David S. Snyder Elliot G. Steinberg
1097 Ash Street P.O. Box 3271
Winnetka, IL 60093 100 West Colorado
(312) 658-5742 Telluride, CO 81435
(970) 728-4343
December 6, 1999
The Board of Directors
American Access Technologies, Inc.
C/o Mr. John Presley, President
37 Skyline Drive, Suite 1101
Lake Mary, FL 32746
Re: American Access Technologies, Inc. (the "Company")
Gentlemen:
We, David Snyder and Elliot Steinberg hereby resign effectively
immediately as members of the Board of Directors of the Company. John Presley
has made it impossible for us to carry out our duty of care and fiduciary
responsibilities to this Company and to the shareholders that are its ultimate
owners.
We were originally appointed as Directors on April 10, 1999. We had
been nominated as "outside" Directors by the "Series A 10% Senior Convertible
Preferred Stockholders" who, pursuant to their stock purchase agreement had the
right to nominate two directors to the Board.
However, since our appointment, Mr. Presley has been extremely hostile
to our directorships. To put it simply, (and as described below in greater
detail), Mr. Presley has completely ignored us as Directors and acted without
Board involvement or consent.
We have found that (1) Mr. Presley acts without regard to the
provisions of the corporate by-laws; (2) fails to provide the Directors with
relevant information; (3) may have "wasted" corporate assets; and (4) breached
his fiduciary duty to the minority shareholders.
1. On June 7, on June 10, and on June 17, 1999, Mr. Presley
caused the Company to loan a total of $1,260,000.00 to a
Mr. Anthony Leavitt. The loans were made without the
consent of the Company's Board of Directors and without any
apparent business purpose. Notwithstanding our repeated
requests, Mr. Presley has not provided us with any
explanation for this series of transactions. We believe
that Mr. Leavitt is in some way connected to a securities
firm called "Capital International" based in Miami, Florida
and had acted in the past as a financial advisor to the
Company. The Leavitt transaction was not disclosed in the
Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999. We first became aware of this
Transaction on September 24, 1999.
2. On or about August 10, 1999, we requested the opportunity
to review, before its filing with the Securities and
Exchange Commission, the Quarterly Report on Form 10-Q to
be issued by the Company for the second quarter of 1999.
Mr. Presley refused to provide a draft of this report prior
to its filing. We have subsequently learned that Mr.
Presley refused to permit the Company's chief financial
officer, Charles Frampton, to review the books and records
of Omega Metals, Inc., a consolidated subsidiary of the
Company, in preparing the Form 10-Q.
3. On or about September 2, 1999, we sent a letter to Mr.
Frampton, requesting certain relevant corporate materials
be sent to us to adequately prepare for a formal board
meeting scheduled to take place later in September. The
items requested included the usual and customary
information that any Directors would find necessary to
carry out his/her responsibilities (such as business plans,
budgets, copies of minutes, sales projections, compensation
agreements, etc.). Mr. Presley responded on September 9,
1999, with a memorandum that the information requested
could only be viewed on the "premises" and was otherwise
available only to senior employees of the Company. Mr.
Presley's conduct was in direct contravention of the
Company's by-laws and good corporate governance.
4. We attended our only formal Board Meeting on September 24,
1999. We inquired about two transactions: a "loan" to a
firm called "Universal Beverage" in the amount of $500,000;
as well as the transaction with Mr. Leavitt. We believe
that Universal Beverage was a "client" of Capital
International and that persons connected with the Company
are or were also shareholders of Universal Beverage at the
time the transaction was entered into. John Cooney, a
director of the Company, is also a director and shareholder
of Universal Beverage. No business purpose for the loan has
been disclosed to us. The Universal Beverage loan has not
been repaid and is overdue. The Company refuses to properly
set up a "reserve" or to discount the value of the note in
any manner, but continues to treat it at face value as an
asset of the Company.
5. Following the September 24 Board Meeting, we asked Mr.
Frampton to provide us with all written materials
concerning the transactions with Universal Beverage and Mr.
Leavitt. On Monday On Monday, September 27, 1999, Mr.
Frampton was told by Mr. Presley that he could not have
access to the Company's minute book or other records he had
requested on our behalf. Following this confrontation, Mr.
Frampton was pressured by Mr. Presley to resign as the
Company's Chief Financial Officer and a Director.
6. Shortly after the September 27 incident, Mr. B.E. Story
replaced Mr. Frampton as "acting" Chief Financial Officer.
Mr. Story, without any detailed explanation stated that the
Leavitt notes related to an exercise
of $8.00 warrants for common stock and "...were properly
treated on the books as an increase in capital stock for
the par value and reduction of paid-in-capital." We
demanded in writing, as well as through the law firm of
Foley & Lardner, special counsel to the Board of Directors,
that the Company fully disclose in its third quarter
financial statements and Form 10-Q all of the facts
surrounding the Leavitt and Universal Beverage
transactions.
7. On October 19, 1999, the Company filed a Current Report on
Form 8-K disclosing that on August 25, 1999, Charles
Frampton resigned as a directors and chief financial
officer and on October 1, 1999, Victor D. Phillips resigned
as a director. First, Mr. Frampton did not resign as a
director until the end of September. Mr. Frampton attended
the September 24 board meeting and participated as an
Officer and Direcotr. Although requested by us, we have
never received copies of the proposed minutes of the
September 24 board meeting and do not understand how Mr.
Frampton's participation could be ignored? More
importantly, the Form 8-K is misleading in that it did not
indicate that the reasons for Messers. Frampton and
Phillips resignation were over disagreements with
management over the company's operations, policies and
practices. As a result of these resignations, the Company's
board of directors consisted of Messers. Presley and Cooney
and us.
9. On November 12, 1999, the draft Form 10-Q to be filed on
November 15 was sent by facsimile to us. We immediately
informed the Company that the draft failed to fully
disclose all the relevant facts concerning the Leavitt and
Universal Beverage transactions. The Company refused to
correct and update its prior statements about these two
transactions. We were unable to comment on any other
material aspect of the draft Form 10-Q since we were not
given any opportunity to review corporate sales or other
activities during the third quarter.
10. As of this date we still do not know (a) who is Anthony
Leavitt; (b) how did he obtain Warrants from the Company;
(c) why were unsecured promissory notes accepted (d) who at
the Company approved this transaction; (e) how did this
transaction occur without the express approval of the
managers of the corporation, and; (e) why the transaction
has not been fully disclosed to the Board and to the
Public?
11. On November 19, 1999, the Company purported to file a proxy
statement soliciting proxies for a special meeting of
shareholders to elect five directors. The proxy statement
is materially misleading in that the Board of Directors of
the Company took no action to call this meeting and did not
nominate any of the individuals purporting to stand for
election.
Mr. Presley seems to be completely unconcerned about the legal
requirement of his position as "President" and a "Director" of a public
company. He
seems to have no regard for the ethical standards the community
expects. He appears unable to lay aside the prejudices of an insider
and make decisions as an officer and board member with the entire
corporate interest uppermost in his mind. In short, we believe Mr.
Presley has no understanding of any of the requirement of the role of a
top manager and fiduciary of a public entity.
Since becoming board members, we have attempted to obtain
desirable changes in corporate governance. Mr. Presley's conduct has
prevented us from being effective Board members. As a result, we hereby
resign effective immediately as Directors of the Company.
However, since we believe it is imperative that we attempt to
seek immediate governmental protection for the interests of minority
and other shareholders, please be advised that a copy of this letter
will be sent to the Securities and Exchange Commission and to the
Attorney General of the State of Florida for their reference. We also
believe that the Company is required to file a Form 8-K disclosing our
resignation and the reasons therefore pursuant to Item 6 of Form 8-K.
Sincerely,
s/David Snyder s/ Elliot Steinberg
David Snyder Elliot Steinberg
Cc Division of Enforcement, Securities and Exchange Commission
Attorney General of the State of Florida
Joel Bernstein, Esquire
Gardner Davis, Esquire
Elliot G. Steinberg
100 West Colorado
Telluride, CO 81435
David S. Snyder
1097 Ash Street
Winnetka, IL 60093
December 22, 1999
Gentlemen:
I am in receipt of your resignation letter. Our positions on material issues are
diametrically opposed. As you know, we have retained the law firm of Foley and
Lardner to review conflicts on matters addressed by management and by the Board
of Directors. Our accountants are also reviewing financial transactions.
I believe your letter is one last effort to depress the price of the stock by
publishing misleading statements to the Securities and Exchange Commission, as
this letter must be attached to our formal filing on Form 8-K. Should the stock
price suffer by your actions, allowing the Preferred Shareholder you represent
to convert at a more lucrative price, I will hold you accountable for damage to
our common shareholders' positions.
In answer to the allegations in your letter:
1.) On August 28, 1997, the American Access Board of Directors authorized
the modification of terms and conditions of the $8 warrants to include
just such a treatment as employed with Mr. Leavitt, provided for in the
April 7, 1999 Registration Statement File No. 333-70805 for 720,000
shares of common stock. (Incidentally, I joined the AATK team in
November, 1998, so did not "cause" anything in August, 1997). The
transaction was accounted for after consultation with our legal counsel
and our accountant, both of whom determined the proper procedure for
treating this. You may recall that you did receive a package detailing
this transaction.
2.) We did send you the third Quarterly Report to be filed with the
Securities and Exchange Commission, with a weekend for you to review
it. Had you done so, and submitted your comments back to us first thing
Monday morning, we would have had time to review them with you. As it
was, you did not voice objections until a little more than an hour
before the deadline for edgarizing and submission. It seems you were
more interested in criticizing our efforts than in aiding them.
3.) My belief has and always will be that you both had an interest in
driving the price of the stock down to benefit a Preferred Shareholder.
My duty is to protect the public company and all the shareholders I
serve, and forwarding to you every item you requested would be akin to
supplying Hitler with Gen. Patton's strategy. You were invited to visit
the premises and at your leisure review any and all
documents. We offered to pay your expenses as directors if you felt you
needed several days in our offices to review this material. You never
took us up on that offer. All we got from you was complaint after
complaint, but no helpful assistance.
4.) The Universal Beverages Holdings Corp. note was fully disclosed and
explained to you, and in our third quarterly report on Form 10-Q to the
Securities and Exchange Commission. The note, now in default, is
secured by assets. Universal Beverages is in the process of
recapitalization, and we are confident that we will be repaid. We also
disclosed in the Form 10-Q that John Cooney is a Board member for both
Universal and American Access. The Board of Directors reviewed and
approved this loan in September, 1999. A copy of the minutes of that
meeting were provided to you.
5.) The Company's Minutes book and other sensitive records were kept in a
safe deposit box at our bank. No employee was `denied access', but it
did become apparent that you both were pressuring Mr. Frampton into
violating company policy. My belief is that you would have used any
information attained to further your client's interests, not those of
the common shareholders. All of the information you requested was made
available to you without your intentionally compromising senior
management into providing it. Mr. Frampton later resigned on his own
accord.
6.) Our Form 10-Qs are reviewed by Corporate Counsel Joel Bernstein, who
advises us about matters such as these. The Universal note was in
default, and Mr. Bernstein advised us to disclose this in the third
quarterly report, which we did. The Leavitt note was properly treated
on the books, after advice from corporate counsel to Mr. Frampton, our
CFO who filed the second quarterly report.
7.) The date of Mr. Frampton's resignation was in error on the 8-K we
filed. He did resign on September 24, 1999. The 8-K was not misleading,
as SEC Rules, particularly Item 6(a) of Form 8-K, state that
resignations by directors should be disclosed if the resignation is
over "a disagreement on any matter relating to the registrant's
operations, policies or practices, and if the director has furnished
the registrant with a letter describing such disagreement and
requesting that the matter be disclosed, the registrant shall state the
date of such resignation or declination to stand for re-election and
summarize the director's description of the disagreement." Neither Mr.
Frampton nor Mr. Phillips indicated any disagreement in their letters
of resignation.
8.) You have skipped Point 8, and so shall I.
9.) You did not "immediately" inform the company that the draft of the Form
10-Q sent to you by facsimile on November 12, 1999, did not meet your
standards. You returned your comments to us a little more than one hour
before the filing deadline on November 15,1999, past 3 p.m. Deadline
was 4:30 p.m.
10.) Anthony Leavitt organized the framework of American Access
Technologies, Inc., secured the capital and received 270,000 $8 AATK
warrants in the process. He was the Mergers and Acquisitions partner
associated with our investment banker, Capital International Securities
Group, Inc. Mr. Leavitt left Capital International in May, 1999, and
was assigned the 270,000 $8 warrants for his services. As indicated
in Point 1 above, these warrants were properly filed under Registration
Statement 333-70805 effective April 7, 1999.
11.) The proxy statement that you call "materially misleading" was carefully
worded by Attorney Joel Bernstein and approved by Attorney Gardner
Davis of Foley and Lardner. Following the by-laws, and because you both
refused to participate in a Board meeting setting the annual meeting
and nominating a slate of directors, it was determined that the
remaining active directors concerned with the company and its
shareholders could nominate a slate. If you will read the proxy
statement closely, you will see that it is written to reflect this.
Again, may I remind you that should your last ditch effort to depress the stock
with the misleading statements contained in your letter result in such an
occurrence, facilitating best conditions for conversion of Preferred Shares, I
am holding you accountable for damage to our common shareholders' positions.
Sincerely,
John Presley
President