[Internet Cable Corporation Logo]
Michael F. Mulholland
Chairman and Chief Executive Officer
February 15, 2001
Mr. Joseph Melanson
9 Grenfell Crescent
Markham, ON L3P-1S6
Dear Joe:
I received your February 12, 2001 letter faxed to me on February 13, 2001 with
your notice of intent to resign as director of Internet Cable Corporation
("ICC"). ICC is surprised and disappointed on several levels. We are pleased,
however, that you will continue to serve ICC and its shareholders as an officer
of the company. We look forward to working with you in developing ICC's valuable
opportunities in its wireless and cable businesses throughout North America, and
particularly in your home of Canada.
In candor, there are particular statements in your February 12, 2001 letter that
require comment and clarification. Just days before your letter, we were
discussing a meeting here at the corporate headquarters (Tuesday, February 13th)
to discuss our plans going forward. We unfortunately had to cancel that meeting
due to the fact that our targeted funding source was cancelled. During our phone
discussion you never indicated to me or to anyone on ICC's Board, for that
matter, any intent to resign as a director. Thus, on both a personal and
professional level, the ICC Board was surprised by your fax.
Certain points raised by you also require comment. At all times, ICC provided
all of the directors and management with all the same material information. For
example, ICC's Board packages included detailed financial presentations, which
were explained in detail by ICC's Management at Board meetings. Our review of
our files does not indicate a single instance in which you or any other board
member was denied financial information.
You are correct that ICC, similar to many companies, has appointed outside
directors to crucial committees such as Audit/Finance or Compensation. Knowing
this, you seconded the motion during the June 15, 2000 Directors' Meeting
approving the charter for the Audit Committee. Indeed, in that discussion during
the Board Meeting, outside director Losier expressed concern about his ability
to spend time on details presented at the Committee level. As explained during
that June 15, 2000 meeting, the role of outside directors is to scrutinize the
details, criticize management and make recommendations. Also, you never
expressed concern or dissent to the Committee appointments also made at the June
15, 2000 Directors Meeting. You are correct that you are not part of these
outside director committees. It would be inappropriate, and possibly illegal,
for any of the ICC's officers to serve on its Board's Compensation Committee
(reviewing his own compensation) and certainly on ICC's Audit/Finance Committee
which is charged with responsibility of providing independent review of
financials and providing criticism of management, along with ICC's outside
auditors, PriceWaterhouseCoopers. You were aware of this need for outside
directorships and at the first meeting of the Board in January 2000 you moved
for appointment of Mark Kearney, Esq. as Chair of these Committees. You
thereafter voted to approve the appointment of PriceWaterhouseCoopers as outside
auditors.
ICC's outside director committees held extensive, multi-hour meetings reviewing
the details. Their role has been fulfilled. However, as you know from our last
meeting on October 30, 2000, when a member of the Board questioned the
Committee's conclusions, the Committee listened to all directors and amended
their findings. Your example of the stock options is a perfect example of this
deliberative process. The Board raised specific concerns about the amount of
options and their allocation to the Compensation Committee. The Compensation
Committee agreed to review the concerns in light of the Board's detailed
concerns. The Board approved the request of the Compensation Committee to review
the issues and provide a resolution addressing the Board's concerns. Following
weeks of review, the Compensation Committee circulated a resolution that
detailed the stock option review. As stated during the Board meeting, the
Compensation Committee decided, in exercise of its judgment as outside
directors, to award options based on fairness among several members of
management. The Compensation Committee debated these issues at length.
Unfortunately, as management directors, you and I were not able to vote on, or
debate these issues, nor should we.
You are correct that you have raised concerns at the Board level on issues
concerning ICC. I cannot recall a single instance where you were told that your
ideas were not valid. The outside directors may have, at times, disagreed with
your conclusions. In the end, the majority of the Board approves actions. At all
times, however, the Board has listened to, and in many cases followed your ideas
and concerns. ICC's Board minutes confirm your active role, and the Board's
response to your concerns.
In response to your allegations that you have not been properly advised of the
financial affairs of the company, you were always very aware, during your entire
tenure as a Board member with ICC, of our precarious financial condition due to
the fact that our company was underfunded from the start. You have known that I
have not taken a pay since June of 2000 and all of the executives at the
corporate office have deferred receipt of payroll from time to time in order to
stretch our cash position, while working feverishly to implement our new annuity
oriented business model. You also have known that I have personally funded this
company with personal loans. On a continuing basis I have explained to you how
tight our cash flow was and how important it was to control expenses. You and I
have not attended several important cable conferences because of the fact. I
also informed you many times that Bill Walsh, our CFO, and Rick Steele, our
Controller, attended to the financial details of our public company on a
day-to-day basis.
You have known from the start, in January of 2000, that I would not even chance
moving you and your family until we knew ICC's financial situation was stable.
Being aware of that fact, you petitioned me to be nominated for a board
position, to which I obviously agreed. Based on these facts, I totally disagree
with your reasons and the justification for your resignation.
At your request, however, ICC will accept your resignation as a director of ICC,
and will file appropriately. We look forward to working with you on our multiple
opportunities as an officer of ICC.
Yours truly,
/s/ Mike
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Michael F. Mulholland