U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
GENROCO, Inc.
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(Name of Small Business Issuer in its charter)
Wisconsin 88-0230309
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporationor organization)
255 Info Highway, Slinger, WI 53086
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(Address of principal executive offices) (Zip code)
Issuer's telephone number (262) 644-8700
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- -------------------------------- -------------------------------------------
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.02 per share
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(Title of class)
PART I.
Item 1. Description of Business.
GENERAL OVERVIEW
GENROCO, Inc. and its wholly owned subsidiaries, VideoPropulsion, Inc. and
GENROCO International, Inc. (collectively the "Company" or "GENROCO") design,
manufacture and sell a range of ultra high-performance network interface cards,
bridges and switches. This equipment, largely because of the Company's
associated software, is capable of moving data from one point to another, within
a computer configuration or on a data network, at speeds far in excess of what
the typical high-performance computer installation does today.
The Company is located in Slinger, Wisconsin (30 miles north of Milwaukee) and
has 28 employees. The Company has an experienced management team that will
focus on continuing to develop and market sophisticated enabling Input/Output
(I/O) technologies for strategic partners and customers along with Storage Area
Network ("SAN") and Digital Video Broadcast ("DVB") solutions for sale directly
to end users.
The Company's primary focus is the SAN market and this effort currently receives
the majority of the Company's available research and development resources. In
order to focus on the emerging DVB market, which the Company believes will bring
High Definition Television and Video-On-Demand ("VOD") functionality into the
average household within five years, the Company recently formed a new wholly-
owned subsidiary VideoPropulsion, Inc. ("VPI"). In January 2000, the Company
intends to spin-off the subsidiary (subject to approval of the Board of
Directors and compliance with the securities laws) in the form of a stock
dividend to all GENROCO, Inc. shareholders of record.
The Company (initially General Robotics Corporation) has been in business since
1974 and was reorganized under the laws of the State of Wisconsin in 1989 as
GENROCO, Inc. The Company's Internet address is www.genroco.com.
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PRINCIPAL PRODUCTS AND MARKETS
GENROCO's current products excel at moving data within a computer (from the
computer's storage devices to the computer's CPU and back) at faster data-rate
speeds than is possible with other existing technology. Consequently, the
Company's established customer base includes Compaq, Tektronix, Fujitsu, SGI,
Sun Microsystems, and Hewlett Packard, plus the US Departments of Defense and
Energy and integrators who sell to them.
Current products include Host Bus Adapters ("HBA") and Network Interface Card
("NIC") printed circuit boards, populated with standard and custom integrated
circuit chips and other electronic components. These circuit boards use Fibre
Channel ("FC") and HIPPI-800 ("HIPPI") communication protocols for a variety of
applications.
The Company's future target market is the emerging Scheduled Transfer ("ST")
Enabled SAN market and DVB market. In response to an increasing demand for
higher speed data paths, which can inter-operate with existing network
infrastructure, the Company is developing a family of host bus adapters, storage
arrays, switches and routers. The SAN market is aimed toward very large high-
performance computer configurations. The Company currently enjoys a "first-to-
market" position with respect to SANs running on ultra high-speed backbones and
is positioned to capture a reasonable share of the network data storage market
which is expected to grow at a rate of 21.5% per year to more than $60.0 billion
by 2003 up from $18.8 billion in 1997, per information compiled by the Gartner
Group.
The Company anticipates that its future products will be sold into a variety of
applications oriented around very large SANs with backbone speeds of gigabytes
per second between a number of industry standard communication fabrics (e.g.,
GigE and ATM). Though initially based on GSN backbones, this technology is
expected to be used to enhance the performance of System I/O (SIO), a recent
merger of the Future I/O (FIO) and Next Generation I/O (NGIO), now under
development by a consortium of major companies (Compaq, IBM, HP, Intel, and
others) in the computer industry.
ABOUT SCHEDULED TRANSFER (ST)
ST is a new ANSI standard network protocol designed to allow many times
higher bandwidth with much lower host platform overhead than TCP/IP or any
other current industry standard. An ST datagram over any type of network
commences, or is "scheduled", only when a ready transmit buffer is matched
by an equal sized, ready receive buffer at the destination. This allows
the sending and receiving engines at endpoints of a network to operate at
the highest possible speed and efficiency by eliminating buffer over-runs
and under-runs.
ABOUT GIGABYTE SYSTEM NETWORK (GSN)
GSN is the highest bandwidth and lowest latency open system industry
standard, providing full duplex 800 megabyte per second channel of error-
free, flow controlled data. The technology is utilized wherever
organizations require timely movement of large amounts of information
including scientific and technical computing, digital TV and movie
production, data mining, transaction processing, video and film archiving,
and storage management. The ANSI standard provides for interoperability
with disparate technologies including Ethernet, FC, ATM, HIPPI-800, and
other standards. The GSN fabric operates at a full duplex data rate of 1.6
gigabytes per second making it an extremely fast backbone for multiplexing
FC storage data streams.
The Company's ability to penetrate the network-independent SAN market is a
function of its:
1. success in implementation of ST software drivers for various platforms;
2. ability to partner with an appropriate RAID supplier; and
3. finding an integration, installation, and maintenance partner.
STRATEGIC DIRECTION
GENROCO initially positioned itself as an engineering and marketing company with
a focus on solving complex I/O problems for many of the major manufacturers of
supercomputers and top-end server systems. During its early years, the Company
focused on producing unique or custom controller cards for a number of platform
vendors with a focus on Digital Equipment Corporation's (now owned by Compaq)
requirements. Experience in these areas led to OEM contracts for its products
with Compaq, Tektronix, Fujitsu and Hewlett Packard as well as partnerships with
SGI, Sun and others.
In the early 1990's the Company developed and introduced a family of disk
controllers that is the foundation for products currently being sold and
undergoing additional research.
The Company now intends to develop and produce a family of products designed to
resolve the fan-out and bandwidth problems associated with building very large
SAN systems and provide cross-platform support using FC, HIPPI, GSN, GigE,
and/or ATM communication protocols. The Company believes this is a high growth
segment in which it can successfully compete.
DISTRIBUTION AND SALES CHANNELS
The Company currently uses a direct sales force of four people, which receives
technical and sales support from the engineering staff on an as needed basis.
Products are typically shipped from the Company's Wisconsin facility direct to
the customer via an independent shipping service.
The Company actively sells its products and technology throughout the World.
Approximately 53%, 22% and 37% of fiscal 1999, 1998 and 1997 sales were made to
Foreign customers. This effort is coordinated by a GENROCO employee residing
near CERN, the European laboratory for particle research, located n Geneva,
Switzerland. Current sales to European customers include FC products to Compaq
- - France.
The sales effort in Japan is spearheaded by Tokyo Electron under a distribution
agreement with the Company. The Company also sells HBAs directly to Fujitsu and
other Japanese supercomputer manufacturers.
GOVERNMENTAL REGULATIONS
Currently the Company is not affected by existing governmental regulations on
its business nor is management aware of any pending legislation that could
materially impact the Company's operations. The Company is not impacted by
environmental regulations and its production process does not generate any
pollutants. Costs incurred by the Company in order to comply with environmental
regulations are negligible.
FISCAL YEAR END
The Company has a fiscal year end of March 31. The results herein include the
years ended March 31, 1999 ("1999"), March 31, 1998 ("1998"), and March 31, 1997
("1997"). The fiscal year ending March 31, 2000 is referred to as "2000".
MAJOR CUSTOMERS
The following customers comprise a significant portion of the Company's
business:
CUSTOMER REVENUE AS A PERCENT OF TOTAL REVENUE
1999 1998 1997
---- ---- ----
Tektronix 28% 41% 17%
Compaq 34% 11% 9%
Fujitsu 19% 14% 27%
Convex - % 11% 12%
STL 2 % 10% 12%
The balance of the business is generated from approximately 30 customers.
COMPETITION
Direct competition for the Company's GSN products is expected to come from PMR
for the GSN switch as well as Silicon Graphics Inc. for the PCI GSN HBA. The
Company intends to face the Competition by delivering competitively priced
first-to-market products that are more effective than other products.
The Company does not expect near term competition for any of its GSN-FC storage
array and GSN bridge/router products. The Company believes its ability to
provide complete product infrastructure will give it an advantage for products
for which there are competitors.
SUPPLIERS
The Company purchases its non-critical parts and services from distributors.
Generally, the Company purchases its critical parts directly from manufacturers.
In the event that a manufacturer would be unable to supply parts, the Company
would select an alternative supplier, however a select few components are single
sourced and if unavailable, the Company would be required to redesign the
product. Price increases are generally passed along to the customer.
All out-sourced circuit board fabrication and circuit board assembly work is
done with suppliers who are ISO 9001 certified.
EMPLOYEES
As of September 30, 1999, the Company had 28 employees, of which 27 were full-
time employees. Of the 27 full time employees, five are employed by
VideoPropulsion, Inc. ("VPI"), a wholly owned subsidiary. None of the Company's
employees are represented by a union. The Company believes that its relations
with its employees are good.
INTELLECTUAL PROPERTY - PATENTS AND TRADEMARKS
The Company owns a U.S. patent (Patent # 5,420,984) covering peripheral
controllers and methods for rapid task switching and memory caching, which was
issued on May 30, 1995. The Company has applied for other patents covering the
following technologies: (1) high-speed data buffer using a virtual first-in
first-out register and (2) buffer memory with parallel data and transfer
instruction buffering.
The Company has requested the following trademarks: (1) GENROCO, (2) SOLSTOR,
(3) TURBOFIBRE, and (4) TURBOSTOR. Any use of the marks by others on U.S.
products in other classes may cause dilution of the mark and the goodwill the
Company has created in the mark.
RESEARCH AND DEVELOPMENT ACTIVITIES
Research and development costs are expensed as incurred. Research and
development expenses for 1999 were $1,134,000 compared to $1,044,000 in 1998 and
$713,000 in 1997, or 24.3%, 18.0% and 19.2% of net sales for 1999, 1998 and
1997, respectively. The Company expects to incur similar levels of research
and development costs in 2000 and thereafter.
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company operates in one industry segment as a developer, marketer and
manufacturer of high-speed data communication computer hardware.
RISK FACTORS
GENERAL
The Company's business strategy includes the sale of products which depend
on industry acceptance of its products as a high-speed network standard of
choice. The products are also dependent on the availability of driver
software and thus the loss of significant numbers of key software
development personnel would adversely impact the future results of the
Company.
Prior to making any investment decision, prospective investors should
carefully consider the risk factors set forth in addition to the other
information presented in this registration statement.
INDUSTRY
The Company operates in a highly competitive and fast-paced industry.
Technological advances are constantly superceding the latest technological
breakthroughs. The speed at which companies must react to target markets
is ever increasing and the Company may not be able to attract the
engineering talent needed to maintain its current technical leadership
position.
CUSTOMERS
The increased demand of customers and the increasing presence of the
Internet in everyday markets are creating a customer base that demands a
quicker response time. This customer expectation coupled with the global
economies make meeting these expectations a constant challenge, especially
for small companies who may not be able to attract the capital resources
needed to meet these demands.
The Company's customer portfolio is composed of a few global companies that
do not provide the luxury of large multi-year contracts. The Company's
dependence on a limited number of key customers exposes them to sporadic
order rates, which require higher than normal inventory levels to support
the business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
The Company's objective is to maximize stockholder value by executing strategies
that focus on a balance of three priorities: growth, profitability and
liquidity.
During 1999 the Company made significant investments in product development. A
very large part of research and development expense for 1999 was dedicated to
designing and demonstrating a Gigabyte System Network Storage Array sustaining
data transfers in excess of 600 megabytes per second -- eight times the speed of
current Fibre Channel disk arrays. The Company has demonstrated that its
products have met this standard in 1999. During 2000 the Company plans on
continuing to invest in technology capable of being used as building blocks for
very high performance, ST enabled SANs that will allow GigE and ATM clients to
access storage directly, without intermediate servers.
RESULTS OF OPERATION
YEARS ENDED MARCH 31, 1999, 1998 and 1997
Net sales for 1999 (Fiscal Year ended March 31, 1999) were $4,658,000 compared
to $5,788,000 and $3,710,000 for 1998 and 1997, respectively. The Company's
19.5% decline in revenue in 1999 can be attributed to approximately $1,500,000
in reduced revenues from the Company's largest customer (in 1998). The Company's
56.0% increase in revenue from 1997 to 1998 was largely due to increased sales
of its TURBOfibre(R) family of Fibre Channel (FC) and Digital Video Broadcast
(DVB) product lines to its customers for use in digital television data
transmission and related high I/O performance applications. The Company's
products are typically sold to major supercomputer and superserver platform
vendors, who in turn utilize these host adapter cards to increase the I/O speed
of their systems. The customers' products, which typically sell for more than
$1,000,000 per system, are used to receive and archive satellite images, edit
weather maps, control newsroom production facilities, edit video films, etc.
Cost of goods sold for 1999 was $1,831,000 compared to $2,346,000 and $1,261,000
for 1998 and 1997, respectively, and was comprised of parts and labor associated
with production and testing of circuit boards shipped to customers.
Gross profit for 1999 was $2,827,000 compared to $3,442,000 and $2,449,000 for
1998 and 1997 respectively. The resulting gross margin percentages were 60.7%,
59.5%, and 66.0% of net sales for 1999, 1988 and 1997, respectively. The
increase in 1999 was due to a change in product mix together with reduced costs
related to producing products for higher volume accounts. The decline in 1998
was primarily due to price concessions made to the Company's largest customer
which represented 28%, 41%, and 17% of total revenue in 1999, 1998 and 1997,
respectively.
Research and development expenses for 1999 were $1,134,000 compared to
$1,044,000 in 1998 and $713,000 in 1997 or 24.3%, 18.0% and 19.2% of net sales
for 1999, 1998 and 1997, respectively.
Selling, general and administrative expenses for 1999 were $1,584,000 compared
to $1,713,000 in 1998 and $1,240,000 in 1997 or 34.0%, 29.6% and 33.4% of net
sales for 1999, 1998 and 1997, respectively. The increases are primarily
associated with additional personnel costs related to the areas of sales and
marketing. The decline in expenses, as a percentage of revenue, is due to
increased revenue as a result of the increased focus on sales and marketing
activities.
Income from operations in 1999 was $109,000 compared to income from operations
of $685,000 in 1998 and of $496,000 in 1997 or 2.3%, 11.8% and 13.4% of net
sales for 1999, 1998 and 1997, respectively. The changes in earnings are the
direct result of respective changes in revenue.
Other income (expense) for 1999 was ($35,000) compared to $154,000 in 1998 and
$5,000 in 1997. The $154,000 of income in 1998 is primarily the result of
achieving a favorable outcome in litigation against a former business partner.
The Company's provision for income taxes totaled $28,000 in 1999 versus $205,000
in 1998 and zero in 1997. The effective tax rate in 1999, 1998 and 1997 was
38.0%, 24.4%, and 0.0% respectively, versus the combined Federal and State
effective statutory rate of 39%, due to the utilization of net operating loss
carryforwards in 1998 and 1997 that were previously fully reserved. Only
minimal net operating loss carry-forwards associated with the state of Wisconsin
remain available for future use.
Net income was $45,000 compared to $634,000 in 1998 and $501,000 in 1997 or
1.0%, 11.0%, and 13.5% of net sales for 1999, 1998 and 1997, respectively.
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
During the first quarter of 2000, the Company stayed focused on its objective to
become a major source of technology to the growing Storage Area Network (SAN)
market. While the Company will continue to provide Fibre Channel Host Bus
Adapter (HBA) cards to customers with unique applications, it has begun to focus
on its new router and switch products. The Company believes that its ability to
provide infrastructure for network independent SAN's will allow integrators of
very large storage systems to move up to new levels of performance and
flexibility.
Revenue for the three months ended June 30, 1999 increased 34.1% to $1,135,000,
compared to $850,000 for the three months ended June 30, 1998. Net income for
the quarter was $11,000 or $0.00 per share for the three months ended June 30,
1999 compared to a net loss of $26,000 or $(0.01) per share for the three months
ended June 30, 1998. The Company's increase in revenues was the result of
increased sales of its Fibre Channel products to customers in the United States
and Europe. The increase in earnings during the first quarter of fiscal 2000 was
the direct result of increased revenue, as compared to the first quarter of
fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at March 31, 1999 was $524,000, an increase from
$506,000 at March 31, 1998. During 1999, net cash provided by operating
activities was $81,000, an increase from $77,000 for 1998. The Company's cash
position at June 30, 1999 was $764,000.
At June 30, 1999, March 31, 1999 and March 31, 1998 the Company had a revolving
line of credit with a bank of up to $500,000 based on a borrowing base relating
to eligible accounts receivable. On October 7, 1999, the Company increased its
revolving line of credit with a bank to $700,000 based on a borrowing base
relating to eligible accounts receivable. Funds borrowed under this agreement
bear interest at the rate of LIBOR plus 2.50% (approximately 7.785% at October
7, 1999). This agreement terminates on July 31, 2001 and has restrictive
covenants including an obligation to maintain tangible net worth in excess of
$1,500,000 and $1,250,000 at March 31, 2001 and 2000, respectively. Amounts
borrowed at June 30, 1999, March 31, 1999 and March 31, 1998 were $300,000,
$425,000 and $291,000, respectively.
Stockholders' equity increased 22.7% to $1,233,000 at March 1999, compared to
$1,005,000 at March 31, 1998 and $278,000 at March 31, 1997. GENROCO's ratio
of current assets to current liabilities (current ratio) reached 3.65 to 1 at
March 31, 1999 versus 2.51 to 1 at March 31, 1998 and 1.09 to 1 at March 31,
1997.
Expenditures for property and equipment during 1999, 1998 and 1997 were $87,000,
$236,000 and $157,000, respectively.
In fiscal 2000, the Company acquired a previously leased 22,000 square foot
single story brick facility. The Company entered into loan agreements with a
bank and the former property owner. Each agreement contains a mortgage lien
against the building. The primary debt agreement with M&I Bank is a mortgage of
$1,110,000, bearing interest at an annual rate of 8.5%, being amortized over 20
years, with a balloon payment of approximately $823,000 due in 2006. The
secondary debt agreement with the former property owner of $200,000 bears annual
interest at 9.0%, is amortized over 20 years with a balloon payment due of
approximately $153,000 in April 2001.
Management believes that cash on hand together with funds available under the
line of credit and projected cash generated from operations will be sufficient
to satisfy fiscal 2000 operating requirements.
YEAR 2000 READINESS
Computers, software and other equipment utilizing microprocessors that use only
two digits to identify a year in a date field may be unable to accurately
process certain date-based information at or after the year 2000. This is
commonly referred to as the "Year 2000 issue." The Company has analyzed the Year
2000 readiness issues related to its computer systems and determined that all
systems critical to managing the business are Year 2000 compliant.
The Company has identified its critical component and service providers and is
contacting each vendor to assess that vendor's Year 2000 readiness. Because the
Company is relying solely on information provided by these vendors, it cannot
conclusively provide assurances that all of its critical vendors are or will be
Year 2000 ready. Therefore, the Company cannot provide assurances that the
Company will not be adversely affected by the Year 2000 change.
The Company has analyzed the Year 2000 readiness status of the products
manufactured by the Company. The Company's current product offerings meet the
Company's Year 2000 readiness standards.
The Company expects that the total costs of its Year 2000 readiness program will
not be material to its financial condition or results of operations. All
costs are charged to expense as incurred and do not include potential costs
related to any customers or other claims in the normal course of business.
Item 3. DESCRIPTION OF PROPERTY
The Company's primary physical presence in the United States is its corporate
headquarters in Slinger, Wisconsin.
In fiscal 2000, the Company acquired for its corporate headquarters the
previously leased 22,000 square foot single story brick facility designed and
built specifically for its needs. In conjunction with the acquisition of the
building, the Company entered into loan agreements with a bank and the former
property owner.
GENROCO currently occupies approximately 16,000 square feet of this space. The
6,000 square foot balance at the facility is used for warehousing and is
available for future growth.
The building is being depreciated over a period of 20 years using the straight-
line method for book purposes and accelerated method for tax purposes. Annual
property taxes are expected to be approximately $17,000 per year.
In the opinion of management, the property is adequately covered by insurance
and adequately provides for the operations of the Company's business.
Item 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information at September 30, 1999 with
respect to the number of shares of common stock beneficially owned by (i) each
person known to the Company to own beneficially more than 5% of the common
stock; (ii) each director of the Company; (iii) the Chief Executive Officer, and
(iv) all directors and executive officers of the Company as a group. Unless
otherwise noted, each person listed below has sole voting and investment power
with respect to his or her shares. The address for each individual set forth
below is 255 Info Highway, Slinger, WI 53086.
PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME OF BENEFICIAL OWNER (1)<F1> SHARES SHARES
--------------------------------------- --------- -------------
Carl A. Pick (husband of Barbara) 1,009,631 24.9%
Barbara Pick (wife of Carl) 998,004 24.6%
Chris Good 287,376 7.1%
Keith Brue 200,340 4.9%
All directors and executive officers as
a group (7 people) 2,894,198 71.2%
(1)<F1> The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and, accordingly, may
include securities owned by or for, among others, the spouse, children or
certain other relatives of such person as well as other securities as to which
the person has or shares voting or investment power or has the right to acquire
within 60 days.
The Company has had an Employee Stock Ownership Plan (ESOP) since April of 1989,
which owns 540,600 shares (13.3%) of the 4,057,392 total outstanding shares of
GENROCO, Inc. common stock.
All employees of GENROCO, Inc are members of the plan. The ESOP provides for a
five year vesting schedule, except that in the event of the sale of the Company
all employees become 100% vested.
Item 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following is a listing of all directors and executive officers of the
Company. An officer remains in office until he or she resigns, dies or a
different person is appointed to the office. Directors shall hold office until
the next annual shareholders' meeting and until the director's successor has
been elected or until his or her resignation, death or removal.
NAME AGE POSITION
----------- --- -----------------------------------------------------
Carl A. Pick 51 Chairman, Chief Executive Officer, President and
Director
Keith Brue 62 Executive Vice President, Chief Financial Officer,
Chief Operations Officer,
Secretary and Director
Don Woelz 52 Vice President of Marketing
Joe Nordman 37 Vice President of Engineering
Emily Otte 44 Vice President of Sales
Barbara Pick 48 Director
Chris Good 48 Director
CARL A. PICK - Chairman, Chief Executive Officer, President and Director. He is
responsible for corporate development, marketing strategy, and overall corporate
management of the Company. Mr. Pick graduated from Yale University in 1971 with
a Bachelor's degree in Computer Engineering. He received a Master's degree in
Computer Science from Yale in 1974. He, along with Barbara Pick, his wife,
founded General Robotics Corporation ("GRC") in August 1974 and reorganized GRC
into GENROCO, Inc. in 1987. Mr. Pick is married to Barbara R. Pick. Mr. Pick
is the Chairman and Marketing Director of the High Speed Networking Forum.
KEITH BRUE - Executive Vice President, Chief Operations Officer, Chief Financial
Officer, Secretary and Director. He is responsible for manufacturing, materials,
logistics, accounting and finance. Mr. Brue received his MBA degree from the
University of Chicago and has extensive operations experience with a focus on
dealing with mergers, acquisitions and business systems processes. He has been
a director of the Company since 1986. He began his career in public accounting
with Ernst & Young LLP and has over 20 years of experience with several
different high technology companies, including two which were publicly held and
traded on NASDAQ, as the result of Initial Public Offerings.
DON WOELZ - Vice President of Marketing. He is responsible for technology and
market evaluations, trade shows and technology presentations, and marketing
communications. Mr. Woelz graduated from Marquette University in 1970 with a
degree in Electrical Engineering and conducted his post-graduate studies in
Electrical Engineering and Computer Science at the University of Wisconsin -
Milwaukee. He joined GRC in April of 1977 and has held the positions of Sales
Engineer, National Sales Manager, General Manager - CAD Systems Division, Vice
President of Engineering, and Vice President of Sales.
JOSEPH NORDMAN - Vice President of Engineering. He is responsible for hardware
development and management. Mr. Nordman graduated from the University of
Wisconsin in 1984 with a degree in Electrical Engineering. He joined GRC in
February 1985.
EMILY OTTE - Vice President of Sales since October 1, 1999. She is responsible
for sales account management. Ms. Otte joined GRC in July 1979 and has held the
positions of Vice President of Operations and Vice President of Special
Products.
BARBARA PICK - Chief Executive Officer and President of VideoPropulsion, Inc.
since incorporation on October 1, 1999. She also served as Director and Vice
President of Sales for GENROCO since incorporation in 1974 to September 30, 1999
and DVB Product manager for DVB and President of GENROCO from 1997 to September
30, 1999. Ms. Pick is married to Carl A. Pick.
CHRIS GOOD - Executive Vice President and Chief Technical Officer of
VideoPropulsion, Inc. since incorporation on October 1, 1999. He graduated with
an honors degree in Mathematics and Physics from King's College, University of
London in 1971. He was formerly with ITT, then Compaq Computer Corporation, UK.
He also served as Executive Vice President and Chief Technical Officer of
GENROCO, Inc. from 1987 to September 30, 1999.
ITEM 6. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company to
executives for services rendered during 1999, 1998 and 1997.
All Other
Compensation ($)
Name and Principal Position Salary ($) - (1)<F2>
--------------------------------- ---------- ----------------
Carl A. Pick, CEO 1999 $95,953 $2,838
1998 175,208 2,444
1997 134,859 2,456
Barbara Pick, President 1999 95,953 2,527
1998 175,208 2,444
1997 134,859 2,264
Chris Good, CTO 1999 83,678 4,850
1998 99,400 4,690
1997 94,010 4,709
Keith Brue, CFO / COO 1999 84,117 7,639
1998 107,886 6,552
1997 8,574 2,312
(1)<F2> These amounts are related to the value of stock grants to
employees and health and life insurance premiums paid by the
Company on behalf of the employee.
DIRECTORS' COMPENSATION
The Company pays director fees to each of its four directors. Directors
compensation varies each year, and by individual based on performance of the
Company and at the discretion of the board. The following table illustrates the
total amount of director fees paid to each director for 1999, 1998 and 1997.
1999 1998 1997
---- ---- ----
Carl Pick $30,795 $37,500 $29,450
Barbara Pick 30,795 37,500 29,450
Chris Good 4,090 12,500 48,125
Keith Brue 4,000 2,500 -
EMPLOYMENT CONTRACTS
STOCK PURCHASE AGREEMENT
The Company has no stock option plans in place. The Company has, from time to
time, entered into stock purchase agreements with certain key employees, whereby
the Company agreed to loan the employee the funds required to buy common stock
from the Company at fair market value on the date of the agreement.
Under the terms of the loan agreements, the employee is obligated to remain in
the employment of the Company for a period of three years. The employee's
obligation to pay principal and interest on the related note payable is waived
at the annual anniversary of the note over a 3-year period and treated as
taxable income to the employee and compensation expense to the Company.
A summary of employees stock purchase agreement transactions is set forth below:
Number of Fair Market Aggregate
Agreement Dates Shares Issued Value / Share Market Value
--------------- ------------- ------------- ------------
November 1997 144,000 $1.16 $168,000
August 1998 364,500 1.88 686,475
July 1999 223,200 1.83 409,200
At March 31, 1999 and 1998, the notes receivable from employees were $608,000
and $154,000, respectively. The 1998 and 1997 notes are receivable over terms
ranging from 15 to 24 months and bear interest at 5.8%. The 1999 notes are
receivable over 36 months and bear interest at 5.8%.
The following table summarizes the shares included in the above totals for all
executive officers outlining the total shares (adjusted for the 3 for 1 stock
split on September 28, 1999 for all shareholders of record as of September 21,
1999), the period over which the note will be waived, original value and the
remaining outstanding balance on the notes as of June 30, 1999.
Remaining
Number of Amortization Total original note balance at
Name shares Period value June 30, 1999
---- --------- ------------ -------------- ---------------
Carl Pick 90,000 36 months $169,500 $117,708
Barbara Pick 90,000 36 months 169,500 117,708
Chris Good 37,500 36 months 70,625 49,045
Keith Brue 181,500 36 months 238,625 91,045
The stock purchase agreements do not provide for any acceleration upon change in
control of the Company.
CONFIDENTIALITY AND NON-COMPETE AGREEMENTS
All GENROCO employees have signed a comprehensive non-compete agreement which
stipulates that the employee shall not directly or indirectly use, disseminate,
disclose, lecture upon or publish any confidential information (as defined
therein) while employed by the Company and for a period of two years thereafter.
The agreement provides that for a period ending two years after the termination
of employment with the Company for whatever reason, the employee shall not,
whether for his own account or for the account of any other individual,
partnership, firm, corporation or other entity, intentionally solicit, endeavor
to entice away from the Company, or otherwise interfere with the relationship of
the Company, any person who is employed by or otherwise engaged to perform
services for the Company.
Item 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has notes receivable outstanding to employees and executive officers
for the purchase of shares under the stock purchase agreements outlined above in
Item 6 of this registration statement. Exact dates and amounts of the shares
are outlined in Part II Item 4 of this registration statement. There are no
other related party transactions with the Company.
Item 8. DESCRIPTION OF SECURITIES
GENERAL
The description of the Company's capital stock contained herein is qualified by
reference to the Company's Articles of Incorporation, as amended to date, and
By-Laws. The Company's authorized capital stock consists of 5,000,000 common
stock shares, par value $0.02 per share and 1,000,000 preferred stock shares, no
par value.
COMMON STOCK
As of September 30, 1999, the Company has 4,057,392 (post split) shares of
common stock issued and outstanding. The Company has authorized only one class
of common stock. The holders of the common stock are entitled to one vote for
each share on all matters voted upon by the Company's shareholders, including
election of directors, and there is no cumulative voting. The holders of the
common stock are also entitled to such dividends as may be declared at the
discretion of the Board of Directors out of funds legally available therefore.
See "Dividend Policy". Holders of common stock are entitled to share ratably in
the net assets of the Company upon liquidation after payment or provision for
all liabilities. The holders of common stock have no preemptive rights to
purchase shares of stock of the Company. Shares of common stock are not subject
to any redemption provisions and are not convertible into any other securities
of the Company.
PREFERRED STOCK
The Board of Directors of the Company, without further action by the Company's
shareholders, is authorized to issue preferred stock or other senior equity
securities in one or more class or series and to determine preferences as
dividends and in liquidation, and conversion, redemption and other rights of
each such series. The Company's Board of Directors could issue a class or
series of preferred stock or other senior equity securities with rights more
favorable with respect to dividends, voting and liquidation than those held by
the holders of common stock. The Company has not issued any preferred stock or
other senior equity securities and the Company has no present plans to issue
such stock or securities.
ANTITAKEOVER PROVISIONS
Sections 180.1140 to 180.1144 of the "Wisconsin Business Combination Law(the
"WBCL") regulate a broad range of "business combinations" between a "resident
domestic corporation" (which the Company is) and an "interested shareholder."
The Wisconsin Business Combination Statute defines a "business combination" to
include a merger or share exchange, sale, lease, exchange, mortgage, pledge,
transfer, or other disposition of assets equal to at least 5% of the market
value of the stock or assets of the company or 10% of its earning power, or
issuance of stock or rights to purchase stock with a market value equal to at
least 5% of the outstanding stock, adoption of a plan of liquidation, and
certain other transactions involving an "interested shareholder." An "interested
shareholder" is defined as a person who beneficially owns, directly or
indirectly, 10% of the voting power of the outstanding voting stock of the
corporation or who is an affiliate or associate of the corporation and
beneficially owned 10% of the voting power of the then outstanding voting stock
within the last three years. The Wisconsin Business Combination Statute
prohibits a corporation from engaging in a business combination (other than a
business combination of a type specifically excluded from the coverage of the
statute) with an interested shareholder for a period of three years following
the date such person becomes an interested shareholder, unless the board of
directors approved the business combination or the acquisition of the stock that
resulted in a person becoming an interested shareholder before such acquisition.
Accordingly, the Wisconsin Business Combination Statute's prohibition on
business combinations cannot be avoided during the three-year period by
subsequent action of the board of directors or shareholders. Business
combinations after the three-year period following the stock acquisition date
are permitted only if (I) the board of directors approved the acquisition of the
stock prior to the acquisition date, (ii) the business combination is approved
by a majority of the outstanding voting stock not beneficially owned by the
interested shareholder, or (iii) the consideration to be received by
shareholders meets certain requirements of the statute with respect to form and
amount.
In addition, the WBCL provides, in Sections 180.1130 to 180.1133, that certain
mergers, share exchanges or sales, leases, exchanges or other dispositions of
assets in a transaction involving a "significant shareholder" and a "resident
domestic corporation" (as defined below) are subject to a supermajority vote of
shareholders (the "Wisconsin Fair Price Statute"), in addition to any approval
otherwise required. A "significant shareholder," with respect to an issuing
public corporation, is defined as a person who beneficially owns, directly or
indirectly, 10% or more of the voting stock of the corporation, or an affiliate
of the corporation which beneficially owned, directly or indirectly, 10% or more
of the voting stock of the corporation within the last two years. Such business
combinations must be approved by 80% of the voting power of the corporation's
stock and at least two-thirds of the voting power of the corporation's stock not
beneficially held by the significant shareholder who is party to the relevant
transaction or any of its affiliates or associates, in each case voting together
as a single group, unless the following fair price standards have been met: (I)
the aggregate value of the per share consideration is equal to the higher of (a)
the highest price paid for any common shares of the corporation by the
significant shareholder in the transaction in which it became a significant
shareholder or within two years before the date of the business combination, (b)
the market value of the corporation's shares on the date of commencement of any
tender offer by the significant shareholder, the date on which the person became
a significant shareholder or the date of the first public announcement of the
proposed business combination, whichever is higher, or (c) the highest
liquidation or dissolution distribution to which holders of the shares would be
entitled, and (ii) either cash, or the form of consideration used by the
significant shareholder to acquire the largest number of shares, is offered.
Under Section 180.1150 (the "Wisconsin Control Share Statute") of the WBCL,
unless otherwise provided in the articles of incorporation (which is not the
case with respect to the Company's Amended and Restated Articles of
Incorporation), the voting power of shares, including shares issuable upon
conversion of convertible securities or exercise of options or warrants, of an
issuing public corporation held by any person or persons acting as a group in
excess of 20% of the voting power in the election of directors is limited (in
voting on any matter) to 10% of the full voting power of those shares. This
restriction does not apply to shares acquired directly from the issuing public
corporation, in certain specified transactions, or in a transaction with respect
to which the corporation's shareholders have approved restoration of the full
voting power of otherwise restricted shares. In light of the 10% threshold
contained in the Wisconsin Business Combination Statute, the Wisconsin Control
Share Statute threshold of 20% may not be implicated unless the board of
directors approves a transaction that permits the shareholder to exceed the 10%
ownership level.
Section 180.1134 (the "Wisconsin Defensive Action Restrictions") of the WBCL
provides that, in addition to the vote otherwise required by law or the articles
of incorporation of an issuing public corporation, the approval of the holders
of a majority of the shares entitled to vote is required before such corporation
can take certain action while a takeover offer is being made or after a takeover
offer has been publicly announced and before it is concluded. Under the
Wisconsin Defensive Action Restrictions, shareholder approval is required for
the corporation to (i) acquire more than 5% of the outstanding voting shares at
a price above the market price from any individual or organization that owns
more than 3% of the outstanding voting shares and has held such shares for less
than two years, unless a similar offer is made to acquire all voting shares, or
(ii) sell or option assets of the corporation which amount to at least 10% of
the market value of the corporation, unless the corporation has at least three
independent directors (directors who are not officers or employees) and a
majority of the independent directors vote not to have this provision apply to
the corporation. The Company will have, following the distribution, three
independent directors, so the restrictions described in clause (ii) will not
initially apply to the Company. The restrictions described in clause (i) above
may have the effect of deterring a shareholder from acquiring the Company's
shares with the goal of seeking to have the Company repurchase such shares at a
premium over the market price.
The Company believes that it will qualify as a resident domestic corporation
because it is headquartered in Wisconsin. Accordingly the Company will have the
above antitakeover protection discussed above.
CERTAIN ANTI-TAKEOVER EFFECTS
Certain provisions of the Company's Articles of Incorporation and By-Laws may
have significant anti-takeover effects, including the inability of shareholders
to remove directors without cause, and the limitation on the number of
directors.
The explicit grant in section 180.0827 of the WBCL, the "Wisconsin Stakeholder
Provisions" of discretion to directors to consider nonshareholder constituencies
could, in the context of an active "auction" of the Company, has anti-takeover
effects in situations where the interests of stakeholders of the Company,
including employees, suppliers, customers and communities in which the Company
does business, conflict with the short-term maximization of shareholder value.
The Wisconsin Control Share Statute may deter any shareholder from acquiring in
excess of 20% of the outstanding stock of the Company and the Wisconsin Fair
Price Statute may discourage any attempt by a shareholder to squeeze out
shareholders without offering an appropriate premium purchase price. In
addition, the Wisconsin Defensive Action Restrictions may have the effect of
deterring a shareholder from acquiring the Company's shares with the goal of
seeking to have the Company repurchase the shares at a premium.
The statutory provisions and the Company's Articles of Incorporation and By-Law
provisions referenced above are intended to encourage persons seeking to acquire
control of the Company to initiate such an acquisition through arms-length
negotiations with the Company's Board of Directors, and to ensure that
sufficient time for consideration of such a proposal, and any alternatives, is
available. Such measures are also designed to discourage investors from
attempting to accumulate a significant minority position in the Company and then
use the threat of a proxy contest as a means to pressure the Company to
repurchase shares at a premium over the market value. To the extent that such
measures make it more difficult for, or discourage, a proxy contest or the
assumption of control by a holder of a substantial block of the Company's stock,
they could increase the likelihood that incumbent directors will retain their
positions, and may also have the effect of discouraging a tender offer or other
attempt to obtain control of the Company, even though such attempt might be
beneficial to the Company and its shareholders.
Forms of the Company's Articles of Incorporation and By-Laws are attached to
this Registration Statement as Exhibits 2.1 and 2.4, respectively, and are
incorporated herein by reference. The foregoing description of certain
provisions of the Amended and Restated Articles of Incorporation and the By-Laws
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the Amended and Restated Articles of Incorporation and
the By-Laws, including definitions of certain terms in each respective document.
DIVIDEND POLICY
To date the Company has paid no cash dividends on its Common Stock. The Company
intends to retain its future earnings, if any, to finance the expansion of its
business and for general corporate purposes. The Company does not anticipate
paying any cash dividends on its common stock in the future. Any payment of
future dividends will be at the discretion of the Company's Board of Directors
and will depend upon, among other things, the Company's earnings, financial
condition, capital requirements, level of indebtedness, contractual restrictions
with respect to the payment of dividends and other factors that the Company's
Board of Directors deems relevant.
TRANSFER AGENT
The transfer agent for the Company's common stock is Fidelity Transfer Company,
1800 S. Temple Suite #301, Box 53, Salt Lake City, UT 84115.
PART II.
Item 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS.
The Company's common stock has been traded on the OTC Bulletin Board as a non-
reporting company since 1988. The amount of shares in the hands of non-employee
shareholders has historically been less than 20% of total shares outstanding.
Trading volume has historically been negligible. The high and low bid prices at
the close of each fiscal quarter for the past 14 quarters are as follows
(adjusted for 3 for 1 stock split as of September 21, 1999):
Bid
--------------------------
QUARTER ENDED High Low
-------------------------------- ------ ------
June 30, 1996 NA NA
September 30, 1996 NA NA
December 30, 1996 1.375 0.328
March 31, 1997 1.000 0.672
June 30, 1997 0.672 0.672
September 30, 1997 1.672 0.672
December 31, 1997 3.328 1.672
March 31, 1998 2.672 1.922
June 30, 1998 2.328 1.672
September 30, 1998 3.000 1.828
December 31, 1998 2.250 1.672
March 31, 1999 2.328 1.672
June 30, 1999 2.171 1.672
September 30, 1999 11.000 1.672
Source: Dow Jones News Retrieval Service (Invest-text database)
These quotations represent bid prices without retail markup, markdown, or
commission, and may not reflect actual transactions.
As of September 30, 1999, there were approximately 169 shareholders of record of
the Company's common stock.
The Company has not paid any cash dividends for the past three fiscal years or
during the interim period presented.
Item 2. LEGAL PROCEEDINGS
The Company is, from time to time, a party to litigation arising in the normal
course of its business. The Company believes that none of these actions will
have a material adverse effect on the financial condition or results of
operations of the Company. Currently there are no litigation claims open.
Item 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Not applicable.
Item 4. RECENT SALES OF UNREGISTERED SECURITIES
From fiscal 1997 through September 30, 1999, all of the sales of the Company's
securities by the Company have been unregistered. The following table
summarizes all stock sales (post split) that have occurred during this time.
All sales or grants were made to employees of the Company.
Number Per Share Total
Purchase Date of shares Amount Value Type of Transaction Exemption
- ------------- --------- --------- ----- ------------------- ---------
June 1996 3,000 $0.58 $1,750 Stock Grant 701
August 1996 186,000 0.33 62,000 Cash sale 4(2)
October 1996 3,000 0.33 1,000 Stock Grant 701
November 1996 3,000 0.33 1,000 Cash Sale 4(2)
October 1997 1,500 1.16 1,750 Stock Grant 701
November 1997 6,522 1.16 7,609 Cash Sale 4(2)
November 1997 144,000 1.16 168,000 Sale in exchange for note 4(2)
January 1998 4,491 3.08 13,847 Cash Sale 4(2)
February 1998 1,326 2.33 3,094 Cash Sale 4(2)
May 1998 11,766 1.96 23,121 Cash Sale 4(2)
June 1998 3,000 2.25 6,750 Stock Grant 701
August 1998 364,500 1.88 686,475 Sale in exchange for note 4(2)
July 1999 223,200 1.83 408,456 Sale in exchange for note 4(2)
The Company has determined its per share amount based on the trailing 30 day
average midpoint between the ask and bid price as listed on the OTC Bulletin
Board.
On September 28, 1999, the Company issued 2,704,928 shares of common stock in
response to having declared a share dividend at the rate of two shares of
authorized but unissued common stock, $0.02 par value, of the Company for each
share of common stock issued and outstanding at the close of business on
September 21, 1999 (the "Effective Date"), so as to effect a 3 for 1 forward
stock split in the form of a share dividend (the "Stock Split").
Item 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
LIMITATION ON LIABILITY OF DIRECTORS
Under the WBCL, director immunity from liability to a corporation or its
shareholders for monetary liabilities applies automatically unless it is
specifically limited by a corporation's articles of incorporation (which is not
the case with the Company's Articles of Incorporation). Excepted from that
immunity are: (i) a willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director has a material
conflict of interest; (ii) a violation of criminal law (unless the director had
reasonable cause to believe that his or her conduct was lawful or no reasonable
cause to believe that his or her conduct was unlawful); (iii) a transaction from
which the director derived an improper personal profit; and (iv) willful
misconduct.
INDEMNIFICATION AND INSURANCE
Under Section 180.0851 (1) of the WBCL, the Company is required to indemnify a
director or officer to the extent such person is successful on the merits or
otherwise in the defense of a proceeding, for all reasonable expenses incurred
in the proceeding if such person was a party because he or she was a director or
officer of the Company. In all other cases, the Company is required by Section
180.0851 (2) of the WBCL to indemnify a director or officer against liability
incurred in a proceeding to which such person was a party because he or she was
an officer or director of the Company, unless it is determined that he or she
breached or failed to perform a duty owed to the Company and the breach or
failure to perform constitutes: (i) a willful failure to deal fairly with the
Company or its shareholders in connection with a matter in which the director or
officer has a material conflict of interest; (ii) a violation of criminal law,
unless the director or officer had reasonable cause to believe his or her
conduct was lawful or no reasonable cause to believe his or her conduct was
unlawful; (iii) a transaction from which the director or officer derived an
improper personal profit; or (iv) willful misconduct. Section 180.0858 (1) of
the WBCL provides that, subject to certain limitations, the mandatory
indemnification provisions do not preclude any additional right to
indemnification or allowance expenses that a director or officer may have under
the Company's articles of incorporation, bylaws, a written agreement or a
resolution of the Board of Directors or shareholders.
Section 180.0859 of the WBCL provides that it is the public policy of the State
of Wisconsin to require or permit indemnification, allowance of expenses and
insurance to the extent required or permitted under Sections 180.0850 to
180.0858 of the WBCL for any liability incurred in connection with a proceeding
involving a federal or state statute, rule or regulation regulating the offer,
sale or purchase of securities.
Section 180.0828 of the WBCL provides that, with certain exceptions, a director
is not liable to a corporation, its shareholders, or any person asserting rights
on behalf of the corporation or its shareholders, for damages, settlements,
fees, fines, penalties or other monetary liabilities arising from a breach of,
or failure to perform, any duty resulting solely from his or her status as a
director, unless the person asserting liability proves that the breach or
failure to perform constitutes any of the four exceptions to mandatory
indemnification under Section 180.0851 (2) referred to above.
Under Section 180.0833 of the WBCL, the directors of the Company against whom
claims are asserted with respect to the declaration of an improper dividend or
other distribution to shareholders to which they assented are entitled to
contribution from other directors who assented to such distribution and from
shareholders who knowingly accepted the improper distribution, as provided
therein.
Article VIII of the Company's By-Laws contains provisions that generally
parallel the indemnification provisions of the WBCL and cover certain procedural
matters not dealt with in the WBCL.
Directors and officers of the Company are not covered by directors' and
officers' liability insurance under which they would be insured against expenses
and liabilities arising out of proceedings to which they could be parties by
reason of being or having been directors or officers.
GENROCO, INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 1999, 1998 AND 1997
CONTENTS
Report of Public Accountants 20
Consolidated Financial Statements
Consolidated Balance Sheets 21
Consolidated Statements of Operations 22
Consolidated Statements of Cash Flows 23
Consolidated Statements of Stockholders' Investment 24
Consolidated Notes to Financial Statements 25
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
GENROCO, Inc.:
We have audited the accompanying consolidated balance sheets of GENROCO, Inc. (a
Wisconsin corporation) and subsidiaries as of March 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' investment and cash
flows for each of the three years in the period ended March 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of GENROCO, Inc. and
subsidiaries as of March 31, 1999 and 1998, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1999, in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
May 7, 1999.
Except for Note 1(k), as to which the date is
October 13, 1999
GENROCO, INC. AND SUBSIDIARIES
------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
(unaudited)
Year ended March 31, Three months ended June 30,
------------------------- ---------------------------
ASSETS 1999 1998 1999 1998
------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $524,359 $506,186 $764,118 $481,041
Accounts receivable, net of allowance of $3,000 904,373 533,353 505,404 544,641
Inventories 458,608 680,516 518,060 671,067
Prepaid expenses 56,504 65,275 76,040 59,690
Employee advances 13,482 10,000 48,530 6,324
Deferred tax asset 34,000 - 34,000 -
---------- ---------- ---------- ----------
Total current assets 1,991,326 1,795,330 1,946,152 1,762,763
PLANT AND EQUIPMENT, at cost:
Leasehold improvements 10,593 10,593 10,593 10,593
Machinery and equipment 577,223 851,284 681,187 493,496
---------- ---------- ---------- ----------
587,816 861,877 691,780 504,089
Less- Accumulated depreciation and amortization 264,039 516,409 293,961 180,986
---------- ---------- ---------- ----------
Net plant and equipment 323,777 345,468 397,819 323,103
OTHER ASSETS 28,314 9,825 27,870 13,929
---------- ---------- ---------- ----------
Total assets $2,343,417 $2,150,623 $2,371,841 $2,099,795
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
----------------------------------------
CURRENT LIABILITIES:
Accounts payable $145,323 $254,544 $298,341 $323,646
Income taxes payable 48,373 165,479 35,556 147,479
Current portion of capital leases payable 98,264 96,878 104,179 95,021
Accrued payroll and payroll taxes 180,392 126,899 107,574 90,655
Other accrued liabilities 72,815 70,444 44,427 71,101
---------- ---------- ---------- ----------
Total current liabilities 545,167 714,244 590,077 727,902
DEFERRED TAX LIABILITY 34,800 - 34,800 -
LONG-TERM DEBT:
Line of credit 425,000 291,000 300,000 398,000
Capital leases payable 105,080 140,206 166,088 119,024
---------- ---------- ---------- ----------
Total liabilities 1,110,047 1,145,450 466,088 517,024
STOCKHOLDERS' INVESTMENT:
Preferred stock, 1,000,000 shares authorized,
no shares outstanding at June 30, 1999,
March 31, 1999 and 1998 - - - -
Common stock, $.02 par value, 5,000,000 shares
authorized, 3,834,192, 3,847,086, 3,482,820 shares
outstanding at June 30, 1999, March 31, 1999 and
1998, respectively 76,941 69,657 76,683 69,951
Paid-in capital 1,586,078 897,341 1,563,872 926,918
Notes receivable from stockholders (608,316) (154,008) (534,485) (154,008)
Advance to ESOP (58,946) - (73,656) (153,687)
Retained earnings 237,613 192,183 248,462 165,695
---------- ---------- ---------- ----------
Total stockholders' investment 1,233,370 1,005,173 1,280,876 854,869
---------- ---------- ---------- ----------
Total liabilities and stockholders' investment $2,343,417 $2,150,623 $2,371,841 $2,099,795
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
GENROCO, INC. AND SUBSIDIARIES
------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
<TABLE>
(Unaudited)
Years ended March 31, Three months ended June 30,
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $4,657,993 $5,788,365 $3,709,808 $1,134,914 $849,626 $1,615,39
COST OF GOODS SOLD 1,831,371 2,346,115 1,261,062 400,166 400,742 630,224
---------- ---------- ---------- ---------- ---------- ----------
Gross profit 2,826,622 3,442,250 2,448,746 734,748 448,884 985,173
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES:
Research and development 1,134,007 1,044,424 712,902 279,866 224,590 256,366
Selling 880,260 817,490 425,951 237,201 136,424 203,038
Customer service 52,517 63,035 46,101 4,553 10,772 12,893
General and administrative 650,952 832,499 767,653 184,937 117,086 270,793
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 2,717,736 2,757,448 1,952,607 706,557 488,872 743,090
---------- ---------- ---------- ---------- ---------- ----------
Income from operations 108,886 684,802 496,139 28,191 (39,988)) 242,083
OTHER (EXPENSE) INCOME (35,456) 153,866 5,123 (10,342) (4,500) (1,190)
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes 73,430 838,668 501,262 17,849 (44,488) 240,893
PROVISION (CREDIT) FOR INCOME TAXES 28,000 204,770 - 7,000 (18,000) -
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) $45,430 $633,898 $501,262 $10,849 ($26,488) $240,893
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
BASIC EARNINGS PER SHARE $0.01 $0.19 $0.16 $0.00 $(0.01) $0.07
FULLY DILLUTED
EARNINGS PER SHARE $0.01 $0.19 $0.16 $0.00 $(0.01) $0.07
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
GENROCO, INC. AND SUBSIDIARIES
------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
(Unaudited)
Years ended March 31, Three months ended June 30,
---------------------------------------- ----------------------------------------
1999 1998 1997 1999 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $45,430 $633,898 $501,262 $10,849 ($26,488) $240,893
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities-
Depreciation and amortization 109,888 86,256 57,300 30,366 22,558 17,615
Provision for deferred taxes 800 - - - - -
Compensation expense from
forgiveness of notes receivable
from stockholders 221,667 80,542 - 73,831 - -
Compensation expense from grants
of common stock 36,420 1,750 2,750 - 29,871 -
Change in-
Accounts receivable (371,020) (119,268) (221,078) 398,969 (11,288) (76,063)
Inventories 221,908 (34,692) (377,735) (59,452) 9,449 (205,104)
Prepaid expenses and employee
advances 5,289 (13,977) 1,064 (54,584) 9,261 (61,314)
Other assets (19,265) 13,929 (8,316) - (4,297) (8,006)
Accounts payable (109,221) (238,627) 231,469 153,018 69,102 49,777
Accrued ESOP contributions - (175,105) 85,168 - - -
Accrued liabilities (61,242) 198,749 9,620 (114,023) (53,587) 151,596
Accrued litigation costs - (356,051) - - - -
-------- -------- -------- -------- -------- --------
Total adjustments 35,224 (556,494) (219,758) 428,125 71,069 (131,949)
-------- -------- -------- -------- -------- --------
Net cash provided by (used in)
operating activities 80,654 77,404 281,504 438,974 44,581 108,944
-------- -------- -------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of plant and equipment (87,421) (236,731) (157,492) (103,964) - (61,744)
-------- -------- -------- -------- -------- --------
Net cash used in investing
activities (87,421) (236,731) (157,492) (103,964) - (61,744)
-------- -------- -------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 1,397,690 505,032 144,882 366,923 374,961 35,823
Principal payments of long-term debt (1,297,430) (136,912) (73,973) (425,000) (291,000) (15,000)
Purchase of common stock (16,374) (14,875) - (22,464) - -
Payment of notes receivable from
stockholders - 25,710 90,403 - - -
Advance to ESOP (58,946) - - (14,710) (153,687) -
-------- -------- -------- -------- -------- --------
Net cash provided by (used in)
financing activities 24,940 378,955 161,312 (95,251) (69,726) 20,823
-------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 18,173 219,628 285,324 239,759 (25,145) 68,023
CASH AND CASH EQUIVALENTS, beginning of year 506,186 286,558 1,234 524,359 506,186 286,558
-------- -------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS, end of year $524,359 $506,186 $286,558 $764,118 $481,041 $354,581
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
GENROCO, INC. AND SUBSIDIARIES
------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
---------------------------------------------------
<TABLE>
Notes Total
Common Stock Receivable Retained Stockholders'
-------------------- Paid-in From Advance Earnings Equity
Shares Amount Capital Stockholders to ESOP (Deficit) (Deficit)
-------- -------- -------- ------------ -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, March 31, 1996 3,099,981 $62,001 $617,822 $(53,113) $ - $(942,977) $(316,267)
Net income - - - - - 501,262 501,262
Issuance - sale to officers 189,000 3,780 59,220 (63,000) - - -
Issuance - grants to directors 3,000 60 1,690 - - - 1,750
Issuance - grants to employees 3,000 60 940 - - - 1,000
Payments on notes receivable
from stockholders - - - 90,403 - - 90,403
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE, March 31, 1997 3,294,981 65,901 679,672 (25,710) - (441,715) 278,148
Net income - - - - - 633,898 633,898
Retirement of purchased shares (6,000) (120) (14,755) - - - (14,875)
Issuance - sale to directors 144,000 2,880 165,120 (168,000) - - -
Issuance - sale to employees 48,339 966 65,584 (66,550) - - -
Issuance - grant to employees 1,500 30 1,720 - - - 1,750
Forgiveness of notes receivable
from stockholders - - - 80,542 - - 80,542
Payments on notes receivable from
stockholders - - - 25,710 - - 25,710
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE, March 31, 1998 3,482,820 69,657 897,341 (154,008) - 192,183 1,005,173
Net income - - - - - 45,430 45,430
Retirement of purchased shares (18,000) (360) (26,514) 10,500 - - (16,374)
Issuance - sale to officers 255,000 5,100 475,150 (480,250) - - -
Issuance - sale to employees 109,500 2,190 204,035 (206,225) - - -
Issuance - grants to employees 17,766 354 36,066 - - - 36,420
Forgiveness of notes receivable
from stockholders - - - 221,667 - - 221,667
Advance to ESOP - - - - (58,946) - (58,946)
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE, March 31, 1999 3,847,086 76,941 1,586,078 (608,316) (58,946) 237,613 1,233,370
Net Income - - - - - 10,849 10,849
Retirement of purchased shares (12,894) (258) (22,206) - - - (22,464)
Forgiveness of notes receivable
from stockholder - - - 73,831 - - 73,831
Advance to ESOP - - - - (14,710) - (14,710)
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE, June 30, 1999 3,834,192 $76,683 $1,563,872 $(534,485) $(73,656) $248,462 $1,280,876
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
GENROCO, INC.
-------------
GENROCO, INC. AND SUBSIDIARIES
------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
MARCH 31, 1999 AND 1998
-----------------------
(1) Description of the Company-
--------------------------
GENROCO, Inc. and its subsidiaries (collectively the "Company") is a
Wisconsin corporation. The Company is engaged in the design, manufacture
and service of computer components to customers who are engaged in the
production and sale of high performance computers and workstations as well
as providing engineering and design services to customers on a worldwide
basis. These services include complex software and engineering designs for
applications specific products requiring very high data transfer rates (in
excess of 80 MB per second). The Company operates as a single segment.
Net sales for components were approximately 96% of total Company net sales
in 1999.
The Company had three customers that individually accounted for 34%, 28%
and 19% of net sales in 1999. The Company had four customers that
individually accounted for 41%, 14%, 11% and 11% of net sales in 1998. The
Company had five customers that individually accounted for 27%, 17%, 12%,
12% and 9% of net sales in 1997.
Sales to foreign customers accounted for a significant portion of Company
sales. Sales to foreign countries were as follows:
Year Ended Year Ended Year Ended
March 31, 1999 March 31, 1998 March 31, 1997
-------------- -------------- --------------
France $1,599,000 $474,000 $ 330,000
Japan $ 887,000 $828,000 $1,038,000
(2) Summary of Significant Accounting Policies-
------------------------------------------
(a) Interim financial information-
-----------------------------
The accompanying financial statements as of June 30, 1999 and 1998 and
for the three-month periods ending June 30, 1999, 1998 and 1997 are
unaudited. In the opinion of management of the Company, these
financial statements reflect all adjustments, consisting only of
normal and recurring adjustments necessary for a fair presentation of
the financial statements. The results of operations for the three-
month period ended June 30, 1999 are not necessarily indicative of the
results that may be expected for the full year ending March 31, 2000.
(b) Revenue recognition-
-------------------
Revenue from product sales is recognized when the products are
shipped. Service revenue from engineering and design work is
recognized as the services are provided.
(c) Principles of consolidation-
---------------------------
The consolidated financial statements include the accounts of GENROCO,
Inc. and its wholly owned subsidiary, GENROCO International, Inc.
which serves as the operating entity of the Company. All significant
intercompany accounts and transactions have been eliminated.
(d) Cash and cash equivalents-
-------------------------
Cash equivalents are defined as short-term investments, which have an
original maturity of three months or less and are readily convertible
into cash.
(e) Inventories-
-----------
Inventories are stated at the lower of average cost, determined using
the first-in, first-out method, or market. Inventories consist of:
(Unaudited)
March 31, June 30 ,
1999 1998 1999 1998
-------- -------- -------- --------
Raw materials and
work-in-process $288,766 $536,246 $357,461 $463,036
Finished goods 169,842 144,270 160,599 208,031
-------- -------- -------- --------
$458,608 $680,516 $518,060 $671,067
-------- -------- -------- --------
-------- -------- -------- --------
(f) Plant and equipment-
-------------------
Plant and equipment are stated at cost. The related depreciation and
amortization expense has been provided using the straight-line method
over the estimated lives of the machinery and equipment (3 to 5 years)
and over the shorter of five years or the life of the lease for
leasehold improvements. Equipment leases that meet the criteria of
capital leases have been capitalized and are being amortized over the
lesser of the estimated lives of the machinery and equipment or the
term of the lease. Depreciation and amortization expense was
approximately $110,000, $86,000, and $57,000 for 1999, 1998 and 1997,
respectively.
(g) Other assets-
------------
Other assets are composed of the following:
(Unaudited)
March 31, June 30 ,
1999 1998 1999 1998
-------- -------- -------- --------
Patent (net of accumulated
amortization of $4,294
and $3,519 as of March 31, $13,913 $7,604 $13,449 $11,708
1999 and 1998, and $4,758
and $3,713 as of June 30,
1999 and 1998 respectively)
Cash surrender value on
insurance policies (net of
loans of $84,244 and
$87,723 as of March 31, 14,401 2,221 14,421 2,221
1999 and 1998, and
$84,244 and $85,502 as
of June 30, 1999
and 1998 respectively)
-------- -------- -------- --------
$28,314 $9,825 $27,870 $13,929
-------- -------- -------- --------
-------- -------- -------- --------
(h) Research and development costs-
------------------------------
Research and development costs are expensed as incurred and shown
separately as a component of operating expenses on the Consolidated
Statements of Operations.
(i) Use of estimates-
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
(j) Net income per common share-
---------------------------
The Company accounts for earnings per share according to the
provisions of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" for purposes of calculating earnings per share.
Basic earnings per share of common stock is computed by dividing net
income by the weighted average number of common shares outstanding
during the period. Diluted earnings per share of common stock is
computed by dividing net income by the average number of common shares
and common equivalent shares related to the assumed exercise of stock
options and warrants. Average common shares for computation of basic
earnings per share were 1,256,086, 1,118,722 and 1,073,135 in 1999,
1998 and 1997, respectively. The Company does not have any common
stock equivalents and therefore diluted earnings per share are
identical to basic earnings per share.
(k) Stock Split-
-----------
On September 28, 1999 the Company issued two additional shares of
stock to all shareholders of record as of September 21, 1999. All
stock disclosures have been restated to effect this split.
(l) Reclassifications-
-----------------
Certain reclassifications have been made to the prior year amounts for
consistency with the current year presentation.
(3) Revolving Credit Agreement-
--------------------------
During 1998, the Company entered into a revolving credit agreement with a
major bank, which allows the Company to borrow up to $500,000 based on a
borrowing base, as defined. The agreement bears interest at the rate of
LIBOR plus 2.75% (approximately 7.72% at March 31, 1999), terminates on
July 31, 2000, and has restrictive covenants including an obligation to
maintain tangible net worth in excess of $1,000,000 and $1,250,000 for 1999
and 2000, respectively. The agreement is collateralized by current
accounts receivable balances.
The balance outstanding was $425,000 and $291,000 as of March 31, 1999 and
1998, respectively. The revolver is classified as long-term as the Company
believes that it has the ability to maintain a borrowing base level during
the next year sufficient to support the outstanding balance.
(4) Long-Term Debt-
--------------
Long-term debt consists of:
(Unaudited)
March 31, June 30 ,
1999 1998 1999 1998
-------- -------- -------- --------
Line of credit (See Note 3) $425,000 $291,000 $300,000 $398,000
Capital leases 203,344 237,084 270,268 214,045
-------- -------- -------- --------
628,344 528,084 570,268 612,045
Less- Current portion (98,264) (96,878) (104,180) (95,021)
-------- -------- -------- --------
Total long-term debt $530,080 $431,206 $466,088 $517,024
-------- -------- -------- --------
-------- -------- -------- --------
The capital leases are for machinery and equipment. These leases range
from 36 to 60 months and bear interest ranging from 9.65% to 17.12%.
The maturities of long-term debt outstanding as of March 31, 1999 are as
follows:
Fiscal Year Maturity
----------- --------
2000 $98,264
2001 491,921
2002 26,152
2003 6,556
2004 5,451
--------
$628,344
--------
--------
(5) Income Taxes-
------------
The Company accounts for income taxes according to provisions of Statement
of Financial Accounting Standards No. 109 "Accounting for Income Taxes."
Components of the deferred income taxes are as follows:
March 31,
-----------------
1999 1998
---- ----
Current deferred tax asset-
Warranty reserve $975 $975
Accrued employee benefits 7,239 8,021
Inventory adjustments 22,651 33,036
Bad debt reserve 1,170 1,170
Other 2,765 4,398
-------- --------
Total current deferred tax asset 34,800 47,600
Noncurrent deferred tax liability-
Property, plant and equipment $(34,800) $(32,900)
-------- --------
Net deferred tax asset $ - $14,700
Valuation allowance - (14,,700)
-------- --------
Net deferred tax liability $ - $ -
-------- --------
-------- --------
The following is a summary of components of the provision for income taxes:
March 31,
--------------------------
1999 1998 1997
---- ---- ----
Pretax book income $73,430 $838,668 $501,262
------- -------- --------
------- -------- --------
Federal tax $20,400 $285,147 $209,290
State tax 6,800 43,065 48,630
Reversal of valuation allowance - (14,812) (257,920)
Business tax credits - (108,630) -
------- -------- --------
Current 27,200 204,770 -
Deferred 800 - -
------- -------- --------
Total provision $28,000 $204,770 $ -
------- -------- --------
------- -------- --------
A reconciliation of the statutory Federal income tax rate to the effective
income tax rate is as follows:
March 31,
--------------------------
1999 1998 1997
---- ---- ----
Federal statutory rate 34.0% 34.0% 34.0%
State income tax, net of Federal benefit 5.2 5.2 5.2
Reversal of valuation allowance - (1.8) (39.2)
Business tax credits and other (1.1) (13.0) -
---- ---- ----
Effective income tax rate 38.1% 24.4% -%
---- ---- ----
---- ---- ----
(6) Supplemental Disclosure of Cash Flow Information-
------------------------------------------------
March 31,
1999 1998 1997
---- ---- ----
Cash paid during the year for-
Interest $31,646 $22,064 $8,977
Income taxes $174,066 $39,291 $ -
Noncash items-
Issuance of common stock for notes
receivable from stockholders $686,475 $234,550 $63,000
(Unaudited) June 30,
1999 1998 1997
---- ---- ----
Cash paid during the three month
period for-
Interest $8,341 $7,172 $4,201
Income taxes $ - $ - $7,000
Noncash items-
Issuance of common stock for notes
receivable from stockholders $ - $ - $ -
(7) Transactions with Related Parties-
---------------------------------
As of March 31, 1999 and 1998, the notes receivable from stockholders were
$608,316 and $154,008, respectively. The 1998 notes are payable over terms
ranging from 15 to 24 months, and bear interest at 5.8%. The 1999 notes
are payable over 36 months and bear interest at 5.8%.
(8) Lease Commitments-
-----------------
The Company leases its operating facility located in Slinger, Wisconsin,
under an agreement expiring October 31, 1999. The Company has options to
renew the lease agreement. The Company also has options to rent additional
adjacent space upon 90 days notice and to buy the entire building at the
end of the lease term or at any time during the lease term (or extended
term). Total rent expense was approximately $109,000, $103,000 and $52,000
in 1999, 1998 and 1997, respectively.
As of March 31, 1999, the approximate future minimum lease payments under
operating leases are as follows:
Year Amount
---- ------
2000 $43,000
(9) Employee Benefit Plans-
----------------------
The Company has an Employee Stock Ownership Plan and Trust (the "Plan"),
covering substantially all domestic employees. The Company's contribution
to the Plan is discretionary and is determined annually by the Board.
Expense recorded under the Plan was approximately $131,000, $92,000 and
$150,000 in 1999, 1998 and 1997, respectively.
The Company funded the current year contribution of $131,000, and made an
advance to the Plan of approximately $59,000 that is included as a
component of stockholders' investment on the balance sheet.
The Plan owned 558,600 and 486,105 shares of Company stock as of March 31,
1999 and 1998, respectively.
(10) Stock Options-
-------------
The Company granted executive stock options on March 1, 1997 that vested
over three years beginning April 1, 1997. During 1998, these options were
cancelled prior to any options being exercised.
The Company accounts for its option grants using the intrinsic value based
method pursuant to APB Opinion No. 25 and Statement of Financial Accounting
Standards No. 123 (SFAS No. 123) under which no compensation expense was
recognized in 1999 and 1998. All options granted in 1997 were terminated
in 1998 and as such there was no compensation cost recognized for these
options pursuant to the fair value method under SFAS No. 123. No options
were granted during 1999 or 1998.
<TABLE>
(Unaudited)
Three months ended
June 30, 1999 1999 1998
------------------------ ------------------------ -----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
<S> <C> <C> <C> <C> <C> <C>
---------- ---------- ---------- ---------- ---------- ----------
Outstanding at beginning of year - $ - - $ - 24,000 $ -
Granted - - - - - -
Exercised - - - - - -
Forfeited - - - - (24,000) -
---------- ---------- ---------- ---------- ---------- ----------
Outstanding at end of year - $ - - $ - - $ -
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Exercisable at end of period - $ - - $ - - $ -
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
(11) Capital Stock-
-------------
Preferred stock authorized is 1,000,000 shares. As of March 31, 1999 and
1998, respectively, no preferred stock had been issued. Common stock
authorized is 5,000,000 shares. There were 3,847,086, 3,482,820 and
3,294,981 shares outstanding (adjusted for 3 for 1 stock split in September
1999) as of March 31, 1999, 1998 and 1997, respectively.
Stock grants awarded during 1999 and 1998 were valued using an average of
the bid and ask price for the thirty days prior to the grant date.
(12) Contingencies and Liabilities-
-----------------------------
During 1997, a court granted a summary judgment against the Company in
favor of Avnet, Inc. ("AVNET") in the amount of $217,891. The Company
established a reserve relating to certain claims and counter claims, in the
amount of $356,051 as of March 31, 1997. During 1998, the case was settled
and a payment of $75,000 was made in full settlement of all claims and
counter claims and the balance of the reserve was recognized as
nonoperating income during 1998.
PART III
Item 1. INDEX TO EXHIBITS
The exhibits listed in the following table have been filed as part of this
Registration Statement and may be found on the following sequential page
numbers.
2.1 Articles of Incorporation of the Company, as amended and restated to date
2.2 Articles of Merger
2.3 Agreement and Plan of Merger
2.4 By-Laws of the Company
3.1 Specimen form of the Company's Common Stock Certificate
6.1 Building Purchase Agreement
6.2 $1,000,000 Mortgage Note- M&I Bank
6.3 $110,000 Mortgage Note - M&I Bank
6.4 Mortgage - former property owner
10.1 Consent of Arthur Andersen LLP
27 Financial Data Schedules
SIGNATURE
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: October 14, 1999
---------------------------------
GENROCO, Inc.
By /s/ Carl A. Pick
-----------------------------------
Carl A. Pick
Chief Executive Officer
By /s/ Keith E. Brue
-----------------------------------
Keith E. Brue
Chief Financial Officer
ARTICLES OF INCORPORATION
OF
CARLSGOOD, INC.
I, the undersigned natural person of the age of eighteen years or more acting as
incorporator of a corporation under the Wisconsin Business Corporation Law,
adopt the following Articles of Incorporation for such corporation:
ARTICLE I
The name of the corporation is Carlsgood, Inc.
ARTICLE II
Purposes
The purposes for which the corporation is organized are to engage in any lawful
activity within the purposes for which a corporation may be organized under the
Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes.
ARTICLE III
Capital Stock
The authorized capital stock of this corporation shall consist of Two Million
Five Hundred Thousand (2,500,000) common shares, par value $.02 per share and
Five Hundred Thousand (500,000) preferred shares, par value $.02 per share.
The board of directors of this corporation is hereby vested to the fullest
extent permitted by the Wisconsin Business Corporation Law to divide the
preferred shared into series, and within the limitations set forth in the
Wisconsin Business Corporation Law, the board of directors may fix and determine
the relative rights and preferences of the shares of any preferred series so
established.
ARTICLE IV
Preemptive Rights
No holder of any stock of the corporation shall have any preemptive right to
purchase, subscribe for, or otherwise acquire any shares of stock of the
corporation of any class or series now or hereinafter authorized or any
securities exchangeable for or convertible into such shares.
ARTICLE V
Directors
---------
The number of directors shall be provided in the Bylaws.
ARTICLE VI
Registered Office and Agent
---------------------------
The address of the initial registered office of the corporation is 205 Kettle
Moraine Drive North, Slinger, Washington County, Wisconsin 53086 and, the name
of such registered agent at such address is Carl A. Pick.
ARTICLE VII
Right to Purchase and Own Shares and Partial Liquidation
--------------------------------------------------------
The corporation shall have the right to acquire its own shares from time to
time, upon such terms and conditions, as the board of directors shall fix. The
board of directors of the corporation may, from time to time, distribute to
shareholders a partial liquidation out of the stated capital or net capital
surplus, a portion of its assets in cash or property as further provided by the
Wisconsin Business Corporation Law.
ARTICLE VIII
Incorporator
------------
The name and address of the incorporator is John A. Hazelwood, 411 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Executed in duplicate, February 1, 1990.
/s/ John A. Hazelwood
------------------------------------
John A. Hazelwood
STATE OF WISCONSIN )
) SS
MILWAUKEE COUNTY )
Personally came before me February 1, 1990, the above named John A. Hazelwood,
to me known to be the person who executed the foregoing instrument and
acknowledged the same.
-----------------------------------
Notary Public, State of Wisconsin
My Commission: --------------------
This document was drafted by:
John A. Hazelwood, Esq.
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, WI 53202
ARTICLES OF MERGER
OF
GENROCO, INC.
(A Nevada Corporation)
into
CARLSGOOD, INC.
(A Wisconsin Corporation)
Pursuant to Section 180.65 of the Wisconsin Business Corporation Law, CARLSGOOD,
INC. ("Surviving Corporation"), a Wisconsin corporation, and GENROCO, INC.
("Merging Corporation"), a Nevada corporation, hereby execute the following
Articles of Merger:
ARTICLE I
Plan of Merger
The Plan of Merger is the Agreement and Plan of Merger attached hereto as
Exhibit A and incorporated herein by reference.
ARTICLE II
Number of Shares Outstanding
The number of outstanding shares of each corporation and the total number of
shares of each corporation required for approval of the Plan of Merger are as
follows:
Number of Shares
Shares Required for
Name Class Outstanding Approval of Merger
---- ----- ----------- ------------------
GENROCO, INC. Common 14,625,000 7,312,501
Preferred None -
Carlsgood, Inc. Common 100 51
Preferred None -
ARTICLE III
Shareholder Approval
The aforesaid Plan of Merger was approved by 11,565,104 shares of the Merging
Corporation and no shares voted against the Plan of Merger at a duly called
meeting of its shareholders and by the unanimous written consent of the sole
holder of the common stock of the Surviving Corporation.
ARTICLE IV
Registered Office
The county is which the Registered Office of each corporation is located is as
follows:
Name County
- ----- ------
GENROCO, INC. Clark, Nevada
Carlsgood, Inc. Washington County, Wisconsin
ARTICLE V
Effective Date
The effective date of the Merger shall be the close of business on March 31,
1990.
IN WITNESS WHEREOF, each of the parties hereto have caused these Articles of
Merger to be executed in its behalf on this 7th day of March, 1990.
GENROCO, INC.
(Merging Corporation)
(No Corporate Seal) By: /s/ Carl A. Pick
---------------------------
Carl A. Pick, President
Attest: /s/ Peter Kerwin
-----------------------
Peter Kerwin, Secretary
Carlsgood, Inc.
(Surviving Corporation)
(No Corporate Seal) By: /s/ Carl A. Pick
---------------------------
Carl A. Pick, President
Attest: /s/ Peter Kerwin
-----------------------
Peter Kerwin, Secretary
STATE OF WISCONSIN )
: ss.
COUNTY OF )
On this 7th day of March, 1990, personally came before me, a notary public, the
above named Carl A. Pick and Peter Kerwin, who acknowledged that they executed
the foregoing Articles of Merger as President and Secretary of each of the
constituent corporations.
-----------------------------------
Notary Public, State of Wisconsin
My Commission: --------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
GENROCO, INC.
AND
CARLSGOOD, INC.
AGREEMENT AND PLAN OF MERGER dated March 7, 1990 by and between GENROCO, Inc.
("Merging Corporation"), a Nevada corporation, and Carlsgood, Inc. ("Surviving
Corporation"), a Wisconsin corporation (said corporations being hereinafter
sometimes collectively referred to as the "Constituent Corporations").
WHEREAS, the authorized capital stock of the Merging Corporation consists of
50,000,000 shares of common stock, par value $.001 per shares of which
14,625,000 shares are issued and outstanding, and 10,000,000 shares of preferred
stock, $.001 par value of which no shares are issued and outstanding; and
WHEREAS, the authorized common stock of the Surviving Corporation consists of
2,500,000 shares of common stock, $.02 par value per share, of which 100 are
issued and outstanding and 500,000 shares of preferred stock, $.02 par value per
share, of which no shares are issued and outstanding; and
WHEREAS, the respective shareholders and boards of directors of the Merging
Corporation and the Surviving Corporation deem it advisable that the Merging
Corporation be merged into the Surviving Corporation pursuant to this Agreement
and the applicable provisions of the laws of the State of Wisconsin and the
State of Nevada;
NOW, THEREFORE, in consideration of the mutual agreements contained herein, the
parties hereby agree, that the Merging Corporation shall be merged into the
Surviving Corporation which will continue its corporate existence and be the
surviving corporation and the terms and conditions of the merger hereby agreed
upon (hereinafter called the "Merger") which the parties covenant to observe,
keep and perform and the mode of carrying the same into effect are and shall be
as hereinafter set forth:
ARTICLE I
Merger
Upon the date herein designated as the effective date of the Merger (hereinafter
referred to as the "effective date of the Merger"), the separate existence of
the Merging Corporation shall cease and the Merging Corporation shall be merged
into the Surviving Corporation. The effective date of the Merger is hereby
designated as the close of business on March 31, 1990.
ARTICLE II
Article of Incorporation; Bylaws
Except the hereinafter provided, the Articles of Incorporation and the Bylaws of
the Surviving Corporation as then in effect shall on the effective date of the
Merger become the Articles of Incorporation and the Bylaws of the Surviving
Corporation. Upon the effective date of the Merger, Article I of the Articles
of Incorporation of the Surviving Corporation shall be amended in its entirety
to read as follows:
"ARTICLE I
The Name of the Corporation is GENROCO, INC."
------------
ARTICLE III
Directors and Officers
The officers and directors of the Surviving Corporation on the effective date of
the Merger shall be the officers and directors of the Surviving Corporation
until their respective successors are duly elected and qualified.
ARTICLE IV
Conversion and Exchange of Shares
The manner of converting and exchanging the shares of each of the Merging
Corporation and the Surviving Corporation shall be as follows:
A. CANCELLATION OF THE SURVIVING CORPORATION'S SHARES
--------------------------------------------------
The 100 shares of common stock of the Surviving Corporation issued and
outstanding on the effective date of the Merger shall, by virtue of the
Merger and without any action on the part of the holder thereof, be retired
and cancelled and the consideration which the holder paid for these shares,
namely $2.00, shall be returned to the holder by the Surviving Corporation.
B. CONVERSION OF MERGING CORPORATION'S SHARES INTO SURVIVING
---------------------------------------------------------
CORPORATION'S SHARES
--------------------
Upon the effective date of the Merger, the Surviving Corporation shall
issue one share of its common stock for each twenty shares of common stock
the holder owns in the Merging Corporation, said conversion to be by virtue
of the Merger and without any action on the part of the holder of the
Merging Corporation's shares. The Merging Corporation may issue fractional
shares.
ARTICLE V
Further Assurances
------------------
At any time and from time to time after the Merger, the parties shall execute
and deliver such instruments and to take such other actions as may reasonably be
required to accomplish the transactions contemplated by this Agreement and Plan
of Merger.
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan of Merger
pursuant to the authority duly given by their respective shareholders and boards
of directors as of the date first written above.
GENROCO, INC.
(Merging Corporation)
(No Corporate Seal) By: /s/ Carl A. Pick
---------------------------
Carl A. Pick, President
Attest: /s/ Peter Kerwin
-----------------------
Peter Kerwin, Secretary
Carlsgood, Inc.
(Surviving Corporation)
(No Corporate Seal) By: /s/ Carl A. Pick
---------------------------
Carl A. Pick, President
Attest: /s/ Peter Kerwin
-----------------------
Peter Kerwin, Secretary
STATE OF WISCONSIN )
: ss.
COUNTY OF )
On this 7th day of March, 1990, personally came before me, a notary public, the
above named Carl A. Pick and Peter Kerwin, who acknowledged that they executed
the foregoing Agreement and Plan of Merger as President and Secretary of each of
the constituent corporations.
-----------------------------------
Notary Public, State of Wisconsin
My Commission: --------------------
CARLSGOOD, INC.
UNDERTAKING
-----------
Pursuant to NRS 78.490, the undersigned corporation, a Wisconsin Corporation,
being the Surviving Corporation in a Merger between GENROCO, INC., a Nevada
Corporation, and itself, does hereby agree that the undersigned corporation may
be served with process in the State of Nevada in any proceeding for enforcement
of any obligation of any constituent corporation organized and existing before
the Merger, under the laws of the State of Nevada, including any amount fixed by
appraisers or the District Court pursuant to the provisions of NRS 78.510.
Additionally, the undersigned corporation does hereby irrevocably appoint the
Secretary of State of the State of Nevada as the undersigned's agent to accept
service of process in an action for the enforcement of payment of any such
obligation or any amount fixed by the appraisers. Additionally, the undersigned
corporation does hereby specify the following address to which a copy of the
process may be mailed by the said Secretary of State: 205 Kettle Moraine Drive
North, Slinger, Wisconsin, 53086, Attention Carl A. Pick.
Dated March 7, 1990
Carlsgood, Inc.
(Soon to be named GENROCO, INC.)
(A Wisconsin Corporation)
(No Corporate Seal) By: /s/ Carl A. Pick
---------------------------
Carl A. Pick, President
Attest: /s/ Peter Kerwin
-----------------------
Peter Kerwin, Secretary
STATE OF WISCONSIN )
: ss.
COUNTY OF )
On this 7th day of March, 1990, personally came before me, a notary public, the
above named Carl A. Pick and Peter Kerwin, the President and Secretary of
Carlsgood, Inc., a Wisconsin Corporation, who acknowledged that they executed
the Undertaking required by NRS 78.490 on behalf of the corporation.
-----------------------------------
Notary Public, State of Wisconsin
My Commission: --------------------
BYLAWS
OF
GENROCO, INC.
ADOPTED
January 25, 1991
ARTICLE I. OFFICES; RECORDS
1.01 Principal and Business Offices.
-------------------------------
The corporation may have such principal and other business offices,
either within or without the State of Wisconsin, as the Board of
Directors may designate or as the business of the corporation may
require from time to time.
1.02 Registered Office and Registered Agent.
---------------------------------------
The registered office of the corporation required by the Wisconsin
Business Corporation Law to be maintained in the State of Wisconsin may
be, but not need be, identical with the principal office in the State of
Wisconsin. The address of the registered office may be changed from
time to time by any officer or by the registered agent. The business
office of the registered agent of the corporation shall be identical to
such registered office.
1.03 Corporate Records.
------------------
The following records shall be kept at the corporation's principal
office or at such other reasonable location as may be specified by the
corporation:
(a) Minutes of shareholders' and Board of Directors' meetings and any
written notices thereof.
(b) Records of actions taken by the shareholders or directors without a
meeting.
(c) Records of actions taken by committees of the Board of Directors.
(d) Accounting records.
(e) Records of its shareholders.
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting.
---------------
The annual meeting of the shareholders shall be held on the second
Friday in August at 11:00 a.m. or at such other time and date as may be
fixed by or under the authority of the Board of Directors, for the
purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the
annual meeting is a legal holiday in the State of Wisconsin, such
meeting shall be held on the succeeding business day. If the election
of directors is not held on the day designated herein, or fixed as
herein provided, for any annual meeting of the shareholders, or at any
adjournment thereof, the Board of Directors shall cause the election to
be held at a special meeting of the shareholders as soon thereafter as
may be convenient.
2.02 Special Meetings.
-----------------
Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the President
or the Board of Directors. If and as required, by the Wisconsin
Business Corporation Law, a special meeting shall be called upon written
demand describing one or more purposes for which it is to be held by
holders of shares with at least 10% of the votes entitled to be cast on
any issue proposed to be considered at the meeting. The purpose or
purposes of any special meeting shall be described in the notice
required by Section 2.04 of these Bylaws.
2.03 Place of Meeting.
-----------------
The Board of Directors may designate any place, either within or without
the State of Wisconsin, as the place of meeting for any annual meeting
or any special meeting. If no designation is made, the place of meeting
shall be the principal business office of the corporation but any
meeting may be adjourned to reconvene at any place designated by vote of
a majority of the shares represented thereat.
2.04 Notice to Shareholders.
-----------------------
(a) Required Notice
---------------
Written notice stating the place, day and hour of the meeting and, in
case of a special meeting, the purpose or purposes for which the meeting
is called, shall be delivered not less than five (5) days nor more than
sixty (60) days before the date of the meeting (unless a different time
is provided by law or the Articles of Incorporation), by or at the
direction of the President or the Secretary, to each shareholder
entitled to vote at such meeting or, if the Wisconsin Business
Corporation Law required that notice be given to shareholders not
entitled to vote, to all shareholders. If mailed, such notice is
effective when deposited in the United States mail, and shall be
addressed to the shareholder's address shown in the current record of
shareholders of the corporation, with postage thereon prepaid. At least
twenty (20) days' notice shall be provided if the purpose of the meeting
is to consider a plan of merger or share exchange or the sale, lease,
exchange or other disposition of all or substantially all of the
corporation's property, with or without goodwill, otherwise than in the
usual and regular course of business
(b) Adjourned Meeting.
-----------------
Except as provided in the next sentence, if any shareholder meeting is
adjourned to a different date, time or place, notice need not be given
of the new date, time and place, if the new date, time and place is
announced at the meeting before the adjournment. If a new record date
for the adjourned meeting is or must be fixed, then notice must be given
pursuant to the requirements of paragraph (a) of this Section 2.04, to
those persons who are shareholders as of the new record date.
(c) Waiver of Notice.
----------------
A shareholder may waive notice in accordance with Article IV of these
Bylaws.
(d) Contents of Notice.
------------------
The notice of each special shareholder meeting shall include a
description of the purpose or purposes for which the meeting is called.
Except as otherwise provided in this Section 2.04(d), or as provided in
the Articles of Incorporation, or otherwise in the Wisconsin Business
Corporation Law, the notice of an annual shareholder meeting need not
include a description of the purpose or purposes for which the meeting
is called.
(e) Fundamental Transactions.
------------------------
If a purpose of any shareholder meeting is to consider either:
(i) a proposed amendment to the Articles of Incorporation
(including any restated articles);
(ii) a plan of merger or share exchange;
(iii) the sale, lease, exchange or other disposition of all or
substantially all of the corporation's property, with or
without good will; otherwise than in the usual and regular
course of business;
(iv) the dissolution of the corporation; or
(v) the removal of a director
the notice must so state and in cases (1), (2) and (3) above must be
accompanied by, respectively, a copy or summary of the:
(i) proposed articles of amendment;
(ii) proposed plan of merger or share exchange; or
(iii) proposed transaction for disposition of all or substantially
all of the corporation's property.
If the proposed corporate action creates dissenters' rights, the notice
must state that shareholders are or may be entitled to assert
dissenters' rights, and must be accompanied by a copy of Sections
180.1301 to 180.1331 of the Wisconsin Business Corporation Law.
(f) Certain Stock Issuances.
------------------------
If the corporation issued or authorizes the issuance of shares for
promissory notes or for promises of future services, the corporation
shall report in writing to the shareholders entitled to receive notice
of that meeting, the number of shares authorized or issued, and the
consideration received or to be received by the corporation.
(g) Indemnification; Advance of Expenses.
-------------------------------------
If the corporation indemnifies or advances expenses to a director or
officer under Sections 180.0820 et seq. of the Wisconsin Business
-------
Corporation Law in connection with a proceeding by or in the right of
corporation, this shall be reported to shareholders entitled to receive
notice of the next shareholder meeting with or before the notice of that
meeting.
2.05 Fixing of Record Date.
----------------------
The Board of Directors may fix in advance a date as the record date for
one or more voting groups for any determination of shareholders entitled
to notice of a shareholder meeting, to demand a special meeting, to
vote, or to take any other action, such date in any case to be not more
than seventy (70) days prior to the meeting or action requiring such
determination of shareholders, and may fix the record date for
determining shareholders entitled to share dividend or distribution. If
not record date is fixed for the determination of shareholders entitled
to demand a shareholder meeting, to notice of or to vote at a meeting of
shareholders, or to consent to action without a meeting,
(a) the close of business on the day before the corporation
receives the first written demand for a shareholder meeting;
(b) the close of business on the day before the first notice of
the meeting is mailed or otherwise delivered to shareholders,
or
(c) the close of business on the day before the first written
consent to shareholder action without a meeting is received by
the corporation,
as the case may be, shall be the record date for the determination of
shareholders. If no record date is fixed for the determination of
shareholders entitled to receive a share dividend or distribution (other
than a distribution involving a purchase, redemption or other
acquisition of the corporation's shares), the close of business on the
day on which the resolution of the Board of Directors is adopted
declaring the dividend or distribution shall be the record date. When a
determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such
determination shall be applied to any adjournment thereof unless the
Board of Directors fixes a new record date and except as otherwise
required by law. A new record date must be set if a meeting is
adjourned to a date more than 120 days after the date fixed for the
original meeting.
2.06 Shareholder List.
-----------------
The officer or agent having charge of the stock transfer books for
shares of the corporation shall, before each meeting of shareholders,
make a complete record of the shareholders entitled to notice of such
meeting, arranged by class or series of shares and showing the address
of and the number of shares held by each shareholder. The shareholder
list shall be available at the meeting and may be inspected by any
shareholder or his or her agent or attorney at any time during the
meeting or any adjournment. Any shareholder or his or her agent or
attorney may inspect the shareholder list beginning two (2) business
days after the notice of the meeting is given and continuing to the date
of the meeting, at the corporation's principal office or at a place
identified in the meeting notice in the city where the meeting will be
held and, subject to Section 180.1602(2)(b) 3 to 5 of the Wisconsin
Business Corporation Law, may copy the list, during regular business
hours and at his or her expense, during the period that it is available
for inspection hereunder. The original stock transfer books and nominee
certificates on file with the corporation (if any) shall be prima facie
evidence as to who are the shareholders entitled to inspect the
shareholder list or to vote at any meeting of shareholders. Failure to
comply with the requirements of this section shall not affect the
validity of any action taken at such meeting.
2.07 Quorum and Voting Requirements.
-------------------------------
Except as otherwise provided in the Articles of Incorporation, a
majority of the votes entitled to be cast by shares entitled to vote as
a separate voting group on matter, represented in person or by proxy,
shall constitute a quorum of that voting group for action on that matter
at a meeting of shareholders. If a quorum exists, action on a matter,
other than the election of directors, by a voting group is approved if
the votes cast within the voting group favoring the action exceed the
votes opposing the action unless a greater number of affirmative votes
is required by the Wisconsin Business Corporation Law or the Articles of
Incorporation. If the Articles of Incorporation or the Wisconsin
Business Corporation Law provide for voting by two (2) or more voting
groups on a matter, action on that matter is taken only when voted upon
by each of those voting groups counted separately. Action may be taken
by one (1) voting group on a matter even though no action is taken by
another voting group entitled to vote on the matter. Once a share is
represented for any purpose at a meeting, other than for the purpose of
objecting to holding the meeting or transacting business at the meeting,
it is considered present for purposes of determining whether a quorum
exists for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for that meeting.
2.08 Conduct of Meetings.
--------------------
The Chairman of the Board, or if there is none, or in his or her
absence, the President, and in the President's absence, a Vice President
in the order provided under Section 4.06 of these Bylaws, and in their
absence, any person chosen by the shareholders present shall call the
meeting of the shareholders to order and shall act as chairman of the
meeting, and the Secretary shall act as secretary of all meetings of the
shareholders, but in the absence of the Secretary, the presiding officer
may appoint any other person to act as secretary of the meeting.
2.09 Proxies.
--------
At all meetings of shareholders, a shareholder entitled to vote may vote
in person or by proxy appointed in writing by the shareholder or by his
or her duly authorized attorney-in-fact. All proxy appointment forms
shall be filled with the Secretary or other officer or agent of the
corporation authorized to tabulate votes before or at the time of the
meeting. Unless the appointment form conspicuously states that it is
irrevocable and the appointment is coupled with an interest, a proxy
appointment may be revoked at any time. The presence of a shareholder
who has filed a proxy appointment shall not of itself constitute a
revocation. No proxy appointment shall be valid after eleven months
from the date of its execution, unless otherwise expressly provided in
the appointment form. The Board of Directors shall have the power and
authority to make rules as to the validity and sufficiency of proxy
appointments.
2.10 Voting of Shares.
-----------------
Each outstanding share shall be entitled to one (1) vote on each matter
submitted to a vote at a meeting of shareholders, except to the extent
that the voting rights of the shares of any class or classes are
enlarged, limited or denied by the Articles of Incorporation or the
Wisconsin Business Corporation Law. Shares owned directly or indirectly
by another corporation are not entitled to vote if this corporation
owns, directly or indirectly, sufficient shares to elect a majority of
the directors of such other corporation. However, the prior sentence
shall not limit the power of the corporation to vote any shares,
including its own shares, held by it in a fiduciary capacity.
Redeemable shares are not entitled to vote after notice of redemption is
mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution
under an irrevocable obligation to pay the holders the redemption price
on surrender of the shares.
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Number.
--------------------------
All corporate powers shall be exercised by or under the authority of,
and the business affairs of the corporation shall be managed under the
direction of, its Board of Directors. The number of directors of the
corporation shall be four (4). The number of directors may be increased
or decreased from time to time by amendment to this Section adopted by
the shareholders or the Board of Directors, but no decrease shall have
the effect of shortening the term of an incumbent member.
3.02 Election, Removal, Tenure and Qualifications.
---------------------------------------------
Subject to the provisions of Article VII of these Bylaws, directors
shall be elected by a plurality of the votes cast by the shares entitled
to vote in the election at a shareholders meeting at which a quorum is
present; i.e., the individuals with the largest number of votes are
elected as directors up to the maximum number of directors to be chosen
in the election. In the event two (2) or more persons tie for the last
vacancy to be filled, a run-off vote shall be taken from among the
candidates receiving the tie vote. Each director shall hold office
until the next annual meeting of shareholders and until the director's
successor shall have been elected, or until his or her prior death,
resignation or removal. If cumulative voting for directors is not
authorized by the Articles of Incorporation, any director or directors
may be removed from office by the shareholders if the number of votes
cast to remove the director exceeds the number cast not to remove him or
her, taken at a meeting of shareholders called for that purpose (subject
to the provisions of Article VII of these Bylaws), provided that the
meeting notice states that the purpose, or one of the purposes, of the
meeting is the removal of the director. The removal may be made with or
without cause unless the Articles of Incorporation or these Bylaws
provide that directors may be removed only for cause. If a director id
elected by a voting group of shareholders, only the shareholders of that
voting group may participate in the vote to remove that director. A
director may resign at any time by delivering a written resignation to
the Board of Directors, its chairperson, or the Secretary of the
corporation. Directors need not be residents of the State of Wisconsin
or shareholders of the corporation.
3.03 Regular Meetings.
-----------------
A regular meeting of the Board of Directors shall be held without other
notice than this Bylaw, immediately after the annual meeting of
shareholders, and each adjourned session thereof. The place of such
regular meeting shall be the same as the place of the meeting of
shareholders which precedes it, or other suitable place as may be
announced at such meeting of shareholders. The Board of Directors may
provide, by resolution, the time and place, either within or without the
State of Wisconsin, for the holding of additional regular meetings
without other notice than such resolution.
3.04 Special Meeting.
----------------
Special meetings of the Board of Directors may be called by or at the
request of the President or any two (2) directors. The persons calling
any special meeting of the Board of Directors may fix any place, either
within or without the State of Wisconsin, as the place for holding any
special meeting of the Board of Directors called by them, and if no
other place is fixed the place of meeting shall be the principal
business office of the corporation in the State of Wisconsin.
3.05 Meetings by Telephone or Other Communication Technology.
--------------------------------------------------------
(a) Any or all directors may participate in a regular or special
meeting or in a committee meeting of the Board of Directors by, or
conduct the meeting through the use of, telephone or any other
means of communications by which either:
(i) all participating directors may simultaneously hear each other
during the meeting, or
(ii) all communication during the meeting is immediately
transmitted to each participating director, and each
participating director is able to immediately send messages to
all other participating directors.
(b) If a meeting will be conducted through the use of any means
described in paragraph (a), all participating directors shall be
informed that a meeting is taking place at which official business
may be transacted. A director participating in a meeting by any
means described in the paragraph (a) is deemed to be present in
person at the meeting.
(c) The identity of each director participating in a meeting of the
Board of Directors or a committee thereof by any means described in
paragraph (a) must be verified before the directors vote at the
meeting
(i) on a plan of merger or share exchange;
(ii) to sell, lease, exchange or otherwise dispose of
substantial property or assets of the corporation;
(iii) to voluntarily dissolve the corporation or to revoke
voluntary dissolution proceedings; or
(iv) to file for bankruptcy.
The procedure for verifying a director's identity shall be by disclosure
by the director of a confidential Director Identification Number
assigned to such director in advance of the meeting by the Secretary
which is provided confidentially to the director with the notice of the
meeting or otherwise. A transaction within the meeting sub subpart (ii)
of this paragraph (c) shall be one which involves the sale, lease,
exchange or other disposition of more than fifty percent (50%) in value
of the corporation's assets to a person other than a subsidiary of the
corporation.
3.06 Notice of Meetings.
-------------------
Except as otherwise provided in the Articles of Incorporation or the
Wisconsin Business Corporation Law, notice of the date, time and place
of any special meeting of the Board of Directors and of any meeting of a
committee of the Board shall be given orally or in writing at least 48
hours prior to the meeting, except that notice by mail shall be given at
least 72 hours prior to the meeting. The notice need not describe the
purpose of or the business to be transacted at the meeting. Notice may
be communicated in person, by telephone, telegraph, or facsimile, or by
mail or private carrier. Oral notice is effective when communicated.
Written notice is effective as follows: If delivered in person, when
received; if given by mail, when deposited, postage prepaid, in the
United States mail addressed to the director at his or her business or
home address (or other such address as the director may have designated
in writing filed with the Secretary); if given by facsimile, at the time
transmitted to a facsimile number at any address designated above; and
if given by telegraph, when delivered to the telegraph company.
3.07 Quorum.
-------
Except as otherwise provided by the Wisconsin Business Corporation Law,
a majority of the number of directors as provided in Section 3.01 shall
constitute a quorum for the transaction of business at any meeting of
the Board of Directors.
3.08 Manner of Acting.
-----------------
Except as otherwise provided by the Wisconsin Business Corporation Law,
the affirmative vote of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of
Directors, unless the vote of a greater number is required by the
Wisconsin Business Corporation Law, or the Articles of Incorporation.
3.09 Conduct of Meetings.
--------------------
The Chairman of the Board, or if there is none, or in his or her
absence, the President and in the President's absence, a Vice President
in the order provided under Section 4.06 of these Bylaws, and in their
absence, any director chosen by the directors present, shall call
meetings of the Board of Directors to order and shall chair the meeting.
The Secretary of the corporation shall act as secretary of all meetings
of the Board of Directors, but in the absence of the Secretary, the
presiding officer may appoint any assistance secretary or any director
or other person present to act as secretary of the meeting.
3.10 Vacancies.
----------
Any vacancy occurring in the Board of Directors, including a vacancy
created by an increase in the number of directors, may be filled for the
remainder of the term by the shareholders or the Board of Directors. If
the directors remaining in office constitute fewer than a quorum of the
Board, the directors may fill a vacancy by the affirmative vote of a
majority of all directors remaining in office. If the vacant office was
held by a director elected by a voting group of shareholders, only the
holders of shares of that voting group may vote to fill the vacancy if
it is filled by the shareholders, and only the remaining directors
elected by that voting group may vote to fill the vacancy if it is
filled by the directors. A vacancy that will occur at a specific later
date (because of a resignation effective at a later date or otherwise)
may be filled before the vacancy occurs, but the new director may not
take office until the vacancy occurs.
3.11 Compensation.
------------
The Board of Directors, irrespective of any personal interest of any of
its members, may fix the compensation of directors.
3.12 Presumption of Assent.
---------------------
A director who is present and is announced as present at a meeting of
the Board of Directors or a committee thereof at which action on a nay
corporate matter is taken shall be presumed to have assented to the
action taken unless
(i) the director objects at the beginning of the meeting or promptly
upon his or her arrival to holding the meeting or transacting
business at the meeting, or
(ii) the director's dissent or abstention from the action taken is
entered into the minutes of the meeting, or
(iii) the director delivers his or her written dissent or abstention to
the presiding officer of the meeting before the adjournment
thereof or to the corporation immediately after the adjournment of
the meeting. Such right to dissent or abstain shall not apply to
a director who voted in favor of such action.
3.13 Committees.
-----------
The Board of Directors, by resolution adopted by the affirmative vote of
a majority of the number of directors as provided in Section 3.01, may
designate one (1) or more committees, each committee to consist of two
(2) or more directors as members, which to the extent provided in the
resolution as initially adopted by a like vote, shall have and may
exercise, the authority of the Board of Directors, except that no
committee may:
(a) authorize distributions;
(b) approve or propose to shareholders action that must be approved by
the Shareholders;
(c) fill vacancies on the Board of Directors or any of its committees,
except that the Board of Directors may provide by resolution that
any vacancies on a committee shall be filled by the affirmative
vote of a majority of the remaining committee members;
(d) amend the Articles of Incorporation;
(e) adopt, amend or repeal Bylaws;
(f) approve a plan of merger;
(g) authorize or approve reacquisition of shares, except according to a
formula or method prescribed by the Board of Directors; or
(h) authorize or approve the issuance or sale or contract for of
shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except
within limits prescribed by the Board of Directors.
The Board of Directors may elect one or more if its members as alternate
members of any such committee who may take the place of any absent
member or members at any meeting of such committee, upon request by the
President or upon request by the chairman of such meeting. Each such
committee shall fix its own rule governing the conduct of its activities
and shall make such reports to the Board of Directors of its activities
as the Board of Directors may request. Unless otherwise provided by the
Board of Directors in creating a committee, a committee may employ
counsel, accountants and other consultants to assist it in the exercise
of authority. The creation of a committee, delegation of authority to a
committee or action by a committee does not relieve the Board of
Directors or any of its members of any responsibility imposed on the
Board of Directors or its members by law.
ARTICLE IV. OFFICERS
4.01 Appointment.
-----------
The officers shall include a President, one or more Vice Presidents (the
number and designations to be determined by the Board of Directors), a
Secretary and such other officers if any, as may be deemed necessary by
the Board of Directors. Any two or more officers may be held by the
same person.
4.02 Resignation and Removal.
-----------------------
An officer or assistant officer shall hold office until he or she
resigns, dies, is removed hereunder, or a different person is appointed
to the office. An officer or assistant officer may resign at any time
by delivering an appropriate written notice to the corporation. The
resignation is effective when the notice is delivered, unless the notice
specifies a later effective date. Any officer, assistant officer or
agent may be removed by the Board of Directors with or without cause,
but such removal shall be without prejudice to the contract rights, if
any, of the officer or assistant officer so removed and the corporation.
Appointment shall not of itself create contract rights.
4.03 Vacancies.
----------
A vacancy in any office because of death, resignation, removal or
otherwise, shall be filled by the Board of Directors. If a resignation
is effective at a later date, the Board of Directors may fill the
vacancy before the effective date if the Board of Directors provides
that the successor may not take office until the effective date.
4.04 Chairman of the Board.
----------------------
The Board of Directors may at their discretion appoint a Chairman of the
Board. The Chairman of the Board shall preside at all meetings of the
shareholders and Board of Directors, and shall carry out such other
duties as directed by the Board of Directors or President.
4.05 President.
---------
The President shall be the principal executive officer and, subject to
the control of the Board of Directors, shall in general supervise and
control all of the business and affairs of the corporation. He or she
shall, in the absence of the Chairman of the Board (if one is
appointed), preside at all meetings of the shareholders and of the Board
of Directors. The President shall have authority, subject to such rules
as may be prescribed by the Board of Directors, to appoint such agents
and employees of the corporation as he or she shall deem necessary, to
prescribe their power, duties and compensation, and to delegate
authority to them. Such agents and employees shall hold office at the
discretion of the President. The President shall have authority to
sign, execute and acknowledge, on behalf of the corporation, all deeds,
mortgages, bonds, stock certificates, contracts, leases, reports and all
other documents or instruments necessary or proper to be executed in the
course of the corporation's regular business, or which shall be
authorized by resolution of the Board of Directors, the President may
authorize any Vice President or other officer or agent of the
corporation to sign, execute and acknowledge such documents or
instruments in his or her place and stead. In general he or she shall
perform all duties incident to the office of President and such other
duties as may be prescribed by the Board of Directors from time to time.
4.06 Vice Presidents.
----------------
In the absence of the President, or in the event of the President's
death, inability or refusal to act, or in the event for any reason it
shall be impracticable for the President to act personally, a Vice
President, the Vice Presidents in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of
their election) shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President may sign, with the
Secretary or Assistant Secretary, certificates for shares of the
corporation; and shall perform such other duties and have such authority
as from time to time may be delegated or assigned to him or her by the
President or the Board of Directors. The execution of any instrument of
the corporation by any Vice President shall be conclusive evidence, as
to third parties, of the Vice President's authority to act in the stead
of the President.
4.07 Secretary.
----------
The Secretary shall:
(a) keep (or cause to be kept) regular minutes of all meetings of the
shareholders, the Board of Directors and any committees of the
Board of Directors in one or more books provided for that purpose;
(b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law;
(c) be custodian of the corporate records and of the seal of the
corporation, if any, and see that the seal of the corporation, if
any is affixed to all documents which are authorized to be executed
on behalf of the corporation under its seal;
(d) keep or arrange for the keeping of a register if the post office
address of each shareholder which shall be furnished to the
Secretary by such shareholder;
(e) sign with the President, or a Vice President, certificates for
shares of the corporation, the issuance of which shall have been
authorized by resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the corporation;
and
(g) in general perform all duties incident to the office of Secretary
and have such other duties and exercise such authority as from time
to time may be delegated or assigned to him or her by the President
or by the Board of Directors.
4.08 Treasurer.
----------
If the Board of Directors appoints a Treasurer, the Treasurer shall:
(a) have charge and custody of and be responsible for all funds and
securities of the corporation;
(b) receive and give receipts for monies due and payable to the
corporation from any source whatsoever, and deposit all such monies
in the name of the corporation in such banks, trust companies or
other depositaries as shall be selected by the corporation; and
(c) in general perform all of the duties incident to the office of
Treasurer and have such other duties and exercise such other
authority as from time to time may be delegated or assigned to him
or her by the President or by the Board of Directors.
4.09 Assistants and Acting Officers.
-------------------------------
The Board of Directors and the President shall have the power to appoint
any person to act as assistant to any officer, or as agent for the
corporation in the officer's stead, or to perform the duties of such
officer whenever for any reason it is impracticable for such officer to
act personally, and such assistant or acting officer or other agent so
appointed by the Board of Directors or President shall have power to
perform all duties of the office to which that person is so appointed to
act, except as such power may otherwise be defined or restricted by the
Board of Directors or the President.
4.10 Salaries.
---------
The salaries of the principal officers shall be fixed from time to time
by the Board of Directors or by a duly authorized committee thereof, and
no officer shall be prevented from receiving such salary by reason of
the fact that such officer is also a director of the corporation.
ARTICLE V. CERTIFICATES FOR SHARES AND THEIR TRANSFER
5.01 Certificates for Shares.
------------------------
All shares of this corporation shall be represented by certificates.
Certificates representing shares of the corporation shall be in such
form, consistent with law, as shall be determined by the Board of
Directors. At a minimum, a share certificate shall state on its face
the name of the issuing corporation, and that it is organized under the
laws of the State of Wisconsin, the name of the person to whom issued,
and the number and class of shares and the designation of the series, if
any, that the certificate represents. If the corporation is authorized
to issue different classes of shares or different series within a class,
the front or back of the certificate must contain either
(a) a summary of the designations, relative rights, preferences and
limitations applicable to each class, and the variations in the
rights, preferences and limitations determined for each series and
the authority of the Board of Directors to determine the variations
for future series, or
(b) a conspicuous statements that the corporation will furnish the
shareholder the information in clause (a) upon request, in writing
and without charge.
Such certificates shall be signed, either manually or in facsimile, by
the President or a Vice President and by the Secretary or an Assistant
Secretary. All certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and the
date of issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation for
transfer shall be cancelled and no new certificate shall be issued until
the former certificate for a like number of shares shall have been
surrendered and cancelled, except as provided in Section 5.05.
5.05 Lost, Destroyed or Stolen Certificates.
---------------------------------------
Where the owner claims that his or her certificate for shares has been
lost, destroyed or wrongfully taken, a new certificate shall be issued
in place thereof if the owner
(a) so requests before the corporation has notice that such shares have
been acquired by a bona fide purchaser, and
(b) if required by the corporation, files with the corporation a
sufficient indemnity bond, and
(c) satisfies such other reasonable requirements as may be prescribed
by or under the authority of the Board of Directors.
5.06 Consideration for Shares.
-------------------------
The shares of the corporation may be issued for such consideration as
shall be fixed from time to time and determined to be adequate by the
Board of Directors, provided that any shares having a par value shall
not be issued for a consideration less than the par value thereof. The
consideration may consist of any tangible or intangible property or
benefit to the corporation, including cash, promissory notes, services
performed, contracts for services to be performed, or other securities
of the corporation. If the corporation issues or authorizes the
issuance of shares for promissory notes or for promises of future
services, it shall report to the shareholders in accordance with Section
2.04(f) of these Bylaws the number of shares authorized or issued and
the consideration received or to be received by the corporation. When
the corporation receives the consideration for which the Board of
Directors authorized the issuance of shares, such shares shall be deemed
to be fully paid and nonassessable by the corporation.
5.07 Stock Regulations.
------------------
The Board of Directors shall have the power and authority to make all
such rules and regulations not inconsistent with the statutes of the
State of Wisconsin as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
corporation.
ARTICLE VI. WAIVER OF NOTICE
6.01 Shareholder Written Waiver.
---------------------------
A shareholder may waive any notice required by the Wisconsin Business
Corporation Law, the Articles of Incorporation or these Bylaws before or
after the date and time stated in the notice. The waiver shall be in
writing and signed by the shareholder entitled to the notice, shall
contain the same information that would have been required in the notice
under the Wisconsin Business Corporation Law except that the time and
place of meeting need not be stated, and shall be delivered to the
corporation for inclusion in the corporate records.
6.02 Shareholder Waiver by Attendance.
---------------------------------
A shareholder's attendance at a meeting, in person or by proxy, waives
objection to both of the following:
(a) Lack of notice of defective notice of the meeting, unless the
shareholder at the beginning of the meeting or promptly upon the
arrival objects to holding the meeting or transacting business at
the meeting.
(b) Consideration of a particular matter at the meeting that is not
within the purpose described in the meeting notice, unless the
shareholder objects to considering the matter when it is presented.
6.03 Director Written Waiver.
------------------------
A director may waive any notice required by the Wisconsin Business
Corporation Law, the Articles of Incorporation or the Bylaws before or
after the date and time stated in the notice. The waiver shall be in
writing, signed by the director entitled to the notice and retained by
the corporation.
6.04 Director Waiver by Attendance.
------------------------------
A director's attendance at or participation in a meeting of the Board of
Directors or any committee thereof waives any required notice to him or
her of the meeting unless the director at the beginning of the meeting
or promptly upon his or her arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote or
assent to action taken at the meeting.
ARTICLE VII. ACTION WITHOUT MEETINGS
7.01 Shareholder Action Without Meeting.
-----------------------------------
Action required or permitted by the Wisconsin Business Corporation Law
to be taken at a shareholders' meeting may be taken without a meeting
(a) by all shareholders entitled to vote on the action, or
(b) if the Articles of Incorporation so provide and except with respect
to an election of directors for which shareholders may vote
cumulatively, by shareholders who would be entitled to vote at a
meeting with shares with voting power sufficient to cast not less
than the minimum number (or, in the case of voting by voting
groups, the minimum numbers) of votes that would be necessary to
authorize or take action at a meeting at which all shares entitled
to vote were present and voted.
The action must be evidenced by one or more written consents describing
the action taken, signed by the shareholders consenting thereto and
delivered to the corporation for inclusion in its corporate records. A
consent hereunder has the effect of a meeting vote and may be described
as such in any document. The Wisconsin Business Corporation Law
requires that notice of the action be given to certain shareholders and
specifies the effective date thereof and the record date in respect
thereto.
7.02 Director Action Without Meeting.
--------------------------------
Unless the Articles of Incorporation provide otherwise, action required
or permitted by the Wisconsin Business Corporation Law to be taken at a
Board of Directors meeting or a committee meeting may be taken without a
meeting if the action is taken by all members of the Board or committee.
The action shall be evidenced by one or more written consents describing
the action taken, signed by each director and retained by the
corporation. Action taken hereunder is effective when the last director
signs the consent, unless the consent specifies a different effective
date. A consent signed hereunder has the effect of a unanimous vote
taken at a meeting at which all directors or committee members were
present, and may be described as such in any document.
ARTICLE VIII. INDEMNIFICATION
8.01 Indemnification for Successful Defense.
---------------------------------------
Within twenty (20) days after receipt of a written request pursuant to
Section 8.02, the corporation shall indemnify a director or officer, to
the extent he or she has been successful on the merits otherwise in the
defense of a proceeding, for all reasonable expenses incurred in the
proceeding if the director or officer was a party because he or she is a
director or officer of the corporation.
8.02 Other Indemnification.
----------------------
(a) In cases not included under Section 8.01, the corporation shall
indemnify a director or officer against all liabilities and
expenses incurred by the director or officer in a proceeding to
which the director or officer was a party because he or she is a
director or officer of the corporation, unless liability was
incurred because the director or officer breached or failed to
perform a duty he or she owes to the corporation and the breach or
failure to perform constitutes any of the following:
(i) A willful failure to deal fairly with the corporation or its
shareholders in connection with a matter in which the director
or officer has a material conflict of interest.
(ii) A violation of criminal law, unless the director or officer
had reasonable cause to believe his or her conduct was lawful
or no reasonable cause to believe his or her conduct was
unlawful.
(iii) A transaction from which the director of officer derived an
improper personal profit.
(iv) Willful misconduct.
(b) Determination of whether indemnification is required under this
Section shall be made pursuant to Section 8.05.
(c) The termination of a proceeding by judgement, order, settlement or
conviction, or upon a plea of no contest or an equivalent plea,
does not, by itself, create a presumption that indemnification of
the director or officer is not required under this Section.
8.03 Written Request.
----------------
A director or officer who seeks indemnification under Sections 8.01 or
8.02 shall make a written request to the corporation.
8.04 Nonduplication.
---------------
The corporation shall not indemnify a director or officer under Sections
8.01 or 8.02 of the director or officer has previously received
indemnification or allowance of expenses from any person, including the
corporation, in connection with the same proceeding. However, the
director or officer has no duty to look to any other person for
indemnification.
8.05 Determination of Right to Indemnification.
------------------------------------------
(a) Unless otherwise provided by the Articles of Incorporation or by
written agreement between the director or officer and the
corporation, the director or officer seeking indemnification under
Section 8.02 shall select one of the following means for
determining his or her right to indemnification:
(i) By a majority vote of a quorum of the Board of Directors
consisting of directors not at the time parties to the same or
related proceedings. If a quorum of disinterested directors
cannot be obtained, by a majority vote of a committee duly
appointed by the Board of Directors and consisting solely of
two (2) or more directors who are not at the time parties to
the same or related proceedings. Directors who are parties to
the same or related proceedings may participate in the
designation of members of the committee.
(ii) By independent legal counsel selected by a quorum of the Board
of Directors or its committee in the manner prescribed in sub.
(i) or, if unable to obtain such a quorum or committee, by a
majority vote of the full Board of Directors, including
directors who are parties to the same or related proceedings.
(iii) By a panel of three (3) arbitrators consisting of one
arbitrator selected by those directors entitled under sub.
A(ii) to select independent legal counsel, one arbitrator
selected by the director or officer seeking indemnification
and one arbitrator selected by the two (2) arbitrators
previously selected.
(iv) By affirmative vote of shares represented at a meeting of
shareholders at which a quorum of the voting group entitled to
vote thereon is present. Shares owned by, or voted under the
control of, persons who are at the time parties to the same or
related proceedings, whether as plaintiffs or defendants or in
any other capacity, may not be voted in making the
determination.
(v) By a court under Section 8.08.
(vi) By any other method provided for in any additional right to
indemnification permitted under Section 8.07.
(b) In any determination under (a), the burden of proof is on the
corporation to prove by clear and convincing evidence that
indemnification under 8.02 should not be allowed.
(c) A written determination as to a director's or officer's
indemnification under Section 8.02 shall be submitted to both the
corporation and the director or officer within 60 days of the
selection made under (a).
(d) If it is determined that indemnification is required under Section
8.02, the corporation shall pay all liabilities and expenses not
prohibited by Section 8.04 within ten (10) days after receipt of
the written determination under (c). The corporation shall also
pay all expenses incurred by the director or officer in the
determination process under (a).
8.06 Advance of Expenses.
--------------------
Within ten (10) days after receipt of a written request by a director or
officer who is a party to a proceeding, the corporation shall pay or
reimburse his or her reasonable expenses as incurred if the director or
officer provides the corporation with all of the following:
(a) A written affirmation of his or her good faith belief that he or
she has not breached or failed to perform his or her duties to the
corporation.
(b) A written undertaking, executed personally or on his or her behalf,
to repay the allowance to the extent that it is ultimately
determined under Section 8.05 that indemnification under Section
8.02 is not required and that indemnification is not ordered by a
court under Section 8.08(b)(ii). The undertaking under this
subsection shall be an unlimited general obligation of the director
or officer and may be accepted without reference to his or her
ability to repay the allowance. The undertaking may be secured or
unsecured.
8.07 Nonexclusivity.
---------------
(a) Except as provided in (b), Sections 8.01, 8.02 and 8.06 do not
preclude any additional right to indemnification or allowance of
expenses that a director or officer may have under any of the
following:
(i) The Articles of Incorporation.
(ii) A written agreement between the director or officer and the
corporation.
(iii) A resolution of the Board of Directors.
(iv) A resolution, after notice, adopted by a majority vote of all
of the corporation's voting shares then issued and
outstanding.
(b) Regardless of the existence of an additional right under (a), the
corporation shall not indemnify a director or officer, or permit a
director or officer to retain any allowance of expenses unless it
is determined by or on behalf of the corporation that the director
or officer did not breach or fail to perform a duty he or she owes
to the corporation which constitutes conduct under Section
8.02(a)(i), (ii), (iii), or (iv). A director or officer who is a
party to the same or related proceeding for which indemnification
or an allowance of expenses is sought may not participate in a
determination under this subsection.
(c) Sections 8.01 to 8.13 do not affect the corporation's power to pay
or reimburse expenses incurred by a director or officer in any of
the following circumstances:
(i) As a witness in a proceeding to which he or she is not a
party.
(ii) As a plaintiff or petitioner in a proceeding because he or she
is or was an employee, agent, director or officer of the
corporation.
8.08 Court-Ordered Indemnification.
------------------------------
(a) Except as provided otherwise by written agreement between the
director or officer and the corporation, a director or officer who
is a party to a proceeding may apply for indemnification to the
court conducting the proceeding or to another court of competent
jurisdiction. Application may be made for an initial determination
by the court under Section 8.05(a)(5) or for review by the court of
an adverse determination under Section 8.05(a)(i), (ii), (iii),
(iv) or (vi). After receipt of an application, the court shall
give any notice it considers necessary.
(b) The court shall order indemnification if it determines any of the
following:
(i) That the director or officer is entitled to indemnification
under Section 8.01 or 8.02.
(ii) That the director or officer is fairly and reasonably entitled
to indemnification in view of all the relevant circumstances,
regardless of whether indemnification is required under
Section 8.02.
(c) If the court determined under (b) that the director or officer is
entitled to indemnification, the corporation shall pay the
director's or officer's expenses incurred to obtain the court-
ordered indemnification.
8.09 Indemnification of Employees and Agents.
----------------------------------------
The corporation shall indemnify an employee of the corporation, to the
extent that he or she has been successful on the merits or otherwise in
defense of a proceeding, for all expenses incurred in the proceeding if
the employee was a party because he or she was an employee of the
corporation. In addition, the corporation may indemnify and allow
reasonable expenses of an employee or agent who is not a director or
officer to the extent provided by the Articles of Incorporation or
Bylaws, by general or specific action of the Board of Directors or by
contract.
8.10 Insurance.
----------
The corporation may purchase and maintain insurance on behalf of an
individual who is an employee, director or officer of the corporation
against liability asserted against or incurred by the individual in his
or her capacity as an employee, agent, director or officer, regardless
of whether the corporation is required or authorized to indemnify or
allow expenses to the individual against the same liability under
Sections 8.01, 8.02, 8.06 and 8.09.
8.11 Securities Law Claims.
----------------------
(a) Pursuant to the public policy of the State of Wisconsin, the
corporation shall provide indemnification and allowance of expenses
and may insure for any liability incurred in connection with a
proceeding involving securities regulation described under (b) to
the extent required or permitted under Sections 8.01 to 8.10.
(b) Sections 8.01 to 8.10 apply, to the extent applicable to any other
proceeding, to any proceeding involving a federal or state statute,
rule or regulation regulating the offer, sale or purchase of
securities, securities brokers, or dealers, or investment companies
or investment advisors.
8.12 Liberal Construction.
---------------------
In order for the corporation to obtain and retain qualified directors,
officers and employees, the foregoing provisions shall be liberally
administered in order to afford maximum indemnification of directors,
officers and employees and, accordingly, the indemnification above
provided for shall be granted in all cases unless to do so would clearly
contravene applicable law, controlling precedent or public policy.
8.13 Report to Shareholders.
-----------------------
If the corporation indemnifies or advances expenses to a director or
officer as required or permitted by these Bylaws or Wisconsin law in
connection with a proceeding by or in the right of the corporation, the
corporation shall report the indemnification or advance in writing to
the shareholders in accordance with Section 2.04(g) of these Bylaws.
8.14 Definitions Applicable to this Article.
---------------------------------------
(a) "Affiliate" shall include, without limitation, and corporation,
partnership, joint venture, employee benefit plan, trust or other
enterprise that directly or indirectly through one or more
intermediaries, controls or is controlled by, or is under common
control with, the corporation.
(b) "Corporation" means this corporation and any domestic or foreign
predecessor of this corporation where the predecessor corporation's
existence ceased upon the consummation of a merger or other
transaction.
(c) "Director or Officer" means any of the following:
(i) A natural person who is or was a director or officer of this
corporation.
(ii) A natural person who, while a director or officer of this
corporation, is or was serving at the corporation's request
as a director, officer, partner, trustee, member of any
governing or decision-making committee, employee or agent of
another corporation or foreign corporation, partnership,
joint venture, trust or other enterprise.
(iii) A natural person who, while a director or officer of this
corporation, is or was serving an employee benefit plan
because his or her duties to the corporation also impose
duties on, or otherwise involve services by, the person to
the plan or to participants in or beneficiaries of the plan.
(iv) Unless the context requires otherwise, the estate or personal
representative or a director or officer.
For purposes of this Article, it shall be conclusively presumed that any
Director or Officer serving as a director, officer, partner, trustee,
member of any governing or decision-making committee, employee or agent
of an Affiliate shall be so serving at the request of the corporation.
(d) "Expenses" include fees, costs, charges, disbursements, attorney
fees and other expenses incurred in connection with a proceeding.
(e) "Liability" includes the obligation to pay a judgement, settlement,
penalty, assessment, forfeiture or fine, including an excise tax
assessed with respect to an employee benefit plan, and reasonable
expenses.
(f) "Party" includes a natural person who was or is, or who is
threatened to be made a named defendant or respondent in a
proceeding.
(g) "Proceeding" means any threatened, pending or completed civil,
criminal, administrative or investigative action, suit, arbitration
or other proceeding, whether formal or informal which involves
foreign, federal, state or local law and which is brought by or in
the right of the corporation or by any other person.
ARTICLE IX. SEAL
The Board of Directors may provide a corporate seal which may be Circular in
form and have inscribed thereon the name of the corporation and the state of
incorporation and the words "Corporate Seal."
ARTICLE X. AMENDMENTS
10.01 By Shareholders.
----------------
These Bylaws may be amended or repealed and new Bylaws may be adopted by
the shareholders by the vote provided in Section 2.07 of these Bylaws or
as specifically provided below. If authorized by the Articles of
Incorporation, the shareholders may adopt or amend a bylaw that fixes a
greater or lower quorum requirement or a greater voting requirement for
shareholders or voting groups of shareholders that otherwise is provided
in the Wisconsin Business Corporation Law. The adoption or amendment of
a Bylaw that adds, changes or deletes a greater or lower quorum
requirement or a greater voting requirement for shareholders must meet
the same quorum requirement and be adopted by the same vote and voting
groups required to take action under the quorum and voting requirement
then in effect.
10.02 By Directors.
-------------
Except as the Articles of Incorporation may otherwise provide, these
Bylaws may also be amended or repealed and new bylaws may be adopted by
the Board of Directors, but
(a) no Bylaw adopted by the shareholders shall be amended, repealed or
readopted by the Board of Directors if the Bylaw so adopted so
provides, and
(b) a Bylaw adopted or amended by the shareholders that fixes a greater
or lower quorum requirement or a greater voting requirement for the
Board of Directors than otherwise is provided in the Wisconsin
Business Corporation Law may not be amended or repealed by the
Board of Directors unless the Bylaw expressly provides that it may
be amended or repealed by a specified vote of the Board of
Directors.
Action by the Board of Directors to adopt or amend a Bylaw that changes
the quorum or voting requirement for the Board of Directors must meet
the same quorum requirement and be adopted by the same vote required to
take action under the quorum and voting requirement then in effect,
unless a different voting requirement is specified as provided by the
preceding sentence. A Bylaw that fixes a greater or lower quorum
requirement or a greater voting requirement for shareholders or voting
groups of the shareholders than otherwise is provided in the Wisconsin
Business Corporation Law may not be adopted, amended or repealed by the
Board of Directors.
10.03 Implied Amendments.
-------------------
Any action taken or authorized by the shareholders or by the Board of
Directors, which would be inconsistent with the Bylaws then in effect
but is taken or authorized by affirmative vote of not less than the
number of shares or the number of directors required to amend the Bylaws
so that the Bylaws would be consistent with such action, shall be given
the same effect as though the Bylaws had been temporarily amended or
suspended so far, but only so far, as is necessary to permit the
specific action so taken or authorized.
ARTICLE XI. STOCK TRANSFER RESTRICTION
In the event the corporation makes a valid election, pursuant to Section1362 of
the Internal Revenue Code of 1986, or any successor provision thereto, to be
treated as an S Corporation, no shareholder of the corporation shall, without
the written consent of the shareholders holding more than fifty percent (50%) of
the outstanding stock of the corporation, transfer any shares of stock to any
person who, by reason of being a shareholder of the corporation, will cause a
termination of the corporation's election to be treated as an S Corporation.
INCORPORATED UNDER THE LAWS
OF
THE STATE OF WISCONSIN
NUMBER 2904 SHARES 15000
(GENROCO LOGO)
GENROCO, INC.
5,000,000 SHARES AUTHORIZED
This certifies that STEPHEN BAILEY
is the owner of FIFTEEN THOUSAND
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF $0.02 PAR VALUE OF
GENROCO, INC.
transferable only on the books of the Corporation by the holder hereof in person
or by attorney upon surrender of this Certificate properly endoresed.
This Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by it's duly authorized officers and its Corporate Seal to be hereunto
affixed.
Dated: SEPTEMBER 20TH 1999
/s/ Barbara R. Pick CORPORATE SEAL /s/ Carl A. Pick
SECRETARY PRESIDENT
NOTICE: Signature must be guaranteed by a firm which is a member of a
registered national stock exchange, or by a bank (other than a savings bank), or
a trust company. The following abbreviation & when used in the inscription on
the face of this certificate; shall be construed as though they were written out
in full according to applicable laws or regulations
TEN COM - as tenants in common UNIF GIFT MIN ACT-----Custodian-----
TEN ENT- as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right under Uniform Gifts to Minors
of survivorship and not as Act -------------------------
tenants in common. (State)
Additional abbreviations may also be used though not in the above list.
For Value Received, ----------------- hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------ Shares
of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint
- ---------------------------------------------------------------------- Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution
in the premises.
Dated ---------------/--------------/-----------------------
- -------------------------------------------------------------------------------
NOTICE. THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER
PURCHASE AND SALE AGREEMENT
---------------------------
THIS AGREEMENT is made as of this 24th day of September 1999, by and
between ALDRICH PARTNERSHIP, a Wisconsin partnership (''Seller''), and
GENROCO, INC., a Wisconsin corporation (''Buyer'').
RECITALS
--------
Seller owns certain property and improvements located at 281 Enders Court,
Slinger, Wisconsin, as legally described on Exhibit A attached hereto and
---------
incorporated herein by reference (the ''Property''). Buyer leases the Property
from Seller by a lease agreement dated October 17, 1996 (the ''Lease''). Buyer
desires to purchase the Property from Seller in accordance with Section 32 of
the Lease and Seller desires to convey the Property to Buyer in accordance with
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. OPTION TO PURCHASE. Buyer hereby exercises its Option to Purchase the
------------------
Property as granted in Section 32 of the Lease.
2. PURCHASE PRICE. The purchase price to be paid by Buyer for the
--------------
Property shall be One Million Two Hundred Fifty Thousand Dollars and 00/100
($1,250,000.00) (the ''Purchase Price''), payable at Closing.
3. CLOSING DATE. The closing of the sale of the Property (the
------------
''Closing'') shall occur on October 5, 1999 (the ''Closing Date'').
4. CLOSING ADJUSTMENTS. All expenses incident to the ownership of the
-------------------
Property shall be prorated on a daily basis as of the Closing Date.
Specifically, the following provisions shall govern the apportionment of
expenses with respect to the Property between Seller and Buyer:
(a) Real estate taxes and assessments shall be prorated between
Seller and Buyer at Closing based upon the previous year's taxes.
(b) Utilities shall be prorated between Seller and Buyer at Closing
based upon the most current bill for such utility.
5. CONVEYANCE OF REAL PROPERTY . On the Closing Date, Seller will convey
---------------------------
title to the Property to Buyer by warranty deed (the ''Deed''), free and clear
of any liens and encumbrances other than general real estate taxes for the year
of closing and such other liens and encumbrances against the Property as are
approved by Buyer in writing prior to Closing (the ''Permitted Encumbrances'').
6. TITLE EVIDENCE. As a condition of Buyer's obligations hereunder,
--------------
Seller shall cause to be delivered to Buyer not later than September 29, 1999, a
commitment to issue (''Title Commitment'') an ALTA owner's policy of title
insurance with full extended coverage and with the following endorsements: (i)
3.1 zoning; (H) access; and (iii) gap, which policy shall be in the amount of
the Purchase Price (the ''Title Policy'') issued by an insurer licensed to write
title insurance in Wisconsin (the ''Title Company''). The final Title Policy
issued pursuant to the Title Commitment shall show title to the Property as of
the Closing Date to be subject only to the Permitted Encumbrances. Seller agrees
to provide to Buyer, together with the foregoing Title Commitment, copies of all
recorded documents affecting title to the Property.
Buyer shall have two (2) days after the receipt of the Title Commitment
(together with copies of recorded documents as set forth above) and the survey
described below to object in writing to any condition of title or to a matter
disclosed by the survey provided hereunder. If any objection is made, Seller
shall have one (1) day thereafter in which to correct the condition, and Seller
shall use good faith efforts to correct such condition. If the condition of
title or survey is not or cannot be corrected within the one (1) day period
despite Seller's efforts, Buyer may, at its option, either (i) declare this
Agreement null and void and all money paid by Buyer shall be returned
immediately to Buyer, or (ii) elect to accept such title as Seller is able to
convey and proceed to closing without adjustment of the Purchase Price. Seller's
inability, after good faith efforts, to correct any such condition of title
shall not constitute a default by Seller hereunder. If Buyer does not, within
two (2) days after the expiration of the one (1) day period described above,
elect either (i) or (ii) above, then Seller mq, at any time thereafter, and
prior to the time that Buyer elects either (i) or (ii) above, declare this
Agreement to be null and void.
7. CLOSING DELIVERIES. Seller agrees to furnish to Buyer at the Closing
------------------
of this transaction originals of the following documents:
(a) The Deed;
(b) A closing statement setting forth a summary of the Purchase Price and
credits to Buyer;
(c) An affidavit as to construction liens and possession sufficient to
permit the Title Company to insure over the standard exceptions for construction
hens and rights or claims of parties in possession not shown by the public
records;
(d) Evidence of payment of the prior year's real estate taxes, special
assessments, and any other municipal and governmental levies, and evidence that
a utility charges and other expenses with regard to the Property are paid
current or prorated through the date of closing;
(e) Wisconsin Real Estate Transfer Return;
(f) Payout letter for all mortgages, liens and judgments being satisfied
as of the date of closing; and
(g) FIRPTA affidavit.
8. CLOSING COSTS
-------------
(a) Seller shall pay the real estate transfer fee;
(b) Seller shall pay all title insurance premiums for the owner's Title
Policy, except that Buyer shall pay for any special coverages or endorsements in
addition to those set out in Section 6 above;
(c) Each party shall pay its own attorneys' fees; and
(d) Buyer shall pay the recording fees for the Deed, and Seller shall pay
the recording fee for any satisfaction of its existing hens and encumbrances.
9. DEFAULT. In the event of a default by either Buyer or Seller, the
-------
non-defaulting party shall be entitled to all available rights and remedies at
law and in equity.
10. MISCELLANEOUS. The provisions of this Agreement, together with the
-------------
entire agreement between the parties with regard to the subject matter hereof
and no amendment, modification or changes hereof shall be of any force and
effect unless executed by each of the parties hereto in writing. This Agreement
shall be governed by and construed under and in accordance with the laws of the
State of Wisconsin. This Agreement shall be binding upon and inure to the
benefit of the heirs, personal representatives and/or successors and assigns of
the parties hereto.
11. Seller to provide commitment to resurface parking lot (1 1/4"
blacktop) prior to June 30, 2000, at closing.
12. Seller to provide environmental condition report at closing.
13. Seller to provide $200,000 loan for 18 months, 5 year amortization
schedule, payments at 9% interest with balloon.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
ALDRICH PARTNERSHIP, A WISCONSIN
PARTNERSHIP
By: /s/ James G. Blise
Print Name: /s/ James G. Blise
Title: Partner
BUYER:
GENROCO, INC., A WISCONSIN
CORPORATION
By: /s/ Keith Brue
Print Name: Keith Brue
Title: VP-CFO
EXHIBIT A
---------
LEGAL DESCRIPTION OF PROPERTY
-----------------------------
Lot Seven (7) of Certified Survey Map No. 3994, recorded in the Washington
County Registry on December 4, 1992 in Volume 25 of Certified Survey Maps, pages
277-279 as Document No. 619618, being a redivision of Lot 6 of Certified Survey
Map No. 3885 recorded In Volume 24 of Certified Survey Maps, pages 306-308 and
Lot 3 of Certified Survey Map No. 3713, recorded in Volume 23 of Certified
Survey Maps, pages 156-158, and being a part of the NE 1/4 and NW 1/4 of the
NW 1/4 of Section 20, T 1 0 N, R 19 E, Village of Slinger, Washington County,
Wisconsin.
FOR INFORMATIONAL PURPOSES ONLY
Tax Key No. V5-0650-00G.
BUSINESS NOTE
(Use only for business purpose loans)
GENROCO, INC. OCTOBER 07, 1999 $1,000,000.00
- ------------------------------------- -------------------- ---------------
(MAKER) (DATE)
1. PROMISE TO PAY AND PAYMENT SCHEDULE. The undersigned ("Maker," whether one or
more) promises to pay to the order of M&I BANK OF MENOMONEE FALLS ("Lender") at
N82 W15415 APPLETON AVENUE, MENOMONEE FALLS, Wisconsin, the sum of $1,000,000.00
[CHECK (A), (B), (C) OR (D); ONLY ONE SHALL APPLY.]
(A) --- SINGLE PAYMENT. In one payment on N/A, PLUS interest payable as set
forth below unless interest is shown on line 4 below.
(B) -X- INSTALLMENTS OF PRINCIPAL AND INTEREST. In 83 equal payments of
$8,757.63 due on November 7, 1999, and on -X- the same day(s) of each
CONSECUTIVE month thereafter --- every 7th day thereafter --- every 14th day
thereafter, PLUS a final payment of the unpaid balance and accrued interest due
on October 07, 2006, all subject to modification as set forth in 2(b) below, if
applicable. All payments include principal and interest.
(C) --- INSTALLMENTS OF PRINCIPAL. In N/A equal payments of principal of $ N/A
due on N/A, and on --- the same day(s) of each N/A month thereafter --- every
7th day thereafter --- every 14th day thereafter, PLUS a final payment of the
unpaid principal due on N/A, PLUS interest payable as set forth below.
(D) --- OTHER. N/A
2. INTEREST CALCULATION. If the amount of interest is now shown on line 4 below,
this Note bears interest on the unpaid principal balance before maturity:
[CHECK (A) OR (B) OR COMPLETE LINE 4 BELOW; ONLY ONE SHALL APPLY.]
(A) -X- FIXED RATE. At the rate of 8.500% per year.
(B) --- VARIABLE RATE. At the annual rate which is equal to the following
Index Rate, --- plus --- minus N/A percentage points ("Note Rate"), and the Note
Rate shall be adjusted as provided below. The Index Rate is:
- --- The prime rate --- The reference rate --- The base rate adopted by ---
Lender --- N/A from time to time as its base or reference rate for interest rate
determinations. The Index Rate may or may not be the lowest rate charged by
Lender. --- N/A
The initial Note Rate is N/A%. An adjustment in the Note Rate will result in an
increase or decrease in (1) --- the amount of each payment of interest, (2) ---
the amount of the final payment, (4) --- the number of scheduled periodic
payments sufficient to repay this Note in substantially equal payments, (4) ---
The amount of each remaining payment of principal and interest so that those
remaining payments will be substantially equal and sufficient to repay this
Note by its scheduled maturity date, (5) --- the amount of each remaining
payment of principal and interest (other than the final payment) so that those
remaining payments will be substantially equal and sufficient to repay this Note
by its scheduled maturity date based on the original amortization schedule used
by Lender, plus the final payment of principal and interest, or (6) --- N/A. In
addition, Lender is authorized to change the amount of periodic payments if and
to the extent necessary to pay in full all accrued interest owing on this Note.
The Maker agrees to pay any resulting payments or amounts. The Note Rate shall
be adjusted only on the following change dates: --- the first day of each month
- --- each scheduled payment date --- as and when the Index Rate changes --- N/A.
Interest is computed for the actual number of days principal is unpaid on the
basis of -X- a 360 day year --- a 365 day year.
3. INTEREST PAYMENT. Interest is payable on N/A, and on --- the same day of each
N/A month thereafter, --- every 7th day thereafter, --- every 14th day
thereafter, and at maturity, or, if box 1(b) is checked, at the times so
indicated.
4. OTHER CHARGES. If any payment (other than the final payment) is not made on
or before the 10th day after its due date, Lender may collect a delinquency
charge of 5% of the unpaid amount. Unpaid principal and interest bear interest
after maturity until paid (whether by acceleration or lapse of time) at the rate
- -X- which would otherwise be applicable plus 3 percentage points --- of N/A% per
year, computed on the basis of -X- a 360 day year --- a 365 day year. Maker
agrees to pay a charge of $15.00 for each check presented for payment under this
Note which is returned unsatisfied.
5. PREPAYMENT. Full or partial prepayment of this Note -X- is permitted at any
time without penalty ---*<F3> N/A.
6. DEFAULT AND ENFORCEMENT. If any installment is not paid when due under this
Note, if a default occurs under any other obligation of any Maker to Lender or
if Lender deems itself insecure, the unpaid balance shall, at the option of
Lender, without notice, mature and become immediately payable The unpaid balance
shall automatically mature and become immediately payable in the event any
Maker, surety, indorser or guarantor becomes the subject of bankruptcy or other
insolvency proceedings. Lender's receipt of any payment on this Note after the
occurrence of an event of default shall not constitute a waiver of the default
or the Lender's rights and remedies upon such default. To the extent not
prohibited by law, Maker consents that venue for any legal proceeding relating
to collection of this Note shall be, at Lender's option, the county in which
Lender has its principal office in this state, the county in which any Maker
resides or the county in which this Note was executed.
7. SECURITY. This Note is secured by all existing and future security agreements
and mortgages between Lender and Maker, between Lender and any indorser or
guarantor of this Note, and between Lender and any other person providing
collateral security for Maker's obligations, and payment may be accelerated
according to any of them. Unless a lien would be prohibited by law or would
render a nontaxable account taxable, Maker grants to Lender a security interest
and lien in any deposit account Maker may at any time have with Lender. Lender
may, at any time after an occurrence of an event of default, without notice or
demand, set-off against any deposit balances or other money now or hereafter
owed any Maker by Lender any amount unpaid under this Note.
8. RIGHTS OF LENDER. Without affecting the liability of any Maker, indorser,
surety, or guarantor, Lender may, without notice, accept partial payments,
release or impair any collateral security for the payment of this Note or agree
not to sue any party liable on it. Lender may apply prepayments, if permitted,
to such future installments as it elects. Lender may without notice to Maker
apply payments made by or for Maker to any obligations of Maker to Lender.
Without affecting the liability of any indorser, surety or guarantor, Lender may
from time to time, without notice, renew or extend the time for payment.
9. OBLIGATIONS AND AGREEMENTS OF MAKER. The obligations under this Note of all
Makers are joint and several. All Makers, indorsers, sureties, and guarantors
agree to pay all costs of collection before and after judgment, including
reasonable attorneys' fees (including those incurred in successful defense or
settlement of any counterclaim brought by Maker or incident to any action or
proceeding involving Maker brought pursuant to the United States Bankruptcy
Code) and waive presentment, protest, demand and notice of dishonor. Maker
agrees to indemnify and hold harmless Lender, its directors, officers, employees
and agents, from and against any and all claims, damages, judgments, penalties,
and expenses, including reasonable attorneys' fees, arising directly or
indirectly from credit extended under this Note or the activities of Maker. This
indemnity shall survive payment of this Note. Each Maker acknowledges that
Lender has not made any representations or warranties with respect to, and that
Lender does not assume any responsibility to Maker for, the collectability or
enforceability of this Note or the financial condition of any Maker. Each Maker
has independently determined the collectability and enforceability of this Note.
Maker authorizes Lender to disclose financial and other information about Maker
to others.
10. INTERPRETATION. This Note is intended by Maker and Lender as a final
expression of this Note and as a complete and exclusive statement of its terms,
there being no conditions to the enforceability of this Note. This Note may not
be supplemented or modified except in writing.
GENROCO, INC.
- ------------------------------------- (SEAL)
A WISCONSIN CORPORATION
- --------------------------------------------
(Type of Organization)
BY: /s/ Keith E. Brue, VP
- ------------------------------------- (SEAL)
Keith E. Brue, Vice President
BY: /s/ Barbara R. Pick, President
- ------------------------------------- (SEAL)
Barbara R. Pick, President
- ------------------------------------- (SEAL)
- ------------------------------------- (SEAL)
255 INFO HWY,
SLINGER WI 53086 414-644-8700
- --------------------------------------------
(ADDRESS) (PHONE)
*<F3> If checked, insert applicable prepayment restrictions and penalties. If
credit life or accident and sickness insurance is requested, a WBA 450 may be
required.
REAL ESTATE MORTGAGE
(FOR CONSUMER OR BUSINESS MORTGAGE TRANSACTIONS)
GENROCO, INC., A WISCONSIN CORPORATION("Mortgagor", whether one or more)
mortgages, conveys and warrants to M&I BANK OF MENOMONEE FALLS("Lender")
in consideration of the sum of **ONE MILLION DOLLARS AND ZERO CENTS** Dollars
($l,000,000.00), loaned or to be loaned to GENROCO, INC. ("Borrower," whether
one or more), evidenced by Borrower's note(s) or agreement dated October 07,
1999, the real estate described below, together with all privileges,
hereditaments, easements and appurtenances, all rents, leases, issues and
profits, all claims, awards and payments made as a result of the exercise of the
right of eminent domain, and all existing and future improvements and fixtures
(all called the "Property") to secure the Obligations described in paragraph 5
on the reverse side, including but not limited to repayment of the sum stated
above plus certain future advances made by Lender.
Recording Area
Name and Return Address
M&I BANK OF MENOMONEE FALLS
COLLATERAL DEPARTMENT
N82 W15415 APPLETON AVENUE
MENOMONEE FALLS, WI 53051
1. DESCRIPTION OF PROPERTY. (This Property IS NOT the homestead of Mortgagor.)
V5 0650 00G
---------------------
Parcel Identifier No.
LOT 7 OF CERTIFIED SURVEY MAP NUMBER 3994, RECORDED IN THE WASHINGTON COUNTY
REGISTRY ON DECEMBER 4, 1992 IN VOLUME 25 OF CERTIFIED SURVEY MAPS, PAGES 277-
279 AS DOCUMENT NO. 619618, BEING A REDIVISION OF LOT 6 OF CERTIFIED SURVEY MAP
NO. 3885 RECORDED IN VOLUME 24 OF CERTIFIED SURVEY MAPS, PAGES 306 -308 AND LOT
3 OF CERTIFIED SURVEY MAP NO. 3713, RECORDED IN VOLUME 23 OF CERTIFIED SURVEY
MAPS, PAGES 156-158, AND BEING A PART OF THE NE 1/4 AND NW 1/4 OF THE NW 1/4 OF
SECTION 20, T 10 N, R 19 E, VILLAGE OF SLINGER, WASHINGTON COUNTY, WISCONSIN.
- --- If checked here, description continues or appears on attached sheet.
- --- If checked here, this Mortgage is a construction mortgage.
- --- If checked here, Condominium Rider is attached.
2. TITLE. Mortgagor warrants title to the Property, excepting only restrictions
and easements of record, municipal and zoning ordinances, current taxes and
assessments not yet due and NONE
3. ESCROW. Interest WILL be paid on escrowed funds if an escrow is required
under paragraph 8(a) on the reverse side.
4. ADDITIONAL PROVISIONS. Mortgagor agrees to the Additional Provisions on the
reverse side, which are incorporated herein.
The undersigned acknowledges receipt of an exact copy of this Mortgage.
NOTICE TO CUSTOMER IN A TRANSACTION GOVERNED BY THE WISCONSIN CONSUMER ACT
(A) DO NOT SIGN THIS BEFORE YOU READ THE WRITING ON THE REVERSE SIDE, EVEN IF
OTHERWISE ADVISED.
(B) DO NOT SIGN THIS IF IT CONTAINS ANY BLANK SPACES.
(C) YOU ARE ENTITLED TO AN EXACT COPY OF ANY AGREEMENT YOU SIGN.
(D) YOU HAVE THE RIGHT AT ANY TIME TO PAY IN ADVANCE THE UNPAID BALANCE DUE
UNDER THIS AGREEMENT AND YOU MAY BE ENTITLED TO A PARTIAL REFUND OF THE
FINANCE CHARGE.
Signed and Sealed October 7, 1999.
GENROCO, INC., A WISCONSIN CORPORATION
- ---------------------------------------(SEAL)
CORPORATION
- ---------------------------------------------
(Type of Organization)
By: /s/ Keith E. Brue
- ---------------------------------------(SEAL)
KEITH E. BRUE VICE PRESIDENT
By: /s/ Barbara R. Pick
- ---------------------------------------(SEAL)
BARBARA R. PICK PRESIDENT
AUTHENTICATION
Signatures of -------------------------------
- ---------------------------------------------
- ---------------------------------------------
authenticated this ------- day of -----------
- ---------------------------------------------
Title: Member State Bar of Wisconsin or -----
- ----------------- authorized under SS 706.06,
Wis. Stats.
- ------------------------
This instrument was drafted by
JACQUELYN M WITZ
4970845/00001
*Type or print name signed above.
OR ACKNOWLEDGEMENT
STATE OF WISCONSIN
County of -------------------------------} SS.
This instrument was acknowledged before me on -------------,
By KEITH E. BRUE
BARBARA R. PICK
- -------------------------------
(name(s) of persons(s))
as VICE PRESIDENT AND PRESIDENT
- -------------------------------
(type of authority; e.g., officer, trustee, etc. if any)
GENROCO, INC., A WISCONSIN CORPORATION
- -------------------------------------------------------------
(Name of party on behalf whom instrument was executed, if any)
Notary Public, Wisconsin
My Commission (Expires) (ls) -------------------------
ADDITIONAL PROVISIONS
5. MORTGAGE AS SECURITY. This Mortgage secures prompt payment to Lender of (a)
the sum stated in the first paragraph of this Mortgage, plus interest and
charges according to the terms of the promissory notes or agreement of Borrower
to Lender identified on the reverse side, and any extensions, renewals or
modifications signed by any Borrower of such promissory notes or agreement, (b)
to the extent not prohibited by the Wisconsin Consumer Act (i) any additional
sums which are in the future loaned by Lender to, any Mortgagor, to any
Mortgagor and another or to another guaranteed or endorsed by any Mortgagor
primarily for personal, family or household purposes and agreed In documents
evidencing the transaction to be secured by this Mortgage, and (ii) all other
additional sums which are in the future loaned by Lender to any Mortgagor, to
any Mortgagor and another; or to another guaranteed or endorsed by any
Mortgagor, (c) all interest and charges, and (d) to the extent not prohibited by
law, all costs and expenses of collection or enforcement (all called the
"Obligations"). This Mortgage also secures the performance of all covenants,
conditions and agreements contained in this Mortgage. Unless otherwise required
by law, Lender will satisfy this Mortgage upon request by Mortgagor if (a) the
Obligations have been paid according to their terms, (b) any commitment to make
future advances secured by this Mortgage has terminated, (c) Lender has
terminated any line of credit under which advances are to be secured by this
Mortgage, and (d) all other payments required under this Mortgage and the
Obligations and all other terms, conditions, covenants, and agreements contained
in this Mortgage and the documents evidencing the Obligations have been paid and
performed
6. TAXES. To the extent not paid to Lender under paragraph 8(a), Mortgagor shall
pay before they become delinquent all taxes, assessments and other charges which
may be levied or assessed against the Property, or against Lender upon this
Mortgage or the Obligations or other debt secured by this Mortgage, upon
Lender's interest in the Property, and deliver to Lender receipts showing timely
payment.
7. INSURANCE. Mortgagor shall keep the improvements on the Property Insured
against direct loss or damage occasioned by fire, flood, extended coverage
perils and such other hazards as Lender may require, through insurers approved
by Lender, in amounts, without co-insurance, not less than the unpaid balance o'
the Obligations or the full replacement value, whichever is less, and shall pay
the premiums when due. The policies shall contain the standard mortgage clause
in favor of Lender and, unless Lender otherwise agrees in writing, the original
of all policies covering the Property shall be deposited with Lender. Subject to
Lender s approval, Borrower is free to select the insurance agent or insurer
through which insurance is obtained. Mortgagor shall promptly give notice of
loss to insurance companies and Lender. All proceeds from such insurance shall
be applied, at Lender's option, to the installments of the Obligations in the
inverse order of their maturities (without penalty for prepayment) or to the
restoration of the improvements on the Property. In the event of foreclosure of
this Mortgage or other transfer of title to the Property, in extinguishment of
the indebtedness secured hereby, all right, title, and interest of Mortgagor in
and to any insurance then in force shall pass to the purchaser or grantee. If
Mortgagor fails to keep any required insurance on the Property, Lender may
purchase such insurance for Mortgagor, such insurance may be acquired by Lender
solely to protect the interest of the Lender (it will not cover Mortgagor's
equity in the Property), and Mortgagor's obligation to repay Lender shall be in
accordance with Section 10.
8. MORTGAGOR'S COVENANTS. Mortgagor covenants:
(A) ESCROW. If an escrow is required by Lender, to pay Lender sufficient funds,
at such times as Lender designates, to pay when due (1) the estimated annual
real estate taxes and assessments on the Property, (2) all property and hazard
insurance premiums, (3) flood insurance premiums, if any, (4) if payments owed
under the Obligations are guaranteed by mortgage guaranty insurance, the
premiums necessary to pay for such insurance, and (5) other items agreed to be
included in the escrow. Lender may, at any time, collect and hold such escrow
funds in an amount not to exceed the maximum amount a lender for a federally
related mortgage loan may require for Mortgagor's escrow account under the
federal Real Estate Settlement Procedures Act of 1974, as amended from time to
time. Lender may estimate the amount of escrow funds due on the basis of current
data and reasonable estimates of future expenditures of future escrow account
funds or as otherwise required by applicable law. Lender shall apply the
escrowed funds against taxes, assessments and insurance premiums when due or as
otherwise required by law. Escrowed funds may be commingled with Lender's
general funds. If the escrowed funds held by Lender exceed the amount permitted
to be held by applicable law, Lender shall account to Mortgagor for the excess
escrowed funds in a manner determined by Lender or as otherwise required by
applicable law. If the escrowed funds held by Lender at any time are not
sufficient to pay the escrow account items when due, Lender may notify Mortgagor
in writing, and Mortgagor shall pay to Lender the amount necessary to make up
the deficiency in a manner determined by Lender or as otherwise required by
applicable law;
(B) CONDITION AND REPAIR. To keep the Property in good and tenantable condition
and repair, and to restore or replace damaged or destroyed improvements and
fixtures;
(C) LIENS. To keep the Property free from liens and encumbrances superior to the
lien of this Mortgage and not described in paragraph 2 on the reverse side;
(D) OTHER MORTGAGES. To perform all of Mortgagor's obligations and duties under
any other mortgage or security agreement on the Property and any obligation to
pay secured by such a mortgage or security agreement;
(E) WASTE. Not to commit waste or permit waste to be committed upon the
Property;
(F) CONVEYANCE. Not to sell, assign, lease, mortgage, convey or otherwise
transfer any legal or equitable interest in all or part of the Property or
permit the same to occur without the prior written consent of Lender and,
without notice to Mortgagor, Lender may deal with any transferee as to his
interest in the same manner as with Mortgagor, without in any way discharging
the liability of Mortgagor under this Mortgage or the Obligations;
(G) ALTERATION OR REMOVAL. Not to remove, demolish or materially alter any part
of the Property, without Lender's prior written consent, except Mortgagor may
remove a fixture, provided the fixture is promptly replaced with another fixture
of at least equal utility;
(H) CONDEMNATION. To pay to Lender all compensation received for the taking of
the Property, or any part, by condemnation proceeding (including payments in
compromise of condemnation proceedings), and all compensation received as
damages for injury to the Property, or any part. The compensation shall be
applied in such manner as Lender determines to rebuilding of the Property or to
the Obligations in the inverse order of their maturities (without penalty for
prepayment);
(I) INSPECTION. Lender and its authorized representatives may enter the Property
at reasonable times to inspect it, and at Lender's option to repair or restore
the Property and to conduct environmental assessments and audits of the
Property;
(J) ORDINANCES. To comply with all laws, ordinances and regulations affecting
the Property; and
(K) SUBROGATION. That Lender is subrogated to the lien of any mortgage or other
lien discharged, in whole or in part, by the proceeds of the note(s) or
agreement identified on the reverse side.
9. ENVIRONMENTAL LAWS. Mortgagor represents, warrants and covenants to Lender
(a) that during the period of Mortgagor s ownership or use of the Property no
substance has been, is or will be present, used, stored, deposited, treated,
recycled or disposed of on, under, in or about the Property in a form, quantity
or manner which if known to be present on, under, in or about the Property would
require clean-up, removal or some other remedial action ("Hazardous Substance")
under any federal, state or local laws, regulations, ordinances, codes or rules
("Environmental Laws"); (b) that Mortgagor has no knowledge, after due inquiry,
of any prior use or existence of any Hazardous Substance on the Property by any
prior owner of or person using the Property; (c) that, without limiting the
generality of the foregoing, Mortgagor has no knowledge, after due inquiry, that
the Property contains asbestos, polychlorinated biphenyl components (PCBs) or
underground storage tanks; (d) that there are no conditions existing currently
or likely to exist during the term of this Mortgage which would subject
Mortgagor to any damages, penalties, injunctive relief or clean-up costs in any
governmental or regulatory action or third-party claims relating to any
Hazardous Substance; (e) that Mortgagor Is not subject to any court or
administrative proceeding, judgment, decree, order or citation relating to any
Hazardous Substance; and (f) that Mortgagor in the past has been, at the
present is, and in the future will remain in compliance with all Environmental
Laws. Mortgagor shall indemnify and hold harmless Lender, its directors,
officers, employees and agents from all loss, cost (including reasonable
attorneys fees and legal expenses), liability and damage whatsoever directly or
indirectly resulting from, arising out of, or based upon (i) the presence, use,
storage, deposit, treatment, recycling or disposal, at any time, of any
Hazardous Substance on, under, in or about the Property, or the transportation
of any Hazardous Substance to or from the Property, (ii) the violation or
alleged violation of any Environmental Law, permit, judgment or license relating
to the presence, use, storage, deposit, treatment, recycling or disposal or any
Hazardous Substance on, under, in or about the Property, or the transportation
of any Hazardous Substance to or from the Property or (iii) the imposition of
any governmental lien for the recovery of environmental clean-up costs expended
under any Environmental Law. Mortgagor shall immediately notify Lender in
writing of any governmental or regulatory action or third-party claim instituted
or threatened in connection with any Hazardous Substance on, in, under or about
the Property.
10. AUTHORITY OF LENDER TO PERFORM FOR MORTGAGOR. If Mortgagor fails to perform
any of Mortgagor's duties set forth in this Mortgage, Lender may after giving
Mortgagor any notice and opportunity to perform which are required by law,
perform the duties or cause them to be performed, including without limitation
signing Mortgagor's name or paying any amount so required, and the cost shall be
due on demand and secured by this Mortgage, bearing interest at the highest rate
stated in any document evidencing an Obligation, but not in excess of the
maximum rate permitted by law, from the date of expenditure by Lender to the
date of payment by Mortgagor.
11. DEFAULT; ACCELERATION; REMEDIES. If (a) there is a default under any
Obligation secured by this Mortgage, or (b) Mortgagor falls timely to observe or
perform any of Mortgagor's covenants or duties contained in this Mortgage, then,
at the option of Lender each Obligation will become immediately payable unless
notice to Mortgagor or Borrower and an opportunity to cure are required by
SS425.105, Wis. Stats., or the document evidencing the Obligation and, in that
event the Obligation will become payable If the default is not cured as provided
in that statute or the document evidencing the Obligation or as otherwise
provided by law. If Lender exercises its option to accelerate the unpaid
principal and interest owed on the Obligation, together with all sums paid by
Lender as authorized or required under this Mortgage or any Obligation, shall be
collectible in a suit at law or by foreclosure of this Mortgage by action, or
both, or by the exercise of any other remedy available at law or equity.
12. WAIVER. Lender may waive any default without waiving any other subsequent or
prior default by Mortgagor.
13. POWER OF SALE. In the event of foreclosure, Lender may sell the Property at
public sale and execute and deliver to the purchasers deeds of conveyance
pursuant to statute.
14. ASSIGNMENT OF RENTS AND LEASES. Mortgagor assigns and transfers to Lender,
as additional security for the Obligations, all rents which become or remain due
or are paid under any agreement or lease for the use or occupancy of any part or
all of the Property. Until the occurrence of an event of default under this
Mortgage or any Obligation, Mortgagor was the right to collect the rents, issues
and profits from the Property, but upon the occurrence of such an event of
default, and the giving of notice by Lender to Mortgagor declaring that
constructive possession of the Property is in Lender, Mortgagor's license to
collect is terminated and Lender shall be entitled to such rents, issues and
Profits and may, after giving Mortgagor any notice and opportunity to perform
required by law, notify any or all tenants to pay all such rents directly to
Lender. All such payments shall be applied in such manner as Lender determines
to payments required under this Mortgage and the Obligations. This assignment
shall be enforceable and Lender shall be entitled to take any action to enforce
the assignment (including notice to the tenants to pay directly to Lender or the
commencement of a foreclosure action) without seeking or obtaining the
appointment of a receiver or possession of the Property.
15. RECEIVER. Upon the commencement or during the pendency of an action to
foreclose this Mortgage, or enforce any other remedies of Lender under it,
without regard to the adequacy or inadequacy of the Property as security for the
Obligations, Mortgagor agrees that the court may appoint a receiver of the
Property (including homestead interest) without bond, and may empower the
receiver to take possession of the Property and collect the rents, issues and
profits or the Property and exercise such other powers as the court may grant
until the confirmation of sale, and may order the rents, issues and profits,
when so collected, to be held and applied as the court may direct.
16. FORECLOSURE WITHOUT DEFICIENCY JUDGMENT. If the Property is a one-to-four
family residence that is owner-occupied at the commencement of a foreclosure, a
farm, a church or owned by a tax exempt charitable organization, Mortgagor
agrees to the provisions of SS846.101. Wis. Stats., and as the same may be
amended or renumbered from time to time, permitting Lender, upon waiving the
right to judgment for deficiency, to hold the foreclosure sale of real estate of
20 acres or less six months after a foreclosure judgment is entered. If the
Property is other than a one-to-four family residence that is owner-occupied at
the commencement of a foreclosure, a farm, a church or a tax exempt charitable
organization, Mortgagor agrees to the provisions of SS846.103. Wis. Stats., and
as the same may be amended or renumbered from time to time, permitting Lender,
upon waiving the right to judgment for deficiency, to hold the foreclosure sale
of real estate three months after a foreclosure judgment is entered.
17. EXPENSES. To the extent not prohibited by law, Mortgagor shall pay all
reasonable costs and expenses before and after judgment, including without
limitation, attorneys' fees, fees and expenses for environmental assessments,
inspections and audits, and fees and expenses for obtaining title evidence
incurred by Lender in protecting or enforcing its rights under this Mortgage.
18. SEVERABILITY. Invalidity or unenforceability of any provision of this
Mortgage shall not affect the validity or enforceability of any other provision.
19. SUCCESSORS AND ASSIGNS. The obligations of all Mortgagors are joint and
several. This Mortgage benefits Lender, its successors and assigns, and binds
Mortgagor(s) and their respective heirs, personal representatives, successors
and assigns.
20. ENTIRE AGREEMENT. This Mortgage is intended by the Mortgagor and Lender as a
final expression of this Mortgage and as a complete and exclusive statement of
its terms, there being no conditions to the full effectiveness of this Mortgage.
No parol evidence of any nature shall be used to supplement or modify any terms.
STATE OF WISCONSIN
COUNTY OF WAUKESHA
BORROWER: GENROCO, INC.
LENDER: M&I Bank of Menomonee Falls
PROPERTY: 251-55 INFO HWY
SLINGER, WI 53086
BORROWER'S AFFIDAVIT
The undersigned borrower/guarantors hereby certify that:
1.) There has been no change in the matters or information set forth in the
application except for:
(if none, so state)
2.) There has been no adverse change in any fact, circumstance, or in the
financial statements or financial information provided, or any other pertinent
information concerning said financial information to the M&I Bank since the date
of initial application, except for:
(if none, so state)
3.) That borrower/guarantors have not recently incurred any obligations; have
not changed levels of earnings and income; or foresee any circumstances in the
immediate future that would impair the ability of borrower/guarantor to repay
the mortgage as required.
The certification of the Affidavit is for the purpose of inducing the M&I Bank
of Menomonee Falls, its Successors and/or Assigns to make the first mortgage
loan on the above captioned property.
Dated effective this 7th Day of October
GENROCO, INC., A WISCONSIN CORPORATION
BY: /s/ Keith E. Brue
- ---------------------------------------
Keith E. Brue, Vice President
BY: /s/ Barbara R. Pick
- ---------------------------------------
Barbara R. Pick, President
Notary Public, State of Wisconsin
County of Waukesha
BY: /s/ Brian T. Hillstrom
- ---------------------------------------
Brian T. Hillstrom
My Commission expires December 14, 1999
State of Wisconsin
County of Waukesha
BORROWER: GENROCO, INC.
LENDER: M&I Bank of Menomonee Falls
PROPERTY: 251-55 INFO HWY
SLINGER, WI 53086
ERROR AND OMISSIONS/COMPLIANCE AGREEMENT
The undersigned borrower/guarantors for and in consideration of the above
referenced Lender this date funding the closing of this loan agree, if requested
by Lender or Closing Agent for Lender, to fully cooperate and adjust for
clerical errors, any or all loan closing documentation if deemed necessary or
desirable in the reasonable discretion of Lender to enable Lender to eliminate
said errors from this loan closing file.
The undersigned borrower/guarantors agree to comply with all above noted
requests by the above-referenced Lender within 30 days from date of mailing of
said requests. Borrower agrees to assume all costs including, by way of
illustration and not limitation, actual expenses, legal fees and marketing
losses for failing to comply with correction requests in the above noted time
period.
The undersigned borrower/guarantors do hereby so agree and covenant in
order to assure that this loan documentation executed this date will conform to
the loan commitment and be acceptable in the market place in the instance of
transfer or conveyance by Lender of its interest in and to said documentation,
review and to assure marketable title in the said borrower.
Dated effective this 7th Day of October
GENROCO, INC., A WISCONSIN CORPORATION
BY: /s/ Keith E. Brue
- ----------------------------------------
Keith E. Brue, Vice President
BY: /s/ Barbara R. Pick
- ----------------------------------------
Barbara R. Pick, President
Notary Public, State of Wisconsin County of Waukesha
BY: /s/ Brian T. Hillstrom
- -----------------------------------------
Brian T. Hillstrom
My Commission expires December 14, 1999
BUSINESS NOTE
(Use only for business purpose loans)
GENROCO, INC. OCTOBER 07, 1999 $110,000.00
- ------------------------------------- ---------------------- ---------------
(MAKER) (DATE)
1.PROMISE TO PAY AND PAYMENT SCHEDULE. The undersigned ("Maker," whether one or
more) promises to pay to the order of M&I BANK OF MENOMONEE FALLS ("Lender")
at N82 W15415 APPLETON AVENUE, MENOMONEE FALLS, Wisconsin, the sum of
$110,000.00
[CHECK (A), (B), (C) OR (D); ONLY ONE SHALL APPLY.]
(a) --- SINGLE PAYMENT. In one payment on N/A, PLUS interest payable as set
forth below unless interest is shown on line 4 below.
(b) -X- INSTALLMENTS OF PRINCIPAL AND INTEREST. In 57 equal payments of
$2,290.08 due on January 07, 2000, and on -X- the same day(s) of each
CONSECUTIVE month thereafter --- every 7th day thereafter --- every 14th day
thereafter, PLUS a final payment of the unpaid balance and accrued interest due
on October 07, 2004, all subject to modification as set forth in 2(b) below, if
applicable. All payments include principal and interest.
(c) --- INSTALLMENTS OF PRINCIPAL. In N/A equal payments of principal of $ N/A
due on N/A, and on --- the same day(s) of each N/A month thereafter --- every
7th day thereafter --- every 14th day thereafter, PLUS a final payment of the
unpaid principal due on N/A, PLUS interest payable as set forth below.
(d) --- OTHER. N/A
2.INTEREST CALCULATION. If the amount of interest is now shown on line 4 below,
this Note bears interest on the unpaid principal balance before maturity:
[CHECK (A) OR (B) OR COMPLETE LINE 4 BELOW; ONLY ONE SHALL APPLY.]
(a) -X- FIXED RATE. At the rate of 8.400% per year.
(b) --- VARIABLE RATE. At the annual rate which is equal to the following
Index Rate, --- plus --- minus N/A percentage points ("Note Rate"), and the Note
Rate shall be adjusted as provided below. The Index Rate is:
- --- The prime rate --- The reference rate --- The base rate adopted by ---
Lender --- N/A from time to time as its base or reference rate for interest rate
determinations. The Index Rate may or may not be the lowest rate charged by
Lender. --- N/A
The initial Note Rate is N/A%. An adjustment in the Note Rate will result in an
increase or decrease in (1) --- the amount of each payment of interest, (2) ---
the amount of the final payment, (4) --- the number of scheduled periodic
payments sufficient to repay this Note in substantially equal payments, (4) ---
The amount of each remaining payment of principal and interest so that those
remaining payments will be substantially equal and sufficient to repay this
Note by its scheduled maturity date, (5) --- the amount of each remaining
payment of principal and interest (other than the final payment) so that those
remaining payments will be substantially equal and sufficient to repay this Note
by its scheduled maturity date based on the original amortization schedule used
by Lender, plus the final payment of principal and interest, or (6) --- N/A. In
addition, Lender is authorized to change the amount of periodic payments if and
to the extent necessary to pay in full all accrued interest owing on this Note.
The Maker agrees to pay any resulting payments or amounts. The Note Rate shall
be adjusted only on the following change dates: --- the first day of each month
- --- each scheduled payment date --- as and when the Index Rate changes --- N/A.
Interest is computed for the actual number of days principal is unpaid on the
basis of -X- a 360 day year --- a 365 day year.
3. INTEREST PAYMENT. Interest is payable on November 7, 1999, and on --- the
same day of each CONSECUTIVE month thereafter, --- every 7th day thereafter, ---
every 14th day thereafter, and at maturity, or, if box 1(b) is checked, at the
times so indicated.
4. OTHER CHARGES. If any payment (other than the final payment) is not made on
or before the 10th day after its due date, Lender may collect a delinquency
charge of 5% of the unpaid amount. Unpaid principal and interest bear interest
after maturity until paid (whether by acceleration or lapse of time) at the rate
- -X- which would otherwise be applicable plus 3 percentage points --- of N/A% per
year, computed on the basis of -X- a 360 day year --- a 365 day year. Maker
agrees to pay a charge of $15.00 for each check presented for payment under this
Note which is returned unsatisfied.
5. PREPAYMENT. Full or partial prepayment of this Note -X- is permitted at any
time without penalty ---*<F4> N/A.
6. DEFAULT AND ENFORCEMENT. If any installment is not paid when due under this
Note, if a default occurs under any other obligation of any Maker to Lender or
if Lender deems itself insecure, the unpaid balance shall, at the option of
Lender, without notice, mature and become immediately payable The unpaid balance
shall automatically mature and become immediately payable in the event any
Maker, surety, indorser or guarantor becomes the subject of bankruptcy or other
insolvency proceedings. Lender's receipt of any payment on this Note after the
occurrence of an event of default shall not constitute a waiver of the default
or the Lender's rights and remedies upon such default. To the extent not
prohibited by law, Maker consents that venue for any legal proceeding relating
to collection of this Note shall be, at Lender's option, the county in which
Lender has its principal office in this state, the county in which any Maker
resides or the county in which this Note was executed.
7. SECURITY. This Note is secured by all existing and future security agreements
and mortgages between Lender and Maker, between Lender and any indorser or
guarantor of this Note, and between Lender and any other person providing
collateral security for Maker's obligations, and payment may be accelerated
according to any of them. Unless a lien would be prohibited by law or would
render a nontaxable account taxable, Maker grants to Lender a security interest
and lien in any deposit account Maker may at any time have with Lender. Lender
may, at any time after an occurrence of an event of default, without notice or
demand, set-off against any deposit balances or other money now or hereafter
owed any Maker by Lender any amount unpaid under this Note.
8. RIGHTS OF LENDER. Without affecting the liability of any Maker, indorser,
surety, or guarantor, Lender may, without notice, accept partial payments,
release or impair any collateral security for the payment of this Note or agree
not to sue any party liable on it. Lender may apply prepayments, if permitted,
to such future installments as it elects. Lender may without notice to Maker
apply payments made by or for Maker to any obligations of Maker to Lender.
Without affecting the liability of any indorser, surety or guarantor, Lender may
from time to time, without notice, renew or extend the time for payment.
9. OBLIGATIONS AND AGREEMENTS OF MAKER. The obligations under this Note of all
Makers are joint and several. All Makers, indorsers, sureties, and guarantors
agree to pay all costs of collection before and after judgment, including
reasonable attorneys' fees (including those incurred in successful defense or
settlement of any counterclaim brought by Maker or incident to any action or
proceeding involving Maker brought pursuant to the United States Bankruptcy
Code) and waive presentment, protest, demand and notice of dishonor. Maker
agrees to indemnify and hold harmless Lender, its directors, officers, employees
and agents, from and against any and all claims, damages, judgments, penalties,
and expenses, including reasonable attorneys' fees, arising directly or
indirectly from credit extended under this Note or the activities of Maker. This
indemnity shall survive payment of this Note. Each Maker acknowledges that
Lender has not made any representations or warranties with respect to, and that
Lender does not assume any responsibility to Maker for, the collectability or
enforceability of this Note or the financial condition of any Maker. Each Maker
has independently determined the collectability and enforceability of this Note.
Maker authorizes Lender to disclose financial and other information about Maker
to others.
10. INTERPRETATION. This Note is intended by Maker and Lender as a final
expression of this Note and as a complete and exclusive statement of its terms,
there being no conditions to the enforceability of this Note. This Note may not
be supplemented or modified except in writing.
GENROCO, INC.
- ----------------------------------(SEAL)
A WISCONSIN CORPORATION
- ----------------------------------------
(Type of Organization)
BY: /s/ Keith E. Brue, VP
- ----------------------------------(SEAL)
Keith E. Brue, Vice President
BY: /s/ Barbara R. Pick, President
- ----------------------------------(SEAL)
Barbara R. Pick, President
- ----------------------------------(SEAL)
- ----------------------------------(SEAL)
255 INFO HWY
SLINGER WI 53086 414-644-8700
- ----------------------------------------
(ADDRESS) (PHONE)
*<F4> If checked, insert applicable prepayment restrictions and penalties. If
credit life or accident and sickness insurance is requested, a WBA 450 may be
required.
ACCT #: 4970845 NOTE #: 00003
JMW
B HILLSTROM 00605
- ---------------------
LOAN OFFICER
MORTGAGE
(To be used for loans over $25,000; loans $25,000 or less
Document Number and first lien; or other non-consumer act transactions)
GENROCO, INC., A WISCONSIN CORPORATION ("Mortgagor," whether
one or more) mortgages to ALDRICH CENTER PARTNERSHIP, A
WISCONSIN PARTNERSHIP ("Mortgagee," whether one or more) to
secure payment of Two Hundred Thousand and no/100's dollars
($200,000.00) evidenced by a note or notes bearing an even date
executed by GENROCO, INC to Mortgagee, and any extensions, and
renewals and modifications of the note(s) and refinancings of any such
indebtedness on any terms whatsoever (including increases in interest)
and the payment of all other sums, with interest, advanced to protect the
security of this Mortgage, the following property, together with the rents,
profits, fixtures and other appurtenant interest (all called "Property"), in
Washington County, State of Wisconsin:
Recording Area
Name and Return Address
Jim Blise
730 Industrial Drive
Slinger, WI 53086
V5-0650-00G
(Parcel Identification Number)
SEE ATTACHED EXHIBIT A
1. This is not homestead property.
2. This is a purchase money mortgage.
3. MORTGAGOR'S COVENANTS.
(a) COVENANT OF TITLE. Mortgagor warrants title to the Property, except
municipal and zoning ordinances, recorded easements for public utilities
located adjacent to side and rear lot lines, recorded building and use
restrictions and covenants, and general taxes levied in the year of closing.
(b) TAXES. Mortgagor promises to pay when due all taxes and assessments
levied on the Property or upon Mortgagee's interest in it and to deliver to
Mortgagee on demand receipts showing such payment.
(c) INSURANCE. Mortgagor shall keep the improvements on the Property
insured against a loss or damage occasioned by fire, extended coverage perils
and such other hazards as Mortgagee may require, through insurers approved by
Mortgagee in such amounts as Mortgagee shall require, but Mortgagee shall not
require coverage in an amount more than the balance of the debt without co-
insurance, and Mortgagor shall pay the premiums when due. The policies shall
contain the standard mortgage clause in favor of Mortgagee and, unless
Mortgagee otherwise agrees in writing, the original of all policies covering
the property shall be deposited with Mortgagee. Mortgagor shall promptly give
notice of loss to insurance companies and Mortgagee. Unless Mortgagor and
Mortgagee otherwise agree in writing, insurance proceeds shall be applied to
restoration or repair of the Property damages, provided the Mortgagee deems
the restoration or repair to be economically feasible.
(d) OTHER COVENANTS. Mortgagor covenants not to commit waste nor suffer
waste to be committed on the Property, to keep the Property in good condition
and repair, to keep the Property free from liens superior to the lien of this
Mortgage, and to comply with all laws ordinances and regulations affecting the
Property. Mortgagor shall pay when due all indebtedness which may be or become
secured at any time by a mortgage or other lien on the Property superior to
this Mortgage and any failure to do so shall constitute a default under this
Mortgage.
4. DEFAULT AND REMEDIES. Mortgagor agrees that time is of the essence with
respect to payment of principal and interest when due and in the performance
of any of the covenants and promises of the Mortgagor contained herein or in
the note(s) secured hereby. In the event of default, Mortgagee may, at his
option and subject to the notice provisions of this Mortgage, declare the
whole amount of the unpaid principal and accrued interest due and payable and
collect it in a suit at law or by foreclosure of this Mortgage by action or
advertisement or by the exercise of any other remedy available at law or
equity, and Mortgagee may sell the Property at public sale and give deeds of
conveyance to the purchasers pursuant to the statutes.
5. NOTICE. Unless otherwise provided in the note(s) secured by this
Mortgage, prior to any acceleration (other than under paragraph 12) Mortgagee
shall mail notice to Mortgagor specifying: (a)the default; (b)the action
required to cure the default; (c)a date, not less than 15 days from the date
the notice is mailed to Mortgagor by which date the default must be cured; and
(d)that failure to cure the default on or before the date specified in the
notice may result in acceleration.
6. EXPENSES AND ATTORNEY'S FEES. In case of default, whether abated or not,
all costs and expenses including reasonable attorneys' fees and expenses of
title evidence to the extent not prohibited by law shall be added to the
principal, become due as incurred, and in the event of foreclosure, be
included in the judgment.
7. FORECLOSURE WITHOUT DEFICIENCY. Mortgagor agrees to the provisions of
Section 846.101 and 846.103(2) of the Wisconsin Statutes, as may apply to the
property and as may be amended, permitting Mortgagee in the event of
foreclosure to waive the right to judgment for deficiency and to hold the
foreclosure sale within the time provided in such applicable Section.
8. LIMITATION ON PERSONAL LIABILITY. Unless a Mortgagor is obligated on the
note or notes secured by this Mortgage, the Mortgagor shall not be liable for
any breach of covenants contained in this Mortgage.
9. RECEIVER. Upon default or during the pendency of any action to foreclose
this Mortgage, Mortgagor consents to the appointment of a receiver of the
Property, including homestead interest, to collect the rents, issues, and
profits of the Property, during the pendency of such an action, and such
rents, issues, and profits when so collected, shall be held and applied as the
court shall direct.
10. WAIVER. Mortgagee may waive any default without waiving any other
subsequent or prior default by Mortgagor.
11. MORTGAGEE MAY CURE DEFAULTS. In the event of any default by Mortgagor
of any kind under this Mortgage or any note(s) secured by this Mortgage,
Mortgagee may cure the default and all sums paid by Mortgagee for such purpose
shall immediately be repaid by Mortgagor with interest at the rate then in
effect under the note secured by this Mortgagee and shall constitute a lien
upon the Property.
12. CONSENT REQUIRED FOR TRANSFER. Mortgagor shall not transfer sell or
convey any legal or equitable interest in the Property (by deed, land
contract, option, long-term lease or in any other way) without the prior
written consent of Mortgagee, unless either the indebtedness secured by this
Mortgage is first paid in full or the interest conveyed is a mortgage or other
security interest in the Property, subordinate to the lien of this Mortgage.
The entire indebtedness under the note(s) secured by this Mortgage shall
become due and payable in full, at the option of Mortgagee without notice,
upon any transfer, sale or conveyance made in violation of this paragraph,
13. ASSIGNMENT OF RENTS. Mortgagor hereby transfers and assigns absolutely
to Mortgagee, as additional security, all rents, issues and profits which
become or remain due (under any form of agreement for use or occupancy of the
Property or any portion thereof), or which were previously collected and
remain subject to Mortgagor's control, following any default under this
Mortgage or the note(s) secured hereby and delivery of notice of exercise of
this assignment by Mortgagee to the tenant or other user(s) of the Property.
This assignment shall be enforceable with or without appointment of a receiver
and regardless of Mortgagee's lack of possession of the Property.
14. SUBORDINATION. This mortgage shall be subordinate to a certain mortgage
of even date herewith in favor of M & I Bank of Menomonee Falls which is
secured by the same real estate.
Dated this 7 day of October, 1999.
Barbara Pick - Pres. Keith Brue, CFO
/s/ Barbara R. Pick - Pres. /s/ Keith Brue, VP-CFO
AUTHENTICATION
Signature(s)------------------------------------------
- ------------------------------------------------------
authenticated this ------- day of ------------,------.
- ------------------------------------------------------
signature
- ------------------------------------------------------
type or print name
TITLE: MEMBER STATE BAR OF WISCONSIN
(If not,----------------------------------------------
authorized by ss 706.06, Wis. Stats.)
THIS INSTRUMENT WAS DRAFTED BY
Atty. Joan R. Beck
P.O. Box 270455, Hartford, WI 53027
ACKNOWLEDGMENT
STATE OF WISCONSIN
WASHINGTON COUNTY
Personally came before me this 7th day of October
1999 the above named Barbara R. Pick
and Keith Brue to me known to be the
persons and officers who executed the foregoing instrument
and acknowledge the same.
/s/ Brian T. Hillstrom
- ----------------------
Signature
type or print name /s/ Brian T. Hillstrom
----------------------
Notary Public Washington County, Wisconsin
My commission is permanent. (If not, state expiration date:
December 14, 1999.)
Names of persons signing in any capacity should be typed or
printed below their signatures.
EXHIBIT A
Lot Seven (7) of Certified Survey Map No. 3994, recorded in the Washington
County Registry on December 4, 1992 in Volume 25 of Certified Survey Maps,
pages 277-279 as Document No. 619618, being a redivision of Lot 6 of Certified
Survey Map No. 3885 recorded in Volume 24 of Certified Survey Maps, pages 306-
308 and Lot 3 of Certified Survey Map No. 3713, recorded in Volume 23 of
Certified Survey Maps, pages 156-158, and being a part of the NE 1/4 and NW
1/4 of the NW 1/4 of Section 20, T 10 N, R 19 E, Village of Slinger,
Washington County, Wisconsin.
FOR INFORMATIONAL PURPOSES ONLY
Tax Key No. V5-0650-00G.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and all references to our Firm) included in or made a part of this registration
statement.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin.
October 13, 1999.
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> JUN-30-1999
<CASH> 764,000
<SECURITIES> 0
<RECEIVABLES> 508,000
<ALLOWANCES> 3,000
<INVENTORY> 518,000
<CURRENT-ASSETS> 1,946,000
<PP&E> 692,000
<DEPRECIATION> 294,000
<TOTAL-ASSETS> 2,372,000
<CURRENT-LIABILITIES> 590,000
<BONDS> 0
0
0
<COMMON> 1,281,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,372,000
<SALES> 1,135,000
<TOTAL-REVENUES> 1,135,000
<CGS> 400,000
<TOTAL-COSTS> 400,000
<OTHER-EXPENSES> 707,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,000
<INCOME-PRETAX> 18,000
<INCOME-TAX> 7,000
<INCOME-CONTINUING> 11,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,000
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
