<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED AUGUST 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER 0-14376
ORACLE SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C>
Delaware 94-2871189
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
500 Oracle Parkway
Redwood City, California 94065
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(415) 506-7000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The number of shares of registrant's common stock outstanding as of August
31, 1994: 286,148,992.
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ORACLE SYSTEMS CORPORATION
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at August 31, 1994 and May 31,
1994..................................................................... 3
Condensed Consolidated Statements of Operations for the three months
ended
August 31, 1994 and August 31, 1993...................................... 4
Condensed Consolidated Statements of Cash Flows for the three months
ended August 31, 1994 and August 31, 1993................................ 5
Notes to Condensed Consolidated Financial Statements..................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations............................................................ 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................... 10
Signatures............................................................... 11
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
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AUGUST
31, MAY 31,
1994 1994
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<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 462,548 $ 404,810
Short-term cash investments................................... 30,743 59,948
Trade receivables, net of allowance for doubtful accounts of
$42,171 and $39,777, respectively.......................... 436,182 455,884
Prepaid and refundable income taxes........................... 60,021 53,765
Other current assets.......................................... 93,356 101,205
--------- ---------
Total current assets.................................. 1,082,850 1,075,612
--------- ---------
PROPERTY, net................................................... 388,755 378,483
COMPUTER SOFTWARE DEVELOPMENT COSTS, net of accumulated
amortization of $117,962 and $107,087, respectively........... 100,270 100,329
OTHER ASSETS.................................................... 50,489 40,560
--------- ---------
Total assets.......................................... $1,622,364 $1,594,984
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to banks........................................ $ 7,121 $ 551
Current maturities of long-term debt.......................... 5,492 6,347
Accounts payable.............................................. 102,994 95,799
Income taxes.................................................. 48,100 62,591
Accrued compensation and related benefits..................... 96,886 136,488
Customer advances and unearned revenues....................... 243,709 227,118
Value added tax and sales tax payable......................... 34,669 44,781
Other accrued liabilities..................................... 133,135 108,426
--------- ---------
Total current liabilities............................. 672,106 682,101
--------- ---------
LONG-TERM DEBT.................................................. 82,686 82,845
OTHER LONG-TERM LIABILITIES..................................... 8,946 12,139
DEFERRED INCOME TAXES........................................... 40,135 38,916
PUT WARRANTS.................................................... 38,430 38,430
STOCKHOLDERS' EQUITY............................................ 780,061 740,553
--------- ---------
Total liabilities and stockholders' equity............ $1,622,364 $1,594,984
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
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ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED AUGUST 31, 1994 AND 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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THREE MONTHS ENDED
AUGUST 31,
-------------------------
1994 1993
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REVENUES:
Licenses and other.............................................. $295,229 $216,874
Services........................................................ 261,245 181,180
-------- --------
Total revenues.......................................... 556,474 398,054
-------- --------
OPERATING EXPENSES:
Sales and marketing............................................. 217,922 164,610
Cost of services................................................ 156,523 100,178
Research and development........................................ 55,157 46,566
General and administrative...................................... 39,329 31,945
-------- --------
Total operating expenses................................ 468,931 343,299
-------- --------
OPERATING INCOME.................................................. 87,543 54,755
Other income (expense), net..................................... 3,800 1,851
-------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES.......................... 91,343 56,606
Provision for income taxes...................................... 30,143 19,246
-------- --------
NET INCOME........................................................ $ 61,200 $ 37,360
======== ========
EARNINGS PER SHARE................................................ $ 0.21 $ 0.13
======== ========
COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING................... 295,498 296,012
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
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ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 1994 AND 1993
(IN THOUSANDS)
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THREE MONTHS ENDED
AUGUST 31,
-------------------------
1994 1993
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................................... $ 61,200 $ 37,360
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................. 30,639 23,301
Provision for doubtful accounts............................... 8,000 6,473
Decrease in trade receivables................................. 33,571 1,978
Increase in prepaid and refundable income taxes............... (6,256) (2,259)
Increase in other current assets.............................. (7,513) (8,234)
Increase in accounts payable.................................. 6,371 1,918
Increase (decrease) in income taxes........................... (12,959) 11,739
Increase (decrease) in customer advances and unearned
revenues..................................................... 14,510 (1,209)
Decrease in other accrued liabilities......................... (24,435) (20,578)
Increase (decrease) in other long-term liabilities............ (3,192) 3,523
Increase (decrease) in deferred income taxes.................. 1,866 (819)
-------- --------
Net cash provided by operating activities........................ 101,802 53,193
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase (decrease) in cash investments....................... 29,205 (21,222)
Capital expenditures, net..................................... (30,135) (103,388)
Capitalization of computer software development costs......... (10,816) (8,421)
Increase in other assets...................................... (11,790) (14,397)
-------- --------
Net cash used for investing activities........................... (23,536) (147,428)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on debt obligations............................ 3,993 770
Proceeds from common stock issued............................. 3,934 2,717
Repurchase of common stock.................................... (31,943) (9,875)
-------- --------
Net cash used for financing activities........................... (24,016) (6,388)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH............................ 3,488 (4,900)
-------- --------
Net increase (decrease) in cash and cash equivalents............. 57,738 (105,523)
CASH AND CASH EQUIVALENTS:
Beginning of period.............................................. 404,810 284,560
-------- --------
End of period.................................................... $462,548 $179,037
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
5
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ORACLE SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction with
the financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended May 31, 1994.
The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) which
are, in the opinion of management, necessary to state fairly the results for the
three month period ended August 31, 1994. The results for the three month period
ended August 31, 1994 are not necessarily indicative of the results expected for
the full fiscal year.
2. PROPERTY
During fiscal 1994, the Company purchased land to be used for its UK
subsidiary's headquarters for approximately $31 million. During the first
quarter of fiscal 1995, the Company sold a significant portion of this land for
approximately $26.6 million. After consideration of the cost of the land,
including certain required improvements, and expense provisions related to other
UK facilities, the net gain realized on the sale of the land was not
significant. The Company believes that the remaining land is sufficient to meet
the requirements for its UK subsidiary's headquarters.
3. EARNINGS PER SHARE
Earnings per share was computed based on the weighted average number of
common and common equivalent shares outstanding during the period. Common
equivalent shares are calculated using the treasury stock method, and represent
shares issuable upon the exercise of outstanding stock options.
4. PENDING ACQUISITION
On September 1, 1994, the Company announced the signing of an agreement to
acquire the Rdb database and repository businesses of Digital Equipment
Corporation, including all related software products and customer support
services for $108 million in cash. The agreement will be effective upon the
close of the transaction, which is subject to pending government approvals.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Domestic and international revenues increased 50% and 34%, respectively,
from the first quarter of fiscal 1994. International revenues were favorably
affected in the first quarter of fiscal 1995 when compared to the corresponding
period of the prior year as a result of the weakening of the U. S. dollar
against certain major international currencies. International revenues expressed
in local currency increased in the first quarter of fiscal 1995 by approximately
29% from the corresponding period of fiscal 1994. International revenues
constituted approximately 61% of total revenues in the first quarter of fiscal
1995 and 63% of total revenues in the first quarter of fiscal 1994. Management
expects that the Company's international operations will continue to provide a
significant portion of total revenues. However, international revenues will be
adversely affected if the U.S. dollar strengthens against certain major
international currencies.
6
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REVENUES:
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THREE MONTHS ENDED
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AUGUST AUGUST
31, 31,
1994 CHANGE 1993
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Licenses and other................................ $295,229 36% $216,874
Percentage of revenues............................ 53.1% 54.5%
Services.......................................... $261,245 44% $181,180
Percentage of revenues............................ 46.9% 45.5%
Total revenues............................... $556,474 40% $398,054
</TABLE>
LICENSES AND OTHER REVENUES. License revenues represent fees earned for
granting customers licenses to use the Company's software products. License
revenues also include revenues from the Company's systems integration business
and other revenues, which include documentation revenues, certain software
development revenues, as well as other miscellaneous revenues. The Company
believes that the strong revenue growth rate in the first quarter of fiscal 1995
is primarily due to an overall increase in market demand for database and
related products and increased market acceptance of the Company's relational
DBMS.
SERVICE REVENUES. Support, consulting and education services revenues each
increased in the first quarter of fiscal 1995 from the corresponding prior year
period. The Company's support revenues continued to constitute the largest
portion of services revenues, and grew 41% in the first quarter of fiscal 1995
when compared to the corresponding period in fiscal 1994, reflecting the
continued increase in the installed base of the Company's products under support
contracts. Consulting and education services grew 47% in the first quarter of
fiscal 1995 when compared to the corresponding period in fiscal 1994, as the
Company continued to expand its services to assist customers in the use and
implementation of applications based on the Company's products.
OPERATING EXPENSES:
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THREE MONTHS ENDED
----------------------------
AUGUST AUGUST
31, 31,
1994 CHANGE 1993
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Sales and marketing............................... $217,922 32% $164,610
Percentage of revenues............................ 39.2% 41.4%
Cost of services.................................. $156,523 56% $100,178
Percentage of revenues............................ 28.1% 25.2%
Research and development(1)....................... $ 55,157 18% $ 46,566
Percentage of revenues............................ 9.9% 11.7%
General and administrative........................ $ 39,329 23% $ 31,945
Percentage of revenues............................ 7.1% 8.0%
</TABLE>
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(1) Pursuant to Statement of Financial Accounting Standards No. 86, the Company
capitalized software development costs equal to 1.9% and 2.1% of total
revenues during the first quarters of fiscal 1995 and 1994, respectively.
International expenses were negatively affected in the first quarter of
fiscal 1995 when compared to the corresponding period in the prior year due to
changes in the value of the U.S. dollar against certain major international
currencies.
SALES AND MARKETING EXPENSES. The Company continues to place significant
emphasis, both domestically and internationally, on direct sales through its own
sales force. However, the Company also continues to emphasize marketing its
products through indirect channels in order to increase market share, while
reducing distribution costs. As a percentage of total revenues, sales and
marketing expenses decreased in the first quarter of fiscal 1995 when compared
to the corresponding period in fiscal 1994 primarily as a result of higher
revenue levels. Included in sales and marketing expenses is the amortization of
capitalized software development costs (see below).
7
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COST OF SERVICES. The cost of providing services consists largely of
consulting, education, and support personnel expenses. As a percentage of
service revenues, cost of services was 60% and 55% of revenues in the first
quarters of fiscal 1995 and 1994, respectively. The Company's service margins
have been negatively affected versus the prior year periods due, in part, to a
higher percentage of service revenues being comprised of consulting and
education revenues, which have lower margins than the support business, as well
as the impact of higher headcount levels to support future growth.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses for
the first quarters of fiscal 1995 and 1994 would have been 12% and 14%,
respectively, of revenues without the capitalization of software development
costs in accordance with Statement of Financial Accounting Standards No. 86.
Before considering the impact of software capitalization, research and
development expenses increased 20% from the first quarter of fiscal 1994 (18%
after the adjustment for software capitalization). The Company capitalized
approximately $10,816,000 and $8,421,000 during the first quarters of fiscal
1995 and 1994, respectively. Amortization of capitalized software development
costs is charged to sales and marketing expenses and totalled $10,875,000 and
$8,471,000 in the first quarters of fiscal 1995 and 1994, respectively. The
Company expects the amount of amortization of capitalized software development
costs to continue to increase in fiscal 1995 over fiscal 1994, as a result of
the introduction of new products and the commencement of the related
amortization. The Company believes that research and development expenditures
are essential to maintaining its competitive position and expects these costs to
continue to constitute a significant percentage of revenues.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
as a percentage of revenues decreased in the first quarter of fiscal 1995 as
compared to the corresponding period in fiscal 1994, reflecting higher revenue
levels and controls over discretionary spending.
OTHER INCOME (EXPENSE):
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THREE MONTHS ENDED
----------------------------
AUGUST AUGUST
31, 31,
1994 CHANGE 1993
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Other income (expense)............................ $ 3,800 105% $ 1,851
Percentage of revenues............................ 0.7% 0.5%
</TABLE>
Changes in non-operating expenses primarily reflect fluctuations in
interest income and expense related to changes in cash and debt balances and
interest rates, as well as foreign exchange and other miscellaneous income and
expense items. Additionally, during the first quarter of fiscal 1995, the
Company realized a gain of approximately $1.8 million related to the sale of
certain marketable equity securities.
PROVISION FOR INCOME TAXES:
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THREE MONTHS ENDED
--------------------------------
AUGUST 31, AUGUST 31,
1994 CHANGE 1993
---------- ------ ----------
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Provision for income taxes.................... $ 30,143 57% $ 19,246
Percentage of revenues........................ 5 .4% 4.8%
</TABLE>
The Company's estimated effective tax rate for the first quarter of fiscal
1995 was 33% as compared to a 34% tax rate in the corresponding period of fiscal
1994.
NET INCOME AND EARNINGS PER SHARE:
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THREE MONTHS ENDED
--------------------------------
AUGUST 31, AUGUST 31,
1994 CHANGE 1993
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Net Income.................................... $ 61,200 64% $ 37,360
Percentage of revenues........................ 11.0% 9.4%
Earnings Per Share............................ $ .21 62% $ .13
</TABLE>
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LIQUIDITY AND CAPITAL RESOURCES
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THREE MONTHS ENDED
------------------------------
AUGUST AUGUST
31, 31,
1994 CHANGE 1993
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Working Capital................................. $410,744 77% $232,544
Cash and short-term investments................. $493,291 71% $288,591
Long-term cash investments...................... $ -- * $ 16,159
Cash provided by operating activities........... $101,802 91% $ 53,193
Cash used for investing activities.............. $ 23,536 (84%) $147,428
Cash used for financing activities.............. $ 24,016 276% $ 6,388
---------------
* Not Meaningful
</TABLE>
Working capital increased in the first quarter of fiscal 1995 over the
corresponding prior year period, primarily due to increased cash flow from
operations, which resulted in higher cash levels.
The Company generated higher positive cash flows from operations in the
first quarter of fiscal 1995 over fiscal 1994, primarily due to improved
profitability and strong cash collections. Cash used for investing activities
decreased in the first quarter of fiscal 1995 as compared to the corresponding
period of the prior year, primarily due to lower capital expenditures, which
were significantly higher in the first quarter of fiscal 1994 due to the
purchase of buildings and improvements at the Company's headquarter site. In
addition, during the first quarter of fiscal 1995, the Company sold land in the
UK for proceeds of approximately $26.6 million.
The Company's Board of Directors has approved the repurchase of up to 12
million shares of Common Stock on the open market to reduce the dilutive effect
of the Company's stock plans. Pursuant to this repurchase program, the Company
repurchased 860,000 shares of the Company's Common Stock for approximately
$31,943,000 during the first quarter of fiscal 1995. To date, the Company has
repurchased a total of 6,832,000 shares of the Company's Common Stock for
approximately $156,728,000. The Company has used cash flow from operations to
repurchase the Company's Common Stock, and to invest in working capital and
other assets to support its growth.
On September 1, 1994, the Company announced the signing of an agreement to
acquire the Rdb database and repository businesses of Digital Equipment
Corporation, including all related software products and customer support
services for $108 million in cash. The agreement will be effective upon the
close of the transaction, which is subject to pending government approvals.
As discussed in Note 4 of Notes to Consolidated Financial Statements, in
December 1991, the Company entered into an $80 million subordinated debt
agreement with Nippon Steel Corporation ("NSC"). In connection with this
agreement, the Company also entered into a strategic relationship with NSC to
target major customers and industries in Japan. The subordinated debt agreement
has a maturity date of December 9, 1998. Interest is charged at LIBOR plus
three-quarters of one percent, payable semi-annually in arrears. The Company is
required to maintain certain financial covenants under the agreement. NSC has
committed to purchase from the Company an ownership position of up to
twenty-five percent of Oracle Corporation Japan, an indirect wholly owned
subsidiary of the Company, in the event that shares in Oracle Corporation Japan
are sold to the public as a part of an initial public offering. The per share
price of the stock would be the same as that offered in the initial public
offering. NSC has agreed not to acquire shares of Oracle Corporation Japan
beyond the twenty-five percent interest, nor any shares of the Company, subject
to certain exceptions.
At August 31, 1994, the Company also had outstanding debt of approximately
$15,299,000 (in addition to the NSC subordinated debt) primarily in the form of
other notes payable and capital leases.
The Company anticipates that current cash balances, as well as anticipated
cash flows from operations, will be sufficient to meet its working capital needs
at least through the next twelve months.
9
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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2.01 Asset Purchase Agreement between Digital Equipment Corporation and
Oracle Corporation dated September 1, 1994.
27.1 Financial Data Schedule
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(b) Reports on Form 8-K
None.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Oracle
Systems Corporation has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
ORACLE SYSTEMS CORPORATION
Dated: October 14, 1994 /s/ By: LAWRENCE J. ELLISON
Lawrence J. Ellison,
President and Chief
Executive Officer
Dated: October 14, 1994 /s/ By: JEFFREY O. HENLEY
Jeffrey O. Henley,
Executive Vice President
and Chief Financial Officer
Dated: October 14, 1994 /s/ By: THOMAS A. WILLIAMS
Thomas A. Williams,
Chief Accounting Officer
11
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EXHIBIT 2.01
______________________________________________________
ASSET PURCHASE AGREEMENT
Between
DIGITAL EQUIPMENT CORPORATION
Seller,
and
ORACLE CORPORATION
Buyer
September 1, 1994
______________________________________________________
ASSTPRCH.007
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ARTICLE I - SALE AND PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.3 Intellectual Property Agreements . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.4 Sales, Use and Other Transfer Taxes . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.5 Service Support and Revenue . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.6 Purchase Price; Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.7 Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.8 Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.9 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.10 Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.11 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.12 Actions at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.13 Disclaimer of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.3 Execution and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.4 Consents and Approvals of Governmental Entities . . . . . . . . . . . . . . . 10
SECTION 2.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.6 Assets Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.7 Support Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.8 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.10 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.11 Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 2.13 Employee Benefit and Compensation Plans . . . . . . . . . . . . . . . . . . . 16
SECTION 2.14 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.15 Litigation; Other Claims . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.16 Product Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.17 Environmental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.18 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.19 Tangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.20 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.21 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
ASSTPRCH.SIG -i-
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SECTION 2.22 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 2.23 Fair Consideration; No Fraudulent Conveyance . . . . . . . . . . . . . . . . 18
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.3 Execution and Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.4 Consent and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3.6 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE IV - COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.3 Certain Notifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.4 Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.5 Seller's Conduct of Business Prior to Closing . . . . . . . . . . . . . . . . 20
SECTION 4.6 Buyer's Source Code Escrow . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.7 No Other Bids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.8 Non-Competition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.9 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.10 Post-Closing Access to Information . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.11 Post-Closing Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.12 Termination of Certain Agreements . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.13 Post-Closing Distribution of Rdb Products . . . . . . . . . . . . . . . . . . 24
SECTION 4.14 No Post-Closing Retention of Assets . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.15 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.16 No Implied License . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.17 Foreign Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V - EMPLOYEE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.1 Offers of Employment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.2 Non-Solicitation by Seller and Other Matters . . . . . . . . . . . . . . . . 26
SECTION 5.3 Compensation and Benefits of Transferred Employees . . . . . . . . . . . . . 27
SECTION 5.4 Employee Incentive Program . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.5 Other Employees of the Business . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.6 No Right to Continued Employment or Benefits . . . . . . . . . . . . . . . . 28
SECTION 5.7 No Solicitation or Hire by Buyer . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI - CONDITIONS TO BUYER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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SECTION 6.1 Representations and Warranties True; Performance; Certificate . . . . . . . . . . . . . 29
SECTION 6.2 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.3 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.4 No Proceeding or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.5 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.6 Governmental Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.7 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.8 Opinion of Seller's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 6.9 Transferred Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII - CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.1 Representations and Warranties True; Performance . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.2 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.3 No Proceeding or Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.4 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.5 Governmental Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.6 Opinion of Buyer's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII - INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 8.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8.4 Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.1 Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9.2 Procedure and Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE X - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 10.2 Certain Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 11.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 11.2 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 11.3 No Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 11.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 11.5 Assignment and Succession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 11.6 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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SECTION 11.7 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11.8 Absence of Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . . 40
SECTION 11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11.11 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 11.13 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 11.14 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 11.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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TABLE OF CONTENTS
(continued)
EXHIBITS
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Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cross License Agreement
Exhibit B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Patent Agreement
Exhibit C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Receipt of Tangible Personal Property
Exhibit D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Support Agreement
Exhibit E . . . . . . . . . . . . . . . . . . . . . . . . . . . Preferred Strategic Relationship Agreement
Exhibit F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Oracle Reseller Agreement
Exhibit G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Digital Reseller Agreement
Exhibit H . . . . . . . . . . . . . . . . . . . . . . . Credit Acquisition Plan (Software Purchase Order)
Exhibit I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hardware Purchase Agreement
Exhibit J-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . General Bill of Sale
Exhibit J-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Assignment and Assumption Agreement
Exhibit K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Technology Escrow Agreement
Exhibit L . . . . . . . . . . . . . . . . . . . . . . . . . Opinion of Assistant General Counsel of Seller
Exhibit M . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Opinion of Venture Law Group
</TABLE>
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TABLE OF CONTENTS
(continued)
SCHEDULES
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Schedule 1.1(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rdb Products
Schedule 1.1(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rdb Tools
Schedule 1.1(d) . . . . . . . . . . . . . . . . . . . . . . . . . . Copyrights and Copyright Registrations
Schedule 1.1(e) . . . . . . . . . . . . . . . . . . . . . . . . Trademarks, Service Marks and Trade Names
Schedule 1.1(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Transferred Agreements
Schedule 1.1(k) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tangible Assets
Schedule 5.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . List of Employees
Schedule 5.6(a) . . . . . . . . . . . . . . . . . . . . . . Employees Subject to Nonsolicitation Provision
</TABLE>
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<PAGE> 8
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "AGREEMENT") is entered into as of
September 1, 1994, by and among DIGITAL EQUIPMENT CORPORATION, a Massachusetts
corporation ("SELLER"), and ORACLE CORPORATION, a California corporation
("BUYER").
WHEREAS, Seller is engaged in the business of developing, marketing,
licensing, supporting and providing related services for Rdb Products and the
other Assets (in each case, as defined in Section 1.1 below) (collectively, the
"BUSINESS");
WHEREAS, Buyer desires to acquire from Seller, and Seller desires to
sell to Buyer, the assets of the Business as described more fully in Section 1.1
below on the terms and subject to the conditions set forth in this Agreement;
and
WHEREAS, Buyer and Seller acknowledge that this Agreement and the
agreements attached as exhibits hereto together constitute the agreements
necessary to accomplish the transactions contemplated by this Agreement and are
parts of an integrated arrangement between the parties with respect to the
purchase and sale of the Assets and the operation of the Business by Buyer after
the Closing (as defined in Section 1.11) and the preferred strategic
relationship between the parties and that separate agreements have been used for
the sake of convenience.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties and covenants hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE
SECTION 1.1 Transfer of Assets. Subject to the terms and conditions
hereof, Seller shall sell, assign, grant, transfer, convey and deliver to
Buyer, and Buyer shall purchase and accept from Seller, as of the Closing Date
(as defined in Section 1.11 below), all of Seller's rights, title and interest
in and to the following tangible and intangible assets of Seller, wherever
situated, as the same shall exist on the Closing Date (collectively, the
"ASSETS"):
(a) Rdb Products. The software products set forth on Schedule 1.1(a),
including any and all source and object codes, binaries, supplements,
modifications, updates, corrections and enhancements to past versions of such
products, shipping versions of such products and versions of such products
currently under development, in each case as existing as of the Closing Date;
and any and all English and foreign language versions of past versions of such
products, shipping versions of such products and versions of such products
currently under development, in each case as existing as of the Closing Date
(collectively, the "RDB PRODUCTS");
(b) Rdb Tools. The software design and development tools set forth in
Schedule 1.1(b) and any and all scripts, modifications and additions to such
tools and to the "DIGITAL TECHNOLOGY," as defined in the License Agreement (as
defined in Section 1.3 below),
ASSTPRCH.007 -1-
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which were primarily created by the Rdb Database Engineering Group (as defined
in Section 10.1) and which are used to compile, link or build Rdb Products,
existing as of the Closing Date (but, excluding the Digital Technology itself)
(the "RDB TOOLS");
(c) Patent Rights. The patents and patent applications assigned to
Buyer pursuant to the Patent Agreement (as defined in Section 1.3 below);
(d) Copyrights. Any and all copyrights in and to the Assets (as
defined in the other subparagraphs of this Section 1.1) and the copyright
registrations set forth in Schedule 1.1(d);
(e) Trademarks, Service Marks and Trade Names. The trademarks, service
marks and trade names set forth in Schedule 1.1(e) and the goodwill therein;
(f) Engineering Information. Any and all design and code
documentation, methodologies, processes, trade secrets, design information,
product information, technology, formulae, routines, engineering specifications,
technical manuals and data, drawings, inventions (exclusive of inventions
covered by patents and patent applications), know-how, techniques, engineering
work papers, and programmer's notes, which were primarily created by the Rdb
Database Engineering Group and which are necessary to, used in, or derived from
the Assets (as defined in the other subparagraphs of this Section 1.1) and which
are relevant to the development, manufacture, operation, maintenance or use of
the Assets (collectively, "ENGINEERING INFORMATION");
(g) Transferred Agreements. All rights under the agreements set forth
in Schedule 1.1(g) (the "TRANSFERRED AGREEMENTS") between Seller and the third
parties named therein;
(h) Testing Materials. Any and all Engineering Information relating to
testing and correcting defects in the Rdb Products and the Rdb Tools (including,
without limitation, regression tests, test beds, test plans, software defect
database and historical defect data, and certain software listed in Schedule
1.1(b)) and other documents and materials, which were primarily created by the
Rdb Database Engineering Group and which are necessary to maintain, enhance and
correct errors in the Rdb Products and the Rdb Tools and to provide continued
customer technical support (the "DOCUMENTATION");
(i) Marketing or User Materials. Any and all customer and marketing
materials relating specifically to Rdb Products, including, without limitation,
product documentation, sale and marketing collateral, white papers, product data
sheets known as "Software Product Descriptions," performance benchmark reports,
customer training materials, sales training materials and sales presentation
materials (the "MARKETING OR USER MATERIALS") and any and all customer and
marketing materials relating specifically to Rdb Tools, including, without
limitation, product documentation, sale and marketing collateral, white papers,
product data sheets known as "Software Product Descriptions," performance
benchmark reports, customer training materials, sales training materials and
sales presentation materials;
ASSTPRCH.007 -2-
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(j) Customer Support Materials. Any and all customer support materials
relating specifically to the Rdb Products or Rdb Tools, including, without
limitation, support training materials, support bulletins (including, without
limitation, copies of any and all information on electronic bulletin boards),
and any and all data contained in Seller's customer support organization
computer system relating specifically to the Rdb Products or Rdb Tools
(notwithstanding the foregoing, nothing herein is intended to convey to the
Buyer any copy, right or interest in Seller's customer support software) (the
"CUSTOMER SUPPORT MATERIALS");
(k) Tangible Assets. The inventories of the Rdb Products, the server,
desktop and other computer equipment used by the Rdb Database Engineering Group
and the desktop and other computer equipment used by the service and support
organization of the Business, as specified in Schedule 1.1(k) attached hereto
(which sets forth substantially all of the tangible assets included in the
Assets and which shall be revised by Seller at the time such tangible assets are
delivered to Buyer to set forth all of the tangible assets included in the
Assets);
(l) Customer Lists. All customer lists maintained by Seller specific
to Rdb Products or Rdb Tools or the service and support of Rdb Products or Rdb
Tools;
(m) License Rights. All license and other rights conveyed to Buyer
pursuant to the License Agreement and the Patent Agreement; and
(n) Books and Records. All books and records specific to the Business.
SECTION 1.2 Liabilities. Buyer shall not assume and shall not be
liable for, and Seller and its wholly-owned direct and indirect subsidiaries
(each a "SELLER SUBSIDIARY" and collectively the "SELLER SUBSIDIARIES") shall
retain and, as between Buyer and Seller, remain solely liable for and obligated
to discharge, all of the debts, contracts, agreements, commitments, obligations
and other liabilities of any nature whatsoever of Seller and the Seller
Subsidiaries, whether known or unknown, accrued or not accrued, fixed or
contingent, and arising out of or resulting from the operation of the Business
through the Closing Date, including, without limitation, the following:
(a) any product warranty claims (i) by a distributor or reseller
relating to any Assets shipped by Seller or any Seller Subsidiary to such
distributor or reseller on or prior to the Closing Date or (ii) by an end-user
relating to any Assets shipped by Seller or any Seller Subsidiary to such
end-user on or prior to the Closing Date;
(b) any liability for breach by Seller of any instrument, purchase
order or contract in existence on or prior to the Closing Date; provided,
however, that with respect to the Transferred Agreements assigned to Buyer, such
breach by Seller occurred on or prior to the Closing Date;
(c) any liability for payments of amounts due under any instrument,
purchase order or contract in existence on or prior to the Closing Date;
(d) any liability or obligation for Taxes (as defined in Section 2.12)
attributable to or imposed upon Seller, or attributable to or imposed upon the
Business or the
ASSTPRCH.007 -3-
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Assets for any period (or portion thereof) through the Closing Date, including,
without limitation, Taxes imposed as a result of this transaction, except as
otherwise provided in Sections 1.4 and 1.10;
(e) any liability or obligation for or in respect of any loan, other
indebtedness for money borrowed, or account payable, including any such
liabilities owed to affiliates of Seller;
(f) any liability or obligation arising as a result of any legal or
equitable action or judicial or administrative proceeding initiated at any time
in respect of anything done, suffered to be done or omitted to be done on or
prior to the Closing Date, including, without limitation, any liability for
infringement of intellectual property rights or violations of federal or state
securities or other laws;
(g) any liability or obligation of Seller incurred in connection with
the making or performance of this Agreement;
(h) any liability or obligation arising on or prior to the Closing Date
out of any "EMPLOYEE BENEFIT PLAN," as such term is defined by the Employee
Retirement Income Security Act of 1974 ("ERISA") or other employee benefit; and
(i) any liability or obligation for making payments of any kind
(including as a result of this sale of Assets or as a result of the termination
of employment by Seller of employees, or other claims arising out of the terms
and conditions of employment with Seller, or for vacation or severance pay or
otherwise) to employees of Seller or in respect of payroll taxes for employees
of Seller.
SECTION 1.3 Intellectual Property Agreements. At the Closing, Seller
shall grant to Buyer licenses and other rights and assign to Buyer certain
rights, and Buyer shall grant to Seller licenses and other rights, in each case
on the terms and conditions set forth in the Cross-License Agreement attached
hereto as EXHIBIT A (the "LICENSE AGREEMENT") and the Patent Agreement attached
hereto as EXHIBIT B (the "PATENT AGREEMENT").
SECTION 1.4 Sales, Use and Other Transfer Taxes. Seller shall be
responsible for paying, shall promptly discharge when due, and shall reimburse,
indemnify and hold harmless Buyer from, any sales or use, transfer, real
property gains, excise, stamp, or other similar Taxes arising from, imposed on
or attributable to the transactions contemplated by this Agreement, provided
that, in the event Buyer breaches the covenants contained in the following
sentences of this Section 1.4, then Buyer shall reimburse, indemnify and hold
harmless Seller from any such Taxes or any increase in such Taxes (including
interest and penalties) arising out of, resulting from or caused by such breach
by Buyer. Seller and Buyer agree to the following, which are intended to avoid
or reduce the amount of sales or use taxes with respect to the transfer of the
Assets:
(a) Seller shall deliver and Buyer shall accept transfer of title to
and possession of all tangible personal property (the "TANGIBLE PERSONAL
PROPERTY") required to be
ASSTPRCH.007 -4-
<PAGE> 12
transferred by Seller to Buyer at the Closing under this Agreement and any
other related agreements in the State of New Hampshire. For purposes of this
Section 1.4, the term "Tangible Personal Property" shall not include any
equipment, materials described in Section 1.1(i) and Customer Support Materials
included in the Assets and located in the State of Colorado or in any other
state other than the State of New Hampshire or outside the United States on the
Closing Date, title and possession of which shall be transferred from Seller to
Buyer at the place at which such Assets are located on the Closing Date.
(b) If Seller delivers the Tangible Personal Property in the State of
New Hampshire, at the Closing, Buyer shall cause an appropriate officer or
employee of Buyer to execute and deliver to Seller the Receipt of Tangible
Personal Property in the form of EXHIBIT C.
(c) Buyer acknowledges and agrees that it is acquiring the Tangible
Personal Property for physical possession and use in the State of New Hampshire
and will in no event physically move any of the Tangible Personal Property
outside of the State of New Hampshire until such time as the Tangible Personal
Property has been used by Buyer within the State of New Hampshire for at least
one hundred (100) days after the Closing Date, exclusive of any time of storage
for shipment to a location outside of the State of New Hampshire. Buyer shall
not be deemed to have breached its covenants in this Section 1.4(c) by either of
the following: (i) making one copy of the source code for the Rdb Products and
Rdb Tools within the State of New Hampshire on blank storage media not acquired
from Seller at the Closing and depositing such copy with an escrow agent
pursuant to the provisions of the Technology Escrow Agreement attached to this
Agreement as Exhibit K (the "ESCROW AGREEMENT"); or (ii) making copies of
Tangible Personal Property other than the source code for the Rdb Products and
Rdb Tools within the State of New Hampshire on blank storage or other media not
acquired from Seller at the Closing and selling, delivering or otherwise using
such copies outside of the State of New Hampshire in the ordinary course of
Buyer's business.
(d) Buyer shall take such other reasonable actions not materially
inconsistent with Buyer's business objectives as Seller may request to the
extent necessary to avoid imposition of any such Taxes.
As used in this Section 1.4, "Buyer" shall include any direct or indirect
subsidiary of Buyer (each a "BUYER SUBSIDIARY" and collectively the
"BUYER SUBSIDIARIES") to which all or any part of the Tangible Personal
Property is transferred after the Closing Date. The indemnification procedures
contained in Section 8.4 shall apply to the indemnities of Seller and Buyer
under this Section 1.4. Buyer's liability for breach of any of its covenants
contained in this Section 1.4 shall be limited to the Taxes (including interest
and penalties) incurred by Seller, as set forth above in this Section 1.4.
SECTION 1.5 Service Support and Revenue.
(a) Following the Closing, Buyer shall furnish support services to
customers of Seller that have support agreements with Seller's Software Product
Services Segment of Seller's Multivendor Customer Services unit ("SPS") relating
to the Rdb Products extending after the Closing Date. Such support services
shall be provided pursuant to a Support Agreement
ASSTPRCH.007 -5-
<PAGE> 13
between Seller and Buyer in the form of EXHIBIT D hereto (the "SUPPORT
AGREEMENT"). Except as otherwise provided in the Support Agreement, such
Support Agreement shall terminate with respect to each customer upon the
earlier to occur of (i) the expiration or termination of the support agreement
between Seller and such customer with respect to support services for Rdb
Products, or (ii) fifteen (15) months after the Closing Date, except, with
respect to item (ii), no earlier than January 31, 1996, unless the Support
Agreement is terminated earlier in accordance with its terms.
(b) Seller and Buyer shall jointly prepare and distribute a letter
addressed to all Rdb Product support customers of SPS identified on the list
provided by Seller pursuant to Section 2.7(a) (the "SUPPORT CUSTOMERS") as of
such date, which notifies such customers that Buyer will provide support
services on a subcontractor basis following the Closing. Seller and Buyer shall
use reasonable efforts to prepare and send such letter within thirty (30) days
after the date of this Agreement and, in any event, such letter shall be
prepared and sent prior to the Closing. Such letter shall also notify such
customers that Buyer intends to enter into new agreements to provide support
services for the Rdb Products to such customers upon the earlier of (i) or (ii)
of Section 1.5(a) above in accordance with Buyer's standard support terms and
conditions, a copy of which shall be included with such letter.
(c) In the case of any support agreement for which a Support Customer
has paid Seller prior to the Closing Date amounts in respect of support of Rdb
Products for a service term which includes any period after the Closing Date,
then such prepaid support amounts shall be allocated between the portion of the
service term through the Closing Date and the remainder of such service term,
based on the number of days included in each portion. Seller shall pay to Buyer
at the Closing a reasonable estimate of the amounts allocated to the
post-Closing Date portion of such service term.
(d) In the case of any support agreement for which a Support Customer
has not prepaid any amounts with respect to post-Closing Date support of Rdb
Products, then prior to the Closing, Seller and Buyer jointly shall agree upon
a method for preparing an estimate as of the Closing Date with respect to each
such support agreement. Such estimate shall reflect the reasonably anticipated
Rdb Product support revenues to be received by Seller from such customer for
the period from the Closing to the termination of the subcontract arrangement
with respect to such customer as determined under Section 1.5(a) above and the
allocation of such revenues to each calendar quarter included in such period.
Such estimates shall be jointly prepared by Seller and Buyer prior to the
Closing. Seller and Buyer currently anticipate that such quarterly estimated
revenues will be 38%, 34%, 21% and 7%, respectively, of the total estimated
revenues for each such agreement. Such quarterly estimated revenues shall be
paid by Seller to Buyer on the last day of each calendar quarter ending after
the Closing Date. Within sixty (60) days after the end of each such calendar
quarter, Seller shall provide Buyer with a compilation, including reasonably
available supporting documentation, if requested, of the actual revenues
invoiced by Seller for Rdb Product support for such quarter. In the event such
amount varied from the amount actually paid by Seller for such prior quarter,
the next quarterly payment owed by Seller to Buyer shall be adjusted upward or
downward to reflect such difference or, in the case of the final quarterly
payment, Buyer or Seller shall make a final adjusted payment, if required,
within sixty (60) days after the end of such quarter.
ASSTPRCH.007 -6-
<PAGE> 14
(e) In the case of any support agreement for Rdb Products which either
(i) extends beyond fifteen (15) months after the Closing Date, or (ii) contains
service requirements beyond the service descriptions as set forth in Attachment
B to the Support Agreement, then Seller shall either (A) with respect to
agreements covered by item (i) and if permitted by the support agreement or by
the other party to the support agreement, terminate any such agreement effective
as of the expiration of the fifteenth month after the Closing Date, or (B) if
Seller notifies Buyer in writing of the support agreement within sixty (60) days
of the date of the Support Agreement, enter into a modification of the Support
Agreement to extend the Support Agreement solely to the remainder of the term of
such support agreement.
SECTION 1.6 Purchase Price; Payment. In consideration of the
acquisition of the Assets, Buyer agrees to pay and deliver to Seller one hundred
eight million dollars ($108,000,000) (the "PURCHASE PRICE"), payable at the
Closing by wire transfer of immediately available funds to an account designated
by Seller.
SECTION 1.7 Allocation of Purchase Price. For purposes of complying
with the requirements of Section 1060 of the Internal Revenue Code of 1986, as
amended (the "CODE"), the Purchase Price shall be allocated as provided in the
purchase price allocation schedule (the "PURCHASE PRICE ALLOCATION SCHEDULE")
prepared by Buyer and approved by Seller on or prior to the Closing Date.
Seller shall have the right to approve the allocation set forth in the Purchase
Price Allocation Schedule, which approval shall not be unreasonably withheld.
Each party hereto agrees to prepare its federal and state income tax returns for
all current and future tax reporting periods and file Form 8594 (and
corresponding state forms) with respect to transfer of the Assets to Buyer in a
manner consistent with such allocation. If any state or federal taxing
authority challenges such allocation, the party receiving notice of such
challenge shall give the other prompt written notice of such challenge, and the
parties shall cooperate in good faith in responding to it in order to preserve
the effectiveness of the allocation.
SECTION 1.8 Facilities. For a period of up to six (6) months
following the Closing, Seller shall permit Buyer to occupy the facilities in New
Hampshire currently occupied by the Rdb Database Engineering Group and the
facilities in Colorado currently occupied by the service and support
organization of the Business (the "FACILITIES"). Buyer shall pay rent to Seller
at rates consistent with rents in the area with respect to any occupation by
Buyer of the Facilities in New Hampshire and at rates and on terms set forth in
the Support Agreement with respect to any occupation by Buyer of the Facilities
in Colorado. At the Closing, the parties shall enter into an agreement with
respect to any such occupation of Facilities by Buyer, which agreement will
address the preservation of confidentiality for each of Buyer's and Seller's
activities at the Facilities. In addition, Seller agrees to provide Buyer with
reasonable assistance in locating alternative facilities in which to operate the
Business; provided, however, that Seller shall incur no liability if Buyer is
unsuccessful in locating alternative facilities.
SECTION 1.9 Other Agreements. At the Closing, Seller and Buyer shall
enter into the Preferred Strategic Relationship Agreement in the form of
EXHIBIT E hereto, the Oracle Reseller Agreement in the form of EXHIBIT F
hereto, the Digital Reseller Agreement in the form of EXHIBIT G hereto and the
Escrow Agreement in the form of EXHIBIT K hereto.
ASSTPRCH.007 -7-
<PAGE> 15
SECTION 1.10 Purchase Orders. On the Closing Date, Seller and Buyer
shall each execute a purchase order and related documentation for $3,000,000 of
the other's software and hardware products, respectively, in the forms of
EXHIBITS H AND I hereto. Notwithstanding any contrary provision of this
Agreement, each of Seller and Buyer shall pay all sales and use taxes required
to be paid with respect to their respective purchases of products pursuant to
this Section 1.10.
SECTION 1.11 Closing. Subject to the terms and conditions of this
Agreement, the transfer of the Assets contemplated hereby (the "CLOSING") shall
take place on such date as the parties may agree (the "CLOSING DATE"), provided
that all of the conditions precedent in Articles VI and VII of this Agreement
shall have been satisfied or waived, as the case may be, by such date.
SECTION 1.12 Actions at the Closing. At the Closing, Seller shall
deliver the Assets to Buyer, Buyer shall deliver the Purchase Price to the
Seller and Buyer and Seller shall take such actions and execute and deliver such
agreements, bills of sale, and other instruments and documents as necessary or
appropriate to effect the transactions contemplated by this Agreement in
accordance with its terms, including without limitation the following:
(a) Seller shall deliver to Buyer a General Bill of Sale substantially
in the form of EXHIBIT J-1 hereto and an Assignment and Assumption Agreement
substantially in the form of EXHIBIT J-2 hereto (each an "ASSIGNMENT AND
ASSUMPTION AGREEMENT") with respect to each Transferred Agreement assigned to
Buyer, duly executed by Seller, assigning to Buyer all of Seller's right, title
and interest in and to the Assets.
(b) Buyer shall deliver the Purchase Price to Seller in accordance with
the provisions of Section 1.6.
(c) Seller shall provide reasonable evidence of valid title to each and
every one of the Assets, in form and substance reasonably satisfactory to Buyer.
(d) Seller shall deliver to Buyer the assignments, and any required
consents to assignment, of all Transferred Agreements assigned to Buyer after
the Closing, duly executed by the appropriate parties having the authority to
so assign or consent to assign, in form and substance as Buyer shall reasonably
request. Buyer shall assume the performance of all obligations arising under
the Transferred Agreements assigned to Buyer after the Closing, as set forth in
the Assignment and Assumption Agreements.
(e) At the Closing, Seller shall deliver to Buyer any and all documents
required to satisfy the conditions set forth in Article VI below and any other
closing documents reasonably requested by Buyer.
(f) At the Closing, Buyer shall deliver to Seller all documents
required to satisfy the conditions set forth in Article VII of this Agreement
and any other closing documents reasonably requested by Seller.
ASSTPRCH.007 -8-
<PAGE> 16
(g) Subsequent to the Closing Date, Seller shall, and shall cause the
Seller Subsidiaries to, from time to time execute and deliver, upon the request
of Buyer, all such other and further materials and documents and instruments of
conveyance, transfer or assignment as may reasonably be requested by Buyer to
effect, record or verify the transfer to, and vesting in Buyer, of Seller's and
the Seller Subsidiaries' right, title and interest in and to the Assets, free
and clear of all Liens (as defined in Section 2.6 below), in accordance with the
terms of this Agreement.
SECTION 1.13 Disclaimer of Warranty. Except as expressly stated herein
or in any agreement delivered pursuant to this Agreement, Seller makes no
warranty, express or implied, as to the condition, use, sale or operation of any
of the Assets, including, without limitation, any implied warranties of
merchantability and fitness for use for a particular purpose.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, provided that each
representation and warranty set forth below is qualified by any exceptions set
forth in the Seller Disclosure Schedule, a copy of which has been previously
provided to Buyer by Seller (the "SELLER DISCLOSURE SCHEDULE"), which exceptions
specifically reference the Section(s) qualified by the exceptions:
SECTION 2.1 Organization. Seller is a corporation duly formed and
validly existing under the laws of Massachusetts, and has full corporate power
and authority and legal right to own and operate or lease the Assets and to
carry on the Business as presently conducted, to execute and deliver this
Agreement and all of the other agreements and instruments to be executed and
delivered by Seller pursuant hereto, and to consummate the transactions
contemplated hereby and thereby. Seller is qualified to do business as a foreign
corporation in each state of the United States or other jurisdiction in which it
is required to be qualified, except in states and other jurisdictions in which
the failure to qualify, in the aggregate, would not have a material adverse
effect on the Assets.
SECTION 2.2 Authority. The execution and delivery of this Agreement
(and all other agreements and instruments contemplated hereunder) by Seller,
the performance by Seller of its obligations hereunder and thereunder, and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of
Seller, and no other act or proceeding on the part of or on behalf of Seller or
its shareholders is necessary to approve the execution and delivery of this
Agreement and such other agreements and instruments, the performance by Seller
of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby. The signatory officers of Seller
have the power and authority to execute and deliver this Agreement and all of
the other agreements and instruments to be executed and delivered by Seller
pursuant hereto, to consummate the transactions hereby and thereby contemplated
and to take all other actions required to be taken by Seller pursuant to the
provisions hereof and thereof.
ASSTPRCH.007 -9-
<PAGE> 17
SECTION 2.3 Execution and Binding Effect. This Agreement has been duly
and validly executed and delivered by Seller and constitutes, and the other
agreements and instruments to be executed and delivered by Seller pursuant
hereto, upon their execution and delivery by Seller, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof by
Buyer), legal, valid and binding agreements of Seller, enforceable against
Seller in accordance with their respective terms.
SECTION 2.4 Consents and Approvals of Governmental Entities. There is
no requirement applicable to Seller to make any filing, declaration or
registration with, or to obtain any permit, authorization, consent or approval
of, any Governmental Entity as a condition to the lawful consummation by Seller
of the transactions contemplated by this Agreement and the other agreements and
instruments to be executed and delivered by Seller pursuant hereto or the
consummation by Seller of the transactions contemplated herein or therein.
SECTION 2.5 No Violation. Neither the execution, delivery and
performance of this Agreement and all of the other agreements and instruments to
be executed and delivered pursuant hereto, nor the consummation of the
transactions contemplated hereby or thereby, will, with or without the passage
of time or the delivery of notice or both, (a) conflict with, violate or result
in any breach of the terms, conditions or provisions of the articles or bylaws
of Seller, (b) conflict with or result in a violation or breach of, or
constitute a default or require consent of any Person (or give rise to any right
of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any notice, bond, mortgage, indenture, license,
franchise, permit, agreement, lease or other instrument or obligation to which
Seller or any Seller Subsidiary is a party or by which Seller, any Seller
Subsidiary or any of the properties or assets of Seller or any Seller Subsidiary
may be bound, where such conflict, violation, breach, default or consent would
have a material adverse effect on the Business or the Assets or (c) violate any
statute, ordinance or law or any rule, regulation, order, writ, injunction or
decree of any Governmental Entity applicable to Seller or any Seller Subsidiary
or by which any properties or assets of Seller or any Seller Subsidiary may be
bound, where such violation would have a material adverse effect on the
Business or the Assets. No "bulk sales" provisions of any state commercial code
apply to the transactions contemplated by this Agreement.
SECTION 2.6 Assets Generally.
(a) The Assets include all properties, tangible and intangible,
currently used by Seller in operating the Business and that will enable Buyer to
operate the Business after the Closing Date in a manner substantially equivalent
to the manner in which Seller has operated the Business prior to and through the
Closing Date. Except as set forth in the Seller Disclosure Schedule, Seller's
operation of the Business does not require any licenses or other consents from,
or royalty payments to, any other Person.
(b) Seller holds valid title to all of the Assets and has the complete
and unrestricted power and the unqualified right to sell, assign and deliver the
Assets to Buyer. Upon consummation of the transactions contemplated by this
Agreement, Buyer will acquire valid title to the Assets (other than trade
secrets, which are addressed in Section 2.9 below) free and clear of any
mortgages, pledges, liens, security interests, encumbrances, charges or other
claims of
ASSTPRCH.007 -10-
<PAGE> 18
third parties of any kind, other than non-exclusive licenses to use the Rdb
Products granted by Seller to end-users in the ordinary course of business
(collectively, "LIENS") and other than Liens created by or through Buyer. No
Person other than Seller has any right or interest in the Assets, including the
right to grant interests in the Assets to third parties, except for those
Assets licensed or leased from third parties which are set forth in the Seller
Disclosure Schedule and identified as such.
(c) Except for end-users or resellers authorized on a non-exclusive
basis to grant non-exclusive object code licenses to end-users, either directly
or through other resellers, of Rdb Products that were granted non-exclusive
object code licenses by Seller, or by resellers or by third party service
providers authorized by Seller to grant such licenses, to use all or part of the
Rdb Products, neither Seller nor any Seller Subsidiary granted to any person or
entity, and no person or entity, other than Seller (including, without
limitation, any independent contractors who have performed services related to
the Business), holds any rights in, or licenses to produce, distribute, license,
sublicense, sell, use in development or otherwise use, any of the Assets. All
of the authorized users of the Rdb Products are authorized to use the Rdb
Products pursuant to non-exclusive licenses granted for use of the Rdb Products
only on a single system, except for an immaterial portion of the authorized
users who are authorized to use the Rdb Prod ucts pursuant to other
arrangements, such as site licenses. The Seller Disclosure Schedule separately
identifies each exclusive arrangement between Seller or any Seller Subsidiary
and any third party to license, sublicense, sell or distribute any of the
Assets, and Seller shall, within thirty (30) days after the date of this
Agreement, furnish to Buyer copies of each agreement relating to such
arrangements.
(d) None of the Assets that constitute tangible personal property is
held under any lease, security agreement, conditional sales contract, or other
title retention or security arrangement.
(e) Immediately after Closing, no restrictions under which Seller or
any Seller Subsidiary operates or which were incurred by Seller or any Seller
Subsidiary will exist on Buyer's right to sell, resell, license or sublicense
any property included in the Assets, other than the restrictions imposed under
the Transferred Agreements, nor will any such restrictions be imposed as a
consequence of the transactions contemplated by this Agreement or by any
agreement referenced in this Agreement.
(f) The Rdb Tools include, without limitation, all software development
tools primarily developed by Seller's Rdb Database Engineering Group and used in
or for the development or maintenance of the Rdb Products.
(g) Neither Seller nor any Seller Subsidiary has licensed or agreed to
license a material portion of its customers with the right to use any Rdb
Products or Rdb Tools with a hardware platform different than Seller's hardware
platform designated in the original license agreements with such customers, and
nothing restricts Seller's ability to charge its customers for any transfer of
licenses to Rdb Products or Rdb Tools between Seller-designated tiers within a
hardware architecture or to a different hardware architecture. No Person has a
license to use or the right to acquire a license to use any future version of
the Rdb Products or Rdb Tools, except
ASSTPRCH.007 -11-
<PAGE> 19
for end-user rights to obtain licenses to future versions of the Rdb Products
or Rdb Tools pursuant to existing support arrangements, and nothing restricts
Seller's ability to charge its customers for any such new version, other than
such support arrangements. After the Closing, Buyer will not be prevented by
any act of Seller from changing prices charged to a customer for support of Rdb
Products and Rdb Tools after expiration or termination of such customer's
existing support agreement.
(h) Each of the Transferred Agreements grants to Seller a
non-exclusive, worldwide license to the source code version of the software that
is the subject of such Transferred Agreement. Seller has the right under each
of the Transferred Agreements to sublicense its right to distribute object code
versions of the software that is the subject of each such Transferred Agreement
integrated with the Rdb Products for use on Seller's hardware platforms. Apart
from obligations to pay royalties or fees and to develop and support code to
achieve compatibility between the Rdb Products and the software that is the
subject of such Transferred Agreement and standard confidentiality obligations,
all of which are described in the Seller Disclosure Schedule, none of the
Transferred Agreements imposes any obligations on Seller, its assignees or
sublicensees. In addition, Seller has the right under each Transferred
Agreement to integrate the software products that are the subject of each such
Transferred Agreement into Buyer's software products ported to Seller's
hardware platforms.
SECTION 2.7 Support Agreements.
(a) Within sixty (60) days after the date of this Agreement, Seller
will provide to Buyer a complete list (including name, address, contact name,
telephone number, and the term of the agreement of all agreements or other
arrangements pursuant to which SPS is obligated to provide support services
with respect to Rdb Products. Notwithstanding the foregoing, if the Closing
Date occurs on or prior to October 31, 1994, Seller shall use reasonable efforts
to assure that the aforementioned list is complete, but to the extent it is not
complete Seller shall update such list and make it complete as soon as
practicable after the Closing Date. Substantially all of such agreements and
arrangements permit Seller to subcontract to Buyer the performance of support
services required under such agreements and arrangements as contemplated by
Section 1.5 of this Agreement. Substantially all of the agreements or other
arrangements listed in the list provided by Seller to Buyer pursuant to this
Section 2.7(a) which have a remaining term of more than one (1) year may be
terminated by Seller upon notice to the customer of not more than one (1) year.
(b) Neither Seller nor any Seller Subsidiary has granted any third
party the right to furnish support or maintenance services with respect to any
Rdb Products to any other third party, except that Seller has authorized certain
distributors and resellers to resell support for Rdb Products and certain third
parties to furnish updates to the Rdb Products, all of which arrangements will
be terminated on or prior to the Closing Date, other than to the extent such
arrangements are permitted pursuant to the Oracle Reseller Agreement.
(c) No agreement for support or maintenance of Rdb Products by SPS
obligates Seller or any Seller Subsidiary, and no agreement would obligate Buyer
after the Closing Date, to provide any improvement, enhancement, change in
functionality or other
ASSTPRCH.007 -12-
<PAGE> 20
alteration in the performance of the Rdb Products. Other than customer
agreements for Rdb Products entered into by Seller's Consulting Services group,
as such group may have been constituted from time to time, no agreement
pursuant to which Seller or any Seller Subsidiary has licensed the use of the
Rdb Products to any third party obligates Seller or any Seller Subsidiary to
provide any improvement, enhancement, change in functionality or other
alteration in the performance of the Rdb Products beyond Seller's current
product plans for the evolution of the Rdb Products. No agreement for the
licensing of the Rdb Products entered into by Seller's Consulting Services
group, as such group may have been constituted from time to time, obligates
Seller to furnish any improvements, enhancements, changes in functionality or
other alterations in the performance of the Rdb Products, requiring technical
resources in excess of those reasonably expected to be available to the
Business at the time such obligations are required to be performed.
(d) Except as described in the Seller Disclosure Schedule, SPS has not
provided any warranties, express or implied, with respect to Rdb Products.
SPS does not, in its standard license terms, provide warranties with respect to
Rdb Products for a period greater than one (1) year.
SECTION 2.8 Financial Information. Seller has delivered to Buyer the
financial information included in the Seller Disclosure Schedule (the
"FINANCIAL INFORMATION"). The Financial Information was derived from Seller's
books and records as maintained by Seller in the ordinary course of business
and the Financial Information fairly presents the information it purports to
represent for the periods indicated. All support and service revenue of the
Business for the fiscal year ended June 30, 1994, as set forth in the Financial
Information, was generated by SPS. Support and service revenues attributable
to the provision of support and service by SPS pursuant to support agreements
with Governmental Entities represents less than thirty percent (30%) of the
support and service revenue of the Business for the fiscal year ended June 30,
1994, as set forth in the Financial Information.
SECTION 2.9 Intellectual Property. The Assets other than the server,
desktop and other computer equipment, the rights under the Transferred
Agreements, and the books and records included in the Assets (the "INTELLECTUAL
PROPERTY ASSETS"), do not infringe any patent, trade name, trademark,
copyright, trade secret or any other intellectual property right of any Person,
without the necessity of relying upon any license held by Seller or any Seller
Su bsidiary to any such intellectual property right of any Person. There
is no pending or threatened claim by Seller against any Person for
infringement, misuse or misappropriation of any Intellectual Property Assets.
Neither Seller nor any Seller Subsidiary is obligated or under any liability
whatsoever to make any payments by way of royalties, fees or otherwise to any
owner of, licensor of, or other claimant to, any patent, trademark, trade name,
copyright, trade secret or other intellectual property rights, with respect to
the use thereof or in connection with the conduct of its business or otherwise,
in each case arising out of the operations of the Business or with respect to
the Intellectual Property Assets and the Transferred Agreements. Seller owns
or has all necessary rights to use all trade secrets, including know-how,
inventions, designs, processes, and technical data required for the
development, operation, license and sale of all products and services sold or
licensed or proposed to be sold or licensed by Seller as part of the Business
and the Assets, except to the extent that the failure to own or have rights to
such trade
ASSTPRCH.007 -13-
<PAGE> 21
secrets would not have a material adverse effect on the Business or Assets.
All of the Intellectual Property Assets are owned by Seller free and clear of
any rights or claims of any former employees, consultants, officers and
directors of Seller or any Seller Subsidiary and former employers of all
current and former employees, consultants, officers and directors of Seller or
any Seller Subsidiary. Seller has adhered to its standard confidentiality
provisions to protect the secrecy and confidentiality of the Intellectual
Property Assets and the Transferred Agreements. The source code for the Rdb
Products and the Rdb Tools constitute trade secrets of Seller that are
presently valid and protectable, and are not part of the public knowledge or
literature. All taxes and fees, including, without limitation, patent and
trademark registration and prosecution fees and all professional fees in
connection therewith pertaining to the Intellectual Property Assets, due and
payable on or before the Closing Date, have been paid by Seller or will be paid
by Seller within three (3) months after the Closing.
SECTION 2.10 Employees.
(a) All employees, consultants, officers, directors and shareholders
of Seller or any Seller Subsidiary that have had access to any material portion
of the Assets are parties to a written agreement ("PROPRIETARY INFORMATION AND
INVENTIONS AGREEMENT"), under which each such person or entity (i) is obligated
to disclose and transfer to Seller or any Seller Subsidiary, without the
receipt by such person of any additional value therefor (other than normal
salary or fees for consulting services), all inventions, developments and
discoveries which, during the period of employment with or performance of
services for Seller or any Seller Subsidiary, he or she makes or conceives of
either solely or jointly with others, that relate to any subject matter with
which his or her work for Seller or any Seller Subsidiary may be concerned, or
relate to or are connected with the business, products or projects of Seller or
any Seller Subsidiary, or involve the use of the time, material or facilities
of Seller or any Seller Subsidiary, and (ii) is obligated to maintain the
confidentiality of proprietary information of the Seller or any Seller
Subsidiary. To Seller's knowledge, none of Seller's or any Seller Subsidiary's
employees, consultants, officers or directors is obligated under any contract
(including licenses, covenants or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would conflict with their obligation to use their
best efforts to promote the interests of Seller in the Business or that would
conflict with the Business. To Seller's knowledge, neither the execution nor
delivery of this Agreement, nor the carrying on of the Business by its
employees and consultants, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any
contract, covenant or instrument under which any of such persons or entities
are now obligated. It is currently not necessary nor will it be necessary for
Seller to utilize in the Business nor will Seller utilize in the Business any
inventions of any of such persons or entities (or people it currently intends
to hire) made or owned prior to their employment by or affiliation with Seller
or any Seller Subsidiary, nor is it or will it be necessary to utilize any
other assets or rights of any such persons or entities (or people it currently
intends to hire) made or owned prior to their employment with or engagement by
Seller or any Seller Subsidiary, in violation of any registered patents, trade
names, trademarks or copyrights or any other limitations or restriction to
which any such persons or entity is a party or to which any of such assets or
rights may be subject, except to the extent that such utilizations would not
have a material adverse effect on the Business or Assets. None of Seller's or
any Seller Subsidiary's employees, consultants, officers, directors or
shareholders
ASSTPRCH.007 -14-
<PAGE> 22
that has had knowledge or access to information relating to the Business has
taken, removed or made use of any proprietary documentation, manuals, products,
materials, or any other tangible item from his or her previous employer
relating to the business as conducted of such previous employer which has
resulted in Seller's or any Seller Subsidiary's access to or use of such
proprietary items in the Business, and Seller and each Seller Subsidiary will
not gain access to or make use of any such proprietary items in the Business,
except to the extent that any such activities would not have a material adverse
effect on the Business or Assets.
(b) Seller will furnish, as soon as practicable after the date of this
Agreement, and in any event prior to Closing, Buyer with the information
specified in Section 5.1 with respect to all Employees (as defined in Section
5.1 below).
(c) Except for the Proprietary Information and Inventions Agreements,
there are no written or oral contracts of employment between Seller and any
Employee.
(d) Except as contemplated under this Agreement, Seller is not aware
that any Employee intends to terminate his or her employment with Seller, nor
does Seller have a present intention to terminate the employment of any
Employee.
SECTION 2.11 Licenses and Permits. Each of Seller and each Seller
Subsidiary does not hold, and is not required by any applicable law or
regulation of any Governmental Entity to hold, any governmental licenses,
registrations, permits or authorizations pertaining to the Assets or the
conduct of the Business.
SECTION 2.12 Taxes. All sales and use taxes, real and personal
property taxes, gross receipts taxes, documentary transfer taxes, employment
taxes, withholding taxes, unemployment insurance contributions and other taxes
or governmental charges of any kind, however denominated, including any
interest, penalties and additions to tax in respect thereto, for which Buyer
could become liable as a result of acquiring the Business or the Assets or
which could result in a lien on or charge against the Assets (collectively,
"TAXES") have been or will be paid for all periods (or portions thereof) prior
to the due dates thereof. Seller and any other person required to file returns
or reports of Taxes has duly and timely filed (or will file prior to the
Closing Date) all returns and reports of Taxes required to be filed prior to
such date, and all such returns and reports are true, correct, and complete.
There are no liens for Taxes on any of the Assets. Seller has complied with
all record keeping and tax reporting obligations relating to income and
employment taxes due with respect to compensation paid to employees or
independent contractors providing services to the Business. Seller is not a
"foreign person" within the meaning of Section 1445(f)(3) of the Code. There
are no pending or, to Seller's knowledge, threatened proceedings with respect
to Taxes, and there are no outstanding waivers or extensions of statutes of
limitations with respect to assessments of Taxes. No agreement or
arrangement regarding compensation of any employee providing services to the
Business provides for any payments which could result in a nondeductible
expense to the Buyer pursuant to Section 280G of the Code or an excise tax to
the recipient of such payment pursuant to Section 4999 of the Code.
ASSTPRCH.007 -15-
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SECTION 2.13 Employee Benefit and Compensation Plans. Except as
provided in Sections 5.3 and 5.4, Buyer will incur no liability with respect
to, or on account of, and Seller will retain any liability for, and on account
of, any employee benefit plan of Seller, any of its affiliates or any
predecessor employer of any employee, including, but not limited to,
liabilities Seller may have to such employees under all incentive compensation
plans, bonus plans, pension and retirement plans, profit-sharing plans
(including, any profit-sharing plan with a cash-or-deferred arrangement subject
to Section 401(k) of the Code (a "401(K) PLAN")) stock purchase and option
plans, savings and similar plans, medical, dental, travel, accident, life,
disability and other insurance and other plans or arrangements, whether written
or oral and whether "qualified" or "non-qualified" under the Code, or to any
employee as a result of termination of employment by Seller as contemplated by
this Agreement. Neither Seller nor any Seller Subsidiary has, with respect to
any employee employed in the Business, maintained or contributed to, or been
obligated or required to contribute to, a "multiemployer plan," as such term is
defined in Section 3(37) of ERISA. Neither Seller nor any Seller Subsidiary is
a party to any collective bargaining agreement covering any employees employed
in the Business, and Seller knows of no effort to organize such employees as a
part of any collective bargaining unit.
SECTION 2.14 Compliance with Law. The operation of the Business has
been conducted in all material respects in accordance with all applicable laws,
regulations and other requirements of Governmental Entities having jurisdiction
over the same.
SECTION 2.15 Litigation; Other Claims.
(a) There are no claims, actions, suits, inquiries, proceedings, or
investigations against Seller or any Seller Subsidiary relating to the
Business, the employees of the Business or the Assets which are currently
pending or, to Seller's knowledge, threatened, at law or in equity or before or
by any Governmental Entity; and
(b) There are no grievances or arbitrations, no threatened or actual
strikes or work stoppages, and no collective bargaining agreement currently
open to bargaining relating to Seller's employees who are employed in the
Business.
SECTION 2.16 Product Liability. There are no claims, actions, suits,
inquiries, proceedings or investigations pending or threatened by or, to
Seller's knowledge, against Seller or any Seller Subsidiary relating to any of
the Assets containing allegations that the Assets are defective or were
improperly designed or manufactured or improperly labeled.
SECTION 2.17 Environmental.
(a) Seller's operation of the Business and ownership of the Assets
are, and have been, in compliance in all material respects with all applicable
environmental laws, permit requirements, use restrictions, and waste control
requirements, and no releases of any hazardous substance requiring notification
to a Governmental Entity have occurred on or in the vicinity of any of the
Assets or the Facilities; and no hazardous substances are used on or in the
vicinity of any of the Assets or the Facilities, except in compliance in all
material respects with applicable law. There is no environmental action, suit,
proceeding or investigation pending, or, to Seller's
ASSTPRCH.007 -16-
<PAGE> 24
knowledge, threatened against or affecting any of the Assets or the Facilities
which could materially and adversely affect the Business or the Assets or the
Facilities, and no governmental entity has served upon Seller any notice
claiming any outstanding violation of any environmental statute, ordinance or
regulation or noting the need for any repair or redemption with respect to the
Assets or the Facilities, requesting data or access, requiring testing or other
investigation relating to environmental conditions, or requiring any change in
the Assets or the Facilities or in Seller's means or methods of conducting the
Business.
(b) For purposes of this Agreement, the term "HAZARDOUS SUBSTANCE"
shall mean any substance which is listed or otherwise defined as "hazardous" or
"toxic" under applicable law; as well as any petroleum product or nuclear
materials; and the term "APPLICABLE LAW" as used in this Section 2.17 shall
include any local, state, federal and/or foreign laws and regulations that
govern the existence and/or remedy of contamination on property, the protection
of the environment from contamination, the control of hazardous wastes, or other
activities involving hazardous substances, including building materials.
SECTION 2.18 Defaults. Neither Seller nor any Seller Subsidiary is in
default under or with respect to any judgment, order, writ, injunction or decree
of any court or any Governmental Entity which could materially adversely affect
the Business or any of the Assets. There does not exist any default by Seller
or, to the knowledge of Seller, by any other Person, or event that, with notice
or lapse of time, or both, would constitute a default under any agreement
(including, without limitation, any of the Transferred Agreements) entered into
by Seller or any Seller Subsidiary as part of the operations of the Business
which could materially and adversely affect the Business or the Assets, and no
notices of breach thereof have been received by Seller or any Seller Subsidiary.
SECTION 2.19 Tangible Property. Schedule 1.1(k) attached to this
Agreement is a schedule identifying substantially all, and Schedule 1.1(k) as
revised by Seller pursuant to Section 1.1(k) shall be a complete and accurate
schedule identifying, the server, desktop, and other computer equipment owned
by, in the possession of, or used by Seller and each Seller Subsidiary in
connection with the Business. The property listed in Schedule 1.1(k)
constitutes substantially all such tangible personal property necessary for the
conduct by Seller or any Seller Subsidiary of the Business as now conducted.
No inventories of Rdb Products or server, desktop, or other computer equipment
to be transferred to Buyer is held under any lease, security agreement,
conditional sales contract, or other title retention or security arrangement
(other than the license of the software, if any, contained therein), or is
located other than in the possession of Seller on its premises.
SECTION 2.20 Business. From June 30, 1994 to the date of this
Agreement, there has not been any material adverse change in the Business, or in
the condition, financial or otherwise, of the Business, or in the Assets, or any
damage, destruction or loss, whether or not covered by insurance, which has
materially adversely affected the Business or the Assets. As of the Closing
Date, there shall have been (i) no material adverse change in Seller's ability
to operate the Business on the Closing Date as compared with such ability on the
date of this Agreement (other than any change arising out of the loss of
employees by the Business), (ii) no decline in excess of 50% of revenues of Rdb
Products from September 1, 1994 through the most recent month end
ASSTPRCH.007 -17-
<PAGE> 25
prior to the Closing Date, as compared with the corresponding period in
Seller's 1994 fiscal year, and (iii) no decline in excess of 15% in support
revenues of Rdb Products (including revenue from support renewals for all
customers) from September 1, 1994 through the most recent month end prior
to the Closing Date as compared with the corresponding period in Seller's 1994
fiscal year.
SECTION 2.21 Full Disclosure. Seller is not aware of any facts
pertaining to the Assets which it believes affect the Business or the Assets in
a material adverse manner or which are likely in the future to affect the
Business or the Assets in a material adverse manner. Neither this Agreement nor
any other agreement, exhibit, schedule or certificate being entered into or
delivered pursuant hereto contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the statements
therein contained not misleading.
SECTION 2.22 Brokers and Finders. Neither Seller nor any of Seller's
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fee, commission or finders fee in connection
with the transactions contemplated by this Agreement, except that Seller has
retained CS First Boston to assist it in connection with the transactions
contemplated hereby and shall be responsible for payment of the fees and
expenses of CS First Boston.
SECTION 2.23 Fair Consideration; No Fraudulent Conveyance. The sale of
the Assets pursuant to this Agreement is made in exchange for fair and
equivalent consideration, and Seller is not now insolvent and Seller will not be
rendered insolvent by the sale, transfer and assignment of the Assets pursuant
to the terms of this Agreement. Seller is not entering into this Agreement and
the other agreements referenced in this Agreement with the intent to defraud,
delay or hinder its creditors and the consummation of the transactions
contemplated by this Agreement, and the other agreements referenced in this
Agreement, will not have any such effect. The transactions contemplated in
this Agreement or any agreements referenced in this Agreement will not
constitute a fraudulent conveyance, or otherwise give rise to any right of any
creditor of Seller whatsoever to any of the Asserts in the hands of Buyer after
the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
SECTION 3.1 Organization. Buyer is a corporation duly formed and
validly existing under the laws of California, and has full corporate power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Buyer pursuant hereto, and to
consummate the transactions contemplated hereby and thereby.
ASSTPRCH.007 -18-
<PAGE> 26
SECTION 3.2 Authority. The execution and delivery of this Agreement
(and all other agreements and instruments contemplated hereunder) by Buyer, the
performance by Buyer of its obligations hereunder and thereunder, and the
consummation by Buyer of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action by the Board of Directors of
Buyer, and no other act or proceeding on the part of Buyer or its shareholders
is necessary to approve the execution and delivery of this Agreement and such
other agreements and instruments, the performance by Buyer of its obligations
hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby. The signatory officers of Buyer have the power and
authority to execute and deliver this Agreement and all of the other agreements
and instruments to be executed and delivered by Buyer pursuant hereto, to
consummate the transactions hereby and thereby contemplated and to take all
other actions required to be taken by Buyer pursuant to the provisions hereof
and thereof.
SECTION 3.3 Execution and Binding Effect. This Agreement has been
duly and validly executed and delivered by Buyer and constitutes, and the other
agreements and instruments to be executed and delivered by Buyer pursuant
hereto, upon their execution and delivery by Buyer, will constitute (assuming,
in each case, the due and valid authorization, execution and delivery thereof
by Seller), legal, valid and binding agreements of Buyer, enforceable against
Buyer in accordance with their respective terms.
SECTION 3.4 Consent and Approvals. Except for approvals under the HSR
Act and Foreign Filings, there is no requirement applicable to Buyer to make
any filing, declaration or registration with, or to obtain any permit,
authorization, consent or approval of, any Governmental Entity as a condition
to the lawful consummation by Buyer of the transactions contemplated by this
Agreement and the other agreements and instruments to be executed and delivered
by Buyer pursuant hereto or the consummation of the transactions contemplated
herein or therein.
SECTION 3.5 No Violation. Neither the execution, delivery and
performance of this Agreement and all of the other agreements and instruments
to be executed and delivered pursuant hereto, nor the consummation of the
transactions contemplated hereby or thereby, will, with or without the passage
of time or the delivery of notice or both, (a) conflict with, violate or result
in any breach of the terms, conditions or provisions of the articles or bylaws
of Buyer, (b) conflict with or result in a violation or breach of, or
constitute a default or require consent of any Person (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any notice, bond, mortgage, indenture, license,
franchise, permit, agreement, lease or other instrument or obligation to which
Buyer is a party or by which Buyer or any of its properties or assets may be
bound, where such conflict, violation, breach, default or consent would have a
material adverse effect on the business or assets of Buyer or (c) violate any
statute, ordinance or law or any rule, regulation, order, writ, injunction or
decree of any Governmental Entity applicable to Buyer or by which any of its
properties or assets may be bound, where such violation would have a material
adverse effect on the business or assets of Buyer, except for any approvals
arising out of the HSR Act or the Foreign Filings.
SECTION 3.6 Brokers and Finders. Neither Buyer nor any of Buyer's
officers, directors or employees has employed any broker or finder or incurred
any liability for any
ASSTPRCH.007 -19-
<PAGE> 27
brokerage fee, commission or finders fee in connection with the transactions
contemplated by this Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1 Access to Information. Prior to the Closing, Seller will
permit Buyer to make a full and complete investigation of the Assets and to
receive from Seller and each Seller Subsidiary all information of Seller
relating to the Assets or reasonably related to Seller's conduct of the
Business, subject to applicable confidentiality and nondisclosure provisions.
Without limitation on this right, Seller will give to Buyer and its
accountants, legal counsel, and other representatives full access, during
normal business hours, at a mutually agreeable location arranged in advance, to
all of the books, records, files, documents, properties, and contracts of
Seller and each Seller Subsidiary relating to the Assets or reasonably related
to Seller's conduct of the Business and, with Seller's consent, not to be
unreasonably withheld, allow Buyer and any such representatives to make copies
thereof.
SECTION 4.2 Third Party Consents. Seller and Buyer shall use
reasonable efforts to obtain, within the applicable time periods required, all
waivers, permits, consents and approvals and to effect all registrations,
filings and notice s with or to third parties or Governmental Entities which
are necessary or desirable in connection with the transactions contemplated by
this Agreement.
SECTION 4.3 Certain Notifications. At all times prior to the Closing,
Seller shall promptly notify Buyer in writing of the occurrence of any event
which will result, or has a reasonable prospect of resulting, in the failure to
satisfy any of the conditions specified in Article VI hereof.
SECTION 4.4 Reasonable Efforts. The parties shall use commercially
reasonable efforts (i) to cause to be fulfilled and satisfied all of the
conditions to the Closing to be fulfilled and satisfied by each of them, (ii)
to cause to be performed all of the matters required of each of them at the
Closing and (iii) without the obligation to incur any material financial
obligation, to cause the Transferred Agreements to be assigned to Buyer.
Notwithstanding the other terms of this Agreement, neither Buyer nor Seller
shall be obligated to take any actions suggested or required by any
Governmental Entity to enable the parties to consummate the transactions
contemplated hereby, other than making all required filings (other than such
filings that would be required to obtain the consent of any Governmental Entity
to the subcontracting of support services by Seller to Buyer under the terms of
a contract between Seller and such Governmental Entity) and providing
information requested by any Governmental Entity.
SECTION 4.5 Seller's Conduct of Business Prior to Closing. During the
period from the date of this Agreement to the Closing Date, Seller will conduct
the Business in its ordinary and usual course, consistent with past practice,
and will use all reasonable efforts to preserve intact all rights, privileges,
franchises and other authority of the Business, to retain the employees
employed in the Business, and to maintain favorable relationships with
licensors, licensees,
ASSTPRCH.007 -20-
<PAGE> 28
suppliers, contractors, distributors, customers, and others having business
relationships with the Business. Without limiting the generality of the
foregoing, and except as approved in writing by Buyer in advance, prior to the
Closing Date Seller:
(a) will not create, incur or assume any obligation which would in any
material way adversely affect the Assets or Buyer's ability to conduct the
Business in substantially the same manner and condition as conducted by Seller
and the Seller Subsidiaries on the date of this Agreement;
(b) will not change in any manner the compensation of, or agree to
provide additional benefits to, or enter into any employment agreement with,
any Employee, except as contemplated in Section 5.4 below;
(c) will maintain insurance coverage in amounts adequate to cover the
reasonably anticipated risks of the Business;
(d) will not sell, dispose of or encumber any of the Assets or license
any Assets to any Person except object code licenses on a non-exclusive basis
to users of Seller's hardware for use only on a single system;
(e) will not enter into any agreements or commitments relating to the
Business, except commercially reasonable agreements or commitments entered into
in the ordinary course of business;
(f) will comply in all material respects with all laws and regulations
applicable to the Business;
(g) will not enter into any agreement involving the exclusive
distribution of any of the Assets;
(h) as provided in Article V, will use reasonable efforts to assist
Buyer in employing after the Closing Date the Employees, including without
limitation by implementation of the Employee Incentive Program as described in
Article V, and will not (and will cause its subsidiaries not to) solicit such
employees to remain in the employ of Seller after the Closing Date;
(i) will not change or announce any change to the Rdb Products except
with Buyer's written consent or at Buyer's request; and
(j) will not expand the use of Rdb Products and Rdb Tools within the
organization of Seller and the Seller Subsidiaries, other than in the ordinary
course of business, consistent with past practice.
SECTION 4.6 Buyer's Source Code Escrow. Within thirty (30) days after
the Closing, Buyer shall transfer the source code for the Rdb Products to an
escrow agent, and shall for the period ending seven (7) years after the Closing
Date maintain such code in such escrow agent's possession, for the purpose of
enabling Seller to fulfill its support obligations in the event of a
ASSTPRCH.007 -21-
<PAGE> 29
material breach by Buyer of its support obligations under the Support
Agreement. The terms and conditions of such escrow shall be as set forth in
the Escrow Agreement attached to this Agreement as EXHIBIT K. The escrow agent
shall be the escrow agent that currently acts as an escrow agent for certain of
Buyer's products and the fees and expenses of the escrow agent with respect to
such escrow shall be borne by Buyer.
SECTION 4.7 No Other Bids. Until the earlier to occur of (a) the
Closing or (b) the termination of this Agreement pursuant to its terms, Seller
shall not, and Seller shall not authorize any of its officers, directors,
employees or other representatives to, directly or indirectly, (i) initiate,
solicit or encourage (including by way of furnishing information regarding the
Business or the Assets) any inquiries, or make any statements to third parties
which may reasonably be expected to lead to any proposal, concerning the sale
of the Business, or (ii) negotiate, engage in any substantive discussions, or
enter into any agreement, with any Person concerning the sale of the Business.
SECTION 4.8 Non-Competition Agreement.
(a) For a period of five (5) years after the Closing Date, Seller
shall not, individually or jointly, alone or with others, engage, or permit any
affiliate to engage, directly or indirectly, anywhere in the world (the
"PROTECTED TERRITORY"), in (i) developing, with an intent to market, any
general purpose database product, (ii) acquiring, with an intent to market, a
general purpose database product, or (iii) publicly disclosing any intent to
develop a general purpose database product, except in each case with the prior
written consent of Buyer. For this purpose, "GENERAL PURPOSE DATABASE PRODUCT"
shall mean any database product substantially similar in use to the Rdb
Products and the Oracle 7 database product existing as of the date of this
Agreement (other than products owned by Seller that are currently on Seller's
price list and commercially available in the form in which such products exist
on the Closing Date or as modified or enhanced thereafter, other than a
fundamental redesign in architecture or marketing of the product).
Notwithstanding the foregoing, Seller may (i) purchase non-exclusive object
code licenses to general purpose database products for purposes of internal use
by Seller and its affiliates, and (ii) enter into non-exclusive marketing
arrangements, such as cooperative marketing programs and other reseller or
distribution arrangements, with suppliers of general purpose database products,
to offer general purpose database products either alone or as part of other
products. Except as permitted in the prior sentence, Seller shall not market
general purpose database products during the five (5) year period after the
Closing Date.
(b) Seller and Buyer acknowledge and agree that it will be difficult
to compute the amount of damage or loss to Buyer if Seller violates any of its
agreements under this Section 4.8, that Buyer may be without an adequate legal
remedy if Seller violates the provisions of this Section 4.8, and that any such
violation may cause substantial irreparable injury and damage to Buyer not
fully compensable by monetary damages. Therefore, Seller and Buyer agree that
in the event of any violation by Seller of this Section 4.8, Buyer shall be
entitled (i) to recover from Seller mone tary damages, (ii) if pursuant to an
order by a court of competent jurisdiction, without prejudice to Seller's right
to contest Buyer's petition seeking equitable relief, to obtain specific
performance, injunctive or other equitable relief, of either a preliminary or
ASSTPRCH.007 -22-
<PAGE> 30
permanent type, and (iii) to seek any other available rights or remedies at law
or in equity which may be exercised concurrently with the rights granted
hereunder.
(c) Seller and Buyer intend that the covenants contained in Section
4.8(a) shall be construed as a series of separate covenants, one for each
county, city and state or other political subdivision of the Protected
Territory. If, in any judicial proceeding, a court shall refuse to enforce any
of the separate covenants, then such unenforceable covenant shall be deemed
eliminated from this Agreement for the purpose of those proceedings to the
extent necessary to permit the remaining separate covenants to be enforced. If
any other provision of this Agreement is held to be invalid or unenforceable by
judicial order for any reason, such action shall not affect the enforceability
of the remaining provisions hereof and, without limiting the foregoing, any
such holdings shall in no event preclude Buyer from enforcing the provisions
hereof for such term, in such territory and to such extent not inconsistent
with or prohibited by said judicial order. If the provisions of this Section
4.8 should ever be deemed to exceed the time, scope or geographic limitations
permitted by applicable law, then such provisions shall be reformed to the
maximum time, scope or geographic limitations, as the case may be, permitted by
applicable laws.
SECTION 4.9 Tax Returns. Seller shall, to the extent that failure to
do so could adversely affect the Business or the Assets following Closing, (a)
continue to file within the time period for filing all returns and reports
relating to Taxes required to be filed by Seller, and such returns and reports
shall be true, correct and complete, and (b) be responsible for and pay when
due any and all Taxes attributable to, levied or imposed upon (i) the Assets or
the Business for periods (or portions thereof) ending on or prior to the
Closing, and (ii) the operations of the Seller.
SECTION 4.10 Post-Closing Access to Information. If, after the
Closing Date, in order properly to operate the Business or prepare documents or
reports required to be filed with Governmental Entities or Buyer's financial
statements, it is necessary that Buyer obtain additional information within
Seller's or any Seller Subsidiary's possession relating to the Assets or the
Business, Seller agrees to reasonably cooperate with Buyer in obtaining or
furnishing such information. Buyer shall reimburse Seller (following receipt
of an invoice and appropriate documentation) for the reasonable out-of-pocket
expenses incurred by Seller in obtaining or furnishing such information. In
the event that Seller is required to devote more than twenty-five (25)
person-hours to any single effort to obtain and furnish such information,
filing with a Governmental Entity or project pertaining to Buyer's financial
statements (each a "PROJECT"), Buyer shall make its own personnel available to
conduct such Project; if it is not practicable, in Seller's discretion, to use
Buyer's personnel, Buyer shall reimburse Seller (following receipt of an
invoice and appropriate documentation) for the reasonable expenses incurred by
Seller in conducting such Project, including costs of using Seller's personnel
or outside services. Such information shall include, without limitation, all
agreements between Seller or any Seller Subsidiary and any Person relating to
the Business. Seller agrees to furnish to Buyer, upon Buyer's request made
within six (6) months after the Closing Date, any and all information and
records available as of the date of this Agreement regarding its business and
operations which are not transferred to Buyer pursuant to this Agreement
necessary to permit Buyer to calculate the availability to it of tax credits
for increasing research activities under Section 41 of the Code.
ASSTPRCH.007 -23-
<PAGE> 31
Seller shall maintain and make available (a) contracts or agreements in effect
on the date of this Agreement until the earlier of (i) three (3) years after
the expiration date of such contract or agreement or (ii) ten (10) years after
the Closing Date and (b) the other information and records specified in this
Section 4.10 in the ordinary course of Seller's business, as if the
transactions contemplated by this Agreement had not occurred.
SECTION 4.11 Post-Closing Cooperation. Seller agrees that, if
requested by Buyer, it will cooperate with Buyer in enforcing the terms of any
agreements between Seller and any third party involving the Business, including
without limitation terms relating to confidentiality and the protection of
intellectual property rights. In the event that Buyer is unable to enforce its
intellectual property rights against a third party as a result of a rule or law
barring enforcement of such rights by a transferee of such rights, Seller
agrees to reasonably cooperate with Buyer by assigning to Buyer such rights as
may be required by Buyer to enforce its intellectual property rights in its own
name. If such assignment still does not permit Buyer to enforce its
intellectual property rights against the third party, Seller agrees to initiate
proceedings against such third party in Seller's or any Seller Subsidiary's
name, provided that Seller shall be entitled to participate in such
proceedings, all at Buyer's expense.
SECTION 4.12 Termination of Certain Agreements. Unless otherwise
requested in writing by Buyer, Seller shall terminate, and shall cause each
Seller Subsidiary to terminate, on or before the Closing Date any agreements or
arrangements between Seller or any Seller Subsidiary and any Person in which
such Person has the exclusive right to sublicense, sell or distribute any of
the Rdb Products.
SECTION 4.13 Post-Closing Distribution of Rdb Products. Following the
Closing, neither Seller, nor any Seller Subsidiary, nor any distributor or
reseller authorized by Seller to distribute or resell any products shall have
the right to, or shall, distribute Rdb Products except pursuant to the terms of
the Oracle Reseller Agreement. Following the Closing, any transfer of a
license granted prior to the Closing to use Rdb Products between
Seller-designated tiers within a hardware architecture or to a different
hardware architecture will require a new license which, if granted by Seller or
any distributor or reseller authorized by Seller, shall be granted pursuant to
the terms of the Oracle Reseller Agreement. After the Closing Date, neither
Seller, nor any Seller Subsidiary, nor any Person who has been granted license
rights to the Rdb Products or Rdb Tools from Seller or any Seller Subsidiary
shall be entitled to receive support services or any copy, update or new
version of the Rdb Products or Rdb Tools except pursuant to the Support
Agreement and the underlying support arrangement with Seller or the Oracle
Reseller Agreement or pursuant to any other written agreement with Buyer.
SECTION 4.14 No Post-Closing Retention of Assets. Immediately after
the Closing, Seller shall deliver to Buyer or destroy copies of Assets in
Seller's or any Seller Subsidiary's possession that are in addition to copies
delivered to Buyer as part of the Closing, whether such copies are in paper
form, on computer media or stored in another form; provided, however, that (i)
Seller is entitled to possess such copies to the extent permitted by the
License Agreement or the Oracle Reseller Agreement, and (ii) Seller may retain
and use copies of financial books and records relating to the Business.
ASSTPRCH.007 -24-
<PAGE> 32
SECTION 4.15 Public Announcements. On and prior to the Closing Date,
Buyer and Seller shall advise and confer with each other prior to the issuance
of any reports, statements or releases concerning this Agreement (including the
exhibits hereto) and the transactions contemplated herein. Neither Buyer or
Seller will make any public disclosure prior to the Closing Date or with
respect to the Closing unless both parties agree on the text and timing of such
public disclosure; provided, however, that nothing contained herein shall
prevent either party at any time from furnishing any information to any
Governmental Entity or prevent Buyer or Seller from issuing any release when it
believes in its sole discretion it is legally required to do so.
SECTION 4.16 No Implied License.
(a) Nothing set forth in this Agreement or the exhibits or schedules
hereto or in any other agreement or document delivered or executed pursuant to
this Agreement or any other document or agreement contemplated hereby or in
connection with the transactions contemplated hereby or thereby shall confer
upon Buyer any implied license to use any intellectual property rights of
Seller not specifically granted, assigned or licensed to Buyer pursuant to this
Agreement or such other documents or agreements.
(b) After the Closing, Buyer shall have the right to sell existing
inventory and to use existing packaging, labeling, containers, advertising
materials, brochures, technical data sheets and documentation and any similar
materials acquired pursuant to Section 1, which bear any of Seller's trade
names, trademarks or service marks that are not conveyed to Buyer pursuant to
Section 1(d) or Section 1(e) hereof until the earlier of (i) twelve (12)
months after the Closing Date or (ii) the date existing stocks of such
materials are exhausted. Buyer shall comply in all material respects with all
applicable laws or regulations in any use of packaging or labeling bearing
Seller's marks.
SECTION 4.17 Foreign Filings. Within seven (7) days after the date of
this Agreement, Buyer shall deliver to Seller a list (the "INITIAL LIST") of
the foreign countries in which Buyer believes it is required or recommended
that filings be made with Governmental Entities with respect to the
transactions contemplated by this Agreement. Within fourteen (14) days after
the date of this Agreement, Buyer shall deliver to Seller a list of those
foreign countries included in the Initial List in which such filings (the
"FOREIGN FILINGS") shall be made. Seller and Buyer shall cooperate to make the
Foreign Filings as promptly as practicable.
ARTICLE V
EMPLOYEE MATTERS
SECTION 5.1 Offers of Employment. Schedule 5.1 attached to this
Agreement sets forth a list of the employees of Seller currently employed in
the Business to whom Buyer has offered or to whom Buyer shall offer employment
with Buyer after the Closing Date (the "EMPLOYEES"). As soon as practicable
after the date of this Agreement and in any event prior to Closing, Seller will
deliver to Buyer a list setting forth the names, home addresses, compensation
levels and job titles of all Employees; provided, however, that with respect to
Employees located
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outside the United States, Seller shall not be required to provide Buyer with
such information in violation of applicable laws, regulations, employment
agreements or restrictions under agreements with trade associations or workers'
councils. Following delivery of such list and prior to the Closing, Buyer
shall have the right to contact Employees (without consent of country managers
or other personnel of Seller or any Seller Subsidiary) for the purposes of
making offers of employment with Buyer after the Closing Date and receiving
written acceptances of such employment (in each case contingent on consummation
of the transactions contemplated by this Agreement). Buyer shall hire all
Employees to whom it has made an offer of employment in accordance with this
Section 5.1 and who accept such offer in the manner and within the time frame
specified by Buyer. Each such Employee who is employed by Seller or any Seller
Subsidiary on the Closing Date and who actually transfers to employment with
Buyer after the Closing Date is hereafter referred to as a "TRANSFERRED
EMPLOYEE." The employment of the Transferred Employees by Seller or any
relevant Seller Subsidiary shall end at the close of business on the Closing
Date and the employment of the Transferred Employees by Buyer shall commence at
12:01 a.m. on the day after the Closing Date, except as to those Transferred
Employees who are on disability leave of less than twenty-six (26) weeks
authorized leave of absence or military service as of the Closing Date, in
which case such Transferred Employees shall remain employees of Seller or the
relevant Seller Subsidiary until, and will commence employment with Buyer as
of, 12:01 a.m. on the date they return to active employment. Transferred
Employees shall not include any person on a disability leave of more than
twenty-six (26) weeks. The terms of employment with Buyer shall be as mutually
agreed to between each Transferred Employee and Buyer, subject to the
succeeding provisions of this Article V. Between the date of this Agreement
and the Closing Date, Seller or the relevant Seller Subsidiary will provide
each Employee with the same level of compensation as that being offered by
Buyer to such Employee, unless prohibited by applicable laws, regulations,
employment agreements or restrictions under agreements with trade associations
or workers' councils.
SECTION 5.2 Non-Solicitation by Seller and Other Matters. Seller
shall not offer and shall cause its subsidiaries to not offer employment with
Seller or any such subsidiary before or after the Closing Date to any Employee
for the period from the date of this Agreement until one (1) year after the
Closing Date. Seller and the Seller Subsidiaries agree to use reasonable
efforts to (a) retain the Employees in the Business until the Closing Date, and
(b) assist Buyer in securing the continued employment of the Employees in the
Business by Buyer after the Closing Date; provided that Seller shall not be
required under this Section 5.2 to incur financial obligations not otherwise
required pursuant to this Agreement, other than immaterial financial
obligations. Neither Seller nor any Seller Subsidiary shall transfer any
Employee to employment with Seller or any Seller Subsidiary outside of the
Business prior to the Closing Date. Seller shall notify Buyer promptly if,
notwithstanding clause (a), any Employee terminates employment with Seller or
any Seller Subsidiary after the date of this Agreement but prior to the Closing
Date.
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SECTION 5.3 Compensation and Benefits of Transferred Employees.
(a) Immediately after Closing, Transferred Employees shall receive,
within Buyer's standard compensation plans, compensation substantially
comparable to the levels received prior to the Closing Date from Seller or any
Seller Subsidiary. Transferred Employees shall receive standard Buyer employee
benefits for employees of comparable status. Coverage for Transferred
Employees under Buyer's benefit plans and programs shall commence as of 12:01
a.m. on the day after the Closing Date. Buyer shall give each Transferred
Employee credit for such Transferred Employee's years of most recent continuous
service (including time during approved leaves of absences of less than
twenty-six (26) weeks) with Seller or any Seller Subsidiary for purposes of
determining participation and benefit levels under all of Buyer's vacation
policies and benefit plans and programs (including, without limitation, Buyer's
401(k) Plan), unless otherwise prohibited by law or the terms of any of Buyer's
benefit plans and programs that cannot be amended by action of the Board of
Directors of Buyer alone, and without limitations on coverage for pre-existing
conditions, waiting period or proof of insurability (except that proof of
insurability may be required for life insurance coverage exceeding $750,000).
(b) In the event that any Transferred Employee is terminated by Buyer
without Cause within six (6) months after the Closing Date, Buyer shall make
severance payments to such Transferred Employee equal to two (2) weeks' pay
plus one additional week of pay for each full year of service to Seller or any
Seller Subsidiary and Buyer in excess of one (1) year.
(c) Buyer will provide relocation benefits consistent with its normal
employment practices for those Transferred Employees whom Buyer determines in
its sole discretion to relocate to satisfy business requirements.
(d) Seller or the relevant Seller Subsidiary shall pay at the Closing
to each Transferred Employee an amount equal to such Transferred Employee's
accrued vacation with Seller or any Seller Subsidiary .
(e) Buyer shall request that its medical and dental plan providers
give credit for calendar year 1994, at no cost to Buyer or the Transferred
Employee, for deductibles satisfied during calendar year 1994 by the
Transferred Employee or his or her covered dependents under the medical and
dental plans of Seller or any Seller Subsidiary in which such individuals were
enrolled.
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SECTION 5.4 Employee Incentive Program.
(a) Each Employee who continues to be employed in the Business by
Seller, any Seller Subsidiary or Buyer at all times during the six-month period
commencing August 29, 1994 and ending on February 28, 1995 (the "BONUS PERIOD")
shall receive bonuses in accordance with the terms of this Section 5.4 (the
"EMPLOYEE INCENTIVE PROGRAM"). Seller shall accrue during the Bonus Period as
a pool for the payment of bonuses amounts equal to 12% of the base salary
earned by each Employee who remains an employee of Seller or any Seller
Subsidiary. The pool will be divided into two components: (i) a General Pool
equal to two-thirds of the total pool, and (ii) a Discretionary Pool equal to
one-third of the total pool. Buyer and Seller agree that, with the mutual
written consent of Buyer and Seller, additional employees of Seller can be
added to the Employees compensated under the Employee Incentive Program, and
such employees shall be compensated under the Employee Incentive Program on a
pro-rated basis based on the amount of the six-month period in which any such
employee provides services to the Business.
(b) On March 31, 1995, each Employee who is still employed in the
Business on that date will receive a bonus from the General Pool equal to 8% of
such Employee's base salary for the Bonus Period. The Discretionary Pool also
will be distributed on that date to selected key Employees based on their
overall contributions to the Business, as determined jointly by Seller and
Buyer, if the Closing has not occurred, or by Buyer if the Closing has
occurred.
(c) If the Closing Date occurs before March 31, 1995, then Buyer shall
pay the bonuses referred to in Section 5.4(b). If the Closing Date has not
occurred prior to March 31, 1995, then Seller shall pay such bonuses and Buyer
will reimburse Seller at the Closing Date for the amount of the bonuses. Buyer
shall have no obligation to reimburse Seller for such bonuses if the Agreement
terminates prior to Closing in accordance with Section 9.1. If Buyer
terminates a Transferred Employee after the Closing Date but prior to February
28, 1995, then such Transferred Employee will receive on March 31, 1995 a
pro-rated portion of the bonus he or she would have received from the General
Pool on March 31, 1995 equal to the amount of the bonus that would have been
received on that date multiplied by a fraction, the numerator of which is the
number of days after August 29, 1994 that such Transferred Employee was
employed in the Business and the denominator of which is 184.
SECTION 5.5 Other Employees of the Business. With respect to each
employee of the Business as of the Closing Date who is not a Transferred
Employee (each a "NON-TRANSFERRED EMPLOYEE"), Seller agrees to either terminate
such Non-Transferred Employee's employment with Seller or any Seller Subsidiary
prior to the Closing Date or offer such Non-Transferred Employee continued
employment with Seller or any Seller Subsidiary other than in the Business.
Seller further acknowledges that the Non-Transferred Employees shall not be
employees of Buyer after the Closing.
SECTION 5.6 No Right to Continued Employment or Benefits. No
provision in this Agreement shall create any third party beneficiary or other
right in any Person (including any beneficiary or dependent thereof) for any
reason, including, without limitation, in respect of
ASSTPRCH.007 -28-
<PAGE> 36
continued employment (or resumed employment) with Seller, any Seller Subsidiary
or Buyer or in respect of any benefits that may be provided, directly or
indirectly, under any plan or arrangement maintained by Seller, any Seller
Subsidiary or Buyer. Except as otherwise expressly provided, Buyer is under no
obligation to hire any employee of Seller or any Seller Subsidiary, provide any
Employee with any particular benefits, or make any payments or provide any
benefits to those employees of Seller whom Buyer chooses not to employ.
SECTION 5.7 No Solicitation or Hire by Buyer. In the event that the
Agreement terminates prior to Closing for any of the reasons specified in
Section 9.1, then the restrictions imposed by this Section 5.7 shall apply to
Buyer for the six-month period commencing with the date of such termination.
(a) Buyer will not actively solicit during such six-month period any
Person who is listed on Schedule 5.7(a) hereto (the "RESTRICTED PERSONS") for
employment with Buyer or any of its affiliates. For purposes of this Section
5.7, the term "actively solicit" shall not include the following activities by
Buyer: (i) advertising for employment in any newspaper, trade journal or other
publication available for general distribution to the public; (ii)
participation in any hiring fair or similar event open to the public not
targeted at Seller's employees; (iii) use of recruiting or employee search
firms that have been instructed by Buyer not to target employees of the
Business; and (iv) negotiating with and/or offering employment to any
Restricted Person who initially contacts Buyer or one of its affiliates or who
engages in discussions with Buyer or one of its affiliates as a result of any
of the activities included in clauses (i) - (iii). Buyer may employ any
Restricted Person provided that neither it nor any of its affiliates has
actively solicited such Restricted Person in contravention of this Section 5.7.
(b) Buyer will not hire in the aggregate more than forty-two (42)
Restricted Persons in Buyer's domestic operations during such six- month
period.
(c) The restrictions set forth in subsections (a) and (b) of this
Section 5.7 shall not apply in the case of a Person who has terminated
employment with Seller prior to being solicited for employment or being hired
by Buyer or an affiliate of Buyer.
ARTICLE VI
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer are subject to the fulfillment, prior to or on
the Closing Date, of each of the following conditions, all or any of which may
be waived by Buyer in writing, except as otherwise provided by law:
SECTION 6.1 Representations and Warranties True; Performance;
Certificate.
(a) The representations and warranties of Seller contained in this
Agreement shall be true and correct on the date hereof and as of the Closing
Date with the same effect as though such representations and warranties had
been made or given again at and as of the Closing Date;
ASSTPRCH.007 -29-
<PAGE> 37
(b) Seller shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by it prior to or at the Closing Date; and
(c) Buyer shall have received a certificate, dated the Closing Date,
signed and verified by an officer of Seller on behalf of Seller certifying that
the conditions in this Article VI have been fulfilled.
SECTION 6.2 Consents. All notices to, and declarations, filings and
registrations with, and consen ts, approvals and waivers from, Governmental
Entities required to consummate the transactions contemplated hereby (other
than where such consent, approval or waiver is required from a Governmental
Entity by reason of a customer contract relationship between Seller and such
Governmental Entity with respect to the provision of support services and where
the failure to obtain such consent, approval or waiver will not have a material
adverse effect on the Assets or the Business) and all consents, approvals and
waivers from third parties required under this Agreement to have been obtained
prior to Closing shall have been obtained.
SECTION 6.3 Other Agreements. Seller shall have executed and
delivered each of the Agreements attached as exhibits hereto, including without
limitation the agreements reflected in EXHIBITS A-K hereto, and such agreements
shall remain in full force and effect.
SECTION 6.4 No Proceeding or Litigation.
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement,
other than a statute, rule, regulation or order which requires a consent of a
Governmental Entity by reason of a customer contract relationship between
Seller and such Governmental Entity and where the failure to obtain such
consent will not have a material adverse effect on the Assets or the Business.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against Seller or
Buyer, or any of their respective affiliates, associates, officers or
directors, seeking to prevent the sale of the Assets or asserting that the sale
of the Assets would be illegal or create liability for damages.
SECTION 6.5 Documents. This Agreement, any other instruments of
conveyance and transfer and all other documents to be delivered by Seller to
Buyer at the Closing and all actions of Seller and Sellers' employees and
shareholders required by this Agreement or incidental thereto, and all related
matters, shall be in form and substance reasonably satisfactory to Buyer and
Buyer's counsel.
SECTION 6.6 Governmental Filings. Seller and Buyer shall have made
the filing required pursuant to the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR ACT"), the Foreign Filings and any other
required filings, other than any filings in foreign countries not involving a
Foreign Filing, with Governmental Entities, and any approvals
ASSTPRCH.007 -30-
<PAGE> 38
shall have been obtained or any applicable waiting periods shall have expired.
If a proceeding or review process by a Governmental Entity, other than a filing
in a foreign country not involving a Foreign Filing, is pending in which a
decision is expected, Buyer shall not be required to consummate the
transactions contemplated by this Agreement until such decision is reached or
rendered, notwithstanding Buyer's legal ability to consummate the transactions
contemplated by this Agreement prior to such decision being reached or
rendered.
SECTION 6.7 No Material Adverse Change. There shall have been (i) no
material adverse change in Seller's ability to operate the Business on the
Closing Date as compared with such ability on the date of this Agreement (other
than any change arising out of the loss of employees by the Business), (ii) no
decline in excess of 50% of revenues of Rdb Products from September 1, 1994
through the most recent month end prior to the Closing Date, as compared with
the corresponding period in Seller's 1994 fiscal year, (iii) no decline in
excess of 15% in support revenues of Rdb Products (including revenue from
support renewals for all customers) from September 1, 1994 through the most
recent month end prior to the Closing Date as compared with the corresponding
period in Seller's 1994 fiscal year; and (iv) no decrease in excess of 25% from
September 1, 1994 through the most recent month end prior to the Closing Date,
as compared with the fourth quarter of Seller's 1994 fiscal year, in the
weighted average revenue per product license for development licenses of the
Rdb Engine product and runtime licenses of the Rdb Engine product,
respectively, as determined by dividing revenues from licenses by unit sales
and weighting the amount so determined by the revenues for each such type of
license.
SECTION 6.8 Opinion of Seller's Counsel. Buyer shall have received an
opinion from the Assistant General Counsel of Seller, dated as of the Closing
Date, conforming in form and substance to EXHIBIT L.
SECTION 6.9 Transferred Agreements. Seller shall have obtained all
necessary consents for assignment of the Transferred Agreements or, in the
event that an assignment is not obtained, Seller shall have sublicensed to
Buyer rights to distribute object code versions of the software that is the
subject of the relevant Transferred Agreement on the terms set forth in the
License Agreement.
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<PAGE> 39
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in writing by Seller, except as
otherwise provided by law.
SECTION 7.1 Representations and Warranties True; Performance.
(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct on the date hereof and as of the Closing
Date with the same effect as though such representations and warranties had
been made or given again at and as of the Closing Date;
(b) Buyer shall have performed and complied with all of its
agreements, covenants and conditions required by this Agreement to be performed
or complied with by it prior to or at the Closing Date.
SECTION 7.2 Other Agreements. Buyer shall have executed and delivered
each of the Agreements attached as exhibits hereto, including without
limitation the agreements reflected in EXHIBITS A-K hereto, and such agreements
shall remain in full force and effect.
SECTION 7.3 No Proceeding or Litigation.
(a) No preliminary or permanent injunction or other order shall have
been issued by any Governmental Entity, nor shall any statute, rule, regulation
or executive order be promulgated or enacted by any Governmental Entity which
prevents the consummation of the transactions contemplated by this Agreement.
(b) No suit, action, claim, proceeding or investigation before any
Governmental Entity shall have been commenced and be pending against Seller or
Buyer, or any of their respective affiliates, associates, officers or
directors, seeking to prevent the sale of the Assets or asserting that the sale
of the Assets would be illegal or create liability for damages.
SECTION 7.4 Documents. This Agreement, any other instruments of
conveyance and transfer and all other documents to be delivered by Buyer to
Seller at the Closing and all actions of Buyer and Buyers' employees and
shareholders required by this Agreement or incidental thereto, and all related
matters, shall be in form and substance reasonably satisfactory to Seller and
Seller's counsel.
SECTION 7.5 Governmental Filings. Buyer and Seller shall have made
the filing required pursuant to the HSR Act, the Foreign Filings and any other
required filings, other than any filings in foreign countries not involving a
Foreign Filing, with Governmental Entities, and any approvals shall have been
obtained or any applicable waiting periods shall have expired. If a proceeding
or review process by a Governmental Entity, other than a filing in a foreign
country not involving a Foreign Filing, is pending in which a decision is
expected, Seller shall not be
ASSTPRCH.007 -32-
<PAGE> 40
required to consummate the transactions contemplated by this Agreement until
such decision is reached or rendered, notwithstanding Seller's legal ability to
consummate the transactions contemplated by this Agreement prior to such
decision being reached or rendered.
SECTION 7.6 Opinion of Buyer's Counsel. Seller shall have received an
opinion from Buyer's counsel, Venture Law Group, dated as of the Closing Date,
conforming in form and substance to EXHIBIT M.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Survival of Representations and Warranties. The
representations and warranties of Seller in Article II shall survive for a
period of eighteen (18) months after the Closing Date, except for claims for
fraud, which shall survive indefinitely, and claims for Taxes and environmental
matters, which shall survive until lapse of the applicable statute of
limitations (including extensions thereof). No investigation, or knowledge
acquired, by Buyer or on behalf of Buyer with respect to any breach of any
representation or warranty made by Seller or any other matter shall affect
Buyer's rights to indemnification pursuant to this Article VIII.
SECTION 8.2 Indemnification by Seller. Seller shall indemnify and
hold harmless Buyer, each direct and indirect subsidiary of Buyer and each of
their officers, directors, employees, agents, successors and assigns ("BUYER
INDEMNITEES") for any and all liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, legal costs and expenses and interest on the amount of any Loss
from the date suffered or incurred by Buyer Indemnitee) (a "LOSS") arising out
of, resulting from or caused by:
(a) Seller's breach or the inaccuracy of any of Seller's
representations, warranties, covenants, or agreements in this Agreement;
(b) any claim arising out of the termination, prior to the Closing or
as contemplated by this Agreement, of employment with Seller or any Seller
Subsidiary by any employee of Seller or any Seller Subsidiary; and
(c) all liabilities or obligations, including, without limitation,
those relating to Taxes, (whether known or unknown, accrued or not accrued,
fixed or contingent) of Seller or any Seller Subsidiary existing at Closing and
arising out of or resulting from the operation of the Business through the
Closing Date.
Seller's obligation to indemnify Buyer under this Section 8.2 shall not be
limited in time or amount; provided, however, that any claim under this Section
8.2 for breach of a representation or warranty must be made prior to the
eighteen month anniversary of the Closing Date; and provided further that
Seller's aggregate liability for claims made solely for breaches of
representations and warranties under Section 8.2(a) shall not exceed Fifty Four
Million Dollars ($54,000,000); and provided further that Seller shall have no
liability under this Section 8.2 until
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the aggregate amount of all claims made hereunder by Buyer Indemnitees exceeds
Five Hundred Thousand Dollars ($500,000), at which time Seller shall be liable
for all such claims; and provided further that Seller's exclusive liability for
breach of its representation under the first sentence of Section 2.9 (or any
other provision of Article II that sets forth, expressly or by implication, any
representation or warranty with respect to infringement of any patent,
tradename, trade mark, copyright, trade secret, or any other intellectual
property right of any Person) about which it had no knowledge on or prior to
the Closing Date shall exist only if the claim is made within ninety (90) days
after the Closing Date and shall not exceed Five Million Five Hundred Thousand
Dollars ($5,500,000).
SECTION 8.3 Indemnification by Buyer. Buyer shall indemnify and hold
harmless Seller, each direct and indirect subsidiary of Seller and each of
their officers, directors, employees, agents, successors and assigns ("SELLER
INDEMNITEES") for any and all Losses arising out of or resulting from:
(a) a liability or obligation, including, without limitation, those
relating to Taxes, (whether known or unknown, accrued or not accrued, fixed
and determined or contingent) of Buyer or any direct or indirect subsidiary of
Buyer to which all or any part of the Business is transferred (or, with respect
to claims arising during the one-year period after the Closing Date, any other
party to which Buyer may transfer all or a substantial portion of the Business)
arising out of or resulting from the operation of the Business after the
Closing Date, other than a liability or obligation for which any Buyer
Indemnitee is entitled to indemnification from Seller pursuant to the
provisions of Section 8.2(a); and
(b) any claim arising out of the failure of Buyer to perform its
obligations arising after the Closing under the Transferred Agreements.
Buyer's obligation to indemnify Seller under this Section 8.3 shall not be
limited in time or amount.
SECTION 8.4 Indemnification Procedure.
(a) Whenever any Loss shall be asserted against or incurred by a Buyer
Indemnitee or Seller Indemnitee (the "INDEMNIFIED PARTY"), the Indemnified
Party shall give written notice thereof (a "CLAIM") to the Seller or Buyer,
respectively (the "INDEMNIFYING PARTY"). The Indemnified Party shall furnish
to the Indemnifying Party in reasonable detail such information as the
Indemnified Party may have with respect to the Claim (including in any case
copies of any summons, complaint or other pleading which may have been served
on it and any written claim, demand, invoice, billing or other document
evidencing or asserting the same). The failure to give such notice shall not
relieve the Indemnifying Party of its indemnification obligations under this
Agreement.
(b) If the Claim is based on a claim of a person that is not a party
to this Agreement, the Indemnifying Party shall, at its expense, undertake the
defense of such Claim with attorneys of its own choosing reasonably
satisfactory to the Indemnified Party. In the event the Indemnifying Party,
within a reasonable time after receiving notice of a Claim from the
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<PAGE> 42
Indemnified Party, fails to defend the Claim, the Indemnified Party may, at the
Indemnifying Party's expense, undertake the defense of the Claim and may
compromise or settle the Claim, all for the account of the Indemnifying Party.
After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such Claim, the Indemnifying Party shall not
be liable to the Indemnified Party under this Section 8.4 for any legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof, except for such expenses incurred in connection with
cooperation with, or at the request of, the Indemnifying Party; provided,
however, that the Indemnified Party shall have the right to employ counsel to
represent it if, in the Indemnified Party's reasonable judgment, based upon the
advice of counsel, it is advisable, in light of the separate interests of the
Indemnified Party and the Indemnifying Party, for the Indemnified Party to be
represented by separate counsel, and in that event the reasonable fees and
expenses of such separate counsel shall be paid by the Indemnifying Party.
(c) The Indemnifying Party shall not, except with the consent of the
Indemnified Party, given in its sole discretion, consent to entry of any
judgment or enter into any settlement.
ARTICLE IX
TERMINATION
SECTION 9.1 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) By mutual written consent of Buyer and Seller;
(b) By Buyer or the Seller, if the Closing shall not have occurred on
or before February 28, 1995;
(c) By either party, if the other party shall become subject to the
jurisdiction of a court in a proceeding under Title 11 of the United States
Bankruptcy Code prior to the Closing; or
(d) By Buyer or Seller if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement.
SECTION 9.2 Procedure and Effect of Termination. In the event of
termination of this Agreement by any or all of the parties pursuant to Section
9.1 hereof, written notice thereof shall forthwith be given to each other party
specifying the provision hereof pursuant to which such termination is made and
this Agreement shall forthwith become void and there shall be no liability on
the part of the parties hereto (or their respective officers, directors,
partners or affiliates), except as a result of any breach of this Agreement by
any party or to the extent a party is entitled to indemnification under Article
VIII.
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ARTICLE X
DEFINITIONS
SECTION 10.1 Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"CAUSE" shall mean (i) any act or failure to act in bad faith, (ii)
persistent unavailability for service, habitual neglect, misconduct or
dishonesty, or (iii) conviction of a crime (other than ordinary traffic
violations).
"GOVERNMENTAL ENTITY" shall mean any court, or any Federal, state,
municipal or other governmental authority, department, commission, board, agency
or other instrumentality (domestic or foreign).
"PERSON" shall mean an individual, corporation, partnership, trust or
unincorporated organization or Governmental Entity.
"RDB DATABASE ENGINEERING GROUP" shall mean Seller's engineering
organizations that developed the Rdb Products.
SECTION 10.2 Certain Other Defined Terms.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
Agreement First paragraph of Agreement
Applicable Law Section 2.17
Assets Section 1.1
Assignment and Assumption Section 1.12
Agreement
Bonus Period Section 5.4
Business Recitals
Buyer First paragraph of Agreement
Buyer Indemnitees Section 8.2
Buyer Subsidiary Section 1.4
Buyer Subsidiaries Section 1.4
Claim Section 8.4
Closing Section 1.11
Closing Date Section 1.11
Code Section 1.7
Customer Support Materials Section 1.1
Digital Technology Section 1.1
Documentation Section 1.1
Employees Section 5.1
Employee Incentive Program Section 5.4
Employee Benefit Plan Section 1.2
</TABLE>
ASSTPRCH.007 -36-
<PAGE> 44
<TABLE>
<S> <C>
Engineering Information Section 1.1
ERISA Section 1.2
Escrow Agreement Section 1.4
Facilities Section 1.8
Financial Information Section 2.8
Foreign Filings Section 4.17
General Purpose Database Product Section 4.8
Hazardous Substance Section 2.17
HSR Act Section 6.6
Indemnified Party Section 8.4
Indemnifying Party Section 8.4
Initial List Section 4.17
Intellectual Property Asset Section 2.9
License Agreement Section 1.3
Liens Section 2.6
Loss Section 8.2
Marketing or User Materials Section 1.1
Patent Agreement Section 1.3
Project Section 4.10
Protected Territory Section 4.8
Proprietary Information and Section 2.10
Inventions Agreement
Purchase Price Section 1.6
Purchase Price Allocation Schedule Section 1.7
Rdb Products Section 1.1
Rdb Tools Section 1.1
Restricted Person Section 5.6
Seller First paragraph of Agreement
Seller Disclosure Schedule Article II
Seller Indemnitees Section 8.3
Seller Subsidiary Section 1.2
Seller Subsidiaries Section 1.2
SPS Section 2.7
Support Agreement Section 1.5
Support Customers Section 1.5
Tangible Personal Property Section 1.4
Taxes Section 2.12
Transferred Agreements Section 1.1
Transferred Employee Section 5.1
401(k) Plan Section 2.13
</TABLE>
ARTICLE XI
GENERAL TERMS AND CONDITIONS
ASSTPRCH.007 -37-
<PAGE> 45
SECTION 11.1 Notices. Every notice or other communication required or
contemplated by this Agreement by either party shall be delivered by (i)
personal delivery, (ii) postage prepaid, return receipt requested, registered
or certified mail (airmail if available), or the equivalent of registered or
certified mail under the laws of the country where mailed, (iii)
internationally recognized express courier, such as Federal Express, UPS or
DHL, (iv) "tested" telex (a telex for which the proper answer back has been
received), or (v) telefacsimile with a confirmation copy sent simultaneously in
the manner contemplated by clauses (i), (ii) or (iii) of this Section 11.1, in
each case addressed to the party for whom intended at the following address:
(1) If to Digital:
Digital Equipment Corporation
146 Main Street
Maynard, Massachusetts 01754-2517
Attention: General Counsel
Facsimile Number: (508) 493-8786
With a copy to:
Daniel Cooperman, Esq.
McCutchen, Doyle, Brown & Enersen
55 South Market Street, Suite 1500
San Jose, California 95113
Facsimile Number: (408) 947-4750
(2) If to Oracle:
Oracle Corporation
500 Oracle Parkway
Redwood City, California 94065
Attention: General Counsel
Facsimile Number: (415) 506-7114
With a copy to:
Donald M. Keller, Jr., Esq.
Venture Law Group
2800 Sand Hill Road
Menlo Park, California 94025
Facsimile Number: (415) 854-1121
or at such other address as the intended recipient previously shall have
designated by written notice to the other party. Notice by registered or
certified mail shall be effective on the date it is officially recorded as
delivered to the intended recipient by return receipt or equivalent, and in the
absence of such record of delivery, the effective date shall be presumed to
have been the sixth
ASSTPRCH.007 -38-
<PAGE> 46
(6th) business day after it was deposited in the mail. All notices and other
communications required or contemplated by this Agreement delivered in person
or sent by courier shall be deemed to have been delivered to and received by
the addressee and shall be effective on the date of personal delivery; notices
delivered by "tested" telex or by facsimile with simultaneous confirmation copy
by registered or certified or equivalent mail or courier shall be deemed
delivered to and received by the addressee and effective on the date sent.
Notice not given in writing shall be effective only if acknowledged in writing
by a duly authorized representative of the party to whom it was given.
SECTION 11.2 Force Majeure. No party hereto shall be liable for
failure to perform, in whole or in material part, its obligations under this
Agreement if such failure is caused by any event or condition not existing as
of the date of this Agreement (unless reasonably foreseeable by such party) and
not reasonably within the control of the affected party, including without
limitation, by fire, flood, typhoon, earthquake, explosion, strikes, labor
troubles or other industrial disturbances, unavoidable accidents, war (declared
or undeclared), acts of terrorism, sabotage, embargoes, blockage, acts of
Governmental Entities, riots, insurrections, or any other cause beyond the
control of the parties; provided, only, that the affected party promptly
notifies the other party of the occurrence of the event of force majeure and
takes all reasonable steps necessary to resume performance of its obligations
so interfered with.
SECTION 11.3 No Agency. This Agreement shall not constitute an
appointment of any of the parties hereto or thereto as the legal representative
or agent of any other party hereto or thereto, nor shall any party hereto or
thereto have any right or authority to assume, create or incur in any manner
any obligation or other liability of any kind, express or implied, against, or
in the name or on behalf of, the other party hereto or thereto.
SECTION 11.4 Severability. In the event any provision of this
Agreement shall be determined to be invalid or unenforceable under applicable
law, all other provisions of this Agreement shall continue in full force and
effect unless such invalidity or unenforceability causes substantial deviation
from the underlying intent of the parties expressed in this Agreement or unless
the invalid or unenforceable provisions comprise an integral part of, or are
inseparable from, the remainder of this Agreement. If this Agreement continues
in full force and effect as provided above, the parties shall replace the
invalid provision with a valid provision which corresponds as far as possible
to the spirit and purpose of the invalid provision.
SECTION 11.5 Assignment and Succession. Except as expressly permitted
herein, no party may assign or otherwise transfer any rights, interests or
obligations under this Agreement other than to a wholly-owned subsidiary
without the prior written consent of the other party, which consent may be
withheld in the sole and absolute discretion of such party for any reason
whatsoever or for no reason and any attempted assignment in violation of this
provision shall be void and of no effect.
SECTION 11.6 Amendments and Waivers. No amendment, modification,
termination or waiver of any provision of this Agreement or consent to any
departure by any party therefrom, shall in any event be effective without the
written concurrence of the other party hereto. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for
ASSTPRCH.007 -39-
<PAGE> 47
which it is given. No notice to or demand on any party in any case shall
entitle any other party to any other or further notice or demand in similar or
other circumstances.
SECTION 11.7 Further Assurances. Each of the parties hereto agrees
that, from and after the Closing, upon the reasonable request of the other
party hereto and without further consideration, such party will execute and
deliver to such other party such documents and further assurances and will take
such other actions (without cost to such party) as such other party may
reasonably request in order to carry out the purpose and intention of this
Agreement including but not limited to the effective consummation of the
transactions contemplated under the provisions of this Agreement, the transfer
of the Assets to Buyer, the vesting in Buyer of title to the Assets in
accordance with the provisions of this Agreement, and the correction of errors
and defects in any such documents.
SECTION 11.8 Absence of Third-Party Beneficiaries. No provisions of
this Agreement, express or implied, are intended or shall be construed to
confer upon or give to any Person other than the parties hereto, any rights,
remedies or other benefits under or by reason of this Agreement unless
specifically provided otherwise herein, and except as so provided, all
provisions hereof shall be personal solely between the parties to this
Agreement.
SECTION 11.9 Governing Law. The validity, construction, performance
and enforceability of this Agreement shall be governed in all respects by the
laws of the State of California, without reference to the choice-of-law
principles thereof.
SECTION 11.10 Interpretation. This Agreement, including any exhibits,
addenda, schedules and amendments, has been negotiated at arm's length and
between persons sophisticated and knowledgeable in the matters dealt with in
this Agreement. Each party has been represented by experienced and
knowledgeable legal counsel. Accordingly, any rule of law (including
California Civil Code Section 1654) or legal decision that would require
interpretation of any ambiguities in this Agreement against the party that has
drafted it is not applicable and is waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to effect the purposes of the
parties and this Agreement.
SECTION 11.11 Entire Agreement. The terms of this Agreement and the
other writings referred to herein and delivered by the parties hereto are
intended by the parties to be the final expression of their agreement with
respect to the subject matter hereof and may not be contradicted by evidence of
any prior or contemporaneous agreement. The parties further intend that this
Agreement, together with the exhibits and schedules hereto, shall constitute
the complete and exclusive statement of its terms. The parties acknowledge and
agree that this Agreement and exhibits and schedules hereto constitute the
agreements necessary to accomplish the transactions contemplated by this
Agreement and are parts of an integrated arrangement between the parties with
respect to the purchase and sale of the Assets and the operation of the
Business by Buyer after the Closing, and the preferred strategic relationship
between the parties and that separate agreements have been used for the sake of
convenience.
SECTION 11.12 Counterparts. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together
ASSTPRCH.007 -40-
<PAGE> 48
shall constitute one and the same instrument. Execution and delivery of this
Strategic Relationship Agreement by exchange of facsimile copies bearing the
facsimile signature of a party hereto shall constitute a valid and binding
execution and delivery of this Strategic Relationship Agreement by such party.
Such facsimile copies shall constitute enforceable original documents.
SECTION 11.13 Expenses. Each of the parties agrees to pay its own
expenses in connection with the transactions contemplated by this Agreement,
including without limitation legal, consulting, accounting and investment
banking fees, whether or not such transactions are consummated.
SECTION 11.14 Consents. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be given in
writing.
SECTION 11.15 Headings. The article and section headings contained in
this Agreement are for reference purposes only and will not affect in any way
the meaning or interpretation of this Agreement.
ASSTPRCH.007 -41-
<PAGE> 49
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of Seller and Buyer as of the date first above
written.
DIGITAL EQUIPMENT CORPORATION
By: /s/ Robert Palmer
Title: Chief Executive Officer and
President
ORACLE CORPORATION
By: /s/ Jeffrey O. Henley
Title: Executive Vice President
and Chief Financial Officer
ASSTPRCH.007 -42-
<PAGE> 50
The company will furnish supplementally a copy of any omitted schedule
to the Securities and Exchange Commission upon request.
ASSTPRCH.SIG
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000777676
<NAME> ORACLE SYSTEMS CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> JUN-01-1994
<PERIOD-END> AUG-31-1994
<EXCHANGE-RATE> 1
<CASH> 462,548
<SECURITIES> 30,743
<RECEIVABLES> 478,353
<ALLOWANCES> 42,171
<INVENTORY> 8,994
<CURRENT-ASSETS> 1,082,850
<PP&E> 643,297
<DEPRECIATION> 254,542
<TOTAL-ASSETS> 1,622,364
<CURRENT-LIABILITIES> 672,106
<BONDS> 0
<COMMON> 2,861
0
0
<OTHER-SE> 777,200
<TOTAL-LIABILITY-AND-EQUITY> 1,622,364
<SALES> 0
<TOTAL-REVENUES> 556,474
<CGS> 0
<TOTAL-COSTS> 156,523
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 4,690
<INTEREST-EXPENSE> 889
<INCOME-PRETAX> 91,343
<INCOME-TAX> 30,143
<INCOME-CONTINUING> 61,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,200
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
