0000921895-12-000507.txt : 20120313 0000921895-12-000507.hdr.sgml : 20120313 20120313160138 ACCESSION NUMBER: 0000921895-12-000507 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20120313 DATE AS OF CHANGE: 20120313 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PLX TECHNOLOGY INC CENTRAL INDEX KEY: 0000850579 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 943008334 STATE OF INCORPORATION: DE FISCAL YEAR END: 1213 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-56235 FILM NUMBER: 12687167 BUSINESS ADDRESS: STREET 1: 870 MAUDE AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94085 BUSINESS PHONE: 4087749060 MAIL ADDRESS: STREET 1: 870 MAUDE AVENUE CITY: SUNNYVALE STATE: CA ZIP: 94085 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BALCH HILL CAPITAL LLC CENTRAL INDEX KEY: 0001130337 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 2778 GREEN ST. CITY: SAN FRANCISCO STATE: CA ZIP: 94123 BUSINESS PHONE: 4154747055 MAIL ADDRESS: STREET 1: 2778 GREEN ST. CITY: SAN FRANCISCO STATE: CA ZIP: 94123 SC 13D/A 1 sc13da208762002_03132012.htm AMENDMENT NO. 2 TO THE SCHEDULE 13D sc13da208762002_03132012.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D
(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
§ 240.13d-2(a)

(Amendment No. 2)1

PLX Technology, Inc.
(Name of Issuer)

Common Stock, par value $0.001 per share
(Title of Class of Securities)

693417107
(CUSIP Number)
 
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
(212) 451-2300
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

March 13, 2012
(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See § 240.13d-7 for other parties to whom copies are to be sent.


_______________
1              The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
 
 
 
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
Balch Hill Partners, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
WC
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
4,312,870
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
4,312,870
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
4,312,870
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
9.7%
14
TYPE OF REPORTING PERSON
 
PN

 
2
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
Balch Hill Capital, LLC
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
4,312,870
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
4,312,870
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
4,312,870
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
9.7%
14
TYPE OF REPORTING PERSON
 
OO

 
3
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
Simon J. Michael
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
PF, AF
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
15,000
8
SHARED VOTING POWER
 
4,312,870
9
SOLE DISPOSITIVE POWER
 
15,000
10
SHARED DISPOSITIVE POWER
 
4,312,870
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
4,327,870
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
9.7%
14
TYPE OF REPORTING PERSON
 
IN

 
4
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
Martin Colombatto
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
 
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
-0-
8
SHARED VOTING POWER
 
-0-**
9
SOLE DISPOSITIVE POWER
 
-0-
10
SHARED DISPOSITIVE POWER
 
-0-**
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
-0-**
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
0%
14
TYPE OF REPORTING PERSON
 
IN

**See Item 5.
 
 
5
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
Michael Cornwell
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
PF, OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
13,836
8
SHARED VOTING POWER
 
-0-**
9
SOLE DISPOSITIVE POWER
 
13,836
10
SHARED DISPOSITIVE POWER
 
-0-**
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
13,836**
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
IN

**See Item 5.
 
 
6
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
       Robert R. Herb
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
      PF, OO 
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
1,000
8
SHARED VOTING POWER
 
-0-**
9
SOLE DISPOSITIVE POWER
 
1,000
10
SHARED DISPOSITIVE POWER
 
-0-**
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
1,000**
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
IN

**See Item 5.

 
7
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
Mark Schwartz
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
 
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
-0-**
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
-0-**
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
-0-**
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
0%
14
TYPE OF REPORTING PERSON
 
IN

**See Item 5.

 
8
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
Dilip Singh
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
 
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
-0-**
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
-0-**
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
-0-**
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
0%
14
TYPE OF REPORTING PERSON
 
IN

**See Item 5.

 
9
 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
Bernard Xavier
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) x
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
       PF, OO
5
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)
 
¨
6
CITIZENSHIP OR PLACE OF ORGANIZATION
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
1,270
8
SHARED VOTING POWER
 
-0-**
9
SOLE DISPOSITIVE POWER
 
1,270
10
SHARED DISPOSITIVE POWER
 
-0-**
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
1,270**
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
Less than 1%
14
TYPE OF REPORTING PERSON
 
IN

**See Item 5.

 
10
 
CUSIP NO. 693417107
 
The following constitutes Amendment No. 2 (“Amendment No. 2”) to the Schedule 13D.  This Amendment No. 2 amends the Schedule 13D as specifically set forth herein.
 
Item 3.
Source and Amount of Funds or Other Consideration.
 
Item 3 is hereby amended to add the following:
 
The aggregate purchase price of the 1,000 Shares owned directly by Mr. Herb is approximately $3,820, excluding brokerage commissions.  Such Shares were acquired with Mr. Herb’s personal funds.
 
The aggregate purchase price of the 1,270 Shares owned directly by Mr. Xavier is approximately $4,921, excluding brokerage commissions.  Such Shares were acquired with Mr. Xavier’s personal funds.
 
Item 4.
Purpose of Transaction.
 
Item 4 is hereby amended to add the following:
 
On March 13, 2012, the Partnership 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 the Partnership stated its concern regarding the Issuer’s disappointing operating performance and loss of stockholder value.  The Partnership further expressed its belief that the Issuer’s search for acquisition targets has been a distraction to management and has caused a significant decline in the Issuer’s share price and substantially weakened the Issuer’s financial performance.  The Partnership also noted its view that the Board should immediately cease all potential acquisition activities and instead focus on improving the Issuer’s sole valuable business, PCI Express.
 
In light of the serious issues set forth in its letter, the Partnership expressed its belief that immediate change at the Board level is necessary to end the erosion of stockholder value and to realize full value for the Issuer’s core assets.  Accordingly, the Partnership has nominated a slate of nominees for election to the Board at the Annual Meeting which it believes have the experience and expertise necessary to address the challenges facing the Issuer and to evaluate all strategic alternatives to improve stockholder value.  The Reporting Persons intend to continue to engage in discussions with management, the Board and stockholders of the Issuer regarding the nomination and election of its slate of director candidates at the Annual Meeting and the composition of the Issuer’s Board, generally, and the Partnership remains prepared to engage in constructive dialog with the Board to reach a mutually agreeable resolution.
 
Item 5.
Interest in Securities of the Issuer.
 
Item 5 is hereby amended and restated to read as follows:
 
(a)           The aggregate percentage of Shares reported owned by each person named herein is based upon 44,550,936 Shares outstanding as of September 30, 2011, which is the total number of Shares outstanding as reported in the Issuer’s Quarterly Report on Form 10-Q filed with the SEC on November 4, 2011.
 
As of the date hereof, the Partnership beneficially owns 4,312,870 Shares, constituting approximately 9.7% of the Shares outstanding.  By virtue of their relationships with the Partnership discussed in further detail in Item 2, each of Balch Hill and Mr. Michael may be deemed to beneficially own the Shares beneficially owned by the Partnership.
 
As of the date hereof, Mr. Michael directly owns 15,000 Shares, constituting less than one percent of the Shares outstanding.
 
 
11
 
CUSIP NO. 693417107
 
As of the date hereof, Mr. Cornwell directly owns 13,836 Shares constituting less than one percent of the Shares outstanding.
 
As of the date hereof, Mr. Herb directly owns 1,000 Shares, constituting less than one percent of the Shares outstanding.
 
As of the date hereof, Mr. Xavier directly owns 1,270 Shares, constituting less than one percent of the Shares outstanding.
 
None of Messrs. Colombatto, Schwartz and Singh directly owns any Shares.
 
Each of the Reporting Persons, as a member of a “group” with the other Reporting Persons for purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), may be deemed to beneficially own the Shares owned by the other Reporting Persons.  The filing of this Amendment No. 2 shall not be deemed an admission that the Reporting Persons are, for purposes of Section 13(d) of the Exchange Act, the beneficial owners of any Shares he or it does not directly own.  Each of the Reporting Persons specifically disclaims beneficial ownership of the Shares reported herein that he or it does not directly own, except to the extent of his or its pecuniary interest therein.
 
(b)           Each of the Partnership, Balch Hill and Mr. Michael have shared voting and dispositive power over the Shares owned directly by the Partnership.  Mr. Michael has sole voting and dispositive power over the Shares he owns directly.  Mr. Cornwell has sole voting and dispositive power over the Shares he owns directly.  Mr. Herb has sole voting and dispositive power over the Shares he owns directly.  Mr. Xavier has sole voting and dispositive power over the Shares he owns directly.
 
(c)           Schedule A annexed hereto lists all transactions in the Shares by the Reporting Persons since the filing of Amendment No. 1 to the Schedule 13D.
 
(d)           No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, the Shares.
 
(e)           Not applicable.
 
Item 7.
Material to be Filed as Exhibits.
 
Item 7 is hereby amended to add the following exhibit:
 
 
99.1
Letter to the Board, dated March 13, 2012.
 
 
12
 
CUSIP NO. 693417107
 
SIGNATURES
 
After reasonable inquiry and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct.
 
Dated: March 13, 2012

 
Balch Hill Partners, L.P.
   
 
By:
Balch Hill Capital, LLC
General Partner
   
 
By:
/s/ Simon J. Michael
   
Name:
Simon J. Michael
   
Title:
Manager


 
Balch Hill Capital, LLC
   
 
By:
/s/ Simon J. Michael
   
Name:
Simon J. Michael
   
Title:
Manager


 
/s/ Simon J. Michael
 
Simon J. Michael
 
Individually and as attorney-in-fact for Martin Colombatto, Michael Cornwell, Robert R. Herb, Mark Schwartz, Dilip Singh and Bernard Xavier
 
 
13
 
CUSIP NO. 693417107
 
SCHEDULE A

Transactions in the Shares Since the Filing of Amendment No. 1 to the Schedule 13D

Shares of Common
Stock Purchased
Price Per
Share($)
Date of
Purchase

ROBERT R. HERB
 
1,000
3.8200
3/13/2012


BERNARD XAVIER
 
1,270
3.8745
3/12/2012

EX-99.1 2 ex991to13da208762002_031312.htm LETTER TO THE BOARD ex991to13da208762002_031312.htm
Exhibit 99.1
 
 
BALCH HILL CAPITAL, LLC
PO Box 7775
San Francisco, California 94120
Telephone:  (415) 474-7055     Fax:  (415) 276-4562

March 13, 2012

BY FACSIMILE AND OVERNIGHT COURIER

The Board of Directors
PLX Technology, Inc.
870 W. Maude Avenue
Sunnyvale, CA 94085

Dear Members of the Board,
 
Balch Hill Partners, L.P. currently owns 4,312,870 shares of PLX Technologies, Inc. (“PLX” or the “Company”), constituting approximately 9.7% of the outstanding common stock of PLX.  As one of the largest stockholders of the Company, we are deeply troubled by the Company’s disappointing operating performance and loss of stockholder value.  We believe that the Board’s ill-advised and poorly executed acquisition strategy is directly responsible for destroying stockholder value and believe that urgent change is needed at the Board level.

Instead of focusing the Company’s resources on its one valuable business, the Company’s PCI Express business, the Board has undertaken a series of acquisitions which have not only had a dilutive effect for stockholders but have also caused a significant decline in the Company’s share price and substantially weakened the Company’s financial performance.

In January 2009, PLX acquired Oxford Semiconductor, Inc. by issuing 9 million shares or approximately 32% of the Company’s then outstanding common stock.  If valued today, the consideration to acquire Oxford would be in excess of $30 million.  Yet, PLX recently sold its UK design team and certain other assets, comprising what we believe to be the bulk of what was originally acquired from Oxford Semiconductor, for $2.2 million.

In October 2010, PLX acquired Teranetics, Inc.  PLX paid a total consideration of $54 million comprised of cash, stock, and assumed debt for this 10 Gigabit Ethernet business with negligible revenues.  This was at a time when PLX’s entire market capitalization was approximately $134 million immediately prior to the acquisition.  Today, the 10 Gigabit Ethernet business is underperforming and consumes essentially all of PLX’s profits and cash flow.

Together, these two acquisitions have led to major equity dilution, increasing the Company’s share count from approximately 28 million to over 44 million shares, an increase of approximately 57%.  We estimate these acquisitions also consumed well in excess of $40 million in cash consideration, acquisition of debt, and operating losses.

PLX’s search for acquisition targets has also been a clear distraction to management, as has been the integration process following any such acquisitions.  This Board should immediately cease all potential acquisition activities.  We believe the Company must instead focus on improving PLX’s truly valuable business, the Company’s PCI Express business.
 
 
 
 

We believe immediate change at the Board level is necessary to end the erosion of stockholder value and to realize full value for the Company’s core assets.  We believe a reconstituted Board focused on reviewing all strategic options for the Company, including a sale of the Company is the best option for creating value for all stockholders of the Company.

Accordingly, Balch Hill Partners has nominated a slate of nominees for election to the Board at the Company’s 2012 Annual Meeting of Stockholders.  We believe our nominees have the broad range of relevant expertise and experience necessary to address the challenges currently facing the Company and to evaluate all strategic alternatives to improve stockholder value.  However, we believe it is in the best interests of stockholders to avoid the disruption and expense of a protracted proxy fight.  Therefore, we urge the Board to continue discussions with us regarding the composition of the Board in hopes of ultimately reaching a mutually agreeable resolution that will serve the best interests of all stockholders.
 
Sincerely,
  
   
Balch Hill Partners, L.P.
  
   
By:
Balch Hill Capital, LLC
  
 
General Partner
  
   
By:
/s/ Simon J. Michael
  
Name:  
Simon J. Michael
  
Title:
Manager