UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |_|
Filed by a Party other than the Registrant |X|
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Under Rule 14a-12
PHOENIX TECHNOLOGIES LTD.
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(Name of Registrant as Specified in Its Charter)
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
PARCHE, LLC
ADMIRAL ADVISORS, LLC
RAMIUS CAPITAL GROUP, L.L.C.
C4S & CO., L.L.C.
PETER A. COHEN
MORGAN B. STARK
JEFFREY M. SOLOMON
THOMAS W. STRAUSS
JOHN MUTCH
PHILIP MOYER
JEFFREY C. SMITH
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(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
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PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM
DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
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PRELIMINARY COPY SUBJECT TO COMPLETION
DATED JANUARY [__], 2007
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
______________, 2007
Dear Fellow Stockholder:
Starboard Value and Opportunity Master Fund Ltd. ("Starboard") and the
other participants in this solicitation (collectively, the "Ramius Group") are
the beneficial owners of an aggregate of 3,502,941 shares of common stock of
Phoenix Technologies Ltd. ("PTEC" or the "Company"), representing approximately
13.7% of the outstanding shares of common stock of the Company. For the reasons
set forth in the attached Proxy Statement, the Ramius Group does not believe
that the Board of Directors of the Company is acting in the best interests of
its stockholders. The Ramius Group is therefore seeking your support at the
annual meeting of stockholders scheduled to be held at the Company's offices
located at 915 Murphy Ranch Road, Milpitas, California, 95035, on February 14,
2007 at 10:00 a.m., Pacific Standard Time, for the following:
1. To elect Starboard's slate of two nominees to the Board of Directors
to serve as Class II directors; and
2. To ratify the selection by the Audit Committee of the Board of
Directors of Ernst & Young LLP as the Company's independent
registered public accounting firm for the 2007 fiscal year.
The Ramius Group urges you to carefully consider the information contained
in the attached Proxy Statement and then support its efforts by signing, dating
and returning the enclosed WHITE proxy card today. The attached Proxy Statement
and the enclosed WHITE proxy card are first being furnished to the stockholders
on or about [___________ __], 2007.
If you have already voted for the incumbent management slate, you have
every right to change your vote by signing, dating and returning a later dated
proxy.
If you have any questions or require any assistance with your vote, please
contact Innisfree M&A Incorporated, which is assisting us, at their address and
toll-free numbers listed on the following page.
Thank you for your support.
Jeffrey C. Smith
Starboard Value and Opportunity
Master Fund Ltd.
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IF YOU HAVE ANY QUESTIONS, REQUIRE ASSISTANCE IN VOTING YOUR WHITE PROXY CARD,
OR NEED ADDITIONAL COPIES OF STARBOARD'S PROXY MATERIALS, PLEASE CALL INNISFREE
M&A INCORPORATED AT THE PHONE NUMBERS LISTED BELOW.
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Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders Call Toll-Free at: (877) 800-5185
Banks and Brokers Call Collect at: (212) 750-5833
2007 ANNUAL MEETING OF STOCKHOLDERS
OF
PHOENIX TECHNOLOGIES LTD.
_________________________
PROXY STATEMENT
OF
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
_________________________
PLEASE SIGN, DATE AND MAIL THE ENCLOSED WHITE PROXY CARD TODAY
Starboard Value and Opportunity Master Fund Ltd., a Cayman Islands
exempted company ("Starboard"), Parche, LLC, a Delaware limited liability
company ("Parche"), Admiral Advisors, LLC, a Delaware limited liability company
("Admiral Advisors"), Ramius Capital Group, L.L.C., a Delaware limited liability
company ("Ramius Capital"), C4S & Co., L.L.C., a Delaware limited liability
company ("C4S"), Peter A. Cohen ("Mr. Cohen"), Morgan B. Stark ("Mr. Stark"),
Thomas W. Strauss ("Mr. Strauss"), Jeffrey M. Solomon ("Mr. Solomon"), Jeffrey
C. Smith ("Mr. Smith"), John Mutch ("Mr. Mutch") and Philip Moyer ("Mr. Moyer")
(collectively, the "Ramius Group") are significant stockholders of Phoenix
Technologies Ltd., a Delaware corporation ("PTEC" or the "Company"). The Ramius
Group does not believe that the Board of Directors of the Company (the "PTEC
Board") is acting in the best interests of its stockholders. The Ramius Group is
therefore seeking your support at the annual meeting of stockholders scheduled
to be held at the Company's offices located at 915 Murphy Ranch Road, Milpitas,
California, 95035, on February 14, 2007 at 10:00 a.m., Pacific Standard Time,
including any adjournments or postponements thereof and any meeting which may be
called in lieu thereof (the "Annual Meeting"), for the election of Starboard's
director nominees, John Mutch and Philip Moyer (the "Ramius Nominees"), to serve
as Class II directors of the Company, in opposition to two of PTEC's incumbent
directors whose terms expire at the Annual Meeting, or any other persons
nominated by PTEC for election as Class II directors at the Annual Meeting.
As of ________ __, 2007, the approximate date on which this Proxy
Statement is being mailed to stockholders, the members of the Ramius Group were
the beneficial owners of an aggregate of 3,502,941 shares of common stock of the
Company, $0.001 par value per share (the "Shares"), which currently represent
approximately 13.7% of the issued and outstanding Shares, 3,502,941 Shares of
which are entitled to be voted at the Annual Meeting.
PTEC has set the record date for determining stockholders entitled to
notice of and to vote at the Annual Meeting as January 10, 2007 (the "Record
Date"). The mailing address of the principal executive offices of PTEC is 915
Murphy Ranch Road, Milpitas, CA 95035. Stockholders of record at the close of
business on the Record Date will be entitled to vote at the Annual Meeting.
According to PTEC, as of the Record Date, there were 25,574,579 Shares
outstanding and entitled to vote at the Annual Meeting. The participants in this
solicitation intend to vote all of their Shares FOR the election of the Ramius
Nominees.
The Ramius Group believes that PTEC should not remain a public company.
Like other small companies, we believe PTEC faces issues such as the high costs
of Sarbanes-Oxley compliance, minimal analyst coverage, pressure to demonstrate
revenue growth and difficulty in absorbing overhead associated with being a
public company. We believe that these issues combined with the demands
associated with operating as a public company will continue to impair value to
stockholders and are a significant distraction to management. The market demands
that public companies demonstrate revenue growth, and we believe that this
expectation will pressure the Company to gain scale - potentially through
acquisitions - and to drive top-line growth. The PTEC Board has already shown
its susceptibility to these pressures, as evidenced by its willingness to allow
management to diversify into an enterprise software business, organically build
the enterprise sales channel, and sell products on a fully paid-up license
basis. These decisions temporarily increased revenue, but proved, in our
opinion, to be major mistakes ultimately damaging the core business and
resulting in significant destruction of stockholder value.
We also believe that PTEC faces a difficult and risky operational
turnaround, which we believe PTEC should not attempt as a public company. In a
public turnaround, management will disclose elements of its strategic plan,
which, we believe will likely put the Company at a competitive disadvantage and
possibly interfere with its effectiveness. Given the Company's poor track
record, we believe that the PTEC Board should not be trusted to evaluate
acquisition opportunities, growth investments, and product expansions while
overseeing a turnaround plan in the public spotlight
We have therefore made efforts over the past several months to negotiate a
transaction with the PTEC Board. Time and time again, our efforts have been
rebuffed. This has led us to believe that the Company has no intention of either
fully considering our offer or pursuing meaningful discussions with interested
strategic buyers. It appears that the Company has abandoned its previously
announced exploration of strategic alternatives in favor of a restructuring plan
that was announced on September 22, 2006. The Ramius Group is skeptical that the
Company's current restructuring strategy is the best way to maximize stockholder
value.
Given the PTEC Board's refusal to date to negotiate a transaction with us,
we have decided to re-submit our offer to acquire the Company. On January 16,
2007, Admiral Advisors, a member of the Ramius Group, delivered a letter to PTEC
offering to purchase all of the outstanding shares of PTEC which we do not
already own for $5.25 per share in cash (the "Ramius Offer"). We believe PTEC
stockholders deserve to receive a fair price for the Company now, before
stockholder value is further eroded and that PTEC stockholders should have the
ability to determine whether it is in their best interests for the Company to be
sold to us. We believe that the Ramius Offer provides all PTEC stockholders with
an opportunity to realize a significant, timely cash return without the risks
attendant to the Company's current restructuring plan. In fact, the Ramius Offer
represents a premium of approximately 13.4% over the January 12, 2007 closing
price of $4.63 per share. However, there are currently a number of obstacles to
the consummation of the Ramius Offer that only the PTEC Board can remove,
including PTEC's "poison pill" shareholders' rights plan and Section 203 of the
Delaware General Corporation Law (the "DGCL"), which the Company has not opted
out of.
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We are therefore seeking your support for the election of the Ramius
Nominees at the Annual Meeting to demonstrate to the members of the PTEC Board
and management that you support the Ramius Offer. The Ramius Nominees, if
elected, will represent a minority of the PTEC Board, and will, subject to their
fiduciary duties as directors, work with the other members of the PTEC Board to
take those steps that they deem are necessary or advisable to facilitate the
consummation of a sale of the Company to Admiral Advisors, an affiliate of
Ramius Capital, or one of its other affiliates. These steps include the
redemption of the Company's "poison pill" shareholders' rights plan and opting
out of Section 203 of the DGCL. Such actions would allow PTEC stockholders to
decide for themselves whether they want to accept the Ramius Offer or any other
third-party acquisition proposal that someone else could make.
Although the Ramius Nominees will not be able to adopt any measures
without the support of at least some members of the current PTEC Board, we
believe that the election of the Ramius Nominees will provide a clear message to
the current members of the PTEC Board that you want them to take any actions
that they may deem necessary or advisable to facilitate the sale of the Company
to Ramius Capital, or a higher bidder.
THIS SOLICITATION IS BEING MADE BY THE RAMIUS GROUP AND NOT ON BEHALF OF THE
BOARD OF DIRECTORS OR MANAGEMENT OF PTEC. THE RAMIUS GROUP IS NOT AWARE OF ANY
OTHER MATTERS TO BE BROUGHT BEFORE THE ANNUAL MEETING. SHOULD OTHER MATTERS,
WHICH THE RAMIUS GROUP IS NOT AWARE OF A REASONABLE TIME BEFORE THIS
SOLICITATION, BE BROUGHT BEFORE THE ANNUAL MEETING, THE PERSONS NAMED AS PROXIES
IN THE ENCLOSED WHITE PROXY CARD WILL VOTE ON SUCH MATTERS IN THEIR DISCRETION.
THE RAMIUS GROUP URGES YOU TO SIGN, DATE AND RETURN THE WHITE PROXY CARD IN
FAVOR OF THE ELECTION OF THE RAMIUS NOMINEES. THE RAMIUS NOMINEES ARE COMMITTED
TO MAXIMIZING STOCKHOLDER VALUE.
IF YOU HAVE ALREADY SENT A PROXY CARD FURNISHED BY PTEC MANAGEMENT TO PTEC, YOU
MAY REVOKE THAT PROXY AND VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES BY
SIGNING, DATING AND RETURNING THE ENCLOSED WHITE PROXY CARD. THE LATEST DATED
PROXY IS THE ONLY ONE THAT COUNTS. ANY PROXY MAY BE REVOKED AT ANY TIME PRIOR TO
THE ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED
PROXY FOR THE ANNUAL MEETING TO THE RAMIUS GROUP, C/O INNISFREE M&A
INCORPORATED. WHICH IS ASSISTING IN THIS SOLICITATION, OR TO THE SECRETARY OF
PTEC, OR BY VOTING IN PERSON AT THE ANNUAL MEETING.
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IMPORTANT
YOUR VOTE IS IMPORTANT, NO MATTER HOW FEW SHARES YOU OWN. THE RAMIUS GROUP
URGES YOU TO SIGN, DATE, AND RETURN THE ENCLOSED WHITE PROXY CARD TODAY TO VOTE
FOR THE ELECTION OF THE RAMIUS NOMINEES.
o If your Shares are registered in your own name, please sign and date the
enclosed WHITE proxy card and return it to the Ramius Group, c/o Innisfree
M&A Incorporated, in the enclosed envelope today.
o If any of your Shares are held in the name of a brokerage firm, bank, bank
nominee or other institution on the Record Date, only it can vote such
Shares and only upon receipt of your specific instructions. Accordingly,
please contact the person responsible for your account and instruct that
person to execute on your behalf the WHITE proxy card. The Ramius Group
urges you to confirm your instructions in writing to the person
responsible for your account and to provide a copy of such instructions to
the Ramius Group, c/o Innisfree M&A Incorporated, who is assisting in this
solicitation, at the address and telephone numbers set forth below, and on
the back cover of this Proxy Statement, so that we may be aware of all
instructions and can attempt to ensure that such instructions are
followed.
If you have any questions regarding your proxy,
or need assistance in voting your Shares, please call:
INNISFREE M&A INCORPORATED
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NY 10022
STOCKHOLDERS CALL TOLL-FREE AT: (877) 800-5185
BANKS AND BROKERS CALL COLLECT AT: (212) 750-5833
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BACKGROUND TO THE SOLICITATION
We are significant stockholders of the Company. The Ramius Group owns in
the aggregate a total of 3,502,941 Shares, representing approximately 13.7% of
the issued and outstanding common stock of the Company, which Shares were
purchased in the open market, except as otherwise noted on Schedule I, for a
total purchase price of approximately $18,294,285, including brokerage
commissions.
REASONS FOR THE RAMIUS GROUP'S SOLICITATION
The Ramius Group believes that PTEC is too small to remain a public
company. We also believe that PTEC faces many difficult business challenges and
a risky operational turnaround. The decision to sell products using fully
paid-up licensing agreements has created significant downward pressure on
near-term revenues. The Company has had difficulty penetrating the non-PC core
system space and has had difficulty gaining traction with its non-BIOS
application products. Solving these issues will require difficult decisions and
dramatic changes that we believe would be much easier to accomplish as a private
company.
The market demands that public companies demonstrate revenue growth, and
we believe that this expectation will pressure the Company to gain scale -
potentially through acquisitions - and to drive top-line growth. The PTEC Board
has already shown its susceptibility to these pressures, as evidenced by its
willingness to allow management to diversify into an enterprise software
business, organically build the enterprise sales channel, and sell products on a
fully paid-up license basis. These decisions temporarily increased revenue, but
proved to be major mistakes ultimately damaging the core business and resulting
in significant destruction of stockholder value. In addition, the substantial
fixed costs associated with being a public company are unduly burdensome, in our
belief, to a company of PTEC's size.
As the largest stockholder of the Company and given the Company's poor
track record, we believe that this Board should not be trusted to assess
acquisitions, growth investments, and product expansions while overseeing a
turnaround plan in the public spotlight.
We have made efforts over the past several months to negotiate a
transaction with the PTEC Board. Time and time again, our efforts have been
rebuffed. This has led us to believe that the Company has no intention of either
fully considering our offer or pursuing meaningful discussions with interested
strategic buyers. It appears that the Company has abandoned its previously
announced exploration of strategic alternatives in favor of a restructuring plan
that was announced on September 22, 2006. We believe PTEC stockholders deserve
to receive a fair price for the Company now and that PTEC stockholders should
have the ability to determine whether it is in their best interests for the
Company to be sold to us.
Given the PTEC Board's refusal to date to negotiate a transaction with us,
we have decided to re-submit our offer to PTEC to acquire the Company in
conjunction with this proxy solicitation requesting PTEC stockholders to vote to
determine whether the Company should be sold to us. The Annual Meeting is a
referendum for you to indicate whether you prefer our offer or the Company's
restructuring plan. We believe that the Ramius Offer provides all PTEC
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stockholders with an opportunity to realize a significant, timely cash return
without the risks attendant to the Company's current restructuring plan.
The Ramius Nominees, if elected, will represent a minority of the PTEC
Board and will, subject to their fiduciary duties as directors, work with the
other members of the PTEC Board to take those steps that they deem are necessary
or advisable to facilitate the consummation of a sale of the Company to Admiral
Advisors, an affiliate of Ramius Capital, or one of its other affiliates, or the
highest bidder in a competitive sales process, including redemption of the
Company's "poison pill" shareholders' rights plan and opting out of Section 203
of the DGCL. This would allow PTEC stockholders to decide for themselves whether
they want to accept the Ramius Offer or any other third-party acquisition
proposal. Although the Ramius Nominees will not be able to adopt any measures
without the support of at least some members of the current PTEC Board, we
believe that the election of the Ramius Nominees will provide a strong signal to
the current Board that the stockholders prefer the Ramius Group's future
direction for the Company.
The Ramius Group believes that for years PTEC has maintained poor
corporate governance practices that inhibit the accountability of management and
directors to the stockholders. The following are examples of the sub-standard
corporate governance practices of PTEC:
STAGGERED BOARD: For years, PTEC has maintained a "staggered" or
classified board -- a policy which a 2002 study by
Harvard University professors, Lucian Bebchuk, John
Coates and Guhan Subramainian found nearly doubles the
likelihood of a company remaining independent and
typically results in an 8% to 10% loss of value in
companies targeted for acquisition by an uninvited
suitor.
SUPERMAJORITY VOTING A supermajority vote is required for stockholders to
PROVISIONS: amend certain provisions of the Company's Amended and
Restated Certificate of Incorporation and Bylaws,
including rescinding the classified Board.
INABILITY TO CALL Stockholders are prohibited from calling special
SPECIAL MEETINGS OF meetings of stockholders.
STOCKHOLDERS:
NO WRITTEN CONSENT: Stockholders are prohibited from taking action by
written consent.
Governance provisions such as these are contrary to the guidelines for
corporate governance best practices issued by leading advocates of stockholder
democracy, such as Institutional Shareholder Services (ISS) and Glass, Lewis &
Co. Commentators and corporate governance experts disagree on the propriety and
utility of such governance provisions. Given the insulation provided to the PTEC
Board by PTEC's governance structures, there are few avenues available to
stockholders dissatisfied with the status quo.
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We are further concerned that the interests of the PTEC Board may not be
aligned with those of the stockholders. As of January 8, 2007, the members of
the PTEC Board collectively beneficially owned 1,483,000 of the Shares, based on
information contained in the Company Proxy Statement filed by PTEC, of which
only 117,000 shares are owned outright by the members of the PTEC Board. It
should be noted that 900,000 of the Shares reported to be beneficially owned by
the PTEC Board were part of an option grant to Mr. Hobbs upon his appointment as
the CEO. We believe that the lack of significant actual ownership of the Shares
by the PTEC Board may contribute to the PTEC Board's lack of commitment to
maximizing the value of the Shares. The lack of significant ownership of the
Shares by the PTEC Board may result, we believe, in actions taken by PTEC that
are not always in the best interests of the greater majority of unaffiliated
stockholders.
In the event that the PTEC Board attempts to use new bylaws or amended
bylaws to prevent the stockholders, including the Ramius Group, from
accomplishing the objectives described in this Proxy Statement, the Nominees, if
elected, intend to repeal any new or amended bylaws having such an effect.
The following is a chronology of events leading up to this proxy
solicitation:
o Ramius Capital and certain of its affiliates commenced investing in
the Shares in November 2005. On June 15, 2006, the members of the
Ramius Group (excluding Messrs. Smith and Moyer) filed with the SEC
a statement on Schedule 13D disclosing that such members of the
Ramius Group had acquired in excess of 5% of the Shares.
o On June 15, 2006, Admiral Advisors, an affiliate of Ramius Capital,
delivered a letter to the PTEC Board expressing its belief that the
market price of the PTEC's shares fails to reflect the value
embedded in PTEC's profitable BIOS business, as well as several of
PTEC's applications, and urging the PTEC Board to immediately hire
an interim chief executive officer and an investment banking firm to
assist the PTEC Board in exploring all strategic alternatives to
maximize stockholder value. Admiral Advisors also expressed concerns
with PTEC's recent poor performance and execution, lack of
leadership, strategic direction and concerns that PTEC lacks scale,
brand recognition and the distribution channels necessary to
effectively compete as a standalone company in the enterprise
software market.
o On June 20, 2006, Anthony Morris, the Company's lead independent
director, sent a letter on behalf of the PTEC Board to Mr. Smith in
which he stated that the PTEC Board is aware of, and is addressing,
the Company's financial performance and the issues that the Company
faces and that the PTEC Board has previously explored, and continues
to consider, strategic alternatives as well as other options to
maximize stockholder value. The letter further stated that the PTEC
Board's belief that hiring an investment banker "is unnecessary at
this time and, in any event, would be premature until a new CEO is
installed and has had an opportunity to provide the leadership,
guidance, new ideas and management we expect from the next CEO of
the Company."
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o On June 25, 2006, certain representatives of Ramius Capital had a
conference call with certain members of the PTEC Board to discuss
the concerns of the Ramius Group with the Company's strategy and the
deterioration of the Company's operating performance. The Ramius
Capital representatives recommended that the PTEC Board consider
Philip Moyer as an interim or a full-time CEO candidate.
o On June 28, 2006, Admiral Advisors sent a letter to Mr. Morris, the
lead independent director of the PTEC Board, reiterating its strong
belief that "quickly retaining a reputable investment bank to
explore strategic alternatives is in the best interest of the
shareholders." The letter further stated that hiring an investment
bank would allow the PTEC Board to quickly decide whether it is in
the best interest of the shareholders to search for a new permanent
CEO to attempt to fix the Company or whether to sell the Company to
the highest bidder. A resume for Philip Moyer was attached to the
letter for the PTEC Board's consideration of Mr. Moyer as a
candidate for CEO.
o On July 5, 2006, Admiral Advisors delivered a letter to Mr. Morris
proposing to acquire in a negotiated transaction, subject to certain
conditions, the Shares of the Company it does not already own for
$5.05 per Share in cash. In its letter, Admiral Advisors wrote, "We
recognize that Phoenix faces many difficult business challenges.
Several senior executives, including the CEO have recently left the
Company. The Company is navigating through a difficult distribution
channel shift for the applications business, while experiencing
installation and compatibility issues with some of its applications.
The Company is working through a shift in its Core System Software
pricing strategy, which has significantly reduced near-term revenue.
The Company has struggled to penetrate the non-PC core system space
and to gain traction with its security application products. Solving
these issues will require difficult decisions and dramatic changes
that we believe would be much easier to accomplish as a private
company. In addition, Phoenix faces issues similar to other
micro-cap companies, including the high costs of Sarbanes-Oxley
compliance, minimal analyst coverage, and public scrutiny of each
important decision. These issues will continue to impair value and
are a significant distraction to management. As such, it is our
belief that Phoenix should not continue as a stand-alone public
company."
o On July 12, 2006, the Company announced that it had engaged Savvian
LLC, an independent investment bank ("Savvian"), to assist the PTEC
Board and management of the Company in assessing its strategic
alternatives to maximize shareholder value, as well as its
consideration of the unsolicited proposal made by Admiral Advisors.
o On August 28, 2006, Admiral Advisors sent a letter to Savvian
stating its frustration by "the Company's insistence on including
stand-still language in our confidentiality agreement which would
obviously be untenable for any investor in our situation." The
letter further stated that, "It is inappropriate for our rights as
stockholders to take certain actions in the future that may be
required to protect our investment and the interests of the
Company's stockholders to be limited in order to be allowed to
participate in the due diligence process. If the Company's review of
strategic alternatives does not result in the Company finding a
buyer on terms we believe to be
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fair and in the best interests of the Company's stockholders, then
we can not allow ourselves to be severely limited in our ability to
take actions to protect our investment and the interests of the
Company's stockholders."
o On September 26, 2006, David S. Dury, Chairman of the PTEC Board,
and certain representatives of Savvian met with certain
representatives of the Ramius Group to introduce Woodson Hobbs, the
recently appointed President and CEO of the Company, and to discuss
the Company's strategy and the Ramius Group's interest in acquiring
the Company.
o On October 20, 2006, Ramius Capital and the Company entered into a
Confidentiality Agreement with certain stand-still provisions that
would allow the Ramius Group to commence due diligence.
o On November 3, 2006, certain representatives of the Ramius Group
attended a presentation by certain members of the Company's
management at the Company's offices.
o On November 17, 2006, Admiral Advisors sent a letter to Mr. Hobbs as
a follow-up to the presentation on November 3, 2006, reiterating
Admiral Advisors' strong interest in purchasing the Company and
Admiral Advisors' intent to submit a preliminary indication of
interest bid pursuant to the instructions communicated by Savvian.
o On December 6, 2006, Admiral Advisors submitted a non-binding
indication of interest to the Company proposing a transaction to
acquire PTEC for between $5.05 and $5.35 per share in cash, with
certain conditions to closing.
o On December 13, 2006, certain representatives of the Ramius Group
met with Mr. Hobbs at the offices of Ramius Capital to discuss the
strategic alternatives review process and the indication of interest
submitted by Admiral Advisors.
o On December 20, 2006, Mr. Hobbs of PTEC called Mr. Smith of Admiral
Advisors to inform Mr. Smith that the Company was not willing to
move forward based on Admiral Advisors' prior indication of interest
submitted on December 6, 2006. Mr. Hobbs did not clearly communicate
to Mr. Smith whether Admiral Advisors' offer was inadequate on price
or conditions.
o On December 21, 2006, Admiral Advisors re-submitted its revised
non-binding indication of interest letter to the Company with more
limited conditions. In the letter, Admiral Advisors reiterated its
strong desire to acquire the Company and proposed to acquire all of
the outstanding shares of the Company it did not own for $5.25 per
share in cash.
o On December 27, 2006, Starboard delivered a letter to PTEC
nominating Jeffrey C. Smith, John Mutch and Philip Moyer as Class II
Nominees for election to the PTEC Board at the Annual Meeting (the
"Nomination Letter").
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o On January 3, 2007, certain representatives of PTEC management met
at Ramius Capital with certain representatives of the Ramius Group
to discuss management's strategic plan. The Ramius Group
representatives reiterated the desire of Admiral Advisors to acquire
the Company.
o On January 12, 2007, PTEC filed its preliminary proxy materials with
the SEC, via EDGAR, on Form PRE 14A (the "Company Proxy Statement").
The Company Proxy Statement contained disclosure that pursuant to a
resolution adopted by the PTEC Board at a meeting held on December
19, 2006, the PTEC Board reduced the number of authorized directors
of the Company from seven to six and the number of Class II
directors from three to two, effective immediately prior to the
commencement of the Annual Meeting. This was the first instance that
such disclosure had been made available to the public.
o On January 12, 2007, Mr. Smith called Mr. Dury and made an oral
offer for Admiral Advisors to acquire the Company in a negotiated
transaction for $5.30 per share in cash.
o On January 14, 2007, Mr. Dury called Mr. Smith to inform him that
the Company had turned down his oral offer for Admiral Advisors to
acquire the Company for $5.30 per share in cash.
o On January 16, 2007, Admiral Advisors delivered a letter to the PTEC
Board re-submitting an increased offer to acquire the Shares of the
Company it does not already own for $5.25 per Share in cash.
o On January 16, 2007, Starboard delivered a supplement to its
Nomination Letter to the Corporate Secretary of the Company (the
"Nomination Supplement") providing notice to the Company of the
withdrawal of Jeffrey C. Smith as a nominee for election to the PTEC
Board as a Class II director at the Annual Meeting. The Nomination
Supplement provided that John Mutch and Philip Moyer are Starboard's
two nominees for election as Class II directors at the Annual
Meeting.
The purpose of this solicitation is to elect members to the PTEC Board who
will have the ability to work with the other members of the PTEC Board to take
those steps that they deem are necessary or advisable to facilitate the
consummation of a sale of the Company to Admiral Advisors, an affiliate of
Ramius Capital, or one of its other affiliates. We believe that the Ramius
Nominees are highly qualified individuals who will protect and enhance
stockholder value. However, there can be no assurance that the election of the
Ramius Nominees will enhance stockholder value.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Pursuant to a resolution adopted by the PTEC Board at a meeting held on
December 19, 2006 and made public by way of the Company Proxy Statement filed on
January 12, 2007, the PTEC Board reduced the number of authorized directors of
the Company from seven to six and
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the number of Class II Directors from three to two, effective immediately prior
to the commencement of the Meeting. Anthony Sun, a Class II director, has
provided notice to the Company that he will not be standing for re-election at
the Annual Meeting. The Ramius Group is seeking your support at the Annual
Meeting to elect the Ramius Nominees in opposition to PTEC's director nominees.
THE RAMIUS NOMINEES
The Ramius Group has nominated a slate of highly qualified nominees who,
if elected, will exercise his independent judgment in accordance with his
fiduciary duties as a director in all matters that come before the PTEC Board.
The Ramius Nominees are independent of the Company in accordance with SEC and
Nasdaq Stock Market rules on board independence and would seek to maximize value
for all stockholders. If elected, and subject to their fiduciary duties as
directors, the Ramius Nominees would have the ability to work with the other
members of the PTEC Board to take those steps that they deem are necessary or
advisable to facilitate the consummation of a sale of the Company to Admiral
Advisors, an affiliate of Ramius Capital, or one of its other affiliates,
including redemption of the Company's "poison pill" shareholders' rights plan
and opting out of Section 203 of the DGCL. This would allow PTEC's stockholders
to have the ability to decide for themselves whether they want to accept the
Ramius Offer or any other third-party acquisition proposal.
Set forth below are the name, age, business address, present principal
occupation, employment history and directorships of publicly-held companies of
each of the Ramius Nominees for at least the past five years. This information
has been furnished to the Ramius Group by the respective Ramius Nominees. Each
of the Ramius Nominees has consented to serve as a director of the Company and
be named in this Proxy Statement as a nominee. Each of the Ramius Nominees is at
least 18 years of age. None of the entities referenced below is a parent or
subsidiary of the Company.
JOHN MUTCH (AGE 50) is the founder and a managing partner of MV Advisors,
LLC. In March 2003, Mr. Mutch was appointed to the Board of Directors of
Peregrine Systems (NASD:PRGN.PK) ("Peregrine"), a global enterprise software
provider, to assist Peregrine and its management in development of a plan of
reorganization, which ultimately led to Peregrine's emergence from bankruptcy.
From August 2003 to December 2005, Mr. Mutch served as President and Chief
Executive Officer of Peregrine, during which time he restructured and stabilized
its business operations and led Peregrine through its acquisition by
Hewlett-Packard. From December 1999 through August 2002, Mr. Mutch was the chief
executive officer of HNC Software, Inc. (NASD:HNCS) ("HNC"), an enterprise
analytics software provider. He also served as president of HNC from May 2001
through August 2002. Mr. Mutch joined HNC in 1997, and from 1997 to 1999 served
in various other senior executive positions, including vice president, marketing
and president of HNC Insurance Solutions. In 1994, Mr. Mutch founded MVenture
Holdings, Inc., a private equity fund that invests in public and private
technology companies, which became Mventure Holdings LLC in 2002. From December
1986 to June 1994, Mr. Mutch held a variety of executive sales and marketing
positions with Microsoft Corporation, including director of organization
marketing. Mr. Mutch is currently a director of the San Diego Software Industry
Council. Mr. Mutch served on the Board of Directors of Brio Software
(NASD:BRIO), a developer of software products, from 2002 to 2003. Mr. Mutch
holds a B.S.
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from Cornell University and an M.B.A. from the University of Chicago. The
principal business address of Mr. Mutch is c/o MV Advisors, LLC, 420 Stevens
Avenue, Suite 270, Solana Beach, CA 92075. As of the date hereof, Mr. Mutch
beneficially owns 200,000 shares of Common Stock of PTEC. For information
regarding purchases and sales during the past two years by Mr. Mutch in
securities of PTEC, please see SCHEDULE I.
PHILIP MOYER (AGE 41) is a private investor and entrepreneur. Since
October 2006, Mr. Moyer has been a shareholder and member of the Board of
Directors of Cassiopae, S.A., a French software company in the commercial
banking market, and serves as Chief Executive Officer of its United States
operations. From January 2006 to August 2006, Mr. Moyer was an
Entrepreneur-in-Residence for Safeguard Scientifics, Inc. (NYSE:SFE) and since
August 2006, he has served on its Information Technology Advisory Board. From
July 2003 to September 2005, Mr. Moyer served as General Manager, Professional
Services Industry for Microsoft Corp. (NASD:MSFT) ("Microsoft"). From July 2002
to July 2005, Mr. Moyer also served as Microsoft's General Manager of Global
Customers, during which time he was responsible for managing worldwide sales and
service teams for some of Microsoft's largest multi-national customers. From
July 1999 to July 2002, Mr. Moyer was General Manager of Microsoft's Services
Organizations (Consulting, Support, Technology Specialists, and Partners) in the
U.S. East Region. From 1991 to July 1999, Mr. Moyer held a variety of executive
and technical positions with Microsoft. Prior to joining Microsoft, Mr. Moyer
was the co-founder of Orion Systems Group, a software company that builds
education and government administration software. Mr. Moyer began his
professional career with GE Aerospace as a software engineer. Mr. Moyer holds a
B.S. in Computer Science from University of Pittsburgh. The principal business
address of Mr. Moyer is c/o Cassiopae, S.A., 174 quai de Jemmapes, 75010 Paris,
France. As of the date hereof, Mr. Moyer does not own any securities of PTEC nor
has he made any purchases or sales of any securities of PTEC during the past two
years.
There can be no assurance that the actions the Ramius Nominees intend to
take as described above will be implemented if they are elected or that the
election of the Ramius Nominees will improve the Company's business or otherwise
enhance stockholder value. Your vote to elect the Ramius Nominees does not
constitute a vote in favor of the Ramius Group's value enhancing plans for PTEC
or the Ramius Offer. Your vote to elect the Ramius Nominees will have the legal
effect of replacing two incumbent directors of PTEC with the Ramius Nominees.
There can be no assurance that stockholder value will be maximized as a result
of this solicitation or the election of the Ramius Nominees.
Admiral Advisors, an affiliate of Ramius Capital, and two of the Ramius
Nominees, Messrs. Mutch and Moyer, have entered into compensation letter
agreements (the "Compensation Letter Agreements") regarding compensation to be
paid by to such Ramius Nominees for their agreement to be named as and serve as
a Ramius Nominee and for their services as directors of PTEC, if elected.
Pursuant to the terms of the Compensation Letter Agreements, Admiral Advisors
has agreed to pay each nominee $5,000 in cash upon the submission of the
Nomination Letter by the Ramius Group to the Company. In the event that the
Ramius Group files a definitive proxy statement with the SEC relating to a
solicitation of proxies in favor of each nominee's election as a director at the
Annual Meeting, Admiral Advisors has agreed to allow each nominee to receive a
profit participation with respect to the sale by Admiral Advisors of the last
$20,000 worth of Shares (the "Participation Shares") beneficially owned by
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Admiral Advisors to a third party unaffiliated with any member of the Ramius
Group. Pursuant to the terms of the Compensation Letter Agreements, each nominee
will be entitled to receive a cash payment equal to the amount, if any, by which
the proceeds received by Admiral Advisors from the sale of the Participation
Shares exceeds $20,000 in the aggregate.
Ramius Capital and certain of its affiliates, have signed or intend to
sign a letter agreement pursuant to which they agree to indemnify the Ramius
Nominees against claims arising from the solicitation of proxies from PTEC's
stockholders in connection with the Annual Meeting and any related transactions.
Other than as stated herein, there are no arrangements or understandings between
members of the Ramius Group and any of the Ramius Nominees or any other person
or persons pursuant to which the nomination of the Ramius Nominees described
herein is to be made, other than the consent by each of the Ramius Nominees to
be named in this Proxy Statement and to serve as a director of PTEC if elected
as such at the Annual Meeting. Neone of the Ramius Nominees are a party adverse
to PTEC or any of its subsidiaries or has a material interest adverse to PTEC or
any of its subsidiaries in any material pending legal proceedings.
The Ramius Group does not expect that the Ramius Nominees will be unable
to stand for election, but, in the event that such persons are unable to serve
or for good cause will not serve, the Shares represented by the enclosed WHITE
proxy card will be voted for substitute nominees. In addition, Starboard
reserves the right to nominate substitute persons if PTEC makes or announces any
changes to the PTEC Bylaws or takes or announces any other action that has, or
if consummated would have, the effect of disqualifying the Ramius Nominees. In
any such case, Shares represented by the enclosed WHITE proxy card will be voted
for such substitute nominees. Starboard reserves the right to nominate
additional persons if PTEC increases the size of the PTEC Board above its
existing size or increases the number of directors whose terms expire at the
Annual Meeting. Additional nominations made pursuant to the preceding sentence
are without prejudice to the position of Starboard that any attempt to increase
the size of the current PTEC Board or to reconstitute or reconfigure the classes
on which the current directors serve constitutes an unlawful manipulation of
PTEC's corporate machinery.
YOU ARE URGED TO VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES ON THE ENCLOSED
WHITE PROXY CARD.
OTHER PROPOSALS
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
According to the Company Proxy Statement, the Audit Committee of the Board
has selected Ernst & Young LLP to continue to serve as the Company's independent
registered public accounting firm for the fiscal year ending September 30, 2007.
The Company is asking stockholders to ratify this appointment. The Ramius Group
does not object to the ratification of the PTEC Board's appointment of as Ernst
& Young LLP as the Company's independent auditors.
REQUIRED VOTE
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If a quorum is present, the affirmative vote of the holders of a majority
of the shares of Common Stock present or represented at the Meeting and voting
on the matter is required for approval of Proposal No. 2.
We are not aware of any other proposals to be brought before the Annual
Meeting. However, we intend to bring before the Annual Meeting such business as
may be appropriate, including without limitation nominating additional persons
for directorships, or making any proposals as may be appropriate to address any
action of the PTEC Board not publicly disclosed prior to the date of this proxy
statement. Should other proposals be brought before the Annual Meeting, the
persons named as proxies in the enclosed WHITE proxy card will vote on such
matters in their discretion.
-14-
VOTING AND PROXY PROCEDURES
Only stockholders of record on the Record Date will be entitled to notice
of and to vote at the Annual Meeting. Each Share is entitled to one vote.
Stockholders who sell Shares before the Record Date (or acquire them without
voting rights after the Record Date) may not vote such Shares. Stockholders of
record on the Record Date will retain their voting rights in connection with the
Annual Meeting even if they sell such Shares after the Record Date. Based on
publicly available information, the Ramius Group believes that the only
outstanding class of securities of PTEC entitled to vote at the Annual Meeting
is the Shares.
Shares represented by properly executed WHITE proxy cards will be voted at
the Annual Meeting as marked and, in the absence of specific instructions, will
be voted FOR the election of the Ramius Nominees to the PTEC Board and in the
discretion of the persons named as proxies on all other matters as may properly
come before the Annual Meeting.
You are being asked to elect the Ramius Nominees. The enclosed WHITE proxy
card may only be voted for the Ramius Nominees and does not confer voting power
with respect to the Company's nominees. Accordingly, you will not have the
opportunity to vote for any of PTEC's nominees. You can only vote for PTEC's
nominees by signing and returning a proxy card provided by PTEC. Stockholders
should refer to the Company's proxy statement for the names, backgrounds,
qualifications and other information concerning the Company's nominees. The
participants in this solicitation intend to vote all of their Shares in favor of
the Ramius Nominees.
QUORUM
The required quorum for transacting business at the Annual Meeting is a
majority of the votes eligible to be cast by holders of Shares issued and
outstanding on the Record Date. Shares that are voted "FOR", "AGAINST" or
"WITHHELD" from a matter are treated as being present at the Annual Meeting for
purposes of establishing a quorum and are also treated as shares entitled to
vote at the Annual Meeting (the "Votes Cast") with respect to such matter.
VOTES REQUIRED FOR APPROVAL
VOTE REQUIRED FOR PROPOSAL 1. A plurality of the total votes cast ("Votes
Cast") is required to elect the Ramius Nominees pursuant to Proposal 1. A vote
to "WITHHOLD" for any nominee for director will be counted for purposes of
determining the Votes Present, but will have no other effect on the outcome of
the vote on the election of directors. A stockholder may cast votes for the
Ramius Nominees either by so marking the ballot at the Annual Meeting or by
specific voting instructions sent with a signed proxy to either the Ramius Group
in care of Innisfree M&A Incorporated at the address set forth on the back cover
of this Proxy Statement or to PTEC at 915 Murphy Ranch Road, Milpitas,
California 95035, or any other address provided by PTEC.
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ABSTENTIONS
Abstentions will count as Votes Present for the purpose of determining
whether a quorum is present. Abstentions will not be counted as Votes Cast in
the election of directors.
DISCRETIONARY VOTING
Shares held in "street name" and held of record by banks, brokers or
nominees may not be voted by such banks, brokers or nominees unless the
beneficial owners of such Shares provide them with instructions on how to vote.
REVOCATION OF PROXIES
Stockholders of PTEC may revoke their proxies at any time prior to
exercise by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy) or by delivering a written notice of revocation. The delivery of a
subsequently dated proxy which is properly completed will constitute a
revocation of any earlier proxy. The revocation may be delivered either to the
Ramius Group in care of Innisfree M&A Incorporated at the address set forth on
the back cover of this Proxy Statement or to PTEC at 915 Murphy Ranch Road,
Milpitas, California 95035, or any other address provided by PTEC. Although a
revocation is effective if delivered to PTEC, the Ramius Group requests that
either the original or photostatic copies of all revocations be mailed to the
Ramius Group in care of Innisfree M&A Incorporated at the address set forth on
the back cover of this Proxy Statement so that the Ramius Group will be aware of
all revocations and can more accurately determine if and when proxies have been
received from the holders of record on the Record Date and the number of
outstanding Shares represented thereby. Additionally, Innisfree M&A Incorporated
may use this information to contact stockholders who have revoked their proxies
in order to solicit later dated proxies for the election of the Ramius Nominees.
IF YOU WISH TO VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES TO THE PTEC BOARD,
PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED WHITE PROXY CARD IN THE
POSTAGE-PAID ENVELOPE PROVIDED.
SOLICITATION OF PROXIES
The solicitation of proxies pursuant to this Proxy Statement is being made
by the Ramius Group. Proxies may be solicited by mail, facsimile, telephone,
telegraph, in person and by advertisements. Starboard will not solicit proxies
via the Internet.
Starboard has entered into an agreement with Innisfree M&A Incorprated for
solicitation and advisory services in connection with this solicitation, for
which Innisfree M&A Incorporated will receive a fee not to exceed $[__________],
together with reimbursement for its reasonable out-of-pocket expenses, and will
be indemnified against certain liabilities and expenses, including certain
liabilities under the federal securities laws. Innisfree M&A Incorporated will
solicit proxies from individuals, brokers, banks, bank nominees and other
institutional holders. Starboard has requested banks, brokerage houses and other
custodians, nominees and fiduciaries to forward all solicitation materials to
the beneficial owners of the Shares they hold of record.
-16-
Starboard will reimburse these record holders for their reasonable out-of-pocket
expenses in so doing. It is anticipated that Innisfree M&A Incorporated will
employ approximately [__] persons to solicit PTEC's stockholders for the Annual
Meeting.
The entire expense of soliciting proxies is being borne by the Ramius
Group. Costs of this solicitation of proxies are currently estimated to be
approximately $___,000.00. The Ramius Group estimates that through the date
hereof its expenses in connection with this solicitation are approximately
$___,000.00.
OTHER PARTICIPANT INFORMATION
Each member of the Ramius Group is a participant in this solicitation. The
principal business of each of Starboard and Parche is serving as a private
investment fund. Each of Starboard and Parche has been formed for the purpose of
making equity investments and, on occasion, taking an active role in the
management of portfolio companies in order to enhance stockholder value. The
principal business of Admiral Advisors is acting as investment manager of
Starboard and managing member of Parche. Ramius Capital is engaged in money
management and investment advisory services for third parties and proprietary
accounts. C4S serves as managing member of Ramius Capital. Mr. Cohen, Mr.
Strauss, Mr. Stark and Mr. Solomon serve as co-managing members of C4S. Mr.
Smith is an Executive Managing Director of Ramius Capital.
The address of the principal office of each of Parche, Admiral Advisors,
Ramius Capital, C4S, Mr. Cohen, Mr. Stark, Mr. Strauss, Mr. Solomon and Mr.
Smith is 666 Third Avenue, 26th Floor, New York, New York 10017. The address of
the principal office of Starboard is c/o Citco Fund Services (Cayman Islands)
Limited, Corporate Center, West Bay Road, Grand Cayman, Cayman Islands, British
West Indies.
As of the date hereof, Starboard beneficially owns 2,774,471 Shares and
Parche beneficially owns 528,470 Shares. As of the date hereof, Admiral Advisors
(as the investment manager of Starboard and the managing member of Parche) may
be deemed to be the beneficial owner of the 2,774,471 Shares owned by Starboard
and the 528,470 Shares owned by Parche. As of the date hereof, Ramius Capital
(as the sole member of Admiral Advisors), C4S (as the managing member of Ramius
Capital) and Mr. Cohen, Mr. Stark, Mr. Strauss and Mr. Solomon (as the managing
members of C4S) each may be deemed to be the beneficial owner of the 2,774,471
Shares owned by Starboard and the 528,470 Shares owned by Parche. Mr. Cohen, Mr.
Stark, Mr. Strauss and Mr. Solomon share voting and dispositive power with
respect to the Shares owned by Starboard and Parche by virtue of their shared
authority to vote and dispose of such Shares. Messrs. Cohen, Stark, Strauss and
Solomon disclaim beneficial ownership of such Shares except to the extent of
their pecuniary interest therein. Mr. Smith does not currently beneficially own
any Shares.
For information regarding purchases and sales of securities of PTEC during
the past two years by the members of the Ramius Group, see Schedule I.
On December 29, 2006, the members of the Ramius Group entered into a Joint
Filing and Solicitation Agreement in which each member of the Ramius Group
agreed to the joint filing on
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behalf of each of them of Statements on Schedule 13D and agreed to form the
Ramius Group for the purpose of soliciting proxies or written consents for the
election of the Ramius Nominees to the PTEC Board at the Annual Meeting and for
the purpose of taking all other actions incidental to the foregoing. The Ramius
Group intends to seek reimbursement from PTEC of all expenses it incurs in
connection with the Solicitation. The Ramius Group does not intend to submit the
question of such reimbursement to a vote of security holders of the Company.
Except as set forth in this Proxy Statement (including the Schedules
hereto), (i) during the past 10 years, no participant in this solicitation has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors); (ii) no participant in this solicitation directly or indirectly
beneficially owns any securities of PTEC; (iii) no participant in this
solicitation owns any securities of PTEC which are owned of record but not
beneficially; (iv) no participant in this solicitation has purchased or sold any
securities of PTEC during the past two years; (v) no part of the purchase price
or market value of the securities of PTEC owned by any participant in this
solicitation is represented by funds borrowed or otherwise obtained for the
purpose of acquiring or holding such securities; (vi) no participant in this
solicitation is, or within the past year was, a party to any contract,
arrangements or understandings with any person with respect to any securities of
PTEC, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies; (vii) no
associate of any participant in this solicitation owns beneficially, directly or
indirectly, any securities of PTEC; (viii) no participant in this solicitation
owns beneficially, directly or indirectly, any securities of any parent or
subsidiary of PTEC; (ix) no participant in this solicitation or any of his/its
associates was a party to any transaction, or series of similar transactions,
since the beginning of PTEC's last fiscal year, or is a party to any currently
proposed transaction, or series of similar transactions, to which PTEC or any of
its subsidiaries was or is to be a party, in which the amount involved exceeds
$60,000; (x) no participant in this solicitation or any of his/its associates
has any arrangement or understanding with any person with respect to any future
employment by PTEC or its affiliates, or with respect to any future transactions
to which PTEC or any of its affiliates will or may be a party; and (xi) no
person, including the participants in this solicitation, who is a party to an
arrangement or understanding pursuant to which the Ramius Nominees are proposed
to be elected has a substantial interest, direct or indirect, by security
holdings or otherwise in any matter to be acted on at the Annual Meeting.
OTHER MATTERS AND ADDITIONAL INFORMATION
The Ramius Group is unaware of any other matters to be considered at the
Annual Meeting. However, should other matters, which the Ramius Group is not
aware of a reasonable time before this solicitation, be brought before the
Annual Meeting, the persons named as proxies on the enclosed WHITE proxy card
will vote on such matters in their discretion.
THE RAMIUS GROUP HAS OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE
REQUIRED BY APPLICABLE LAW THAT IS ALREADY INCLUDED IN THE COMPANY'S PROXY
STATEMENT. THIS DISCLOSURE INCLUDES, AMONG OTHER THINGS, BIOGRAPHICAL
INFORMATION ON PTEC'S DIRECTORS AND EXECUTIVE OFFICERS, INFORMATION CONCERNING
EXECUTIVE COMPENSATION, AN ANALYSIS OF CUMULATIVE TOTAL RETURNS ON AN
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INVESTMENT IN SHARES DURING THE PAST FIVE YEARS AND PROCEDURES FOR SUBMITTING
PROPOSALS FOR INCLUSION IN THE COMPANY'S PROXY STATEMENT AT THE NEXT ANNUAL
MEETING. STOCKHOLDERS SHOULD REFER TO THE COMPANY'S PROXY STATEMENT IN ORDER TO
REVIEW THIS DISCLOSURE.
See Schedule II for information regarding persons who beneficially own
more than 5% of the Shares and the ownership of the Shares by the management of
PTEC.
The information concerning PTEC contained in this Proxy Statement and the
Schedules attached hereto has been taken from, or is based upon, publicly
available information.
THE RAMIUS GROUP
_______________ __, 2007
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SCHEDULE I
TRANSACTIONS IN SECURITIES OF PTEC
DURING THE PAST TWO YEARS
EXCEPT AS OTHERWISE SPECIFIED, ALL PURCHASES AND SALES
WERE MADE IN THE OPEN MARKET.
Shares of Common Stock Price Per Date of
PURCHASED / (SOLD) SHARE($) PURCHASE / SALE
STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD.
84,000 5.6000 11/16/2005
38,724 6.0617 11/18/2005
6,468 5.9439 11/18/2005
21,000 6.2378 11/21/2005
17,808 6.2992 11/28/2005
12,600 6.2332 11/29/2005
4,200 6.3506 11/30/2005
4,200 6.3637 12/1/2005
117,600 6.3500 12/2/2005
8,400 6.3500 12/2/2005
21,000 6.9092 12/12/2005
42,000 5.2474 5/11/2006
42,000 5.2497 5/11/2006
27,720 5.2483 5/12/2006
32,172 5.2292 5/12/2006
140,868 5.3694 5/15/2006
33,600 5.2875 5/15/2006
32,340 5.2883 5/15/2006
27,048 5.4610 5/16/2006
25,200 5.4790 5/17/2006
22,428 5.6225 5/18/2006
21,000 5.8289 5/19/2006
7,896 5.4995 5/22/2006
21,756 5.4763 5/23/2006
29,736 5.4223 5/24/2006
3,836 5.5000 5/25/2006
52,248 5.7617 5/30/2006
16,800 5.7825 5/31/2006
7,115 5.7500 5/31/2006
8,400 5.7600 6/1/2006
5,325 5.7500 6/1/2006
8,400 5.7700 6/1/2006
A-1
12,432 5.7454 6/2/2006
51,820 5.7500 6/5/2006
46,200 5.5806 6/5/2006
63,355 5.4857 6/6/2006
7,171 5.6398 6/7/2006
25,200 5.5867 6/7/2006
19,271 5.5876 6/8/2006
3,780 5.6433 6/9/2006
25,378 5.6387 6/12/2006
16,800 5.6500 6/12/2006
51,912 5.6846 6/13/2006
20,412 5.6498 6/14/2006
12,600 5.6800 6/14/2006
131,124 5.7125 6/15/2006
8,400 5.7416 6/19/2006
3,482 5.7500 6/21/2006
16,800 4.0900 6/22/2006
71,400 4.0000 6/22/2006
12,600 3.9500 6/23/2006
42,000 3.9000 6/23/2006
51,280 4.0690 6/28/2006
8,400 4.1300 6/28/2006
80,002 4.1430 6/29/2006
35,801 4.4558 6/30/2006
189,000 4.5500 6/30/2006
823,963 5.1000 7/13/2006
PARCHE, LLC
9,870 5.7500 6/5/2006
8,800 5.5806 6/5/2006
*182,156 5.5200 6/6/2006
12,068 5.4857 6/6/2006
1,366 5.6398 6/7/2006
4,800 5.5867 6/7/2006
3,671 5.5876 6/8/2006
720 5.6433 6/9/2006
4,834 5.6387 6/12/2006
3,200 5.6500 6/12/2006
--------
* Shares were acquired in private transactions with various transferors for
which Ramius Capital Group, L.L.C. or an affiliate serves as the
investment manager, the managing member or the managing member of the
investment manager.
A-2
9,888 5.6846 6/13/2006
3,888 5.6498 6/14/2006
2,400 5.6800 6/14/2006
24,976 5.7125 6/15/2006
1,600 5.7416 6/19/2006
663 5.7500 6/21/2006
3,200 4.0900 6/22/2006
13,600 4.0000 6/22/2006
2,400 3.9500 6/23/2006
8,000 3.9000 6/23/2006
9,768 4.0690 6/28/2006
1,600 4.1300 6/28/2006
15,238 4.1430 6/29/2006
6,819 4.4558 6/30/2006
36,000 4.5500 6/30/2006
156,945 5.1000 7/13/2006
JOHN MUTCH
55,000 5.2400 5/31/2006
45,000 5.6400 6/5/2006
90,000 4.0037 6/23/2006
10,000 3.8500 6/23/2006
PHILIP MOYER
NONE
A-3
I-1
SCHEDULE II
THE FOLLOWING TABLE IS REPRINTED FROM PTEC'S PROXY STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION ON JANUARY 12, 2007
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of January 8, 2007,
with respect to the Common Stock owned beneficially by (I) any person who is
known to the Company to be the beneficial owner of more than 5% of its Common
Stock, (II) each director and Nominee of the Company, (III) the Chief Executive
Officer and each executive officer included in the Summary Compensation Table on
page 12 (collectively, the "Named Executive Officers"), and (IV) all current
directors and executive officers of the Company as a group. Except as otherwise
indicated in the table, the address of each person listed in the table is c/o
Phoenix Technologies Ltd., 915 Murphy Ranch Road, Milpitas, California 95035.
Except as otherwise indicated in the footnotes to the table, to the Company's
knowledge, the persons named in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable.
AMOUNT AND NATURE OF PERCENT OF COMMON
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP STOCK OUTSTANDING(1)
-------------------------------------------------------------- -------------------- --------------------
Starboard Value and Opportunity Master Fund Ltd. (2)
666 Third Avenue
26th Floor
New York, NY 10017 3,502,941 13.7%
Austin W. Marxe & David M. Greenhouse (3)
527 Madison Avenue, Suite 2600
New York, New York 10022 3,227,776 12.6%
Barclays Global Fund Advisors, LLC (4)
1414 Avenue of the Americas
New York, NY 10019 1,897,062 7.4%
Woodson Hobbs (5) 1,000,000 3.8%
Albert E. Sisto(6) 797,282 3.0%
David L. Gibbs(7) 393,264 1.5%
Scott C. Taylor (8) 148,608 *
Ira Scharfglass(9) 36,314 *
Kort van Bronkhorst(10) 938 *
Curtis Francis -- *
Ramesh Kesanupalli -- *
Anthony Morris(11) 148,000 *
Taher Elgamal(12) 130,000 *
David Dury(13) 110,000 *
Richard Noling(14) 55,000 *
Dale Fuller(15) 40,000 *
Anthony Sun (16) 208,600 *
All current directors and executive officers as a group (17) 2,258,472 8.2%
----------
* Ownership is less than 1%
(1) Based on 25,574,579 shares of Common Stock outstanding on January 8, 2007.
In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock
II-1
subject to options that are exercisable within 60 days of January 8, 2007 are
deemed to be outstanding. Such shares, however, are not deemed outstanding for
the purpose of computing the percentage ownership of any other person.
(2) Based on information contained in a Schedule 13D/A filed on January 3, 2007
with the SEC by Starboard Value and Opportunity Master Fund Ltd. ("Starboard")
on behalf of itself and other reporting persons named therein. According to the
Schedule 13D/A, as of December 29, 2006, (i) Starboard had beneficial ownership
and voting and dispositive control of 2,774,471 shares of the Company's Common
Stock, (ii) Parche, LLC had beneficial ownership and voting and dispositive
control of 528,470 shares of Common Stock, and (iii) (A) Admiral Advisors, LLC,
as the investment manager of Starboard and the managing member of Parche, (B)
Ramius Capital Group, LLC ("Ramius"), as the sole member of Admiral Advisors,
and (C) C4S & Co., LLC ("C4S"), as the managing member of Ramius, may each be
deemed to have beneficial ownership and voting and dispositive control over the
shares of Common Stock held by Starboard and Parche. In addition, Peter A.
Cohen, Morgan B. Stark, Jeffrey M. Solomon and Thomas W. Strauss, as the
managing members of C4S, may each be deemed to share beneficial ownership and
voting and dispositive control of the shares of Common Stock held by Starboard
and Parche. The persons and entities listed above have agreed to form a group
with Mr. John Mutch, who beneficially owns and controls 200,000 shares of Common
Stock, and certain other persons, for the purpose of soliciting proxies or
written consents for the election of the persons nominated by Starboard to our
Board at the Meeting.
(3) Based on information contained in a Form 4 filed on September 14, 2006 with
the SEC by Austin W. Marxe and David M. Greenhouse. According to the Form 4,
Messrs. Marxe and Greenhouse share voting and investment control over the Common
Stock owned by Special Situations Fund III QP, L.P., Special Situations Cayman
Fund, L.P., Special Situations Technology Fund, L.P. and Special Situations
Technology II, L.P., respectively. The interest of Messrs. Marxe and Greenhouse
in these shares of Common Stock are limited to the extent of each of their
pecuniary interest.
(4) Based on information contained in a Schedule 13G filed on January 30, 2006
with the SEC by Barclays Global Fund Advisors, LLC. According to the Schedule
13G, Barclays Global Investors, N.A. has sole voting power as to 1,220,083 of
the shares and sole dispositive power as to 1,302,419 of the shares and Barclays
Global Fund Advisors has sole voting and dispositive power as to 594,643 of the
shares.
(5) Includes 900,000 shares as to which Mr. Hobbs has the right to acquire
beneficial ownership within 60 days of January 8, 2007.
(6) Includes 754,782 shares as to which Mr. Sisto has the right to acquire
beneficial ownership within 60 days of January 8, 2007.
(7) Includes 69,230 shares owned by Mr. Gibbs in his personal capacity, 4,000
shares owned by the Gibbs Trust and held jointly by David and Afina Gibbs, and
320,034 shares as to which Mr. Gibbs has the right to acquire beneficial
ownership within 60 days of January 8, 2007.
(8) Includes 57,156 shares as to which Mr. Taylor has the right to acquire
beneficial ownership within 60 days of January 8, 2007.
(9) Consists of 36,314 shares as to which Mr. Scharfglass has the right to
acquire beneficial ownership within 60 days of January 8, 2007.
(10) Consists of 938 shares as to which Mr. Bronkhorst has the right to acquire
beneficial ownership within 60 days of January 8, 2007.
(11) Consists of (i) 17,000 shares owned by Mr. Morris, (ii) 5,000 shares held
in a custodial account by his spouse for his minor daughters, and 126,000 shares
as to which Mr. Morris could acquire beneficial ownership at or within 60 days
after January 8, 2007.
II-2
(12) Consists of 130,000 shares as to which Dr. Elgamal has the right to acquire
beneficial ownership within 60 days of January 8, 2007.
(13) Consists of 110,000 shares as to which Mr. Dury has the right to acquire
beneficial ownership within 60 days of January 8, 2007.
(14) Consists of 55,000 shares as to which Mr. Noling has the right to acquire
beneficial ownership within 60 days of January 8, 2007.
(15) Consists of 40,000 shares as to which Mr. Fuller has the right to acquire
beneficial ownership within 60 days of January 8, 2007.
(16) Includes 175,625 shares as to which Mr. Sun has the right to acquire
beneficial ownership within 60 days of January 8, 2007
(17) Includes (i) 344,657 shares and (ii) 1,913,815 shares underlying options
exercisable within 60 days of January 8, 2007, held by the Company's current
directors and executive officers. The holdings of Richard Arnold, the Company's
newly appointed Chief Financial Officer and Executive Vice President, Strategy
and Corporate Development, and Gaurav Banga, the Company's newly appointed Chief
Technology Officer and Senior Vice President, are included in this calculation.
In addition, the holdings of Dr. Elgamal and Messrs. Hobbs, Gibbs, Taylor,
Morris, Dury, Noling, Fuller and Sun are also included.
II-3
IMPORTANT
Tell your Board what you think! Your vote is important. No matter how many
Shares you own, please give the Ramius Group your proxy FOR the election of the
Ramius Group's Director Nominees by taking three steps:
o SIGNING the enclosed WHITE proxy card,
o DATING the enclosed WHITE proxy card, and
o MAILING the enclosed WHITE proxy card TODAY in the envelope provided
(no postage is required if mailed in the United States).
If any of your Shares are held in the name of a brokerage firm, bank, bank
nominee or other institution, only it can vote such Shares and only upon receipt
of your specific instructions. Accordingly, please contact the person
responsible for your account and instruct that person to execute the WHITE proxy
card representing your Shares. The Ramius Group urges you to confirm in writing
your instructions to the Ramius Group in care of Innisfree M&A Incorporated at
the address provided below so that the Ramius Group will be aware of all
instructions given and can attempt to ensure that such instructions are
followed.
If you have any questions or require any additional information concerning
this Proxy Statement, please contact Innisfree M&A Incorporated at the address
set forth below.
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, NY 10022
Stockholders Call Toll-Free at: (877) 800-5185
Banks and Brokers Call Collect at: (212) 750-5833
PRELIMINARY COPY SUBJECT TO COMPLETION
DATED JANUARY __, 2007
PHOENIX TECHNOLOGIES LTD.
2007 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE RAMIUS GROUP
THE BOARD OF DIRECTORS OF PTEC CORPORATION
IS NOT SOLICITING THIS PROXY
P R O X Y
The undersigned appoints _______________ and ____________, and each of them,
attorneys and agents with full power of substitution to vote all shares of
common stock of Phoenix Technologies Ltd. ("PTEC" or the "Company") which the
undersigned would be entitled to vote if personally present at the 2007 Annual
Meeting of Stockholders of the Company scheduled to be held at the Company's
offices located at 915 Murphy Ranch Road, Milpitas, California, 95035, on
February 14, 2007 at 10:00 a.m., Pacific Standard Time, and including at any
adjournments or postponements thereof and at any meeting called in lieu thereof
(the "Annual Meeting").
The undersigned hereby revokes any other proxy or proxies heretofore given to
vote or act with respect to the shares of common stock of the Company held by
the undersigned, and hereby ratifies and confirms all action the herein named
attorneys and proxies, their substitutes, or any of them may lawfully take by
virtue hereof. If properly executed, this Proxy will be voted as directed on the
reverse and in the discretion of the herein named attorneys and proxies or their
substitutes with respect to any other matters as may properly come before the
Annual Meeting that are unknown to the Ramius Group a reasonable time before
this solicitation.
IF NO DIRECTION IS INDICATED WITH RESPECT TO THE PROPOSAL ON THE REVERSE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1.
This Proxy will be valid until the sooner of one year from the date indicated on
the reverse side and the completion of the Annual Meeting.
IMPORTANT: PLEASE SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY!
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
[X] PLEASE MARK VOTE AS IN THIS EXAMPLE
THE RAMIUS GROUP STRONGLY RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
FOLLOWING PROPOSAL.
Proposal No. 1 - The Ramius Group's Proposal to Elect John Mutch and Philip
Moyer Class II directors of the Company.
FOR ALL EXCEPT
WITHHOLD AUTHORITY NOMINEE(S)
TO VOTE FOR WRITTEN
FOR ALL NOMINEES ALL NOMINEES BELOW
Nominees: John Mutch [ ] [ ] [ ]
Philip Moyer
______________
Proposal No. 2 - To ratify the appointment of Ernst & Young LLP as independent
auditors for the fiscal year 2007.
|_| FOR |_| AGAINST |_| ABSTAIN
THE RAMIUS GROUP MAKES NO RECOMMENDATION ON PROPOSAL NO. 2
DATED: _____________________________
____________________________________
(Signature)
____________________________________
(Signature, if held jointly)
____________________________________
(Title)
WHEN SHARES ARE HELD JOINTLY, JOINT OWNERS SHOULD EACH SIGN. EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD INDICATE THE CAPACITY IN WHICH SIGNING.
PLEASE SIGN EXACTLY AS NAME APPEARS ON THIS PROXY.