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TAX SHARING AGREEMENT
THIS AGREEMENT, executed this 31st day of July, 1996, is
entered into by and between Tridex Corporation, a Connecticut corporation
("Tridex") and TransAct Technologies, Inc., a Delaware corporation ("TransAct").
RECITALS
WHEREAS, Tridex, TransAct, Magnetec Corporation, a Connecticut
corporation and wholly-owned subsidiary of Tridex ("Magnetec"), and Ithaca
Peripherals, Inc., a Delaware corporation and wholly-owned subsidiary of Tridex
(Ithaca"), have entered into a Plan of Reorganization dated as of June __, 1996
(the "Plan") pursuant to which, among other things, (i) TransAct is acquiring
from Tridex all of the outstanding capital stock of Magnetec, (ii) TransAct is
issuing [5,400,000] shares of its common stock to Tridex and (iii) TransAct is
issuing up to 1,322,500 of common stock pursuant to an underwritten public
offering registered under the Securities Act of 1933, as amended (the
"Securities Act") on a Registration Statement on Form S-1 (the "Offering");
WHEREAS, as contemplated by the Plan, the shares of
outstanding common stock of TransAct held by Tridex are to be distributed on a
pro rata basis to the record holders of shares of Tridex common stock (the
"Distribution") upon the satisfaction of certain conditions;
WHEREAS, Tridex and its subsidiaries, including Magnetec and
Ithaca, have heretofore: (1) joined in filing consolidated federal income tax
returns under the Internal Revenue Code of 1986, as amended (the "Code"), and
the applicable Treasury Regulations promulgated thereunder by the Treasury
Department (the "Regulations"); (2) joined in filing certain consolidated,
combined, and unitary state income tax returns; and (3) in some cases filed
income tax returns on a separate company basis.
WHEREAS, during the period prior to the consummation of the
Distribution, TransAct is expected to remain within the affiliated group (within
the meaning of Section 1504(a) of the Code) of corporations (the "Tridex Group")
of which Tridex is the common parent;
WHEREAS, the parties hereto desire to allocate their
respective federal, state, local and foreign income tax (or similar tax)
liabilities, assessed in connection with the filing of returns, including but
not limited to consolidated, combined, unitary, or separate returns, among
themselves for all fiscal years thereafter during which TransAct remains a
member of the Tridex Group;
WHEREAS, the parties hereto desire to provide for the
compensation and reimbursement of each other for Tax Deficiencies (as
hereinafter defined) or Tax Refunds (as hereinafter defined) as a result of
audits by or applications to the Internal Revenue Service (the "Service") and
other taxing authorities or by judicial determination, if any, involving
consolidated federal, consolidated, combined or unitary state and local income
tax returns and similar aggregate reporting for certain foreign jurisdictions;
WHEREAS, the parties hereto desire to provide and fix the
responsibilities for: (1) the preparation and filing of tax returns along with
the payments of taxes shown to be due and payable therein (as well as estimated
or advance payments required prior to the filing of said returns) for all
periods prior to and
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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.
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(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.
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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 ELECTIONS. 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.
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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
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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
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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.
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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
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(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.
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(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
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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.
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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.
0 Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: President
To Tridex: Tridex Corporation
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
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.
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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: /s/ Xxxx X. Xxxxxx
-------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
TRANSACT TECHNOLOGIES INCORPORATED
By: /s/ Xxxx X. Xxxxxxxx
---------------------
Title: Chief Executive Officer and President
--------------------------------------
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