email from sen action group

I attach the following received today by email for the information of readers.........see my disclaimer at end.........

Senetas Shareholders Action Group
http://www.senetas-action-group.org
email:[email protected]
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Senetas Shareholders Action Group (SSAG)
Address: P O Box 4372 Parkville VIC 3052
Phone: 61 3 9842 8225 Fax: 61 3 9842 8225
28th October 2005

Dear Senetas Shareholder,
Please refer to the letter from Senetas Corporation dated 27th October 2005, addressed to
you.
In response to the letter and on behalf of the Senetas Shareholders’ Action Group (SSAG),
below are our reasons as to why we think that the recent actions performed by the Board of
Senetas Corporation are not in the interests of all shareholders.
SSAG has nominated four directors to be elected at the Annual General Meeting (AGM).
However, there are only two positions available for election. On the 4th October 2005, SSAG
had requested the Board to include additional positions to be voted at the AGM but the Board
refused to do so. The Board had already been informed that if they did not comply with the
request, an EGM would be called. As a direct result of their decision, an EGM Notice was
given to the company on the 6th October 2005. The Board was fully aware of the situation and
deliberately made the decision to waste the company’s additional resources, management
time and expenses by not making additional positions available at the AGM in the first place.
It is obvious that the Board had deliberately made misleading statements to shift the cause of
additional management time and expenses to the group of shareholders. It is definitely not the
fault of the group of shareholders but the Board instead.
Section 249D of the Corporations Act states that a minimum of five percent of voting power of
shareholders is required to call an EGM. SSAG does represent significantly much more than
the stated 7.7 percent of total votes. This group of shareholders are currently unrepresented
on the Board and requires representation to safeguard their interests and also to represent
the rest of the minority shareholders.
The Board has moved to limit the discussion of business which will be conducted at the
Extraordinary General Meeting (EGM) to be held on the 6th December 2005.
Five out of a total of seven resolutions put forth by a group of Senetas shareholders have
been totally censored and excluded. These are:
Resolutions Included for voting at the EGM by the Board:
Resolution No. 1 Removal of Mr. Francis Galbally as director
Resolution No. 2 Removal of Mr. Peter Samuel Cook as director
Resolutions totally censored and excluded from voting at the EGM by the Board:
Resolution No. 3 Appointment of Dato' Larry Nyap Liou Gan as director
Resolution No. 4 Appointment of Dr Roger Knight as director
Resolution No. 5 Appointment of Mr. Desmond Wee as director
Resolution No. 6 Appointment of Mr. Jack Szydzik as director
Resolution No. 7 That the company shall not provide any loan to the Directors,
Executives or Employees of the Senetas Group of Companies
without first obtaining shareholder approval.



Senetas Shareholders Action Group
http://www.senetas-action-group.org
email:[email protected]
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Senetas Shareholders Action Group (SSAG)
Address: P O Box 4372 Parkville VIC 3052
Phone: 61 3 9842 8225 Fax: 61 3 9842 8225
The action of censoring and excluding the five resolutions by the current Board is a definite
infringement of your rights as a shareholder to determine the direction of your Company
which is vested with the shareholders and not the Board.
The Board allegations that the four candidates had failed to comply with the requirements of
the Company’s Constitution is incorrect. The candidates had complied with the Corporations
Act using legal counsel in serving notice to the company and had given the company Letters
of Consent to act as Directors. This action taken by the Board is in direct violation of the
Corporations Act 2001. The company’s Constitution and the Board’s decision cannot override
the Corporations Act 2001 but the Corporations Act 2001 can override the company’s
Constitution and the Board’s decision.
This matter of censoring by the Board shall be brought to the attention of the Australian
Securities Investment Corporation (ASIC) on behalf of the shareholders.
SSAG has recommended the nomination of the four directors above, in order to contribute
additional skills and experience to compliment the current Board. The current Board lacks the
additional skills in order to bring the company to the next level by accelerating its growth and
development. With the additional four directors, your company shall be in a better position of
achieving greater profits resulting in a much higher share price and bringing greater wealth to
the shareholders.
Additional directors will bring about a more balanced Board, corporate governance and
transparency to the activities of the company as well as to represent a substantial group of
shareholders who currently have no representation on the Board.
SSAG shall continue to take necessary actions to ensure that their representative directors
are on the Board.
We believe that the practice of requiring shareholders approval of loans to directors,
executives or employees will protect the shareholder’s interests.
We are of the opinion that the rejection of such safety measures and value adding proposals
provide evidence that the existing Board are definitely not acting in the shareholders’ best
interests but their own.
The majority of the Board consisting of Mr Galbally and Mr Cook have not disclosed to the
market of the potential sales of SONET and Ethernet products until very recently when SSAG
started taking actions to make changes to the Board and also expressed a number of hot
issues on the SSAG website. Please visit our website: http://www.senetas-action-group.org.
One of the hot issues questioned the apparent gap between the projected net profit forecast
of more than $11 million for the financial year 2006 and SafeNet Inc. projected sales forecast
of US$250 million per annum growing to US$500 million per annum by 2008. Similar forecast
are also made for Ethernet products. It also questioned the Board’s action of not having
continuous disclosure as and when information was available. It is apparent that lack of
continuous disclosure has hampered the increase of share price until recently with the
projected sales forecast. The share price has in the past been stagnating between 25 cents
and 30 cents since January 2005 despite having achieved a high of 43.5 cents in October
2005.
The recent sales figure announced in the last few weeks were already made known to the
company in mid 2005 by SafeNet Inc. during the analyst presentations which were available
through the internet. If the company had adopted the policy of disclosing this significant information to the market and the shareholders, the share price and market capitalization
would have achieved the current price of around 50 cents at that time i.e. in mid 2005. By
now, the share price would have been much higher than the current levels of around 50 cents.
The Board also lacks transparency and disclosure relating to the relationship between
SafeNet Inc. and the Senetas Group of Companies; cash flows from the 30% royalty income
from SafeNet Inc; the transactions relating to Payments to Suppliers and Employees and
related party transactions.
Based on the information presented above, SSAG encourages you to vote and recommends
that it is in your interest to vote FOR in each of the two resolutions by marking two "X"s in the
FOR box as shown in the attached EGM Proxy Form as follows:
FOR
Item 1. Removal of Francis Galbally as director X
Item 2. Removal of Peter Samuel Cook as director X
DO NOT mark "X" for the appointment to the Proxy for the Chairman or insert any name in
the Appointment of the Proxy box. Please leave them blank.
You may use the proxy form already sent to you by the Company or if you have not received
it, then you may complete the attached Proxy Form by completing Name, Address and Holder
Identification Number (HIN) , Contact Name, Contact Daytime Telephone and Date.
Please do not forget to sign the Proxy Form and fax it back to Computershare (Fax: 61 3
9473 2555) immediately.
Or Post immediately to: Share Registry
Computershare Investor Services Pty Ltd
Repaid Paid 242
GPO Box 242
Melbourne
Victoria
AUSTRALIA 3001
If you have already voted and would like to change your votes according to the above, you
can still so do by completing the attached Proxy Form according to the above given
instructions and returning the Proxy Form immediately to Computershare.
If you have voted according to the above, you may wish to send a copy of the Proxy Form
indicating the number of votes to SSAG, P O Box 4372 Parkville, Victoria, Australia 3052 or
email to: [email protected] for vote tallying purpose immediately.
ABOUT THE SSAG: The Senetas Shareholders Action Group is a non-profit organisation
voluntarily funded by a collective of Senetas Shareholders. The need for such an organisation
has arisen as a direct result of the current issue faced by shareholders of Senetas
Corporation regarding the conduct of the existing Board. Our objective is to take the
necessary and appropriate actions in order to rectify the current situation in order to protect
the interest of all Senetas shareholders and to maximise the wealth through a higher share
price and market capitalization. Please visit our website for further information
http://www.senetas-action-group.org.


PLEASE NOTE: I am not a member of the Action Group and only received this info as a SEN shareholder who had emailed the AG to obtain further info. about their objectives etc.

I do not offer an opinion as to whether their position should be followed or otherwise.......make up your own mind.

cheers