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Exhibit 20.01
PPI Capital Group, Inc.
1661 Lakeview Circle
Ogden, Utah 84403
May 18, 2000
Henry A. Macchio, President
Utilicom Inc.
323 Love Place
Santa Barbara, California 93117
Re: Proposed Exchange of Shares of PPI Capital Group, Inc. ("PPIK") for one
hundred percent (100%) of the outstanding shares of Utilicom Inc. ("UC
Wireless")
Dear Mr. Macchio:
This letter will confirm the recent discussions we have had with you and
your representatives relative to the proposed exchange of shares of the common
stock of PPIK for all of the issued and outstanding common stock of UC
Wireless. The objective of our discussions has been the execution and
consummation, as soon as feasible, of a formal agreement between PPIK and UC
Wireless (the "Agreement"), which among other things, would provide for the
various matters set forth below:
1. Just prior to the Closing of this transaction, PPIK will have 13,739,867
shares issued and outstanding. At the Closing, Mark Scharmann will surrender
5,739,867 of his shares for cancellation so that there will be 8,000,000
shares outstanding.
2. PPIK will acquire all of the issued and outstanding common stock of UC
Wireless from the shareholders of UC Wireless in exchange for 172,400,000
restricted shares of common stock of PPIK ("PPIK Common Stock"), which will be
delivered upon the closing of this transaction (the "Closing Date"). This
exchange is intended to qualify as a tax-free reorganization under Section 368
of the Internal Revenue Code of 1986, as amended, and the shares of PPIK
received by UC Wireless shareholders will be received on a tax-free basis.
The shares to be issued by PPIK will be "restricted securities" as defined in
Rule 144 under the Securities Act of 1933, and an appropriate legend will be
placed on the certificates representing such shares, and stop transfer orders
placed against them.
3. Prior to the Closing, UC Wireless will raise a minimum of $5,000,000 in
net proceeds in a Rule 506 offering to accredited investors overseas. The
offering will be managed by CCRI Corporation and the funds will be escrowed in
the trust account of Krys Boyle Freedman & Sawyer, P.C., legal counsel for UC
Wireless.
4. On the Closing, PPIK will also issue a total of 19,600,000 shares as
finder's fees for this transaction, which will bring the total number of
shares issued and outstanding after the Closing to 200,000,000 shares.
Following is a breakdown of the shares to be outstanding:
Shares to be retained by current PPIK shareholders 8,000,000
Shares to be issued for $5,000,000 in net proceeds 22,400,000
Shares to be issued for UC Wireless 150,000,000
Shares to be issued for finder's fees (PPIK) 2,000,000
Shares to be issued for finder's fees (UC Wireless 17,600,000
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Total 200,000,000
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Upon the Closing, UC Wireless will become a wholly-owned subsidiary of PPIK.
5. The parties will use their best efforts to close this transaction on or
before June 30, 2000.
6. At the Closing, the present PPIK officers and directors shall deliver to
UC Wireless their respective letters of resignation, along with minutes of the
PPIK Board of Directors accepting such resignations and appointing to the PPIK
Board those persons designated by UC Wireless to be directors of PPIK.
7. Prior to Closing, UC Wireless will provide an unaudited balance sheet
and income statement for the period ended on a date within 60 days of the
Closing.
8. As soon as possible after the Closing, UC Wireless will call a PPIK
shareholder meeting for the purpose of seeking shareholders approval of a one
for ten reverse stock split, a change of PPIK's name to UC Wireless, and a
change of domicile to Nevada.
9. On the date of this Letter of Intent, the common stock of PPIK is
registered with the Securities and Exchange Commission pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended, (the "Act"), and
PPIK has filed all reports required to be filed by Section 13(g) of the Act
during the past 12 months. These reports were, when filed, accurate, not
misleading and complete in all material respects.
10. The common stock of PPIK is currently listed for trading on the OTC
Bulletin Board under the symbol PPIK.
11. On the Closing, PPIK will have no assets and no liabilities.
12. Once this letter is executed, all parties hereto, in reliance upon the
agreement represented herein, shall not, for a period of 45 days from the date
of execution hereof, negotiate with any other third party with respect to
undertaking any merger or stock or asset acquisition.
13. PPIK and UC Wireless will take all necessary steps to call meetings of
their respective directors as soon as possible to approve the terms of this
Letter of Intent.
14. Upon the signing of this Letter of Intent, PPIK and UC Wireless will
provide to each other full access to their books and records and will furnish
financials and operating data and such other information with respect to their
business and assets as may reasonably be requested from time to time. If the
proposed transaction is not consummated, all parties shall keep confidential
any information (unless ascertainable from public filings or published
information) obtained concerning the other's operations, assets and business.
15. This Letter of Intent may be executed in two or more counterparts, each
of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
16. Each party will pay its legal expenses incurred in connection with this
transaction whether or not the transaction is consummated.
17. Upon the execution by you and return to us of this Letter of Intent,
counsel for UC Wireless and PPIK will prepare an Exchange Agreement which
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shall contain provisions in accordance with this Letter together with such
further appropriate terms and conditions as legal counsel and the parties may
mutually determine. The Exchange Agreement shall be subject, in all respects,
to the approval of the respective Boards of Directors of PPIK and UC Wireless.
18. It is understood that the terms set forth in this Letter may not
constitute all of the major terms which will be included in the Exchange
Agreement, that the terms set forth herein are subject to further discussion
and negotiation, and that this Letter is an expression of intent only and is
not to create or result in any legally binding obligation upon the parties
hereto except with respect to paragraphs 12, 14 and 16.
If the foregoing accurately reflects our discussions, please execute and
return to the undersigned one copy of this Letter.
PPI CAPITAL GROUP, INC. UTILICOM INC.
By: /S/Mark A. Scharmann, President By: /S/Henry A. Macchio, President
