EXHIBIT 99.1
CAUTIONARY STATEMENTS
RISKS RELATED TO OUR BUSINESS
WE EXPECT OUR QUARTERLY REVENUES AND OPERATING RESULTS TO FLUCTUATE FOR A NUMBER
OF REASONS, WHICH COULD CAUSE OUR STOCK PRICE TO FLUCTUATE
Our quarterly revenues and operating results from continuing operations
have varied significantly in the past and are likely to vary significantly in
the future due to a number of factors, any of which may cause our stock price to
fluctuate. The primary factors that may affect our quarterly financial
performance include the following:
- fluctuations in demand for our products and services;
- the timing of customer orders, which are often grouped toward
the end of a quarter, particularly large orders from our
significant customers and whether any orders are cancelled;
- sales mix among our storage networking and channel networking
products and services;
- our traditionally long sales cycle, which can range from 90
days to 12 months or more;
- our ability to develop, introduce, ship and support new
products and product enhancements;
- the fact that our products and services are usually only part
of an overall solution that our customers may have problems
implementing or obtaining the required components or services
from other vendors;
- the rate of adoption of storage networks as an alternative to
existing data storage and management systems;
- announcements and new product introductions by our competitors
and deferrals of customer orders in anticipation of new
products, services or product enhancements introduced by us or
our competitors;
- decreases over time in the prices at which we can sell our
products;
- our ability to obtain sufficient supplies of components,
including limited sourced components, and products we supply
at reasonable prices, or at all;
- communication costs and the availability of communication
lines;
- increases in the prices of the components and supplied
products we purchase;
- under utilization of consultants;
- our ability to attain and maintain production volumes and
quality levels for our products;
- increased expenses, particularly in connection with our
strategy to continue to expand our relationships with the
parties with whom we have entered into strategic
relationships;
- potentially negative earnings impact related to future
acquisitions; and
- general economic conditions and related customer budget
constraints.
Accordingly, you should not rely on the results of any past periods as
an indication of our future performance. It is likely, in some future period,
that our operating results may be below expectations of public market analysts
or investors. Because most of our expenses are fixed in the short-term or
incurred in advance of anticipated revenue, we may not be able to decrease our
expenses in a timely manner to offset any unexpected shortfall in revenue.
WE RECENTLY INCURRED LOSSES AND MAY NOT BE ABLE TO MAINTAIN PROFITABILITY
We experienced losses of $2.3 million for the year ended December 31,
1997, and $2.6 million in the fourth quarter of 1999. In addition, our
discontinued operations lost $4.1 million during 2000 and experienced declining
revenues. Although we were profitable in 2000, taken as a whole, we cannot be
certain that we will be able to sustain historical or projected growth rates
with respect to our storage networking products. For the year ended January 31,
2002, we incurred losses from continuing operations before income taxes of $17.2
million, or $3.6 million excluding special charges. Included in this $17.2
million pre-tax loss is a $10.3 million loss on the sale and write-down of
webMethods stock acquired from the disposition of a portion of our discontinued
operations, a $2.0 million write-down of inventory, a $325,000 write-off of our
FileSpeed product and a $996,000 restructuring charge. On an after tax basis, we
lost $11.9 million from continuing operations for the year ended January 31,
2002, or $2.5 million excluding special charges. We are dependent on our storage
networking products and services for our future revenue, especially since we
divested our Enterprise Integration Solutions Division, and as revenue from our
traditional channel networking products continue to decline. We expect to incur
significant product development, sales and marketing and administrative expenses
in connection with the introduction of new products, and, as a result, we will
need to generate significant revenue increases to achieve and maintain
profitability. We may not be able to sustain or increase profitability.
OUR FUTURE REVENUES AND OPERATING RESULTS ARE DIFFICULT TO PREDICT
Markets for our storage networking products and services are constantly
changing. In addition, we expect that our future revenue will be derived from
our storage networking products and services. Recent economic and world events,
combined with the evolving nature of the markets in which we sell our products,
reduces our ability to accurately forecast our quarterly and annual revenue. Our
revenue base has also become less diversified and could be subject to increased
volatility since we have divested our Enterprise Integration Solutions Division.
Moreover, we plan our operating expenses based in part on our revenue
projections. Because most of our expenses are fixed in the short-term or
incurred in advance of anticipated revenue, we may not be able to decrease our
expenses in a timely manner to offset any unexpected shortfall in revenue.
WE HAVE LIMITED PRODUCT OFFERINGS AND DEPEND ON THE WIDESPREAD MARKET ACCEPTANCE
OF OUR EXISTING AND NEW PRODUCTS
We derive a substantial portion of our revenue from a limited number of
existing products. We expect that revenue from our storage networking products
will account for a substantial and growing portion of our total revenue for the
foreseeable future. We are also substantially more dependent on storage
networking product revenue since we have divested our Enterprise Integration
Solutions Division. Further we expect revenue from our channel networking
products to continue to decline. As a result, for the foreseeable future, we
will continue to be subject to the risk of a dramatic decrease in revenue if
there is a decrease in demand for our storage networking products. Therefore,
widespread market acceptance of these products is critical to our future
success. Recent economic and world events, combined with the evolving nature of
the markets in which we sell our products, reduces our ability to accurately
forecast our quarterly and annual revenue. Accordingly, the demand for, and
market acceptance of, these products is uncertain.
Factors that may affect the market acceptance of our products, some of
which are beyond our control, include the following:
- growth of storage networking product markets;
- performance, quality, price and total cost of ownership of our
existing products;
- continued development of technologies that allow our storage
networking products to function over WANs and over IP-based
networks;
- availability, price, quality and performance of competing
products and technologies; and
- successful development of our relationships with new and
existing customers and parties with whom we have entered into
strategic relationships.
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OUR HISTORICAL FINANCIAL INFORMATION IS NOT REFLECTIVE OF THE DIVESTITURE OF OUR
ENTERPRISE INTEGRATION SOLUTIONS DIVISION OR OUR ACQUISITION OF ARTICULENT
Our financial statements filed with the Securities and Exchange
Commission include the results of operations of our Networking Solutions
Division and the Enterprise Integration Solutions Division. The Networking
Solutions Division and the Enterprise Integration Solutions Division were not
accounted for, and were not operated as, separate stand alone business entities
and reported results of the two divisions may not be the same as those that
would be achieved on a stand alone basis. In addition, we acquired Articulent in
April 2001, and Articulent's results are not included in our financial
statements prior to that date. As a result, the historical financial statements
may not be useful in predicting our future financial results.
OUR SUCCESS DEPENDS ON THE DEMAND FOR OUR STORAGE NETWORKING SOLUTIONS
We depend on the demand for and success of our storage networking
products and services. Potential customers who have invested substantial
resources in their existing data storage and management systems may be reluctant
or slow to adopt a new approach, like storage networks or outside consulting or
managed services. Our success in generating revenue in these areas will depend
on, among other things, our ability to:
- educate potential customers, parties with whom we have entered
into strategic relationships and end users about the benefits
of our products and related technologies and our expertise;
- maintain and enhance our strategic relationships; and
- predict and base our products and services on standards that
ultimately become industry standards.
In addition, the continued growth of the market for storage networking
products and services may depend in part on the continued decrease in the price
of related services and components, such as telecommunication lines and
switches. Any increase in the price of these related services and components
would likely cause this market to grow at a reduced rate. Further, storage
networks are often implemented in connection with deployment of new storage
systems and servers. Accordingly, our future success is also substantially
dependent on the market for new storage systems and servers. We are
substantially more dependent on our storage networking revenue since we have
divested our Enterprise Integration Solutions Division.
IF OUR RELATIONSHIPS WITH PARTIES WITH WHOM WE HAVE ENTERED INTO STRATEGIC
RELATIONSHIPS ARE UNSUCCESSFUL OR TERMINATED, OUR PRODUCT REVENUES COULD DECLINE
We market our products in connection with a few significant storage
vendors. As a result, our success depends substantially on our ability to manage
and expand our relationships with these vendors, the overall market acceptance
of these vendors' products, and our ability to initiate new strategic
relationships. In addition, we rely to a significant extent on the continued
recommendation of our products by the parties with whom we have entered into
strategic relationships. To the extent that these parties do not recommend our
products, or to the extent that they recommend products offered by our
competitors, or develop their own products similar to ours, our business will be
harmed.
We may not be able to successfully manage or expand the relationships
with the parties with whom we have entered into strategic relationships, and
they may not market our products successfully. Moreover, our relationships with
such parties are not in writing, have no minimum purchase commitments and can be
terminated or changed at any time. Our failure to manage and expand our
relationships with these parties, our failure to develop relationships or the
failure of these parties to market our products could substantially reduce our
revenues and seriously harm our business.
Moreover, we rely on a limited number of suppliers to provide certain
of the products we supply to our customers. If any of our agreements with these
parties are terminated, our ability to provide end-to-end storage solutions may
be adversely affected.
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OUR INDUSTRIES ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE, AND WE MUST KEEP PACE
TO SUCCESSFULLY COMPETE
The markets in which we sell our products and services are
characterized by rapidly changing technology, evolving industry standards and
the frequent introduction of new products and enhancements. Our future success
depends in large part on our ability to enhance our existing products and
services and to introduce new products and services on a timely basis to meet
changes in customer preferences and evolving industry standards. In addition,
our services must also be continually enhanced in order to comply with new
technological developments. We cannot be certain that we will be successful in
developing, manufacturing and marketing new solutions that respond to such
changes in a timely manner and achieve market acceptance. We also cannot be
certain that we will be able to develop the underlying core technologies
necessary to create new products, enhancements and services.
Additionally, changes in technology and consumer preferences could
potentially render our current products and services noncompetitive or obsolete.
If we are unable, for technological or other reasons, to develop new products or
services or enhance existing products and services in a timely manner in
response to technological and market changes, our business, results of
operations and financial condition would be harmed.
WE ARE SUBSTANTIALLY DEPENDENT ON THE FINANCIAL SERVICES, TELECOMMUNICATIONS AND
INFORMATION OUTSOURCING INDUSTRIES
Historically, a significant portion of our product revenues were
derived from businesses in financial services, telecommunications and
information outsourcing industries, respectively. The erosion of our
relationships with our customers in these industries, or the erosion of demand
for products in these industries generally, would harm our financial condition
and operating results.
WE DEPEND ON A LIMITED NUMBER OF SUPPLIERS FOR CERTAIN COMPONENTS AND TWO
CONTRACT MANUFACTURERS
We depend upon a limited number of suppliers for several components
used in the manufacture of our products. In the future, we may experience
shortages of, or difficulties in acquiring, these components. If we are unable
to buy these components, then we will not be able to manufacture our products on
a timely basis. We also rely on two contract manufacturers for the manufacture
of many of our products. Any failure on the part of our suppliers to keep pace
with technological developments may harm our ability to offer competitive
solutions. In addition, our results of operations could also be harmed if
suppliers or contract manufacturers terminate their agreements with us.
We use rolling forecasts based on anticipated product orders to
determine our component requirements. Lead times for materials and components
that we order vary significantly and depend on factors such as specific supplier
requirements, contract terms and current market demand for such components. As a
result, our component requirement forecasts may not be accurate. If we
overestimate our component requirements, then we may have excess inventory,
which would increase our costs. If we underestimate our component requirements,
then we may have inadequate inventory, which could interrupt our manufacturing
and delay delivery of our products to our customers. Either of these occurrences
would negatively impact our business and operating results.
THE COMPETITION IN OUR MARKETS MAY LEAD TO REDUCED SALES OF OUR SOLUTIONS,
REDUCED PROFITS OR REDUCED MARKET SHARE
The markets for our solutions are competitive and are likely to become
even more competitive. Increased competition could result in pricing pressures,
reduced sales, reduced margins, reduced profits, reduced market share or the
failure of our solutions to achieve or maintain market acceptance. Our products
and services face competition from multiple sources, including the ability of
some of our customers to design alternative solutions to the problems targeted
by our solutions. Many of our competitors and potential competitors have longer
operating histories, greater name recognition, access to larger customer bases
or substantially greater resources than we have. As a result, they may be able
to respond more quickly than we can to new or changing opportunities,
technologies, standards or customer requirements. For all of the foregoing
reasons, we may not be able to compete successfully against our current and
future competitors.
WE MAY ENGAGE IN FUTURE ACQUISITIONS THAT MAY DILUTE OUR SHAREHOLDERS AND CAUSE
US TO INCUR DEBT OR ASSUME CONTINGENT LIABILITIES
As part of our strategy, we expect to review opportunities to buy other
businesses or technologies that would complement our current products and
services, expand the breadth of our markets, enhance our technical capabilities,
or otherwise offer growth opportunities. Because of our acquisition of
Articulent, or in the event of any future purchases, we could:
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- spend significant amounts of cash;
- issue stock that would dilute our current shareholders'
percentage ownership;
- be subject to goodwill impairment charges; or
- incur debt or assume liabilities.
These purchases also involve numerous risks, including:
- problems combining the purchased operations, technologies,
personnel or products;
- unanticipated costs;
- diversion of management's attention from our core business;
- adverse effects on existing business relationships with
suppliers, customers or parties with whom we have entered into
strategic relationships;
- risks associated with acquisitions in foreign countries;
- risks associated with entering markets in which we have no or
limited prior experience;
- potential loss of employees of acquired or merged
organizations; and
- the growth rates of any acquired company may be less than
those projected by analysts or anticipated by markets, which
could have a depressive effect on our stock price.
We cannot assure you that we will be able to successfully integrate any
businesses, products, technologies or personnel related to organizations that we
might acquire or merge with in the future, including Articulent.
FUTURE TERRORIST ATTACKS COULD SUBSTANTIALLY HARM OUR BUSINESS
On September 11, 2001, the United States was the target of terrorist
attacks of unprecedented scope. The U.S. government and media agencies were also
subject to subsequent acts of terrorism through the distribution of anthrax
through the mail. Such attacks and the U.S. government's ongoing response may
lead to further acts of terrorism, bio-terrorism and financial and economic
instability. The precise effects of these attacks, future attacks or the U.S.
government's response to the same are difficult to determine, but they could
have an adverse effect on our business, profitability and financial condition.
UNDETECTED SOFTWARE OR HARDWARE ERRORS COULD INCREASE OUR COSTS AND DELAY
PRODUCT INTRODUCTION
Networking products frequently contain undetected software or hardware
errors when first introduced or as new versions are released. Our products are
complex and errors may be found from time to time in our products, including new
or enhanced products. In addition, our products are combined with products from
other vendors. As a result, when problems occur, it may be difficult to identify
the source of the problem. These problems may cause us to incur significant
warranty and repair costs, divert the attention of our engineering personnel
from our product development efforts and cause significant customer relations
problems. Moreover, the occurrence of hardware and software errors, whether
caused by our or another vendor's products, could delay or prevent the
development of the markets in which we compete.
THE LOSS OF KEY EXECUTIVE OR EXPERIENCED PERSONNEL OR THE INABILITY TO HIRE AND
RETAIN ADDITIONAL PERSONNEL WITH STORAGE NETWORKING EXPERTISE COULD NEGATIVELY
IMPACT SALES AND DELAY PRODUCT INTRODUCTION
We are dependent on Thomas G. Hudson, our Chairman, President and Chief
Executive Officer. In addition, we rely upon the continued contributions of our
key management, engineering and sales and marketing personnel, many of whom
would be difficult to replace quickly. We also believe that our success depends
to a significant extent on the ability of our management to operate
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effectively, both individually and as a group. The loss of any one of our key
employees could adversely affect our sales or delay the development or marketing
of existing or future products and services.
We believe our future success will depend also in part upon our ability
to attract and retain highly skilled and qualified managerial, engineering,
sales and marketing, and finance and operations personnel. Competition for these
personnel is intense. In the past, we have experienced difficulty in hiring
qualified personnel with storage networking expertise, and there can be no
assurance that we will be successful in attracting and retaining these
individuals in the future. The inability to attract or retain qualified
personnel in the future or delays in hiring required personnel, particularly
engineers and sales personnel, could delay the development and introduction of
and negatively impact our ability to sell our products and services. In
addition, companies in our industry whose employees accept positions with
competitors frequently claim that their competitors have engaged in unfair
hiring practices. We cannot assure you that we will not receive such claims in
the future as we seek to hire qualified personnel or that such claims will not
result in costly litigation. We could incur substantial costs in defending
ourselves against these claims, regardless of their merits.
WE MUST CONTINUE TO IMPROVE OUR OPERATIONAL SYSTEMS AND CONTROLS TO MANAGE
FUTURE GROWTH
We plan to continue to expand our operations to pursue existing and
potential market opportunities. We expect that this growth will place a
significant demand on our management and our operational resources. In order to
manage growth effectively, we must implement and improve our operational
systems, procedures and controls and train our employee base. Accordingly, we
cannot assure you that:
- we will be able to effectively manage the expansion of our
operations;
- our key employees will be able to work together effectively as
a team to successfully manage our growth;
- we will be able to hire, train and manage our employee base;
- we will be able to properly integrate our acquisitions;
- our systems, procedures or controls will be adequate to
support our operations; and
- our management will be able to achieve the rapid execution
necessary to fully exploit the market opportunity for our
products and services.
Our inability to manage growth effectively could harm our business.
WE PLAN TO INCREASE OUR INTERNATIONAL SALES ACTIVITIES, WHICH WILL SUBJECT US TO
ADDITIONAL BUSINESS RISKS
Historically, international markets have accounted for a significant
portion of our revenues. We plan to expand our international sales activities,
and therefore our success will become increasingly dependent on our performance
in international markets. Our international sales growth in these and other
countries will be limited if we are unable to establish relationships with
international distributors, establish additional foreign operations, expand
international sales channel management, hire additional personnel and develop
relationships with international service providers. Even if we are able to
successfully expand international operations, we cannot be certain that we will
be able to maintain or increase international market demand for our products.
Our international operations, are subject to a number of risks, including:
- supporting multiple languages;
- recruiting sales, technical and consulting support personnel
with the skills to support our solutions;
- increased complexity and costs of managing international
operations;
- protectionist laws and business practices that favor local
competition;
- dependence on local vendors;
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- multiple, conflicting and changing governmental laws and
regulations;
- longer sales cycles;
- difficulties in collecting accounts receivable, converting
foreign currency to dollars and remitting funds to the United
States;
- difficulties in enforcing our legal rights;
- reduced or limited protections of intellectual property
rights; and
- political and economic instability.
None of our products include screen displays or user documentation in
any language other than the English language. Our future prospects in
international markets may require us to develop multiple language versions of
our products and support documentation. The lack of such documentation could
cause prospective customers to select other products. In addition, the
development of such products and documentation could be costly and time
consuming.
Because a significant portion of our international revenues are
denominated in foreign currencies, primarily the euro and British pounds
sterling, an increase in the value of the U.S. dollar relative to these
currencies could make our products more expensive and thus less competitive in
foreign markets.
WE HAVE APPLIED FOR AND RECEIVED A LIMITED NUMBER OF PATENTS AND WE MAY BE
UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WHICH WOULD NEGATIVELY AFFECT OUR
ABILITY TO COMPETE
Historically, we have not pursued patents on all our intellectual
property. Traditionally, we have relied, and currently continue to rely, on a
combination of patent, copyright, trademark and trade secret laws and
restrictions on disclosure to protect our intellectual property rights. We also
enter into confidentiality agreements with substantially all our employees,
consultants and parties with whom we enter into strategic relationships, and
control access to and distribution of our software, documentation and other
proprietary information. We have nine patents in process and have three existing
patents. In addition, while we may pursue patent protection for our intellectual
property in the future, unauthorized parties may attempt to copy or otherwise
obtain and use our products or technology. Monitoring unauthorized use of our
products is difficult, and we cannot be certain that the steps we have taken
will prevent unauthorized use of our technology, particularly in foreign
countries where the laws may not protect our proprietary rights as fully as in
the United States or where legal authorities in foreign countries do not
vigorously enforce existing laws.
We have from time to time received, and may in the future receive,
communications from parties asserting patent rights against us that relate to
certain of our products. Although we believe that we possess all required
proprietary rights to the technology involved in our products and that our
products, trademarks and other intellectual property rights do not infringe upon
the proprietary rights of third parties, we cannot assure you that others will
not claim a proprietary interest in all or part of our technology or assert
claims of infringement. All such claims, regardless of their merits, could
expose us to costly litigation and could substantially harm our operating
results.
OTHERS MAY BRING INFRINGEMENT CLAIMS AGAINST US, WHICH COULD BE TIME-CONSUMING
AND EXPENSIVE TO DEFEND
In recent years, there has been significant litigation in the United
States involving patents and other intellectual property rights. Although we are
not currently involved in any intellectual property litigation, we have in the
past received correspondence from third parties alleging infringement and we may
be a party to litigation in the future to protect our intellectual property or
as a result of an alleged infringement of others' intellectual property. These
claims and any resulting lawsuits could subject us to significant liability for
damages and invalidation of our proprietary rights. These lawsuits, regardless
of their success, would likely be time-consuming and expensive to resolve and
would divert management time and attention. Any potential intellectual property
litigation also could force us to do one or more of the following:
- stop selling, incorporating or using our products or services
that use the challenged intellectual property;
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- obtain a license from the owner of the infringed intellectual
property allowing us to sell or use the relevant technology,
which license may not be available on reasonable terms, or at
all;
- pay damages to entities which acquired our discontinued
operations as a result of indemnities included in relevant
agreements; and
- redesign those products or services that use such technology.
In addition to the related costs of the foregoing actions, if we are
forced to take any of these actions, we may be unable to manufacture and sell
the related products, which would reduce our revenues.
OUR PRODUCTS MUST COMPLY WITH EVOLVING INDUSTRY STANDARDS AND GOVERNMENT
REGULATIONS
The market for our products is characterized by the need to support
industry standards as they emerge, evolve and achieve acceptance. To remain
competitive, we must continue to introduce new products and product enhancements
that meet these industry standards. For example, all components of a storage
network must utilize a limited number of defined standards in order to work with
existing computer systems. Our products also must generally be approved for use
by the storage vendors with whom we have strategic marketing relationships. Any
failure to obtain such approval would have a material adverse impact on our
business. Our products comprise only a part of the entire storage network and we
depend on the companies that provide other components of the storage network,
many of whom are significantly larger than we are, to support the industry
standards as they evolve. The failure of these providers to support these
industry standards could adversely affect the market acceptance of our products.
In addition, in the United States, our products must comply with various
regulations and standards defined by the Federal Communications Commission and
Underwriters Laboratories. Internationally, products that we develop will also
be required to comply with standards established by authorities in various
countries. Failure to comply with existing or evolving industry standards or to
obtain timely domestic or foreign regulatory approvals or certificates could
materially harm our business.
RISKS RELATED TO OUR COMMON STOCK
OUR STOCK PRICE HAS BEEN AND IS LIKELY TO CONTINUE TO BE VOLATILE, WHICH MAY
RESULT IN LOSSES FOR INVESTORS
The market price of our common stock has been, and likely will continue
to be, subject to significant fluctuations in response to many factors, some of
which are beyond our control, including:
- general stock market conditions;
- conditions in our industry;
- changes in our revenues and earnings;
- general economic and political conditions, including further
terrorist attacks and responses thereto;
- changes in analyst recommendations and projections; and
- our ability to achieve results projected by analysts.
In addition to the foregoing, we may fail to meet expectations of our
shareholders or of analysts at some time in the future, and our stock price
could decline.
WE DO NOT INTEND TO PAY DIVIDENDS
We have never paid cash dividends to shareholders and do not anticipate
paying cash dividends in the foreseeable future.
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS OUR STOCK PRICE
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Sales of a substantial number of shares of our common stock in the
public market, or the appearance that such shares are available for sale, could
adversely affect the market price for our common stock. From time to time our
directors and executive officers may implement Rule 10b5-1 trading plans
pursuant to which sales of shares of our common stock are being made for the
accounts of such individuals at varying price targets. Sales pursuant to such
plans and other sales by our directors and officers may also have a depressive
affect on the market price for our stock.
ANTI-TAKEOVER EFFECTS OF CERTAIN BY-LAW PROVISIONS, MINNESOTA LAW, THE INDENTURE
AND OUR SHAREHOLDER RIGHTS PLAN COULD DISCOURAGE, DELAY OR PREVENT A CHANGE IN
CONTROL
Our articles of incorporation, bylaws and shareholder rights plan along
with the indenture and Minnesota law could discourage, delay or prevent persons
from acquiring or attempting to acquire us.
Our articles of incorporation authorize our board of directors, without
action by our shareholders, to designate and issue preferred stock in one or
more series, with such rights, preferences and privileges as the board of
directors shall determine. In addition, our articles of incorporation grant our
board of directors the authority to adopt, amend or repeal all or any of our
bylaws, subject to the power of the shareholders to change or repeal the bylaws.
In addition, our bylaws limit who may call meetings of our shareholders.
In addition, we have a shareholder rights plan. Under the plan each
holder of shares of our common stock has the right upon the occurrence of
certain events to purchase from us 1/1000th of a share of the Series A Junior
Participating Preferred Stock at a price of $100.00 per unit, subject to
adjustment.
As a public corporation, we are prohibited by the Minnesota Business
Corporation Act, except under certain specified circumstances, from engaging in
any merger, significant sale of stock or assets or business combination with any
shareholder or group of shareholders who own at least 10% of our common stock.
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