-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KWblkW1+2+aHHkWVG3zBFCyHZL0SiNkUTOLSsQACkHzB42+Bwt39cYPzLiKgc2+P qkat+eamI9OfgBoox6/pOw== 0001005477-96-000426.txt : 19961113 0001005477-96-000426.hdr.sgml : 19961113 ACCESSION NUMBER: 0001005477-96-000426 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRIDEX CORP CENTRAL INDEX KEY: 0000047254 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 060682273 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05513 FILM NUMBER: 96660043 BUSINESS ADDRESS: STREET 1: 61 WILTON RD CITY: WESTPORT STATE: CT ZIP: 06880-3121 BUSINESS PHONE: 2032261144 MAIL ADDRESS: STREET 1: 61 WILTON ROAD CITY: WESTPORT STATE: CT ZIP: 06880-3121 FORMER COMPANY: FORMER CONFORMED NAME: HI G INC DATE OF NAME CHANGE: 19840829 10-Q 1 FORM 10-Q 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: September 28, 1996 -------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from: to: -------------------------------------------- Commission file number: -------------------------------------------- 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 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (203) 226-1144 - -------------------------------------------------------------------------------- (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. Class Outstanding October 26, 1996 - ------------- ---------------------------- Common stock, 4,009,283 no par value TRIDEX CORPORATION AND SUBSIDIARIES INDEX Page No. -------- PART I. Financial Information: Item 1. Financial Statements Consolidated Condensed Balance Sheets September 28, 1996 and December 31, 1995 3 Consolidated Statements of Income for the Quarters and Nine Months Ended September 28, 1996 and September 30, 1995 4 Consolidated Statements of Cash Flows for the Nine Months Ended September 28, 1996 and September 30, 1995 5 Notes to Consolidated Condensed Financial Statements 6 Item 2. Management's Discussion and Analysis of the Results of Operations and Financial Condition 8 PART II. Other Information: Item 6. Exhibits and Reports on Form 8-K 12 Signatures 13 2 TRIDEX CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheets (Dollars in Thousands) (Unaudited) September 28, December 31, 1996 1995 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 3,714 $ 933 Receivables 11,682 7,406 Inventories 11,283 9,597 Deferred tax assets 1,082 645 Other current assets 502 732 -------- -------- Total current assets 28,263 19,313 -------- -------- Plant and equipment, net 5,970 5,196 Excess of cost over fair value of net assets acquired 8,956 9,608 Other assets 1,004 1,608 -------- -------- $ 44,193 $ 35,725 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Bank loans payable $ 98 $ 396 Current portion of long-term debt 1,282 2,411 Accounts payable 6,303 4,516 Accrued liabilities 5,230 4,264 -------- -------- Total current liabilities 12,913 11,587 -------- -------- Long-term obligations, less current portion: Term loan payable 4,843 Senior subordinated convertible debentures, due 1997, net of discount of $7 and $16 2,453 2,714 Subordinated convertible term promissory notes, due 1997, net of discount of $85 and $186 115 614 Deferred taxes payable 267 Minority interest 2,707 Other 392 405 -------- -------- 5,934 8,576 -------- -------- Shareholders' equity: Common stock, at stated value 1,031 978 Additional paid-in capital 23,086 21,939 Retained earnings (deficit) 2,064 (6,609) Cumulative valuation adjustments 38 82 Common shares held in treasury, at cost (873) (828) -------- -------- 25,346 15,562 -------- -------- $ 44,193 $ 35,725 ======== ======== See notes to consolidated condensed financial statements. 3 TRIDEX CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (Dollars in Thousands Except Per Share Amounts) (Unaudited)
Quarters Ended Nine Months Ended ----------------------------- ------------------------------ September 28, September 30, September 28, September 30, 1996 1995 1996 1995 ------------- ------------- ------------- -------------- Net sales $ 20,851 $ 16,581 $ 55,794 $ 47,024 ----------- ---------- --------- -------- Operating costs and expenses: Cost of sales 14,312 10,901 37,717 31,372 Engineering, design and product development costs 882 805 2,736 2,204 Selling, administrative and general expenses 3,649 3,309 10,103 9,801 ----------- ---------- --------- -------- 18,843 15,015 50,556 43,377 ----------- ---------- --------- -------- Operating income 2,008 1,566 5,238 3,647 Other charges (income): Gain on sale of subsidiary stock (6,200) (6,200) Interest expense, net 214 340 821 1,008 Other, net 82 (1) (69) 53 ----------- ---------- --------- -------- (5,904) 339 (5,448) 1,061 ----------- ---------- --------- -------- Income before income taxes and minority interest 7,912 1,227 10,686 2,586 Provision for income taxes 753 565 1,924 400 ----------- ---------- --------- -------- Income before minority interest 7,159 662 8,762 2,186 Minority interest in net earnings of subsidiary 89 89 ----------- ---------- --------- -------- Net income $ 7,070 $ 662 $ 8,673 $ 2,186 =========== ========== ========= ======== Earnings per common and common equivalent share: Primary $ 1.67 $ 0.17 $ 2.12 $ 0.56 =========== ========== ========= ======== Fully diluted $ 1.51 $ 1.94 =========== ========= Weighted average common and common equivalent shares outstanding: Primary 4,234,140 3,974,451 4,084,896 3,916,273 =========== ========= ========= ========= Fully diluted 4,719,149 4,617,711 =========== =========
See notes to consolidated condensed financial statements. 4 TRIDEX CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Dollars in Thousands) (Unaudited) Nine Months Ended ------------------------------- September 28, September 30, 1996 1995 -------------- -------------- Cash flows from operating activities: Net income $ 8,673 $ 2,186 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Gain on sale of subsidiary stock (6,200) Depreciation and amortization 2,252 1,910 Deferred income taxes 259 (522) Gain on sale of marketable securities (285) Changes in operating assets and liabilities: Receivables (4,248) (2,196) Inventory (1,682) (2,455) Other current assets (75) Other assets (167) (106) Accounts payable, accrued liabilities and income taxes payable 2,674 665 Other 2 34 -------- -------- Net cash provided by (used in) operating activities 1,203 (484) -------- -------- Cash flows from investing activities: Purchases of plant and equipment (1,962) (2,194) Proceeds from sale of assets 522 Other (10) 11 -------- -------- Net cash used in investing activities (1,450) (2,183) -------- -------- Cash flows from financing activities: Net change in borrowings under line of credit (301) 3,519 Net proceeds from sale of subsidiary stock 8,991 Net proceeds from issuance of long-term debt 120 263 Principal payments on long-term borrowings (5,963) (1,944) Proceeds from exercise of stock options and warrants 187 15 Other (12) (22) -------- -------- Net cash provided by financing activities 3,022 1,831 -------- -------- Effect of exchange rate changes on cash 6 10 -------- -------- Increase (decrease) in cash and cash equivalents 2,781 (826) Cash and cash equivalents at beginning of period 933 1,494 -------- -------- Cash and cash equivalents at end of period $ 3,714 $ 668 ======== ======== Supplemental cash flow information: Interest paid $ 733 $ 788 Income taxes paid, net of refunds 713 1,155 Supplemental non-cash investing and financing activities: Conversion of convertible debentures to common stock $ 968 See notes to consolidated condensed financial statements. 5 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 September 28, 1996, the results of its operations for the quarters and nine months ended September 28, 1996 and September 30, 1995 and changes in its cash flows for the nine months ended September 28, 1996 and September 30, 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 accompanying consolidated financial statements include the accounts of the Company and all subsidiaries after elimination of all material intercompany accounts and transactions. The minority interest represents the 19.7% public ownership of Transact Technologies Incorporated ("Transact"). (See note 7). 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 nine months ended September 28, 1996 and September 30, 1995 are not necessarily indicative of the results to be expected for the full year. See note 4 for discussion of the gain on sale of subsidiary stock. 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. Fully diluted earnings per common share assume conversion of dilutive securities when the result is dilutive. 3. Inventories: Components of inventory are: September 28, 1996 December 31, 1995 ------------------ ----------------- (Dollars in Thousands) Raw materials and component parts $7,692 $6,704 Work-in-process 999 1,271 Finished goods 2,592 1,622 ------- ------ $11,283 $9,597 ======= ====== 4. Other income, net: Non-operating income for the third quarter includes the $6,200,000 gain on the sale of subsidiary stock. Other non-operating charges for the third quarter include an additional provision for loss on disposal of real estate held for sale of $58,000 and transactional foreign exchange losses of approximately $20,000. For the nine months, other non-operating income includes the gain on the sale of subsidiary stock and a $285,000 gain on the sale of marketable securities offset by an additional provision for loss on disposal of real estate held for sale of $113,000 and transactional foreign exchange losses of approximately $100,000. 6 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 September 28, 1996 and to the date of this report, there has been no material development in the resolution of this matter. 6. Issuance of Common Stock: Through the first nine months of 1996, the Company accepted $1,010,000 ($968,000 net carrying value) principal amount of the 10.5% Debentures for conversion into 112,210 shares of common stock. The conversion of these Debentures into common stock satisfies the Company's otherwise required sinking fund obligation of $740,000 due on December 15, 1996. 7. Public equity offering by Transact Technologies Incorporated: Pursuant to a previously announced plan of reorganization, during the third quarter of 1996, the Company's Transact subsidiary completed an initial public offering of 1,322,500 shares of its common stock at a price of $8.50 per share. Transact received approximately $8,991,000 of net proceeds from the offering and used $7,500,000 to repay intercompany indebtedness to Tridex and the balance was used for Transact's working capital and general corporate purposes. Of the $7,500,000 received from Transact, Tridex used approximately $5,254,000 to repay all outstanding indebtedness to Fleet National Bank. The Company intends to spin-off its remaining equity interest in Transact, consisting of 5,400,000 shares of common stock, to all Tridex stockholders on an approximate one-for-one basis as a tax-free dividend (the "Distribution"). The Distribution is expected to be made in 1997 and is subject to certain conditions, including the receipt of a ruling from the Internal Revenue Service confirming the tax-free nature of the transaction. 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. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION Certain statements contained in this report which are not historical facts may be deemed to contain forward-looking statements with respect to events the occurrence of which involves risks and uncertainties, including, without limitation, the Company's results of operations in future periods, the Company's expectations regarding the distribution and the Company's liquidity and financial condition after such distribution. Results of Operations Quarter Ended September 28, 1996 Compared to Quarter Ended September 30, 1995 Consolidated net sales for the quarter ended September 28, 1996 increased $4,270,000 (26%) to $20,851,000 from $16,581,000 in the comparable quarter of the prior year. The Company's 80.3% owned subsidiary, Transact, reported a 23% increase in sales to $10,794,000 from $8,809,000, primarily as a result of increased shipments of POS and on-line lottery printers. The increase also reflects significantly greater volume of shipments of cash drawers and POS terminals and related products. Consolidated gross profit increased $859,000 (15%) to $6,539,000 from $5,680,000 in the prior year's quarter, as a result of the higher volume of shipments of cash drawers and printers. Transact's operations contributed $599,000 to increased gross profit. The consolidated gross margin percentage was 31.4% of consolidated net sales compared to 34.3% in the prior year's quarter. The decline in gross margin percentage is attributable to the start-up of the standardized product line of cash drawers, the mix of POS terminals and related products and to the change in sales mix of printers, particularly in the POS market. The Company expects that Transact's gross profit will increase with increased net sales, while its gross margin will decrease slightly due to a growing proportion of sales of printers at lower average selling prices resulting from volume discount pricing, particularly in the POS market. However, operating income as a percentage of net sales has increased at Transact, and the Company expects that gross margin at its other operating units will improve. Consolidated engineering, design and product development costs increased $77,000 (10%) to $882,000 from $805,000 in the prior year's quarter. The increase includes $36,000 attributable to Transact related primarily to the development of new products. Expenditures for the development of POS terminal products also increased from the prior year's quarter. Consolidated selling, administrative and general expenses increased $340,000 (10%) to $3,649,000 from $3,309,000 in the prior year's quarter. The increase includes non-recurring costs, approximating $200,000, related to the amendment of the Company's bank credit facilities and to the anticipated distribution of shares of Transact to Tridex shareholders. Transact's selling, general and administrative expenses increased $92,000 due to operational start-up activities and to compensation related costs for additional employees. The increase also reflects expenditures to broaden the geographic sales organization for POS terminal products. Consolidated operating income for the current quarter increased $442,000 (28%) to $2,008,000 from $1,566,000 in the prior year's quarter, primarily due to the results of increased volume of shipments of printers by Transact. Operating income from the increased sale of cash drawers was offset by the non-recurring administrative costs. Consolidated operating income as a percentage of revenue increased to 9.6% from 9.4% in the prior year's quarter and is primarily the result of the higher volume of shipments of cash drawers and printers offset in part by the impact of the mix of POS terminals and related products and of the increased selling, general and administrative expenses. Net interest expense decreased $126,000 (37%) to $214,000 from $340,000 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, and to the impact of the conversion of debentures to common stock. Non-operating income for the current quarter is the gain recognized on the sale of shares of common stock of Transact. Non-operating charges for the current quarter include an additional provision of $58,000 for real estate held for sale and approximately $20,000 transactional foreign exchange losses. Provision for income taxes in the current quarter, exclusive of the gain on sale of subsidiary stock, reflects an estimated effective tax rate of 44%. The estimated effective tax rate was approximately 46% in the prior year's quarter. Net income for the current quarter, exclusive of the one-time gain on the sale of subsidiary stock, was $870,000 (or $0.20 per share) as compared to $662,000 (or $0.17 per share) in the prior year's quarter. Net income including the one-time gain was $7,070,000 (or $1.67 per share, $1.51 per share on a fully diluted basis). The average number of common and common equivalent shares outstanding increased to 4,234,140 shares from 3,974,451 shares in the prior year's quarter. 8 Nine Months Ended September 28, 1996 Compared to Nine Months Ended September 30, 1995 Consolidated net sales for the nine months ended September 28, 1996 increased $8,770,000 (19%) to $55,794,000 from $47,024,000 in the comparable prior year's period. Transact's sales increased $6,026,000 (24%) to $31,019,000 from $24,993,000, primarily as a result of increased shipments of POS and on-line lottery printers. The increase also reflects significantly greater volume of shipments of cash drawers and, to a lesser degree, to increased shipments of POS terminals and related products. Consolidated gross profit increased $2,425,000 (16%) to $18,077,000 from $15,652,000 in the prior year's period, primarily as a result of the higher volume of shipments of cash drawers and printers. Transact contributed $1,932,000 to the increased gross profit. The consolidated gross margin percentage was approximately 32.4% of sales compared to 33.3% in the prior year's period. The decline in gross margin percentage is attributable to the start-up costs of the standardized product line of cash drawers, to the mix of POS terminals and related products and to the change in sales mix of printers, particularly in the POS market. Consolidated engineering, design and product development costs increased $532,000 (24%) to $2,736,000 from $2,204,000 in the prior year's period. The increase includes $431,000 attributable to Transact related primarily to the development of new products in the POS market. Expenditures for the developement of POS terminal products also increased from the prior year's quarter. Consolidated selling, administrative and general expenses increased $302,000 (3%) to $10,103,000 from $9,801,000 in the prior year's period. The increase in selling expense results from efforts to expand the sales force for POS terminal and related products. Administrative and general expenses include non-recurring costs related to the amendment of the Company's bank credit facilities and to the anticipated distribution of shares of TransAct to Tridex shareholders. The increase also reflects operational start-up activities of Transact. Consolidated operating profit for the current period increased $1,591,000 (44%) to $5,238,000 from $3,647,000 in the prior year's period, primarily due to increased volume of shipments of printers by Transact. Operating income from the increased sales of cash drawers was offset by the non-recurring administrative costs. Consolidated operating income as a percentage of revenue increased to 9.4% from 7.8% in the prior year's period and is primarily the result of a higher volume of shipments. Net interest expense decreased $187,000 (19%) to $821,000 from $1,008,000 in the prior year's period. The decrease in interest expense reflects lower levels of indebtedness, particularly decreased utilization of the domestic line of credit and the impact of the conversion of debentures to common stock. Non-operating income for the current period includes the $6,200,000 gain on the sale of subsidiary stock and $285,000 gain on the sale of marketable securities offset by approximately $100,000 transactional foreign exchange losses and an additional provision of $113,000 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, exclusive of the gain on the sale of subsidiary stock, was based upon an estimated effective tax rate of 43% 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 the final 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, exclusive of the one-time gain on the sale of subsidiary stock, was $2,473,000 (or $0.60 per share) as compared to $2,186,000 (or $0.56 per share) in the prior year's period. Net income including the gain was $8,673,000 (or $2.12 per share, $1.94 per share on a fully diluted basis). The average number of common and common equivalent shares outstanding increased to 4,084,896 shares from 3,916,273 shares in the prior year's quarter. 9 Liquidity and Capital Resources The Company's working capital at September 28, 1996 was $15,350,000 compared with $7,726,000 at December 31, 1995. The current ratio was 2.2 at September 28, 1996 and 1.7 at December 31, 1995. The increase in working capital reflects the receipt of the net proceeds from the initial public offering discussed below, the repayment of bank debt, a higher level of operating activity and the conversion of $1,010,000 principal amount of debentures to 112,210 shares of common stock. During the third quarter, the Company's Transact subsidiary completed the initial public offering of 1,322,500 shares of its common stock at a price of $8.50 per share. Transact received net proceeds of the offering of $8,991,000, of which $7,500,000 was used to repay intercompany indebtedness to Tridex. The balance was used for Transact's working capital and general corporate purposes. Of the $7,500,000 received from TransAct, the Company used approximately $5,254,000 to repay all outstanding indebtedness to Fleet National Bank. The Company has a $2,000,000 Working Capital Facility (the "Working Capital Facility") with Fleet National Bank ("Fleet"), which provides 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 capital base, a maximum leverage ratio, a minimum interest coverage ratio, and a minimum current ratio, otherwise Fleet may withdraw its commitment. The Company was in compliance with these covenants at September 28, 1996 and expects to be in compliance with these covenants for the foreseeable future. During the first nine 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 September 28, 1996, the Company had availability of $2,000,000 under the Working Capital Facility. During the first nine months of 1996, $1,010,000 principal amount of debentures were converted into 112,210 shares of common stock. The conversion satisfies the otherwise required $740,000 sinking fund payment due on December 15, 1996. During the remainder of 1996, the Company expects that its cash balances and funds generated from operations will be sufficient to satisfy its cash needs for working capital, scheduled debt retirements and capital expenditures, primarily tooling for new products. The Company believes that funds generated from operations, its cash balances 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. In June 1996, the Company filed with the Internal Revenue Service (the "IRS") an application for a ruling that the Distribution will constitute a tax free reorganization for purposes of the Internal Revenue Code of 1986, as amended (the "Code"). If the Company receives a favorable ruling from the IRS, it intends to complete the Distribution as early as practicable on 1997. However, no assurance can be given as to whether or when the IRS will issue a favorable ruling or that the Distribution will occur. If the IRS issues a favorable ruling and certain other conditions are satisfied, the Company will proceed with the Distribution, after which the 5,400,000 shares of Transact common stock owned by the Company prior to the Distribution will be owned by the holders of Tridex common stock as of the record date for the Distribution (the "Record Date"), and Transact will no longer be a subsidiary of Tridex. If the IRS does not issue a favorable ruling, the Company may either request reconsideration, resubmit its request based on changes in facts and circumstances, if any, or abandon the Distribution. If the Company adandons the Distribution, it may either maintain ownership of Transact as a consolidated subsidiary or sell shares of Transact common stock in subsequent public offerings or private sales. Although the Company expects to effect the Distribution, it is possible that the Distribution will not occur within the time frame contemplated, or at all. Assuming that the Distribution occurs, the Company would be comprised of its wholly-owned subsidiaries Ultimate Technology Corporation ("Ultimate") and Cash Bases GB Limited ("Cash Bases") and its Tridex Ribbons division. Assuming that the Distribution occurred as of September 28, 1996, that all 910,206 options and warrants outstanding as of that date were exercised (with a weighted average exercise price of $7.38), all $2,460,000 of the senior subordinated convertible debentures (which are convertible at $9.00 per share) and all $1,299,000 of the subordinated convertible term promissory notes (which are convertible at $12.00 per share) outstanding as of that date were converted in accordance with their respective terms, and that Transact repaid its $1.0 million subordinated note to the Company due March 1, 1998, the Company would have minimal, if any, debt and approximately $10 million in cash and cash equivalents. Also, the Company's management expects that Ultimate, Cash Bases and the Tridex Ribbons division will have total revenue of approximately $35 million for 1996 and will be profitable for the foreseeable future. However, no assurance can be given that all outstanding options and warrants will be exercised or that all the debentures and notes will be converted, and no assurance can be given regarding the future results of operations or financial condition of the Company. After the Distribution, the Company will have fewer product lines and, therefore, will be more susceptible to the adverse effects of a downturn or disruption in the demand for any single product line. As part of its business strategy, the Company intends (i) to focus on internal growth through the development of products that broaden and extend the business of providing integrated systems and peripheral devices to the point-of-sale ("POS"), financial services and other transaction based markets and (ii) to pursue joint ventures, strategic alliances or other transactions, including transactions to complement its existing products and markets, acquire new product lines or enter new markets. Implementation of this strategy may require substantial capital expenditures. There can be no assurance that the Company will be able to successfully implement its strategy, or that the Company can successfully manage any new operations. 10 PART II. OTHER INFORMATION 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 Amendment to Plan of Reorganization dated as of August 30, 1996 among Tridex, Magnetec, Transact and Ithaca. Exhibit 10.3 Agreement and Plan of Merger dated as of July 16, 1996 between Magnetec and Ithaca. Exhibit 10.4 Asset Transfer Agreement dated as of July 31, 1996 between Magnetec and Trident. Exhibit 10.5 Manufacturing Support Services Agreement dated as of September 28, 1996 between Magnetec and Trident. Exhibit 10.6 Corporate Services Agreement dated as of July 30, 1996 between Tridex and Transact. Exhibit 10.7 Printer Supply Agreement dated as of July 31, 1996 between Magnetec and Ultimate Technology Corporation. Exhibit 10.8 Tax Sharing Agreement dated as of July 31, 1996 between Tridex and Transact. Exhibit 10.9 Amendment No. 2, dated as of August 30, 1996 to Amended and Restated Credit Agreement, dated as of December 14, 1995, among Tridex Corporation, Ithaca Peripherals Incorporated, Ultimate Technology Corporation, Magnetec Corporation, Cash Bases Incorporated and Fleet National Bank. Exhibit 11 Computation of Per Share Earnings Exhibit 27. Financial Data Schedule b. Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter covered by this report. 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) November 11, 1996 /s/Seth M. Lukash ----------------- Seth M. Lukash Chairman of the Board, President, Chief Executive Officer, and Chief Operating Officer (Principal Executive Officer) November 11, 1996 /s/George T. Crandall --------------------- George T. Crandall Vice President and Treasurer (Principal Accounting Officer) 12 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"). Exhibit 10.2 Amendment to Plan of Reorganization dated as of August 30, 1996 among Tridex, Magnetec, Transact and Ithaca. Exhibit 10.3 Agreement and Plan of Merger dated as of July 16, 1996 between Magnetec and Ithaca. Exhibit 10.4 Asset Transfer Agreement dated as of July 31, 1996 between Magnetec and Tridex. Exhibit 10.5 Manufacturing Support Services Agreement dated as of September 28, 1996 between Magnetec and Tridex. Exhibit 10.6 Corporate Services Agreement dated as of June 24, 1996 between Tridex and Transact. Exhibit 10.7 Printer Supply Agreement dated as of July 30, 1996 between Magnetec and Ultimate Technology Corporation. Exhibit 10.8 Tax Sharing Agreement dated as of July 31, 1996 between Tridex and Transact. Exhibit 10.9 Amendment No. 2, dated as of August 30, 1996 to Amended and Restated Credit Agreement, dated as of December 14, 1995, among Tridex Corporation, Ithaca Peripherals Incorporated, Ultimate Technology Corporation, Magnetec Corporation, Cash Bases Incorporated and Fleet National Bank. Exhibit 11 Computation of Per Share Earnings Exhibit 27 Financial Data Schedule EX-10.1 2 PLAN OF REORGANIZATION PLAN OF REORGANIZATION PLAN OF REORGANIZATION dated as of June 24, 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 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 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 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 a 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 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 1.1 and 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 May9, 1996 pursuant to which Tridex has entered into an exclusive Sales Agreement with Oki Europe Limited dated as of May10, 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. 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. (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 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 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. TRIDEX CORPORATION By: /s/ Seth M. Lukash ------------------------------ Title: Seth M. Lukash, Chairman and Chief Executive Officer MAGNETEC CORPORATION By: /s/ Bart C. Shuldman ------------------------------ Title: Bart C. Shuldman President ITHACA PERIPHERALS INCORPORATED By: /s/ Richard L. Cote ------------------------------ Title: Vice President TRANSACT TECHNOLOGIES, INC. By: /s/ Bart C. Shuldman ------------------------------ Title: Bart C. Shuldman President and Chief Executive Officer LIST OF SCHEDULES/EXHIBITS Exhibit A - Corporate Services Agreement Exhibit B - Tax Sharing Agreement Exhibit C - Printer Supply Agreement EX-10.2 3 AMENDMENT TO PLAN OF REORGANIZATION AMENDMENT TO PLAN OF REORGANIZATION THIS AMENDMENT (the "Amendment) is entered into by and among Tridex Corporation, a Connecticut corporation with executive offices at 61 Wilton Road, Westport, CT 06880 ("Tridex"), Magnetec Corporation, a Connecticut corporation ("Magnetec") and TransAct Technologies Incorporated, a Delaware corporation ("TransAct") each with executive offices at 7 Laser Lane, Wallingford, CT 06492; WHEREAS, the parties hereto and Ithaca Peripherals Incorporated ("Ithaca"), formerly a Delaware corporation, entered into a Plan of Reorganization dated as of June 25, 1996 (the "Plan of Reorganization"); WHEREAS, as contemplated under the Plan of Reorganization, Ithaca merged with and into Magnetec on July 29, 1996; WHEREAS, the parties hereto wish to amend Section 6.1 of the Plan of Reorganization, which contains a non-competition covenant. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree with as follows: The last sentence of Section 6.1 of the Plan of Reorganization is hereby deleted in its entirety and replaced with the following: The foregoing shall not prohibit Tridex from: (i) 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; or (ii) manufacturing custom keyboards and pole displays and selling point-of-sale systems and components, including printers or printer goods, through its wholly-owned subsidiary, Ultimate Technology Corporation. IN WITNESS WHEREOF, the parties have executed this Amendment this 30th day of August, 1996. TRIDEX CORPORATION By: /s/ Seth M. Lukash ------------------------------------- Title: Seth M. Lukash, Chairman and Chief Executive Officer MAGNETEC CORPORATION By: /s/ Bart C. Shuldman ------------------------------------- Title: Bart C. Shuldman President TRANSACT TECHNOLOGIES INCORPORATED By: /s/ Bart C. Shuldman ------------------------------------- Title: Bart C. Shuldman President and Chief Executive Officer EX-10.3 4 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER This AGREEMENT AND PLAN OF MERGER is made and entered into as of the 16th 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 33-371 of the Connecticut General Statutes and 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 33-371 of the Connecticut General Statutes and 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 September7, 1973. 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 of Ithaca, and otherwise carry out the purposes of this Agreement 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 cancelled 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. 13. 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. 2 14. 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 /s/ George T. Crandall By: /s/ Bart C. Shuldman - ------------------------- ------------------------------- Secretary Bart C. Shuldman, President ATTEST: ITHACA PERIPHERALS INCORPORATED /s/ George T. Crandall By: /s/ Richard L. Cote - ------------------------- ------------------------------- Secretary Richard L. Cote, Vice President 4 EX-10.4 5 ASSET TRANSFER AGREEMENT 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"). (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 2 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. 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. 3 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 4 which remain unfilled or unperformed as of the date of the Closing. (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. 5 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 31st day of July, 1996. MAGNETEC CORPORATION By: /s/ Bart C. Shuldman ------------------------------------- Title: President ---------------------------------- TRIDEX CORPORATION By: /s/ Richard L. Cote ------------------------------------- Title: Senior Vice President and Chief Financial Officer ---------------------------------- 6 EX-10.5 6 MANUFACTURING SUPPORT SERVICES AGREEMENT MANUFACTURING SUPPORT SERVICES AGREEMENT THIS MANUFACTURING AND SERVICES AGREEMENT (the "Agreement") is dated as of September 28, 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 Transfer Agreement dated as of July 31, 1996 under which Magnetec has agreed to transfer 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 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 2 Business operations at Magnetec's facility. Tridex shall provide proof of coverage upon request by Magnetec. 3. Space Provided. Magnetec hereby agrees to provide Tridex approximately 2,200 square feet of floor space including, to the extent practicable, manufacturing, stockroom, finished goods warehouse, and shipping and receiving space. Space provided to Tridex shall, to the extent practicable, 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. 3 (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. 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 4 Magnetec no later than thirty (30) days after the date of the invoice, the following amounts: (a) For Magnetec's occupancy costs, Tridex shall pay Magnetec a flat fee of $3,300 per month, and for Magnetec's overhead directly attributable to manufacturing, Tridex shall pay Magnetec 9.6% of the monthly revenue of the Ribbon Business, subject to annual adjustment upon the agreement of both parties; (b) For Magnetec's overhead attributable to general and administrative expenses (e.g., expenses incurred to provide order processing, customer billing and accounting services), Tridex shall pay Magnetec a flat fee of $8,509 per month, subject to annual adjustment upon the agreement of both parties; (c) For Magnetec's fixed employment costs for sales employees, Tridex shall pay Magnetec 2.4% of the monthly revenue of the Ribbon Business; and (d) For other costs incurred and paid by Magnetec on behalf of Tridex which are not included in Section 7(a) - (c) but are directly related to the conduct of the Ribbon Business, including but not limited to sales commissions paid on Ribbon Business sales, temporary labor, the direct cost of engineering labor costs, benefits, and 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 may request and Tridex may, to the extent available, provide the services of the Tridex employee filling the position of Ribbon Line Supervisor (the "Ribbon Line Supervisor"). Magnetec shall pay Tridex for the services of the Ribbon Line Supervisor, to the extent they are requested by and provided to Magnetec, at an hourly rate calculated by dividing the weekly salary paid to the Ribbon Line supervisor by forty (40). 5 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 6 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 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. 7 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:___________________________________ 8 EX-10.6 7 CORPORATE SERVICES AGREEMENT CORPORATE SERVICES AGREEMENT THIS CORPORATE SERVICES AGREEMENT (the "Agreement") is dated as of June 24, 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. -1- (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: (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. -2- 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. 4. Term. (a) Term. The initial term of this Agreement shall begin on the Effective Date and continue until December 31, 1997. -3- (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 December31, 1997. If Tridex notifies TransAct that it does not intend to employ Mr. Curtain beyond December31, 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 December31, 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. -4- 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. 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 be 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: /s/ Seth M. Lukash ------------------------------------- Title: Chairman and Chief Executive Officer TRANSACT TECHNOLOGIES INCORPORATED By: /s/ Bart C. Shuldman ------------------------------------- Title: Chief Executive Officer -5- EX-10.7 8 PRINTER SUPPLY AGREEMENT 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 75% 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 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. 2 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: Cancellation or Reschedule Reschedule Cancellation Notice Received Charge Charge - -------------------------- ---------- ------------ 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 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. 3 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. 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. 4 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. 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 5 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 6 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 30th day of July, 1996. ITHACA PERIPHERALS, a division of MAGNETEC CORPORTION By: /s/ Bart C. Shuldman ------------------------------------- Print Name: -------------------------- Title: President ------------------------------ ULTIMATE TECHNOLOGY CORPORATION By: /s/ Dennis J. Lewis Print Name: -------------------------- Title: President ------------------------------ 7 EX-10.8 9 TAX SHARING AGREEMENT TAX SHARING AGREEMENT THIS AGREEMENT, executed this 31 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 24, 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 -1- 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: 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. -2- (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). (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. -3- 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 Electionx. 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. (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. -4- 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 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 -5- 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 -6- 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. (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. -7- 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 (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 current year 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 -8- (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. (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 therefor 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. -9- (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 therefor 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 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 -10- 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. -11- 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 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. -12- 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. 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: EX-10.9 10 AMND. #2 TO AMENDED AND RESTATED CREDIT AGREEMENT AMENDMENT NO. 2 AMENDMENT dated as of August 30, 1996, among TRIDEX CORPORATION, a Connecticut corporation, ULTIMATE TECHNOLOGY CORPORATION, a New York corporation, CASH BASES INCORPORATED, a Delaware corporation, and FLEET NATIONAL BANK, a national banking association organized under the laws of the United States of America. Background A. Tridex Corporation ("Tridex"), Ultimate Technology Corporation, Cash Bases Icorporated, Ithaca Peripherals Incorporated ("Ithaca"), Magnetec Corporation ("Magnetec") (collectively, the "Original Borrowers"), and the Bank are parties to the Amended and Related Credit Agreement dated as of December 15, 1995 (as amended, modified or supplemented from time to time, the "Credit Agreement"), under which the Bank extended to the Original Borrowers a $5,500,000 term loan facility (the "Term Loan") and a $3,000.000 revolving loan facility (the "Revolver"). B. On July 28, 1996, Tridex caused Ithaca to be merged into Magnetec, with Magnetec being the surviving entity. Contemporaneously therewith, Tridex formed a new wholly-owned subsidiary, TransAct Technologies Incorporated ("TransAct"), to which it contributed all Magnetec stock owned by Tridex in return for the issuance by TransAct to Tridex of 5,400,000 shares of common stock of TransAct. C. On or about the date hereof, TransAct intends to conduct an initial public offering (the "Initial Public Offering") of up to 19.7% of its authorized common stock. TransAct intends to utilize a portion of the net proceeds realized from the Initial Public Offering to satisfy certain indebtedness of TransAct to Tridex, and, simultaneously therewith, Tridex intends to satisfy in full the indebtedness outstanding under the Term Loan and to reduce the Working Capital Commitment from $3,060,000 to $2,000,000. D. The Original Borrowers have requested that the Bank (i) consent to the actions contemplated under the Plan of Reorganization dated as of June 25, 1996, among Tridex, TransAct, Magnetec and Ithaca, (ii) release from the lien created by the Pledge Agreement, the shares of stock owed by Tridex in Ithaca and Magnetec, (iii) release Magnetec from its obligations under the Credit Agreement, the Amended and Restated Working Capital Note dated as of March 15, 1996 (the "First Restated Note") and all other Facility Documents, (iv) reduce the Working Capital Commitment from $3,000,000 to $2,000,000, (v) extend the Revolving Credit Termination Date, and (vi) amend certain financial covenants. E. The Bank has agreed to the Original Borrowers' requests subject to the terms and conditions of this Agreement. 2 Agreement In consideration of the Background, which is incorporated by reference, the parties, intending to be legally bound, agree as follows: SECTION 1. Capitalized terms not otherwise deemed herein shall have the meaning ascribed to them in the Credit Agreement. SECTION 2. Amendments to Credit Agreement. All of the terms and conditions of the Facility Documents remain in full force and effect as follows: (a) All references to "Borrowers" and "Borrower" in the Credit Agreement shall be deemed to exclude Ithaca and Magnetec. (b) The following definitions are added to Section 1.1 of the Credit Agreement: "Distribution" means the tax free distribution by Tridex, subsequent to the Initial Public Offering, of all TransAct stock held by Tridex to each shareholder of record at tile time of the distribution. "Clean-Down Period" shall mean any 30-day period of each one year period commencing on the date hereof, or fraction thereof, provided that no such period shall commence sooner than 30 days after the date hereof or later than 30 days prior to the Revolving Credit Termination Date, during which the aggregate outstanding principal amount of Working Capital Loans must be reduced to $0. "Interest Coverage Ratio" means, with respect to any Person, for any period, the ratio of (i) EBITDA to (ii) Interest Expense for such period. (c) The definition of "Margin" contained in Section 1.1 of the Credit Agreement is deleted and the following is substituted therefor: "Margin" means (a) for Variable Rate Loans, 0 basis points and (b) for LIBOR Loans, 150 basis points (1.50%). (d) The definition of "Revolving Credit Termination Date" contained in Section 1.1 of the Credit Agreement is deleted and the following is substituted therefor: "Revolving Credit Termination Date" means June 30, 1998; provided that if such date is not a Banking Day, the Revolving Credit 3 Termination Date shall be the next succeeding Banking Day (or, if such next succeeding Banking Day falls in the next calendar month, the next preceding Banking Day) or (ii) the earlier date of termination of the Working Capital Commitment pursuant to Section 9.2 hereof. (e) The definition of "Variable Rate" contained in Section 1.1 of the Credit Agreement is deleted and the following is substituted therefor: "Variable Rate" means, for any day, the Prime Rate for such day. (f) The amount "$5,000,000" contained in the definition of Working Capital Commitment in Section 1.1 of the Credit Agreement is deleted and the amount "$2,000,000" is substituted therefor. (g) The following is added after the phrase "outstanding F/E Credits" in the sixth line of Section 2.1(c) of the Credit Agreement: but in no event shall Working Capital Loans exceed the aggregate outstanding amount of $2,000,000 from time to time (h) Section 2.5(b)(iii) of the Credit Agreement is deleted and the following is substituted therefor: (iv) During each Clean-Down Period the Borrowers shall satisfy in full all amounts then outstanding with the Working Capital Loans. (i) The following Section 2.5(b)(iv) is added to the Credit Agreement: (v) Each such prepayment in accordance with paragraphs (i), (ii) (iii) and (iv) above shall be applied first to any expenses incurred by the Bank, second to any interest due on the amount prepaid, and last to the outstanding principal amount of the Loans prepaid, in each case in such manner as the Bank in its discretion shall determine. (j) Section 2.11 of tile Credit Agreement is deleted and the following is substituted therefor: Section 2.11. Fees. (a) Commitment Fee. The Borrowers shall pay to the Bank a commitment fee on the daily average unused Working Capital Commitment for the period from and including the date hereof to the Revolving Credit Termination Date at a rate per annum equal to one- 4 quarter of one percent (1/4 of 1%) calculated on the basis of a year of 360 days for the actual number of days elapsed. The accrued commitment fee shall be due and payable in arrears upon any reduction or termination of the Working Capital Commitment and on the last day of each March, June, September and December, commencing on the first such date after the Closing Date. (b) Closing Fee. The Borrowers shall pay to the Bank, on the Closing Date, a closing fee in an amount equal to one-quarter of one percent (1/4 of 1%) of the Working Capital Commitment. (k) Section 2.13 of the Credit Agreement is hereby deleted in its entirety. (1) Section 7.6 of the Credit Agreement is deleted and the following is substituted therefor: Section 7.6 Dividends. Declare or pay any dividends, purchase, redeem, retire or otherwise acquire for value any of its capital stock now or hereafter outstanding, or make any distribution of assets to its stockholders as such whether in cash, assets or in obligations of a Borrower, or allocate or otherwise set apart any sum for the payment of any dividend or distribution on, or for the purchase, redemption or retirement of any shares of its capital stock, or make any other distribution by reduction of capital or otherwise in respect of any shares of its capital stock or permit any of their respective Subsidiaries to purchase or otherwise acquire for value any stock of a Borrower or another such Subsidiary, except with respect to the Distribution and except that: (a) a Borrower may declare and deliver dividends and make distributions payable solely in common stock of such Borrower; (b) a Borrower may purchase or otherwise acquire shares of its capital stock by exchange for or out of the proceeds received from a substantially concurrent issue of new shares of its capital stock; and (c) any Subsidiary may declare and deliver dividends and make distributions to the Parent. (m) Sections 8.1, 8.2, 8.3, and 8.4 of the Credit Agreement are deleted and the following are substituted therefor Section 8.1. Minimum Tangible Net Worth. The Borrowers shall maintain at all times, as measured at the end of each fiscal quarter commencing with the fiscal quarter succeeding the fiscal quarter in which the Distribution occurs, a Consolidated Tangible 5 Net Worth of not less than $17,000,000 an such minimum Consolidated Tangible Net Worth hereunder shall increase from fiscal year to fiscal year by an amount equal to 50% of Consolidated Net Income for each immediately preceding fiscal year end. Section 8.2 Maximum Leverage Ratio. The Borrowers shall maintain at all times, as measured at the end of each fiscal quarter, a ratio of Consolidated Senior Liabilities to Consolidated Tangible Capital Base of not greater than 1.0 to 1.0. Section 8.3 Minimum Interest Coverage Ratio. The Borrowers, on a consolidated basis, shall maintain at all times, as measured at the end of each fiscal quarter, for each fiscal quarter through and including the fiscal quarter in which the Distribution occurs, an Interest Coverage Ratio of not less than 1.5 to 1.0, for such fiscal quarter and the three consecutive immediately preceding fiscal quarters and for each succeeding fiscal quarter, an Interest Coverage Ratio of not less than 2.0 to 1.0, for such fiscal quarter and the three consecutive immediately preceding fiscal quarters. Section 8.4 Minimum Current Ratio. The Borrowers shall maintain at all times, as measured at the end of each fiscal quarter, for each fiscal quarter through and including the fiscal quarter in which the Distribution occurs, a ratio of Consolidated Current Assets to Consolidated Current Liabilities of not less than 1.5 to 1.0, and for each succeeding fiscal quarter, a ratio of Consolidated Current Assets to Consolidated Current Liabilities of not less than 2.0 to 1.0. (n) The following Section 8.8 is added to the Credit Agreement: Section 8.8 Minimum Tangible Capital Base. The Borrowers shall maintain at all times, as measured at the end of each fiscal quarter, a Consolidated Tangible Capital Base of not less than $13,500,000, as such minimum required amount shall increase from quarter to quarter by 50% of Consolidated Net Income for each fiscal quarter beginning with the fiscal year ending December 31, 1997. (o) The following Section 10.20 is added to The Credit Agreement: 6 SECTION 10.20 JURISDICTION; IMMUNITIES. EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY CONNECTICUT STATE OR UNITED STATES FEDERAL COURT SITTING IN CONNECTICUT OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE NOTE, AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CONNECTICUT STATE OR FEDERAL COURT. EACH BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS, IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO EACH BORROWER AT ITS ADDRESS SPECIFIED IN SECTION 10.6. EACH BORROWER AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH BORROWER FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJBCTION TO AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS. EACH BORROWER FURTHER AGREES THAT ANY ACTION OR PROCEEDING BROUGHT AGAINST THE BANK SHALL BE BROUGHT ONLY IN CONNECTICUT STATE OR UNITED STATES FEDERAL COURT SITTING IN CONNECTICUT. EACH BORROWER WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL. (a) Nothing in this Section 10.20 shall affect the right of the Bank to serve legal process in any other manner permitted by, law or affect the right of the Bank to bring any action or proceeding against any Borrower or its property in the courts of any other jurisdictions. (b) To the extent that any Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether from service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such Borrower hereby irrevocably waives such immunity in respect of its obligations under this Agreement and the Note. 7 (p) Schedule 5.9 to the Credit Agreement is deleted and the attached Schedule 5.9 is substituted therefor. (q) The information with respect to notices on page 55 of the Credit Agreement is deleted and the following is substituted therefor: Address for Notices and Lending office: One Landmark Square Stamford, CT 06901 Attention: Frederick A. Meagher, Vice President Facsimile No.: (203) 964-4850 (r) The First Restated Note is amended and restated in its entirety in the form of the Second Amended and Restated Promissory Note dated the date hereof In the form of the attached Exhibit B (the "Second Restated Note"). (s) Schedule I to the Pledge Agreement is deleted and the attached Schedule I is substituted therefor. (t) All references in the Facility Documents to "Fleet Bank, N.A." are deleted and "Fleet National Bank" is substituted therefor. SECTION 3. Release. The Bank (a) releases Ithaca and Magnetec from their respective obligations under the Credit Agreement, the First Restated Note and all other Facility Documents, and (b) releases from the lien of the Pledge Agreement the shares of capital stock of Ithaca and Magnetec owned by Tridex and the original stock certificates with respect thereto. SECTION 4. Consent of Bank. The Bank hereby consents to (a) the creation of TransAct, (b) the merger of Ithaca with and into Magnetec, (c) the issuance by TransAct to Tridex of 5,400,000 shares of TransAct common stock in exchange for 1,000 shares of the common stock of Magnetec, (d) the transfer from Magnetec to Tridex of all of the assets used to conduct the ribbon business as presently conducted by Magnetec, (e) the Initial Public Offering, and (f) the proposed pro rata distribution in 1997 by Tridex to its stockholders of the common stock of TransAct owned by Tridex subsequent to the Initial Public Offering in connection with a tax free reorganization of Tridex and its Subsidiaries. SECTION 5. Conditions of Effectiveness. This Amendment shall become effective when the Bank shall have received counterparts of this Amendment executed by the Borrowers and the Bank. and the fol1owing documents or evidence of the following actions, each document (unless otherwise indicated) being dated the date of receipt thereof by the Bank (which date shall be the same for all such documents), in form and substance satisfactory to the Bank: 8 (a) Evidence that all indebtedness outstanding under the Term Note has been satisfied in full; (b) The Second Restated Note duly drawn to the order of the Bank; (c) A certificate of the Secretary or an Assistant Secretary of each Borrower certifying the names and the signatures of the officers of such Borrower authorized to sign this Amendment and the other documents to be delivered hereunder; (d) A favorable opinion of Hinckley, Allen & Snyder, counsel for the Borrowers, to the effect that this Amendment, and the Second Restated Note have been duly authorized, executed and delivered by the Borrowers, and such instruments constitute the legal, valid and binding obligations of the Borrowers, enforceable against the Borrowers, in accordance with their respective terms; and (e) A certificate signed by a duly authorized officer of each Borrower stating that: (i) The representations and warranties contained in Section 8 hereof are correct on and as of the date of such certificate as though made on and as of such date, and (ii) No event has occurred and is continuing which constitutes a Default or Event of Default. SECTION 6. Representations and Warranties of Borrowers. Each Borrower represents and warrants as follows: (a) Such Borrower is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its assets and to TransAct the business in which it is now engaged or proposed to be engaged, and is duly qualified as a foreign corporation and in good standing under the laws of each other jurisdiction in which such qualification is required. (b) The execution, delivery and performance by such Borrower of this Amendment, the Second Restated Note and the Facility Documents, as amended hereby, to which it is a party have been duly authorized by all necessary corporate action and do not and will not: (a) require any consent or approval of its stockholders; (b) contravene its charter or by-laws; (c) violate any provision of; or require any filing, registration, consent or approval wider, any law, rule, regulation (including, without limitation, Regulation U), order, writ, judgment, injunction, decree, determination or award 9 presently in effect having applicability to such Borrower or any of its Subsidiaries or Affiliates; (d) result in a breach of or constitute a default or require any consent wider any indenture or loan or credit agreement or any other agreement, lease or instrument to which such Borrower is a party or by which it or its properties may be bound or affected; (e) result in, or require, the creation or imposition of any Lien, upon or with respect to any of the properties now owned or hereafter acquired by such Borrower; or (f) cause such Borrower (or any Subsidiary or Affiliate, as the case may be) to be in default under any such law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. (c) This Amendment, the Second Restated Note and each other Facility Document, as amended hereby, to which such Borrower is a party is, or when delivered under this Amendment will be, a legal, valid and binding obligation of such Borrower enforceable against such Borrower in accordance with its terms, except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally. (d) There are no actions, suits or proceedings pending or to the knowledge of such Borrower, threatened, against or affecting such Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator, which may, in any one case or in the aggregate, materially adversely affect the financial condition, operations, properties or business of such Borrower or any such Subsidiary or of or the ability of such Borrower to perform its obligation under this Amendment, Second Restated Amendment or any of the other Facility Documents, as amended hereby. (e) The Security Agreement constitutes valid and perfected first priority Liens in and to the Collateral covered thereby enforceable against all third parties in all jurisdictions and secure the payment of all obligations of the Borrowers under the Facility Documents, as amended hereby, including all obligations of the Borrower under the Second Restated Amendment, and the execution, delivery and performance of this Amendment do not adversely affect the aforesaid Liens of such Security Agreement. SECTION 7. Reference to and Effect on the Facility Documents. (a) This Amendment and the Second Restated Note shall be deemed "Facility Documents". (b) Upon the effectiveness of Sections 1 and 2 hereof, on and after the date hereof each reference in the Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of like import, and each reference in the other Facility Documents to the Credit Agreement and Notes, shall mean and be a reference to the Credit Agreement and Second Restated Note as amended hereby. 10 (c) Except as specifically amended above, the Credit Agreement and the Second Restated Note, and all other Facility Documents, shall remain in full force and effect and are hereby ratified and confirmed without limiting the generality of the foregoing, the Pledge Agreement and all of the Pledged Collateral described therein, the Security Agreement and all of the Collateral described therein, and the Cash Bases Pledge Agreement and all of the Charged Property described therein do and shall continue to secure the payment of all Obligations, in each case as amended hereby. (d) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Bank under any of the Facility Documents, nor constitute a waiver of any provision of any of the Facility Documents. SECTION 8. Costs, Expenses and Taxes. The Borrowers jointly and severally agree to pay on demand all costs and expenses of the Bank in connection with the preparation, execution and delivery of this Amendment, the Second Restated Note and the other instruments and documents to be delivered hereunder, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Bank with respect thereto and with respect to advising the Bank as to its rights and responsibilities hereunder and thereunder. The Borrowers further jointly and severally agree to pay on demand all costs and expenses, if any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Amendment, the Second Restated Note and the other instruments and documents to be delivered hereunder, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 10; In addition, the Borrowers agree to pay jointly and severally any and all stamp and other taxes payable or determined to be payable in connection with the execution and delivery of this Amendment. the Second Restated Note and the other instruments and documents to be delivered hereunder, and agrees to save the Bank harmless from and against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such taxes. SECTION 9. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. SECTION 10. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of Connecticut. The parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. TRIDEX CORPORATION By /s/ Seth M. Lukash ------------------------------- Seth M. Lukash Title: Chairman and Chief Executive Officer ULTIMATE TECHNOLOGY CORPORATION By /s/ George T. Crandall ------------------------------- George T. Crandall Title: Treasurer CASH BASES INCORPORATED By /s/ George T. Crandall ------------------------------- George T. Crandall Title: Treasurer FLEET NATIONAL BANK By /s/ Frederick A. Meagher ------------------------------- Frederick A. Meagher Title: Vice President Schedule I Attached to and forming a part of the Amendment to Pledge Agreement dated December 15, 1995, by Tridex Corporation to Fleet Bank, N.A. Stock Issuer Class of Stock Par Value Number of Percentage of Stock Certificate Shares Outstanding No(s) Shares - -------------------------------------------------------------------------------- Ultimate Class A A-8 $0.01 500,000 100% Technology Common Corporation Ultimate Class B B-8 $0.01 497,000 100% Technology Common Corporation Cash Bases Common 1 $0.01 1,000 100% Incorporated Exhibit B Working Capital Note SECOND AMENDED AND RESTATED PROMISSORY NOTE $2,000,000 Stamford, Connecticut August 30, 1996 For value received, TRIDEX CORPORATION, ULTIMATE TECHNOLOGY CORPORATION and CASH BASES INCORPORATED (each, a "Borrower" and collectively, the "Borrowers"), hereby promise, jointly and severally, to pay to the order of FLEET NATIONAL BANK ("the Bank") at the office of the Bank, at 777 Main Street, Hartford, Connecticut 06115, for the account of the appropriate Lending Office of the Bank, the principal sum of TWO MILLION DOLLARS ($2,000,000) or, if less, the amount of Working Capital Loans made by the Bank to the Borrowers pursuant to the Credit Agreement referred to below, in lawful money of the United States of America and in immediately available funds, on the date(s) and in the manner provided in said Credit Agreement. The Borrowers also promise to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, at said principal office for the account of said Lending Office, in like money, at the rates of interest as provided in the Credit Agreement referred to below, on the date(s) and in the manner provided in said Credit Agreement. The date and amount of each Working Capital Loan made by the Bank to the Borrowers under the Credit Agreement referred to below, and each payment of principal thereof, shall be recorded by the Bank on its books and, prior to any transfer of this Note (or, at the discretion of the Bank, at any other time), endorsed by the Bank on the schedule attached hereto or any continuation thereof. This is the Working Capital Note referred to in that certain Amended and Restated Credit Agreement dated as of December 15, 1995 among the Borrowers and the Bank (as amended, modified or supplemented from time to time the "Credit Agreement") and evidences the Working Capital Loans made by the Bank thereunder. All terms not defined herein shall have the meanings given to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain Events of Default and for prepayments on the terms and conditions specified therein. 2 Each Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this Note. This Note shall be governed by, and interpreted and construed in accordance with, the laws of the State of Connecticut. This Note amends and restates in its entirety the Amended and Restated Promissory Note, dated as of March 15, 1996, from the Borrowers to the Bank, in the original principal amount of Three Million Dollars ($3,000,000) (the "First Restated Note") Upon the execution and delivery of this Note, this Note shall replace the First Restated Note and shall immediately evidence all outstanding indebtedness under the First Restated Note. The Borrowers and the Bank hereby agree that the indebtedness embodied in and evidenced by this Note is the same indebtedness embodied in and evidenced by the First Restated Note, and that such indebtedness is a continuing obligation of the Borrowers to the Bank, and has been and continues to be fully enforceable, absolute and in existence. TRIDEX CORPORATION By /s/ Seth M. Lukash -------------------------------------------- Seth M. Lukash Title: Chairman and Chief Executive Officer ULTIMATE TECHNOLOGY CORPORATION By /s/ George T. Crandall -------------------------------------------- George T. Crandall Title: Treasurer CASH BASES INCORPORATED By /s/ George T. Crandall -------------------------------------------- George T. Crandall Title: Treasurer 3 Amount Amount of Balance Notation Date of Loan Payment Outstanding By - ---- ------- --------- ----------- -------- 4 SCHEDULE 5.9 to Amended and Restated Credit Agreement dated as of December 15,1995 Subsidiaries of Tridex Ultimate Technology Corporation Cash Bases Incorporated TransAct Technologies Incorporated EX-11 11 COMPUTATION OF PER SHARE EARNINGS TRIDEX CORPORATION AND SUBSIDIARIES Exhibit 11 Computation of Per Share Earnings (Dollars in Thousands) (Unaudited)
Quarter Ended Nine Months Ended September 28, September 30, September 28, September 30, 1996 1995 1996 1995 ------------- ------------- ------------- ------------- PRIMARY: EARNINGS: Net income $ 7,070 $ 662 $ 8,673 $ 2,186 ============= ============= ============= ============= SHARES: Average common shares outstanding 3,987,905 3,707,136 3,878,058 3,687,891 Dilutive effect of outstanding options and warrants as determinded by the treasury stock method 246,235 267,315 206,838 228,382 ------------- ------------- ------------- ------------- 4,234,140 3,974,451 4,084,896 3,916,273 ============= ============= ============= ============= PRIMARY EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ 1.67 $ 0.17 $ 2.12 $ 0.56 ============= ============= ============= ============= FULLY DILUTED: EARNINGS: Net Income $ 7,070 $ 8,673 Add: after-tax interest on convertible debt 78 275 ------------- ------------- Adjusted net income $ 7,148 $ 8,948 ------------- ------------- SHARES: Average common shares outstanding 3,987,905 3,878,058 Dilutive effect of outstanding options and warrants as determined by the treasury stock method 344,919 273,161 Dilutive effect of convertible debt assumed converted at the beginning of the year 386,325 466,492 ------------- ------------- 4,719,149 4,617,711 ------------- ------------- FULLY DILUTED EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $ 1.51 $ 1.94 ============= =============
EX-27 12 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-28-1996 3,714 0 11,884 202 11,283 28,263 13,477 7,507 44,193 12,913 5,934 0 0 1,031 24,315 44,193 55,794 55,794 37,717 50,556 (6,269) 0 821 10,686 1,924 8,762 0 0 0 8,673 2.12 1.94
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