EXHIBIT 10.4
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (the "AGREEMENT"), dated as of
October 31, 2006, by and between MedCom USA, Incorporated, a Delaware
corporation ("MEDCOM") and Card Activation Technologies Inc., a Delaware
corporation ("CAT") which as of the date of this agreement is a wholly owned
subsidiary of MedCom.
RECITALS:
MedCom desires to separate its businesses into independent companies.
MedCom intends to spin-off (the "SPIN-OFF") to certain of its shareholders a
substantial portion of the outstanding capital stock of CAT at the date and time
of such Spin-off (the "SPIN-OFF DATE").
The parties recognize that it will be necessary or advisable for each of
them to provide certain administrative and other services to the other on an
interim basis in order to facilitate their respective transitions into separate,
publicly owned companies.
Therefore, in consideration of the mutual covenants and subject to the
terms and conditions contained herein, the parties agree as follows:
1. PERFORMANCE OF SERVICES.
(a) To the extent necessary personnel and facilities are employed
by and available to MedCom and CAT, each of them agrees, from and
after the Spin-off date and for a transition period of up to one year
following the Spin-off date, to provide the other on an "as needed" basis
with the following services:
(1) Tax consultation and assistance with tax return preparation
and audits. Any taxes due shall be paid in accordance with that
Tax Sharing Agreement of even date herewith between the parties;
(2) Assistance with the preparation of (i) periodic filings
under the Securities Exchange Act of 1934 or with the National
Association of Securities Dealers, Inc., (ii) reports to stockholders,
and (iii) other external financial reports;
(3) Design and implementation of internal audit procedures;
(4) Coordination of independent audits by nonaffiliated
auditors;
(5) Consultation on cash management, financing and other
treasury matters;
(6) Insurance and risk management services involving
administration, placement of insurance, and broker selection for
past and future insurance and risk management programs; and
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(7) Such other services as may be mutually agreed upon between
the parties.
(b) Each party shall use its respective best efforts in providing
the above services and, except for gross negligence or willful
misconduct, shall not be responsible for the accuracy, completeness or
timeliness of any advice or service or any return, report, filing or other
document which it provides, prepares or assists in preparing.
Notwithstanding the foregoing, neither party shall be obligated to provide
the above services if that party determines in its reasonable judgment that
providing such services would unreasonably interfere with the conduct of
its own business activities. The parties shall cooperate in planning the
scope and timing of services to be provided by each of them under this
agreement so as to lessen or eliminate any such interference.
2. REIMBURSEMENT. The parties agree to reimburse each other for
services rendered in accordance with an hourly fee schedule to be agreed upon
from time to time by the parties. The hourly fee schedule may provide different
rates for different categories of personnel. In addition, each party agrees to
reimburse the other for all out-of-pocket expenses incurred by the providing
party in connection with performing such services. The parties shall, on a
periodic basis to be agreed upon, but not less frequently than quarterly, submit
to and exchange with each other their respective statements of fees and expenses
for payment, accompanied by such supporting detail as the recipient of the
statement may reasonably request. Only the amount owed to one party for any
period in excess of the amount owed by that party for the same period need be
paid. Payment shall be due 30 days after date of the statement.
3. STAFFING PLANS. Nothing contained in this Agreement shall preclude
either party from obtaining the above services from other providers. During the
term of this Agreement, each party shall use reasonable efforts to hire or train
personnel and, in its discretion, establish consulting relationships with third
parties, so that each party will, with the passage of time, increasingly be able
to perform or have performed all of the above services for itself. Each party
shall keep the other generally informed of its plans in this regard in order for
the other party to make any appropriate adjustments in its staffing and hiring
plans.
4. DELIVERY OF RECORDS. As soon as is practicable after the Spin-off
date, each party shall deliver to the other the originals of all certificates of
incorporation, bylaws, licenses, certificates, board of directors' meeting
minutes, stock certificates of their respective subsidiaries and all other
corporate records, documents and instruments of a permanent nature pertaining to
the other party which either of them may have in their possession in the
condition and order in which they then exist. Each party shall be permitted to
retain copies of such documents.
5. ACCESS TO PROPERTIES AND RECORDS. Each party will provide the other,
and each of their respective officers, employees, representatives and agents
full access, during normal business hours, to any and all premises, properties,
books, records, data and other information relating to their respective
businesses, as well as to their respective employees, representatives and
agents, to acquire information for:
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(a) The formulation and completion of: (a) any tax returns or
other forms or reports required to be filed by either party with any
governmental agency; (b) any amended tax returns or requests for tax
refunds; and (c) any tax audits or investigations;
(b) The preparation and completion of any financial statements
which require the inclusion of the other party's financial
information;
(c) All insurance and bond matters;
(d) The defense or prosecution of any claims, lawsuits or
proceedings, if any, in which either party as a separate corporation
has liability or rights, contingent or otherwise; and
(e) Such other purposes as may be required, provided such purposes
shall be attributable to the corporate relationship that formerly
existed between MedCom and CAT, or for purposes related to the services
provided pursuant to this Agreement or any other agreement entered into
between MedCom and CAT in connection with the Spin-off.
6. RECORDS RETENTION. Each party shall retain all books, records, data
and other information relating to its business and operations for the longer of:
(a) Seven years;
(b) The time that party normally keeps its records based upon its
past custom and practice; or
(c) The time necessary to resolve any tax issue, claim, lawsuit,
action or proceeding that is pending at the time such records would
otherwise be destroyed, taking into account any statutes of limitation
which may have been waived.
Each party shall annually provide the other with a list, prepared in reasonable
detail, of books, records, data and other information scheduled for destruction
in the ordinary course, provided that it shall not be necessary to include on
the list any records which would clearly have no relevance to the other party.
At the recipient's request, the other party shall retain any records so
designated for an additional 12 months, at which time such records may again be
listed as scheduled for destruction.
7. AMENDMENTS. This Agreement may not be amended or revised except by a
written instrument signed by both parties to this Agreement.
8. WAIVERS. The failure of any party to this Agreement at any time to
require strict performance by the other party to this Agreement of any provision
of this Agreement shall not waive or diminish such party's right to later demand
strict performance of that or any other provision of this Agreement.
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9. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
10. NOTICES. All notices and other communications shall be in writing
and shall be delivered by hand or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or such other
addresses for a party as shall be specified by like notices) and shall be deemed
given on the date on which such notice is received:
To MedCom: 7975 North Hayden Road, Suite D-333
Scottsdale, AZ 85258
To CAT: 33 West Jackson Blvd., Suite 1618
Chicago, IL 60604-3749
11. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties to it and their respective affiliates and should not be
deemed to confer upon third parties any remedy, claim, reimbursement, cause of
action or other right in excess of those existing without reference to this
Agreement.
12. SUCCESSORS AND ASSIGNS. This Agreement and the obligations and
rights incident hereto shall inure to the benefit of the successors and
permitted assigns of the parties to this Agreement.
13. RELATIONSHIP OF PARTIES. Nothing contained in this Agreement shall
be deemed to constitute the appointment of either party as the agent of the
other.
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In witness, the parties have executed this agreement as of the date first
above written.
"MEDCOM" MEDCOM USA, INCORPORATED,
a Delaware corporation
By: /s/ William P. Williams
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William P. Williams, CEO
"CAT" CARD ACTIVATION TECHNOLOGIES INC.,
a Delaware corporation
By: /s/ Michael Malet
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Michael Malet, Executive Vice President
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