<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 29, 1996
----------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to:
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Commission file number:
---------------------------------------------
TRIDEX CORPORATION
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0682273
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
61 WILTON ROAD, WESTPORT CT 06880
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(Address of principal executive offices)
(Zip Code)
(203) 226-1144
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(Registrant's telephone number, including area code)
Former address:
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 Months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES /X/ NO / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES / / NO / /
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AUGUST 9, 1996
- ----- --------------------------
<S> <C>
COMMON STOCK,
NO PAR VALUE 3,988,553
</TABLE>
<PAGE> 2
TRIDEX CORPORATION AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. Financial Information:
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
June 29, 1996 and December 31, 1995 3
Consolidated Statements of Income for the Quarters and Six
Months Ended June 29, 1996 and July 1, 1995 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 29, 1996 and July 1, 1995 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of the Results of
Operations and Financial Condition 7
PART II. Other Information:
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
EXHIBIT INDEX
Exhibit 10.1 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"). 12
Exhibit 10.2 Agreement and Plan of Merger dated as of July 16, 1996 between
Magnetec and Ithaca. 19
Exhibit 10.3 Asset Transfer Agreement dated as of July 31, 1996 between Magnetec
and Tridex. 21
Exhibit 10.4 Form of Manufacturing Support Services Agreement between Magnetec
and Tridex. 24
Exhibit 10.5 Corporate Services Agreement dated as of July 30, 1996 between Tridex
and TransAct. 28
Exhibit 10.6 Printer Supply Agreement dated as of July 31, 1996 between Magnetec
and Ultimate Technology Corporation. 32
Exhibit 10.7 Tax Sharing Agreement dated as of July 31, 1996 between Tridex and
TransAct. 37
Exhibit 11 Computation of Per Share Earnings 48
Exhibit 27 Financial Data Schedule
</TABLE>
2
<PAGE> 3
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 29, DECEMBER 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 524 $ 933
Receivables 9,752 7,406
Inventories 9,840 9,597
Deferred tax assets 674 645
Other current assets 830 732
------- -------
Total current assets 21,620 19,313
------- -------
Plant and equipment, net 5,638 5,196
Excess of cost over fair value of net assets acquired 9,173 9,608
Other assets 1,587 1,608
------- -------
$38,018 $35,725
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans payable $ 447 $ 396
Current portion of long term debt 2,188 2,411
Accounts payable 5,134 4,516
Accrued liabilities 4,572 4,264
------- -------
Total current liabilities 12,341 11,587
------- -------
Long term obligations, less current portion:
Term loan payable 4,351 4,843
Senior subordinated convertible debentures,
due 1997, net of discount of $9 and $16 2,601 2,714
Subordinated convertible term promissory notes,
due 1997, net of discount of $118 and $186 282 614
Other 339 405
------- -------
7,573 8,576
------- -------
Shareholders' equity:
Common stock, at stated value 1,026 978
Additional paid-in capital 22,937 21,939
Accumulated deficit (5,006) (6,609)
Cumulative valuation adjustments 20 82
Common shares held in treasury, at cost (873) (828)
------- -------
18,104 15,562
------- -------
$38,018 $35,725
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE> 4
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED SIX MONTHS ENDED
-------------- ----------------
JUNE 29, JULY 1, JUNE 29, JULY 1,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 17,351 $ 15,113 $ 34,943 $ 30,443
---------- ---------- ---------- ----------
Operating costs and expenses:
Cost of sales 11,713 10,223 23,405 20,471
Engineering, design and product development costs 905 720 1,854 1,399
Selling, administrative and general expenses 3,108 3,220 6,454 6,492
---------- ---------- ---------- ----------
15,726 14,163 31,713 28,362
---------- ---------- ---------- ----------
Operating income 1,625 950 3,230 2,081
Other charges (income):
Interest expense, net 296 360 607 668
Other, net (23) 11 (151) 54
---------- ---------- ---------- ----------
273 371 456 722
---------- ---------- ---------- ----------
Income before income taxes 1,352 579 2,774 1,359
Provision for income taxes 545 266 1,171 (165)
---------- ---------- ---------- ----------
Net income $ 807 $ 313 $ 1,603 $ 1,524
========== ========== ========== ==========
Earnings per common and common equivalent share:
Primary $ 0.20 $ 0.08 $ 0.40 $ 0.39
========== ========== ========== ==========
Average common and common equivalent share
shares outstanding: 4,081,859 3,883,389 4,009,971 3,887,175
========== ========== ========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
4
<PAGE> 5
TRIDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------
JUNE 29, JULY 1,
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,603 $ 1,524
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,321 1,262
Deferred income taxes (519)
Gain on disposal of assets, including marketable securities (283) (5)
Changes in operating assets and liabilities:
Receivables (2,337) (3,016)
Inventory (248) (1,884)
Other current assets (29) 87
Other assets (104) (152)
Accounts payable, accrued liabilities and income taxes payable 525 652
Other 36
------- -------
Net cash provided by (used in) operating activities 448 (2,015)
------- -------
Cash flows from investing activities:
Purchases of plant and equipment (1,167) (1,357)
Proceeds from sale of assets, including marketable securities 520
Acquired assets and acquisition costs, net of cash acquired (68)
Other (10) 75
------- -------
Net cash used in investing activities (657) (1,350)
------- -------
Cash flows from financing activities:
Net change in borrowings under lines of credit 50 3,444
Net proceeds from issuance of long term debt 27 106
Principal payments on long term borrowings (447) (1,289)
Proceeds from exercise of stock options and warrants 178 2
Other (10) (9)
------- -------
Net cash provided by (used in) financing activities (202) 2,254
------- -------
Effect of exchange rate changes on cash 2 10
------- -------
Decrease in cash and cash equivalents (409) (1,101)
Cash and cash equivalents at beginning of period 933 1,494
------- -------
Cash and cash equivalents at end of period $ 524 $ 393
======= =======
Supplemental cash flow information:
Interest paid $ 505 $ 472
Income taxes paid, net of refunds 390 877
Supplemental non-cash investing and financing activities:
Conversion of convertible debentures to common stock $ 860
</TABLE>
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
5
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TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments (consisting only
of normal recurring adjustments) necessary to present fairly its
financial position as of June 29, 1996, the results of its operations for
the quarters and six months ended June 29, 1996 and July 1, 1995 and
changes in its cash flows for the six months ended June 29, 1996 and July
1, 1995. The December 31, 1995 consolidated condensed balance sheet has
been derived from the Company's audited financial statements at that
date. Certain amounts in the December 31, 1995 balance sheet have been
reclassified to conform to the current period's presentation. These
interim financial statements should be read in conjunction with the
financial statements included in the Company's Transition Report on Form
10-K for the nine months ended December 31, 1995.
The financial position and results of operations of the Company's foreign
subsidiaries are measured using local currency as the functional
currency. Assets and liabilities of such subsidiaries have been
translated at current exchange rates, and related revenues and expenses
have been translated at weighted average exchange rates. The aggregate
effect of translation adjustments so calculated is included as a separate
component of shareholders' equity. Transaction gains and losses are
included in other income.
The results of operations for the quarters and six months ended June 29,
1996 and July 1, 1995 are not necessarily indicative of the results to be
expected for the full year.
2. Primary earnings per common share is based on the weighted average number
of shares outstanding during the period after consideration of the
dilutive effect of stock options and warrants.
3. Inventories:
Components of inventory are:
<TABLE>
<CAPTION>
June 29, 1996 December 31, 1995
------------- -----------------
(Dollars in Thousands)
<S> <C> <C>
Raw materials and
component parts $6,913 $6,704
Work-in-process 952 1,271
Finished goods 1,975 1,622
------ ------
$9,840 $9,597
====== ======
</TABLE>
4. Other income, net:
Other non-operating income for the six months includes $285,000 gain on
the sale of marketable securities offset by transactional foreign
exchange losses and an additional provision for loss on disposal of real
estate held for sale of $25,000.
5. Commitments and contingencies:
The Company is involved in an environmental matter discussed in the
footnotes to the financial statements included in the Company's
Transition Report on Form 10-K for the nine months ended December 31,
1995. As of June 29, 1996 and to the date of this report, there has been
no material development in the resolution of this matter.
6
<PAGE> 7
6. Issuance of Common Stock:
During the second quarter, the Company accepted $860,000 principal amount
of the 10.5% Debentures for conversion into 95,545 shares of common
stock. The conversion of these Debentures into common stock satisfies the
Company's sinking fund obligation of $740,000 due on December 31, 1996.
7. Public equity offering:
On April 30, 1996 the Company announced that it had engaged an investment
banking firm to pursue an underwritten public offering of up to 20% of
the equity of its Printer Group. Pursuant to a plan of reorganization, on
June 17, 1996 management incorporated TransAct Technologies Incorporated,
a wholly-owned subsidiary of Tridex, principally comprised of the
Magnetec Corporation and Ithaca Peripherals Incorporated subsidiaries. On
June 26, 1996, TransAct filed a registration statement on Form S-1 with
the Securities and Exchange Commission. Also in conjunction with this
plan of reorganization, the Company has agreed to indemnify TransAct
against certain future liabilities, including environmental liability
associated with the former Magnetec facility located on Granby Street,
Bloomfield, Connecticut. Costs incurred to date related to the proposed
offering aggregating $398,000 are included in other current assets on the
accompanying balance sheet. These costs will be reimbursed from the
proceeds of the anticipated public offering upon closing.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 29, 1996 COMPARED TO QUARTER ENDED JULY 1, 1995
CONSOLIDATED NET SALES for the quarter ended June 29, 1996 increased $2,238,000
(15%) to $17,351,000 from $15,113,000 in the comparable quarter of the prior
year. The increase reflects greater volume of shipments of printers into the
gaming and lottery market and of cash drawers from the Company's Cash Bases GB
Ltd. subsidiary into the point-of-sale ("POS") market. Shipments of POS
terminals and related products improved slightly from the prior year's quarter.
CONSOLIDATED GROSS PROFIT increased $748,000 (15%) to $5,638,000 from $4,890,000
in the prior year's quarter, primarily as a result of the higher volume of
shipments of printers and cash drawers. Consolidated gross profit percentage was
approximately 32% of sales in both periods.
CONSOLIDATED ENGINEERING, DESIGN AND PRODUCT DEVELOPMENT COSTS increased
$185,000 (26%) to $905,000 from $720,000 in the prior year's quarter. The
increase is primarily the result of the cost of developing new products,
principally for the POS and gaming and lottery markets, and, to a lesser degree,
enhancing existing products.
CONSOLIDATED SELLING, ADMINISTRATIVE AND GENERAL EXPENSES decreased $112,000
(3%) to $3,108,000 from $3,220,000 in the prior year's quarter. The decrease
reflects restructuring actions taken at the end of 1995 and continuing cost
controls at all operating units.
CONSOLIDATED OPERATING PROFIT for the current quarter increased $675,000 (71%)
to $1,625,000 from $950,000 in the prior year's quarter, primarily the result of
the contribution of increased volume of shipments of printers and cash drawers.
Consolidated operating profit as a percentage of revenue increased to 9% from 6%
in the prior year's quarter and is primarily the result of the higher volume of
shipments of printers and cash drawers and of the lower selling, general and
administrative expenses.
NET INTEREST EXPENSE decreased $64,000 (18%) to $296,000 from $360,000 in the
prior year's quarter. The decrease in interest expense reflects lower levels of
indebtedness, particularly decreased utilization of the domestic line of credit.
OTHER NON-OPERATING INCOME, NET for the current quarter includes $106,000 gain
on the sale of marketable securities offset by $64,000 transactional foreign
exchange losses and an additional provision of $25,000 for real
7
<PAGE> 8
estate held for sale. Other non-operating expense in the prior year's quarter
consists primarily of transactional foreign exchange losses.
PROVISION FOR INCOME TAXES in the current quarter reflects an estimated
effective tax rate of 40% reflecting an adjustment for certain tax credits. The
estimated effective tax rate was approximately 46% in the prior year's quarter.
NET INCOME for the current quarter was $807,000 (or $0.20 per share) as compared
to $313,000 (or $0.08 per share) in the prior year's quarter. The average number
of common and common equivalent shares outstanding increased to 4,081,859 shares
from 3,883,389 shares in the prior year's quarter.
SIX MONTHS ENDED JUNE 29, 1996 COMPARED TO SIX MONTHS ENDED JULY 1, 1995
CONSOLIDATED NET SALES for the six months ended June 29, 1996 increased
$4,500,000 (15%) to $34,943,000 from $30,443,000 in the comparable prior year's
period. The increase reflects greater volume of shipments of printers into both
the POS and gaming and lottery markets and of cash drawers from the Company's
Cash Bases GB Ltd. subsidiary into the POS market. Shipment of POS terminals and
related products declined slightly from the prior year's period.
CONSOLIDATED GROSS PROFIT increased $1,566,000 (16%) to $11,538,000 from
$9,972,000 in the prior year's period, primarily as a result of the higher
volume of shipments of printers and cash drawers. Consolidated gross profit
percentage was approximately 33% of sales in both periods.
CONSOLIDATED ENGINEERING, DESIGN AND PRODUCT DEVELOPMENT COSTS increased
$455,000 (33%) to $1,854,000 from $1,399,000 in the prior year's period. The
increase is primarily the result of the cost of developing new products,
principally for the POS and gaming and lottery markets, and, to a lesser degree,
enhancing existing products.
CONSOLIDATED SELLING, ADMINISTRATIVE AND GENERAL EXPENSES decreased $38,000 (1%)
to $6,454,000 from $6,492,000 in the prior year's period. Administrative and
general expenses decreased from the prior year's period, reflecting
restructuring actions taken at the end of 1995 and continuing cost controls at
all operating units. Selling expenses increased due primarily to a more
intensive sales effort in the cash drawer operation.
CONSOLIDATED OPERATING PROFIT for the current period increased $1,149,000 (55%)
to $3,230,000 from $2,081,000 in the prior year's period, primarily the result
of the contribution of increased volume of shipments of printers and cash
drawers and the lower selling, general and administrative expenses. Consolidated
operating profit as a percentage of revenue increased to 9% from 7% in the prior
year's period and is primarily the result of a higher volume of shipments.
NET INTEREST EXPENSE decreased $61,000 (9%) to $607,000 from $668,000 in the
prior year's period. The decrease in interest expense reflect lower levels of
indebtedness, particularly decreased utilization of the domestic line of credit.
OTHER NON-OPERATING INCOME, NET for the current period includes $285,000 gain on
the sale of marketable securities offset by $82,000 transactional foreign
exchange losses and an additional provision of $55,000 for real estate held for
sale. Other non-operating expense in the prior year's period includes provisions
of $50,000 for real estate held for sale and $60,000 for estimated clean-up
costs associated with certain environmental matters, offset by transactional
foreign exchange gains.
PROVISION FOR INCOME TAXES in the current period reflects an estimated effective
tax rate of 42% reflecting an adjustment for certain tax credits. A net tax
benefit resulted in the prior year's period due to the recording of a tax credit
of $770,000. Such credit reflected an adjustment to the Company's valuation
allowance to recognize federal deferred tax benefits available to be used by the
Company.
NET INCOME for the current period was $1,603,000 (or $0.40 per share) as
compared to $1,524,000 (or $0.30 per share) in the prior year's period. The
average number of common and common equivalent shares outstanding increased to
4,009,971 shares from 3,887,175 shares in the prior year's quarter.
8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at June 29, 1996 was $9,279,000 compared with
$7,726,000 at December 31, 1995. The current ratio was 1.8 to 1.0 at June 29,
1996 and 1.7 to 1.0 at December 31, 1995. The increase in working capital
reflects a higher level of operating activity and the conversion of $860,000
principal amount of the Company's 10.5% Debentures to 95,545 shares of common
stock.
The Company has a $3,000,000 Working Capital Facility (the "Working Capital
Facility") with Fleet Bank, N.A. ("Fleet") which provides critical capital for
the Company. If for any reason this or comparable financing is not available to
the Company, it would have an adverse effect on the Company and its ability to
conduct its operations as presently conducted. The Company is required to comply
with certain financial covenants, including a minimum tangible net worth, a
minimum current ratio, a maximum leverage ratio and a minimum debt service
coverage ratio, otherwise Fleet may withdraw its commitment. The Company was in
compliance with these covenants at June 29, 1996 and expects to be in compliance
with these covenants for the remainder of 1996.
On April 30, 1996, the Company announced that it has engaged an investment
banking firm to pursue an underwritten public offering of up to 20% of its
Printer Group, which principally consists of two Company subsidiaries, Magnetec
Corporation and Ithaca Peripherals Incorporated. The Company also announced its
intent to spin-off its remaining equity interest in the Printer Group in a
tax-free distribution to the shareholders of the Company. If the public
offering is completed, the Company expects to reduce its overall level of
indebtedness, including bank loans, and to amend its agreements with Fleet.
During the first six months of 1996, the Company's operating cash requirements
were satisfied by cash flow from operations, borrowings under its lines of
credit and by the proceeds from the sale of marketable securities. At June 29,
1996, the Company had approximately $500,000 in commitments for capital
expenditures and had availability of $3,000,000 under the Working Capital
Facility. During the second quarter, $860,000 principal amount of 10.5%
Debentures were converted into 95,545 shares of common stock. The conversion
satisfies the $740,000 sinking fund requirement due on December 31, 1996. During
the remainder of 1996, the Company expects that funds generated from operations,
supplemented by borrowings under the Working Capital Facility, if necessary,
will be sufficient to satisfy its cash needs for working capital, scheduled debt
retirements and capital expenditures, primarily tooling for new products.
Over the long term, the Company believes that funds generated from operations
and borrowings under the Working Capital Facility, if necessary, will continue
to satisfy its working capital needs, support a certain level of growth and meet
scheduled debt retirements.
9
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 4. Submission of Matter to a Vote of Security Holders
(1) The Company held its Annual Meeting of Shareholders on May
30, 1996. Matters voted upon at the meeting and the number
of votes cast for, against or withheld, are as follows:
<TABLE>
<CAPTION>
Nominee Votes For Votes Against or Withheld
------- --------- -------------------------
<S> <C> <C>
Seth M. Lukash 3,551,212 44,276
Paul J. Dunphy 3,551,212 44,276
Graham Y. Tanaka 3,551,212 44,276
C. Alan Peyser 3,544,429 51,059
Thomas R. Schwarz 3,550,934 44,554
</TABLE>
(2) To appoint Price Waterhouse as the Company's independent
certified public accountants for the year ending December
31, 1996. Votes cast were: 3,570,912 for, 13,960 against and
10,626 withheld.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
Exhibit 10.1 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").
Exhibit 10.2 Agreement and Plan of Merger dated as of
July 16, 1996 between Magnetec and Ithaca.
Exhibit 10.3 Asset Transfer Agreement dated as of July 31,
1996 between Magnetec and Tridex.
Exhibit 10.4 Form of Manufacturing Support Services
Agreement between Magnetec and Tridex.
Exhibit 10.5 Corporate Services Agreement dated as of July
30, 1996 between Tridex and TransAct.
Exhibit 10.6 Printer Supply Agreement dated as of July 31,
1996 between Magnetec and Ultimate Technology
Corporation.
Exhibit 10.7 Tax Sharing Agreement dated as of July 31,
1996 between Tridex and TransAct.
Exhibit 11 Computation of Per Share Earnings
Exhibit 27 Financial Data Schedule
b. Reports on Form 8-K
On May 2, 1996, the Company filed a Current Report on Form
8-K to report that on April 30, 1996, it had announced that
it had engaged an investment banking firm to pursue an
underwritten public offering of up to 20% of the equity of
its Printer Group, which consists of two Tridex
subsidiaries, Magnetec Corporation and Ithaca Peripherals
Incorporated.
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIDEX CORPORATION
(Registrant)
August 9, 1996 /s/Seth M. Lukash
-----------------
Seth M. Lukash
Chairman of the Board, President, Chief
Executive Officer, and Chief Operating
Officer
August 9, 1996 /s/Richard L. Cote
------------------
Richard L. Cote
Senior Vice President and
Chief Financial Officer
August 9, 1996 /s/George T. Crandall
---------------------
George T. Crandall
Vice President and Treasurer
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
Exhibit 10.1 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"). 12
Exhibit 10.2 Agreement and Plan of Merger dated as of July 16, 1996 between
Magnetec and Ithaca. 19
Exhibit 10.3 Asset Transfer Agreement dated as of July 31, 1996 between Magnetec
and Tridex. 21
Exhibit 10.4 Form of Manufacturing Support Services Agreement between Magnetec
and Tridex. 24
Exhibit 10.5 Corporate Services Agreement dated as of July 30, 1996 between Tridex
and TransAct. 28
Exhibit 10.6 Printer Supply Agreement dated as of July 31, 1996 between Magnetec
and Ultimate Technology Corporation. 32
Exhibit 10.7 Tax Sharing Agreement dated as of July 31, 1996 between Tridex and
TransAct. 37
Exhibit 11 Computation of Per Share Earnings 48
Exhibit 27 Financial Data Schedule
</TABLE>
2
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EXHIBIT 10.1
PLAN OF REORGANIZATION
PLAN OF REORGANIZATION dated as of June __, 1996 by and among Tridex
Corporation, a Connecticut corporation ("Tridex"), with executive offices at 61
Wilton Road, Westport, Connecticut, 06880, Magnetec Corporation, a Connecticut
corporation ("Magnetec"), and TransAct Technologies Incorporated, a Delaware
corporation ("TransAct") each with executive offices located at 7 Laser Lane,
Wallingford, CT 06492 and Ithaca Peripherals Incorporated ("Ithaca"), a Delaware
corporation, with executive offices at 20 Bomax Drive, Ithaca, New York 14850;
WHEREAS, Magnetec, TransAct and Ithaca are wholly-owned, direct
subsidiaries of Tridex;
WHEREAS, Tridex believes it to be in its best interest if the business,
operations and related assets used and useful in the printer business and
related activities conducted by Tridex through its subsidiaries, Magnetec and
Ithaca, be contained within a single corporation, its subsidiary, TransAct,
separate and apart from Tridex; and
WHEREAS, after the execution and delivery of this Agreement, up to
1,322,500 shares of TransAct Common Stock (or such other number as shall equal
approximately 19.7% of the outstanding shares of the Common Stock of TransAct on
a pro forma basis after giving effect to the Exchange and the Offering, as
defined herein) shall be registered under the Securities Act of 1933, as amended
(the "Securities Act") for sale in a firm commitment underwritten public
offering.
WHEREAS, on or about the date hereof, Tridex has filed or will file an
application with the United States Internal Revenue Service (the "IRS") seeking
a ruling (the "Ruling") that a pro rata distribution by Tridex of all shares of
TransAct Common Stock held by Tridex to its stockholders (the "Distribution")
would not be treated as taxable for federal income tax purposes.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
I. TRANSFERS OF ASSETS; ISSUANCE OF SECURITIES.
1.1 Ithaca Merged Into Magnetec. Subject to the terms and conditions
set forth herein, and as soon as practicable after the date hereof, Tridex, as
sole shareholder of Magnetec and Ithaca, and the Boards of Directors of Ithaca
and Magnetec, respectively, agree to take all steps necessary to effectuate the
merger of Ithaca with and into Magnetec (the "Merger"), such merger to be
effective no later than the day before the Effective Date (as defined below),
including but not limited to the execution of agreements, plans and certificates
of merger pursuant to the laws of the states of organization of the merging
entities, Delaware and Connecticut, respectively.
1.2 Issuance of TransAct Common Stock. Subject to the terms and
conditions set forth herein, as soon as practicable, but in no event later than
the day before the Effective Date, TransAct shall issue to Tridex, and Tridex
shall acquire from TransAct, 5,400,000 shares of TransAct Common Stock, par
value $.01 per share ("TransAct Common Stock") (or such other number as shall
equal no less than approximately 80.3% of the outstanding TransAct Common Stock
after giving effect to such issuance and the Offering) constituting all of the
then outstanding capital stock of TransAct, in exchange for the tender and
delivery by Tridex of all of the outstanding shares of common stock, par value
$.01 per share, of Magnetec (the "Magnetec Shares") (the "Exchange"). It is the
intent of the parties hereto that, upon the completion of the Offering by
TransAct contemplated under Section 1.3 below, that Tridex will own no less than
approximately 80.3% of the outstanding shares of TransAct Common Stock.
1.3 Offer of TransAct Shares. TransAct shall use its commercially
reasonably best efforts to issue and sell, in a firm commitment underwritten
public offering pursuant to a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act, up to 1,322,500 shares of
TransAct Common Stock, par value $.01 per share (the "Offering"). TransAct shall
prepare and file with the Securities and Exchange Commission (the "SEC") a
Registration Statement, and any amendments thereto necessary or advisable for
purposes of this Plan of
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Reorganization. The "Effective Date" shall be the date on which the SEC declares
the Registration Statement on Form S-1 to be effective.
1.4 Payment of Intercompany Indebtedness. Subject to the terms and
conditions set forth herein and the completion of the Offering contemplated
under Section 1.3 above, TransAct hereby agrees to advance to Magnetec, from the
proceeds of the Offering, sufficient funds to enable Magnetec to pay to Tridex
$8,500,000 of intercompany indebtedness. Magnetec shall pay at least $7,500,000
of such intercompany indebtedness at, or as soon as practicable after the
closing of the Offering and, at its option, may pay the balance either at such
closing or by issuance of promissory note for $1,000,000. If TransAct elects to
issue such note, (i) it shall be payable one year after issuance, bear interest
at a rate equal to the rate paid by Tridex under its revolving credit agreement
with Fleet Bank, National Association, and provide for prepayment without
penalty and (ii) TransAct's obligation to advance funds to Magnetec from the
proceeds of the Offering shall be reduced by the amount of the Note. Tridex
shall furnish to Magnetec and TransAct a written acknowledgment that payment of
such $8,500,000 satisfies any and all intercompany indebtedness owed by Magnetec
or TransAct to Tridex.
1.5 Related Agreements. TransAct and Tridex hereby agree that, no later
than the day before the Effective Date, they shall enter into certain agreements
relating to the allocation of taxes and tax attributes, provision of certain
corporate and administrative services and the sale of printers by TransAct to
Ultimate Technology Corporation, a wholly-owned subsidiary of Tridex. Forms of a
Corporate Services Agreement, Tax Sharing Agreement and Printer Supply Agreement
between TransAct and Tridex are attached hereto as Exhibits A, B and C,
respectively.
1.6 Application for Internal Revenue Service Ruling. Tridex hereby
agrees that it will use its commercially reasonable best efforts to prosecute
the Ruling and to obtain a favorable result from the IRS so that the
distribution on a pro rata basis of all of the shares of TransAct Common Stock
owned by Tridex after the Exchange and Offering (constituting at least 80.3% of
the shares of TransAct Common Stock outstanding after the completion of the
Offering) would be a tax-free distribution to Tridex stockholders for federal
income tax purposes.
1.7 Pro Rata Distribution. Tridex hereby agrees that, upon the
successful completion of the Offering and the receipt of a favorable Ruling from
the IRS as contemplated under Section 1.6 above, it shall distribute on a pro
rata basis, to stockholders of record of Tridex common stock all shares of
TransAct Common Stock owned by Tridex; in no case shall Tridex have any
obligation to complete such distribution before receipt of a favorable Ruling.
1.8 Granby Street Liability. Tridex hereby agrees that, upon completion
of the Merger and Exchange contemplated under Section 1.1 and Section 1.2 above,
respectively, it shall indemnify and hold harmless Magnetec and TransAct from
any and all liabilities (as former occupant, operator or otherwise), including
but not limited to liabilities with respect to environmental matters, concerning
the real property located at 96 Granby Street, Bloomfield, CT.
1.9 Release from Guarantees. Upon completion of the Merger and
Exchange, TransAct hereby agrees to use commercially reasonable efforts to
obtain the release of Tridex from any and all of Tridex's obligations and
liabilities under guarantees of leases of real property or equipment used by
TransAct.
1.10 Release of Magnetec and Ithaca from Fleet Lien. Upon completion of
the Offering, Tridex shall obtain the release of Magnetec, the Magnetec Shares
and Ithaca from any and all obligations under the Fleet loan documents.
1.11 27-Wire Printhead. Tridex hereby acknowledges and confirms that it
has no right, title or interest in or to any form of intellectual property or
other rights of ownership in the 27-wire printhead manufactured and sold by
Magnetec to GTECH Holdings Corporation and to the extent it may have any basis
to assert or claim such right, title or interest, Tridex (intending to confirm
Magnetec's exclusive ownership of such technology) hereby unconditionally
releases and forever discharges Magnetec from any and all claims related
thereto.
1.12 Assignment of Okidata Agreements. Upon completion of the Merger
and Exchange, Tridex hereby agrees to assign, transfer, convey and deliver its
rights under a Strategic Agreement by and between it and Okidata, a Division of
Oki America, Inc. dated as of May 9, 1996 pursuant to which Tridex has entered
into an exclusive Sales Agreement with Oki Europe Limited dated as of May 10,
1996 to sell POS and kiosk products in Europe, the Middle East and North Africa.
Upon completion of the Merger and Exchange, TransAct hereby agrees to assume
from Tridex any and all liabilities under the Strategic Agreement and Exclusive
Sales Agreement.
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II. REPRESENTATIONS AND WARRANTIES OF TRIDEX, MAGNETEC AND ITHACA.
Tridex, Magnetec and Ithaca hereby represent and warrant to TransAct as
follows:
2.1 Organization; Good Standing; Subsidiaries. Tridex, Magnetec and
Ithaca are corporations duly organized, validly existing and in good standing
under the laws of the states of Connecticut, Connecticut and Delaware,
respectively. Each is qualified to do business as a foreign corporation under
the laws of all other states or jurisdictions in which such qualification is
required because of the properties owned, leased or operated by it or the nature
of the business currently conducted by it. Each has corporate power and
authority to own its properties and to conduct its businesses as presently
conducted.
2.2 Authorization; Binding Effect. The execution and delivery of this
Plan of Reorganization by each of Tridex, Magnetec and Ithaca and the
performance of its respective obligations thereunder (a) have been duly
authorized by all necessary corporate action, (b) do not conflict with any of
the provisions contained in the Certificate of Incorporation or by- laws of any
of Tridex, Magnetec or Ithaca, or in any agreement, indenture or other
instrument to which any of them is a party, or by which any of its respective
assets may be bound, (c) do not violate any law, regulation, order or decree,
and (d) will not result in the creation of any lien or encumbrance upon any of
the assets being transferred except as contemplated hereby. This Plan of
Reorganization and the other instruments to be executed and delivered by each of
Tridex, Magnetec and Ithaca hereunder will constitute valid and binding
obligations.
2.3 Magnetec Shares. The Magnetec Shares have been duly authorized and
are fully paid and non-assessable shares of capital stock of Magnetec, free and
clear of all liens and encumbrances, except for the lien in favor of Fleet Bank,
National Association.
III. REPRESENTATIONS AND WARRANTIES OF TRANSACT
TransAct represents and warrants to Tridex, Magnetec and Ithaca as
follows:
3.1 Organization and Good Standing. TransAct is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and will have by the Effective Date registered as a foreign corporation
under the laws of Connecticut and New York. TransAct has the corporate power and
authority to conduct its business as presently proposed.
3.2 Authorization. The execution, delivery and performance of this and
the other agreements and instruments to be executed and delivered by TransAct in
accordance herewith (a) have been duly authorized by all necessary corporate
action, (b) do not conflict with any of the provisions contained in the
Certificate of Incorporation or By-Laws of TransAct, or in any other agreement,
indenture or instrument to which TransAct is a party or by agreement, indenture
or instrument to which TransAct is a party or by which TransAct or its assets
may be bound and (c) do not violate any law, regulation, order or decree. This
Plan of Reorganization and the other instruments to be executed and delivered by
TransAct hereunder will constitute valid and binding obligations of TransAct.
3.3 Shares of TransAct Capital Stock. Upon the completion of the
Exchange, the 5,400,000 shares of Common Stock issued to Tridex shall be duly
authorized and validly issued shares of capital stock of TransAct, fully paid
and non-assessable.
IV. CONDITIONS TO CLOSING
4.1 Conditions to Obligations of TransAct and Tridex. The obligations
of TransAct and Tridex to complete the transactions provided for herein are
subject to the satisfaction or waiver of the following conditions:
(a) There shall not be any pending or threatened governmental action or
proceeding by or before any court or governmental body or agency which shall
seek to restrain, prohibit or invalidate the transactions contemplated by this
Plan or Reorganization.
(b) TransAct shall have filed the Registration Statement with the SEC.
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(c) Prior to the Effective Date, Tridex and TransAct shall have entered
into an agreement regarding the disposition of the ribbon business.
(d) The Merger shall have been completed.
V. CLOSING OF EXCHANGE
The closing of the transactions in connection with the Exchange shall
be held at the offices of Hinckley, Allen & Snyder, One Financial Center,
Boston, MA 02111 at the close of business no later than the day before the
Effective Date (the "Closing").
5.1 Obligations of Tridex.
At the Closing, Tridex shall deliver to TransAct:
(a) A certificate representing the Magnetec Shares, duly endorsed for
transfer to TransAct;
(b) Proof of filing of the Ruling;
(c) A Good Standing Certificate from the Secretary of State of the
State of Connecticut;
(d) Certificates of Merger certified by the Secretaries of the States
of Delaware and Connecticut;
(e) All books and records of Magnetec and Ithaca; and
(f) Executed Corporate Services Agreement, Tax Sharing Agreement and
Printer Supply Agreement.
5.2 Obligations of TransAct.
At the Closing, TransAct shall deliver to Tridex:
(a) A certificate representing 5,400,000 shares of the Common Stock of
TransAct, issued to Tridex;
(b) Executed Corporate Services Agreement, Tax Sharing Agreement and
Printer Supply Agreement; and
(c) A good standing certificate from the Secretary of the State of
Delaware;
VI. COVENANT NOT TO COMPETE; CONFIDENTIALITY
6.1 Covenant Not to Compete. For a period of five (5) years from the
date of the pro rata distribution of the capital stock of TransAct to Tridex
shareholders contemplated under Section 1.7 above, Tridex shall not, whether as
owner, part owner, partner, director, officer, trustee, employee, consultant,
agent or in any other capacity, directly or indirectly, engage or participate in
any business, organization or entity located in or doing business in any
geographic market in which TransAct is then doing business, in the design,
manufacture, sale or distribution of printers or printer goods, for use in
point-of-sales, gaming and wagering, financial services and kiosk markets. The
foregoing shall not prohibit Tridex from holding five percent (5%) or less of
the outstanding equity securities of any corporation whose equity securities are
regularly traded on any national stock exchange or recognized "over-the-counter"
market.
6.2 Remedies. Any breach of Section 6.1 of this Plan of Reorganization
may not be adequately compensated by damages at law, and TransAct shall be
entitled, in addition to any other available remedies, to equitable relief in a
court of equity by injunction or otherwise, without the necessity or proving
actual damages for breach of such Section 6.
6.3 Confidentiality. Each party to this Plan of Reorganization shall
hold, and shall cause its officers, directors, employees, agents, affiliates,
consultants and authorized representatives to hold in strict confidence all
information concerning the other party in its possession or furnished by the
other or the other's representatives pursuant to this Plan of Reorganization
(except to the extent that such information can be shown to have been (a) in
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the public domain through no fault of such party, or (b) later lawfully acquired
from other sources by such party) and neither party shall disclose or release
such information to any other person except its authorized representatives
unless compelled to by judicial or administrative process, as advised by counsel
or by other requirement of law. Each party shall be deemed to have satisfied its
obligation to hold confidential information concerning or supplied by the other
party if it exercises the same care as it takes to preserve the confidentiality
of its own information.
VII. MISCELLANEOUS
7.1 Waivers and Amendments.
(a) This Plan of Reorganization may be amended, modified or
supplemented, and any obligation hereunder may be waived, only by a written
instrument executed by the parties hereto. The waiver by any party hereto of a
breach of any provision of this Plan of Reorganization shall not operate as a
waiver of any subsequent breach.
(b) No failure on the part of any party to exercise, and no delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or remedy by such party
preclude any right or remedy. All remedies hereunder are cumulative and are not
exclusive of any other remedies provided by law.
7.2 Notices. All notices, requests, demands and other communications
which are required or may be given under this Plan of Reorganization shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail, return receipt requested, postage prepaid
(a) if to Tridex, to Tridex Corporation, with executive offices at 61 Wilton
Road, Westport, CT 06880, Attention: Seth M. Lukash, Chairman and Chief
Executive Officer; (b) if to Magnetec, Ithaca or TransAct, to TransAct
Technologies Incorporated, 7 Laser Lane, Wallingford, CT 06492, Attention: Bart
C. Shuldman, President and Chief Executive Officer, or to such other address as
the parties shall have specified by notice in writing to the other.
7.3 Expenses; Further Assurances. All expenses associated with the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall be paid by Tridex. At the request of any
party, on or after the Effective Date, Tridex, Magnetec, Ithaca and TransAct
shall cause to be executed and delivered, such documents or instruments in
addition to those required by this Plan of Reorganization, as may reasonably be
necessary or desirable to carry out or implement any provision of this Plan of
Reorganization.
7.4 Access to and Information Concerning Properties, Records, Etc. of
TransAct After Closing. After the Closing, TransAct agrees to maintain any
records and files of Magnetec and Ithaca acquired at the Closing and, upon
reasonable notice, to provide Tridex and its authorized representatives during
normal business hours, with such access to the books, records, and files of
TransAct for purposes of copying by Tridex as may reasonably be required in
connection with its tax, financial reporting and legal obligations for a period
of six (6) years from the Effective Date. After the Closing, Tridex agrees to
provide access to TransAct and its authorized representatives reasonable notice
and during normal business hours to any and all records which may be deemed
necessary to its tax, financial reporting and legal obligations for the same
period.
7.5 Miscellaneous. This Plan of Reorganization and the Exhibits hereto
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and supersedes all prior correspondence and other writing
between the parties in connection with the subject matter of this Agreement, and
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of [Connecticut]
without regard to its principles of choice of law. Any provision of this Plan of
Reorganization which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. All Exhibits mentioned in this Plan of Reorganization shall be
attached to this Plan of Reorganization, and shall form an integral part
thereof. All terms defined in this Plan of Reorganization which are used in any
Exhibit shall, unless the context otherwise requires, have the same meaning
therein as given herein. This Plan of Reorganization may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as of the date first above written.
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TRIDEX CORPORATION
By:_________________________
Title: Seth M. Lukash,
Chairman and Chief
Executive Officer
MAGNETEC CORPORATION
By:____________________________
Title: Bart C. Shuldman
President
ITHACA PERIPHERALS INCORPORATED
By:____________________________
Title: Vice President
TRANSACT TECHNOLOGIES, INC.
By:_________________________
Title: Bart C. Shuldman
President and Chief
Executive Officer
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LIST OF SCHEDULES/EXHIBITS
Exhibit A - Corporate Services Agreement
Exhibit B - Tax Sharing Agreement
Exhibit C - Printer Supply Agreement
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EXHIBIT 10.2
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is made and entered into as of the
day of July, 1996, by and between Magnetec Corporation, a Connecticut
corporation (hereinafter called "Magnetec"), and Ithaca Peripherals
Incorporated, a Delaware corporation (hereinafter called "Ithaca"), pursuant to
Section 33-371 of the Connecticut General Statutes and Section 252 of the
General Corporation Law of Delaware.
WHEREAS, the authorized capital stock of Ithaca consists of 4,000,000
shares of common stock, par value $.10 per share, of which 100 shares were
issued and outstanding as of July 8, 1996 and owned of record by Tridex
Corporation, a Connecticut corporation ("Tridex") on such date, and 2,000,000
shares of preferred stock, par value $1.50 per share, of which none were issued
and outstanding as of July 8, 1996;
WHEREAS, the authorized capital stock of Magnetec consists of 5,000
shares of common stock, no par value per share, of which 1,000 shares were
issued and outstanding as of July 8, 1996 and owned of record by Tridex;
WHEREAS, the respective Boards of Directors and shareholders of
Magnetec and Ithaca have deemed it advisable and to the advantage of the two
corporations that Ithaca merge into Magnetec upon the terms and conditions
herein provided;
WHEREAS, Magnetec and Ithaca intend that the merger contemplated hereby
qualify as a tax-free reorganization within the meaning of Section 368(a)(1) of
the Internal Revenue Code of 1986, as amended; and
WHEREAS, the Boards of Directors and shareholders of Magnetec and
Ithaca approved this Agreement and Plan of Merger on July __, 1996.
NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, Magnetec and Ithaca hereby agree to merge in accordance with
the following plan:
1. Merger. Ithaca shall be merged with and into Magnetec and Magnetec
shall survive the merger. As required under Section 33-371 of the Connecticut
General Statutes and Section 252 of the Delaware General Corporation Law (a) an
appropriate Certificate of Merger shall be signed, verified and delivered for
filing with the Secretary of the State of Connecticut, and (b) an appropriate
Certificate of Merger and Secretary's Certificate shall be signed, verified and
delivered for filing with the Secretary of the State of Delaware.
2. Effective Time. The Agreement and Plan of Merger shall become
effective for purposes of Delaware and Connecticut law, respectively, at the
date and time of the completion of the filing of the Certificate of Merger in
such states (hereinafter referred to as the "Effective Time").
3. Directors and Officers and Governing Documents.
(a) The directors and officers of Magnetec shall be the same upon the
Effective Time as they are for Magnetec immediately prior thereto.
(b) The by-laws of Magnetec, as in effect at the Effective Time, are
the same as those of the surviving corporation.
(c) The Agreement and Plan of Merger effects no change in the
Certificate of Incorporation of the surviving corporation, Magnetec, and said
Certificate of Incorporation shall continue in full force and effect as the
Certificate of Incorporation of the corporation surviving the merger.
(d) The Certificate of Incorporation of Magnetec was filed with the
Secretary of the State of Connecticut on September 7, 1973.
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3. Rights and Liabilities of Magnetec. At and after the Effective Time,
Magnetec shall possess all the rights, privileges, immunities and franchises, as
well as of a public and private nature of each of the merging corporations; and
property, real, personal and mixed, and all debts due Ithaca on whatever
account, and all other choses in action, and all and every other interest of, or
belonging to or due to each of the corporations so merged, shall be taken and
transferred to and vested in Magnetec without further act or deed; and the title
to any real estate, or any interest therein, vested in either of such
corporations shall not prevent or be in any way impaired by reason of the
merger.
4. Further Assurances. From time to time, as and when required by
Magnetec, there shall be executed and delivered on behalf of Ithaca such deeds
and other instruments, and there shall be taken or caused to be taken by it all
such further and other action, as shall be appropriate or necessary in order to
vest, perfect or confirm, of record or otherwise, in Magnetec the title to and
possession of all property, interest, assets, rights, privileges, immunities,
powers, franchises and authority and Plan of Merger, and the officers and
directors of Magnetec are fully authorized in the name and on behalf of Ithaca
or otherwise to take any and all such action and to execute and deliver any and
all such deeds and other instruments.
5. Stock of Magnetec and Ithaca. No shares of Magnetec shall be issued
as a result of the merger. The 100 shares of common stock of Ithaca issued and
outstanding immediately prior to the Effective Time owned by Magnetec shall
automatically be canceled without any conversion thereof into any other security
or right to receive any form of compensation and no payment shall be made with
respect thereto.
6. Appointment of Agent. Magnetec hereby consents to service of process
in the State of Delaware in any action or special proceeding for the enforcement
of any liability or obligation of Ithaca and for the enforcement of the right of
holders of Common Stock of Ithaca to receive payment for the shares owned by
such holders, and hereby irrevocably appoints the Secretary of State of Delaware
as its agent to accept service of process in any action or special proceeding
for the enforcement, of any such liability or obligation. The address to which a
copy of such process shall be mailed by the Secretary of State to Ithaca is: c/o
Magnetec Corporation, 7 Laser Lane, Wallingford, CT 06492 Attention: Corporate
Secretary.
7. Amendment. At any time prior to the Effective Time this Agreement
and Plan of Merger may be amended in any manner as may be determined in the
judgment of the respective Boards of Directors of Magnetec and Ithaca, to be
necessary, desirable or expedient.
8. Abandonment. At any time before the Effective Time, this Agreement
and Plan of Merger may be terminated and the merger may be abandoned by the
Board of Directors and shareholders of either Magnetec or Ithaca or both.
9. Counterparts. In order to facilitate the filing and recording of
this Agreement and Plan of Merger, the same may be executed in two or more
counterparts, each of which shall be deemed to be an original and the same
agreement.
IN WITNESS WHEREOF, each of the corporate parties hereto, pursuant to
authority granted by the Boards of Directors of Magnetec and Ithaca, has caused
this Agreement and Plan of Merger to be executed by its President and attested
to by its Secretary and its corporate seal to be affixed hereto, as of the date
first above written.
ATTEST: MAGNETEC CORPORATION
By:
Secretary Bart C. Shuldman, President
ATTEST: ITHACA PERIPHERALS INCORPORATED
By:
Secretary Richard L. Cote, Vice President
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EXHIBIT 10.3
ASSET TRANSFER AGREEMENT
THIS ASSET TRANSFER AGREEMENT (the "Agreement") is entered into by and
between MAGNETEC CORPORATION, a Connecticut corporation ("Magnetec"), and TRIDEX
CORPORATION, a Connecticut corporation ("Tridex").
WHEREAS, Magnetec desires to transfer to Tridex and Tridex desires to
acquire from Magnetec all of the assets owned and used by Magnetec in Magnetec's
ribbon business (the "Ribbon Business").
NOW, THEREFORE, in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Transfer of Assets. (a) Magnetec hereby agrees to transfer to Tridex,
at the Closing (as defined in Section 7.1) all of Magnetec's right,
title and interest in and to the assets of Magnetec listed on Schedule
1 attached hereto, which constitute all of the equipment, inventory
(whether components, work-in progress or finished goods), unfilled
customer purchase orders, accounts receivable, packaging, sales
literature and other supplies used by Magnetec exclusively in the
conduct of the Ribbon Business (the "Assets") and (b) The Assets are
being transferred to Tridex "as is" and "where is" without any
warranties of quality or fitness except as hereinafter set forth.
2. Assumption of Liabilities. Tridex hereby agrees to assume all
liabilities and obligations of Magnetec (a) for accrued but unused
vacation days as set forth on Schedule 2(a) attached hereto, due to
employees engaged in the Ribbon Business who, in connection with the
Closing, cease to be employees of Magnetec and become employed by
Tridex and (b) under any purchase orders submitted by customers of
Magnetec as set forth on Schedule 2(b) attached hereto which remain
unperformed or unfilled at the time of the Closing and are assigned to
Tridex by Magnetec.
3. Consideration for Transfer of Assets. Tridex and Magnetec agree that,
at Closing, Magnetec shall accept, in consideration for the transfer of
the Assets, cancellation of intercompany indebtedness, owed by Magnetec
to Tridex, in an amount equal to the book value of the Assets at the
date of the closing. Tridex and Magnetec acknowledge that such book
value was approximately $228,000 at June 29, 1995.
4. Representations and Warranties of Magnetec. Magnetec represents and
warrants to Tridex as follows:
4.1 Corporate Status. Magnetec is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Connecticut.
4.2 Due Authorization. The entry by Magnetec into this Agreement
and the transfer of the Assets to Tridex hereunder have been
duly authorized by all requisite corporate action.
4.3 Title to Assets. Magnetec has good and marketable title to the
Assets free and clear of all liens and encumbrances (except
for a lien on the Assets held by Fleet Bank, National
Association pursuant to an Amended and Restated Credit
Agreement dated as of December 15, 1995 and last amended on
March 15, 1996 (the "Credit Agreement")).
4.4 Condition of Assets. The inventory included in the Assets is
of a quality useable and saleable in the ordinary course of
business. All other tangible personal property, including
manufacturing equipment, transferred hereunder is in
reasonably good operating condition and repair, subject to
normal wear.
4.5 Sufficiency of Assets. The Assets transferred by Magnetec to
Tridex pursuant to this Agreement constitute all of the assets
used by Magnetec exclusively in the conduct of the Ribbon
Business and, in combination with the services to be provided
by Magnetec to Tridex pursuant to a Manufacturing Services
Agreement, in the form attached hereto as Exhibit 7.2(b) (the
"Manufacturing Services Agreement"), are sufficient to conduct
the Ribbon Business as presently conducted by Magnetec.
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5. Representations and Warranties of Tridex.
5.1 Corporate Status. Tridex is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Connecticut.
5.2 Due Authorization. The entry by Tridex into this Agreement and
the transfer of the assets from Magnetec to Tridex hereunder
has been duly authorized by all requisite corporate action.
6. Conditions Precedent to Closing.
6.1 Conditions Precedent to Tridex's Closing. The obligations of
Tridex under this Agreement are subject to the satisfaction,
at or before the Closing, of the conditions set out below.
(a) Accuracy of Representations. All representations and
warranties made by Magnetec in this Agreement will be
true as of the Closing as though made at that time.
(b) Absence of Litigation. No action, suit, or proceeding
before any court or any governmental body or
authority, pertaining to the transaction contemplated
by this Agreement or its consummation, will have been
instituted or threatened as of the Closing.
(c) Bank Consent. Fleet Bank, National Association shall
have consented to the transactions contemplated by
this Agreement, including but not limited to the
transactions under the Manufacturing Services
Agreement.
6.2 Conditions Precedent to Magnetec's Closing.
The obligations of Magnetec under this Agreement are subject
to the satisfaction, at or before the Closing, of the
conditions set out below.
(a) Accuracy of Representations. All representations and
warranties made by Tridex in this Agreement will be
true as of the Closing as though made at that time.
(b) Absence of Litigation. No action, suit, or proceeding
before any court or any governmental body or
authority, pertaining to the transaction contemplated
by this Agreement or its consummation, will have been
instituted or threatened as of the Closing.
(c) Bank Consent. Fleet Bank, National Association shall
have consented to the transactions contemplated by
this Agreement, including but not limited to the
transactions under the Manufacturing Services
Agreement.
7. Closing.
7.1 Time and Place.
The transfer of the Assets by Magnetec to Tridex (the
"Closing") shall take place on September 27, 1996 at the
offices of Magnetec, 7 Laser Lane, Wallingford, Connecticut at
10:00 a.m., or at such other time and place as the parties
shall mutually agree, but in no event later than December 31,
1996.
7.2 Magnetec's Obligations at Closing.
At the Closing, Magnetec will deliver to Tridex the following
documents:
(a) An Assignment and Assumption Agreement, in
substantially the form attached hereto as Exhibit
7.2(a) (the "Assignment and Assumption Agreement"),
duly executed by Magnetec, assigning and transferring
to Tridex all of Magnetec's right, title and interest
in and to the customer purchase orders which remain
unfilled or unperformed as of the date of the
Closing.
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(b) The Manufacturing Services Agreement, in
substantially the form attached hereto as Exhibit
7.2(b), duly executed by Magnetec, regarding the
provision of services to Tridex by Magnetec with
respect to the operation of the Ribbon Business.
(c) An Instrument of Transfer, in substantially the form
attached hereto as Exhibit 7.2(c), transferring the
Assets from Magnetec to Tridex.
7.3 Tridex's Obligation at Closing.
At the Closing, Tridex will deliver to Magnetec the following:
(a) The Assignment and Assumption Agreement, duly
executed by Tridex.
(b) The Manufacturing Services Agreement, duly executed
by Tridex.
(c) Proof of cancellation of indebtedness by Tridex.
8. Further Assurances. Magnetec and Tridex will execute and deliver such
additional documents and take such additional actions as may be
necessary to carry out the transactions contemplated by this Agreement.
9. Titles. The title of this Agreement and the titles of sections and
subsections, and of exhibits, are for convenience of reference only and
will not be considered in the construction or interpretation hereof.
10. Survival. All representations, warranties and agreements contained in
this Agreement will survive for six (6) months from the date of the
Closing.
11. Entire Agreement. This Agreement and the schedules hereto constitute
the entire agreement and understanding between the parties in respect
of the subject matter hereof and supersede any prior or contemporaneous
agreement or understanding between the parties, written or oral, which
relates to the subject matter hereof.
12. Successors and Assigns. References in this Agreement to the parties
hereto will be deemed to include their successors and permitted assigns
and this Agreement will be binding upon and inure to the benefit of the
parties hereto and their successors and permitted assigns.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Connecticut.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
15. Amendments. This Agreement may be amended or modified only by a written
instrument signed by the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement on the _______ day
of July, 1996.
MAGNETEC CORPORATION
By:____________________________
Title:_________________________
TRIDEX CORPORATION
By:____________________________
Title:_________________________
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<PAGE> 1
EXHIBIT 10.4
MANUFACTURING SUPPORT SERVICES AGREEMENT
THIS MANUFACTURING AND SERVICES AGREEMENT (the "Agreement") is dated as
of _______ ___, 1996 by and between Tridex Corporation, a Connecticut
corporation ("Tridex"), and Magnetec Corporation, a Connecticut corporation
("Magnetec").
WHEREAS, Magnetec and Tridex have entered into an Asset Purchase
Agreement dated as of July __, 1996 under which Magnetec has agreed to sell to
Tridex all of the assets used exclusively in the conduct of the ribbon business
(the "Ribbon Business"); and
WHEREAS, Tridex has not yet obtained a facility separate from the
Magnetec facility suitable for the conduct of the Ribbon Business, and Magnetec,
with its existing manufacturing facility and shipping, receiving, accounting and
related support capability at that facility, can provide the space and support
services required by Tridex, as the owner of the Ribbon Business assets, for the
operation of the Ribbon Business; and
WHEREAS, upon completing the acquisition of the Ribbon Business assets,
Tridex will employ the individuals now employed by Magnetec who are directly
involved in the manufacturing of the Ribbon Business products and the individual
who supervises Ribbon Business manufacturing and related operations; and
WHEREAS, Tridex desires to obtain space within Magnetec's facility and
manufacturing support and related services necessary for the conduct of the
Ribbon Business, and Magnetec is willing to furnish or make such services and
space available to Tridex in connection with the transfer of the Ribbon Business
assets;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Staffing; Management Supervision and Control by Tridex.
(a) After the date of this Agreement, no Magnetec employees will engage
directly in the manufacturing operations of the Ribbon Business. As of the date
of this Agreement, Tridex shall offer full time employment to the individuals
listed on Schedule 4(a), and such individuals shall cease to be employed by
Magnetec. Tridex shall offer such individuals cash compensation equal to their
cash compensation paid by Magnetec and benefits substantially equivalent to
their benefits provided by Magnetec. Only these individuals employed by Tridex
for the Ribbon Business shall be permitted to operate Ribbon Business equipment.
(b) Tridex shall maintain managerial supervision and control of the
Ribbon Business manufacturing operations and shall exercise final approval
authority over all Tridex purchase orders and Tridex checks prepared by Magnetec
in connection with the manufacturing support services rendered hereunder. The
Ribbon Line Supervisor will supervise the Ribbon Business manufacturing line
employees and serve as day-to-day on-site representative of Tridex for Ribbon
Business matters.
(c) The Ribbon Line Supervisor, or another Tridex employee (as
designated by Tridex in writing to Magnetec), shall: (i) forecast annual
materials requirements; (ii) develop material requirements planning ("MRP") data
for input to Magnetec's automated manufacturing and inventory control systems;
(iii) develop a production schedule and determine quantities and delivery dates
required for periodic materials requirements; (iv) issue Tridex purchase orders
for delivery of such materials in the appropriate quantities on the delivery
dates; (v) supervise Tridex employees engaged in the manufacturing operations of
the Ribbon Business; (vi) collect Ribbon Business receivables; (vii) authorize
payment of invoices; and (viii) supervise third-party payroll service and
provide Tridex federal taxpayer identification number for payroll purposes.
2. Insurance. Tridex agrees to obtain and maintain all necessary
insurance, including but not limited to, property, casualty, liability and
workers' compensation with respect to the Ribbon Business and the Tridex
employees engaged in Ribbon Business operations at Magnetec's facility. Tridex
shall provide proof of coverage upon request by Magnetec.
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<PAGE> 2
3. Space Provided. Magnetec hereby agrees to provide Tridex
approximately ____ square feet of factory floor space and ____ total square feet
of stockroom and finished goods warehouse space. Space provided to Tridex shall
be clearly marked as separate areas designated for the Ribbon Business.
4. Ribbon Business Products Sold to Magnetec. Tridex agrees to sell
Ribbon Business products to Magnetec at prices no higher than ten percent (10%)
below the lowest price paid by any other customer of Tridex for the same
products. This price is subject to annual adjustment upon the mutual agreement
of the parties hereto, with annual increases not to exceed five percent (5%) of
then current prices.
5. Tridex Manufacturing Facility. Tridex agrees to use commercially
reasonable efforts to obtain its own manufacturing facility suitable for the
conduct of the Ribbon Business and to relocate the Ribbon Business assets to
such facility.
6. Manufacturing Support Services Provided by Magnetec. Effective upon
the date first written above (the "Effective Date"), Magnetec will provide the
following services to Tridex for the conduct of the Ribbon Business:
(a) Purchasing and Manufacturing Processing Services: receive at the
Magnetec receiving dock materials ordered by Tridex for Ribbon Business
operations; generate list of goods received and cross-check against vendor's
packing list and Tridex purchase order; spot inspect such materials upon
receipt; store materials in the Magnetec stockroom in a separate area designated
for the Ribbon Business; move materials to manufacturing area according to
manufacturing schedule; and move finished goods to a separate area designated
for Ribbon Business finished goods.
(b) Sales Order Processing and Customer Billing Services: promptly
after the date hereof, notify all Ribbon Business customers to submit orders to
Tridex in care of Magnetec Sales Department; receive and, after acceptance of
order by Ribbon Line Supervisor (as defined below), enter customer orders into
order processing system, including scheduling shipment date; generate shipping
documents; package and prepare finished goods for shipment; ship finished goods
and generate invoice on Tridex form.
(c) Accounts Payable Processing Services: promptly after the date
hereof, notify Ribbon Business suppliers to submit invoices to Tridex in care of
Magnetec Accounts Payable; match suppliers invoices with Tridex purchase orders
and receiving department records and enter verified invoices onto accounts
payable system; and prepare Tridex checks to suppliers for signature by Tridex
authorized signatory. (Tridex will in all cases make the final decision
regarding payment of any invoice submitted by a Ribbon Business supplier.)
(d) Payroll Processing Services: maintain Ribbon Business employee
files, including hours worked and payroll records. (Using the Tridex employer
identification number, Tridex will establish with a third party payroll service
provider a separate payroll for all Ribbon Business employees, including the
Ribbon Line Supervisor. Subject only to Magnetec's agreement under Section 3 to
reimburse Tridex for 40% of the direct employment cost of the Ribbon Line
Supervisor, Tridex will be solely responsible for all Ribbon Business wages,
salaries, insurance and other benefits, and all withholding or other taxes due
thereon.)
(e) Accounting and Data Processing Services: establish within the
Magnetec accounting system separate accounts for all activity of the Ribbon
Business; provide Tridex with a monthly trial balance, detailed general ledger
and subledgers for all transactions. (All general ledger accounts will be
controlled by Tridex. Tridex will provide a Ribbon Business cash receipt journal
to Magnetec on a monthly basis to update the accounts receivable on the Ribbon
Business records maintained by Magnetec.)
7. Tridex Payments to Magnetec. Magnetec shall bill Tridex in arrears,
as of the last day of Magnetec's accounting month, for manufacturing support
services provided, and Tridex shall pay Magnetec no later than thirty (30) days
after the date of the invoice, the following amounts:
(a) For Magnetec's overhead directly attributable to manufacturing
(e.g., occupancy costs such as rent and utilities), Tridex shall pay Magnetec a
flat fee of $_____ per month, plus ______% of the actual direct labor cost of
Ribbon Business employees (permanent and temporary), subject to annual
adjustment upon the agreement of both parties;
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<PAGE> 3
(b) For Magnetec's overhead attributable to general and administrative
expenses (e.g., expenses incurred to provide purchasing, order processing,
customer billing and accounting services), Tridex shall pay Magnetec a flat fee
of $______ per month, subject to annual adjustment upon the agreement of both
parties; and
(c) For other costs incurred and paid by Magnetec on behalf of Tridex
which are not includable in Section 2(a) or 2(b) but are incurred and are
directly related to the conduct of the Ribbon Business, including but not
limited to temporary labor, the direct cost of engineering labor, benefits,
manufacturing equipment maintenance and repair, Tridex shall reimburse Magnetec
for the actual cost of such services. Tridex shall reimburse Magnetec for the
full cost of such goods or services, when all such goods or services have been
or will be used for the Ribbon Business.
8. Magnetec Payments to Tridex. During the term of this Agreement,
Magnetec shall reimburse Tridex for forty (40%) percent of total cash
compensation (consisting of salary, a pro-rated portion of annual bonus actually
paid and other benefits such as medical, life insurance) paid by Tridex to or on
behalf of the Tridex employee filling the position of Ribbon Line Supervisor
(the "Ribbon Line Supervisor"). The Ribbon Line Supervisor, Tridex and Magnetec
shall cooperate to make the Ribbon Line Supervisor available to Magnetec for the
provision of services to Magnetec using forty (40%) percent of his or her total
working time during the term of this Agreement. With respect to the employment
and compensation level of the Ribbon Line Supervisor, Tridex shall advise
Magnetec in writing ten (10) days prior to any change in the Ribbon Line
Supervisor's compensation level or employment status initiated by Tridex. Tridex
agrees to consult with Magnetec regarding any such change in status prior to
such change.
9. Goodwill of Common Customers. Magnetec has invested substantial
time, effort and expense in developing its goodwill and reputation for providing
to its customers quality printer products, including Ribbon Business products,
at competitive prices. Magnetec will continue to sell printers to such
customers, many of whom are and will be Ribbon Business customers. As a material
inducement to Magnetec to enter into this Agreement, Tridex agrees not to take
any action during the term of this Agreement which is intended to have, or which
would have a reasonable likelihood of having, a material adverse effect on the
relationship of Magnetec with its customers or end users of its products.
10. Liabilities; Disclaimer. In furnishing the other party with
services as herein provided, Tridex, Magnetec and their respective officers,
directors, employees or agents (collectively, "Representatives") shall not be
liable to the other party or its respective Representatives, creditors or
shareholders for any action or failure to act except willful malfeasance, bad
faith or gross negligence in the performance of their duties or reckless
disregard of their obligations and duties under the terms of this Agreement. The
provisions of this Agreement are for the sole benefit of Tridex, Magnetec and
their respective Representatives and will not, except to the extent otherwise
expressly stated herein, inure to the benefit of any third party. Neither Tridex
nor Magnetec makes any express or implied warranty or representation with
respect to the quality of the services provided hereunder.
11. Term. The term of this Agreement shall begin on the date hereof and
continue for two (2) years, unless terminated sooner by the mutual agreement of
the parties.
12. Status of Relationship. Magnetec shall be deemed to be an
independent contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or bind Tridex.
13. Notices. All notices, billings, requests, demands, approvals,
consents, and other communications which are required or may be given under this
Agreement will be in writing and will be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth below:
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<PAGE> 4
If to Magnetec:
Magnetec Corporation
7 Laser Lane
Wallingford, CT 06492
Attention: President
If to Tridex:
Tridex Corporation
61 Wilton Road
Westport, CT 06880
Attention: Chief Executive Officer
14. Confidentiality. Tridex and Magnetec hereby agree to hold, and
cause their respective employees, agents and authorized representatives to hold,
in strict confidence, all information concerning the other party furnished
pursuant to this Agreement.
15. No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and shall not be deemed to confer upon any third
party and right, remedy or claim in excess of those existing without reference
to this Agreement.
16. Access to Information. During the term of this Agreement and for
one (1) year thereafter, Tridex shall afford to Magnetec and its authorized
representatives, agents and employees, and Magnetec shall afford to Tridex and
its authorized representatives, agents and employees, access during normal
business hours to all records, books, contracts and other data, including but
not limited to corporate, financial, accounting, personnel and other business
records, related to the Ribbon Business.
17. No Assignment. This Agreement shall not be assignable except with
the prior written consent of the other party to this Agreement.
18. Applicable Law. This Agreement shall be governed by and construed
under the laws of the State of Connecticut applicable to contracts made and to
be performed therein.
19. Section Headings. The section headings used in his Agreement are
for convenience of reference only and will not be considered in the
interpretation of construction of any of the provisions thereof.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
21. Amendments. This Agreement may be amended or modified only by a
written instrument signed by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument by their duly authorized officers as of the date
first above written.
TRIDEX CORPORATION
By:
Title:
MAGNETEC CORPORATION
By:
Title:
27
<PAGE> 1
EXHIBIT 10.5
CORPORATE SERVICES AGREEMENT
THIS CORPORATE SERVICES AGREEMENT (the "Agreement") is dated as of
_______ ___, 1996 by and between Tridex Corporation, a Connecticut corporation
("Tridex"), and TransAct Technologies Incorporated, a Delaware corporation
("TransAct").
WHEREAS, TransAct and its subsidiary Magnetec Corporation
(collectively, the "TransAct Group") desire to obtain administrative and other
services from Tridex and Tridex is willing to furnish or make such services
available to TransAct; and
WHEREAS, Tridex and its subsidiaries Ultimate Technology Corporation
and Cash Bases GB Ltd. (collectively the "Tridex Group") desire to obtain
certain financial services from TransAct and TransAct is willing to furnish or
make such services available to Tridex;
WHEREAS, Tridex and TransAct desire to set forth the basis for the
provision of services of the type referred to herein.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Services.
1.1 Beginning on the effective date of the Registration Statement on
Form S-1 (the "Registration Statement") filed in connection with the public
offering of TransAct common stock ( the "Effective Date"), Tridex will provide
or otherwise make available to the TransAct Group certain general corporate
services provided by Tridex's corporate staff, including but not limited to
certain human resources, employee benefit administration, financial reporting,
insurance, risk management and general administrative services. The services
will include the following:
(a) Human resources and employee benefit related services - General
human resources services (including but not limited to administration of all
employee matters), administration of TransAct's employee participation in
employee benefit plans and insurance programs sponsored by Tridex such as the
following: 401(k) plan, group medical insurance, group life insurance, employee
stock option plans and filing of all required reports under ERISA for employee
benefit plans sponsored by Tridex.
(b) Financial reporting and securities compliance related services -
Maintenance of corporate records, assistance, if and when necessary, in
preparation of Securities and Exchange Commission filings, including without
limitation registration statements, Forms 10-K, 10-Q and 8-K, assistance in the
preparation of Proxies and Proxy Statements and the solicitation of proxies, and
assistance in the preparation of the Annual and Quarterly Reports to
Stockholders.
(c) Risk management and insurance related services - Provision of risk
management (including, but not limited to premiums attributable to TransAct) and
related services and maintenance of all policies of liability, fire, workers'
compensation and other forms of insurance for the benefit of TransAct, its
employees, assets and facilities.
(d) Services in addition to those enumerated in subsections 1.1(a)
through 1.1(c) above to include, but not be limited to, corporate recordkeeping,
other general administrative activities and financial services as reasonably
requested from time to time by TransAct or as provided by Tridex.
1.2 For performing the services described above in Section 1.1,
TransAct shall pay Tridex in accordance with the following schedule:
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<PAGE> 2
(a) TransAct shall reimburse Tridex for one-half (50%) of total cash
compensation (consisting of salary, a pro-rated portion of annual bonus actually
paid and other out-of-pocket expenditures for medical, life insurance and other
benefits) paid by Tridex to or on behalf of Mr. Thomas Curtin, Tridex's Vice
President of Human Resources, for the period from the Effective Date until
December 31, 1997. Mr. Curtin, Tridex and TransAct shall cooperate to make Mr.
Curtin available to TransAct for one half (50%) of his total working time for
the provision of services to TransAct for this period.
(b) TransAct shall reimburse Tridex for one-half (50%) of the total
cash compensation (consisting of salary, a pro-rated portion of annual bonus
actually paid and other out-of-pocket expenditures for medical, life insurance
and other benefits) paid by Tridex to or on behalf of Mr. George Crandall,
Tridex's Vice President, Secretary and Comptroller, for the period from the
Effective Date until March 31, 1997. Mr. Crandall, Tridex and TransAct shall
cooperate to make Mr. Crandall available to TransAct for one half (50%) of his
total working time for the provision of services for this period.
1.3 TransAct will reimburse Tridex for expenses incurred for insurance
(including but not limited to property, casualty, group life and health and
Workers Compensation), accounting and legal services in accordance with the
Company's historical allocation methods.
In addition, TransAct will reimburse Tridex for other expenses
incurred to provide specific services requested by TransAct, as agreed by
TransAct and Tridex when such services are requested.
1.4 Beginning on the Effective Date, TransAct will provide or otherwise
make available to the Tridex Group certain financial services customarily
provided by a chief financial officer, including but not limited to management
of corporate finance and accounting matters. For performing the services
described herein, Tridex shall reimburse TransAct for fifteen percent (15%) of
the total cash compensation (consisting of salary, a pro-rated portion of annual
bonus actually paid and other out-of-pocket expenditures for medical, life
insurance and other benefits) paid by TransAct to or on behalf of Mr. Richard L.
Cote, TransAct's Executive Vice President, Chief Financial Officer and
Treasurer, for the period of the Effective Date, until March 31, 1997. Mr. Cote,
TransAct and Tridex shall cooperate to make Mr. Cote available to Tridex for
fifteen percent (15%) of his total working time for the provision of services to
Tridex during this period. Upon the Effective Date, Mr. Cote will become a
full-time employee of TransAct, and his office will be relocated to TransAct's
Wallingford, Connecticut facility.
1.5 The charges for services pursuant to Sections 1.2, 1.3 and 1.4
above will be determined and payable no less frequently than on a monthly basis;
provided that reimbursement of a pro-rated portion of bonuses shall be payable
after such bonuses are paid by Tridex or TransAct. The charges will be due when
billed and shall be paid no later than ten (10) business days from the date of
billing.
1.6 When services of the type described in this Agreement are provided
by outside vendors to Tridex, TransAct or, in connection with the provision of
such services, out-of-pocket costs such as travel are incurred, the cost thereof
will be paid directly by the party receiving the service. If either party to
this Agreement is billed for services provided to the other party, the billed
party may pay the bill and charge the party receiving the services the amount of
the bill or forward the bill to the party receiving the services for payment.
2. TransAct's Directors and Officers. Nothing contained herein will be
construed to relieve the directors or officers of TransAct from the performance
of their respective duties or to limit the exercise of their powers in
accordance with the charter or By-Laws of TransAct or in accordance with any
applicable statute or regulation.
3. Liabilities; Disclaimer. In furnishing the other party with services
as herein provided, neither Tridex nor TransAct, any member of the respective
Groups nor any of their respective officers, directors employees or agents shall
be liable to any member of the other party or their respective creditors or
shareholders for errors of judgment or for anything except willful malfeasance,
bad faith or gross negligence in the performance of their duties or reckless
disregard of their obligations and duties under the terms of this Agreement. The
provisions of this Agreement are for the sole benefit of the Tridex Group and
the TransAct Group and will not, except to the extent otherwise expressly stated
herein, inure to the benefit of any third party. Neither Tridex nor TransAct
makes any express or implied warranty or representation with respect to the
quality of the services provided hereunder.
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<PAGE> 3
4. Term.
(a) Term. The initial term of this Agreement shall begin on the
Effective Date and continue until December 31, 1997.
(b) Termination. This Agreement may be terminated by either party at
any time on ninety (90) days' prior notice to the other; provided, however, that
the provisions of Section 1.2(a) and (b) and Section 1.4 shall survive any such
termination.
5. Status. Each member of the Tridex Group shall be deemed to be an
independent contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act or represent any member of TransAct.
6. Employment Changes.
(a) With respect to the employment and compensation levels of Mr.
Curtain and Mr. Crandall, Tridex shall advise TransAct in writing ten (10) days
prior to any change in Mr. Curtain's or Mr. Crandall's compensation level or
employment status initiated by Tridex. Tridex agrees to consult with TransAct
regarding any such change in Mr. Curtain's or Mr. Crandall's compensation level
or employment status prior to such change.
(b) With respect to the employment of Mr. Curtain, Tridex shall notify
TransAct whether it intends to continue Mr. Curtain's employment beyond December
31, 1997. If Tridex notifies TransAct that it does not intend to employ Mr.
Curtain beyond December 31, 1997, TransAct shall, within fifteen (15) days from
the date of Tridex's notice to TransAct, notify Tridex of its intent to employ
Mr. Curtain beyond December 31, 1997.
7. Notices. All notices, billings, requests, demands, approvals,
consents, and other communications which are required or may be given under this
Agreement will be in writing and will be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth below:
If to TransAct:
TransAct Technologies, Inc.
7 Laser Lane
Wallingford, CT 06492
Attention: President
If to Tridex:
Tridex Corporation
61 Wilton Road
Westport, CT 06880
Attention: President
8. Confidentiality. Tridex and TransAct hereby agree to hold, and cause
its respective employees, agents and authorized representatives to hold, in
strict confidence, all information concerning the other party furnished pursuant
to this Agreement.
9. No Third Party Beneficiaries. This Agreement is solely for the
benefit of the parties hereto and should not be deemed to confer upon any third
party and right, remedy or claim in excess of those existing without reference
to this Agreement.
10. Access to Information. Tridex shall afford to TransAct and its
authorized representatives, agents and employees, and TransAct shall afford to
Tridex and its authorized representatives, agents and employees, access during
normal business hours to all records, books, contracts and other data, including
but not limited to corporate, financial, accounting, personnel and other
business records, for a period of six (6) years following the termination of
this Agreement.
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<PAGE> 4
11. No Assignment. This Agreement shall not be assignable except with
the prior written consent of the other party to this Agreement.
12. Applicable Law. This Agreement shall be governed by and construed
under the laws of the State of Connecticut applicable to contracts made and to
be performed therein.
13. Section Headings. The section headings used in his Agreement are
for convenience of reference only and will not b considered in the
interpretation of construction of any of the provisions thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument by their duly authorized officers as of the date
first above written.
TRIDEX CORPORATION
By:
Title:
TRANSACT TECHNOLOGIES INCORPORATED
By:
Title:
31
<PAGE> 1
EXHIBIT 10.6
PRINTER SUPPLY AGREEMENT
THIS MANUFACTURE AND SUPPLY AGREEMENT (the "Agreement") is made by and
between Ithaca Peripherals ("Ithaca"), a division of Magnetec Corporation, a
Connecticut corporation and a wholly owned subsidiary of TransAct Technologies
Incorporated, a Delaware corporation ("TransAct"), and Ultimate Technology
Incorporated, a New York corporation ("Ultimate").
WHEREAS, Ithaca manufactures POS printers and Ultimate wishes to
purchase POS printers from Ithaca, and Ithaca wishes to provide the POS printers
to Ultimate, all on the terms and conditions set forth in this Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto hereby agree as follows:
1. Manufacture and Supply of Product.
During the term of this Agreement, Ithaca will manufacture and
sell to Ultimate and Ultimate will purchase from Ithaca, subject to the terms
and conditions contained herein, no less than __ of Ultimate's total
requirements for POS printers, calculated on a unit basis (the "Required
Percentage"). The POS printers will be manufactured and supplied to Ultimate
pursuant to written purchase orders submitted by Ultimate to Ithaca from time to
time which, promptly upon receipt, will be acknowledged and accepted or rejected
by Ithaca pursuant to article 4.2 of this Agreement.
2. List Price Discount; Verification of Minimum
Percentage.
2.1 In consideration for Ultimate's purchase of the Required
Percentage, Ithaca shall sell POS printers to Ultimate at prices equal to the
discount from Ithaca's published list prices as set forth on Exhibit 2.1
attached hereto. Ithaca will sell to Ultimate options, accessories and supplies
at Ithaca's published maximum discounts and will sell spare parts at a 20%
discount from Ithaca's list prices for spare parts, subject to adjustment by
mutual agreement on a case by case basis. Ithaca retains the right to increase
its list prices from time to time in its sole discretion, but agrees that during
the term of this Agreement no other distributor of Ithaca products whose volume
of POS printer purchases is greater than 1,000 units per year will receive
discounts greater than the discounts provided to Ultimate.
2.2 Ultimate shall provide to Ithaca, no more than thirty (30)
days after the end of a quarter, a quarterly report of all POS printers
purchased by Ultimate from all sources in the quarter just ended. In order to
confirm that Ultimate is fulfilling its obligations under this Agreement, Ithaca
and its representatives shall have the right, upon reasonable notice and during
normal business hours, to have access to Ultimate's purchasing and related
records and to otherwise conduct a reasonable audit of Ultimate's purchases of
POS printers. The cost of any such audit shall be paid by Ithaca unless an audit
reveals that Ultimate is not purchasing the Minimum Percentage, in which case
Ultimate shall reimburse Ithaca for the full cost of such audit.
3. Effective Date and Term.
The term of this Agreement shall commence as of the effective
date of the Registration Statement on Form S-1 of TransAct Technologies
Incorporated (Registration No. 333-06895) and ending on December 31, 1999.
4. Estimates; Ordering; Shipment.
4.1 Beginning on September 28, 1996 and thereafter on or
before the last day of every accounting month, Ultimate shall provide Ithaca
with a written estimate in the form attached hereto as Exhibit 4.1.
4.2 Purchase orders for POS printers shall reference this
Agreement and be submitted by Ultimate on its regular purchase order forms.
Purchase orders will be deemed accepted by Ithaca unless rejected in writing by
Ithaca specifying the reasons for rejection within fourteen (14) calender days
after receipt of the purchase
32
<PAGE> 2
order. Purchase orders may be rejected by Ithaca if a purchase order (i) does
not comply with the terms and conditions of this Agreement, or (ii) proposes new
or additional terms that are not acceptable to Ithaca or requires modifications
to the POS printers which Ithaca, in its sole discretion, is unwilling to make.
The delivery date, quantity, payment terms and other terms and conditions of
sale set forth in any such purchase order shall, to the extent not inconsistent
with this Agreement, govern.
4.3 Unless otherwise agreed, purchase orders shall specify a
delivery date with the normal lead time of forty-five (45) days. If no lead time
is specified, the POS Printers will be delivered within forty-five (45) days of
Ithaca's receipt of the purchase order.
4.4 Expedited delivery will be available for an additional
charge to be agreed to by Ithaca and Ultimate on a case by case basis.
4.5 Title to the equipment shall pass to Ultimate only upon
Ithaca's receipt of payment of the full purchase price. Ithaca warrants title to
be clear, free and unencumbered. Ithaca reserves, and Ultimate hereby grants to
Ithaca, a purchase money security interest in each unit of the equipment in the
amount of its purchase price, and such security interest shall be satisfied by
payment in full of the purchase price. Ithaca may file a financing statement
with any appropriate state or local authorities in order to perfect Ithaca's
security interest. Ultimate hereby appoints Ithaca as its agent and attorney in
fact with full power to sign in Ultimate's name any financing statements. No
authorization is given to resell any unit of equipment or sublicense any program
unless the price, charge or fee shall have been paid to Ithaca, or unless
Ultimate has protected Ithaca's security interest by the appropriate filings
otherwise.
4.6 In the event Ultimate (a) cancels any order or portion
thereof, (b) fails to meet any obligation hereunder, causing cancellation or
rescheduling of any order or portion thereof, or (c) requests a rescheduling of
scheduled orders and such request is accepted by Ithaca, Ultimate agrees to pay
to Ithaca cancellation or rescheduling charges based on a percentage of the
current price to Ultimate of the cancelled or rescheduled POS printers. Such
changes are as follows:
<TABLE>
<CAPTION>
Cancellation or Reschedule Reschedule Cancellation
Notice Received Charge Charge
--------------- ------ ------
<S> <C> <C>
61-90 days prior to 5% 10% or $200 whichever
scheduled delivery month is greater
31-60 days prior to 10% 15% or $200 whichever
scheduled delivery month is greater
30 days or less prior to 15% Non-cancelable
scheduled delivery month
During scheduled delivery Non-reschedulable Non-cancelable
month
</TABLE>
The third request for rescheduling an order constitutes an automatic
cancellation of that order. Ultimate may not cancel or reschedule any order or
portion thereof after delivery.
5. Payment.
Ithaca may issue invoices no earlier than the shipping date of the POS
printers. Payment will be made within thirty (30) calender days of the date of
shipment.
6. POS printers Warranty.
Ithaca shall provide warranties on the POS printers as set
forth in its warranty policy, as in effect from time to time. A copy of Ithaca's
current warranty policy is attached as Schedule 6 hereto. Ithaca reserves the
right to revise its warranty policy from time to time, and shall promptly
provide any revisions to Ultimate.
33
<PAGE> 3
7. Corporate Authorization. Ithaca and Ultimate each represent to
the other that: (a) it has the right to enter into this Agreement; (b) all
necessary actions, corporate and otherwise, have been taken to authorize the
execution and delivery of this Agreement and the same is a valid and binding
obligation of such party; (c) all licenses, consents and approvals necessary to
carry out all of the transactions contemplated in this Agreement have been
obtained by such party; and (d) such party's performance of this Agreement will
not violate the terms of any license, contract, note or other obligation to
which such party is a party.
8. Changes, Amendments and Waivers.
This Agreement may not be amended or modified, nor any of its
terms waived, except by a written instrument duly executed by the parties
hereto. When used herein, the term "Agreement" will include any amendments or
modifications made in accordance herewith. A waiver by either party of a breach
of any provision of this Agreement by the other party, or any right hereunder,
will not operate to waive or excuse any subsequent breach or waive any other
right.
9. No Assignment.
This Agreement may not be assigned or transferred by either
Party hereunder without prior written consent of the non-assigning party.
10. Notice.
Any notice or other communication required or permitted
hereunder will be in writing and will be given (i) by delivery in person, (ii)
by certified mail, return receipt requested, (iii) by commercial overnight
courier, or (iv) by facsimile transmission (telecopy) (with telephone
confirmation of receipt), as follows:
(a) If to Ithaca, to:
Ithaca Peripherals, a division of
Magnetec Corporation
20 Bomax Drive
Ithaca, NY 14850
Attention: Lucy H. Staley,
Senior Vice President
Telecopy number: (607) 257-8922
Telephone number: (607) 257-8901
(b) If to Ultimate, to:
Ultimate Technology Corporation
6280 Route 96 East
Victor, NY 14564
Attention: Dennis Lewis, President
Facsimile number: (716) 924-1434
Telephone number: (716) 924-9500
Any such notice or other communication will be deemed to have been given (i) on
the date of delivery in person, (ii) on the fifth day after mailing by certified
mail, provided that receipt of delivery is confirmed in writing, (iii) on the
first Business Day following delivery to a commercial overnight courier, or (iv)
on the day of facsimile transmission (telecopy) provided that telephone
confirmation of receipt is obtained.
11. Governing Law.
This Agreement will be governed by the laws of the State of
Connecticut without reference to its conflict of laws rules.
34
<PAGE> 4
12. Arbitration; Venue and Jurisdiction.
Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach, termination or validity thereof will be
settled by arbitration in accordance with the Rules of the American Arbitration
Association. The number of arbitrators will be one. The place of arbitration
will be Hartford, Connecticut, or at such other place as the parties may
mutually agree in writing. The award or determination made by the arbitrators
will be final and binding upon the parties and judgment thereon may be entered
in any court of competent jurisdiction. The parties consent to and accept the
jurisdiction of such courts and waive any objection (including any objection to
venue or any objection based upon the grounds of forum non convenience) which
might be asserted to the entering of the judgment in such courts.
13. Termination.
13.1 This Agreement and the obligations of the parties
hereunder will terminate upon the expiration of the term set forth in Section 3
or earlier, at the option of the party which is affected adversely by any of the
following and upon the occurrence thereof:
(a) If either party fails to observe or perform or breaches
any material term or obligation contained herein and fails to cure the
non-observance or non-performance or breach within fifteen (15) days after being
given notice by the other party of the existence thereof or, as to failures
which cannot reasonably be cured within fifteen (15) days, fails within fifteen
(15) days to begin the curing thereof and thereafter diligently prosecutes the
same to completion within thirty (30) days after being given the notice. Without
limiting the generality of the foregoing, Ultimate hereby acknowledges and
confirms that its obligation to purchase the Minimum Percentage of its POS
printer requirements from Ithaca is a material obligation of this Agreement.
(b) The dissolution, insolvency (in the sense of being unable
to pay debts as they mature), making of an assignment for the benefit of
creditors, the filing of an involuntary petition under the United States
Bankruptcy Code or the bankruptcy laws of any other country which is not
dismissed within sixty (60) days, or the appointment of a receiver (or similar
official) of the assets of, by or against either party.
13.2 Either party's termination of this Agreement pursuant to
Sections 13 hereof will be without prejudice to its legal remedies for
non-observance, non-performance or breach of this Agreement.
14. Sole Understanding.
This Agreement is the entire agreement and understanding of
the parties related to the subject matter hereof and supersedes all other prior
agreements, understandings and communications, whether oral or written.
15. Headings.
The headings of the sections and subsections of this Agreement
have been added for convenience only and will not be deemed to be a part of this
Agreement.
16. Counterparts.
This Agreement may be executed in any number of counterparts,
but all counterparts hereof will together constitute but one agreement. In
proving this Agreement, it will not be necessary to produce or account for more
than one counterpart signed by both of the parties.
THIS AGREEMENT has been executed by the duly authorized representative
of each of the parties hereto this _____ day of July, 1996.
35
<PAGE> 5
ITHACA PERIPHERALS, a division of MAGNETEC
CORPORATION
By:_______________________________
Print Name:____________________
Title:_________________________
ULTIMATE TECHNOLOGY CORPORATION
By:______________________________
Print Name:___________________
Title:________________________
36
<PAGE> 1
EXHIBIT 10.7
TAX SHARING AGREEMENT
THIS AGREEMENT, executed this _____ day of July, 1996, is
entered into by and between Tridex Corporation, a Connecticut corporation
("Tridex") and TransAct Technologies, Inc., a Delaware corporation ("TransAct").
RECITALS
WHEREAS, Tridex, TransAct, Magnetec Corporation, a Connecticut
corporation and wholly-owned subsidiary of Tridex ("Magnetec"), and Ithaca
Peripherals, Inc., a Delaware corporation and wholly-owned subsidiary of Tridex
(Ithaca"), have entered into a Plan of Reorganization dated as of June __, 1996
(the "Plan") pursuant to which, among other things, (i) TransAct is acquiring
from Tridex all of the outstanding capital stock of Magnetec, (ii) TransAct is
issuing [5,400,000] shares of its common stock to Tridex and (iii) TransAct is
issuing up to 1,322,500 of common stock pursuant to an underwritten public
offering registered under the Securities Act of 1933, as amended (the
"Securities Act") on a Registration Statement on Form S-1 (the "Offering");
WHEREAS, as contemplated by the Plan, the shares of
outstanding common stock of TransAct held by Tridex are to be distributed on a
pro rata basis to the record holders of shares of Tridex common stock (the
"Distribution") upon the satisfaction of certain conditions;
WHEREAS, Tridex and its subsidiaries, including Magnetec and
Ithaca, have heretofore: (1) joined in filing consolidated federal income tax
returns under the Internal Revenue Code of 1986, as amended (the "Code"), and
the applicable Treasury Regulations promulgated thereunder by the Treasury
Department (the "Regulations"); (2) joined in filing certain consolidated,
combined, and unitary state income tax returns; and (3) in some cases filed
income tax returns on a separate company basis.
WHEREAS, during the period prior to the consummation of the
Distribution, TransAct is expected to remain within the affiliated group (within
the meaning of Section 1504(a) of the Code) of corporations (the "Tridex Group")
of which Tridex is the common parent;
WHEREAS, the parties hereto desire to allocate their
respective federal, state, local and foreign income tax (or similar tax)
liabilities, assessed in connection with the filing of returns, including but
not limited to consolidated, combined, unitary, or separate returns, among
themselves for all fiscal years thereafter during which TransAct remains a
member of the Tridex Group;
WHEREAS, the parties hereto desire to provide for the
compensation and reimbursement of each other for Tax Deficiencies (as
hereinafter defined) or Tax Refunds (as hereinafter defined) as a result of
audits by or applications to the Internal Revenue Service (the "Service") and
other taxing authorities or by judicial determination, if any, involving
consolidated federal, consolidated, combined or unitary state and local income
tax returns and similar aggregate reporting for certain foreign jurisdictions;
WHEREAS, the parties hereto desire to provide and fix the
responsibilities for: (1) the preparation and filing of tax returns along with
the payments of taxes shown to be due and payable therein (as well as estimated
or advance payments required prior to the filing of said returns) for all
periods prior to and following the Effective Date (as hereinafter defined); (2)
the retention and maintenance of all relevant records necessary to prepare and
file appropriate tax returns, as well as the provision for appropriate access to
those records for all parties to this Agreement; (3) the conduct of audits,
examinations, and proceedings by appropriate governmental authorities which
could result in a redetermination of tax liabilities (for all periods prior to
or following the Effective Date) of any party to this Agreement; and (4) the
cooperation of all parties with one another in order to fulfill their duties and
responsibilities under this Agreement and under applicable laws.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and other good and valuable considerations, the receipt of which is
hereby acknowledged, the parties agree as follows:
37
<PAGE> 2
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the following
meanings:
(a) "Affiliated Group" shall have the meaning attributed to that
term in Section 1504 of the Code, determined without regard to Section 1504(b)
of the Code.
(b) "Code" shall have the meaning attributed to that term in the
recitals above.
(c) "Common Parent" shall have the meaning attributed to that
term in the Consolidated Return Regulations (Treas. Reg. Section 1.1502-1 et
seq.) promulgated pursuant to Section 1502 of the Code.
(d) "Consolidated Return Regulations" shall have the meaning
attributed to that term in Section 4 hereof.
(e) "Effective Date" shall mean the date on which the
Registration Statement relating to the Offering is declared effective under the
Securities Act.
(f) "IRS" or "Service" shall have the meaning attributed to that
term in the recitals above.
(g) "Joint Contest" shall mean a Tax Contest seeking a
redetermination of Taxes involving one of more Members (determined by reference
to the time of such contest rather than the period for which such return was
filed) of the Tridex Group and one or more Members of the TransAct Group,
whether such corporations joined in the filing of returns on a consolidated,
combined, or unitary basis (including similar aggregate reporting for certain
foreign jurisdictions).
(h) "Member" shall have the meaning attributed to that term in
Section 1.1502-1(b) of the Regulations, but without regard to whether a
corporation qualifies to be a Member of an Affiliated Group under Section
1504(b) of the Code.
(i) "Minimum Tax Credit" shall have the meaning attributed to
that term in Section 5 hereof.
(j) "Offering" shall have the meaning attributed to that term in
the recitals above.
(k) "Plan" shall have the meaning attributed to that term in the
recitals above.
(l) "Regulations" shall have the meaning attributed to that term
in the recitals above.
(m) "Separate Contest" shall mean a Tax Contest which involves:
(i) only Members (or their direct and indirect subsidiaries) of the Tridex Group
or (ii) only Members (or their direct and indirect subsidiaries) of the TransAct
Group.
(n) "Separation Date" shall mean the date, if any that TransAct
shall cease to be a member of the Tridex Group.
(o) "Tax" or "Taxes" shall mean (i) all federal income taxes and
state, local, and foreign income and franchise taxes (or taxes in lieu thereof)
plus (ii) any penalties, fines or additions to tax with respect thereto, plus
(iii) any interest with respect to the items contained in (i) and (ii).
(p) "Tax Attributes" shall mean any losses, credits and other tax
attributes that may be carried forward or back by any Member of the Tridex Group
or the TransAct Group on a separate return or consolidated basis to a taxable
year other than the taxable year in which such attribute is recognized,
including, but not limited to, net operating losses, alternative minimum tax
credits, targeted jobs tax credits, investment tax credits, foreign tax credits,
research and development credits, and similar credits under state or local law.
(q) "Tax Contest" shall mean an audit, review, examination or the
like, inclusive of litigation, with the purpose or effect of redetermining Taxes
of any corporation or other entity (without regard to whether such matter was
initiated by an appropriate taxing authority or in response to a claim for a
refund).
38
<PAGE> 3
(r) "Tax Deficiency" or "Tax Deficiencies" shall mean with
respect to previously filed returns an assessment for Taxes as a result of
audits by or applications to the Service and other taxing authorities or
judicial determination.
(s) "Tax Liability" or "Tax Liabilities" shall mean a
liability for Taxes.
(t) "Tax Refund" or "Tax Refunds" shall mean with respect to
previously filed returns, a refund of Taxes as a result of audits by or
application to the Service and other taxing authorities or judicial
determination.
(u) "TransAct" shall have the meaning attributed to that term
in the preamble hereof.
(v) "TransAct Group" shall mean the group of corporations at
any given time after the Separation Date which would be the Affiliated Group of
which TransAct is the Common Parent if TransAct was a "common parent" within the
meaning of the Consolidated Return Regulations, and where relevant, all other
subsidiaries which are owned directly or indirectly by its Members.
(w) "Tridex" shall have the meaning attributed to such term
in the preamble hereof.
(x) "Tridex Group" shall mean the group of corporations at
any given time (either prior to, or subsequent to, the Effective Date) which
would be the Affiliated Group of which Tridex is the Common Parent if Tridex was
a "common parent" within the meaning of the Consolidated Return Regulations, and
where relevant, all other subsidiaries which are owned directly or indirectly by
its Members.
SECTION 2. CONSOLIDATED RETURN ELECTION; ALLOCATION OF TAX OBLIGATIONS;
POST-SEPARATION DATE ALLOCATIONS AND PAYMENTS; TREATMENT OF TAX
CARRYFORWARDS; AND COMPUTATION OF INCOME TAX PROVISIONS.
(a) Consolidated Return Election. In determining Tax
Liabilities of the Tridex Group and its Members for Fiscal 1996 and where
relevant any subsequent fiscal year up to the Separation Date, the computations
of the tax liabilities of the Tridex Group and its Members shall, to the extent
permitted by law, be made in accordance with the methods used in the
consolidated returns for the fiscal years ending prior to Fiscal 1996 which
include Tridex and TransAct.
(b) Allocation of Tax Obligations.
(i) Taxes assessed pursuant to the returns described in the
preceding subsection will be allocated among the Members
of the Tridex Group pursuant to the Tridex Group's
historic tax allocation method, described in Section
1552(a)(2) of the Code and Section 1502-33(d)(3) of the
Regulations (applying a fixed percentage of 100 percent).
(ii) With respect to fiscal 1996 and any subsequent fiscal
year or portion thereof up to the Separation Date for
which TransAct remains a Member of the Tridex Group,
TransAct shall pay to Tridex an amount equal to the
federal income taxes for such period which the TransAct
Group would have been liable but for the fact of being a
Member of the Tridex Group.
(iii) With respect to Taxes which are determined on a
consolidated, combined or unitary basis, similar
principles as those described in Section 2(b)(i) and (ii)
shall govern the allocation of such Tax Liabilities among
the parties hereto.
(c) Post-Separation Date Allocations and Payments. With
respect to any fiscal year or portion thereof when TransAct is no longer a
member of the Tridex Consolidated Group, beginning on the Separation Date, the
allocations (to be made by Tridex and TransAct for any fiscal year) will be made
not later than 90 days following the filing of the Federal consolidated income
tax return of the Tridex Group for each such period. Any payments required as a
result of the allocations for any portion of any fiscal year in which the
Separation Date occurs will be made by TransAct or Tridex as the case may be, in
federal or immediately available funds to such bank account as shall be
designated by the recipient. Subject to the provisions of Section 10(c) hereof,
such payment shall be made not later than 95 days after the aforementioned
returns are filed.
39
<PAGE> 4
(d) Treatment of Tax Carryforwards. Magnetec currently has
available for its use certain net operating loss and tax credit carryforwards.
If for any fiscal year beginning after the Effective Date, TransAct uses any net
operating loss or tax credit carryforward of Magnetec's available for use as of
the Effective Date, TransAct will pay to Tridex an amount equal to the net
benefit of the carryforward used in the taxable year. Such payment will be made
not later than 90 days following the filing of the Federal consolidated income
tax return of the Tridex Group for each such period.
(e) Computation of Income Tax Provisions. For financial
reporting purposes, the TransAct Group will compute its income tax accounts as
if a separate return had been filed, using those elements of income and expense
as reported in the consolidated or combined financial statements in accordance
with U.S. Generally Accepted Accounting Principles.
SECTION 3. SEPARATE COMPANY LIABILITIES.
Notwithstanding the provisions of Section 2 hereof, for all
fiscal years prior to the Separation Date, Taxes imposed (including refunds
owed) upon Tridex or a Member of the Tridex Group or any of their direct and
indirect subsidiaries and which are determined or assessed on a separate company
basis will be the separate liability (or asset in the case of a refund) of
Tridex or such Member or such subsidiary and not subject to allocation or
sharing among other Members of the Tridex Group.
SECTION 4. ALLOCATION OF TAX ATTRIBUTES.
Except as otherwise provided in Section 5 hereof, all Tax
Attributes of the Tridex Group (other than foreign tax credits) will be
allocated among Tridex, TransAct and their respective subsidiaries, in
accordance with the Regulations promulgated pursuant to Section 1502 of the Code
or analogous provisions of state, local or foreign law (the "Consolidated Return
Regulations"). All foreign tax credits generated by Tridex's investment in
subsidiaries other than members of the TransAct Group shall be allocated to
Tridex.
SECTION 5. MINIMUM TAX CREDIT.
(a) Allocation of Credit. The credit against income tax
provided by Section 53 of the Code, as well as analogous credits provided by
state, local, or foreign law, for payment of alternative minimum tax in periods
through and including those ending on the Separation Date (the "Minimum Tax
Credit"), shall be allocated as follows:
(i) For each year or portion of the year in which the
Separation Date occurs, the Minimum Tax Credit for each
such year shall be allocated to TransAct in the amount of
such credit multiplied by a fraction whose numerator is
the sum of the alternative minimum taxable income or loss
for such year for all Members of the TransAct Group and
whose denominator is the sum of the alternative minimum
taxable income or loss for such year for all Members of
the TransAct and all Members of the Tridex Group. The
remaining portion of such credits shall be allocated to
Tridex.
(ii) In no event shall either Tridex or TransAct be allocated
for any period an amount of Minimum Tax Credit in excess
of that available to the Tridex Group for such period.
(b) Future Regulations. Notwithstanding Section 2(c) hereof,
in the event that regulations are promulgated which do not permit the Minimum
Tax Credit to be allocated among the members of the Tridex Group in the manner
set forth herein, Tridex or TransAct, as the case may be, will be obligated to
make a payment to the other in an amount equal to the excess of the Minimum Tax
Credit that is allocated to it and its Members by such regulations over that
which would be allocated to it pursuant to Subsection 5(a)(i) above.
SECTION 6. CARRYBACKS OF TAX ATTRIBUTES.
(a) TransAct Carrybacks. If for any taxable year beginning on
or after the Separation Date, TransAct or any Member of the TransAct Group
recognizes a Tax Attribute which TransAct or such Member of the TransAct Group,
under the applicable provisions of the Code and Regulations promulgated under
Section 1502 thereof, is permitted or required to carry back to a prior taxable
year of the Tridex Group or the prior taxable year of
40
<PAGE> 5
a Member of the Tridex Group (either on a consolidated, combined, unitary or
separate return basis), Tridex (or a Member of the Tridex Group) shall, at
TransAct's cost and expense, file appropriate refund claims within a reasonable
period after being requested by TransAct. Tridex (or the Member of the Tridex
Group receiving such refund) shall promptly remit to TransAct any refunds it
receives with respect to any Tax Attribute so carried back.
(b) Tridex Carrybacks. If for any taxable year Tridex or any
Member of the Tridex Group recognizes a Tax Attribute which Tridex or such
Member of the Tridex Group, under the applicable provision of the Code and
Consolidated Return Regulations, carries back to one of its prior taxable years,
Tridex or such Member of the Tridex Group may file appropriate refund claims and
shall be entitled to any refund resulting from such claims.
SECTION 7. CONDUCT OF TAX CONTESTS.
(a) Joint Contests.
(i) Each party shall have the right and obligation to pursue
and defend against any Joint Contest. TransAct shall
conduct Joint Contests, without prejudice to any right or
obligation of Tridex relating to such Joint Contest.
Tridex, as the Common Parent of the Tridex Group or
otherwise, agrees to take all such actions and to cause
its subsidiaries to take all such actions as may be
necessary to permit TransAct to conduct such Joint
Contests. Each party shall cooperate fully with the other
during the course of a Joint Contest as provided in
Section 7(c) herein, and shall bear its own costs in so
doing except as otherwise provided in clause (iv) or
clause (v) of this Section 7(a).
(ii) Each party hereto shall have the right to extend the
statute of limitations on assessments with respect to any
Taxes of such party without regard to whether the
extension leads to the initiation or the continuation of
a Joint Contest; the other party hereto shall cooperate
fully with the requesting party in accordance with
Section 7(c), and shall execute such documentation as may
be required to extend the statute if extension is not
otherwise within the legal power of the requesting party.
Similarly, each party hereto shall have the right to file
a claim for a Tax Refund without regard to whether such
claim leads to the initiation or the continuation of a
Joint Contest; the other party hereto shall cooperate
fully with the requesting party in accordance with
Section 7(c), and shall execute such documentation as may
be required to claim the Tax Refund if it is not
otherwise within the legal power of the requesting party
to file such claim. Neither the extension of the statute
nor the filing of a claim for Tax Refund in accordance
with this paragraph shall entitle either party to any
indemnity from the other, except as provided in clause
(v) of this Section 7(a).
(iii) The party hereto that receives the first information that
a taxing authority is conducting an examination of a Tax
return which included the other party hereto and/or its
subsidiaries shall immediately notify the other that a
possible Joint Contest exists and shall afford such other
party the opportunity to participate, at its own expense,
in contesting in administrative and judicial proceedings
all relevant items that affect the Tax Liability or Tax
Attributes of such entities. TransAct and Tridex shall
share jointly in any decisions involved in connection
with settlements of Joint Contests to the extent that
items are involved that affect the Taxes or Tax
Attributes of both parties or subsidiaries of both
parties. Neither party may agree to settle such a dispute
without the consent of the other, which shall not be
unreasonably withheld. If both parties agree to pursue or
defend a Joint Contest, then each party shall bear its
own costs of contesting the matter. Notwithstanding the
preceding sentence, if the parties agree on the use of
third party advisors or experts, the costs thereof shall
be shared equally between both parties. If one party
acting reasonably and in good faith declines to pursue or
defend a Joint Contest, such declining party nevertheless
shall cooperate fully with the contesting party in
accordance with Section 7(c) herein, and shall bear its
own associated costs and expenses, if any, and shall not
be entitled to any indemnity from the contesting party
except as provided in clause (v) of this Section 7(a);
provided however, that the declining party shall not be
required to incur any costs of any third party advisors
or experts to whose engagement it has not agreed. Each
party shall be liable for its share of any redetermined
liability for Taxes in accordance with Section 8 herein.
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<PAGE> 6
(iv) Each party hereto shall act reasonably and in good faith
in exercising its right to share jointly in any decisions
involved in connection with Joint Contests affecting its
Taxes or Tax Attributes. A determination of whether a
party is acting reasonably and in good faith shall be
made taking into account all relevant facts and
circumstances; provided however, that it shall not be
considered to be acting reasonably and in good faith for
purposes of this Section 7(a) if a party declines a
reasonable, good faith request by the other party to
facilitate the extension of the statute of limitations or
the claim of a Tax Refund (as described in clause (ii) of
this Section 8(a)).
(v) Neither party shall be required to indemnify or hold
harmless the other for any cost or expense incurred in
connection with this Agreement. Notwithstanding the
preceding sentence, one party shall indemnify the other
to the extent of costs (other than Taxes and interest
assessed by any taxing authority with respect thereto)
incurred by the indemnitee that would not have been
incurred but for the failure of the indemnifying party to
act reasonably and in good faith in accordance with this
Section 7(a). In addition, one party shall indemnify and
hold harmless the other from any costs or claims of third
party advisors or experts engaged in connection with a
Tax Contest and to whose engagement the indemnitee has
not agreed.
(b) Separate Contests. Any Separate Contests with respect to
tax returns filed by any Member of either the Tridex Group or the TransAct Group
on a separate company basis shall be conducted by the entity which filed such
tax return (or the Common Parent of the Affiliated Group of which such entity is
a Member at the time of such contest), and such entity shall have sole and
complete authority to conduct such Tax Contest, including the authority to
negotiate with and enter into settlements with any taxing authority. If at any
point of the proceedings of a Separate Contest, it becomes a Joint Contest, then
the Tax Contest shall thereafter be conducted as a Joint Contest.
(c) Cooperation. Tridex (and the Members of the Tridex Group)
and TransAct (and the Members of the TransAct Group) shall each provide the
assistance reasonably requested by the other with respect to conducting any Tax
Contest, including without limitation providing access to or furnishing books,
records, tax returns and supporting work papers, executing any powers of
attorney or other appropriate documentation required to pursue or defend any Tax
Contest, attending administrative or judicial proceedings in connection with
Joint Contests as necessary, performing necessary computations, and other
functions necessary or helpful to the pursuit or defense of any Tax Contest.
SECTION 8. REDETERMINED TAX LIABILITIES.
In the event of a redetermination of Taxes as a result of audits
by the Service or other taxing authority and/or judicial determinations,
payments in connection therewith, if any, made or received by or among Tridex,
TransAct, and their respective subsidiaries, shall be governed by the following
principles:
(a) Separate Contests. In the case of matters arising out of
Separate Contests, the redetermined liability will be borne (that is, any
increases in Tax Liability will be paid by, and any decreases in Tax Liability
will be received by) the applicable entity.
(b) Joint Contests. In the case of matters arising out of any
Joint Contest, a Tax Deficiency shall be paid to the relevant taxing authority
by, and a Tax Refund received from the relevant taxing authority shall be paid
to, Tridex and/or its subsidiaries; provided, however, that whether or not a
payment is required to or from a relevant taxing jurisdiction and subject to the
provisions of Section 8(c) hereof, TransAct and/or its subsidiaries shall make
payments to Tridex and/or its subsidiaries, or receive payments from Tridex
and/or its subsidiaries, based on the following principles:
(i) in the case of adjustments which increase the taxable
income of Members of the TransAct Group, TransAct shall
make a payment equal to the amount of the adjustment
multiplied by the highest applicable marginal rate of
taxation in effect for the period for which the
adjustment is made; or
42
<PAGE> 7
(ii) in the case of adjustments which decrease taxable income
of Members of the TransAct Group, Tridex shall make a
payment equal to the amount of the adjustment multiplied
by the highest applicable marginal rate of taxation in
effect for the period for which the adjustment is made;
(iii) in the case of adjustments which decrease current year
credits (exclusive of credits carried back or forward
into such year) of Members of the TransAct Group,
TransAct shall make a payment to Tridex in the amount of
such decrease; or
(iv) in the case of adjustments which increase currentyear
credits (exclusive of credits carried back or forward
into such year) of Members of the TransAct Group, Tridex
shall make a payment to TransAct in the amount of such
increase.
Notwithstanding the provisions of Section 8(b)(iii)(iv), no
payment will be required under this Section 8(b) in the case of increases or
decreases to the amount of Alternative Minimum Tax Credit. Changes in the amount
of Alternative Minimum Tax Credit will be controlled by the provisions of
Section 8(c) below.
(c) Tax Attribute Reallocations. If there is a
redetermination of Tax Liabilities in connection with either a Joint Contest or
a Separate Contest, or for purposes of this Section 8(c) only, as a result of
carrybacks or carryforwards of Tax Attributes, and as a result thereof there is
an adjustment to Tax Attributes (inclusive of Minimum Tax Credits) allocated
among the parties pursuant to Section 4 and 5 hereof:
(i) Tridex shall, in the case of credits, make a payment to
TransAct equal to the amount of any resulting reduction
in items allocated to Members of the TransAct Group, or
in the case of income items (including but not limited to
net operating losses) Tridex shall make a payment to
TransAct equal to the amount of the reduction multiplied
by the highest applicable marginal rate of taxation in
effect for the period in which the adjustment is made;
and
(ii) TransAct shall, in the case of credits, make a payment to
Tridex equal to the amount of any resulting increase in
items allocated to Members of the TransAct Group, or in
the case of income items (including but not limited to
net operating losses) TransAct shall make a payment to
Tridex equal to the amount of the increase multiplied by
the highest applicable marginal rate of taxation in
effect for the period in which the adjustment is made.
(d) Certain Reorganization-Related Redeterminations. Any Tax
Liability arising from adjustments to income in connection with the transactions
contemplated by and effected under the Plan shall be borne entirely by Tridex.
(e) Timing of Payments. Any payments required by Section 8(b)
or (c) hereof shall be made within 15 days of such adjustments becoming final.
(f) Interest. Payments, if any pursuant to this Section 8
shall bear interest determined by applying similar principles as those described
herein.
SECTION 9. RETENTION OF RECORDS; ACCESS TO RECORDS; COOPERATION &
ASSISTANCE.
(a) Retention of Records.
(i) Duties of TransAct. TransAct shall retain all tax
returns, tax reports, related work papers and all
schedule (along with all documents that pertain to any
such tax returns, reports, work papers or schedules)
which relate to a tax period ending on or before the
Separation Date. TransAct shall make such documents
available at no cost to Tridex and/or its subsidiaries at
Tridex's request. TransAct shall not dispose of such
documents without the permission of Tridex.
43
<PAGE> 8
(ii) Duties of Tridex. Tridex shall retain all tax returns,
tax reports, related work papers and all schedules (along
with all documents that pertain to any such tax returns,
reports, work papers or schedules) which relate to any
tax period ending on or before the Separation Date.
Tridex shall make such documents available at no cost to
TransAct and/or its subsidiaries at TransAct's request.
Tridex shall not dispose of such documents without the
permission of TransAct.
(b) Access to Records.
(i) Duties of TransAct. TransAct shall permit Tridex or any
Members of the Tridex Group (or their direct and indirect
subsidiaries), or their designated representative, to
have access at any reasonable time and from time to time,
after the Separation Date, to all relevant tax returns
and supporting papers therefore in respect of periods
ending on or before the Separation Date, wherever
located, and shall furnish, and request that the
independent accountants of TransAct or any of the members
of the TransAct Group furnish, to Tridex and its
subsidiaries, as the case may be, such additional tax and
other information and documents with respect to
consolidated federal and state income tax returns filed
in respect of periods ending on or before the Separation
Date, as Tridex or any of its subsidiaries may from time
to time reasonably request.
(ii) Duties of Tridex. Tridex shall permit TransAct or any
Members of the TransAct Group (or their direct and
indirect subsidiaries), or their designated
representative, to have access at any reasonable time and
from time to time, after the Separation Date, to all
relevant tax returns and supporting papers therefore of
Tridex and the other members of the Tridex Group in
respect of periods ending on or before the Separation
Date, wherever located, and shall furnish, and request
that the independent accountants of Tridex or any of the
members of the Tridex Group furnish, to TransAct and its
subsidiaries, as the case may be, such additional tax and
other information and documents with respect to
consolidated federal and state income tax returns filed
in respect of periods ending on or before the Separation
Date, as TransAct or any of its subsidiaries may from
time to time reasonably request.
(c) Assistance and Cooperation. Tridex (and Members of the
Tridex Group) and TransAct (and Members of the TransAct Group) will provide each
other with such cooperation, assistance and information as either of them
reasonably may request of the other with respect to the filing of any tax
return, amended return, claim for refund or other document with any taxing
authority. With respect to the federal consolidated tax return or any
consolidated, combined, or unitary state or local tax return (or similar
aggregate reporting for foreign tax purposes) filed by Tridex for tax periods
which begin before the Separation Date and end after the Separation Date, such
assistance shall include the timely submission by TransAct to Tridex of proforma
tax returns for TransAct and each Member of the TransAct Group, prepared on the
basis that each such Member's tax period ended on the Separation Date.
SECTION 10. PREPARATION OF TAX RETURNS; ESTIMATED PAYMENTS.
(a) FY 1996 and all Pre-Separation Date Taxable Years. Tridex
shall prepare and timely file the Tridex Group consolidated returns for fiscal
1996 and all taxable periods prior to the Separation Date. In connection
therewith, TransAct shall (1) permit Tridex to have access at any reasonable
time and from time to time, after the Separation Date, to all tax returns and
supporting papers therefor of TransAct and its subsidiaries, wherever located;
and (2) furnish to Tridex such additional tax and other information and
documents in the possession of such companies, with respect to consolidated
federal and state income tax returns filed in respect of periods including or
ending before the Separation Date, as Tridex may from time to time reasonably
request. TransAct shall, and shall cause its subsidiaries to, cooperate in
connection with the preparation of the consolidated federal and state income tax
returns of the Tridex Group for fiscal 1996. It shall be the responsibility of
Tridex to make any payments required in connection therewith to the applicable
taxing authorities.
(b) Post-Separation Date Taxable Years.
(i) TransAct's Separate Returns. All tax returns of the
TransAct Group which are filed on a consolidated or
combined basis for tax periods beginning after the
Separation Date shall
44
<PAGE> 9
be prepared and filed by TransAct. TransAct shall be
solely responsible for the payment of all Taxes due with
respect to such tax returns for such tax periods.
(ii) Tridex's Separate Returns. All tax returns of the Tridex
Group which are filed on a consolidated or combined basis
for tax periods beginning after the Separation Date shall
be prepared and filed by Tridex. Tridex shall be solely
responsible for the payment of all Taxes due with respect
to such tax returns for such tax periods.
(c) Estimated Payments. All payments (including estimated
payments or payments made in connection with requests for extensions of time to
file such returns) made subsequent to the date hereof with respect to
consolidated, combined, or unitary income tax liabilities of the Tridex Group
and its Members for any and all tax years prior to the Separation Date shall be
made by Tridex. Tridex shall promptly thereafter notify TransAct of the portion,
if any, of such payment which it in good faith believes to be attributable to
TransAct's share of the liability, as determined under the provisions of Section
2 hereof. TransAct shall, within five (5) business days of the due date for such
estimated payments, pay such amount to Tridex or advise Tridex of the basis for
its disagreement.
SECTION 11. INDEMNIFICATION.
With respect to all consolidated federal and state income tax
returns filed by the Tridex Group:
(a) Self-Assessments. Tridex shall indemnify and hold
harmless TransAct and its subsidiaries, and TransAct shall indemnify and hold
harmless Tridex and its subsidiaries, from and against any liability, cost, or
expense, including, without limitation, any fine, penalty (including interest on
penalties or penalty increments to interest) or accountants' or attorneys' fees,
arising out of fraudulent or negligently prepared information, workpapers,
documents, and other items used in the preparation of, or presented in, any
return, amended return, or claim for refund filed for the Tridex Group for the
tax years in which a Separation Date occurs, and which information, workpapers,
documents, or other items originated with and/or were prepared by such
indemnifying party.
(b) Redeterminations. Except as otherwise provided in Section
11(a) hereof:
(i) Tridex shall indemnify and hold harmless TransAct from
and against any liability, cost, or expense incurred or
paid by TransAct in excess of its share thereof as
allocated pursuant to Section 8 hereof, including any
amount paid by TransAct in connection with an assessment
by the Service or other taxing authority; and
(ii) TransAct shall indemnify and hold harmless Tridex from
and against any liability, cost, or expense incurred or
paid by Tridex in excess of its share thereof as
allocated pursuant to Section 8 hereof, including any
amount paid by Tridex in connection with an assessment by
the Service or other taxing authority.
SECTION 12. RESOLUTION OF DISPUTES.
Any disputes between the parties with respect to this Agreement
that cannot be resolved by the parties shall be resolved by a public accounting
firm or a law firm reasonably satisfactory to Tridex and TransAct, the
determination of which shall be final and binding on both parties. The fees and
expenses of such firm shall be borne equally by Tridex and TransAct.
SECTION 13. SUBSIDIARIES.
Any reference herein to a subsidiary or subsidiaries includes
Members (and their direct and indirect subsidiaries) of the Tridex Group and the
TransAct Group. To the extent that the provisions of the Agreement pertain to a
subsidiary or subsidiaries of Tridex or TransAct, Tridex and TransAct
respectively agree that it will cause the respective subsidiary or subsidiaries
to carry out the terms of this Agreement.
SECTION 14. SURVIVABILITY/ASSIGNABILITY.
This Agreement and each of its provisions shall be binding upon
and inure to the benefit of the parties and their respective heirs and
successors. Nothing in this Agreement is intended or shall be construed to
45
<PAGE> 10
give any person or entity other than the parties and their respective heirs or
successors any rights or remedies under or by reason of the Agreement and
neither party shall assign its rights and obligations hereunder without the
express written consent of the other party, which consent each party reserves
the right to withhold in its sole and absolute discretion.
SECTION 15. NOTICES.
All notices and other communications required or permitted under
this Agreement shall be in writing, shall be deemed delivered upon receipt, and
shall be delivered in person or by courier or sent by certified or registered
mail, return receipt requested, first class, postage prepaid, to the parties at
their respective addresses set forth below, or as to any party at such other
address as shall be designated by such party in a written notice to the other
party:
To TransAct: TransAct Technologies Inc.
7 Laser Lane
Wallingford, CT 06492
Attention: President
To Tridex: Tridex Corporation
61 Wilton Road
Westport, CT 06880
Attention: President
SECTION 16. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Connecticut.
SECTION 17. COSTS AND EXPENSES.
In any action brought to enforce or interpret this Agreement,
each party shall pay its own costs and expenses of maintaining or defending such
action.
SECTION 18. REMEDIES CUMULATIVE.
The remedies provided in this Agreement are cumulative and not
exclusive of any remedies provided by law.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original and all of which taken together shall
constitute one and the same Agreement.
SECTION 20. SEVERABILITY.
In the event that any portion of this Agreement shall be declared
invalid by order, decree or judgment of a court or governmental agency having
jurisdiction, this Agreement shall be construed as if such portion had not been
inserted herein, except when such construction would operate as an undue
hardship on any party to this Agreement or constitute a substantial deviation
from the general intent and purpose of said parties as reflected in this
Agreement.
SECTION 21. AMENDMENTS; WAIVER.
This Agreement may be amended, and the observance of any terms of
this Agreement may be waived, only in a written document signed by Tridex and
TransAct.
46
<PAGE> 11
SECTION 22. EFFECTIVENESS OF AGREEMENT.
This Agreement shall become effective upon the Effective Date and
shall continue in effect until otherwise agreed in writing by Tridex and
TransAct, or their successors.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
TRIDEX CORPORATION
By:
Title:
TRANSACT TECHNOLOGIES INCORPORATED
By:
Title:
47
<PAGE> 1
TRIDEX CORPORATION AND SUBSIDIARIES
EXHIBIT 11 COMPUTATION OF PER SHARE EARNINGS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
------------- ----------------
JUNE 29, JULY 1, JUNE 29, JULY 1,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
PRIMARY:
EARNINGS:
Net income $ 807 $ 313 $ 1,603 $ 1,524
========== ========== ========== ==========
SHARES:
Average common shares outstanding 3,841,537 3,679,788 3,822,831 3,679,255
Dilutive effect of outstanding options and warrants
as determined by the treasury stock method 240,322 203,601 187,140 207,920
---------- ---------- ---------- ----------
4,081,859 3,883,389 4,009,971 3,887,175
========== ========== ========== ==========
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE:
Primary $ 0.20 $ 0.08 $ 0.40 $ 0.39
========== ========== ========== ==========
</TABLE>
48
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TRIDEX
CORPORATION QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED JUNE 29, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> MAR-31-1996
<PERIOD-END> JUN-29-1996
<CASH> 524
<SECURITIES> 0
<RECEIVABLES> 9953
<ALLOWANCES> 201
<INVENTORY> 9840
<CURRENT-ASSETS> 21620
<PP&E> 12779
<DEPRECIATION> 7141
<TOTAL-ASSETS> 38018
<CURRENT-LIABILITIES> 12341
<BONDS> 7573
0
0
<COMMON> 1026
<OTHER-SE> 17078
<TOTAL-LIABILITY-AND-EQUITY> 38018
<SALES> 17351
<TOTAL-REVENUES> 17351
<CGS> 11713
<TOTAL-COSTS> 11713
<OTHER-EXPENSES> 3964
<LOSS-PROVISION> 26
<INTEREST-EXPENSE> 296
<INCOME-PRETAX> 1352
<INCOME-TAX> 545
<INCOME-CONTINUING> 807
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 807
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
