|I find this resignation of two AATK directors in 1999 very interesting indeed:|
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
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")
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 7, on June 10, and on June 17, 1999, Mr. Presleycaused 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.
. 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 Beveragetransactions.
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.
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