Oracle Corporation et al v. SAP AG et al

Filing 1060

Declaration of Zachary J. Alinder in Support of 1059 Opposition/Response to Motion, For Stay of Judgment and Approval of Proposed Security filed byOracle International Corporation. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E)(Related document(s) 1059 ) (Alinder, Zachary) (Filed on 4/13/2011)

EXHIBIT B

Page 1 of 3

Alinder, Zachary J.
From:

Jane L Froyd [[e-mail]]

Sent:

Monday, February 07, 2011 1:45 PM

To:

Alinder, Zachary J.

Cc:

'Elaine Wallace'; 'Fred Norton'; Hinman, Frank; 'Gregory Castanias'; Howard, Geoff; 'Jason McDonell';
'Steven Holtzman'; 'Greg Lanier'; Jacqueline K. S. Lee; Scott Cowan; Joshua L Fuchs

Subject: Re: Summary Escrow Terms
Zac,
Thanks for your comments below. We believe that many of Oracle's proposed revisions are acceptable to
Defendants and we will send to you shortly a revised version of the escrow term sheet incorporating these
changes. However, Defendants do not understand why Oracle insists that SAP AG be a party to the escrow. As
g
,
y
p y
we have previously stated, for a variety of internal administrative reasons, it makes more sense for Defendants to
p
y
,
y
,
have the escrow agreement structured in the way that Defendants have proposed, and there should be no
prejudice to Oracle so long as the full amount of its money judgment and interest is secured. The escrow account
will have the full $1.3B judgment plus the agreed upon post-judgment interest already paid into the account, an
account to which Oracle is a party. Please explain what prejudice Oracle believes it could possibly suffer (and the
legal authority, if any, on which such a claim of prejudice is based) by not having SAP AG as a named party to the
escrow agreement.
Regards,
Jane
__________________________
Jane L. Froyd
JONES DAY
1755 Embarcadero Road
Palo Alto, CA 94303
650.739.3937 (Direct)
650.739.3900 (Fax)
[e-mail]

From:

"Alinder, Zachary J." <[e-mail]>

To:

"'Jane L Froyd'" <[e-mail]>

Cc:

"'Greg Lanier'" <[e-mail]>, "Howard, Geoff" <[e-mail]>, "'Steven Holtzman'"
<[e-mail]>, "'Fred Norton'" <[e-mail]>, "Hinman, Frank" <[e-mail]>, "'Jason McDonell'"
<[e-mail]>, "'Elaine Wallace'" <[e-mail]>, "'Gregory Castanias'" <[e-mail]>

Date:

02/04/2011 04:29 PM

Subject:

Summary Escrow Terms

Jane,
Thank you for sending the full proposed escrow agreement this afternoon. We note that it is substantially more
complex than the summary term sheet. As for the summary terms, below in red, I've inserted our

4/13/2011

Page 2 of 3

comments/responses/questions on the proposed revisions to the escrow terms in between the high level
comments that you sent in your earlier email:
-Parties to the Agreement: For administrative reasons, Defendants prefer to have the escrow account in the
name of SAP America, Inc., but this does not otherwise effect any of the terms of the agreement or obligations of
the security.
z

We will not agree to an escrow agreement where SAP AG is not a party. The judgment is against all three
defendants, jointly and severally. The escrow agreement must include each of those parties.

-Amount of Escrow: Defendants believe that the two-year period for interest is sufficient, but are willing to
compromise and agree to a three-year period. We made this edit, but otherwise accepted Oracle's changes.
z

Assuming that we reach agreement on the other terms, including that SAP AG is a party to the agreement,
we will accept the three-year period.
-Investment of Funds: Defendants believe that so long as SAP maintains the minimum escrow amount, it
should be free to withdraw the investment income. We have edited this section accordingly, but otherwise
accepted Oracle's changes.

Assuming that we reach agreement on the other terms and assuming that the investments are sufficiently
conservative and that there are sufficient enforcement mechanisms in place in case the amount drops below the
minimum escrow amount, we can accept in principle that SAP may withdraw investment income above the
minimum escrow amount.

z

-Release of Funds: Oracle modified this section so that there are six provisions regarding release of funds.
Defendants are generally fine with paragraphs 1, 2, and 5, with a minor internal consistency edit to number 2.
With regard to paragraphs 3 and 4, we have added language having SAP confirm the computation of the amount
to be released from the escrow account. With regard to paragraph 6, it largely duplicated a provision in
Defendants' original proposal, but was premised on the notion that the escrow agreement will have a date certain
on which it terminates. We have now simply deleted it from this draft.
z

z

As for the provision that SAP be allowed to confirm the released funds from escrow, we will agree to this
provision only if (a) there is a clear enforcement procedure with the Court in case Oracle and SAP disagree
on whether funds should be released or the amount of any release, and (b) there is a time limit for SAP to
provide confirmation, e.g. one week.
As for paragraph 6, the purpose of that paragraph was to provide a backstop. You have deleted that
provision and also added in a provision that would set forth a date certain by which the escrow would
terminate. On that date, any funds would go back to SAP. It doesn't make sense for a date certain for the
funds to go back to SAP, without the backstop to ensure that Oracle has been paid before that date. So,
while we may be able to agree to a date certain for ending of the escrow (see below), paragraph 6 should
be added back in regardless.

Also, Oracle added to the "Release of Funds" section a provision lifting the stay of enforcement of the
judgment upon the occurrence of any of the previous conditions. Defendants believe that it is not necessary for
the stay to be lifted before funds could be released from the escrow account. Thus we deleted this provision.
z

Why don’t you believe that it is necessary for the stay to be lifted before funds could be released? At base,
we need to make sure that release of funds is not a violation of the stay. So, we can make it a provision of
the escrow agreement, as Oracle previously proposed, or we may be able to build it into a
stipulation/motion re entry of the escrow agreement, e.g. that any release of funds under the escrow
agreement shall not be a violation of any stay.
-Dispute Resolution and Governing Law: After reviewing Oracle's edits, Defendants believe that these
sections are largely duplicative, and simply eliminated the "Dispute Resolution" provision and accepted
Oracle's changes to the "Governing Law" provision.

4/13/2011

Page 3 of 3

z

z

z

Per the discussion above, we disagree and think that there needs to be a clear and strong dispute
resolution section. Moreover, we need both sides to agree that the Judge Hamilton shall retain jurisdiction
on any dispute related to the agreement. Finally, we will need Judge Hamilton to sign off on the order
saying that she will retain jurisdiction.
-Termination Date: Oracle added several new termination events. Defendants added language having
SAP confirm that the event has occurred.
Per the above, if SAP wants to be allowed to confirm, we will need both a limit on the time for that
confirmation to occur (e.g. one week) and a clear procedure for dispute resolution.
Also, Oracle eliminated the concept of a date certain for the termination date, which means that the
agreement would remain in effect indefinitely. It is Defendants' understanding that escrow agents usually
require that there be some final termination date, and have thus added this provision back into the
agreement. Defendants are willing to negotiate with Oracle regarding the specific date.
As discussed above, we need the backstop provided in paragraph 6 discussed above, if we have a
termination date certain in the future. In addition, the termination date should not be less than 15 years
out. Though not likely, the appeal could conceivably last more than 10 years.

In addition, we are reviewing the full escrow agreement, and expect to have significant additional comments on
that next week. We should attempt to set up a meet and confer next week to work out the remaining issues.
Have a good weekend,
Zac
Zachary J. Alinder
Bingham McCutchen LLP
Three Embarcadero Center | San Francisco, CA 94111
T [phone] | F [phone]
[e-mail]
¬

________________________________
Confidentiality Notice: The information in this e-mail (including attachments, if any) is considered
confidential and is intended only for the recipient(s) listed above. Any review, use, disclosure,
distribution or copying of this e-mail is prohibited except by or on behalf of the intended recipient.
If you have received this email in error, please notify me immediately by reply email, delete this
email, and do not disclose its contents to anyone.
Bingham McCutchen LLP Circular 230 Notice: To ensure compliance with IRS requirements, we
inform you that any U.S. federal tax advice contained in this communication is not intended or
written to be used, and cannot be used by any taxpayer, for the purpose of avoiding any federal
tax penalties. Any legal advice expressed in this message is being delivered to you solely for your
use in connection with the matters addressed herein and may not be relied upon by any other
person or entity or used for any other purpose without our prior written consent.

==========
This e-mail (including any attachments) may contain information that is private, confidential, or protected by
attorney-client or other privilege. If you received this e-mail in error, please delete it from your system without
copying it and notify sender by reply e-mail, so that our records can be corrected.
==========

4/13/2011