EXHIBIT 10.18
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LETTER OF INTENT
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THIS LETTER OF INTENT between ADVANCED COMMUNICATIONS TECHNOLOGIES INC.,
of 00000 Xxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx, Xxxxxx Xxxxxx of
America 92612, a USA-based corporation incorporated in the State of Florida and
publicly traded on the OTCBB under ticker symbol "ADVC" (hereinafter "ADVC");
and ADVANCED COMMUNICATIONS TECHNOLOGIES (AUSTRALIA) PTY LTD (ACN 866 856 817)
of Xxxxx 00, 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxx ("ACT"), a private
corporation incorporated in the State of Victoria, Australia, (hereinafter
"ACT").
1. MUTUAL INTENTION OF THE PARTIES AND BINDING NATURE
1.1. This Memorandum of Understanding ("LOI") contains the
preliminary principles and guidelines regarding the basic
content of an initial Letter of Intent ("LOI") that the
parties have mutually agreed upon, and have accepted for the
purposes of preparing a formal legal agreement, that will
contain all terms, conditions, and explanations that the
parties hereby agree to prepare, finalize and execute within
sixty (60) days of the execution of this LOI.
1.2. This LOI is, and the obligations of the parties pursuant to it
are, legally binding on the parties, notwithstanding the
absence of a formal agreement relating to the subject matter
of this LOI.
2. BACKGROUND
2.1. ADVC is the registered holder of 200 fully paid ordinary
shares in the capital of ACT, comprising 20% of the issued
capital of ACT.
2.2. ACT is the registered holder of 5,000,000 (five million) fully
paid ordinary shares in the capital of ADVC.
2.3. ACT is developing and owns all of the intellectual property
rights in and to a product known as "SpectruCell," a multiple
protocol mobile telephone base station (using software defined
as radio technology) ("SpectruCell"). Four patents regarding
the SpectruCell technology have been filed.
2.4. ACT has granted to ADVC certain licensing and marketing rights
for SpectruCell in North, South and Central America, as more
fully described in a "Licensing Agreement" between the
parties.
2.5. The venture capital market in Australia is not as buoyant or
extensive as the USA financial marketplace for a product of
this nature. Accordingly, it may be difficult to raise
appropriate capital in Australia to enable ACT to finalize and
commercialize SpectruCell in the global marketplace.
2.6. Venture capital investors in the United States of America have
expressed interest in investing in SpectruCell, but not with
the current relationship between ACT and ADVC regarding the
ownership of the Intellectual Property ("IP") rights.
3. OBJECTIVE
3.1. ACT, or subject to an internal restructuring of ACT pursuant
to which all of the intellectual property rights in and to
SpectruCell may be transferred to a related body corporate of
ACT, the related body corporate of ACT, wishes to transfer to
ADVC all of the intellectual property rights in SpectruCell to
ADVC so that ADVC may take advantage of venture capital
investors willing to invest in and commercialize SpectruCell
in the USA marketplace and globally.
3.2. ACT agrees to re-purchase from ADVC all of the shares in ACT
registered in the name of ADVC.
4. CONDITIONS PRECEDENT TO THE TRANSFER OF THE INTELLECTUAL PROPERTY
Completion of the transactions contemplated in clause 2 will be subject
to the fulfillment of the following conditions precedent, to be fulfilled by not
later than the date on which the transfer of all of the intellectual property
rights in and to SpectruCell from ACT to ADVC is completed:
4.1. ADVC must undertake a capital raising of not less than US$80
million, which capital raising must be underwritten by an
underwriter reasonably approved by ACT;
4.2. ADVC enters into an agreement with ACT, or its nominee,
appointing ACT, or its nominee, as the sole contractor, with
the right to appoint sub-contractors, to finalize the
development of SpectruCell for commercialization and for any
future development of SpectruCell;
4.3. such regulatory approvals for the proposed transactions by the
shareholders and members of the Board of Directors of ADVC as
may be required:
4.4. the granting of all consents required by law, the listing
rules of the Nasdaq exchange, and any other regulatory body
having jurisdiction over ADVC and its activities; and
4.5. the grant of all consents required by law or any other
regulatory body having jurisdiction over ACT and its
activities.
5. PURCHASE PRICE FOR SPECTRUCELL
5.1. The purchase price payable by ADVC to ACT, or a related body
corporate of ACT, for all of the intellectual property rights
in and to SpectruCell will be US$125 million.
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5.2. The purchase price referred to in clause 5.1 will be satisfied
on the completion date of the transfer of all of the
intellectual property rights in and to SpectruCell from ACT,
or a related body corporate of ACT, to ADVC, by ADVC.
5.2.1. paying to ACT, or a related body corporate of ACT,
US$40 million in cash; and
5.2.2. issuing to ACT, or a related body corporate of ACT,
200 million fully paid shares of common stock in the
capital of ADVC at an issue price of US$0.30 per
share.
6. COLLATERAL AGREEMENTS AND ARRANGEMENTS
In addition to the transactions contemplated in clause 5:
6.1. ACT will buy back from ADVC the 200 fully paid ordinary shares
in the capital of ACT registered in the name of ADVC for a
purchase price of US$25 million, less any unpaid amounts still
owing to ACT from the original purchase by ADVC, in accordance
with the provisions of the Corporations Law of Australia;
6.2. in consideration of ACT, or its nominee, finalizing the
development and further developing SpectruCell, ADVC shall pay
to ACT, or its nominee, 20% of all license fees earned by ADVC
arising out of or in connection with the grant of any
license(s) relating to embedded software pursuant to the
commercial sale of SpectruCell mobile telephone base stations.
7. EXPIRY OF THIS LOI
Unless otherwise agreed in writing by the parties, this LOI and the
rights and obligations of the parties pursuant to it shall expire on the date
that is 12 months after the date on which it is executed.
8. REASONABLE ENDEAVORS
Each of ACT and ADVC agrees that it will use all reasonable endeavors
to progress the transactions contemplated by this LOI in a timely and
expeditious manner so as to complete the transactions in the shortest possible
time without compromising the objectives of either ACT or ADVC.
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9. ANNOUNCEMENTS
Neither ACT nor ADVC may issue, and shall procure that their directors,
officers, employees, contractors, advisers, shareholders and related bodies
corporate do not issue any press release or otherwise make any public statement
or announcement with respect to this LOI or the transactions contemplated by it
without the prior written consent of the other of them, which consent shall not
be unreasonably withheld or delayed.
EXECUTED FOR AND ON BEHALF OF
ADVANCED COMMUNICATIONS
TECHNOLOGIES (AUSTRALIA) PTY LTD
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Signature
Name of Signatory (Print): Xxxxx Xxxxxxx
Capacity: Authorized Signatory
EXECUTED FOR AND ON BEHALF OF
ADVANCED COMMUNICATIONS
TECHNOLOGIES INC.
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Signature
Name of Signatory (Print): [Xxxxx Xxx]
Capacity: [Chairman/CEO]
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