American Electric Technologies Inc – ‘8-K’ for 12/6/99 – EX-17

On:  Thursday, 12/23/99   ·   For:  12/6/99   ·   Accession #:  1042910-99-1825   ·   File #:  0-24575

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         3     10K 
 2: EX-17       Resignation Letter of David Snyder and Elliott         7     32K 
                          Steinberg.                                             

EX-17   —   Resignation Letter of David Snyder and Elliott Steinberg.

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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

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                    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  

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                  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                                                   

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 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                                        

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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           

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         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

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         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                                                                       

Dates Referenced Herein   and   Documents Incorporated by Reference

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		6/30/99		2					10QSB
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