Sunday, December 06, 2009 2:49:10 PM
[North & Webster Letterhead]
November 13, 2009
EZENIA!, Inc.
14 Celina Ave. Suite 17-18
Nashua, NH 03063
via Electronic Mail
Dear Members of the Board of Directors,
North & Webster, LLC currently owns 748,157 shares of Common Stock or 5.1% of Ezenia!, Inc. ('Ezenia' or the 'Company'). As a significant shareholder of Ezenia, we are extremely dissatisfied with the current direction of the Company. Specifically, we feel that problems relating to the performance of management and the composition and operation of the Board of Directors (the 'Board') are severely depressing the price of the Company's Common Stock.
We urge the Board to immediately appoint two independent shareholder representatives who will ensure that all actions are taken with the best interest of shareholders in mind and who will hold management accountable for poor performance. Further, the board must immediately take actions to: increase transparency to shareholders, specifically regarding the Company's current plan to regain profitability; must rescind the Company's shareholder rights plan, which currently serves to entrench management and depress the stock price; and must begin an immediate process of enhancing shareholder value. In the past, we have privately contacted members of management and the Board to discuss significant concerns regarding the Company's current strategy. During these discussions it has become clear to us the company does not have a coherent plan for regaining profitability, that the company's core product is of uncertain value, and that the company is at a competitive disadvantage in the procurement process.
We strongly believe that the current composition of the Board does not represent either the interests or priorities of the shareholders. The fact that no director owns more than a token amount of stock is a clear indication of this divergence of interests. It is clear to us that the Board needs 'new blood' to reinvigorate the company.
Specific issues that we feel the Board has handled in a manner inconsistent with shareholders' interests are: the decline in Stockholder's equity by 73%, to $3.2 million, since 2006; the increase in compensation for the CEO of 54% to $868,511 since 2006; the failure of board members to attend annual meetings, despite the fact that the Bylaws of the Company state that a regular meeting of the Board 'shall be held immediately after the adjournment of the annual meeting of stockholders'; the adoption of a shareholder rights plan which has served to entrench management and destroy shareholder value; a lack of a publicly communicated long-term strategic plan; and the lack of a publicly communicated succession plan for key management positions.
We are long-term investors, acting in the interests of all shareholders of the Company. We are hereby asking that the Board immediately begin negotiations to seat two directors chosen directly by shareholders and begin a transparent, open process of investigating strategic alternatives to improve shareholder value. It is not our intention to engage in a costly and contentious battle with the board, but we will take any and all actions necessary to hold the board and management accountable for poor performance. We look forward to a fruitful and businesslike dialog.
Sincerely,
/s/ Samuel A. Kidston
Samuel A. Kidston
(reprinted: http://ragingbull.quote.com/mboard/boards.cgi?board=EZEN&read=6598 )
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