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                                                                    Exhibit 10.8

                               SEVERANCE AGREEMENT

     This Severance Agreement (the "Agreement") is entered into as of the 1st
day of June, 2004, by and between Steven A. DeMartino, an individual with a
residence address of 47 Agerola Road, Durham, CT 06422 (the "Executive"), and
TransAct Technologies Incorporated, a Delaware corporation with a mailing
address of 7 Laser Lane, Wallingford, Connecticut 06492 (the "Company"). As used
in this Agreement, the "Company" shall also include all subsidiaries of the
Company, as the context requires.

                                  INTRODUCTION

     1. The Company is in the business of designing, developing, manufacturing
and marketing printers for point of sale, gaming and wagering, financial service
and kiosk applications (the "Business").

     2. The Company desires that the Executive continue to serve in his position
with the Company and that the Company be able to rely upon his advice when
requested as to the best interests of the Company, and its shareholders.

     3. The Board of Directors of the Company believe Executive can best serve
the Company without the distractions of personal uncertainties and risks that
might be created in the event a change in control of the Company is proposed or
his employment by the Company is terminated.

                                    AGREEMENT

     In consideration of the premises and mutual promises hereinbelow set forth,
the parties hereby agree as follows:

     1. Definitions. The following terms shall have the meanings indicated for
the purposes of this Agreement:

          (a) "Cause" shall mean: (i) the death or disability of the Executive
(For purposes of this Agreement, "disability" shall mean the Executive's
incapacity due to physical or mental illness which has caused the Executive to
be absent from the fulltime performance of his duties with the Company for a
period of six (6) consecutive months.) (ii) any action or inaction by the
Executive that constitutes larceny, fraud, gross negligence, a willful or
negligent misrepresentation to the directors or officers of the Company, their
successors or assigns, a crime involving moral turpitude; or (iii) the refusal
of the Executive to follow the reasonable and lawful written instructions of the
President or the Board of Directors of the Company with respect to the services
to be rendered and the manner of rendering such services by Executive, provided
such refusal is material and repetitive and is not justified or excused either
by the terms of this Agreement or by actions taken by the Company in violation
of this Agreement, and with respect to the first two refusals Executive has been
given reasonable written notice and explanation thereof
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and reasonable opportunity to cure and no cure has been effected within a
reasonable time after such notice.

          (b) "Change in Control" will be deemed to have occurred if: (1) the
Company effectuates a Takeover Transaction; or (2) any election of directors of
the Company (whether by the directors then in office or by the stockholders at a
meeting or by written consent) where a majority of the directors in office
following such election are individuals who were not nominated by the members of
the Board of Directors (or the Nominating Committee of the Board of Directors)
immediately preceding such election; or (3) the Company effectuates a complete
liquidation of the Company or a sale or disposition of all or substantially all
of its assets. A "Change in Control" shall not be deemed to include, however, a
merger or sale of stock, assets or business of the Company if the Executive
immediately after such event owns, or in connection with such event immediately
acquires (other than in the Executive's capacity as an equity holder of the
Company or as a beneficiary of its employee stock ownership plan or profit
sharing plan), any stock of the buyer or any affiliate thereof.

          (c) A "Takeover Transaction" shall mean (i) a merger or consolidation
of the Company with, or an acquisition of the Company of all or substantially
all of its assets by, any other corporation, other than a merger, consolidation
or acquisition in which the individuals who were members of the Board of
Directors of the Company immediately prior to such transaction continue to
constitute a majority of the Board of Directors of the surviving corporation
(or, in the case of an acquisition involving a holding company, constitute a
majority of the Board of Directors of the holding company) for a period of not
less than twelve (12) months following the closing of such transaction, or (ii)
when any person or entity or group of persons or entities (other than any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company) either related or acting in concert becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
of securities of the Company representing more than fifty percent (50%) of the
total number of votes that may be cast for the election of directors of the
Company.

          (d) "Terminating Event" shall mean: (i) termination by the Company of
the employment of the Executive for any reason other than retirement or for
Cause occurring within twelve (12) months of a Change of Control; or (ii)
resignation of the Executive from the employ of the Company, while the Executive
is not receiving payments or benefits from the Company by reason of the
Executive's disability, subsequent to any of the following events occurring
within twelve (12) months of a Change of Control: (A) a significant reduction in
the nature or scope of the Executive's responsibilities, authorities, powers,
functions or duties from the responsibilities, authorities, powers, functions or
duties exercised by the Executive immediately prior to the Change in Control;
(B) a decrease in the salary payable by the Company to the Executive from the
salary payable to the Executive immediately prior to the Change in Control
except for across-the-board salary reductions similarly affecting all management
personnel of the Company; or (C) the relocation of the Company's facility at
which the Executive is currently employed by more than 50 miles from its current
location (unless such new location is closer than such facility


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to the Executive's then residence) provided, however, that a Terminating Event
shall not be deemed to have occurred solely as a result of the Executive being
an employee of any direct or indirect successor to the business or assets of the
Company, rather than continuing as an employee of the Company, following a
Change in Control; or (D) elimination or reduction of the Executive's
participating in the Company's Executive Incentive Compensation Plan.

     2. Severance.

          (a) Without Cause. If the Company terminates the employment of the
Executive without Cause, other than as a result of a Terminating Event, then
commencing on the date of such termination and for a period of one (1) year
thereafter, the Company shall provide Executive with a severance package which
shall consist of the following: (i) payment on the first business day of each
month of an amount equal to one-twelfth of the Executive's then current annual
base salary; (ii) payment on the first business day of each month of an amount
equal to one-twelfth of the Executive's annual target bonus amount under the
TransAct Executive Incentive Compensation Plan, pro rated for the portion of the
fiscal year occurring prior to the termination; and (iii) continuation of all
benefits under Section 4.

          (b) With A Terminating Event. If the Company terminates the employment
of the Executive as a result of a Terminating Event, then commencing on the date
of such termination and for a period equal to two (2) years thereafter, the
Company shall provide Executive with a severance package which shall consist of
the following: (i) payment on the first business day of each month an amount
equal to one-twelfth of the Executive's then current annual base salary; (ii)
payment on the first business day of each month an amount equal to one-twelfth
of the Executive's annual target bonus amount under the Company's Executive
Incentive Compensation Plan; and (iii) continuation of all benefits under
Section 4. In addition, if the Company terminates the employment of the
Executive as a result of a Terminating Event, then the Company shall cause the
immediate vesting of all options granted by the Company to the Executive under
the Company's stock plans. At any time when the Company is obligated to make
monthly payments under Section 2(b), the Company shall, ten (10) days after
receipt of a written request from the Executive, pay the Executive an amount
equal to the balance of the amounts payable under Section 2(b)(i)-(ii), provided
that the obligation of the Company to continue to provide benefits pursuant to
Section 2(b)(iii) or to make monthly payments under 2(b)(i)-(ii) shall cease
upon the payment of such amount.

          (c) General Release. As a condition precedent to receiving any
severance payment, the Executive shall execute a general release of any and all
claims which Executive or his heirs, executors, agents or assigns might have
against the company, its subsidiaries, affiliates, successors, assigns and their
past, present and future employees, officers, directors, agents and attorneys.


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          (d) Withholding. All payments made by the Company under this Agreement
shall be net of any tax or other amounts required to be withheld by the Employer
under applicable law.

     3. Non-competitition. During Executive's employment with the Company and
the term of this Agreement and (a) in the case of termination other than as a
result of a Terminating Event, for six (6) months following the termination of
Executive's employment with the Company or (b) in the case of termination as a
result of a Terminating Event, for one (1) year following the termination of
Executive's employment with the Company, Executive will not directly or
indirectly whether as a partner, consultant, agent, employee, co-venturer,
greater than two percent owner or otherwise or through any other person (as
hereafter defined): (a) be engaged in any business or activity which is
competitive with the Business of the Company in any part of the world in which
the Company is at the time of the Executive's termination engaged in selling
their products directly or indirectly; or (b) attempt to recruit any employee of
the Company, assist in their hiring by any other person, or encourage any
employee to terminate his or her employment with the Company; or (c) encourage
any customer of the Company to conduct with any other person any business or
activity which such customer conducts or could conduct with the Company. For
purpose of this Section 3, the term "Company" shall include any person
controlling, under common control with or controlled by, the Company.

     For purposes of this Section 3, the term "Person" shall mean an individual
or corporation, association or partnership in estate or trust or any other
entity or organization.

     The Executive recognizes and agrees that because a violation by him of this
Section 3 will cause irreparable hart to the Company that would be difficult to
quantify and for which money damages would be inadequate, the Company shall have
the right to injunctive relief to prevent or restrain any such violation,
without the necessity of posting a bond.

     Executive expressly agrees that the character, duration and scope of this
covenant not to compete are reasonably in light of the circumstances as they
exist at the date upon which this Agreement has been executed. However, should a
determination nonetheless be made by a court of competent jurisdiction at a
later date that the character, duration or geographical scope of this covenant
not to compete is unreasonable in light of the circumstances as they then exist,
then it is the intention of both Executive and the Company that this covenant
not to compete shall be construed by the court in such a manner as to impose
only those restrictions on the conduct of Executive which are reasonable in
light of the circumstances as they then exist and necessary to provide the
Company the intended benefit of this covenant to compete.

     4. Confidentiality Covenants. Executive understands that the Company may
impart to him confidential business information including, without limitation,
designs, financial information, personnel information, strategic plans, product
development information and the like (collectively "Confidential Information").
Executive hereby acknowledges Company's exclusive ownership of such Confidential
Information.


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     Executive agrees as follows: (1) only to use the Confidential Information
to provide services to the Company; (2) only to communicate the Confidential
Information to fellow employees, agents and representatives of the Company on a
need-to-know basis; and (3) not to otherwise disclose or use any Confidential
Information. Upon demand by the Company or upon termination of Executive's
employment, Executive will deliver to the Company all manuals, photographs,
recordings, and any other instrument or device by which, through which, or on
which Confidential Information has been recorded and/or preserved, which are in
Executive's possession, custody or control. Executive acknowledges that for
purposes of this Section 4 the term "Company" means any person or entity now or
hereafter during the term of this Agreement which controls, is under common
control with, or is controlled by, the Company.

     The Executive recognizes and agrees that because a violation by him of this
Section 4 will cause irreparable harm to the Company that would be difficult to
quantify and for which money damages would be inadequate, the Company shall have
the right to injunctive relief to prevent or restrain any such violation,
without the necessity of posting a bond.

     5. Governing Law/Jurisdiction. This Agreement shall be governed by and
interpreted and governed in accordance with the laws of the State of
Connecticut. The parties agree that this Agreement was made and entered into in
Connecticut and each party hereby consents to the jurisdiction of a competent
court in Connecticut to hear any dispute arising out of this Agreement.

     6. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and thereof
and supercedes any and all previous agreements, written and oral, regarding the
subject matter hereof between the parties hereto including, without limitation,
the Severance Agreement between Executive and the Company dated as of January
21, 1998. This Agreement shall not be changed, altered, modified or amended,
except by a written agreement signed by both parties hereto.

     7. Notices. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been given if delivered by hand, sent by
generally recognized overnight courier service, telex or telecopy, or certified
mail, return receipt requested.

        (a) to the Company at:
            7 Laser Lane
            Wallingford, Connecticut 06492
            Attn: President

        (b) to the Executive at:
            47 Agerola Road
            Durham, CT 06422


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     Any such notice or other communication will be considered to have been
given (i) on the date of delivery in person, (ii) on the third day after mailing
by certified mail, provided that receipt of delivery is confirmed in writing,
(iii) on the first business day following delivery to a commercial overnight
courier or (iv) on the date of facsimile transmission (telecopy) provided that
the giver of the notice obtains telephone confirmation of receipt.

     Either party may, by notice given to the other party in accordance with
this section, designate another address or person for receipt of notices
hereunder.

     8. Severability. If any term or provision of this Agreement, or the
application thereof to any person or under any circumstance, shall to any extent
be invalid or unenforceable, the remainder of this Agreement, or the application
of such terms to the persons or under circumstances other than those as to which
it is invalid or unenforceable, shall be considered severable and shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law. The invalid or unenforceable provisions
shall, to the extent permitted by law, be deemed amended and given such
interpretation as to achieve the economic intent of this Agreement.

     9. Waiver. The failure of any party to insist in any one instance or more
upon strict performance of any of the terms and conditions hereof, or to
exercise any right or privilege herein conferred, shall not be construed as a
waiver of such terms, conditions, rights or privileges, but same shall continue
to remain in full force and effect. Any waiver by any party of any violation of,
breach of or default under any provision of this Agreement by the other party
shall not be construed as, or constitute, a continuing waiver of such provision,
or waiver of any other violation of, breach of or default under any other
provision of this Agreement.

     10. Successors and Assigns. This Agreement shall be binding upon the
Company and any successors and assigns of the Company.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

                                        TRANSACT TECHNOLOGIES INCORPORATED


                                        By: /s/ Bart C. Shuldman
                                            ------------------------------------
                                        Title: Chairman, President and CEO


                                        EXECUTIVE:


                                        /s/ Steven A. DeMartino
                                        ----------------------------------------
                                        Steven A. DeMartino


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