PINNACLE
FUND, LLLP
654
Broadway, Suite 5 | New York, New York 10012
Telephone
(212) 614-8952 | Facsimile (646) 390-6784
May 18,
2009
VIA
OVERNIGHT DELIVERY AND FACSIMILE
Management
and Board of Directors
Forgent
Networks, Inc.
108 Wild
Basin Road
Austin,
TX 78746
Re: Response
to Statements from your May 12 Letter
Dear
Management and the Board of Directors:
I am
writing to respond to certain statements in your May 12 letter. You
mischaracterize Pinnacle's positions and your letter is one more attempt to
ignore the serious disagreement which many Asure ("ASUR") stockholders have with
your attempt to take the company private and continue excessive spending on
management compensation and other matters. Pinnacle's and Red Oak's
views are spelled out in our 13D filing and our preliminary proxy statement
which we hope we will soon be able to deliver to stockholders so they can judge
our arguments for themselves.
In the
meantime, please note that we have never characterized ASUR as an
"asset play" and if we regarded it as such would not have recommended
to you several important cost-saving measures. While we have
correctly pointed out that the company was trading at a severe discount to its
cash on hand, as we told Jay
Peterson
in November, we viewed the company as attractive in part because
of its public forecasts of positive EBITDA and cash flow. We wish
those forecasts had proved to be correct but hope that under a new board of
directors and a slimmed down management team these goals can be
achieved. As our proxy filing will reveal, we believe that a new
board, not controlled by Pinnacle or Red Oak, but responsive to stockholders,
should seek to cut costs and return the company to profitable
operations.
You are
correct when you say we have tried many times to speak with you but mistaken
when you try to characterize this as inappropriate. Why should
management not be willing to hear suggestions from significant
holders? In fact the first time your CEO agreed to speak with us was
for 15 minutes by
telephone
on March 5 and he finally met in person on April 27. You keep trying
to cast our information requests as an "asset play," which you seem to view as
sinister. This is egregious because you know from our face-to-face
meeting that we are seeking cost reductions and believe operations can
improve. You
also
conveniently omit to point out that major cost savings would result from things
you could do without depriving holders of publicly available information. You
can reduce the cost of the $360,000/year D&O insurance when the policy comes
up for renewal in July, you can retain less expensive advisors
(instead
of having Winstead charge you $150,000+ per year for public filings per your
CFO's statements during our meeting in Dallas on April 27), and you can
eliminate excess senior management by not having both a CEO and a
COO. During our April meeting your CEO told me and others that he
planned to leave in six months anyway and have the COO take over a dual CEO/COO
role. We believe this departure should occur immediately
and without severance (based on the aggregate losses generated under his tenure)
as there is simply no need for Asure's shareholders to pay six additional months
of his salary given he has
already
indicated his intent to leave. We think it is inappropriate that you
have not explained that these savings can occur without going
private.
Your
comments about our requests to hold an annual meeting make us think you do not
trust your stockholders. You have ignored our requests for a stockholder vote to
elect directors, either in connection with or before the meeting to vote on
going private. With a fiscal year that ended last July, there would
seem to
have been ample time to hold an annual meeting by now and you could have saved a
lot of costs by combining the two meetings. We are sorry you regard our
complaints about missed forecasts, excess overhead, and an inability in our
meeting to reconcile inconsistent statements as personal or professional
attacks. It
did seem to us that your management was unprepared to answer questions and was
unable to answer several questions. You have still not provided answers despite
the statement during our April 27 meeting in Dallas by your director Mr. Miles
that the request to explain apparent discrepancies
would be
addressed.
Finally,
we remain of the view that the price to be paid in the going private transaction
is excessive and we believe that if Southwest had based its opinion on actual
operating results instead of missed forecasts it would not have recommended that
price. You own letter admits that current stock prices do not support paying
such a price and we believe that current operating results do not support that
price either.
We remain
opposed to what we regard as a wasteful transaction which has generated large
fees to advisors and which we believe has distracted the board from taking
immediate steps to reduce costs and improve operations. We are
confident that these proposals will be rejected.
Sincerely,
PINNACLE FUND, LLLP
By: PINNACLE
PARTNERS, LLC,
its general partner
By: RED
OAK PARTNERS, L.P.,
its general partner
By:
______________________________
David
Sandberg, Managing Member
cc:
Corporate Secretary