LETTER OF INTENT
Published on August 20, 2001
LETTER OF INTENT
BY AND BETWEEN
AMERICAN COMMUNICATIONS ENTERPRISES, INC.
And
AEROGROUP INCORPORATED
Table of Contents
1. Delivery of Shares of the Company.....................................1
2. Consideration for Transfer of Shares..................................2
3. Publicly-Traded Entity................................................2
4. ACE's Representations................................................2
5. Obligation to Close...................................................4
6. Exchange of Shares....................................................4
7. Management............................................................5
8. Further Provisions....................................................5
a. Exclusivity.......................................................5
b. Venue.............................................................6
c. Confidentiality...................................................6
d. Hold Harmless.....................................................6
e. Notice............................................................7
9. Remedies..............................................................8
10. No Brokers............................................................8
11. Construction of Terms.................................................8
12. Non-Assignable........................................................8
13. Binding Affect........................................................8
14. Time is of the Essence................................................8
15. Entire Agreement......................................................8
16. Modification..........................................................9
17. Severability..........................................................9
18. Facsimile and Counterparts............................................9
LETTER OF INTENT
LETTER OF INTENT (the "Agreement"), dated as of May ______, 2001, between
American Communications Enterprises, Inc. a Nevada corporation ("ACE"), and
AeroGroup, Inc., a Nevada corporation (the "Company"), and Shareholders of the
Company ("Shareholders").
Witnesseth:
WHEREAS, the Shareholders represent that they are the legal and beneficial
owners of all of the outstanding shares of capital stock of the Company; and
represent that the Company owns all of the properties (copyrights, patents,
trademarks, etc) that are included within the Company's Business Plan which is
attached hereto and incorporated herein as Exhibit A; and that the Company
warrants that it will use its best efforts to exact and accomplish its Business
Plan as set forth and defined within said Business Plan attached hereto as
Exhibit A; and
WHEREAS, the Shareholders desire to exchange 100% of the capital stock of
the Company for shares of ACE, a publicly traded entity, and ACE desires to
effect such exchange, all on the terms and conditions hereinafter set forth in
such a manner that the exchange will constitute a tax-free reorganization
pursuant to the provisions of Section 368 of the Internal Revenue Code of 1986,
as amended and other applicable IRS and SEC statutory codes and regulations as
mutually agreed upon between ACE and the Company's financial counsel:
WHEREAS, Frederick Wahl, the Chief Executive Officer of the Company, has
been empowered and authorized by the Shareholders and other interested parties
of the Company to enter into this Agreement, with such signature further
supported by the signatures of the other interested parties of the Company as
listed below; and
WHEREAS, the Company desires to raise not less than One Million Five
Hundred Thousand dollars (US$1,500,000.00) to be used for the Company's
expansion and growth plans in exchange for 20% of the stock of The Company; and
WHEREAS, ACE is willing to complete the fund raising for the Company in
consideration of the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and the mutual agreements
and undertakings hereinafter set forth, the parties do hereby agree to adopt a
said plan of reorganization. The principal terms of which are as follows:
1. Delivery of Shares of the Company. The Shareholders agree to transfer and
deliver to ACE, a public company, and ACE agrees to acquire 100% of the capital
stock of the Company, from the Shareholders, as well as all the shares of one of
the Company's affiliate entities listed below.
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2. Consideration for Transfer of Shares. Upon the terms and subject to the
conditions set forth in this Agreement, ACE agrees to deliver its common shares,
as more fully described in Article 4 below.
3. Publicly-Traded Entity. ACE represents and warrants that it is a publicly
trading and fully reporting company, and has at all material times been in full
compliance with all SEC and IRS codes and regulations. As a result of its
business, ACE is able to acquire operating companies through acquisitions and
mergers. ACE will assist the Company and work with the Company's legal and
financial representatives in all phases of this process to acquire the Company.
The process consists of the following steps:
a. Completing due diligence with and effecting an Agreement and
Plan of Exchange with ACE.
b. Obtaining appropriate audits and applicable regulatory approval, if any.
c. Raising the necessary capital, which the Company has identified as a $1.5
million funding, to be raised prior to, and paid to the Company at, the closing
of this transaction, subject to a bridge loan of $250,000 to be paid to Company
within two (2) business days of the full execution of this Letter of Intent.
This transaction shall close, pursuant to a definitive agreement approved by
both parties, on or before five (5) business days from the completion and
presentment of SEC qualified audited financial statements on the Company and its
affiliated leasing companies.
d. It is currently contemplated that substantially all of the shares issued to
the Company's Shareholders shall be subject to the applicable one (1) year
holding period and two (2) year volume restriction under Rule 144 of the
Securities and Exchange Commission (SEC).
The Company agrees to provide its full and maximum cooperation in the
accomplishment of these goals. Until the date the reorganization is fully
accomplished, the Company will continue to operate as an independent business
entity.
4. ACE's Representations.
a. ACE does not have outstanding and has not agreed, orally
or in writing, to issue any stock or securities convertible
or exchangeable for any shares of its stock, nor does it
have outstanding nor has it agreed, orally or in writing,
to issue any options or rights to purchase or otherwise acquire its stock.
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b. ACE is not subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of its stock.
c. That ACE has not violated any applicable securities laws or regulations in
connection with the offer or sale of its securities other than violations that
have been, or will before the exchange contemplated herein have been, correct by
post-issuance filings. Furthermore, at all material times, ACE has not been
de-listed, there is no pending litigation, and there have been no notices of
late filings by the SEC.
d. All of the outstanding shares of ACE's capital stock are validly issued,
fully paid, and non-assessable.
e. The Shareholders will have, and upon exchange thereof pursuant to the terms
of this Agreement, good and marketable title to the Shares, free and clear of
all security interests, liens, encumbrances, or other restrictions or claims,
subject only to restrictions as to marketability imposed by securities laws.
f. Assuming that the representations herein are true and correct, neither Tampa
Bay Financial, Inc. or ACE have violated or will violate any applicable
securities laws in connection with the offer or exchange of the Shares to
Shareholders hereunder.
g. ACE has complied with all applicable SEC reporting requirements, copies of
the last two (2) years of which will be delivered to the Company within five (5)
days after the execution of this Agreement.
h. ACE has SEC qualified audited financial statements, copies of the last two
(2) years of which will be delivered to the Company within ten (10) days after
the execution of this Agreement.
i. ACE submits that it has full authority of its Boards of Directors to enter
into this Letter of Intent and effect the transaction set forth herein.
j. Furthermore, there shall be no reverse split of the Company's shares for a
thirty (30) day period following the execution of an Agreement and Plan of
Exchange between the companies; secondly, for the next two (2) years following
such agreement, any reverse split (or reverse splits in the aggregate) shall not
be greater than ten (10) for one (1).
k. Contemporaneously with the closing of this transaction, all present officers
and directors of ACE will resign, and any necessary corporate minutes and/or
changes to the by-laws will be completed. The Shareholders shall elect all of
the new directors and officers post-merger/acquisition.
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5. Obligation to Close. Upon funding of the bridge loan of $250,000, this
Agreement shall be binding as to all clauses requiring closing of the Agreement
and Plan of Exchange. Upon a finding by a Court of competent jurisdiction that
good cause does not exist for the failure to consummate the transaction set
forth herein, there shall result a penalty of two hundred and fifty thousand
dollars ($250,000) from the breaching party. If the Company is found to be in
breach, then it shall pay to ACE the penalty sum. If ACE, Tampa Bay Financial,
or one of its assigns or agents shall be the breaching party, then ACE shall
forfeit the $250,000 bridge loan to the Company and the note shall be deemed
satisfied without any further action.
6. Exchange of Shares. Both parties have agreed to a distribution of controlling
shares of ACE, which is allocated as follows:
a. Up to twenty percent (20%) to ACE and/or its assigns or designees, based on
the amount actually raised under the Private Placement, together with an option
for the full twenty percent (20%) upon delivery of the full amount due under the
Private Placement (of which all costs and funds raised will come from ACE
through the sale of its allocated shares or otherwise) after the completion of
the stock reverse split: and
b. The remaining shares shall be transferred to the designated Shareholders of
AeroGroup, which will represent approximately sixty percent (60%) of ACE at
closing. Contemporaneously with the merger/acquisition of the Company by ACE,
one of the affiliated leasing companies (to be determined by the Company prior
to closing) will also be acquired by ACE as part of the foregoing consideration.
c. Upon completion of the contemplated Plan of Exchange, three (3) of the
following airplane leasing companies controlled by Rick Wahl and Mark Daniels
shall immediately be acquired ACE, with the fourth having already been acquired
at closing.
1. Genesis Capital Services, LLC
2. Allied Aircraft Holdings, Inc.
3. Flight Ventures, Inc.
4. Jetech Leasing, Inc.
d. Upon the subsequent acquisition of the three (3) remaining affiliate leasing
companies, the designated Shareholders of AeroGroup will receive an additional
twenty percent (20%) ownership in ACE, which will represent an aggregate
ownership interest of exactly eighty percent (80%) of the then issued and
outstanding shares of ACE by the designated Shareholders.
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As part of the transactions, ACE will arrange, at its sole cost and
expense (which may be reimbursed to ACE as part of the funds raised in
excess of One Million Five Hundred Thousand {US$1,500,000} under the
Private Placement) for the necessary primary funding of the Company in the
aggregate amount of One Million Five Hundred Thousand {US$1,500,000}, as
stated above.
7. Management. Post merger, ACE agrees to perform limited management services
for the Company on a best efforts basis. These services include, but are not
limited to, the following:
a. Procuring the services of legal counsel, acceptable to the Company, to effect
the transaction, at no cost to the Company.
b. Recruiting management and directors, if needed and approved by the directors
and the Shareholders of the Company.
c. Administrative and operational support, at no charge to the Company.
d. Assist in the implementation of a strategic plan for public relations and
dissemination of promotional materials, at no charge to the Company, to create
visibility and public awareness for the Company.
There shall be no charge to the Company for these services. AeroGroup shall
maintain direct operational control of its business and shall be entitled to no
less than three (3) directors on the Company's Board of Directors, which shall
be constituted of no more than five (5) directors, such that AeroGroup shall
maintain a majority on the Board at all material times.
8. Further Provisions:
a. Exclusivity. Subject to the terms of Item 4 of this document, the Company
agrees that without the express written consent of ACE, which consent will not
be unreasonably withheld, for a period of thirty (30) days after the date
hereof, and thereafter so long as negotiations are progressing with ACE on a
definitive written agreement, the Company and its Shareholders agree that they
will not solicit, accept, enter into, negotiate or otherwise pursue any offers
for the sale, transfer or assignment (by merger or otherwise) of the assets or
business of the Company, the sale or issuance of any shares in the Company, or
for employment of any of the professional personnel or any other key employees
of its business by any other individual or entity. The proposed transaction is
subject to the execution of a definitive written agreement satisfactory to all
parties, which shall contain customary representations, warranties and other
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provisions. The approval of the proposed transaction by ACE, and the receipt and
review by ACE of additional requested due diligence information with respect to
the Company is also a condition precedent.
Either party may terminate this Agreement for cause upon thirty (30) days
written notice. Cause is to be defined as including, but not limited to, a
material breach of this Agreement or the dissatisfaction of ACE with the
completion of its due diligence on the Company or the dissatisfaction of the
Company with the completion of its due diligence on ACE. The termination penalty
set forth above shall not be applicable or due if this Agreement is terminated
for cause.
b. Venue. Venue for any legal proceeding in connection with this Agreement shall
be Palm Beach County, Florida. Florida law shall govern any dispute between the
parties herein.
c. Confidentiality. The parties may request from each other certain documents
and other pertinent material related to the transaction including, without
limitation, financial data, tax information, future plans and other information
relating to the assets which the parties consider to be confidential. All of the
confidential information shall at all times be the property of the respective
parties, and they shall obtain no rights in any such confidential information
they obtain, until after closing of the transaction. Except as may be required
by applicable law(s) or as the parties may from time to time consent in writing,
the parties shall not, at any time, disclose any confidential information, or
any part thereof, to any person, firm, corporation, association, or other entity
for any reason or purpose whatsoever. Except as otherwise required herein, and
except for information that is being sold by the parties at such other time or
times as the parties may request, the parties shall immediately return to each
other all of their confidential information and shall not retain any copies
thereof and shall continue to refrain from any use whatsoever of any
confidential information. In the event either party takes any action or fails to
take any action in contravention of this Section, that party shall indemnify and
hold harmless the other party from any damage or claim that may arise as a
result of such action or inaction. In addition, that party shall be entitled to
collect from the other party all costs incurred in obtaining such
indemnification, including all attorney and court fees. The parties shall take
nay and all legal actions necessary to minimize any damages resulting from such
disclosure, to retrieve such disclosed confidential information, and to return
same to the other party upon their direction. Each party shall be responsible
for any action or inaction in contravention of this Section by their personal
representatives, successors and assigns.
d. Hold Harmless. Both the Company and ACE agree to hold each other harmless on
any act either performs other than acts of gross negligence, malfeasance, fraud,
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theft, or as set forth in "c" above in their effort to perform under this
Agreement. ACE and its Chairman/Chief Executive Officer asserts and indemnifies
that ACE has no pending litigation or disputes of any kind that could ultimately
result in litigation and will provide an Affidavit confirming the foregoing at
or before closing. Furthermore, each of the respective parties have conducted,
or will conduct, and are relying solely on their own independent research,
investigation and due diligence of each other, the Company, ACE, and the merits
of the proposed transaction set forth herein. All the parties hereto, and their
individual representatives, agents, and officers release and hold harmless Craig
I. Kelley, P.A. and Craig I. Kelley, Esquire, and acknowledge that he and his
firm have provided no advice or legal opinions to either side regarding the
merits of the transaction, or legal issues involving securities or transactional
law. The parties herein have been advised of the recommendation to hire
respective securities counsel to properly advise them of their rights,
responsibilities, obligations, and ramifications pursuant to the transaction
contemplated within this Letter of Intent.
e. Right of First Refusal. The Shareholders and/or the Company shall have a
right of first refusal to purchase the shares of the current shareholders of ACE
that are parties to this Agreement, Tampa Bay Financial, or any of their agents
or assigns at such time as they express an intent or desire to sell their shares
of ACE, regardless of whether such shares are free-trading or restricted under
Rule 144, or otherwise. The purchase price shall be the then existing bid trade
price on the day of acceptance of written notice offering the shares for sale,
The Shareholders and/or the Company shall have 24 hours from receipt of the
aforementioned written notice of intent and offer to sell in which to exercise
the offer and purchase any or all of the offered shares.
f. Notice. All legal notices under this Agreement shall be sent to the following
parties:
If to ACE: American Communications Enterprises, Inc.
Attn: Carl L. Smith, C.E.O.
355 Interstate Boulevard
Sarasota, FL 34240
941/923-1949 ~ 941/921-2821-- FAX
Email Address: CSMITH@TBFCORP.NET
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If to Company: AeroGroup, Inc.
Attn: Frederick R. WahI, C.E.O.
2715 N. Sheridan Road
Hangar 4, Suite 2
Tulsa, OK 74115
937/427-5377~ 937/427-5381-- FAX
Email Address: RWAHL1965@AOL.COM
With a copy to: Craig I. KelIey, Esquire
The Forum-- Suite 1012
1655 Palm Beach Lakes Blvd.
West Palm Beach, FL 33401
561/684-5524 2 561/684-3773-- FAX
Email Address: CRAIGKELIEY@MINDSPRING.COM
9. Remedies. If any party fails to abide by this Agreement, the other parties
will be entitled to specific performance, including immediate issuance of a
temporary restraining order or preliminary injunction enforcing this Agreement,
and to judgment for damages caused by such breach, and to any other remedies
provided by applicable law.
10. No Brokers. There are no claims for brokerage commissions, finders' fees, or
similar compensation in connection with the exchange based on any arrangement or
agreement binding upon any of the parties hereto.
11. Construction of Terms. Whenever the context so requires or admits, any
pronoun used herein may be deemed to mean the corresponding masculine, feminine
or neuter form thereof and the singular form of any nouns and pronouns herein be
deemed to mean the corresponding plural form thereof and vice versa.
12. Non-Assignable. This Agreement may not be assigned by either party without
the prior written consent thereof, which consent shall be at the sole and
absolute discretion of the party so requested.
13. Binding Effect. This Agreement shall be binding upon the parties hereto and
their respective successors and/or assigns.
14. Time is of the Essence. Time is of the essence of this Agreement.
15. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto and shall be construed under the laws of the State of
Florida.
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16. Modification. No modification of this Agreement shall be binding unless
signed by all parties to this Agreement and no representation, promise, or
inducement not included in this Agreement shall be binding upon any party
hereto.
17. Severability. In the event that any portion of this Agreement is found to be
unenforceable, said clause shall be severed from the Agreement and the remainder
of the Agreement shall remain in full force and effect.
18. Facsimile and Counterparts. A facsimile copy of this Agreement and any
signatures thereon, shall be considered, for all purposes, as originals. For the
purposes of facilitating the proving of this Agreement, as herein provided and
for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original.
Such counterparts together shall constitute but one and the same Agreement.
If the foregoing is in accordance with your understanding, please indicate your
agreement with the terms of this Letter of Intent by signing in the space
provided below.
Dated this day of May, 2001.
AMERICAN COMMUNICAITONS AEROGROUP, INC.
ENTERPRISES, INC.
By: /s/Carl L. Smith By: /s/Frederick R. Wahl
Carl L. Smith Frederick R. Wahl
Chairman/CEO Chief Executive Officer
By: /s/ Mark Daniels
Mark Daniels
Vice President
Witness:/s/ Craig I. Kelley Witness:
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