Page 10 of 15 – SEC Filing
The Reporting
Persons also questioned in the Demand Letter whether a majority of the Board has undertaken a good faith effort to explore all
means to maximize value for stockholders, including to fully consider and evaluate any proposal to acquire the Issuer that may
have been received by the Board. In the Reporting Persons’ view, the Issuer operates in a highly strategic area of the technology
industry with an attractive competitive position and a compelling product, its touch feedback technology, the value of which is
not reflected in the Issuer’s current market price. At the same time, the industry in which the Issuer operates is consolidating,
which makes the Reporting Persons believe that there could be a number of credible buyers that would be interested in acquiring
the Issuer at a price that could return significant value to stockholders. However, based on historic discussions with Chairman
Schlachte and the overly generous compensation packages paid to Board members, the Reporting Persons are concerned that Chairman
Schlachte and other members comprising the majority of the Board may not have the same alignment of interests as stockholders
to fully consider any acquisition proposals that may be received by the Issuer. In particular, Chairman Schlachte has received
in excess of one million dollars ($1,000,000) in total compensation over his tenure as Chairman, despite the Issuer’s poor
performance. The Reporting Persons also note that none of the directors have purchased any material amount of stock and therefore
have little of their own dollars at risk. In addition, the recent adoption of a “poison pill” in response to the Reporting
Persons’ nomination of directors was, in the Reporting Persons’ view, yet another attempt by the incumbent directors
to maintain their control of the Issuer and disenfranchise stockholders.
On January 11, 2018,
the Issuer’s counsel sent a letter rejecting the Demand Letter.
The Reporting Persons
sent the Demand Letter to protect stockholder value. In light of the significant decisions that need to be made at the Issuer,
including the appointment of a new CEO, and the Reporting Persons’ concerns with the majority of the Board’s oversight
and possible breaches of fiduciary duties, the Reporting Persons believe it is imperative that they obtain immediate Board representation
to better align the Board’s interests with stockholders.
On December 29, 2017,
the Reporting Persons had a discussion with Sharon Holt, the Issuer’s lead independent director, to express their concerns
and request the immediate appointment of their nominees, Steve L. Domenik and Eric Singer, to the Board so that stockholders could
weigh in on the important decisions facing the Issuer. On January 4, 2017, the Issuer communicated that the Board would not appoint
Messrs. Domenik or Singer to the Board.
The Reporting Persons
are alarmed that the Board would choose to pursue a costly proxy fight at the Annual Meeting rather than agree to appoint two stockholder
representatives to the Board. The Reporting Persons intend to hold each director accountable if the Board continues to waste stockholder
resources on an unnecessary contested election, by paying egregious compensation to directors, by adopting other stockholder unfriendly
measures to further entrench themselves, and by failing to fully evaluate all opportunities to monetize value for all stockholders.
| Item 5. | Interest in Securities of the Issuer. |
Item 5(a)-(c) is hereby amended and restated
to read as follows:
The aggregate percentage
of Shares reported owned by each Reporting Person is based upon 29,251,243 Shares outstanding, which is the total number of Shares
outstanding as of October 27, 2017 as reported in the Issuer’s Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on November 3, 2017.
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