Corporate Management Services Agreement - Networks Associates Inc. and McAfee.com Corp.
CORPORATE MANAGEMENT SERVICES AGREEMENT
THIS CORPORATE MANAGEMENT SERVICES AGREEMENT (this "Agreement"), is
executed as of January 1, 1999 (the "Effective Date"), by and between NETWORKS
ASSOCIATES, INC., a Delaware corporation ("NAI") and MCAFEE.COM CORPORATION a
Delaware corporation ("McAfee.com").
RECITALS
WHEREAS, McAfee.com is a wholly-owned subsidiary of NAI; and
WHEREAS, McAfee.com is engaged in the field of internet-based software
sales and services, and the conduct of such other activities as may be
incidental or related thereto; and
WHEREAS, McAfee.com has and will have the need for accounting,
administrative, financial, technical, consulting and similar services from time
to time, but has determined that it is not cost effective to maintain all the
infrastructure associated therewith; and
WHEREAS, in the event that McAfee.com issues to the public shares of
its capital stock pursuant to a registration statement under the Securities Act
of 1933, as amended, McAfee.com desires to continue to obtain the foregoing
services from NAI; and
WHEREAS, by this Agreement, McAfee.com and NAI desire to confirm their
agreement with respect to services to be provided to McAfee.com commencing on
January 1, 1999 (the "Effective Date"), and to set forth the basis for NAI's
providing further services of the type referred to herein; and
WHEREAS, NAI is able and willing to provide the foregoing services to
McAfee.com, and McAfee.com desires to engage NAI as an independent contractor to
provide the same in accordance with the terms set forth herein:
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, provisions and covenants contained herein, and for other good and
valuable consideration, the receipt and legal sufficiency whereof are hereby
acknowledged, the parties hereto further agree as follows:
ARTICLE I
SECTION 1. MANAGEMENT SERVICES. Commencing on the Effective Date,
McAfee.com hereby engages and retains NAI through its corporate staff to provide
or otherwise make available to McAfee.com the services described in this Section
1 (the "Management Services"), and NAI hereby accepts and agrees to provide such
Management Services to McAfee.com, for the term and consideration as specified
herein. The fee payable for such Management Services shall be determined in
accordance with Section 3 hereof.
1.1. TAX SERVICES. NAI shall provide McAfee.com with the following
tax services: preparation of federal tax returns; preparation of state and local
tax returns (including income tax returns); filing of state sales and other
state tax returns; preparation of financial statement
<PAGE> 2
disclosures and calculation of tax provisions for financial statement purposes;
conducting negotiations with tax authorities as necessary; and providing tax
research and planning and assistance with respect to federal, state and local
audits. The tax services described in this Section 1.1 shall be provided by NAI
until terminated pursuant to the provisions of Section 6.3 hereof. Upon
termination of such services for any reason, NAI shall provide to McAfee.com
copies of its records relating to federal, state and local tax returns filed by
on behalf of McAfee.com, and all other correspondence and documentation
reasonably required by McAfee.com relating to payment of its taxes.
1.2. ACCOUNTING SERVICES. NAI shall provide McAfee.com with the
following accounting services: maintenance of McAfee.com's general ledger;
maintenance of McAfee.com's accounts payable and accounts receivable records;
and maintenance of McAfee.com's fixed asset records. Such services shall also
include information services support, including account maintenance and
reporting support, access to the on-line intranet reporting tools, access to SAP
software (or its equivalent), access to sales commission database software
services and sales commission database support, and continued remote access
availability to NAI's corporate databases to the same extent that such databases
are available to other NAI business units. The services described in this
Section 1.2 shall also be provided by NAI at the request of McAfee.com in
connection with McAfee.com's preparation of any required filings with the
Securities and Exchange Commission pursuant to federal securities laws. The
services described in this Section 1.2 shall be provided by NAI until terminated
pursuant to the provisions of Section 6.3 hereof.
1.3. INSURANCE SERVICES. NAI shall from and after the Effective
Date continue in force the then existing liability, property, casualty,
indemnity and other business insurance policies applicable to McAfee.com. All of
such insurance coverage shall be maintained by NAI until the respective
termination dates of the current policies in effect with respect thereto.
Thereafter, until terminated pursuant to Section 6.3 hereof, NAI shall provide
or cause to be provided to McAfee.com insurance in such amount and on such terms
as are customary for businesses such as McAfee.com's.
1.4. EMPLOYEE BENEFITS SERVICES. From and after the Effective Date
until terminated pursuant to the provisions of Section 6.3 hereof, NAI shall
provide administrative services, including without limitation filing of all
governmental reports, with respect to the participation of McAfee.com employees
in the following benefit plans: (a) the NAI 401(k) Plan; (b) the McAfee.com
medical, dental, vision, life, AD&D and LTD insurance programs; (c) the
McAfee.com 1999 Stock Option Plan (the "McAfee.com Option Plan"); (d) the
McAfee.com Employee Stock Purchase Plan (the "McAfee.com ESPP"); (e) the NAI
Employee Stock Purchase Plan (the "NAI ESPP"); (f) the Employee Assistance
Program; (g) the Flexible Spending Plan; and (h) the Tuition and Charitable
Contribution Matching Program. Upon termination of the administration services
provided under this Section 1.4, NAI shall provide McAfee.com with such
information and records as are reasonably requested by McAfee.com to enable it
to administer the benefit plans in which its employees are enrolled from and
after January 1, 1999.
1.5. CORPORATE RECORD-KEEPING SERVICES. NAI shall maintain all past
tax, accounting and payroll records relating to McAfee.com, until such time as
such records shall be disposed of in accordance with applicable legal
requirements and NAI's normal record disposition policies. NAI shall give
McAfee.com 30 days' prior written notice of its intention to dispose of such
records and shall provide McAfee.com with the opportunity to retain the same.
-2-
<PAGE> 3
1.6. DIRECTOR SERVICES. In the event that any officer or employee
of NAI acts as a director of McAfee.com, McAfee.com shall remit to NAI all
director and other fees which would otherwise be payable to such person for
acting in such capacity.
1.7. PAYROLL SERVICES. Until terminated pursuant to the provisions
of Section 6.3 hereof, NAI shall provide McAfee.com with payroll services,
including payment processing by an outside vendor; Form 1099 preparation; Form
W-2 preparation; employee-incurred expense reimbursement services; assistance
with any required regulatory compliance in connection with any payroll services
provided pursuant to this Section 1.7; and distribution and maintenance of the
McAfee.com employee database. Upon termination of such services, NAI shall
provide McAfee.com with all payroll records for McAfee.com employees, including
information for calendar year 1999.
1.8. IT SERVICES. Until terminated pursuant to the provisions of
Section 6.3 hereof, NAI shall provide McAfee.com with information technology
services, including assistance with, installation of, and maintenance of
McAfee.com's telephonic and computer equipment during the Term of this
Agreement.
1.9. FACILITIES MANAGEMENT SERVICES. Until terminated pursuant to
the provisions of Section 6.3 hereof, NAI shall provide McAfee.com with all
facilities management services which NAI currently provides in the standard
course of business in facilities occupied by NAI, including building maintenance
and security services at all McAfee.com office buildings.
1.10. LEGAL SERVICES. Until terminated pursuant to the provisions of
Section 6.2 hereof, NAI shall provide McAfee.com with all legal services
reasonably requested by McAfee.com which NAI counsel currently provides NAI in
the standard course of business.
1.11 INVESTOR RELATIONS. Until terminated pursuant to the
provisions of Section 6.2 hereof, NAI shall provide McAfee.com with all investor
relations services reasonably requested by McAfee.com in the standard course of
business.
ARTICLE II
SECTION 2. ADDITIONAL SERVICES. Beginning on such date or dates
subsequent to the Effective Date as are mutually agreed to in writing by the
parties, NAI and its corporate staff will provide or otherwise make available to
McAfee.com such services in addition to those described in Section 1 hereof as
are reasonably requested by McAfee.com, subject in each case to the parties'
agreement to financial consideration and other terms. In the event that
McAfee.com desires to avail itself of any of such additional services, the
parties shall negotiate in good faith to reach agreement on the scope and term
of such services. When and if an agreement is reached, the parties shall prepare
an appropriate schedule or addendum to this Agreement, in which the nature,
scope and quality of such services is described in detail. Each such addendum
shall be executed on behalf of each party hereto, shall be effective as of its
date and shall, upon such effective date, be incorporated into and made an
integral part of this Agreement.
ARTICLE III
SECTION 3. REIMBURSEMENT OF EXPENSES.
-3-
<PAGE> 4
(a) In connection with the Management Services pursuant to Section
1 hereof and Additional Services pursuant to Section 2 hereof,
McAfee.com shall reimburse NAI for any and all expenses or
costs ("Charges") incurred or paid by NAI on behalf of
McAfee.com in the performance of any of its responsibilities
under this Agreement (including an appropriate allocation for
overhead and general and administrative costs).
(b) Unless NAI and McAfee.com shall agree to a different
arrangement contrary to this Section 3(b), and except as
specifically set forth in Section 3(c) hereof, McAfee.com
shall pay to NAI a fee(s) (collectively, the "Fees") for
Management Services and Additional Services in an amount equal
to the following formulation: (i) the overall amount of
expenses and costs attributable to NAI's provision of such
Management Services or Additional Services on a company-wide
basis, including provision of such Services to McAfee.com,
(ii) multiplied by a fraction, (aa) the numerator of which
shall be the number of employees employed at McAfee.com as of
the end of each monthly period, and (bb) the denominator of
which shall be the number of employees employed at NAI, plus
the number of employees employed at McAfee.com, as of the end
of each monthly period, (iii) plus 10% of the amount of
Charges associated with such services. (By way of example
only, if the overall expenses and costs attributable to NAI's
accounting services are $20,000 for a monthly period, and NAI
has 9,800 employees, and McAfee.com has 200 employees, the Fee
payable by McAfee.com to NAI for such monthly period for
accounting services shall be 20,000 x 200/10,000, which equals
400, plus 10% multiplied by 400, which equals a Fee for this
monthly period for accounting services of $440.)
(c) McAfee.com shall pay to NAI Fees for facilities management
services pursuant to Section 1.9 hereof in the following
manner: (i) for rent payments on any facilities NAI provides,
McAfee.com shall pay the direct rent actually paid by NAI,
plus ten percent (10%); and (ii) for all other Fees payable
pursuant to Section 1.9, McAfee.com shall pay the amount that
would be payable if calculated by the formulation provided in
Section 3(b) hereof.
(d) The Charges and Fees shall be billed and payment shall be made
to NAI in U.S. Dollars.
(e) McAfee.com shall also pay any applicable sales or use taxes
payable with respect to the Charges and the Fees.
(f) NAI shall, as and when necessary, prepare all applications,
reports, statements and other documents showing the Charges,
Fees and the related costs and expenses incurred or paid by
NAI on behalf of McAfee.com in the performance of any of its
responsibilities under this Agreement.
(f) To the extent that McAfee.com is billed by an outside provider
directly, McAfee.com shall pay such bill directly. If NAI is
billed by outside providers for services performed for
McAfee.com pursuant to this Agreement, NAI may pay the bill
and charge McAfee.com the amount of the bill or forward the
bill to McAfee.com for payment by McAfee.com. A Fee will be
payable on all amounts paid in connection with services
related to NAI's responsibilities hereunder, regardless of
whether NAI or McAfee.com paid such amounts;
-4-
<PAGE> 5
provided, however, that to the extent that McAfee.com uses an
outside provider directly for any services within the scope of
this Agreement, McAfee.com shall not be liable to NAI for a
Fee relating to such services.
ARTICLE IV
SECTION 4. PAYMENT OF FEES. Amounts payable by McAfee.com for services
provided by NAI under this Agreement shall be payable from and after the first
day of the month following the month in which the Effective Date occurs.
Thereafter, such amounts shall be paid quarterly. Within 15 days after the end
of each calendar quarter, NAI shall submit to McAfee.com a detailed statement of
Charges and Fees, and such statement shall be paid within 30 days of receipt by
McAfee.com.
ARTICLE V
SECTION 5. DISCLAIMER, LIMITED LIABILITY.
(a) NAI will use reasonable efforts to make the Management
Services available (and, if it agrees to provide the
Additional Services, Additional Services) with substantially
the same degree of care as it employs in making the same
services available for its own operations; provided, however,
that NAI shall not be liable to McAfee.com or any other person
for any loss, damage or expense which may result therefrom or
from any change in the manner in which NAI renders such
services, so long as NAI deems such change necessary or
desirable in the conduct of its own operations.
(b) Neither NAI nor any of its officers, directors or agents who
provide services to McAfee.com shall not be liable to
McAfee.com or to any third party, including any governmental
agency or McAfee.com's stockholders, for any claims, damages
or expenses relating to the Management Services (and, if it
agrees to provide the Additional Services, Additional
Services) provided pursuant to this Agreement, except for
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.
McAfee.com shall have the ultimate responsibility for all
services provided herein.
ARTICLE VI
SECTION 6. TERM AND TERMINATION.
6.1. TERM. Except as provided in Section 6.2 hereof, the initial
term of this Agreement shall commence on the Effective Date and continue through
the end of McAfee.com's then 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 6.3 hereof.
6.2. TERMINATION UPON CERTAIN EVENTS. Upon the closing of an
initial public offering of McAfee.com's common stock pursuant to the Securities
Act of 1933, as amended, the Management Services provided under Sections 1.10
and 1.11 shall no longer be provided by
-5-
<PAGE> 6
NAI, and this Agreement will terminate with respect to the provision of such
services. Notwithstanding the foregoing, such termination shall not cancel
McAfee.com's obligation to remit payment to NAI, pursuant to Sections 3 and 4
hereof, for the provision of such services in the monthly period prior to the
closing of the initial public offering.
6.3. TERMINATION GENERALLY. This Agreement or any Management
Service specified in Section 1 hereof may be terminated (a) by McAfee.com at
anytime on 30 days' prior notice to NAI, or (b) at the option of NAI exercisable
by written notice to McAfee.com, as of the date that NAI ceases to hold,
directly or indirectly, a majority of the voting power of all classes of
outstanding voting stock of McAfee.com.
6.4. TERMINATION OF SPECIFIC SERVICES. Specific services provided
hereunder may be terminated, or shall expire, as described in Section 1 hereof
or in any schedule or addendum hereto. If and to the extent that NAI incurs
expenses in connection with and resulting from termination of any specific
services provided hereunder, McAfee.com shall reimburse NAI for such costs or
expenses promptly upon receipt of an itemized account thereof.
6.5. POST-TERMINATION SERVICES. In the event of termination of this
Agreement, or a service provided hereunder, pursuant to Section 6.3(a) hereof,
NAI shall be required at McAfee.com's option to continue to provide the
terminated services of the type then being provided to McAfee.com during the
30-day period referred to in Section 6.3(a) hereof and, whether or not
McAfee.com requests continuation of such services, McAfee.com shall continue to
pay NAI the costs of such services for such 30-day period. Subsequent to such
30-day period, or in the event of termination of this Agreement pursuant to
Section 6.3(b), corporate administrative services of the kind provided under the
Agreement may continue to be provided to McAfee.com on an as-requested basis by
McAfee.com, in which event McAfee.com shall be charged by NAI a fee equal to the
market rate for comparable services charged by third-party vendors. Such fee
will be charged monthly and payable by McAfee.com within 30 days. The
obligations of McAfee.com set forth in this Section 6.4 shall survive the
termination of this Agreement.
ARTICLE VII
7.1. STATUS OF THE PARTIES. NAI shall be deemed to be an
independent contractor and, except as expressly provided or authorized in this
Agreement, shall have no authority to act for or represent McAfee.com.
7.2. OTHER ACTIVITIES OF NAI. McAfee.com hereby recognizes that NAI
now renders and may continue to render management and other services to other
companies that may or may not have policies and conduct activities similar to
those of McAfee.com. NAI shall be free to render such advice and other services,
and McAfee.com hereby consents thereto. NAI shall devote so much of its time and
attention to the performance of its duties under this Agreement as it deems
reasonable or necessary to perform the services required hereunder in a manner
consistent with that in which such services have been performed by NAI in the
past.
ARTICLE VIII
-6-
<PAGE> 7
8.1 NOTICES. All notices and other communications hereunder shall
be in writing and shall be delivered by hand or mailed by registered or
certified mail (return receipt requested) or transmitted by facsimile to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and shall be deemed delivered upon personal
delivery, upon actual receipt or on the third business day after deposit in the
mail:
If to NAI:
Networks Associates, Inc.
3965 Freedom Circle
Santa Clara, California 95054
Attn: Prabhat Goyal
If to McAfee.com Corporation:
McAfee.com Corporation
2805 Bowers Avenue
Santa Clara, California 95051
Attn: Evan Collins
8.2. FORCE MAJEURE. Neither party shall be in default of this
Agreement or liable to the other party for any delay or default in performance
where occasioned by any cause of any kind or extent beyond its control,
including but not limited to, armed conflict or economic dislocation resulting
therefrom; embargoes; shortages of labor, raw materials, production facilities
or transportation; labor difficulties; civil disorders of any kind; action of
any civil or military authorities (including priorities and allocations); fires;
floods; and accidents. The dates on which the obligations of a party are to be
fulfilled shall be extended for a period equal to the time lost by reason of any
delay arising directly or indirectly from:
(a) Any of the foregoing causes, or
(b) Inability of that party, as a result of causes beyond its
reasonable control, to obtain instruction or information from
the other party in time to perform its obligations by such
dates.
8.3. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding between the parties with respect to the subject matter hereof and
all prior agreements or understandings shall be deemed merged herein. No
representations, warranties and certifications, express or implied, shall exist
as between the parties except as stated herein.
8.4. AMENDMENTS. No amendments, waivers or modifications hereof
shall be made or deemed to have been made unless in writing executed by the
party to be bound thereby.
8.5. SEVERABILITY. If any provision in this Agreement or the
application of such provision to any person or circumstance shall be invalid,
illegal or unenforceable, the remainder of this Agreement or the application of
such provision to persons or circumstances other than those to which it is held
invalid, illegal or unenforceable shall not be affected thereby.
8.6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute this Agreement.
-7-
<PAGE> 8
8.7. SUCCESSORS AND ASSIGNS. This Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the other party hereto, and any attempt to
assign any rights or obligations arising under this Agreement without such
consent shall be void. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
8.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California and of the
United States.
8.9. NO THIRD-PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and should not be deemed to confer upon third
parties any remedy, claim, liability, reimbursement, claim of action or other
right in excess of those existing without reference to this Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]
-8-
<PAGE> 9
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed and operable as of the Effective Date.
BY:
NETWORKS ASSOCIATES, INC. MCAFEE.COM CORPORATION
3965 Freedom Circle 2810 Bowers Avenue
Santa Clara, California 95054 Santa Clara, California 95054
By: /s/ PRABHAT GOYAL By: /s/ SRIVATS SAMPATH
---------------------------- ----------------------------
Name: Prabhat Goyal Name: Srivats Sampath
---------------------------- ----------------------------
Title: Title:
---------------------------- ----------------------------
[SIGNATURE PAGE FOR CORPORATE MANAGEMENT SERVICES AGREEMENT]
-9-