EXHIBIT 10.6
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INTERIM ADMINISTRATIVE SERVICES AGREEMENT
This Interim Administrative Services Agreement ("Agreement"), dated as of
January 1, 2000 (the "Effective Date"), is made between GENROCO, INC., a
Wisconsin corporation ("GENROCO"), with offices at 255 Info Highway, Slinger,
Wisconsin 53086, and VideoPropulsion, Inc., a Wisconsin corporation
("VideoPropulsion"), with offices at 251 Info Highway, Slinger, Wisconsin 53086.
WHEREAS, the video Division was a division of GENROCO (the "Division"),
until the Effective Date when it was contributed to a separate and independent
company, VideoPropulsion (the "Contribution");
WHEREAS, VideoPropulsion acquired the business of the Division in the
Contribution, and will be in the business of research, development, manufacture
and sale of various video related products as a separate company;
WHEREAS, prior to the Spin-Off, GENROCO provided certain administrative and
manufacturing services to support the Division's operations;
WHEREAS, VideoPropulsion intends to provide such administrative and
manufacturing support services for its operations, without GENROCO assistance,
as soon as it is reasonably feasible to do so;
WHEREAS, VideoPropulsion desires and GENROCO is willing to provide certain
administrative and manufacturing support services (as herein defined) for
VideoPropulsion's operations for certain specified interim periods after the
Spin-off solely for purposes of permitting VideoPropulsion to make an orderly
transition to independent status as soon as reasonably feasible.
NOW THEREFORE, in consideration of the promises set forth herein, the
parties do hereby agree as follows:
1. ADMINISTRATIVE AND MANUFACTURING SUPPORT SERVICES. Subject to the
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terms and conditions provided herein, GENROCO shall provide VideoPropulsion with
General Administrative Services (hereafter referred to collectively as
"Services" and individually as a "Service") on an interim basis, consisting of:
A. General Administrative Services which shall consist of:
(i) "Financial Services" which shall mean the general accounting
services previously provided by GENROCO to the Division, and
shall consist of general ledger use and reporting services,
cost accounting services, receivable and payable processing
services, the computation of gross payroll services for hourly
workers of VideoPropulsion and property accounting services
for VideoPropulsion. Financial Services shall not include any
services by GENROCO relating to treasury, tax, shareholder
relations, legal, salaried payroll and hourly payroll check
preparation, credit or collection procedure functions.
(ii) "Human Resources Services" which shall mean the human
resources services previously provided by GENROCO to the
Division and shall consist of employment services, personnel
administrative (salaried and hourly) services, benefits and
claims processing services, and medical reporting services.
Human Resources Services shall not include services relating
to corporate training and development and mail and messenger
department functions.
(iii) "Information Systems Services" which shall mean data
processing, communications and maintenance of records and
files, arising from centralized data processing and file
storage operations, as previously provided by GENROCO to the
Division and shall consist of accounting system services, cost
accounting system services, E-Mail system services, EDI system
services, engineering system services, order entry system
services, purchasing system services, time system services,
payroll (hourly) system services, human resource system
services, PERMAC system services, and records and files system
services, and shall also include the use of hardware,
furniture and fixtures associated with the foregoing services.
2. AGREEMENT PRINCIPLES AND GUIDELINES. By this Agreement, GENROCO and
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VideoPropulsion seek to implement the general principle that with the exceptions
noted herein or in the Contribution Agreement, Plan and Agreement of
Reorganization and Distribution including any Schedules, Exhibits or Annexes
thereto ("Contribution Documents"), GENROCO will provide Services on an interim
basis similar to those previously offered to the Division while it is not
reasonably feasible for VideoPropulsion to independently provide such Services
itself. Except as specifically provided in the Contribution Documents, GENROCO
does not agree, promise or covenant to provide any other services to
VideoPropulsion. GENROCO will continue to offer Services in the same or similar
magnitude as previously offered to the Division and by this Agreement does not
promise, covenant, or agree to provide a greater level or magnitude of Services.
VideoPropulsion acknowledges and covenants to use reasonable efforts to
independently provide such Services for itself as soon as reasonably feasible.
If reasonably feasible, VideoPropulsion will provide such Services for itself,
prior to the term limits set forth in Section 4 of this Agreement.
VideoPropulsion hereby acknowledges that the requirement for VideoPropulsion to
use reasonable efforts to independently provide such Services as soon as
reasonably feasible is a material element and condition to this Agreement and
that failure to fully comply with such provision will give rise to, among other
provisions, the termination rights set forth in Paragraph 19(e) of this
Agreement. Nothing in this Agreement shall be construed to cause GENROCO to
become a service bureau or to perform a Service which it cannot provide (i)
without conflict with a third-party contract to which GENROCO is a party or (ii)
a breach of any third- party contract to which GENROCO is a party. In no event
will GENROCO be responsible for any damages if it is unable to offer or continue
to provide a Service to VideoPropulsion pursuant to this paragraph.
3. FEES AND ADDITIONAL CHARGES. VideoPropulsion agrees to pay for the
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Services received hereunder as follows:
For all the functions referenced in Section 1 above, except for
Information Systems Services which are discussed separately, GENROCO and
VideoPropulsion agree the following per hour fee structure shall apply:
Level Billing Rate per Hour
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Class I $ 80.00
Class II $ 50.00
Class III $ 20.00
In the event that VideoPropulsion provides like services to GENROCO, the
above fee structure shall apply.
Exhibit 3 attached hereto sets forth a list of the Class I, Class II
or Class III category classification for GENROCO employees who may provide
Services. The classification and the employees may change at GENROCO's
discretion and notice thereof will be provided to VideoPropulsion. GENROCO
agrees to bill VideoPropulsion for the Services on a monthly basis.
GENROCO will provide certain financial, Human resource and Information
Systems Services (including use of the hardware and furniture and fixtures
associated with these services) to VideoPropulsion at the rate of $5,000 per
month.
Upon VideoPropulsion's request, upgrades (hardware and/or software) to
existing GENROCO's systems during the applicable Service Periods described below
(including any extension, if any), that benefit VideoPropulsion in any form or
manner, may be undertaken in GENROCO's sole discretion, and the costs thereof,
will be billed to VideoPropulsion (including all costs of installing or
implementing all upgrades). GENROCO can make upgrades (hardware or software) to
its existing systems, in its sole discretion, and may bill VideoPropulsion for
its proportionate share of the costs of the upgrades appropriately allocable to
VideoPropulsion (considering, among other factors, use and the period of time
VideoPropulsion could utilize the upgrades) provided GENROCO provides
VideoPropulsion with 10 days notice of the event on an upgrade.
(A) ADDITIONAL CHARGES. In addition to the charges set forth above,
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VideoPropulsion agrees to pay for any manufacturers, sales, use, excise,
personal property, or any other tax or charge, or duty or assessment cost,
expense, or fee attributable to the execution or performance of any Service
pursuant to this Agreement, except (i) any income, franchise, doing business or
similar taxes levied or assessed on or based on GENROCO' s income, capital stock
or other similar base, and (ii) employment taxes with respect to employees of
GENROCO (including, but not limited to, unemployment taxes, social security
taxes and income tax withholdings). VideoPropulsion also agrees to pay any fee,
expense, or charge associated with obtaining consents from any party other than
GENROCO to utilize software or other contracts necessary to offer any Service
under this Agreement. VideoPropulsion also agrees to reimburse GENROCO for its
reasonable out-of-pocket expenses directly attributable to the provision of
Services hereunder.
(B) TERMS OF PAYMENT. VideoPropulsion shall pay the fees and any
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additional charges owed within thirty (30) days of invoice. VideoPropulsion
shall also pay any collection fees and reasonable attorneys' fees incurred by
GENROCO in collecting payment of the charges and other amounts for which
VideoPropulsion is liable under the terms and conditions of this Agreement.
Without limiting the foregoing, if VideoPropulsion is more then two months in
arrears on any payment, GENROCO may terminate this Agreement pursuant to the
provisions of Paragraph 19(e).
4. TERM. This Agreement shall be effective upon January 1, 2000 or such
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other date as agreed upon by the parties ("Effective Date"). Subject to the
requirement set forth in Section 2 that VideoPropulsion must use reasonable
efforts to independently provide such Services when reasonably feasible, the
respective periods during which GENROCO shall perform the Services (a "Service
Period") offered pursuant to this Agreement shall be as follows:
Term of Services
General Administrative Services (In Months)
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Financial Services
- General Ledger Use/Reporting 24
- Cost Accounting 24
- Receivables/Payables 24
- Hourly Payroll (Gross Pay
Computation) 24
- Property Accounting 24
Human Resources Services
- Employment 24
- Personnel Administration 24
- Benefits and Claims Processing 24
- Medical Reporting 24
Information Systems Services
- Accounting 24
- Cost Accounting 24
- E-Mail 24
- Purchasing 24
- Time & Attendance 24
- Payroll (Hourly) 24
- Human Resources 24
- Records and Files 24
GENROCO, at its sole discretion, and upon request of VideoPropulsion at
least 30 days prior to termination of any Service Period, may extend the term
date for an additional period. Such Services will then be offered at a rate of
up to 125% of the billing rate in effect at such time, subject to any subsequent
adjustment pursuant to Section 3 of this Agreement.
5. TELEPHONE AND LAN. Any costs in creating VideoPropulsion's telephone
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and voicemail system accrued by GENROCO, on or after the Effective Date, will be
billed to VideoPropulsion as part of the invoice for Services. After the
Effective Date, VideoPropulsion will utilize GENROCO's telephone and voicemail
system as part of the Information Systems Services provided by GENROCO.
GENROCO will provide data communication links between the VideoPropulsion
facilities and GENROCO Information System Services for the applicable Service
Period. All third party network costs (MCI, AT&T, etc.) related to
VideoPropulsion's data communication circuits, traffic and services will be
billed by GENROCO or the respective third parties, if appropriate, monthly to
VideoPropulsion. GENROCO or its representatives will be permitted reasonable
access to any Data Communication equipment located on VideoPropulsion's property
in order to provide maintenance, repair or updates.
All MIS equipment, including any located at VideoPropulsion, as set forth
on related Exhibit 7 hereto, will remain solely the property of GENROCO.
GENROCO shall remain responsible for all maintenance of the MIS equipment,
wherever located. GENROCO will be permitted access to any MIS equipment located
on VideoPropulsion's property in order to provide maintenance, repair or
updates, in order to remove such equipment or for any reasonable request related
to the MIS equipment. There will be no charge for GENROCO's right to enter
VideoPropulsion's property. GENROCO will indemnify VideoPropulsion for any
damage or injury arising from its entrance rights, provided the damage or injury
arises from GENROCO gross negligence or willful misconduct.
6. PROGRAMMING. GENROCO reserves the right to determine the programming
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(whether hardware or software) used in fulfilling the Services under this
Agreement. All programs (including ideas and know-how and concepts) now
existing or developed by GENROCO in connection with the Services are and remain
GENROCO sole property.
7. EQUIPMENT. VideoPropulsion, at its own cost, may obtain and maintain
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such data processing, computer and communications equipment as may be necessary
or appropriate to facilitate the proper use and receipt of the Services set
forth in this Agreement. GENROCO will be permitted access to any
VideoPropulsion equipment or property in order (i) to provide maintenance,
repair or updates, or (ii) to remove such equipment listed on GENROCO accounting
records, if appropriate, or (iii) to respond to any reasonable request related
to VideoPropulsion's equipment. There will be no charge for GENROCO's right to
enter VideoPropulsion's property.
8. SYSTEMS MODIFICATION; AMENDMENT OF SERVICES. GENROCO, at its sole
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discretion, may modify, amend, enhance, update or provide an appropriate
replacement for any of the Services offered by this Agreement, the software used
to provide the Services or any element of its systems (hardware or software) at
any time.
9. INSURANCE AND BONDS.
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(A) FIDELITY BONDS. At VideoPropulsion's request, GENROCO shall
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obtain, at VideoPropulsion's expense, fidelity bond coverage for GENROCO's
employees who provide Services hereunder.
(B) INSURANCE. Throughout the term of this Agreement, GENROCO may
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maintain insurance coverage for losses from fire, disaster and other causes
contributing to interruption of the Services. The proceeds of any such
insurance shall be payable to GENROCO. Nothing in this Agreement shall be
construed as to permit VideoPropulsion to receive any of such proceeds, or to be
named as an additional loss payee under any such insurance policy.
10. RESPONSIBILITY.
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(A) GENERAL. GENROCO agrees to perform the Services in a reasonable
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manner, which is similar to services GENROCO provides for its own operations,
and assumes no other or higher degree of care. In connection with providing
Services, both parties acknowledge that it is a reasonable manner for GENROCO to
mail items or documents to VideoPropulsion, provided that VideoPropulsion may
request documents or items to be delivered via messenger, at VideoPropulsion's
cost. Except as specifically provided herein, GENROCO assumes no other
obligations as to performance, timing or quality of the Services provided under
this Agreement, all risks of error are expressly and solely assumed by
VideoPropulsion and GENROCO shall not be responsible for loss or damage due to
delays in providing the Services under this Agreement. GENROCO WILL IN NO EVENT
BE LIABLE FOR ANY INDIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES INCURRED BY
VIDEOPROPULSION INCLUDING, BUT NOT LIMITED TO, LOST PROFITS OR BUSINESS
OPERATION LOSS, REGARDLESS OF WHETHER GENROCO WAS ADVISED OF THE POSSIBLE
OCCURRENCE OF SUCH DAMAGES. GENROCO shall not be required to maintain
throughout the term of this Agreement, off-site disaster recovery capabilities
which permit GENROCO to recover from a disaster and continue providing Services
to VideoPropulsion within a commercially reasonable period.
GENROCO shall use reasonable efforts to keep the equipment necessary
to provide Services operational, but does not warrant the availability,
performance, capacity or capabilities of the equipment or any Service offered by
GENROCO. Except as specifically provided hereunder, VideoPropulsion remains
solely liable and responsible for any damages suffered arising from GENROCO
performance of this Agreement.
(B) RELIANCE ON VIDEOPROPULSION. In connection with the foregoing,
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VideoPropulsion agrees that VideoPropulsion and its employees will have a
significant impact on the timing and quality of the performance of the Services
offered. GENROCO will provide those Services described in this Agreement on the
basis of information and/or instructions furnished by VideoPropulsion. GENROCO
shall be entitled to rely upon any such data, information, or instructions as
provided by VideoPropulsion. If any error results from incorrect input supplied
by VideoPropulsion, VideoPropulsion shall be responsible for discovering and
reporting such error and supplying the information or instructing necessary to
correct such error to GENROCO. GENROCO may rely upon any instrument, signature,
instruction or telephone call from any employee of VideoPropulsion as to
Services requested under this Agreement. In connection with providing such
Services, GENROCO shall not be liable for any action taken or omitted by it in
good faith and believed to have been authorized by VideoPropulsion or its
employees. In any event, VideoPropulsion will indemnify and hold GENROCO
harmless from any cost, claim, damage, or liability (including attorneys' fees)
whatsoever arising out of such data, information or instructions, or any
inaccuracy or inadequacy therein. Except as specifically provided herein,
VideoPropulsion assumes all risk of loss, delay, and miscommunication in the
transportation or transmission by electronic means of data and information from
any terminal or remote unit.
11. WARRANTIES. EXCEPT AS SPECIFICALLY DESCRIBED IN THIS AGREEMENT,
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GENROCO DISCLAIMS ALL OTHER WARRANTIES, WHETHER WRITTEN, ORAL, EXPRESSED OR
IMPLIED INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
12. FORCE MAJEURE. GENROCO shall not be liable to VideoPropulsion if
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GENROCO's fulfillment or performance of any terms or provisions of this
Agreement is delayed or prevented by revolution or other civil disorders, wars,
act of enemies, strikes, electrical equipment availability failures, labor
disputes, fires, floods, act of God, federal, state, or municipal action,
statute, ordinance or regulation, or, without limiting the foregoing, any other
causes not within its reasonable control, and which by the exercise of
reasonable diligence it is unable to prevent, whether of the class of causes
hereinbefore enumerated or not. In case of emergency, GENROCO may also select
the order, timeliness, or availability of providing any Services to
VideoPropulsion.
13. EMPLOYEES. All employees of GENROCO providing Services to
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VideoPropulsion will continue to remain employees of GENROCO. All employees of
VideoPropulsion providing services to GENROCO will continue to remain employees
of VideoPropulsion.
14. CONFIDENTIALITY. Both parties recognize that the rendering of
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Services will be governed by the Confidentiality and Nondisclosure Agreement
entered into by the parties in connection with the Spin-Off, except the
confidentiality requirements of both parties will survive for one (1) year after
termination of the Services under this Agreement, regardless of the reason for
termination. In the event of any dispute concerning confidentiality, the
parties agree to utilize the provisions of Section 17.
15. DISPUTE RESOLUTION PROCEDURE.
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(A) GENERAL. Subject to the parties respective rights under Section
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19(e), 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. The CEOs of GENROCO
and VideoPropulsion, respectively, or their designated successor each shall
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 another
executive officer of GENROCO and VideoPropulsion, respectively, for considera-
tion.
(B) ARBITRATION. If settlement cannot be reached through the efforts
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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.
(C) LEGAL PROCEEDINGS. If the parties are unable to agree on an
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alternative dispute resolution mechanism within 30 days, either party may
initiate legal proceedings to resolve such matter.
16. PRECEDENCE AND UPDATING OF AGREEMENT. This Agreement is being
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executed contemporaneously with Contribution Documents. To the extent the
Contribution Documents, or any other document or other agreement executed in
connection with the Contribution Documents, is in conflict with any term of
provision of this Agreement or any Exhibit to this Agreement, this Agreement
will take precedence. To the extent this Agreement is in conflict with any
Exhibit, the Exhibit will take precedence.
17. MISCELLANEOUS.
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(A) GOVERNING LAW. This Agreement shall be construed in accordance
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with the internal laws of the State of Wisconsin.
(B) LIMITATIONS. Nothing in this Agreement is to be construed as an
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assignment or grant of any right, title or interest in any trademark, copyright,
design or trade dress or patent right.
(C) PARTIES IN INTEREST. This Agreement may be assigned to a parent
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or subsidiary of a party, or to a third party acquiring substantially all of the
assets of a party, provided that prior to such assignment the other party has
granted its written consent to the assignment, and further provided that neither
party may unreasonably withhold its consent to a request for assignment. Except
as provided above, this Agreement may not be assigned to a third party.
(D) ENTIRE AGREEMENT. This Agreement and the Exhibits are the entire
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Agreement between the Parties in connection with the matters set forth herein.
This Agreement may only be amended in writing signed by both Parties.
(E) TERMINATION.
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(i) GENROCO may promptly terminate this Agreement upon
written notice to VideoPropulsion with cause for any material breach
of this Agreement by VideoPropulsion, unless within a period of thirty
(30) days after written notice the VideoPropulsion remedies the breach
or proposes a course of action, reasonably acceptable to GENROCO, to
remedy the breach within a reasonable time. This Agreement will
terminate automatically (to the extent permitted by law at the time)
in the event VideoPropulsion files a petition in bankruptcy, becomes
insolvent, makes an assignment for the benefit of creditors or an
arrangement pursuant to any bankruptcy law, or discontinues its
business or has a receiver appointed for it. GENROCO, in its sole
discretion, may also terminate this Agreement in the event that
VideoPropulsion's ownership changes from its current ownership, namely
ownership of the stock by the public with no single shareholder having
more than 20% of the outstanding shares of common stock or having the
power to elect a majority of the board of directors, whether such
power is conferred by voting power or by agreement with
VideoPropulsion.
In addition, GENROCO shall have the right to terminate this
Agreement, upon 90 days notice to VideoPropulsion in the event
VideoPropulsion consolidates with or merges into any other Person or
conveys, transfers or leases all or any substantial portion of its
properties and assets to any Person, permits 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. For purposes of the above, "Person" shall mean any
individual, corporation, partnership, joint venture, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
(ii) VideoPropulsion can terminate at will, upon 90 days'
notice.
(iii) Upon any termination hereunder, VideoPropulsion will
promptly pay any charges or fees owed to GENROCO. There will be no
cost or charge to GENROCO if it elects to terminate its Services under
this Agreement.
(F) NOTICES. All notices and communications required or permitted
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under this Agreement shall be in writing and any communication or delivery
hereunder shall be deemed to have been duly made if personally 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
Either party may, by written notice so delivered to the other, change
the address to which future delivery shall be made.
(G) NO RELIANCE. No third party is entitled to rely on any of the
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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 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
