mew Doc 2896 Filed 03/20/18 Entered 03/20/18 15:26:23 Main Document Pg 1 of 9

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1 Pg 1 of 9 Amish R. Doshi, Esq. Hearing Date: March 27, 2018 Magnozzi & Kye, LLP Hearing Time: 11:00 AM 23 Green Street, Suite 302 Plan Objection Date: March 15, 2018 Huntington, New York Contract Notice Objection Date: March 20, 2018 Telephone: (631) (Extended by Consent from Debtors) And Deborah Miller, Esq. Michael Czulada, Esq. 500 Oracle Parkway Redwood City California Telephone: (650) Attorneys for UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: WESTINGHOUSE ELECTRIC COMPANY, LLC, et. al., Debtors. Chapter 11 Case No (MEW) Jointly Administered ORACLE S LIMITED OBJECTION AND RIGHTS RESERVATION TO (A) DEBTORS CHAPTER 11 PLAN OR REORGANIZATION (B) DEBTORS NOTICE REGARDING (I) EXECUTORY CONTRACTS AND UNEXPIRED LEASE, (II) PROPOSED CURE OBLIGATIONS, AND (III) RELATED PROCEDURES AND (C) SALE TRANSACTION CONTEMPLATED AS AN ALTERNATIVE TO PLAN OF REORGANIZATION, on behalf of itself and as successor-in-interest to Oracle, USA, Inc., Oracle Corporation, Acme Packet, Primavera Software, Inc., Sun Microsystems, Inc. and Goldengate Software, Inc. (collectively, Oracle ), a creditor and contract counter-party in the above-captioned jointly administered Chapter 11 cases, submits this Limited Objection and Rights Reservation (the Limited Objection ) in response to (A) Debtors Chapter 11 Plan Of

2 Pg 2 of 9 Reorganization (as amended or modified, the Plan ) 1, (B) Debtors Notice Regarding (I) Executory Contracts And Unexpired Lease, (II) Proposed Cure Obligations, And (III) Related Procedures ( Contract Notice ), And (C) Sale Transaction 2 contemplated as an alternative to the Plan, filed by Westinghouse Electric Company LLC and certain of its affiliates (collectively, the Debtors ). I. INTRODUCTION 1. Among other things, the Plan seeks Court authority to assume certain executory contracts. The Contract Notice provides notice that certain executory contracts and unexpired leases may be designated for assumption by the Debtors. 2. The Plan also provides that if it is not confirmed by March 31, 2018 or if the Parties to the Plan Funding Agreement 3 mutually agree that confirmation of the Plan is unlikely to occur, then the Transactions shall automatically convert to a sale of all or substantially all of the assets of the Debtors pursuant to Section 363 of the Bankruptcy Code ( Sale Transaction ). 3. In this alternative scenario, the Contract Notice serves to provide notice that certain executory contracts and unexpired leases may be designated for assumption and assignment to Plan Investor. 4. Oracle files this Limited Objection to the Plan, Contract Notice and the Sale Transaction, to the extent they seek to assume, assume and assign or reject any Oracle Agreement for the following reasons: (a) The Oracle Agreements pertain to licenses of intellectual property which are not assignable absent Oracle s consent, pursuant to both the underlying license agreement and applicable law; and 1 The objection to the Plan relates to the Contract Notice and the issues raised herein regarding assumption, assumption and assignment or rejection of Oracle Agreements. 2 Oracle is aware that there will be a separate deadline to object if the transaction is converted to a Sale Transaction. However, Oracle files this objection at this time to avoid multiple filings. 3 Capitalized terms used, but not otherwise defined herein, shall have the meaning ascribed to them in the Plan. 2

3 Pg 3 of 9 (b) (c) (d) The Contract Notice does not adequately describe the contract (or contracts) the Debtors seek to assume or assume and assign, preventing Oracle from evaluating either the Debtors proposed cure amount or the assignability of the agreement. Third, the Debtors have failed to provide adequate assurance of future performance by the Plan Investor 4. To the extent that any Oracle Agreement is being rejected, all Oracle software should be scrubbed from the Debtors systems and provide Oracle with confirmation of same, consistent with the terms of the applicable agreement. of its rights. 5. Accordingly, Oracle submits this Limited Objection in order to timely preserve all II. FACTUAL BACKGROUND 6. Prior to the commencement of the above captioned cases, the Debtors and Oracle are parties to numerous integrated executory contracts, relating to the non-exclusive use of Oracle s patented licensed software by the Debtors, along with provisions of support, products and other services relating to such licenses (collectively, the Oracle Agreements ). 7. The above captioned cases were commenced on March 29, 2017 when the Debtors filed their voluntary Chapter 11 petitions. 8. The Debtors Chapter 11 cases have been consolidated for procedural purposes and are jointly administered. 9. The Debtors filed the Plan on February 22, The Plan sets forth procedures for the assumption, assumption and assignment and rejection of executory contracts. 11. The Plan at Section 9.1 (a) provides, in relevant part, that: On the Effective Date, except as otherwise provided in the Plan, each Executory Contract and Unexpired Lease not previously rejected, 4 The Debtors have provided the financial information regarding the Plan Investor, which Oracle is evaluating. Thus, it reserves its right to be heard on this point, as well as the other points raised herein with regards to adequate assurance. 3

4 Pg 4 of 9 assumed, or assumed and assigned by the Debtors shall be deemed automatically rejected pursuant to sections 365 and 1123 of the Bankruptcy Code, unless such Executory Contract or Unexpired Lease: (a) is listed on the Schedules of Executory Contracts, (b) as of the Effective Date is subject to a pending motion to assume or assume and assign such Unexpired Lease or Executory Contract, or (c) is a contract, instrument, release or other agreement or document entered into in connection with the Plan, including, for the avoidance of doubt, the Plan Funding Agreement. 12. On February 22, 2018, the Debtors filed the Contract Notice, which list the following with respect to Oracle: Counterparty Contract Description Cure Costs Oracle - 4 Internet App Server / 6 DB Enterprise IMS DB Management Application Oracle - 3 Yr. Software Maint & Support - Valenta $0.00 $0.00 Order No Oracle Partnernetwork Master Distribution Agreement $0.00 $ For the reasons set forth herein, Oracle files this Limited Objection to the extent that any Oracle Agreement is sought for assumption or assumption and assignment to Plan Investor. 14. To the extent that any Oracle Agreement is rejected, the Debtors are required to comply with their obligations under the Oracle Agreement with respect to scrubbing. 4

5 Pg 5 of 9 III. ARGUMENT A. The Debtors May Not Assume or Assume And Assign Any Oracle Agreement Absent Oracle s Consent Because Oracle Agreements Pertain To Licenses Of Intellectual Property. 15. Section 365(c) of the Bankruptcy Code provides, in relevant part: The trustee may not assume or assign any executory contract... of the debtor... if (1)(A) applicable law excuses a party, other than the debtor, to such contract or lease from accepting performance from or rendering performance to an entity other than the debtor..., whether or not such contract or lease prohibits or restricts assignment of rights or delegation of duties; and (B) such party does not consent to such assumption or assignment. 16. Federal law makes non-exclusive patent licenses non-assignable absent consent of the licensor. See In re Catapult Entertainment, Inc., 165 F.3d 747 (9th Cir. 1999), cert. dismissed, 528 U.S. 924 (1999) (patent law renders non-exclusive patent licenses personal and non-assignable under Bankruptcy Code 365(c) (1)); see also In re Trump Entm't Resorts, Inc., 2015 Bankr. LEXIS 523 (Bankr. D. Del. Feb. 20, 2015) ( Non-exclusive patent and copyright licenses create only personal and not property rights in the licensed intellectual property and so are not assignable. ). See, In re Patient Educ. Media, 210 B.R. 237, 243 (Bankr. S.D.N.Y 1997); See, In re Adelphia Communications Corp, et al., 359 B.R. 65 (Bankr. S.D.N.Y. 2007). 17. To the extent the Debtors wish to assume or assume and assign any Oracle Agreements, which are integrated agreements for the licensing of non-exclusive, patented software, the Debtors must obtain Oracle s consent. 18. At this time, for the reasons described herein, Oracle does not consent to the Debtors proposed assumption or assumption and assignment of any Oracle Agreements. 19. Accordingly, Oracle reserves all rights with respect to any attempt to assume or assume and assign any Oracle Agreement. 5

6 Pg 6 of 9 B. The Debtors Have Not Adequately Identified Any Oracle Agreement to Assume or Assume and Assign. 20. The descriptions provided in the Contract Notice are insufficient to allow Oracle to ensure that it is evaluating the same agreements the Debtors seek to assume or assume and assign. 21. First, there are no dates of the targeted agreements sought for assumption or assumption and assignment. In some cases, the descriptions provided by the Debtors is incomplete and in other cases, there is no identifying governing software or license agreement 22. For example, Line 3589, lists a software and maintenance contract, but no corresponding governing software or license agreement. 23. The Debtors may not segregate the governing Oracle agreement from the corresponding support agreement and any payment agreements, if that is the Debtors intention. See In re Interstate Bakeries Corporation, 751 F.3d 955, 963 (8th Cir. 2014); In re Buffets Holdings, 387 B.R. 115 (Bankr. D. Del. 2008) (holding that where several agreements are economically interdependent, and the parties course of dealing demonstrates that the deal was meant to be indivisible, the agreements comprised one integrated agreement that the debtor cannot sever in order to assume, assign, or reject individually.) 24. Identifying with specificity the Oracle Agreements sought for assumption or assumption and assignment is even more critical here because the Plan s broad default language is to reject all contracts that are not specifically listed on the Contract Notice or subject to a pending motion for assumption Such specificity will prevent the Debtors from inadvertently rejecting any Oracle Agreement that was sought to be assumed or assumed and assigned. 5 None of the Oracle Agreements are subject of any pending Motions pursuant to section 365 of the Bankruptcy Code, other than the Plan language and Contract Notice. 6

7 Pg 7 of Thus, to the extent the Debtors seek to assume or assume and assign any Oracle Agreement, Oracle requests that the Debtors provide a specific (a) contract name; (b) contract identification number; (c) contract date; (d) whether the targeted contract pertains to support or support renewals; and (e) the governing license agreement for each contract. 27. This information will enable Oracle to evaluate whether the targeted agreements are assumable and/or assignable, whether the Debtors are in default and, if so, what the appropriate cure amount is, and whether Oracle may accept performance from an entity other than the Debtors. 28. Oracle reserves its right to be heard on this issue when and if any Oracle Agreement is identified with greater specificity. C. To the Extent the Debtors Seek to Assume or Assume and Assign any Oracle Agreements, An Adequate Cure Amount Must Be Provided. 29. Before assuming and assigning any executory contract, the Debtors must cure (or provide adequate assurance of a prompt cure of) any default under the subject contract. 11 U.S.C. 365(b)(1). 30. The Contract Notice lists a $0.00 for three of the items listed in the Contract Notice and $ for the last item. 31. However, as discussed above, the Debtors have failed to describe the Oracle Agreements with sufficient particularity for Oracle to identify the precise agreement (or agreements) at issue, and thereby confirm the accuracy of the corresponding cure amount. $9, In addition to the above, Oracle records indicate that it is owed no less than 33. The Debtors cannot assume or assume and assign any Oracle Agreement unless all arrearages are cured. 7

8 Pg 8 of Therefore, Oracle reserves its right to be heard further regarding the appropriate cure amount until after the contract, or contracts, the Debtors seek to assume or assume and assign are identified with enough specificity to allow Oracle to determine the correct cure amount. D. To the Extent that the Debtors Seek the Alternative Sale Transaction, The Debtors Have Not Provided Adequate Assurance of Future. 35. To the extent that the Sale Transaction is consummated, in addition to the all of the above, the Debtors must provide adequate assurance of future performance before assuming and assigning any Oracle Agreements. 11 U.S.C. 365(b)(1). 36. To the extent the Debtors do seek to assume and assign Oracle Agreements, in order to satisfy section 365(b), Oracle requests that the Debtors provide the following information: (a) financial bona fides 6 ; (b) confirmation that the Plan Investor is not an Oracle competitor; and (c) confirmation that Plan Investor both will (i) execute an Oracle Assignment Agreement and related documentation which identifies all of the Oracle executory contracts to be assigned, and (ii) if appropriate, enter into an Oracle Master Licensing Agreement. 37. Absent these assurances, Oracle cannot determine the Plan Investor s creditworthiness, its suitability as an Oracle customer, or its ability to adequately perform under the terms of the underlying agreements. 38. Until the information described above is provided, the Debtors have not complied with the requirements of section 365(b)(1)(C) and the Sale Transaction must be denied to the extent it seeks to authorize the Debtors to assume and assign any Oracle Agreement. 6 Debtors have provided financial information, which Oracle is reviewing. Since Oracle s review is not complete, it reserves it right to be heard on this point, if necessary. 8

9 Pg 9 of 9 E. All Oracle Software Must Be Scrubbed Prior To Rejection Of Any Oracle Agreements. 39. To the extent that the Debtors are rejecting any Oracle Agreement by the broad default language in the Plan, Oracle requests that the Court condition such rejection on Debtors scrubbing all Oracle software from their systems, pursuant to the terms thereof and provide confirmation of same, if requested by Oracle. IV. CONCLUSION 40. For the foregoing reasons, Oracle respectfully requests that the Court deny the assumption or assumption and assignment of any Oracle Agreement and condition any rejection on the Debtors scrubbing all Oracle software from their systems. Oracle reserves all rights to be heard on all issues raised herein. Dated: March 20, 2018 Huntington, New York Respectfully submitted, By: /s/ Amish R. Doshi Amish R. Doshi, Esq. Magnozzi & Kye LLP 23 Green Street, Suite 302 Huntington, New York Telephone: (631) adoshi@magnozzikye.com Deborah Miller, Esq. Michael Czulada, Esq. 500 Oracle Parkway Redwood City California Telephone: (650) Attorneys for 9