UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (As Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
TRANSACT TECHNOLOGIES INCORPORATED
----------------------------------
(Name of Registrant as Specified In Its Charter)
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TRANSACT TECHNOLOGIES INCORPORATED
7 LASER LANE
WALLINGFORD, CONNECTICUT 06492
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2005
Notice is hereby given that the 2005 Annual Meeting of Stockholders (the
"Annual Meeting") of TransAct Technologies Incorporated (the "Company" or
"TransAct"), a Delaware corporation, will be held on May 25, 2005 at 10:00 a.m.
Eastern Daylight Savings Time, at the Four Points by Sheraton Hotel, 275
Research Parkway, Meriden, CT 06450 for the following purposes, all of which are
more completely set forth in the accompanying Proxy Statement:
(1) To elect two directors to serve until the 2008 Annual Meeting of
Stockholders or until the director's successor has been duly elected
and qualified;
(2) To ratify the selection of PricewaterhouseCoopers LLP as the Company's
independent registered public accounting firm for 2005;
(3) To approve the 2005 Equity Incentive Plan; and
(4) To transact such other business as may legally come before the Annual
Meeting.
Stockholders of record at the close of business on March 28, 2005 are
entitled to notice of and to vote at the Annual Meeting. The transfer books will
not be closed for the Annual Meeting.
By Order of the Board of Directors,
STEVEN A. DEMARTINO
Secretary
Wallingford, Connecticut
May 2, 2005
YOUR VOTE IS IMPORTANT.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, THE COMPANY REQUESTS THAT
YOU FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY. A RETURN ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS ENCLOSED FOR THAT
PURPOSE. IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE
IN PERSON. PROMPT RESPONSE IS HELPFUL, AND YOUR COOPERATION IS APPRECIATED.
TRANSACT TECHNOLOGIES INCORPORATED
7 LASER LANE
WALLINGFORD, CONNECTICUT 06492
PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON MAY 25, 2005
This Proxy Statement is being furnished to the stockholders of TransAct
Technologies Incorporated (the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders of the Company to be held on May 25, 2005, and any adjournments
or postponements thereof (the "Annual Meeting"). This Proxy Statement, the
foregoing Notice of Annual Meeting, the enclosed form of proxy and the Company's
2004 Annual Report to Stockholders are first being mailed or given to
stockholders on or about May 2, 2005.
SOLICITATION AND REVOCATION OF PROXY
Any stockholder who executes and returns the enclosed proxy has the power
to revoke the same anytime prior to its being voted. The shares represented by
the proxy will be voted unless the proxy is mutilated or otherwise received in
such form or at such time as to render it not votable. The proxy is in ballot
form so that a specification may be made to grant or withhold authority to vote
for the election of directors and to indicate separate approval or disapproval
as to the other matters presented to stockholders. All of the proposals will be
presented by the Board of Directors. The shares represented by the proxy will be
voted for the election of the director named thereon, unless authority to do so
is withheld. With respect to the other proposals presented to stockholders by
the Board of Directors, the shares represented by the proxy will be voted in
accordance with the specification made. Where a choice is not so specified, the
shares represented by the proxy will be voted for the proposal. In addition, the
proxy confers discretionary authority to vote on any matter properly presented
at the Annual Meeting which is not known to the Company as of the date of this
Proxy Statement.
VOTING SECURITIES
Stockholders of record on March 28, 2005 are entitled to vote at the Annual
Meeting. Each holder of Common Stock is entitled to cast one vote for each share
of Common Stock held on March 28, 2005. There were 10,194,808 shares of Common
Stock issued and outstanding and entitled to vote at the close of business on
March 28, 2005. Shares representing a majority of the votes entitled to be cast
at the Annual Meeting, present in person or represented by proxy, will
constitute a quorum to transact business.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to the Company regarding
the beneficial ownership of the Company's common stock as of March 28, 2005 by:
(i) each person known by the Company to own beneficially more than 5% of the
Company's common stock; (ii) each director or nominee for director of the
Company; (iii) each current executive officer of the Company named in the
Summary Compensation Table; and (iv) all current directors and executive
officers of the Company as a group. Except as otherwise indicated, each of the
persons named in the table has sole voting power and sole dispositive power with
respect to the shares set forth opposite such person's name and the address of
the holder is 7 Laser Lane, Wallingford, CT 06492.
SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED CLASS
------------------------ ------------ ----------
COMMON STOCK
Bart C. Shuldman(1)......................................... 373,736 3.46%
Graham Y. Tanaka(2)......................................... 335,097 3.11%
Charles A. Dill(3).......................................... 215,006 1.99%
Michael S. Kumpf(4)......................................... 93,274 *
Steven A. DeMartino(5)...................................... 80,400 *
Thomas R. Schwarz(6)........................................ 63,225 *
James B. Stetson(7)......................................... 43,000 *
All current directors and executive officers as a group (7
persons)(8)............................................... 1,203,738 11.16%
Janus Capital Management LLC(9)............................. 894,475 8.29%
151 Detroit Street
Denver, CO 80206
Arbor Capital Management, LLC(10)........................... 892,500 8.27%
One Financial Plaza
120 South Sixth Street, Suite 1000
Minneapolis, MN 55402
Barclays Global Investors, NA(11)........................... 590,231 5.47%
45 Fremont Street
San Francisco, CA 94105
---------------
* Less than 1% of the outstanding Common Stock.
(1) Includes 78,634 owned jointly with Mr. Shuldman's spouse, 1,500 shares
owned by his spouse in an individual retirement account, 4,800 shares owned
by his minor children and 3,750 shares owned by his mother. Also includes
50,000 unvested shares of restricted stock of the Company and 268,550
shares subject to options exercisable within 60 days of March 28, 2005
granted under the Company's 1996 Stock Plan.
(2) Includes 41,250 shares subject to options exercisable within 60 days of
March 28, 2005 granted under the Company's Non-Employee Directors' Stock
Plan and 7,065 shares deemed beneficially owned by Mr. Tanaka for the
benefit of his children.
(3) Includes 56,250 shares subject to options exercisable within 60 days of
March 28, 2005 granted under the Non-Employee Directors' Stock Plan. Also
includes 85,821 shares with respect to which Mr. Dill is the trustee for
the benefit of his parent and 1,500 shares owned by his spouse.
(4) Includes 21,000 unvested shares of restricted stock of the Company and
45,174 shares subject to options exercisable within 60 days of March 28,
2005 granted under the 1996 Stock Plan.
(5) Includes 24,000 unvested shares of restricted stock of the Company and
41,400 shares subject to options exercisable within 60 days of March 28,
2005 granted under the 1996 Stock Plan.
(6) Includes 41,250 shares subject to options exercisable within 60 days of
March 28, 2005 granted under the Non-Employee Directors' Stock Plan. Also
includes 1,500 shares deemed to be beneficially owned by Mr. Schwarz in his
capacity as trustee of a trust for the benefit of his granddaughter and
1,500 shares beneficially owned by his daughter, as to which shares he
disclaims beneficial ownership, and 3,975 shares owned by his spouse.
(7) Includes 16,000 unvested shares of restricted stock of the Company and
22,500 shares subject to options exercisable within 60 days of March 28,
2005 granted under the 1996 Stock Plan.
(8) Includes 111,000 unvested shares of restricted stock of the Company and
517,624 shares subject to options exercisable within 60 days of March 28,
2005 granted under the 1996 Stock Plan and the Non-Employee Directors'
Stock Plan.
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(9) Based on information provided in a Schedule 13G filed with the Securities
and Exchange Commission (the "SEC") on February 14, 2005 by Janus Capital
Management LLC ("Janus Capital") and Janus Venture Fund, Janus Capital is
an investment adviser and indirect majority owner of two other investment
advisers, Enhanced Investment Technologies LLC and Bay Isle Financial LLC,
and such entities have sole voting power and sole dispositive power over
894,475 shares of the Company's Common Stock, including 805,350 shares of
Common Stock with respect to which Janus Venture Fund, a registered
investment company to which Janus Capital provides investment advice, has
sole voting power and sole dispositive power.
(10) Based on information provided in a Schedule 13G filed with the SEC on
February 4, 2005 by Arbor Capital Management, LLC ("Arbor Capital") and
Rick D. Leggott, Arbor Capital is an investment adviser and Mr. Leggott is
the CEO of Arbor Capital and beneficially owns a controlling percentage of
its outstanding voting securities, and such parties have sole voting power
and sole dispositive power over 892,500 shares of the Company's Common
Stock.
(11) Based on information provided in a Schedule 13G filed with the SEC on
February 14, 2005, Barclays Global Investors, NA ("Barclays Global
Investors") and Barclays Global Fund Advisors ("Barclays Global Advisors"),
Barclays Global Investors is a bank that has sole voting power over 425,165
shares and dispositive power over 491,921 shares of the Company's Common
Stock, and Barclays Global Advisors is an investment advisor that has sole
voting power over 92,892 shares and dispositive power over 98,310 shares of
the Company's Common Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
persons who beneficially own more than 10% of the Company's common stock to file
with the SEC and the Nasdaq Stock Market reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company
and to furnish the Company with copies of all such reports they file. To the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company, or written representations that no other reports were
required to be filed by those persons, the Company believes that, during the
fiscal year ended December 31, 2004, all such reports were timely filed except:
(i) Messrs. Shuldman, Cote, Kumpf, Stetson and DeMartino received grants of
restricted stock as of January 2, 2004 which were reported late on Form 4 on
February 10, 2004, and (ii) Mr. Kumpf exercised an employee stock option and
sold shares of the underlying Common Stock on March 24, 2004 which was reported
late on Form 4 on March 30, 2004.
CORPORATE GOVERNANCE
The Company strives to maintain corporate governance practices that benefit
the long-term interests of the Company's stockholders by clearly outlining the
Company's duties and responsibilities, providing a framework for active and
fruitful discussions among the members of the Company's Board of Directors and
between the Board and management, and avoiding conflicts of interest and other
legal and ethical problems. Accordingly, the Company's corporate governance
practices are designed not only to satisfy regulatory requirements, but also to
provide for effective management of the Company.
Information on the Company's corporate governance practices is available to
the public under "Corporate Governance" on the Company's website at
www.transact-tech.com. The information on the website includes the Company's
Corporate Governance Principles, the charters of the Board's Committees, and the
Company's Standards of Business Conduct, which includes a code of ethics
applicable to the officers responsible for financial reporting, including the
Chief Executive Officer, Chief Financial Officer and Controller.
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The remainder of this section of the Proxy Statement summarizes the key
features of the Company's corporate governance practices:
BOARD SIZE
The Corporate Governance Principles provide that the Board should generally
have between five and ten members. In establishing the appropriate number of
directors, the Board and the Compensation and Corporate Governance Committee
consider (i) resignations and retirements from the current Board, (ii) the
availability of appropriate, qualified candidates, and (iii) the goal of
assuring that the Board is small enough to facilitate active discussions and
decision-making while, at the same time, is large enough to provide an
appropriate mix of continuity, experience, skills and diversity so that the
Board and its Committees can effectively perform their responsibilities.
The Board's Nominating Committee is considering whether or not at this time
an additional Board member is appropriate.
CRITERIA FOR MEMBERSHIP ON THE BOARD
The Board and its Nominating Committee consider a number of different
factors in selecting nominees for director. Some of these factors, such as
integrity, are applied uniformly to all prospective candidates. Others, such as
specific industry experience, may be adopted on a case by case basis by the
Board and the Nominating Committee based on the Company's business needs at the
time a nomination is under consideration. The Nominating Committee and the Board
of Directors apply the same criteria to each candidate for a particular position
on the Board, regardless of whether the candidate is proposed by a stockholder
or some other source. Specific criteria considered by the Nominating Committee
and the Board include:
Independence. The Board of Directors, in its Corporate Governance
Principles and Committee charters, has established a policy that a substantial
majority of the directors be "independent" members of the Board. The Nominating
Committee and the Board consider the independence of each prospective director
before election and further consider the independence of all continuing
directors on at least an annual basis. The Board has determined that all the
directors, except for Mr. Shuldman, who is the Company's Chief Executive
Officer, are independent in accordance with the Company's criteria. The Board
applies the following criteria in determining independence, which criteria are
derived from Nasdaq's listing standards as well as certain additional
requirements that are imposed on certain Committee members under the rules and
regulations of the Securities and Exchange Commission and the Internal Revenue
Service:
- Independent Judgment. The director must not have any relationship with
the Company that, in the opinion of the Board, would interfere with the
exercise of independent judgment in carrying out the responsibilities of
a director. In making this determination, the Board considers all
relevant facts and circumstances, including commercial, charitable and
familial relationships that might have an impact on the director's
judgment.
- Employment. The director must not have been an employee of the Company
at any time during the past three years. In addition, a member of the
director's immediate family (including the director's spouse, parents,
children, siblings, mother-in-law, father-in-law, brother-in-law,
sister-in-law, son-in-law, daughter-in-law and anyone who resides in the
director's home) must not have been an executive officer of the Company
during the past three years.
- Other Payments. Neither the director nor a member of his or her
immediate family member may have received payments of more than $60,000
per year from the Company during the current or any of the past three
years, except for director fees, payments arising solely from investments
in the Company's securities, benefits under certain Company plans and
non-discretionary compensation, certain permitted loans and compensation
paid to a family member who is not an executive officer of the Company.
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- Auditor Affiliation. Neither the director nor a member of his or her
immediate family may be a current partner of the Company's independent
auditors or have been a partner or employee of the Company's independent
auditors who worked on the Company's audit at any time during the past
three years.
- Interlocking Directorships. Neither the director nor any member of his
or her immediately family may be employed as an executive officer by
another entity where, at any time during the past three years, any of the
Company's executive officers served on the compensation committee.
- Transactions. Neither the director nor any member of his or her
immediately family may be a partner in, or a controlling stockholder or
executive officer of, any organization that, during the current or any
one of the past three years, received payments from the Company, or made
payments to the Company, for property or services that exceed the greater
of $200,000 or 5% of the recipient's annual consolidated gross revenues
for such year (excluding payments arising solely from investments in the
Company's securities or paid under a non-discretionary charitable
matching program).
- Additional Standards for Audit Committee Members. Any director who
serves on the Board's Audit Committee may not, directly or indirectly,
have received any consulting, advisory or other compensatory fee from the
Company (other than certain retirement benefits and deferred
compensation) or be an affiliate of the Company (except as a director,
but including by way of stock ownership). In addition, no such director
may have participated in the preparation of the financial statements of
the Company or any current subsidiary of the Company at any time during
the past three years.
Overall Board Composition. The Board of Directors believes it is important
to consider the professional skills and background, experience in relevant
industries, age and diversity of its directors in light of the Company's current
and future business needs.
Personal Qualities. Each director must possess certain personal qualities,
including integrity, judgment and business acumen. In addition, each director
must be no older than 75 years of age at the time of nomination or renomination.
Commitments. Each director must have the time and ability to make a
constructive contribution to the Board. While the Board does not believe it is
appropriate to establish a single standard regarding the number of other boards
on which a director may sit, this is a factor that may be considered in
reviewing a candidate's suitability.
Additional Criteria for Incumbent Directors. During their terms, all
incumbent directors on the Company's Board are expected to have regular
attendance at Board and Committee meetings; to stay informed about the Company
and its business; to participate in discussions of the Board and its Committees;
to take an interest in the Company's business and provide advice and counsel to
the Company's Chief Executive Officer; and to comply with the Company's
Corporate Governance Principles and other applicable policies.
Regulatory Requirements. The Board must have directors who meet the
criteria established from time to time by The Nasdaq Stock Market, the
Securities and Exchange Commission, the Internal Revenue Service and other
applicable regulatory entities for service on the Board and its Committees.
DIRECTOR NOMINATION PROCESS
Under its charter, the Nominating Committee is responsible for identifying,
reviewing and recommending individuals to the Board for nomination or election
as directors. This typically involves the following steps:
- Specific Criteria. The Nominating Committee and the Board review the
overall composition of the Board in light of the Company's current and
expected business needs and, as a result of such assessments, may
establish specific qualifications that the Committee will seek in Board
candidates.
- Identifying New Candidates. The Committee may seek to identify new
candidates for the Board (i) who possess the desired qualifications, and
(ii) who satisfy the other requirements for Board
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service. In identifying new director candidates, the Committee may seek
advice and names of candidates from Committee members, other members of
the Board, members of management, and other public and private sources.
The Committee may also, but need not, retain a search firm in order to
assist it in these efforts.
- Reviewing New Candidates. The Committee reviews the potential new
director candidates identified through this process. This involves
reviewing the candidates' qualifications and conducting an appropriate
background investigation. The Committee may also select certain
candidates to be interviewed by one or more Committee members.
- Reviewing Incumbent Candidates. On an annual basis, the Committee also
reviews incumbent candidates for renomination to the Board. This review
involves an analysis of the criteria described above that apply to
incumbent directors.
- Recommending Candidates. The Nominating Committee recommends a slate of
candidates for the Board of Directors to submit for approval to the
stockholders at the Annual Meeting. This slate of candidates may include
both incumbent and new nominees. In addition, apart from this annual
process, the Committee may, in accordance with the Corporate Governance
Principles, recommend that the Board elect new members of the Board who
will serve until the next annual stockholders meeting. At the time of
making any recommendation to the Board, the Committee reports on the
criteria that were applied in making the recommendation and its findings
concerning each candidate's qualifications.
- Stockholder Nominations Submitted to the Committee. Stockholders may
also submit names of director candidates, including their own, to the
Nominating Committee for its consideration. The process for stockholders
to use in submitting suggestions to the Nominating Committee is set forth
below at "Procedures for Submitting Director Nominations and
Recommendations."
BOARD MEETINGS AND EXECUTIVE SESSIONS
The Board of Directors not only holds regular quarterly meetings, but also
holds at least one special-purpose meeting each year to review the Company's
strategy, to approve its annual business plan and annual budget, and to act on
matters relating to the Company's Annual Meeting and filings with the Securities
and Exchange Commission.
Non-employee directors meet by themselves in executive sessions, without
management or employee directors present, at every regularly scheduled Board
meeting. In addition, the non-employee directors and independent directors may
convene additional executive sessions at any time.
These executive sessions are led by the Chair of the committee that is
responsible for the subject matter at issue (e.g., the Audit Committee Chair
would lead a discussion of audit-related matters). When it is not clear which
committee has specific responsibility for the subject matter, the Chair of the
Compensation and Corporate Governance Committee presides.
COMMITTEES OF THE BOARD
The Board has four standing committees: the Audit Committee, the
Compensation and Corporate Governance Committee, the Nominating Committee and
the Executive Committee.
Each Committee is composed entirely of independent directors and operates
under a written charter. The Chair of each Committee is selected by the Board.
Each Committee, except the Executive Committee, holds regular executive sessions
at which only Committee members are present. Each Committee is authorized to
retain its own outside counsel and other advisors as it desires.
Charters for the Audit Committee, the Compensation and Corporate Governance
Committee, and the Nominating Committee are available on the Company's website,
www.transact-tech.com, but a brief summary of the committees' responsibilities
follows:
Audit Committee. The Audit Committee is responsible for assisting the
Board in fulfilling its responsibilities to oversee the quality and integrity of
the Company's financial statements and accounting practices, the Company's
compliance with legal and regulatory requirements, the independent registered
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public accounting firm's qualifications and independence, and the performance of
the Company's independent registered public accounting firm and internal audit
function.
Nominating Committee. The Nominating Committee is responsible for
assisting the Board in carrying out its responsibilities relating to the
composition of the Board, including identifying, reviewing and recommending
candidates to the Board for nomination or election as directors.
Compensation and Corporate Governance Committee. The Compensation and
Corporate Governance Committee is responsible for assisting the Board in
carrying out its responsibilities relating to executive compensation, the
Company's corporate governance practices, CEO performance review and succession
planning, director compensation, Board and Committee performance evaluation and
stockholder communication matters.
Executive Committee. The Executive Committee meets between scheduled
meetings of the Board of Directors and has the power and authority of the Board,
except as limited by the Company's By-Laws.
BOARD AND COMMITTEE PERFORMANCE EVALUATIONS
The Board of Directors conducts periodic evaluations of its composition,
responsibilities, structure, processes and effectiveness. Each Committee of the
Board conducts a similar evaluation with respect to such Committee. These
evaluations are conducted under the auspices of the Compensation and Corporate
Governance Committee.
STANDARDS OF BUSINESS CONDUCT
In order to help assure the highest levels of business ethics at the
Company, the Board of Directors has adopted the Company's Standards of Business
Conduct, which apply to the Company's directors, officers and employees. The
Standards of Business Conduct provide an overview of the Company's policies
pertaining to employee conduct in the workplace, regulatory compliance and
investigations; the Company's relationships with its customers, vendors,
competitors and the public; insider trading; conflicts of interest; lobbying;
political activities and contributions; accuracy of books, records and financial
statements; confidentiality; and the protection of all who come forward to
report suspected violations of the Standards. In addition, with respect to the
Company's officers who are responsible for financial reporting, including the
Chief Executive Officer, Chief Financial Officer and Controller, the Standards
of Business Code are designed to act as a code of ethics that are designed to
promote honest and ethical conduct and mandate that these officers avoid
conflicts of interest and disclose any relationship that could give rise to a
conflict, protect the confidentiality of non-public information about the
Company, work to achieve responsible use of the Company's assets and resources,
comply with all applicable governmental rules and regulations and promptly
report any possible violation of the Standards. In addition, the Standards
require that these individuals promote full, fair, understandable and accurate
disclosure in the Company's publicly filed reports and other public
communications and sets forth standards for accounting practices and records.
Individuals to whom the Standards of Business Conduct apply are held accountable
for their adherence to it. Failure to observe the terms of the Standards of
Business Conduct can result in disciplinary action (including termination of
employment).
1. ELECTION OF DIRECTORS
The Board of Directors currently consists of four directors and is divided
into three classes. Each class of directors are elected by the holders of the
Company's Common Stock to serve staggered three-year terms.
At the Annual Meeting, two people are to be elected to hold office as a
director until the 2008 Annual Meeting of Stockholders or until successor is
duly elected and qualified. In the absence of instructions to the contrary, the
persons named in the accompanying proxy will vote such proxy "FOR" the election
of the nominees named below. Should either nominee become unavailable, which is
not anticipated, votes pursuant to the proxy will be cast for a substitute
candidate as may be designated by the Board of Directors, or in the absence of
such designation, in such other manner as the Board may in their discretion
determine. Alternatively, in such a situation, the Board of Directors may take
action to fix the number of directors for the ensuing year at the number of
nominees and incumbent directors who are then able to serve.
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DIRECTOR INDEPENDENCE AND QUALIFICATIONS
The Board of Directors has determined that all of the directors or
nominees, except for Mr. Shuldman, are "independent" within the criteria
established under the Company's Corporate Governance Principles. See "Corporate
Governance -- Criteria for Membership on the Board." In addition, the Board has
determined that each member of the Audit Committee is financially literate and
each director or nominee possesses the high level of skill, experience,
reputation and commitment that is mandated by the Board.
INFORMATION CONCERNING NOMINEE FOR RE-ELECTION AS DIRECTOR WHOSE TERM WILL
EXPIRE AT THE 2008 ANNUAL MEETING
Thomas R. Schwarz, 68, has been a director of the Company since its
formation in June 1996 and Chairman of the Board from June 1996 to February
2001. Mr. Schwarz was Chairman and Chief Executive Officer of Grossman's Inc., a
retailer of building materials, from 1990 until his retirement in 1994. From
1980 to 1990, he was President, Chief Operating Officer and a director of
Dunkin' Donuts Incorporated, a food service company. Mr. Schwarz is a director
of Tanaka Growth Fund.
Bart C. Shuldman, 48, has been Chief Executive Officer, President and a
director of the Company since its formation in June 1996 and Chairman of the
Board since January 2001. Previously, Mr. Shuldman was Vice President of Sales
and Marketing of Magnetec Corporation, a former subsidiary of Tridex, from April
1993 to August 1993, and served as President of Magnetec, and later the combined
operations of Magnetec and Ithaca Peripherals Incorporated, another former
Tridex subsidiary, from August 1993 to June 1996.
VOTE REQUIRED
The election of Thomas R. Schwarz and Bart C. Shuldman, respectively, as
directors of the Company requires affirmative votes of the holders of a
plurality of the votes of the Company's Common Stock present in person or
represented by proxy and entitled to vote. Abstentions by holders of such shares
and broker non-votes will have no effect on the election of directors, but will
be included in determining the presence of a quorum at the Annual Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THOMAS R. SCHWARZ AND BART C. SHULDMAN AS DIRECTORS OF THE COMPANY.
INFORMATION CONCERNING DIRECTOR WHOSE TERM WILL EXPIRE AT THE 2006 ANNUAL
MEETING
Charles A. Dill, 65, has been a director of the Company since its formation
in June 1996. From 2004 to the present, Mr. Dill has served as a General Partner
of Two Rivers Advisors, a private equity investment firm. Mr. Dill has been a
General Partner of Gateway Associates, a venture capital firm, since 1996. Mr.
Dill currently serves as a director of Zoltek Companies, Inc. and Stifel
Financial Corp., as well as several other privately held companies.
INFORMATION CONCERNING DIRECTOR WHOSE TERM WILL EXPIRE AT THE 2007 ANNUAL
MEETING
Graham Y. Tanaka, 57, has been a director of the Company since its
formation in June 1996. Mr. Tanaka has been President of Tanaka Capital
Management, Inc., an investment management firm, since 1986. From 1989 until
1996, Mr. Tanaka was a limited partner of McFarland Dewey & Co., a financial
advisor to the Company. He is a director of Tanaka Funds, Inc. and Tanaka
Capital Management, Inc.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended December 31, 2004, the Board of Directors held four
meetings. Each director attended all of the meetings of the Board of Directors
and of the Committees of the Board of Directors on which such director served.
The standing committees of the Board of Directors are the Audit Committee,
the Compensation and Corporate Governance Committee, the Nominating Committee
and the Executive Committee.
The Audit Committee is comprised of Messrs. Charles A. Dill, Thomas R.
Schwarz and Graham Y. Tanaka, with Mr. Dill serving as Chair. As discussed above
under "Corporate Governance -- Criteria for
8
Membership on the Board", the Board has determined that each member of the Audit
Committee is an independent director and meets the financial literacy
requirements of The Nasdaq Stock Market to serve on the Committee. In addition,
the Board has determined that Mr. Dill is an "audit committee financial expert"
as defined under the rules of the Securities and Exchange Commission. The Audit
Committee operates under a written charter, which was revised in March 2004 and
is posted on the Company's website. The Audit Committee met four times during
2004.
The Compensation and Corporate Governance Committee is comprised of Messrs.
Charles A. Dill, Thomas R. Schwarz and Graham Y. Tanaka, with Mr. Schwarz
serving as Chair. The Compensation and Corporate Governance Committee operates
under a written charter, which was adopted in March 2004 and is posted on the
Company's website. See "Corporate Governance -- Recent Developments." The
Compensation and Corporate Governance Committee met three times during 2004.
The Nominating Committee is comprised of Messrs. Charles A. Dill, Thomas R.
Schwarz and Graham Y. Tanaka, with Mr. Tanaka serving as Chair. The Nominating
Committee operates under a written charter, which was adopted in March 2004 and
is posted on the Company's website. See "Corporate Governance -- Recent
Developments." The Nominating Committee met once during 2004.
The Executive Committee is comprised of Messrs. Charles A. Dill, Thomas R.
Schwarz and Graham Y. Tanaka. The Executive Committee did not meet during 2004.
AUDIT COMMITTEE REPORT
Under its charter, the Audit Committee is responsible for assisting the
Board in fulfilling its responsibilities to oversee the internal control over
financial reporting and quality and integrity of the Company's financial
statements and accounting practices, the Company's compliance with legal and
regulatory requirements, the independent registered public accounting firm's
qualifications and independence, and the performance of the Company's
independent registered public accounting firm and internal audit function.
Although the Audit Committee oversees the Company's financial reporting
process for the Board of Directors consistent with the Audit Committee charter,
management is responsible for the Company's system of internal controls and the
preparation of the Company's consolidated financial statements in accordance
with generally accepted accounting principles. The independent registered public
accounting firm is responsible for performing independent audits of the
Company's consolidated financial statements and for issuing reports about those
financial statements. The Audit Committee meets with the independent registered
public accounting firm, the Chief Executive Officer and the senior management of
the Company to review the scope and the results of the annual audit, the amount
of audit fees, the Company's system of internal accounting controls over
financial reporting, the financial statements contained in the Company's Annual
Report to Stockholders and other related matters. In addition, the Audit
Committee reviews the Company's quarterly financial statements and discusses
them with both the senior management of the Company and the independent
registered public accounting firm prior to including such interim financial
statements in the Company's quarterly reports on Form 10-Q. Separate meetings
are held with the independent registered public accounting firm and management.
Substantial attention at Audit Committee meetings throughout 2004 was devoted to
progress updates and presentations by management and the independent registered
public accounting firm relative to the Company's Sarbanes-Oxley Section 404
Internal Control Certification Program. Management's Report on Internal Control,
together with the independent registered public accounting firm's accompanying
report, has been reviewed by the Committee and is contained in the Company's
2004 Annual Report on Form 10-K.
In connection with its duties, the Audit Committee has taken the following
actions:
- It has reviewed and discussed the audited financial statements, as well
as management's assessment of the effectiveness of the Company's internal
controls over financial reporting, with management and the independent
registered public accounting firm.
- It has discussed with the independent registered public accounting firm,
which is responsible for expressing an opinion on the financial
statements in accordance with generally accepted accounting
9
principles, the matters required to be discussed by Statement on Auditing
Standards No. 61, "Communication with Audit Committees," as amended by
Statement on Auditing Standards No. 90.
- It has received from the independent registered public accounting firm
the written disclosures describing any relationships between the
independent auditors and the Company and the letter confirming their
independence required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," and has discussed with
the independent auditors matters relating to their independence.
- Based on its review and discussions described above, the Audit Committee
recommended to the Board of Directors that the audited financial
statements of the Company for the year ended December 31, 2004 be
included in the Company's Annual Report on Form 10-K for filing with the
SEC.
AUDIT COMMITTEE
Charles A. Dill, Chairman
Thomas R. Schwarz
Graham Y. Tanaka
COMPENSATION OF DIRECTORS
During the year ended December 31, 2004, each outside director of the
Company received as compensation for services rendered: (i) a retainer of $2,000
for each fiscal quarter served as director, (ii) $750 for each Board of
Directors meeting attended, (iii) $300 for each Board of Directors committee
meeting attended, (iv) $250 for each telephonic Board of Directors meeting, and
(v) $100 for each telephonic committee meeting. Chairs of committees received
$600 for each committee meeting attended and $200 for each telephonic meeting.
Directors are reimbursed for expenses incurred in attending meetings.
Pursuant to the terms of the Company's Non-Employee Directors' Stock Plan
(the "Directors' Plan"), each non-employee director receives a non-qualified
option to purchase 7,500 shares of common stock upon his or her initial election
to the Board of Directors. Thereafter, each director who is not an employee of
the Company receives an annual grant of a non-qualified option to purchase
11,250 shares of common stock. Each option is granted at an exercise price equal
to 100% of the fair market value of the common stock on the date of grant,
expires ten years from the date of grant, and becomes exercisable at a rate of
20% per year on the first through fifth anniversaries of the date of grant. In
the event of a change-in-control, stock options awarded under the Directors'
Plan not previously exercisable shall become fully exercisable.
On March 25, 2005, the Compensation Committee approved a revised
compensation structure for outside directors. Beginning in April 2005, cash
compensation for non-employee directors will include the following: (i) a
quarterly retainer of $2,500 for each fiscal quarter served as a director, (ii)
1,000 for each Board of Directors meeting attended, (iii) $500 for each Board of
Directors committee meeting attended, (iv) $500 for each telephonic Board of
Directors meeting, and (v) $250 for each telephonic committee meeting. Chairs of
committees will receive $750 for each committee meeting attended and $250 for
each telephonic meeting.
In addition, subject to stockholder approval, the Compensation Committee
approved changes to equity compensation for non-employee directors. Under the
new approach, annual grants to each director of 11,250 non-qualified stock
options will be replaced by annual grants to each director of 5,000 shares of
restricted stock. The restricted stock will vest at the rate of 20% per year
beginning on the first anniversary of the date of grant.
10
EXECUTIVE COMPENSATION
The following tables set forth information concerning the compensation
earned by the Company's Chief Executive Officer and each of the other four most
highly compensated executive officers (the "Named Executive Officers") in 2004:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-----------------------
AWARDS
----------------------- ALL
ANNUAL COMPENSATION RESTRICTED SECURITIES OTHER
-------------------- STOCK UNDERLYING COMPEN-
FISCAL SALARY(1) BONUS AWARDS(3) OPTIONS(4) SATION(5)
NAME AND PRINCIPAL POSITIONS YEAR ($) ($) ($) (#) ($)
---------------------------- ------ ---------- ------- ---------- ---------- ---------
Bart C. Shuldman..................... 2004 390,000 52,650 612,500 -- 29,305
Chairman, President and 2003 390,000 73,125 -- -- 56,413
Chief Executive Officer 2002 375,000 25,000 -- 168,750 9,003
Steven A. DeMartino(6)............... 2004 166,759 24,239 220,240 -- 18,521
Executive Vice President, 2003 145,600 16,380 -- -- 29,764
Chief Financial Officer, 2002 140,000 5,000 -- 57,000 5,060
Treasurer and Secretary
Michael S. Kumpf..................... 2004 162,565 20,686 122,500 -- 20,132
Executive Vice President, 2003 158,600 20,816 -- -- 17,045
Engineering 2002 152,555 6,000 -- 36,750 7,838
James B. Stetson(7).................. 2004 179,067 27,569 122,500(2) -- 21,587
Senior Vice President and 2003 174,720 58,633 -- -- 22,094
Business Manager, TransAct 2002 168,000 31,118 -- 37,500 8,030
Services Group
Richard L. Cote(8)................... 2004 157,379 22,925 12,250 -- 25,293
Vice President, Special Projects 2003 206,000 30,900 -- -- 26,124
2002 198,000 7,500 -- 97,500 10,785
---------------
(1) None of the Named Executive Officers received perquisites or other personal
benefits in an amount which exceeded 10% of their salary plus bonus during
any fiscal year.
(2) A portion of the bonuses paid to Mr. Stetson represents commissions on sales
by the Company.
(3) All restricted stock awards were granted under the Company's 1996 Stock
Plan. The value of the restricted stock awards is based on the closing
market price of the Company's common stock on the date of grant. At the end
of fiscal year 2004, the number of shares of common stock which remain
subject to restricted awards and the value of such shares, based on the
closing price of the Company's common stock of $21.36 on such date, were as
follows: Mr. Shuldman: 37,500 shares and $801,000; Mr. DeMartino: 10,500
shares and $224,280; Mr. Kumpf: 7,500 shares and $160,200; Mr. Stetson:
9,000 shares and $192,240; and Mr. Cote: 750 shares and $16,020. The grants
of shares of restricted stock in 2004 (i) to Mr. Shuldman, Mr. DeMartino,
Mr. Kumpf and Mr. Stetson vest in five equal installments beginning on the
first anniversary of the date of grant; and (ii) to Mr. Cote vest on the
first anniversary of the date of grant. Currently, no dividends may be paid
on shares of the Company's common stock.
(4) All options were granted under the Company's 1996 Stock Plan.
(5) For all the Named Executive Officers, these amounts consist of automobile
allowances, Company contributions under the Company's 401(k) Plan, and other
benefits such as life and disability insurance. Also, for 2003, includes a
one-time payment of accrued vacation as of December 31, 2002.
(6) Mr. DeMartino was appointed Senior Vice President, Finance and Information
Technology in October 2001, and replaced Richard L. Cote as Executive Vice
President, Chief Financial Officer, Treasurer and Secretary in June 2004.
11
(7) Mr. Stetson was appointed Executive Vice President, Sales and Marketing in
November 2001 and Senior Vice President and Business Manager, TransAct
Services Group in October 2004.
(8) Mr. Cote stepped down as Executive Vice President, Chief Financial Officer,
Treasurer, Secretary and Director in June 2004 and was appointed Vice
President, Special Projects. Mr. Cote retired from the Company on January 2,
2005.
AGGREGATED OPTION EXERCISES IN 2004 AND FISCAL YEAR-END
OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR-END FISCAL YEAR-END
EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
NAME (#) ($) (#) ($)
---- ----------- --------- ------------------------- -------------------------
Bart C. Shuldman......... 36,400 641,371 215,863/84,187 3,687,396/1,495,830
Steven A. DeMartino...... 4,500 85,125 26,550/15,450 467,208/272,237
Michael S. Kumpf......... 10,601 201,666 36,811/11,913 597,994/211,991
James B. Stetson......... 6,750 109,242 12,000/20,250 215,820/353,540
Richard L. Cote.......... 161,501 3,277,362 6,875/34,875 107,892/617,242
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Under the terms of an Employment Agreement dated July 31, 1996 between Bart
C. Shuldman and the Company, Mr. Shuldman serves as President and Chief
Executive Officer at the pleasure of the Board of Directors. If Mr. Shuldman's
employment is terminated other than for Cause (as such term is defined in the
employment agreement), Mr. Shuldman shall be entitled to continue to receive:
(i) his annual base salary and all other benefits for two years from the date of
termination and (ii) a pro rata portion of his annual target bonus amount for
the year of termination. If Mr. Shuldman's employment is terminated other than
for Cause, or if Mr. Shuldman resigns for specified reasons, within one year of
a change-in-control of the Company, Mr. Shuldman shall be entitled to continue
to receive his annual base salary, annual target bonus and all benefits for a
period of three years from the date of termination. In addition, the Company
shall cause the immediate vesting of all restricted stock and stock options
granted to Mr. Shuldman under the 1996 Stock Plan.
Under the terms of a Severance Agreement with Steven A. DeMartino dated
June 1, 2004, if the employment of Mr. DeMartino is terminated other than for
Cause (as such term is defined in the severance agreement), Mr. DeMartino shall
be entitled to continue to receive, for one year following the date of
termination, his annual base salary, a pro rata portion of his annual target
bonus for the year of termination and all benefits which would otherwise have
been payable to him. If the employment of Mr. DeMartino is terminated other than
for Cause, or if he resigns for specified reasons, within one year of a
change-in-control of the Company, Mr. DeMartino shall be entitled to continue to
receive his annual base salary, annual target bonus and all benefits for a
period of two years from the date of termination. In addition, the Company shall
cause the immediate vesting of all restricted stock and stock options granted to
Mr. DeMartino under the 1996 Stock Plan.
Under the terms of Severance Agreements between the Company and James B.
Stetson and Michael S. Kumpf dated January 24, 2001 and September 4, 1996,
respectively, if the employment of Mr. Stetson or Mr. Kumpf is terminated other
than for Cause (as such term is defined in the respective severance agreement),
each executive shall be entitled to continue to receive, for six months
following the date of termination, the annual base salary, a pro rata portion of
the annual target bonus for the year of termination and all benefits which would
otherwise have been payable to each of them. If the employment of Mr. Stetson or
Mr. Kumpf is terminated other than for cause, or if they resign for specified
reasons, within one year of a change-in-control of the Company, each shall be
entitled to continue to receive his annual base salary, annual
12
target bonus and all benefits for a period of one year from the date of
termination. In addition, the Company shall cause the immediate vesting of all
restricted stock and stock options granted under the 1996 Stock Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, which is comprised of independent directors of
the Company, is responsible for administering the Company's executive
compensation policies. In connection with such responsibilities, the
Compensation Committee establishes the general compensation policies for the
Company, approves the hiring and termination of all executive officers and any
staff reporting directly to the Chief Executive Officer of the Company and
approves the compensation plans and specific compensation levels for all
executive officers and any staff reporting directly to the Chief Executive
Officer of the Company. The Compensation Committee also approves the issuance of
all awards to employees of the Company and its subsidiaries under the Company's
1996 Stock Plan and 2001 Employee Stock Plan.
Compensation Policies and Goals
The primary goals of the Company's compensation policies are to attract,
retain, motivate and reward management of the Company and its operating units,
while, at the same time, aligning their interests closely with those of the
Company and its stockholders. The Company seeks to attract and retain management
by offering a competitive total compensation package. To align the interests of
management more closely with those of the Company as a whole and reward
individual initiative and effort, the Company seeks to promote performance-based
compensation where contribution to the Company as a whole is rewarded. Through
the use of performance-based plans that reward attainment of operating unit or
Company goals, the Company seeks to foster an attitude of teamwork. The Company
also believes that the use of equity ownership is an important tool to ensure
that the efforts of management are consistent with the objectives of its
stockholders and seeks to promote increased ownership of the Company by
management through the use of stock awards.
The Compensation Committee has tried to achieve the above goals utilizing
publicly available information regarding competitive compensation. The
Compensation Committee may utilize an independent consultant to ensure that
compensation for the Company's management is competitive, meets the above-stated
objectives and is consistent for all members of management of the Company and
its operating units.
Compensation Components
At present, the compensation of the executive officers of the Company
consists of a combination of salary, cash bonuses, stock options, restricted
stock and participation in the Company's 401(k) Plan, as well as the provision
of medical and other personal benefits typically offered to corporate
executives. The executive officers of the Company are parties to agreements
which provide for severance payments under certain circumstances. These
agreements for the Named Executive Officers are described above under
"Employment Contracts, Termination of Employment and Change-In-Control
Arrangements."
Salaries: The Compensation Committee targets the Chief Executive Officer's
salary at the mean of that for the Company's peer group and seeks to provide a
total compensation package competitive with those of others in the industry.
Cash Bonuses: The Company generally maintains an incentive compensation
plan for all salaried employees of the Company and its operating units,
including key executives, which provides for the payment of cash bonuses. Under
the plan, the Board of Directors fixes an incentive target, as well as
individual goals and objectives, for each employee at the beginning of the year
and bonuses are paid shortly after the end of the year. During fiscal 2004, the
Company achieved earnings per share performance that entitled the Named
Executive Officers to receive certain bonuses with respect to such year.
Stock Awards: Under the Company's 1996 Stock Plan and 2001 Employee Stock
Plan, stock options and restricted stock are granted by the Compensation
Committee. All salaried employees are granted an initial award of stock options
or restricted stock on their date of hiring for a fixed number of shares
depending on
13
their level, which vests over three to four years. In each year following the
initial award, eligible employees may be granted an annual award in varying
amounts depending on their level and individual performance.
Other Benefit Plans: Executive officers of the Company may participate in
the Company's nondiscriminatory 401(k) Plan.
Chief Executive Officer Compensation
The Compensation Committee also makes decisions regarding the compensation
of the Chief Executive Officer using the philosophy and criteria set forth
above. Each year, the Company approves the adjustment of salary ranges for the
Chief Executive Officer based on studying the compensation paid to CEOs at peer
group companies. Mr. Shuldman's annual base salary for 2004 was $390,000.
Mr. Shuldman's annual incentive award, shown in the fourth column of the
Summary Compensation Table, was based upon a policy of rewarding performance,
for example increasing of the Company's earnings per share, and on the degree of
achievement of the corporate and individual goals and objectives. The 25,000
shares of restricted stock granted Mr. Shuldman reflect this policy.
COMPENSATION COMMITTEE
Thomas R. Schwarz, Chairman
Charles A. Dill
Graham Y. Tanaka
14
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock from December 31, 1999 through December 31, 2004, with the CRSP
Total Return Index for the Nasdaq Stock Market (U.S.) and the Nasdaq Computer
Manufacturer Stocks Index. The graph assumes that $100 was invested on December
31, 1999 in each of the Company's common stock, the CRSP Total Return Index for
the Nasdaq Stock Market (U.S.) and the Nasdaq Computer Manufacturer Stocks
Index, and that all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
TRANSACT TECHNOLOGIES INCORPORATED COMMON STOCK,
THE CRSP TOTAL RETURN INDEX FOR THE NASDAQ STOCK MARKET (U.S.),
AND THE NASDAQ COMPUTER MANUFACTURER STOCKS INDEX
[PERFORMANCE LINE GRAPH]
----------------------------------------------------------------------------------------------------------------
12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
----------------------------------------------------------------------------------------------------------------
TransAct Technologies
Incorporated Common Stock $100.00 $69.42 $72.72 $62.67 $321.96 $423.64
CRSP Total Return Index for the
Nasdaq Stock Market (U.S.) $100.00 $60.31 $69.85 $33.07 $ 71.46 $ 53.81
Nasdaq Computer Manufacturer
Stocks Index $100.00 $57.01 $39.28 $26.03 $ 36.20 $ 47.34
15
2. RATIFICATION OF SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2005
The Audit Committee has selected PricewaterhouseCoopers LLP as independent
registered public accounting firm to audit the financial statements of the
Company for the 2005 fiscal year. This selection is being presented to the
stockholders for ratification at the Annual Meeting. PricewaterhouseCoopers LLP
has audited the Company's financial statements since the Company's formation.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting, will have the opportunity to make a statement, and is
expected to be available to respond to appropriate questions.
POLICY REGARDING PRE-APPROVAL OF SERVICES PROVIDED
BY THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has established a policy requiring its pre-approval of
all audit services and permissible non-audit services provided by the
independent registered public accounting firm, along with the associated fees
for those services. The Policy provides for the annual pre-approval of specific
types of services pursuant to policies and procedures adopted by the Audit
Committee, and gives detailed guidance to management as to the specific services
that are eligible for such annual pre-approval. The Policy requires the specific
pre-approval of all other permitted services. For both types of pre-approval,
the Audit Committee considers whether the provision of a non-audit service is
consistent with the Securities and Exchange Commission's rules on auditor
independence, including whether provision of the service (i) would create a
mutual or conflicting interest between the independent registered public
accounting firm and the Company, (ii) would place the independent registered
public accounting firm in the position of auditing its own work, (iii) would
result in the independent registered public accounting firm acting in the role
of management or as an employee of the Company, or (iv) would place the
independent registered public accounting firm in a position of acting as an
advocate for the Company. In addition, the Audit Committee considers whether the
independent registered public accounting firm is best positioned and qualified
to provide the most effective and efficient service, based on factors such as
the independent registered public accounting firm's familiarity with the
Company's business, personnel, systems or risk profile and whether provision of
the service by the independent registered public accounting firm would enhance
the Company's ability to manage or control risk or improve audit quality or
would otherwise be beneficial to the Company.
The Audit Committee may delegate to one of its members the authority to
address certain requests for pre-approval of services between meetings of the
Committee, and such Committee member is required to report his or her
pre-approval decisions to the Committee at its next regular meeting. The Policy
is designed to ensure that there is no delegation by the Audit Committee of
authority or responsibility for pre-approval decisions to management of the
Company. The Audit Committee monitors compliance by management with the
pre-approval policy by requiring management, pursuant to the Policy, to report
to the Audit and Finance Committee on a regular basis regarding the pre-approved
services rendered by the independent registered public accounting firm.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S SERVICES AND FEES
The Audit Committee is responsible for the appointment, compensation,
retention and oversight of the work of the independent registered public
accounting firm. Accordingly, the Audit Committee has appointed
PricewaterhouseCoopers LLP to perform audit and other services for the Company.
In addition, the Committee has procedures in place, described above, for the
pre-approval by the Committee of all services provided by PricewaterhouseCoopers
LLP.
16
The aggregate fees billed by PricewaterhouseCoopers LLP to the Company for
the years ended December 31, 2004 and 2003 are as follows:
2004 2003
-------- --------
Audit Fees(1)............................................... $605,700 $144,700
Audit-Related Fees(2)....................................... 69,315 13,500
Tax Fees(3)................................................. 41,400 53,725
All Other Fees(4)........................................... 1,500 0
-------- --------
Total Fees for Services Provided............................ $717,915 $211,925
======== ========
---------------
(1) Audit Fees consist of fees related to: (i) the annual audit of the Company's
financial statements, (ii) the audit of management's assessment of the
effectiveness of internal control over financial reporting in 2004 (as
required by Section 404 of the Sarbanes-Oxley Act of 2002), (iii) reviews of
the Company's quarterly financial statements, (iv) statutory audits for the
Company's UK subsidiary, and (v) the review of registration statements,
periodic reports and other reports filed with the SEC.
(2) Audit-Related Fees consist of fees incurred for the audit of the Company's
401(k) Plan, consultation with management regarding accounting and reporting
matters, and due diligence related to the proposed acquisition of TPG, Inc.
(3) Tax Fees include fees incurred for the preparation of domestic and foreign
tax returns, as well as tax planning and advice.
(4) All Other Fees include software license fees for the use of a web-based
accounting research tool.
The Audit Committee has considered whether the provision of the above
services other than Audit Fees is compatible with maintaining the auditors'
independence and has determined that, in its opinion, they are compatible.
VOTE REQUIRED
The ratification of the selection of PricewaterhouseCoopers LLP as
independent registered public accounting firm for 2005 requires the affirmative
vote of a majority of the votes of the Common Stock present in person or
represented by proxy and entitled to vote. In the absence of instructions to the
contrary, the persons named in the accompanying proxy will vote such proxy "FOR"
the ratification of PricewaterhouseCoopers LLP. Abstentions by holders of such
shares with respect to voting on this matter will have the effect of a negative
vote; broker non-votes with respect to voting on this matter will have no effect
on the outcome of the vote. In the event stockholders do not ratify the
appointment, the Audit Committee will reconsider the appointment.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" RATIFICATION
OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2005.
3. RATIFICATION OF THE 2005 EQUITY INCENTIVE PLAN
On March 25, 2005, the Board of Directors unanimously voted to adopt the
2005 Equity Incentive Plan (the "Plan") and to recommend approval of the Plan by
stockholders. The following is a summary of the material features of the Plan.
It may not contain all of the information important to you. We urge you to read
the entire Plan, a copy of which appears as Annex A to this Proxy Statement.
DESCRIPTION OF THE PLAN
The purpose of the Plan is to advance the interests of the Company by
providing for the grant to participants of stock-based and other incentive
awards, all as more fully described below. The Plan will
17
become effective on the date of its approval by the stockholders. A maximum of
600,000 shares of common stock may be delivered in satisfaction of awards made
under the Plan. The maximum number of shares of common stock for which stock
options may be granted to any person in any calendar year and the maximum number
of shares of common stock subject to stock appreciation rights, or "SARs",
granted to any person in any calendar year will each be 500,000. The maximum
number of shares subject to other awards granted to any person in any calendar
year will be 500,000 shares. The maximum amount payable to any person in any
year in the case of an award denominated in cash will be $750,000. In the event
of a stock dividend, stock split or other change in our capital structure, the
Administrator will make appropriate adjustments to the limits described above
and will also make appropriate adjustments to the number and kind of shares of
stock or securities subject to awards, any exercise prices relating to awards
and any other provisions of awards affected by the change. The Administrator may
also make similar adjustments to take into account other distributions to
stockholders or any other event, if the Administrator determines that
adjustments are appropriate to avoid distortion in the operation of the Plan and
to preserve the value of awards.
The maximum number of shares that may be issued under the Plan represents
approximately 5.9% percent of the total number of shares of the Company's common
stock outstanding on Mach 28, 2005, excluding treasury shares.
On March 28, 2005, approximately 315,000 shares remained issuable in
connection with outstanding awards under prior TransAct plans. The total number
of shares issuable under prior TransAct plans, added together with shares
issuable under the proposed Plan, represent approximately 9.0% percent of
Company's outstanding shares on March 28, 2005. However, the Company has
determined that upon approval by the stockholders of the Plan, no new awards
will be made under prior TransAct plans.
No awards may be made after March 24, 2015.
Administration. The Compensation and Corporate Governance Committee will
administer the Plan. The term "Administrator" is used in this proxy statement to
refer to the person (the Committee and its delegates) charged with administering
the Plan. The Administrator has discretionary authority, subject only to the
express provisions of the Plan, to interpret the Plan, determine eligibility for
and grant awards, determine, modify or waive the terms and conditions of any
award; prescribe forms, rules and procedures, and otherwise do all things
necessary to carry out the purposes of the Plan. Determinations of the
Administrator made under the Plan are conclusive and bind all parties. Awards
may be in the form of options, SARs, restricted or unrestricted stock, stock
units (including restricted stock units), performance awards and cash awards.
Eligibility. Participation is limited to those key employees and
directors, as well as consultants and advisors, who in the Administrator's
opinion are in a position to make a significant contribution to the success of
the Company and its affiliated corporations and who are selected by the
Administrator to receive an award. The group of persons from which the
Administrator will select participants consists of approximately 100
individuals.
Stock Options. The Administrator may from time to time award options to
any participant subject to the limitations described above. Stock options give
the holder the right to purchase shares of common stock of the Company within a
specified period of time at a specified price. Two types of stock options may be
granted under the Plan: incentive stock options, or "ISOs", which are subject to
special tax treatment as described below, and nonstatutory options, or "NSOs".
Eligibility for ISOs is limited to employees of the Company and its
subsidiaries. The exercise price of a stock option cannot be less than the fair
market value of the common stock subject to the stock option at the time of
grant. In addition, the expiration date of an ISO cannot be more than ten years
after the date of the original grant. The Administrator determines all other
terms and conditions related to the exercise of an option, including the
consideration to be paid, if any, for the grant of the option, the time at which
options may be exercised and conditions related to the exercise of options. The
closing price of the Company common stock as reported on the NASDAQ National
Market on April 21, 2005 was $9.41 per share.
Stock Appreciation Rights. The Administrator may grant SARs under the
Plan. An SAR entitles the holder upon exercise to receive an amount, payable in
shares of common stock, equal to the excess of the fair
18
market value of the shares of common stock subject to the SAR over the fair
market value of such shares at the date of grant.
Stock Awards; Stock Units. The Plan provides for awards of nontransferable
shares of restricted common stock, as well as unrestricted shares of common
stock. Awards of restricted stock and unrestricted stock may be made in exchange
for past services or other lawful consideration. Generally, awards of restricted
stock are subject to the requirement that the shares be forfeited or resold to
the Company unless specified conditions are met. Subject to these restrictions,
conditions and forfeiture provisions, any recipient of an award of restricted
stock will have all the rights of a stockholder of the Company, including the
right to vote the shares and to receive dividends. Other awards under the Plan
may also be settled with restricted stock. The Plan also provides for awards of
stock units, which are unfunded and unsecured promises to deliver common stock
or cash (measured by the value of common stock) in the future. Stock units may
be restricted, meaning that the delivery of common stock or cash with respect to
the stock unit is subject to the satisfaction of specified performance or other
vesting conditions.
Performance Awards. The Administrator may also make awards subject to the
satisfaction of specified performance criteria. Performance awards may consist
of common stock or cash or a combination of the two. The performance criteria
used in connection with a particular performance award will be determined by the
Administrator. In the case of performance awards intended to qualify for
exemption under Section 162(m) of the Internal Revenue Code, the Administrator
will use objectively determinable measures of performance in accordance with
Section 162(m) that are based on any or any combination of the following
(determined either on a consolidated basis or, as the context permits, on a
divisional, subsidiary, line of business, project or geographical basis or in
combinations thereof): sales; revenues; assets; expenses; earnings before or
after deduction for all or any portion of interest, taxes, depreciation, or
amortization, whether or not on a continuing operations or an aggregate or per
share basis; return on equity, investment, capital or assets; one or more
operating ratios; borrowing levels, leverage ratios or credit rating; market
share; capital expenditures; cash flow; stock price; stockholder return; sales
of particular products or services; customer acquisition or retention;
acquisitions and divestitures (in whole or in part); joint ventures and
strategic alliances; spin-offs, split-ups and the like; reorganizations; or
recapitalizations, restructurings, financings (issuance of debt or equity) or
refinancings. The Administrator will determine whether the performance targets
or goals that have been chosen for a particular Performance Award have been met.
General Provisions Applicable to All Awards. Neither ISOs nor, except as
the Administrator otherwise expressly provides, other awards may be transferred
other than by will or by the laws of descent and distribution. During a
recipient's lifetime an ISO and, except as the Administrator may provide, other
non-transferable awards requiring exercise may be exercised only by the
recipient. Shares delivered under the Plan may consist of either authorized but
unissued shares or treasury shares. The number of shares delivered upon exercise
of a stock option is determined net of any shares transferred by the optionee to
the Company (including through the holding back of shares that would otherwise
have been deliverable upon exercise) in payment of the exercise price or tax
withholding.
Change in Control; Other Mergers and Similar Transactions. In the event of
a change in control of the Company, the following rules will apply:
- Each award requiring exercise will become fully exercisable, the
restrictions on each outstanding share of stock will lapse, and the
delivery of shares of stock deliverable under each outstanding award of
stock units (including restricted stock units and performance awards to
the extent consisting of stock units) will be accelerated and such shares
will be delivered, prior to the transaction, in each case on a basis that
gives the holder of the award a reasonable opportunity, as determined by
the Administrator, following exercise of the award or the delivery of the
shares, as the case may be, to participate as a stockholder in the
transaction; and
- With limited exceptions, each award requiring exercise or providing for
the future delivery of stock (unless previously exercised, surrendered,
paid or otherwise terminated) will terminate upon consummation of the
transaction, unless the acquiring company or an affiliate assumes the
awards.
19
If a merger or similar transaction were to occur involving the Company that
did not constitute a change in control of the Company (for example, because
pre-transaction TransAct stockholders continued to own beneficially more than
50% of the stock of the surviving company), or in the case of a dissolution or
liquidation of the Company, with limited exceptions outstanding awards would
terminate in the transaction but would first vest, be paid out or become
exercisable unless a substitution or assumption of awards had been arranged.
However, the Administrator could impose restrictions on any cash or other
property delivered with respect to the affected awards to reflect any
performance or other vesting conditions to which the awards were subject.
For purposes of the foregoing, a "change in control" of the Company will be
deemed to occur in the following circumstances: Any of (i) a reorganization,
merger, consolidation or similar transaction in which the surviving corporation
is not, and is not a subsidiary of, a publicly owned corporation in which the
stockholders of the Company immediately prior to the transaction continue to own
beneficially securities representing more than 50% of the voting power of all
outstanding voting securities of the Company, (ii) a sale, exchange or other
disposition of all or substantially all the Company's assets, or (iii) any
acquisition of voting securities of the Company by any person or group (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), but excluding (a)
the Company or any of its subsidiaries, (b) any person who was an officer or
director of the Company on the day prior to the Effective Date, or (c) any
savings, pension or other benefits plan for the benefit of employees of the
Company or any of its subsidiaries, which theretofore did not beneficially own
voting securities representing more than 50% of the voting power of all
outstanding voting securities of the Company, if such acquisition results in
such entity, person or group owning beneficially securities representing more
than 50% of the voting power of all outstanding voting securities of the
Company. As used herein, "voting power" means ordinary voting power for the
election of directors of the Company.
Amendment. The Administrator may at any time or times amend the Plan or
any outstanding award for any purpose which may at the time be permitted by law,
and may at any time terminate the Plan as to any future grants of awards.
The Administrator may not, however, alter the terms of an award so as to
affect adversely the participant's rights under the award without the
participant's consent, unless the Administrator expressly reserved the right to
do so at the time of the award. Any amendments to the Plan shall be conditioned
upon stockholder approval only to the extent, if any, such approval is required
by law (including the Code and applicable stock exchange requirements), as
determined by the Administrator.
NEW PLAN BENEFITS
The future benefits or amounts that would be received under the Plan by
executive officers, non-executive directors and non-executive officer employees
are discretionary and are therefore not determinable at this time. In addition,
the benefits or amounts which would have been received by or allocated to such
persons for the last completed fiscal year if the plan had been in effect cannot
be determined.
20
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about the Company's common stock that
may be issued upon the exercise of options, warrants and rights under all of the
Company's existing equity compensation plans as of December 31, 2004.
(A) (B) (C)
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED AVERAGE FUTURE ISSUANCE UNDER
BE ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- ----------------------- -------------------- -------------------------
Equity compensation plans approved
by security holders:
1996 Stock Plan.................. 588,899 $3.75 208,649
1996 Non-Employee Director
Plan............................. 206,250 9.99 112,500
2000 Employee Stock Purchase
Plan............................. -- -- 39,733
------- ----- -------
Total.............................. 795,149 $5.37 360,882
======= ===== =======
Equity compensation plans not
approved by security holders:
2001 Employee Stock Plan......... 98,015 5.94 41,859
======= ===== =======
FEDERAL INCOME TAX CONSEQUENCES OF CERTAIN AWARDS
The following discussion summarizes certain federal income tax consequences
of the issuance and receipt of options under the Plan under the law as in effect
on the date of this proxy statement. The summary does not purport to cover
federal employment tax or other federal tax consequences that may be associated
with the Plan, nor does it cover state, local or non-U.S. taxes.
ISOs. In general, an optionee realizes no taxable income upon the grant or
exercise of an ISO. However, the exercise of an ISO may result in an alternative
minimum tax liability to the optionee. With certain exceptions, a disposition of
shares purchased under an ISO within two years from the date of grant or within
one year after exercise produces ordinary income to the optionee (and a
deduction to the Company) equal to the value of the shares at the time of
exercise less the exercise price. Any additional gain recognized in the
disposition is treated as a capital gain for which the Company is not entitled
to a deduction. If the optionee does not dispose of the shares until after the
expiration of these one- and two-year holding periods, any gain or loss
recognized upon a subsequent sale is treated as a long-term capital gain or loss
for which the Company is not entitled to a deduction.
Stock Options Other Than ISOs. In general, in the case of a stock option
other than an ISO, the optionee has no taxable income at the time of grant but
realizes income in connection with exercise of the option in an amount equal to
the excess (at the time of exercise) of the fair market value of the shares
acquired upon exercise over the exercise price; a corresponding deduction is
available to the Company; and upon a subsequent sale or exchange of the shares,
any recognized gain or loss after the date of exercise is treated as capital
gain or loss for which the Company is not entitled to a deduction.
In general, an ISO that is exercised by the optionee more than three months
after termination of employment is treated as a non-ISO for federal income tax
purposes. ISOs are also treated as non-ISOs to the extent they first become
exercisable by an individual in any calendar year for shares having a fair
market value (determined as of the date of grant) in excess of $100,000.
The Administrator may award stock options that are exercisable for
restricted stock. Under Section 83 of the Code, an optionee who exercises an
option other than an ISO for restricted stock will generally have income only
when the stock vests. The income will equal the fair market value of the stock
at that time less the exercise price. However, the optionee may make a so-called
"83(b) election" in connection with the exercise to recognize taxable income at
that time. Assuming no other applicable limitations, the amount and
21
timing of the deduction available to the Company will correspond to the income
recognized by the optionee. The application of Section 83 to ISOs exercisable
for restricted stock is less clear.
Under the so-called "golden parachute" provisions of the Code, the
accelerated vesting of awards in connection with a change in control of the
Company may be required to be valued and taken into account in determining
whether participants have received compensatory payments, contingent on the
change in control, in excess of certain limits. If these limits are exceeded, a
substantial portion of amounts payable to the participant, including income
recognized by reason of the grant, vesting or exercise of awards under the Plan,
may be subject to an additional 20% federal tax and may be nondeductible to the
Company.
VOTE REQUIRED
Approval of the 2005 Equity Incentive Plan requires the affirmative vote of
a majority of the votes of the Common Stock present in person or represented by
proxy and entitled to vote. In the absence of instructions to the contrary, the
persons named in the accompanying proxy will vote such proxy "FOR" the 2005
Equity Incentive Plan. Abstentions by holders of such shares with respect to
voting on this matter will have the effect of a negative vote; broker non-votes
with respect to voting on this matter will have no effect on the outcome of the
vote.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" APPROVAL OF
THE 2005 EQUITY INCENTIVE PLAN.
STOCKHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Stockholder proposals submitted for inclusion in next year's proxy
materials must be received by the Secretary of the Company on or before January
2, 2006. Proposals should be addressed to TransAct Technologies Incorporated, 7
Laser Lane, Wallingford, Connecticut 06492, Attention: Secretary. Stockholders
who wish to make a proposal at the 2006 Annual Meeting without regard to whether
it will be included in the Company's proxy materials should notify the Company
no later than February 28, 2006. If a Stockholder who wishes to present a
proposal fails to notify the Company by the due date, the proxies that the
Company solicits for the meeting will accord them discretionary authority to
vote on the Stockholder's proposal if it is properly brought before the meeting.
PROCEDURES FOR SUBMITTING DIRECTOR NOMINATIONS AND RECOMMENDATIONS
Stockholders may nominate candidates for election to the Board of Directors
if the proper nomination procedures specified in the Company's By-Laws are
followed. All nominations by stockholders must be delivered to or mailed and
received at the principal executive offices of the Company not less than 30 nor
more than 60 days prior to the meeting at which election of directors will take
place; however, if less than 40 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, nominations will be timely
if received not later than 10 days after notice was given or public disclosure
was made. A stockholder's notice must set forth in writing (i) for each person
proposed to be nominated, all information relating to each such person that is
required to be disclosed in solicitations of proxies for election of directors
pursuant to Regulation 14A under the Exchange Act, including such person's
written consent to be named in the proxy and to serving as a director, and (ii)
for the stockholder giving notice, the (x) name and address of such stockholder
as they appear on the Company's books, and (y) the class and number of shares of
the Company beneficially owned by such stockholder. The Nominating Committee
will also consider any stockholder recommendation of a candidate for nomination
by the Board if the stockholder submits his or her recommendation in accordance
with the foregoing procedures.
22
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS POLICY
Any stockholder wishing to communicate directly with members of the Board
of Directors should do so in writing. All correspondence addressed to the Board
as a whole, to its independent directors, to any of its Committees or Committee
Chairs, or to individual Board members should be mailed to the following
address:
Board of Directors/Independent Directors/Committee/Director
c/o Secretary
TransAct Technologies Incorporated
7 Laser Lane
Wallingford, Connecticut 06492
- You are welcome to communicate anonymously or confidentially.
- All correspondence addressed to an individual director or Committee
Chair, and marked "Confidential", will be collected in the office of the
Secretary and forwarded unopened to the individual director.
- Other correspondence will be opened by the Secretary, reviewed, copied
and directed as follows:
- Concerns regarding the Company's accounting, internal accounting
controls or auditing matters will be referred to the members of the
Audit Committee.
- Nominations or recommendations of candidates for election to the Board
of Directors will be referred to members of the Nominating Committee.
- Other correspondence will be copied by the Secretary and forwarded to
all of the members of the Board of Directors (or its independent
directors, if so addressed) unless the stockholder directs otherwise.
- A Stockholder may request written acknowledgement of the receipt of his
or her correspondence, which will be provided by the Secretary or, in the
case of correspondence marked "Confidential", by the individual director
or Committee Chair to whom it is addressed.
ANNUAL REPORT
A COPY OF THE COMPANY'S SECURITIES AND EXCHANGE COMMISSION ANNUAL REPORT ON
FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, WILL BE
FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN REQUEST. REQUESTS
SHOULD BE ADDRESSED TO: TRANSACT TECHNOLOGIES INCORPORATED, STOCKHOLDER
RELATIONS DEPARTMENT, 7 LASER LANE, WALLINGFORD, CONNECTICUT 06492.
GENERAL
The accompanying proxy will be voted as specified thereon. Unless otherwise
specified, proxies will be voted for the directors nominated by the Board of
Directors, for ratification of the selection of PricewaterhouseCoopers LLP as
independent registered public accounting firm for 2005, and for the 2005 Equity
Incentive Plan. As of the date of this Proxy Statement, the Board of Directors
is not aware of any matter which is to be presented for action at the Annual
Meeting other than the matters set forth herein. Should any other matter
requiring a vote of the stockholders arise at the Annual Meeting, the proxies
confer upon the persons named in the accompanying proxy the authority to vote in
respect of any such other matter in accordance with the recommendation of the
Board of Directors.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise at the Annual Meeting by: (i) giving written notice of revocation to
the Secretary of the Company, (ii) properly submitting to the Company a duly
executed proxy bearing a later date, or (iii) voting in person at the Annual
Meeting. All written notices of revocation and other communications with respect
to revocation of proxies should be addressed to the Company, as follows:
TransAct Technologies Incorporated, 7 Laser Lane, Wallingford,
23
Connecticut 06492, Attention: Secretary. A proxy appointment will not be revoked
by death or supervening incapacity of the stockholder executing the proxy
unless, before the shares are voted, notice of such death or incapacity is filed
with the Company's Secretary or other person responsible for tabulating votes on
behalf of the Company.
The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit proxies otherwise than by use of
the mail, in that certain officers and regular employees of the Company, without
additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. The Company will also request persons, firms and
corporations holding shares in their names, or owned by others, to send this
proxy material to and obtain proxies from such beneficial owners and will
reimburse such holders for their reasonable expenses in doing so.
STOCKHOLDERS ARE URGED TO SPECIFY THEIR CHOICES, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. PROMPT
RESPONSE IS HELPFUL, AND YOUR COOPERATION IS APPRECIATED.
May 2, 2005
24
ANNEX A
TRANSACT TECHNOLOGIES INCORPORATED
2005 EQUITY INCENTIVE PLAN
1. DEFINED TERMS
Exhibit A, which is incorporated by reference, defines the terms used in
the Plan and sets forth certain operational rules related to those terms.
2. PURPOSE
The Plan has been established to advance the interests of the Company by
providing for the grant to Participants of Stock-based and other incentive
Awards.
3. ADMINISTRATION
The Administrator has discretionary authority, subject only to the express
provisions of the Plan, to interpret the Plan; determine eligibility for and
grant Awards; determine, modify or waive the terms and conditions of any Award;
prescribe forms, rules and procedures; and otherwise do all things necessary to
carry out the purposes of the Plan. In the case of any Award intended to be
eligible for the performance-based compensation exception under Section 162(m),
the Administrator will exercise its discretion consistent with qualifying the
Award for that exception. Determinations of the Administrator made under the
Plan will be conclusive and will bind all parties.
4. LIMITS ON AWARDS UNDER THE PLAN
(A) Number of Shares. A maximum of 600,000 shares of Stock may be
delivered in satisfaction of Awards under the Plan, including without limitation
upon the exercise of ISOs. The number of shares of Stock delivered in
satisfaction of Awards shall, for purposes of the preceding sentence, be
determined net of shares of Stock withheld by the Company in payment of the
exercise price of the Award or in satisfaction of tax withholding requirements
with respect to the Award. The limit set forth in this Section 4(a) shall be
construed to comply with Section 422 of the Code and regulations thereunder. To
the extent consistent with the requirements of Section 422 of the Code and
regulations thereunder, and with other applicable legal requirements (including
applicable stock exchange requirements), Stock issued under awards of an
acquired company that are converted, replaced, or adjusted in connection with
the acquisition shall not reduce the number of shares available for Awards under
the Plan.
(B) Type of Shares. Stock delivered by the Company under the Plan may be
authorized but unissued Stock or previously issued Stock acquired by the
Company. No fractional shares of Stock will be delivered under the Plan.
(C) Section 162(m) Limits. The maximum number of shares of Stock for which
Stock Options may be granted to any person in any calendar year and the maximum
number of shares of Stock subject to SARs granted to any person in any calendar
year will each be 500,000. The maximum number of shares subject to other Awards
granted to any person in any calendar year will be 500,000 shares. The maximum
amount payable to any person in any year under Cash Awards will be $750,000. The
foregoing provisions will be construed in a manner consistent with Section
162(m).
5. ELIGIBILITY AND PARTICIPATION
The Administrator will select Participants from among those key Employees
and directors of, and consultants and advisors to, the Company or its Affiliates
who, in the opinion of the Administrator, are in a position to make a
significant contribution to the success of the Company and its Affiliates.
Eligibility for ISOs is limited to employees of the Company or of a "parent
corporation" or "subsidiary corporation" of the Company as those terms are
defined in Section 424 of the Code.
A-1
6. RULES APPLICABLE TO AWARDS
(A) All Awards
(1) Award Provisions. The Administrator will determine the terms of all
Awards, subject to the limitations provided herein. By accepting any Award
granted hereunder, the Participant agrees to the terms of the Award and the
Plan. Notwithstanding any provision of this Plan to the contrary, awards of an
acquired company that are converted, replaced or adjusted in connection with the
acquisition may contain terms and conditions that are inconsistent with the
terms and conditions specified herein as determined by the Administrator.
(2) Term of Plan. No Awards may be made after March 24, 2015, but
previously granted Awards may continue beyond that date in accordance with their
terms.
(3) Transferability. Neither ISOs nor, except as the Administrator
otherwise expressly provides, other Awards may be transferred other than by will
or by the laws of descent and distribution, and during a Participant's lifetime
ISOs and, except as the Administrator otherwise expressly provides with respect
to other non-transferable Awards requiring exercise may be exercised only by the
Participant.
(4) Vesting, Etc. The Administrator may determine the time or times at
which an Award will vest or become exercisable and the terms on which an Award
requiring exercise will remain exercisable. Without limiting the foregoing, the
Administrator may at any time accelerate the vesting or exercisability of an
Award, regardless of any adverse or potentially adverse tax consequences
resulting from such acceleration. Unless the Administrator expressly provides
otherwise, however, the following rules will apply: immediately upon the
cessation of the Participant's Employment, each Award requiring exercise that is
then held by the Participant or by the Participant's permitted transferees, if
any, will cease to be exercisable and will terminate, and all other Awards that
are then held by the Participant or by the Participant's permitted transferees,
if any, to the extent not already vested will be forfeited, except that:
(A) subject to (B) and (C) below, all Stock Options and SARs held by
the Participant or the Participant's permitted transferees, if any,
immediately prior to the cessation of the Participant's Employment, to the
extent then exercisable, will remain exercisable for the lesser of (i) a
period of three months or (ii) the period ending on the latest date on
which such Stock Option or SAR could have been exercised without regard to
this Section 6(a)(4), and will thereupon terminate;
(B) all Stock Options and SARs held by a Participant or the
Participant's permitted transferees, if any, immediately prior to the
Participant's death or voluntary resignation from active employment at or
after age 55, to the extent then exercisable, will remain exercisable for
the lesser of (i) the one year period ending with the first anniversary of
the Participant's death or voluntary resignation from active employment at
or after age 55 or (ii) the period ending on the latest date on which such
Stock Option or SAR could have been exercised without regard to this
Section 6(a)(4), and will thereupon terminate; and
(C) all Stock Options and SARs held by a Participant or the
Participant's permitted transferees, if any, immediately prior to the
cessation of the Participant's Employment will immediately terminate upon
such cessation if the Administrator in its sole discretion determines that
such cessation of Employment has resulted for reasons which cast such
discredit on the Participant as to justify immediate termination of the
Award.
(5) Taxes. The Administrator will make such provision for the withholding
of taxes as it deems necessary. The Administrator may, but need not, hold back
shares of Stock from an Award or permit a Participant to tender previously owned
shares of Stock in satisfaction of tax withholding requirements (but not in
excess of the minimum withholding required by law).
(6) Dividend Equivalents, Etc. The Administrator may provide for the
payment of amounts in lieu of cash dividends or other cash distributions with
respect to Stock subject to an Award.
A-2
(7) Rights Limited. Nothing in the Plan will be construed as giving any
person the right to continued employment or service with the Company or its
Affiliates, or any rights as a stockholder except as to shares of Stock actually
issued under the Plan. The loss of existing or potential profit in Awards will
not constitute an element of damages in the event of termination of Employment
for any reason, even if the termination is in violation of an obligation of the
Company or Affiliate to the Participant.
(8) Section 162(m). This Section 6(a)(8) applies to any Performance Award
intended to qualify as performance-based for the purposes of Section 162(m)
other than a Stock Option or SAR. In the case of any Performance Award to which
this Section 6(a)(8) applies, the Plan and such Award will be construed to the
maximum extent permitted by law in a manner consistent with qualifying the Award
for such exception. With respect to such Performance Awards, the Administrator
will preestablish, in writing, one or more specific Performance Criteria no
later than 90 days after the commencement of the period of service to which the
performance relates (or at such earlier time as is required to qualify the Award
as performance-based under Section 162(m)). Prior to grant, vesting or payment
of the Performance Award, as the case may be, the Administrator will certify
whether the applicable Performance Criteria have been attained and such
determination will be final and conclusive. No Performance Award to which this
Section 6(a)(8) applies may be granted after the first meeting of the
stockholders of the Company held in 2010 until the listed performance measures
set forth in the definition of "Performance Criteria" (as originally approved or
as subsequently amended) have been resubmitted to and reapproved by the
stockholders of the Company in accordance with the requirements of Section
162(m) of the Code, unless such grant is made contingent upon such approval.
(B) Awards Requiring Exercise
(1) Time and Manner of Exercise. Unless the Administrator expressly
provides otherwise, an Award requiring exercise by the holder will not be deemed
to have been exercised until the Administrator receives a notice of exercise (in
form acceptable to the Administrator) signed by the appropriate person and
accompanied by any payment required under the Award. If the Award is exercised
by any person other than the Participant, the Administrator may require
satisfactory evidence that the person exercising the Award has the right to do
so.
(2) Exercise Price. The exercise price (or the base value from which
appreciation is to be measured) of each Award requiring exercise shall be 100%
(in the case of an ISO granted to a ten-percent shareholder within the meaning
of Section 422(b)(6) of the Code, 110%) of the fair market value of the Stock
subject to the Award, determined as of the date of grant, or such higher amount
as the Administrator may determine in connection with the grant. No such Award,
once granted, may be repriced other than in accordance with the applicable
stockholder approval requirements of Nasdaq.
(3) Payment of Exercise Price. Where the exercise of an Award is to be
accompanied by payment, the Administrator may determine the required or
permitted forms of payment, subject to the following: all payments will be by
cash or check acceptable to the Administrator, or, if so permitted by the
Administrator and if legally permissible, (i) through the delivery of shares of
Stock that have been outstanding for at least six months (unless the
Administrator approves a shorter period) and that have a fair market value equal
to the exercise price, (ii) by delivery to the Company of a promissory note of
the person exercising the Award, payable on such terms as are specified by the
Administrator, (iii) through a broker-assisted exercise program acceptable to
the Administrator, (iv) by other means acceptable to the Administrator, or (v)
by any combination of the foregoing permissible forms of payment. The delivery
of shares in payment of the exercise price under clause (a)(i) above may be
accomplished either by actual delivery or by constructive delivery through
attestation of ownership, subject to such rules as the Administrator may
prescribe.
(C) Awards not Requiring Exercise
Restricted Stock and Unrestricted Stock, whether delivered outright or
under Awards of Stock Units or other Awards that do not require exercise, may be
made in exchange for such lawful consideration, including services, as the
Administrator determines.
A-3
7. EFFECT OF CERTAIN TRANSACTIONS
(A) Mergers, Etc.
(1) Change in Control. In the event of a Change in Control,
(A) each Award requiring exercise shall become fully exercisable, the
restrictions on each outstanding share of Stock shall lapse, and the
delivery of shares of Stock deliverable under each outstanding Stock Unit
(including Restricted Stock Units and Performance Awards consisting of
Stock Units) shall be accelerated and such shares shall be delivered, in
each case prior to the Change in Control on a basis that gives the holder
of the Award a reasonable opportunity, as determined by the Administrator,
following exercise of the Award or the vesting or delivery of the shares,
as the case may be, to participate as a stockholder in the Change in
Control; and
(B) if the Change in Control is also a Covered Transaction, each Award
requiring exercise or providing for the future delivery of Stock, to the
extent not previously exercised, surrendered, paid or otherwise terminated,
shall terminate upon consummation of the Covered Transaction unless the
acquiring entity or an affiliate thereof assumes the Award or provides a
new award in substitution therefor.
(2) Covered Transaction not Constituting a Change in Control. In the event
of a Covered Transaction that does not constitute a Change in Control,
(A) unless assumed (or unless another award is substituted) in the
Covered Transaction, each Award requiring exercise shall become fully
exercisable, and the delivery of shares of Stock deliverable under each
outstanding Stock Unit (including Restricted Stock Units and Performance
Awards consisting of Stock Units) shall be accelerated and such shares
shall be delivered, in each case prior to the Covered Transaction on a
basis that gives the holder of the Award a reasonable opportunity, as
determined by the Administrator, following exercise of the Award, to
participate as a stockholder in the Covered Transaction; provided, that the
Administrator may require that any stock or other property delivered upon
the exercise, surrender or satisfaction of an Award accelerated under this
Section 7(2)(B) be placed in escrow or otherwise made subject to such
restrictions as the Administrator deems appropriate to reflect any
performance or other vesting provisions to which the Award was subject or
otherwise to carry out the intent of the Plan;
(B) each Award (other than outstanding shares of Restricted Stock,
which shall be treated in the same manner as other shares of Stock, subject
to Section 7(2)(C) below), to the extent not previously exercised,
surrendered, paid or otherwise terminated, shall terminate immediately upon
consummation of the Covered Transaction; and
(C) in the case of Restricted Stock, the Administrator may require
that any amounts delivered, exchanged or otherwise paid in respect of such
Stock in connection with the Covered Transaction be placed in escrow or
otherwise made subject to such restrictions as the Administrator deems
appropriate to reflect any performance or other vesting provisions to which
the Award was subject or otherwise to carry out the intent of the Plan.
(B) Change in and Distributions with Respect to Stock
(1) Basic Adjustment Provisions. In the event of a stock dividend, stock
split or combination of shares (including a reverse stock split),
recapitalization or other change in the Company's capital structure, the
Administrator will make appropriate adjustments to the maximum number of shares
specified in Section 4(a) that may be delivered under the Plan and to the
maximum share limits described in Section 4(c), and will also make appropriate
adjustments to the number and kind of shares of stock or securities subject to
Awards then outstanding or subsequently granted, any exercise prices relating to
Awards and any other provision of Awards affected by such change.
(2) Certain Other Adjustments. The Administrator may also make adjustments
of the type described in Section 7(b)(1) above to take into account
distributions to stockholders other than those provided for in
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Section 7(a) and 7(b)(1), or any other event, if the Administrator determines
that adjustments are appropriate to avoid distortion in the operation of the
Plan and to preserve the value of Awards made hereunder, having due regard for
the qualification of ISOs under Section 422 of the Code and with the
performance-based compensation rules of Section 162(m), where applicable.
(3) Continuing Application of Plan Terms. References in the Plan to shares
of Stock will be construed to include any stock or securities resulting from an
adjustment pursuant to this Section 7.
8. LEGAL CONDITIONS ON DELIVERY OF STOCK
The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to remove any restriction from shares of Stock previously
delivered under the Plan until: (i) the Company is satisfied that all legal
matters in connection with the issuance and delivery of such shares have been
addressed and resolved; (ii) if the outstanding Stock is at the time of delivery
listed on any stock exchange or national market system, the shares to be
delivered have been listed or authorized to be listed on such exchange or system
upon official notice of issuance; and (iii) all conditions of the Award have
been satisfied or waived. If the sale of Stock has not been registered under the
Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the Award, such representations or agreements as counsel for the
Company may consider appropriate to avoid violation of such Act. The Company may
require that certificates evidencing Stock issued under the Plan bear an
appropriate legend reflecting any restriction on transfer applicable to such
Stock, and the Company may hold the certificates pending lapse of the applicable
restrictions.
9. AMENDMENT AND TERMINATION
The Administrator may at any time or times amend the Plan or any
outstanding Award for any purpose which may at the time be permitted by law, and
may at any time terminate the Plan as to any future grants of Awards; provided,
that except as otherwise expressly provided in the Plan the Administrator may
not, without the Participant's consent, alter the terms of an Award so as to
affect adversely the Participant's rights under the Award, unless the
Administrator expressly reserved the right to do so at the time of the Award.
Any amendments to the Plan shall be conditioned upon stockholder approval only
to the extent, if any, such approval is required by law (including the Code and
applicable stock exchange requirements), as determined by the Administrator.
10. OTHER COMPENSATION ARRANGEMENTS
The existence of the Plan or the grant of any Award will not in any way
affect the Company's right to Award a person bonuses or other compensation in
addition to Awards under the Plan.
11. WAIVER OF JURY TRIAL
By accepting an Award under the Plan, each Participant waives any right to
a trial by jury in any action, proceeding or counterclaim concerning any rights
under the Plan and any Award, or under any amendment, waiver, consent,
instrument, document or other agreement delivered or which in the future may be
delivered in connection therewith, and agrees that any such action, proceedings
or counterclaim shall be tried before a court and not before a jury. By
accepting an Award under the Plan, each Participant certifies that no officer,
representative, or attorney of the Company has represented, expressly or
otherwise, that the Company would not, in the event of any action, proceeding or
counterclaim, seek to enforce the foregoing waivers.
A-5
EXHIBIT A
DEFINITION OF TERMS
The following terms, when used in the Plan, will have the meanings and be
subject to the provisions set forth below:
"ADMINISTRATOR": The Compensation Committee, except that the
Compensation Committee may delegate (i) to one or more of its members such
of its duties, powers and responsibilities as it may determine; (ii) to one
or more officers of the Company the power to grant rights or options to the
extent permitted by Section 157(c) of the Delaware General Corporation Law;
(iii) to one or more officers of the Company the authority to allocate
other Awards among such persons (other than officers of the Company)
eligible to receive Awards under the Plan as such delegated officer or
officers determine consistent with such delegation; provided, that with
respect to any delegation described in this clause (iii) the Compensation
Committee (or a properly delegated member or members of such Committee)
shall have authorized the issuance of a specified number of shares of Stock
under such Awards and shall have specified the consideration, if any, to be
paid therefor; and (iv) to such Employees or other persons as it determines
such ministerial tasks as it deems appropriate. In the event of any
delegation described in the preceding sentence, the term "Administrator"
shall include the person or persons so delegated to the extent of such
delegation.
"AFFILIATE": Any corporation or other entity owning, directly or
indirectly, 50% or more of the outstanding Stock of the Company, or in
which the Company or any such corporation or other entity owns, directly or
indirectly, 50% of the outstanding capital stock (determined by aggregate
voting rights) or other voting interests.
"AWARD": Any or a combination of the following:
(i) Stock Options.
(ii) SARs.
(iii) Restricted Stock.
(iv) Unrestricted Stock.
(v) Stock Units, including Restricted Stock Units.
(vi) Performance Awards.
(vii) Cash Awards.
(viii) Awards (other than Awards described in (i) through (vii)
above) that are convertible into or otherwise based on Stock.
"BOARD": The Board of Directors of the Company.
"CASH AWARD": An Award denominated in cash.
"CHANGE IN CONTROL": Any of (i) a reorganization, merger, consolidation or
similar transaction in which the surviving corporation is not, and is not a
subsidiary of, a publicly owned corporation in which the stockholders of the
Company immediately prior to the transaction continue to own beneficially
securities representing more than 50% of the voting power of all outstanding
voting securities of the Company, (ii) a sale, exchange or other disposition of
all or substantially all the Company's assets, or (iii) any acquisition of
voting securities of the Company by any person or group (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), but excluding (a) the Company or
any of its subsidiaries, (b) any person who was an officer or director of the
Company on the day prior to the Effective Date, or (c) any savings, pension or
other benefits plan for the benefit of employees of the Company or any of its
subsidiaries, which theretofore did not beneficially own voting securities
representing more than 50% of the voting power of all outstanding voting
securities of the Company, if such acquisition results in such entity, person or
group owning beneficially
A-6
securities representing more than 50% of the voting power of all outstanding
voting securities of the Company. As used herein, "voting power" means ordinary
voting power for the election of directors of the Company.
"CODE": The U.S. Internal Revenue Code of 1986 as from time to time
amended and in effect, or any successor statute as from time to time in effect.
"COMPENSATION COMMITTEE": The Compensation and Corporate Governance
Committee of the Board.
"COMPANY": TransAct Technologies Incorporated.
"COVERED TRANSACTION": Any of (i) a reorganization, merger, consolidation
or similar transaction or series of related transactions, including a sale or
other disposition of stock, in which the Company is not the surviving
corporation or which results in the acquisition of all or substantially all of
the Company's then outstanding common stock by a single person or entity or by a
group of persons and/or entities acting in concert, (ii) a sale or transfer of
all or substantially all the Company's assets, or (iii) a dissolution or
liquidation of the Company. Where a Covered Transaction involves a tender offer
that is reasonably expected to be followed by a merger described in clause (i)
(as determined by the Administrator), the Covered Transaction shall be deemed to
have occurred upon consummation of the tender offer.
"EMPLOYEE": Any person who is employed by the Company or an Affiliate.
"EMPLOYMENT": A Participant's employment or other service relationship
with the Company and its Affiliates. Employment will be deemed to continue,
unless the Administrator expressly provides otherwise, so long as the
Participant is employed by, or otherwise is providing services in a capacity
described in Section 5 to the Company or its Affiliates. If a Participant's
employment or other service relationship is with an Affiliate and that entity
ceases to be an Affiliate, the Participant's Employment will be deemed to have
terminated when the entity ceases to be an Affiliate unless the Participant
transfers Employment to the Company or its remaining Affiliates.
"ISO": A Stock Option intended to be an "incentive stock option" within
the meaning of Section 422 of the Code. Each option granted pursuant to the Plan
will be treated as providing by its terms that it is to be a non-incentive
option unless, as of the date of grant, it is expressly designated as an ISO.
"PARTICIPANT": A person who is granted an Award under the Plan.
"PERFORMANCE AWARD": An Award subject to Performance Criteria. The
Committee in its discretion may grant Performance Awards that are intended to
qualify for the performance-based compensation exception under Section 162(m)
and Performance Awards that are not intended so to qualify.
"PERFORMANCE CRITERIA": Specified criteria, other than the mere
continuation of Employment or the mere passage of time, the satisfaction of
which is a condition for the grant, exercisability, vesting or full enjoyment of
an Award. For purposes of Awards that are intended to qualify for the
performance-based compensation exception under Section 162(m), a Performance
Criterion will mean an objectively determinable measure of performance relating
to any or any combination of the following (measured either absolutely or by
reference to an index or indices and determined either on a consolidated basis
or, as the context permits, on a divisional, subsidiary, line of business,
project or geographical basis or in combinations thereof): sales; revenues;
assets; expenses; earnings before or after deduction for all or any portion of
interest, taxes, depreciation, or amortization, whether or not on a continuing
operations or an aggregate or per share basis; return on equity, investment,
capital or assets; one or more operating ratios; borrowing levels, leverage
ratios or credit rating; market share; capital expenditures; cash flow; stock
price; stockholder return; sales of particular products or services; customer
acquisition or retention; acquisitions and divestitures (in whole or in part);
joint ventures and strategic alliances; spin-offs, split-ups and the like;
reorganizations; or recapitalizations, restructurings, financings (issuance of
debt or equity) or refinancings. A Performance Criterion and any targets with
respect thereto determined by the Administrator need not be based upon an
increase, a positive or improved result or avoidance of loss. To the extent
consistent with the requirements for satisfying the performance-based
compensation exception under Section 162(m), the Administrator may provide in
the case of any Award intended to qualify for such exception that one or more of
the Performance Criteria applicable to such Award will be adjusted in an
objectively determinable manner to reflect events (for example, but without
A-7
limitation, acquisitions or dispositions) occurring during the performance
period that affect the applicable Performance Criterion or Criteria.
"PLAN": The TransAct Technologies Incorporated 2005 Equity Incentive Plan
as from time to time amended and in effect.
"RESTRICTED STOCK": An Award of Stock for so long as the Stock remains
subject to restrictions requiring that it be redelivered or offered for sale to
the Company if specified conditions are not satisfied.
"RESTRICTED STOCK UNIT": A Stock Unit that is, or as to which the delivery
of Stock or cash in lieu of Stock is, subject to the satisfaction of specified
performance or other vesting conditions.
"SECTION 162(M)": Section 162(m) of the Code.
"SAR": A right entitling the holder upon exercise to receive an amount
(payable in shares of Stock of equivalent value) equal to the excess of the fair
market value of the shares of Stock subject to the right over the fair market
value of such shares at the date of grant."STOCK": Common Stock of the Company,
par value $0.01 per share.
"STOCK UNIT": An unfunded and unsecured promise, denominated in shares of
Stock, to deliver Stock or cash measured by the value of Stock in the future.
"STOCK OPTIONS": Options entitling the recipient to acquire shares of
Stock upon payment of the exercise price.
"UNRESTRICTED STOCK": An Award of Stock not subject to any restrictions
under the terms of the Award.
A-8
TRANSACT TECHNOLOGIES INCORPORATED
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, MAY 25, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TRANSACT TECHNOLOGIES INCORPORATED
The undersigned stockholder of TransAct Technologies Incorporated (the
"Company") does hereby nominate, constitute and appoint Bart C. Shuldman and
Steven A. DeMartino, or either of them, with full power to act alone, my true
and lawful attorney with full power of substitution, for me and in my name,
place and stead to vote all of the shares of Common Stock of the Company
standing in my name on its books on March 28, 2005, at the Annual Meeting of its
stockholders to be held at the Four Points by Sheraton Hotel, 275 Research
Parkway, Meriden, CT 06450 on May 25, 2005 at 10:00 a.m., or at any adjournment
thereof, with all powers the undersigned would possess if personally present as
follows:
(TO BE SIGNED ON REVERSE SIDE)
PLEASE SIGN, DATE AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS OF
TRANSACT TECHNOLOGIES INCORPORATED
MAY 25, 2005
[X] Please mark your
votes in blue or black ink
as shown here.
FOR ABSTAIN
1. ELECTION OF [ ] [ ] Nominee: Thomas R. Schwarz
DIRECTORS
FOR ABSTAIN
[ ] [ ] Nominee: Bart C. Shuldman
FOR ABSTAIN AGAINST
2. RATIFICATION OF INDEPENDENT [ ] [ ] [ ]
REGISTERED PUBLIC
ACCOUNTING FIRM
FOR ABSTAIN AGAINST
3. APPROVAL OF 2005 EQUITY
INCENTIVE PLAN [ ] [ ] [ ]
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES AS
DIRECTORS AND FOR PROPOSALS 2 AND 3. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTORS AND FOR PROPOSALS 2 AND 3.
THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD IN THE ENCLOSED
ENVELOPE.
SIGNATURE DATE , 2005
---------------------------------- ---------------------
SIGNATURE DATE , 2005
---------------------------------- ---------------------
(SIGNATURE IF HELD JOINTLY)
NOTE: Please sign exactly as name appears on the mailing label. When
shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give
full title as such. If signing on behalf of a corporation, please
sign the full corporate name by president or other authorized
officer. If signing on behalf of a partnership, please sign the
partnership name by authorized person.