Exhibit 10.20
STOCK INCENTIVE COMPENSATION AGREEMENT
This Stock Incentive Compensation Agreement made and entered into as of this
10th day of March, 1997, by and between Xxxxxx Xxxxx of 0000 Xxxxx 00 Xxxxx,
Xxxxxx, Xxx Xxxx 00000 ("Xxxxx"), Xxxx German of 000 Xxxxxxxx Xxxxx, Xxxxxxx,
Xxx Xxxx 00000 ("German") and Xxxx Xxxx of 00 Xxxxxxxx Xxxxx Xxxx, Xxxxxxxxxxx,
Xxx Xxxx 00000 ("Wolf") (collectively hereinafter referred to as the "Ultimate
Officers") and Tridex Corporation, a Connecticut corporation, with its principal
place of business at 00 Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx ("Tridex" or the
"Company") and Ultimate Technology Corporation, a New York corporation
("Ultimate"),
RECITALS
The Ultimate Officers are the senior executive management of Ultimate which is a
wholly-owned subsidiary of Tridex. Each of the Ultimate Officers entered into
Employment Agreements (the "January, 1993 Employment Agreement") with Ultimate
on January 20, 1993, which Employment Agreements expire on April 4, 1998. At the
time the Ultimate Officers entered into the January, 1993 Employment Agreements,
they also entered into an Employee Performance and Compensation Agreement with
Ultimate and Tridex dated January 20, 1993 (the "Performance Agreement"). The
Ultimate Officers and Tridex have reached agreement for entering into new
employment agreements and for termination of the Performance Agreement, and for
the entry into this Agreement and new employment agreements effective upon the
Effective Date hereof.
NOW, THEREFORE, in consideration of the promises and agreements herein
contained, and for other good and valuable consideration, the receipt whereof is
hereby acknowledged, the Ultimate Officers and Tridex agree as follows:
1. Definitions. As used herein, the following terms shall have the following
meanings unless the context shall otherwise require:
a. "Commission" means the United States Securities and Exchange
Commission.
b. "Closing Value" means on any day the price of the last trade of a
security on a national exchange, or if no trade occurred on that day
the average of the closing bid and asked prices.
c. "Employment Agreements" means those certain employment agreements
between Ultimate and each of German, Xxxxx and Xxxx, dated of even
date herewith.
d. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
e. "German" - See Introduction.
f. "Holder" means any of German, Xxxxx or Wolf.
g. "Indemnified Party" - See Section 13(c).
h. "Indemnifying Party" - See Section 13(c).
i. "January, 1993 Employment Agreements" - See Introduction.
j. "Xxxxx" - See Introduction.
k. "Net TransAct Proceeds" - See Section 7
l. "Performance Agreement" - See Introduction
m. "Piggyback Registration" - See Section 10.
n. "Pledge Agreements" means those certain Pledge Agreements between
Ultimate and each Ultimate Officer, dated of even date herewith, a
form of which is attached hereto as Exhibit A.
o. "Spin Off" means the distribution of TransAct Stock to holders of
Tridex Stock.
p. "TransAct" means TransAct Technologies, Inc., a Delaware corporation.
q. "TransAct Stock" means shares of TransAct Common Stock, par value
$0.01 per share.
r. "TransAct Valuation Date" means a date selected by Tridex a Valuation
Date for determining the fair market value of any or all TransAct
Stock then subject to the Pledge Agreement.
s. "Tridex" - See Introduction.
t. "Tridex Pledged Stock" means Tridex Stock pledged to Ultimate by each
Ultimate Officer pursuant to Section 3 hereof.
u. "Tridex Stock" means shares of Tridex Common Stock, no par value.
v. "Valuation Date" means as the context requires (i) the date shares of
TransAct Stock are sent to the Transfer Agent for registration in the
name of the Ultimate Officers, (ii)any TransAct Valuation Date, or
(iii) the date of the Spin-Off.
w. "Transfer Agent" means as the context requires, the transfer agent
from time to time for with TransAct Stock or Tridex Stock.
x. "Sharing Percentages" means as to Xxxxx - 46%, as to German - 29% and
as to Wolf - 25%, or if this Agreement shall be terminated as to any
one of German, Xxxxx or Xxxx in accordance with Section 8 prior to
January 3, 1999, then the Sharing Percentages for the remaining
Ultimate Officers shall be such officer's Sharing Percentage divided
by the Sharing Percentages of all Ultimate Officers then party to this
Agreement.
y. "Ultimate" - See Introduction.
z. "Ultimate Officers" - See Introduction.
aa. "Wolf" - See Introduction.
2. Termination of Employee Performance Agreement. The Performance Agreement is
hereby terminated, and none of the parties to the Performance Agreement
shall have any further obligation thereunder.
3. Tridex Representations and Conditions Precedent. Tridex represents to the
Ultimate Officers that it has (a) received a ruling from the Internal
Revenue Service that the Spin-Off will be tax free to holders of Tridex
Stock, (b)received a No Action Letter from the Securities & Exchange
Commission that shares of TransAct Stock received by holders of restricted
Tridex securities will not be restricted securities except to the extent
that the holders are affiliates of TransAct, and (c) that the shares of
Tridex Stock, when delivered to the Ultimate Officers, will be validly
issued, fully paid and non-assessable.
4. Delivery of Tridex Shares.
a. Within two (2) business days of the date hereof, Tridex shall issue and
deliver to each Ultimate Officer a number of Tridex Shares equal to the
product of (a) 100,000 and (b) such Ultimate Officer's then Sharing
Percentage, which such shares shall be restricted securities and shall
bear the legends as hereinafter provided. Each share certificate shall
bear a restrictive legend as follows:
"The shares represented by this Certificate have been acquired
for investment and have not been registered under the
Securities Act of 1933 as amended, and may not be offered,
sold or otherwise transferred, pledged or hypothecated, unless
and until such shares are registered under such Act or an
opinion of counsel satisfactory to the Company is obtained to
the effect that such registration is not required.."
b. Concurrent with the execution and delivery of this Agreement each
Ultimate Officer has executed and delivered to Ultimate a Pledge
Agreement. Fifty (50%) percent of Tridex Stock received by each
Ultimate Officer shall be pledged to Ultimate pursuant to the Pledge
Agreement and shall be immediately delivered to Ultimate with stock
powers attached to be held by Ultimate pursuant to the terms of this
Agreement and the Pledge Agreement. In addition, such Tridex Pledged
Stock and any TransAct Stock received by each Ultimate Officer as a
dividend with respect to Tridex Pledged Stock shall bear a further
legend as follows:
"The Shares represented by this Certificate are subject to
that Certain Stock Incentive Compensation Agreement, dated
March 10, 1997 between the recordholder and Tridex Corporation
and may not be sold or transferred except pursuant to such
Agreement and are further subject to forfeiture by the
recordholder upon the happening of certain events as more
fully set forth in said Stock Incentive Compensation
Agreement."
5. Additional Distribution.
a. On the date of the Spin-Off, the number of shares of TransAct Stock
received by the Ultimate Officer not subject to the Pledge Agreement
shall be valued based on the Closing Valuation. If and to the extent
that the Closing Value of the such TransAct Stock shall be less than
$600,000, Tridex shall direct Ultimate to release from the Pledge
Agreement and deliver to the Ultimate Officers a number of shares of
TransAct Stock based upon the Closing Value on the date of the
Spin-Off sufficient so that the value of total shares of TransAct
Stock received by the Ultimate Officers by virtue of the Tridex Stock
received pursuant to Section 4 and this Section 5a (and not subject to
the Pledge Agreement) will have a Closing Value on the
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date of the Spin-Off equal to $600,000. Additionally Tridex will cause
the Transfer Agent to remove any restrictive legends with respect to
such TransAct Stock so delivered to the Ultimate Officers.
b. On January 2, 1998 Tridex will direct Ultimate to release from the
Pledge Agreement and deliver to the Ultimate Officers in accordance
with their then respective Sharing Percentages, fifty percent (50%) of
the remaining shares of TransAct and Tridex Stock then held pursuant
to the Pledge Agreement and fifty percent (50%) of the net proceeds of
any sale of TransAct Stock pursuant to Section 7 hereof then being
held by Ultimate. On January 2, 1999, unless this Agreement has been
terminated pursuant to Section 8 with respect to any Ultimate Officer,
Tridex, shall direct to Ultimate to release from the Pledge Agreement
and deliver to the Ultimate Officers in accordance with their then
Sharing Percentages the balance of the shares of Tridex and TransAct
Stock and cash or other securities then being held by Ultimate
pursuant to the Pledge Agreement.
c. All shares of Tridex Stock delivered to the Ultimate Officers pursuant
to this Section 5 shall be restricted securities and bear the legend
set forth in Section 4.a. hereof. Tridex shall cause the Transfer
Agent to remove the legend set forth in paragraph 4. b. from all
TransAct Stock and Tridex Stock delivered pursuant to this Section 5.
d. Any payments or distributions required to be made by Ultimate pursuant
to this Sections 5 shall be reduced by any federal, state or local
withholding obligations incurred by Ultimate as a result of such
distribution as determined by its independent public accountant and
Ultimate is authorized to sell a sufficient number of shares of
TransAct Stock to satisfy such withholding obligations prior to making
any distribution thereof in the event that the Net TransAct Proceeds
which otherwise would be distributed are insufficient to satisfy such
withholding obligations unless the Ultimate officer shall pay to
Ultimate the amount of any such insufficiency.
6. Tridex Guarantee. Tridex guarantees to each Ultimate Officer that in the
aggregate the total value of the TransAct Stock received by him from Tridex
using the sum of Closing Values on each Valuation Date shall equal or
exceed the product of $1.2 million and such Officer's Sharing Percentage
(the "Guarantee Amount"). The Tridex guarantee shall terminate as to any
Ultimate Officer with respect to whom this Agreement is terminated pursuant
to Section 8 hereof. If, on January 3, 1999 the total value of the TransAct
Stock received by each Ultimate Officer valued as aforesaid shall be less
than such Officer's Guarantee Amount, Tridex shall, within ten (10) days,
pay to each such Ultimate Officer an amount equal to the difference between
his Guarantee Amount and the value of the TransAct Stock theretofor
delivered to such Ultimate Officer valued in accordance with the provisions
of this paragraph.
7. TransAct Valuation Date/Ultimate Officers Option. At any time and from time
to time upon one business day actual notice to each Ultimate Officer,
Tridex may set the TransAct Valuation Date with respect to TransAct Stock
held by Ultimate pursuant to the Pledge Agreement. Upon receipt of such
notice, each Ultimate Officer shall have the right to instruct Tridex to
cause Ultimate to sell any or all TransAct Stock which was subject of such
notice. Upon receipt of such instructions, Ultimate shall sell such
TransAct Stock in an orderly fashion and the net proceeds of such sale
shall be distributed in accordance with this Section 7. The Guarantee
Amount with respect to such Officer's shall be reduced by the amount of
proceeds. From the proceeds, Ultimate will (a) immediately pay to itself an
amount determined by its independent public accountants as necessary to
satisfy any federal, state or local withholding obligations Ultimate may
have with respect to each Ultimate Officer by reason of such Officer's
election to sell and (b) on or before March 31 of the year following the
year in which the sale occurs, distribute to such Ultimate Officer cash
equal to the positive difference, if any, between: (1) the excess of: (i)
the actual tax liability of such Ultimate Officer for the calendar year in
which the sale occurred, over (ii) the tax liability which such Ultimate
Officer would have incurred had the proceeds of a sale of TransAct Stock
for such taxable year not been included in such Ultimate Officer's gross
income (as defined in the Internal Revenue Code of 1986) (such amount to be
calculated by such Ultimate Officer at Ultimate's cost and communicated to
Ultimate on or before March 15, and subject to reasonable verification by
Tridex's independent public accountants), over (2) the amount of such
withholding paid by Ultimate with respect to any proceeds of sale of
TransAct Stock during such calendar year. The balance (the "Net TransAct
Proceeds") shall remain subject to this Agreement and the Pledge Agreement
and shall be invested by Ultimate in United States obligations with a
maturity of not more than two years. The account and/or securities in which
such proceeds are placed or invested shall designate that the owner thereof
is the appropriate Ultimate Officer but that the account or securities are
subject to this Agreement and the Pledge
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Agreement. All interest paid with respect to the Net TransAct Proceeds or
securities shall be paid to, or paid over by Ultimate to, the Ultimate
Officer for whom the account was opened or for whose benefit the securities
were purchased. In the event an Ultimate Officer does not elect to sell all
the TransAct Stock which was subject of a TransAct Valuation Date notice,
the TransAct Stock subject to the notice shall be valued at the Closing
Value on the TransAct Valuation Date and the value of TransAct Stock as so
determined with respect to each Ultimate Officer shall reduce such
Officer's Guarantee Amount.
8. Early Termination. Notwithstanding any provisions herein to the contrary,
if prior to January 3, 1999 an Ultimate Officer's Employment Agreement
shall be terminated for Cause, as that term is defined in such Employment
Agreement, or if the Ultimate Officer shall voluntarily terminate his
employment with Ultimate then Ultimate shall have the right to and shall
sell all TransAct Stock then subject to the Pledge Agreement with such
terminated Ultimate Officer. The net proceeds of such sale, any securities
owned by terminated Ultimate Officer then pledged pursuant to Section 7
hereof and the Pledged Tridex Stock shall be the property of Ultimate free
and clear of any claims thereto by such Terminated Ultimate Officer.
Upon the death or disability, as that term is defined in the Employment
Agreement, prior to December 31, 1998 of an Ultimate Officer, Ultimate
shall release from the Pledge Agreement with respect to such deceased or
disabled Ultimate Officer, Net TransAct Proceeds, and all sale TransAct and
Tridex Stock and shall make the following transfers:
a. If such death or disability takes place prior to January 1, 1998, then
that portion equal to fifty percent (50%) of the Net TransAct Proceeds
and a number of shares of TransAct Stock and Tridex Stock multiplied
in each case by a fraction, the numerator of which shall be the number
of days having elapsed in 1997 prior to the date of such death or
disability and the denominator of which shall be 365, shall be paid
(or delivered in the case of stock) to the estate or to the disabled
Ultimate Officer, as the case may be; or
b. If the date of such Ultimate Officer's death or disability shall occur
after December 31, , 1997 but prior to January 1, 1999, then Ultimate
shall distribute to the estate of such Ultimate Officer or to the
disabled Ultimate Officer an amount equal to the Net TransAct
Proceeds, a number of shares of TransAct Stock, and Tridex Stock,
multiplied in each case by a fraction, the numerator of which shall be
the number of days in 1998 having elapsed prior to the date of such
death or disability and the denominator of which shall be 365.
c. Ultimate shall sell the TransAct Stock not so delivered pursuant to
the foregoing Subsections a. or b. and the cash proceeds thereof
together with remaining securities and Pledged Tridex Stock shall be
retained by Ultimate free of any claims of such deceased or disabled
Ultimate Officer.
d. Any payments or distributions required to be made by Ultimate pursuant
to this Sections 8 shall be reduced by any federal, state or local
withholding obligations incurred by Ultimate as a result of such
distribution as determined by its independent public accountant and
Ultimate is authorized to sell a sufficient number of shares of
TransAct Stock to satisfy such withholding obligations prior to making
any distribution thereof in the event that the Net TransAct Proceeds
which otherwise would be distributed are insufficient to satisfy such
withholding obligations unless the Ultimate officer shall pay to
Ultimate the amount of any such insufficiency.
9. Representations. Each Ultimate Officer represents to Tridex on the date
hereof, and agrees that such representation shall be deemed made at the
date of any release of the Tridex Stock from the Pledge Agreement, that:
a. He is an "accredited investor" for purposes of Regulation D under the
Securities Act and that it is acquiring the Tridex Stock for its own
account, and not with a view to selling or otherwise distributing the
Tridex Stock in violation of the Securities Act;
b. He has sufficient knowledge and experience in investing in companies
similar to Tridex so as to be able to evaluate the risks of its
investment in Tridex and is able to financially bear the risks
thereof;
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c. It has had the opportunity to discuss Tridex's, business, financial
affairs and management with the Tridex's management and has received
(or had made available to it) any financial and business documents
requested by it;
d. He understands that (a) the shares of Tridex Stock have not been
registered under the Securities Act of 1933 by reason of their
issuance in a transaction exempt from the registration requirements of
the Securities Act pursuant to Section 4(2) thereof or Rules 505 or
506 under the Securities Act, (b) such shares must be held
indefinitely unless a subsequent disposition is registered under the
Securities Act or is exempt from registration thereunder, (c) such
shares will bear a legend to that effect, and (d) the Company will
make a notation on its transfer books to such effect.
10. Registration Rights
a. "Piggy-Back" Registration. If the Company proposes to register any of
its Tridex Stock under the Securities Act in connection with any
public offering whether or not for sale for its own account following
the date hereof (other than a registration on Form S-8 relating solely
to the sale of securities to participants in a stock plan offered by
the Company or a registration on Form S-1 or S-4 relating to an
acquisition), the Company shall promptly give each Holder written
notice of such registration. Upon the written request of any Holder
given within thirty (30) days after such notice, the Company shall use
its best efforts to cause a registration statement covering all of the
Tridex Stock then owned by such Holder (the "Registerable Securities")
that each such Holder has requested to be registered to become
effective under the Securities Act. The Company shall be under no
obligation to complete any offering of its securities it proposes to
make under this Section 10 and shall incur no liability to any Holder
for its failure to do so. Notwithstanding any other provisions of this
Section 10, if the managing underwriter for the offering advises the
Company in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise
all Holders of Registerable Securities which would otherwise be so
underwritten, and the number of shares of Registerable Securities that
may be included in the underwriting shall be allocated as follows:
(i) First, to the Company for shares requested to be sold by it in
such offering.
(ii) Second, to the Holders for shares to be sold by them in such
offering in accordance with their initial Sharing Percentage.
In no event shall the rights granted to the Holder in this Agreement
reduce the number of Registerable Securities to be included in any
offering by the Company. In the event that any limitation is imposed
hereunder on the number of Registerable Securities that any Holder may
include in such offering, the registration rights provided herein
shall continue in full force and effect with respect to any remaining
unregistered Registerable Securities of such Holder or any Tridex
Stock thereafter delivered to such Holder pursuant to this Agreement;
provided that the registration rights granted pursuant to this
agreement shall terminate on January 1, 2001.
b. Selection of Underwriters. In any Piggyback Registration, the Company
shall (unless Company shall otherwise agree) have the right to select
the investment bankers and managing underwriters in such registration.
c. Expenses. Tridex shall pay all registration expenses in connection
with one registration of Registerable Securities requested pursuant to
this Section 3; provided that each Holder of Registerable Securities
shall pay all underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder's
Registerable Securities pursuant to a registration statement effected
pursuant to this Section 10.
11. Obligations of the Company
In connection with the registration of any Registerable Securities, the
Company shall take the following actions as expeditiously as reasonably
possible:
a. prepare and file with the Commission a registration statement with
respect to such Registerable Securities and use its best efforts to
cause such registration statement to become effective (provided, that
before filing a registration statement or prospectus or any amendments
or supplements thereto, the Company will
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furnish to one counsel, selected by the Holders, copies of all such
documents proposed to be filed, which documents will be subject to the
timely review of such counsel);
b. prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for not more than nine (9) months, and comply with the
provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement during such
effective period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement;
c. upon request, furnish to each seller of Registerable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as each such seller may reasonably request in order to
facilitate the disposition of the Registerable Securities owned by
each such seller;
d. use its best efforts to register or qualify such Registerable
Securities under such other securities or blue sky laws of such
jurisdictions as any Holder reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable
to enable such Holder to consummate the disposition in such
jurisdictions of the Registerable Securities owned by such Holder;
provided that the Company will not be required (i) to qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph (d), (ii)
to subject itself to taxation in any such jurisdiction or (iii) to
consent to general service of process in any such jurisdiction;
e. notify each seller of such Registerable Securities, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such
seller, the Company will promptly prepare (and, when completed, give
notice to each seller of Registerable Securities) a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registerable Securities, such prospectus will not
contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading; that
upon such notification by the Company, each seller of such
Registerable Securities will not offer or sell such Registerable
Securities until the Company has notified such seller that it has
prepared a supplement or amendment to such prospectus and delivered
copies of such supplement or amendment to such seller;
f. provide a transfer agent and registrar for all such Registerable
Securities not later than the effective date of such registration
statement;
g. enter into such customary agreements (including underwriting
agreements in customary form) in order to expedite or facilitate the
disposition of such Registerable Securities; and,
h. permit each Holder, in its sole and exclusive judgment which might be
deemed to be an underwriter or a controlling person of the Company
within the meaning of Section 15 of the Securities Act, to participate
in the preparation of such registration or comparable statement and to
permit the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of the Holder and its
counsel should be included, provided that such material shall be
furnished under such circumstances as shall cause it to be subject to
the indemnification provisions provided pursuant to Section 13(b)
hereof.
12. Cooperation by Prospective Sellers, Etc.
a. Each prospective seller of Registerable Securities will furnish to the
Company in writing such information as the Company may reasonably
require from such seller, and otherwise reasonably cooperate with the
Company in connection with any registration statement with respect to
such Registerable Securities.
b. The failure of any prospective seller of Registerable Securities to
furnish any information or documents in accordance with any provision
contained in this Agreement shall not affect the obligations of the
Company under this Agreement to any remaining sellers who furnish such
information and documents unless in the
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reasonable opinion of counsel to the Company or the underwriters, such
failure impairs or may impair the viability of the offering or the
legality of the registration statement or the underlying offering.
c. each selling Holder shall enter into and perform its obligations under
an underwriting agreement with the managing underwriter for such
offering in customary form not inconsistent with this Agreement,
including furnishing any opinion of counsel and agreeing to
indemnification obligations reasonably requested by the managing
underwriter, but in no event will any Holder be liable for
indemnification obligations in excess of the net offering proceeds
received by such Holder.
13. Indemnification
a. Indemnification by the Company. The Company will indemnify the Holder
requesting or joining in a registration and each underwriter of the
securities so registered, the officers, directors and partners of each
such person and each person, if any, who controls any thereof (within
the meaning of the Securities Act) against any and all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of any
material fact contained in any prospectus, offering circular or other
document incident to any registration, qualification or compliance (or
in any related registration statement, notification or the like) or
any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act applicable to such
person and relating to any action or inaction required of such person
in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, underwriter, officer,
director, partner and controlling person for any legal and any other
expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or
is based on any untrue statement or omission based upon written
information furnished to the Company in an instrument duly executed by
the Holder, underwriter, officer, director, partner or controlling
person and stated to be specifically for use in such prospectus,
offering circular or other document.
b. Indemnification by the Holder. The Holder requesting or joining in a
registration will indemnify each underwriter of the securities so
registered, the Company and the officers, directors and partners of
each such person and each person, if any, who controls any thereof
(within the meaning of the Securities Act) and their respective
successors in title and assigns against any and all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of any
material fact contained in any prospectus, offering circular or other
document incident to any registration, qualification or compliance (or
in any related registration statement, notification or the like) or
any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statement
therein not misleading, and the Holder will reimburse each
underwriter, the Company and each other person indemnified pursuant to
this paragraph (b) for any legal and any other expenses reasonably
incurred in connection with investigating or defending any such claim,
loss, damage, liability or action; provided, however, that this
paragraph (b) shall apply only if (and only to the extent that) such
statement or omission was made in reliance upon written information
furnished to such underwriter or the Company in an instrument duly
executed by the Holder and stated to be specifically for use in such
prospectus, offering circular or other document (or related
registration statement, notification or the like) or any amendment or
supplement thereto; and provided further that the Holder's liability
hereunder with respect to any particular registration shall be limited
to an amount equal to the proceeds received by the Holder from the
Registerable Securities sold by the Holder in such registration.
c. Indemnification Proceedings. Each party entitled to indemnification
pursuant to this Section 13 (the "Indemnified Party") shall give
notice to the party required to provide indemnification pursuant to
this Section 13 (the "Indemnifying Party") promptly after such
Indemnified Party acquires actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party (at
its expense) to assume the defense of any claim or any litigation
resulting therefrom; provided that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be
reasonably acceptable to the Indemnified Party, and the Indemnified
Party may participate in such defense at such party's expense; and
provided, further, that the failure by any Indemnified Party to give
notice as provided in this paragraph (c) shall not relieve the
Indemnifying Party of its obligations under this Section 13 except
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to the extent that the failure results in a failure of actual notice
to the Indemnifying Party and such Indemnifying Party is damaged as a
result of the failure to give notice. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such
claim or litigation. The reimbursement required by this Section 13
shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses
incurred.
14. Contribution in Lieu of Indemnification
If the indemnification provided for in Section 13 hereof is unavailable to
a party that would have been an Indemnified Party under any such section in
respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each party that would have been
an Indemnifying Party thereunder shall, in lieu of indemnifying such
Indemnified Party, contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and such Indemnified Party on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Indemnifying Party or such Indemnified Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Holder agree that
it would not be just and equitable if contribution pursuant to this Section
14 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to above in this Section 14. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages or liabilities
(or actions in respect thereof) referred to above in this Section 14 shall
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or
claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
indemnification or contribution from any person who was not guilty of such
fraudulent misrepresentation.
15. Reports Under The Exchange Act
In order to provide the Holder the benefits of Rule 144 under the
Securities Act to sell securities of the Company to the public without
registration, the Company agrees to:
a. Public Information. Make and keep public information available as
those terms are understood and defined in Rule 144, at all times after
the date hereof.
b. Timely Filing. File with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and
the Exchange Act.
c. Compliance; Information. Furnish to any Holder, so long as Holder owns
any Registerable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any
Holder of Rule 144 rights to sell Registerable Securities to the
public without registration.
16. Lockup Agreement
The Holder, if the Company or the managing underwriters so request in
connection with any underwritten registration of the Company's Securities,
will not, without the prior written consent of the Company or such
underwriters, effect any public sale or other distribution of any equity
securities of the Company, including any sale pursuant to Rule 144, during
the seven days prior to, and during the ninety (90) day period commencing
on the effective date of such underwritten registration, except in
connection with such underwritten registration.
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17. Participation In Underwritten Registrations
No person may participate in any underwritten registration pursuant to this
Agreement unless such person (a) agrees to sell such person's securities on
the basis provided in any underwriting arrangements approved by the persons
entitled, under the provisions hereof, to approve such arrangements, and
(b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably
required by the terms of such underwriting arrangements. The Holder shall
be entitled at any time to withdraw such Registerable Securities from such
registration prior to its effective date in the event that the Holder shall
disapprove of any of the terms of the related underwriting agreement but
only if the Holder is permitted to do so by the managing underwriters or
pursuant to any agreement therewith.
18. Miscellaneous
a. Amendments and Waivers. The provisions of this Agreement, including
the provisions of this paragraph (a), may not be amended, modified or
supplemented, and any waiver or consent to or any departure from any
of the provisions of this Agreement may not be given and shall not
become or be effective, unless and until (in each case) the Company
shall have received the prior written consent of each Holder to any
such amendment, modification, supplement, waiver or consent.
b. Term. Subject to the provisions of Section 10(a), the agreements of
the Company contained in this Agreement shall continue in full force
and effect so long as the Holder holds any Registerable Securities.
c. Notices. Except as provided in Section 7, all notices provided for or
permitted hereunder shall be made in writing by hand delivery,
registered or certified first-class mail, telex, telecopier or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set after such Holder's name in
the Introduction with a copy to:
Xxxxxxx X. XxXxxx, Esq.
Xxxxxx, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
and
(ii) if to the Company, at:
00 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
with a copy to:
Xxxxxxx X. Xxxxxxxx
Xxxxxxxx, Xxxxx & Xxxxxx
0000 Xxxxx xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
and thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 18(c).
All such notices shall be deemed to have been duly given: when
delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; when answered
back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
d. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation, subsequent holders of Registerable
Securities agreeing to be bound by all of the terms and conditions of
this Agreement by executing an Instrument of Accession.
e. Counterparts. This Agreement may be executed in four or more
counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same instrument.
9
f. Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor
shall they affect their meaning construction or effect.
g. Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with
the internal laws of the State of Connecticut , without giving effect
to principles of conflicts of law.
h. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or
impaired thereby.
i. Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein with respect to the registration
rights granted by the Company with respect to the Registerable
Securities.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
The parties hereto have caused this Agreement to be duly executed under seal as
of the date first above written.
Tridex Corporation
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Chairman and Chief Executive Officer
/s/ Xxxx German
----------------------------------------
Xxxx German
/s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxx
/s/ Xxxx Xxxx
----------------------------------------
Xxxx Xxxx
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