EMPLOYEE BENEFITS AND COMPENSATION
AGREEMENT
Between
GENROCO, INC.
and
VIDEOPROPULSION, INC.
Dated ------- --, 2000
EMPLOYEE BENEFITS AND COMPENSATION
This Agreement dated as of ------- --, 2000 between GENROCO, INC. ("GENROCO"),
a Wisconsin corporation with offices at 255 Info Highway, Slinger, WI 53086,
and VIDEOPROPULSION, INC. ("VideoPropulsion"), a Wisconsin corporation with
offices at 251 Info Highway, Slinger, WI 53086, shall govern the rights and
obligations of GENROCO and VideoPropulsion with respect to the employees
(including their compensation and benefits) of the Video Division in
connection with the transaction effected by the Contribution Agreement as
defined below. The term "GENROCO" when used in this Agreement shall not be
construed to include the Division where such construction would have the
effect of negating any obligation of VideoPropulsion or the Division
hereunder. The term VideoPropulsion when used shall not be construed to
include GENROCO where such construction would have the effect of negating any
obligation of GENROCO hereunder.
RECITALS
WHEREAS, GENROCO hereby and by certain other instruments of even date
herewith transfers or will transfer to VideoPropulsion effective as of 12:01
a.m., Central Standard Time, ------- --, 2000 or such other date as specified
in the Contribution Agreement, Plan and Agreement of Reorganization and
Distribution ("Contribution Agreement") dated as of ------- --, 2000 as the
effective date ("Effective Date"), those assets of GENROCO related to
GENROCO's video and related products business as conducted by the Division
("Division Assets") in accordance with the Contribution Agreement between the
parties, and including, without limitation, assets associated with the past,
present and future development, production, manufacture, marketing, use,
storage, distribution, disposal and sale of certain video products
manufactured by the Division throughout the world.
WHEREAS, the assets, business and operations formerly and currently used
and conducted by the Division are herein referred to collectively as the
"Division Business".
WHEREAS, the parties hereto intend, by this Agreement and the other
agreements and instruments provided for in the Contribution Agreement, to
convey to VideoPropulsion substantially all of the business and assets of the
Division Business.
NOW THEREFORE, in consideration of the premises and the mutual promises
contained in this Agreement, the Contribution Agreement and in the other
agreements and instruments provided for in the Contribution Agreement, the
parties hereto agree as follows:
ARTICLE I
Additional Definitions
----------------------
"Active Division Employees" means employees of GENROCO who are actively
working for the Division immediately prior to the Effective Date.
"Benefit Plans" means, collectively, all Pension Plans, Welfare Plans and
Other Benefit Plans maintained by GENROCO and covering Division Employees or
their dependents or beneficiaries.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Employees" means employees of GENROCO who work at the Division, including
those who are not actively working for the Division immediately prior to the
Effective Date solely by reason of vacation, sick leave, family or medical
leave, military leave, short-term disability leave, long-term disability
leave, leave compensated by workers' compensation or other leave of absence or
layoff or strike, but excluding persons for whom the employment relationship
has been finally terminated whether by retirement, discharge, quit or death,
and excluding persons who prior to the Effective Date have, pursuant to
procedures established by GENROCO, elected to transfer to employment with
GENROCO other than Division employment.
"Other Benefit Plans" means any written or oral plan, contract or other
arrangement of benefits or advantage to any group of employees, including
without limitation bonus, profit sharing, deferred compensation, stock
purchase, stock option, severance plan, salary continuation, vacation, sick
leave, fringe benefit, incentive, insurance, training program, apprenticeship
program, welfare or similar arrangement (other than a Pension Plan or Welfare
Plan) maintained by GENROCO and covering Division Employees or their
beneficiaries or dependents.
"Welfare Plan" means any employee welfare benefit plan, as defined in
Section 3(1) of ERISA, maintained by GENROCO and covering Division Employees
or dependents or beneficiaries of Division Employees.
ARTICLE II
Identification of Benefit Plans
--------------------------------
Schedule H-2 sets forth a list of the Benefit Plans maintained by GENROCO
with respect to Employees. VideoPropulsion acknowledges that it has been
furnished with descriptions of all Benefit Plans described on Schedule H-2.
In the event another benefit plan is offered to Employees which is not listed
on Schedule H-2, the parties agree to allocate financial responsibility
between themselves consistent with the approach taken for similar benefits
listed under Schedules H-2. The parties agree to resolve any disputes in
accordance with the procedures set forth at Article VII.
The parties agree that all matters concerning the Worker's Compensation
Plans listed on Schedule H-2 will be treated as set forth in the General
Assignment, Assumption and Agreement regarding Litigation, Claims and Other
Liabilities, dated ------- --, 2000 (the "General Assignment, Assumption and
Agreement").
The parties further agree that all matters concerning the Stock Incentive
Plan (including Employment Agreement) will be governed by the Release and
Settlement Agreement, dated ------- --, 2000.
ARTICLE III
Employees and Employee Benefits
-------------------------------
3.1 Employees. (a) Effective as of the Effective Date, VideoPropulsion
---------
shall offer employment to all persons who are Employees. VideoPropulsion shall
on the Effective Date assume the employment responsibilities for each Employee
and shall offer to return each such employee to a position with job
responsibilities comparable to such employee's prior position of employment in
the Division if such position is available or if required by law, or otherwise
to any other open position for which such employee is qualified.
(b) Employees (and their dependents and beneficiaries) shall be provided
compensation and benefits by VideoPropulsion comparable to compensation and
benefits being provided to them by GENROCO immediately prior to the Effective
Date.
(c) Employees shall be given credit for GENROCO service under
VideoPropulsion's benefit plans.
(d) (i) GENROCO, in good faith, will calculate the estimated liability
amount related to Employees' unpaid and accrued vacation expense earned for the
period January 1, 2000 through ------- --, 2000. GENROCO will remit to
VideoPropulsion cash equal to 1.0765 times this liability amount.
(ii) VideoPropulsion will assume all liability related to Employees'
payroll taxes. VideoPropulsion will remit the payroll taxes to the
appropriate regulatory authorities. GENROCO will not be responsible for any
of the payroll taxes relating to Employees.
(iii) GENROCO will calculate all wages due to Employees for the payroll
period ending on ------- --, 2000. GENROCO will directly remit such wages,
net of deductions, to all Employees. On and after the Effective Date,
VideoPropulsion shall remain solely liable for all compensation and wages to
be paid to Employees.
(iv) VideoPropulsion will assume all liability relating to Employees'
compensation for holidays occurring on or after the Effective Date.
(v) Any disputes concerning the calculation of the liability will be
resolved by the dispute resolution provisions of this Agreement.
(e) Both before and after the Effective Date, GENROCO and VideoPropulsion
shall coordinate with each other and shall take all actions necessary to
effect the smooth transfer of Employees and continuing benefit coverage and
administration.
3.2 Allocation of Benefit Payment Responsibility. Except as provided in
--------------------------------------------
Section 3.1(f), Article IV and Article V, VideoPropulsion is not assuming any
benefit or compensation program maintained by GENROCO and GENROCO is not
assigning any such program to VideoPropulsion. VideoPropulsion's obligations
with respect to benefit and compensation programs shall be as described
therein. As to all other Benefit Plans, from and after the Effective Date
VideoPropulsion shall provide Employees with all benefits and payments which
would have been provided to them under the Benefit Plans (other than stock
option or stock purchase plans) with respect to claims for benefits incurred
prior to the Effective Date so long as GENROCO would not ordinarily have paid
such benefits in accordance with its ordinary benefit payment practices prior
to the Effective Date. However, notwithstanding the foregoing, with respect to
(a) health benefits, (b) dental benefits, (c) vision benefits, (d) life
insurance, (e) travel accident insurance and (f) other benefits for which an
insurance carrier or some party other than GENROCO is responsible, GENROCO
shall remain responsible, subject to and in accordance with the terms of the
applicable Benefits Plan, for all claims incurred by Employees prior to the
Effective Date even if such claims are not filed until after the Effective
Date. Further, if any Hired Division Employee or dependent is not actively at
work by reason of hospitalization on the Effective Date, GENROCO shall retain
responsibility for the payment of health care claims until the end of such
hospitalization, subject to and in accordance with the terms and conditions of
the applicable health benefits plan as in effect on the Effective Date.
3.3 VideoPropulsion to Indemnify GENROCO. VideoPropulsion shall
------------------------------------
indemnify, hold harmless and defend GENROCO from and against any damages,
claims (including, but not limited to, unfair labor practice claims),
liabilities, obligations, costs of defense (including attorney fees), expenses,
fines, levies, assessments, charges, penalties, damages, settlements or awards
asserted against GENROCO associated with Benefit Plans or compensation
applicable to Employees (including dependents or beneficiaries, if any) except
to the extent liability has been specifically retained by GENROCO in this
Agreement, provided that VideoPropulsion's obligation to indemnify, hold
harmless, and defend shall not apply to the extent (a) an insurance carrier or
(b) any party other than GENROCO or VideoPropulsion is responsible. Without
limiting the foregoing, it is specifically contemplated that VideoPropulsion's
indemnity shall extend to any claims (except to the extent (a) liability has
been specifically retained by GENROCO in this Agreement, (b) an insurance
carrier is responsible, or (c) any party other than GENROCO or VideoPropulsion
is responsible) made against GENROCO for benefits which would have been
provided by GENROCO to the Employees under its Benefit Plans had the Employees
remained GENROCO employees throughout the remainder of their careers but are
not provided by VideoPropulsion which would have been applicable to them had
they continued to be covered under the GENROCO Benefit Plans. The parties
agree to generally follow the procedure for notification of a claim for defense
or indemnification and the procedures for obtaining indemnification or defense
as set forth in Articles V and VI of the General Assignment, Assumption and
Agreement.
3.4 Retirees. Those individuals who were employees of the Division who
--------
retired prior to the Effective Date and were eligible for benefits available to
retired employees of the Division under a plan maintained by GENROCO shall
continue to be the responsibility of GENROCO after the Effective Date.
3.5 COBRA. (a) This paragraph (a) applies to (i) those individuals who
-----
are Employees (and their dependents) and (ii) those individuals who are not
Employees but who had been employees of the Division (in this circumstance
meaning an individual who for over 50% of the time in the most recent 2 years
of his employment was an employee of the Division) prior to the Effective Date
(or their dependents). If an election for any such person of continuing
coverage under a health, dental and/or vision benefits plan sponsored by
GENROCO as a result of the requirements of ERISA Sections 601-608 is in effect
on the Effective Date or if such an election for any such person is made on or
after the Effective Date, VideoPropulsion shall at its option either (i)
reimburse GENROCO for the amount of health, dental and vision benefit claims
paid by GENROCO for such person for claims incurred after the Effective Date
less the amount of any premiums paid by such person to GENROCO with respect to
periods after the Effective Date for the right to receive such continuing
coverage or (ii) provide replacement coverage with no applicable pre-existing
condition exclusion.
(b) Notwithstanding any other provision of this agreement to the
contrary, GENROCO shall retain all liabilities for the provision of continuing
coverage under a health, dental and/or vision benefits plan sponsored by
GENROCO as a result of the requirements of ERISA Section 601-608 for those
individuals who had been employees of the Division (or their dependents) for
whom the employment relationship with the Division and GENROCO ended prior to
the Effective Date and who are not otherwise described in paragraph (a) above.
3.6 Personnel and Medical Records. GENROCO shall transfer or make
-----------------------------
available to VideoPropulsion the personnel and medical records of Employees.
VideoPropulsion shall indemnify, hold harmless, and defend GENROCO from and
against any damages, claims, liabilities, obligations, costs of defense
(including attorney fees), expenses, fines, levies, assessments, charges,
penalties, damages, settlements or awards asserted against GENROCO resulting
from the release of any personnel and medical records under this Section 3.6.
3.7 Reimbursement for Compensation Arising From Note Forgiveness.
------------------------------------------------------------
VideoPropulsion shall pay Genroco in cash amounts forgiven for employees of
VideoPropulsion under the related Genroco employee stock purchase agreements
as such amounts are forgiven. The total amount outstanding between Genroco and
VideoPropulsion for VideoPropulsion employees as of December 31, 1999 is
$325,368.06. Such amounts will be forgiven as vested as described specifically
in Schedule H-3.
ARTICLE IV
Dispute Resolution
------------------
4.1 General. In an effort to resolve informally and amicably any claim
-------
or controversy arising out of or related to the interpretation or performance
of this Agreement without resorting to litigation, a party shall first notify
the other of any difference or dispute hereunder that requires resolution.
GENROCO and VideoPropulsion each shall designate an employee to investigate,
discuss and seek to settle the matter between them. If the two are unable to
settle the matter within 30 days after such notification (or such longer period
as may be agreed upon), the matter shall be submitted to a senior officer of
GENROCO and VideoPropulsion, respectively, for consideration.
4.2 Arbitration. If settlement cannot be reached through the efforts of
-----------
the senior officers within an additional 30 days or such longer period as may
be agreed upon, the parties shall consider arbitration or other alternative
means to resolve the dispute.
4.3 Legal Proceedings. If the parties are unable to agree on an
-----------------
alternative dispute resolution mechanism within 30 days, either party may
initiate legal proceedings to resolve such matter.
ARTICLE V
Notices
-------
5.1 General. All notices and communications required or permitted under
-------
this Agreement shall be in writing and any communication or delivery hereunder
shall be deemed to have been duly made if actually delivered, or if mailed by
first class mail, postage prepaid, or by air express service, with charges
prepaid and addressed as follows:
If to GENROCO: GENROCO, Inc.
255 Info Highway
Slinger, Wisconsin 53086
Attention: CEO
If to VideoPropulsion: VideoPropulsion, Inc.
251 Info Highway
Slinger, Wisconsin 53086
Attention: CEO
5.2 Change in Address. Either party may, by written notice so delivered
-----------------
to the other, change the address to which future delivery shall be made.
ARTICLE VI
Written Amendment and Non-Waiver
--------------------------------
6.1 Written Amendment and Waiver. This Agreement may not be altered or
----------------------------
amended nor any rights hereunder be waived, except by an instrument in writing
executed by the party or parties to be charged with such amendment or waiver.
6.2 Limited Amendment or Waiver. No waiver of any term, provision or
---------------------------
condition of this Agreement or failure to exercise any right, power or remedy
or failure to enforce any provision of this Agreement, in any one or more
instances, shall be deemed to be a further or continuing waiver of any such
term, provision or condition or as a waiver of any other term, provision or
condition or enforcement right of this Agreement or deemed to be an impairment
of any right, power or remedy or acquiescence to any breach.
ARTICLE VII
Miscellaneous
-------------
7.1 Governing Law. This Agreement and the transactions contemplated
-------------
hereby shall be construed in accordance with and governed by the internal laws
of the State of Wisconsin.
7.2 Entire Agreement. This Agreement constitutes the entire
----------------
understanding of the parties hereto with respect to the subject matter hereof,
superseding all negotiations, prior discussions and prior agreements. To the
extent a subject is specifically covered in this Agreement and to the extent
any other agreement (other than the Release and Settlement Agreement and
General Assignment Agreement provision on Worker's Compensation described in
Article II) is in conflict herewith, this Agreement, if specific, shall
control.
7.3 Parties In Interest. Neither party may assign its rights or
-------------------
delegate any of its duties under this Agreement without prior written consent
of the other. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
Nothing contained in this Agreement, express or implied, is intended to confer
upon any third party any benefits, rights or remedies.
7.4 Effectiveness. This Agreement shall become effective at the
-------------
Effective Date and may be terminated by GENROCO at any time prior thereto
without any liability on GENROCO's part.
7.5 Consolidation, Merger, Etc. Involving VideoPropulsion.
-----------------------------------------------------
VideoPropulsion shall not consolidate with or merge into any other Person or
convey, transfer or lease all or any substantial portion of its properties and
assets to any Person, and VideoPropulsion shall not permit any Person to
consolidate with or merge into VideoPropulsion or convey, transfer or lease all
or any substantial portion of its properties and assets to VideoPropulsion,
unless, in case VideoPropulsion shall consolidate with or merge into another
Person or convey, transfer or lease all or any substantial portion of its
properties and assets to any Person, the Person formed by such consolidation or
into which VideoPropulsion is merged or the Person which acquires by conveyance
or transfer, or which leases, all or any substantial portion of properties and
assets of VideoPropulsion shall be a corporation, partnership or trust
organized and validly existing under the laws of the United States of America,
any State thereof or the District of Columbia and shall expressly assume, by a
written agreement, executed and delivered to GENROCO, in form reasonably
satisfactory to GENROCO, all the liabilities, obligations and expenses to be
assumed by VideoPropulsion under this Agreement and the due and punctual
performance or observance of every agreement and covenant of this Agreement on
the part of VideoPropulsion to be performed or observed.
For purposes of this Section, "Person" shall mean any individual,
corporation, partnership, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
7.6 Reformation and Severability. If any provision of this Agreement
----------------------------
shall be held to be invalid, unenforceable or illegal in any jurisdiction under
any circumstances for any reason, (i) such provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and
legal and preserve the original intent of the parties, or (ii) if such
provision cannot be so reformed, such provision shall be severed from this
Agreement. Such holding shall not affect or impair the validity,
enforceability or legality of such provision in any other jurisdiction or under
any other circumstances. Neither such holding nor such reformation or
severance shall affect or impair the legality, validity or enforceability of
any other provisions of this Agreement to the extent that such other provision
is not itself actually in conflict with any applicable law.
7.7 Titles and Headings. All titles and headings have been inserted
-------------------
solely for the convenience of the parties and are not intended to be a part of
this Agreement or to affect its meaning or interpretation.
7.8 No Reliance. No third party is entitled to rely on any of the
-----------
representations, warranties and agreements of the parties contained in this
Agreement. The parties assume no liability to any third party because of any
reliance on the representation, warranties and agreements of the parties
contained in this Agreement.
IN WITNESS WHEREOF the Parties have caused this Agreement to be
executed by their duly authorized officers as of this ---- day of -------,
2000.
GENROCO, INC.
By:-------------------------------
Keith Brue
Executive Vice President and
Chief Financial Officer
VIDEOPROPULSION, INC.
By:-------------------------------
Chris Good
Executive Vice President
and Chief Technical Officer
TABLE OF CONTENTS
EMPLOYEE BENEFITS AND COMPENSATION H-1
RECITALS H-1
ARTICLE I Additional Definitions H-3
ARTICLE II Identification of Benefit Plans H-5
ARTICLE III Employees and Employee Benefits H-6
3.1 Employees H-6
3.2 Allocation of Benefit Payment Responsibility H-7
3.3 VideoPropulsion to Indemnify GENROCO H-8
3.4 Retirees H-9
3.5 COBRA H-9
3.6 Personnel and Medical Records H-10
3.7 Reimbursement for Compensation Arising From Note Forgiveness H-10
ARTICLE IV Dispute Resolution H-11
4.1 General H-11
4.2 Arbitration H-11
4.3 Legal Proceedings H-11
ARTICLE V Notices H-12
5.1 General H-12
5.2 Change in Address H-12
ARTICLE VI Written Amendment and Non-Waiver H-13
6.1 Written Amendment and Waiver H-13
6.2 Limited Amendment or Waiver H-13
ARTICLE VII Miscellaneous H-14
7.1 Governing Law H-14
7.2 Entire Agreement H-14
7.3 Parties In Interest H-14
7.4 Effectiveness H-14
7.5 Consolidation, Merger, Etc. Involving VideoPropulsion H-14
7.6 Reformation and Severability H-15
7.7 Titles and Headings H-16
7.8 No Reliance H-16
