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EXHIBIT 10.5
CORPORATE SERVICES AGREEMENT
THIS CORPORATE SERVICES AGREEMENT is entered into as of _______________,
1997 between Science Applications International Corporation, a Delaware
corporation ("SAIC"), and Network Solutions, Inc., a Delaware corporation
("Subsidiary").
RECITALS
WHEREAS, Subsidiary is currently a wholly-owned subsidiary of SAIC and
obtains administrative and other services from SAIC;
WHEREAS, Subsidiary is currently considering an initial public offering of
_____ percent of its Common Stock;
WHEREAS, after such initial public offering, SAIC will own the remaining
_____% of the Common Stock of Subsidiary;
WHEREAS, after such initial public offering, Subsidiary desires to
continue to obtain administrative and other services from SAIC and SAIC is
willing to continue to furnish or make such services available to Subsidiary;
and
WHEREAS, by this Agreement, SAIC and Subsidiary desire to set forth the
basis for SAIC's providing services of the type referred to herein.
IT IS MUTUALLY agreed by the parties hereto as follows:
1. SERVICES
Beginning on the date of this Agreement, SAIC, through its corporate
staff, will provide or otherwise make available to Subsidiary certain general
corporate services, including, but not limited to, the following:
1.1 Control Group. SAIC shall provide to Subsidiary all services
and functions comprised of the "Control Group" as defined by SAIC in its
Corporate Home Office Disclosure Statement. The Control Group currently
includes the functions of the Chief Executive Officer's Office, Corporate
Administration, Internal Audit, Treasury, SAIC Board of Directors, Annual
Report, Controller, Chief Financial Officer, Quality Programs and Financial
Reporting.
1.2 Central Services. SAIC shall also provide to Subsidiary
certain services and functions within the "Central Services" as defined by SAIC
in its Corporate Home Office Disclosure Statement and agreed upon by the
Subsidiary. Such services and functions currently include the following:
(a) Records Retention. SAIC shall provide assistance in the
storage and
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retrieval of documentation and backup information.
(b) Financial Accounting. SAIC shall provide assistance with
internal and external financial reporting, management of general ledger
functions and fixed asset and real property accounting.
(c) Corporate Project Control. SAIC shall provide assistance,
training and coordination of project control activities.
(d) Cost Accounting. SAIC shall provide assistance in
assigning project account and contract numbers, maintaining organization tables
and group receivable analysis.
(e) Corporate Development. SAIC shall provide assistance with
corporate planning, government relations and corporate quality assurance.
(f) Corporate Information Services. SAIC shall be responsible
for developing application software for the Corporate Management
Information System (MIS), writing program codes and distributing MIS reports.
(g) Tax. SAIC shall be responsible for the preparation and
filing of Federal, state and local tax returns in accordance with the Tax
Sharing Agreement of even date herewith between SAIC and Subsidiary. In
addition, SAIC shall provide tax research and planning and assistance on tax
audits (Federal, state and local). Subsidiary shall be responsible for the
preparation and filing of property, sales and use tax returns.
(h) Corporate Contracts. SAIC shall provide assistance on
general contracting issues and internal administration procedures and conflicts
of interest.
(i) Risk Management. Except for employee benefit programs
defined in Section 1.2(k) below, SAIC shall include Subsidiary and its
property and employees, where applicable, within insurance coverage obtained by
SAIC ("SAIC Insurance"), except for Directors and Officers Liability Insurance,
which shall be procured with the assistance of SAIC Risk Management at the sole
cost of Subsidiary, with coverage limits and terms acceptable to SAIC.
Subsidiary shall be responsible for coordinating with SAIC Risk Management for
any other insurance policy or coverage it desires and shall be responsible for
any expense or settlement which is (i) not within the scope of the SAIC
Insurance or (ii) a policy exclusion or limitation under the SAIC Insurance.
Any claim expense or settlement amounts that are within any deductible or
self-insured retention applicable to any policy shall be charged to Subsidiary.
Subsidiary shall not take any action which shall cause a default or limit
SAIC's ability to make any claim under any of the SAIC Insurance and Subsidiary
agrees to indemnify and hold harmless SAIC for any expenses that are the result
of Subsidiary's breach of policy provisions which results in denial of coverage
to SAIC. With respect to any claim made under the SAIC Insurance which is
applicable to or desired by Subsidiary, Subsidiary shall notify SAIC of such
claim, cooperate with SAIC in the presentation and prosecution of such claim,
and consult with SAIC on any dispute regarding such claim, provided, however
that as between SAIC and Subsidiary, SAIC shall have final decision-making
authority over such claim.
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(j) Legal. SAIC shall provide general legal advice,
review and guidance in the areas of contracts, intellectual property, labor and
corporate matters. SAIC shall provide assistance for SEC compliance,
acquisitions and strategic arrangements and will maintain Subsidiary's
corporate records, including minutes of meetings of the Boards of Directors and
Stockholders. Legal services provided by lawyers other than SAIC's in-house
counsel shall be coordinated with and approved by Subsidiary prior to obtaining
such services and the cost of such services shall be invoiced to and paid by
Subsidiary.
(k) Human Resources/Payroll. SAIC shall administer,
oversee and maintain SAIC programs and benefits in which Subsidiary
participates, provide support and assistance in employee relation matters,
interface with governmental agencies including EEOC and maintain and update
employee policies and procedures. SAIC, through a third party provider, shall
provide payroll and related services for Subsidiary's employees. Subsidiary
shall provide to SAIC all necessary information required for participation in
such plans by employees and for payroll and other related services.
(l) Stock Programs. SAIC shall administer the
participation of Subsidiary's employees in certain stock benefit programs and
plans maintained by SAIC such as stock options plans, bonus plans and stock
purchase plans.
(m) Retirement Programs. SAIC shall administer the
participation of Subsidiary's employees in the employee benefit plans sponsored
by SAIC such as the following: Employee Stock Ownership Plan, Profit Sharing
Plan, Cash or Deferred Arrangement and certain bonus and deferral plans.
Subsidiary shall provide to SAIC all necessary information required for
participation in such plans by its employees. SAIC shall be responsible for
filing all required reports under ERISA for employee benefit plans sponsored by
SAIC.
(n) Real Estate/Facilities. SAIC shall assist Subsidiary
in locating facilities and will provide assistance in the negotiation and
documentation of leases.
1.3 SAIC shall also provide services in addition to those
enumerated in Sections 1.1 and 1.2 above as reasonably requested by Subsidiary.
2. FEES.
2.1 Fixed Fee. For performing general services of the types
described above in Section 1, SAIC will charge Subsidiary an annual fixed fee
equal to 2.5% of the net revenues of Subsidiary for the fiscal year in which
such services are performed (such amount to be prorated on a daily basis for
any partial year), which fee is intended to compensate SAIC for Subsidiary's
pro rata share of the aggregate costs actually incurred by SAIC in connection
with the provision of such services to all recipients thereof. The fee set
forth in the preceding sentence may be adjusted on an annual basis by mutual
agreement of SAIC and Subsidiary.
2.2 Additional Costs. In addition to the foregoing services,
certain specific services will be made available to Subsidiary by SAIC on an
as-requested basis. These may include, but are not limited to, services
specifically requested by Subsidiary or services which, in SAIC's
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judgment, are not routine administrative services or create unusual burdens or
demands on SAIC's resources. In such event, SAIC shall notify Subsidiary of
the cost of such services and obtain Subsidiary's consent prior to performing
such services. SAIC will charge Subsidiary for the costs actually incurred
(including overhead and general administrative expenses) for such services that
are requested by Subsidiary and supplied by SAIC.
2.3 The charges for service pursuant to Sections 2.1 and 2.2.
above will be determined and payable at the end of each SAIC accounting period.
The charges will be due when billed and shall be paid no later than 15 days
from the date of billing. When services of the type described above in Section
1 are provided by outside providers to Subsidiary or, if in connection with the
provision of such services out-of-pocket costs are incurred such as travel, the
cost thereof will be paid by Subsidiary. To the extent that Subsidiary is
billed by the provider directly, Subsidiary shall pay the xxxx directly. If
SAIC is billed for such services, SAIC may pay the xxxx and charge Subsidiary
the amount of the xxxx or forward the xxxx to Subsidiary for payment by
Subsidiary.
3. SUBSIDIARY'S DIRECTORS AND OFFICERS. Nothing contained herein
will be construed to relieve the directors or officers of Subsidiary from the
performance of their respective duties or to limit the exercise of their powers
in accordance with the Certificate of Incorporation or Bylaws of Subsidiary or
in accordance with any applicable statute or regulation.
4. NO LIABILITY; NO THIRD PARTY BENEFICIARIES. In furnishing
Subsidiary with management advice and other services as herein provided,
neither SAIC nor any of its officers, directors, employees or agents shall be
liable to Subsidiary or its employees, creditors or shareholders for errors of
judgment or for anything except willful malfeasance, bad faith or gross
negligence in the performance of their duties or reckless disregard of their
obligations and duties under the terms of this Agreement. The provisions of
this Agreement are for the sole benefit of SAIC and Subsidiary and will not,
except to the extent otherwise expressly stated herein, inure to the benefit of
any third party.
5. TERM.
5.1 Term. The initial term of this Agreement shall begin on the
date of this Agreement and continue through the end of Subsidiary's current
fiscal year. This Agreement shall automatically renew at the end of the initial
term for successive one-year terms until terminated in accordance with Section
5.2 below.
5.2 Termination.
(a) Entire Agreement. After SAIC no longer owns more than 50% of
the issued and outstanding Common Stock of Subsidiary, this Agreement may be
terminated in its entirety by either party at any time on one hundred eighty
(180) days prior written notice to the other party.
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(b) Central Services. Any or all of the services or functions
within the "Central Services" may be terminated by either party at any time on
one hundred eighty (180) days prior written notice to the other party.
(c) Mutual Agreement. This Agreement may be terminated at any
time by the mutual agreement of the parties hereto.
5.3 Termination Fee. In the event of a termination of this
Agreement, Subsidiary shall pay to SAIC its pro rata fee through the date of
termination pursuant to Section 2.1 for the year in which the termination takes
effect.
6. INDEPENDENT CONTRACTORS. SAIC and Subsidiary each hereby
declares and represents that each is engaged in an independent business and
will perform its obligations under the Agreement as an independent contractor
and not as the agent or employee of the other, that each party shall and hereby
retains the right to exercise full control of and supervision over the
performance of its own obligations hereunder and shall retain full control over
the employment, direction, compensation, and discharge of all those of its
employees assisting in the performance of such obligations.
7. OTHER ACTIVITIES OF SAIC. Subsidiary recognizes that SAIC now
renders and may continue to render services to other companies that may or may
not have policies and conduct activities similar to those of Subsidiary. SAIC
shall be free to render such advice and other services, and Subsidiary hereby
consents thereto. SAIC shall not be required to devote full time and attention
to the performance of its duties under this Agreement, but shall devote only so
much of its time and attention as it deems reasonable or necessary to perform
the services required hereunder.
8. MISCELLANEOUS.
8.1 Notices. All notices, xxxxxxxx, requests, demands, approvals,
consents, and other communications which are required or may be given under
this Agreement shall be in writing and will be deemed to have been duly given
if delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth below:
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If to Subsidiary: If to SAIC:
Network Solutions, Inc. Science Applications
000 Xxxxxxx Xxxx Drive International Corporation
Xxxxxxx, XX 00000 00000 Xxxxxx Xxxxx Xxxxx
Attention: Controller Xxx Xxxxx, XX 00000
Attention: Controller
8.2 No Assignment. This Agreement shall not be assignable except
with the prior written consent of the other party to this Agreement.
8.3 Applicable Law. This Agreement shall be governed by and
construed under the laws of the State of California applicable to contracts
made and to be performed therein.
8.4 Headings. The section headings used in this Agreement are for
convenience of reference only and will not be considered in the interpretation
or construction of any of the provisions thereof.
8.5 Amendments, Waivers. No amendment, waiver of compliance with
any provision or condition hereof, or consent pursuant to this Agreement, will
be effective unless evidenced by an instrument in writing signed by the
parties (which, in the case of NSI, shall require the approval of a majority of
its independent directors).
8.6 Severability. If any terms or provisions hereof or the
application thereof to any circumstances shall be found by any court having
jurisdiction to be invalid or unenforceable to any extent, such term or
provision shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
terms and provisions hereof or the application of such term or provision to
circumstances other than those as to which it is held invalid or unenforceable.
8.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument by their duly authorized officers as of the date first
above written.
SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION
By:
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Title:
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SUBSIDIARY
NETWORK SOLUTIONS, INC.
By:
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Title:
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