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 00
Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx, 00000, Magnetec Corporation, a Connecticut
corporation ("Magnetec"), and TransAct Technologies Incorporated, a Delaware
corporation ("Transact") each with executive offices located at 0 Xxxxx Xxxx,
Xxxxxxxxxxx, XX 00000 and Ithaca Peripherals Incorporated ("Ithaca"), a Delaware
corporation, with executive offices at 00 Xxxxx Xxxxx, Xxxxxx, Xxx Xxxx 00000;
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 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX.
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 Xxxxxxxx, Xxxxx & Xxxxxx, Xxx Xxxxxxxxx Xxxxxx, Xxxxxx,
XX 00000 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 00 Xxxxxx
Xxxx, Xxxxxxxx, XX 00000, Attention: Xxxx X. Xxxxxx, Chairman and Chief
Executive Officer; (b) if to Magnetec, Ithaca or TransAct, to TransAct
Technologies Incorporated, 0 Xxxxx Xxxx, Xxxxxxxxxxx, XX 00000, Attention: Xxxx
X. Xxxxxxxx, 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/ Xxxx X. Xxxxxx
------------------------------
Title: Xxxx X. Xxxxxx,
Chairman and Chief
Executive Officer
MAGNETEC CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Title: Xxxx X. Xxxxxxxx
President
ITHACA PERIPHERALS INCORPORATED
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Title: Vice President
TRANSACT TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------
Title: Xxxx X. Xxxxxxxx
President and Chief
Executive Officer
LIST OF SCHEDULES/EXHIBITS
Exhibit A - Corporate Services Agreement
Exhibit B - Tax Sharing Agreement
Exhibit C - Printer Supply Agreement
