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The Proposed MOU, as text

By Pamela Jones et al.

Here's the Memorandum of Understanding [PDF] between SCO and the Stephen Norris Capital Partners, as text. As you will see, it's a takeover. Not only does Darl McBride have to resign, but the SNCP folks get 4 of 7 seats on the board of directors and can pretty much control the rest, the way the voting arrangement is set up. The 5th seat will be the CEO. The last two the current shareholders can pick in a group consisting of them and the holders of the Series A Preferred shares, meaning SNCP, and one must be an "outside executive with suitable industry expertise who is designated by a majority of the Board." Ralph Yarro signed the MOU for SCO.

It's a takeover, whereby they give SCO $5 million, and as for the rest of the money, the more SCO borrows from the $95 million, the more control SNCP gets, with indemnification for the directors "to the maximum extent permitted by law," and the company must "purchase 'tail' directors and officers insurance coverage to protect against claims arising prior to the effective date of the Proposed Plan of Reorganization".

Suitably insured, assuming they can find an insurance company stupid enough to take on these liabilities, the company will go private and then give its full and aggressive attention to raping and pillaging the FOSS community some more with SCO's bogo lawsuits against Linux. Well, that's how I read it. It is, of course, at least in part also a shot across the bow of IBM. Still not interested in settling, the MOU fairly screams?

Full post as published by Groklaw on February 15, 2008 (boomark / email).