Keynote Systems, Inc.
Keynote Systems, Inc. Securities Settlement
The lawsuit was settled for additional disclosures in the proxy statement mailed to shareholders. The following is a summary of the proceedings in the lawsuit: ‘On June 24, 2013, Keynote Systems, Inc. (Keynote) publicly announced that it entered into a definitive merger agreement (Merger Agreement) with Thoma Bravo, LLC and two of its affiliates, Hawaii Parent Corp. and Hawaii Merger Corp. (collectively, Thoma Bravo). Pursuant to the Merger Agreement, Hawaii Merger Corp. would merge with and into Keynote, with Keynote surviving as a wholly-owned subsidiary of Hawaii Parent Corp. (the Proposed Merger). Upon the consummation of the Proposed Merger, each share of Keynote common stock would be converted into the right to receive $20.00 in cash per share. On June 27, 2013, the case Telker v. Keynote Systems, Inc., et al., Case No. CIV 522600 was filed in the Superior Court of the State of California for San Mateo County (Telker Action). On July 2, 2013, the case Ruffner v. Keynote Systems, Inc., et al., Civil Action No. 8699-VCL was filed in the Court of Chancery of the State of Delaware (Ruffner Action). On July 3, 2013, the case Satyanaryana Gunda v. Keynote Systems, Inc., et al., Case No. CIV 522675 was filed in the Superior Court of the State of California for San Mateo County (Gunda Action). Finally, on July 9, 2013, the case Vladimir Gusinsky Revocable Trust v. Keynote Systems, Inc., et al., Civil Action No. 8699-VCL was filed in the Court of Chancery of the State of Delaware (Gusinsky Action). These four actions are referred to collectively herein as the Actions. All plaintiffs in the Actions are collectively referred to herein as Plaintiffs; all defendants in the Actions are collectively referred to herein as Defendants; Plaintiffs and Defendants are collectively referred to herein as the Parties. The Actions are all putative class actions filed on behalf of Keynote stockholders and name as Defendants Keynote, its directors, and Thoma Bravo. The Actions allege, among other things, that the individual Defendants breached their fiduciary duties by failing to maximize stockholder value in negotiating and approving the Proposed Merger, and that Thoma Bravo aided and abetted the alleged breaches of fiduciary duties. The Actions each seek, among other relief, declaratory and injunctive relief enjoining the Proposed Merger. On July 18, 2013, Keynote filed a Definitive Proxy Statement on Schedule 14A (Definitive Proxy) with the U.S. Securities and Exchange Commission (SEC). On July 19, 2013, an Amended Complaint was filed in the Telker Action, alleging certain omissions in the Definitive Proxy that precluded Keynote stockholders from fully evaluating the Proposed Merger. No amended complaint or other pleadings or documents have been filed in the other Actions. On July 26, 2013, Keynote agreed with Brodsky & Smith, LLC, Plaintiffs counsel in the Telker Action and the Gunda Action, to provide certain expedited discovery. On July 26, 2013, Keynote began production of the agreed-upon documents on a rolling basis, and Plaintiffs counsel carefully reviewed the documents produced in discovery. Since the filing of the Gunda Action, Plaintiff Gunda sold his Keynote shares and, consequently, on September 3, 2013, the Gunda Action was dismissed without prejudice to comply with Rule 3.770 of the California Rules of Court. Following arm-length discussions and negotiations concerning a possible settlement of the Actions, the Parties reached an agreement-in-principle providing for the settlement of the Actions on the terms and conditions set forth in a Memorandum of Understanding (MOU), entered into on August 9, 2013, which was subject to certain additional discovery to confirm that the proposed Settlement is fair, reasonable, adequate, and in the best interests of the Plaintiffs and the putative class of former Keynote shareholders. On August 9, 2013, Keynote filed a Schedule 14A with the SEC, in part to supplement its disclosures as they relate to the Proposed Merger as contemplated by the MOU (the Supplemental Disclosures). The Schedule 14A also included other disclosures unrelated to the Settlement or the MOU. A copy of the Schedule 14A is attached to the Stipulation as Exhibit A. This amendment resulted, in part, from prosecution of the Actions, and the claims raised by Plaintiffs in the Amended Complaint. Plaintiffs believe that the Supplemental Disclosures provided stockholders with additional material information concerning the Proposed Merger (described more fully below). The Proposed Merger was consummated on August 22, 2013. As part of confirmatory discovery, on September 11, 2013, Plaintiffs took the deposition of Keynote former Chief Executive Officer, Umang Gupta. On October 17, 2013, Plaintiffs took the deposition of a representative from Keynote financial advisor, GCA Savvian Advisors (Savvian). Plaintiffs believe that the depositions further confirmed that the proposed Settlement is fair, reasonable, adequate, and in the best interest of Plaintiffs and the putative class of former Keynote shareholders.’