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EXHIBIT 10.6
CORPORATE SERVICES AGREEMENT
THIS AGREEMENT is made as of June 1, 1998 between INTERNATIONAL DATA
GROUP, INC., a Massachusetts corporation ("IDG"), and IDG BOOKS WORLDWIDE, INC.,
a Delaware corporation ("IDGB").
Preliminary Statement
In the event that IDGB issues to the public shares of its capital stock
pursuant to a registration statement under the Securities Act of 1933, IDGB
desires to obtain administrative and other services from IDG and IDG is willing
to furnish or make such services available to IDGB, subject to the parties'
agreement on the terms under which such services are to be provided. By this
Agreement, IDG and IDGB desire to confirm their agreement with respect to
services to be provided to IDGB commencing on the effective date of the
aforesaid public offering (the "Effective Date"), and to set forth the basis for
IDG's providing further services of the type referred to herein.
Agreements
IT IS MUTUALLY AGREED by the parties hereto as follows:
1. SERVICES TO BE PROVIDED INITIALLY.. Commencing on the Effective
Date, IDG through its corporate staff will provide or otherwise make available
to IDGB the services described in this section 1, for the term and consideration
as specified herein. Such services shall be performed by IDG in a manner
consistent with that in which such services have been performed by IDG in the
past.
1.1 Tax Services. IDG shall provide IDGB 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 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 IDG until terminated pursuant
to the provisions of section 8. The fee payable by IDGB to IDG for such services
shall be $7,500 per month. Upon termination of such services, IDG shall provide
to IDGB copies of its records relating to federal, state and local tax returns
filed by on behalf of IDGB, and all other correspondence and documentation
reasonably required by IDGB relating to payment of its taxes.
1.2 Accounting Services. IDG shall provide IDGB with the following
accounting services: maintenance of IDGB' general ledger; maintenance of IDGB'
accounts payable records; and maintenance of IDGB' 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 Essbase software (or its equivalent), and continued remote
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access availability to IDG's corporate databases to the same extent that such
databases are available to other IDG business units. The services described in
this section 1.2 shall be provided by IDG until terminated pursuant to the
provisions of section 8. The fee payable by IDGB to IDG for such services shall
be $27,500 per month.
1.3 Insurance Services. IDG shall from and after the Effective Date
continue in force the then existing liability, property, casualty, indemnity and
other business insurance policies applicable to IDGB. All of such insurance
coverage shall be maintained by IDG until the respective termination dates of
the current policies in effect with respect thereto. Schedule 1.3 attached
hereto and made a part hereof sets forth the insurance coverage to be provided
to IDGB pursuant to this section 1.3, including without limitation the policy
information with respect to such insurance, termination dates of each such
insurance policy and the monthly fee payable by IDGB with respect to current
coverage under each such policy. Unless IDGB gives IDG at least 30 days notice
prior to the termination date specified in Schedule 1.3 applicable to each such
insurance policy of its desire for continued coverage thereunder, coverage under
such policy shall expire with respect to IDGB on the expiration or renewal date
of such policy as specified therein.
1.4 Employee Benefit Services. From and after the Effective Date, and
through September 30, 1998, IDG shall provide administrative services, including
without limitation filing of all governmental reports, with respect to the
participation of IDGB employees in the following benefit plans: (a) the IDG
401(k) Plan; (b) the IDGB Section 125 Cafeteria Plan; (c) the IDGB medical,
dental, vision, life, AD&D and LTD insurance programs; and (d) the IDG Books
Worldwide, Inc. Employee Stock Ownership Plan (the "IDGB ESOP"). Prior to
September 30, 1998, IDGB shall at its expense amend the IDGB ESOP into a KSOP
and the 401(k) accounts of IDGB employees shall be transferred to such plan as
of September 30, 1998. Upon termination of the administration services provided
under this section 1.4, IDG shall provide IDGB with such information and records
as are reasonably requested by IDGB to enable it to administer the benefit plans
in which its employees are enrolled from and after October 1, 1998. The fee
payable by IDGB with respect to such services shall be $2,000 per month. IDGB
shall also reimburse IDG for the cost of any legal services incurred by IDG in
connection any required amendment of the IDG 401(k) plan, establishment of the
IDGB KSOP and the establishment of the benefit plans referred to in (b) and (d)
above.
1.5 Corporate Record-Keeping Services. IDG shall at no cost to IDGB
maintain all past tax, accounting and payroll records relating to IDGB, until
such time as such records shall be disposed of in accordance with applicable
legal requirements and IDG's normal record disposition policies. IDG shall give
IDGB 30 days' prior written notice of its intention to dispose of such records
and shall provide IDGB with the opportunity to retain the same.
1.6 Director Services. In the event that any officer or employee of
IDG acts as a director of IDGB, IDGB shall remit to IDG all director and other
fees which would otherwise be payable to such person for acting in such
capacity.
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1.7 Payroll Services. IDG shall provide IDGB with payroll services,
including payment processing by an outside vendor, Form 1099 preparation, and
distribution and maintenance of the IDGB employee database. Such services shall
continue until September 30, 1998, provided that such services may be extended
on a month-to-month basis upon 30 days' prior written notice by IDGB to IDG.
Upon termination of such services, IDG shall provide IDGB with all payroll
records for IDGB employees, including information for calendar year 1998. The
fee payable by IDGB to IDG for the services described in this section 1.7 shall
be $4,000 per month.
1.8 Trademark Transfers. IDG and IDGB have previously agreed that IDG
would transfer to IDGB approximately 400 trademark registrations and
applications that are currently in the name of IDG, are used by IDGB in
connection with its business, and are not covered by the Trademark License
Agreement between the parties of even date herewith. IDG agrees to take all
necessary action and file all necessary documents in order to complete the
transfer of such registrations and applications, and IDGB confirms its agreement
to reimburse IDG in accordance with the terms of this Agreement for the actual
costs incurred by IDG in connection with such transfers.
1.9 Trademark Maintenance Services. With respect to the trademarks
transferred or to be transferred to IDGB pursuant to section 1.8, IDG shall
continue to maintain such trademark applications and registrations, including
filing of appropriate renewals and maintenance of the trademark files and
databases, through September 30, 1998. IDG shall use reasonable efforts prior to
September 30, 1998 to train IDGB employees in the preparation and submission of
trademark applications and maintenance of trademarks generally. Upon termination
of the trademark services provided pursuant to this section 1.9, IDG shall
transfer the physical trademark files, current and historical, to IDGB. The fee
payable by IDGB to IDG for the trademark services described in this section 1.9
shall be $3,000 per month through September 30, 1998. Thereafter, if and to the
extent that additional services are requested by IDGB concerning the trademarks
to which this section 1.9 relates, IDGB shall pay IDG $75 for each hour of time
expended by IDG personnel in providing such services. In any event, prior and
subsequent to September 30, 1998, IDGB shall reimburse IDG promptly for all
out-of-pocket costs incurred by IDG in providing the services described in this
section 1.9
2. FUTURE SERVICES. Beginning on such date or dates subsequent to
the Effective Date as are mutually agreed to in writing by the parties, IDG and
its corporate staff will provide or otherwise make available to IDGB such
services in addition to those described in section 1 hereof as are reasonably
requested by IDGB, subject in each case to the parties' agreement to financial
consideration and other terms. In the event that IDGB 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 and the compensation to be paid by IDGB to IDG for such
services is specified. Each such addendum shall be executed on behalf of each
party hereto, shall
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be effective as of its date and shall, upon such effective date, be incorporated
into and made an integral part of this Agreement.
3. SPECIAL SERVICES. In addition to service programs of the type
described in sections 1 and 2 hereof, certain specific services may be made
available to IDGB by IDG subsequent to the Effective Date on an as-requested
basis. These may include, but shall not be limited to, services specifically
requested by IDGB in writing which, in IDG's reasonable judgment, are not
routine administrative services or create unusual burdens or demands on IDG's
resources, such as litigation support, legal services, acquisition services,
corporate development, and public or investor relations services other than
routine shareholder communications. IDG will charge IDGB the costs actually
incurred (including an appropriate allocation for overhead and general and
administrative costs) for any such services that are requested by IDGB. Any
agreement for the provision of services pursuant to this section 3 shall be in
writing and shall include a description of the nature of such services, the
compensation to be paid by IDGB to IDG for such services, and any standards
applicable to such services.
4. OUT-OF-POCKET COSTS. In the event that IDG incurs out-of-pocket
costs, such as travel costs, in connection with services provided under this
Agreement, such costs will be paid by IDGB. To the extent that IDGB is billed by
an outside provider directly, IDGB shall pay such xxxx directly. If IDG is
billed for services provided by outside providers, IDG may pay the xxxx and
charge IDGB the amount of the xxxx or forward the xxxx to IDGB for payment by
IDGB.
5. PAYMENT OF FEES. The fees payable by IDGB for services provided
by IDG 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
fees shall be paid quarterly. Within 15 days after the end of each calendar
quarter, IDG shall submit to IDGB a detailed statement of such fees, and such
statement shall be paid within 30 days of receipt by IDGB. The parties
acknowledge that, between the Effective Date and the last day of the month in
which the Effective Date occurs, the services of the type provided by IDG
hereunder are covered by the $50,000 monthly inter-company services fee
currently being paid by IDGB to XXX.
0. DIRECTORS AND OFFICERS OF IDGB. Nothing contained herein will be
construed to relieve the directors or officers of IDGB from responsibility for
the proper performance of their respective duties or to limit the exercise of
their powers in accordance with the Certificate of Incorporation or By-Laws of
IDGB or in accordance with any applicable statute or regulation.
7. LIABILITIES. In furnishing IDGB with management advice and other
services as herein provided, neither IDG nor any of its officers, directors or
agents shall be liable to IDGB or its 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 IDG and IDGB and will not, except to the
extent otherwise expressly stated herein, inure to the benefit of any third
party.
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8. TERM AND TERMINATION.
8.1 Term. The initial term of this Agreement shall commence on the
Effective Date and continue through the end of the 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 8.2
hereof. In the event that IDGB shall not have closed a public offering of its
capital stock by December 31, 1998, this Agreement shall not become effective
and shall no longer be binding on either party hereto in any respect.
8.2 Termination Generally. This Agreement may be terminated (a) by
IDGB at anytime on 90 days' prior notice to IDG, or (b) at the option of IDG
exercisable by written notice to IDGB, as of the date that IDG ceases to hold,
directly or indirectly, a majority of the outstanding voting stock of IDGB.
8.3 Termination of Specific Services. Specific services provided
hereunder may be terminated, or shall expire, as described in section 1 or in
any schedule or addendum hereto. If and to the extent that IDG incurs expenses
in connection with and resulting from termination of any specific services
provided hereunder, IDGB shall reimburse IDG for such costs or expenses promptly
upon receipt of an itemized account thereof; provided, however, that the
aggregate of such costs and expenses payable with respect to the termination of
any specific services hereunder shall not exceed $25,000.
8.4 Post-Termination Services. In the event of termination of this
Agreement, or a service provided hereunder, pursuant to section 8.2(a), IDG
shall be required at IDGB's option to continue to provide the terminated
services of the type then being provided to IDGB during the 90-day period
referred to in section 8.2(a) and, whether or not IDGB requests continuation of
such services, IDGB shall continue to pay IDG the costs of such services for
such 90-day period. Subsequent to such 90-day period, or in the event of
termination of this Agreement pursuant to section 8.2(b), corporate
administrative services of the kind provided under the Agreement may continue to
be provided to IDGB on an as-requested basis by IDGB, in which event IDGB shall
be charged by IDG a fee equal to the market rate for comparable services charged
by third-party vendors. Such fee will be charged monthly and payable by IDGB
within 30 days. The obligations of IDGB set forth in this section 8.4 shall
survive the termination of this Agreement.
9. STATUS. IDG 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 IDGB.
10. OTHER ACTIVITIES OF IDG. IDGB recognizes that IDG 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 IDGB. IDG
shall be free to render such advice and other services, and IDGB hereby consents
thereto. IDG 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 IDG in the past.
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11. NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by guaranteed overnight delivery by means of a nationally recognized
overnight delivery service, by fax, or by first class certified or registered
mail, return receipt requested, postage prepaid, to the following addresses.
(a) If to IDGB, at 000 Xxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Chief Financial Officer, or at such
other address or addresses as may have been furnished in writing by IDGB to IDG,
with a copy in each case to Xxxxx X. Xxx, Esq., Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, 000 Xxxx Xxxx Xxxx, Xxxx Xxxx, XX 00000.
(b) If to IDG, at 0 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx
00000, Attention: Vice President and Controller, or at such other address or
addresses as may have been furnished to IDGB in writing by IDG, with a copy in
each case to Xxxxxx X. Xxxxxx, Xx., Esq., Xxxxx, Xxxx & Xxxxx LLP, Xxx Xxxx
Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000.
Notices provided in accordance with this section 11 shall be deemed delivered
upon personal delivery, upon actual receipt or on the third business day after
deposit in the mail.
12. NO ASSIGNMENT. This Agreement shall not be assignable by either
party except with the prior written consent of the other party to this
Agreement; provided, however, that this Agreement may without IDGB' consent be
assigned by IDG to another subsidiary of IDG or by any such subsidiary to an
affiliated corporation.
13. APPLICABLE LAW. This Agreement shall be governed by and construed
under the laws of the State of Delaware, without regard to its principles of
conflicts of laws.
14. PARAGRAPH TITLES. The paragraph titles 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
INTERNATIONAL DATA GROUP, INC.
By:______________________________________
IDG BOOKS WORLDWIDE, INC.
By:______________________________________
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Schedule 1.3
IDGB Insurance Coverage
Monthly
Type of Insurer and Expiration Date Fee Payable
Insurance Policy Number of Current Policy By IDGB
--------- ------------- ----------------- -------
Property and liability - Chubb-35-3332322 9/30/98 $ 702
basic
Property and liability - Chubb (00) 0000-00-00 9/30/98 125
umbrella
Workers' compensation Chubb (00) 0000-00-00 9/30/98 1,164
(federal)
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