Skip to main content
Find a Lawyer

Kaleida Restructuring Agreement - Apple Computer Inc. and International Business Machines Corp.

               KALEIDA RESTRUCTURING AGREEMENT
                    BETWEEN APPLE AND IBM

This is a Restructuring Agreement (hereinafter 'Agreement') made effective
November 16th, 1995, between Apple Computer, Inc. (hereinafter 'Apple'), a
California corporation having its principal place of business in Cupertino,
California, and International Business Machines Corporation ('IBM') a New
York corporation having its principal place of business in Armonk, New
York.

1.   GENERAL PLAN

1.1  Apple and IBM are the two principal shareholders in, and have in the
past been the sole providers of funds to, Kaleida Labs, Inc. ('Kaleida'), a
Delaware corporation having its principal place of business in Mountain
View, California.  The parties have decided to make fundamental changes in
Kaleida (hereinafter called the 'Restructuring').  Both parties intend to
continue to use Kaleida's ScriptX technology, but to do so in a more
efficient and cost effective manner.  The parties have agreed that they
will cause Kaleida to cease to exist as a separate operating entity,
although Kaleida will continue as a legal entity.  At some later date, the
parties may decide to formally dissolve Kaleida, Kaleida employees,
customers and the public will begin to be informed of the planned changes
on approximately 11/16/95.  Effective approximately 1/16/96, Kaleida will
have no employees and will cease its operations.

1.2  Apple plans to hire a 'Core Team' of approximately 10 to 15 Kaleida
employees to continue maintenance and enhancements to ScriptX, which will
be subject to a separate ScriptX Development and License Agreement ('SDLA')
between Apple and IBM.  The parties' obligations and rights relating to
this continuing maintenance and enhancements to ScriptX will be as defined
in that SDLA.

2.   TRANSITION

2.1  It is anticipated that the phasing out of Kaleida's operations will
extend from the current date until some uncertain period of time after
Kaleida ceases its operations (hereinafter called the 'Transition Period').
The parties will cause their representatives to oversee the termination of
Kaleida employees, deal with customer claims and support issues, and in
general manage all other aspects of the Restructuring.  The parties will
jointly manage the Restructuring during the Transition Period with a
Transition Team comprised of people with financial, technical, legal, human
resources and other necessary skills from each of the parties.  Mr. David
Nagel of Apple and Mr. Steven Mills of IBM, or their designees, will
resolve any disagreements that the Transition Team cannot resolve.  This
Transition Team will develop and implement action plans to resolve all
issues, will quickly respond to new issues, and will track all issues until
resolved,
                             136


2.2  All costs of the Restructuring through the Transition Period are
subject to approval by both parties, including such costs as separation
payments to employees, customer and other third party claims, settlement of
Toshiba's share for liquidation/ dissolution value, administrative
expenses, other Kaleida debts, legal and other fees, etc.  Payment of such
costs shall be initially made from Kaleida funds.  If such funds are
insufficient, the parties intend to provide such additional funds as are
approved by the parties, split equally between Apple and IBM.  The parties
do not intend to make the 4th quarter 1995 payment to Kaleida according to
the existing Funding Agreement.  The parties will develop a process to
compensate each other for a pro rata share of any agreed to restructuring
costs that are expended directly by one party.

2.3  In addition, the parties may agree to retain the services of certain
former Kaleida employees on a part time basis after 1/16/96 to assist in
performing administrative and other work during the Transition Period.  The
parties will share equally the costs of retaining the services of such
persons.

3.   TOSHIBA

The parties will mutually determine a fair resolution of the value of
Toshiba's share of Kaleida.  An offer will be made to Toshiba in return for
Toshiba's relinquishing its shares in Kaleida and releasing any claims
against Kaleida, Apple and IBM.

4.   INTELLECTUAL PROPERTY RIGHTS

4.1  The parties agree that the best way to preserve the intellectual
property ('IP') assets of Kaleida is to keep Kaleida as a non-operating
corporation, which will own the IP assets only and have no employees.
Following Toshiba's relinquishment of its shares, Kaleida will be owned 50%
by each party.  The parties will cause Kaleida to be jointly managed by
representatives of the parties and the parties shall advance to Kaleida in
equal amounts, all administrative and operating costs required in excess of
Kaleida's resources.  Necessary corporate documents will be modified to
simplify the administration, requiring a single board member from each
company and other changes.  If and when the parties later formally dissolve
Kaleida, they intend to agree at that time on ownership of IP assets and
any additional licenses that may be needed.

4.2  Under the Multimedia License Agreement entered into among Kaleida,
Apple, and IBM on May 5, 1992 ('MLA') each party has equivalent broad
rights to Kaleida's IP assets on a worldwide, perpetual basis, including
copyrighted ScriptX technology, COS, Malibu, ITV and any other Kaleida
technologies.  In complete satisfaction of the royalty obligations of each
party, the parties will cause Kaleida to accept the cancellation of its pre-
paid royalty obligations to each party and the licenses under the MLA will
become pre-paid and royalty free.  Promptly after completion of the process
described in Section 4.3, the parties will cause Kaleida to deliver to each
party a copy of all existing Company Materials and Development
Environments, which will include the most current electronic and hardcopy
versions of the code (source and object), all documentation, all training
materials, etc., (hereinafter called 'Transfer Event').  Each parties use
                             137


of the Company Materials will be subject to the license grant in Section
6.1 of the MLA, except that SubSections 6.1.1.2, 6.1.1.3, and 6.1.1.6 of
that Section are deleted.  Further, the parties agree that all Type I Code
becomes Type II Code as of the date of this Agreement and that the
Development Environments will be licensed according to the terms of Section
6.1, not Section 6.2. The parties also agree that the procedures in Section
4.2 of the MLA need not be followed.  The parties will resolve later any
rights to Kaleida trademarks they may require.

4.3  Notwithstanding the foregoing, the licenses from the Parents to
Kaleida and from Kaleida to the Parents in the MLA will not include any
Parent Materials that have not been incorporated into Company Materials or
used as part of a Development Environment to create or maintain Company
Materials (hereinafter called 'Unused Parent Materials').  Prior to the
Transfer Event, the parties will use best efforts to cause all Materials at
Kaleida to be inventoried and to determine which of the Materials are
Unused Parent Materials.  Any copies of Unused Parent Materials found on
Kaleida's premises will, at the contributing Parent's election, either be
returned to the contributing Parent or destroyed.  Once the Transfer Event
has occurred, however, each party will have the complete rights as defined
in Section 4.2 to use the Company Materials in accordance with the license
in the MLA, even if such Company Materials inadvertently contain any Unused
Parent Materials.  The parties will enter into and will cause Kaleida to
enter into an amendment to the MLA to effectuate the provisions of this
Agreement.

4.4  This Agreement does not modify the Malibu Agreement between Apple and
IBM, dated June 27. 1995.

5.   KALEIDA PERSONNEL

The parties will cause Kaleida to provide its employees with 60 days
written notice of termination and separation benefits approved by the
parties.  IBM and Apple may hire certain employees, in addition to the
'Core Team' required for the SDLA.  While the other party's permission or
review will not be required for any hiring decisions, the requirements for
the Core Team will first be identified.  Neither party will interfere with
the attempt by Apple to hire the necessary Kaleida employees into the Core
Team.

6.   OTHER KALEIDA ASSETS

The parties will cause Kaleida to inventory all its non-IP assets.  The
parties will agree on whether assets will be liquidated or distributed
following the settlement with Toshiba.  If assets are liquidated, the
proceeds are to be distributed equally.  The parties will agree on an equal
distribution of all other non-liquidated assets, with appropriate
requirements of the Core Team considered first,

7.   OTHER

The parties will cause any necessary Kaleida corporate documents to be
created or amended in order to effectuate any of the actions described
above, including Board resolutions, amendments
                             138


to By-Laws, assignments, licenses, etc.  This Agreement shall bind and
inure to the benefit of the parties and their respective successors and
assigns.  This Agreement shall be governed by New York law.  This Agreement
shall  is solely for the benefit of the parties hereto and is not intended
nor shall it be construed as creating any rights in any third party
(including without limitation Kaleida or its other shareholder or
creditors).  This Agreement may be amended or terminated only by written
agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their Authorized Representatives.


INTERNATIONAL BUSINESS             APPLE COMPUTER, INC.
MACHINES CORPORATION

ACCEPTED AND AGREED TO:            ACCEPTED AND AGREED TO:

By:  /s/ Steven A. Mills           By:  /s/ David C. Nagel


Name  Steven A. Mills               Name    David C. Nagel
                          

Title: General Manager, SWS         Title: Senior V.P., Apple Computer, Inc.
                                  

Date   November 16, 1995            Date  November 17, 1995
                               
                              
                              
                              
                              
                             139



Was this helpful?

Copied to clipboard