This Amendment No. 2
(this Amendment No. 2) to the Schedule 13D filed with the Securities and
Exchange Commission on behalf of Vector Capital III, L.P., a Delaware limited
partnership (VC III), Vector Entrepreneur Fund III, L.P., a Delaware limited
partnership (Entrepreneur Fund), Vector Capital Partners III, L.L.C., a
Delaware limited liability company (VCP III and, together with VC III and
Entrepreneur Fund, Vector) and Alexander R. Slusky, an individual (Mr. Slusky
and, together with Vector, the Reporting Persons) on August 20, 2007, as
amended by Amendment No. 1 to Schedule 13D filed by the Reporting Persons
on September 13, 2007 (together, the Schedule 13D) is being filed
pursuant to Rule 13d-2 of the Securities Exchange Act, as amended, on
behalf of the Reporting Persons to amend certain information previously
reported by the Reporting Persons in the Schedule 13D by adding the
information set forth below to the items indicated. Unless otherwise stated herein, all
capitalized terms used in this Amendment No. 2 have the same meanings as those
set forth in the Schedule 13D.
Item 4.
Purpose of Transaction.
Item 4 is hereby amended
and supplemented to add the following:
As previously disclosed,
VCC entered into the Confidentiality Agreement on September 12, 2007 with a
view to exploring a potential transaction. On January 23, 2008, the
Company informed the Reporting Persons that it would stop providing non-public
information pursuant to the Confidentiality Agreement and that the dialogue
between the Reporting Persons and the Company that had been enabled by the
execution of the Confidentiality Agreement would be terminated. Thus, the Reporting Persons have no choice
but to abandon this path of encouraging the Company to maximize shareholder
value through a possible merger, sale of the Companys assets, consolidation,
business combination or a recapitalization or refinancing (which could have
included a transaction with the Reporting Persons at a significant premium to
market).
Although the Reporting Persons continue to believe
that the shares of the Company are undervalued, the views of the Reporting
Persons with respect to the degree to which the Company is undervalued have
been materially affected by the Reporting Persons view that the Company is
pursuing a flawed and distracting acquisition strategy. Its recent ODT acquisition is the latest such
acquisition, and the Reporting Persons believe that it may negatively affect
the Companys long term value to shareholders. In this regard, the Reporting
Persons are deeply concerned that between Castelle and ODT the Company has
committed over $46M in corporate cash and assumed liabilities.
As
previously disclosed, the Reporting Persons will continue to assess available
alternatives to maximize the value of their investment in the Company in light
of general investment policies, market conditions, subsequent developments
affecting the Company, the general business and future prospects of the Company
and their respective contractual obligations, including, without limitation,
under the
Confidentiality
Agreement.