Prouty

A new parent company terminated plaintiff employees upon its purchasing their employer. The employees sued, claiming the parent company violated the terms of its purchase contract with the prior parent company regarding termination of employees and severance pay. The trial court granted summary judgment against the employees, concluding they were not third party beneficiaries who could recover under the contract. We disagree and reverse.

FACTS

In April 2001, defendant Gores Technology Group (GTG) entered into a stock purchase agreement by which GTG agreed to purchase from Hewlett-Packard Company all of the capital stock of VeriFone, Inc. Among various matters, the parties agreed in section 5.7 of the agreement that GTG would offer employment to all VeriFone employees with salaries and benefits similar to those the employees received at VeriFone, except GTG had no duty to continue any severance obligation Hewlett-Packard had provided them other than as required by law. GTG agreed to indemnify Hewlett-Packard for any costs or expenses incurred as a result of terminating an employee after the closing on the stock sale purchase.

Regarding third party beneficiaries, section…