A letter from US Shareholders, written to Gordon Bain & Alphonse Belanger concerning their attempt to force bankruptcy on ECT. The court date is tomorrow. These were the same individuals who were to provide the financing to bring the CRAM to the market.
The Ect investors alliance
September 11, 2010
VIA FEDERAL EXPRESS
Mr. M. Gordon Bain
c/o Group Ocean, Inc.
105, rue Abraham-Martin
Quebec City, Quebec G1K 8N1
Canada
Mr. Alphonse Belanger
c/o Quebec Stevedoring Company Limited (QSL)
2070, avenue de la Riviere-Jaune
Quebec City, Quebec G2N 1T2
Canada
Re: Effective Control Transport, Inc., a Delaware corporation (“ECT”)
Gentlemen:
The individuals on the undersigned partial list are citizens of the United States, and as long-term investors in ECT have structured a coalition (the “ECT Investors Alliance”), dedicated to the purposes of protecting and advancing our mutual interests. The ECT Investors Alliance consists of several major shareholders and creditors of ECT, counting as members a number of American professionals, including doctors, psychologists, a pastor, an attorney and ethicist, as well as persons involved in transportation, insurance, finance, telecommunications, real estate, tourism and recreation, and other fields. We estimate that we own approximately 30-50 million shares of ECT, and we are continuing to seek out other individuals with comparable interests.
The ECT Investors Alliance is contacting each of you at this time to express our serious concerns about any possible threat to the future financial posture of ECT, which would obviously constitute a direct threat to our joint interests as well. It is our understanding that you are, like some of us, shareholders and creditors of ECT, and that you are aware of the distressed financial circumstances that the company presently faces. For this reason, we would initially be inclined to believe that your interests with respect to ECT should be fully aligned with our own. Namely, we would assume that, like us, you strongly desire that the company recover from its existing financial troubles, and succeed as a viable business enterprise, which as you know, involves the completion of the development of the CRAM technology.
The ECT Investors Alliance has recently learned, however, that each of you has apparently acquired certain of ECT’s outstanding debt obligations, and that litigation in the Quebec courts over the satisfaction of those debts may be contemplated, perhaps with the objective of forcing ECT into bankruptcy, and effectively wiping out the interests of its many shareholders. While we can appreciate the efforts of any creditor or shareholder to enforce his legal rights, we must vigorously disapprove of, and we will most certainly oppose, any such effort if taken at the direct expense of ECT’s other shareholders.
Many of us have invested substantial portions of our savings into the ECT venture, and sincerely believe that the company’s potential for success is enormous. For that reason, we must construe any potential threat to ECT’s survival as a profoundly personal matter, not just a business matter. We are aware, of course, that ECT has endured considerable turmoil in its short history, but we are resolved to remain patient, given the latent value of the CRAM technology.
As you both will recall, one year ago a convincing majority of ECT’s shareholders voted to reclaim our rightful ownership of the company, to install a competent Board of Directors, and to continue moving towards the goal of bringing the CRAM to an expected worldwide market. It is our understanding that each of you supported the solicitation proposals, and that like us, you believed that such joint shareholder action was warranted in light of the previous regime’s mismanagement. Although the validity of the shareholder vote was disputed, our confidence was promptly restored when justice was decisively achieved – in an American court of law.
Despite the progress resulting from the turnover in ECT’s management, in our view the company now stands at a critical stage. The company is saddled with the debts incurred by the former management, but has no business revenues with which to pay its creditors. On the other hand, the company still possesses an extremely promising but intangible asset – its intellectual property rights to the CRAM technology. In an attempt to resolve these problems and move the company forward, the ECT Board has recently proposed the creation of a new, private Canadian corporation, to be formed with original investment capital, which would operate in tandem with ECT as the exclusive licensee and developer of its technology.
The ECT Investors Alliance has carefully examined and evaluated the Board’s proposal, and strongly favors its implementation. We have concluded that the Board’s plan, in a remarkably equitable manner, simultaneously accommodates the interests of ECT’s creditors, the interests of ECT’s shareholders, and the interests of the new investors. Put simply, under the Board’s current proposal, everyone benefits and no one loses.
With this in mind, several members of the ECT Investors Alliance have been assisting the Board in pursuing new investment capital, pursuant to the terms being proposed. Our efforts along these lines, as well as those of the Board itself, are ongoing. We believe that it is only a matter of time before a suitable arrangement will be reached with a group of new investors.
As mentioned above, the interests of the members of the ECT Investors Alliance, and the interests of each of you as shareholders and creditors of ECT, would appear to be compatible ones. As a result, all of us are, or at least all of us should be, “on the same page” in this challenging endeavor. There appears to be no rational necessity – for any of us – to strike any kind of adversarial posture towards the others.
In other words, if we can all focus our resources in a determined effort to advance our common interests, everyone benefits and no one loses.
Accordingly, we genuinely hope that it is not, in fact, your present intention to exploit your current status as two of ECT’s creditors in a manner that inequitably threatens to have this fledgling but possibly world-changing enterprise – which as you are well aware, remains an American corporation established under the laws of the State of Delaware – placed into an involuntary bankrupt status. But if this is your intention, then the members of the ECT Investors Alliance, and all others with similar interests, will have no choice but to take all necessary and appropriate steps to assert and protect their own interests and legal rights, to the full extent permitted under the law, with all of the resources at their collective disposal.
Under that kind of reciprocally hostile scenario, the various parties will inevitably end up in the courts of law, litigating the specifics of their respective claims and legal rights, possibly for several years. Predictably, it will be the lawyers who accumulate the greatest benefits from that process, to the proportional detriment of the parties, and as typically occurs in such protracted cases, all of the parties will eventually walk away disappointed and dissatisfied. Which is to say – nobody wins, everybody loses.
That is not what we want, and we cannot fathom that such an ultimate waste of time, effort, and money is what anyone wants.
As we see it, if the Board’s dual-entity recovery plan can be implemented successfully, resulting in the final development and marketing of the CRAM device, the bottom line is that there will be more than enough financial rewards for everyone involved. It was only three years ago, after all, that ECT’s shares were trading at prices that were approaching one dollar. Yet that result was accomplished on little more than overly-optimistic speculation and rumor, which sidestepped the real-world problems that the Board is now openly acknowledging and addressing. We ask you to imagine, by contrast, ECT as a legitimate, debt-free technology licensor, with minimal operating costs, with regular royalty payments as its revenues, with yearly earnings per share, and paying dividends. Is there any question that the trading price of ECT’s shares could once again approach, and likely exceed, those previous highs?
And as an added consequence, would we not have the moral satisfaction of knowing that our shared efforts have facilitated the implementation of a device that saves lives?
Messrs. Bain and Belanger, the undersigned individuals therefore make this personal appeal to each of you. If we disregard the fact that our interests are essentially harmonious, and if we proceed to steer mutually antagonistic headings, we will not only have dissipated our resources in frustrating legal wrangling, but most importantly, we will have missed participating in what appears to be the opportunity of a lifetime. We sincerely believe, then, that the most profitable route for all parties involved in the ECT endeavor is clear – to help the company recover, and to help the company succeed.
Given these considerations, the ECT Investors Alliance respectfully solicits your response to this expression of our serious concerns. Although our members are located across the United States, making a face-to-face meeting impractical, a delegation representing our membership (as indicated below) is willing to arrange a telephonic conference with the two of you, if you so desire, to discuss these matters further.
Gentlemen, your kind attention and consideration are appreciated.
Sincerely,
THE ECT INVESTORS ALLIANCE
Partial List of Members:
xxx
North Bloomfield, Ohio
xxx
Newbury Park, California
xxx
Bakersfield, Vermont
xxx
Austintown, Ohio
xxx
Lake Charles, Louisiana
xxx
Manalapan, New Jersey
xxx
Farmville, North Carolina
xxx
Burlington, Vermont
xxx
Jackson, Michigan
xxx
Kirkland, Washington
xxx
Kirkland, Washington
xxx
Glendale, California
xxx
Jeffersonville, Vermont
xxx
Kirkland, Washington
xxx
Philadelphia, Pennsylvania
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