USA TECHNOLOGIES, INC. v. TIRPAK et al

Filing 25

ORDERED THAT PLAINTIFFS MOTION FOR A TEMPORARY RESTRAINING ORDER IS GRANTED. IT IS FURTHER ORDERED THE FOLLOWING STATEMENTS HEREIN IN FROM THE DEFENDANTS 4/30/2012 PRESS RELEASE VIOLATE SECTION 9 OF THE SECOND SETTLEMENT AGREEMENT. THE FOLLOWING STAT EMENTS IN THE DEFENDANTS FIRST PRELIMINARY PROXY STATMENT HEREIN VIOLATE SECTION 9 OF THE SECOND SETTLEMENT AGREEMENT. USAT SHALL POST A BOND OF $1,000 AS SECURITY. SIGNED BY HONORABLE TIMOTHY J. SAVAGE ON 5/24/2012. 5/24/2012 ENTERED AND COPIES MAILED AND E-MAILED. MAILED TO UNREPS.(sg, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
USA TECHNOLOGIES, INC.

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v.
BRADLEY M. TIRPAK, et al.

CIVIL ACTION

NO. 12-2399

ORDER
AND NOW, this 24th day of May, 2012, upon consideration of Plaintiff’s Motion for
a Temporary Restraining Order, (Doc. No. 3) and the parties’ consent to treat the motion
as one for a preliminary injunction, the defendants’ response, and after a hearing on May
9, 2012, it is ORDERED that the motion is GRANTED.
It is FURTHER ORDERED as follows:
1.

The following statements from the defendants’ April 30, 2012 press release

violate Section 9 of the Second Settlement Agreement:
Since Stephen Herbert became President and COO in August 1999, the
Company has accumulated net losses each fiscal year, totaling more than
$175 million. During that time, the Company’s stock price has declined over
99%.
....
The Board approved four securities offerings from March 2010 to March
2011, and shareholders have been diluted by over 43% in the past two
years.
One long-standing Board member, Douglas Lurio, has billed the Company
over $2,300,000 through his small law firm during the past five fiscal years
while collecting an additional $100,000 in Board fees during that time.
....
Eliminate Wasteful Spending . . . Mr. Lurio’s small law firm has billed the
Company over $2,300,000 during the past five fiscal years . . . .
2.

The following statements in the defendants’ first preliminary proxy statement

violate Section 9 of the Second Settlement Agreement:

Over the past one-, five- and ten-year periods, ended [sic] May 1,
2012, the Company’s share price declined approximately 45.0%, 84.7% and
95.2%, respectively.
....
In the last three fiscal years ended [sic] June 30, 2011, the Company
has reported operating losses and overall net losses, each totaling in excess
of $30 million.
...
In the fiscal years ended [sic] June 30, 2011, June 30, 2010 and June
30, 2009, net cash used in operating activities was approximately $5.2
million, $12.3 million and $8.5 million.
3.

The statements in the revised preliminary proxy statement discussing the

Glass Lewis report violate the non-disparagement provision.
4.

Defendants Bradley M. Tirpak, Craig W. Thomas, John S. Ioannou, Ajoy H.

Karna, Rodman K. Reef, Andrew Salisbury, George Wallner, S.A.V.E. Partners IV, LLC,
and Locke Partners I LLC (collectively “defendants”) are ENJOINED from publishing or
otherwise disseminating the statements identified in paragraphs one, two, and three of this
Order.
5.

Defendants shall immediately redact the statements identified in paragraph

one of this Order from the April 30, 2012 press release, in paragraph two from the initial
preliminary proxy statement, and in paragraph three from the revised preliminary proxy
statement.
6.

Defendants are ENJOINED from making and disseminating any statements

that violate the non-disparagement provision.

7.

USAT shall post a bond of $1,000 as security.1

/s/ Timothy J. Savage
TIMOTHY J. SAVAGE, J.

1

Federal Rule of Civil Procedure 65(c) provides a prelim inary injunction m ay issue “only if the m ovant
gives security in an am ount that the court considers proper to pay the costs and dam ages sustained by any
party found to have been wrongfully enjoined or restrained.” In the Second Settlem ent Agreem ent, the parties
agreed to waive Federal Rule of Civil Procedure 65(c)’s bond requirem ent, and SAVE has not requested that
USAT post a bond. However, the requirem ent cannot be waived. Zambelli Fireworks Mfg. Co. v. W ood, 592
F.3d 412, 426 (3d Cir. 2010). Therefore, we fix security in a nom inal am ount.