December 11, 2000
Dear Shareholder of ePHONE Telecom, Inc.:
As you may already be aware from our recent press release there have
been additional directors elected to the board and a new management team
appointed for ePHONE Telecom, Inc. (the "Company"). These changes were supported
in writing by shareholders owning approximately 57% of the outstanding shares of
common stock of the Company. Enclosed with this letter is a copy of the notice
we are required to provide pursuant to Section 607.0704(3) of the Florida
Business Corporation Act to shareholders who did not sign written consents
effecting the actions required to elect new directors.
The new members of the board are:
Robert G. Clarke, who was the former Chairman, President and Chief Executive
Officer of the Company
Anthony F. Balinger, President of 7bridge Systems Ltd., the Company's strategic
partner, based in Hong Kong.
Charlie Rodriguez, who was the former Chief Financial Officer of the Company,
and Walter Pickering, both of whom have served as Directors of other public
companies, including Waverider Communications Inc.
All of these individuals have prior public company experience in the United
States and elsewhere.
In addition, Robert Clarke was appointed as Chairman, President and CEO
and Charlie Rodriguez was appointed as Chief Financial Officer. Mr. Row Zadeh
and Mr. Bahram Ossivand have resigned from their positions as directors and
officers of the Company.
<PAGE>
Shareholder of ePHONE Telecom, Inc.
December 11, 2000
Page 2
Business Objectives
The fundamental reason for these changes is that these shareholders
felt the direction and management of the Company could be significantly improved
in a number of areas, most importantly in its business operations. The new
directors and the new management team - which will be strengthened in the coming
months - accept that the Company's performance will be the key indicator of the
success of this change.
In the prevailing market conditions revenues and profits are the
defining measures of business performance and the current management is focused
on creating a functioning, worldwide network serving customers in a number of
national markets in the shortest time possible. We anticipate additional news
will be available as our activities bear results.
In addition to organic or internal growth of the network, the current
business climate presents a number of interesting opportunities for potential
acquisitions and we plan to pursue such opportunities. Several potential
transactions are already undergoing the early stages of due diligence. If we are
successful in executing acquisitions on terms acceptable to management of the
Company, this has the potential to increase the Company's growth.
Investor Relations
One area that will have increased focus is Investor Relations. The
Company is aware that many investors have felt that additional resources should
be committed to Investor Relations and management is immediately implementing a
renewed commitment to this function. In addition to an added internal focus on
Investor Relations the Company is in the process of retaining an external
professional Investor Relations firm. An announcement is expected shortly and we
believe the benefits of this renewed approach will become evident in the coming
weeks.
ePHONE Technologies Inc.
One aspect of the recent changes that may be causing some confusion is
the creation of ePHONE Technologies ("EPT"). This is a separate company that has
been established by Mr. Row Zadeh, the former Chairman, CEO and President of the
Company and certain employees. EPT has a service and technical support and
development agreement with the Company.
This arrangement offers a number of advantages to the Company. It
secures technical support for the existing Array 3000 gateways and facilitates
the continued development of VoIP products. It also retains at the Company's
disposal technical expertise while permitting the Company to focus on the
rollout of its network and services. At the same time, it does not preclude any
other technical choices that the Company might wish to make. The Company already
has agreements with other technology vendors and we plan to continue to maintain
and expand these arrangements.
Conclusion
Actions speak louder than words. We appreciate your support and belief
in the Company. It is our goal, in the coming months, to demonstrate to you that
your support is not misplaced.
Yours truly,
Robert G. Clarke
Chairman, President and
Chief Executive Officer
<PAGE>
December 11, 2000
Dear Shareholder of ePHONE Telecom, Inc.:
Effective December 1, 2000, ePHONE Telecom, Inc. (the "Company")
received written consents from shareholders holding approximately 57% of the
Company's outstanding common stock taking the following actions, waiving notice
and without a meeting, pursuant to Section 607.0704 of the Florida Business
Corporation Act:
1. Repealing Article III, Section 12 of the Amended and Restated By-Laws
of the Company.
2. Amending and restating Article III, Section 2 of the By-Laws of the
Company as follows:
"SECTION 2. Number, Qualifications, Election and Term of
Office. The Board shall consist of nine members. Members of
the Board need not be residents of the State of Florida and
need not be shareholders of the Corporation. Directors shall
be elected at the annual meeting of the shareholders and the
term of office of each director shall be until the next annual
meeting of shareholders and the election and qualification of
a successor."
3. Electing the following individuals to serve as Directors of the Company
to fill the vacancies created by increasing the membership of the Board
of Directors from five members to nine members:
a. Anthony Balinger
b. Robert Clarke
c. Charlie Rodriguez
d. Walter Pickering
The effect of repealing Article III, Section 12 of the By-Laws is that
the By-Laws of the Company no longer govern the issue of when and under what
circumstances Directors of the Company may be removed from office. Pursuant to
Section 607.0808(1) of the Florida Business Corporation Act, Directors of the
Company may be removed, with or without cause, by the holders of a majority of
the outstanding common stock of the Company.
The effect of the amendment and restatement of Article III, Section 2
of the By-Laws is to increase the size of the Board of Directors from five
members to nine members.
As noted above, the new directors named by the shareholders to fill the
four vacancies created by incresasing the size of the Board of Directors from
five members to nine members are Robert G. Clarke, who was formerly Chairman of
the Board of the Company, Anthony F. Balinger, President of 7bridge Systems Ltd.
of Hong Kong, Charlie Rodriguez and Walter Pickering who have served as
directors of other public companies, including Waverider Communications Inc.
More detailed biographies of Messrs. Clarke, Rodriquez, Balinger and Pickering
are attached hereto as Schedule I.
<PAGE>
This letter serves as written notice pursuant to Section 607.0704(3) of
the Florida Business Corporation Act to the shareholders of the Company who did
not execute written consents of the taking of the above described actions. None
of the actions taken by the consenting shareholders entitles you to dissenters
rights under the Florida Business Corporation Act.
The Company also wishes to advise you that, effective December 1, 2000,
the Company accepted the resignations of Row Zadeh and Bahram Ossivand as
Directors of the Company. On that date, the Company has also accepted the
resignation of Mr. Zadeh as President and Chief Executive Officer and Mr.
Ossivand as Chief Financial Officer. Robert G. Clarke has been appointed as the
new Chairman, President and Chief Executive Officer of the Company and Charlie
Rodriguez has been appointed as Chief Financial Officer and Vice President -
Corporate Affairs of the Company.
In connection with departing the Company, Mr. Zadeh, together with
certain other current employees of the Company, has formed a new company named
ePHONE Technologies, Inc. The Company and ePHONE Technologies have entered into
a Support and Development Agreement under which ePHONE Technologies has agreed
to provide certain software development and technical support services to the
Company. As part of the Support and Development Agreement, the Company has made
an investment in ePHONE Technologies for which the Company received a 20%
ownership interest in ePHONE Technologies.
Sincerely,
Robert G. Clarke
Chairman, President and
Chief Executive Officer
<PAGE>
SCHEDULE I
BIOGRAPHIES OF NEW DIRECTORS
Robert G. Clarke. Mr. Clarke, 55, has been appointed as Chairman, President and
Chief Executive Officer of the Company. Mr. Clarke previously served in these
roles at the Company, having been Director, President and Chief Executive
Officer of the Company on June 3, 1999. Effective August 9, 1999, he resigned as
President and Chief Executive Officer, and was appointed Chairman of the Board
of the Company. Mr. Clarke was re-appointed President and Chief Executive
Officer on March 9, 2000 and served in that role until April 1, 2000. Mr. Clarke
remained as a Director until the Company's 2000 Annual Meeting of Shareholders
on September 25, 2000, at which time, his term as a Director expired. Since
stepping down as President and Chief Executive Officer of the Company, Mr.
Clarke has been involved in the founding and operation of 7bridge Systems Ltd.
of Hong Kong, which entered into a strategic alliance agreement with the Company
in July 2000 to market the Company's products and services in Asia. During the
last five years, Mr. Clarke has acted an independent business consultant -
principally in the area of high tech start-ups - providing advice with respect
to public and private financings, creating business plans, assembling management
teams and business opportunity assessments. Mr. Clarke holds the degrees of
Bachelor of Commerce from Memorial University and Master of Business
Administration from the University of Western Ontario.
Charlie Rodriguez. Mr. Rodriguez, 55, has been elected as a Director and
appointed as Chief Financial Officer and Vice President - Corporate Affairs of
the Company. Mr. Rodriguez previously served as Vice-President of Corporate
Affairs and Corporate Secretary of the Company from June 1999 to April 16, 2000.
Since resigning from the Company, Mr. Rodriguez has been appointed as Vice
President - Corporate Affairs of 7bridge Systems Ltd. of Hong Kong and President
of 7bridge Systems America, Inc. Mr. Rodriguez is also President of Management
Services of Arizona, a business consulting company specializing in mergers,
acquisitions and financing. Prior to that, he served as Chief Financial Officer
for Zephyr Technologies, Inc., a biometrics and smartcard software integration
company. He was with WaveRider Communications, Inc., a wireless communication
company, where he served as a member of the board of directors from January to
November 1997, and as President and Chief Executive Officer from May 1995 to
January 1997. Mr. Rodriguez has a Masters in Business Administration.
Anthony Balinger. Mr. Balinger, 49, is President of 7bridge Systems Ltd. of Hong
Kong. A Fellow of the Hong Kong Institute of Directors, Mr. Balinger is a
seasoned telecom professional with 30 years experience in the telecommunications
industry. He started his career with British Telecom, where he spent 13 years as
a Digital Design engineer. Thereafter he joined Cable & Wireless as a project
engineer for Mercury Communications, then transferring to commercial, he headed
Mercury's City of London support services. In 1989 he was subsequently
transferred to New York to head Cable and Wireless North America's Banking and
Finance division. C&W loaned him to OPTUS communications of Australia where he
headed the International Products division. In 1993 he joined Executive TeleCard
Ltd., (a NASDAQ listed company) as Director of Asia Pacific. In 1995 he joined
the Board of Directors of the company. Mr. Balinger went on to serve as Chief
Executive and President before finally retiring as Vice Chairman in 1999.
<PAGE>
Walter Pickering. Mr. Pickering, 51, has over 20 years of management experience
in real estate development, construction and high technology. Since 1988 he has
been president of Corporate Information Group Ltd., a high technology consulting
firm specializing in market assessment and strategic planning. The firm covers a
wide range of technology sectors, including biotechnology, medical devices,
telecommunications and information technology. Since 1998 Pickering has been
Executive Director of the Canadian Institute for Market Intelligence, a federal
corporation working under contract to the National Research Council of Canada.
The role of the Institute is to provide competitive intelligence services, due
diligence and management of international technology transfer events for small
and medium-sized Canadian technology companies. Pickering has worked extensively
with the private and public sectors of Japan, China, Hong Kong, Thailand,
Singapore and Korea.
