Paragon Technologies letter to Ocean Power Technologies
$OPTT
To the Independent Directors of Ocean Power Technologies, Inc.:
This letter is being provided by Paragon Technologies, Inc. (“Paragon”) (OTCPink:PGNT), to the independent directors of Ocean Power Technologies, Inc. (“OPT” or the “Company”)--Terence J. Cryan, Peter E. Slaiby, Clyde W. Hewlett, Natalie M. Lorenz-Anderson, and Diana G. Purcel.
We suspect that you are not being fully informed and may not fully understand the nature of the actions you have taken, which appear to have been taken not in an effort to carefully carry out your fiduciary duties and allow OPT shareholders to vote on qualified director candidates, but to block those candidates from ever being presented to shareholders.
In your extreme efforts to block Paragon’s campaign to benefit shareholders, you have approved the following:
1.
You adopted new burdensome advance notice by-laws only weeks after Paragon first requested board representation, and in Court you falsely claimed that the purpose of the new provisions was to address new SEC universal proxy rules, which were in effect prior to your last annual meeting. It appears that you designed these by-laws to give OPT the ability to block shareholders from nominating director candidates.
2.
You adopted an anti-shareholder poison pill only weeks after Paragon first requested board representation, supposedly to protect OPT’s NOLs but despite having significant NOLs for 30 years. We have little doubt that your board discussion regarding the poison pill acknowledged that protecting your NOLs was only a pretext for the poison pill that was aimed at Paragon.
3.
You have engaged multiple high-priced law firms, not to ensure that OPT’s shareholders have the benefit of a fair election at your 2023 annual meeting, but to impede and block Paragon’s efforts to even nominate director candidates. While the company has annual revenues of only $2.7 million and annual losses of $26.3 million, you are likely to pay more than a few million dollars to these law firms. Shouldn’t your fiduciary duties require you to preserve the cash and just let shareholders vote?
4.
You engaged an extremely expensive proxy defense firm, which OPT can hardly afford, that does not appear to have the goal of assisting you in carefully fulfilling your fiduciary duties. Ask your expensive defense firm if their goal is to help you facilitate a fair election for your shareholders or to block Paragon’s director candidates at any cost.
5.
You blocked Paragon from having access to OPT books and records so that it could investigate why OPT keeps increasing expenses and board and management compensation when OPT keeps losing more and more money, knowing that this would lead to expensive litigation. You lost this litigation, with the Court finding a “credible basis that wrongdoing occurred” at OPT under your supervision.
6.
Instead of working cooperatively with Paragon regarding access to books and records, you immediately filed and wasted additional OPT resources on a motion to disqualify our counsel, which you lost.
7.
You rejected Paragon’s nomination notice, instead of allowing shareholders to vote to decide who their directors will be, knowing that this would lead to a second expensive litigation that is now pending.
8.
You engaged in bad faith with Paragon’s request for shareholder lists, falsely telling the Court that Paragon requested lists without intending to collect them, while offering the lists subject to conditions that Paragon, its nominees and proxy advisor could not reasonably accept and subject to the payment of an unjustified ransom. You continue to play games with Paragon’s request for shareholder lists, which will likely lead to a third expensive litigation that OPT can hardly afford.
9.
You appear to be engaged in a strategy to increase Paragon’s costs, while OPT itself can hardly afford the exorbitant fees you are incurring, as OPT’s losses continue to grow and its stock price continues to decline. In the registration statement that you signed and filed with the SEC, should you disclose to investors currently buying your stock through the market the extreme amounts you plan to spend blocking a fair election?
10.
You have ignored Paragon’s calls for OPT to cut costs. Instead, your CFO has said that expenses will be at the same level in fiscal 2024 and your CEO has said that OPT’s “strategy is working,” while OPT continues to march steadily towards insolvency.
Why not just let shareholders vote? What is your management afraid of? Are you completely comfortable spending OPT’s precious cash, cash that is declining rapidly due to OPT’s increasing expenses, while trying to raise funds by selling stock at $0.32 per share? You will soon be the subject of depositions and likely further litigation regarding the details of these actions. We strongly suggest that you engage independent counsel to provide you with unbiased advice.
Sincerely,
Paragon Technologies, Inc.
Source:
https://www.sec.gov/Archives/edgar/data/90045/000110465923111047/tm2329019d1_ex99-2.htm