Page 15 of 24 – SEC Filing On June 2, 2016, Dialectic Capital (together with its affiliates, “Dialectic”) delivered a letter to the Board, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In the letter, Dialectic expressed its serious concerns with the Issuer’s strategic direction, recent performance and delayed “Plan B” under the direction of its current management team and Board. Dialectic also expressed its concerns with the Issuer’s decision to delay the announcement of its “Plan B” until the Q1 conference call, which it scheduled for June 6, 2016, days after the deadline for nominating director candidates for election to the Board at the 2016 Annual Meeting. Dialectic also expressed its belief that other shareholders are likewise frustrated with management’s apparent inability to communicate a clear strategy for the Issuer. In the letter, Dialectic stated that it believes change is needed on the Board to ensure that appropriate actions are taken to implement a clear strategy for the benefit of all shareholders. Dialectic also stated that it tried to engage constructively with members of the Issuer’s management team to reach an amicable resolution to reconstitute the Board and avoid a proxy contest but to no avail. To that end, Dialectic disclosed in the letter that last week it delivered the Nomination Letter to the Issuer nominating its slate of five highly qualified Nominees for election to the Board at the 2016 Annual Meeting. Dialectic remains open to continuing its constructive dialogue with the Issuer to reach an amicable resolution that is in the best interests of all shareholders. Dialectic’s highly-qualified nominees include: Scott Daniels has served on the Board of Directors of Carbonite, Inc. (NASDAQ: CARB) since January 2016. Mr. Daniels served as a senior analyst of Shannon River Partners, a private hedge fund focused on technology, media and communications companies, from July 2013 to April 2014. From November 2005 to July 2013, Mr. Daniels served as a senior analyst and partner of S Squared Technology, a technology investment fund where he evaluated and invested in multiple publicly traded small and midsized emerging growth technology companies around the world. Prior to S Squared Technology, Mr. Daniels served in various analyst roles covering technology and software companies. Mr. Daniels holds an M.B.A from Columbia Business School and a B.A. in English Literature from University of Pennsylvania. Alan B. Howe has served as the co-founder and managing partner of Broadband Initiatives LLC, a boutique corporate advisory and consulting firm, since 2001. He served as vice president of strategic and wireless business development for Covad Communications, Inc., a national broadband telecommunications company from May 2005 to October 2008. He served as CFO and vice president of corporate development for Teletrac, Inc., a SaaS fleet management service provider, from April 1995 to April 2001. Previously, he held various executive management positions for Sprint PCS, and Manufacturers Hanover Trust Company. He is currently a board member and chairman of Data I/O Corporation (NASDAQ: DAIO) and board member and vice chairman of Determine, Inc. (NASDAQ: DTRM). In addition, Mr. Howe serves as an advisor to the investment bank, Bowen Advisors, under a consulting agreement. Mr. Howe has served on a number of private and public boards including in the past five years former reporting companies Qualstar, Ditech Networks, Inc., Altigen Communications, Inc., Proxim Wireless Corporation, and Crossroads Systems, Inc. He has a M.B.A. in Finance from Indiana University and a B.S. from the University of Illinois. John Fichthorn is a co-founder of Dialectic Capital, an investment management firm, and has been a portfolio manager there since 2003. From 2000 to 2003, he was employed by Maverick Capital, most recently as managing director of the technology group. From 1999 to 2000, he was an analyst at Alliance Capital working across multiple hedge fund products and as a member of the technology team. From 1997 to 1999, he was an analyst at Quilcap Corporation, a hedge fund where he covered all sectors, with a focus on technology. From 1995 to 1997, Mr. Fichthorn worked at Ganek & Orwicz Partners where his responsibilities included small cap research, international closed-end fund arbitrage and operations. Since 2014, Mr. Fichthorn has served as a director of Lyman Corporation, a privately held company that designs and manufactures case preparation and reloading products for shooters, hunters, and law enforcement professionals. From June 2011 to June 2014, Mr. Fichthorn served as a director of Immersion Corporation, the leading innovator in haptics technology. Mr. Fichthorn served as a director of California Micro Devices Corporation, a supplier of protection devices for the mobile handset, high brightness LED (HBLED), digital consumer electronics and personal computer markets, from September 2009 until its sale to ON Semiconductor Corporation in January 2010. Mr. Fichthorn holds a B.A. in Astronomy from the University of North Carolina at Chapel Hill. John Mutch has a 30 year track record of creating significant shareholder value as both an investor and operating executive. Mr. Mutch founded MV Advisors LLC in January of 2006 as a strategic block investment firm which provides focused investment and operational guidance to both private and public companies across a variety of industries, and has served as managing partner of MV Advisors LLC since then. MV Advisors current portfolio includes companies in the technology, active lifestyle, and sports segments valued in excess of $100M. Mr. Mutch has had a sustained career as an operating executive in the technology industry most recently serving as the chairman and chief executive officer of BeyondTrust Software, a privately held security software company focused on privilege identity management solutions sold into the Global 2000 IT infrastructure market. In March of 2003, Mr. Mutch was appointed by the U.S. Bankruptcy court to the Board of Peregrine Systems and he assisted that company in a bankruptcy work out proceeding and was named president, chief executive officer and a director in July 2003. Mr. Mutch ran Peregrine Systems operating the company under an SEC consent decree and successfully restructured the company culminating in a sale to Hewlett-Packard in December 2005 for $450M. From July 1997 to August 2002, Mr. Mutch served as president, chief executive officer and a director of HNC Software, a publically traded enterprise analytics software provider. Mr. Mutch executed a complex merger and acquisition strategy that resulted in HNC returning over $2.6B dollars to its shareholders through the spin out of its Retek subsidiary. HNC Software was sold to FICO in August of 2002 for $825M. Prior to HNC Software, Mr. Mutch spent eight years at Microsoft Corporation in a variety of executive sales and marketing positions. Mr. Mutch has served on numerous public and private company boards. He is currently Chairman of the Board of Aviat Networks (NASDAQ:AVNW) a director at Agilysys, Inc. (NASDAQ: AGYS) and Steel Excel (NASDAQ: SXCL). Mr. Mutch holds a B.S. in Economics from Cornell University and an M.B.A. from The University of Chicago.
On June 2, 2016, Dialectic Capital (together with its affiliates, “Dialectic”) delivered a letter to the Board, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. In the letter, Dialectic expressed its serious concerns with the Issuer’s strategic direction, recent performance and delayed “Plan B” under the direction of its current management team and Board. Dialectic also expressed its concerns with the Issuer’s decision to delay the announcement of its “Plan B” until the Q1 conference call, which it scheduled for June 6, 2016, days after the deadline for nominating director candidates for election to the Board at the 2016 Annual Meeting. Dialectic also expressed its belief that other shareholders are likewise frustrated with management’s apparent inability to communicate a clear strategy for the Issuer.
In the letter, Dialectic stated that it believes change is needed on the Board to ensure that appropriate actions are taken to implement a clear strategy for the benefit of all shareholders. Dialectic also stated that it tried to engage constructively with members of the Issuer’s management team to reach an amicable resolution to reconstitute the Board and avoid a proxy contest but to no avail. To that end, Dialectic disclosed in the letter that last week it delivered the Nomination Letter to the Issuer nominating its slate of five highly qualified Nominees for election to the Board at the 2016 Annual Meeting. Dialectic remains open to continuing its constructive dialogue with the Issuer to reach an amicable resolution that is in the best interests of all shareholders.
Dialectic’s highly-qualified nominees include:
Scott Daniels has served on the Board of Directors of Carbonite, Inc. (NASDAQ: CARB) since January 2016. Mr. Daniels served as a senior analyst of Shannon River Partners, a private hedge fund focused on technology, media and communications companies, from July 2013 to April 2014. From November 2005 to July 2013, Mr. Daniels served as a senior analyst and partner of S Squared Technology, a technology investment fund where he evaluated and invested in multiple publicly traded small and midsized emerging growth technology companies around the world. Prior to S Squared Technology, Mr. Daniels served in various analyst roles covering technology and software companies. Mr. Daniels holds an M.B.A from Columbia Business School and a B.A. in English Literature from University of Pennsylvania.
Alan B. Howe has served as the co-founder and managing partner of Broadband Initiatives LLC, a boutique corporate advisory and consulting firm, since 2001. He served as vice president of strategic and wireless business development for Covad Communications, Inc., a national broadband telecommunications company from May 2005 to October 2008. He served as CFO and vice president of corporate development for Teletrac, Inc., a SaaS fleet management service provider, from April 1995 to April 2001. Previously, he held various executive management positions for Sprint PCS, and Manufacturers Hanover Trust Company. He is currently a board member and chairman of Data I/O Corporation (NASDAQ: DAIO) and board member and vice chairman of Determine, Inc. (NASDAQ: DTRM). In addition, Mr. Howe serves as an advisor to the investment bank, Bowen Advisors, under a consulting agreement. Mr. Howe has served on a number of private and public boards including in the past five years former reporting companies Qualstar, Ditech Networks, Inc., Altigen Communications, Inc., Proxim Wireless Corporation, and Crossroads Systems, Inc. He has a M.B.A. in Finance from Indiana University and a B.S. from the University of Illinois.
John Fichthorn is a co-founder of Dialectic Capital, an investment management firm, and has been a portfolio manager there since 2003. From 2000 to 2003, he was employed by Maverick Capital, most recently as managing director of the technology group. From 1999 to 2000, he was an analyst at Alliance Capital working across multiple hedge fund products and as a member of the technology team. From 1997 to 1999, he was an analyst at Quilcap Corporation, a hedge fund where he covered all sectors, with a focus on technology. From 1995 to 1997, Mr. Fichthorn worked at Ganek & Orwicz Partners where his responsibilities included small cap research, international closed-end fund arbitrage and operations. Since 2014, Mr. Fichthorn has served as a director of Lyman Corporation, a privately held company that designs and manufactures case preparation and reloading products for shooters, hunters, and law enforcement professionals. From June 2011 to June 2014, Mr. Fichthorn served as a director of Immersion Corporation, the leading innovator in haptics technology. Mr. Fichthorn served as a director of California Micro Devices Corporation, a supplier of protection devices for the mobile handset, high brightness LED (HBLED), digital consumer electronics and personal computer markets, from September 2009 until its sale to ON Semiconductor Corporation in January 2010. Mr. Fichthorn holds a B.A. in Astronomy from the University of North Carolina at Chapel Hill.
John Mutch has a 30 year track record of creating significant shareholder value as both an investor and operating executive. Mr. Mutch founded MV Advisors LLC in January of 2006 as a strategic block investment firm which provides focused investment and operational guidance to both private and public companies across a variety of industries, and has served as managing partner of MV Advisors LLC since then. MV Advisors current portfolio includes companies in the technology, active lifestyle, and sports segments valued in excess of $100M. Mr. Mutch has had a sustained career as an operating executive in the technology industry most recently serving as the chairman and chief executive officer of BeyondTrust Software, a privately held security software company focused on privilege identity management solutions sold into the Global 2000 IT infrastructure market. In March of 2003, Mr. Mutch was appointed by the U.S. Bankruptcy court to the Board of Peregrine Systems and he assisted that company in a bankruptcy work out proceeding and was named president, chief executive officer and a director in July 2003. Mr. Mutch ran Peregrine Systems operating the company under an SEC consent decree and successfully restructured the company culminating in a sale to Hewlett-Packard in December 2005 for $450M. From July 1997 to August 2002, Mr. Mutch served as president, chief executive officer and a director of HNC Software, a publically traded enterprise analytics software provider. Mr. Mutch executed a complex merger and acquisition strategy that resulted in HNC returning over $2.6B dollars to its shareholders through the spin out of its Retek subsidiary. HNC Software was sold to FICO in August of 2002 for $825M. Prior to HNC Software, Mr. Mutch spent eight years at Microsoft Corporation in a variety of executive sales and marketing positions. Mr. Mutch has served on numerous public and private company boards. He is currently Chairman of the Board of Aviat Networks (NASDAQ:AVNW) a director at Agilysys, Inc. (NASDAQ: AGYS) and Steel Excel (NASDAQ: SXCL). Mr. Mutch holds a B.S. in Economics from Cornell University and an M.B.A. from The University of Chicago.
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