AGILYSYS, INC.

(Name of Registrant as Specified in Its Charter)

RAMIUS VALUE AND OPPORTUNITY MASTER FUND LTD PARCHE, LLC RAMIUS ENTERPRISE MASTER FUND LTD RCG PB, LTD. RAMIUS ADVISORS, LLC RCG STARBOARD ADVISORS, LLC RAMIUS LLC C4S & CO., L.L.C. PETER A. COHEN MORGAN B. STARK JEFFREY M. SOLOMON THOMAS W. STRAUSS JOHN MUTCH STEVE TEPEDINO JAMES ZIERICK

(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

 

Background to the Solicitation

 

The following is a chronology of events leading up to this proxy solicitation:

 

v

On May 12, 2008 members of the Ramius Group met with Martin Ellis, the Company’s new Chief Executive Officer, who at the time served as the Chief Financial Officer, and the Company’s former Chief Executive Officer, Arthur Rhein, to discuss the fundamentals of the Company’s business, the Company’s strategy and various corporate governance issues, including the potential nomination of directors to the Board by the Ramius Group.

 

v	On May 15, 2008 members of the Ramius Group held a conference call with Arthur Rhein and Martin Ellis to finalize the negotiations of a letter agreement to extend the Company’s discretionary voting deadline in connection with the Annual Meeting (the “Letter Agreement”).

 

v	On May 16, 2008, the Ramius Group and the Company entered into the Letter Agreement.

 

v

On May 20, 2008 members of the Ramius Group held a conference call with Arthur Rhein and Martin Ellis to discuss candidates proposed by Ramius to be appointed to the Board and certain other issues, including the Ramius Group’s desire to work with the Company to constructively reconfigure the composition of the Board.

 

v

On May 21, 2008 we sent a private letter to Arthur Rhein and the Board expressing our belief that the Company is significantly undervalued.  In the letter we encouraged the Mr. Rhein and the Board to broaden the scope of JPMorgan’s engagement to assist the Board in reviewing all available strategic alternatives to maximize shareholder value.  We encouraged the Board to evaluate, among other things, divesting the Company’s hospitality business, divesting the Company’s retail business, significantly reducing corporate overhead and selling the Company to a strategic or financial buyer.  The letter also expressed our belief that management and the Board have a unique opportunity to unlock significant value by executing the initiatives outlined in the letter and our expectation that management and the Board will adopt a greater sense of urgency in evaluating and executing the strategic opportunities available to the Company.  We also encouraged the Board to meet and interview our potential Board appointees that, we believed, could help the Board to both evaluate strategic alternatives as well as assist management and the Board in restructuring the Company.

 

v	On May 23, 2008 members of the Ramius Group held a conference call with Arthur Rhein and Martin Ellis to negotiate a letter agreement to extend the Company’s discretionary voting deadline in connection with the Annual Meeting.

 

v	On May 30, 2008, the Ramius Group and the Company entered into a letter agreement that superseded, in all respects, the Letter Agreement and further extended the Company’s discretionary voting deadline in connection with the Annual Meeting (the “May 30 Letter Agreement”).

 

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v	On June 5, 2008 members of the Ramius Group met with Bob Bailey and Peter Coleman at the Company’s Boca Raton offices to gain a better understanding of the Company’s individual businesses.

 

v	On June 13, 2008, the Ramius Group and the Company entered into a letter agreement that superseded, in all respects, the May 30 Letter Agreement and further extended the Company’s discretionary voting deadline in connection with the Annual Meeting.

 

v	On June 20, 2008 we delivered a letter to the Company nominating John Mutch, Steve Tepedino and James Zierick for election as directors on the Board.

 

v

On October 10, 2008 we delivered a public letter to Arthur Rhein and the Board expressing our disappointment with the Company’s underperformance.  We stated in the letter that any attempt by management to fix the Company’s operations would be, in our opinion, “too little, too late” and our belief that real structural changes are required at the Company.  The letter stated our belief that, in order to remedy the Company’s valuation discrepancy and provide shareholders with the best risk-adjusted outcome, management and the Board must promptly and diligently complete the strategic alternatives review process and consummate a sale of the Company.  The letter also included our valuation methodology for the Company.

 

v	On October 22, 2008, the Company announced that the Board has completed its review of strategic alternatives and as a result of this review, the Board has concluded that the best course of action to maximize shareholder value is to remain as an independent company.

 

v

On October 28, 2008 members of the Ramius Group met with Martin Ellis and Curtis Stout, a vice president and treasurer of the Company, to discuss the fundamentals of the business, the Company’s strategy going forward and the Ramius Group’s view that change needs to be made to the composition of the Board.

 

v

Between November 17, 2008 and December 12, 2008, members of the Ramius Group had discussions with certain members of the Board and management regarding, among other things, the recent management changes at the Company, the current restructuring that is taking place at the Company, the Board’s perspective on the Company’s position in the market-place and the Ramius Group’s preference to resolve its issues with the Company including constructively reconfiguring the composition of the Board, without the costs and distractions associated with a proxy contest.

 

 

 

 

 

 

 

 

 

 

 

 

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PROPOSAL NO. 1

 

ELECTION OF DIRECTORS

 

The Ramius Group is seeking your support at the Annual Meeting to elect the Ramius Nominees in opposition to the Company’s director nominees.  The Board is currently composed of nine directors divided into three classes, Class A, Class B and Class C.  The Ramius Group believes the three Class B directors’ terms expire at the Annual Meeting.  We are seeking your support at the Annual Meeting to elect the Ramius Nominees in opposition to the three Agilysys Class B director nominees.  Your vote to elect the Ramius Nominees will have the legal effect of replacing three incumbent directors of Agilysys with the Ramius Nominees.  If elected, the Ramius Nominees will represent a minority of the members of the Board.

 

THE RAMIUS NOMINEES

 

Set forth below are the name, age, business address, present principal occupation, and employment and material occupations, positions, offices, or employments for the past five years of each of the Ramius Nominees.  This information has been furnished to the Ramius Group by the Ramius Nominees.  The Ramius Nominees are independent of the Company in accordance with Securities and Exchange Commission (“SEC”) and Nasdaq Stock Market rules on board independence and are citizens of the United States of America.  The Ramius Nominees have been nominated by Value and Opportunity Master Fund (f/k/a Starboard Value and Opportunity Master Fund Ltd.) in accordance with the Company’s advance notice bylaw provision.

 

John Mutch (Age 52) 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 Inc. (“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.  Mr. Mutch served as a director of Overland Storage Inc., a provider of data protection appliances, from April 2003 to June 2005.  From 2002 to 2003, Mr. Mutch served as a director of Brio Software, Inc., a developer of software products.  Mr. Mutch served as President of HNC Software (“HNC”), an enterprise analytics software provider, from September 1999 to June 2001, and as Chief Executive Officer from December 1999 until the sale of HNC to Fair Isaac Corporation in August 2002.  Mr. Mutch joined HNC in 1997, and from 1997 to 1999 served in various other senior executive positions, including Vice President of Marketing and Corporate Development 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.  Mr. Mutch is a director of and serves on the audit committee of Edgar Online, Inc.  Mr. Mutch is a director of and serves as the chairman of the audit committee of Adaptec, Inc.  Mr. Mutch is also a director and the chairman of the board of directors of Aspyra, Inc., and serves on its nominating committee.  Mr. Mutch earned a B.S. in Applied Economics from Cornell University, where he serves on the advisory board for the undergraduate school of business, and a Masters of Business Administration from the University of Chicago Graduate School of Business.  As of the date hereof, Mr. Mutch does not directly own any securities of Agilysys nor has he made any purchases or sales of any securities of Agilysys during the past two years.  Mr. Mutch, as a member of the Ramius Group, is deemed to be the beneficial owner of the Shares owned by the members of the Ramius Group.  For information regarding purchases and sales during the past two years by the members of the Ramius Group of securities of Agilysys that are deemed to be beneficially owned by Mr. Mutch, see Schedule I.

 

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Steve Tepedino (Age 47) was a co-founder, and has served as President and Chief Executive Officer, of Channel Savvy LLC, a management consulting firm specializing in technology channels, since May 2006.  Additionally, since May 2006 Mr. Tepedino has served as a Member of JET Creative LLC, a management consulting company specializing in the information technology industry.  From 1984 to 2006, Mr. Tepedino worked in various positions within divisions of Avnet, Inc., a Fortune 500 company focused on global technology distribution.  From 2005 to 2006, Mr. Tepedino served as Vice President of Avnet, Inc. and President of Avnet Technology Solutions, Americas, a global technology sales and marketing organization with operations in the United States, Mexico and Canada.  From 2002 to 2005 Mr. Tepedino served as President of Avnet Partner Solutions, Americas, an industry-leading, value-added distributor and provider of servers, storage, software and services, with operations in the United States, Mexico and Canada.  Mr. Tepedino earned a B.S. in Engineering Chemistry from State University of New York at Stony Brook.  As of the date hereof, Mr. Tepedino directly owns 10,670 Shares. See Schedule I for information regarding purchases and sales during the past two years by Mr. Tepedino of securities of Agilysys.  Mr. Tepedino, as a member of the Ramius Group, is deemed to be the beneficial owner of the Shares owned by the members of the Ramius Group.  For information regarding purchases and sales during the past two years by the members of the Ramius Group of securities of Agilysys that are deemed to be beneficially owned by Mr. Tepedino, see Schedule I.

James Zierick (Age 52) has served as interim Chief Executive Officer of Aspyra, Inc. (“Aspyra”), a healthcare information technology and service provider that specializes in Clinical Information Systems (CIS) and Diagnostic Information Systems (DIS) for healthcare providers, since February 2008 and a director of Aspyra since September 2007.  From January 2007 to December 2007, Mr. Zierick served as Chief Executive Officer of LogicalApps, Inc., a provider of embedded controls software for enterprise applications.  From 2004 to 2006, Mr. Zierick was Executive Vice President of Worldwide Field Operations for Peregrine, where he led a 350 person sales, alliance, customer support and professional services organization.  From 1989 to 2003, Mr. Zierick was a Principal in McKinsey & Company, where he helped lead the company’s Southern California technology and operational effectiveness practices. Mr. Zierick earned a Masters of Business Administration from Dartmouth College, Amos Tuck School of Business, a B.S. in Engineering from Dartmouth College, Thayer School of Engineering, and a B.A. in Engineering Sciences from Dartmouth College.  As of the date hereof, Mr. Zierick directly owns 775 Shares.  See Schedule I for information regarding purchases and sales during the past two years by Mr. Zierick of securities of Agilysys.  Mr. Zierick, as a member of the Ramius Group, is deemed to be the beneficial owner of the Shares owned by the members of the Ramius Group.  For information regarding purchases and sales during the past two years by the members of the Ramius Group of securities of Agilysys that are deemed to be beneficially owned by Mr. Zierick, see Schedule I.

 

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RCG Starboard Advisors, an affiliate of Ramius, and the Ramius Nominees, have entered into compensation letter agreements (the “Compensation Letter Agreements”) regarding compensation to be paid to the Ramius Nominees for their agreement to be named and to serve as Ramius Nominees and for their services as a director of Agilysys, if elected.  Pursuant to the terms of the Compensation Letter Agreements, RCG Starboard Advisors has agreed to pay each of the Ramius Nominees (i) $10,000 in cash as a result of the submission by Value and Opportunity Master Fund of its nomination of the Ramius Nominees to Agilysys and (ii) $10,000 in cash upon the filing of a definitive proxy statement with the Securities and Exchange Commission relating to a solicitation of proxies in favor of each Nominee’s election as a director at the Annual Meeting.  Pursuant to the Compensation Letter Agreements, each Ramius Nominee agrees to use such compensation to acquire securities of Agilysys (the “Nominee Shares”) at such time that such Nominee shall determine, but in any event no later than [  ] days after receipt of such compensation.  If elected or appointed to serve as a director of the Agilysys Board, each Ramius Nominee agrees not to sell, transfer or otherwise dispose of any Nominee Shares within two years of such Ramius Nominee’s election or appointment as a director; provided, however, in the event that the Agilysys enters into a business combination with a third party, each Ramius Nominee may sell, transfer or exchange the Nominee Shares in accordance with the terms of such business combination

 

Value and Opportunity Master Fund 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 Agilysys shareholders 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 Agilysys if elected as such at the Annual Meeting.  None of the Ramius Nominees are a party adverse to Agilysys or any of its subsidiaries or has a material interest adverse to Agilysys 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 GOLD proxy card will be voted for substitute nominees, to the extent this is not prohibited under the Company’s bylaws or applicable law.  In addition, Value and Opportunity Master Fund reserves the right to challenge any action by Agilysys that has, or if consummated would have, the effect of disqualifying the Ramius Nominees.  In any such case, Shares represented by the enclosed GOLD proxy card will be voted for such substitute nominees, to the extent this is not prohibited under the Company’s bylaws or applicable law.  Value and Opportunity Master Fund reserves the right to nominate additional persons, to the extent this is not prohibited under the Company’s bylaws or applicable law, if Agilysys increases the size of the 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 Value and Opportunity Master Fund that any attempt to increase the size of the current Board or to reconstitute or reconfigure the classes on which the current directors serve constitutes an unlawful manipulation of the Company’s corporate machinery.

 

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YOU ARE URGED TO VOTE FOR THE ELECTION OF THE RAMIUS NOMINEES ON THE ENCLOSED GOLD PROXY CARD.

 

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 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 GOLD proxy card will vote on such matters in their discretion.

 

VOTING AND PROXY PROCEDURES

Only shareholders of record on the Record Date will be entitled to notice of and to vote at the Annual Meeting.  Shareholders who sell Shares before the Record Date (or acquire them without voting rights after the Record Date) may not vote such Shares.  Shareholders 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 Agilysys entitled to vote at the Annual Meeting is the Shares.

 

If, not less than 48 hours before the start time of the Annual Meeting, any shareholder gives written notice to the Chief Executive Officer, an Executive Vice President or the Secretary of the Company that he, she or it wants the voting for the election of directors to be cumulative, the shareholder giving notice or a representative of that shareholder, the Chairman or the Secretary will make an announcement about such notice at the start of the Annual Meeting.  Cumulative voting means that each shareholder may cumulate his, her or its voting power for the election by distributing a number of votes, determined by multiplying the number of directors to be elected at the Annual Meeting times the number of the shareholder’s Shares.  The shareholder may distribute all of the votes to one individual director nominee, or distribute his, her or its votes among two or more director nominees, as the shareholder chooses.

 

Shares represented by properly executed GOLD 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 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 GOLD 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 the Company’s nominees.  You can only vote for the Company’s nominees by signing and returning a proxy card provided by Agilysys.  Shareholders should refer to the Agilysys 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.

 

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QUORUM

 

A majority of the outstanding Shares represented at the Annual Meeting in person or by proxy will constitute a quorum for the transaction of business.

 

VOTES REQUIRED FOR ELECTION OF DIRECTORS

 

Under Ohio law and the Company’s Amended Code of Regulations, if a quorum is present at the Annual Meeting, the three nominees for election as directors will be elected as directors if they receive the greatest number of votes cast for the election of directors at the Annual Meeting by the holders of the Shares present in person or represented by proxy and entitled to vote.  A shareholder 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 Agilysys at 28925 Fountain Parkway, Solon, Ohio 44139, or any other address provided by Agilysys.

 

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.

 

ABSTENTIONS AND BROKER NON-VOTES

 

Abstentions and broker “non-votes” will count as votes present for the purpose of determining whether a quorum is present.  Abstentions and broker “non-votes” will not be counted as votes cast in the election of directors.

 

 

REVOCATION OF PROXIES

 

Shareholders of Agilysys 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 Agilysys at 28925 Fountain Parkway, Solon, Ohio 44139, or any other address provided by Agilysys.  Although a revocation is effective if delivered to Agilysys, 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 shareholders 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 BOARD, PLEASE SIGN, DATE AND RETURN PROMPTLY THE ENCLOSED GOLD PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED.

 

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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, Internet, in person and by advertisements.

 

Value and Opportunity Master Fund has entered into an agreement with Innisfree M&A Incorporated 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.  Value and Opportunity Master Fund 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.  Value and Opportunity Master Fund 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 Agilysys shareholders 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.

 

ADDITIONAL PARTICIPANT INFORMATION

 

The Ramius Nominees and the other members of the Ramius Group are participants in this solicitation.  The principal business of each of Value and Opportunity Master Fund, Parche and RCG PB is serving as a private investment fund. Each of Value and Opportunity Master Fund 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 shareholder value.  The principal business of RCG Starboard Advisors is acting as investment manager of Value and Opportunity Master Fund and managing member of Parche.  The principal business of Enterprise Master Fund is serving as a private investment fund and acting as the non-managing member of Parche.  The principal business of Ramius Advisors is acting as the investment advisor of each of Enterprise Master Fund and RCG PB.  Ramius is engaged in money management and investment advisory services for third parties and proprietary accounts and serves as the sole member of RCG Starboard Advisors and Ramius Advisors. C4S serves as managing member of Ramius.  Messrs. Cohen, Strauss, Stark and Solomon serve as co-managing members of C4S.

 

The address of the principal office of each of Parche, RCG Starboard Advisors, Ramius Advisors, Ramius, C4S, and Messrs. Cohen, Stark, Strauss and Solomon is 599 Lexington Avenue, 20th Floor, New York, New York 10022.  The address of the principal office of Value and Opportunity Master Fund, Enterprise Master Fund and RCG PB is c/o Citco Fund Services (Cayman Islands) Limited, Corporate Center, West Bay Road, Grand Cayman, Cayman Islands, British West Indies.

 

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As of the date hereof, Value and Opportunity Master Fund beneficially owns 2,342,130 Shares, Parche beneficially owns 323,761 Shares and RCG PB beneficially owns 277,103 Shares.  As of the date hereof, RCG Starboard Advisors (as the investment manager of Value and Opportunity Master Fund and the managing member of Parche) is deemed to be the beneficial owner of the 2,342,130 Shares owned by Value and Opportunity Master Fund and the 323,761 Shares owned by Parche.  As of the date hereof, Enterprise Master Fund (as the sole non-managing member of Parche and owner of all economic interests therein) is deemed the beneficial owner of the 323,761 Shares owned by Parche.  As of the date hereof, Ramius Advisors (as the investment advisor of each of Enterprise Master Fund and RCG PB) is deemed to be the beneficial owner of the 323,761 Shares owned by Parche and the 277,103 Shares owned by RCG PB.  As of the date hereof, Ramius (as the sole member of each of RCG Starboard Advisors and Ramius Advisors), C4S (as the managing member of Ramius) and Messrs. Cohen, Stark, Strauss and Solomon (as the managing members of C4S) are deemed to be the beneficial owners of the 2,342,130 Shares owned by Value and Opportunity Master Fund, the 323,761 Shares owned by Parche and the 277,103 Shares owned by RCG PB.  Messrs. Cohen, Stark, Strauss and Solomon share voting and dispositive power with respect to the Shares owned by Value and Opportunity Master Fund, Parche and RCG PB by virtue of their shared authority to vote and dispose of such Shares.

Each of the Ramius Nominees, as a member of a “group” for the purposes of Rule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended, is deemed to be a beneficial owner of the 2,342,130 Shares owned by Value and Opportunity Master Fund, the 323,761 Shares owned by Parche and the 277,103 Shares owned by RCG PB.  Each of the Ramius Nominees disclaims beneficial ownership of Shares that he does not directly own.  As of the date hereof, Mr. Tepedino beneficially owns 10,670 Shares and Mr. Zierick beneficially owns 775 Shares.

Each member of the Ramius Group, as members of a “group” for the purposes of Rule 13d-5(b)(1) of the Exchange Act, is deemed to beneficially own the Shares beneficially owned in the aggregate by the other members of the group.  Each member of the Ramius Group disclaims beneficial ownership of such Shares, except to the extent of their pecuniary interest therein.  For information regarding purchases and sales of securities of Agilysys during the past two years by members of the Ramius Group, including the Ramius Nominees, see Schedule I.

On October 10, 2008, the members of the Ramius Group entered into an Amended and Restated Joint Filing and Solicitation Agreement in which each member of the Ramius Group agreed to the joint filing on 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 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 Agilysys of all expenses it incurs in connection with this solicitation.  The Ramius Group does not intend to submit the question of such reimbursement to a vote of security holders of the Company.

 

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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 Agilysys; (iii) no participant in this solicitation owns any securities of Agilysys which are owned of record but not beneficially; (iv) no participant in this solicitation has purchased or sold any securities of Agilysys during the past two years; (v) no part of the purchase price or market value of the securities of Agilysys 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 Agilysys, 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 Agilysys; (viii) no participant in this solicitation owns beneficially, directly or indirectly, any securities of any parent or subsidiary of Agilysys; (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 Agilysys’ last fiscal year, or is a party to any currently proposed transaction, or series of similar transactions, to which Agilysys or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $120,000; (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 Agilysys or its affiliates, or with respect to any future transactions to which Agilysys 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.  There are no material proceedings to which the Ramius Nominees or any of their associates is a party adverse to Agilysys or any of its subsidiaries or has a material interest adverse to Agilysys or any of its subsidiaries.  With respect to the Ramius Nominees, none of the events enumerated in Item 401(f)(1)-(6) of Regulation S-K of the Exchange Act, occurred during the past five years.

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Securities Exchange Act of 1934 requires persons who beneficially own more than 10% of the Shares to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC.  Based solely on its review of the Ramius Nominees’ transaction history and ownership information with respect to the Shares, the Ramius Group believes that all of the Section 16(a) filing requirements were satisfied by the Ramius Nominees.

 

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 GOLD proxy card will vote on such matters in their discretion.

 

SHAREHOLDER PROPOSALS

 

Any shareholder that intends to present a proposal at the 2009 Annual Meeting of Shareholders (the “2009 Annual Meeting”) must ensure the proposal is received by the Company’s Secretary at the Company’s principal executive offices no later than _________ for inclusion in the Company’s proxy statement and form of proxy relating to the 2009 Annual Meeting.  Each proposal submitted should be accompanied by the name and address of the shareholder submitting the proposal and the number of Shares owned.  If the proponent is not a shareholder of record, proof of beneficial ownership should also be submitted.  All proposals must be a proper subject for action and comply with the proxy rules of the Securities and Exchange Commission.

 

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The information set forth above regarding the procedures for submitting shareholder proposals for consideration at the 2009 Annual Meeting is based on information contained in the Company’s proxy statement.  The incorporation of this information in this proxy statement should not be construed as an admission by the Ramius Group that such procedures are legal, valid or binding.

 

INCORPORATION BY REFERENCE

 

THE RAMIUS GROUP HAS OMITTED FROM THIS PROXY STATEMENT CERTAIN DISCLOSURE REQUIRED BY APPLICABLE LAW THAT IS EXPECTED TO BE INCLUDED IN AGILYSYS’ PROXY STATEMENT RELATING TO THE ANNUAL MEETING.  THIS DISCLOSURE IS EXPECTED TO INCLUDE, AMONG OTHER THINGS, CURRENT BIOGRAPHICAL INFORMATION ON AGILYSYS’ CURRENT DIRECTORS, INFORMATION CONCERNING EXECUTIVE COMPENSATION, AND OTHER IMPORTANT INFORMATION.  PLEASE NOTE THAT BECAUSE THE RAMIUS GROUP WAS NOT INVOLVED IN THE PREPARATION OF AGILYSYS’ PROXY STATEMENT, THE RAMIUS GROUP CANNOT REASONABLY CONFIRM THE ACCURACY OR COMPLETENESS OF CERTAIN INFORMATION CONTAINED THEREIN.  SEE SCHEDULE II FOR INFORMATION REGARDING PERSONS WHO BENEFICIALLY OWN MORE THAN 5% OF THE SHARES AND THE OWNERSHIP OF THE SHARES BY THE DIRECTORS AND MANAGEMENT OF AGILYSYS.

 

The information concerning Agilsys contained in this Proxy Statement and the Schedules attached hereto has been taken from, or is based upon, publicly available information.

 

THE RAMIUS GROUP

_______________ __, 2008

 

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SCHEDULE I

 

TRANSACTIONS IN SECURITIES OF AGILYSYS

DURING THE PAST TWO YEARS