Edgar Filing: TRANSACT TECHNOLOGIES INC

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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LOGO

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 15, 2007

To the Stockholders of TransAct Technologies Incorporated:

Notice is hereby given that the 2007 Annual Meeting of Stockholders (the
"Annual Meeting") of TransAct Technologies Incorporated (the "Company" or
"TransAct"), a Delaware corporation, will be held on May 15, 2007 at 10:00 a.m.
Eastern Time, at the Clarion Hotel & Suites, 2260 Whitney Avenue, Hamden, CT
06518 for the following purposes:

(1) To elect one director to serve until the 2010 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 2007; and

(3) To transact such other business as may legally come before the Annual
Meeting.

Stockholders of record at the close of business on March 23, 2007 are
entitled to notice of and to vote at the Annual Meeting.

By Order of the Board of Directors,

LOGO
STEVEN A. DEMARTINO
Secretary

Hamden, Connecticut
April 19, 2007

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
ONE HAMDEN CENTER
2319 WHITNEY AVENUE
SUITE 3B
HAMDEN, CONNECTICUT 06518

PROXY STATEMENT FOR ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON MAY 15, 2007

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 15, 2007, 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
2006 Annual Report to Stockholders are first being mailed or given to
stockholders on or about April 19, 2007.

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 an executed proxy has been
received, but a choice is not so specified, the shares represented by the proxy
will be voted to elect the director nominee and for proposal 2. 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 23, 2007 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 23, 2007. There were 9,504,780 shares of Common
Stock issued and outstanding and entitled to vote at the close of business on
March 23, 2007. Shares representing a majority of the shares issued, outstanding
and entitled to be voted 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 23, 2007 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 One Hamden Center, 2319 Whitney Avenue, Suite 3B, Hamden, CT
06518.

SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED CLASS
------------------------ ------------ ----------

COMMON STOCK
Bares Capital Management, Inc.(1)............................ 486,296 5.12%
221 West Sixth Street, Suite 1225
Austin, TX 78701
Graham Y. Tanaka(2).......................................... 367,597 3.87%
Bart C. Shuldman(3).......................................... 293,299 3.09%
Charles A. Dill(4)........................................... 201,735 2.12%
Thomas R. Schwarz(5)......................................... 95,725 1.01%
Steven A. DeMartino(6)....................................... 85,000 *
Michael S. Kumpf(7).......................................... 69,824 *
Jon D. Berkley(8)............................................ 57,999 *
James B. Stetson(9).......................................... 37,900 *
All current directors and executive officers as a group (10
persons)(10)............................................... 1,243,878 13.09%

--------

* Less than 1% of the outstanding Common Stock.

(1) Based on information provided in a Schedule 13G filed with the SEC on
March 13, 2007 by Bares Capital Management, Inc. ("Bares Capital") and
Brian T. Bares. Bares Capital is an investment adviser and Mr. Bares is
the President of Bares Capital and beneficially owns a controlling
percentage of its outstanding voting securities, and such parties have
sole voting power and sole dispositive power over 486,296 shares of the
Company's Common Stock.

(2) Includes 63,750 shares subject to options exercisable within 60 days of
March 23, 2007 granted under the Company's Non-Employee Directors' Stock
Plan and 7,065 shares deemed beneficially owned by Mr. Tanaka that are
directly owned by his children. Also includes 9,000 unvested shares of
restricted stock of the Company.

(3) Includes 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 31,000 unvested shares of restricted stock
of the Company and 242,113 shares subject to options exercisable within
60 days of March 23, 2007 granted under the Company's 1996 Stock Plan
and 2005 Equity Incentive Plan.

(4) Includes 48,750 shares subject to options exercisable within 60 days of
March 23, 2007 granted under the Company's Non-Employee Directors' Stock
Plan. Also includes 9,000 unvested shares of restricted stock of the
Company and 1,550 shares directly owned by his spouse.

(5) Includes 63,750 shares subject to options exercisable within 60 days of
March 23, 2007 granted under the Company's Non-Employee Directors' Stock
Plan. Also includes 9,000 unvested shares of restricted stock of the
Company, 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,
1,500 shares beneficially owned by his daughter, as to which shares he
disclaims beneficial ownership, and 3,975 shares owned by his spouse.

(6) Includes 16,800 unvested shares of restricted stock of the Company and
45,000 shares subject to options exercisable within 60 days of March 23,
2007 granted under the Company's 1996 Stock Plan and 2005 Equity
Incentive Plan.

(7) Includes 15,000 unvested shares of restricted stock of the Company and
24,724 shares subject to options exercisable within 60 days of March 23,
2007 granted under the Company's 1996 Stock Plan and 2005 Equity
Incentive Plan.

(8) Includes 2,800 shares owned by his mother, 2,800 shares owned by his
father and 1,000 shares owned by his sister. Also includes 8,000
unvested shares of restricted stock of the Company and 32,000 shares
subject to options exercisable within 60 days of March 23, 2007 granted
under the Company's 1996 Stock Plan and 2005 Equity Incentive Plan.

(9) Includes 11,000 unvested shares of restricted stock of the Company and
17,400 shares subject to options exercisable within 60 days of March 23,
2007 granted under the Company's 1996 Stock Plan and 2005 Equity
Incentive Plan.

(10) Includes 129,800 unvested shares of restricted stock of the Company and
544,786 shares subject to options exercisable within 60 days of March
23, 2007 granted under the Company's 1996 Stock Plan, 2005 Equity
Incentive Plan and Non-Employee Directors' Stock Plan.

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, 2006, all such reports were timely filed.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company maintains policies that relate to the identification, review
and approval of related party transactions. As part of a review of possible
related person transactions, the Company annually distributes and collects
questionnaires that solicit information about any direct or indirect
transactions with the Company from each of our directors and officers.

Our Standards of Business Conduct require all directors, officers and
employees to avoid any situation that involves an actual or apparent conflict of
interest in personal and professional relationships or with their duty to, or
with any interest of, the Company. Under the Standards of Business Conduct,
situations that involve, or may reasonably be inferred to involve, a conflict
between a director, officer or employee's personal interests and the interests
of the Company should be disclosed to the Chair of the Audit Committee. No
related party transaction shall be approved or ratified if such transaction is
contrary to the best interests of the Company.

From January 1, 2006 to the date of this proxy statement, there have not
been any transactions of the type described in Item 404 of Regulation S-K, and
currently no such transactions are proposed.

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 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 each of the Company's
Committees, and the Company's Standards of Business Conduct, which includes a
code of ethics applicable to the officers responsible for financial reporting,
the Chief Executive Officer, Chief Financial Officer and Controller. The Company
encourages its directors to attend all Board meetings as well as the Annual
Meeting. All of the directors attended the Company's 2006 Annual Meeting, except
for Mr. Schwarz who was absent due to illness. Each director attended at least
90% of the Company's Board meetings held in 2006 and at least 80% of applicable
Committee meetings.

BOARD SIZE

The Corporate Governance Principles provide that the Board should generally
have between four 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.

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 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 Messrs.
Dill, Schwarz and Tanaka are independent in accordance with the Company's
criteria and Mr. Shuldman, the Company's Chief Executive Officer, is not
independent. 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
or any parent or subsidiary 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, stepparents, children,
stepchildren, 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 other than a tenant or employee) 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 compensation of more than
$100,000 per year from the Company during any period of twelve
consecutive months during 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.

- 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 immediate 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
immediate 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 Global 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 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." Candidates who are nominated for the Board of Directors
by shareholders are evaluated in the same manner as recommendations
received from other sources.

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. In 2006, the Board of Directors held twelve meetings.

Non-employee directors meet by themselves in executive sessions, without
management or employee directors present, at most regularly scheduled Board
meetings. 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 auditor's
qualifications and independence, and the performance of the Company's
independent registered public accounting firm and internal audit function. It is
comprised of Messrs. Charles A. Dill, Thomas R. Schwarz and Graham Y. Tanaka,
with Mr. Dill serving as Chair. The Board has determined that each member of the
Audit Committee is an independent director and meets the financial literacy
requirements of The Nasdaq Global 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 five times during 2006.

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. It 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.
The Nominating Committee met two times during 2006.

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. It 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.
The Compensation and Corporate Governance Committee met six times during 2006.

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. It is comprised of Messrs. Charles
A. Dill, Thomas R. Schwarz and Graham Y. Tanaka. The Executive Committee did not
meet during 2006.

BOARD AND COMMITTEE PERFORMANCE EVALUATIONS

The Board of Directors conducts annual 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 approved and the Company has adopted
Standards of Business Conduct (the "Standards"), which apply to the Company's
directors, officers and employees. The Standards provide an overview of the
Company's policies related 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, the
Standards act as a code of ethics promoting honest and ethical conduct on the
part of the Company's officers who are responsible for financial reporting,
including the Chief Executive Officer, Chief Financial Officer and Controller.
The Standards 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. The Standards require these individuals to promote
full, fair, understandable and accurate disclosure in the Company's publicly
filed reports and other public communications. It sets forth standards for
accounting practices and maintenance of records. Individuals who fail to observe
the terms of the Standards may face disciplinary action, including possible
employment termination.

PROPOSAL 1:

ELECTION OF DIRECTORS

The Board of Directors currently consists of four directors and is divided
into three classes. Each class of directors is elected by the holders of the
Company's Common Stock to serve a staggered three-year term.

At the Annual Meeting, one person is to be elected to hold office as a
director until the 2010 Annual Meeting of Stockholders or until a 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 nominee named below. Should the 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.

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 2010 ANNUAL MEETING

Graham Y. Tanaka, 59, 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. He is a director of
Tanaka Funds, Inc. and Tanaka Capital Management, Inc.

VOTE REQUIRED

The election of Graham Y. Tanaka as director 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 GRAHAM Y. TANAKA AS DIRECTOR OF THE COMPANY.

INFORMATION CONCERNING DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2008 ANNUAL
MEETING

Thomas R. Schwarz, 70, has been a director of the Company since its
formation in June 1996 and was 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 and another privately held company.

Bart C. Shuldman, 50, has been Chief Executive Officer, President and a
director of the Company since its formation in June 1996 and has been Chairman
of the Board since February 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.

INFORMATION CONCERNING DIRECTOR WHOSE TERM WILL EXPIRE AT THE 2009 ANNUAL
MEETING

Charles A. Dill, 67, 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 was a General
Partner of Gateway Associates, a venture capital firm, from 1996 to 2004. Mr.
Dill currently serves as a director of Zoltek Companies, Inc. and Stifel
Financial Corp., as well as several other privately held companies.

PROPOSAL 2:

RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2007

The Audit Committee has selected PricewaterhouseCoopers LLP as the
independent registered public accounting firm to audit the financial statements
of the Company for the 2007 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.

VOTE REQUIRED

The ratification of the selection of PricewaterhouseCoopers LLP as
independent registered public accounting firm for 2007 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 2007.

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 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 Audit Committee has procedures in place for the pre-approval by
the Audit Committee of all services provided by PricewaterhouseCoopers LLP.
These pre-approval procedures, as amended, are described below under "Policy
Regarding Pre-Approval of Services Provided by the Independent Registered Public
Accounting Firm."

The aggregate fees billed by PricewaterhouseCoopers LLP to the Company for
the years ended December 31, 2006 and 2005 are as follows:

2006 2005
-------- --------

Audit Fees(1)................................................ $435,034 $468,234
Audit-Related Fees(2)........................................ 37,000 35,000
Tax Fees(3).................................................. 53,068 56,210
All Other Fees(4)............................................ 1,515 1,515
-------- --------
Total Fees for Services Provided............................. $526,617 $560,959
======== ========

--------

(1) Audit Fees consist of fees related to: (i) the annual audit of the
Company's financial statements and of internal controls, (ii) reviews of
the Company's quarterly financial statements, (iii) statutorily required
audits for the Company's UK subsidiary and (iv) the review of
registration statements, periodic reports and other reports filed with
the SEC.

(2) Audit-Related Fees consist of fees incurred for consultations regarding
accounting and financial reporting standards and acquisition due
diligence work.

(3) Tax Fees include fees incurred for tax planning and advice, preparation
of domestic and foreign tax returns, and review of tax accruals.

(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. All
of the above services during the year ended December 31, 2006, other than those
covered by Audit Fees, were either approved by the Audit Committee or were
performed pursuant to pre-approval policies and procedures.

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.

Management is responsible for preparing complete and accurate consolidated
financial statements in accordance with generally accepted accounting
principals. 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. Separate meetings are held with the independent registered
public accounting firm and management.

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 the assessment of internal controls over financial reporting, with
management.

- 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 principles,
the matters required to be discussed by Statement on Auditing Standards
No. 61, "Communication with Audit Committees," as amended.

- It has received from the independent registered public accounting firm
the written disclosures describing any relationships between the
independent registered public accounting firm 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 registered public accounting firm
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, 2006 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

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

OVERVIEW

This Compensation Discussion and Analysis describes the philosophy,
approach, and elements used by us and the Compensation and Corporate Governance
Committee (the "Compensation Committee") of our Board of Directors, which is
composed entirely of independent directors of the Company, to define, manage,
and review compensation paid to our executives. Our philosophy and approach to
executive compensation apply to all executive officers of the Company, including
those executives designated as named executive officers.

Our Compensation Committee provides oversight for the hiring and
termination of all executive officers of the Company, the design and management
of the executive compensation programs, and our philosophy and programs for all
employee compensation and benefit programs worldwide. The Compensation Committee
also approves the issuance of all equity awards to employees, including
executive officers, of the Company and its subsidiaries. The Committee maintains
a written charter statement (the "Compensation Committee Charter") that is
formally reviewed by the Compensation Committee on an annual basis. The
Compensation Committee Charter is available on our Internet website at
www.transact-tech.com under the Investor Relations tab.

PHILOSOPHY AND OBJECTIVES OF THE COMPENSATION PROGRAM

Our Compensation Committee's philosophy is that our executive compensation
program is to be based on our performance and be competitive with other similar-
sized companies in similar industries. The primary objectives of our
compensation program are to:

- Attract, engage, retain, and reward executive officers;

- Motivate employees and encourage individual initiative and effort;

- Help to achieve key business objectives and attain Company goals; and

- Align executives' interests closely with those of the Company and its
shareholders.

Our executive compensation program principally includes base salary,
incentive cash performance bonus and equity incentive awards. The Compensation
Committee believes that each element of the total compensation program helps to
ensure that the efforts of our executive officers support the creation of
stockholder value, whether through focusing on short-term and long-term
performance goals, promoting an ownership mentality or linking individual
performance to the Company's overall performance.

The elements of our executive compensation program are periodically
analyzed using current publicly available market data, contemporary market
trends and other information from established compensation and benefit surveys.
In addition, in 2006 the Compensation Committee engaged an independent
compensation consultant, Towers Perrin, to examine the total compensation
package for the Company's Chief Executive Officer, Chief Financial Officer and
Executive Vice President, Engineering. The survey data used for the analysis
included (1) comparable high technology companies, (2) companies in our industry
of similar size in terms of revenue and market capitalization, (3) companies in
our geographic area and (4) companies which are otherwise relevant. The
Compensation Committee also reviewed other compensation surveys including the
National Executive Compensation Survey, among others, to supplement the findings
from the Towers Perrin study. These studies were one factor in evaluating the
current total compensation of the Chief Executive Officer, Chief Financial
Officer and the Executive Vice President, Engineering.

Although we regularly use salary surveys and occasionally use compensation
consultants to analyze elements of our compensation program, we do not believe
that it is appropriate to establish compensation levels based solely on the use
of such surveys. We rely upon our judgment in making compensation decisions,
after reviewing the financial performance of the Company and carefully
evaluating an executive officer's performance during the year against
established goals, leadership qualities, operational performance, business
responsibilities, number of years of experience in the industry and/or with the
Company, current compensation arrangements and long-term potential

to enhance shareholder value. While competitive market compensation paid by
other companies is one of the many factors that we consider in assessing the
reasonableness of compensation, we do not attempt to maintain a certain target
percentile within a peer group or otherwise rely on those data to solely
determine executive officer compensation. Instead, we incorporate flexibility
into our compensation program and in the assessment process to respond to and
adjust for the evolving business environment. We strive to achieve an
appropriate mix between cash payments and equity incentive awards to meet our
objectives. Any apportionment goal is not applied rigidly and does not control
our compensation decisions. Our mix of compensation elements is designed to
reward recent results and motivate long-term performance through a combination
of cash and equity awards. We believe one of the most important indicators of
whether our compensation objectives are being met is our ability to motivate our
executive officers to deliver superior performance.

The Compensation Committee, on occasion, meets with the Chief Executive
Officer and Chief Financial Officer to obtain recommendations with respect to
the Company's compensation programs, practices and packages for executive
officers, senior managers and other employees. Our Chief Executive Officer and
Chief Financial Officer, with the assistance and support of the human resources
department, provide recommendations regarding the design of the Company's
compensation program to the Compensation Committee. The Compensation Committee
considers, but is not bound to accept, management's recommendations with respect
to executive compensation.

ELEMENTS OF THE COMPANY'S COMPENSATION PLAN

The principal elements of the Company's compensation program are base
salary, incentive cash bonus and equity incentive awards.

Base Salary: In general, base salaries for employees, including executive
officers, are established based on the scope of their responsibilities,
individual contribution, prior experience, sustained performance, external
market data and anticipated level of difficulty of replacing the employee with
someone of comparable experience and skill. Base salary for each executive is
reviewed on an annual basis as part of our companywide merit review process. The
amount of any merit increase to an executive's base salary is determined based
on a combination of the current position of the executive's pay against market
data and the executive's performance and results during the past year. Our Chief
Executive Officer is responsible for assessing the performance of each executive
reporting to him. Our Compensation Committee assesses the performance of our
Chief Executive Officer.

Incentive Cash Bonus: We maintain an incentive cash compensation plan for
all executive officers, except for those who receive sales commissions. Our
incentive cash compensation awards under the plan emphasize pay-for-performance
by providing our executives with the opportunity to receive performance bonuses
only upon the attainment of certain annual financial objectives, as well as
individual performance objectives. The incentive cash bonus is designed to be a
significant portion of executive compensation in order to create and maintain a
significant incentive for our executives to achieve or exceed our strategic and
annual financial objectives.

To ensure alignment of compensation with our business objectives and
performance, our Chief Executive Officer and other executive officers establish
specific performance objectives/metrics and goals at the corporate, department
and individual levels each fiscal year. Our performance objectives (as used for
incentive cash bonus) are reviewed and approved by our Compensation Committee.
The objectives and goals are quantifiable and aligned with our strategic and
annual business plans. Our corporate objectives and strategic plans and progress
towards these objectives are regularly reviewed by our Board of Directors and
Compensation Committee. For 2006, our corporate performance metric consisted of
a target level of diluted earnings per share.

Our executive officers, except for those that receive sales commissions,
participate in the incentive cash bonus plan. Bonuses are paid under the
incentive cash bonus program only if the Company meets specified performance
objectives. The incentive cash bonus that any particular executive is eligible
to earn is established as a percentage of the individual's base salary ("Target
Bonus"). If we reach our target performance objective, which in 2006 was based
on a level of diluted earnings per share, bonuses are paid at 100% of the Target
Bonus amount. If we under-achieve or over-achieve our target performance
objective, the Target Bonus is adjusted accordingly on a sliding scale. For
2006, the estimated bonus payout upon reaching the minimum threshold was 25% of
Target Bonus and the estimated maximum bonus payout was 150% of Target Bonus. In
addition, if performance objectives are

achieved, the actual bonus amount payable to an executive could be modified
based on an evaluation of the executive's individual performance. The
Compensation Committee sets the target diluted earnings per share amount at a
level which it believes is challenging, yet achievable by the Company. The
maximum bonus payout requires very high levels of both individual and Company
performance, which the Compensation Committee believes are possible but
extremely difficult to meet.

Equity Incentive Awards: The goal of our equity-based incentive awards is
to align the interests of our executives with our shareholders and to provide
executives with an incentive to manage the Company from the perspective of an
owner with an equity stake in the business. We believe that our long-term
performance is improved by encouraging ownership by our executives through the
use of stock-based grants. Because vesting of our stock awards is based on
continued employment, our equity-based incentives also facilitate the retention
of executives through the term of the awards. Generally, we believe that stock
options are the most effective tool for meeting our compensation goal of
increasing long-term shareholder value by tying the value of stock options to
our future performance -- i.e. executives are able to profit from stock options
only if our stock price increases in value over the stock option's exercise
price.

Grants of stock options are typically approved by the Compensation
Committee at its regularly scheduled meeting on or about March 1. While the
majority of stock option awards to our employees have been made under our annual
grant program, the Compensation Committee may make stock option awards to
employees at other times, including at the time of hire of an employee,
promotion of an employee, to reward an employee, for retention purposes or for
other circumstances as recommended by the Chief Executive Officer or the
Compensation Committee. In determining the size of the long-term equity
incentives to be awarded to employees, we take into consideration a number of
factors including but not limited to relative job scope, individual performance
level, prior contributions to the Company, the need to retain the employee, the
size of prior grants and competitive market data. Based upon these factors, the
Compensation Committee determines the size of the equity incentives at levels it
considers appropriate to create meaningful opportunity for reward predicated on
the creation of long-term shareholder value.

The exercise price of options granted is set at the closing price of our
common stock on the date of grant. Grants of options generally vest in equal
annual installments over a three- to five-year period and have a ten-year term.

2006 EXECUTIVE COMPENSATION

The specific compensation decisions made for each of our executive officers
for 2006 reflect the performance of the Company against key financial and
operational measurements, as well as performance against individual objectives.

Base Salary: In determining the base salary of the Named Executive
Officers, the Compensation Committee evaluated the overall performance of the
Company and the individual's contributions to that performance, as well as the
performance of the sales unit or function that each leads when relevant. Based
on this evaluation, the Compensation Committee increased the base salaries of
Mr. Shuldman, Mr. DeMartino and Mr. Kumpf by 5% in March 2006 to $425,900,
$196,560 and $178,400, respectively. In addition, in 2006 the Compensation
Committee retained an independent compensation consultant, Towers Perrin, to
ensure that compensation for Mr. Shuldman, Mr. DeMartino and Mr. Kumpf were
competitive. Under the direction of the Compensation Committee, Towers Perrin
provided a competitive analysis of total compensation including base salary,
incentive cash bonus, long-term equity compensation and certain employee
benefits. Based on this analysis, the Compensation Committee concluded that Mr.
DeMartino's base salary should be increased to $230,000 effective October 2006
and Mr. Kumpf's salary should be increased at the time of the companywide annual
merit increase in March 2007.

In March 2007, the Compensation Committee conducted an annual review and
evaluation of the compensation levels of Mr. Shuldman, Mr. DeMartino and Mr.
Kumpf, including taking into consideration the recently completed compensation
study prepared by Towers Perrin. The Compensation Committee concluded that Mr.
Shuldman's base salary level was competitive, and accordingly, no increase in
base salary was warranted. In addition, Mr. Kumpf's base salary was increased by
12% to $200,000 and Mr. DeMartino's base salary was increased by 3% to $236,900.

Incentive Cash Bonus: During 2006, the Company achieved its diluted
earnings per share performance objective as reviewed and approved by the
Compensation Committee at the beginning of 2006. Therefore, for 2006, the cash
bonus payout for all eligible employees, including executives, was 100% of the
annual target amount. However, the actual cash bonus payouts for executives in
2006 represented only 75% of each executive's full target bonus, as each
executive exchanged 25% of their target cash bonus in 2006 for an additional
grant of stock options in January 2006. For 2006, Mr. Shuldman, Mr. DeMartino
and Mr. Kumpf were paid an incentive cash bonus of $191,646, $86,250 and
$46,829, respectively. These amounts are shown in the "Summary Compensation
Table" below under the column "Non-Equity Incentive Plan Compensation." These
bonuses were calculated as a percentage of each executive's base salary in
effect as of March 2006, except for Mr. DeMartino whose cash incentive bonus was
based on his salary in effect as of October 2006. Mr. Berkley and Mr. Stetson
were not eligible to participate in the cash incentive program as they earned
commission based on annual sales from their respective sales unit, as well as a
cash bonus based on the attainment of certain individual objectives.

Equity Incentive Awards: With regard to equity incentive compensation,
during 2006 two equity incentive awards were granted to the executives. In
January 2006, the Compensation Committee awarded a grant to Mr. Shuldman, Mr.
DeMartino, Mr. Kumpf, Mr. Berkley and Mr. Stetson of stock options to purchase
12,500, 10,000, 7,500, 5,000 and 5,000 shares, respectively. This grant was a
special grant of options to executives in exchange for a 25% reduction in each
executive's target cash incentive bonus for 2006. In addition, in March 2006,
the Compensation Committee awarded a second grant to Mr. Shuldman, Mr.
DeMartino, Mr. Kumpf, Mr. Berkley and Mr. Stetson of stock options to purchase
15,000, 10,000, 7,500, 5,000 and 5,000 shares, respectively. The vesting terms
of both grants of stock options are outlined in the table entitled "Grants of
Plan-Based Awards in 2006."

In February 2007, the Compensation Committee awarded an annual grant to Mr.
Shuldman, Mr. DeMartino, Mr. Kumpf, Mr. Berkley and Mr. Stetson of stock options
to purchase 25,000, 15,000, 15,000, 7,500 and 7,500 shares, respectively. These
stock options have an exercise price of $9.51 per share and vest 20% per year
over five years.

TAX DEDUCTIBILITY OF COMPENSATION

Limitations on the deductibility of compensation may occur under Section
162(m) of the Internal Revenue Code of 1986, which generally limits a publicly
held corporation's tax deduction for compensation paid to its Chief Executive
Officer and next four most highly compensated executive officers to $1 million
in any year. In addition, Section 162(m) specifically exempts certain
performance-based compensation from the deduction limit. The levels of base
salary, annual cash incentive bonus and equity compensation we generally pay to
our executive officers do not exceed this limit. The intent of our Compensation
Committee is to design compensation that will be deductible without limitation,
where doing so will further the objectives of our executive compensation
program. However, the Compensation Committee will take into consideration
various other factors, together with Section 162(m) considerations, in making
executive compensation decisions and could, in certain circumstances, approve
and authorize compensation that is not fully tax deductible.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation
Discussion and Analysis with management. Based on its review and discussions
with management, the Compensation Committee recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in
TransAct's proxy statement for the 2007 Annual Meeting.

COMPENSATION AND CORPORATE
GOVERNANCE COMMITTEE

Thomas R. Schwarz, Chairman
Charles A. Dill
Graham Y. Tanaka

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the compensation
earned by the Company's Chief Executive Officer, Chief Financial Officer and
each of the other three most highly compensated executive officers (the "Named
Executive Officers") in 2006:

NON-EQUITY
STOCK OPTION INCENTIVE
NAME AND PRINCIPAL AWARDS AWARDS PLAN ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) (3)($) (4)($) COMPENSATION ($) COMPENSATION ($) TOTAL ($)
------------------ ---- ---------- --------- ------- ------ ---------------- ---------------- ---------

Bart C. Shuldman(1)...... 2006 422,517 -- 162,578 29,236 191,646(5) 34,231(6) 840,208
Chairman, President and
Chief Executive Officer
Steven A. DeMartino...... 2006 203,360 -- 73,466 21,222 86,250(5) 18,961(7) 403,259
Executive Vice
President,
Chief Financial
Officer,
Treasurer and Secretary
Michael S. Kumpf......... 2006 176,983 -- 54,244 15,923 46,829(5) 20,661(7) 314,640
Executive Vice
President,
Engineering
Jon D. Berkley........... 2006 140,000 105,176(2) 19,761 10,617 -- 12,442(8) 287,996
Senior Vice President
and
Business Manager,
Gaming and Lottery
James B. Stetson......... 2006 140,000 71,732(2) 44,354 10,617 -- 14,312(7) 281,015
Senior Vice President
and Business Manager,
TransAct Services Group

--------

(1) Mr. Shuldman was a director of the Company in 2006, but he did not
receive any compensation for those services other than what is contained
in this table.

(2) All of the bonuses paid to Mr. Berkley and Mr. Stetson represent
commissions on sales by the Company.

(3) All restricted stock awards were granted prior to January 1, 2006 under
the Company's 1996 Stock Plan. There were no forfeitures of restricted
stock awards by this group during the year. For information on the
valuation assumptions with respect to these awards, refer to note 2 of
the Company's financial statements in the Form 10-K for the year ended
December 31, 2006, as filed with the SEC.

(4) All stock option awards in 2006 were granted under the company's 2005
Equity Incentive Plan. The amounts shown here represent compensation
expense incurred by us in 2006 in connection with those options,
calculated in accordance with SFAS 123(R). For information on the
valuation assumptions with respect to these awards, refer to note 2 of
the Company's financial statements in the Form 10-K for the year ended
December 31, 2006, as filed with the SEC. Please see the "Outstanding
Equity Awards at 2006 Fiscal Year-End" table for a description of option
awards. There were no forfeitures of stock option awards by this group
during the year.

(5) For Mr. Shuldman, DeMartino and Kumpf, these amounts represents incentive
cash bonuses earned in 2006 based on achievement of the Company's diluted
earnings per share performance objective as reviewed and approved by the
Compensation Committee at the beginning of 2006.

(6) For Mr. Shuldman, this amount consists of an automobile allowance,
Company contributions under the Company's 401(k) Plan, life insurance,
disability insurance and tax return preparation fees.

(7) For Mr. DeMartino, Kumpf and Stetson, these amounts consist of automobile
allowances, Company contributions under the Company's 401(k) Plan, life
insurance and disability insurance.

(8) For Mr. Berkley, this amount consists of an automobile allowance and
Company contributions under the Company's 401(k) Plan.

Our compensation package for each Named Executive Officer consists of a
combination of base salary, incentive cash bonus and equity compensation in the
form of stock options and restricted stock awards. Messrs. Shuldman, DeMartino
and Kumpf received cash bonus payments pursuant to the Company's non-equity
incentive plan, while Messrs. Berkley and Stetson received cash bonus payments
in the form of commissions earned

on Company sales. In 2006, cash compensation in the form of base salary and cash
bonus, including amounts paid pursuant to our non-equity incentive plan,
represented between approximately 71% and 85% of the total compensation paid to
each Named Executive Officer.

GRANT OF PLAN-BASED AWARDS IN 2006

The following table sets forth information concerning the grant of plan-
based awards to Named Executive Officers in 2006:

ALL OTHER
OPTION EXERCISE
ESTIMATED FUTURE PAYOUTS AWARDS: OR BASE GRANT DATE
UNDER NON-EQUITY INCENTIVE NUMBER OF PRICE OF FAIR VALUE OF
PLAN AWARDS SECURITIES OPTION STOCK AND
GRANT ---------------------------------------- UNDERLYING AWARDS OPTION
NAME DATE THRESHOLD ($) TARGET ($) MAXIMUM ($) OPTIONS(1)(#) ($/SH) AWARDS(2)($)
---- ------ ------------- ---------- ----------- ------------- -------- -------------

Bart C. Shuldman......... 1/2/06 -- -- -- 12,500 7.90 65,975
3/1/06 -- -- -- 15,000 9.75 98,151
3/1/06 63,882 255,528 383,292 -- -- --
Steven A. DeMartino...... 1/2/06 -- -- -- 10,000 7.90 52,780
3/1/06 -- -- -- 10,000 9.75 65,434
3/1/06 28,750 115,000 172,500 -- -- --
Michael S. Kumpf......... 1/2/06 -- -- -- 7,500 7.90 39,585
3/1/06 -- -- -- 7,500 9.75 49,076
3/1/06 15,610 62,438 93,657 -- -- --
Jon D. Berkley........... 1/2/06 -- -- -- 5,000 7.90 26,390
3/1/06 -- -- -- 5,000 9.75 32,717
James B. Stetson......... 1/2/06 -- -- -- 5,000 7.90 26,390
3/1/06 -- -- -- 5,000 9.75 32,717

--------

(1) Each stock option award disclosed in the Grants of Plan-Based Awards in
2006 table was issued under our 2005 Equity Incentive Plan and was
granted with an exercise price per share equal to the fair market value
of our common stock on the date of grant, as determined by the closing
price of the stock on the date the option was granted. Subject to the
terms of our 2005 Equity Incentive Plan and the option agreements issued
in connection with these grants, each option award granted in 2006 to a
Named Executive Officer vests at a rate of 20% per year over five years.

(2) All stock option awards in 2006 were granted under the company's 2005
Equity Incentive Plan. The amounts shown represent the fair value of
stock options granted in 2006 calculated in accordance with SFAS 123(R).
For information on the valuation assumptions with respect to these
awards, refer to note 2 of the Company's financial statements in the Form
10-K for the year ended December 31, 2006, as filed with the SEC. Please
see the "Outstanding Equity Awards at 2006 Fiscal Year-End" table for a
description of option awards. There were no forfeitures of stock option
awards by this group during the year.

OUTSTANDING EQUITY AWARDS AT 2006 FISCAL YEAR-END

The following table shows outstanding equity awards for the named executive
officers as of December 31, 2006:

STOCK AWARDS
-----------------------
OPTION AWARDS MARKET
------------------------------------------------------------ VALUE OF
NUMBER OF NUMBER OF NUMBER OF SHARES
SECURITIES SECURITIES SHARES OR OR UNITS
UNDERLYING UNDERLYING UNITS OF OF STOCK
UNEXERCISED UNEXERCISED OPTION OPTION STOCK THAT THAT HAVE
GRANT OPTIONS OPTIONS EXERCISE EXPIRATION HAVE NOT NOT VESTED
NAME DATE (# EXERCISABLE) (# UNEXERCISABLE) PRICE ($) DATE VESTED (#) (1)($)
---- -------- --------------- ----------------- --------- ---------- ---------- ----------

Bart C. Shuldman...... 8/24/99 7,500 -- 4.17 8/24/09 -- --
2/26/01 60,363 -- 3.42 2/26/11 -- --
5/17/02 168,750 -- 3.77 5/17/12 -- --
1/2/04 -- -- -- -- 22,500 186,750
3/25/05 -- -- -- -- 16,000 132,800
1/2/06 -- 12,500 7.90 1/2/16 -- --
3/1/06 -- 15,000 9.75 3/1/16 -- --
Steven A. DeMartino... 2/26/01 500 -- 3.42 2/26/11 -- --
5/17/02 40,500 -- 3.77 5/17/12 -- --
1/2/04 -- -- -- -- 4,500 37,350
6/1/04 -- -- -- -- 1,800 14,940
3/25/05 -- -- -- -- 12,000 99,600
1/2/06 -- 10,000 7.90 1/2/16 -- --
3/1/06 -- 10,000 9.75 3/1/16 -- --
Michael S. Kumpf...... 2/26/01 2,100 -- 3.42 2/26/11 -- --
5/17/02 14,625 -- 3.77 5/17/12 -- --
11/20/02 4,999 -- 3.10 11/20/12 -- --
1/2/04 -- -- -- -- 4,500 37,350
3/25/05 -- -- -- -- 12,000 99,600
1/2/06 -- 7,500 7.90 1/2/16 -- --
3/1/06 -- 7,500 9.75 3/1/16 -- --
Jon D. Berkley........ 4/28/03 30,000 -- 4.60 4/28/13 -- --
3/25/05 -- -- -- -- 8,000 66,400
1/2/06 -- 5,000 7.90 1/2/16 -- --
3/1/06 -- 5,000 9.75 3/1/16 -- --
James B. Stetson...... 2/26/01 4,500 -- 3.42 2/26/11 -- --
5/17/02 7,500 -- 3.77 5/17/12 -- --
11/20/02 3,400 -- $3.10 11/20/12 -- --
1/2/04 -- -- -- -- 4,500 37,350
3/25/05 -- -- -- -- 8,000 66,400
1/2/06 -- 5,000 7.90 1/2/16 -- --
3/1/06 -- 5,000 9.75 3/1/16 -- --

--------

(1) Calculated based on the closing price of the Company's stock on December
29, 2006, the last trading day of the fiscal year.

OPTIONS AWARDS VESTING SCHEDULE

GRANT DATE VESTING SCHEDULE
---------- ----------------

8/24/99............................................. 20% per year for five years
2/26/01............................................. 20% per year for five years
5/17/02............................................. 20% per year for five years
11/20/02............................................ 20% per year for five years
4/28/03............................................. 20% per year for five years
1/2/06.............................................. 20% per year for five years
3/1/06.............................................. 20% per year for five years

STOCK AWARDS VESTING SCHEDULE

GRANT DATE VESTING SCHEDULE
---------- ----------------

1/2/04.............................................. 20% per year for five years
6/1/04.............................................. 20% per year for five years
3/25/05............................................. 20% per year for five years

OPTION EXERCISES AND STOCK VESTED IN FISCAL YEAR 2006

OPTION AWARDS STOCK AWARDS
----------------------------------- ---------------------------------
NUMBER OF NUMBER OF
SHARES SHARES
ACQUIRED VALUE REALIZED ACQUIRED VALUE REALIZED
NAME ON EXERCISE (#) ON EXERCISE(1)($) ON VESTING (#) ON VESTING(2)($)
---- --------------- ----------------- -------------- ----------------

Bart C. Shuldman.................... 52,937 289,244 11,500 96,850
Steven A. DeMartino................. 1,000 4,663 5,100 48,546
Michael S. Kumpf.................... 27,000 142,945 4,500 40,050
James B. Stetson.................... 12,750 125,368 3,500 30,650
Jon D. Berkley...................... -- -- 2,000 18,800

--------

(1) Calculated based on the difference between the market price of the
underlying securities at exercise and the exercise price of the options.

(2) Calculated based on the market value on the vesting date of the shares
underlying each award.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The Company has entered into certain agreements and maintains certain plans
that may require payments be made, and/or benefits be provided, to the Named
Executive Officers: (i) in the event a Named Executive Officer's employment is
terminated other than for Cause, as defined below, (a "Termination Event"), (ii)
if a change in control (as defined by the applicable agreement or plan) occurs
(a "Change in Control Event") or (iii) if a Termination Event occurs or a Named
Executive Officer resigns for certain specified reasons within one year of a
change in control (a "Change in Control and Termination Event"). The payments
and benefits that each Named Executive Officer may be entitled to receive upon a
Termination Event, Change in Control Event or a Change in Control and
Termination Event are described in the applicable employment agreement or
severance agreement and the Company's 1996 Stock Plan and 2005 Equity Incentive
Plan. Below is a description of the types of events that would trigger payments
under these agreements and plans and the potential payments to each such Named
Executive Officer assuming that a triggering event occurred on December 31,
2006, the last day of the Company's most recent fiscal year.

EMPLOYMENT AND SEVERANCE AGREEMENTS

Events That Trigger a Termination Event or Change in Control Event. The
applicable employment and severance agreements generally define Cause as a
termination for the following reasons: (i) action or inaction by the Named
Executive Officer that constitutes larceny, fraud, gross negligence, a willful
or negligent misrepresentation to the Board or officers of the Company or a
commission of a crime of moral turpitude; (ii) material, repetitive, unjustified
and unexcused refusal to follow the reasonable and lawful written instruction of
the Board -- or in the case of the Named Executive Officers other than Mr.
Shuldman, the Board or the Company's President; or (iii) death or disability.
Change in control is generally defined in each agreement to include (i) a merger
of the Company with another company where the majority of board of the surviving
company is not comprised of directors of the Company in office immediately prior
to the transaction, (ii) a change in the board of directors of the Company such
that after an election a majority of the directors in office are not directors
that were nominated by two-thirds of board members prior to the election or
(iii) a complete liquidation of the Company.

Effect of a Termination Event or Change in Control and Termination
Event. Under the terms of an Employment Agreement dated July 31, 1996 between
Bart C. Shuldman and the Company, if a Termination Event or Change in Control
Event were to occur, Mr. Shuldman would continue to receive: (i) his annual base
salary and (ii) all other benefits (including health, disability and life
insurance benefits; participation in any ERISA benefit plans and 401(k) plans;
an automobile allowance; and certain service fees related to medical exams,
income tax planning and estate planning) for two years and three years,
respectively, from the date of termination. In connection with a Termination
Event, Mr. Shuldman would receive a pro rata portion of his annual target bonus
amount for the year of termination. If a Change in Control Event were to occur
and within one year thereafter either Mr. Shuldman's employment is terminated
other than for Cause, or Mr. Shuldman resigns following a significant reduction
in the nature or scope of his responsibilities or authorities, a decrease in
salary other than resulting from a reduction that applies generally to all
management personnel or specified relocations of the Company's facilities, Mr.
Shuldman would be entitled to continue to receive, in addition to the amounts
listed in the first sentence, his annual target bonus for a period of three
years from the date of termination and all stock options and other awards
granted to Mr. Shuldman under the Company's stock plans would immediately vest.

Under the terms of a Severance Agreement with Steven A. DeMartino dated
June 1, 2004, if a Termination Event were to occur, Mr. DeMartino would be
entitled to continue to receive, for one year following the date of termination
(i) his annual base salary, (ii) a pro rata portion of his annual target bonus
for the year of termination and (iii) medical, dental, vision, life and long
term disability insurance benefits. If a Change in Control Event were to occur
and 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, Mr.
DeMartino would be entitled to receive for two years after his termination (i)
his annual base salary, (ii) annual target bonus, (iii) medical, dental, vision,
life and long term disability insurance benefits and (iv) all stock options
granted to Mr. DeMartino would immediately vest.

Under the terms of Severance Agreements with Michael S. Kumpf, Jon D.
Berkley and James B. Stetson dated September 4, 1996, April 4, 2003 and January
24, 2001, respectively, if a Termination Event were to occur, the applicable
Named Executive Officer would be entitled to continue to receive, for six months
following the date of termination (i) a pro rata portion of his annual base
salary, (ii) a pro rata portion of his annual target bonus for the year of
termination or, in the case of Messrs. Berkley and Stetson, the full amount of
the applicable annual target bonus for the year of termination, and (iii) only
in the case of Mr. Kumpf, all benefits which would otherwise have been payable.
If a Change in Control Event were to occur, the applicable Named Executive
Officer would be entitled to continue to receive for a period of one year from
the date of termination (i) base salary, (ii) annual target bonus, (iii) in the
case of Mr. Kumpf, all benefits and (iv) all stock options granted to the
applicable Named Executive Officer would immediately vest.

EQUITY PLANS

2005 Equity Incentive Plan. The terms of the Company's 2005 Equity
Incentive Plan provide that all awards issued under the plan would accelerate
and either become exercisable or vest, as applicable, immediately prior to any
of the following: (i) a reorganization, merger, consolidation or similar
transaction in which the surviving corporation is not the Company or a publicly
owned corporation (or a subsidiary thereof) in which the stockholders

of the Company immediately prior to the transaction continue to beneficially own
50% or more of the voting securities of the Company, (ii) a sale, transfer,
exchange or other disposition of all or substantially all of the Company's
assets, (iii) any acquisition of 50% or more of the voting securities of the
Company excluding acquisitions by specified parties or (iv) any dissolution or
liquidation of the Company. Upon the occurrence of some of the foregoing Change
in Control Events, stock or other property to be delivered upon acceleration of
any award may be placed in escrow, rather than actually delivered, under terms
set by the Compensation and Corporate Governance Committee.

1996 Stock Plan. The terms of the Company's 1996 Stock Plan do not provide
for the acceleration of all awards issued under the plan in the event of a
change in control of the Company. Instead, the plan provides that acceleration
upon a change in control is permitted and that the terms of the individual
awards issued under the plan control whether the awards accelerate upon
occurrence of a Change in Control Event.

Payments Upon a Change in Control Event. If a Change in Control Event had
occurred on December 31, 2006 that triggered acceleration of all of the equity
awards outstanding to each Named Executive Officer under each of the 1996 Stock
Plan and the 2005 Equity Incentive Plan that accelerate either by their terms or
the terms of the applicable plan, the following amounts would have been paid to
the Named Executive Officers:

STOCK STOCK
NAME OPTIONS(1) AWARDS(2) TOTAL
---- ---------- --------- ----------

Bart C. Shuldman................................... $1,095,772 $319,550 $1,415,322
Steven A. DeMartino................................ 190,042 151,890 341,932
Michael S. Kumpf................................... 105,550 136,950 242,500
Jon D. Berkley..................................... 113,000 66,400 179,400
James B. Stetson................................... 75,655 103,750 179,405

--------

(1) Accelerated stock options were valued using the spread between the
exercise price of the applicable award and the closing price of $8.30 per
share of our common stock on December 29, 2006, which was the last
trading day of the year.

(2) Accelerated stock awards were valued using the closing price of $8.30 per
share of our common stock on December 29, 2006, which was the last
trading day of the year.

PAYMENTS UPON A TERMINATION EVENT

The following table summarizes the potential payments to each Named
Executive Officer, over the course of the applicable time period for which such
payments would be owed, assuming that a Termination Event occurred on December
31, 2006, the last day of the Company's fiscal year.

PRO RATA
PORTION OF
ANNUAL
BASE TARGET STOCK STOCK
NAME SALARY BONUS BENEFITS(1) OPTIONS AWARDS TOTAL
---- -------- ---------- ----------- ------- ------ ----------

Bart C. Shuldman................ $851,760 $255,528 $43,284 -- -- $1,150,572
Steven A. DeMartino............. 230,000 115,000 28,014 -- -- 373,014
Michael S. Kumpf................ 89,198 31,219 13,135 -- -- 133,552
Jon D. Berkley.................. 70,000 -- -- -- -- 70,000
James B. Stetson................ 70,000 -- -- -- -- 70,000

--------

The following assumptions were used to calculate these payments:

(1) Benefits were valued using the same assumptions that the Company uses for
our financial reporting under generally accepted accounting principles,
with the exception that the Company's cost of medical premiums is
included here.

PAYMENTS UPON A CHANGE IN CONTROL AND TERMINATION EVENT

The following table summarizes the potential payments to each Named
Executive Officer, over the course of the applicable time period for which such
payments would be owed, assuming that a Change in Control and Termination Event
occurred on December 31, 2006, the last day of the Company's fiscal year.

ANNUAL
BASE TARGET STOCK STOCK
NAME SALARY BONUS BENEFITS(1) OPTIONS(2) AWARDS(3) TOTAL
---- ---------- -------- ----------- ---------- --------- ----------

Bart C. Shuldman........... $1,277,640 $766,584 $129,852 $1,095,772 $319,550 $3,589,398
Steven A. DeMartino........ 460,000 230,000 56,028 190,042 151,890 1,087,960
Michael S. Kumpf........... 178,395 62,438 26,270 105,550 136,950 509,603
Jon D. Berkley............. 140,000 -- -- 113,000 66,400 319,400
James B. Stetson........... 140,000 -- -- 75,655 103,750 319,405

--------

The following assumptions were used to calculate these payments:

(2) Accelerated stock options were valued using the spread between the
exercise price of the applicable award and the closing price of $8.30 per
share of our common stock on December 29, 2006, which was the last
trading day of the year.

(3) Accelerated stock awards were valued using the closing price of $8.30 per
share of our common stock on December 29, 2006, which was the last
trading day of the year.

NON-COMPETITION PROVISIONS THAT APPLY TO A TERMINATION EVENT OR CHANGE IN
CONTROL EVENT

Pursuant to Mr. Shuldman's Employment Agreement, upon the occurrence of a
Termination Event while he is receiving severance payments under the agreement,
Mr. Shuldman agrees that for two years, or in the case of a Change in Control
Event, for three years, that he will not directly or indirectly engage in any
business or activity that is competitive with the Company in a geography where
the Company is selling its products. Further, Mr. Shuldman agrees not to attempt
to recruit any employees of the Company or encourage them to leave the Company
and agrees not to encourage any of the Company's customers to direct their
business elsewhere. The other Named Executive Officers have the same provisions
in their Severance Agreements, except that they apply for six months upon the
occurrence of a Termination Event or one year upon the occurrence of a Change in
Control Event and they are not contingent upon the payment of the benefits
described in each agreement by the Company to the Named Executive Officer.

DIRECTOR COMPENSATION FOR FISCAL YEAR 2006

FEES EARNED OR STOCK
PAID IN AWARDS
NAME CASH ($) (2),(3),(4)($) TOTAL ($)
---- -------------- -------------- ---------

Thomas R. Schwarz............................ $24,250 $17,948 $42,198
Charles A. Dill.............................. 26,250 17,948 44,198
Graham Y. Tanaka............................. 26,000 17,948 43,948
Bart C. Shuldman(1).......................... -- -- --

--------

(1) Mr. Shuldman did not receive any compensation for director services other
than what is contained in the "Summary Compensation Table" above.

(2) On May 18, 2006, Mr. Schwarz, Dill and Tanaka were each awarded 5,000
shares of restricted stock, at a grant date fair value of $68,900, as
calculated in accordance with the guidance under SFAS 123(R).

(3) All stock awards in 2006 were granted under the Company's 2005 Equity
Incentive Plan and the amounts shown represent compensation expense
incurred in 2006 in connection with those awards, calculated in
accordance with SFAS 123(R), as discussed in footnote 2 to the Financial
Statements in the Company's filing on Form 10K for the year ended
December 31, 2006.

(4) As of December 31, 2006, Mr. Schwarz held 63,750 fully vested stock
options at exercise prices ranging from $2.33 to $31.82 and 9,000 shares
of unvested restricted stock grants, Mr. Dill held 48,750 fully vested
stock options at exercise prices ranging from $3.77 to $31.82 and 9,000
shares of unvested restricted stock grants, Mr. Tanaka held 63,750 fully
vested stock options at exercise prices ranging from $2.33 to $31.82 and
9,000 shares of unvested restricted stock grants, and Mr. Shuldman held
no stock option or restricted stock grants other than those shown in the
"Outstanding Equity Awards at 2006 Fiscal Year-End" table above.

During the year ended December 31, 2006, each outside director of the
Company received as compensation for services rendered: (i) a retainer of $2,500
for each fiscal quarter served as 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 received
$750 for each committee meeting attended and $500 for each telephonic meeting.
Directors are also reimbursed for reasonable expenses incurred in attending
meetings.

Each non-employee director receives an annual grant of 5,000 shares of
restricted stock, pursuant to the terms of the Company's 2005 Equity Incentive
Plan. The restricted stock will vest at the rate of 20% per year beginning on
the first anniversary of the date of grant.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Board's Compensation and Corporate Governance Committee
has served as an officer or employee of the Company at any time. None of the
Company's executive officers serve as a member of the compensation committee of
any other company that has an executive officer serving as a member of the
Company's Board. None of the Company's executive officers serve as a member of
the board of directors of any other company that has an executive officer
serving as a member of the Board's Compensation and Corporate Governance
Committee.

STOCKHOLDER PROPOSALS FOR 2008 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, 2008. Proposals should be addressed to TransAct Technologies Incorporated,
One Hamden Center, 2319 Whitney Avenue, Suite 3B, Hamden, CT 06518, Attention:
Secretary. Stockholders who wish to make a proposal at the 2008 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, 2008. 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.

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
One Hamden Center
2319 Whitney Avenue, Suite 3B
Hamden, CT 06518

- 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, ONE HAMDEN CENTER, 2319 WHITNEY AVENUE, SUITE 3B, HAMDEN,
CT 06518.

GENERAL

The accompanying proxy will be voted as specified thereon. Unless otherwise
specified, proxies will be voted for the director nominated by the Board of
Directors, and for ratification of the selection of PricewaterhouseCoopers LLP
as independent registered public accounting firm for 2007. 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, One Hamden Center, 2319 Whitney Avenue,
Suite 3B, Hamden, CT 06518, 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 the 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.

No director or executive officer of the Company has any direct or indirect
substantial interest, whether by security holdings or otherwise, in the
ratification of PricewaterhouseCoopers LLP as independent registered public
accounting firm for the Company's 2007 fiscal year.

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.

April 19, 2007

TRANSACT TECHNOLOGIES INCORPORATED
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD WEDNESDAY, MAY 15, 2007

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 23, 2007, at the Annual Meeting of its
stockholders to be held at the Clarion Hotel & Suites, 2260 Whitney Avenue,
Hamden, CT 06518 on May 15, 2007 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
TRANSACT TECHNOLOGIES INCORPORATED

MAY 15, 2007

[X] Please mark your
votes as in this
example.

FOR ABSTAIN

1. ELECTION OF [ ] [ ] Nominee: Graham Y. Tanaka
DIRECTOR

FOR ABSTAIN AGAINST

2. RATIFICATION OF INDEPENDENT [ ] [ ] [ ]
REGISTERED PUBLIC
ACCOUNTING FIRM

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 NOMINEE AS
DIRECTOR AND FOR PROPOSAL 2. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEE FOR DIRECTOR AND FOR PROPOSAL 2. 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 USING THE ENCLOSED
POSTAGE-PAID ENVELOPE.

SIGNATURE _____________________________ DATE ______________________ ____ , 2007

SIGNATURE _____________________________ DATE ______________________ ____ , 2007
(SIGNATURE IF HELD JOINTLY)

NOTE: Please sign exactly as name appears on this proxy. When shares are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.