Schedule 13D

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SWftuyi4RwkZ60o6ploDSQC26rqkGv+kdsH1JNLJbC+L0mqneSkPenj/8PQsnHxG uV+NmH5GvnxzjgtUDKG4bw== 0001193125-07-054593.txt : 20070314 0001193125-07-054593.hdr.sgml : 20070314 20070314163445 ACCESSION NUMBER: 0001193125-07-054593 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20070314 DATE AS OF CHANGE: 20070314 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CORVU CORP CENTRAL INDEX KEY: 0001103341 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 411457090 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-60219 FILM NUMBER: 07693978 BUSINESS ADDRESS: STREET 1: 3400 W 66TH ST STREET 2: STE 445 CITY: EDINA STATE: MN ZIP: 55435 BUSINESS PHONE: 9529447777 MAIL ADDRESS: STREET 1: 3400 W. 66TH ST STREET 2: SUITE 445 CITY: EDINA STATE: MN ZIP: 55435 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ROCKET SOFTWARE INC CENTRAL INDEX KEY: 0001111173 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: TWO APPLE HILL DRIVE CITY: NATICK STATE: MA ZIP: 01760 BUSINESS PHONE: 5086554321 SC 13D 1 dsc13d.htm SCHEDULE 13D Schedule 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

CORVU CORPORATION

(Name of Issuer)

COMMON STOCK

(Title of Class of Securities)

221011 109

(CUSIP Number)

Johan Magnusson Gedda

Rocket Software, Inc.

275 Grove Street

Newton, MA 02466

617 614 4321

Copy to:

David Robbins, Esq.

Bingham McCutchen LLP

355 South Grand Avenue

Los Angeles, CA 90071

213 680 6560

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

March 5, 2007

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f), 13d-1(g), check the following box. ¨

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §§240.13d–7 for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


1.	Names of Reporting Persons. I.R.S. Identification Nos. Of Above Persons (Entities Only)

	Rocket Software, Inc.
2.	Check the Appropriate Box if a Member of a Group (See Instructions)
	(a) ¨
	(b) ¨
3.	SEC Use Only


4.	Source Of Funds (See Instructions)

	WC*
5.	Check if Disclosure of Legal Proceedings Is Required Pursuant To Items 2(D) or 2(E)	¨


6.	Citizenship or Place of Organization

	Delaware


Number Of Shares Beneficially Owned By Each Reporting Person With		7. Sole Voting Power


		8. Shared Voting Power

		10,102,745**
		9. Sole Dispositive Power


		10. Shared Dispositive Power

		10,102,745**


11.	Aggregate Amount Beneficially Owned by Each Reporting Person

	10,102,745**
12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)	¨


13.	Percent of Class Represented By Amount In Row (11)

	20.4%
14.	Type of Reporting Person (See Instructions)

	CO

No payment was made to the holders of the shares subject to the Option and Support Agreements described in Item 5 of this Schedule 13D upon execution thereof. To the extent that the Reporting Persons hereafter exercise the purchase options set forth therein, it is anticipated that the funds necessary for such exercise will come from the working capital of the Reporting Person.

**	See Item 5

Item 1. Security and Issuer

This Schedule 13D relates to the common stock, par value $0.01 per share (the “Common Stock”), of CorVu Corporation (the “Issuer”), a corporation organized under the laws of the State of Minnesota, whose principal executive office is at 3400 West 66th Street, Edina, Minnesota, 55435.

Item 2. Identity and Background

This Schedule 13D is filed on behalf of Rocket Software, Inc. (“Rocket”), a corporation organized under the laws of the State of Delaware, whose principal executive office is at 275 Grove Street, Newton, Massachusetts, 02466.

Rocket is a global software development firm that builds enterprise infrastructure products.

During the last five years, neither Rocket, nor to its knowledge, any of its executive officers or directors (as set forth in Schedule A attached), has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws.

Each executive officer and director of Rocket is a citizen of the United States, except as otherwise set forth in Schedule A.

Item 3. Source and Amount of Funds or Other Consideration

In connection with Rocket entering into the Merger Agreement (as defined in Item 4 below), each of Justin MacIntosh, Delia MacIntosh and ComVest Investment Partners II LLC (each, a “Stockholder” and together, the “Stockholders”), on the one hand and solely in their capacities as stockholders of the Issuer, and Rocket, on the other hand, entered into separate Option and Support Agreements dated March 5, 2007 (collectively, the “Option and Support Agreements”) with respect to certain shares of Common Stock owned by the respective Stockholders. The terms of the Option and Support Agreements are described in greater detail in Item 4 below. No payment was made to the Stockholders upon execution and delivery of such agreements, and shares of the Common Stock subject to the Option and Support Agreements have not been purchased by Rocket pursuant to the Option and Support Agreements, and thus no funds were used for such purpose.

Item 4. Purpose of Transaction

The purpose of Rocket’s entering into the Option and Support Agreements covering the shares of Common Stock to which this Schedule 13D relates is to facilitate the transactions contemplated by the Agreement and Plan of Merger dated as of March 5, 2007 (the “Merger Agreement”), among the Issuer, Rocket and Rocket Software Minnesota, Inc. a wholly-owned subsidiary of Rocket (“Newco”).

Pursuant to the Merger Agreement, Newco will be merged with and into the Issuer, with the Issuer surviving the merger as a wholly-owned subsidiary of Rocket (the “Merger”). Upon the closing of the Merger, holders of Common Stock will receive $0.40 per share of Common

Stock and holders of Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Stock”), will receive for each outstanding share of the Series B Stock, an amount equal to the sum of $1.00 plus the amount obtained by dividing the per share merger consideration payable per share of Common Stock ($0.40) by 0.3 (carried out to five decimal places).

Consummation of the Merger is subject to various conditions, including, among other things: (a) approval of the Merger by the stockholders of the Issuer and (b) the satisfaction or valid waiver of all required closing conditions.

The following is a description of the relationship among Rocket and the Stockholders established under the Option and Support Agreements; however, this description is not an affirmation or admission by Rocket of the existence of any group for purposes of Section 13(d)(3) or Section 13(g)(3) of the Act, or Rule 13d-5(b)(1) thereunder.

In order to induce Rocket to enter into the Merger Agreement, the Stockholders entered into the Option and Support Agreements with Rocket.

Pursuant to the Option and Support Agreements each respective Stockholder agreed, under certain terms and conditions, to vote certain shares of Common Stock in favor of the Merger, as follows:

Justin MacIntosh agreed to vote 70,011 shares, Delia MacIntosh agreed to vote 1,398,952 shares and ComVest Investment Partners II LLC (“ComVest”) agreed to vote 8,633,782 shares, in favor of the Merger.

In addition, pursuant to the Option and Support Agreements, each of the Stockholders agreed to vote these same shares against certain other acquisition proposals made by third parties, as described in greater detail in such agreements.

Each of the Stockholders also granted Rocket a proxy to vote these same shares if the Stockholder does not take certain actions specified in the agreement that are consistent with such Stockholder’s voting covenants. Each proxy and all of the voting covenants in the Option and Support Agreements terminate upon the termination of the Merger Agreement and the payment to Rocket of a termination fee in connection with such termination in accordance with the terms of the Merger Agreement.

Pursuant to the Option and Support Agreements, each of the Stockholders also granted to Rocket an option (the “Option”) to purchase the number of shares of Common Stock, subject to such Stockholder’s respective Option and Support Agreement, at a purchase price of $.40 per share. These Options are exercisable at any time within nine (9) months following certain “Designated Events” (as defined in Section 2.1 of the Option and Support Agreements), which Designated Events are beyond Rocket’s control.

The foregoing descriptions of the Option and Support Agreements and the Merger Agreement are qualified in their entirety by reference to such respective agreements, copies of which are filed as exhibits to this Schedule 13D.

Except as described in this Schedule 13D, neither Rocket, nor, to the knowledge of Rocket any of the executive officers or directors named on Schedule A attached hereto, has any plans or proposals that relate to or would result in or relate to any of the actions specified in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer

(a) The Issuer has represented to Rocket in the Merger Agreement that there were 49,527,274 shares of Common Stock outstanding as of the close of business on March 5, 2007. By virtue of the Option and Support Agreements, and notwithstanding the conditions to the exercise of the proxy and purchase rights granted therein that are beyond Rocket’s control, Rocket may be deemed to have beneficial ownership of 10,102,745 shares, or 20.4%, of the outstanding Common Stock.

The directors and officers of Rocket identified on Schedule A also may be deemed to beneficially own the shares subject to the Option and Support Agreement by virtue of their direct or indirect control of Rocket. However, each such director and officer expressly disclaims any beneficial ownership of such shares. Further, to the knowledge of Rocket, no executive officer or director named on Schedule A attached hereto beneficially owns any shares of Common Stock.

(b) Pursuant to the Option and Support Agreements, Rocket may be deemed to have shared voting power with respect to: (i) 8,633,782 shares beneficially owned by ComVest; (ii) 70,011 shares beneficially owned by Justin MacIntosh; and (iii) 1,398,952 shares beneficially owned by Delia MacIntosh. Rocket is not entitled to any rights as a stockholder of the Issuer as to the shares of Common Stock covered by this Schedule 13D, except to the limited extent of the proxies granted under and voting provisions of the Option and Support Agreements.

(c) Other than as disclosed in this Schedule 13D, neither Rocket nor any executive officer or director named on Schedule A attached, has effected any transaction in the Common Stock during the past 60 days.

(d) Not Applicable.

(e) Not Applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

See “Item 4. Purpose of Transaction” for a description of the Option and Support Agreements and the Merger Agreement, which are qualified in their entirety by reference to the respective agreements which are filed as exhibits hereto. Copies of the Option and Support Agreements are filed as Exhibits 99.1 through 99.3 attached hereto and are incorporated by reference into this Item 6.

Item 7. Material to Be Filed as Exhibits

The following are attached as exhibits:


Exhibit 99.1		Option and Support Agreement dated as of March 5, 2007, between Rocket Software, Inc. and ComVest Investment Partners II

Exhibit 99.2		Option and Support Agreement dated as of March 5, 2007, between Rocket Software, Inc. and Justin MacIntosh

Exhibit 99.3		Option and Support Agreement dated as of March 5, 2007, between Rocket Software, Inc. and Delia MacIntosh

Exhibit 99.4		Agreement and Plan of Merger

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

March 14, 2007

Date

/s/ Johan Magnusson Gedda

Signature

Johan Magnusson Gedda, Executive Vice President

Name/Title

EXHIBIT INDEX


Exhibit 99.1		Option and Support Agreement dated as of March 5, 2007, between Rocket Software, Inc. and ComVest Investment Partners II

Exhibit 99.2		Option and Support Agreement dated as of March 5, 2007, between Rocket Software, Inc. and Justin MacIntosh

Exhibit 99.3		Option and Support Agreement dated as of March 5, 2007, between Rocket Software, Inc. and Delia MacIntosh

Exhibit 99.4		Agreement and Plan of Merger

SCHEDULE A

DIRECTORS AND EXECUTIVE OFFICERS

The name, position, principal business address and present principal occupation or employment of each of the directors and officers of Rocket Software, Inc. are set forth below. Each person identified is a United States citizen, with the exception of Mr. Magnusson Gedda, who is a citizen of Sweden.

Rocket Software, Inc.


Name	Position with Rocket Software, Inc.	Present Principal Occupation	Principal Business Address
Andrew Youniss	Chief Executive Officer, Director of Rocket Software, Inc.	Chief Executive Officer, Director of Rocket Software, Inc.	275 Grove Street Newton, MA 02466

Johan Magnusson Gedda	Executive Vice President, Director of Rocket Software, Inc.	Self-employed entrepreneur	275 Grove Street Newton, MA 02466

Matthew Kelley	Chief Technology Officer, Director of Rocket Software, Inc.	Chief Technology Officer, Director of Rocket Software, Inc.	275 Grove Street Newton, MA 02466

Michael Beasley	Chairman, Director of Rocket Software, Inc.	Principal of Beasley Consulting, Inc.	2120 Rolling Hills Drive, Morgan Hill, CA 95037

Joseph Manning	Chief Financial Officer of Rocket Software, Inc.	Chief Financial Officer of Rocket Software, Inc.	275 Grove Street Newton, MA 02466

Troy Heindel	Chief Operating Officer of Rocket Software, Inc.	Chief Operating Officer of Rocket Software, Inc.	275 Grove Street Newton, MA 02466

EX-99.1 2 dex991.htm OPTION AND SUPPORT AGREEMENT FOR ROCKET SOFTWARE & COM VEST INVEST PARTNERS II Option and Support Agreement for Rocket Software & Com Vest Invest Partners II

Exhibit 99.1

OPTION AND SUPPORT AGREEMENT

This OPTION AND SUPPORT AGREEMENT (this “Agreement”), is dated as of March 5, 2007 by and between Rocket Software, Inc., a Delaware corporation (“Parent”), and ComVest Investment Partners II LLC, a Delaware limited liability company (“Stockholder”).

WITNESSETH:

WHEREAS, concurrently with the execution and delivery of this Agreement, Parent, CorVu Corporation, a Minnesota corporation (the “Company”), and Rocket Software Minnesota, Inc., a Minnesota corporation and a wholly owned subsidiary of Parent (“Newco”), are entering into an Agreement and Plan of Merger (as the same may be modified or amended from time to time, the “Merger Agreement”), providing for, among other things, the Merger and the other transactions contemplated thereby, on the terms and subject to the conditions set forth therein (capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement);

WHEREAS, as of the date hereof, Stockholder beneficially and of record owns the type and number of shares of voting stock of the Company as are set forth on Attachment A hereto (the “Owned Shares”);

WHEREAS, as a condition to Parent’s willingness to enter into and perform its obligations under the Merger Agreement, Parent has required that Stockholder agree, and Stockholder desires to agree (i) to vote, or cause to be voted, in person or by proxy at least 8,633,782 of the Owned Shares or such greater or lesser number of shares as represents 17.02% of the Common Stock outstanding (such number of the Owned Shares, the “Voting Shares”), in favor of (a) adoption of the Merger Agreement, (b) approval of the Merger and the other transactions contemplated thereby and (c) any other matter that is required by applicable Law or by any governmental authority (as defined in the Merger Agreement) to be approved by stockholders of the Company to consummate the Merger and the other transactions contemplated by the Merger Agreement, and against any Competing Transaction; (ii) to grant Parent a proxy to vote the Voting Shares on behalf and in the name of Stockholder; (iii) to grant Parent the right to purchase from Stockholder all or any portion of the Voting Shares in accordance with the terms and conditions set forth herein; and (iv) to take the other actions, or to refrain from taking certain enumerated actions, as further described herein; and

WHEREAS, Stockholder desires to express its support for the Merger and the other transactions contemplated by the Merger Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Agreement to Vote; Non-Solicit; Irrevocable Proxy.

1.1 Agreement to Vote. Subject to Section 1.4 below, Stockholder hereby agrees that, during the time this Agreement is in effect, at any meeting of the stockholders of the Company, however called, or any adjournment or postponement thereof, and in response to any request for any written consent of the stockholders of the Company Stockholder shall be present (in person or by proxy) and vote (or cause to be voted) all of its Voting Shares (a) in favor of (i) adoption of the Merger Agreement, (ii) approval of the Merger and the other transactions contemplated thereby, and (ii) approval of any other matter that is required by applicable Law or a governmental authority (as defined in the Merger Agreement) to be approved by the stockholders of the Company to consummate the Merger and the transactions contemplated by the Merger Agreement; and (b) against (i) any Competing Transaction, (ii) any liquidation or winding up of the Company, (iii) any extraordinary dividend by the Company, (iv) any change in the capital structure of the Company (other than any change in capital structure resulting from the Merger) and (v) any other action that could reasonably be expected to (A) impede, interfere with, delay, postpone or attempt to discourage or have the effect of discouraging the consummation of the Merger and the other transactions contemplated by the Merger Agreement, (B) constitute or result in a breach of any of the representations, warranties covenants, or other obligations or agreements of the Company under the Merger Agreement that would reasonably be expected to have a material adverse effect on the Company or its business or (C) impair or adversely affect the respective abilities of the Company, Parent and Newco to consummate the Merger and the other transactions contemplated by the Merger Agreement.

1.2 Non-Solicit. Subject to Section 1.4 below, Stockholder hereby agrees that, during the time this Agreement is in effect and except as otherwise expressly permitted by the Merger Agreement, neither it nor any of its subsidiaries, nor any of the officers, directors or employees of it or its subsidiaries shall, and that it shall cause its and its subsidiaries’ representatives not to, directly or indirectly, (a) initiate, solicit or knowingly encourage or facilitate any inquiries with respect to, or the making of, a Competing Transaction, (b) engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any Person relating to a Competing Transaction, (c) approve or recommend or propose publicly to approve or recommend, any Competing Transaction or (d) approve or recommend, or propose publicly to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement relating to any Competing Transaction or propose publicly or agree to do any of the foregoing relating to any Competing Transaction.

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1.3 Irrevocable Proxy. Solely with respect to the matters described in Section 1.1, and subject to Section 1.4 below, if Stockholder has not taken a Qualifying Action (as defined below) on or prior to the fifth business day prior to the Shareholders Meeting (including any adjournments or postponements thereof) or any other meeting, date or event upon which stockholders of the Company will be asked to vote with respect to the matters described in Section 1.1 (such meeting, date or event, the “Voting Event”), Stockholder hereby irrevocably appoints Parent as its proxy with full power of substitution (which proxy is irrevocable and which appointment is coupled with an interest, including for purposes of all applicable provisions of the Minnesota Business Corporation Act) to vote in its discretion all Voting Shares owned by Stockholder beneficially and of record solely on the matters described in Section 1.1 effective from and after such third business day prior to the Voting Event and until the six months after the date of the applicable Voting Event. Stockholder agrees to execute any further agreement or form reasonably necessary or appropriate to confirm and effectuate the grant of the proxy contained herein. “Qualifying Action” means either (a) the delivery by each Stockholder to Parent of a copy of such Stockholder’s duly executed and valid proxy (and any amendment of such proxy) with respect to the Shareholders Meeting or other Voting Event, provided the votes reflected in such proxy or amendment thereof are consistent with Stockholder’s voting obligations under this Agreement with respect to the matter(s) in question or (b) the delivery by Stockholder to Parent of a written certificate by one of its duly authorized individuals certifying that Stockholder shall attend the Shareholders Meeting or other Voting Event in person (if a meeting of stockholders) and vote its Voting Shares in accordance with Section 1.1 hereof, provided that in the event that a Qualifying Action is subsequently rescinded, revoked or modified in any manner inconsistent with the requirements of Section 1.1, or if Stockholder does not attend and vote as required hereunder at any Voting Event, Stockholder shall be deemed to have affirmed as of the time of the Voting Event the proxy with respect to the Voting Shares granted in this Section (notwithstanding any other action take since the date hereof) and Parent (or its designee) shall be entitled to the proxy and vote the Voting Shares in its discretion at or in connection with the applicable Voting Event.

1.4 Termination of Voting and Non-Solicitation Covenants and Proxy. Notwithstanding the foregoing provisions, the voting and non-solicitation covenants and obligations of Stockholder set forth in Sections 1.1 and 1.2, and the proxy granted to Parent with respect to the Voting Shares in Section 1.3, automatically shall terminate and be of no further force or effect from and after any termination of the Merger Agreement pursuant to the terms thereof as a result of which Parent is entitled to receive and is paid the Termination Fee (as defined and provided in Section 8.5 of the Merger Agreement); provided, however, that any such termination of such voting and non-solicitation obligations or the proxy with respect to the Voting Shares shall in no way affect or impair Parent’s independent rights to purchase the Voting Shares (or an equivalent number of shares of Owned Shares of Stockholder) as provided in Section 2 below.

2. Right to Purchase Voting Shares

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(as defined below). Parent may exercise the Option by notifying Stockholder within nine (9) months following any Designated Event, in accordance with Section 2.2 hereof, of Parent’s intent to exercise the Option in whole or in part (the “Option Notice”). The Option Notice, shall specify the number of Voting Shares (or an equivalent number of shares of Owned Shares of Stockholder) Parent desires to purchase from Stockholder, and the date by which the closing of Stockholder’s sale and Parent’s purchase of such number of Voting Shares shall occur, which shall be no later than five business days after delivery of the Option Notice. Parent may deliver only one Option Notice and shall include in such Option Notice the total number of Voting Shares (or an equivalent number of shares of Owned Shares of Stockholder) Parent desires to purchase from Stockholder. A “Designated Event” shall be deemed to have occurred upon any of the following: (a) Stockholder breaches or fails to observe or perform any agreement or obligation set forth in this Agreement; (b) the Board of Directors or the Special Committee withdraws or modifies or changes its respective recommendation to the stockholders of the Company that such stockholders adopt and approve the Merger Agreement or the Merger, (c) the Board of Directors or the Special Committee approves or recommends a Competing Transaction or (d) the Company shall breach its obligations to duly call and hold the Shareholders Meeting pursuant to Section 6.4 of the Merger Agreement or the Company Shareholder Approval shall not have been received at the Shareholders Meeting duly called and held at which a quorum was present or any adjournment or postponement thereof.

2.2 Purchase Price. The purchase price payable by Parent to purchase shares pursuant to the Option (the “Purchased Shares”) shall be $0.40 per share (the “Per Share Price,” and the total amount payable for all Purchased Shares so purchased, the “Purchase Price”). At the closing of the purchase and sale of the Purchased Shares, Parent shall pay Stockholder the aggregate Purchase Price by wire transfer of immediately available funds to an account designated by Stockholder (or in such other manner as Stockholder shall instruct Parent) against delivery by Stockholder to Parent of all original stock certificate(s) evidencing the Purchased Shares, duly endorsed or with duly executed stock powers. The Per Share Price shall be appropriately adjusted for any stock splits, stock dividends, recapitalizations, reclassifications, or any similar events affecting the number of outstanding shares of capital stock of the Company.

3. Representations and Warranties of Stockholder. Stockholder hereby represents and warrants to Parent as follows:

3.1 Due Organization. Stockholder is duly organized, is validly existing and is in good standing under the laws of the State of Delaware.

3.2 Power; Due Authorization; Binding Agreement. Stockholder has full limited liability company power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Stockholder and constitutes a valid and binding agreement of Stockholder, enforceable against Stockholder in accordance with its terms, except that enforceability may be subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors rights generally and to general principles of equity.

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3.3 Ownership of Shares. The Owned Shares set forth opposite Stockholder’s name on Attachment A hereto are owned of record and beneficially by Stockholder in the manner reflected thereon and include all of the Voting Shares owned of record or beneficially by Stockholder. All Owned Shares are held free and clear of any Liens and no proxy has been granted with respect thereto (other than pursuant to this Agreement) and will be held free and clear of any Liens and the Voting Shares will not be subject to any proxies (other than pursuant to this Agreement) as of the date of the Shareholders Meeting or any other applicable Voting Event. As of the date hereof, Stockholder has, and as of the date of the Shareholders Meeting or other Voting Event, Stockholder will have (except as otherwise permitted or required by this Agreement), sole voting power and sole dispositive power with respect to all of the Owned Shares.

3.4 No Conflicts. The execution and delivery of this Agreement by Stockholder does not, and the performance of the terms of this Agreement by Stockholder will not, (a) require Stockholder to obtain the consent or approval of, or make any filing with or notification to, any Governmental Authority, (b) require the consent or approval of any other person pursuant to any agreement, obligation or instrument binding on Stockholder or its properties and assets, (c) conflict with or violate any organizational document or any Law applicable to Stockholder or pursuant to which any of its or its affiliates’ respective properties or assets are bound or (d) violate any other agreement to which Stockholder or any of its affiliates is a party including any voting agreement, stockholders agreement, irrevocable proxy or voting trust, except for any consent, approval, filing or notification which has been obtained as of the date hereof or the failure of which to obtain, make or give would not, or any conflict or violation which would not, impair in any material respect Stockholder’s ability to perform its obligations under this Agreement or in any event impair Stockholder’s ability to perform its obligations under Section 1.1 hereof. Except for this Agreement, the Voting Shares are not, with respect to the voting or transfer thereof, subject to any other agreement or third party rights, including any voting agreement, stockholders agreement, irrevocable proxy or voting trust.

3.5. Acknowledgment. Stockholder understands and acknowledges that each of Parent and Newco is entering into the Merger Agreement in reliance upon such Stockholder’s execution, delivery and performance of this Agreement.

4. Certain Covenants of Stockholder. Stockholder hereby covenants and agrees with Parent as follows:

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or other obligations under this Agreement or (d) commit or agree to take any of the foregoing actions. Any transfer of any Voting Shares in violation of this provision shall be null and void. If any involuntary transfer of any of the Voting Shares shall occur (including a sale by Stockholder’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Voting Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until the earlier of (i) the date on which such restrictions, liabilities and rights terminate pursuant to this Agreement and (ii) a valid termination of this Agreement.

4.2 No Limitations on Actions. Stockholder signs this Agreement solely in its capacity as the record and/or beneficial owner, as applicable, of the Voting Shares; this Agreement shall not limit or otherwise affect the actions of Stockholder or any affiliate, employee or designee of such Stockholder or any of its affiliates with respect to any of the other Owned Shares or in any other capacity, including such person’s capacity, if any, as an officer of the Company or a member of the board of directors of the Company; and nothing herein shall limit or affect the Company’s rights available at law or in equity in connection with the Merger Agreement.

4.3 Further Assurances. From time to time, at the request of Parent and without further consideration, Stockholder shall execute and deliver such additional documents and instruments and take all such further action as may be reasonably requested by Parent to effectuate or evidence the purpose and intent of this Agreement.

4.4 Stop Transfer Order; Legend. In furtherance of this Agreement, and concurrently herewith, Stockholder shall and hereby does authorize the Company or the Company’s counsel, and the Company hereby does covenant and agree, to notify the Company’s transfer agent that there is a stop transfer order with respect to all of the Voting Shares. Stockholder and/or the Company shall cause to be provided to Parent evidence of such stop transfer order as promptly as reasonably practicable after the date hereof.

6. Miscellaneous.

6.1 Entire Agreement; Assignment. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. This Agreement shall not be assigned by operation of law or otherwise and shall be binding upon and inure solely to the benefit of each party hereto; provided, however, that Parent shall be permitted to assign this Agreement and any of its rights, interests or obligations under this Agreement to an affiliate of Parent to whom the Merger Agreement shall have been assigned pursuant to the proviso of Section 8.9 of the Merger Agreement (it being understood and agreed by each of the parties hereto that such assignment shall not be deemed to be a breach by Parent of any of its representations and warranties set forth herein, shall not be deemed to result in any such representation or warranty becoming untrue or inaccurate and shall not be deemed to be a breach by Parent of any covenant or agreement contained herein).

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6.2 Savings Clause. Notwithstanding anything to the contrary contained herein, in the event that the number of Voting Shares, when aggregated with the number of shares subject to other Option and Support Agreements or other voting support agreements, by and between Parent and other holders of the voting stock of the Company dated as of the date hereof (collectively, the “Other Support Agreements”) would exceed 19.9% of the voting power of the then-outstanding shares of capital stock of the Company, this Agreement shall deem to apply only to the maximum number of shares subject hereto as would not result in the total shares with voting power subject to this Agreement and the Other Support Agreements exceeding such 19.9% maximum amount, with any resulting adjustment in the amount of shares subject to this Agreement and the Other Support Agreements to be allocated pro rata among such agreements based on the relative numbers of shares (calculated on an as-converted to Common Stock basis) subject to such agreements.

6.3 Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by each of the parties hereto.

6.4 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by hand delivery, by facsimile transmission or by mail (registered or certified mail, postage prepaid, return receipt requested) or by any courier service, such as Federal Express, providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the following addresses:

If to Stockholder to:

ComVest Investment Partners II LLC

Michael S. Falk, Managing Partner

One North Clematis—Suite 300

West Palm Beach, FL 33401

Attn: Michael S. Falk, Managing Partner

Facsimile No.: (212) 829-5936

If to Parent:

Rocket Software, Inc.

275 Grove Street

Newton, MA 02466-2273

Attn: Johan Magnusson Gedda

Facsimile No.: (617) 630-7173

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with a copy (which shall not constitute notice) to:

Bingham McCutchen LLP

355 S. Grand Avenue, 44th Floor

Los Angeles, CA 90071

Attn: David Robbins, Esq.

Facsimile No.: (213) 830-8610

or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

6.7 Governing Law.

(a) This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.

(b) Each party hereto irrevocably submits to the jurisdiction of any federal court sitting in the State of Minnesota in any action arising out of or relating to this Agreement, and hereby irrevocably agrees that all claims in respect of such action may be heard and determined in such Minnesota state or federal court. Each party hereto hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The parties hereto further agree, to the extent permitted by law, that final and unappealable judgment against any of them in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified copy of which shall be conclusive evidence of the fact and amount of such judgment.

(c) To the extent that any party hereto has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, each party hereto hereby irrevocably waives such immunity in respect of its obligations with respect to this Agreement.

(d) Each party hereto waives, to the fullest extent permitted by applicable laws, any right it may have to a trial by jury in respect of any action, suit or proceeding arising out of or relating to this Agreement. Each party hereto certifies that it has been induced to enter into this Agreement by, among other things, the mutual waivers and certifications set forth above in this Section.

6.8 Remedies. The parties agree that irreparable damage would occur in the event that any provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they may be entitled under any applicable Law or in equity.

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6.9 Counterparts. This Agreement may be executed by facsimile or PDF signature and in two or more counterparts, each of which shall be deemed to be an original, but all of which when taken together shall constitute one and the same Agreement.

6.10 Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.

6.11 Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

6.12 No Presumption Against Drafter. Each of the parties hereto has jointly participated in the negotiation and drafting of this Agreement. In the event of an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by each of the parties hereto and no presumptions or burdens of proof shall arise favoring any party hereto by virtue of the authorship of any of the provisions of this Agreement.

[Signature Page Follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.


COMVEST INVESTMENT PARTNERS II LLC

By:		/s/ Michael S. Falk
Name:		Michael S. Falk
Title:		Managing Partner

ROCKET SOFTWARE, INC.

By:		/s/ Johan Magnusson Gedda
Name:		Johan Magnusson Gedda
Title:		Executive Vice President

ATTACHMENT A

Voting Shares Owned of Record and/or Beneficially by Stockholder

Shares Owned of

Record

Shares Owned

Beneficially But Not Of

Record

Type of Shares

22,000,000*

Common Stock

*	Does not include 3,400,000 shares subject to immediately exercisable warrant at $0.50 per share or 2,000,000 shares subject to the ComVest Protective Warrant exercisable at $0.50 per share.

EX-99.2 3 dex992.htm OPTION AND SUPPORT AGREEMENT FOR ROCKET SOFTWARE & JUSTIN MACINTOSH Option and Support Agreement for Rocket Software & Justin MacIntosh

Exhibit 99.2

OPTION AND SUPPORT AGREEMENT

This OPTION AND SUPPORT AGREEMENT (this “Agreement”), is dated as of March 5, 2007 by and between Rocket Software, Inc., a Delaware corporation (“Parent”), and Justin MacIntosh (“Stockholder”).

WITNESSETH:

WHEREAS, as a condition to Parent’s willingness to enter into and perform its obligations under the Merger Agreement, Parent has required that Stockholder agree, and Stockholder desires to agree (i) to vote, or cause to be voted, in person or by proxy at least 70,011 of the Owned Shares or such greater or lesser number of shares as represents 0.13% of the Common Stock outstanding (such number of the Owned Shares, the “Voting Shares”), in favor of (a) adoption of the Merger Agreement, (b) approval of the Merger and the other transactions contemplated thereby and (c) any other matter that is required by applicable Law or by any governmental authority (as defined in the Merger Agreement) to be approved by stockholders of the Company to consummate the Merger and the other transactions contemplated by the Merger Agreement, and against any Competing Transaction; (ii) to grant Parent a proxy to vote the Voting Shares on behalf and in the name of Stockholder; (iii) to grant Parent the right to purchase from Stockholder all or any portion of the Voting Shares in accordance with the terms and conditions set forth herein; and (iv) to take the other actions, or to refrain from taking certain enumerated actions, as further described herein; and

WHEREAS, Stockholder desires to express his support for the Merger and the other transactions contemplated by the Merger Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Agreement to Vote; Non-Solicit; Irrevocable Proxy.

1.1 Agreement to Vote. Subject to Section 1.4 below, Stockholder hereby agrees that, during the time this Agreement is in effect, at any meeting of the stockholders of the Company, however called, or any adjournment or postponement thereof, and in response to any request for any written consent of the stockholders of the Company Stockholder shall be present (in person or by proxy) and vote (or cause to be voted) all of his Voting Shares (a) in favor of (i) adoption of the Merger Agreement, (ii) approval of the Merger and the other transactions contemplated thereby, and (ii) approval of any other matter that is required by applicable Law or a governmental authority (as defined in the Merger Agreement) to be approved by the stockholders of the Company to consummate the Merger and the transactions contemplated by the Merger Agreement; and (b) against (i) any Competing Transaction, (ii) any liquidation or winding up of the Company, (iii) any extraordinary dividend by the Company, (iv) any change in the capital structure of the Company (other than any change in capital structure resulting from the Merger) and (v) any other action that could reasonably be expected to (A) impede, interfere with, delay, postpone or attempt to discourage or have the effect of discouraging the consummation of the Merger and the other transactions contemplated by the Merger Agreement, (B) constitute or result in a breach of any of the representations, warranties covenants, or other obligations or agreements of the Company under the Merger Agreement that would reasonably be expected to have a material adverse effect on the Company or its business or (C) impair or adversely affect the respective abilities of the Company, Parent and Newco to consummate the Merger and the other transactions contemplated by the Merger Agreement.

1.2 Non-Solicit. Subject to Section 1.4 below, Stockholder hereby agrees that, during the time this Agreement is in effect and except as otherwise expressly permitted by the Merger Agreement, neither he nor any of his affiliates or representatives shall, directly or indirectly, (a) initiate, solicit or knowingly encourage or facilitate any inquiries with respect to, or the making of, a Competing Transaction, (b) engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any Person relating to a Competing Transaction, (c) approve or recommend or propose publicly to approve or recommend, any Competing Transaction or (d) approve or recommend, or propose publicly to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement relating to any Competing Transaction or propose publicly or agree to do any of the foregoing relating to any Competing Transaction.

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appoints Parent as its proxy with full power of substitution (which proxy is irrevocable and which appointment is coupled with an interest, including for purposes of all applicable provisions of the Minnesota Business Corporation Act) to vote in its discretion all Voting Shares owned by Stockholder beneficially and of record solely on the matters described in Section 1.1 effective from and after such third business day prior to the Voting Event and until the six months after the date of the applicable Voting Event. Stockholder agrees to execute any further agreement or form reasonably necessary or appropriate to confirm and effectuate the grant of the proxy contained herein. “Qualifying Action” means either (a) the delivery by each Stockholder to Parent of a copy of such Stockholder’s duly executed and valid proxy (and any amendment of such proxy) with respect to the Shareholders Meeting or other Voting Event, provided the votes reflected in such proxy or amendment thereof are consistent with Stockholder’s voting obligations under this Agreement with respect to the matter(s) in question or (b) the delivery by Stockholder to Parent of a written certificate signed by Stockholder certifying that Stockholder shall attend the Shareholders Meeting or other Voting Event in person (if a meeting of stockholders) and vote his Voting Shares in accordance with Section 1.1 hereof, provided that in the event that a Qualifying Action is subsequently rescinded, revoked or modified in any manner inconsistent with the requirements of Section 1.1, or if Stockholder does not attend and vote as required hereunder at any Voting Event, Stockholder shall be deemed to have affirmed as of the time of the Voting Event the proxy with respect to the Voting Shares granted in this Section (notwithstanding any other action take since the date hereof) and Parent (or its designee) shall be entitled to the proxy and vote the Voting Shares in its discretion at or in connection with the applicable Voting Event.

2. Right to Purchase Voting Shares

2.1 Right to Purchase Shares. Stockholder hereby grants to Parent the right and option to purchase (the “Option”) all or any portion of the Voting Shares (or an equivalent number of shares of Owned Shares of Stockholder), in the event that there shall occur a Designated Event (as defined below). Parent may exercise the Option by notifying Stockholder within nine months following any Designated Event, in accordance with Section 2.2 hereof, of Parent’s intent to exercise the Option in whole or in part (the “Option Notice”). The Option Notice, shall specify the number of Voting Shares (or an equivalent number of shares of Owned Shares of Stockholder) Parent desires to purchase from Stockholder, and the date by which the closing of Stockholder’s sale and Parent’s purchase of such number of Voting Shares shall occur, which

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shall be no later than five business days after delivery of the Option Notice. Parent may deliver only one Option Notice and shall include in such Option Notice the total number of Voting Shares (or an equivalent number of shares of Owned Shares of Stockholder) Parent desires to purchase from Stockholder. A “Designated Event” shall be deemed to have occurred upon any of the following: (a) Stockholder breaches or fails to observe or perform any agreement or obligation set forth in this Agreement; (b) the Board of Directors or the Special Committee withdraws or modifies or changes its respective recommendation to the stockholders of the Company that such stockholders adopt and approve the Merger Agreement or the Merger, (c) the Board of Directors or the Special Committee approves or recommends a Competing Transaction or (d) the Company shall breach its obligations to duly call and hold the Shareholders Meeting pursuant to Section 6.4 of the Merger Agreement or the Company Shareholder Approval shall not have been received at the Shareholders Meeting duly called and held at which a quorum was present or any adjournment or postponement thereof.

3. Representations and Warranties of Stockholders. Stockholder hereby represents and warrants to Parent as follows:

3.1 Power; Due Authorization; Binding Agreement. Stockholder has full power and authority to execute and deliver this Agreement, to perform his obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Stockholder and constitutes a valid and binding agreement of Stockholder, enforceable against Stockholder in accordance with its terms, except that enforceability may be subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors rights generally and to general principles of equity.

3.2 Ownership of Shares. The Owned Shares set forth opposite Stockholder’s name on Attachment A hereto are owned of record and beneficially by Stockholder in the manner reflected thereon and include all of the Voting Shares owned of record or beneficially by Stockholder. All Owned Shares are held free and clear of any Liens and no proxy has been granted with respect thereto (other than pursuant to this Agreement) and will be held free and clear of any Liens and the Voting Shares will not be subject to any proxies (other than pursuant to this Agreement) as of the date of the Shareholders Meeting or any other applicable Voting Event. As of the date hereof, Stockholder has, and as of the date of the Shareholders Meeting or other Voting Event, Stockholder will have (except as otherwise permitted or required by this Agreement), sole voting power and sole dispositive power with respect to all of the Owned Shares.

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3.3 No Conflicts. The execution and delivery of this Agreement by Stockholder does not, and the performance of the terms of this Agreement by Stockholder will not, (a) require Stockholder to obtain the consent or approval of, or make any filing with or notification to, any Governmental Authority, (b) require the consent or approval of any other person pursuant to any agreement, obligation or instrument binding on Stockholder or his properties and assets, (c) conflict with or violate any organizational document or any Law applicable to Stockholder or pursuant to which any of his properties or assets are bound or (d) violate any other agreement to which Stockholder or any of his affiliates is a party including any voting agreement, stockholders agreement, irrevocable proxy or voting trust, except for any consent, approval, filing or notification which has been obtained as of the date hereof or the failure of which to obtain, make or give would not, or any conflict or violation which would not, impair in any material respect Stockholder’s ability to perform his obligations under this Agreement or in any event impair Stockholder’s ability to perform his obligations under Section 1.1 hereof. Except for this Agreement, the Voting Shares are not, with respect to the voting or transfer thereof, subject to any other agreement or third party rights, including any voting agreement, stockholders agreement, irrevocable proxy or voting trust.

3.4 Acknowledgment. Stockholder understands and acknowledges that each of Parent and Newco is entering into the Merger Agreement in reliance upon such Stockholder’s execution, delivery and performance of this Agreement.

4. Certain Covenants of Stockholder. Stockholder hereby covenants and agrees with Parent as follows:

4.1 Restriction on Transfer, Proxies and Non-Interference. Stockholder hereby agrees, while this Agreement is in effect, not to (a) sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding other than this Agreement with respect to the sale, transfer, pledge, encumbrance, assignment or other disposition of, or limitation on the voting rights of, any of the Voting Shares, (b) grant any proxies or powers of attorney, deposit any Voting Shares into a voting trust or enter into a voting agreement with respect to any Voting Shares (or attempt or purport to revoke or supersede the proxy granted to Parent hereunder), (c) take any action that reasonably could cause any representation or warranty of Stockholder contained herein to become untrue or incorrect or have the effect of preventing or disabling Stockholder from performing his covenants or other obligations under this Agreement or (d) commit or agree to take any of the foregoing actions. Any transfer of any Voting Shares in violation of this provision shall be null and void. If any involuntary transfer of any of the Voting Shares shall occur (including a sale by Stockholder’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Voting Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until the earlier of (i) the date on which such restrictions, liabilities and rights terminate pursuant to this Agreement and (ii) a valid termination of this Agreement.

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4.2 No Limitations on Actions. Stockholder signs this Agreement solely in his capacity as the record and/or beneficial owner, as applicable, of the Voting Shares; this Agreement shall not limit or otherwise affect the actions of Stockholder or any affiliate, employee or designee of such Stockholder or any of his affiliates with respect to any of the other Owned Shares or in any other capacity, including such person’s capacity, if any, as an officer of the Company or a member of the board of directors of the Company; and nothing herein shall limit or affect the Company’s rights available at law or in equity in connection with the Merger Agreement.

5. Miscellaneous.

5.1 Entire Agreement; Assignment. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. This Agreement shall not be assigned by operation of law or otherwise and shall be binding upon and inure solely to the benefit of each party hereto; provided, however, that Parent shall be permitted to assign this Agreement and any of its rights, interests or obligations under this Agreement to an affiliate of Parent to whom the Merger Agreement shall have been assigned pursuant to the proviso of Section 8.9 of the Merger Agreement (it being understood and agreed by each of the parties hereto that such assignment shall not be deemed to be a breach by Parent of any of its representations and warranties set forth herein, shall not be deemed to result in any such representation or warranty becoming untrue or inaccurate and shall not be deemed to be a breach by Parent of any covenant or agreement contained herein).

5.2 Savings Clause. Notwithstanding anything to the contrary contained herein, in the event that the number of Voting Shares, when aggregated with the number of shares subject to other Option and Support Agreements or other voting support agreements, by and between Parent and other holders of the voting stock of the Company dated as of the date hereof (collectively, the “Other Support Agreements”) would exceed 19.9% of the voting power of the then-outstanding shares of capital stock of the Company, this Agreement shall deem to apply only to the maximum number of shares subject hereto as would not result in the total

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shares with voting power subject to this Agreement and the Other Support Agreements exceeding such 19.9% maximum amount, with any resulting adjustment in the amount of shares subject to this Agreement and the Other Support Agreements to be allocated pro rata among such agreements based on the relative numbers of shares (calculated on an as-converted to Common Stock basis) subject to such agreements.

5.3 Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by each of the parties hereto.

5.4 Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by hand delivery, by facsimile transmission or by mail (registered or certified mail, postage prepaid, return receipt requested) or by any courier service, such as Federal Express, providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the following addresses:

If to Stockholder to:

Justin MacIntosh

42 Binalong Avenue

Allambie Heights, NSW 2100

Australia

If to Parent:

Rocket Software, Inc.

275 Grove Street

Newton, MA 02466-2273

Attn: Johan Magnusson Gedda

Facsimile No.: (617) 630-7173

with a copy (which shall not constitute notice) to:

Bingham McCutchen LLP

355 S. Grand Avenue, 44th Floor

Los Angeles, CA 90071

Attn: David Robbins, Esq.

Facsimile No.: (213) 830-8610

or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

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5.5 Governing Law.

5.6 Remedies. The parties agree that irreparable damage would occur in the event that any provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they may be entitled under any applicable Law or in equity.

5.7 Counterparts. This Agreement may be executed by facsimile or PDF signature and in two or more counterparts, each of which shall be deemed to be an original, but all of which when taken together shall constitute one and the same Agreement.

5.8 Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.

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5.9 Interpretation. When a reference is made in this Agreement to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include,” “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

5.10 No Presumption Against Drafter. Each of the parties hereto has jointly participated in the negotiation and drafting of this Agreement. In the event of an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by each of the parties hereto and no presumptions or burdens of proof shall arise favoring any party hereto by virtue of the authorship of any of the provisions of this Agreement.

[Signature Page Follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

/s/ Justin MacIntosh

Justin MacIntosh


ROCKET SOFTWARE, INC.

By:		/s/ Johan Magnusson Gedda
Name:		Johan Magnusson Gedda
Title:		Executive Vice President

ATTACHMENT A

Voting Shares Owned of Record and/or Beneficially by Stockholder


	Owned Shares	Voting Shares	Type of Shares
Justin MacIntosh	716,011	70,011	Common Stock

EX-99.3 4 dex993.htm OPTION AND SUPPORT AGREEMENT FOR ROCKET SOFTWARE & DELIA MACINTOSH Option and Support Agreement for Rocket Software & Delia MacIntosh

Exhibit 99.3

OPTION AND SUPPORT AGREEMENT

This OPTION AND SUPPORT AGREEMENT (this “Agreement”), is dated as of March 5, 2007 by and between Rocket Software, Inc., a Delaware corporation (“Parent”), and Delia MacIntosh (“Stockholder”).

WITNESSETH:

WHEREAS, as a condition to Parent’s willingness to enter into and perform its obligations under the Merger Agreement, Parent has required that Stockholder agree, and Stockholder desires to agree (i) to vote, or cause to be voted, in person or by proxy at least 1,398,952 of the Owned Shares or such greater or lesser number of shares as represents 2.75% of the Common Stock outstanding (such number of the Owned Shares, the “Voting Shares”), in favor of (a) adoption of the Merger Agreement, (b) approval of the Merger and the other transactions contemplated thereby and (c) any other matter that is required by applicable Law or by any governmental authority (as defined in the Merger Agreement) to be approved by stockholders of the Company to consummate the Merger and the other transactions contemplated by the Merger Agreement, and against any Competing Transaction; (ii) to grant Parent a proxy to vote the Voting Shares on behalf and in the name of Stockholder; (iii) to grant Parent the right to purchase from Stockholder all or any portion of the Voting Shares in accordance with the terms and conditions set forth herein; and (iv) to take the other actions, or to refrain from taking certain enumerated actions, as further described herein; and

WHEREAS, Stockholder desires to express her support for the Merger and the other transactions contemplated by the Merger Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

1. Agreement to Vote; Non-Solicit; Irrevocable Proxy.

1.1 Agreement to Vote. Subject to Section 1.4 below, Stockholder hereby agrees that, during the time this Agreement is in effect, at any meeting of the stockholders of the Company, however called, or any adjournment or postponement thereof, and in response to any request for any written consent of the stockholders of the Company Stockholder shall be present (in person or by proxy) and vote (or cause to be voted) all of her Voting Shares (a) in favor of (i) adoption of the Merger Agreement, (ii) approval of the Merger and the other transactions contemplated thereby, and (ii) approval of any other matter that is required by applicable Law or a governmental authority (as defined in the Merger Agreement) to be approved by the stockholders of the Company to consummate the Merger and the transactions contemplated by the Merger Agreement; and (b) against (i) any Competing Transaction, (ii) any liquidation or winding up of the Company, (iii) any extraordinary dividend by the Company, (iv) any change in the capital structure of the Company (other than any change in capital structure resulting from the Merger) and (v) any other action that could reasonably be expected to (A) impede, interfere with, delay, postpone or attempt to discourage or have the effect of discouraging the consummation of the Merger and the other transactions contemplated by the Merger Agreement, (B) constitute or result in a breach of any of the representations, warranties covenants, or other obligations or agreements of the Company under the Merger Agreement that would reasonably be expected to have a material adverse effect on the Company or its business or (C) impair or adversely affect the respective abilities of the Company, Parent and Newco to consummate the Merger and the other transactions contemplated by the Merger Agreement.

1.2 Non-Solicit. Subject to Section 1.4 below, Stockholder hereby agrees that, during the time this Agreement is in effect and except as otherwise expressly permitted by the Merger Agreement, neither he nor any of her affiliates or representatives shall, directly or indirectly, (a) initiate, solicit or knowingly encourage or facilitate any inquiries with respect to, or the making of, a Competing Transaction, (b) engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any Person relating to a Competing Transaction, (c) approve or recommend or propose publicly to approve or recommend, any Competing Transaction or (d) approve or recommend, or propose publicly to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, acquisition agreement, option agreement or other similar agreement relating to any Competing Transaction or propose publicly or agree to do any of the foregoing relating to any Competing Transaction.

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appoints Parent as its proxy with full power of substitution (which proxy is irrevocable and which appointment is coupled with an interest, including for purposes of all applicable provisions of the Minnesota Business Corporation Act) to vote in its discretion all Voting Shares owned by Stockholder beneficially and of record solely on the matters described in Section 1.1 effective from and after such third business day prior to the Voting Event and until the six months after the date of the applicable Voting Event. Stockholder agrees to execute any further agreement or form reasonably necessary or appropriate to confirm and effectuate the grant of the proxy contained herein. “Qualifying Action” means either (a) the delivery by each Stockholder to Parent of a copy of such Stockholder’s duly executed and valid proxy (and any amendment of such proxy) with respect to the Shareholders Meeting or other Voting Event, provided the votes reflected in such proxy or amendment thereof are consistent with Stockholder’s voting obligations under this Agreement with respect to the matter(s) in question or (b) the delivery by Stockholder to Parent of a written certificate signed by Stockholder certifying that Stockholder shall attend the Shareholders Meeting or other Voting Event in person (if a meeting of stockholders) and vote her Voting Shares in accordance with Section 1.1 hereof, provided that in the event that a Qualifying Action is subsequently rescinded, revoked or modified in any manner inconsistent with the requirements of Section 1.1, or if Stockholder does not attend and vote as required hereunder at any Voting Event, Stockholder shall be deemed to have affirmed as of the time of the Voting Event the proxy with respect to the Voting Shares granted in this Section (notwithstanding any other action take since the date hereof) and Parent (or its designee) shall be entitled to the proxy and vote the Voting Shares in its discretion at or in connection with the applicable Voting Event.

2. Right to Purchase Voting Shares

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3. Representations and Warranties of Stockholders. Stockholder hereby represents and warrants to Parent as follows:

3.1 Power; Due Authorization; Binding Agreement. Stockholder has full power and authority to execute and deliver this Agreement, to perform her obligations hereunder and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Stockholder and constitutes a valid and binding agreement of Stockholder, enforceable against Stockholder in accordance with its terms, except that enforceability may be subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors rights generally and to general principles of equity.

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3.3 No Conflicts. The execution and delivery of this Agreement by Stockholder does not, and the performance of the terms of this Agreement by Stockholder will not, (a) require Stockholder to obtain the consent or approval of, or make any filing with or notification to, any Governmental Authority, (b) require the consent or approval of any other person pursuant to any agreement, obligation or instrument binding on Stockholder or her properties and assets, (c) conflict with or violate any organizational document or any Law applicable to Stockholder or pursuant to which any of her properties or assets are bound or (d) violate any other agreement to which Stockholder or any of her affiliates is a party including any voting agreement, stockholders agreement, irrevocable proxy or voting trust, except for any consent, approval, filing or notification which has been obtained as of the date hereof or the failure of which to obtain, make or give would not, or any conflict or violation which would not, impair in any material respect Stockholder’s ability to perform her obligations under this Agreement or in any event impair Stockholder’s ability to perform her obligations under Section 1.1 hereof. Except for this Agreement, the Voting Shares are not, with respect to the voting or transfer thereof, subject to any other agreement or third party rights, including any voting agreement, stockholders agreement, irrevocable proxy or voting trust.

4. Certain Covenants of Stockholder. Stockholder hereby covenants and agrees with Parent as follows:

4.1 Restriction on Transfer, Proxies and Non-Interference. Stockholder hereby agrees, while this Agreement is in effect, not to (a) sell, transfer, pledge, encumber, assign or otherwise dispose of, or enter into any contract, option or other arrangement or understanding other than this Agreement with respect to the sale, transfer, pledge, encumbrance, assignment or other disposition of, or limitation on the voting rights of, any of the Voting Shares, (b) grant any proxies or powers of attorney, deposit any Voting Shares into a voting trust or enter into a voting agreement with respect to any Voting Shares (or attempt or purport to revoke or supersede the proxy granted to Parent hereunder), (c) take any action that reasonably could cause any representation or warranty of Stockholder contained herein to become untrue or incorrect or have the effect of preventing or disabling Stockholder from performing her covenants or other obligations under this Agreement or (d) commit or agree to take any of the foregoing actions. Any transfer of any Voting Shares in violation of this provision shall be null and void. If any involuntary transfer of any of the Voting Shares shall occur (including a sale by Stockholder’s trustee in any bankruptcy, or a sale to a purchaser at any creditor’s or court sale), the transferee (which term, as used herein, shall include any and all transferees and subsequent transferees of the initial transferee) shall take and hold such Voting Shares subject to all of the restrictions, liabilities and rights under this Agreement, which shall continue in full force and effect until the earlier of (i) the date on which such restrictions, liabilities and rights terminate pursuant to this Agreement and (ii) a valid termination of this Agreement.

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4.2 No Limitations on Actions. Stockholder signs this Agreement solely in her capacity as the record and/or beneficial owner, as applicable, of the Voting Shares; this Agreement shall not limit or otherwise affect the actions of Stockholder or any affiliate, employee or designee of such Stockholder or any of her affiliates with respect to any of the other Owned Shares or in any other capacity, including such person’s capacity, if any, as an officer of the Company or a member of the board of directors of the Company; and nothing herein shall limit or affect the Company’s rights available at law or in equity in connection with the Merger Agreement.

5. Miscellaneous.

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5.3 Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by each of the parties hereto.

If to Stockholder to:

Delia MacIntosh

42 Binalong Avenue

Allambie Heights, NSW 2100

Australia

If to Parent:

Rocket Software, Inc.

275 Grove Street

Newton, MA 02466-2273

Attn: Johan Magnusson Gedda

Facsimile No.: (617) 630-7173

with a copy (which shall not constitute notice) to:

Bingham McCutchen LLP

355 S. Grand Avenue, 44th Floor

Los Angeles, CA 90071

Attn: David Robbins, Esq.

Facsimile No.: (213) 830-8610

or to such other address as the person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

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5.5 Governing Law.

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[Signature Page Follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.


/s/ Delia MacIntosh
Name:		Delia MacIntosh


ROCKET SOFTWARE, INC.

By:		/s/ Johan Magnusson Gedda
Name:		Johan Magnusson Gedda
Title:		Executive Vice President

ATTACHMENT A

Voting Shares Owned of Record and/or Beneficially by Stockholder


	Owned Shares	Voting Shares	Type of Shares
Delia MacIntosh	3,700,957	1,398,952	Common Stock

EX-99.4 5 dex994.htm AGREEMENT & PLAN OF MERGER Agreement & Plan of Merger

Execution Version

Exhibit 99.4

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

ROCKET SOFTWARE, INC.,

ROCKET SOFTWARE MINNESOTA, INC.

AND

CORVU CORPORATION

Dated as of March 5, 2007

Execution Version

TABLE OF CONTENTS


Article I. THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . .			2

	1.1	The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	2

	1.2	Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	2

	1.3	Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	2

	1.4	Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	2

Article II. SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..			3

	2.1	Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3

	2.2	Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	3

	2.3	Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	3

Article III. MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SECURITIES IN THE MERGER . . . . .			3

	3.1	Share Consideration for the Merger; Conversion or Cancellation of Shares in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . .	3

	3.2	Stock Options and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4

	3.3	Payment for Securities in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5

	3.4	Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	7

	3.5	No Further Rights or Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8

	3.6	Certain Company Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8

Article IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			8

	4.1	Corporate Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

	4.2	Capitalization; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9

	4.3	Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10

	4.4	Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11

	4.5	SEC Reports; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

	4.6	Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

	4.7	Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	13

	4.8	Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13

	4.9	Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	13

	4.10	Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	13

	4.11	Employee Benefit Plans; Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15

	4.12	Environmental Laws and Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17

Execution Version



	4.13	Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	17

	4.14	Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22

	4.15	Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	22

	4.16	Agreements, Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23

	4.17	Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	24

	4.18	Brokers, Finders and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

	4.19	Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24

	4.20	Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	24

	4.21	Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	25

	4.22	Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	25

	4.23	Foreign Corrupt Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25

	4.24	Affiliate Transactions; Sarbanes-Oxley Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25

	4.25	Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	26

Article V. REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			26

	5.1	Corporate Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26

	5.2	Authority Relative to This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26

	5.3	Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	27

	5.4	Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	27

	5.5	Interim Operations of Newco . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28

	5.6	Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	28

	5.7	Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	28

Article VI. COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			28

	6.1	Conduct of Business of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	28

	6.2	No Solicitation of Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	31

	6.3	Reasonable Best Efforts to Complete Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	33

	6.4	Shareholders Meeting; Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34

	6.5	Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35

	6.6	Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	36

	6.7	Indemnification of Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	36

	6.8	Invention Assignment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	37

Article VII. CONDITIONS TO CONSUMMATION OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .			38

	7.1	Conditions to Each Party’s Obligations to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38

	7.2	Conditions to the Company’s Obligations to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	38

Execution Version


	7.3	Conditions to Parent’s and Newco’s Obligations to Effect the Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . .	38

Article VIII. TERMINATION; WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . ..			41

	8.1	Termination by Mutual Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	41

	8.2	Termination by Either Parent or the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	41

	8.3	Termination by Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	41

	8.4	Termination by the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	42

	8.5	Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	42

	8.6	Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	43

Article IX. ADDITIONAL DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..			44

	9.1	Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	44

Article X. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..			48

	10.1	Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48

	10.2	Survival of Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48

	10.3	Modification or Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	48

	10.4	Waiver of Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	49

	10.5	Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	49

	10.6	Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	49

	10.7	Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	49

	10.8	Entire Agreement; Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	50

	10.9	Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	50

	10.10	Obligation of Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	51

	10.11	Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	51

	10.12	Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	51

	10.13	Certain Interpretations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..	51

Attachments

	Exhibit A – Warrant Waiver Agreement
	Exhibit B – Option and Support Agreement
	Exhibit C – Management Employment Acknowledgement
	Exhibit D – Officers and Directors of Surviving Corporation
	Exhibit E – Form of Confidentiality, Assignment and Loyalty Agreement
	Exhibit F – Form of Opinion
	Exhibit G – Certificate
	Company Disclosure Schedule
	Schedule A Shareholder Register
	Schedule B Net Working Capital

iii

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of March 5, 2007, by and among Rocket Software, Inc., a Delaware corporation (“Parent”), Rocket Software Minnesota, Inc., a Minnesota corporation and a direct wholly-owned Subsidiary of Parent (“Newco”), and CorVu Corporation, a Minnesota corporation (the “Company”).

RECITALS

WHEREAS, each of Parent and the Company has determined that it is in its best interests for Parent to acquire the Company, upon the terms and subject to the conditions set forth in this Agreement;

WHEREAS, concurrently herewith, ComVest Investment Partners II LLC, a Delaware limited liability company (“ComVest”) is entering into an agreement in the form of Exhibit A attached (the “Warrant Waiver Agreement”), pursuant to which it is agreeing that the Protective Warrant issued to ComVest as of February 11, 2005 pursuant to which ComVest is entitled to purchase up to 2,000,000 shares of common stock of the Company, par value $0.01 per share (“Common Stock”) upon the happening of certain events (the “ComVest Protective Warrant”), automatically shall be cancelled without payment immediately prior to the Effective Time;

WHEREAS, ComVest, Justin M. MacIntosh and Delia MacIntosh are executing and delivering an Option and Support Agreement to Parent substantially in the form attached hereto as Exhibit B (the “Option and Support Agreement”), pursuant to which, among other things, such persons are agreeing to vote certain shares for the Merger and Parent has the option to purchase a portion of such holder’s Common Stock, as more fully described in the respective Option and Support Agreements;

WHEREAS, prior to the date hereof, the Company has redeemed and retired each formerly outstanding share of Series C Convertible Preferred Stock, par value $100.00 per share (the “Series C Stock”), of the Company, such that none of such securities currently are outstanding;

WHEREAS, prior to the date hereof, the Company has paid in full and forever extinguished any payment or other obligations with respect to the Senior Secured Promissory Note in the initial principal amount of $1,500,000 issued in favor of ComVest as of February 11, 2005 (the “ComVest Note”);

WHEREAS, concurrently herewith, each of the Key Employees is entering into an employment agreement, a form of which is attached hereto as Exhibit C (each, a “Management Employment Acknowledgement”);

WHEREAS, concurrently herewith, Parent and Company are executing and delivering to U.S. Bank National Association, a national banking association (the “Escrow Agent”), an escrow agreement (the “Escrow Agreement”), and Parent is depositing One Million Dollars ($1,000,000) (the “Escrow Fund”), to serve as a source of payment if Parent is required to pay the Company the fee provided in Section 8.5(d) hereof;

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WHEREAS, a duly constituted committee of disinterested members of the board of directors of the Company (the “Special Committee”), has determined that this Agreement and the transactions contemplated hereby, including the Merger, are in the best interests of the shareholders of the Company, has approved this Agreement and the transactions contemplated hereby in accordance with the Minnesota Business Corporation Act (the “MBCA”), and has resolved to recommend that the shareholders of the Company adopt this Agreement and approve the Merger at a special meeting of shareholders to be duly called and held by the Company;

WHEREAS, the board of directors of each of Parent and Newco has approved this Agreement, the Merger and the other transactions contemplated by this Agreement; and

WHEREAS, Parent, Newco and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger.

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements set forth herein, Parent, Newco and the Company hereby agree as follows:

ARTICLE I.

THE MERGER

1.1 The Merger. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined below), the Company and Newco shall consummate a merger (the “Merger”) in which (a) Newco shall be merged with and into the Company and the separate corporate existence of Newco shall thereupon cease, (b) the Company shall be the surviving corporation in the Merger and shall continue to be governed by the Laws (as defined below) of the State of Minnesota, and (c) the separate corporate existence of the Company shall continue unaffected by the Merger. The corporation surviving the Merger is sometimes hereinafter referred to as the “Surviving Corporation.”

1.2 Effective Time. As soon as practicable after the satisfaction or waiver of the conditions set forth in Article VII hereof, the appropriate parties hereto shall execute in the manner required by the MBCA and file with the Minnesota Secretary of State appropriate articles of merger relating to the Merger (the “Articles of Merger”), and the parties hereto shall take such other reasonable and further actions as may be required by Law to make the Merger effective. The time that the Merger becomes effective in accordance with applicable Law is hereinafter referred to as the “Effective Time.”

1.3 Effects of the Merger. The Merger shall have the effects set forth in Section 302A.641 of the MBCA.

1.4 Closing. The closing of the Merger (the “Closing”) shall take place (a) at the offices of Fredrikson & Byron, P.A., 200 South Sixth Street, Suite 4000, Minneapolis, MN 55402-1425 on the third business day following the date on which the last of the conditions set forth in Article VII hereof shall be fulfilled or waived in accordance with this Agreement, or (b) at such other place, time and date and in such other manner as Parent and the Company may agree.

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ARTICLE II.

SURVIVING CORPORATION

2.1 Articles of Incorporation. The Articles of Incorporation of Newco, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation, until thereafter further amended in accordance with the MBCA and the provisions of such Articles of Incorporation, except that such Articles of Incorporation shall be amended so as to change the name of Newco to “CorVu Corporation”.

2.2 Bylaws. The Bylaws of Newco, as in effect immediately prior to the Effective Time, shall be the Bylaws of the Surviving Corporation, until thereafter amended in accordance with the MBCA and the provisions of Newco’s Articles of Incorporation and such Bylaws.

2.3 Directors and Officers. From and after the Effective Time, the directors and officers of the Surviving Corporation shall be those individuals listed on Exhibit D until their successors have been duly elected or appointed and qualified, or until their earlier death, resignation or removal, in accordance with the Surviving Corporation’s Articles of Incorporation and Bylaws.

ARTICLE III.

MERGER CONSIDERATION; CONVERSION OR CANCELLATION OF SECURITIES

IN THE MERGER

3.1 Share Consideration for the Merger; Conversion or Cancellation of Shares in the Merger. At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Newco, the Company, the Surviving Corporation or the holders of any outstanding shares of the Company’s Capital Stock described in Section 4.2 below, each share of such Capital Stock (collectively, the “Shares,” and each, a “Share”) shall be treated as follows:

(a) Each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than those shares of Common Stock which are Dissenting Shares (as defined below) and shares owned by Parent, Newco or any direct or indirect wholly-owned Subsidiary of Parent (collectively, “Parent Companies”) or by the Company or any of the Company’s direct or indirect wholly-owned Subsidiaries), shall be cancelled and extinguished and converted into the right to receive from Parent, pursuant to Section 3.3, an amount equal to the Per Share Merger Consideration, payable to the holder thereof without interest thereon, upon the surrender of the certificate formerly representing such share of Common Stock.

(b) Each Share issued and outstanding and owned by the Parent Companies or the Company or any of the Company’s direct or indirect wholly-owned Subsidiaries shall immediately prior to the Effective Time cease to be outstanding, be cancelled and retired, without payment of any consideration therefor, and shall cease to exist.

(c) Each share of Series B Convertible Preferred Stock, par value $0.01 per share (the “Series B Stock”) issued and outstanding immediately prior to the Effective Time (other

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than those shares of Series B Stock which are Dissenting Shares), shall be cancelled and extinguished and converted into the right to receive, pursuant to Section 3.3, an amount equal to the Per Share Merger Consideration, payable to the holder thereof without interest thereon, upon the surrender of the certificate formerly representing such share of Series B Stock.

(d) Each share of common stock of Newco issued and outstanding immediately prior to the Effective Time shall be converted into one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.

3.2 Stock Options and Warrants.

(a) Prior to the Effective Time, the Board of Directors shall adopt such resolutions and take such other actions as are required to approve and effect the matters contemplated by this Section 3.2. The Company shall use its best efforts to obtain any necessary consents of the holders of Options and Warrants (each as defined below) to effect this Section 3.2.

(b) The Company shall take all necessary steps to ensure that each option to acquire shares of capital stock of the Company (“Option”) that has been granted under the Company’s 1996 Stock Option Plan or the Company’s 2005 Equity Incentive Plan (collectively, the “Option Plans”), or otherwise, and is outstanding as of immediately prior to the Effective Time, and each warrant to purchase Capital Stock, that is outstanding as of immediately prior to the Effective Time (the “Warrants”), other than the ComVest Protective Warrant, will (i) become fully exercisable or “vested” as of immediately prior to the Effective Time, and (ii) at the Effective Time, automatically shall be cancelled and converted into the right to receive, upon compliance with the provisions noted below, a lump sum cash payment in an amount equal to the product of the following:

(i) the excess, if any, of the Per Share Merger Consideration payable per share of Common Stock over the per share exercise price of each share of Common Stock subject to such Option or Warrant, multiplied by

(ii) the number of shares of Capital Stock covered by such Option or Warrant, and in each case

less applicable taxes required to be withheld pursuant to Section 3.2(f).

(c) If, in accordance with Section 3.2(b)(i) above, the Per Share Merger Consideration payable per share of Common Stock is less than the per share exercise price of any Option or Warrant, then any such Option or Warrant shall automatically be cancelled without any consideration as of the Effective Time.

(d) As of the Effective Time, each of the Option Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of securities or rights to acquire securities of the Company shall be terminated and cancelled (without any liability on the part of Parent or the Surviving Corporation other than as expressly set forth in this Section 3.2).

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(e) No party to this Agreement shall be liable to any holder of any Option or Warrant for any cash delivered to a public official pursuant to and in accordance with any abandoned property, escheat or similar Law.

(f) Parent shall cause the Surviving Corporation to deduct and withhold from the cash otherwise payable to the holder of any Option or Warrant pursuant to this Section 3.2, such amounts as the Parent and the Surviving Corporation reasonably and in good faith determine are required to be deducted and withheld with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “Code”), or any social security, FICA or Medicare tax Law, or any other provision of federal, state, local or foreign tax Law. To the extent that amounts are so withheld by the Surviving Corporation, such withheld amounts shall be (i) treated for all purposes of this Agreement as having been paid to the Option or Warrant holder in respect of which such deduction and withholding was made by the Surviving Corporation, and (ii) deposited on such Option or Warrant holder’s behalf with the appropriate taxing authorities.

(g) The Company and the Board of Directors shall take any and all actions (including, but not limited to, giving requisite notices to, and using their best efforts to obtain all necessary consents from, holders of Options and Warrants advising them of such cancellations and any rights pursuant to this Section 3.2) as are necessary to (i) fully advise holders of Options of their rights under the Option Plans or otherwise and the Options in connection with the Merger and the rights of holders of Warrants of their rights under the Warrants in connection with the Merger, and (ii) effectuate the provisions of this Section 3.2 under the terms of the Option Plans or other Option-related agreements and Warrants. From and after the Effective Time, other than as expressly set forth in this Section 3.2, no holder of an Option or Warrant shall have any rights in respect thereof other than to receive payment (if any) for the Options or Warrants as set forth in this Section 3.2, and neither Parent nor the Surviving Corporation shall have any liability or obligation under any of the Option Plans or, other than the obligation to make any required payment set forth in this Section 3.2, with respect to the Options or Warrants.

(h) Any payment to be made to a holder of any Option or Warrant in accordance with this Section 3.2 shall be subject to Parent’s prior receipt of (i) the Option or Warrant, as the case may be, for cancellation or delivery of an instrument reasonably satisfactory to Parent effecting the cancellation of the Option or Warrant, as the case may be, and (ii) written instructions from the holder of such Option or Warrant specifying the Person to whom payment should be made and the address where such check should be sent, or appropriate wire transfer instructions. Upon receipt of such items, Parent shall direct the Paying Agent (as defined below) to make any such payment in respect of such Option or Warrant. Until surrendered in accordance with the provisions of this Section 3.2, each Option and Warrant shall represent for all purposes after the Effective Time only the right to receive the payments, if any, pursuant to this Section 3.2.

3.3 Payment for Securities in the Merger. The manner of making payment for Shares, Options and Warrants in the Merger shall be as follows:

(a) Prior to the Effective Time, Parent shall designate a reputable bank or trust company or other entity reasonably acceptable to the Company to act as paying agent for the

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holders of Shares, Options and Warrants in connection with the Merger (the “Paying Agent”), and to receive the funds to which the holders of Shares will become entitled pursuant to Section 3.1(a), and to which the holders of Options and Warrants may become entitled pursuant to Section 3.2. Immediately prior to the Effective Time, Parent shall deposit, or cause to be deposited, with the Paying Agent, for the benefit of the holders of Shares, Options and Warrants, the funds necessary to make the payments contemplated by Sections 3.1 and 3.2, respectively (the “Payment Fund”). The Paying Agent shall, pursuant to irrevocable instructions, make the payments contemplated by Sections 3.1(a) and (c) and 3.2, respectively, out of the Payment Fund in accordance with the provisions of Section 3.3(c) below.

(b) The Paying Agent shall invest the Payment Fund as directed by Parent or Newco in (i) investment grade money market instruments, (ii) direct obligations of the United States of America, (iii) obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, (iv) commercial paper rated the highest quality by either Moody’s Investors Services, Inc. or Standard & Poor’s Corporation, or (v) certificates of deposit, bank repurchase agreements or bankers’ acceptances of commercial banks with capital exceeding $1 billion, in each case having maturities not to exceed thirty (30) days and as designated by Parent, with any interest earned thereon being payable to Parent. Parent shall cause the Payment Fund to be promptly replenished to the extent of any losses incurred and not offset by earnings or gains as a result of the aforementioned investments. All earnings and gains thereon shall inure to the benefit of Parent. If for any reason (including losses) the Payment Fund is inadequate to pay the amounts to which holders of Shares shall be entitled under Sections 3.1(a) and (c), and this Section 3.3, and to which holders of Options or Warrants shall be entitled under Section 3.2 and this Section 3.3, Parent shall in any event be liable for payment thereof. The Payment Fund shall not be used for any purpose except as expressly provided in this Agreement.

(c) As soon as reasonably practicable after the Effective Time, the Paying Agent shall mail to each holder of record (other than holders of certificates representing Dissenting Shares and for Shares referred to in Section 3.1(b)) of a certificate or certificates which immediately prior to the Effective Time represented outstanding Common Stock (the “Certificates”) and to each holder of record of Series B Convertible Preferred Stock (other than holders owning Dissenting Shares), (i) a notice and letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent, and shall be in such form and have such other provisions as Parent may reasonably specify), and (ii) instructions for use in effecting the surrender of the Certificates for payment therefor. Upon surrender of Certificates, if any, for cancellation to the Paying Agent, together with such letter of transmittal duly executed and properly completed, and any other required documents, the holder of such Certificates shall be entitled to receive for each Share represented by such Certificates, and the holder of record of Series B Convertible Preferred Stock shall be entitled to receive for each Share of Series B Convertible Preferred Stock, the Per Share Merger Consideration, without any interest thereon, less any required withholding of taxes, and the Certificates so surrendered shall forthwith be cancelled. With respect to Options and Warrants, Parent shall direct the Paying Agent to make payments to the holders of Options and Warrants (other than the ComVest Protective Warrant) in accordance with the provisions of Section 3.2(h).

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(d) If payment is to be made to a Person other than the Person in whose name a Certificate so surrendered is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer and that the Person requesting such payment shall pay to the Paying Agent any transfer or other taxes required by reason of the payment to a Person other than the registered holder of the Certificate surrendered, or shall establish to the satisfaction of the Paying Agent that such tax has been paid or is not applicable. Until surrendered in accordance with the provisions of this Section 3.3, each Certificate (other than certificates representing Dissenting Shares or Shares referred to in Section 3.1(b)) shall represent for all purposes only the right to receive, for each Share represented thereby, the Per Share Merger Consideration, and shall not evidence any interest in, or any right to exercise the rights of a shareholder or other equityholder of, the Company or the Surviving Corporation.

(e) Any portion of the Payment Fund made available to the Paying Agent which remains unclaimed by the former shareholders, holders of Options or holders of Warrants of the Company for nine (9) months after the Effective Time shall be delivered to Parent, upon demand of Parent, and any former shareholders, holders of Options or holders of Warrants of the Company shall thereafter look only to Parent for payment of any amounts to which such holders are entitled pursuant to Sections 3.1 or 3.2, as applicable, in each case without any interest thereon and subject to any taxes required to be withheld.

(f) Neither the Paying Agent nor any party to this Agreement shall be liable to any shareholder or holder of Options or Warrants of the Company for any Merger Consideration or cash delivered to a public official pursuant to and in accordance with any abandoned property, escheat or similar Law.

(g) The Paying Agent shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Agreement to any former holder of Shares, Options or Warrants of the Company such amounts as Parent and the Surviving Corporation reasonably and in good faith determine are required to be deducted and withheld with respect to the making of such payment under the Code, or any social security, FICA or Medicare tax Law or any other provision of federal, state, local or foreign tax Law. To the extent that amounts are so withheld by the Paying Agent, such withheld amounts shall be (i) treated for all purposes of this Agreement as having been paid to the former holder of Shares, Options or Warrants, as the case may be, in respect of which such deduction and withholding was made by the Paying Agent, and (ii) deposited on behalf of such former holder with the appropriate tax authorities.

3.4 Dissenting Shares.

(a) Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by a holder who has not voted such Shares in favor of the Merger, who will have delivered, prior to any vote on the Merger, a written demand for the fair value of such Shares in the manner provided in Section 302A.473 of the MBCA and who, as of the Effective Time, will not have effectively withdrawn or lost such right to dissenters’ rights (“Dissenting Shares”) will not be converted into or represent a right to receive the Per Share Merger Consideration pursuant to Section 3.1, but the holder thereof will be entitled only to such rights as are granted by Section 302A.473 of the

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MBCA. Each holder of Dissenting Shares who becomes entitled to payment for such Shares pursuant to Sections 302A.471 and 302A.473 of the MBCA will receive payment therefor from the Surviving Corporation in accordance with the MBCA; provided, however, that if any such holder of Dissenting Shares will have effectively withdrawn such holder’s demand for appraisal of such Shares or lost such holder’s right to appraisal and payment of such shares under Section 302A.473 of the MBCA, such holder will forfeit the right to appraisal of such Shares and each such Share will thereupon be deemed to have been canceled, extinguished and converted, as of the Effective Time, into and represent the right to receive payment from the Surviving Corporation of the Per Share Merger Consideration, as provided in Section 3.1.

(b) The Company will give Parent (i) prompt notice of any written notice of intent to demand fair value, any withdrawal of such notice and any other instrument served pursuant to Section 302A.473 of the MBCA received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to notice of intent to demand fair value under Section 302A.473 of the MBCA. The Company will not, except with the prior written consent of Parent, voluntarily make any payment with respect to any such notices or offer to settle or settle any such demand.

3.5 No Further Rights or Transfers. Except for the surrender of the Certificates representing the Shares in exchange for the right to receive the Per Share Merger Consideration with respect to each Share or the perfection of dissenters’ rights with respect to the Dissenting Shares, at and after the Effective Time, a holder of Shares shall cease to have any rights as a shareholder of the Company, and no transfer of Shares shall thereafter be made on the stock transfer books of the Company.

3.6 Certain Company Actions. Prior to the Effective Time, each of the Company and Parent shall take all such steps as may be required (to the extent permitted under applicable Law) to cause any dispositions of Shares (including derivative securities with respect to Shares) resulting from the transactions contemplated by Article III of this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) with respect to the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby makes the representations and warranties in this Article IV to Parent and Newco, except as qualified or supplemented by sections in the Company Disclosure Schedule attached hereto.

4.1 Corporate Organization and Qualification. The Company is a corporation, duly incorporated, validly existing and in good standing under the Laws of the State of Minnesota and is qualified and in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated or the business conducted by it require such

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qualification, except failure to so qualify or be in good standing would not have a Company Material Adverse Effect (as hereinafter defined in Section 9.1). Each of the Subsidiaries (as hereinafter defined in Section 9.1) of the Company is duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and is qualified and in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated or the business conducted by it require such qualification, except where failure to so qualify or be in good standing would not have a Company Material Adverse Effect (as hereinafter defined in Section 9.1). The Company has all requisite corporate power and authority to own its properties and to carry on its business as it is now being conducted. Each of the Subsidiaries of the Company has all requisite power and authority to own its properties and to carry on its business as it is now being conducted. The Company has previously made available to Parent complete and correct copies of the Company Articles, and the Company’s Restated Bylaws, as amended and in effect on the date hereof (the “Company Bylaws”), and the certificate of incorporation and bylaws (or other comparable organizational documents) of each of its Subsidiaries (the “Subsidiary Organizational Documents”).

4.2 Capitalization; Subsidiaries.

(a) The authorized capital stock of the Company consists of 100,000,000 shares, 75,000,000 shares of which are designated as Common Stock, 1,000,000 shares of which are designated as Series A Convertible Preferred Stock, par value $10.00 per share (the “Series A Stock”), 600,000 shares of which are designated as Series B Stock, and 17,000 shares of which are designated as Series C Stock (the Series C Stock, together with the Series A Stock, the Series B Stock and the Common Stock are collectively referred to herein as the “Capital Stock”). As of the date of this Agreement, 49,527,274 shares of Common Stock were issued and outstanding, no shares of Series A Stock were issued and outstanding, 360,000 shares of Series B Stock were issued and outstanding and no shares of Series C Stock were issued and outstanding. Other than the foregoing, there are no other shares of a class or series of Capital Stock of the Company or any Subsidiary thereof authorized or outstanding. All of the issued and outstanding shares of Capital Stock have been duly authorized and validly issued and are fully paid and nonassessable, and are free of preemptive rights. All of the issued and outstanding shares of Capital Stock were issued in compliance with any preemptive rights and any other statutory or contractual rights of any shareholders of the Company and in compliance with all applicable securities Laws. As of the date hereof, 1,200,000 shares of Common Stock are reserved for issuance upon conversion of the Series B Stock, 8,129,751 shares of Common Stock are reserved for issuance upon the exercise of outstanding Options granted pursuant to the Option Plans, 150,440 shares of Common Stock are reserved for issuance upon the exercise of outstanding Options granted outside of the Option Plans, and 8,239,999 shares of Common Stock are reserved for issuance upon the exercise of outstanding Warrants (including the ComVest Protective Warrant). Section 4.2(a) of the Company Disclosure Schedule sets forth a correct, true and complete list of each Person who, as of the close of business on March 2, 2007, held an Option under any of the Option Plans or otherwise or a Warrant, indicating with respect to each Option and Warrant then outstanding, the number of Shares subject to such Option or Warrant, the grant date and exercise price of such Option or Warrant, and the vesting schedule and expiration of such Option or Warrant. The only security issuable upon exercise of outstanding Options or Warrants is Common Stock. There are not as of the date hereof, and at the Effective Time there will not be, any subscriptions, outstanding or authorized options, warrants, convertible securities, calls, rights

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(including preemptive rights), commitments or any other agreements of any character to which the Company or any of its Subsidiaries is a party, or by which it may be bound, requiring it to issue, transfer, sell, purchase, redeem or acquire any shares of its capital stock or any securities or rights convertible into, exercisable or exchangeable for, or evidencing the right to subscribe for, any shares of its capital stock, or requiring it to give any Person the right to receive any benefit or rights similar to any rights enjoyed by or accruing to the holders of its shares of capital stock or any rights to participate in the equity or net income of the Company or any of its Subsidiaries. Other than the Option and Support Agreements, there are no shareholders’ agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party or by which it is bound or, to the Knowledge of the Company, between or among shareholders, in each case with respect to the transfer or voting of any capital stock of the Company or any of its Subsidiaries.

(b) To the Knowledge of the Company, the shareholder register attached to this Agreement as Schedule A accurately records, in all material respects: (i) the name and address of each Person owning shares of Capital Stock and (ii) the certificate number of each certificate evidencing shares of Capital Stock issued by the Company, the number of shares evidenced by each such certificate, the date of issuance thereof and, in the case of cancellation, the date of cancellation.

(c) Section 4.2(c) of the Company Disclosure Schedule sets forth a true and complete list of the names, jurisdictions of organization, and jurisdictions of qualification as a foreign entity of each of the Company’s Subsidiaries. All outstanding shares of capital stock or other equity interests of the Company’s Subsidiaries are owned by the Company or a direct or indirect wholly-owned Subsidiary of the Company free and clear of all Liens, other than Permitted Liens (each term as defined in Section 9.1).

(d) Other than the Subsidiaries, there are no other corporations, joint ventures, associations or other entities in which the Company or any of its Subsidiaries owns, of record or beneficially, any direct or indirect equity or other interest or any right (contingent or otherwise) to acquire the same. Other than the Subsidiaries, neither the Company nor any of its Subsidiaries is a member of (nor is any part of its business conducted through) any partnership nor is the Company or any of its Subsidiaries a participant in any joint venture or similar arrangement.

4.3 Authority Relative to This Agreement. The Company has the requisite corporate power and authority to execute and deliver this Agreement and each instrument required hereby to be executed and delivered by it at the Closing, to perform its obligations hereunder or thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement and each instrument required hereby to be executed and delivered by the Company at the Closing and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by the Special Committee and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, other than the approval of the Merger and the adoption of this Agreement by holders of the Shares in accordance with the MBCA and the Company Articles. This Agreement has been duly and validly executed and delivered by the Company and, assuming that this Agreement constitutes the legal, valid and binding agreement of Parent and Newco, constitutes the legal, valid and binding agreement of

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the Company, enforceable against the Company in accordance with its terms, except that such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to creditors’ rights generally, and (ii) general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law).

4.4 Consents and Approvals; No Violation.

(a) Neither the execution and delivery by the Company of this Agreement and of each instrument required hereby to be executed and delivered by the Company at the Closing, nor the performance of its obligations hereunder or thereunder, nor the consummation by the Company of the transactions contemplated hereby or thereby, will:

(i) conflict with or result in any breach of any provision of the Company Articles or Company Bylaws or the respective Subsidiary Organizational Documents of any of the Company’s Subsidiaries;

(ii) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental authority, except (A) pursuant to the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, (B) the filing of the Articles of Merger pursuant to the MBCA and appropriate documents with the relevant authorities of other states in which the Company or any of its Subsidiaries is authorized to do business, (C) as may be required by any applicable state securities or “blue sky” Laws, or (D) where the failure to obtain such consent, approval, authorization or permit, or to make such filing or notification, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, or adversely affect or materially delay the consummation of the transactions contemplated hereby;

(iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration or Lien) under any of the terms, conditions or provisions of any note, license, agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of its or their assets may be bound, except for such violations, breaches and defaults (or rights of termination, cancellation or acceleration or Lien) as to which requisite waivers or consents have been obtained by the Company or the failure of which to obtain would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect; or

(iv) assuming that the consents, approvals, authorizations or permits and filings or notifications referred to in this Section 4.4 are duly and timely obtained or made and the approval of the Merger and the adoption of this Agreement by the Company’s shareholders have been obtained, violate any Order (as defined in Section 4.14), or any statute, rule or regulation applicable to the Company or any of its Subsidiaries, or to any of their respective assets.

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(b) The only votes of the holders of any class or series of the Company’s or its Subsidiaries’ securities necessary to approve this Agreement, the Merger and the other transactions contemplated hereby are the affirmative vote of the holders of a majority of the outstanding voting power of (A) the Common Stock and the Series B Stock (on an as-converted basis), voting together as a single class and (B) the Series B Stock, voting as a single class (such approvals, collectively, the “Company Shareholder Approval”).

4.5 SEC Reports; Financial Statements.

(a) The Company has filed all forms, reports and documents required to be filed by it with the Securities and Exchange Commission (the “SEC”) since January 1, 2004, pursuant to the federal securities Laws and the SEC rules and regulations thereunder (collectively, the “Company SEC Reports”), all of which, as of their respective dates (or if subsequently amended or superseded by a Company SEC Report, then as of the date of such subsequent filing), complied in all material respects with all applicable requirements of the Exchange Act and the Securities Act, as the case may be. None of the Company SEC Reports, including, without limitation, any financial statements or schedules included therein, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b) The consolidated balance sheets and the related consolidated statements of income and cash flows (including the related notes thereto) of the Company included in the Company SEC Reports, as of their respective dates, (i) complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, (ii) were prepared in accordance with the books and records of the Company and with United States generally accepted accounting principles (“GAAP”) applied on a basis consistent with prior periods (except as otherwise noted therein and, subject, in the case of any unaudited interim financial statements, to normal year-end adjustments and the lack of footnotes), and (iii) presented fairly, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of their respective dates, and the consolidated results of their operations and their cash flows for the periods presented therein (subject, in the case of any unaudited interim financial statements, to normal year-end adjustments), all in accordance with GAAP.

4.6 Absence of Certain Changes or Events. As of the date of this Agreement, since June 30, 2006, the Company has not suffered any Company Material Adverse Effect, and to the Knowledge of the Company, no fact, condition or circumstance exists that would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

4.7 Litigation. As of the date of this Agreement, there are no actions, claims, suits, proceedings, governmental investigations, inquiries or subpoenas (collectively, “Actions”), pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries, or any property or asset of the Company or any of its Subsidiaries.

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4.8 Absence of Undisclosed Liabilities. Except for obligations required or permitted to be incurred in connection with the transactions contemplated hereby, neither the Company nor any of its Subsidiaries has any material liabilities or obligations of any nature (whether accrued, absolute or contingent, asserted or unasserted, due or to become due) of the type required by GAAP to be reflected as a liability on a consolidated balance sheet of the Company, other than liabilities and obligations (i) reflected on the balance sheet included in the Company’s Quarterly Report on Form 10-QSB for the fiscal quarter ended December 31, 2006, or (ii) incurred after December 31, 2006 in the ordinary course of business consistent with past practice and immaterial in amount.

4.9 Proxy Statement. The Proxy Statement (as defined below) and other materials distributed to the Company’s shareholders in connection with the Merger, including any amendments or supplements thereto, will comply in all material respects with applicable federal securities Laws, and the Proxy Statement and any other proxy materials will not, (a) at the time that it or any amendment or supplement thereto is mailed to the Company’s shareholders, (b) at the time of the Shareholders Meeting (as defined below) or (c) at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Company with respect to information that is supplied in writing by Newco or Parent expressly for inclusion in the Proxy Statement.

4.10 Taxes.

(a) Tax Returns.

(i) The Company and each of its Subsidiaries have duly, timely and properly filed all federal, state, local and foreign tax returns (including, but not limited to, income, franchise, sales, payroll, employee withholding and social security and unemployment) which were or (in the case of returns not yet due but due on or before the date of the Closing, taking into account any valid extension of the time for filing) will be required to be filed with the appropriate taxing authority. All such tax returns accurately reflect in all material respects all liabilities for taxes for the periods covered thereby, and the Company and its Subsidiaries have paid or accrued, or caused to be paid or accrued, all material taxes for all periods or portions thereof ending on or prior to the date of this Agreement (whether or not shown on any tax return), including interest and penalties and withholding amounts owed by the Company or any such Subsidiary, other than amounts being contested in good faith for which appropriate reserves have been included on the balance sheet of the appropriate Person. Without limiting the generality of the foregoing, the accruals and reserves for current taxes reflected in the financial statements included in the Company SEC Reports are adequate in all material respects to cover all taxes accruable through the respective dates thereof (including interest and penalties, if any, thereon) in accordance with GAAP consistently applied.

(ii) Neither the Company nor any of its Subsidiaries has received written notice of any material claim made by a governmental authority in a jurisdiction where the Company or such Subsidiary, as the case may be, does not file tax returns that the Company or such Subsidiary is or may be subject to taxation by that jurisdiction.

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(iii) No unpaid tax deficiencies have been proposed or assessed in writing against the Company or any of its Subsidiaries and no material tax deficiencies, whether paid or unpaid, have been proposed or assessed in writing against the Company or any of its Subsidiaries since January 1, 2002.

(iv) Neither the Company nor any of its Subsidiaries is liable for any taxes attributable to any other Person under any Law, whether by reason of being a member of another affiliated group, being a party to a tax sharing agreement, as a transferee or successor, or otherwise. Neither the Company nor any of its Subsidiaries is a party to any material tax sharing, tax indemnity or other agreement or arrangement with any entity not included in the Company’s consolidated financial statements most recently filed by the Company with the SEC contained in the 2006 Form 10-KSB. No Person has any right of claim, reimbursement, allocation or sharing against any tax refunds received or due to be received by the Company.

(b) Audits. Neither the Company nor any of its Subsidiaries has consented to any extension of time with respect to a tax assessment or deficiency or has waived any statute of limitations in respect of taxes. In addition, (i) none of the federal income tax returns of the Company or any of its Subsidiaries has been examined by the Internal Revenue Service during the last six (6) taxable years, (ii) no tax audit, examinations or other administrative or judicial proceedings are pending or being conducted, or, to the Knowledge of the Company, threatened, with respect to any taxes due from or with respect to or attributable to the Company or any Subsidiary of the Company or any tax return filed by or with respect to the Company or any Subsidiary of the Company, and (iii) no written notification of an intent to audit, to examine or to initiate administrative or judicial proceedings has been received by the Company or by any of its Subsidiaries.

(c) Liens. There are no tax Liens upon any property or assets of the Company or any of its Subsidiaries, except for Liens for current taxes not yet due and payable and Permitted Liens.

(d) Withholding Taxes. The Company and each of its Subsidiaries has properly withheld and timely paid in all material respects all taxes which it was required to withhold and pay in connection with or relating to salaries, compensation and other amounts paid or owing to its employees, consultants, creditors, shareholders, independent contractors or other third parties. All Forms W-2 and 1099 required to be filed with respect thereto have been timely and properly filed.

(e) Other Representations.

(i) There is no contract, agreement, plan or arrangement to which the Company or any of its Subsidiaries is a party, or to which the Company or any of its Subsidiaries is bound, including, but not limited to, the provisions of this Agreement, covering any Person that, individually or collectively, has resulted or would result in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code or any similar provision of foreign, state or local Law.

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(ii) Neither the Company nor any of its Subsidiaries (A) is a party to or bound by any closing agreement or offer in compromise with any taxing authority, (B) has been or will be required to include any material adjustment in taxable income for any tax period (or portion thereof) pursuant to Section 481 or Section 263A of the Code or any similar provision of foreign, state or local Law as a result of the transactions, events or accounting methods employed as of or prior to the Closing, (C) has any excess loss account (as defined in Treasury Regulations Section 1.1502-19), or (D) has any deferred intercompany gains (as defined in Treasury Regulations Section 1.1502-13).

(iii) None of the assets of the Company or any of its Subsidiaries is (A) “tax exempt use property” within the meaning of Section 168(h) of the Code, (B) subject to any lease made pursuant to Section 168(f) (8) of the Internal Revenue Code of 1954 or (C) directly or indirectly secures any debt the interest on which is tax exempt under Section 103(a) of the Code.

(iv) The Company and each of its Subsidiaries have disclosed on their federal income tax returns all positions taken therein that (A) constitute a reportable tax shelter transaction or any other tax shelter transaction within the meaning of Section 6011 of the Code or (B) to the Knowledge of the Company, could give rise to a substantial understatement of federal income tax within the meaning of Section 6662 of the Code.

(v) There are no powers of attorney or other authorizations in effect that grant to any Person the authority to represent the Company or any of its Subsidiaries in connection with any tax matter or proceeding.

4.11 Employee Benefit Plans; Labor Matters.

(a) Employee Benefit Plans.

(i) Section 4.11(a)(i) of the Company Disclosure Schedule sets forth a list of all Company Plans. The Company and the Subsidiaries have performed all material obligations required to be performed by them under and are not in any material respect in default under or in violation of, and to the Knowledge of the Company, there is no material default or violation by any party to, any Company Plan. No Action is pending or, to the Knowledge of the Company, threatened with respect to any Company Plan (other than claims for benefits in the ordinary course) and, to the Knowledge of the Company, no fact or event exists that could give rise to any such Action.

(ii) All contributions required to be made to each Company Plan under the terms thereof, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the Code, or any other applicable Law have in all material respects been timely made, and are in all material respects fully deductible in the year for which they were paid or accrued. All other amounts that should be accrued in accordance with GAAP as liabilities of the Company or any Subsidiary under or with respect to each Company Plan (including any unpaid administrative expenses and incurred but not reported claims) for the current plan year of each Company Plan have been recorded in all material respects on the books of the Company or such Subsidiary.

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(iii) There has been no “reportable event,” as that term is defined in Section 4043 of ERISA and the regulations thereunder, with respect to any of the Company Plans which would require the giving of notice, or any event requiring notice to be provided, under Section 4063(a) of ERISA.

(iv) To the Knowledge of the Company, there has been no violation of ERISA that could reasonably be expected to result in a material liability with respect to the filing of applicable returns, reports, documents or notices regarding any of the Employee Benefit Plans with the Secretary of Labor or the Secretary of the Treasury or the furnishing of such notices or documents to the participants or beneficiaries of the Employee Benefit Plans.

(v) No Action is pending or has been asserted or instituted against any Employee Benefit Plan or its assets or against the Company, or, to the Knowledge of the Company, against any plan administrator or fiduciary of any Employee Benefit Plan, with respect to the operation of any such Employee Benefit Plan (other than routine, uncontested benefit claims). To the Knowledge of the Company, the Company has not engaged in a nonexempt prohibited transaction described in Sections 406 of ERISA or 4975 of the Code.

(vi) Neither the Company nor any Subsidiary maintains, contributes to or is obligated to contribute to (or within the past three (3) years has maintained, contributed to or been obligated to contribute to) any Pension Plan that is subject to Title IV of ERISA or Section 412 of the Code.

(vii) There will be no material liability of the Company or any Subsidiary thereof (A) with respect to any Company Plan that has previously been terminated or (B) under any insurance policy or similar arrangement procured in connection with any Company Plan in the nature of a retroactive rate adjustment, loss sharing arrangement, or other liability arising wholly or partially out of events occurring at or prior to the Effective Time.

(b) Labor Matters. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining or other labor union contracts. There is no labor union or organizing activity pending or, to the Knowledge of the Company, threatened, with respect to the Company, any of its Subsidiaries or their respective businesses. There is no pending or, to the Knowledge of the Company, threatened labor dispute, strike or work stoppage against the Company or any of its Subsidiaries which would interfere with the respective business activities of the Company or its Subsidiaries. To the Knowledge of the Company, as of the date of this Agreement, no executive, key employee or significant group of employees plans to terminate employment with the Company or any Subsidiary during the next twelve (12) months.

4.12 Environmental Laws and Regulations. The Company and each of its Subsidiaries and their respective properties are in compliance in all material respects with all

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applicable federal, state, local and foreign Laws and regulations relating to pollution or protection of human health or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq., and any amendments thereto, the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., and any amendments thereto, the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., any other Laws now in effect relating to, or imposing liability or standards of conduct concerning, any Hazardous Materials (as defined in Section 9.1) (collectively, “Environmental Laws”). Neither the Company nor any of its Subsidiaries has received within the period of five (5) years prior to the Effective Time written notice of, or, to the Knowledge of the Company, is the subject of, any action, cause of action, claim, investigation, demand or notice by any Person alleging material liability under or noncompliance in any material respect with any Environmental Law or advising it that it is or may be responsible, or potentially responsible, for material response costs with respect to a release or threatened release of any Hazardous Materials. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries nor anyone acting on their behalf in the course of so acting, has used, generated, stored, released, manufactured, processed, treated, transported or disposed of any Hazardous Materials on, beneath or about any premises owned or used by the Company or any of its Subsidiaries at any time, except for Hazardous Materials that were and are used, generated, stored, released, manufactured, processed, treated, transported and disposed of in the ordinary course of business in material compliance with all applicable Environmental Laws. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has caused or is aware of any release or threat of release of any Hazardous Materials on, beneath or about any premises owned or used by the Company or any of its Subsidiaries at any time, except such releases that are in material compliance with all applicable Environmental Laws.

4.13 Intellectual Property.

(a) Section 4.13(a) of the Company Disclosure Schedule sets forth true, complete and correct lists of the following Intellectual Property (as defined below), both U.S. and foreign, that are owned or claimed by the Company or any Subsidiary of the Company as of the date of this Agreement along with the jurisdiction in which each such item of Intellectual Property has been registered or filed and the applicable registration, application or serial number or similar identifier:

(i) all patents and pending patent applications, including any and all extensions, continuations, continuations-in-part, divisions, reissues, reexaminations, substitutes, renewals, and foreign counterparts thereof;

(ii) all trademark registrations and pending trademark registration applications; and

(iii) all copyright registrations and pending copyright registration applications.

For purposes of this Agreement, the “Company’s Registered Intellectual Property” shall mean the above categories (i), (ii) and (iii), collectively.

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(b) All of the Company’s Registered Intellectual Property is owned collectively by the Company or a Subsidiary of the Company.

(c) All of the Company’s Registered Intellectual Property is subsisting, and, to the Knowledge of the Company, valid and in full force and effect (except with respect to applications), and has not expired or been cancelled or abandoned. All necessary documents and certificates in connection with such Company Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of avoiding abandonment, prosecuting and maintaining of such Company Registered Intellectual Property.

(d) Except for official actions of the relevant jurisdiction’s patent and trademark office or other government intellectual property office (“Office Actions”), the Company has not received written notice of any pending or threatened (and at no time within the two years prior to the date of this Agreement has there been pending any) Action (as defined below) before any court, governmental authority or arbitral tribunal in any jurisdiction challenging the use, ownership, validity, enforceability or registerability of any of the Company’s Registered Intellectual Property. Rejections of pending applications before a national patent, trademark or intellectual property office shall not constitute such written notice. Except for Office Actions, neither the Company nor any Subsidiary of the Company is a party to any settlements, covenants not to sue, consents, decrees, stipulations, judgments or orders resulting from Actions which permit third parties to use any of the Company’s Registered Intellectual Property.

(e) The Company and each of the Company’s Subsidiaries owns, or has valid rights to use, all the Intellectual Property (as defined below) used in the business of the Company or such Subsidiary, as applicable, as currently conducted, including without limitation (i) the reproduction, manufacture, branding, marketing, use, distribution, import, licensing, provision and sale of Proprietary Products (as defined below), and (ii) to the Knowledge of the Company, the design and development of Proprietary Products (as defined below).

(f) To the Knowledge of the Company, the conduct of the business of the Company and each of the Company’s Subsidiaries as currently conducted, including without limitation the design, development, reproduction, manufacture, branding, marketing, use, distribution, import, licensing, provision and sale of Proprietary Products does not infringe upon or misappropriate any Intellectual Property or other proprietary right owned by any Person, violate any right to privacy or publicity of any person, or constitute unfair competition or unfair trade practices under the Laws of any jurisdiction where the Company currently conducts business.

(g) To the Knowledge of the Company, no third party is misappropriating, infringing, diluting (with respect to trademarks) or violating any Intellectual Property owned by the Company or any of the Company’s Subsidiaries (collectively, and including the Company’s Registered Intellectual Property, the “Company Intellectual Property”), and no Intellectual Property or other proprietary right, misappropriation, infringement, trademark dilution or violation Actions have been brought against any third party by the Company or any Subsidiary of the Company.

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(h) As of the date of this Agreement, the Company has not received written notice of any pending or threatened (and at no time within the two years prior to the date of this Agreement has there been, to the Knowledge of the Company, pending any) Action alleging that the activities or the conduct of the Company’s business or any Company Subsidiary’s business dilutes (solely with respect to trademark rights), misappropriates, infringes, violates or constitutes the unauthorized use of, or will dilute (solely with respect to trademark rights), misappropriate, infringe upon, violate or constitute the unauthorized use of the Intellectual Property of any third party (nor, to the Knowledge of the Company does there exist any basis therefor). Except for Office Actions pertaining to Company’s Registered Intellectual Property, neither the Company nor any of the Company’s Subsidiaries is party to any settlement, covenant not to sue, consent, decree, stipulation, judgment, or order resulting from any Action which (i) restricts the Company’s or any such Subsidiary’s rights to use any Intellectual Property, (ii) restricts the Company’s or any such Subsidiary’s business in order to accommodate a third party’s Intellectual Property rights or (iii) requires any future payment by the Company or any such Subsidiary.

(i) Other than under an appropriate confidentiality or nondisclosure agreement or contractual provision relating to confidentiality and nondisclosure, there has been no disclosure to any third party of material confidential or proprietary information or trade secrets of the Company or any Subsidiary of the Company related to any product currently being marketed, sold, licensed or developed by the Company or any Subsidiary of the Company (each such product, a “Proprietary Product”). The current and former employees of the Company and each Subsidiary set forth on Section 4.13(i) of the Company Disclosure Schedule have made material contributions to the development of any Proprietary Product (including without limitation all employees who have designed, written, tested or worked on any software code contained in any Proprietary Product) and have signed an invention assignment agreement or have performed such work on the software code in the course of and within the scope of their employment. All consultants and independent contractors currently or previously engaged by the Company or its Subsidiaries who made contributions to the development of any Proprietary Product (including without limitation all consultants and independent contractors who have designed, written, or modified any software code contained in any Proprietary Product) have entered into a work-made-for-hire agreement or have otherwise assigned to the Company or a Subsidiary of the Company (or a third party that previously conducted any business currently conducted by the Company and that has subsequently assigned its rights in such Proprietary Product to the Company) all of their right, title and interest (other than moral rights, if any) in and to the portions of such Proprietary Product developed by them in the course of their work for the Company or any such Subsidiary. To the Knowledge of the Company, other than the employees, consultants and contractors referred to in this Section 4.13(i), no Person currently makes any contribution to the development of any components of any Proprietary Product owned by the Company.

(j) Neither the Company nor any Subsidiary has granted nor is it obligated to grant access or a license to any of the source code relating to any Proprietary Product, where the Proprietary Product consists of a compiled binary distribution of such source code (including, without limitation, in any such case any conditional right to access or under which the Company or any of its Subsidiaries has established any escrow arrangement for the storage and conditional release of any of its source code). Section 4.13(j) of the Company Disclosure Schedule includes,

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with respect to any grant or obligation to grant access or a license to source code listed therein, a detailed description of such grant or obligation, including the source code to which it relates. The source code for all Proprietary Products that include software has been documented in a manner that is reasonably sufficient to independently enable a programmer of reasonable skill, competence and experience with the programming language in which the software is programmed to understand, analyze, and interpret program logic, correct errors and improve, enhance, modify and support the respective Proprietary Product.

(k) Section 4.13(k) of the Company Disclosure Schedule accurately identifies and describes (i) each item of Open Source Code (defined below) that is contained in any Proprietary Product or from which any part of any Proprietary Product is derived, (ii) the applicable license agreement for each such item of Open Source Code, and (iii) the Proprietary Product(s) to which each such item of Open Source Code relates. None of the Proprietary Products is subject to the provisions of any contract or agreement which conditions the distribution of such Proprietary Product on a requirement that the Proprietary Product or any portion thereof be licensed to the public generally for the purpose of making modifications or derivative works, or on a requirement that such Proprietary Product or any portion thereof be distributed without charge to the public generally. For purposes of this Agreement, “Open Source Code” means any software code that is licensed under the GNU General Public License, GNU Lesser General Public License, Mozilla License, Common Public License, Apache License, BSD License, Artistic License, or Sun Community available to the public generally under a license approved, as of the date hereof, by the Open Source Initiative of San Francisco, California as an Open Source License.

(l) Neither the Company nor any Subsidiary of the Company has any obligation to pay any third party any future royalties or other fees for the continued use of Intellectual Property and will not have any obligation to pay such royalties or other fees arising from the consummation of the transactions contemplated by this Agreement.

(m) To the Knowledge of the Company, neither the Company nor any Subsidiary of the Company is in material violation of any contract, agreement, license or other instrument relating to Intellectual Property to which it is a party or otherwise bound, or is in any violation of such contract, agreement, license or instrument which violation gives grounds for termination of the same by any other party thereto. The consummation by the Company of the transactions contemplated hereby will not result in any violation, loss or impairment of ownership by the Company or any Company Subsidiary of, or impair or restrict the right of any of them to use, any Intellectual Property that is material to the business of the Company or any Subsidiary of the Company as currently conducted, and will not require the consent of any governmental authority or third party with respect to any such Intellectual Property. Neither the Company nor any Subsidiary of the Company is a party to any contract, agreement, license or other instrument under which a third party would have or would be entitled to receive a license or any other right to any Intellectual Property of Parent or any of Parent’s affiliates as a result of the consummation of the transactions contemplated by this Agreement nor would the consummation of such transactions result in the amendment, alteration or termination of any such license or other right which exists on the date of this Agreement.

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(n) Other than inbound licenses for generally-available commercial software, implied licenses attendant to the sale or purchase of non-software products, and outbound non-sublicensable licenses to end-user customers in the ordinary course of business, the contracts, licenses and agreements listed in Section 4.13(n)(ii) of the Company Disclosure Schedule lists all contracts, licenses and agreements to which the Company or any of the Company’s Subsidiaries is a party with respect to any Intellectual Property, including all licenses of Intellectual Property granted to or by the Company or its Subsidiaries and all assignments of Intellectual Property to or by the Company or its Subsidiaries, except for assignments by employees pursuant to invention or copyright assignment agreements. All such contracts, licenses and agreements are in full force and effect, and neither the Company nor any Subsidiary of the Company is in material breach of or has failed to perform under, any of such contracts, licenses or agreements to which it is party and, to the Knowledge of the Company, no other party to any such contract, license or agreement is in material breach thereof or has failed to perform thereunder. The consummation of the transactions contemplated by this Agreement, will neither violate nor result in the breach, modification, cancellation, termination or suspension of such contracts, licenses, arrangements and agreements set forth in Section 4.13(n). Following the Effective Time, both Parent and the Surviving Corporation will be permitted to exercise all of the Company’s rights under such contracts, licenses and agreements to the same extent the Company and its Subsidiaries would have been able to had the transactions contemplated by this Agreement not occurred and without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which Company or it Subsidiaries would otherwise be required to pay.

(o) To the Knowledge of the Company, all Company Intellectual Property will be fully transferable, alienable or licensable by the Surviving Corporation and Parent from and after the Effective Time without restriction and without payment of any kind to any third party.

(p) Except for non-sublicensable licenses to end-user customers in the ordinary course of business, Section 4.13(p) of the Company Disclosure Schedule lists all contracts, licenses and agreements between the Company or any of its Subsidiaries, on the one hand, and any other Person, on the other hand, wherein or whereby the Company or any such Subsidiary has agreed to, or assumed, any obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or otherwise assume or incur any obligation or liability or provide a right of rescission or similar right with respect to the infringement or misappropriation by the Company, any such Subsidiary or such other Person with respect to any Intellectual Property.

(q) To the Knowledge of the Company, no government funding, facilities of a university, college, other educational institution or research center or non-revenue funding from third parties was used in the development of any Company Intellectual Property. To the Knowledge of the Company, no current or former employee, consultant or independent contractor of the Company or any Company Subsidiary, who was involved in, or who contributed to, the creation or development of any Company Intellectual Property, has performed services for the government, university, college, or other educational institution or research center during a period of time during which such employee, consultant or independent contractor was also performing services for the Company or such Subsidiary.

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(r) To the Knowledge of the Company, the Proprietary Products are free of all viruses, worms, and Trojan horses, excluding key registration and activation mechanisms and self-help mechanisms.

(s) The Company and its Subsidiaries have entered an agreement with an ICANN-sanctioned domain name registrar for the registration and DNS sponsoring and administration of the second level domain names set forth in Section 4.13(s) of the Company Disclosure Schedules (“Domain Names”). The domain name registration agreements provide for the registration of each Domain Name of the Company Disclosure Schedules until the date indicated in Section 4.13(s) of the Company Disclosure Schedules, and to the Knowledge of the Company, no third-party other than ICANN has rights in the Domain Names superior to the Company or its Subsidiaries and no Person has made any claims against the Company’s Domain Names.

(t) For purposes of this Agreement, “Intellectual Property” shall mean trademarks, service marks, trade names, slogans, logos, trade dress, and other similar designations of source or origin, together with all goodwill, registrations and applications related to the foregoing; patents, utility, models and industrial design registrations or applications therefor (including without limitation any continuations, divisionals, continuations-in-part, provisionals, extensions, renewals, reissues, re-examinations and applications for any of the foregoing and foreign counterparts thereof); copyrights and copyrightable subject matter (including without limitation any registration and applications for any of the foregoing); mask works rights and trade secrets and other confidential business information (including manufacturing and production processes and techniques, research and development information, technology, drawings, specifications, designs, plans, proposals, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans, customer and supplier lists and information, where confidential), and computer programs (whether in source code, object code or other form).

4.14 Compliance with Laws. (a) Neither the Company nor any of its Subsidiaries has in any material respect violated or failed to comply with, or is in any material respect in default under, any Law, applicable to the Company or any of its Subsidiaries or any of their respective material assets and material properties and non-compliance with which has resulted or would be reasonably likely to result in a material adverse effect upon the Company, such Subsidiary or such asset or property, as the case may be, and (b) neither the Company nor any of its Subsidiaries has received any written notice from any governmental authority or other Person claiming any material violation of any Law with respect to the Company, any of its Subsidiaries or any of their respective businesses.

4.15 Takeover Statutes. The Special Committee has taken all action necessary to render inapplicable to the Merger and to the transactions contemplated by this Agreement the provisions of Section 302A.673 of the MBCA restricting business combinations with “interested shareholders” (including any such restrictions that may arise on account of the Option and Support Agreements entered into after such Special Committee meeting). The Company does not have any stockholder or shareholder rights agreement or any similar type of anti-takeover protections or defenses.

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4.16 Agreements, Contracts and Commitments. (a) Section 4.16 of the Company Disclosure Schedule contains a list of the following written contracts, agreements, understandings or other instruments or obligations to which either the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or has committed to be bound (the “Contracts”) as of the date hereof:

(i) all leases for personal property in which the amount of payments which the Company is required to make on an annual basis exceeds $50,000;

(ii) all Contracts between the Company or any of its Subsidiaries and their twenty (20) largest customers relating to the provision of maintenance services and/or consulting services by the Company or its Subsidiaries, as the case may be, determined on the basis of consolidated revenue for the twelve months ended December 31, 2006;

(iii) all Contracts between the Company or any of its Subsidiaries and their twenty (20) largest suppliers determined on the basis of the total dollar value of goods or services purchased by the Company and the Subsidiaries for the twelve months ended December 31, 2006;

(iv) all Contracts limiting the freedom of the Company or any of its Subsidiaries to compete in any line of business or in any geographic area or with any Person;

(v) all Contracts to make any capital expenditures in excess of $50,000; and

(vi) all Contracts with any director, officer, employee or consultant of or to the Company or any of its Subsidiaries or any family member or other Person affiliated with any of the foregoing.

(b) All Contracts required to be listed in Section 4.16(a) of the Company Disclosure Schedule and any “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-B of the Securities Act) with respect to the Company or any of its Subsidiaries (such contracts being referred to herein as “Material Contracts”) are valid and binding agreements of the Company or a Subsidiary of the Company, as the case may be, and are in full force and effect. To the Knowledge of the Company, none of the parties to the Material Contracts is in any material respect in breach thereof or default thereunder or, subject to receipt of the consents, waivers or amendments with respect to such Material Contracts as are described in Section 4.4(a)(iii) of the Company Disclosure Schedule, will be in any material respect in breach thereof or default thereunder as a result of the execution of this Agreement or the consummation of the transactions contemplated hereby.

(c) Neither the Company nor any of its Subsidiaries is a party to any oral or written agreement or plan, including any stock option plan, stock appreciation rights plan, restricted stock plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated

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on the basis of any of the transactions contemplated by this Agreement. There are no amounts payable by the Company or its Subsidiaries to any officers of the Company or its Subsidiaries (in their capacity as officers) as a result of the transactions contemplated by this Agreement and/or any subsequent employment termination.

4.17 Permits. The Company and each of its Subsidiaries hold all material permits, licenses, variances, exemptions, orders, registrations, certificates and other approvals from all governmental authorities that are required from them to own, lease or operate their assets and to carry on their businesses as presently conducted in compliance with all applicable Law (the “Company Permits”). Neither the Company nor any of its Subsidiaries is in material violation of the terms of any such Company Permit. To the Knowledge of the Company, the Merger, in and of itself, would not cause the revocation or cancellation of any Company Permit.

4.18 Brokers, Finders and Others. Except for the fees and expenses in the total amount of Eight Hundred Thirty Seven Thousand Dollars ($837,000) (plus $10,000 of reimbursable expenses) payable to ComVest Group Holdings, LLC and $100,000 (plus a maximum of $100 of reimbursable expenses) payable to Cherry Tree Securities, LLC (“Cherry Tree”), the Company has not employed, and to the Knowledge of the Company, no other Person has made any arrangement by or on behalf of the Company with, any Person in connection with the transactions contemplated by this Agreement which would be entitled to any investment banking, brokerage, finder’s or similar fee or commission in connection with this Agreement or the transactions contemplated hereby.

4.19 Opinion of Financial Advisor. The Special Committee has received the opinion of Cherry Tree to the effect that, as of the date hereof, the Per Share Merger Consideration to be received by the shareholders of the Company for each share of Common Stock pursuant to the Merger is fair to such shareholders from a financial point of view (such opinion that the Per Share Merger Consideration is fair from a financial point of view, the “Fairness Opinion”). Cherry Tree has consented to being named in and to the inclusion of a copy of the Fairness Opinion in its entirety and a description of its analysis and other bases for the Fairness Opinion in customary form in the Proxy Statement.

4.20 Property.

(a) The Company and its Subsidiaries have good and valid title in all personal property owned by them that is material to the business of the Company and its Subsidiaries and/or is included as an owned asset of the Company or any of its Subsidiaries in any of the financial statements included in the Company SEC Reports. The Company and each of its Subsidiaries holds valid leasehold or license interests in all personal property leased by or licensed to it that is material to its respective business, in each case free and clear of all Liens, except for Permitted Liens.

(b) True and correct descriptions of all real property leased by the Company or any of its Subsidiaries are set forth in Section 4.20 of the Company Disclosure Schedule. The Company or a Subsidiary of the Company has a valid leasehold interest in all real property leased by it, free and clear of all Liens except for Permitted Liens. Neither the Company nor any Subsidiary of the Company owns any real property.

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4.21 Insurance. The Company and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in its businesses in which the Company and the Subsidiaries are engaged. True and correct copies of all such insurance contracts and policies have been provided to Parent, and none have been subsequently amended, terminated or not renewed. Neither the Company nor any Subsidiary has any reason to believe that it or the Surviving Corporation will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

4.22 Books and Records. The books and records of the Company and each of its Subsidiaries are true and complete in all material respects, and the matters contained therein are appropriately reflected in the financial statements to the extent required to be reflected therein. Without limiting the foregoing, the minute books of the Company and its Subsidiaries contain accurate records of all meetings and accurately reflect all other actions taken by the stockholders, boards of directors and all committees of the boards of directors of the Company and the Subsidiaries. Copies of all such books and records (including a copy of the stock register for each) of the Company and each Company Subsidiary have been provided by the Company to Parent.

4.23 Foreign Corrupt Practices. Neither the Company nor any Company Subsidiary, nor to the Knowledge of the Company, any agent or other Person acting on behalf of the Company or any of its Subsidiaries, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any of its Subsidiaries (or made by any Person acting on its behalf or any of its Subsidiaries to the Knowledge of the Company) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

4.24 Affiliate Transactions; Sarbanes-Oxley Act.

(a) No executive officer, director or employee of the Company or any of its Subsidiaries or any Person owning 1% or more of the Capital Stock (an “Affiliated Party”) is a party to any Contract or has any material interest in any property or assets owned by the Company or any of its Subsidiaries or has engaged in any transaction with the Company material to the Company since January 1, 2004. Each contract, commitment or other arrangement between an Affiliated Party and the Company or any of its Subsidiaries is on terms no less favorable to the Company and its Subsidiaries than would have been available from an unaffiliated third party at the time such Contract or commitment was executed and is terminable by the Company or such Subsidiary at any time without cost, penalty charge, or any other premium. Since January 1, 2004, no event or transaction has occurred that would be required to be reported as a Certain Relationship or Related Transaction or similar relationship or transaction pursuant to Statement of Financial Accounting Standards No. 57, or in any SEC filing pursuant to Item 404 of Regulation S-B that was not so reported.

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(b) The Company is in compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations promulgated thereunder, that are effective, and intends to comply substantially with other applicable provisions of the Sarbanes-Oxley Act, and the rules and regulations promulgated thereunder, upon the effectiveness of such provisions. Without limiting the generality of the foregoing, there are no outstanding loans to directors or officers of the Company or any of its Subsidiaries of the kind prohibited by Section 402 of the Sarbanes-Oxley Act.

4.25 Expenses. Section 4.25 of the Company Disclosure Schedule sets forth a true and complete list of all Company Expenses, including the maximum amount of the obligation (including the maximum amount of any reimbursable expenses) and to whom the respective Company Expenses are payable. Except for the Company Expenses, which shall in no event exceed $1,900,000 in the aggregate (including the full amount of any reimbursable expenses), neither the Company nor any of its Subsidiaries is obligated (and the Surviving Corporation will not be obligated following the Effective Time) to pay any fees or reimburse any expense in connection with this Agreement and the transactions contemplated hereby.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO

Parent and Newco represent and warrant, jointly and severally, to the Company that:

5.1 Corporate Organization and Qualification. Each of Parent and Newco is a corporation duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation and is qualified and in good standing as a foreign corporation in each jurisdiction where the properties owned, leased or operated, or the business conducted, by it require such qualification, except where the failure to so qualify or be in such good standing would not have a Parent Material Adverse Effect. Each of Parent and Newco has all requisite power and authority (corporate or otherwise) to own its properties and to carry on its business as it is now being conducted.

5.2 Authority Relative to This Agreement. Each of Parent and Newco has the requisite corporate power and authority to execute and deliver this Agreement and each instrument required hereby to be executed and delivered by it at Closing, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement and each instrument required hereby to be executed and delivered by Parent or Newco at Closing, and the consummation by Parent and Newco of the transactions contemplated hereby and thereby have been duly and validly authorized by the respective boards of directors of Parent and Newco and by Parent as the sole shareholder of Newco, and no other corporate proceedings on the part of Parent and Newco are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by each of Parent and Newco and, assuming that this Agreement constitutes the legal, valid and binding agreement of the Company, constitutes the

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legal, valid and binding agreement of each of Parent and Newco, enforceable against each of them in accordance with its terms, except that such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to creditors’ rights generally, and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).

5.3 Consents and Approvals; No Violation. Neither the execution and delivery by Parent or Newco of this Agreement or any instrument required hereby to be delivered by Parent and Newco at the Closing, nor the performance by Parent and Newco of their respective obligations hereunder or thereunder, nor the consummation by Parent and Newco of the transactions contemplated hereby, will:

(a) conflict with or result in any breach of any provision of the Articles of Incorporation (or Certificate of Incorporation, as the case may be) or Bylaws, respectively, of Parent or Newco;

(b) require Parent or Newco to obtain or make any consent, approval, authorization, permit or filing with or notification to, any governmental authority, except (i) pursuant to the applicable requirements of the Securities Act or the Exchange Act, (ii) the filing of the Articles of Merger pursuant to the MBCA, (iii) as may be required by any applicable state securities or “blue sky” Laws, or (iv) where the failure to obtain such consent, approval, authorization or permit, or to make such filing or notification, would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect or adversely affect or materially delay the consummation of the transactions contemplated hereby;

(c) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration or Lien) under any of the terms, conditions or provisions of any note, license, agreement or other instrument or obligation to which Parent or any of its Subsidiaries is a party or by which any of their assets may be bound, except for such violations, breaches and defaults (or rights of termination, cancellation or acceleration or Lien) as to which requisite waivers or consents have been obtained or which, individually or in the aggregate, would not reasonably be expected to have a Parent Material Adverse Effect or adversely affect the consummation of the transactions contemplated hereby; or

(d) assuming that the consents, approvals, authorizations or permits and filings or notifications referred to in this Section 5.3 are duly and timely obtained or made, violate in any material respect any applicable Law to Parent or any of its Subsidiaries or to any of their respective assets.

5.4 Proxy Statement. None of the information supplied by Parent or Newco in writing for inclusion in the Proxy Statement will, (a) at the time that it or any amendment or supplement thereto is mailed to the Company’s shareholders, (b) at the time of the Shareholders Meeting or (c) at the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. No representation or warranty is made by Parent or Newco with respect to (i) statements made or

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incorporated by reference in the Proxy Statement based on information supplied by the Company expressly for inclusion or incorporation by reference therein or (ii) statements regarding Parent or Newco that become incorrect after the filing or mailing of the Proxy Statement which the Company does not correct by amending or supplementing the Proxy Statement to the extent appropriate with a reasonable period of time after written notice of such change from Parent or Newco.

5.5 Interim Operations of Newco. Newco was formed solely for the purpose of engaging in the transactions contemplated hereby and has not engaged in any business activities or conducted any operations, other than in connection with the transactions contemplated hereby.

5.6 Brokers and Finders. Neither Parent nor Newco has employed, and to the Knowledge of Parent, no other Person has made any arrangement by or on behalf of Parent or Newco with, any investment banker, broker, finder, consultant or intermediary in connection with the transactions contemplated by this Agreement which would be entitled to any investment banking, brokerage, finder’s or similar fee or commission in connection with this Agreement or the transactions contemplated hereby.

5.7 Company Stock. Neither Parent nor Newco is, nor at any time during the last four years has it been, an “interested shareholder” of the Company as defined in Section 302A.011 subd. 49 of the MBCA. As of the date hereof, and except to the extent of the rights set forth in the Option and Support Agreements, neither Parent nor Newco is a “beneficial owner” (as defined in Section 302A.011 subd. 41 of the MBCA) of any Shares.

ARTICLE VI.

COVENANTS AND AGREEMENTS

6.1 Conduct of Business of the Company. The Company agrees that during the period from the date of this Agreement to the Effective Time (unless Parent shall otherwise agree in writing and except as otherwise contemplated by this Agreement), the Company will, and will cause each of its Subsidiaries to, conduct its operations according to its ordinary and usual course of business consistent with past practice in compliance in all material respects with all applicable Laws, pay its debts and taxes when due (subject to good faith disputes over such debts), pay or perform other material obligations when due, and, to the extent consistent therewith, with no less diligence and effort than would be applied in the absence of this Agreement, use commercially reasonable efforts to preserve intact its current business organizations, keep available the service of its current officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it to the end that goodwill and ongoing businesses shall not be impaired in any material respect at or prior to the Effective Time. Without limiting the generality of the foregoing, and except as otherwise expressly permitted in this Agreement, or as set forth in Section 6.1 of the Company Disclosure Schedule, prior to the Effective Time, neither the Company nor any of its Subsidiaries will, without the prior written consent of Parent:

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(a) except for shares to be issued or delivered upon exercise of the Options outstanding as of the date hereof in accordance with the Option Plans or other Option-related agreements or Warrants outstanding as of the date hereof in accordance with their respective terms, issue, deliver, sell, dispose of, pledge or otherwise encumber, or authorize or propose the issuance, sale, disposition or pledge or other encumbrance of (i) any additional shares of capital stock of any class (including the Shares), or any securities or rights convertible into, exercisable or exchangeable for, or evidencing the right to subscribe for any shares of capital stock, or any rights, warrants, options, calls, commitments or any other agreements of any character to purchase or acquire any shares of capital stock or any securities or rights convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of capital stock, or (ii) any other securities in respect of, in lieu of, or in substitution for, Shares outstanding on the date hereof;

(b) redeem, purchase or otherwise acquire, or propose to redeem, purchase or otherwise acquire, any of its outstanding shares of capital stock;

(c) split, combine, subdivide or reclassify any shares of capital stock or declare, set aside for payment or pay any dividend, or make any other actual, constructive or deemed distribution in respect of any shares of capital stock or otherwise make any payments to shareholders in their capacity as such, except for “upstream” dividends paid by a Subsidiary to the Company;

(d) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger);

(e) adopt any amendment, modification or repeal, or propose to, or permit or consent to, any amendment, modification or repeal of the Company Articles of Incorporation or the Company Bylaws (or the equivalent Subsidiary Organizational Documents) or alter through merger, liquidation, reorganization, restructuring or in any other fashion the corporate structure or ownership of any of the Company’s Subsidiaries;

(f) make any acquisition, by means of merger, consolidation, acquisition of all or substantially all of the assets, capital stock or equity interests, or otherwise, of any Person, or make any disposition or assignment, of any of its capital stock, material assets or properties or permit any of its assets or properties to be subject to any Liens (other than Permitted Liens), except to the extent such disposition or Lien is made or incurred in the ordinary course of business consistent with past practice;

(g) incur any Indebtedness for borrowed money or guarantee any such Indebtedness, or make any loans, advances or capital contributions to, or investments in, any other Person other than to or in the Company or any of its Subsidiaries, or enter into any “keep well” or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing;

(h) grant any increases (other than as required by Law) in the compensation, pension, retirement or other employment benefit of any character, or grant any new material

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benefit to any of its directors, officers or employees, except for increases in compensation for employees who are not officers in the ordinary course of business and in accordance with past practice;

(i) pay or agree to pay any pension, retirement allowance or other employee benefit with respect to its directors, employees, agents or consultants not required or contemplated by any of the existing Company Plans as in effect on the date hereof;

(j) enter into any new, or amend any existing, employment, severance, change of control or termination agreement with any director, officer, consultant, agent or employee;

(k) except as may be required to comply with applicable Law, become obligated under any new pension plan, welfare plan, multiemployer plan, employee benefit plan, severance plan, benefit arrangement or similar plan or arrangement, which was not in existence on the date hereof, or amend any such plan or arrangement in existence on the date hereof if such amendment would have the effect of enhancing of any benefits thereunder;

(l) change or remove the certified public accountants for the Company or change any of the accounting methods, policies, procedures, practices or principles used by the Company unless required by GAAP or the SEC;

(m) enter into, or become obligated under, or change, amend, terminate or otherwise modify any Material Contract;

(n) modify the terms of, discount, setoff or accelerate the collection of, any accounts receivable, except in the ordinary course of business consistent with past practice;

(o) pay accounts payable and other obligations and liabilities other than in the ordinary course of business consistent with past practice;

(p) fail to maintain in all material respects inventory levels appropriate for the businesses of the Company and each of its Subsidiaries;

(q) make or commit to make aggregate capital expenditures in excess of $50,000;

(r) settle any material pending claim or other material disagreement resulting in any payment of an amount in excess of $50,000 in the aggregate as to all such claims or disagreements;

(s) grant any Lien on the capital stock of the Company or any of its Subsidiaries except for a Permitted Lien;

(t) enter into, directly or indirectly, any new material transaction with any Affiliate of the Company (excluding transactions with the Subsidiaries in the ordinary course of business and consistent with past practice), including, without limitation, any transaction, agreement, arrangement or understanding that would be required to be reported as a Certain Relationship or Related Transaction or similar relationship or transaction pursuant to Statement of Financial Accounting Standards No. 57, or in any SEC filing pursuant to Item 404 of Regulation S-B;

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(u) take, undertake, incur, authorize, commit or agree to take any action that would cause any of the representations or warranties in Article IV to be untrue in any respect or would reasonably be anticipated to cause any of the conditions to closing set forth in Article VII not to be satisfied; or

(v) authorize, recommend, propose or announce an intention to do any of the foregoing, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.

6.2 No Solicitation of Transactions.

(a) The Company has ceased and terminated, and has directed each officer, director, employee, investment banker, attorney or other advisor or representative of the Company to cease and terminate, all activities, discussions, solicitations, communications or negotiations with any Third Party (as defined below) with respect to any Competing Transaction (as defined below). The Company shall not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit any officer, director or employee of, or any investment banker, attorney or other advisor or representative of, the Company or any of its Subsidiaries to (i) solicit, accept or initiate, encourage, or facilitate, directly or indirectly, any inquiries relating to, or the submission of, any proposal or offer, whether in writing or otherwise, from any Person other than Parent, Newco or any Affiliates thereof (any such other Person, a “Third Party”) to acquire beneficial ownership (as defined under Rule 13(d) of the Exchange Act) of all or more than fifteen percent (15%) of the assets of the Company and its Subsidiaries, taken as a whole, or fifteen percent (15%) or more of any class or series of equity securities of the Company, whether pursuant to a merger, consolidation or other business combination or other transaction, sale of shares of stock, sale of assets, tender offer, exchange offer or similar transaction or series of related transactions, which is structured to permit such Third Party to acquire beneficial ownership of more than fifteen percent (15%) of the assets of the Company and its Subsidiaries, taken as a whole, or fifteen percent (15%) or more of any class or series of equity securities of the Company (any transaction or series of transactions with the foregoing effect, a “Competing Transaction”); (ii) participate or engage in any discussions or negotiations with any Third Party regarding any Competing Transaction, or furnish to any Third Party any information or data with respect to or access to the properties of the Company in connection with a Competing Transaction, or take any other action to facilitate the making of any proposal that constitutes, or may reasonably be expected to lead to, any Competing Transaction; (iii) withdraw, modify or amend in any way adverse to Parent or Newco its recommendation to the Company’s stockholders that they approve this Agreement and the Merger, except in strict compliance with this Section 6.2, or (iv) enter into any agreement with respect to any Competing Transaction, approve or recommend or resolve to approve or recommend any Competing Transaction, or enter into any agreement requiring it to abandon, terminate or fail to consummate the Merger or the other transactions contemplated by this Agreement.

(b) Notwithstanding the foregoing sentence or anything to the contrary in this Agreement, if the Company receives (in the absence of any violation of this Section 6.2) a bona

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fide, unsolicited written proposal or offer for a Competing Transaction prior to the receipt of the Company Shareholder Approval and that has not been withdrawn, which the Special Committee, acting reasonably and in good faith (after consultation with the Company’s outside legal counsel and financial advisor), determines by majority vote (excluding any members of the Special Committee that are not independent of the Third Parties making such offer for a Competing Transaction) (i) is reasonably likely to result in terms which are more favorable from a financial point of view to the holders of Shares than the Merger, (ii) is reasonably capable of being consummated within a reasonable period of time, and (iii) for which financing, to the extent required, is committed (a “Superior Competing Transaction”), then the Company may, in response to such unsolicited proposal or offer and subject to compliance with this Section 6.2, furnish information with respect to the Company and its Subsidiaries to, and participate in discussions and negotiations directly or through its representatives with, such Third Party. Notwithstanding the foregoing, the Company shall not provide any non-public information to any such Third Party unless the Company provides such non-public information pursuant to a nondisclosure agreement at least as restrictive as the Confidentiality Agreement (defined below) or any such other agreement binding on Parent or Newco. The Company shall be permitted to waive the provisions of any “standstill” agreement between the Company and a Third Party to the extent necessary to permit such Third Party to submit a Competing Transaction that the Special Committee believes, in its good faith judgment (after consultation with its legal counsel and financial advisors), is reasonably likely to result in a Superior Competing Transaction. Nothing contained in this Agreement shall prevent the Special Committee or the Board of Directors from (i) complying with any applicable Law, rule or regulation, including, without limitation, Rule 14d-9 and Rule l4e-2 promulgated under the Exchange Act, (ii) making any disclosure to the Company’s shareholders required by applicable Law, rule or regulation, or (iii) otherwise making such disclosure to the Company’s shareholders or otherwise that the Board of Directors (after consultation with its counsel) concludes in good faith is necessary in order to comply with its fiduciary duties to the Company’s shareholders under applicable Law.

(c) Subject to subparagraph (d) below, if the Special Committee determines that it has received a proposal for a Superior Competing Transaction and reasonably determines in good faith (after consultation with the Company’s outside counsel and financial advisors) that taking any or all of the following actions is necessary in order to comply with its fiduciary duties under applicable Law, and provided, that neither the Company nor any representative of the Company is and would not as a result be in breach of any of the provisions of this Section 6.2, the Company and the Special Committee may (i) withdraw, modify or change the Special Committee’s approval or recommendation of this Agreement or the Merger, (ii) approve or recommend to the Company’s shareholders such Superior Competing Transaction, (iii) terminate this Agreement in accordance with Section 8.4(ii), and/or (iv) publicly announce the Special Committee’s intention to do any or all of the foregoing; provided, that in any such event the Company shall timely pay any amounts owing to Parent as a result thereof pursuant to Section 8.5.

(d) The Company shall not take any of the actions referred to in Section 6.2(b) and the Special Committee shall not take any of the actions referred to in Section 6.2(c) unless the Company shall have delivered to Parent prior written notice advising Parent that it intends to take such action, which written notice shall state the material terms and conditions of the applicable Superior Competing Transaction and the identity of the applicable Third Party

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(including the ultimate beneficial owner thereof if the Third Party is an entity and such information is known to the Company), and shall be accompanied by any written materials and correspondence (or a summary of any oral communications) from or to such Third Party or its advisors with respect to the purportedly Superior Competing Transaction. The parties hereto agree that, in the event any such written notice is delivered pursuant hereto, before the Company takes any action referred to in Section 6.2(b) or the Special Committee takes any action referred to in Section 6.2(c), Parent shall be provided with three business days from the date of delivery of such notice to agree to make adjustments to the terms and conditions of this Agreement, and the Company shall negotiate in good faith with respect thereto, to match or improve upon the economic or other terms of the purportedly Superior Competing Transaction. In addition, the Company shall notify Parent as promptly as reasonably practicable, and use its reasonable best efforts to provide such notice within one business day, following receipt by the Company (or any of its advisors) of any proposal for a Competing Transaction or any written request for nonpublic information relating to the Company or any of its Subsidiaries or for access to the business, properties, assets, personnel, books or records of the Company or any of its Subsidiaries by any Third Party that indicates it may be considering making, or has made, a proposal for a Competing Transaction (including the identity of such Third Party and the material terms and conditions of any such proposal, indication of interest or request relating to a Competing Transaction). The Company shall keep Parent reasonably informed, on a current basis, of the status and material details of any such proposal, indication or request (and any modification or amendment thereof), including of any meeting of its Board of Directors (or any committee thereof) at which its Board of Directors (or such committee) is reasonably expected to consider any Competing Transaction.

(e) The Company shall not take any action to exempt any Person (other than Parent and Newco) from the restrictions on “business combinations” contained in Section 302A.673 of Minnesota Law (or any similar provisions) or otherwise cause such restrictions not to apply unless such actions are taken after a termination of this Agreement in accordance with Section 8.3(iii) or (iv) or Section 8.4(ii).

6.3 Reasonable Best Efforts to Complete Transactions.

(a) Subject to the terms and conditions herein provided, each of the parties hereto shall cooperate with the other and use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner possible, the Merger and the other transactions contemplated by this Agreement, including using its reasonable best efforts to obtain the Company Shareholder Approval, all necessary or appropriate waivers, consents, and approvals, to effect all necessary registrations, filings and submissions (including, but not limited to, the filings referred to in Sections 4.4(a)(ii) and 5.3(b) and such filings, consents, approvals, orders registrations and declarations as may be required under applicable Laws, which shall be made as promptly as reasonably practicable after the date of this Agreement, and to challenge or lift any injunction or other legal bar to the Merger (and, in such case, to proceed with the Merger as expeditiously as possible).

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(b) Each of the parties hereto agrees to cooperate with each other in taking, or causing to be taken, all actions necessary to terminate registration of the Company’s Capital Stock under the Exchange Act as of the Effective Time.

(c) Each of the Company and Parent shall keep the other reasonably informed of the status of their respective efforts to consummate the transactions contemplated hereby, including by furnishing the other with such necessary information and reasonable assistance as it may reasonably request in connection with its preparation of necessary filings or submissions of information to any governmental authority and by giving prompt notice of (i) any representation or warranty made by it contained in this Agreement becoming untrue or inaccurate in accordance with its terms, (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; provided, however, that no such notification provided pursuant to clause (i) or (ii) above shall affect the representations, warranties, covenants or agreements of the parties or the conditions to or obligations of the parties under this Agreement, (iii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Merger or the transactions contemplated by this Agreement, (iv) any notice or other communication relating to an investigation or restraint from any governmental authority in connection with the Merger or the transactions contemplated by this Agreement, (v) any notice or communication from the Key Employees who executed and delivered Management Employment Acknowledgements proposing to terminate, revoke or withdraw any statements made therein and (vi) any Action commenced or, to the Knowledge of the Company, on the one hand, or to the Knowledge of Parent, on the other hand, threatened against, relating to or involving or otherwise affecting the Company or any of its Subsidiaries, on the one hand, and Parent or Newco, on the other hand, and which, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Article IV or Article V, as the case may be, or which relate to the consummation of the transactions contemplated by this Agreement.

(d) Notwithstanding the foregoing, the Company shall not be obligated to use its reasonable efforts or take any action pursuant to this Section 6.3 if in the good faith opinion of the Special Committee (after consultation with counsel) such actions would violate its fiduciary duties to the Company’s shareholders under applicable Law.

6.4 Shareholders Meeting; Proxy Statement.

(a) The Company, acting through the Special Committee, shall:

(i) (A) use all commercially reasonable efforts to promptly prepare and, no later than fifteen (15) business days after the date of this Agreement, file with the SEC a proxy statement complying with applicable requirements of Law and all of the proxy rules of the SEC for the purposes of considering and taking action upon this Agreement (the “Proxy Statement”), (B) obtain and furnish the information required to be included by it in the Proxy Statement and, after consultation with Parent and Newco, respond promptly to any comments made by the SEC with respect to the Proxy Statement and any preliminary version thereof, and (C) undertake to obtain the Company Shareholder Approval, unless the Company has received and accepted an offer for a Superior Competing Transaction and has terminated this Agreement pursuant to Section 8.4(ii);

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(ii) include in the Proxy Statement the unanimous recommendation of the Special Committee that the shareholders of the Company vote in favor of the approval of this Agreement and the Merger and use its reasonable best efforts to solicit from the shareholders of the Company proxies in favor of adoption of this Agreement and approval of the Merger for the Shareholders Meeting; provided, that, notwithstanding anything to the contrary set forth in this Agreement, the Special Committee may withdraw, modify or amend its recommendation if, permitted by and in accordance with Section 6.2;

(iii) duly call, give notice of, convene and hold a special meeting of its shareholders for the purpose of obtaining Company Shareholder Approval (the “Shareholders Meeting”), to be held thirty (30) days following the filing of the definitive Proxy Statement with the SEC (even in the case that the Special Committee has withdrawn, modified or amended its recommendation that the shareholders approve this Agreement and the Merger); and

(iv) if at any time prior to the Shareholders Meeting any information relating to the Company, or any of its Affiliates, officers or directors, should be discovered which should be set forth in an amendment or supplement to the Proxy Statement, so that it would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Company shall promptly notify Parent and shall promptly file an appropriate amendment or supplement describing such information with the SEC and, to the extent required by Law, disseminate it to the shareholders of the Company.

(b) Parent and Newco shall, upon request, furnish the Company with all information concerning it and its Affiliates as the Company may deem reasonably necessary or advisable in connection with the Company preparing the Proxy Statement, and Parent shall be entitled to review and approve the statements made regarding such matters prior to filing with the SEC. If at any time prior to the Shareholders Meeting any information relating to the Parent, or any of its Affiliates, officers or directors, should be discovered by Parent which should be set forth in an amendment or supplement to the Proxy Statement, so that it would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, Parent shall promptly notify the Company and the Company shall promptly file an appropriate amendment or supplement describing such information with the SEC and, to the extent required by Law, disseminate it to the shareholders of the Company.

6.5 Access to Information.

(a) The Company shall (and shall cause each of its Subsidiaries to) afford to the officers, employees, counsel, accountants and other authorized representatives of Parent (“Representatives”), in order to evaluate the transactions contemplated by this Agreement and

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from time to time evaluate the Company’s Net Working Capital, reasonable access, during normal business hours and upon reasonable advance notice throughout the period prior to the Effective Time, to its properties, books, records, facilities, officers, directors and accountants and, during such period, shall (and shall cause each of its Subsidiaries to) furnish or make available reasonably promptly to such Representatives all information concerning its business, properties and personnel as may reasonably be requested; provided, however, that any such access shall be conducted under the supervision of personnel of the Company and in a manner that does not unreasonably interfere with the normal operations of the Company. Parent agrees that it shall not, and shall cause its Representatives not to, use any information obtained pursuant to this Section 6.5 for any purpose unrelated to the consummation of the transactions contemplated by this Agreement.

(b) No information received pursuant to an investigation made under this Section 6.5 shall be deemed to (i) qualify, modify, amend or otherwise affect any representations, warranties, covenants or other agreements of the Company set forth in this Agreement or any certificate or other instrument delivered to Parent and Newco in connection with the transactions contemplated hereby, (ii) amend or otherwise supplement the information set forth in the Company Disclosure Schedule, (iii) limit or restrict the remedies available to the parties under applicable Law arising out of a breach of this Agreement or otherwise available at Law or in equity, or (iv) limit or restrict the ability of either party to invoke or rely on the conditions to the obligations of the parties to consummate the transactions contemplated by this Agreement set forth in Article VII hereof.

(c) The Confidentiality Agreement, dated September 11, 2006 (the “Confidentiality Agreement”), by and between the Company (being represented by ComVest Group Holdings, LLC) and Parent shall apply, in accordance with the terms thereof, to information furnished by the Company, its Subsidiaries and the Company’s officers, employees, counsel, accountants and other authorized representatives pursuant to this Section 6.5.

6.6 Publicity. The parties shall consult with each other and shall mutually agree upon any press releases or public announcements pertaining to this Agreement and the Merger and shall not issue any such press releases or make any such public announcements prior to such consultation and agreement, except as may be required by applicable Law or by obligations pursuant to any agreement with any automated quotation system, in which case the party proposing to issue such press release or make such public announcement shall consult in good faith with, the other parties before issuing any such press releases or making any such public announcements; provided, that no such consultation shall be required to make any disclosure or otherwise take any action expressly permitted by Section 6.2.

6.7 Indemnification of Directors and Officers.

(a) Parent and Newco agree that all rights to indemnification existing in favor of, and all exculpations and limitations of the personal liability of, the directors, officers, employees and agents of the Company (the “Indemnified Parties”) in the Company Articles and Company Bylaws, and of the Company’s Subsidiaries in their respective Articles of Incorporation and Bylaws, as in effect as of the date hereof with respect to matters occurring at or prior to the Effective Time, including the Merger, shall continue in full force and effect for a period of not

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less than six (6) years after the Effective Time, and Parent shall cause the Surviving Corporation to honor all such obligations to the Indemnified Parties; provided, however, that (i) all rights to indemnification in respect of any such claims (each, a “Claim”) asserted or made within such period shall continue until the disposition of such Claim, and (ii) Parent and Newco shall acquire “tail” directors’ and officers’ liability insurance and fiduciary insurance policies effective as of the Effective Time covering Claims with respect to matters occurring at or prior to the Effective Time, including the Merger, and with terms that are no less favorable to the Indemnified Parties than the Company’s existing directors’ and officers’ liability insurance and fiduciary insurance policies in effect immediately prior to the Effective Time; provided, however, that Parent and Newco collectively shall be obligated to pay no more than $100,000 in the aggregate for such “tail” directors’ and officers’ liability insurance and fiduciary insurance policies and if such insurance with terms no less favorable to the Indemnified Parties than such existing directors’ and officers’ liability insurance and fiduciary insurance policies cannot be obtained for aggregate premiums of $100,000 or less, then Parent shall only be obligated to obtain such insurance coverage on such terms and for such duration as reasonably can be obtained for $100,000.

(b) This Section 6.7 is intended for the irrevocable benefit of, and to grant third party rights to, the Indemnified Parties and shall be binding on all successors and assigns of Parent, the Company and the Surviving Corporation. Each of the Indemnified Parties shall be entitled to enforce the covenants contained in this Section 6.7. The obligations under this Section 6.7 shall not be terminated, amended or otherwise modified in such a manner as to adversely affect any Indemnified Party (or any other Person who is a beneficiary under the “tail” policy referred to in paragraph (a) above) and their respective heirs, successors and assignees without the prior written consent of such Indemnified Party (or other Person who is a beneficiary under such “tail” policy) and their respective heirs, successors and assignees. The rights of each Indemnified Party (and other Person who is a beneficiary under such “tail” policy) (and their respective heirs, successors and assignees) under this Section 6.7 shall be in addition to, and not in substitution for, any other rights that such Persons may have as of the date hereof under the certificate or articles of incorporation, bylaws or other equivalent organizational documents, any indemnification agreements to which such Indemnified Party or other Person is a party, or applicable Law (whether in a proceeding at Law or in equity).

(c) In the event that the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges with or into any other Person and shall not be the continuing or surviving entity of such consolidation or merger, or (ii) transfers or conveys a majority of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors, assigns and transferees of the Surviving Corporation, as the case may be, assume the obligations set forth in this Section 6.7.

6.8 Invention Assignment Agreements. The Company shall use its commercially reasonable best efforts to cause each Person who (i) is currently employed by the Company or any of its Subsidiaries or is providing services to the Company or any of its Subsidiaries as a consultant or an independent contractor, or (ii) is hired by the Company or any Subsidiary after the date of this Agreement and through the Effective Time who has material responsibilities or makes or has made material contributions with respect to the development of any Proprietary Products (including, designing, writing, testing or working on any software code contained in a Proprietary Product) to execute a Confidentiality, Assignment and Loyalty Agreement, in the form attached hereto as Exhibit E as promptly as reasonably practicable after the date of this Agreement.

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ARTICLE VII.

CONDITIONS TO CONSUMMATION OF THE MERGER

7.1 Conditions to Each Party’s Obligations to Effect the Merger. The respective obligations of each party to this Agreement to effect the Merger are subject to the satisfaction or written waiver by the party protected by the condition to be satisfied or waived, at or prior to the Effective Time, of the following conditions:

(a) Shareholder Approval. The Company Shareholder Approval shall have been obtained in accordance with applicable Law and the Company Articles and Company By-Laws.

(b) Injunction. There shall not be in effect any Law enjoining or prohibiting the consummation of the transactions contemplated hereby; provided, however, that prior to any party invoking this condition, such party shall use its commercially reasonable efforts to have any such Law lifted, vacated, or rendered inapplicable to such transactions.

(c) Governmental Filings and Consents. All consents, orders and approvals of governmental authorities legally required for the consummation of the Merger and the transactions contemplated hereby shall have been obtained and be in effect at the Effective Time.

7.2 Conditions to the Company’s Obligations to Effect the Merger. The obligations of the Company to effect the Merger are subject to the satisfaction, at or prior to the Effective Time, of the following additional conditions (any of which may be waived by the Company, in whole or in part, at any time prior to the Effective Time):

(a) The representations and warranties of Parent and Newco contained in this Agreement, without regard to any qualification or reference to “material”, “Material Adverse Effect” or similar variation thereof (a “Materiality Qualifier”) shall be true and correct at and as of the Effective Time as though made on and as of such date (except that those representations and warranties which address matters only as of a particular date shall remain true and correct as of such date), except for those failures to be true and correct which individually or in the aggregate, have not had and would not reasonably be expected to have a Parent Material Adverse Effect, and the Company shall have received a certificate of a duly authorized officer of Parent to the foregoing effect.

(b) Parent and Newco shall have performed and complied with in all material respects their obligations under this Agreement required to be performed or complied with on or prior to the Effective Time, and the Company shall have received a certificate of a duly authorized officer of Parent to the foregoing effect.

7.3 Conditions to Parent’s and Newco’s Obligations to Effect the Merger. The obligations of Parent and Newco to effect the Merger are subject to the satisfaction, at or prior to the Effective Time, of the following additional conditions (any of which may be waived by Parent and Newco, in whole or in part, at any time prior to the Effective Time):

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(a) The representations and warranties of the Company contained in this Agreement, without regard to any Materiality Qualifiers, shall be true and correct at and as of the Effective Time as though made on and as of such date (except that those representations and warranties which address matters only as of a particular date shall remain true and correct as of such date) except for those failures to be true and correct which, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect, and Parent shall have received a certificate of a duly authorized officer of the Company to the foregoing effect.

(b) The Company shall have performed and complied with in all material respects its obligations under this Agreement, required to be performed or complied with on or prior to the Effective Time, and Parent shall have received a certificate of a duly authorized officer of the Company to the foregoing effect.

(c) All consents, approvals and authorizations necessary for the Company to consummate the Merger and the other transactions contemplated hereby shall have been obtained (including any consents needed from holders of Options and Warrants).

(d) Less than ten percent (10%) of the outstanding shares of Capital Stock shall be Dissenting Shares.

(e) There shall not have occurred or exist a Company Material Adverse Effect.

(f) There shall not be pending any Action that has a reasonable likelihood of success challenging this Agreement or the transactions contemplated hereby, seeking to delay, restrain or prohibit the Merger or seeking to prohibit or impose material limitations on the ownership or operations of all or a material portion of the operations or assets of the Company or any of its Subsidiaries that would be effective after the Effective Time, or seeking the payment of any material amount of damages.

(g) Parent and Newco shall have sufficient funds available to them to consummate the Merger.

(h) The Company shall have (i) repaid the ComVest Note in full, in accordance with its terms as in effect as of the date of such repayment and without making any other payment not required by its express terms, and (ii) delivered to Parent evidence of repayment in full of the ComVest Note and the release of any related Liens, and except for that certain term loan in the principal amount of $3,200,000, as evidenced by that certain promissory note, dated as of February 20, 2007 issued by the Company in favor of Commerce Bank pursuant to that certain Term Loan Agreement, dated as for February 20, 2007 between the Company and Commerce Bank, there shall be no other Indebtedness of the Company outstanding as of the Effective Time, other than accounts payable, trade payables and capital lease obligations incurred in the ordinary course of business.

(i) Parent shall have received an opinion of the Company’s outside legal counsel in form and substance in the form attached hereto as Exhibit F.

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(j) Parent shall have received a certificate of a duly authorized officer of the Company certifying (i) as to the accuracy and completeness of Section 4.25 of the Company Disclosure Schedule and (ii) that Company Expenses do not exceed, in the aggregate, $1,900,000 (including the full amount of any reimbursable expenses). Parent shall have received an executed release, in a form reasonably satisfactory to Parent, from each Person to whom any Company Expense is payable as set forth in Section 4.25 of the Company Disclosure Schedule, and pursuant to which the Company, the Surviving Corporation, Parent and Newco and any Affiliate of any of them, are fully released from any obligation or liability in respect of any amounts in excess of the respective amounts owed to such Person (whether for fees, reimbursable expenses or otherwise) as set forth in Section 4.25 of the Company Disclosure Schedule.

(k) The Warrant Waiver Agreement shall be in full force and effect and shall not have been amended since the execution thereof.

(l) The Company shall have delivered to Parent the following documents: (i) a certified copy of the resolutions duly adopted by the Board of Directors authorizing the execution, delivery and performance of this Agreement and the Merger, (ii) a certified copy of the resolutions duly adopted by the Company’s shareholders adopting this Agreement, (iii) a good standing certificate, or equivalent document, certified by the Secretary of State of the State of Minnesota, and dated no more than two (2) business days prior to the Closing Date (iv) a copy of the Company’s Articles, certified by the Secretary of State of the State of Minnesota as of no more than two (2) business days prior to the Closing Date, and (v) a certificate executed by a duly authorized officer of the Company to the effect that neither the Company nor any Subsidiary of the Company is a U.S. real property holding company substantially in the form attached hereto as Exhibit G.

(m) The Net Working Capital deficit as of the Closing Date shall be no greater than negative $5,463,000 calculated in the same manner as the Target Working Capital as set forth on Schedule B.

(n) The Fairness Opinion shall have been delivered and not subsequently modified, amended, withdrawn or rescinded.

(o) The Company shall have delivered to Parent copies of all Confidentiality, Assignment and Loyalty Agreements executed pursuant to Section 6.8.

(p) The Tax Indemnification Arrangement shall be in full force and effect in favor of the Company, and shall be available to and enforceable by the Surviving Corporation from and after the Effective Time notwithstanding the consummation of the Merger and the other transactions contemplated hereby.

(q) All previously outstanding shares of Series C Stock shall have been redeemed and retired in accordance with the terms of such Capital Stock and there shall be no Series C Stock outstanding and no holder of such shares entitled to vote on any matter contemplated hereby by virtue of ownership of Series C Stock. Parent shall have received the original Series C Stock certificates marked “CANCELLED” and wire confirmations or cancelled checks, as the

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case may be, showing the full amount paid in respect of the redemption of such shares of Series C Stock, as evidence of the completion of the redemption. In addition, Parent shall have received a stock ledger showing all issuances of Series C Stock, as well as reflecting the redemption of all outstanding shares of Series C Stock, such that no share of Series C Stock remains outstanding.

ARTICLE VIII.

TERMINATION; WAIVER

8.1 Termination by Mutual Consent. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time (even after obtaining the Company Shareholder Approval), by the mutual written consent of Parent and the Company.

8.2 Termination by Either Parent or the Company. This Agreement may be terminated and the Merger may be abandoned by Parent or the Company if (i) there is in force a Law permanently restraining, enjoining or otherwise prohibiting the Merger and such Law shall have become final and non-appealable and not subject to challenge, (ii) the Company Shareholder Approval shall not have been received at the Shareholders Meeting duly called and held at which a quorum was present or any adjournment thereof; provided that the right to terminate this Agreement pursuant to this Section 8.2(ii) (A) shall not be available to the Company if the Company has breached the provisions of Section 6.2 or 6.4, and (B) shall be subject to the Company’s obligation to pay any amounts determined to be payable to Parent under Section 8.5 as and when due, or (iii) the Effective Time shall not have occurred on or before June 30, 2007 (the “Termination Date”); provided, that (A) the right to terminate this Agreement pursuant to this Section 8.2(iii) shall not be available to any party whose failure to fulfill any of its obligations under this Agreement results in such failure to close, and (B) the Termination Date for any termination by the Company pursuant to this Section 8.2(iii) shall be extended by the number of days in excess of thirty (30) days that is required to obtain final SEC approval of the Proxy Statement (measured from the date of the first filing of the preliminary Proxy Statement with the SEC until the date the Proxy Statement is cleared by the SEC to be mailed to the shareholders of the Company).

8.3 Termination by Parent. This Agreement may be terminated by Parent prior to the Effective Time (even after receipt of the Company Shareholder Approval), if (i) there shall have been a breach of representation, warranty or covenant of the Company that gives rise to a failure of the conditions to Closing in Sections 7.3(a) or 7.3(b), which breach or failure is not cured, or is incapable of being cured, within ten (10) days after the receipt by the Company of written notice, provided, that at such time Parent shall not be in breach of its representations, warranties, or covenants such that the conditions in Sections 7.2(a) or 7.2(b) are not then capable of being satisfied other than as a result of the Company’s actions or omissions, (ii) the Special Committee withdraws or modifies or changes its recommendation of this Agreement or the Merger in a manner adverse to Parent or Newco, or (iii) the Company shall have approved or recommended a Competing Transaction.

8.4 Termination by the Company. This Agreement may be terminated by the Company and the Merger may be abandoned at any time prior to the Effective Time if (i)

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there shall have been a breach of representation, warranty or covenant of Parent or Newco that gives rise to a failure of the conditions to Closing in Sections 7.2(a) or 7.2(b), which breach or failure is not cured, or is incapable of being cured, within ten (10) days after the receipt by Parent of written notice, provided, that at such time the Company shall not be in breach of its representations, warranties, or covenants such that the conditions in Sections 7.3(a) or 7.3(b) are not then capable of being satisfied, other than as a result of Parent’s actions or omissions, or (ii) the Special Committee withdraws or modifies or changes its recommendation of this Agreement or the Merger and there exists at such time a proposal or offer for a Competing Transaction that constitutes a Superior Competing Transaction and the Company concurrently enters into, a definitive agreement providing for the consummation of such Superior Competing Transaction; provided, that, in the case of any such termination by the Company, (A) prior to such termination, the Company shall have complied with its obligations under Section 6.2(d), (B) Parent does not make, within three (3) business days of receipt of the written notice to be delivered pursuant to Section 6.2(d), an irrevocable unconditional offer that the Special Committee reasonably and in good faith determines is at least as favorable to the stockholders of the Company as the proposal or offer for such Superior Competing Transaction, it being understood that the Company shall not enter into such binding agreement during such three (3) business day period, and (C) the Company shall timely pay the Termination Fee or Expense Reimbursement to Parent required by Section 8.5(b) within the applicable time period specified in Section 8.5.

8.5 Effect of Termination.

(a) In the event of the termination or abandonment of this Agreement pursuant to Sections 8.1, 8.2, 8.3 or 8.4, this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its Affiliates, directors, or officers thereof other than pursuant to the provisions of this Section 8.5; provided, that nothing contained in this Section 8.5 shall relieve any party from liability for any fraud or the breach of any representation, warranty, covenant or other agreement contained in this Agreement occurring prior to termination.

(b) In the event of termination of this Agreement without consummation of the transactions contemplated hereby:

(i) by the Company pursuant to Section 8.2(ii) or 8.2(iii), if within nine (9) months of the date of such termination, the Company and/or its shareholders enters into a definitive agreement for or consummates a Competing Transaction (for purposes of which the definition of “Competing Transaction” shall be as defined in Section 6.2 except that all references to “15%” shall instead be deemed to refer to “50%”);

(ii) by Parent pursuant to Sections 8.3(ii) or 8.3(iii); or

(iii) by the Company pursuant to Section 8.4(ii),

then the Company shall pay Parent by wire transfer of immediately available funds a nonrefundable fee in the amount of One Million Dollars ($1,000,000) (the “Termination Fee”), in the case of clause (i) above concurrently with the consummation of the Competing Transaction, or in the case of clauses (ii) or (iii) above concurrently with termination.

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(c) In the event of termination of this Agreement without consummation of the transactions contemplated hereby by either Parent or the Company pursuant to Section 8.2(ii), then the Company shall reimburse Parent by wire transfer of immediately available funds for the amount of expenses (including any financing commitment fees) actually incurred by Parent or Newco in connection with this Agreement or the transactions contemplated hereby, up to a maximum of One Million Dollars ($1,000,000) (the “Expense Reimbursement”), concurrently with such termination, provided that if the Company is obligated to pay a Termination Fee in compliance with Section 8.5(b)(i) thereafter, then the Termination Fee so payable shall be reduced by the amount previously paid by the Company for the Expense Reimbursement.

(d) If this Agreement is terminated by either Parent or the Company pursuant to Section 8.2(iii) and at such time Parent (i) is not otherwise entitled to terminate this Agreement pursuant to this Article VIII, and (ii) each and every condition to Parent and Newco’s obligation to effect the Merger, other than the financing condition in Section 7.3(g), is then satisfied, (or, to the extent any such condition requires the delivery of documents by or on behalf of the Company at the Closing, the Company shall then be in a position to deliver or cause the delivery of such items to Parent were the Closing then to occur), Parent shall pay to the Company a nonrefundable fee of One Million Dollars ($1,000,000) (the “Parent Termination Fee”) which shall be paid from the Escrow Fund pursuant to the Escrow Agreement. Upon payment of the Parent Termination Fee, Parent, Newco and their respective shareholders, partners, members, Affiliates, directors, officers, employees and agents shall be forever fully released and discharged by the Company from any liability or obligation under this Agreement or as a result of the termination or failure to consummate the transactions contemplated by this Agreement or any claims or Actions arising therefrom.

(e) The parties acknowledge and agree that Parent and the Company have incurred significant expense in negotiation and entering into this Agreement and that if terminated in the context of facts giving rise to the payment of the Termination Fee, the Parent Termination Fee or the Expense Reimbursement, (i) the Termination Fee or the Parent Termination Fee, respectively, shall be deemed liquidated damages appropriate in such circumstances and not in the nature of a penalty, and (ii) the payment of the Expense Reimbursement also shall be deemed an appropriate measure of liquidated damages to compensate Parent or Newco for expenses associated with the transactions contemplated hereby, and not in the nature of a penalty.

8.6 Extension; Waiver. At any time prior to the Effective Time, each of Parent, Newco and the Company may (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties of the other parties contained herein or in any document, certificate or writing delivered pursuant hereto, or (iii) waive compliance by the other parties hereto with any of the agreements or conditions contained herein. Any agreement on the part of any party hereto to any such extension or waiver shall be valid only if set forth in any instrument in writing signed on behalf of such party. The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of such rights.

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ARTICLE IX.

ADDITIONAL DEFINITIONS

9.1 Certain Definitions. As used herein the following terms have the following respective meanings:

(a) An “Affiliate” of, or a Person “affiliated” with, a specific Person is a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.

(b) “Company Disclosure Schedule” means the Company Disclosure Schedule dated as of March 5, 2007, delivered to Parent by the Company in connection with the execution and delivery of this Agreement

(c) “Company Expenses” means the any and all fees and expenses, whether previously paid, accrued or payable in the future, of financial advisors, proxy solicitors, legal counsel, accountants, and all other third parties providing services or advice to the Company in connection with the transactions contemplated hereby, retention or change in control bonuses payable to Company employees, severance payments incurred but not yet paid to Joseph J. Caffarelli and David C. Carlson as a result of the consummation of the Merger or the execution of this Agreement, and all other fees and expenses incurred by the Company or payable by the Company on behalf of other Persons, all in connection with the negotiation, execution and consummation of this Agreement and the transactions contemplated hereby.

(d) “Company Material Adverse Effect” shall mean any circumstance, change in or effect on the business, assets or liabilities of the Company or any Subsidiary of the Company that, individually or in the aggregate with all other circumstances, changes in, or effects on such business, assets or liabilities of the Company or any Subsidiary of the Company: (i) is or is reasonably likely to be materially adverse to the business, operations, assets or liabilities (including contingent liabilities), employee relationships, customer or supplier relationships, results of operations or the condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or (ii) is reasonably likely to materially adversely effect the ability of the Surviving Corporation to operate or conduct its business in the manner in which the Company currently conducts its business; but excluding any changes or effects resulting from (i) general changes in economic, or financial or capital market conditions, in each case which do not affect disproportionately the Company and its Subsidiaries, taken as a whole, (ii) terrorism, war or the outbreak of hostilities, (iii) changes in conditions generally applicable to the industries in which the Company and its Subsidiaries are involved, in each case which do not affect the Company and its Subsidiaries, taken as a whole, to a materially disproportionate degree relative to other companies in such industries, (iv) changes in the Law or GAAP, or (v) from the announcement of the transactions contemplated hereby, the taking of any action contemplated or required by this Agreement, or the consummation of the transactions contemplated hereby.

(e) “Company Plan” means (i) all “employee benefit plans” (as defined in Section 3(3) of ERISA), and any other employee benefit arrangements or payroll practices (including, without limitation, severance pay, vacation pay, company awards, salary continuation

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for disability, sick leave, death benefit, hospitalization, medical welfare benefit, deferred compensation, profit sharing, retirement, retiree medical or life insurance, supplemental retirement, bonus or other incentive compensation, stock purchase, stock option, restricted stock and phantom stock arrangements or policies) (collectively, the “Employee Benefit Plans”); (ii) all Employee Benefit Plans which are “pension plans” (as defined in Section 3(2) of ERISA (“Pension Plans”)); and (iii) all material employment, termination, bonus, severance or other contracts or agreements (“Employment Agreements”), in each case to which the Company or any ERISA Affiliate (as defined below) is a party, with respect to which the Company or any ERISA Affiliate has any obligation or which are maintained by the Company or any ERISA Affiliate or to which the Company or an ERISA Affiliate contributes or is obligated to contribute with respect to current or former employees of the Company.

(f) “Consolidated Current Assets” means, at any relevant time, the aggregate amount of the current assets, being cash and cash equivalents, trade receivables, prepaid expenses and other receivables of the Company and its Subsidiaries at such time calculated on a consolidated basis, but, in each case, excluding the deferred tax accounts and any cash paid in connection with the exercise of Options or Warrants between the date of this Agreement and the Effective Time.

(g) “Consolidated Current Liabilities” means, at any relevant time, the aggregate amount of the current liabilities, including, but not limited to, accounts payable, payroll accruals, corporation taxes, other current liabilities and deferred revenues, of the Company and its Subsidiaries at such time calculated on a consolidated basis.

(h) “governmental authority” means any agency, public or regulatory authority, instrumentality, department, commission, court, ministry, tribunal or board of any government, whether foreign or domestic or supranational and whether national, federal, tribal, provincial, state, regional, local or municipal.

(i) “Hazardous Materials” means petroleum and all derivatives thereof or synthetic substitutes therefor, asbestos and asbestos-containing materials, and any and all materials now or hereafter defined, listed, designated or classified as, or otherwise determined to be, “hazardous wastes,” “hazardous substances,” “radioactive,” “solid wastes,” or “toxic” under or pursuant to or otherwise listed or regulated pursuant to any Environmental Law.

(j) “Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person, whether or not contingent, for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services, (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the Company or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities (whether or not drawn), (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock,

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valued, in the case of redeemable preferred stock, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (h) all Indebtedness of others referred to in clauses (a) through (g) above guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Indebtedness or to advance or supply funds for the payment or purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness or to assure the holder of such Indebtedness against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss, and (i) all Indebtedness referred to in clauses (a) through (g) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness.

(k) “Key Employees” shall mean Eddie O’Reilly, Troy Rollo, Grant Christian and Deanna Ziemba.

(l) “Knowledge of the Company” shall mean the actual knowledge of Joseph J. Caffarelli, Justin M. MacIntosh, Eddie O’Reilly, Troy Rollo, Dave Carlson, Grant Christian, and Deanna Ziemba.

(m) “Knowledge of Parent” shall mean the actual knowledge of Johan Magnusson Gedda.

(n) “Law” shall mean statutes, common laws, rules, ordinances, regulations, codes, licensing requirements, writs, orders, judgments, injunctions, decrees, licenses, agreements, settlements, governmental guidelines or interpretations, permits, rules and bylaws of a governmental authority.

(o) “Lien” means any charge, encumbrance, lien, pledge, security interest or adverse claim.

(p) “Net Working Capital” means, at any time, the aggregate amount of the Consolidated Current Assets of the Company at such time less the aggregate amount of the Consolidated Current Liabilities of the Company at such time.

(q) “Parent Material Adverse Effect” shall mean a material adverse change in the financial condition, business, assets, liabilities, properties or results of operations of Parent and its Subsidiaries, taken as a whole, excluding any changes or effects resulting from (i) general changes in economic, or financial or capital market conditions, (ii) terrorism, war or the outbreak of hostilities, (iii) changes in conditions generally applicable to the industries in which Parent and its Subsidiaries are involved, in each case which do not affect Parent and its Subsidiaries, taken as a whole, to a materially disproportionate degree relative to other companies in such industries, (iv) changes in the Law or GAAP, or (v) the announcement of the transactions contemplated hereby, the taking of any action contemplated or required by this Agreement, or the consummation of the transactions contemplated hereby, and that in each case would prevent Parent from performing its obligations to pay the Total Merger Consideration payable hereunder.

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(r) “Per Share Merger Consideration” means

(i) with respect to each Share of outstanding Common Stock, $0.40 per Share; and

(ii) with respect to each Share of outstanding Series B Stock, an amount equal to the sum of (A) $1.00 plus (B) the amount obtained by dividing the Per Share Merger Consideration payable per share of Common Stock by 0.3 (carried out to five decimal places).

(s) “Permitted Lien” means (i) Liens for utilities and current taxes not yet due and payable, (ii) mechanics’, carriers’, workers’, repairers’, materialmen’s, warehousemen’s, lessor’s, landlord’s and other similar Liens arising or incurred in the ordinary course of business with respect to which the underlying obligations are not yet due and payable, (iii) Liens for taxes being contested in good faith for which appropriate reserves have been included on the balance sheet of the applicable Person, (iv) easements, restrictive covenants and similar encumbrances or impediments against any of the Company’s assets or properties which do not materially interfere with the business of the Company and its Subsidiaries, and (v) minor irregularities and defects of title which do not materially interfere with the business of the Company and its Subsidiaries.

(t) “Person” means an individual, corporation, partnership, limited liability company, association, trust, unincorporated organization other entity or group (as defined in Section 13(d)(3) of the Exchange Act).

(u) “Subsidiary” means, with respect to any party, any Person of which (i) such party or any Subsidiary of such party owns, of record or beneficially, at least 50% of the outstanding equity or voting securities or interests of such Person, or (ii) such party or any Subsidiary of such party has the right to elect at least a majority of the board of directors or others performing similar functions with respect to such Person.

(v) “Target Working Capital” means negative $5,163,000, as reflected and calculated in accordance with Schedule B attached hereto.

(w) “tax” and “taxes” means (i) all federal, state, local or foreign taxes, charges, fees, imposts, levies or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any taxing authority in connection with any item described in clause (i).

(x) “Tax Indemnification Arrangement” means the obligation of Justin MacIntosh pursuant to a letter agreement dated February 11, 2005 to indemnify the Company from and against certain liability for foreign taxes in excess of $400,000 not timely or fully paid by the Company prior to the Effective Time (including the amount of such tax and any interest,

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penalties, fines, additions to tax or additional amounts imposed by any taxing authority relating thereto), including any document, agreements or other arrangements implemented to give effect to such indemnification obligation.

(y) “tax returns” means all returns, declarations, reports, estimates, information returns and statement required to be filed in respect of any taxes.

(z) “Total Merger Consideration” means the aggregate Per Share Merger Consideration plus any amounts due in respect of Options and Warrants under Section 3.2.

ARTICLE X.

MISCELLANEOUS

10.1 Payment of Expenses. If the Merger is not consummated, each party hereto shall pay its own expenses incident to preparing for, entering into and carrying out this Agreement and the consummation of the transactions contemplated hereby.

10.2 Survival of Confidentiality. None of the representations, warranties, covenants and other agreements in this Agreement or in any instrument delivered pursuant to this Agreement, including any rights arising out of any breach of any such representations, warranties, covenants and other agreements, shall survive beyond the earlier of (i) termination of this Agreement, or (ii) the Effective Time, except for (A) those covenants and agreements contained herein that by their terms apply or are to be performed in whole or in part after the Effective Time and (B) the provisions of this Article X. Each party hereto agrees that, except for the representations and warranties contained in this Agreement or in a certificate delivered at the Closing, none of the Company, Parent or Newco makes any other representations or warranties, and each hereby disclaims any other representations and warranties made by itself or any of its officers, directors, employees, agents, financial and legal advisors or other representatives, with respect to the execution and delivery of this Agreement, the documents and the instruments referred to herein, or the transactions contemplated hereby or thereby, notwithstanding the delivery or disclosure to any other party or other party’s representatives of any documentation or other information with respect to any one or more of the foregoing. The Confidentiality Agreement shall survive the execution and delivery of this Agreement and any termination of this Agreement in accordance with the terms of such Confidentiality Agreement, and the provisions of such Confidentiality Agreement shall apply to all information and material delivered by any party hereunder.

10.3 Modification or Amendment. Subject to the applicable provisions of the MBCA, at any time prior to the Effective Time, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorized officers of the respective parties; provided, however, that after approval of this Agreement by the shareholders of the Company, no amendment shall be made which changes the consideration payable in the Merger or adversely affects the rights of the Company’s shareholders hereunder, or which by Law requires further approval by the Company’s shareholders, without the approval of such shareholders; provided, further that if the amendment adversely affects the rights of only a particular shareholder (or holders of a separate class or series of securities), then this Agreement may be amended with the approval of only that shareholder or those affected holders.

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10.4 Waiver of Conditions. The conditions to each of the parties’ obligations to consummate the Merger are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Law.

10.5 Counterparts. For the convenience of the parties hereto, this Agreement may be executed (by facsimile or pdf signature) in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement.

10.6 Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of Minnesota, without giving effect to the principles of conflicts of law thereof.

10.7 Notices. Unless otherwise set forth herein, any notice, request, instruction or other document to be given hereunder by any party to the other parties shall be in writing and shall be deemed duly given (i) upon delivery, when delivered personally, (ii) one (1) business day after being sent by overnight courier or when sent by facsimile transmission (with a confirming copy sent by overnight courier), and (iii) five (5) business days after being sent by registered or certified mail, postage prepaid, as follows:

If to the Company:

CorVu Corporation

3400 W. 66th St.

Suite 445

Edina, MN 55435

Attn: Joseph Caffarelli, CEO

Facsimile No.: (952) 843-7752

With copies (which shall not constitute effective notice) to:

CorVu Corporation

3400 W. 66th St.

Suite 445

Edina, MN 55435

Attn: David Carlson, CFO

Facsimile No.: (952) 843-7752

and to

Fredrikson & Byron, P.A.

200 South Sixth Street

Suite 4000

Minneapolis, MN 55402-1425

Attn: John H. Stout, Esq.

Facsimile No.: (612) 492-7077

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If to Parent or Newco:

Rocket Software, Inc.

275 Grove Street

Newton, MA 02466-2273

Attn: Johan Magnusson Gedda

Facsimile No.: (617) 630-7173

With a copy (which shall not constitute effective notice) to:

Bingham McCutchen LLP

355 South Grand Avenue

Los Angeles, CA 90071-3106

Attn: David Robbins, Esq.

Facsimile No.: (213) 830-8660

or to such other Persons or addresses as may be designated in writing by the party to receive such notice.

10.8 Entire Agreement; Assignment. This Agreement (including the exhibits, schedules, documents and instruments referred to herein, including the Confidentiality Agreement) constitutes the entire agreement of the parties and supersedes all prior or contemporaneous agreements and understandings, both written and oral, among the parties hereto, or any of them, with respect to the collective subject matter hereof. All exhibits and schedules (including the Company Disclosure Schedule) attached to this Agreement are expressly made a part of, and incorporated by reference into, this Agreement. This Agreement may not be assigned by any of the parties hereto by operation of Law or otherwise without the written consent of the other parties except that (a) Parent may assign any or all of its rights hereunder to any Affiliate of Parent and Newco may assign any or all of its rights hereunder to any other newly organized corporation under the Laws of the State of Minnesota, all of the capital stock of which is owned directly or indirectly by Parent; provided, that Parent shall remain liable on a direct and primary basis for the performance of any such Affiliate or direct or indirect Subsidiary, and (b) Parent or Newco may assign its rights hereunder to any lender financing any portion of the Total Merger Consideration.

10.9 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and assigns. Nothing in this Agreement, express or implied, other than the right to receive the consideration payable in the Merger pursuant to Article III hereof, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement; provided, however, that the provisions of Section 6.7 shall inure to the benefit of and be enforceable by the Indemnified Parties.

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10.10 Obligation of Parent. Whenever this Agreement requires Newco or the Surviving Corporation to take any action, such requirement shall be deemed to include an undertaking on the part of Parent to cause Newco or the Surviving Corporation to take such action and a guarantee of the performance thereof.

10.11 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in a manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.

10.12 Specific Performance. The parties agree that irreparable damage would occur and that the parties would not have any adequate remedy at Law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms. It is accordingly agreed that the parties shall be entitled to specific performance of the terms hereof, this being in addition to any other remedy to which they are entitled at Law or in equity.

10.13 Certain Interpretations. For purposes of this Agreement:

(a) Unless otherwise specified, all references in this Agreement to Articles, Sections, Schedules and Exhibits shall be deemed to refer to Articles, Sections, Schedules and Exhibits to this Agreement.

(b) The Article, Section and paragraph captions herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof.

(c) The words “include,” includes” and “including,” when used herein shall be deemed in each case to be followed by the words “without limitation.”

(d) The parties hereto agree that they have been represented by legal counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any Law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document shall be construed against the party drafting such agreement or document.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be executed by their respective duly authorized officers as of the date first above written.


CORVU CORPORATION

By:		/s/ David C. Carlson
Name:		David C. Carlson
Title:		Chief Financial Officer

ROCKET SOFTWARE, INC.

By:		/s/ Johan Magnusson Gedda
Name:		Johan Magnusson Gedda
Title:		Executive Vice President

ROCKET SOFTWARE MINNESOTA, INC.

By:		/s/ Johan Magnusson Gedda
Name:		Johan Magnusson Gedda
Title:		Executive Vice President

Signature Page to the Merger Agreement

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