| | • | | Implementation of a highly-dilutive, imprudent and unnecessary financing agreement in October; |
| | • | | Squandering Company resources on employment contracts, legal costs and accounting remediation that could have been avoided through proper oversight; |
| | • | | Failure to substantively engage with shareholders; and |
| | • | | Responding to Hudson Executive’s calls for a shareholder meeting by adopting a highly restrictive “poison pill” and adding onerous provisions to the Company’s bylaws on nominating directors. |
Simply put, Hudson Executive believes the actions that have been taken on the incumbent directors’ watch reflect a board focused on entrenchment rather than creating shareholder value. Their actions have significantly damaged shareholder value and thus require a meaningful change in leadership.
Douglas L. Braunstein, Founder and Managing Partner of Hudson Executive, said, “We invested in USAT because we believed then, and continue to believe, that the Company has great potential, and we had hoped to work with the Company to unlock that promise. The Board’s repeated actions have prevented us from doing so. We now believe the Company requires a refreshed Board of highly-qualified, independent directors with a mix of financial services, operational experience, capital allocation, and corporate governance expertise that can attract and provide proper oversight of management and help create long-term value for shareholders. Hudson Executive’s intended nominees would constitute such a Board. Our nominees bring much-needed skillsets, and, if elected, we believe they will put the Company back on a path to success.”
Hudson Executive and its independent director nominees have spent considerable time and effort evaluating the business, and, if elected, will focus on the following:
| | 1. | Hiring a qualified CEO and CFO with relevant industry experience, and whose incentives are more closely aligned with shareholders; |
| | 2. | Installing a culture of accelerated and responsible growth in the underserved micropayments marketplace through expansion of adjacent verticals, expanded product set, international sales, and other means; |
| | 3. | Renegotiating key supplier contracts, which Hudson Executive believes to be meaningfullyoff-market, on terms favorable to the Company; |
| | 4. | Bringing discipline to product profitability and generating operating cash flow; |
| | 5. | Optimizing the capital structure, including seeking the immediate renegotiation or rescinding of the recently announced debt agreement; and |
| | 6. | Restoring credibility through strong governance, effective controls, and creating long-term value for shareholders. |
Braunstein continued, “As USAT’s largest shareholder, it is vitally important to Hudson Executive that the Company’s issues be resolved as effectively and as efficiently as possible, for the benefit of all constituents. The Board’s constant excuses and delay have already damaged value for shareholders, and we can no longer tolerate its failure to engage in a meaningful way.
“The Board must honor the Chairman’s commitment to us on October 10 that the annual meeting would be held within 90 days of October 10. Even with that commitment, it will have been almost 21 months since the shareholders of this Company last exercised their right to vote. Shareholders must have the opportunity to exercise their fundamental right to elect directors who will act in the best interests of the Company to drive shareholder value.”
Hudson Executive is taking the additional step of filing a consent solicitation statement with the SEC in order to solicit revocable consents of shareholders to request a special meeting pursuant to the Company’s bylaws. Hudson Executive calls upon the Board to comply with its commitments made to hold a shareholder’s annual meeting. However, given the repeated delays to date, and the failure to hold a meeting since April 26, 2018, this action will provide shareholders a forum to express their views and exercise their right to vote if the Board does not fulfill its obligation to promptly hold an annual meeting.
