RESPONSE
TO SCHEDULE 13D FILING
The
following responds to statements set forth in Ahmed Hussein’s Amendment No.9 to
Schedule 13D filing with the Securities and Exchange Commission on May 28, 2008.
Statements by Mr. Hussein are followed by the Company’s response indicated by
the bolded text.
In Amendment No. 8, the
Reporting Person disclosed his concerns about the structure
of the Board of Directors of the Company (the "Board") and the corporate
governance of the Company under the control of the Chairman. [Company
Response: The Company disagrees with this statement: The Chairman does not
control corporate governance or the Company, the Board of Directors as a whole
does.]
In 2006,
the Reporting Person indicated to the Company that he intended to nominate three
individuals (the "Hussein Nominees") to stand for election to the Company's
Board at its 2006 Annual Meeting of Shareholders and to solicit proxies in
support of their election.
After
being approached by the Company [Company Response: Mr. Hussein was
initially approached by one of the members of senior management, Pat Cline, who
was concerned about the discord at the Board level and attempted to broker a
settlement between the contesting factions. Once it was determined that Mr.
Hussein and the Company would participate in that process, the Company and Mr.
Hussein each engaged their respective counsel, who negotiated a settlement
agreement.], the Company and the Reporting Person entered into a
settlement agreement dated August 8, 2006 (the "Settlement Agreement") whereby
the Company agreed to nominate the Hussein Nominees for election to the Board at
the 2006 Annual Meeting of Shareholders and the 2007 Annual Meeting of
Shareholders (together, the "Annual Meetings").
In
exchange, the Reporting Person agreed in the Settlement Agreement, among other
things, to refrain from submitting any shareholder proposal or director
nominations at the Annual Meetings and to terminate his pending litigation,
which was then on appeal, with the Company concerning the election of directors
in connection with the 2005 annual meeting. [Company Response: The case was on
appeal by Mr. Hussein because he had lost his case before the California
Superior Court after a full evidentiary hearing. Mr. Hussein had previously lost
another appeal to the Independent Inspector of Election – IVS that was brought
on similar grounds. The Company believes it was in Mr. Hussein’s interest to
enter into the Settlement Agreement to avoid a lengthy and costly appellate
process.]
Prior to
entering into the Settlement Agreement, the Reporting Person told the Company,
that the Reporting Person had the following expectations as a result of the
Settlement Agreement:
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1)
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removal
of the Company's present legal
counsel;
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2)
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keeping
accurate board and committee minutes, which could be achieved by
taping, stenographing, or the taking of the minutes by a third
party
acceptable to both sides;
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3)
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balancing
the standing independent directors committees and making sure
they are not controlled by the Chairman or management;
and
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4)
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the
Chairman, under the Settlement Agreement, conducting himself in a way
consistent with the status of an independent director. [Company Response: The Company
believes that Mr. Hussein’s personal expectations are unfounded and
contrary to the terms of the Settlement Agreement, which Mr. Hussein
signed after extended and detailed negotiations in which Mr. Hussein was
represented by legal counsel. Furthermore, the Settlement Agreement
specifically states in Section 4.2 that it sets forth the entire
understanding of the parties to the
Agreement.]
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FROM THE
SETTLEMENT AGREEMENT - SECTION 4.2: Entire Agreement.
This Agreement contains the entire understanding of the parties with respect to
the subject matter hereof. The parties hereto may not amend or modify
this
Agreement
except in such manner as may be agreed upon by a written instrument executed by
all of the parties hereto.
The
Settlement Agreement was drafted by the Company's lawyers. [Company Response: The Settlement
Agreement was highly negotiated and resulted from a process involving many
drafts that were reviewed and edited by legal counsel for the respective
parties. The Agreement reflects the understanding of both parties – each
represented by legal counsel throughout the process.]
The
Reporting Person entered into the Settlement Agreement in good faith. [Company Response: Despite Mr.
Hussein’s assertion, Mr. Hussein’s actions after entering into the Settlement
Agreement cast doubt on his claim to be acting in good faith. Almost immediately
after entering into the Settlement Agreement, Mr. Hussein placed a phone call to
Nasdaq in an attempt to get that body to investigate the Company and Mr. Razin’s
independence - notwithstanding that Mr. Hussein had agreed under the Settlement
Agreement to place Mr. Razin on Board committees that required all members to be
independent directors. After examining the facts, Nasdaq promptly closed the
matter.]
FROM THE SETTLEMENT AGREEMENT SECTION 3.6(a): During the
Standstill Period, Hussein agrees that Hussein and his Affiliates (each, a “
Hussein Party”) shall not directly or indirectly, individually or in concert
with others, engage in any conduct or make, or cause to be made, any statement,
observation or opinion, or communicate any information (whether oral or written)
that is calculated to or is likely to have the effect of in any way ... (ii)
accusing or implying that the Company or any Company Party engaged in any
wrongful, unlawful or improper conduct or (iii) asserting, implying or
suggesting that any Majority Nominee other than Louis Silverman and Patrick
Cline is not an independent Director.
After the
new Board was elected pursuant to the Settlement Agreement, the Reporting Person
believes that the Chairman's interpretation of the Settlement Agreement was to
allow himself total control of the independent directors' committees and the
ability to keep present counsel and to engage other counsel of his choosing.
[Company Response: This is an
expression of Mr. Hussein’s “belief”. Nevertheless, the fact is that under the
terms of the Settlement Agreement, the key Nominating and Compensation
Committees were both populated with 4 persons – 2 nominated by Mr. Hussein and 2
nominated by Mr. Razin.]
The
Reporting Person's advisors informed the Company's lawyers that the
interpretation of the Settlement Agreement by the Chairman, supported by
management and the directors he had nominated to the Board, was unreasonable and
inconsistent with the Reporting Person's announced intentions when he entered
into the Settlement Agreement. [Company Response: The “advisors”
that Mr. Hussein refers to are not independent parties, but are attorneys from
several law firms he has engaged to assist him in advocating his position. These
paid advocates have provided the Company with Mr. Hussein’s position, and, after
consideration, the majority of the Board disagrees with his position, as does
the Company’s management, general counsel and special counsel. The Company notes
that in addressing similar issues raised by Mr. Hussein during the course of
many years, the majority of the Board, management and counsel similarly
disagreed with Mr. Hussien’s position]
The
Reporting Person's advisors explained that, if accepted, the Chairman's
interpretation of the Settlement Agreement would have meant that the Reporting
Person would have given up his claims against the Chairman and other directors
involved in exchange for no material consideration. [Company Response: The Company
disagrees with the characterization suggested by Mr. Hussein’s paid “advisors”.
Under the settlement, the Company agreed that Mr. Hussein would be able to
nominate 3 directors on the Company’s Board and would obtain representation on
all of the Company’s 4 major committees (including half the members of the
Nominating and Compensation Committees), without the need to engage in the time
and expense of a proxy contest. The Company believes that Mr. Hussein received
valuable consideration in exchange for withdrawing an unfounded
claim].
Obviously,
that was not the Reporting Person's intention. The Reporting Person's advisors
further pointed out that any ambiguity in the interpretation of the Settlement
Agreement must be resolved in the Reporting Person's favor, as a matter of law,
since the Company's lawyers were the ones who drafted the Settlement Agreement.
[Company Response: The Company
disagrees with the assertion that the Settlement Agreement is ambiguous, as well
as the assertion that the Company’s lawyers were solely responsible for the
preparation of the agreement. Again, the Agreement was heavily negotiated with
Mr. Hussein’s lawyers, who had a major role in drafting the Agreement, and
clearly sets forth the rights and obligations both parties.]
The
Company described its understanding of the terms of the Settlement Agreement in
its Proxy Statement filed with the Securities and Exchange Commission on July 9,
2007.
The
Company's interpretation of the Settlement Agreement is substantially different
from the understanding of the Reporting Person when he entered into the
Settlement Agreement. [Company
Response: Mr. Hussein’s understanding is set forth in the text of the Settlement
Agreement. Section 4.2 of the Settlement Agreement, signed by Mr. Hussein,
states this quite clearly. (see above re Section 4.2).]
The
Reporting Person disputed (and continues to dispute) the Company's
interpretation. In order to resolve the dispute, the Reporting Person offered to
enter into binding arbitration with the Company. The Company did not respond in
any material fashion to the offer of binding
arbitration nor did it provide the Reporting Person with all of the information
he and other minority directors requested. [Company Response: The meaning of
those portions of the Settlement Agreement contested by Mr. Hussein is clear.
Accordingly, the Board voted against submitting this matter to arbitration
because the meaning is quite easily understood from the plain text of the
Agreement – and Mr. Hussein’s interpretation had no support in the clear
language of the Agreement.]
The
Reporting Person remains concerned about the corporate governance of the Company
and the structure of the Board of Directors. One of the Reporting Person's
concerns is the Company's legal counsel. [Company Response: Mr. Hussein’s
concern over the Company’s external legal counsel surfaced after such counsel
ruled against him on a legal interpretation involving a Board vote which had the
effect of removing Mr. Hussein from his control of the Chairmanship of all the
Company’s committees (including its Audit Committee) and his position as the
Company’s Lead Director – all while owning, at the time, less than 20% of the
Company’s shares. He has also demanded the removal of the law firms of Sullivan
& Cromwell, Gibson Dunn & Crutcher and Latham & Watkins – in each
case claiming that these large, reputable international law firms were under the
Chairman’s control or appointed under an improper scheme promoted by the
Company’s Audit Committee Chairman.]
The lawyer
that the Reporting Person intended to be removed as the Company's counsel under
the Settlement Agreement was not removed. Instead, he continued to work for the
Company and assumed the various responsibilities of corporate counsel, Board
counsel, and general counsel. [Company Response: All of the
aforementioned roles played by counsel are usual and customary, and are clearly
permitted by law and the terms of the Settlement Agreement (see immediately
below).]
FROM THE
SETTLEMENT AGREEMENT - SECTION 3.3 Board Proceedings and
Counsel. After the 2006 Annual Meeting and during the Standstill Period,
the Board shall appoint as its counsel an independent, national law firm with an
office in Orange County, California that is approved by the Nominating
Committee. The responsible partner from that firm, who shall also be based in
Orange County, shall be responsible for preparing Board minutes. Nothing in this section shall limit
the Company’s ability to seek legal advice or representation from any attorney
or law firm, including attorneys or law firms that it has retained in the
past.
The lawyer
also acted as corporate secretary. [Company Response: This is incorrect.
The Company’s legal counsel has attended Board meetings for purposes of taking
notes and preparing draft Board minutes. This is a common practice. The
Company’s corporate secretary, an officer of the Company, is Paul Holt (who is
also its CFO).]
To the
Reporting Person's knowledge, even though he assumed these various roles, the
lawyer has no written contract with the Company that defines his relationship to
the Company or spells out his duties and responsibilities. [Company Response: The Board has
voted and confirmed the representation by the Company’s current external general
counsel. No such written arrangement is required under applicable law and the
Board has not sought one. The Company’s legal counsel carries out
responsibilities that are usual and customary for such position. This
arrangement has been in effect for over 11 years.]
The lawyer
has also represented the Chairman and other Board members and was involved in
the formation of a Special Committee that continues to operate after the
Settlement Agreement, and the Reporting Person believes that that seems designed
to prevent the Reporting Person from raising any corporate governance issues.
[Company Response: Counsel
drafted the resolutions of the Board which established the Special Committee.
Drafting Board resolutions is a typical responsibility of legal counsel. The
Special Committee was formed by a majority of the Board after it determined that
such a committee was needed to, among other things, prevent harm to the
Company’s shareholders as a result of the actions of Mr. Hussein. The Special
Committee has separate outside legal counsel; the lawyer referred to is counsel
to the Company, not the Special Committee.]
The
Special Committee lacks transparency and fails to divulge its minutes to the
other members of the Board.
The
Reporting Person believes that the Special Committee operates in direct conflict
with open governance and functions autonomously without any supervision by the
rest of the Board of the Directors. [Company Response: The Special
Committee is concerned with threats of litigation by Mr. Hussein against the
Company, its Board members, management, advisors and others. As such, its
minutes are generally subject to privilege against disclosure to adverse parties
such as Mr. Hussein. The Special Committee is a function of and subject to the
will of the majority of the Board.]
It is an
example of the need for a balanced Board and balanced committees as well as
impartial legal counsel.
Despite
the Reporting Person's efforts, The Reporting Person believes that the Board
minutes continue to be inaccurate, incomplete, and misleading. These minutes are
not acceptable to the Reporting Person and to the directors that the Reporting
Person has nominated to the Board. [Company Response: A majority of the
Board reviews, discusses, modifies (when necessary) and then approves each set
of minutes. The minutes are sent out well in advance of each Board meeting and,
if there are any changes desired, those changes are noted on the latest draft
for submission to the full Board at its next meeting. At the next meeting of the
Board, a majority of the Board approves any changes and then approves the
minutes generally. This is a customary procedure for the approval of Board
minutes. During his tenure on the Board, Mr. Hussein has objected to every
person who has recorded the minutes (other than his personal attorney) including
the two CFO’s of the Company, general counsel, special board counsel, other
attorneys from general counsel’s office and the Chairman of the Compensation
Committee].
A call to
tape or stenograph the meeting minutes was rejected by the Board. [Company Response: A majority of the
Board has repeatedly rejected this suggestion. The majority of the Board
believes that such action is not customary or in keeping with best
practices.] The Chairman, supported by management and the directors he
nominated to the Board, refused to allow the minority shareholders an expression
of their views to be added to the minutes in writing. [Company Response: Mr. Hussein has
repeatedly attempted to add material to the Board minutes that he developed
after the meeting has ended – often memoranda providing his view of individual
board members, management and Company advisors and including points that were
never discussed during the course of the meeting itself. Mr. Hussein has been
informed that it is improper to represent matters as having occurred in the
meeting when in fact they did not. However, Mr. Hussein has been invited to
submit his statements/memoranda at the next Board meeting at which time they
would be properly reflected in the Board minutes.]
The
Chairman and his directors have also refused to allow the Reporting Person's
lawyer to attend certain meetings of the Board. [Company Response: As a matter of
proper corporate governance, guests of the Board must be invited to attend its
meetings by a majority of the Board. When he makes such a request, the Board
will
respond to it through the vote of a
majority of its members as is proper corporate governance in such
instances.]
It is the
Reporting Person's opinion that even if taken at face value, the minutes of the
Board meetings amply demonstrate:
1) The
Board's inability to govern the Company or oversee management, given the control
by the Chairman over the independent directors. Change in management favored by
almost all the independent directors, and that was even promised by the
Chairman, was not implemented. The Chairman said that it was not the right time
to do so, but gave no rationale for his change of mind and no time table. [Company Response: The Board adopts
appropriate resolutions for the governance of the Company when it determines
that such matters are in the best interest of the Company and its shareholders.
If the Board desires a particular action to be taken, such as the termination of
executive level personnel, it will do so at a duly convened meeting through the
vote of a majority of its members. This did not occur.]
2) The
inability of the Board to address the status of the Chairman's independence,
independently of the Chairman. The Reporting Person and the directors who were
nominated by him realize the Chairman's actions are totally inconsistent with
the Chairman's claim of the status of an independent director. They called for
an independent evaluation of the status of the Chairman. The Board has refused,
and continues to refuse, to address the issue in any material way. [Company Response: The subject of the
independence of the Chairman and other Board members has been addressed at past
Board meetings, by special legal counsel, by general counsel, by the Audit
Committee Chairman and has, again, been most recently been confirmed by the
Company’s Board of Directors at its meeting on May 29, 2008. In the latest
assessment, all of the Company’s nonemployee directors were determined by a
clear majority of the Board to be independent under applicable law and
regulations.]
3) The
Chairman on numerous occasions acted in a controlling, executive fashion without
the Board's knowledge. The Chairman's actions are totally inconsistent with his
claim of independence. Management and the directors nominated to the Board by
the Chairman acted zealously to cover up for the Chairman's actions. [Company Response: The Company
disagrees with this statement. The majority of the Board are elected by the
shareholders after nomination by the Nominating Committee and the Board - and
they represent the interests of all the Company’s shareholders. Furthermore, Mr.
Hussein has not provided any detail as to the “actions” about which he
complains, and he provides no evidence to support his
assertion.]
4)
Correspondence by the Reporting Person and others raising the issue of the
Chairman's independence and his executive actions was attacked on a personal
level by one of the directors nominated by the Chairman. [Company Response: The director in
question, the Audit Committee Chairman, was not nominated by the Chairman.]
This particular director attacked other directors' competence, integrity,
and motives in raising governance issues. This particular director alleged that
the Reporting Person violated certain laws when the Reporting Person chaired the
Audit Committee of the Company. The Reporting Person explained to the directors
that they legally could not allow such an unfounded accusation and that they had
to investigate this director's claims in order to safeguard the Company and to
satisfy disclosure requirements if there are grounds for such unfounded
accusation. The Chairman and those directors he nominated to the Board voted
against requiring this director to disclose the alleged basis of his unfounded
accusation. Instead of receiving reasonable answers, the Reporting Person
received some threats from this director and from the Special Committee
discussed above. [Company
Response: Mr. Hussein is referring to the Company’s Audit Committee Chair who
was concerned over certain actions taken in the past that exhibit questionable
behavior by Mr. Hussein. The Audit Committee Chairman has asked interested Board
members to speak to Mr. Hussein about this matter.]
5) The
agenda of the Board meetings and minutes are controlled. The Board meetings are
conducted by the Chairman to allow no viable dissent. The Chairman uses his
controlling position to effectively silence all opposing
opinions at Board meetings. He does so by, among other ways, not allowing
adequate time for questions, regularly declaring the Reporting Person to be out
of order, refusing to let him speak, refusing to answer his questions, and
threatening to eject him from Board meetings and from the Board. The lawyers for
the Reporting Person received hostile correspondence from the lawyer
representing the Special Committee. [Company Response: Mr. Hussein is
provided more time to speak than any other member of the Board.
He
frequently uses that time to make
loud and lengthy denunciations of the Company, its management and its advisors
and then refuses to yield the floor to other Board members that desire to speak,
thus preventing the Board from conducting business until he is ordered to cease.
Mr. Hussein has frequently raised his voice and used insulting language directed
at other Board members and others during Board meetings, again, not permitting
others to respond. As a result, on several occasions he has been warned to cease
behaving in such manner on threat of being expelled from the meeting. On a
number of occasions he has been formally reprimanded by the Board for his
behavior. The Board has also formally reprimanded him for refusing to attend
important Board and committee meetings as a form of
protest.]
6) The
Company failed to develop a coherent strategy and business plan approved by the
Board. The Reporting Person fails to understand the business justification or
underlying concepts for the budget approved by the
Board.
7) Failure
to meet performance targets is not addressed in a material way by the Board.
Instead, the Board is willing to increase equity compensation for management, as
described below. [Company
Response: This is incorrect. For fiscal year 2008, management did not earn any
equity compensation under the Company’s compensation
program.]
8) The
Board fails to discuss why the Company headquarters, its legal representation
and its board and committee meetings are held in Orange County, California, when
in excess of 90% of the business is on the East
Coast. [Company Response: The
Board has voted on several occasions over several years as to the location of
its meetings – it has determined that the executive offices are where it would
like to meet. Mr. Hussein has residences in Cairo, Egypt and New York City and
prefers otherwise.]
In fiscal
year 2007, the independent directors voted 4-3, in favor of awarding management
significantly more options ten months into the fiscal year without changing the
previously set business goals to be met by management. The Chairman, who the
Reporting Person as well as other directors believe should clearly not be
considered independent, cast the deciding vote. [Company Response: It is incorrect to
characterize the Chairman’s vote as the “deciding vote.” Any of those in the
majority may be deemed to have cast the vote that provided the majority, since
all Board members voted at the same time. The fact is that a majority of those
voting approved the matter, including a majority of the independent directors of
the Company. Moreover, the only directors who appear to agree with Mr. Hussein’s
conclusion concerning the Chairman’s independence are Mr. Hussein’s
nominees.]
The
Reporting Person believes that: [Company Response: These are matters
of Mr. Hussein’s beliefs which are not stated as matters of fact. Accordingly,
they should be given weight as such.]
1)
Disclosure to the shareholders of this change in management's compensation was
unsatisfactory because it was lacking in clarity. [Company Response: Management’s
compensation is clearly stated in the Company’s SEC filings.] The
Reporting Person could see no business reason to significantly alter the number
of options awarded to management, given that the performance of the Company
failed to meet projections. [Company Response: The majority of
the Board disagrees.]
2) The
growth of the Company has suffered from abuse of governance. The Reporting
Person and the directors that he nominated to the Board, felt concern about the
legality of changing the number of options awarded to management ten months into
the year. [Company Response:
Again, this was reviewed, discussed, voted upon and approved by a majority of
the independent directors and promptly and clearly disclosed to the public in a
Form 8-K.]
The
Reporting Person believes that the Chairman has recently solicited a major
transaction for the Company, and involved at least one member of management. The
Chairman's actions appear to have spanned three or four months without informing
the Board or the Transaction Committee. There was no prior discussion by the
Transaction Committee or the Board about the possibility of such a transaction.
[Company Response: In fact,
these matters were discussed at length – however, Mr. Hussein refused to attend
the meetings of the Transaction Committee (of which he is Chairman) and the
Board that covered these matters – and now complains that he
was not informed of the details. The
Company receives investment/transaction inquiries on a regular basis. However,
in the two years that he has been Chairman of the Transaction Committee, Mr.
Hussein has never called a meeting of that Committee. As a result, members of
the Committee were forced to call a special meeting on their own – which Mr.
Hussein refused to attend.]
The
directors did not question the Chairman's apparent unilateral actions and
hastily responded by forming a Special Committee composed of the Chairman, the
CEO of the Company, the President of the NextGen Healthcare Information Systems
division, and another director, to handle the transaction. The Reporting Person
considers the formation of this committee to handle this particular transaction
to be a clear violation of the Bylaws of the Company. [Company Response: Mr. Hussein
provides no explanation as to how the Bylaws have been violated. Mr. Hussein has
repeatedly claimed that the Board or management or the Company’s advisors are
violating the Company’s Bylaws, but when asked to identify the Bylaw violation
he has failed to do so. The Board still awaits the basis for his latest claims
of “Bylaw violations” – and has been waiting for months. ]
The new
Special Committee employed lawyers and other professionals. The Special
Committee did not give progress reports when asked. [Company Response: This is not
true. Information was supplied [to Mr. Hussein] – even after he refused to
attend the meetings at which this matter was discussed in detail.] The
Reporting Person understands now that the potential transaction has been
aborted. The Reporting Person is still trying to evaluate the possible damage
this event may have caused. [Company Response: The majority of the Board finds it very
disturbing that a Board member would elect to make public disclosure of a highly
confidential matter affecting the Company. The majority of the Board believes
that such action fails to take into consideration the best interests of the
Company and its shareholders, as “leaking” information of this type has the
potential to seriously harm the Company by impeding its sales and marketing
efforts and by causing potential buyers and target companies to be wary of
approaching the Company.
The
Company's lawyers consistently denied information requested by the Reporting
Person or his lawyers, which the Reporting Person feels is necessary to fulfill
his fiduciary responsibilities and to protect his interests and the interest of
shareholders, other than the Chairman. [Company Response: This is not true.
The information was supplied [to Mr. Hussein] – despite the fact that he refused
to attend the meetings at which these matters were discussed. Mr. Hussein,
through his attorney, has over the past few years initiated a letter writing
campaign which appears to be designed to harass the Company, its management and
advisors rather than to obtain information.]
In another
recent transaction, the Board authorized the President of NextGen to act as the
Transaction Committee of the Board over strong objection by the Reporting
Person, as the chair of the Transaction Committee. The President of NextGen
proceeded to conclude a transaction that was hastily rubber stamped by the
Transaction Committee and the Board. [Company Response: As detailed below,
the Board disagrees with these assertions]
The
Reporting Person, as well as the directors who were nominated to the Board by
the Reporting Person, believes that the transaction was conducted by management
and improperly supervised by the Chairman. [Company Response: This transaction
received the recommendation of the Transaction Committee and the approval of the
Board. The Chairman did not supervise the transaction.] While the
Chairman, the CEO of the Company, and the President of NextGen had ample
opportunity to conduct their due diligence, other members of the Board,
including the Reporting Person as the Chairman of the Transaction Committee,
were denied the ability to fulfill their fiduciary function. [Company Response: As discussed
above, Mr. Hussein refused to participate in the meetings at which these matters
were discussed in detail, including by refusing to attend a meeting of the
Transaction Committee, of which he is Chairman.]
The
transaction was ultimately consummated at an extremely large multiple of the
unaudited 2007 EBITDA. Company management justified the transaction based on
unusually high expectations for performance in 2008 but nevertheless paid over
90% of the maximum possible price up front. Ancillary costs for employee
retention contracts plus incentive options will be incurred in addition to the
sale price.
The final
vote by the Board was 5-3 with management, the Chairman, and two of his nominees
voting for the transaction that was not overseen in any material way by the
independent directors. The transaction did not have the approval of the majority
of the independent directors of the Company at the board meeting, where
the
transaction
was approved. [Company
Response: The transaction required the approval of a majority of the Board –
which it received. Further, as a point of information, but not necessary to
conclude that the transaction was properly approved, a majority of independent
directors did approve of the transaction, since Mr. Love, an independent
director who was absent from the Board meeting at which the transaction was
approved, approved the transaction the subsequent Board meeting held on May 29,
2008.]
The
Reporting Person believes that the Chairman's executive and controlling actions
are totally inconsistent with his claim of being an independent director. The
Chairman is the chair of the Nominating Committee. The Chairman will be
controlling the nominating process. The Reporting Person does not plan to
support the slate of directors nominated by the Company. [Company Response: We note that in
this filing, Mr. Hussein is announcing his objection to the Company’s slate of
directors, sight unseen.]