0000921895-13-000303.txt : 20130213 0000921895-13-000303.hdr.sgml : 20130213 20130213092231 ACCESSION NUMBER: 0000921895-13-000303 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20130213 DATE AS OF CHANGE: 20130213 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: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-56235 FILM NUMBER: 13599907 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: POTOMAC CAPITAL PARTNERS II LP CENTRAL INDEX KEY: 0001436622 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 825 THIRD AVENUE STREET 2: 33RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 212-521-5115 MAIL ADDRESS: STREET 1: 825 THIRD AVENUE STREET 2: 33RD FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 sc13da108679006_02132013.htm AMENDMENT NO. 1 TO THE SCHEDULE 13D sc13da108679006_02132013.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. 1)1

PLX Technology, Inc.
(Name of Issuer)

Common Stock,  $.001 per share
(Title of Class of Securities)

693417107
(CUSIP Number)
 
Paul J. Solit
Eric Singer
POTOMAC CAPITAL PARTNERS II, L.P.
825 Third Avenue, 33rd Floor
New York, New York 10022

With copies to:

Steve Wolosky, Esq.
OLSHAN FROME 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)

February 13, 2013
(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
 
POTOMAC CAPITAL PARTNERS II, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
WC, 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
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
1,391,757
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
1,391,757
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
1,391,757
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
3.1%
14
TYPE OF REPORTING PERSON
 
PN

 
2

 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
POTOMAC CAPITAL MANAGEMENT II, L.L.C.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (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
 
1,391,757
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
1,391,757
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
1,391,757
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
3.1%
14
TYPE OF REPORTING PERSON
 
OO

 
3

 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
POTOMAC CAPITAL PARTNERS III, L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (b) o
3
SEC USE ONLY
 
4
SOURCE OF FUNDS
 
WC, 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
 
DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
115,749
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
115,749
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
115,749
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
 
PN

 
4

 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
POTOMAC CAPITAL MANAGEMENT III, L.L.C.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (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
 
115,749
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
115,749
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
115,749
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
 
OO

 
5

 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
POTOMAC CAPITAL PARTNERS L.P.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (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
 
808,739
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
808,739
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
808,739
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
1.8%
14
TYPE OF REPORTING PERSON
 
PN

 
6

 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
POTOMAC CAPITAL MANAGEMENT, L.L.C.
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (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
 
808,739
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
808,739
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
808,739
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
1.8%
14
TYPE OF REPORTING PERSON
 
OO

 
7

 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
PAUL J. SOLIT
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (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
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
2,316,245
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
2,316,245
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
2,316,245
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
5.1%
14
TYPE OF REPORTING PERSON
 
IN

 
8

 
CUSIP NO. 693417107
 
1
NAME OF REPORTING PERSON
 
ERIC SINGER
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
  (a) o
  (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
 
USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7
SOLE VOTING POWER
 
- 0 -
8
SHARED VOTING POWER
 
1,507,506
9
SOLE DISPOSITIVE POWER
 
- 0 -
10
SHARED DISPOSITIVE POWER
 
1,507,506
11
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
 
1,507,506
12
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
 
o
13
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
 
3.3%
14
TYPE OF REPORTING PERSON
 
IN

 
9

 
CUSIP NO. 693417107
 
The following constitutes Amendment No. 1 to the Schedule 13D filed by the undersigned (“Amendment No. 1”).  This Amendment No. 1 amends the Schedule 13D as specifically set forth herein.
 
Item 3.
Source and Amount of Funds or Other Consideration.
 
Item 3 is hereby amended and restated as follow:
 
The aggregate purchase price of the 1,391,757 Shares owned directly by PCP II is approximately $6,106,220, including brokerage commissions.  The Shares owned directly by PCP II were acquired with its working capital.
 
The aggregate purchase price of the 115,749 Shares owned directly by PCP III is approximately $476,089, including brokerage commissions.  The Shares owned directly by PCP III were acquired with its working capital.
 
The aggregate purchase price of the 808,739 Shares owned directly by PCP is approximately $3,415,795, including brokerage commissions.  The Shares owned directly by PCP were acquired with its working capital.
 
PCP II, PCP III and PCP each effect purchases of securities primarily through margin accounts maintained for them with prime brokers, which may extend margin credit to them as and when required to open or carry positions in the margin accounts, subject to applicable federal margin regulations, stock exchange rules and the prime brokers’ credit policies.  In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the accounts.
 
Item 4.
Purpose of Transaction.
 
Item 4 is hereby amended to add the following:
 
On February 13, 2013, the Reporting Persons delivered a second letter to the Board of Directors of the Issuer (the “Board”).  In the letter, the Reporting Persons expressed their grave disappointment with the Board’s failure to provide a meaningful response to the issues raised in their January 25, 2013 letter.  The letter noted that the response by David Raun, the newly appointed President and CEO of the Issuer, that he would meet with the Reporting Persons as part of management’s periodic meetings with investors regarding routine communications was disturbing.  The Reporting Persons pointed out that while Board members had excused themselves with having no time to meet immediately, the Board had found time to adopt shareholder unfriendly defenses to entrench themselves only four days after the filing of the Reporting Persons’ Schedule 13D.  The letter reiterated that value can best be created by capitalizing on the historic interest in the Issuer and exploring all available strategic alternatives, including the sale of the Issuer.  However, the Reporting Persons stressed they had no faith that the Board as currently composed will translate strategic interest in the Issuer into a value-maximizing transaction. The Reporting Persons concluded that change is needed in the composition of the Board. The full text of the letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
Item 5.
Interest in Securities of the Issuer.
 
Item 5(a) through 5(c) are hereby amended and restated as follows:
 
(a)      The aggregate percentage of Shares reported owned by each Reporting Person is based upon 45,061,030 Shares outstanding, which is the total number of Shares outstanding as of December 5, 2012 as reported in the Issuer’s Amendment No. 9 to Schedule TO, filed with the Securities and Exchange Commission on December 7, 2012.
 
 
10

 
CUSIP NO. 693417107
 
As of the close of business on February 12, 2013, PCP II beneficially owns 1,391,757 Shares, constituting approximately 3.1% of the Shares outstanding.  By virtue of their relationships with PCP II discussed in further detail in Item 2, each of Potomac Management II and Messrs. Solit and Singer may be deemed to beneficially own the Shares beneficially owned by PCP II.
 
As of the close of business on February 12, 2013, PCP III beneficially owns 115,749 Shares, constituting less than 1% of the Shares outstanding.  By virtue of their relationships with PCP III discussed in further detail in Item 2, each of Potomac Management III and Messrs. Solit and Singer may be deemed to beneficially own the Shares beneficially owned by PCP III.
 
As of the close of business on February 12, 2013, PCP beneficially owned 808,739 Shares, constituting approximately 1.8% of the Shares outstanding.  By virtue of their relationships with PCP discussed in further detail in Item 2, each of Potomac Management and Mr. Solit may be deemed to beneficially own the Shares beneficially owned by PCP.
 
(b)           PCP II, Potomac Management II and Messrs. Solit and Singer share the power to vote and dispose of the Shares beneficially owned by PCP II.  PCP III, Potomac Management III and Messrs. Solit and Singer share the power to vote and dispose of the Shares beneficially owned by PCP III.  PCP, Potomac Management and Mr. Solit share the power to vote and dispose of the Shares beneficially owned by PCP.
 
(c)           Schedule A annexed hereto lists all transactions in the Shares by the Reporting Persons since the filing of the Schedule 13D. All of such transactions were effected in the open market, except as otherwise noted.
 
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 February 13, 2013.
 
 
11

 
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:  February 13, 2013
POTOMAC CAPITAL PARTNERS II, L.P.
   
 
By:
Potomac Capital Management II, L.L.C.
   
General Partner
   
 
By:
/s/ Paul J. Solit
 
Name:
Paul J. Solit
 
Title:
Co-Managing Member


 
POTOMAC CAPITAL MANAGEMENT II, L.L.C.
   
 
By:
/s/ Paul J. Solit
 
Name:
Paul J. Solit
 
Title:
Co-Managing Member


 
POTOMAC CAPITAL PARTNERS III, L.P.
   
 
By:
Potomac Capital Management III, L.L.C.
   
General Partner
   
 
By:
/s/ Paul J. Solit
 
Name:
Paul J. Solit
 
Title:
Co-Managing Member


 
POTOMAC CAPITAL MANAGEMENT III,  L.L.C.
   
 
By:
/s/ Paul J. Solit
 
Name:
Paul J. Solit
 
Title:
Co-Managing Member


 
POTOMAC CAPITAL PARTNERS L.P.
   
 
By:
Potomac Capital Management, L.L.C.
   
General Partner
   
 
By:
/s/ Paul J. Solit
 
Name:
Paul J. Solit
 
Title:
Managing Member

 
12

 
CUSIP NO. 693417107

 
POTOMAC CAPITAL MANAGEMENT, L.L.C.
   
 
By:
/s/ Paul J. Solit
 
Name:
Paul J. Solit
 
Title:
Managing Member


 
/s/ Paul J. Solit
 
PAUL J. SOLIT
   
   
 
/s/ Eric Singer
 
 
ERIC SINGER
 
 
 
13

 
CUSIP NO. 693417107
SCHEDULE A
Transactions in the Shares Since the Filing of the Schedule 13D

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

POTOMAC CAPITAL PARTNERS II, L.P.

9,800
4.6500
01/28/13
 

POTOMAC CAPITAL MANAGEMENT II, L.L.C.
None


POTOMAC CAPITAL PARTNERS III, L.P.
None


POTOMAC CAPITAL MANAGEMENT III, L.L.C.
None


POTOMAC CAPITAL PARTNERS L.P.

1,000
4.5000
01/30/13

 
POTOMAC CAPITAL MANAGEMENT, L.L.C.
None


PAUL J. SOLIT
None


ERIC SINGER
None




EX-99.1 2 ex991to13da108679006_021313.htm LETTER TO THE BOARD ex991to13da108679006_021313.htm
Exhibit 99.1
 
POTOMAC CAPITAL PARTNERS II, LLC
825 Third Ave, 33rd Floor
New York, New York 10022


February 13, 2013

VIA ELECTRONIC DELIVERY & OVERNIGHT MAIL

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

Dear Members of the Board,
 
As you know, Potomac Capital Management II, LLC, together with its affiliates (“Potomac”), is a significant shareholder of PLX Technology, Inc. (“PLX” or the “Company”), with ownership of approximately 5.1% of the outstanding shares of common stock of the Company.  We are writing to express our grave disappointment over the Company’s failure to provide a meaningful response to the serious concerns outlined in our letter of January 25, 2013.  We have stated very clearly our belief that, in the current context, in order to maximize value for shareholders the Board of Directors (the “Board”) must immediately commence a process of thorough review of all strategic alternatives available to PLX.
 
Action must be taken decisively and urgently. The response we received from David Raun, the recently appointed President and CEO of the Company, stating that he and Arthur Whipple, the Company’s CFO, will try to schedule time to meet with us as part of the senior management’s periodic meetings with investors regarding routine communications is disturbing.  The issues we have raised are far too serious to be dismissively treated as routine communications and deserve the immediate attention of the Board.  Coupled with the curt and uninformative statement during the 2012 fourth quarter earnings call that the “…Board is in the process of considering the Potomac letter [and they] do not intend to take questions or make further comment on this matter,” the reaction of the Company appears clearly designed to obstruct constructive dialogue and ignore the substance of the matter.
 
We further find the excuse that the Board does not have time to meet with a concerned significant shareholder rather disingenuous when taken in the context of the recent amendment to the Company’s organizational documents to implement a number of shareholder unfriendly defensive provisions.  The Company’s announcement only four days after we filed a Schedule 13D with the SEC and made our views public is clearly reactive to our filing.  In short, while the Board could not find the time to meet with us and hear the concerns of a significant shareholder, it found the time to take defensive actions to help entrench the position of the incumbent directors and isolate themselves from the constructive input of PLX’s shareholders. It is very hard to justify this Board’s actions and not view them for what they are --a troubling disregard for shareholder concern.
 
It is clear that shareholder value can best be created by capitalizing on the historic interest in PLX from potential acquirers, while leveraging the improved operating model of the Company.  There is significant strategic value in PLX’s dominant position in the PCI Express market which coupled with the cost synergies that a large acquirer could recognize, would drive an acquisition value substantially higher than what the Company could achieve as a standalone business.  Notably, the Company received an all-cash acquisition offer during the “go-shop” period of the now abandoned transaction with Integrated Device Technology, Inc. (the “IDTI Transaction”).  Since then, efforts to pursue a prudent strategy by divesting of non-core businesses and streamlining expenses have helped increase PLX’s appeal to potential buyers even more.  Overall, we strongly believe that the Company’s strong fundamentals make it an attractive target of strategic interest.  Our concern is that this Board will not translate this strategic interest into a value-maximizing transaction.
 
 
 

 
 
We note that historically the Board has taken difficult but necessary steps to unlock value for shareholders only when faced with a proxy contest by a shareholder.  The IDTI Transaction was provoked by the efforts of a fellow shareholder, Balch Hill Capital LLC, to effect change at the Company, including by its submission of formal nominations of director candidates for election at the 2012 annual meeting of shareholders.  In our view, shareholders have a legitimate concern over this Board’s commitment to proactively enhance shareholder value.  We further doubt the current Board’s objectivity in assessing what is best for the Company and its shareholders.  For instance, we question whether a PLX veteran and first time chief executive officer, Mr. Raun, may be too inclined to run the Company as a standalone business even if this is not optimal for the PLX shareholders.  The Company’s shareholders deserve an objective assessment of whether a sale of the Company will maximize value.  However, we have no faith that this Board will ever act to realize the value of the shareholders’ investment.
 
We believe that change in the Board is necessary at this time to break from the current Board’s historic complacency and reactive practices and ensure objective analysis of value enhancing opportunities.  We are deeply cognizant of the impending deadline for the nomination of director candidates to the Board for election at the 2013 annual meeting of shareholders and are prepared to pursue our rights and responsibility as shareholders to seek much needed change in the Board composition.  We remain open to engaging in a constructive dialogue with the Board regarding our serious concerns outlined above.
 
 

 
Sincerely,
 

 
/s/ Eric Singer
 
Eric Singer
 
Co-managing member
Potomac Capital Management II, LLC





 

 

 
cc:           Steve Wolosky, Esq., Olshan Frome Wolosky LLP