Transact. Tridex expects Transact to
pay Tridex approximately $134,000 during 1996 for the services of the designated
Tridex employees and that Transact will reimburse Tridex for accounting,
insurance and legal expenses and approximately $52,000 during 1997 for the
services of the designated Tridex employees, net of Tridex's payments to
Transact. Additional amounts may be paid by Transact to reimburse Tridex for
specific services requested by Transact. Upon the mutual agreement of Tridex and
Transact, services may continue to be provided after the dates provided in the
Services Agreement.
TAX SHARING AGREEMENT
The Tax Sharing Agreement between Tridex and Transact provides the terms
under which Transact is to be included in Tridex's consolidated federal income
tax return. Under current federal tax law, Transact will be included in the
return so long as Tridex owns at least 80% of the total voting power of Transact
stock, which has a value equal to at least 80% of the total value of the stock
of Transact. The Tax Sharing Agreement covers the period from the initial public
offering of Transact until the effective date of the Distribution or such time
as Transact otherwise ceases to be eligible to be included in the consolidated
return of Tridex. During this period, for financial accounting purposes,
Transact will compute its income tax expense or benefit as if it filed separate
returns using those elements of income and expense as reported in Transact
financial statements. If Transact incurs losses or realizes tax credits, Tridex
will pay to Transact the amount of any tax reduction Tridex realizes by
utilizing those losses or credits in its consolidated income tax return. In
addition, at the time of utilization of any existing tax attributes, Transact
will pay to Tridex the tax benefit Transact obtains by utilizing such tax
attributes. Any tax deficiencies or refunds resulting from amending prior year
tax returns or examinations by the taxing authorities will be the responsibility
of or inure to the benefit of Transact to the extent they relate to Transact or
its predecessor entities.
PRINTER SUPPLY AGREEMENT
The Printer Supply Agreement, which has an initial term expiring on
December 31, 1999, provides for Transact to sell to Ultimate, which remains a
subsidiary of Tridex, and for Ultimate to purchase from Transact, POS printers
at discounts from list prices comparable to discounts historically offered to
Ultimate as a subsidiary under common ownership with Transact. In consideration
for these favorable price terms, the Printer Supply Agreement requires Ultimate
to purchase from Transact at least three quarters of its total POS printer
requirements. Transact may, in its discretion, increase its list prices from
time to time, and the prices offered to Ultimate will reflect the discount rate
applied to such increased list prices.
AGREEMENT REGARDING TRIDEX RIBBONS DIVISION
Pursuant to the Plan of Reorganization, Transact transferred the assets of
the Tridex Ribbons division to Tridex. Tridex employs the manufacturing and
supervisory personnel required to conduct such business. Transact provides the
Tridex Ribbons division with space within its Wallingford, Connecticut
manufacturing facility and certain support services. As a monthly fee for the
space and support services, Tridex pays Transact an amount equal to the direct
and indirect costs incurred by Transact to provide the space and render such
services, plus certain related costs.
12
<PAGE> 14
SELLING SECURITYHOLDERS
<TABLE>
The following tables set forth the name of each Selling Securityholder, the
Common Stock owned by such Selling Securityholder prior to the Offering, the
amount of Common Stock to be offered for such Selling Securityholder's account
and the amount and percentage, if required, of Common Stock to be owned by the
Selling Securityholder after the Offering. Unless indicated in a footnote, none
of the Selling Securityholders has held any position, office or material
relationship with the Company or any of its predecessors or affiliates within
three years of the date of this Prospectus. The amounts set forth below are as
of September 28, 1996.
HOLDERS OF DEBENTURES:
<CAPTION>
SHARES OF
COMMON STOCK
ACQUIRABLE SHARES OF COMMON STOCK
SHARES OF (AND REGISTERED HEREBY) REMAINING IF ALL SHARES
COMMON STOCK UPON CONVERSION REGISTERED HEREBY
NAME CURRENTLY OWNED(a) OR EXERCISE ARE SOLD(a) (% IF > 1%)
---- ------------------ ----------------------- ------------------------
<S> <C> <C> <C>
Seth M. Lukash and Gayle L.
Smithson JTWROS(b)............ 496,808 11,110 496,808(12.1%)
Jeffrey T. Leeds................ -- 5,555 --
McFarland Dewey & Co.(c)........ -- 22,220 --
Thomas Bryson(d)................ -- 22,220 --
Charlotte E. Kopitsky Trust..... -- 5,555 --
Stavisky, Knittle, Isaacs &
Dichek Pension Plan FBO
Herbert Stavisky.............. 49,549 5,555 49,549(1.4%)
Herbert Stavisky................ 54,676 23,609 54,676(2.07%)
Milton Chwasky.................. 48,844 6,944 48,844(1.4%)
Graham Y. Tanaka(e)............. 29,225 16,665 29,225
Yusuo Tanaka and Yuri L. Tanaka
Trust dtd 9/25/91(f).......... 5,000 5,555 5,000
J.T. & C.K. Tanaka(g)........... 5,000 5,555 5,000
Charlotte Hershberg............. -- 11,110 --
Advest Inc., Custodian f/b/o
Milton Chwasky................ -- 13,887 --
Lisa R. Zenkel.................. -- 11,110 --
Lois S. Zenkel.................. -- 11,110 --
Walter F. Toombs................ -- 5,555 --
Dennis J. Lewis(h).............. 20,600 16,665 20,600
Gary H. German(i)............... 12,200 5,555 12,200
William J. Nolan, III........... 400 5,555 400
Milton Movitz................... -- 5,555 --
Paul C. Wolf(k)................. 10,000 5,555 10,000
Nancy S. DeMoss................. -- 5,555 --
Philadep & Co. ................. -- 11,110 --
CEDE & Co. ..................... -- 34,441 --
</TABLE>
13
<PAGE> 15
<TABLE>
HOLDERS OF ULTIMATE NOTES:
<CAPTION>
SHARES OF
COMMON STOCK
ACQUIRABLE SHARES OF COMMON STOCK
SHARES OF (AND REGISTERED HEREBY) REMAINING IF ALL SHARES
COMMON STOCK UPON CONVERSION REGISTERED HEREBY
NAME CURRENTLY OWNED(a) OR EXERCISE ARE SOLD(a) (% IF > 1%)
---- ------------------ ----------------------- ------------------------
<S> <C> <C> <C>
Walter F. Toombs................ -- 4,179
Dennis J. Lewis(h).............. 20,600 60,849 20,600
Gary H. German(i)............... 12,200 11,701 12,200
Theodore Thomas(j).............. 500 16,716 500
Paul C. Wolf(k)................. 10,000 14,861 10,000
</TABLE>
<TABLE>
HOLDERS OF SHARES ISSUED UPON
CONVERSION OF ITHACA NOTES:
<CAPTION>
SHARES OF
COMMON STOCK
ACQUIRABLE SHARES OF COMMON STOCK
SHARES OF (AND REGISTERED HEREBY) REMAINING IF ALL SHARES
COMMON STOCK UPON CONVERSION REGISTERED HEREBY
NAME CURRENTLY OWNED(a) OR EXERCISE ARE SOLD(a) (% IF > 1%)
---- ------------------ ----------------------- ------------------------
<S> <C> <C> <C>
S. Scott Kumpf(l)............... 44,000 6,865 44,000
Lucy H. Staley(m)............... 18,100 675 18,100
</TABLE>
<TABLE>
HOLDERS OF PLACEMENT WARRANTS:
<CAPTION>
SHARES OF
COMMON STOCK
ACQUIRABLE SHARES OF COMMON STOCK
SHARES OF (AND REGISTERED HEREBY) REMAINING IF ALL SHARES
COMMON STOCK UPON CONVERSION REGISTERED HEREBY
NAME CURRENTLY OWNED(a) OR EXERCISE ARE SOLD(a) (% IF > 1%)
---- ------------------ ----------------------- ------------------------
<S> <C> <C> <C>
Seth M. Lukash and Gayle L.
Smithson JTWROS(b)............ 496,808 1,000 496,808(12.1%)
Jeffrey T. Leeds................ -- 500 --
McFarland Dewey & Co.(c)........ -- 1,000 --
Thomas Bryson(d)................ -- 3,500 --
Charlotte E. Kopitsky Trust..... -- 500 --
Stavisky, Knittle, Isaacs &
Dichek Pension Plan FBO.......
Herbert Stavisky................ 49,549 500 49,549(1.4%)
Herbert Stavisky................ 54,676 2,125 54,676(2.0%)
Graham Y. Tanaka(e)............. 29,225 1,000 29,225
Yusuo Tanaka and Yuri L. Tanaka
Trust dtd 9/25/91(f).......... 5,000 500 5,000
Jonathan T. Tanaka(g)........... 5,000 500 5,000
Schiro Family Trust............. -- 1,000 --
Robert G. Schiro................ -- 500 --
Charlotte Hershberg............. -- 1,000 --
Advest Inc., Custodian f/b/o
Milton Chwasky................ -- 1,250 --
Lisa R. Zenkel.................. -- 1,000 --
Lois S. Zenkel.................. -- 1,000 --
Walter F. Toombs................ -- 500 --
Dennis J. Lewis(h).............. 20,600 1,500 20,600
Gary H. German(i)............... 12,200 500 12,200
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
ACQUIRABLE SHARES OF COMMON STOCK
SHARES OF COMMON (AND REGISTERED HEREBY) REMAINING IF ALL SHARES
STOCK UPON CONVERSION REGISTERED HEREBY
NAME CURRENTLY OWNED(A) OR EXERCISE ARE SOLD(A) (% IF > 1%)
- -------------------------------- ------------------ ----------------------- ------------------------
<S> <C> <C> <C>
Theodore Thomas(j).............. 500 500 500
William J. Nolan, III........... 400 500 400
Paul C. Wolf(k)................. 10,000 500 10,000
Milton Movitz................... -- 500 --
Nancy S. DeMoss................. -- 500 --
Armand O. Norehad............... 10,000 1,000 10,000
Banque Continentale due Luxem-
bourg......................... -- 300 --
J. Romeo & Co................... -- 1,000 --
Brown Brothers Harriman......... -- 2,500 --
William Bernard................. -- 2,000 --
Robert G. Shiro................. -- 15,700 --
Cudd & Co....................... -- 250 --
Alfred Callahan................. -- 250 --
Milton Chwasky.................. 48,844 625 48,844(1.4%)
</TABLE>
HOLDERS OF AGENT WARRANTS(N):
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
ACQUIRABLE SHARES OF COMMON STOCK
SHARES OF COMMON (AND REGISTERED HEREBY) REMAINING IF ALL SHARES
STOCK UPON CONVERSION REGISTERED HEREBY
NAME CURRENTLY OWNED(A) OR EXERCISE ARE SOLD(A) (% IF > 1%)
- -------------------------------- ------------------ ----------------------- ------------------------
<S> <C> <C> <C>
Robert G. Shiro................. -- 11,000 --
Doreen C. Schiro, Custodian
f/b/o Perry G. Schrio......... -- 62,332 --
</TABLE>
HOLDERS OF DIRECTORS WARRANTS(O):
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
ACQUIRABLE SHARES OF COMMON STOCK
SHARES OF COMMON (AND REGISTERED HEREBY) REMAINING IF ALL SHARES
STOCK UPON CONVERSION REGISTERED HEREBY
NAME CURRENTLY OWNED(A) OR EXERCISE ARE SOLD(A) (% IF > 1%)
- -------------------------------- ------------------ ----------------------- ------------------------
<S> <C> <C> <C>
Ralph I. Fine................... -- 22,700 --
Graham Y. Tanaka(e)............. 29,225 42,500 29,225
Richard T. Bueschel............. 3,825 27,500 3,825
Paul J. Dunphy.................. 825 37,500 825
Richard W. Sonnenfeldt.......... 825 22,500 825
Alvin Lukash.................... 96,303 7,500 96,303
Seth M. Lukash(b)............... 496,808 25,000 496,808(12.1%)
</TABLE>
- ---------------
(a) Includes shares of Common Stock issuable upon the exercise of presently
exercisable conversion rights and options to acquire the Company's Common
Stock other than the shares being registered hereby.
(b) Seth M. Lukash is Chairman, Chief Executive Officer and a Director of the
Company and is Vice President and a Director of and Ultimate. Seth M.
Lukash is the son of Alvin Lukash, Director Emeritus of the Company. The
shares of Common Stock listed as currently owned are beneficially owned by
Seth M. Lukash. Ms. Smithson does not beneficially own any of such shares.
Mr. Lukash and
15
<PAGE> 17
Ms. Smithson beneficially own, as joint tenants with rights of
survivorship, the 11,110 shares being registered hereby.
(c) McFarland Dewey & Co. is the Company's financial advisor.
(d) Mr. Bryson is a partner in McFarland Dewey & Co., the company's financial
advisor.
(e) Graham Y. Tanaka is a Director of the Company.
(f) The Yusuo Tanaka and Yuri L. Tanaka Trust was established by the parents of
Graham Y. Tanaka, for their benefit and the benefit of their children.
(g) Jonathan T. Tanaka is the brother of Graham Y. Tanaka.
(h) Mr. Lewis is President of Ultimate.
(i) Mr. German is the Director of Sales and Marketing of Ultimate.
(j) Mr. Thomas was the Director of the Software Division of Ultimate until
December 31, 1993.
(k) Mr. Wolf is the Chief Engineer of Ultimate.
(l) Mr. Kumpf was President of Ithaca until March 26, 1996.
(m) Ms. Staley is a Senior Vice President of Magnetec and General Manager of
its Ithaca, NY facility.
(n) The Agent Warrants were originally issued to Value Investing Partners, Inc.
as partial consideration for its assistance in privately placing $2,200,000
of the 10.5% Debentures and the Private Placement Warrants.
(o) Each of the holders of Directors' Warrants is a Director or former Director
of the Company. Mr. Fine was Secretary and a Director of the Company until
September 19, 1995. Mr. Bueschel and Mr. Sonnenfeldt were Directors of the
Company until May 30, 1996.
16
<PAGE> 18
INDEMNIFICATION
Section 33-320a of the Stock Corporation Act of the State of Connecticut
and Article VI of the Company's bylaws provide that the Company shall indemnify
any person made a party to any proceeding, other than an action by or in the
right of the corporation, by reason of the fact that he, or the person whose
legal representative he is, is or was a shareholder, director, officer, employee
or agent of the corporation, or an eligible outside party (as defined by Section
33-320a of the Connecticut Stock Corporation Act), against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
by him, and the person whose legal representative he is, in connection with such
proceeding, provided that no indemnification shall be provided for any person
with respect to any matter unless he was successful on the merits in the defense
of any proceeding or he acted in good faith in the reasonable belief that his
action was in the best interests of the corporation.
As of January 1, 1997, the Connecticut Stock Corporation Act will be
replaced by the Connecticut Business Corportions Act. Sections 33-770 through
33-778 of the Connecticut Business Corporations Act, provide for indemnification
substantially equivalent to the indemnification under Section 33-320a of the
Stock Corporation Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the registrant has been informed that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
LEGAL MATTERS
Certain legal matters in connection with the validity of the shares of
Common Stock offered hereby will be passed upon for the Company by Messrs.
Hinckley, Allen & Snyder, One Financial Center, Boston, Massachusetts
02111-2625.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K for the transition period from April 2,
1995 through December 31, 1995 have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
17
<PAGE> 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
ANY SECURITIES (i) OTHER THAN THOSE SPECIFICALLY OFFERED HEREBY, (ii) IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, (iii) IN ANY
JURISDICTION IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR (iv) TO ANY PERSON, TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE AS OF WHICH SUCH INFORMATION IS PROVIDED IN THIS
PROSPECTUS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
693,184 SHARES
TRIDEX CORPORATION
COMMON STOCK
(NO PAR VALUE)
------------------------
PROSPECTUS
------------------------
, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
<TABLE>
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The registrant estimates that expenses in connection with the offering
described in this Registration Statement, all of which shall be borne by the
Company, will be as follows:
<S> <C>
Securities and Exchange Commission registration fee........................ $ 0
Accountant's fees and expenses............................................. $ 8,000
Legal fees and expenses.................................................... $10,000
Miscellaneous.............................................................. $ 2,000
-------
Total............................................................ $20,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 33-320a of the Stock Corporation Act of the State of Connecticut
and Article VI of the Company's bylaws provide that the Company shall indemnify
any person made a party to any proceeding, other than an action by or in the
right of the corporation, by reason of the fact that he, or the person whose
legal representative he is, is or was a shareholder, director, officer, employee
or agent of the corporation, or an eligible outside party (as defined by Section
33-320a of the Connecticut Stock Corporation Act), against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
by him, and the person whose legal representative he is, in connection with such
proceeding, provided that no indemnification shall be provided for any person
with respect to any matter unless he was successful on the merits in the defense
of any proceeding or he acted in good faith in the reasonable belief that his
action was in the best interests of the corporation.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
A list of the exhibits included as part of this Registration Statement is
set forth in the Exhibit Index which immediately precedes such exhibits and is
hereby incorporated by reference herein.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this registration statement
or any material change to such information in this registration
statement.
II-1
<PAGE> 21
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) The undersigned registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of the Offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Westport,
State of Connecticut, on October 29, 1996.
TRIDEX CORPORATION
By: /S/ SETH M. LUKASH
------------------------------------
Seth M. Lukash, Chairman, President
Chief Executive Officer,
and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and
appoints Seth M. Lukash and George T. Crandall and each of them, with full power
of substitution and full stead and to execute in the name and on behalf of each
person, individually and in each capacity stated below, and to file, any and all
amendments to this registration statement relating to the same offering as this
registration statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-fact, or their
substitute or substitutes, may do or cause to be done by virtue hereof.
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/S/ SETH M/ LUKASH Chairman, President, Chief October 29, 1996
- ------------------------------------------ Executive Officer and Chief
Seth M. Lukash Operating Officer
/S/ GEORGE T. CRANDALL Vice President, Treasurer, October 29, 1996
- ------------------------------------------ Secretary, Principal Financial
George T. Crandall Officer and Principal Accounting
Officer
/S/ PAUL J. DUNPHY Director October 29, 1996
- ------------------------------------------
Paul J. Dunphy
/S/ THOMAS R. SCHWARZ Director October 29, 1996
- ------------------------------------------
Thomas R. Schwarz
/S/ GRAHAM Y. TANAKA Director October 29, 1996
- ------------------------------------------
Graham Y. Tanaka
/S/ C. ALAN PEYSER Director October 29, 1996
- ------------------------------------------
C. Alan Peyser
</TABLE>
II-3
<PAGE> 23
<TABLE>
EXHIBIT INDEX
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- ------------
<S> <C> <C>
3.1 -- Certificate of Incorporation of Tridex Corporation ("Tridex" or the
"Company"), as amended, filed on June 28, 1985 as Exhibit 3.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended March 30,
1985, is hereby incorporated herein by reference.
3.2 -- Certificate of Amendment of Incorporation of Tridex, dated October 1,
1987, filed on July 18, 1988 as Exhibit 3.2 to the Company's Annual Report
on Form 10-K for the fiscal year ended April 2, 1988 is hereby
incorporated herein by reference.
3.3 -- Certificate of Amendment of Incorporation of Tridex, dated August 15,
1988, filed on June 29, 1989 as Exhibit 3.3 to the Company's Annual Report
on Form 10-K for the fiscal year ended April 1, 1989 is hereby
incorporated herein by reference.
3.4 -- Certificate of Amendment of Incorporation of Tridex, dated March 31,
1989 filed on June 29, 1989 as Exhibit 3.4 to the Company's Annual Report
on Form 10-K for the fiscal year ended April 1, 1989 is hereby
incorporated herein by reference.
3.5 -- Bylaws of Tridex, as amended and restated on May 26, 1994, filed as an
Exhibit to the Company's Annual Report on Form 10-K for the fiscal year
ended April 2, 1994 is hereby incorporated herein by reference.
4.1 -- Form of Option Agreement entered into by the Company and certain
Directors, filed as Exhibit 4.1, to the Company's Registration Statement on
Form S-3 (No. 33-58864), is hereby incorporated herein by reference.
4.2 -- Form of Warrant Agreement, expiring December 31, 1997 issued to the
Holders of the 10.5% Debentures filed as Exhibit 4.2, to the Company's
Registration Statement on Form S-3 (No. 33-58864), is hereby
incorporated herein by reference.
4.3 -- Warrant Agreement expiring December 31, 1997 issued to the Placement
Agent of the 10.5% Debentures filed as Exhibit 4.3, to the Company's
Registration Statement on Form S-3 (No. 33-58864), is hereby
incorporated herein by reference.
4.4 -- The Tridex Corporation 1989 Long Term Incentive Plan (as amended and
restated) filed as Exhibit A to the Company's Proxy Statement for Annual
Meeting of Shareholders filed July 23, 1992 is hereby incorporated
herein by reference.
4.5 -- Form of 8% Subordinated Convertible Term Promissory Notes dated January
20, 1993, by and among the Company and the shareholders of Ultimate
Technology Corporation, filed as an Exhibit to Current Report on Form
8-K filed February 10, 1993, is hereby incorporated herein by reference.
4.6 -- Form of Registration Rights Agreement, dated January 20, 1993, filed as
an Exhibit to Current Report on Form 8-K filed February 10, 1993, is hereby
incorporated herein by reference.
4.7 -- Indenture dated as of December 31, 1992 by and among the Company and
American Stock Transfer & Trust Company, as Trustee, filed as an Exhibit
to Current Report on Form 8-K filed February 10, 1993, is hereby
incorporated herein by reference.
4.8 -- Form of 10.5% Senior Subordinated Convertible Debentures due December
31, 1997, filed as an Exhibit to Current Report on Form 8-K filed February
10, 1993, is hereby incorporated herein by reference.
4.9 -- Form of Warrant, dated January 20, 1993, to purchase shares of Tridex
Common Stock, filed as an Exhibit to Current Report on Form 8-K filed
February 10, 1993, is hereby incorporated herein by reference.
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- ------------
<C> <S> <C>
4.10 -- Form of Registration Rights Agreement, filed as an Exhibit to Current
Report on Form 8-K filed February 10, 1993, is hereby incorporated herein
by reference.
4.10 -- Registration Rights Agreement, dated as of May 10, 1990, by and among
the Company, Ithaca Peripherals Incorporated and Noteholders filed as an
Exhibit of the Company's Current Report on Form 8-K filed May 25, 1990
is hereby incorporated herein by reference.
4.11 -- Form of Warrant dated January 20, 1993, to purchase common stock of
Tridex Corporation filed as an Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended April 3, 1993 is hereby incorporated
herein by reference.
5.1 -- Opinion of Messrs. Hinckley, Allen & Snyder regarding legality of
securities offered.
10.1 -- Retirement Agreement, dated as of December 31, 1995, between Tridex
Corporation and Alvin Lukash filed as Exhibit 10.15 to the Company's
Annual Report and Form 10-K for the fiscal year ended December 31, 1995,
and incorporated herein by reference.
10.2 -- Employment Agreement, dated as of April 16, 1995, between Tridex and
Seth M. Lukash filed as an Exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended April 1, 1995, is hereby incorporated
herein by reference.
10.3 -- Severance Agreement, dated as of April 16, 1990, between Tridex and Seth
M. Lukash filed as an Exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended March 31, 1990 is hereby incorporated herein
by reference.
10.4 -- First Amendment to Severance Agreement, dated as of April 16, 1992
between Tridex and Seth M. Lukash, filed as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended March 28, 1992, is
hereby incorporated herein by reference.
10.5 -- Second Amendment to Severance Agreement, dated as of June 1, 1995,
between Tridex and Seth M. Lukash filed as an Exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended April 1, 1995, is
hereby incorporated by reference.
10.6 -- Severance Agreement, dated as of April 30, 1990, between Tridex and
George T. Crandall filed as an Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1990 is hereby
incorporated herein by reference.
10.7 -- Employment and Non-competition Agreement, dated as of January 20, 1993,
between Ultimate Technology Corporation and Dennis J. Lewis, filed as an
exhibit to the Company's Annual Report on Form 10-K for the fiscal year
ended April 3, 1993 is hereby incorporated herein by reference.
10.11 -- The Tridex Corporation 1989 Long Term Incentive Plan (as amended and
restated) filed as Exhibit A to the Company's Proxy Statement for annual
Meeting of Shareholders filed July 23, 1992 is hereby incorporated
herein by reference.
10.12 -- Employment Performance Compensation Agreement, dated January 20, 1993 by
and among Tridex and the Ultimate shareholders, filed as an exhibit to
the Company's Annual Report on form 10-K for the fiscal year ended April
3, 1993 is hereby incorporated herein by reference.
</TABLE>
<PAGE> 25
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------ ----------- ------------
<S> <C> <C>
10.13 -- Amended and Restated Credit Agreement dated as of December 15, 1995
between Tridex Corporation, Ultimate Technology Corporation, Cash Bases
Incorporated, Ithaca Peripherals Incorporated, Magnetec Corporation and
Fleet National Bank, filed as an Exhibit to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1995 and
incorporated herein by reference.
10.14 -- Amendment No. 2 to Credit Agreement dated as of August 30, 1996 between
Tridex Corporation, Ultimate Technology Corporation, Cash Bases
Incorporated, Ithaca Peripherals Incorporated, Magnetec Corporation and
Fleet National Bank.
10.15 -- Service Agreement, dated June 20, 1994, between Cash Bases G.B. Limited
and Hugh T. Bernett, filed as an Exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ended April 2, 1994 and incorporated
herein by reference.
10.16 -- Plan of Reorganization dated as of June 25, 1996 among Tridex
Corporation, Transact Technologies Incorporated, Magnetec Corporation,
Ithaca Peripherals Incorporated, filed as Exhibit 10.2 to the
Registration Statement of Transact on Form S-1 (No. 333-06895), is
incorporated herein by reference.
10.17 -- Form of Corporate Services Agreement between Tridex Corporation and
Transact Technologies Incorporated, filed as Exhibit 10.3 to the
Registration Statement of Transact on Form S-1 (No. 333-06895), is
incorporated herein by reference.
10.18 -- Form of Tax Sharing Agreement between Tridex Corporation and Transact
Technologies Incorporated, filed as Exhibit 10.4 to the Registration
Statement of Transact on Form S-1 (No. 333-06895), is incorporated
herein by reference.
10.19 -- Printer Supply Agreement dated as of July 30, 1996 between Ithaca
Peripherals, a division of Magnetec Corporation, and Ultimate Technologies
Corporation, filed as Exhibit 10.5 to the Registration Statement of
Transact on Form S-1 (No. 333-06895), is incorporated herein by
reference.
10.20 -- Asset Transfer Agreement dated as of July 31, 1996 among Tridex
Corporation, Transact Technologies Incorporated and Magnetec Corporation,
filed as Exhibit 10.18 to the Registration Statement of Transact on Form
S-1 (No. 333-06895), is incorporated herein by reference.
10.21 -- Form of Manufacturing Support Services Agreement between Tridex
Corporation and Transact Technologies Incorporated regarding the Tridex
Ribbons division, filed as Exhibit 10.19 to the Registration Statement
of Transact on Form S-1 (No. 333-06895), is incorporated herein by
reference.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Hinckley, Allen & Snyder (included in the opinion filed as
Exhibit 5.0).
25 -- Power of Attorney (included in signature page).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
-----------
October 29, 1996
Tridex Corporation
61 Witon Road
Westport, CT 06880
Re: Registration Statement on Form S-3
----------------------------------
You have asked us to render this opinion in connection with the
captioned Registration Statement (the "Registration Statement"), to be filed by
Tridex Corporation, a Connecticut corporation (the "Company"), on or about the
date hereof with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, covering up to 693,184 shares (the "Shares") of Common
Stock, no par value per share (the "Common Stock"), of the Company. Capitalized
terms used herein and not otherwise defined herein shall have the meanings set
forth in the Registration Statement.
In connection with this opinion, we have examined the Company's
Certificate of Incorporation, the By-Laws of the Company, the Registration
Statement, including the exhibits thereto, corporate proceedings of the Company
relating to the issuance of the Shares, and such other documents as we have
deemed relevant under the circumstances. In addition, we have examined and
relied upon such other certificates, documents and materials and have made such
other inquiries of fact or law as we have deemed necessary or appropriate in
connection with this opinion.
In making the aforesaid examination, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us as original or photostatic copies. We have also assumed that the corporate
records furnished to us by the Company include all corporate proceedings
regarding the issuance of the Shares taken by the Company to date.
For purposes of this opinion we have made such examination of the
Connecticut Stock Corporation Act and the Connecticut Business Corporations Act
as we have deemed relevant, and have not made any independent review of the laws
of any other state. Accordingly, this opinion is limited to the Stock
Corporation Act and the Business Corporations Act of the State of Connecticut.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized and, when issued and delivered by the Company
against payment therefor
<PAGE> 2
Tridex Corporation
October 29, 1996
Page 2
pursuant to the terms and conditions of the Debentures, Ultimate Notes,
Placement Warrants, Agent Warrants and Director Warrants, will be duly and
validly issued, fully paid and non-assessable shares of Common Stock of the
Company.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement. This opinion is rendered to you in connection with the
Registration Statement and, except as consented to in the preceding sentence,
may not be relied upon or furnished to any other person in any context.
Very truly yours,
HINCKLEY, ALLEN & SNYDER
<PAGE> 1
CREDIT AGREEMENT
Dated as of August 29, 1996
among
TRANSACT TECHNOLOGIES INCORPORATED,
MAGNETEC CORPORATION
and
FLEET NATIONAL BANK
<PAGE> 2
CREDIT AGREEMENT dated as of August 29, 1996 among TRANSACT TECHNOLOGIES
INCORPORATED, a Delaware corporation ("TransAct"), MAGNETEC CORPORATION, a
Connecticut corporation ("Magnetec") (collectively, the "Borrowers" and each,
individually a "Borrower"), and FLEET NATIONAL BANK, a national banking
association organized under the laws of the United States of America (the
"Bank").
Background
----------
Pursuant to the Credit Agreement dated June 17, 1994 among Tridex
Corporation, a Connecticut corporation ("Tridex"), Ithaca Peripherals
Incorporated, a Delaware corporation ("Ithaca"), Ultimate Technology
Corporation, a New York corporation, Cash Bases Incorporated, a Delaware
corporation, Magnetec and the Bank, the Bank extended a $5,500,000 term loan
facility (the "Term Loan") and a $5,000,000 revolving loan facility (the
"Revolver").
On July 28, 1996, Tridex caused Ithaca to be merged into Magnetec, with
Magnetec being the surviving entity. Tridex then created a new wholly-owned
subsidiary, TransAct, to which it contributed all of Magnetec's stock.
On or about the date hereof, TransAct intends to conduct an initial public
offering (the "Initial Public Offering") of approximately twenty percent (20%)
of its equity securities. TransAct intends to utilize a portion of the net
proceeds realized from the Initial Public Offering to satisfy the indebtedness
of TransAct to Tridex under the Tridex Loan, and, simultaneously therewith,
Tridex intends to satisfy in full the indebtedness outstanding under the Term
Loan and the Revolver.
To effect the Initial Public Offering and to obtain funds for working
capital, the Borrowers have requested that the Bank extend to them a $5,000,000
revolving credit facility. The Bank has agreed to the Borrowers' request subject
to the terms and conditions of this Agreement.
Agreement
---------
In consideration of the Background, which is incorporated by reference, and
other valuable consideration, receipt of which is acknowledged, the parties,
intending to be legally bound, agree as follows:
<PAGE> 3
2
ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS
----------------------------------------
Section 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and VICE VERSA):
"Affiliate" means any Person: (a) which directly or indirectly controls, or
is controlled by, or is under common control with, any Borrower or any of their
respective Subsidiaries; (b) which directly or indirectly beneficially owns or
holds five percent or more of any class of voting stock of any Borrower or any
of their respective Subsidiaries; (c) five percent or more of the voting stock
of which is directly or indirectly beneficially owned or held by any Borrower or
any of their respective Subsidiaries; or (d) which is a partnership in which any
Borrower or any of their respective Subsidiaries is a general partner. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Agreement" means this Credit Agreement, as amended or supplemented from
time to time. References to Articles, Sections, Exhibits, Schedules and the like
refer to the Articles, Sections, Exhibits, Schedules and the like of this
Agreement unless otherwise indicated.
"Banking Day" means any day on which commercial banks are not authorized or
required to close in Hartford, Connecticut, and whenever such day relates to a
LIBOR Loan or notice with respect to any principal amounts bearing interest at
the LIBO Rate, a day on which dealings in Dollar deposits are also carried out
in the London interbank market.
"Borrowing" means any Revolving Loan requested by any Borrower hereunder.
"Capital Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.
"Change of Control" means any one or more of the following events:
(a) the failure by Bart Schulman OR Richard Cote to remain active in
the day to day senior management of TransAct; or
(b) the stockholders of any Borrower shall approve a plan or proposal
for the acquisition of, merger, liquidation or dissolution of such Borrower, or
a sale of more than 25% of its assets in one or a series of related
transactions; or
<PAGE> 4
3
(c) a Person or group of Persons acting in concert (other than the
direct or indirect beneficial owners of the capital stock of any Borrower as of
the date of this Agreement) shall, as a result of a tender or exchange offer,
open market purchases, privately negotiated purchases or otherwise, have become
the direct or indirect beneficial owner (within the meaning of Rule 13d-3 under
the Securities Exchange Act of 1934, as amended from time to time ) of
securities of such Borrower representing 15% or more of the combined voting
power of the outstanding voting securities for the election of directors or
shall have the right to elect a majority of the board of directors of such
Borrower.
"Clean-Down Period" shall mean any 30-day period of each one year period
commencing on the Closing Date, or fraction thereof, provided that no such
period shall commence sooner than 30 days after the first Borrowing or later
than 30 days prior to the Revolving Credit Termination Date, during which the
aggregate outstanding principal amount of Revolving Loans must be reduced to $0.
"Closing Date" means the date this Agreement has been executed by the
Borrowers and the Bank.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means the obligation of the Bank to make the Revolving Loans
under this Agreement up to the aggregate principal amount of $5,000,000, and as
such amount may be reduced or otherwise modified from time to time pursuant to
Section 2.7 or otherwise.
"Consolidated Subsidiary" means any Subsidiary whose accounts are or are
required to be consolidated with the accounts of a Person in accordance with
GAAP.
"Current Assets" of any Person at any time means all cash, Receivables and
Inventory of such Person.
"Current Liabilities" means all liabilities of a Person treated as current
liabilities in accordance with GAAP, including without limitation (a) all
obligations payable on demand or within one year after the date in which the
determination is made and (b) installment and sinking fund payments required to
be made within one year after the date on which determination is made, but
excluding all such liabilities or obligations which are renewable or extendible
at the option of such Person to a date more than one year from the date of
determination.
"Debt" means, with respect to any Person: (a) indebtedness of such Person
for borrowed money; (b) indebtedness for the deferred purchase price of property
or services (except trade payables in the ordinary course of business); (c)
Unfunded Benefit Liabilities of such Person; (d) the face amount of any
outstanding letters of credit issued
<PAGE> 5
4
for the account of such person; (e) obligations arising under acceptance
facilities; (f) guaranties, endorsements (other than for collection in the
ordinary course of business) and other contingent obligations to purchase, to
provide funds for payment, to supply funds to invest in any Person, or otherwise
to assure a creditor against loss, including any contingent obligations under
swaps, derivatives, currency exchanges and similar transactions; (g) obligations
secured by any Lien on property of such Person; and (h) obligations of such
Person as lessee under Capital Leases.
"Default" means any event which with the giving of notice or lapse of time,
or both, would become an Event of Default.
"Default Rate" means, with respect to the principal of any Revolving Loan
and, to the extent permitted by law, any other amount payable by the Borrowers
under this Agreement or the Note that is not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the period from
and including the due date, to, but excluding the date on which such amount is
paid in full equal to two percent above the Prime Rate as in effect from time to
time plus the applicable Margin (provided that, if the amount so in default is
principal of a LIBOR Loan and the due date thereof is a day other than the last
day of the Interest Period therefor, the "Default Rate" for such principal shall
be, for the period from and including the due date and to but excluding the last
day of the Interest Period therefor, 2% above the interest rate for such
Revolving Loan as provided in Section 2.10 hereof and, thereafter, the rate
provided for above in this definition).
"Dollars" and the sign "$" mean lawful money of the United States of
America.
"EBITDA" means, for any Person, for any period, earnings before Interest
Expense, taxes, depreciation, amortization and extraordinary items for such
Person determined in accordance with GAAP.
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder.
<PAGE> 6
5
"ERISA Affiliate" means any corporation or trade or business which is a
member of any group of organizations (i) described in section 414(b) or (c) of
the Code of which any Borrower is a member, or (ii) solely for purposes of
potential liability under section 302(c)(11) of ERISA and section 412(c)(11) of
the Code and the lien created under section 302(f) of ERISA and section 412(n)
of the Code, described in section 414(m) or (o) of the Code of which any
Borrower is a member.
"Event of Default" has the meaning given such term in Section 9.1.
"Facility Documents" means this Agreement, the Note, the Subordination
Agreement, the Security Agreement and each of the documents, certificates or
other instruments referred to in Article 4 hereof as well as any other document,
instrument or certificate to be delivered by the Borrowers in connection with
this Agreement or in connection with the documents, certificates or instruments
referred to in Article 4, including documents delivered in connection with any
Borrowing.
"Forfeiture Proceeding" means any action, proceeding or investigation
affecting the Parent or any of its Subsidiaries or Affiliates before any court,
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or the receipt of notice by any such party that any of them
is a suspect in or a target of any governmental inquiry or investigation, which
may result in an indictment of any of them or the seizure or forfeiture of any
of their property.
"Funded Debt" means, with respect to any Person, all Debt of such Person
for money borrowed.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a basis consistent with
those used in the preparation of the financial statements referred to in Section
5.5 (except for changes concurred in by the Borrowers' independent public
accountants).
"Interest Coverage Ratio" means, with respect to any Person, for any
period, the ratio of (i) EBITDA to (ii) Interest Expense for such period.
"Interest Expense" shall mean, with respect to any Person, for any period,
the sum, for such Person in accordance with GAAP, of (a) all interest on Debt
that is accrued as an expense during such period (including, without limitation,
imputed interest on Capital Lease obligations), PLUS (b) all amounts paid,
accrued or amortized as an expense during such period in respect of interest
rate protection agreements, MINUS (c) all amounts received or accrued as income
during such period in respect of interest rate protection agreements.
"Interest Period" means with respect to any LIBOR Loan, on the numerically
corresponding day in the first, second or third calendar month thereafter,
<PAGE> 7
6
provided that each such Interest Period which commences on the last Banking Day
of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on the
last Banking Day of the appropriate calendar month.
"Inventory" means all inventory, now or hereafter owned and wherever
located, of the Borrowers, including (without limitation) raw materials,
work-in-process, finished goods, supplies and packaging materials.
"Lending Office" means the lending office of the Bank set forth on the
signature page.
"LIBO Rate" means with respect to any Interest Period for LIBOR Loans, a
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of one
percent) determined by the Bank to be equal to the quotient of (i) the rate per
annum (rounded upwards, if necessary, to the nearest 1/16 of one percent) quoted
at approximately 11:00 a.m. London time by the principal London branch of the
Bank two Banking Days prior to the first day of such Interest Period for the
offering to leading banks in the London interbank market of Dollar deposits in
immediately available funds, for a period, and in an amount, comparable to the
Interest Period and principal amount of the LIBOR Loan outstanding during such
Interest Period, divided by (ii) one minus the Reserve Requirement for such
LIBOR Loan for such Interest Period.
"LIBOR Loan" means any Revolving Loan when and to the extent the interest
rate therefor is determined on the basis of the definition "LIBO Rate."
"Lien" means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, negative pledge, charge, conditional
sale, title retention agreement, financing lease or other encumbrance or similar
right of others, or any agreement to give any of the foregoing.
"Margin" means (a) for Prime Rate Loans, 0 basis points (0%) and (b) for
LIBOR Loans, 150 basis points (1.50%).
"Multiemployer Plan" means a Plan defined as such in section 3(37) of ERISA
to which contributions have been made by the Borrowers or any ERISA Affiliate
and which is covered by Title IV of ERISA.
"Net Income (Loss)" of any Person for any period means the net income
(loss) of such Person for such period determined in accordance with GAAP.
"Net Income Increase" means the aggregate of fifty percent (50%) of the
Borrowers' Net Income, on a consolidated basis, from the Closing Date through
and including December 31, 1996, and for each fiscal year thereafter.
<PAGE> 8
7
"Note" means the promissory note of the Borrowers, in substantially the
form of Exhibit A hereto, evidencing the indebtedness of the Borrowers to the
Bank resulting from the Revolving Loans.
"Notice of Borrowing" shall mean the notice of each Borrowing required by
Section 4.2.
"Opening Balance Sheet" means the balance sheet of the Borrowers, after
giving effect to the receipt by TransAct of the net proceeds of the Initial
Public Offering and the satisfaction in full by TransAct of the Tridex Loan.
"Over-allotment Sale" means the sale by TransAct, subsequent to the Initial
Public Offering, of the over-alloted 172,500 shares still available to the
public at $8.50 per share.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Plan" means any employee benefit or other plan established or maintained,
or to which contributions have been made, by any Borrower or any ERISA Affiliate
and which is covered by Title IV of ERISA, other than a Multiemployer Plan.
"Prime Rate" means that rate of interest from time to time announced by the
Bank at its office located at 1 Monarch Place, Springfield, Massachusetts, which
rate may not be the Bank's lowest or best rate.
"Prime Rate Loan" means any Revolving Loan when and to the extent the
interest rate therefor is determined in relation to the Prime Rate.
"Receivable" means all accounts owing to a Person arising out of or in
connection with the bona fide sale or lease of goods or services in the ordinary
course of business.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means any change after the date of this Agreement in
United States federal, state, municipal or foreign laws or regulations
(including without
<PAGE> 9
8
limitation Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of banks including
the Bank of or under any United States, federal, state, municipal or foreign
laws or regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Reserve Requirement" means, for any Interest Period for any LIBOR Loan,
the average maximum rate at which reserves (including any marginal, supplemental
or emergency reserves) are required to be maintained during such Interest Period
under Regulation D by member banks of the Federal Reserve System in Boston with
deposits exceeding $1,000,000,000 against "Eurocurrency liabilities" (as such
term is used in Regulation D). Without limiting the effect of the foregoing, the
Reserve Requirement shall reflect any other reserves required to be maintained
by such member banks by reason of any Regulatory Change against (i) any category
of liabilities which includes deposits by reference to which the LIBO Rate for
LIBOR Loans is to be determined as provided in the definition of "LIBO Rate" in
this Section 1.1 or (ii) any category of extensions of credit or other assets
which include LIBOR Loans.
"Revolving Credit Termination Date" means June 30, 1998; provided that if
such date is not a Banking Day, the Revolving Credit Termination Date shall be
the next succeeding Banking Day (or, if such next succeeding Banking Day falls
in the next calendar month, the next preceding Banking Day) or (b) the earlier
date of termination of the Commitment pursuant to Section 9.2.
"Revolving Loan" means any loan made by the Bank pursuant to Section 2.1.
"Security Agreement" means the security agreement dated as of the Closing
Date by the Borrowers in favor of the Bank, in substantially the form of Exhibit
C.
"Senior Liabilities" means for any Person at any time, all Debt, other than
contingent liabilities and Subordinated Debt.
"Subordinated Debt" means Funded Debt of a Person subordinated to the
Revolving Loans on terms satisfactory to the Bank.
"Subordination Agreement" means the subordination agreement dated as of the
Closing Date, among one or both of the Borrowers, Tridex and the Bank, in
substantially the form of Exhibit B.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the securities or other ownership
interests having ordinary voting power (absolutely or contingently) for the
election of directors or other
<PAGE> 10
9
persons performing similar functions are at the time owned directly or
indirectly by such Person.
"Tangible Net Worth" means, at any date of determination thereof, the
excess of total assets of a Person over total liabilities of such Person,
excluding, however, from the determination of total assets: goodwill,
trademarks, patents, organizational costs, unamortized debt discounts and
expenses and other like intangible assets as defined by GAAP.
"Tridex Loan" means the aggregate indebtedness in the amount of $8,500,000
as of the Closing Date, owed by TransAct to Tridex as reflected on the books and
records of Tridex.
"Total Liabilities" means all liabilities of a Person which would be
classified as such on a balance sheet in accordance with GAAP.
"Unfunded Benefit Liabilities" means, with respect to any Plan, the amount
(if any) by which the present value of all benefit liabilities (within the
meaning of section 4001(a)(16) of ERISA) under the Plan exceeds the fair market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA for calculating the potential liability of the Borrowers or any ERISA
Affiliate under Title IV of ERISA.
Section 1.2. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data required to be delivered hereunder shall be prepared in accordance with
GAAP.
Section 1.3. CURRENCY EQUIVALENTS. For all purposes of this Agreement, all
amounts denominated in a currency other than Dollars shall be converted into the
Dollar equivalent of such amounts. The equivalent in another currency of an
amount in Dollars shall be determined at the rate of exchange quoted by Fleet
National Bank in Boston at 9:00 a.m. (Boston time) on the date of determination,
to prime banks in Boston for the spot purchase in the Boston foreign exchange
market of such amount of Dollars with such other currency.
ARTICLE 2. THE CREDIT
---------------------
Section 2.1. The Revolving Loans.
-------------------
(a) Subject to the terms and conditions of this Agreement, the Bank
agrees to make loans (the "Revolving Loans") to the Borrowers from time to time
from and including the date hereof to and including the Revolving Credit
Termination Date, up to but not exceeding in the aggregate principal amount at
any one time outstanding the amount of the Commitment, EXCEPT THAT the aggregate
principal
<PAGE> 11
10
amount outstanding shall not exceed $2,500,000 prior to the delivery of the
Projection Scenario in accordance with Section 6.10. Revolving Loans may be
outstanding as Prime Rate Loans or LIBOR Loans (each a "type" of Revolving
Loan).
(b) The Revolving Loans shall be due and payable on the Revolving
Credit Termination Date.
Section 2.2. THE NOTE. The Revolving Loans shall be evidenced by a single
promissory note in favor of the Bank in the form of Exhibit A, dated the Closing
Date, duly completed and executed by the Borrowers.
Section 2.3. PURPOSE. The Borrowers shall use the proceeds of the Revolving
Loans for working capital of the Borrowers. No proceeds of the Revolving Loans
shall be used to directly or indirectly fund the needs of any Subsidiary of any
Borrower if such Subsidiary is not also a Borrower hereunder. No proceeds of the
Revolving Loans shall be used for the purpose, whether immediate, incidental or
ultimate, of buying or carrying "margin stock" within the meaning of Regulation
U.
Section 2.4. BORROWING PROCEDURES. The Borrowers shall give the Bank notice
of each Borrowing to be made hereunder as provided in Section 2.8. Not later
than 1:00 p.m. Hartford, Connecticut time on the date of such Borrowing, the
Bank shall, subject to the conditions of this Agreement, make the amount of the
Revolving Loan to be made by it on such day available to the Borrowers, in
immediately available funds, by the Bank crediting an account of the Borrowers
designated by the Borrowers and maintained with the Bank at the Lending Office.
Section 2.5. Prepayments and Conversions.
---------------------------
(a) OPTIONAL PREPAYMENTS AND CONVERSIONS. The Borrowers shall have the
right to make prepayments of principal, or to convert one type of Revolving Loan
into another type of Revolving Loan, at any time or from time to time; provided
that: (i) the Borrowers shall give the Bank notice of each such prepayment or
conversion as provided in Section 2.8; and (ii) LIBOR Loans may be prepaid or
converted only on the last day of an Interest Period for such Revolving Loans.
(b) Mandatory Prepayments.
---------------------
(i) The Borrowers shall immediately repay the excess by
which the aggregate principal amount of all outstanding Revolving Loans exceeds
the Commitment.
(ii) During each Clean-Down Period the Borrowers shall
satisfy in full all amounts then outstanding with the Revolving Loans.
<PAGE> 12
11
(iii) Each such prepayment in accordance with subsection
(i) and (ii) above shall be applied first to any expenses incurred by the Bank,
second to any interest due on the amount prepaid, and last to the outstanding
principal amount of the Revolving Loans prepaid, in each case in such manner as
the Bank in its discretion shall determine.
Section 2.6. LATE CHARGES. Payments not received within 10 days of the due
date therefor will be subject to a one-time charge equal to 5% of the amount
overdue.
Section 2.7. CHANGES OF COMMITMENT.The Borrowers shall have the right to
reduce or terminate the amount of the unused portion of the Commitment at any
time or from time to time, provided that: (i) the Borrowers shall give notice of
each such reduction or termination to the Bank as provided in Section 2.8; and
(ii) each partial reduction shall be in an aggregate amount at least equal to
$500,000. Once reduced or terminated, the Commitment may not be reinstated.
Section 2.8. CERTAIN NOTICES. Notices by the Borrowers to the Bank of each
Borrowing pursuant to Section 2.4, and each prepayment or conversion pursuant to
Section 2.5(a), and each reduction or termination of the Commitment pursuant to
Section 2.7 shall be irrevocable and shall be effective only if received by the
Bank not later than 12:00 noon Hartford, Connecticut time, and (a) in the case
of Borrowings and prepayments of, conversions into and (in the case of LIBOR
Loans) renewals of (i) Prime Rate Loans, given one Banking Day prior thereto;
and (ii) LIBOR Loans, given two Banking Days prior thereto; and (b) in the case
of reductions or termination of the Commitment, given three Banking Days prior
thereto. Each such notice shall specify the Revolving Loans to be borrowed,
prepaid, converted or renewed and the amount (subject to Section 2.9) and type
of the Revolving Loans to be borrowed, or converted, or renewed or prepaid and
the date of the Borrowing or prepayment, or conversion or renewal (which shall
be a Banking Day). Each such notice of reduction or termination shall specify
the amount of the Commitment to be reduced or terminated.
Section 2.9. MINIMUM AMOUNTS. Except for Borrowings which exhaust the full
remaining amount of the unused portion of the Commitment or prepayments or
conversions which result in the prepayment or conversion of all Revolving Loans,
as the case may be, of a particular type, each Borrowing, optional prepayment,
conversion and renewal of principal of Revolving Loans of a particular type
shall be in an amount at least equal to (a) $25,000 with respect to Prime Rate
Loans, and (b) $500,000 and integral multiples of $100,000 in excess thereof
with respect to LIBOR Loans (borrowings, prepayments, conversions or renewals of
or into Revolving Loans of different types or, in the case of LIBOR Loans,
having different Interest Periods at the same time hereunder to be deemed
separate borrowings, prepayments, conversions and renewals for the purposes of
the foregoing, one for each type of Interest Period).
<PAGE> 13
12
Section 2.10. Interest.
--------
(a) Interest shall accrue on the outstanding and unpaid principal
amount of each Revolving Loan for the period from and including the date of such
Revolving Loan to but excluding the date such Revolving Loan is due at the
following rates per annum: (i) for Prime Rate Loans, at a variable rate per
annum equal to the Prime Rate plus the Margin and; (ii) for LIBOR Loans, at a
fixed rate equal to the LIBO Rate plus the Margin, for the period from and
including the first day of the Interest Period therefor to but excluding the
last day of such Interest Period If the principal amount of any Revolving Loan
and any other amount payable by the Borrowers hereunder or under the Note shall
not be paid when due (at stated maturity, by acceleration or otherwise),
interest shall accrue on such amount to the fullest extent permitted by law from
and including such due date to but excluding the date such amount is paid in
full at the Default Rate for such type of Revolving Loan.
(b) The interest rate on Prime Rate Loans shall change when the Prime
Rate changes and interest on each such Revolving Loan shall be calculated on the
basis of a year of 360 days for the actual number of days elapsed. Interest on
each LIBOR Loan shall be calculated on the basis of a year of 360 days for the
actual number of days elapsed.
(c) Accrued interest on all types of Revolving Loans shall be due and
payable in arrears upon any payment of principal and on the last day of each
calendar month, commencing August 31, 1996, and on the Revolving Credit
Termination Date ; provided that interest accruing at the Default Rate shall be
due and payable from time to time on demand of the Bank.
Section 2.11. Fees.
----
(a) COMMITMENT FEE. The Borrowers shall pay to the Bank a commitment
fee on the daily average unused Commitment for the period from and including the
date hereof to the Revolving Credit Termination Date at a rate per annum equal
to one-quarter of one percent (1/4 of 1%), calculated on the basis of a year of
360 days for the actual number of days elapsed. The accrued commitment fee shall
be due and payable in arrears upon any reduction or termination of the
Commitment and on the last day of each March, June, September and December,
commencing on the first such date after the Closing Date.
(b) CLOSING FEE. The Borrowers shall pay to the Bank, on the Closing
Date, a closing fee in the amount of $18,750.
Section 2.12. PAYMENTS GENERALLY. All payments under this Agreement or the
Note shall be made in Dollars in immediately available funds not later than 1:00
p.m. Hartford, Connecticut, time on the relevant dates specified above (each
such
<PAGE> 14
13
payment made after such time on such due date to be deemed to have been
made on the next succeeding Banking Day) at the Lending Office of the Bank. The
Bank may (but shall not be obligated to) debit the amount of any such payment
which is not made by such time to any ordinary deposit account of the Borrowers
with the Bank. Until the Bank and the Borrowers otherwise agree, the Bank shall
debit the Borrowers' account number 9368994710 with the Bank for the amount of
any payment required hereunder, but the Bank may also debit any ordinary deposit
account of the Borrowers if the amount in account number 9368994710 is
insufficient to make any required payment. The Borrowers shall, at the time of
making each payment under this Agreement or the Note, specify to the Bank the
principal or other amount payable by the Borrowers under this Agreement or the
Note to which such payment is to be applied (and in the event that it fails to
so specify, or if a Default or Event of Default has occurred and is continuing,
the Bank may apply such payment as it may elect in its sole discretion). If the
due date of any payment under this Agreement or the Note would otherwise fall on
a day which is not a Banking Day, such date shall be extended to the next
succeeding Banking Day and interest shall be payable for any principal so
extended for the period of such extension.
Section 2.13. Interest Periods; Renewals.
--------------------------
(a) In the case of each LIBOR Loan, the Borrowers shall select an
Interest Period of any duration in accordance with the definition of Interest
Period in Section 1.1, subject to the following limitations: (i) no Interest
Period shall have a duration less than one month; and if any such proposed
Interest Period would otherwise be for a shorter period, such Interest Period
shall not be available; (ii) if an Interest Period would end on a day which is
not a Banking Day, such Interest Period shall be extended to the next Banking
Day, unless, in the case of a LIBOR Loan, such Banking Day would fall in the
next calendar month in which event such Interest Period shall end on the
immediately preceding Banking Day; (iii) no more than five Interest Periods may
be outstanding at any one time.
(b) Upon notice to the Bank as provided in Section 2.8, the Borrowers
may renew any LIBOR Loan on the last day of the Interest Period therefor as the
same type of Revolving Loan with an Interest Period of the same or different
duration in accordance with the limitations provided above. If the Borrowers
shall fail to give notice to the Bank of such a renewal, such LIBOR Loan shall
automatically become a Prime Rate Loan on the last day of the current Interest
Period; provided that the foregoing shall not prevent the conversion of any type
of LIBOR Loan into another type of Revolving Loan in accordance with Section
2.5.
<PAGE> 15
14
ARTICLE 3. YIELD PROTECTION; ILLEGALITY; ETC.
---------------------------------------------
Section 3.1. Additional Costs.
----------------
(a) The Borrowers shall pay to the Bank from time to time on demand
such amounts as the Bank may determine to be necessary to compensate it for any
costs which the Bank determines are attributable to its making or maintaining
any LIBOR Loans under this Agreement or the Note or its obligation to make any
such Revolving Loans hereunder, or any reduction in any amount receivable by the
Bank hereunder in respect of any such Revolving Loans or such obligation (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), resulting from any Regulatory Change which: (i) changes the
basis of taxation of any amounts payable to the Bank under this Agreement or the
Note in respect of any of such Revolving Loans (other than taxes imposed on the
overall net income of the Bank or of its Lending Office for any of such
Revolving Loans by the jurisdiction in which the Principal Office or such
Lending Office is located); or (ii) imposes or modifies any reserve, special
deposit, deposit insurance or assessment, minimum capital, capital ratio or
similar requirements relating to any extensions of credit or other assets of, or
any deposits with or other liabilities of, the Bank (including any of such
Revolving Loans or any deposits referred to in the definition of "LIBO Rate" in
Section 1.1); or (iii) imposes any other condition affecting this Agreement or
the Note (or any of such extensions of credit or liabilities). The Bank will
notify the Borrowers of any event occurring after the date of this Agreement
which will entitle the Bank to compensation pursuant to this Section 3.1(a) as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.
(b) Without limiting the effect of the foregoing provisions of this
Section 3.1, in the event that, by reason of any Regulatory Change, the Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
the Bank which includes deposits by reference to which the interest rate on
LIBOR Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of the Bank which includes LIBOR Loans or
(ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if the Bank so elects by notice
to the Borrowers, the obligation of the Bank to make or renew, and to convert
Revolving Loans of any other type into, Revolving Loans of such type hereunder
shall be suspended until the date such Regulatory Change ceases to be in effect,
and the Borrowers shall on the last day(s) of the then current Interest
Period(s) for the outstanding Revolving Loans of such type, either prepay such
Revolving Loans or convert such Revolving Loans into another type of Revolving
Loan in accordance with Section 2.5.
(c) Without limiting the effect of the foregoing provisions of this
Section 3.1 (but without duplication), the Borrowers shall pay to the Bank from
time to time on request such amounts as the Bank may determine to be necessary
to compensate
<PAGE> 16
15
the Bank for any costs which it determines are attributable to the maintenance
by it or any of its affiliates pursuant to any law or regulation of any
jurisdiction or any interpretation, directive or request (whether or not having
the force of law and whether in effect on the date of this Agreement or
thereafter) of any court or governmental or monetary authority of capital in
respect of its Revolving Loans hereunder or its obligation to make Revolving
Loans hereunder (such compensation to include, without limitation, an amount
equal to any reduction in return on assets or equity of the Bank to a level
below that which it could have achieved but for such law, regulation,
interpretation, directive or request). The Bank will notify the Borrowers if it
is entitled to compensation pursuant to this Section 3.1(c) as promptly as
practicable after it determines to request such compensation.
(d) Determinations and allocations by the Bank for purposes of this
Section 3.1 of the effect of any Regulatory Change pursuant to subsections (a)
or (b), or of the effect of capital maintained pursuant to subsection (c), on
its costs of making or maintaining Revolving Loans or its obligation to make
Revolving Loans, or on amounts receivable by, or the rate of return to, it in
respect of Revolving Loans or such obligation, and of the additional amounts
required to compensate the Bank under this Section 3.1, shall be conclusive,
provided that such determinations and allocations are made on a reasonable
basis; PROVIDED, HOWEVER, that the Bank shall provide ninety days' notice of any
additional amounts required to compensate the Bank under this Section 3.1 (the
"Adjustment"), and the Borrowers may thereafter attempt to negotiate the amount
of the Adjustment in good faith with the Bank within ninety days of the day on
which the Borrowers are so notified. If the Borrowers and the Bank are unable to
agree on the amount of the Adjustment within such ninety-day period, then the
amount of the Adjustment shall be the amount set forth in the aforementioned
notice from the Bank to the Borrowers. Whatever the final Adjustment may be, if
the Bank shall still have any Revolving Loans outstanding to the Borrowers upon
the expiration of such ninety-day period, then the Adjustment shall be effective
retroactive to the date on which the Borrowers first received notice of the
Adjustment. The Bank shall not be obligated to offer LIBO Rates with respect to
Interest Periods commencing during the period following any such notice and
prior to agreement by the Bank and the Borrowers as to the amount of the
Adjustment.
Section 3.2. LIMITATION ON TYPES OF REVOLVING LOANS. Anything herein to the
contrary notwithstanding, if the Bank determines (which determination shall be
conclusive) that:
(a) quotations of interest rates for the relevant deposits referred to
in the definition of "LIBO Rate" in Section 1.1 are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for any LIBOR Loans as provided in this Agreement; or
<PAGE> 17
16
(b) the relevant rates of interest referred to in the definition of
"LIBO Rate" in Section 1.1 upon the basis of which the rate of interest for any
LIBOR Loans is to be determined do not adequately cover the cost to the Bank of
making or maintaining such Revolving Loans; then the Bank shall give the
Borrowers prompt notice thereof, and so long as such condition remains in
effect, the Bank shall be under no obligation to make or renew Revolving Loans
of such type or to convert Revolving Loans of any other type into Revolving
Loans of such type and the Borrowers shall, on the last day(s) of the then
current Interest Period(s) for the outstanding Revolving Loans of the affected
type, either prepay such Revolving Loans or convert such Revolving Loans into
another type of Revolving Loans in accordance with Section 2.5.
Section 3.3. ILLEGALITY. Notwithstanding any other provision in this
Agreement, in the event that it becomes unlawful for the Bank or its Lending
Office to (a) honor its obligation to make or renew LIBOR Loans hereunder or
convert Revolving Loans of any type into Revolving Loans of such type, or (b)
maintain LIBOR Loans hereunder, then the Bank shall promptly notify the
Borrowers thereof and the Bank's obligation to make or renew LIBOR Loans and to
convert other types of Revolving Loans into Revolving Loans of such type
hereunder shall be suspended until such time as the Bank may again make, renew
or convert and maintain such affected Revolving Loans and the Borrowers shall,
on the last day(s) of the then current Interest Period for the outstanding LIBOR
Loans, as the case may be (or on such earlier date as the Bank may specify to
the Borrowers), either prepay such Revolving Loans or convert such Revolving
Loans into another type of Revolving Loans in accordance with Section 2.5.
Section 3.4. CERTAIN COMPENSATION. The Borrowers shall pay to the Bank,
upon the request of the Bank, such amount or amounts as shall be sufficient (in
the reasonable opinion of the Bank) to compensate it for any loss, cost or
expense which the Bank determines is attributable to:
(a) any payment, prepayment, conversion or renewal of a LIBOR Loan on
a date other than the last day of an Interest Period for such Revolving Loan
(whether by reason of acceleration or otherwise); or
(b) any failure by the Borrowers to borrow, convert into or renew a
LIBOR Loan to be made, converted into or renewed by the Bank on the date
specified therefor in the relevant notice under Section 2.4, 2.5 or 2.13, as the
case may be.
Without limiting the foregoing, such compensation shall include an amount
equal to the excess, if any, of: (i) the amount of interest which otherwise
would have accrued on the principal amount so paid, prepaid, converted or
renewed or not borrowed, converted or renewed for the period from and including
the date of such payment, prepayment or conversion or failure to borrow, convert
or renew to but excluding the last day of the then current Interest Period for
such Revolving Loan (or, in the case of a failure to borrow,
<PAGE> 18
17
convert or renew, to but excluding the last day of the Interest Period for such
Revolving Loan which would have commenced on the date specified therefor in the
relevant notice) at the applicable rate of interest for such Revolving Loan
provided for herein; over (ii) with respect to a LIBOR Loan, the amount of
interest (as reasonably determined by the Bank) the Bank would have bid in the
London interbank market for Dollar deposits for amounts comparable to such
principal amount and maturities comparable to such period. A determination of
the Bank as to the amounts payable pursuant to this Section 3.4 shall be
conclusive absent manifest error.
ARTICLE 4. CONDITIONS PRECEDENT
-------------------------------
Section 4.1. DOCUMENTARY CONDITIONS PRECEDENT. The obligation of the Bank
to make the Revolving Loans is subject to the conditions precedent that the Bank
shall have received on or before the date of such Borrowing each of the
following, in form and substance satisfactory to the Bank and its counsel:
(a) the Note duly executed by the Borrowers;
(b) the Security Agreement duly executed by the Borrowers, together
with (i) acknowledgment copies of the financing statements (UCC-1) duly filed
under the Uniform Commercial Code of all jurisdictions necessary or, in the
opinion of the Bank, desirable to perfect the security interest created by the
Security Agreement; (ii) certified copies of requests for information (Form
UCC-11) identifying all of the financing statements on file with respect to the
Borrowers in all jurisdictions referred to under (i), including the financing
statements filed by the Bank against the Borrowers, indicating that no party
claims an interest in any of the Collateral (as defined in the Security
Agreement);
(c) evidence that TransAct has concluded the Initial Public Offering
at an offering price of not less than $8.50 per share for 1,150,000 shares of
its Common Stock;
(d) the Opening Balance Sheet;
(e) a certificate of the Secretary or Assistant Secretary of each
Borrower, dated the Closing Date, attesting to all corporate action taken by
such Borrower, including resolutions of its Board of Directors authorizing the
execution, delivery and performance of the Facility Documents to which it is a
party and each other document to be delivered pursuant to this Agreement and
certifying copies of the Certificate of Incorporation and by-laws of such
Borrower;
(f) a certificate of the Secretary or Assistant Secretary of each
Borrower, dated the Closing Date, certifying the names and true signatures of
the officers of such Borrower authorized to sign the Facility Documents to which
it is a party and the other documents to be delivered by such Borrower under
this Agreement;
<PAGE> 19
18
(g) a certificate of a duly authorized officer of each Borrower,
dated the Closing Date, stating that the representations and warranties in
Article 5 of this Agreement, and Article 2 of the Security Agreement, and in
each other Facility Document, are true and correct on such date as though made
on and as of such date and that no event has occurred and is continuing which
constitutes a Default or Event of Default;
(h) an Environmental Indemnification Agreement duly signed by the
Borrowers in form and substance satisfactory to the Bank;
(i) a certificate of good standing for each Borrower from the
Secretary of the State of the state in which such Borrower is incorporated and
each other jurisdiction in which such Borrower is qualified to do business;
(j) evidence of satisfaction by the TransAct of the Tridex Loan;
(k) evidence of satisfaction by Tridex of the indebtedness
outstanding under the Term Loan and under the Revolver;
(l) payment by the Borrowers to the Bank of the Closing Fee and all
other expenses and fees incurred by the Bank;
(m) a favorable opinion of counsel for the Borrowers, dated the
Closing Date, in substantially the form of Exhibit D and as to such other
matters as the Bank may reasonably request;
(n) a copy of the final prospectus on Form S-1;
(o) copies of all instruments evidencing any Subordinated Debt of
any Borrower and a satisfactory review of the same;
(p) the Subordination Agreement duly executed by the parties thereto;
(q) evidence of no material adverse change in the business,
management, operations, properties, prospects or condition (financial or
otherwise) of any Borrower or any of their respective Subsidiaries since the
date of the commitment letter; and
(r) evidence of the absence of any change in market conditions which,
in the Bank's opinion, would materially impair a financial institution's ability
to fund Revolving Loans of this type.
<PAGE> 20
19
Section 4.2. ADDITIONAL CONDITIONS PRECEDENT. The obligation of the Bank to
make the Revolving Loans pursuant to a Borrowing which increases the amount
outstanding hereunder (including the initial Borrowing) shall be subject to the
further conditions precedent that on the date of such Borrowing:
(a) the following statements shall be true:
(i) the representations and warranties contained in Article
5 herein, and in Article 2 of the Security Agreement, and in each other Facility
Document, are true and correct on and as of the date of such Revolving Loan as
though made on and as of such date; and
(ii) no Default or Event of Default has occurred and is
continuing, or would result from such Revolving Loan; and
(iii) there has been no material adverse change in the
business, management, operations, properties, prospects or condition (financial
or otherwise) of any Borrower or any of their respective Subsidiaries since the
Closing Date;
(b) the Bank shall have received such approvals, opinions or documents
as the Bank may reasonably request.
Section 4.3. DEEMED REPRESENTATIONS. Each Notice of Borrowing hereunder and
acceptance by any Borrower of the proceeds of such Borrowing shall constitute a
representation and warranty that the statements contained in Section 4.2(a) are
true and correct both on the date of such notice and, unless any Borrower
otherwise notifies the Bank prior to such Borrowing, as of the date of such
Borrowing.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
-----------------------------------------
Each Borrower hereby represents and warrants that:
Section 5.1. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION. Each of
such Borrowers and its Subsidiaries is duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own its assets and to transact the business
in which it is now engaged or proposed to be engaged, and is duly qualified as a
foreign corporation and in good standing under the laws of each other
jurisdiction in which such qualification is required.
Section 5.2. CORPORATE POWER AND AUTHORITY; NO CONFLICTS. The execution,
delivery and performance by such Borrower of the Facility Documents to which it
is a party have been duly authorized by all necessary corporate action and do
not and will not: (a) require any consent or approval of its stockholders; (b)
<PAGE> 21
20
contravene its charter or by-laws; (c) violate any provision of, or require any
filing (other than the filing of the financing statements contemplated by the
Security Agreement), registration, consent or approval under, any law, rule,
regulation (including, without limitation, Regulation U), order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to such Borrower or any of its Subsidiaries or Affiliates; (d)
result in a breach of or constitute a default or require any consent under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which such Borrower is a party or by which it or its properties
may be bound or affected; (e) result in, or require, the creation or imposition
of any Lien (other than as created under the Security Agreement), upon or with
respect to any of the properties now owned or hereafter acquired by such
Borrower; or (f) cause such Borrower (or any Subsidiary or Affiliate, as the
case may be) to be in default under any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument.
Section 5.3. LEGALLY ENFORCEABLE AGREEMENTS. Each Facility Document to
which such Borrower is a party is, or when delivered under this Agreement will
be, a legal, valid and binding obligation of such Borrower enforceable against
such Borrower in accordance with its terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency and other
similar laws affecting creditors' rights generally.
Section 5.4. LITIGATION. There are no actions, suits or proceedings pending
or, to the knowledge of such Borrower, threatened, against or affecting such
Borrower or any of its Subsidiaries before any court, governmental agency or
arbitrator, which may, in any one case or in the aggregate, materially adversely
affect the financial condition, operations, properties or business of such
Borrower or any such Subsidiary or of or the ability of such Borrower to perform
its obligation under the Facility Documents to which it is a party.
Section 5.5. FINANCIAL STATEMENTS. The consolidated and consolidating
balance sheet of such Borrower and its Consolidated Subsidiaries as at December
31, 1995, and the related consolidated and consolidating income statement and
statements of cash flows and changes in stockholders' equity of such Borrower
and its Consolidated Subsidiaries for the fiscal year then ended, and the
accompanying footnotes, together with the opinion thereon as to the consolidated
statements, of Price Waterhouse, independent certified public accountants, and
the interim consolidated and consolidating balance sheet of such Borrower and
its Consolidated Subsidiaries as at June 29, 1996, and the related consolidated
and consolidating income statement and statements of cash flows and changes in
stockholders' equity for the six-month period then ended, copies of which have
been furnished to the Bank, are complete and correct and fairly present the
financial condition of such Borrower and its Consolidated Subsidiaries as at
such dates and the results of the operations of such Borrower and its
Consolidated Subsidiaries for the periods
<PAGE> 22
21
covered by such statements, all in accordance with GAAP consistently applied
(subject to year-end adjustments in the case of the interim financial
statements). There are no liabilities of such Borrower or any of its
Consolidated Subsidiaries, fixed or contingent, which are material but are not
reflected in the financial statements or in the notes thereto, other than
liabilities arising in the ordinary course of business since December 31, 1995.
No information, exhibit or report furnished by such Borrower to the Bank in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading. Since
December 31, 1995, there has been no material adverse change in the condition
(financial or otherwise), business, operations or prospects of such Borrower or
any of its Subsidiaries.
Section 5.6. OWNERSHIP AND LIENS. Such Borrower and each of its
Consolidated Subsidiaries has title to, or valid leasehold interests in, all of
its properties and assets, real and personal, including the properties and
assets, and leasehold interests reflected in the financial statements referred
to in Section 5.5 (other than any properties or assets disposed of in the
ordinary course of business), and none of the properties and assets owned by
such Borrower or any of its Subsidiaries and none of its leasehold interests is
subject to any Lien, except as disclosed in such financial statements or as may
be permitted hereunder and except for the Lien created by the Security
Agreement.
Section 5.7. TAXES. Such Borrower and each of its Subsidiaries has filed
all tax returns (federal, state and local) required to be filed and has paid all
taxes, assessments and governmental charges and levies thereon to be due,
including interests and penalties.
Section 5.8. ERISA. Each Plan, and, to the best knowledge of such Borrower,
each Multiemployer Plan, is in compliance in all material respects with, and has
been administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other applicable federal or state law, and
no event or condition is occurring or exists concerning which such Borrower
would be under an obligation to furnish a report to the Bank in accordance with
Section 6.8(k) hereof. As of the most recent valuation date for each Plan, each
Plan was "fully funded," which for purposes of this Section 5.8 shall mean that
the fair market value of the assets of the Plan is not less than the present
value of the accrued benefits of all participants in the Plan, computed on a
Plan termination basis. To the best knowledge of such Borrower, no Plan has
ceased being fully funded as of the date these representations are made with
respect to any Revolving Loan under this Agreement.
Section 5.9. SUBSIDIARIES AND OWNERSHIP OF STOCK. Schedule 5.9 is a
complete and accurate list of the Subsidiaries of such Borrower, showing the
jurisdiction of incorporation or organization of each Subsidiary and showing the
percentage of such Borrower's ownership of the outstanding stock or other
interest of each
<PAGE> 23
22
such Subsidiary. All of the outstanding capital stock or other interest of each
such Subsidiary has been validly issued, is fully paid and nonassessable and is
owned by such Borrower free and clear of all Liens.
Section 5.10. CREDIT ARRANGEMENTS. Schedule 5.10 is a complete and correct
list of all credit agreements, indentures, purchase agreements, guaranties,
Capital Leases and other investments, agreements and arrangements presently in
effect providing for or relating to extensions of credit (including agreements
and arrangements for the issuance of letters of credit or for acceptance
financing) in respect of which such Borrower or any of its Subsidiaries is in
any manner directly or contingently obligated; and the maximum principal or face
amounts of the credit in question, outstanding and which can be outstanding, are
correctly stated, and all Liens of any nature given or agreed to be given as
security therefor are correctly described or indicated in such Schedule.
Section 5.11. OPERATION OF BUSINESS. Such Borrower and each of its
Subsidiaries possesses all licenses, permits, franchises, patents, copyrights,
trademarks and trade names, or rights thereto, to conduct its business
substantially as now conducted and as presently proposed to be conducted, and
neither such Borrower nor any of its Subsidiaries is in violation of any valid
rights of others with respect to any of the foregoing.
Section 5.12. HAZARDOUS MATERIALS. Such Borrower and each of its
Subsidiaries have obtained all permits, licenses and other authorizations which
are required under all Environmental Laws, except to the extent failure to have
any such permit, license or authorization would not have a material adverse
effect on the consolidated financial condition, operations, business or
prospects of such Borrower and its Consolidated Subsidiaries. Such Borrower and
each of its Subsidiaries are in compliance with the terms and conditions of all
such permits, licenses and authorizations, and are also in compliance with all
other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in any applicable
Environmental Law or in any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply would not have a material
adverse effect on the consolidated financial condition, operations, business or
prospects of such Borrower and its Consolidated Subsidiaries.
In addition, except as set forth in Schedule 5.12 hereto:
(a) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation or review is pending or
threatened by any governmental or other entity with respect to any alleged
failure by such Borrower or any of its Subsidiaries to have any permit,
license or authorization required in connection with the
<PAGE> 24
23
conduct of the business of such Borrower or any of its Subsidiaries or with
respect to any generation, treatment, storage, recycling, transportation,
release or disposal, or any release as defined in 42 U.S.C. s/s 9601(22)
("Release") of any substance regulated under Environmental Laws ("Hazardous
Materials") generated by such Borrower or any of its Subsidiaries.
(b) Neither such Borrower nor any of its Subsidiaries has handled any
Hazardous Material, other than as a generator, on any property now or previously
owned or leased by such Borrower or any of its Subsidiaries to an extent that it
has, or may reasonably be expected to have, a material adverse effect on the
consolidated financial condition, operations, business or prospects taken as a
whole of the Borrowers and their Consolidated Subsidiaries; and
(i) to the best of its knowledge, no PCB is or has been
present at any property now or previously owned or leased by such Borrower or
any of its Subsidiaries;
(ii) to the best of its knowledge, no asbestos is or has
been present at any property now or previously owned or leased by such Borrower
or any of its Subsidiaries;
(iii) there are no underground storage tanks for Hazardous
Materials, active or abandoned, at any property now or previously owned or
leased by such Borrower or any of its Subsidiaries;
(iv) no Hazardous Materials have been Released, in a
reportable quantity, where such a quantity has been established by statute,
ordinance, rule, regulation or order, at, on or under any property now or
previously owned by such Borrower or any of its Subsidiaries.
(c) Neither such Borrower nor any of its Subsidiaries has transported
or arranged for the transportation of any Hazardous Material to any location
which is listed on the National Priorities List under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLIS") or on any similar state or
foreign list or which is the subject of federal, state, foreign or local
enforcement actions or other investigations which may lead to claims against
such Borrower or any of its Subsidiaries for clean-up costs, remedial work,
damages to natural resources or for personal injury claims, including, but not
limited to, claims under CERCLA.
(d) No Hazardous Material generated by such Borrower or any of its
Subsidiaries has been recycled, treated, stored, disposed of or Released by such
<PAGE> 25
24
Borrower or any of its Subsidiaries at any location other than those listed in
Schedule 5.12 hereto.
(e) No oral or written notification of a Release of a Hazardous
Material has been filed by or on behalf of such Borrower or any of its
Subsidiaries and no property now or previously owned or leased by such Borrower
or any of its Subsidiaries is listed or proposed for listing on the National
Priority List promulgated pursuant to CERCLA, on CERCLIS or on any similar state
or foreign list of sites requiring investigation or clean-up.
(f) There are no Liens arising under or pursuant to any Environmental
Laws on any of the real property or properties owned or leased by such Borrower
or any of its Subsidiaries, and no government actions have been taken or are in
process which could subject any of such properties to such Liens and neither
such Borrower nor any of its Subsidiaries would be required to place any notice
or restriction relating to the presence of Hazardous Materials at any property
owned by it in any deed to such property.
(g) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
such Borrower or any of its Subsidiaries in relation to any property or facility
now or previously owned or leased by such Borrower or any of its Subsidiaries
which have not been made available to the Bank.
Section 5.13. NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. Such Borrower
and each of its Subsidiaries has satisfied all judgments and neither such
Borrower nor any of its Subsidiaries is in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign.
Section 5.14. NO DEFAULTS ON OTHER AGREEMENTS. Neither such Borrower nor
any of its Subsidiaries is a party to any indenture, loan or credit agreement or
any lease or other agreement or instrument or subject to any charter or
corporate restriction which could have a material adverse effect on the
business, properties, assets, operations or conditions, financial or otherwise,
of such Borrower or any of its Subsidiaries, or the ability of such Borrower to
carry out its obligations under the Facility Documents to which it is a party.
Neither such Borrower nor any of its Subsidiaries is in default in any respect
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument material to its
business to which it is a party.
Section 5.15. LABOR DISPUTES AND ACTS OF GOD. Neither the business nor the
properties of such Borrower or of any of its Subsidiaries are affected by
<PAGE> 26
25
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), materially and adversely
affecting such business or properties or the operation of such Borrower or such
Subsidiary.
Section 5.16. GOVERNMENTAL REGULATION. Neither such Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holding Company
Act of 1935, the Investment Company Act of 1940, the Interstate Commerce Act,
the Federal Power Act or any statute or regulation limiting its ability to incur
indebtedness for money borrowed as contemplated hereby.
Section 5.17. PARTNERSHIPS. Neither such Borrower nor any of its
Subsidiaries is a partner in any partnership.
Section 5.18. NO FORFEITURE. Neither such Borrower nor any of its
Subsidiaries or Affiliates is engaged in or proposes to be engaged in the
conduct of any business or activity which could result in a Forfeiture
Proceeding and no Forfeiture Proceeding against any of them is pending or
threatened.
Section 5.19. SOLVENCY.
(a) The present fair salable value of the assets of such Borrower
after giving effect to all the transactions contemplated by the Facility
Documents and the funding of all Commitment hereunder exceeds the amount that
will be required to be paid on or in respect of the existing debts and other
liabilities (including contingent liabilities) of such Borrower and its
Subsidiaries as they mature.
(b) The property of such Borrower does not constitute unreasonably
small capital for such Borrower to carry out its business as now conducted and
as proposed to be conducted, including the capital needs of such Borrower.
(c) Such Borrower does not intend to, nor does it believe that it
will, incur debts beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be received by such Borrower, and
of amounts to be payable on or in respect of debt of such Borrower). The cash
available to such Borrower, after taking into account all other anticipated uses
of the cash of such Borrower, is anticipated to be sufficient to pay all such
amounts on or in respect of debt of such Borrower when such amounts are required
to be paid.
(d) Such Borrower does not believe that final judgments against it in
actions for money damages will be rendered at a time when, or in an amount such
that, such Borrower will be unable to satisfy any such judgments promptly in
accordance with their terms (taking into account the maximum reasonable amount
of such judgments in any such actions and the earliest reasonable time at which
such judgments might be rendered).
<PAGE> 27
26
The cash available to such Borrower after taking into account all other
anticipated uses of the cash of such Borrower (including the payments on or in
respect of debt referred to in paragraph (c) of this Section 5.19), is
anticipated to be sufficient to pay all such judgments promptly in accordance
with their terms.
Section 5.20. SUBORDINATED DEBT. The Subordinated Debt of such Borrower now
outstanding, true and complete copies of instruments evidencing which have been
furnished to the Bank, has been duly authorized by such Borrower, has not been
amended or otherwise modified, and constitutes the legal, valid and binding
obligation of such Borrower enforceable against such Borrower in accordance with
its terms. There exists no default in respect of any such Subordinated Debt.
ARTICLE 6. AFFIRMATIVE COVENANTS
--------------------------------
So long as the Note shall remain unpaid or the Bank shall have the
Commitment under this Agreement, the Borrowers shall:
Section 6.1. MAINTENANCE OF EXISTENCE. Preserve and maintain, and cause
each of their respective Subsidiaries to preserve and maintain, their corporate
existence and good standing in the jurisdiction of their incorporation, and
qualify and remain qualified, and cause each of their respective Subsidiaries to
qualify and remain qualified, as a foreign corporation in each jurisdiction in
which such qualification is required.
Section 6.2. CONDUCT OF BUSINESS. Continue, and cause each of their
respective Subsidiaries to continue, to engage in an efficient and economical
manner in a business of the same general type as conducted by it on the date of
this Agreement.
Section 6.3. MAINTENANCE OF PROPERTIES. Maintain, keep and preserve, and
cause each of their respective Subsidiaries to maintain, keep and preserve, all
of their properties (tangible and intangible), necessary or useful in the proper
conduct of their business in good working order and condition, ordinary wear and
tear excepted.
Section 6.4. MAINTENANCE OF RECORDS. Keep, and cause each of their
respective Subsidiaries to keep, adequate records and books of account, in which
complete entries will be made in accordance with GAAP, reflecting all financial
transactions of the Borrowers and their respective Subsidiaries.
Section 6.5. MAINTENANCE OF INSURANCE. Maintain, and cause each of their
respective Subsidiaries to maintain, insurance with financially sound and
reputable insurance companies or associations in such amounts and covering such
risks as are usually carried by companies engaged in the same or similar
business and similarly situated, which insurance may provide for reasonable
deductibility from coverage thereof.
<PAGE> 28
27
Section 6.6. COMPLIANCE WITH LAWS. Comply, and cause each of their
respective Subsidiaries to comply, in all respects with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon it or upon its property.
Section 6.7. RIGHT OF INSPECTION. At any reasonable time and from time to
time, permit the Bank or any agent or representative thereof, to examine and
make copies and abstracts from the records and books of account of, and visit
the properties of, the Borrowers and any of their respective Subsidiaries, and
to discuss the affairs, finances and accounts of the Borrowers and any such
Subsidiary with any of its officers and directors and the Borrowers' independent
accountants. The Bank shall perform an annual field audit of the Borrowers at
the Borrowers' expense; provided that such expenses shall not exceed $4,000 per
annum.
Section 6.8. REPORTING REQUIREMENTS. Furnish to the Bank:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of the Borrowers, a consolidated and consolidating balance
sheet of the Borrowers and their respective Consolidated Subsidiaries as of the
end of such fiscal year and a consolidated and consolidating income statement
and statements of cash flows and changes in stockholders' equity and working
capital of the Borrowers and their respective Consolidated Subsidiaries for such
fiscal year and computations of Excess Cash Flow for such fiscal year, all in
reasonable detail and stating in comparative form the respective consolidated
and consolidating figures for the corresponding date and period in the prior
fiscal year and all prepared in accordance with GAAP and as to the consolidated
statements accompanied by an opinion thereon acceptable to the Bank by Price
Waterhouse or other independent accountants of national standing selected by the
Borrowers;
(b) as soon as available and in any event within 45 days after the end
of each fiscal quarter of the Borrowers, a true and complete copy of TransAct's
Report on Form 10-Q;
(c) as soon as available and in any event within 45 days after the end
of each fiscal quarter, a consolidating balance sheet of the Borrowers and their
respective Consolidated Subsidiaries as of the end of such month and a
consolidating income statement and statements of cash flows and changes in
stockholders' equity and working capital, of the Borrowers and their respective
Consolidated Subsidiaries for the period commencing at the end of the previous
fiscal year and ending with the end of such month, all in reasonable detail and
stating in comparative form the consolidating figures for the corresponding date
and period in the previous fiscal year and all prepared in accordance with GAAP
and certified by the Chairman or Chief Financial Officer of each Borrower
(subject to year-end adjustments);
<PAGE> 29
28
(d) promptly upon receipt thereof, copies of any reports, inclusive of
any management letters, submitted to any Borrower or any of its Subsidiaries by
independent certified public accountants in connection with examination of the
financial statements of such Borrower or any such Subsidiary made by such
accountants;
(e) promptly at the end of each fiscal quarter, a certificate of the
Chairman or Chief Financial Officer of each Borrower (i) certifying that to the
best of his knowledge no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is continuing,
a statement as to the nature thereof and the action which is proposed to be
taken with respect thereto, and (ii) with computations demonstrating compliance
with the covenants contained in Articles 7 and 8;
(f) as soon as available and in any event within 90 days after the end
of each fiscal year of TransAct, a true and complete copy of TransAct's Report
on Form 10-K;
(g) within 30 days after the Closing Date, and thereafter, as soon as
available and in any event within 90 days after the end of each fiscal year of
the Borrowers, management's projected financial statements inclusive of a
balance sheet, an income statement and a statement of cash flow (supported by
key assumptions) for each upcoming fiscal year, prepared on a quarter-by-quarter
basis;
(h) simultaneously with the delivery of the projected financial
statements referred to in Section 6.8(g), a copy of the Borrowers' business plan
for each upcoming fiscal year;
(i) simultaneously with the delivery of the annual financial
statements referred to in Section 6.8(a), a certificate of the independent
public accountants who audited such statements to the effect that, in making the
examination necessary for the audit of such statements, they have obtained no
knowledge of any condition or event which constitutes a Default or Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying in such certificate each such condition or event
of which they have knowledge and the nature and status thereof;
(j) promptly after the commencement thereof, notice of all actions,
suits and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting any
Borrower or any of its Subsidiaries which, if determined adversely to such
Borrower or such Subsidiary, could have a material adverse effect on the
financial condition, properties or operations of such Borrower or such
Subsidiary;
(k) as soon as possible and in any event within five days after the
occurrence of each Default or Event of Default a written notice setting forth
the details
<PAGE> 30
29
of such Default or Event of Default and the action which is proposed to be taken
by any Borrower with respect thereto;
(l) as soon as possible, and in any event within ten days after any
Borrower knows or has reason to know that any of the events or conditions
specified below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by a senior financial officer of such Borrower setting
forth details respecting such event or condition and the action, if any, which
such Borrower or its ERISA Affiliate proposes to take with respect thereto (and
a copy of any report or notice required to be filed with or given to PBGC by
such Borrower or an ERISA Affiliate with respect to such event or condition):
(i) any reportable event, as defined in section 4043(b) of
ERISA, with respect to a Plan, as to which PBGC has not by regulation waived the
requirement of section 4043(a) of ERISA that it be notified within 30 days of
the occurrence of such event (provided that a failure to meet the minimum
funding standard of section 412 of the Code or section 302 of ERISA including,
without limitation, the failure to make on or before its due date a required
installment under section 412(m) of the Code or section 302(e) of ERISA, shall
be a reportable event regardless of the issuance of any waivers in accordance
with section 412(d) of the Code) and any request for a waiver under section
412(d) of the Code for any Plan;
(ii) the distribution under section 4041 of ERISA of a
notice of intent to terminate any Plan or any action taken by such Borrower or
an ERISA Affiliate to terminate any Plan;
(iii) the institution by PBGC of proceedings under section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan, or the receipt by such Borrower or any ERISA Affiliate of
a notice from a Multiemployer Plan that such action has been taken by PBGC with
respect to such Multiemployer Plan;
(iv) the complete or partial withdrawal from a Multiemployer
Plan by such Borrower or any ERISA Affiliate that results in liability under
section 4201 or 4204 of ERISA (including the obligation to satisfy secondary
liability as a result of a purchaser default) or the receipt of such Borrower or
any ERISA Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to section 4241 or 4245 of ERISA or that
it intends to terminate or has terminated under section 4041A of ERISA;
(v) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against such Borrower or any ERISA Affiliate to enforce
section 515 of ERISA, which proceeding is not dismissed within 30 days;
<PAGE> 31
30
(vi) the adoption of an amendment to any Plan that pursuant
to section 401(a)(29) of the Code or section 307 of ERISA would result in the
loss of tax-exempt status of the trust of which such Plan is a part if such
Borrower or an ERISA Affiliate fails to timely provide security to the Plan in
accordance with the provisions of said Sections;
(vii) any event or circumstance exists which may reasonably
be expected to constitute grounds for such Borrower or any ERISA Affiliate to
incur liability under Title IV of ERISA or under sections 412(c)(11) or 412(n)
of the Code with respect to any Plan; and
(viii) the Unfunded Benefit Liabilities of one or more Plans
increase after the date of this Agreement in an amount which is material in
relation to the financial condition of such Borrower and its Subsidiaries, on a
consolidated basis; provided, however, that such increase shall not be deemed to
be material so long as it does not exceed during any consecutive 2-year period
$200,000;
(m) promptly after the request of the Bank, copies of each annual
report filed pursuant to section 104 of ERISA with respect to each Plan
(including, to the extent required by section 104 of ERISA, the related
financial and actuarial statements and opinions and other supporting statements,
certifications, schedules and information referred to in section 103) and each
annual report filed with respect to each Plan under section 4065 of ERISA;
provided, however, that in the case of a Multiemployer Plan, such annual reports
shall be furnished only if they are available to such Borrower or an ERISA
Affiliate;
(n) promptly after the furnishing thereof, copies of any statement or
report furnished to any other party pursuant to the terms of any indenture, loan
or credit or similar agreement and not otherwise required to be furnished to the
Bank pursuant to any other clause of this Section 6.8;
(o) promptly after the sending or filing thereof, copies of all proxy
statements, financial statements and reports which any Borrower or any of its
Subsidiaries sends to its stockholders, and copies of all regular, periodic and
special reports, and all registration statements which any Borrower or any of
its Subsidiary files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any national
securities exchange;
(p) as soon as available, and in any event within 10 days of the end
of each fiscal month, an aging schedule with respect to Receivables with names
of all account debtors, as of the end of such calendar month and certified by
the Chairman or Chief Financial Officer of each Borrower;
<PAGE> 32
31
(q) promptly after the commencement thereof or promptly after any
Borrower knows of the commencement or threat thereof, notice of any Forfeiture
Proceeding; and
(s) such other information respecting the condition or operations,
financial or otherwise, of any Borrower or any of its Subsidiaries as the Bank
may from time to time reasonably request.
Section 6.9. OPERATING ACCOUNTS. Maintain, and cause each of their
respective Subsidiaries to maintain, all United States operating accounts at the
Bank.
Section 6.10. DELIVERY OF PROJECTION SCENARIO. Deliver within 30 days of
the Initial Public Offering, a two year projection scenario (the "Projection
Scenario") in form and substance satisfactory to the Bank, setting forth the
Borrowers' conclusion based upon the projections, that the proceeds of the
Revolving Loans will be used solely for working capital purposes as set forth in
Section 2.3.
ARTICLE 7. NEGATIVE COVENANTS
-----------------------------
So long as the Note shall remain unpaid or the Bank shall have any
Commitment under this Agreement, the Borrowers shall not:
Section 7.1. DEBT. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries to create, incur, assume or suffer to exist any Debt,
except:
(a) Debt of the Borrowers under this Agreement or the Note;
(b) Debt described in Schedule 5.10, including renewals, extensions or
refinancings thereof, provided that the principal amount thereof does not
increase; and
(c) Debt of the Borrowers or any of their respective Subsidiaries
secured by purchase money Liens permitted by Section 7.3.
Section 7.2. GUARANTIES, ETC. Assume, guaranty, endorse or otherwise be or
become directly or contingently responsible or liable, or permit any of their
respective Subsidiaries to assume, guarantee, endorse or otherwise be or become
directly or indirectly responsible or liable (including, but not limited to, an
agreement to purchase any obligation, stock, assets, goods or services or to
supply or advance any funds, assets, goods or services, or an agreement to
maintain or cause such Person to maintain a minimum working capital or net worth
or otherwise to assure the creditors of any Person against loss) for the
obligations of any Person, except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
<PAGE> 33
32
Section 7.3. LIENS. Create, incur, assume or suffer to exist, or permit any
of their respective Subsidiaries to create, incur, assume or suffer to exist,
any Lien, upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(a) Liens for taxes or assessments or other government charges or
levies if not yet due and payable or if due and payable if they are being
contested in good faith by appropriate proceedings and for which appropriate
reserves are maintained;
(b) Liens imposed by law, such as mechanic's, materialmen's,
landlord's, warehousemen's and carrier's Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are not
past due for more than 30 days, or which are being contested in good faith by
appropriate proceedings and for which appropriate reserves have been
established;
(c) Liens under workers' compensation, unemployment insurance, social
security or similar legislation (other than ERISA);
(d) Liens, deposits or pledges to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement), public or statutory obligations,
surety, stay, appeal, indemnity, performance or other similar bonds, or other
similar obligations arising in the ordinary course of business;
(e) judgment and other similar Liens arising in connection with court
proceedings; provided that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are being actively contested
in good faith and by appropriate proceedings;
(f) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by any Borrower or any such Subsidiary of the
property or assets encumbered thereby in the normal course of its business or
materially impair the value of the property subject thereto;
(g) Liens securing obligations of such a Subsidiary to a Borrower or
another such Subsidiary;
(h) Liens set forth on Schedule 7.3, provided the Debt secured by such
Liens is permitted by Section 7.1;
(i) purchase money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition, or
a Lien incurred in connection with any conditional sale or other title retention
agreement or a Capital Lease; provided that:
<PAGE> 34
33
(i) any property subject to any of the foregoing is acquired
by a Borrower or any such Subsidiary in the ordinary course of its business and
the Lien on any such property is created contemporaneously with such
acquisition;
(ii) the obligation secured by any Lien so created, assumed
or existing shall not exceed 80 percent of the lesser of cost or fair market
value as of the time of acquisition of the property covered thereby to a
Borrower or any such Subsidiary acquiring the same;
(iii) each such Lien shall attach only to the property so
acquired and fixed improvements thereon; and
(iv) the obligations secured by such Lien are permitted by
the provisions of Section 7.1; and
Section 7.4. LEASES. Create, incur, assume or suffer to exist, or permit
their respective Subsidiaries to create, incur, assume or suffer to exist, any
obligation as lessee for the rental or hire of any real or personal property,
except: (a) leases existing on the date of this Agreement and any extensions or
renewals thereof; (b) leases (other than Capital Leases) which do not in the
aggregate require the Borrowers and their respective Subsidiaries on a
consolidated basis to make payments (including taxes, insurance, maintenance and
similar expense which any Borrower or any Subsidiary is required to pay under
the terms of any lease) in any fiscal year of the Borrowers in excess of
$250,000; (c) Capital Leases permitted by Section 7.3.
Section 7.5. INVESTMENTS. Make, or permit any of their respective
Subsidiaries to make, any loan or advance to any Person or purchase or otherwise
acquire, or permit any such Subsidiary to purchase or otherwise acquire, any
capital stock, assets, obligations or other securities of, make any capital
contribution to, or otherwise invest in, or acquire any interest in, any Person,
except: (a) direct obligations of the United States of America or any agency
thereof with maturities of one year or less from the date of acquisition; (b)
commercial paper of a domestic issuer rated at least "A-1" by Standard & Poor's
Corporation or "P-1" by Moody's Investors Service, Inc.; (c) certificates of
deposit with maturities of one year or less from the date of acquisition issued
by any commercial bank operating within the United States of America having
capital and surplus in excess of $500,000,000; and (d) for stock, obligations or
securities received in settlement of debts (created in the ordinary course of
business) owing to a Borrower or any such Subsidiary.
Section 7.6. DIVIDENDS. Declare or pay any dividends, purchase, redeem,
retire or otherwise acquire for value any of its capital stock now or hereafter
outstanding, or make any distribution of assets to its stockholders as such
whether in cash, assets or in obligations of any Borrower, or allocate or
otherwise set apart any sum for the payment of any dividend or distribution on,
or for the purchase, redemption or retirement of any shares of its capital
stock, or make any other distribution by reduction of capital or
<PAGE> 35
34
otherwise in respect of any shares of its capital stock or permit any of their
respective Subsidiaries to purchase or otherwise acquire for value any stock of
any Borrower or another such Subsidiary, except that: (a) any Borrower may
declare and deliver dividends and make distributions payable solely in common
stock of such Borrower; (b) any Borrower may purchase or otherwise acquire
shares of its capital stock by exchange for or out of the proceeds received from
a substantially concurrent issue of new shares of its capital stock; (c)
TransAct may make the payments to Tridex as permitted under the Subordination
Agreement; and (d) any Subsidiary may declare and deliver dividends and make
distributions to the Parent.
Section 7.7. SALE OF ASSETS. Sell, lease, assign, transfer or otherwise
dispose of, or permit any of their respective Subsidiaries to sell, lease,
assign, transfer or otherwise dispose of, any of its now owned or hereafter
acquired assets (including, without limitation, shares of stock and indebtedness
of such Subsidiaries, receivables and leasehold interests); except: (a) for
inventory disposed of in the ordinary course of business; (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business;
and (c) that any such Subsidiary may sell, lease, assign or otherwise transfer
its assets to the Parent.
Section 7.8. STOCK OF SUBSIDIARIES, ETC. Sell or otherwise dispose of any
shares of capital stock of any of their respective Subsidiaries or permit any
such Subsidiary to issue any additional shares of its capital stock, except
directors' qualifying shares.
Section 7.9. TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate or permit any of their respective
Subsidiaries to enter into any transaction, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service, with any
Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to such Borrower or such Subsidiary than it
would obtain in a comparable arms' length transaction with a Person not an
Affiliate, and except as set forth on Schedule 7.9.
Section 7.10. MERGERS, ETC. Merge or consolidate with, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or acquire all or substantially all of the
assets or the business of any Person (or enter into any agreement to do any of
the foregoing), or permit any of their respective Subsidiaries to do so except
that any such Subsidiary may merge into or transfer assets to a Borrower.
Section 7.11. NO ACTIVITIES LEADING TO FORFEITURE. Neither the Borrowers
nor any of their respective Subsidiaries or Affiliates shall engage in or
<PAGE> 36
35
propose to be engaged in the conduct of any business or activity which could
result in a Forfeiture Proceeding.
ARTICLE 8. FINANCIAL COVENANTS
------------------------------
So long as the Note shall remain unpaid or the Bank shall have the
Commitment under this Agreement:
Section 8.1. MINIMUM TANGIBLE NET WORTH. The Borrowers, on a consolidated
basis, shall maintain at all times, as measured at the end of each fiscal
quarter, Tangible Net Worth of not less than the greater of (a) $10,500,000 PLUS
the Net Income Increase and (b) Tangible Net Worth as reflected on the Opening
Balance Sheet LESS $250,000 PLUS the Net Income Increase; except, if the
Over-allotment Sale does not occur, in which case, the Borrower's, on a
consolidated basis, shall maintain at all times, as measured at the end of each
fiscal quarter, Tangible Net Worth of not less than the greater of (a)
$9,700,000 PLUS the Net Income Increase and (b) Tangible Net Worth as reflected
on the Opening Balance Sheet LESS $250,000 PLUS the Net Income Increase
Section 8.2. MAXIMUM LEVERAGE RATIO. The Borrowers, on a consolidated
basis, shall maintain at all times, as measured at the end of each fiscal
quarter, a ratio of Total Liabilities to Tangible Net Worth of not greater than
1.5 to 1.0.
Section 8.3. MINIMUM CURRENT RATIO. The Borrower, on a consolidated basis,
shall maintain at all times, as measured at the end of each fiscal quarter, a
ratio of Current Assets to Current Liabilities of not less than 2.0 to 1.0.
Section 8.4. MINIMUM INTEREST COVERAGE RATIO. The Borrowers, on a
consolidated basis, shall maintain at all times, as measured at the end of each
fiscal quarter, an Interest Coverage Ratio of not less than 3.0 to 1.0.
Section 8.5. CONSECUTIVE LOSSES. The Borrowers, on a consolidated basis,
shall not suffer a Net Loss in any two (2) consecutive fiscal quarters..
Section 8.6. ANNUAL LOSS. The Borrowers shall not suffer an annual loss, as
determined on a consolidated basis in accordance with GAAP.
ARTICLE 9. EVENTS OF DEFAULT
----------------------------
Section 9.1. EVENTS OF DEFAULT. Any of the following events shall be an
"Event of Default":
(a) the Borrowers shall: (i) fail to pay the principal of any Note as
and when due and payable; or (ii) fail to pay interest on the Note or any fee or
other amount due hereunder as and when due and payable;
<PAGE> 37
36
(b) any representation or warranty made or deemed made by any Borrower
in this Agreement or in any other Facility Document or which is contained in any
certificate, document, opinion, financial or other statement furnished at any
time under or in connection with any Facility Document shall prove to have been
incorrect in any material respect on or as of the date made or deemed made;
(c) any Borrower shall: (i) fail to perform or observe any term,
covenant or agreement contained in Section 2.3 or Articles 7 or 8; or (ii) fail
to perform or observe any term, covenant or agreement on its part to be
performed or observed (other than the obligations specifically referred to
elsewhere in this Section 9.1) in any Facility Document and such failure shall
continue for 20 consecutive days;
(d) any Borrower, or any of its respective Subsidiaries: (i) shall
generally not, or be unable to, or shall admit in writing its inability to, pay
its debts as such debts become due; or (ii) shall make an assignment for the
benefit of creditors, petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for it or a substantial part of its assets; or
(iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any
such petition or application filed or any such proceeding shall have been
commenced against it, in which an adjudication or appointment is made or order
for relief is entered, or which petition, application or proceeding remains
undismissed for a period of 30 days or more; or shall be the subject of any
proceeding under which its assets may be subject to seizure, forfeiture or
divestiture (other than a proceeding in respect of a Lien permitted under
Section 7.3(b)); or (v) by any act or omission shall indicate its consent to,
approval of or acquiescence in any such petition, application or proceeding or
order for relief or the appointment of a custodian, receiver or trustee for all
or any substantial part of its property; or (vi) shall suffer any such
custodianship, receivership or trusteeship to continue undischarged for a period
of 30 days or more;
(e) one or more judgments, decrees or orders for the payment of money
in excess of $250,000 in the aggregate shall be rendered against any Borrower,
or any of its respective Subsidiaries and such judgments, decrees or orders
shall continue unsatisfied and in effect for a period of 30 consecutive days
without being vacated, discharged, satisfied or stayed or bonded pending appeal;
(f) any event or condition shall occur or exist with respect to any
Plan or Multiemployer Plan concerning which any Borrower is under an obligation
to furnish a report to the Bank in accordance with Section 6.8(h) hereof and as
a result of such event or condition, together with all other such events or
conditions, such Borrower or any ERISA Affiliate has incurred or in the opinion
of the Bank is reasonably likely to incur a liability to a Plan, a Multiemployer
Plan, the PBGC or a section 4042 Trustee (or any combination of the foregoing)
which is material in relation to the financial position of such
<PAGE> 38
37
Borrower and its Subsidiaries, on a consolidated basis; provided, however, that
any such amount shall not be deemed to be material so long as all such amounts
do not exceed in the aggregate during any consecutive 2-year period $200,000;
(g) the Unfunded Benefit Liabilities of one or more Plans have
increased after the date of this Agreement in an amount which is material (as
specified in Section 9.1(g) hereof);
(h) a Change of Control shall occur;
(i) (A) any Forfeiture Proceeding shall have been commenced or any
Borrower shall have given the Bank written notice of the commencement of any
Forfeiture Proceeding as provided in Section 6.8 or (B) the Bank has a good
faith basis to believe that a Forfeiture Proceeding has been threatened or
commenced;
(j) there shall be any material adverse change in the condition
(financial or otherwise), business, management, operations, properties or
prospects of the Borrowers and their respective Subsidiaries since the Closing
Date; or
(k) the Security Agreement or the Pledge Agreement shall at any time
after its execution and delivery and for any reason cease: (A) to create a valid
and perfected first priority security interest in and to the property purported
to be subject to such agreement; or (B) to be in full force and effect or shall
be declared null and void, or the validity or enforceability thereof shall be
contested by the party thereto, or such party shall deny it has further
liability or obligation thereunder or such party shall fail to perform any of
its obligations thereunder.
Section 9.2. REMEDIES. If any Event of Default shall occur and be
continuing, the Bank may, by notice to the Borrowers, (a) declare the Commitment
to be terminated, whereupon the same shall forthwith terminate, and (b) declare
the outstanding principal of the Note, all interest thereon and all other
amounts payable under this Agreement and the Note or any one of them to be
forthwith due and payable, whereupon the Note, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrowers; provided that, in the case of an Event of Default
referred to in Section 9.1(e) or Section 9.1(i)(A) above, the Commitment shall
be immediately terminated, and the Note, all interest thereon and all other
amounts payable under this Agreement shall be immediately due and payable
without notice, presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrowers.
<PAGE> 39
38
ARTICLE 10. MISCELLANEOUS
-------------------------
Section 10.1. AMENDMENTS AND WAIVERS. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be amended or
modified only by an instrument in writing signed by the Borrowers and the Bank,
and any provision of this Agreement may be waived by the Borrowers and the Bank.
No failure on the part of the Bank to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof or preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 10.2. USURY. Anything herein to the contrary notwithstanding, the
obligations of the Borrowers under this Agreement and the Note shall be subject
to the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of law applicable to the
Bank limiting rates of interest which may be charged or collected by the Bank.
Section 10.3. EXPENSES. The Borrowers shall reimburse the Bank on demand
for all reasonable costs, expenses and charges (including, without limitation,
telephone, telex, courier expenses, printing costs, reasonable fees and charges
of external legal counsel for the Bank and reasonable costs allocated after the
Closing Date by its internal legal department) incurred by the Bank in
connection with the preparation, negotiation, execution, delivery, filing,
recording, performance, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the Note or any Facility Document. The Borrowers agree to indemnify
the Bank and its directors, officers, employees and agents from, and hold each
of them harmless against, any and all losses, liabilities, claims, damages or
expenses incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any actual or
proposed use by the Borrowers or any of their respective Subsidiaries of the
proceeds of the Revolving Loans, including, without limitation, the reasonable
fees and disbursements of counsel incurred in connection with any such
investigation or litigation or other proceedings (but excluding any such losses,
liabilities, claims, damages or expenses incurred by reason of the gross
negligence or willful misconduct of the Person to be indemnified).
Section 10.4. SURVIVAL. The obligations of the Borrowers under Section 10.3
shall survive the repayment of the Revolving Loans and the termination of the
Commitment.
Section 10.5. ASSIGNMENT; PARTICIPATIONS. This Agreement shall be binding
upon, and shall inure to the benefit of, the Borrowers, the Bank and their
respective successors and assigns, except that no Borrower may assign or
transfer its rights
<PAGE> 40
39
or obligations hereunder. The Bank may assign, or sell participations in, all or
any part of any Revolving Loan to another bank or other entity, in which event
(a) in the case of an assignment, upon notice thereof by the Bank to the
Borrowers, the assignee shall have, to the extent of such assignment (unless
otherwise provided therein), the same rights, benefits and obligations as it
would have if it were the Bank hereunder; and (b) in the case of a
participation, the participant shall have no rights under the Facility
Documents. The agreement executed by the Bank in favor of the participant shall
not give the participant the right to require the Bank to take or omit to take
any action hereunder except action directly relating to (i) the extension of a
payment date with respect to any portion of the principal of or interest on any
amount outstanding hereunder allocated to such participant, (ii) the reduction
of the principal amount outstanding hereunder or (iii) the reduction of the rate
of interest payable on such amount or any amount of fees payable hereunder to a
rate or amount, as the case may be, below that which the participant is entitled
to receive under its agreement with the Bank. The Bank may furnish any
information concerning the Borrowers in the possession of the Bank from time to
time to assignees and participants (including prospective assignees and
participants); provided that the Bank shall require any such prospective
assignee or such participant (prospective or otherwise) to agree in writing to
maintain the confidentiality of such information.
Section 10.6. NOTICES. Unless the party to be notified otherwise notifies
the other party in writing as provided in this Section, and except as otherwise
provided in this Agreement, notices shall be delivered in person or sent by
overnight courier, facsimile, ordinary mail, cable or telex addressed to such
party at its "Address for Notices" on the signature page of this Agreement.
Notices shall be effective: (a) on the day on which delivered to such party in
person, (b) on the first Banking Day after the day on which sent to such party
by overnight courier, (c) if given by mail, 48 hours after deposit in the mails
with first-class postage prepaid, addressed as aforesaid, and (d) if given by
facsimile, cable or telex, when the facsimile, cable or telex is transmitted to
the facsimile, cable or telex number as aforesaid; provided that notices to the
Bank shall be effective upon receipt.
Section 10.7. SETOFF. The Borrowers agree that, in addition to (and without
limitation of) any right of setoff, banker's lien or counterclaim the Bank may
otherwise have, the Bank shall be entitled, at its option, to offset balances
(general or special, time or demand, provisional or final) held by it for the
account of any Borrower at any of the Bank's offices, in Dollars or in any other
currency, against any amount payable by any Borrower under this Agreement or the
Note which is not paid when due (regardless of whether such balances are then
due to such Borrower), in which case it shall promptly notify the Borrowers
thereof; provided that the Bank's failure to give such notice shall not affect
the validity thereof.
SECTION 10.8. JURISDICTION; IMMUNITIES. EACH BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY CONNECTICUT STATE OR UNITED STATES FEDERAL
COURT SITTING IN
<PAGE> 41
40
CONNECTICUT OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE NOTE, AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH CONNECTICUT STATE OR FEDERAL COURT. EACH BORROWER IRREVOCABLY CONSENT TO
THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES OF SUCH PROCESS TO EACH BORROWER AT ITS ADDRESS SPECIFIED IN
SECTION 10.6. EACH BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH BORROWER
FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO AN
ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. EACH
BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE BANK
SHALL BE BROUGHT ONLY IN CONNECTICUT STATE OR UNITED STATES FEDERAL COURT
SITTING IN CONNECTICUT. EACH BORROWER WAIVES ANY RIGHT IT MAY HAVE TO JURY
TRIAL.
(a) Nothing in this Section 10.8 shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect the right of
the Bank to bring any action or proceeding against any Borrower or its property
in the courts of any other jurisdictions.
(b) To the extent that any Borrower has or hereafter may acquire any
immunity from jurisdiction of any court or from any legal process (whether from
service or notice, attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to itself or its property, such Borrower
hereby irrevocably waives such immunity in respect of its obligations under this
Agreement and the Note.
Section 10.9. TABLE OF CONTENTS; HEADINGS. Any table of contents and the
headings and captions hereunder are for convenience only and shall not affect
the interpretation or construction of this Agreement.
Section 10.10. SEVERABILITY. The provisions of this Agreement are intended
to be severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction, be ineffective to the extent of such invalidity
or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 10.11. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
<PAGE> 42
41
instrument, and any party hereto may execute this Agreement by signing any such
counterpart.
Section 10.12. INTEGRATION. The Facility Documents set forth the entire
agreement between the parties hereto relating to the transactions contemplated
thereby and supersede any prior oral or written statements or agreements with
respect to such transactions.
SECTION 10.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CONNECTICUT.
Section 10.14. CONFIDENTIALITY. The Bank agrees (on behalf of itself and
each of its affiliates, directors, officers, employees and representatives) to
use reasonable precautions to keep confidential, in accordance with safe and
sound banking practices, any nonpublic information supplied to it by the
Borrowers pursuant to this Agreement which is identified by the Borrowers as
being confidential at the time the same is delivered to the Bank, provided that
nothing herein shall limit the disclosure of any such information (i) to the
extent required by statute, rule, regulation or judicial process, (ii) to
counsel for the Bank, (iii) to bank examiners, auditors or accountants, (iv) in
connection with any litigation to which the Bank is a party or (v) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) agrees to
maintain the confidentiality of such information; and provided finally that in
no event shall the Bank be obligated or required to return any materials
furnished by the Borrowers.
Section 10.15. TREATMENT OF CERTAIN INFORMATION. Each Borrower (a)
acknowledges that services may be offered or provided to it (in connection with
this Agreement or otherwise) by the Bank or by one or more of its subsidiaries
or affiliates and (b) acknowledges that information delivered to the Bank by any
Borrower may be provided to each such subsidiary and affiliate.
SECTION 10.16. COMMERCIAL WAIVER. EACH BORROWER ACKNOWLEDGES THAT THE
REVOLVING LOANS EVIDENCED BY THE NOTE ARE FOR COMMERCIAL PURPOSES AND WAIVES ANY
RIGHT TO NOTICE AND HEARING UNDER SECTIONS 52-278a THROUGH 52-278n OF THE
CONNECTICUT GENERAL STATUTES AS NOW OR HEREAFTER AMENDED AND AUTHORIZES THE
ATTORNEY OF THE BANK, OR ANY SUCCESSOR THERETO, TO ISSUE A WRIT OF PREJUDGMENT
REMEDY WITHOUT COURT ORDER. FURTHER, EACH BORROWER HEREBY WAIVES, TO THE EXTENT
PERMITTED BY LAW, THE BENEFITS OF ALL VALUATION, APPRAISEMENTS, HOMESTEAD,
EXEMPTION, STAY, REDEMPTION AND MORATORIUM LAWS NOW IN FORCE OR WHICH MAY
HEREAFTER BECOME LAWS. EACH BORROWER ACKNOWL-
<PAGE> 43
42
EDGES THAT IT MAKES THESE WAIVERS AND THE WAIVERS CONTAINED IN SECTION 10.8
KNOWINGLY, VOLUNTARILY AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE
RAMIFICATIONS OF THESE WAIVERS WITH ITS ATTORNEYS.
SECTION 10.17. WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE BORROWERS AND THE BANK WISH
APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
BORROWERS AND THE BANK DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE
APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE
BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE BORROWERS AND THE BANK
HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING
BROUGHT TO RESOLVE ANY DISPUTE, WHETHER IN CONTRACT, TORT, OR OTHERWISE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO, THIS AGREEMENT OR ANY OF
THE OTHER FACILITY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
Section 10.18. MULTIPLE BORROWERS.
(a) It is understood and agreed by each Borrower that the handling of
this credit facility on a joint borrowing basis as set forth in this Agreement
is solely as an accommodation to the Borrowers and at their request, and that
the Bank shall not incur liability to the Borrowers as a result thereof. To
induce the Bank to do so and in consideration thereof, each Borrower hereby
agrees to indemnify the Bank and to hold the Bank harmless from and against any
and all liabilities, expenses, losses, damages and claims of damage or injury
asserted against the Bank by any Borrower or by any other Person arising from or
incurred by reason of the Bank's handling of the financing arrangements of the
Borrowers as provided herein, reliance by the Bank on any request or instruction
from any other Borrower or any other action taken by the Bank with respect to
this Section 10.18.
(b) Each Borrower represents and warrants to the Bank that the request
for joint handling of the Revolving Loans to be made by the Bank hereunder was
made because the Borrowers are engaged in an integrated operation which required
financing on a basis permitting the availability of credit from time to time to
each Borrower as required for the continued successful operation of each
Borrower of the integrated operation of the Borrowers. Each Borrower expects to
derive benefit, directly or indirectly, from such availability because the
successful operation of the Borrowers is
<PAGE> 44
43
dependent on the continued successful performance of the functions of the
integrated group.
(c) Each Borrower hereby irrevocably designates TransAct as its
attorney to borrow, sign and endorse notes, and execute and deliver all
instruments, documents, writings and further assurances now or hereafter
required hereunder, on behalf of each Borrower, and does hereby authorize the
Bank to pay over or credit all Revolving Loan proceeds hereunder to TransAct as
the Borrowers' attorney in fact, recognizing, however, that Lender is not bound
by such authorization and may elect either to disburse loan proceeds to each
Borrower directly for its use, to TransAct as attorney for any Borrower or to
TransAct for its own account, in which case TransAct may advance or lend such
proceeds to the other Borrowers. Each Borrower further agrees that all
obligations hereunder or referred to herein or under any other Facility Document
shall be joint and several, and that each Borrower shall make payment upon any
notes issued pursuant hereto and any and all other obligations hereunder or
referred to herein or under any other Facility Document upon their maturity by
acceleration or otherwise, and that such obligation and liability on the part of
each Borrower shall in no way be affected by any extensions, renewals and
forbearances granted by the Bank to any Borrower, failure of the Bank to give
any Borrower notice of borrowing or any other notice, any failure of the Bank to
pursue or preserve its rights against any other Borrower, the release by the
Bank of any collateral now or hereafter acquired from any Borrower, failure of
the Bank to realize upon such collateral in a commercially reasonable manner,
and that such agreement by each Borrower to pay upon any notice issued pursuant
hereto is unconditional and unaffected by prior recourse by the Bank to the
other Borrowers or any collateral for such Borrowers' obligations or the lack
thereof.
(d) Each Borrower hereby grants a right of contribution to each other
Borrower for any amount paid by such other Borrower in satisfaction of any
obligations under this Agreement, the Note or any other Facility Document;
provided, however, that the aggregate of the rights of contribution against any
Borrower hereunder shall not exceed such Borrower's net worth. In calculating
the net worth of any Borrower for purposes of this paragraph, such Borrower's
obligations under the Facility Documents will not be included in its liabilities
and such Borrower's rights of contribution against other Borrowers for amounts
paid under the Facility Documents will not be included in its assets.
(e) All notices to, or other communications with, the Borrowers or any
one of them shall be sufficient if given to any of the Borrowers. Although the
Bank may require that all of the Borrowers or a particular Borrower execute any
document (including any Notice of Borrowing) in any matter pertaining to this
Agreement or any of the other Facility Documents, any one of the Borrowers may
bind all of the Borrowers and any document (including any Notice of Borrowing)
signed by any Borrower, and any and all action taken by any Borrower, is
sufficient to represent all of the Borrowers. Without
<PAGE> 45
44
limiting the foregoing, any single Borrower may make representations and
warranties on behalf of all the Borrowers or any other Borrower, and such
representations and warranties shall be of the same force and effect as if made
directly by such other Borrowers.
Section 10.19. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default or Event of Default if such action is
taken or condition exists.
Section 10.20. TIME OF THE ESSENCE. Time and punctuality shall be of the
essence with respect to this instrument, but no delay or failure of the Bank to
enforce any of the provisions herein contained and no conduct or statement of
the Bank shall waive or affect any of the Bank's rights hereunder.
Section 10.21. REFERENCE TO AND EFFECT ON THE FACILITY DOCUMENTS.
(a) Upon the effectiveness of this Agreement, on and after the date
hereof each reference in the Facility Documents to the Credit Agreement or the
Note, shall mean and be a reference to this Credit Agreement as amended and
restated hereby or the Note as amended and restated in connection with the
execution and delivery of this Agreement.
(b) The execution, delivery and effectiveness of this Agreement shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Bank under any of the Facility Documents, nor constitute
a waiver of any provision of any of the Facility Documents.
<PAGE> 46
45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TRANSACT TECHNOLOGIES INCORPORATED
By
--------------------------------------
Richard L. Cote
Title: Executive Vice President and
Chief Financial Officer
MAGNETEC CORPORATION
By
--------------------------------------
Richard L. Cote
Title: Vice President
Address for Notices to Borrowers:
7 Laser Lane
Wallingford, Connecticut 06492
FLEET NATIONAL BANK
By
--------------------------------------
Frederick A. Meagher
Vice President
Address for Notices and Lending Office:
One Landmark Square
Stamford, Connecticut 06901
Attn: Frederick A. Meagher
Vice President
Facsimile No.: 203.964.4836
<PAGE> 47
46
EXHIBITS
- --------
Exhibit A - Note
Exhibit B - Subordination Agreement
Exhibit C - Security Agreement
Exhibit D - Opinion of Counsel for Borrowers
Exhibit E - Notice of Borrowing
SCHEDULES
- ---------
Schedule 5.9 - Subsidiaries of Borrowers
Schedule 5.10 - Credit Arrangements
Schedule 5.12 - Hazardous Materials
Schedule 7.3 - Liens
Schedule 7.9 - Transactions with Affiliates Outside the Ordinary Course of
Business
<PAGE> 48
EXHIBIT A
---------
PROMISSORY NOTE
---------------
$5,000,000 Stamford, Connecticut
August 29, 1996
For value received, TRANSACT TECHNOLOGIES INCORPORATED. and MAGNETEC
CORPORATION (the "Borrowers"), hereby promise, to pay to the order of FLEET
NATIONAL BANK, (the "Bank") at the office of the Bank at One Landmark Square,
Stamford, Connecticut 06901, for the account of the appropriate Lending Office
of the Bank, the principal sum of FIVE MILLION DOLLARS ($5,000,000) or, if less,
the amount of RevolvingLoans made by the Bank to the Borrowers pursuant to the
Credit Agreement referred to below, in lawful money of the United States of
America and in immediately available funds, on the date(s) and in the manner
provided in said Credit Agreement. The Borrowers also promise to pay interest on
the unpaid principal balance hereof, for the period such balance is outstanding,
at said principal office for the account of said Lending Office, in like money,
at the rates of interest as provided in the Credit Agreement referred to below,
on the date(s) and in the manner provided in said Credit Agreement.
The date and amount of each Revolving Loan made by the Bank to the
Borrowers under the Credit Agreement referred to below, and each payment of
principal thereof, shall be recorded by the Bank on its books and, prior to any
transfer of this Note (or, at the discretion of the Bank, at any other time),
endorsed by the Bank on the schedule attached hereto or any continuation
thereof.
This is the Revolving Note referred to in that certain Credit Agreement (as
amended from time to time the "Credit Agreement") dated of even date herewith
among the Borrowers and the Bank and evidences the Revolving Loans made by the
Bank thereunder. All terms not defined herein shall have the meanings given to
them in the Credit Agreement.
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain Events of Default and for prepayments on the
terms and conditions specified therein.
The Borrowers waive presentment, notice of dishonor, protest and any other
notice or formality with respect to this Note.
<PAGE> 49
2
This Note shall be governed by, and interpreted and construed in accordance
with, the laws of the State of Connecticut.
TRANSACT TECHNOLOGIES INCORPORATED
By
--------------------------------------
Richard L. Cote
Title: Executive Vice President and
Chief Financial Officer
MAGNETEC CORPORATION
By
--------------------------------------
Richard L. Cote
Title: Vice President
<PAGE> 50
Amount Amount of Balance Notation
DATE OF REVOLVING LOAN PAYMENT OUTSTANDING BY
- ---- ----------------- ------- ----------- --
<PAGE> 51
EXHIBIT E
---------
NOTICE OF BORROWING
-------------------
[DATE]
Fleet National Bank
One Landmark Square
Stamford, CT 06901
ATTN: Frederick A. Meagher
Ladies and Gentlemen:
The undersigned, a duly authorized officer of [TransAct Technologies
Incorporated] [Magnetec Corporation] refers to the Credit Agreement dated as of
August 29, 1996 among TransAct Technologies Incorporated, Magnetec Corporation
and Fleet National Bank (as amended, modified or supplemented from time to time
the "Credit Agreement") and hereby gives you notice pursuant to Section 4.2 of
the Credit Agreement that the undersigned hereby requests a Revolving Loan, and
in that connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by the Credit Agreement. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Credit Agreement.
(i) The Banking Day of the Proposed Borrowing is
_________________.
(ii) The aggregate amount of the Proposed Borrowing
is U.S.$_____________.
(iii) The interest rate for the Proposed Borrowing is
(check one):
_____ Prime Rate
_____ LIBO Rate (Complete Section v)
(iv) (LIBOR Loans Only) The initial Interest Period
for the Proposed Borrowing is (check one):
_____ one (1) month
_____ two (2) months
_____ three (3) months
<PAGE> 52
2
In accordance with Section 4.2 of the Credit Agreement, the undersigned
hereby certifies that all representations and warranties of the Borrowers
contained in each Facility Document, including Article 5 of the Credit Agreement
and Article 2 of the Security Agreement, are true and correct on the date
hereof, and unless we otherwise notify you in writing, you may rely on the fact
that such statements are true and correct on the day of the Proposed Borrowing
before and after giving effect to such Proposed Borrowing and the application of
the proceeds thereof, as though made on and as of such date. The undersigned
also certifies that there has been no material adverse change in the business,
management operations, properties, prospects or condition (financial or
otherwise) of any Borrowers since the Closing Date.
The undersigned further certifies and warrants that no Default or Event of
Default is existing as of the date of this Certificate and, unless we notify you
in writing, as of the day of the Proposed Borrowing.
Very truly yours,
[TRANSACT TECHNOLOGIES INCORPORATED]
[MAGNETEC CORPORATION]
By
--------------------------------------
Name:
Title:
<PAGE> 53
SCHEDULE 5.9
to
CREDIT AGREEMENT
Dated as of August 29, 1996
SUBSIDIARIES OF BORROWER
------------------------
Magnetec Corporation, a Connecticut corporation (survivor of merger between
Magnetec Corporation, a Connecticut corporation, and Ithaca Peripherals
Incorporated, a Delaware corporation).
SUBSIDIARIES OF MAGNETEC
------------------------
Ithaca Peripherals Ltd, a UK corporation.
<PAGE> 54
SCHEDULE 5.10
to
CREDIT AGREEMENT
Dated as of August 29, 1996
CREDIT ARRANGEMENTS
Lessee Lessor Security
------ ------ --------
Magnetec Xerox Corporation Photocopy equipment
Magnetec NTFC Capital Corp. Telecommunications
equipment
Magnetec Pitney Bowes Mailing equipment
Ithaca Xerox Corporation Photocopy equipment
Ithaca Mullin Industrial Handling Forklift equipment
Corp.
Ithaca Tompkins County Trust Telecommunications
Company equipment
Ithaca Pitney Bowes Mailing equipment
<PAGE> 55
SCHEDULE 5.12
to
CREDIT AGREEMENT
Dated as of August 29, 1996
HAZARDOUS MATERIALS
-------------------
Oily Solids
- -----------
One of the Borrower's subsidiaries regularly uses two types of lubricants
in performing certain machining processes. As a result of these processes, the
lubricant combines with metal shavings and eventually produces liquid sludge and
"oily solids". The liquid sludge and oily solids are contained in clearly marked
drums which are periodically transported off-site by General Chemical, a
Framingham, Massachusetts hazardous waste disposal company.
<PAGE> 56
SCHEDULE 7.3
to
CREDIT AGREEMENT
Dated as of August 29, 1996
LIENS
-----
1. UCC-1 Financing Statement filed 12/9/94 with the Connecticut Secretary
of State, File No. 1591536, Debtor = Magnetec, Secured Party = State
of Connecticut Department of Economic Development
2. UCC-1 Financing Statement filed 6/19/95 with the Connecticut Secretary
of State, File No. 1627702, Debtor = Magnetec, Secured Party = NTFC
Capital Corporation
3. UCC-1 Financing Statement filed 7/11/96 with the Wallingford Town
Clerk, File No. 7547, Debtor = Magnetec, Secured Party = OCE' BRUNING
4. UCC-1 Financing Statement filed 1/06/92 with the Connecticut Secretary
of State, File No. 951207, Debtor = Magnetec, Secured Party = Pitney
Bowes Credit Corporation
5. UCC-1 Financing Statement filed 7/27/94 with the New York Secretary of
State, File No. 153581, Debtor = Ithaca Peripherals Incorporated,
Secured Party = Citicorp Dealer Finance (assigned by Mullen Industrial
Handling)
6. UCC-1 Financing Statement filed 3/4/92 with the New York Secretary of
State, File No. 042641, Debtor = Ithaca Peripherals Incorporated,
Secured Party = World Omni Leasing, Inc.
<PAGE> 57
SCHEDULE 7.9
to
CREDIT AGREEMENT
Dated as of August 29, 1996
TRANSACTIONS WITH AFFILIATES OUTSIDE THE
ORDINARY COURSE OF BUSINESS
Borrower has entered into the following contracts which may be considered
outside the ordinary course of business:
1. Plan of Reorganization dated as of June 24, 1996 among Tridex
Corporation ("Tridex"), Magnetec Corporation ("Magnetec"), TransAct
Technologies Incorporated ("TransAct") and Ithaca Peripherals
Incorporated ("Ithaca").
2. Agreement and Plan of Merger dated as of July 16, 1996 between
Magnetec and Ithaca.
3. Asset Transfer Agreement dated as of July 31, 1996 between Magnetec
and Tridex.
4. Form of Manufacturing Support Services Agreement between Magnetec and
Tridex.
5. Corporate Services Agreement dated as of July 30, 1996 between Tridex
and TransAct.
6. Printer Supply Agreement dated as of July 31, 1996 between Magnetec
and Ultimate Technology Corporation.
7. Tax Sharing Agreement dated as of July 31, 1996 between Tridex and
TransAct.
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
March 15, 1996 appearing on page 14 of Tridex Corporation's Annual Report on
Form 10-K for the year ended December 31, 1995. We also consent to the reference
to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Hartford, Connecticut
October 28, 1996
