Oracle Corporation et al v. SAP AG et al

Filing 1155

Declaration of Thai Le in Support of 1154 Opposition/Response to Motion In Limine filed byOracle International Corporation. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P, # 17 Exhibit Q, # 18 Exhibit R, # 19 Exhibit S, # 20 Exhibit T, # 21 Exhibit U, # 22 Exhibit V, # 23 Exhibit W, # 24 Exhibit X, # 25 Exhibit Y, # 26 Exhibit Z)(Related document(s) 1154 ) (Howard, Geoffrey) (Filed on 5/10/2012)

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EXHIBIT D Participants SAP: • • • Stephen Tseng Thomas Ziemen Uwe Wieditz TomorrowNow: • • Andrew Nelson: ex-CEO; Responsible for Support Operations (Bryan, TX) • Others: as needed from TomorrowNow Management team in Bryan, TX Seth Ravin: ex-President; Responsible for Business Development & Sales (Pleasanton, CA) © SAP AG 2005, Title of Presentation / Speaker Name / 2 2 Participants Thomas Ziemen Vice President Service Solution Management, representing Gerd Oswald as member of SAP’s executive board responsible for Service & Support and IT Uwe Wieditz Vice President AGS Product Support (Installed Base Maintenance and Support) Stephen Tseng Director AGS Solution Support Americas, nominated to join the TNow Management Team as SAP’s representative and key contact for the Field and Service & Support organization © SAP AG 2005, Title of Presentation / Speaker Name / 3 3 Introduction On behalf of Gerd Oswald, member of SAP’s executive board responsible for Service & Support, welcome to the SAP community and eco-system Merger presents a huge opportunity for us Facing an exiting adventure with the unprecedented launch of our Safe Passage offering which surprised the analysts and especially ORACLE Battle for the 12.500 PSFT customers has just started TNow will serve as major cornerstone of our Go-to-market strategy as our key Service-delivery unit Scale, build-up and prepare the organization accordingly Let’s do it Together Now !!! © SAP AG 2005, Title of Presentation / Speaker Name / 4 4 Objective and Deliverables from Meeting • Define a detailed working version of TomorrowNow Business and Operation Plan (all functions) • Define and Request approval for Hiring Program globally from Gerd Oswald based on plan • Define Support Operations Integration Plan (Process, Infrastructure and Service Integration) • Identify IT Requirements to provide Transparency between SAP and TomorrowNow for Pipeline and Reporting • Educate and Align TomorrowNow’s understanding of SAP Services and Support Philosophy and Execution © SAP AG 2005, Title of Presentation / Speaker Name / 5 5 “Sync Points” with Gerd Oswald Tuesday, 25 January 2005 18:30 - 19:00 CET Wednesday, 26 January 2005 18:30 - 19:00 CET © SAP AG 2005, Title of Presentation / Speaker Name / 6 6 Agenda for Tuesday, 25 January 2005 - Morning Day 1 - Morning - TomorrowNow Infrastructure Overview and SAP Services Overview 08:30-08:45 Agenda Overview and Introduction 08:45-09:30 TomorrowNow Sales and Pipeline Management Process and Infrastructure (A. Nelson/ S. Ravin) 09:30-10:30 Working Session: Reporting and Contract Management Process and Infrastructure Requirements 10:30-10:45 Coffee Break 10:45-11:30 SAP Services and Support Organization, Methodology and Philosophy (Tseng/Wieditz) 11:30-12:00 Review IT and Sales Management findings with Gerd 12:00-12:45 Lunch © SAP AG 2005, Title of Presentation / Speaker Name / 7 7 Agenda for Tuesday, 25 January - Afternoon Day 1 - Afternoon - SAP Strategy and Planning for TomorrowNow 12:45-13:45 TomorrowNow Support Methodology and Process (A. Nelson) 13:45-15:00 SAP Safe Passage Proposal (10%/17% offering) (Ziemen) 15:00-16:00 TomorrowNow Review of Business Opportunity for PSFT/JDEC Support Maintenance (Ravin) 16:00-16:15 Coffee Break 16:15-17:30 Working Session: Define Short and Long Term Business Plan (Lead: Ziemen, Participants: All) 17:30-19:00 Working Session: Define Hiring Plan and Headcount Proposal (Location, Profile, Recruitment) (Lead: Tseng, Participants: All) 19:00-??? Working Dinner to Prepare Proposal to Gerd Oswald Approval of Business Plan and Headcount (Lead: Tseng, Participants: All) © SAP AG 2005, Title of Presentation / Speaker Name / 8 8 Agenda Wednesday, 26 January 2005 Day 2 - Morning - Knowledge Transfer and Alignment 07:30-08:45 Review with Gerd and others (HR?) for approval (material will be provide to Gerd by morning in Walldorf) (Tseng/Ziemen/Wieditz) 08:45-10:00 Working Session: Support Operations Alignment Planning (Lead: Tseng, Participants: All) 10:00-10:15 Coffee Break 10:15-11:30 Define Knowledge Transfer Plan for TomorrowNow on SAP Processes and Methodology (All) 11:30-12:00 Lunch and Update to Gerd on Support Operations Alignment Day 2 - Afternoon - Wrap-Up and Detailed Planning for Execution 12:00-14:00 Working Session: Draft Detailed Project Plan for each of Working Sessions (Participants: ALL) 14:00-14:15 Coffee Break 14:15-16:00 Working Session: Continuation from earlier working session (Participants: ALL) 18:30-21:00 SAP/TomorrowNow Team Dinner (Location: TBD) © SAP AG 2005, Title of Presentation / Speaker Name / 9 9 TomorrowNow Integration Meeting 25-26 January 2005 Appendix: Action Items/Open Issues Next Steps 10 Key Deliverables from the Workshop Service Portfolio / Offering Maintenance Stratetgy, Consulting Services, Hosting Services Revised Business plan for 2005+ by Product Line and Line of Service Operational Model Organization Structure Process Models (e.g. Request Mgmt., Notes DB, Change Mgmt.) Engagement & Collaboration Models IT infrastructure Concept (CRM, Service, Backoffice) Ressource plan Locations, Headcounts, Skill sets, Global Hiring Program Investment plan Capital increase © SAP AG 2005, Title of Presentation / Speaker Name / 11 11 Action Items: Maintenance Strategy PSFT Maintenance Strategy PSFT Release Strategy: Major/Minor Releases PSFT release and maintenance planning (esp. end of dates) Required Infos prior to signing a contract modules, database, OS, degree of modification Customer evaluation, Risk assessment SAP’s maintenance strategy for PSFT Target date for terminating PSFT maintenance: 2010 + x Adopt 5-1-2 concept Adaption of TNow concept (10 years offering) © SAP AG 2005, Title of Presentation / Speaker Name / 12 12 Action Items: Revised Business Plan Key Assumptions Targeted Customer segments … Scenario Planning Conservative, most likely, aggressive Revenue and Cost Planning © SAP AG 2005, Title of Presentation / Speaker Name / 13 13 Business Planning Overview Key Assumptions Revised Serice Revenue Planning Average Deal Size: 10% model -> 75 kUSD 17% model: -> 127,5 kUSD Cumulated Service Revenue 2005 - 2012 in kUSD Cumulated Service Revenue 2005 - 2012 in kEUR Deal Split: 30/70 -> on average 100 kUSD per Customer TomorrowNow, Inc. DCF-Valuation Actuals 2002 kUSD 9.417,2 7.080,6 Actuals 2003 kUSD Actuals 2004 kUSD Forecast 2005 kUSD Forecast 2006 kUSD Forecast 2007 kUSD Forecast 2008 kUSD Forecast 2009 kUSD Forecast 2010 kUSD Forecast 2011 kUSD Forecast 2012 kUSD Profit and Loss-Statement Consulting Revenue 461.5 1,513.0 2,647.1 5,029.5 8,550.1 12,825.2 15,390.2 18,468.3 20,315.1 22,346.6 23,240.5 461.5 1,513.0 2,647.1 5,029.5 8,550.1 12,825.2 15,390.2 18,468.3 20,315.1 22,346.6 23,240.5 -272.6 -58.1 -917.6 -105.8 -1,250.4 Total Cost of Services -330.8 -1,023.4 -1,250.4 -2,514.7 -4,275.1 -6,412.6 -7,387.3 -8,680.1 -9,345.0 -10,056.0 -10,458.2 Gross Profit 130.7 489.5 1,396.7 2,514.7 4,275.1 6,412.6 8,002.9 9,788.2 10,970.2 12,290.6 12,782.3 -214.6 -4.4 -70.7 -496.2 -13.5 -136.3 -838.1 -65.2 -398.0 -1,609.4 -165.0 -754.4 -2,736.0 -355.7 -1,282.5 -3,975.8 -611.7 -1,795.5 -4,617.1 -790.9 -2,000.7 -5,540.5 -793.9 -2,216.2 -6,094.5 -714.1 -2,437.8 -6,704.0 -657.0 -2,458.1 -4,648.1 -620.8 -2,324.0 Operating Expenses -289.7 -646.0 -1,301.3 -2,528.9 -4,374.2 -6,383.1 -7,408.7 -8,550.6 -9,246.5 -9,819.1 -7,593.0 Operating Income -159.0 -156.4 95.4 -14.1 -99.2 29.5 594.2 1,237.6 1,723.7 2,471.5 5,189.3 Interest Income Interest Expense 0.5 -2.1 0.0 -18.0 15.7 -23.4 10.1 17.0 23.9 32.5 44.9 59.1 74.2 63.9 -160.7 -174.4 87.7 -4.1 -82.1 53.5 626.7 1,282.6 1,782.8 2,545.7 5,253.2 0.0 0.0 -35.1 1.6 32.9 -21.4 -250.7 -513.0 -713.1 -1,018.3 -2,101.3 -160.7 -174.4 52.6 -2.4 -49.3 32.1 376.0 769.5 1,069.7 1,527.4 3,151.9 Total Revenue Direct Wages and related Costs Indirect Costs Sales and Marketing Depreciation and Amortization Other operating Expenses Income before Income Tax Income Taxes Net Income Financial Information Provided by TomorrowNow Management © SAP AG 2005, Title of Presentation / Speaker Name / 14 14 Operations Support Model TomorrowNow offers a limited support policy covering legislative/regulatory updates and “critical issue” fixes to small end user bases in less complex environments Support fees are 50% of the PeopleSoft support price (9 to 10% of license fees) TomorrowNow’s sales model focuses on identifying customers with mature and stable systems, primarily PSFT 7.x customers, with a very limited history with PSFT 8.x customers (a much more complex solution) Pitched as "insurance policy" support - provide the basic support to keep existing systems current, low level of interaction, depth of knowledge of customers when engagement occurs (which is not frequent) Leading edge customers (i.e. Schwab) are not the type of customer TomorrowNow can service, average deal sizes are $50,000, (reflecting initial customer license fees of approximately $1 million) Method of Delivery Access to Peoplesoft system is based on a DEMO system non-production copy (install with environment characteristics like customer) which works for stable environments (will not work for newer version or recently implemented modules) TomorrowNow functions as an independent contractor under the customer license agreement, the liability of providing system access is pushed onto the Peoplesoft customer © SAP AG 2005, Title of Presentation / Speaker Name / 15 15 TomorrowNow, Inc. : Company Overview Business Description Company Facts Headquarters: Status: Private Website: Chairman: Andrew Nelson Number of Employees: 33 2004 Revenue: $2.65 million Operating Income: TomorrowNow, Inc. is a professional services firm that provides critical support services to organizations using PeopleSoft Enterprise application software for Human Capital Management, Financials and Supply Chain Management, and Student Administration. Bryan, Texas $95,400 TomorrowNow Support Services provides tax and regulatory updates, 24x7 around-the-clock product support, and product fixes to organizations using PeopleSoft Inc.’s products. TomorrowNow serves the support needs of 54 organizations operating in the United States and Canada. 2004 Operating Margin: 3.5% Founded in 1999. Customers © SAP AG 2005, Title of Presentation / Speaker Name / 16 16 SWOT Acquisition Analysis Strengths Weaknesses Very short time to market for offering and announcing service offering "No frills" model makes sense for a segment of customers This company has two years of experience building a maintenance and support model Targeting stable and mature PSFT releases and limiting the complexity of the service, appears to be a successful model Management is not sophisticated Customers have been offered 10 year support terms, discouraging upgrade Solely focused on U.S./Canada market JD Edwards support practice is just starting TomorrowNow has limited experience supporting PSFT 8.x customers The bulk of TomorrowNow personnel are outside Austin, Texas The TomorrowNow model is not unique - a similar model could be replicated by another company S W Opportunities Threats Oracle's deal assumptions are challenged by this support model - losing support revenue stream forces actions or reactions and is a distraction Oracle's legal challenges to TomorrowNow's ability to provide derivative works/support will require Oracle to also sue its customers - a difficult situation for Oracle There is a level of critical mass with expertise delivering a no frill support model, but scaling is heavily reliant of adding new headcount © SAP AG 2005, Title of Presentation / Speaker Name / 17 The access rights to the Peoplesoft software is very likely to be challenged by Oracle and past operating issues may be a serious liability if Oracle challenges (i.e., offsite production copies and the form of delivery of regulatory updates may be subject to Oracle challenge) The "no frills"/lower cost model is at odds with SAP's maintenance model - this conflict will create issues among PSFT and SAP customers Its unclear if a "no frills" model is appealing to the broad PSFT customer base or the PSFT customer base that are most successfully converted to SAP O T 17 Acquisition Structure, Due Diligence and Indemnities Acquisition Structure SAP AG 100% of Stock $8 -10 MM Cash SAP AG, or a wholly-owned affiliate, acquires 100% of the stock of TomorrowNow, Inc., for cash, subject to representations and warranties of the stockholders and appropriate indemnities TomorrowNow, Inc., a Texas corporation SAP will leave Texas corporation in existence as a liability shield for any potential claims Due Diligence All offers would be non-binding and subject to complete due diligence, areas of primary concern and focus include: Legal A full and complete assessment of the legality of the service model and the method of delivery by internal and external counsel. Financial A full assessment of the financial results, accounting practices and internal controls, including an financial integration assessment and Sarbanes-Oxley internal control and reporting issues. © SAP AG 2005, Title of Presentation / Speaker Name / 18 18 HR A full assessment of the skills, salaries and benefits offered by the Company. Potential Operational Structure Operational Model Build upon TomorrowNow framework by enhancing service offerings New Offering providing same level of service as SAP at SAP standard rates New Offering to assist in migration to SAP solutions Likely need someone from outside TomorrowNow PSFT and JDE Service Offerings Platinum Gold Maintenance and Support Likely need someone from outside TomorrowNow Maintenance and Support Migration Services Continue offering same level of support and maintenance TomorrowNow offers to its customer base with same pricing model (9-10%) of license fee TomorrowNow Management Operates Offer 2-year employment agreements (containing noncompetition and non-solicitation restrictions) to Andrew Nelson, CEO and Seth Ravin, President © SAP AG 2005, Title of Presentation / Speaker Name / 19 19 TomorrowNow Integration Meeting Brief Update Jan 26 Thomas Ziemen / Stephen Tseng 20 Organization and Infrastructure Organization Support Organization Management and Support Teams should be kept as is Deep Knowledge and Expertise on PSFT Enterprise to be extended to PSFT Enterprise One and PSFT World Locations/Facilities can be scaled up Sales Organization TNow’s Sales Organization should be kept as separate virtually integrated SAP US Sales Team Lead generation must be driven by joint pipeline owned by SAP Americas Infrastructure subscription for Contact Management Should be integrated in SAP CRM Solution Lotus Domino based Solution for Customer, Pipeline and Contracts Should be integrated in SAP CRM Solution Lotus Domino based Solution for Service Automation Workflow with e-mail generation and automatic message routing to be kept © SAP AG 2005, Title of Presentation / Speaker Name / 21 21 TNow Service Offering Programs 3 Service Programs offered Program 1: Launched Mid 02, only for Retired releases (7.0x, 7.5x), PSFT limited maintenance, TNow additional offering (e.g. regulatory updates) Program 2: Launched Mid 03, only for Retired releases (7.0x, 7.5x), TNow only offering for 50% of regular PSFT maintenance fee Program 3: Launched Mid 04, for all PSFT full supported 8.x releases (up to 8.9), TNow offering for 50% lower fees, “essential fixes” only, Upgrade events Program 3 for J.D. Edwards: Lauched End 04, for XE, 8.x and World customers, like program for PSFT Key Figures Supporting 54 customers today (only mature systems in stable production mode) Receiving approximately 6 messages per customer and year (less than 700 in 2,5 years) Only 10% of calls related to PSFT Tools/Technology, covered via work-arounds © SAP AG 2005, Title of Presentation / Speaker Name / 22 22 TNow Service Processes in detail Client Onboarding Support Portal Setup Build Vendor-based Software and Support Library Acquire/Process Client Software (codeline accuracy, License Validation) Installing, Fix-/Data-Mastering the Baseline Environment Proactive Tax and Regulatory R&D (Critical Support) & Retrofits (Extended Support) Proactive Research, Issue Validation and Scoping Changes Development and Testing Fix Packaging and Delivery (CD, Web Publishing, Client Experience) Reactive 24x7 Case Support (Problem Resolution) Client-branded website for reporting case Support Response Router (SRR) Blackberry-enabled SSR and SAS secure websites Platform Certification Testing Upgrade Support © SAP AG 2005, Title of Presentation / Speaker Name / 23 23 Business and Resource Planning (1) Customer base for TNow Maintenance Services 54 existing TNow customers, 200 planned for 2005 including JDE, up to 800 in 2009 2000 joint SAP/PSFT customer as primary focus, 300 covered in 2005 Overall 500 customers in 2005 Scenario 1: 2000 customers in 2009 (2,5x original TNow planning) Scenario 2: 4000 customers in 2009 (5x original TNow planning) Planning assumptions PeopleSoft Enterprise (20 FTE per 100 customers) 15:1 customers per Primary Support Engineer, 7 PSE per 100 7,5:1 customers per Development Support Engineer, 13 DSE per 100 PeopleSoft Enterprise One and World (30 FTE per 100 customers) 10:1 customers per PSE (in 2005/2006), 10 PSE per 100 5:1 customers per DSE (in 2005/2006), 20 DSE per 100 Assuming PeopleSoft Enterprise planning ratios for 2009 © SAP AG 2005, Title of Presentation / Speaker Name / 24 24 Business and Resource Planning (2) Resource (FTE) calculation (Scenario 1, Scenario 2 doubles) Support 300/2005, 600/2006 PSFT Enterprise customers 60 FTE in 2005, 120 FTE in 2006 Support 200/2005, 400/2006 PSFT Enterprise One and World customers 60 FTE in 2005, 120 FTE in 2006 Overall 137 employees in 2005, 270 in 2006, …, 450 in 2009 Hiring Plan Assuming 5-6 month ramp-up time for new hires Program 2005: Existing: 47 (30 PSE/DSE), incl. management, sales, IT and administration Hiring 90 people, 35 PSFT and 55 JDE, till end of march 2005 Staff needs to be productive by Oct 1 2005 Program 2006: Hiring additional 133 people (incl. management, IT, administration) till end of september 2005 Staff needs to be productive ba april 1 2006 © SAP AG 2005, Title of Presentation / Speaker Name / 25 25 Business and Resource Planning (3) Primary and Development Support Locations Americas (120+) Extend Bryan Support and Development and keep existing Remote Support Locations => 50+ Build up Atlanta and Dallas Support Center => 30+ Build up Denver JDE Development => 20+ Build/Extend Pleasenton Support and Development Center (evetually move to Palo Alto) => 20+ Europe (60+) Build Amsterdam Support Center => 15+ Build Madrid Support Center => 15+ Build Dublin Support Center => 15+ Build UK Support Center => 15+ Asia (60+) Build Singapore Support Center => 15+ Build Bangalore Support Center => 30+ Build Sidney Support Center => 15+ © SAP AG 2005, Title of Presentation / Speaker Name / 26 26

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