I am looking for specific details (other than what is provided below)
to the deal that People soft stuck with ADP in 1992. What happended
to the terms of the deal now that Oracle acquired PeopleSoft? Are
there any case studies, or other deals that are similar to this model
where no equity was given up in exchange for favorable financing?
********************************************
The PeopleSoft/ADP arrangement ? was worth over $22MM to PeopleSoft
and did not apparently require them to give up any equity - see below
excerpt from S-4.
Excerpted from PeopleSoft S-4 Registration Statement as filed with the
Securities and Exchange Commission on October 2, 1996 (Registration
No. 333-12815)
RELATIONSHIP WITH ADP
In order to broaden the overall distribution of its
PeopleSoft HRMS products and PeopleTools technology, in 1992 the
Company signed a Software License and Support Agreement with ADP. This
agreement provides ADP with a perpetual license to use internally, to
modify and to sublicense to its clients and prospects Release 3.0 of
PeopleSoft HRMS and PeopleTools on the Centura SQLBase (OS/2) and
Oracle environments. This license also permits ADP to provide service
bureau functions to its clients and prospects using these software
products. The service bureau and sublicense rights are limited to: (i)
ADP clients and prospects which have a majority of their employees
located in the United States, Canada, Mexico, the United Kingdom,
Belgium, the Netherlands and Luxembourg (for such clients' and
prospects' employees wherever located) and (ii) ADP clients and
prospects for such clients' and prospects' employees who are located
in such countries, even if such clients and prospects have a majority
of their employees outside of such countries. ADP does, however, have
the option to sublicense PeopleSoft HRMS for operation with several
other RDBMS platforms under certain circumstances. Under the
agreement, the Company provides ADP with certain training, consulting
and support services and product modifications. The Company also
agreed that, prior to 1998, it would not act as a service bureau or
grant a license to use or modify PeopleSoft HRMS to parties in the
United States, Canada and Mexico that could be considered
"remarketers" of the PeopleSoft HRMS software product (excluding
PeopleTools), such as consulting and facility management firms and
payroll service bureaus. On September 21, 1995, the Company and ADP
amended the agreement to permit their properly licensed customers to
have a broad right to implement and enter into outsourcing
arrangements with third parties.
Through June 30, 1996, the Company has received payments
from ADP totaling $4.1 million for license fees and the fulfillment of
certain customization and training obligations and $10.4 million in
minimum royalties for sublicenses granted by ADP. In addition, the
Company will receive $0.5 million upon completion of certain
customization obligations and $4.9 million in minimum royalties for
1996 and will receive additional royalties until such time as a
cumulative sum of $22.8 million, including the $4.6 million for
license fees, software product customizing, and training services,
have been paid to PeopleSoft.
On December 28, 1995, the Company and ADP entered into a
fourth amendment to the agreement. Under the fourth amendment, ADP
obtained license rights to use and distribute PeopleSoft Workflow
release 5 and the Company agreed to provide ADP with defined product
maintenance services for all updates, improvements, additions,
modifications and/or enhancements to such PeopleSoft Workflow
licensed only up to but not including release 6 of PeopleSoft
Workflow. Under the fourth amendment, ADP further agreed to: (i)
irrevocably commit to the 1996 and 1997 annual minimum royalty
payments; (ii) accelerate payment from an annual basis to a quarterly
basis with associated cost of money discounts; and (iii) pay the
Company a negotiated license fee for PeopleSoft Workflow.
Consequently, under this revised agreement, ADP will be required to
make quarterly minimum royalty payments to PeopleSoft of approximately
$1.2 million during 1996 and 1997. ADP also agreed to provide the
Company with a license to use a copy of ADP's PC Payroll and PC
Exchange in connection with the Company's efforts to build an
interface between certain modules of the Company's software and ADP's
Autopay II payroll system. After 1997, ADP will continue to have a
perpetual license to Release 3.0 of PeopleSoft HRMS, PeopleSoft
Workflow Release 5 as set forth above, as well as to PeopleTools,
including any enhancements to PeopleTools made by the Company through
1997.
Under the terms of the agreement, the Company also has agreed
to provide ADP with notice of each prospective customer that has less
than 2,000 employees and not to enter into a license with that
customer for a period of 60 days after the Company has provided that
customer with the Company's and ADP's respective marketing materials,
in order to give ADP an opportunity to market to that customer. |
