USATP USA Technologies Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN CONSENT

PRELIMINARY COPY SUBJECT TO COMPLETION DATED NOVEMBER 12, 2019

                    , 2019

To Fellow Shareholders of USA Technologies, Inc.:

The enclosed Consent Statement, the Special Meeting Request Form attached as Exhibit A-1 and the accompanying revocable consent (the “BLUE Consent”) to request a special meeting of the Company’s shareholders (the “Special Meeting”) attached as Exhibit A-2 are being furnished to you as a shareholder of USA Technologies, Inc., a Pennsylvania corporation (which we refer to as the “Company” or “USAT”), by and on behalf of HEC Master Fund LP, a Cayman Islands exempted limited partnership (“Hudson Master Fund”) and an affiliate of Hudson Executive Capital LP, a Delaware limited partnership (“Hudson Executive,” together with Hudson Master Fund and their respective affiliates, “Hudson”).

THIS SOLICITATION IS BEING MADE BY HUDSON MASTER FUND AND NOT ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY (THE “BOARD”).

The purpose of our sending you these materials is to solicit your revocable consent to request a special meeting of the Company’s shareholders to consider the matters set forth below. We are mailing a printed copy of this Consent Statement, the enclosed Special Meeting Request Form attached as Exhibit A-1 and the accompanying BLUE Consent attached as Exhibit A-2 beginning on or about                     , 2019.

Under the Company’s Amended and Restated Bylaws (the “Bylaws”), holders of shares of the Company’s Common Stock, no par value (the “Common Stock”), and Series A convertible preferred stock, no par value (the “Series A Preferred Stock”), entitled to cast at least 20% of the combined voting power of the then outstanding shares are entitled to call a special meeting. Each share of Common Stock is entitled to one vote and each share of Series A Preferred Stock is entitled to 0.1988 of a vote with any fractional vote being rounded to the nearest whole number.

We are seeking your support to call the Special Meeting for shareholders to be able to consider and vote upon the following proposals:

The Company last held its annual meeting on April 26, 2018. We are seeking to call a special meeting to provide shareholders a forum to express their views and exercise their right to vote. If we succeed in calling the Special Meeting, we expect to solicit proxies to vote in support of each of the Proposals at the Special Meeting.

If the Proposals are approved, we intend to call a subsequent special meeting to remove the following seven (7) incumbent directors: Steven D. Barnhart, Joel Brooks, Robert L. Metzger, Patricia A. Oelrich, William J. Reilly Jr., William J. Schoch and Ingrid S. Stafford, and the successors of any of them (together, the “Incumbent Directors”), and elect the eight (8) nominees identified by Hudson: Lisa P. Baird, Douglas G. Bergeron, Douglas L. Braunstein, Jacob Lamm, Michael K. Passilla, Ellen Richey, Anne M. Smalling and Shannon S. Warren (together, the “Nominees”). The current size of the Board is nine, consisting of eight directors and one vacancy. If a new director is appointed to fill the vacancy, we will seek to remove the Incumbent Directors and the newly-appointed director and elect all eight of the Nominees. If no new directors are appointed, we will seek to remove the Incumbent Directors and have the vacancy filled by a Nominee. We reserve the right to nominate less than eight of the Nominees in the event the size of the Board decreases. Each Nominee named herein is independent under the Board’s independence guidelines, the applicable rules of Nasdaq, and the independence standards applicable to the Company under paragraph (a)(1) of Item 407 of Regulation S-K under the Securities Exchange Act of 1934 (as amended, the “Exchange Act”). 

The subsequent special meeting is necessary because the Bylaws currently prohibit calling a special meeting for the purpose of electing and removing directors. However, if shareholders support the Proposals, it is our expectation that the Board will be responsive to the will of the shareholders and will work with Hudson to make the appropriate changes to the composition of the Board.

At this time, we are soliciting your revocable consent to request a Special Meeting in the form of the accompanying BLUE Consent to empower us to deliver the valid, executed and completed Special Meeting Request Form on your behalf to the Chairman of the Board and the Chief Executive Officer of the Company to call the Special Meeting.

Executing and returning the BLUE Consent will authorize Hudson Master Fund to execute the Special Meeting Request Form to call the Special Meeting on your behalf. We do not intend to use your BLUE Consent to call the Special Meeting unless we have received BLUE Consents from a sufficient number of shareholders prior to       , 2019 (the “Outside Date”). A failure to return a BLUE Consent authorizing us to call the Special Meeting will have the same effect as opposing the call for a Special Meeting.

In accordance with the Bylaws, if a special meeting is duly called by shareholders, the Company is required to cause notice to be given that a meeting will be held not less than 90 nor more than 120 days after the receipt of the shareholders’ request. It is our intention to submit the request for the Special Meeting after receiving BLUE Consents authorizing us to call the Special Meeting from shareholders holding at least 20% of the voting power of the outstanding shares of the Company.

On November 11, 2019, the Company issued a press release alleging that Hudson’s solicitation was invalid under the Bylaws because the Bylaws prohibit the calling of special meetings for the purpose of removing directors. The Company further announced that the Board had amended the Bylaws so that no special meeting may be called before the next annual meeting of the Company’s shareholders.

Hudson strongly disagrees with the Company’s assertion that our solicitation is invalid. Hudson believes that the Company is mischaracterizing our solicitation by stating that we are seeking to call a special meeting to remove directors. We are soliciting consents to request a special meeting to consider certain amendments to the Bylaws. The removal of directors will not be considered at the special meeting.

Hudson further believes that the Bylaw amendment to prevent the calling of a special meeting is illegal and invalid under Pennsylvania law and that the Company’s actions constitute an unlawful interference with shareholders’ franchise rights. Hudson is currently evaluating the legal options available to it, including bringing a legal action against the Company and its directors.

Given the Company’s actions to date, there is a risk that the Company will not recognize properly executed consents delivered by shareholders and will refuse to call the Special Meeting even if the requisite consents are delivered.

We are not currently seeking your proxy, consent, authorization or agent designation for approval of any proposals or any other actions that would be considered at the Special Meeting. In the event the Special Meeting is called, we will send you proxy materials relating to a vote on the applicable Proposals.

This solicitation is being made by Hudson Master Fund, and not on behalf of the Company or the Board. You may receive a revocation Consent Statement from the Company together with an accompanying revocation card. We urge you not to return any revocation card you may receive from the Company, since only the last dated card that you execute will count.

We thank you in advance for your support in calling the Special Meeting.

If you have any questions, require assistance in voting your shares,

or need additional copies of this Consent Statement, please contact:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York NY 10022

Shareholders call toll-free: 1-888-750-5834

Banks and Brokers call collect: 1-212-750-5833

PRELIMINARY COPY SUBJECT TO COMPLETION DATED NOVEMBER 12, 2019

SOLICITATION STATEMENT

OF

HEC MASTER FUND LP

This Consent Statement, the enclosed Special Meeting Request Form attached as Exhibit A-1 and the accompanying revocable consent (the “BLUE Consent”) to request a special meeting of the Company’s shareholders (the “Special Meeting”) attached as Exhibit A-2 are being furnished to you as a shareholder of USA Technologies, Inc., a Pennsylvania corporation (which we refer to as the “Company” or “USAT”), by and on behalf of HEC Master Fund LP, a Cayman Islands exempted limited partnership (“Hudson Master Fund”) and an affiliate of Hudson Executive Capital LP, a Delaware limited partnership (“Hudson Executive,” together with Hudson Master Fund and their respective affiliates, “Hudson”).

THIS SOLICITATION IS BEING MADE BY HUDSON MASTER FUND AND NOT ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY (THE “BOARD”).

The purpose of our sending you these materials is to solicit your revocable consent to request a special meeting of the Company’s shareholders to consider the matters set forth below. We are mailing a printed copy of this Consent Statement, the enclosed Special Meeting Request Form attached as Exhibit A-1 and the accompanying BLUE Consent attached as Exhibit A-2 beginning on or about                     , 2019.

If you complete and return the BLUE Consent authorizing Hudson to deliver the Special Meeting Request Card, you will also be authorizing Hudson to withdraw the request for the Special Meeting after it has been submitted. We are asking for this authority because we can envision circumstances in which it would not be in the best interests of shareholders to proceed with the Special Meeting. Specifically, we may decide to withdraw the request for the Special Meeting if the Board takes meaningful steps to respond to shareholder concerns, including the appointment of nominees to the Board acceptable to Hudson.

QUESTIONS AND ANSWERS ABOUT THE CONSENT STATEMENT AND THE SPECIAL MEETING

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We believe that the Company’s actions over the past ten months have consistently eroded shareholder value and that the Board, which is charged with management of the business and affairs of the Company, bears ultimate responsibility for the Company’s actions and failures to act. Over this period, the Company repeatedly failed to file its financial statements on time which led to the Company’s securities being delisted from trading on Nasdaq. The Company disclosed that it had incurred in 2019 additional expenses of $15.4 million in connection with remediating this failure. When the Company finally regained compliance with its periodic filing obligations, it disclosed that it had entered into agreements with Antara Capital Master Fund pursuant to which the Company had sold 3,800,000 shares of Company Common Stock representing approximately 6% of the Company’s outstanding stock at the then below-market price of $5.25 and entered into a debt commitment letter for a $30 million senior secured term loan facility that would be used to retire its existing credit facility. The Company also disclosed that it had paid $3,147,000 in fees for this debt and equity financing plus up to $400,000 of legal fees for Antara Capital Master Fund’s counsel. As of the date of this Consent Statement, the Company’s securities remain delisted from trading on Nasdaq.

If a Special Meeting is successfully called, we intend to make the following proposals:

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On November 11, 2019, the Company announced that the Board had amended the Bylaws to provide that no special meeting may be called before the next annual meeting of the Company’s shareholders. Hudson believes that the Bylaw amendment to prevent the calling of a special meeting is illegal and invalid under Pennsylvania law and that the Company’s actions constitute an unlawful interference with shareholders’ franchise rights. Hudson is currently evaluating the legal options available to it, including bringing a legal action against the Company and its directors.

Only holders of Common Stock or Series A Preferred Stock of record at the close of business on the record date will be entitled to notice of and to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote and each share of Series A Preferred Stock is entitled to 0.1988 of a vote on all matters to come before the Special Meeting, with any fractional vote being rounded to the nearest whole number. The number of votes to which each share of Series A Preferred Stock is entitled is equal to the votes attributable to that number of shares of Common Stock into which each share of Series A Preferred Stock is convertible.

We urge you not to return any revocation card you may receive from the Company, since only the last dated card that you execute will count.

Beneficial Owners: If any of your shares of Common Stock or Series A Preferred Stock are held in the name of a brokerage firm, bank, bank nominee or other institution, only the brokerage firm, bank, bank nominee or other institution can execute a BLUE Consent for your shares and will do so only upon receipt of specific instructions from you. Accordingly, please contact the person responsible for your account and give instructions for a written request to be signed representing your shares of Common Stock or Series A Preferred Stock or follow the instructions on the voting instruction form that may have been sent to you by your brokerage firm, bank, nominee or other institution together with this Consent Statement.

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Hudson strongly disagrees with the Company’s assertion that our solicitation is invalid. Hudson believes that the Company is mischaracterizing our solicitation by stating that we are seeking to call a special meeting to remove directors. We are soliciting consents to request a special meeting to consider certain amendments to the Bylaws. The removal of directors will not be considered at the special meeting.

Hudson further believes that the Bylaw amendment to prevent the calling of a special meeting is illegal and invalid under Pennsylvania law and that the Company’s actions constitute an unlawful interference with shareholders’ franchise rights. Hudson is currently evaluating the legal options available to it, including bringing a legal action against the Company and its directors.

Given the Company’s actions to date, there is a risk that the Company will not recognize properly executed consents delivered by shareholders and will refuse to call the Special Meeting even if the requisite consents are delivered.

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Proposal 3: If Proposal 3 is approved, any shareholder with ownership of at least 10% of the combined voting power of the then outstanding shares, which currently includes Hudson, could call a special meeting of the Company. Additionally, any special meeting called pursuant to Section 3.03(a) of Article III of the Bylaws would need to be held within not less than 45 nor more than 60 days following the Company’s receipt of the request, which may shorten the time period in which the Company would be able to prepare for the special meeting. The proposed Bylaw amendment also specifies the process for the consideration of business at the special meeting and provides the shareholders calling the special meeting with an opportunity to address the meeting and present their proposals, as well as reasonable access to the chairman of the special meeting, the judges of election, and the books and records of the Company. We believe Proposal 3 is consistent with corporate governance best practices and facilitating the shareholders’ ability to call a timely special meeting will strengthen the role shareholders play in corporate governance.

Proposal 4: If Proposal 4 is approved, the Board will not be able to adopt or repeal any amendments to bylaws properly adopted by the shareholders, even if the Board believes such amendments are in the best interests of the Company and its shareholders, unless such amendments are also approved by the Company’s shareholders. If Proposal 4 is approved, the Board will also not be able to adopt any bylaw that was previously properly repealed by shareholders, unless such adoption is also approved by the Company’s shareholders. The Board would further be prohibited from adopting any bylaw that increases the burden on shareholders seeking to, or otherwise impairs the ability of shareholders to, call a special meeting, propose business or nominate individuals for election to the Board at an annual or special meeting or vote for any matter or cause the election or removal of any director at an annual or special meeting. If Proposal 4 is approved, the Board will not be able to adopt bylaws that have the effect of preventing shareholders from calling a special meeting or that would result in a delay of a special meeting that is requested by shareholders. We believe that Proposal 4 is necessary to prevent the Board from unilaterally taking any actions to amend the Bylaws to attempt to nullify the effectiveness of bylaws properly adopted by the shareholders or to adopt any bylaw previously properly repealed by shareholders. We also believe that Proposal 4 is necessary to prevent the Board from taking any actions to amend the Bylaws to impose additional burdens on shareholders calling a special meeting or nominating directors or proposing business at an annual or special meeting.

Additional information concerning the Proposals is set forth under the caption “The Proposals to be Introduced at the Special Meeting.”

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BACKGROUND TO THE SOLICITATION

Hudson Executive is an investment firm that primarily seeks to identify value-oriented opportunities in the small and mid-cap U.S. public markets and to actively engage with management, boards and shareholders of portfolio companies. Hudson invested in the Company with the belief that it could work collaboratively with the Company to help return it to a strong growth profile, generate free cash flow, and create long-term sustainable value for shareholders. In early discussions, the Board and management both said they were pleased Hudson chose to invest in the Company, and that they welcomed Hudson’s active participation. It was in that spirit that Hudson repeatedly endeavored to engage with the Board over the past 10 months.

The Company last held its annual meeting of shareholders on April 26, 2018.

The following is a description of the events and circumstances, including contacts that we have had with representatives of the Company, that have preceded our decision to request that shareholders join us in calling the Special Meeting. With the benefit of hindsight, we believe that the Company delayed, deferred or rejected our suggestions and did not consider in good faith our efforts to assist the Company, to the detriment of all shareholders.

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At the meeting, representatives of Hudson repeated their governance changes discussed on September 23, 2019 that the Board be reconstituted with a majority of Hudson-designated independent directors. In response, representatives of the Company offered to nominate Mr. Braunstein for election to the Board at the next annual meeting of shareholders and to consider nominating up to an additional two new Board members, subject to the review and approval of the Nominating and Corporate Governance Committee. In addition, they committed to hold the annual shareholder meeting within 90 days of October 10, 2019. The Company representatives made clear that they were not prepared to improve upon this offer.

In response to questions regarding the recent financings, the Board representatives of the Company also confirmed that they had not solicited financing alternatives from any long-term shareholder, did not reach out to Hudson despite Hudson’s prior offers, did not engage in discussions regarding amending the Company’s existing bank facilities with JPM and did not seek other bank funding sources. The Chairman also stated that the Company did not have an immediate need for the capital it had raised. The Board representatives informed Hudson that the decision was unanimously supported by the Board.

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Hudson insisted on a change in the Chief Executive Officer role, the initiation of a search process and Hudson’s active involvement in that search process, as well as a change in leadership of the Board. The Board representatives were not prepared to engage in those discussions.

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THE PROPOSALS TO BE INTRODUCED AT THE SPECIAL MEETING

If we, with the support of other shareholders, are successful in obtaining sufficient shareholder support to call the Special Meeting pursuant to the Bylaws and the Special Meeting is called, we expect to present the following matters for a shareholder vote at the Special Meeting:

Proposal 1 would repeal all Bylaws adopted by the Board without the approval of shareholders subsequent to October 18, 2019 (which is the date of the last publicly disclosed amendment to the Company’s Bylaws) and would prevent the Board from unilaterally amending the Bylaws to nullify or delay the actions taken by, or proposed to be taken by, the shareholders pursuant to the other Proposals or to create new obstacles to the consideration of the Proposals at the Special Meeting.

The affirmative vote of a majority of the votes cast by the holders of the issued and outstanding shares of Common Stock and Series A Preferred Stock voting together is required to approve Proposal 1. Each share of Common Stock is entitled to one vote and each share of Series A Preferred Stock entitled to 0.1988 of a vote with any fractional vote being rounded to the nearest whole number.

If Proposal 1 is approved, any amendments to the Bylaws adopted by the Board without shareholder approval subsequent to October 18, 2019 will be repealed, including the Bylaw amendment announced by the Company on November 11, 2019, which purports to prevent the calling of a special meeting before the next annual meeting of the Company’s shareholders. Approval of Proposal 1 would also result in the repeal of amendments adopted after October 18, 2019 that may be aligned with the interests of the shareholders, if any.

If Proposal 1 is approved, Section 3.03(a) of Article III of the Bylaws would be revised as follows:

(a) A special meeting of the shareholders for any purpose or purposes shall be called only by the chairman of the board of directors, the chief executive officer, or the board of directors. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting. Special meetings of the shareholders may also be called by the holders of at least 20% of the combined voting power of the then outstanding shares entitled to vote at the particular meeting; provided, however, that a special meeting may not be called by any shareholder or shareholders for the purpose of electing or removing any director or directors of the corporation. Upon request in writing sent by registered mail to the chairman of the board of directors or chief executive officer of the corporation by any shareholder or shareholders entitled to call a special meeting of the shareholders pursuant to this Section 3.03(a), the board of directors shall determine a place and time for such meeting, which time shall not be less than ninety (90) nor more than one hundred and twenty (120) days after the receipt of such request, and a record date for the determination of shareholders entitled to vote at such meeting in the manner set forth in Section 3.12 hereof. Following such receipt, it shall be the duty of the secretary of the corporation to cause notice to be given to the shareholders entitled to vote at such meeting, in the manner set forth in Section 2.03 hereof, that a meeting will be held at the time and place so determined. Notwithstanding anything to the contrary in these Bylaws, a special meeting of the shareholders may not be called or otherwise requested by any shareholder or shareholders before the first annual meeting of shareholders that is held after November 8, 2019.

Proposal 2 would facilitate the ability of the shareholders to hold the Board accountable by permitting shareholders to call special meetings for the purpose of electing and removing directors. Section 3.03 of Article III of the Company’s current Bylaws provides that a special meeting may not be called by any shareholder or shareholders for the purpose of electing or removing any director or directors of the Company.

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The language of the proposed Bylaw amendment to Section 3.03 of Article III of the Bylaws is as follows and assumes the Bylaw amendment announced on November 11, 2019 has been repealed by the adoption of Proposal 1:

(a) A special meeting of the shareholders for any purpose or purposes shall be called only by the chairman of the board of directors, the chief executive officer, or the board of directors. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting. Special meetings of the shareholders may also be called by the holders of at least 20% of the combined voting power of the then outstanding shares entitled to vote at the particular meeting; provided, however, that a special meeting may not be called by any shareholder or shareholders for the purpose of electing or removing any director or directors of the corporation. Any business that could be considered at an annual meeting of the shareholders may be considered at a special meeting of the shareholders, including the election and/or removal of any director or directors of the corporation. Upon request in writing sent by registered mail to the chairman of the board of directors or chief executive officer of the corporation by any shareholder or shareholders entitled to call a special meeting of the shareholders pursuant to this Section 3.03(a), the board of directors shall determine a place and time for such meeting, which time shall not be less than ninety (90) nor more than one hundred and twenty (120) days after the receipt of such request, and a record date for the determination of shareholders entitled to vote at such meeting in the manner set forth in Section 3.12 hereof. Following such receipt, it shall be the duty of the secretary of the corporation to cause notice to be given to the shareholders entitled to vote at such meeting, in the manner set forth in Section 2.03 hereof, that a meeting will be held at the time and place so determined.

(b) Nominations of persons for election to the board of directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the corporation’s notice of meeting (1) by or at the direction of the board of directors, or (2) provided that the board of directors has determined that directors shall be elected at such meeting, by any shareholder of the corporation who is a shareholder of record at the time of giving of notice provided for in this Section 3.03, who shall be entitled to vote at the meeting, and who complies with the notice procedures set forth in this Section 3.03(b). In the event the corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the board, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the corporation’s notice of meeting, if the shareholder’s notice in the form required by paragraph (d) of Section 3.02 of these Bylaws shall be received by the secretary at the principal executive offices of the corporation not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of (i) the 60th day prior to such special meeting, or (ii) the 10th day following the date on which public announcement is first made of the date of the special meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a shareholder’s notice as described above. Only such persons who are nominated by a shareholder in accordance with the procedures set forth in this Section 3.03 shall be eligible to be elected as a director at any special meeting.

(c) The chairman of the special meeting shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in this Section 3.03 and, if any proposed nomination is not in compliance with this Section 3.03, to declare that such defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section, a shareholder shall also comply with the applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Sections 3.03.

The affirmative vote of a majority of the votes cast by the holders of the issued and outstanding shares of Common Stock and Series A Preferred Stock voting together is required to approve Proposal 2. Each share of Common Stock is entitled to one vote and each share of Series A Preferred Stock entitled to 0.1988 of a vote with any fractional vote being rounded to the nearest whole number.

If Proposal 2 is approved, then the shareholders of the Company may act to elect and remove directors at any time pursuant to a duly called special meeting. Proposal 2 would also remove the explicit power of the chairman

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to determine whether nominations are made in accordance with the Bylaws and declare nominations defective, and the explicit requirement that only nominations made in compliance with the Bylaws be considered.

We believe Proposal 2 is consistent with corporate governance best practices and needed to ensure that the Board is accountable to shareholders. If the Proposals are approved, we intend to call a subsequent special meeting to remove the following seven (7) incumbent directors: Steven D. Barnhart, Joel Brooks, Robert L. Metzger, Patricia A. Oelrich, William J. Reilly Jr., William J. Schoch and Ingrid S. Stafford, and the successors of any of them (together, the “Incumbent Directors”), and elect the eight (8) nominees identified by Hudson: Lisa P. Baird, Douglas G. Bergeron, Douglas L. Braunstein, Jacob Lamm, Michael K. Passilla, Ellen Richey, Anne M. Smalling and Shannon S. Warren (together, the “Nominees”). The current size of the Board is nine, consisting of eight directors and one vacancy. If a new director is appointed to fill the vacancy, we will seek to remove the Incumbent Directors and the newly-appointed director and elect all eight of the Nominees. If no new directors are appointed, we will seek to remove the Incumbent Directors and have the vacancy filled by a Nominee. We reserve the right to nominate less than eight of the Nominees in the event the size of the Board decreases.

Proposal 3 would allow shareholders to request a special meeting to be held faster and more easily by, among other changes, lowering the stock ownership threshold to call a special meeting, providing that the Board shall set the date of a special meeting called by shareholders for a date not less than forty-five (45) nor more than sixty (60) days after receipt of the request, specifying the process for the consideration of business at a special meeting and providing the shareholders requesting the special meeting with reasonable access to the chairman of the special meeting, the judges of election, and the books and records of the Company relating to the special meeting. Section 3.03 of Article III of the Company’s current Bylaws provide that a special meeting may be called by holders of at least 20% of the combined voting power of the then outstanding shares entitled to vote, and that upon delivery of a request for a special meeting, the Company must determine a time for the meeting not less than 90 days nor more than 120 days after the receipt of such request.

The language of the proposed Bylaw amendment to Section 3.03 of Article III of the Bylaws is as follows and assumes the Bylaw amendment announced on November 11, 2019 has been repealed by the adoption of Proposal 1:

(a) A special meeting of the shareholders for any purpose or purposes shallmay be called only by the chairman of the board of directors, the chief executive officer, or the board of directors. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting. In the case of a special meeting called at the request of any shareholder or shareholders pursuant to this Section 3.03(a), the corporation’s notice of meeting shall include all business proposed by such shareholder or shareholders calling a special meeting of the shareholders, shall list such business proposed by such shareholder or shareholders in the same order as set forth in the shareholder or shareholders’ request for a special meeting and such business shall be the only business considered at such special meeting (other than, in the event the meeting is called by such shareholder or shareholders for the purpose of electing one or more directors, any nominations made pursuant to Section 3.03(b)). Special meetings of the shareholders may also be called by the holders of at least 20%10% of the combined voting power of the

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then outstanding shares entitled to vote at the particular meeting. Any business that could be considered at an annual meeting of the shareholders may be considered at a special meeting of the shareholders, including the election and/or removal of any director or directors of the corporation. Upon request in writing sent by registered mail to the chairman of the board of directors or chief executive officer of the corporation by any shareholder or shareholders entitled to call a special meeting of the shareholders pursuant to this Section 3.03(a), the board of directors shall determine a place and time for such meeting, and shall hold such meetingwhich time shall not be less than ninetyforty-five (9045) nor more than one hundred and twentysixty (12060) days after the receipt of such request, and shall set a record date for the determination of shareholders entitled to vote at such meeting in the manner set forth in Section 3.12 hereof. Following such receipt, it shall be the duty of the secretary of the corporation to cause notice to be given to the shareholders entitled to vote at such meeting, in the manner set forth in Section 2.03 hereof, that a meeting will be held at the time and place so determined, no later than five (5) business days after the date of receipt of such request.

(b) Nominations of persons for election to the board of directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the corporation’s notice of meeting (1) by or at the direction of the board of directors, or (2) by any shareholder of the corporation who is a shareholder at the time of giving of notice provided for in this Section 3.03, who shall be entitled to vote at the meeting, and who complies with the notice procedures set forth in this Section 3.03(b). In the event the corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the board, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the corporation’s notice of meeting, if the shareholder’s notice in the form required by paragraph (d) of Section 3.02 of these Bylaws shall be received by the secretary at the principal executive offices of the corporation not earlier than the 90th40th day prior to such special meeting and not later than the close of business on the later of (i) the 60th20th day prior to such special meeting, or (ii) the 10th day following the date on which public announcement is first made of the date of the special meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a shareholder’s notice as described above.

(c) At any special meeting of the shareholders called at the request of any shareholder or shareholders pursuant to Section 3.03(a), the agenda for such special meeting shall set forth the business proposed by such shareholder or shareholders in the order proposed in the request, and such shareholder or shareholders shall be provided with an opportunity to address the meeting and present such business for consideration before the meeting. Prior to, during, and following the special meeting, such shareholder or shareholders and their representatives shall be given reasonable access to the chairman of the special meeting, the judges of election, and the books and records of the corporation relating to the special meeting, including the completed ballots and proxies cast at the special meeting. Notwithstanding the foregoing provisions of this Section, a shareholder shall also comply with the applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Sections 3.03.

The foregoing language of the proposed Bylaw amendment to Section 3.03 of Article III of the Bylaws assumes that Proposal 2 is approved and the Bylaws are amended accordingly. If Proposal 2 is not approved, and Proposal 1 and Proposal 3 are approved, the language of the proposed Bylaw amendment to Section 3.03 of Article III of the Bylaws would instead read as follows:

(a) A special meeting of the shareholders for any purpose or purposes shallmay be called only by the chairman of the board of directors, the chief executive officer, or the board of directors. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the corporation’s notice of meeting. In the case of a special meeting called at the request of any shareholder or shareholders pursuant to this Section 3.03(a), the corporation’s notice of meeting shall include all business proposed by such shareholder or shareholders calling a special meeting of the shareholders, shall list such business proposed by such shareholder or shareholders in the same order as set forth in the shareholder or shareholders’ request for a special meeting and such business shall be the only business considered at such special meeting (other than, in the event the meeting is called by such shareholder or shareholders for the

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purpose of electing one or more directors, any nominations made pursuant to Section 3.03(b)). Special meetings of the shareholders may also be called by the holders of at least 20%10% of the combined voting power of the then outstanding shares entitled to vote at the particular meeting; provided, however, that a special meeting may not be called by any shareholder or shareholders for the purpose of electing or removing any director or directors of the corporation. Upon request in writing sent by registered mail to the chairman of the board of directors or chief executive officer of the corporation by any shareholder or shareholders entitled to call a special meeting of the shareholders pursuant to this Section 3.03(a), the board of directors shall determine a place and time for such meeting, and shall hold such meetingwhich time shall not be less than ninetyforty-five (9045) nor more than one hundred and twentysixty (12060) days after the receipt of such request, and shall set a record date for the determination of shareholders entitled to vote at such meeting in the manner set forth in Section 3.12 hereof. Following such receipt, it shall be the duty of the secretary of the corporation to cause notice to be given to the shareholders entitled to vote at such meeting, in the manner set forth in Section 2.03 hereof, that a meeting will be held at the time and place so determined, no later than five (5) business days after the date of receipt of such request.

(b) Nominations of persons for election to the board of directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the corporation’s notice of meeting (1) by or at the direction of the board of directors, or (2) provided that the board of directors has determined that directors shall be elected at such meeting, by any shareholder of the corporation who is a shareholder of record at the time of giving of notice provided for in this Section 3.03, who shall be entitled to vote at the meeting, and who complies with the notice procedures set forth in this Section 3.03(b). In the event the corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the board, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the corporation’s notice of meeting, if the shareholder’s notice in the form required by paragraph (d) of Section 3.02 of these Bylaws shall be received by the secretary at the principal executive offices of the corporation not earlier than the 90th40th day prior to such special meeting and not later than the close of business on the later of (i) the 60th20th day prior to such special meeting, or (ii) the 10th day following the date on which public announcement is first made of the date of the special meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a shareholder’s notice as described above. Only such persons who are nominated by a shareholder in accordance with the procedures set forth in this Section 3.03 shall be eligible to be elected as a director at any special meeting.

(c) At any special meeting of the shareholders called at the request of any shareholder or shareholders pursuant to Section 3.03(a), the agenda for such special meeting shall set forth the business proposed by such shareholder or shareholders in the order proposed in the request, and such shareholder or shareholders shall be provided with an opportunity to address the meeting and present such business for consideration before the meeting. Prior to, during, and following the special meeting, such shareholder or shareholders and their representatives shall be given reasonable access to the chairman of the special meeting, the judges of election, and the books and records of the corporation relating to the special meeting, including the completed ballots and proxies cast at the special meeting. The chairman of the special meeting shall have the power and duty to determine whether a nomination was made in accordance with the procedures set forth in this Section 3.03 and, if any proposed nomination is not in compliance with this Section 3.03, to declare that such defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section, a shareholder shall also comply with the applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Sections 3.03.

The affirmative vote of a majority of the votes cast by the holders of the issued and outstanding shares of Common Stock and Series A Preferred Stock voting together is required to approve Proposal 3. Each share of Common Stock is entitled to one vote and each share of Series A Preferred Stock entitled to 0.1988 of a vote with any fractional vote being rounded to the nearest whole number.

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If Proposal 3 is approved, any shareholder with ownership of at least 10% of the combined voting power of the then outstanding shares, which currently includes Hudson, could call a special meeting of the Company. Additionally, any special meeting called pursuant to Section 3.03(a) of Article III of the Bylaws would need to be held within not less than 45 nor more than 60 days following the Company’s receipt of the request, which may shorten the time period in which the Company would be able to prepare for the special meeting. The proposed Bylaw amendment also specifies the process for the consideration of business at the special meeting and provides the shareholders calling the special meeting with an opportunity to address the meeting and present their proposals, as well as reasonable access to the chairman of the special meeting, the judges of election, and the books and records of the Company relating to the special meeting.

Proposal 4 would prevent the Board from taking any actions, without further shareholder approval, to amend the Bylaws to attempt to nullify the effectiveness of bylaws that were previously properly adopted by the shareholders or to adopt bylaws that were previously properly repealed by shareholders. Proposal 4 would also prevent the Board from adopting bylaws that increase the burden on shareholders seeking to call a special meeting or propose business or nominate individuals for election to the Board, or vote for any matter, at an annual or special meeting. Section 8.08 of Article VIII of the Bylaws currently does not contain a provision that would prevent the Board from taking these actions.

The language of the proposed Bylaw amendment to Section 8.08 of Article VIII of the Bylaws is as follows:

These bylaws may be amended or repealed, or new bylaws may be adopted, either (i) by vote of the shareholders at any duly organized annual or special meeting of shareholders, or (ii) with respect to those matters that are not by statute committed expressly to the shareholders and subject to the following sentenceand regardless of whether the shareholders have previously adopted or approved the bylaw being amended or repealed, by vote of a majority of the board of directors of the corporation in office at any regular or special meeting of directors. The board of directors shall not amend or repeal or alter any bylaws or bylaw amendments that were adopted by the shareholders and that involve a proper matter for shareholder action unless the shareholders shall approve any such amendment, repeal or alteration. The board of directors shall not adopt any bylaw that is the same or substantially similar to a bylaw that has previously been repealed by the shareholders and that involves a proper matter for shareholder action unless the shareholders shall approve any such amendment, repeal or alteration. The board of directors shall not adopt any bylaw that increases the burden on any shareholder or shareholders seeking to, or otherwise impairing the ability of any shareholder or shareholders to, (i) call a special meeting of the shareholders, (ii) propose business or nominate persons for election or reelection as a director at any annual meeting or special meeting of the shareholders, or (iii) vote for any matter or cause the election or removal of any director at an annual or special meeting of the shareholders.  Any change in these bylaws shall take effect when duly adopted unless otherwise provided in the resolution effecting the change. See Section 2.03(b) (relating to notice of action by shareholders on bylaws).

The affirmative vote of a majority of the votes cast by the holders of the issued and outstanding shares of Common Stock and Series A Preferred Stock voting together is required to approve Proposal 4. Each share of Common Stock is entitled to one vote and each share of Series A Preferred Stock entitled to 0.1988 of a vote with any fractional vote being rounded to the nearest whole number.

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If Proposal 4 is approved, the Board will not be able to adopt or repeal any amendments to bylaws properly adopted by the shareholders, even if the Board believes such amendments are in the best interests of the Company and its shareholders, unless such amendments are also approved by the Company’s shareholders. If Proposal 4 is approved, the Board will also not be able to adopt any bylaw that was previously properly repealed by shareholders, unless such adoption is also approved by the Company’s shareholders. The Board would further be prohibited from adopting any bylaw that increases the burden on shareholders seeking to, or otherwise impairs the ability of shareholders to, call a special meeting, propose business or nominate individuals for election to the Board at an annual or special meeting or vote for any matter or cause the election or removal of any director at an annual or special meeting. If Proposal 4 is approved, the Board will not be able to adopt bylaws that have the effect of preventing shareholders from calling a special meeting or that would result in a delay of a special meeting that is requested by shareholders.

WE STRONGLY RECOMMEND THAT YOU MARK THE ENCLOSED BLUE CONSENT FOR THE REQUEST FOR A SPECIAL MEETING OF SHAREHOLDERS.

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THE SPECIAL MEETING

For the Special Meeting to be properly called in accordance with the Bylaws, a written request in favor of calling the Special Meeting must be executed and delivered to the Company by shareholders representing at least 20% of the combined voting power of the then outstanding shares entitled to vote at the Special Meeting.

Master Fund and HEC SPV IV LP, Delaware limited partnership (“SPV IV”), are each record holders of 100 shares of Common Stock. Hudson Executive, HEC Management GP LLC, Hudson Master Fund, SPV IV and Douglas L. Braunstein are the beneficial owners of 10,385,172 shares of Common Stock, constituting approximately 16.3% of the Common Stock outstanding. This percentage is based on 63,808,481 shares of outstanding Common Stock of the Company. Such shares of Common Stock consist of 60,008,481 shares issued and outstanding as of September 19, 2019 as reported in the Company’s Form 10-K for the fiscal year ended June 30, 2019, and the 3,800,000 shares issued pursuant to the Stock Purchase Agreement dated October 9, 2019 between the Company and Antara Capital Master Fund LP as reported in the Company’s Form 8-K dated October 9, 2019. There were 445,063 shares of Series A Preferred Stock outstanding as of June 30, 3019, based on the Company’s Form 10-K for the fiscal year ended June 30, 2019. Based on the Company’s Form 10-K for the fiscal year ended June 30, 2019, each share of Common Stock is entitled to one vote and each share of Series A Preferred Stock is entitled to 0.1988 of a vote as of June 30, 2019, with each fractional vote being rounded to the nearest whole number. The voting rights of the Series A Preferred Stock are subject to adjustment based upon the occurrence of certain events. The Company has not disclosed any such adjustments to the Series A Preferred Stock as of date hereof. The total Common Stock and Series A Preferred Stock outstanding are entitled to cast approximately 63,896,960 votes, and based on this number of votes outstanding, BLUE Consents representing an aggregate of at least 12,779,392 votes will be required to demand the call of the Special Meeting, or at least 2,394,220 votes in addition to the 10,385,172 votes Hudson is entitled to cast through its beneficial ownership of Common Stock. Hudson intends to cast all of its shares in favor of calling the special meeting.

According to Section 3.03 of Article III of the Bylaws, after a request for a meeting has been delivered to the Chairman of the Board or the Chief Executive Officer by holders of the required percentage of the outstanding shares, the Board is required to determine a place and time for such meeting, which time shall be no less than 90 nor more than 120 days after the receipt of such request, and the secretary of the Company is required to cause notice to be given to the shareholders that such meeting will be held. If the Special Meeting is called, the record date for determining shareholders entitled to notice of, or to vote at, the Special Meeting may be fixed by the Board in accordance with Section 3.12(a) of Article III of the Bylaws. Such record date shall be not more than 90 days prior to the date of the Special Meeting. If not fixed by the Board, Section 3.12(b)(1) of Article III of the Bylaws provides that the record date shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day immediately preceding the day on which the meeting is held.

It is our intention to submit the request for the Special Meeting after receiving BLUE Consents from shareholders holding the requisite percentage of shares of Common Stock authorizing us to submit the request. Under Pennsylvania law, the consent to request a Special Meeting you grant us by delivering a BLUE Consent is valid for 3 years from the date it is signed (unless you revoke it before then), but we do not intend to call the Special Meeting unless we receive BLUE Consents from a sufficient number of shareholders prior to the Outside Date.

We are currently only soliciting BLUE Consents in support of the calling of the Special Meeting. If the Special Meeting is called, our current intention is to solicit votes in favor of the Proposals described above under “The Proposals to be Introduced at the Special Meeting.” We also expect to request, in our proxy solicitation relating to the Special Meeting, authority (i) to initiate and vote for proposals to recess or adjourn the Special Meeting for any reason, (ii) to oppose and vote against any other proposal to recess or adjourn the Special Meetings and (iii) to vote in our discretion on any other matters that may be brought before the Special Meeting, if there is inadequate time to obtain instruction from the persons furnishing their proxies to us for the Special Meeting.

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We do not currently anticipate additional proposals on any substantive matters. Nevertheless, we reserve the right to either modify the Proposals or cause additional proposals to be identified in the notice of, and in the materials for, the Special Meeting. We are not currently aware of any other proposals that might be brought before the Special Meeting.

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INFORMATION CONCERNING THE PARTICIPANTS IN THIS SOLICITATION

Hudson Executive, HEC Management GP, LLC, Hudson Master Fund, HEC SPV IV LP and Douglas L. Braunstein (the “Hudson Participants,” and together with the Nominees, the “Participants”) are participants in this consent solicitation. The principal business address of the Hudson Participants is 570 Lexington Avenue, 35^th Floor, New York, NY 10022. The Nominees are also participants in this consent solicitation. The principal business addresses of the Nominees are set forth under the caption “Information Regarding the Nominees.”

As of November 12, 2019, the amount of each class of securities of the Company beneficially owned by each of the Participants in this solicitation is as follows:

Hudson Participants

Hudson Executive is an SEC-registered investment advisor to certain affiliated investment funds. Hudson Executive’s principal business is to serve as investment advisor to certain affiliated investment funds.

HEC Management GP LLC, a Delaware limited liability company (“Management GP”), has the principal business of serving as the general partner of Hudson Executive.

The principal occupation of Mr. Braunstein is to serve as the Managing Partner of Hudson Executive and the Managing Member of Management GP.

Master Fund’s principal business is investing in securities.

SPV IV’s principal business is purchasing certain securities of the Company.

Hudson Executive, as the investment adviser to Hudson Master Fund and SPV IV (together, the “HEC Funds”), shares power to vote or direct the vote of (and shares power to dispose or direct the disposition of) the shares held by the HEC Funds.

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Management GP, as the general partner of Hudson Executive, shares power to vote or direct the vote of (and shares power to dispose or direct the disposition of) the shares held by the HEC Funds.

By virtue of his role with respect to Hudson Executive and Management GP, Mr. Braunstein shares power to vote or direct the vote of (and shares power to dispose or direct the disposition of) the shares held by the HEC Funds and, therefore, each of Mr. Braunstein, Management GP and Hudson Executive is a beneficial owner of the shares held by the HEC Funds.

Nominees

Each of the Nominees may be deemed “Participants” under SEC rules in this solicitation. The name and present principal occupation or employment of each Nominee is set forth under the caption “Information Regarding the Nominees.”

As of the date hereof, Mr. Bergeron does not own, beneficially or of record, any shares of Common Stock or Series A Preferred Stock. Mr. Bergeron has indirect interests in one or more of the HEC Funds, which own, beneficially or of record, 10,385,172 shares of Common Stock of the Company as of the date hereof. In addition, Mr. Bergeron is one of Hudson Executive’s “CEO Partners” and serves as an advisor to Hudson Executive. Mr. Bergeron has a 0.5% interest in HEC Management GP LLC, the general partner of Hudson Executive. As of the date hereof, Mr. Bergeron has not engaged in any transactions in securities of the Company during the past two (2) years.

As of the date hereof, Ms. Smalling does not own, beneficially or of record, any shares of Common Stock or Series A Preferred Stock. Ms. Smalling has indirect interests in one or more of the HEC Funds, which own, beneficially or of record, 10,385,172 shares of Common Stock of the Company as of the date hereof. As of the date hereof, Ms. Smalling has not engaged in any transactions in securities of the Company during the past two (2) years.

Transactions in Securities of the Company

As of November 12, 2019, the Hudson Participants have sold 5,300 FLEX European-style put options (with each contract having a 100 multiplier) with a strike price of $7.00 and exercisable on March 20, 2020. The put options sold by the Hudson Participants permit the counterparty thereto to require the Hudson Participants to acquire shares of Common Stock if exercised.

As reflected in more detail in Annex I, within the past year, certain of the Hudson Participants have been party to various listed American style, FLEX European-style and over-the-counter European-style put options providing the right to sell shares of Common Stock (which, were both sold and bought by the relevant Hudson Participant, and which permitted the counterparty thereto to sell and required the relevant Hudson Participant to acquire such shares of Common Stock if exercised and vice versa), with strike price of $5.00 and expiration date of March 15, 2019, strike price of $5.00 and exercisable on June 21, 2019, strike price of $7.00 and exercisable on March 20, 2020, and strike price of $9.00 and exercisable on January 17, 2020. Also, within the past year, certain of the Hudson Participants have been party to various European-style listed call options providing the right to purchase shares of Common Stock (which, were both bought and sold by the relevant Hudson Participant, and which required the counterparty thereto to sell and permitted the relevant Hudson Participant to acquire such shares of Common Stock when exercised and vice versa) with strike price of $10.00 and exercisable on June 21, 2019 and strike price of $10 and exercisable on January 17, 2020. These contracts are no longer in effect.

For information regarding purchases and sales of securities of the Company during the past two years by the Participants, please refer to Annex I. Except as set forth on Annex I, there have been no purchases or sales in the securities of the Company in the past two years by the Participants.

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Additional Information Regarding the Participants

Except as set forth in this Consent Statement (including the Annexes hereto), (i) during the past ten years, no Participant has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); (ii) no Participant directly or indirectly beneficially owns any securities of the Company; (iii) no Participant owns any securities of the Company which are owned of record but not beneficially; (iv) no Participant has purchased or sold any securities of the Company during the past two years; (v) no part of the purchase price or market value of the securities of the Company owned by any Participant is represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding such securities; (vi) no Participant is, or within the past year was, a party to any contracts, arrangements or understandings with any person with respect to any securities of the Company, 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 owns beneficially, directly or indirectly, any securities of the Company; (viii) no Participant owns beneficially, directly or indirectly, any securities of any parent or subsidiary of the Company; (ix) no Participant or any of his or its associates was a party to any transaction, or series of similar transactions, since the beginning of the Company’s last fiscal year, or is a party to any currently proposed transaction, or series of similar transactions, to which the Company or any of its subsidiaries was or is to be a party, in which the amount involved exceeds $120,000; (x) no Participant or any of his or its associates has any arrangement or understanding with any person with respect to any future employment by the Company or its affiliates, or with respect to any future transactions to which the Company or any of its affiliates will or may be a party; and (xi) no person, including any of the Participants, who is a party to an arrangement or understanding pursuant to which directors may be elected at the Special Meeting, has special interests, direct or indirect, by securities holdings or otherwise in any matter to be acted upon as set forth in this Consent Statement. There are no material proceedings to which any Participant or any of his or its associates is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

INFORMATION CONCERNING THE COMPANY

The Company is required to file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document the Company files at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The Company’s SEC filings are also available to the public at the SEC’s website at www.sec.gov.

The mailing address of the Company is 100 Deerfield Lane, Suite 300, Malvern, PA 19355.

Except as otherwise noted in this Consent Statement, the information in this Consent Statement concerning the Company has been taken from or is based upon documents and records on file with the SEC and other publicly available information. We do not take responsibility, except to the extent imposed by law, for the accuracy or completeness of statements in public documents and records that were not prepared by or on behalf of the Participants, or for any failure of the Company to disclose in its public documents and records any events that may affect the significance or accuracy of the information contained herein. For information regarding the security ownership of certain beneficial owners and executives of the Company, see Annex II.

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INFORMATION REGARDING THE NOMINEES

If we succeed in calling the Special Meeting, we expect to solicit proxies to vote in support of each of the Proposals at the Special Meeting. If the Proposals are approved, we intend to call a subsequent special meeting to remove the following seven (7) incumbent directors: Steven D. Barnhart, Joel Brooks, Robert L. Metzger, Patricia A. Oelrich, William J. Reilly Jr., William J. Schoch and Ingrid S. Stafford, and the successors of any of them (together, the “Incumbent Directors”), and elect the eight (8) nominees identified by Hudson: Lisa P. Baird, Douglas G. Bergeron, Douglas L. Braunstein, Jacob Lamm, Michael K. Passilla, Ellen Richey, Anne M. Smalling and Shannon S. Warren (together, the “Nominees”). The current size of the Board is nine, consisting of eight directors and one vacancy. If a new director is appointed to fill the vacancy, we will seek to remove the Incumbent Directors and the newly-appointed director and elect all eight of the Nominees. If no new directors are appointed, we will seek to remove the Incumbent Directors and have the vacancy filled by a Nominee. We reserve the right to nominate less than eight of the Nominees in the event the size of the Board decreases. Hudson also reserves the right to request the appointment or election of substitute persons for any of the Nominees named herein. The information herein regarding a particular Nominee has been furnished to Hudson by such Nominee.

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Each Nominee named herein is independent under the Board’s independence guidelines, the applicable rules of Nasdaq, and the independence standards applicable to the Company under paragraph (a)(1) of Item 407 of Regulation S-K under the Exchange Act.

None of the Nominees has any position or office with the Company, and no occupation or employment with which the Nominees have been involved, during the past five years, was carried on with the Company or any corporation or organization that is a parent, subsidiary or other affiliate of the Company. None of the Nominees has ever served on the Board. There exist no family relationships between any Nominee and any director or executive officer of the Company.

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Each Nominee has consented to be named in this Consent Statement and to serve as a director of the Company, if elected. If these Nominees are elected, they have indicated that they intend to discharge their duties as directors of the Company consistent with all applicable legal requirements, including the general fiduciary obligations imposed upon corporate directors. If elected, each Nominee would serve as a director until the Company’s annual meeting in 2019 and until a successor has been duly elected.

Hudson does not intend to compensate the Nominees in connection with their nomination. If elected, the Nominees will be entitled to such compensation from the Company as may be determined by the Company for non-employee directors, and which is described in the Company’s Definitive Proxy Statement on Schedule 14A, as filed with the SEC on April 2, 2018 for its 2018 annual meeting (the “Company Proxy Statement”). We expect that, if elected, the Nominees will be indemnified for service as a director of the Company to the same extent indemnification is provided to the current directors of the Company and that the Nominees will be covered by the Company’s director and officer liability insurance, if any.

In connection with the Nomination, Hudson Executive has entered into an Indemnification Agreement with each of the Nominees (the “Nominee Indemnification Agreements” and each a “Nominee Indemnification Agreement”), pursuant to which each Nominee has agreed, among other things, to be a member of Hudson’s slate of nominees (the “Slate”) to be proposed by Hudson for election to the Board and to be named in Hudson’s proxy soliciting materials related to the Special Meeting and to serve as a director of the Company if elected. Pursuant to the Indemnification Agreements, Hudson Executive has agreed to indemnify each Nominee against any losses suffered, incurred or sustained by such Nominee in connection with such Nominee’s being a member of the Slate or the solicitation of proxies in connection therewith. Hudson Executive has further agreed to reimburse each Nominee for reasonable, documented, out-of-pocket expenses incurred as a result of such Nominee’s being a member of the Slate, including, without limitation, travel expenses and expenses in connection with legal counsel retained to represent such Nominee in connection with being a member of the Slate.

Information regarding the amount of each class of securities of the Company beneficially owned by the Participants in this solicitation and certain other matters is set forth in the section of the Consent Statement titled “Information Concerning the Participants in this Solicitation.” Except as set forth in this Consent Statement, the Nominees do not own any shares of capital stock or other securities of the Company. Information regarding purchases and sales in the securities of the Company effected during the past two years by Participants in this solicitation is set forth in Annex I attached to this Consent Statement. Except as set forth in Annex I, there have been no purchases and sales in the securities of the Company in the past two years by the Nominees.

Other than as disclosed herein, there are no agreements, arrangements or understandings between the Nominees and Hudson or any other person or persons with respect to the nomination of the Nominees.

Neither the Nominees nor any of their respective associates are party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries in any material proceeding, and there is no event that occurred during the past ten years with respect to the Nominees that is required to be described under 401(f) of Regulation S-K.

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CONSENT PROCEDURES

Hudson Master Fund is making this solicitation of the Company’s shareholders to request that the Company call a Special Meeting in accordance with the Bylaws and as described in this Consent Statement. By executing a BLUE Consent and authorizing Hudson Master Fund to call the Special Meeting, shareholders will be authorizing us (i) to submit the Special Meeting Request Form on their behalf and (ii) if determined by Hudson Master Fund in its discretion, to withdraw the request for the Special Meeting after it has been submitted to the Company. Under the Bylaws, the record date for determining shareholders entitled to call a special meeting will be the close of business on the day on which the first written consent for a special meeting is filed with the Secretary of the Company.

A failure to return a BLUE Consent authorizing us to call the Special Meeting will have the same effect as opposing the call for a Special Meeting.

If your shares of Common Stock or Series A Preferred Stock are registered in your own name, please sign, date and mail the enclosed BLUE Consent to Innisfree M&A Incorporated (“Innisfree”) in the postage-paid envelope provided.

If any of your shares of Common Stock or Series A Preferred Stock are held in the name of a brokerage firm, bank, bank nominee or other institution, only the brokerage firm, bank, bank nominee or other institution can execute a BLUE Consent for your shares and will do so only upon receipt of specific instructions from you. Accordingly, please contact the person responsible for your account and give instructions for a written request to be signed representing your shares of Common Stock or Series A Preferred Stock or follow the instructions on the voting instruction form that may have been sent to you by your brokerage firm, bank, nominee or other institution together with this Consent Statement.

On November 11, 2019, the Company issued a press release alleging that Hudson’s solicitation was invalid under the Bylaws because the Bylaws prohibit the calling of special meetings for the purpose of removing directors. The Company further announced that the Board had amended the Bylaws so that no special meeting may be called before the next annual meeting of the Company’s shareholders.

Hudson strongly disagrees with the Company’s assertion that our solicitation is invalid. Hudson believes that the Company is mischaracterizing our solicitation by stating that we are seeking to call a special meeting to remove directors. We are soliciting consents to request a special meeting to consider certain amendments to the Bylaws. The removal of directors will not be considered at the special meeting.

Hudson further believes that the Bylaw amendment to prevent the calling of a special meeting is illegal and invalid under Pennsylvania law and that the Company’s actions constitute an unlawful interference with shareholders’ franchise rights. Hudson is currently evaluating the legal options available to it, including bringing a legal action against the Company and its directors.

Given the Company’s actions to date, there is a risk that the Company will not recognize properly executed consents delivered by shareholders and will refuse to call the Special Meeting even if the requisite consents are delivered.

The BLUE Consents to call the Special Meeting will not grant us the power to vote your shares of Common Stock or Series A Preferred Stock at the Special Meeting and will not commit you to cast any vote in favor or against any proposal to be brought before the Special Meeting. To vote on the matters to be brought before the Special Meeting, you must vote by proxy or in person at the Special Meeting.

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Revocation

You may revoke your BLUE Consent at any time prior to the date on which we deliver the Special Meeting Request Form to the Company by delivering a written revocation to us, care of Innisfree, 501 Madison Avenue, 20^th Floor, New York, NY 10022 or by submitting a later-dated consent authorization to the Company. Such a revocation must clearly state that your BLUE Consent is no longer effective. Any revocation of a BLUE Consent will not affect any action taken by us pursuant to the BLUE Consent prior to such revocation. Although a revocation is also effective if delivered to the Secretary of the Company or to such other recipient as the Company may designate as its agent, we request that either the original or a copy of all revocations be mailed, faxed or e-mailed to us, care of Innisfree, so that we will be aware of all revocations and can more accurately determine if and when enough BLUE Consents have been received from shareholders.

By completing and returning the BLUE Consent, you will be agreeing to inform us if you dispose of any of your shares of Common Stock or Series A Preferred Stock with respect to which you are furnishing the BLUE Consent prior to the Outside Date, which is the date by which we intend to submit the Special Meeting Request Form to the Company, assuming that we have received the BLUE Consent from holders of a sufficient number of shares to satisfy the requirements of the Bylaws in order to call the meeting. By completing and returning the BLUE Consent you will not be entering into any agreement with us to hold or dispose of your shares, which you are free to do in your sole discretion. However, if you do dispose of your shares prior to the Outside Date, you will be deemed to have revoked your BLUE Consent to the extent of the shares that you dispose of. If you do not inform us that you have disposed of any shares with respect to which you furnished the BLUE Consent, we will assume that you continue to own those shares at least through the Outside Date.

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EXPENSES

Hudson Executive has retained Innisfree to act as our Information Agent in connection with this consent solicitation. Innisfree has agreed in that capacity to provide consulting and analytical services and solicitation services with respect to banks, brokers, institutional investors and individual shareholders. Hudson Executive has agreed to pay Innisfree an initial fee for its services estimated to be not more than $             and to reimburse Innisfree for its reasonable out-of-pocket expenses. Hudson Executive also has agreed to indemnify Innisfree against certain liabilities and expenses in connection with this consent solicitation, including liabilities under the federal securities laws. Approximately              employees of Innisfree will engage in the solicitation. Consents may be solicited by mail, advertisement, telephone, facsimile or in person. Solicitations may also be made by persons employed by or affiliated with Hudson. However, no such person will receive additional compensation for such solicitation.

Banks, brokerage houses and other custodians, nominees and fiduciaries will be requested to forward the solicitation materials to the beneficial owners of USAT shares which they hold of record, and Hudson will reimburse them for their reasonable out-of-pocket expenses.

The expenses related directly to this consent solicitation are expected to be approximately $             in the aggregate and will be borne by Hudson Executive. These expenses include fees and expenses for attorneys, proxy solicitors, printing, postage, filing expenses and other costs incidental to the solicitation. Of this estimated amount, approximately $             has been spent to date. The actual costs and expenses could be materially different than the estimated amounts.

The purpose of the proposals in this Consent Statement is to advance the interests of all the Company’s shareholders. Therefore, Hudson believes that its expenses related to this consent solicitation should be borne by the Company and it intends to seek reimbursement of such expenses from the Company whether or not this consent solicitation is successful. The question of reimbursement of the expenses of Hudson by the Company will not be submitted to a shareholder vote.

CONCLUSION

We hope you share our view that change at the Board level is required if shareholders are to realize value from their investments in the Company. Calling the Special Meeting is the first step in effecting what we believe is a long overdue change.

Your support is important. Please sign, date and mail the enclosed BLUE request card as soon as possible in the enclosed postage-paid envelope. If your shares of Common Stock or Series A Preferred Stock are held in the name of a brokerage firm, bank, bank nominee or other institution, only it can sign a written request with respect to your Common Stock or Series A Preferred Stock. Accordingly, please contact the person responsible for your account and give instructions for a written request to be signed representing your shares of Common Stock or Series A Preferred Stock.

If you have any questions about this consent solicitation or voting your shares or require assistance, please contact:

Innisfree M&A Incorporated

501 Madison Avenue, 20^th Floor

New York NY 10022

Shareholders call toll-free: 1-888-750-5834

Banks and Brokers call collect: 1-212-750-5833

We thank you for in advance for your support.

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ANNEX II

The following table and related explanatory text and footnotes are reprinted from the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on October 9, 2019

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Preferred Stock

The following table sets forth, as of September 19, 2019, the beneficial ownership of the series A preferred stock by the Company’s directors, by the named executive officers included in the Fiscal Year 2019 Summary Compensation Table set forth above, by the Company’s current directors and executive officers as a group, and by the beneficial owner of more than 5% of the series A preferred stock. Other than the shares of series A preferred stock beneficially owned by Messrs. Moschner and Reilly, there were no shares of series A preferred stock beneficially owned as of September 19, 2019 by the Company’s directors, by the named executive officers included in the Fiscal Year 2019 Summary Compensation Table set forth above, or by the current directors and executive officers as a group. Except as indicated below, the Company believes that the beneficial owners of the series A preferred stock listed below, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.

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Exhibit A-1

SPECIAL MEETING REQUEST FORM

                    , 2019

Via Registered Mail and Personal Delivery

USA Technologies, Inc.

100 Deerfield Lane, Suite 300

Malvern, Pennsylvania 19355

Ladies and Gentlemen:

Pursuant to Section 3.03 of Article III of the Company’s Amended and Restated Bylaws (the “Bylaws”), this letter constitutes a request to call a special meeting of the shareholders of the Company (the “Special Meeting”) by HEC Master Fund LP, a Delaware limited partnership (“Master Fund”), on its own behalf as the holder of record of             shares of Common Stock, no par value, of the Company (“Common Stock”) and on behalf of all other shareholders of the Company submitting revocable consents to request the Special Meeting and authorizing Master Fund to submit this Special Meeting Request Form on their behalves in respect of their shares of Common Stock or Series A Preferred Stock, and who collectively hold at least 20% of the combined voting power of the outstanding shares entitled to vote.

The proposals to be presented to the shareholders by Master Fund at the Special Meeting, and the reasons for presenting such proposals to the Special Meeting, are as set out in the Consent Statement of Master Fund and its affiliates filed with the Securities and Exchange Commission on                     , 2019, which is incorporated herein by reference.

All further correspondence on this matter should be addressed to Douglas L. Braunstein, c/o Hudson Executive Capital, LP, 570 Lexington Avenue, 35^th Floor, New York, NY 10022, with a copy to Richard M. Brand, Cadwalader, Wickersham & Taft LLP, 200 Liberty Street, New York, NY 10281.

PRELIMINARY COPY SUBJECT TO COMPLETION DATED NOVEMBER 12, 2019

Exhibit A-2

[FORM OF BLUE CONSENT]

CONSENT TO REQUEST

A SPECIAL MEETING OF USA TECHNOLOGIES, INC. SHAREHOLDERS

THIS CONSENT IS BEING SOLICITED BY HEC MASTER FUND LP AND THE OTHER PARTICIPANTS NAMED IN THE CONSENT STATEMENT (AS DEFINED BELOW)

AND NOT BY USA TECHNOLOGIES, INC. OR THE BOARD OF DIRECTORS OF USA TECHNOLOGIES, INC.

Please sign and date this revocable consent (this “BLUE Consent”) to request a special meeting of the shareholders (the “Special Meeting”) of USA Technologies, Inc. (the “Company”) and return it in the postage-paid envelope provided or return it to: Innisfree M&A Incorporated LLC, 501 Madison Avenue, 20th Floor, New York NY 10022.

If so indicated below on this BLUE Consent, the undersigned shareholder hereby appoints HEC Master Fund LP, with full power of substitution, to complete, execute and submit, on behalf of the undersigned shareholder in respect of all shares of the Company’s common stock, no par value (the “Common Stock”), and Series A convertible preferred stock, no par value (the “Series A Preferred Stock”), owned by the undersigned shareholder, the Special Meeting Request Form substantially in the form attached as Exhibit A-l to the Consent Statement filed with the Securities and Exchange Commission by Hudson Executive Capital LP on                     , 2019 (the “Consent Statement”), and any modifications, amendments or updates not inconsistent therewith, to the Chairman of the Board of Directors of the Company (the “Board”) and the Chief Executive Officer of the Company in accordance with Section 3.03(a) of the Company’s Amended and Restated Bylaws (the “Bylaws”).

The Special Meeting Request Form is Exhibit A-1 to the Consent Statement filed by Hudson Executive Capital LP with the Securities and Exchange Commission on                     , 2019, and requests that the Company call a Special Meeting of shareholders to act on the proposals set forth in the Consent Statement.

THIS BLUE CONSENT, WHEN PROPERLY EXECUTED, WILL AUTHORIZE HEC MASTER FUND LP TO EXECUTE THE SPECIAL MEETING REQUEST FORM ON BEHALF OF THE UNDERSIGNED SHAREHOLDER, BUT WILL NOT GRANT HEC MASTER FUND LP AUTHORITY TO VOTE ON ANY MATTER PRESENTED AT THE SPECIAL MEETING.

On November 11, 2019, the Company issued a press release alleging that Hudson’s solicitation was invalid under the Bylaws because the Bylaws prohibit the calling of special meetings for the purpose of removing directors. The Company further announced that the Board had amended the Bylaws so that no special meeting may be called before the next annual meeting of the Company’s shareholders.

Hudson strongly disagrees with the Company’s assertion that our solicitation is invalid. Hudson believes that the Company is mischaracterizing our solicitation by stating that we are seeking to call a special meeting to remove directors. We are soliciting consents to request a special meeting to consider certain amendments to the Bylaws. The removal of directors will not be considered at the special meeting.

Hudson further believes that the Bylaw amendment to prevent the calling of a special meeting is illegal and invalid under Pennsylvania law and that the Company’s actions constitute an unlawful interference with shareholders’ franchise rights. Hudson is currently evaluating the legal options available to it, including bringing a legal action against the Company and its directors.

Given the Company’s actions to date, there is a risk that the Company will not recognize properly executed consents delivered by shareholders and will refuse to call the Special Meeting even if the requisite consents are delivered.

We are not currently seeking your proxy, consent, authorization or agent designation for approval of any proposals or any other actions that would be considered at the Special Meeting. In the event the Special Meeting is called, we will send you proxy materials relating to a vote on the applicable proposals.

The undersigned shareholder AUTHORIZES execution of the Special Meeting Request Form on behalf of the undersigned shareholder in respect of all shares of the Common Stock and Series A Preferred Stock owned by the undersigned shareholder.  ☐

The undersigned shareholder DOES NOT AUTHORIZE execution of the Special Meeting Request Form on behalf of the undersigned shareholder in respect of all shares of the Common Stock and Series A Preferred Stock owned by the undersigned shareholder.  ☐

This BLUE consent supersedes, and the undersigned shareholder hereby revokes, any earlier dated consent or revocation which the undersigned may have submitted to HEC Master Fund LP, the Company or any designee of either.

THE SHARES OF COMMON STOCK AND SERIES A PREFERRED STOCK REPRESENTED BY THIS BLUE CONSENT WILL BE TREATED AND APPLIED BY HEC MASTER FUND LP IN ACCORDANCE WITH THE CHOICES MADE BY THE UNDERSIGNED SHAREHOLDER PURSUANT TO THIS BLUE CONSENT.

Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by authorized officer, giving full title. If a partnership, please sign partnership name by authorized person, giving full title.

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