<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 NOVEMBER 30, 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)
<TABLE>
<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 OFFICES) (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 November 30,
1994: 286,471,099.
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ORACLE SYSTEMS CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at November 30, 1994 and May 31,
1994......................................................................... 3
Condensed Consolidated Statements of Operations for the three months and six months
ended November 30, 1994 and 1993............................................. 4
Condensed Consolidated Statements of Cash Flows for the six months ended November 30,
1994 and 1993................................................................ 5
Notes to Condensed Consolidated Financial Statements......................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations... 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.......................... 10
Item 6. Exhibits and Reports on Form 8-K............................................. 11
Signatures................................................................... 12
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NOVEMBER 30, MAY 31,
1994 1994
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 221,097 $ 404,810
Short-term cash investments................................... 108,350 59,948
Trade receivables, net of allowance for doubtful accounts of
$44,174 and $39,777, respectively.......................... 539,263 455,884
Prepaid and refundable income taxes........................... 68,166 53,765
Other current assets.......................................... 100,009 101,205
------------ ---------
Total current assets.................................. 1,036,885 1,075,612
------------ ---------
PROPERTY, net................................................... 442,168 378,483
COMPUTER SOFTWARE DEVELOPMENT COSTS, net of accumulated
amortization of $129,785 and $107,087, respectively........... 100,216 100,329
OTHER ASSETS.................................................... 165,150 40,560
------------ ---------
Total assets.......................................... $1,744,419 $1,594,984
============= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to banks........................................ $ 3,655 $ 551
Current maturities of long-term debt.......................... 4,903 6,347
Accounts payable.............................................. 127,296 95,799
Income taxes.................................................. 50,537 62,591
Accrued compensation and related benefits..................... 128,730 136,488
Customer advances and unearned revenues....................... 237,058 227,118
Value added tax and sales tax payable......................... 36,788 44,781
Other accrued liabilities..................................... 133,053 108,426
------------ ---------
Total current liabilities............................. 722,020 682,101
------------ ---------
LONG-TERM DEBT.................................................. 82,417 82,845
OTHER LONG-TERM LIABILITIES..................................... 9,081 12,139
DEFERRED INCOME TAXES........................................... 31,370 38,916
PUT WARRANTS.................................................... 76,804 38,430
STOCKHOLDERS' EQUITY............................................ 822,727 740,553
------------ ---------
Total liabilities and stockholders' equity............ $1,744,419 $1,594,984
============= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED NOVEMBER 30, 1994 AND 1993
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
---------------------- -----------------------
1994 1993 1994 1993
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
REVENUES:
Licenses and other......................... $362,524 $252,119 $ 657,753 $468,993
Services................................... 307,756 200,051 569,001 381,231
-------- -------- ---------- --------
Total revenues................... 670,280 452,170 1,226,754 850,224
-------- -------- ---------- --------
OPERATING EXPENSES:
Sales and marketing........................ 244,067 166,276 461,989 330,886
Cost of services........................... 187,578 116,198 344,101 216,376
Research and development................... 57,226 45,867 112,383 92,433
General and administrative................. 43,477 31,908 82,806 63,853
-------- -------- ---------- --------
Total operating expenses......... 532,348 360,249 1,001,279 703,548
-------- -------- ---------- --------
OPERATING INCOME............................. 137,932 91,921 225,475 146,676
Other income (expense), net................ 2,166 (29) 5,966 1,822
-------- -------- ---------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES..... 140,098 91,892 231,441 148,498
Provision for income taxes................. 46,232 29,767 76,375 49,013
-------- -------- ---------- --------
NET INCOME................................... $ 93,866 $ 62,125 $ 155,066 $ 99,485
======== ======== ========= ========
EARNINGS PER SHARE........................... $ 0.32 $ 0.21 $ 0.52 $ 0.34
======== ======== ========= ========
COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING (See Note 3)................... 295,622 295,932 295,560 295,972
======== ======== ========= ========
</TABLE>
See notes to condensed consolidated financial statements.
4
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ORACLE SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1994 AND 1993
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30,
---------------------------
1994 1993
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................... $ 155,066 $ 99,485
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization........................... 65,108 48,633
Provision for doubtful accounts......................... 20,965 14,863
Increase in trade receivables........................... (88,858) (46,703)
Increase (decrease) in prepaid and refundable income
taxes................................................ (14,209) 1,695
Increase in other current assets........................ (2,184) (5,534)
Increase in accounts payable............................ 30,053 6,912
Increase (decrease) in income taxes..................... (8,055) 16,480
Increase (decrease) in customer advances and unearned revenues.... 6,534 (8,092)
Increase (decrease) in other accrued liabilities........ 10,125 (13,742)
Increase (decrease) in other long-term liabilities...... (3,057) 1,407
Increase (decrease) in deferred income taxes............ (5,036) 2,336
--------- ---------
Net cash provided by operating activities.................... 166,452 117,740
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in cash investments............................ (48,402) (8,582)
Capital expenditures.................................... (107,942) (122,594)
Capitalization of computer software development costs... (22,585) (17,609)
Increase in other assets................................ (127,299) (17,864)
--------- ---------
Net cash used for investing activities....................... (306,228) (166,649)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on debt obligations........................ 115 (2,679)
Proceeds from common stock issued....................... 27,015 18,616
Repurchase of common stock.............................. (75,855) (49,627)
--------- ---------
Net cash used for financing activities....................... (48,725) (33,690)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH........................ 4,788 (7,227)
--------- ---------
Net decrease in cash and cash equivalents.................... (183,713) (89,826)
CASH AND CASH EQUIVALENTS:
Beginning of period.......................................... 404,810 284,560
--------- ---------
End of period................................................ $ 221,097 $ 194,734
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE> 6
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
six month period ended November 30, 1994. The results for the six month period
ended November 30, 1994 are not necessarily indicative of the results expected
for the full fiscal year.
2. PROPERTY
During the third quarter of 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. ACQUISITION
On November 30, 1994, the Company completed the acquisition of the Rdb database
and repository businesses of Digital Equipment Corporation, including all
related software products and customer support services for $108 million in
cash. Pending the final allocation of the purchase price, the $108 million has
been included in Other Assets in the accompanying condensed consolidated
financial statements.
5. PUT WARRANTS
During fiscal 1994 and the first half of fiscal 1995, the Company sold 2,556,000
put warrants that entitle the holder to sell one share of common stock to the
Company at prices between $24.125 and $38.375. Additionally, the Company
purchased 1,598,000 call options that entitle the Company to buy one share of
Common Stock at prices between $30.875 and $47.375. These put and call options
expire between July and October 1995. At no future stock price will the
Company's combined repurchases of Common Stock from the puts and call options
exceed 2,556,000 shares at a maximum cost of $76,804,000. In the event that the
Company's stock price is above $47.375, and the Company exercises all of it's
call options, the repurchase of 1,598,000 shares will cost $60,327,000.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Domestic revenues increased 53% and 51% from the second quarter and first half
of fiscal 1994, respectively, while international revenues increased 46% and 40%
in the second quarter and first half of fiscal 1995, respectively, as compared
to the corresponding periods in fiscal 1994. International revenues were
favorably affected in the second quarter and first half of fiscal 1995 when
compared to the corresponding periods 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 second
quarter and first half of fiscal 1995 by approximately 36% and 32%,
respectively, from the corresponding periods of fiscal 1994. International
revenues constituted approximately 60% and 61% of total revenues in the second
quarters of fiscal 1995 and 1994, respectively, and 60% and 61% of total
revenues in the first half of fiscal 1995 and 1994, respectively. 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.
REVENUES:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- ------------------------------
NOV 30, NOV 30, NOV 30, NOV 30,
1994 CHANGE 1993 1994 CHANGE 1993
-------- ------ -------- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Licenses and other............ $362,524 44% $252,119 $ 657,753 40% $468,993
Percentage of revenues........ 54.1% 55.8% 53.6% 55.2%
Services...................... $307,756 54% $200,051 $ 569,001 49% $381,231
Percentage of revenues........ 45.9% 44.2% 46.4% 44.8%
Total revenues...... $670,280 48% $452,170 $1,226,754 44% $850,224
</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 and second quarters 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 from the corresponding periods of fiscal 1994. The Company's support
revenues continued to constitute the largest portion of service revenues in the
second quarter and first half of fiscal 1995. Support revenues grew 45% and 43%
in the second quarter and first half of fiscal 1995 reflecting the continued
increase in the installed base of the Company's products under support
contracts. Consulting and education services grew 61% and 55% in the second
quarter and first half of fiscal 1995 when compared to the corresponding periods
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.
7
<PAGE> 8
OPERATING EXPENSES:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
---------------------------- ----------------------------
NOV 30, NOV 30, NOV 30, NOV 30,
1994 CHANGE 1993 1994 CHANGE 1993
-------- ------ -------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Sales and marketing............ $244,067 47% $166,276 $461,989 40% $330,886
Percentage of revenues......... 36.4% 36.8% 37.7% 38.9%
Cost of services............... $187,578 61% $116,198 $344,101 59% $216,376
Percentage of revenues......... 28.0% 25.7% 28.0% 25.4%
Research and development(1).... $ 57,226 25% $ 45,867 $112,383 22% $ 92,433
Percentage of revenues......... 8.5% 10.1% 9.2% 10.9%
General and administrative..... $ 43,477 36% $ 31,908 $ 82,806 30% $ 63,853
Percentage of revenues......... 6.5% 7.1% 6.8% 7.5%
</TABLE>
- ---------------
(1) Pursuant to Statement of Financial Accounting Standards No. 86, the Company
capitalized software development costs equal to 1.8% and 2.0% of total
revenues during the second quarters of fiscal 1995 and 1994, respectively,
and 1.8% and 2.1% of total revenues in the first half of fiscal 1995 and
1994, respectively.
International expenses were unfavorably affected in the second quarter and first
half of fiscal 1995 when compared to the corresponding periods 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 when compared to the corresponding periods 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).
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 61% and 58% of revenues in the second
quarters of fiscal 1995 and 1994, respectively, and increased to 60% in the
first half of fiscal 1995 from 57% in the same corresponding period in fiscal
1994. 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
second quarters of fiscal 1995 and 1994 would have been 10.3% and 12.2%,
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 25.3% from the second quarter of fiscal 1994 and
22.7% from the first half of fiscal 1994 to the corresponding periods of fiscal
1995 (24.8% and 21.6% after the adjustment for software capitalization). The
Company capitalized approximately $11,770,000 and $9,188,000 during the second
quarters of fiscal 1995 and 1994, respectively, and $22,586,000 and $17,609,000
in the corresponding six month periods. Amortization of capitalized software
development costs is charged to sales and marketing expenses and totaled
$11,823,000 and $9,352,000 in the second quarters of fiscal 1995 and 1994,
respectively, and $22,698,000 and $17,823,000 in the corresponding six month
periods. 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.
8
<PAGE> 9
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses as a
percentage of revenues decreased in the second quarter and first half of fiscal
1995 as compared to the corresponding periods in fiscal 1994, primarily as a
result of higher revenue levels.
OTHER INCOME (EXPENSE):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------ ------------------------------
NOV 30, NOV 30, NOV 30, NOV 30,
1994 CHANGE 1993 1994 CHANGE 1993
------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Other income (expense).......... $ 2,166 * $ (29) $ 5,966 227% $ 1,822
Percentage of revenues.......... 0.3% * 0.5% 0.2%
</TABLE>
- ---------------
* Not meaningful
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 securities.
PROVISION FOR INCOME TAXES:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- --------------------------
NOV 30, NOV 30, NOV 30, NOV 30,
1994 CHANGE 1993 1994 CHANGE 1993
------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Provision for income taxes...... $46,232 55% $29,767 $76,375 56% $49,013
Percentage of revenues.......... 6.9% 6.6% 6.2% 5.8%
</TABLE>
The Company's estimated effective tax rate was 33% for both the first half of
fiscal 1995 and fiscal 1994.
NET INCOME AND EARNINGS PER SHARE:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------- ---------------------------
NOV 30, NOV 30, NOV 30, NOV 30,
1994 CHANGE 1993 1994 CHANGE 1993
------- ------ ------- -------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net income..................... $93,866 51% $62,125 $155,066 56% $99,485
Percentage of revenues......... 14.0% 13.7% 12.6% 11.7%
Earnings per share............. $ 0.32 52% $ 0.21 $ 0.52 53% $ 0.34
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
NOV 30, NOV 30,
1994 CHANGE 1993
--------- ------ ---------
<S> <C> <C> <C>
Working capital......................................... $ 314,865 18% $ 266,609
Cash and cash investments............................... $ 329,447 7% $ 307,807
Cash provided by operating activities................... $ 166,452 41% $ 117,740
Cash used for investing activities...................... $(306,228) 84% $(166,649)
Cash used for financing activities...................... $ (48,725) 45% $ (33,690)
</TABLE>
Working capital increased in the first half 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
half of fiscal 1995 over fiscal 1994, primarily due to improved profitability.
Cash used for investing activities increased in the first half of fiscal 1995 as
compared to the corresponding period of the prior year, primarily due to the
acquisition of the Rdb database and repository businesses of
9
<PAGE> 10
Digital Equipment Corporation for $108 million in cash. Offsetting the effect of
this acquisition, 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 1,867,500 shares of the Company's Common Stock for approximately
$75,855,000 during the first half of fiscal 1995. To date, the Company has
repurchased a total of 7,840,000 shares of the Company's Common Stock for
approximately $200,640,000. 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.
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 November 30, 1994, the Company also had outstanding debt of approximately
$10,976,000 (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.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 10, 1994, the Company held its Annual Meeting of Stockholders. At the
meeting, the stockholders elected as directors Lawrence J. Ellison (with
245,590,205 affirmative votes, and 1,002,699 votes withheld), James A.
Abrahamson (with 246,506,124 affirmative votes, and 1,086,780 votes withheld),
Michael J. Boskin (with 246,654,913 affirmative votes, and 937,991 votes
withheld), Joseph B. Costello (with 246,591,281 affirmative votes, and 1,001,623
votes withheld), Donald L. Lucas (with 246,592,136 affirmative votes and
1,000,768 votes withheld) and Delbert W. Yocam (with 246,591,461 affirmative
votes, and 1,001,443 votes withheld).
In addition, the stockholders approved the adoption of the Company's Executive
Officers 1995 Bonus Plan (with 235,737,004 affirmative votes, 7,262,949 negative
votes, 953,152 votes withheld and 3,639,799 broker non-votes).
The stockholders also approved an amendment to the Company's 1991 Long-Term
Equity Incentive Plan limiting the number of shares that may be granted to any
individual in any given year thereunder (with 232,006,929 affirmative votes,
13,563,238 negative votes, 906,028 votes withheld and 1,116,709 broker non-
votes).
The stockholders also ratified the appointment of Arthur Andersen & Co. as the
Company's independent public accountants for fiscal year 1995 (with 247,015,389
affirmative votes, and 565,501 negative votes).
10
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
2.01 Asset Purchase Agreement between Digital Equipment Corporation and
Oracle Corporation Amended and Restated effective as of September
1, 1994
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
11
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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.
<TABLE>
<S> <C>
ORACLE SYSTEMS CORPORATION
Dated: January 13, 1995 By: /S/ LAWRENCE J. ELLISON
Lawrence J. Ellison,
President and Chief Executive Officer
Dated: January 13, 1995 By: /S/ JEFFREY O. HENLEY
Jeffrey O. Henley,
Executive Vice President and Chief Financial
Officer
Dated: January 13, 1995 By: /S/ THOMAS A. WILLIAMS
Thomas A. Williams,
Chief Accounting Officer
</TABLE>
12
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ORACLE SYSTEMS CORPORATION
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT TITLES PAGE
----------- ---------------------------------------------------------------------- ----
<C> <S> <C>
2.01 Asset Purchase Agreement between Digital Equipment Corporation and
Oracle Corporation Amended and Restated effective as of September 1,
1994..................................................................
27.1 Financial Data Schedule...............................................
</TABLE>
13
<PAGE> 1
EXHIBIT 2.01
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
BETWEEN
DIGITAL EQUIPMENT CORPORATION
SELLER,
AND
ORACLE CORPORATION
BUYER
- --------------------------------------------------------------------------------
SEPTEMBER 1, 1994
- --------------------------------------------------------------------------------
AMENDED AND RESTATED EFFECTIVE AS OF SEPTEMBER 1, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I -- SALE AND PURCHASE...................................................... 1
SECTION 1.1 Transfer of Assets.................................................. 1
SECTION 1.2 Liabilities......................................................... 3
SECTION 1.3 Intellectual Property Agreements.................................... 3
SECTION 1.4 Sales, Use and Other Transfer Taxes................................. 3
SECTION 1.5 Service Support and Revenue......................................... 4
SECTION 1.6 Purchase Price; Payment............................................. 5
SECTION 1.7 Allocation of Purchase Price........................................ 5
SECTION 1.8 Facilities.......................................................... 6
SECTION 1.9 Other Agreements.................................................... 6
SECTION 1.10 Purchase Orders..................................................... 6
SECTION 1.11 Closing............................................................. 6
SECTION 1.12 Actions at the Closing.............................................. 6
SECTION 1.13 Disclaimer of Warranty.............................................. 7
ARTICLE II -- REPRESENTATIONS AND WARRANTIES......................................... 7
SECTION 2.1 Organization........................................................ 7
SECTION 2.2 Authority........................................................... 7
SECTION 2.3 Execution and Binding Effect........................................ 7
SECTION 2.4 Consents and Approvals of Governmental Entities..................... 8
SECTION 2.5 No Violation........................................................ 8
SECTION 2.6 Assets Generally.................................................... 8
SECTION 2.7 Support Agreements.................................................. 9
SECTION 2.8 Financial Information............................................... 10
SECTION 2.9 Intellectual Property............................................... 10
SECTION 2.10 Employees........................................................... 11
SECTION 2.11 Licenses and Permits................................................ 12
SECTION 2.12 Taxes............................................................... 12
SECTION 2.13 Employee Benefit and Compensation Plans............................. 12
SECTION 2.14 Compliance with Law................................................. 12
SECTION 2.15 Litigation; Other Claims............................................ 12
SECTION 2.16 Product Liability................................................... 12
SECTION 2.17 Environmental....................................................... 13
SECTION 2.18 Defaults............................................................ 13
SECTION 2.19 Tangible Property................................................... 13
SECTION 2.20 Business............................................................ 13
SECTION 2.21 Full Disclosure..................................................... 13
SECTION 2.22 Brokers and Finders................................................. 14
SECTION 2.23 Fair Consideration; No Fraudulent Conveyance........................ 14
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF BUYER................................ 14
SECTION 3.1 Organization, etc................................................... 14
SECTION 3.2 Authority........................................................... 14
SECTION 3.3 Execution and Binding Effect........................................ 14
SECTION 3.4 Consent and Approvals............................................... 14
SECTION 3.5 No Violation........................................................ 15
SECTION 3.6 Brokers and Finders................................................. 15
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ARTICLE IV -- COVENANTS.............................................................. 15
SECTION 4.1 Access to Information............................................... 15
SECTION 4.2 Third Party Consents................................................ 17
SECTION 4.3 Certain Notifications............................................... 17
SECTION 4.4 Reasonable Efforts.................................................. 17
SECTION 4.5 Seller's Conduct of Business Prior to Closing....................... 17
SECTION 4.6 Buyer's Source Code Escrow.......................................... 18
SECTION 4.7 No Other Bids....................................................... 18
SECTION 4.8 Non-Competition Agreement........................................... 18
SECTION 4.9 Tax Returns......................................................... 19
SECTION 4.10 Post-Closing Access to Information.................................. 19
SECTION 4.11 Post-Closing Cooperation............................................ 19
SECTION 4.12 Termination of Certain Agreements................................... 19
SECTION 4.13 Post-Closing Distribution of Rdb Products........................... 20
SECTION 4.14 No Post-Closing Retention of Assets................................. 20
SECTION 4.15 Public Announcements................................................ 20
SECTION 4.16 No Implied License.................................................. 20
SECTION 4.17 Foreign Filings..................................................... 21
SECTION 4.18 Customer Lists...................................................... 21
SECTION 4.19 Trademarks.......................................................... 21
ARTICLE V -- EMPLOYEE MATTERS....................................................... 21
SECTION 5.1 Offers of Employment................................................ 21
SECTION 5.2 Non-Solicitation by Seller.......................................... 21
SECTION 5.3 Compensation and Benefits of Transferred Employees.................. 22
SECTION 5.4 Employee Incentive Program.......................................... 22
SECTION 5.5 Other Employees of the Business..................................... 23
SECTION 5.6 No Right to Continued Employment or Benefits........................ 23
SECTION 5.7 No Solicitation or Hire by Buyer.................................... 23
ARTICLE VI -- CONDITIONS TO BUYER'S OBLIGATIONS...................................... 24
SECTION 6.1 Representations and Warranties True; Performance; Certificate....... 24
SECTION 6.2 Consents............................................................ 24
SECTION 6.3 Other Agreements.................................................... 24
SECTION 6.4 No Proceeding or Litigation......................................... 24
SECTION 6.5 Documents........................................................... 24
SECTION 6.6 Governmental Filings; Bulk Sales Notice............................. 24
SECTION 6.7 No Material Adverse Change.......................................... 25
SECTION 6.8 Opinion of Seller's Counsel......................................... 25
SECTION 6.9 Transferred Agreements.............................................. 25
ARTICLE VII -- CONDITIONS TO SELLER'S OBLIGATIONS..................................... 25
SECTION 7.1 Representations and Warranties True; Performance.................... 25
SECTION 7.2 Other Agreements.................................................... 25
SECTION 7.3 No Proceeding or Litigation......................................... 25
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SECTION 7.4 Documents........................................................... 26
SECTION 7.5 Governmental Filings................................................ 26
SECTION 7.6 Opinion of Buyer's Counsel.......................................... 26
ARTICLE VIII -- INDEMNIFICATION; ADJUSTMENTS.......................................... 26
SECTION 8.1 Survival of Representations and Warranties.......................... 26
SECTION 8.2 Indemnification by Seller........................................... 26
SECTION 8.3 Indemnification by Buyer............................................ 27
SECTION 8.4 Indemnification Procedure........................................... 27
ARTICLE IX -- TERMINATION........................................................... 28
SECTION 9.1 Termination of Agreement............................................ 28
SECTION 9.2 Procedure and Effect of Termination................................. 28
ARTICLE X -- DEFINITIONS........................................................... 28
SECTION 10.1 Certain Definitions................................................. 28
SECTION 10.2 Certain Other Defined Terms......................................... 28
ARTICLE XI -- MISCELLANEOUS......................................................... 30
SECTION 11.1 Notices............................................................. 30
SECTION 11.2 Force Majeure....................................................... 31
SECTION 11.3 No Agency........................................................... 31
SECTION 11.4 Severability........................................................ 31
SECTION 11.5 Assignment and Succession........................................... 31
SECTION 11.6 Amendments and Waivers.............................................. 31
SECTION 11.7 Further Assurances.................................................. 31
SECTION 11.8 Absence of Third-Party Beneficiaries................................ 31
SECTION 11.9 Governing Law....................................................... 32
SECTION 11.10 Interpretation...................................................... 32
SECTION 11.11 Entire Agreement.................................................... 32
SECTION 11.12 Counterparts........................................................ 32
SECTION 11.13 Expenses............................................................ 32
SECTION 11.14 Consents............................................................ 32
SECTION 11.15 Headings............................................................ 32
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TABLE OF CONTENTS -- (CONTINUED)
EXHIBITS
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
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TABLE OF CONTENTS -- (CONTINUED)
SCHEDULES
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 4.6.....................................Source Code Into Escrow
Schedule 5.1...........................................List of Employees
Schedule 5.6(a)...........Employees Subject to Nonsolicitation Provision
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AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
This Amended and Restated 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 and Buyer entered into an Asset Purchase Agreement dated as
of September 1, 1994 (the "Original Agreement") and now wish to amend and
restate the Original Agreement;
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; and any and all back-up tapes
and archival tapes from Seller's storage facilities, 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), 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), including
without limitation all related back-up tapes and archival tapes from
Seller's storage facilities (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);
<PAGE> 8
(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;
(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 copyright 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.
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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 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
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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 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 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
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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
prepare 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. 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.
(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
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<PAGE> 12
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.
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.
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(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.
(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.
(h) In the event Seller fails to deliver at the Closing all foreign
language versions of the Rdb Products or Rdb Tools to Buyer, Seller shall
use its best effort to deliver such Assets as soon as practicable after the
Closing and in all events shall deliver such Assets within twenty days
after Closing.
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 or the Addendum to the Seller Disclosure
Schedule, copies of which have been previously provided to Buyer by Seller
(collectively, 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.
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.
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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 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 Products 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.
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(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 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
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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 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 Subsidiary 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 has no pending
applications or current registrations with the Patent and Trademark Office or
any corresponding United States state authority. 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 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
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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 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.
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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.
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.
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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 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 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
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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.
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.
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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 brokerage fee, commission or finders fee in connection
with the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS
SECTION 4.1 Access to Information.
(i) 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 (collectively, the "RDB INFORMATION") and,
with Seller's consent, not to be unreasonably withheld, allow Buyer and any
such representatives to make copies thereof.
(ii) (a) Without limitation of the rights set forth in (i) above,
Seller and Buyer shall jointly appoint a nationally recognized accounting
firm mutually acceptable to both parties (the "ACCOUNTANTS"), to have full
access during normal business hours, at a mutually agreeable location or
locations arranged in advance, to the Rdb Information, and, with Seller's
consent, not to be unreasonably withheld, to make copies thereof. The fees
and expenses of the Accountants shall be shared equally between Buyer and
Seller.
The purpose of such access shall be to verify the accuracy of the
Financial Information. Seller and Buyer agree to instruct the Accountants
to use their best efforts to conclude the review during the sixty (60) day
period subsequent to the commencement of such review.
Buyer and Seller will cause the Accountants to commence the review as
soon as practicable but no later than February 1, 1995. Seller agrees to
cooperate with the Accountants in conducting such review. The determination
by the Accountants of the accuracy of the Financial Information shall be
made in accordance with generally accepted accounting principles, and with
the understanding that a proration of net revenues to the Rdb Products and
services shall occur in bundled contracts, and shall include a
determination as to the reasonableness of the proration to the Rdb Products
and services revenues associated with the bundled contracts. The
determination by the Accountants shall be binding on both Buyer and Seller.
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(b) The review conducted by the Accountants shall be limited to
verifying the accuracy of the Financial Information. If mutually agreed
upon by both Buyer and Seller, such review may also be limited to
specified procedures.
(c) If the review of the Financial Information reveals that the
license or service revenue included in the Financial Information varies
from the license or service revenue amounts determined by the
Accountants, the Purchase Price will be adjusted as follows ("Adjusted
Purchase Price"):
(1) Revised service revenues for the Rdb Products for the period
July 1, 1993 to June 30, 1994 shall be determined. If the resulting
figure is below $39.7 million, the difference between $39.7 million
and the resulting figure shall be calculated, and the Service
Deduction shall be calculated to be the difference multiplied by a
factor of 2.0. If the resulting figure is $39.7 million or above, no
adjustment to the Purchase Price shall be made under this
subparagraph.
(2) Revised license revenues for Rdb Products for the period
July 1, 1993 to June 30, 1994 shall be determined. If the resulting
figure is below $73.9 million, the difference between $73.9 million
and the resulting figure shall be calculated, and the License
Deduction shall be calculated to be the difference multiplied by a
factor of 0.4. If the resulting figure is $73.9 million or above, the
difference between $73.9 million and the resulting figure shall be
calculated, then the License Addition shall be calculated to be the
difference multiplied by a factor of 0.4, which amount shall be
applied only to offset any reduction in the Purchase Price resulting
pursuant to subparagraph (3) below, but only to the extent that such
increase to the license revenue amount was due to a determination by
the Accountants that previously recognized Rdb Products services
revenues should instead have been recognized as license revenues.
Seller agrees that a determination that license revenues were
understated due to a misallocation of contract amounts between Rdb
Products and non Rdb Products shall not result in an offset to any
reductions to the Purchase Price.
(3) The Adjusted Purchase Price shall be calculated by the
Accountants according to the following formula:
(i) $108 million, less
(ii) the sum of the Service Deduction described in
subparagraph (1) above, plus the License Deduction described in
subparagraph (2) above, such sum reduced by $500,000 (but in no
event shall this subparagraph be less than $0); plus
(iii) the License Addition described in subparagraph (2)
above reduced by $500,000 (but in no event shall this
subparagraph be less than $0).
In no event shall the final Purchase Price be greater than $108
million.
(d) Within ten (10) days after the determination of the adjusted
Purchase Price by the Accountants, Seller shall pay to Buyer the amount
of any adjustments to the Purchase Price as determined in subparagraph
(c) above.
(e) If the Adjusted Purchase Price is equal to or less than $86.4
million, the Purchase Price shall not be adjusted as provided in
paragraphs (a) through (d) above. In lieu thereof, the parties shall
select a mutually acceptable nationally recognized firm of valuation
experts with experience in the computer and software industry
("VALUATION EXPERT"). The Valuation Expert shall have complete access to
the Rdb Information, including the Accountants findings, and shall make
a determination of the fair market value of the Rdb Products Business as
of the Closing Date, which shall not exceed $108 million. Such
determination shall be final and binding on Buyer and Seller. If the
Valuation Expert's determination of fair market value is less than the
Purchase Price previously paid by Buyer, Seller shall remit the
difference to Buyer.
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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
notices 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, 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.
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SECTION 4.6 Buyer's Source Code Escrow. Within ten (10) days after written
request provided by Seller to Buyer at any time after 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 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. In connection with the transfer of the source
code for the Rdb Products to an escrow agent following the Closing, Buyer agrees
to execute and deliver to Seller the Certificate Regarding Duplication of Source
Code for Escrow attached hereto as Schedule 4.6 (the "Certificate") at the time
the source code is transferred to the escrow agent. In the event that the source
code transfer to the escrow agent occurs more than one hundred (100) days after
Closing, Buyer may delete paragraph 5 of the Certificate.
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 monetary
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 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
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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. 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
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the exclusive right to sublicense, sell or distribute any of the Rdb Products.
In the event that, notwithstanding the prior sentence, Seller has not terminated
any such agreements or arrangements as of the Closing Date, Seller agrees to
terminate, and shall cause each Seller Subsidiary to terminate, on or before the
thirtieth day after the Closing Date, all such agreements or arrangements. In
addition, in the event any such agreements or arrangements continue after the
Closing Date to conflict with Buyer's rights under the Digital Reseller
Agreement (the form of such is attached as EXHIBIT G hereto), Seller agrees to
cure such conflict prior to the thirtieth day after the Closing Date by
obtaining all necessary written approvals or acknowledgements of third parties
(other than Buyer). On the thirtieth day after the Closing Date Seller shall
deliver to Buyer (i) a certificate of an authorized officer of Seller in which
such officer certifies to Seller's compliance with this Section 4.12, and (ii)
an opinion of Seller's Assistant General Counsel confirming compliance with this
Section 4.12.
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 promote, market, reproduce, sublicense or
distribute any products shall have the right to, or shall, promote, market,
reproduce, sublicense or 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.
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.
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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.
SECTION 4.18 Customer Lists. Seller agrees to use reasonable efforts
during the ninety (90) day period following the Closing Date to provide to Buyer
and supplement with all reasonably available information all customer lists
specific to the Rdb Products or the service and support of Rdb Products or Rdb
Tools to the extent such information is not provided to Buyer at Closing.
SECTION 4.19 Trademarks. Buyer agrees not to register any of the
trademarks, service marks or trade names set forth in Schedule 1.1(e) during the
ninety day period following the Closing Date.
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 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
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<PAGE> 28
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.
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.
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
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<PAGE> 29
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 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.
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<PAGE> 30
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;
(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 consents, 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 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,
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<PAGE> 31
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.
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.
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<PAGE> 32
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 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; and
(d) any failure of Seller to comply with any part of Section 4.12,
including without limitation any failure to comply with the first sentence
of Section 4.12, and any conflict between Buyer's rights under the Digital
Reseller Agreement and any other agreement to which Seller is a party.
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
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Four Million Dollars ($54,000,000); and provided further that Seller shall have
no liability under this Section 8.2 until 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 (i)
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), (ii)
with respect to the trademarks, service marks and tradenames set forth in
Schedule 1.1(e), (a) only for the use of such trademarks, service marks and
tradenames in a manner that is immediately preceded, within one word or as two
words, by the name "Oracle" (b) only if the claimant has not previously asserted
a claim against Buyer in writing with respect to Buyer's use of the name
"Oracle," and (c) only if, at the time of Closing, Buyer had no knowledge of the
claimant's use of a mark which, in Buyer's reasonable judgment, would infringe
Buyer's prospective use of any of such trademarks, service marks and tradenames.
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
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
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<PAGE> 34
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.
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>
Accountants..................................... Section 4.1
Agreement....................................... First paragraph of Agreement
Applicable Law.................................. Section 2.17
Assets.......................................... Section 1.1
Assignment and Assumption Agreement............. Section 1.12
</TABLE>
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<PAGE> 35
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
---- ------------------
<S> <C>
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
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 Inventions
Agreement..................................... Section 2.10
Purchase Price.................................. Section 1.6
Purchase Price Allocation Schedule.............. Section 1.7
Rdb Information................................. Section 4.1
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
</TABLE>
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<PAGE> 36
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
---- ------------------
<S> <C>
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
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
30
<PAGE> 37
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 (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 as the legal representative or agent of any other
party hereto nor shall any party hereto 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.
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 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,
31
<PAGE> 38
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 and shall supersede the Original Agreement.
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 shall constitute one and the same instrument. Execution and
delivery of this 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 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.
32
<PAGE> 39
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/ HAROLD F. ENRIGHT, JR.
Title: Vice President -- Strategic
Software Alliances
ORACLE CORPORATION
By: /s/ JEFFREY O. HENLY
Title: Executive Vice President and
Chief Financial
Officer
33
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> NOV-30-1994
<EXCHANGE-RATE> 1
<CASH> 221,097
<SECURITIES> 108,350
<RECEIVABLES> 583,437
<ALLOWANCES> 44,174
<INVENTORY> 10,946
<CURRENT-ASSETS> 1,036,885
<PP&E> 718,367
<DEPRECIATION> 276,199
<TOTAL-ASSETS> 1,744,419
<CURRENT-LIABILITIES> 722,020
<BONDS> 0
<COMMON> 2,851
0
0
<OTHER-SE> 819,876
<TOTAL-LIABILITY-AND-EQUITY> 1,744,419
<SALES> 0
<TOTAL-REVENUES> 670,280
<CGS> 0
<TOTAL-COSTS> 187,578
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,832
<INTEREST-EXPENSE> 1,697
<INCOME-PRETAX> 140,098
<INCOME-TAX> 46,232
<INCOME-CONTINUING> 93,866
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 93,866
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
