Form 8-K HTML Exhibit 10.1--04/13/01





ProCare
Industries, Ltd.1960 
White Birch Drive

Vista, CA 92083

706-599-8559



April 11, 2001




Mr. Chris Kessen

President

HK Utility Construction, Inc.

320 Whetstone Alley, Suite B

Cincinnati, OH 45202



Gentlemen:


        This
letter of intent will outline the mutual understandings, which have been reached
pursuant to which ProCare Industries, Ltd., a Colorado corporation
(“ProCare”) will acquire HK Utility Construction, Inc., a Delaware
corporation (“HK”). The completion of the transaction described herein
(the “Closing”) is intended to occur at the earliest practicable time,
but not sooner than the completion, to our mutual satisfaction, of the matters
set forth below. 


        We
intend that the following conditions will exist or that the following steps will
be taken at the earliest practicable time:


        1.
ProCare. ProCare is a public corporation, which shall have, at the effective
time of the Closing, no more than 1,120,000 shares of its common stock issued
and outstanding and held by approximately 2,100 shareholders of record. No
options or warrants to acquire ProCare securities will be outstanding.
ProCare’s no par value common stock is registered under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and has been so
registered for more than 10 years. ProCare’s most recent Form 10-QSB, for
the quarter ended September 30, 2000 and its Form 10-KSB for the fiscal year
ended December 31, 2000, were both timely filed with the Securities and Exchange
Commission. ProCare’s common stock is included in the Nasdaq OTC Electronic
Bulletin Board with the symbol “PCRF.OB.” As of the date of this
letter, ProCare has no assets and liabilities of approximately $30,000 and a
contingent liability of approximately $225,000 owed to its president, who is
obligated to satisfy all current liabilities of ProCare (including the cost and
expense incurred by ProCare in consummating the transaction contemplated
hereby), and a minimal loss carryforward. ProCare is not engaged in any business
and has no operations. ProCare is not involved in any pending litigation and has
no knowledge of any party or entity that has threatened to involve ProCare in
any litigation. 


        2.
HK.  HK is a privately-owned newly-formed Delaware corporation formed to
consolidate,  through  acquisition of operating  companies,  a national business
engaged in the underground utility  installation of fiber optic, gas, electrical
and cable  television  connections.  HK has  issued  letters  of intent to seven
acquisition targets (“Acquisition Targets”) for acquisition by HK. The
Acquisition  Targets have combined revenue for 2000 equal to approximately $28.0
million and EBITDA of  approximately  $3.22 million.  As of April 10,2001 HK has
received two Letters of Intent,  representing combined revenue for 2000 equal to
approximately  $7.0  million  and  EBITDA  of  approximately  $1.2  million.  HK
represents that it intends to acquire additional Acquisition Targets, which will
represent  minimum combined revenue for 2000 equal to $15.0 million,  and EBITDA
of $2.57 million.  HK also  represents  that it intends to merge Acquired Target
companies simultaneously at the time of closing with ProCare. HK represents that
it intends to raise new funding in the amount of approximately  $2.5 million for
general  working  capital and plans to complete this funding by May 31, 2001. HK
further represents that it and the acquisition entities identified above are not
parties  to any  pending  litigation  and  that  HK and its  management  have no
threatened  litigation  against  any of such  entities.  There are fewer than 35
shareholders  of HK,  including  the  owners of the  Acquired  Entities  to whom
ProCare shares are to be issued in connection with the Merger. 


        3
Structure of Transaction. The transaction shall be structured as
nontaxable to the shareholders of HK, as a merger (the “Merger”) of
ProCare’s subsidiary corporation, “FastPoint Acquisition, Inc.,”
a Delaware corporation, with and into HK pursuant to a triangular merger
agreement (an “A Reorganization”). Upon completion of the Merger,
including the simultaneous acquisition of the merger entities identified in the
preceding paragraph, there will be no more than 16 million shares of ProCare
common stock issued and outstanding, of which no more than 1,120,000 common
shares shall be held by current ProCare shareholders, amounting to approximately
7% of the outstanding common stock and the balance shall be issued to and held
by HK shareholders, equal to approximately 93% of the outstanding stock of
ProCare following the Merger. Following the Closing of the Merger, the former
shareholders of HK shall control ProCare and HK shall be a wholly owned
subsidiary of ProCare. 


        4.
Securities Implications. The ProCare stock to be issued to the HK
shareholders in the Merger shall be issued under Rule 506 of Regulation D, and
exempt from registration under the Securities Act of 1933, as amended (the
“Securities Act”). HK shareholders will receive restricted ProCare
common stock. 


        5.
Cash Payments. HK shall make cash payments to ProCare as set forth below.
ProCare shall use the cash payments prior to and at the Closing of the Merger to
pay all outstanding obligations and liabilities of ProCare, including amounts
owed to Robert W. Marsik, president of ProCare, such that at the time of Closing
of the Merger, ProCare shall have no assets, no liabilities and no contingent
liabilities. 


	 	        (a)
At the time  this  letter  of intent is  signed,  HK shall  pay to  ProCare,  by
certified  or  wire  transfer  funds,   $50,000;  this  cash  payment  shall  be
nonrefundable  unless: (1) ProCare withdraws from the merger transaction for any
reason other than the failure to complete the transactions in a timely manner as
contemplated by this letter of intent or by any subsequent plan and agreement of
merger, or (2) if ProCare’s due diligence review of HK establishes material
adverse  information about HK which would make the Merger improper or materially
and adversely affect Procare following the Merger.





	 	        (b)
$175,000 shall be paid to ProCare at the Closing, to be disbursed as
contemplated in this letter of intent, but none of which remain as an asset of
ProCare at the completion of the Merger. 






	 	        (c)
$75,000 shall be paid by delivery at the Closing of a Promissory Note payable to
the person or persons designated to HK by ProCare at the Closing. 






        6.
Name Change.  The Board of Directors of ProCare shall cause ProCare to file an
amendment to its Articles of Incorporation to change the name of the corporation to "HK Utility
Construction, Inc.," effective at or immediately following the Closing of the Merger.  Authoriza
tion to effect the change of name was given to the Board of Directors of ProCare by the
shareholders of ProCare at a meeting of shareholders held July 6, 1999.


        7.
Management. At the Closing, the officers of ProCare shall resign to be
replaced by persons designated by HK. Also at the Closing, the Board of
Directors of Procare shall elect three new directors, designated by HK at or
before the Closing, to the Board of ProCare. At least 10 days before the
closing, ProCare shall mail to its shareholders of record, and shall file with
the Securities and Exchange Commission, a notice containing the information
required by Rule 14(f)-1 adopted under the Exchange Act, notifying ProCare
shareholders of a planned change in control of the Board of Directors at the
time of Closing. At the Closing, each of the persons who are directors of
ProCare prior to the Closing shall deliver a form of written resignation, signed
by the director, dated and effective on the day of Closing. HK shall pay the
costs of said shareholder mailing, which is estimated to cost $5,000 to $7,000.
From and after the effective date of such resignations, the three persons
nominated by HK shall constitute the sole directors of ProCare. 


        8.
Due Diligence.  Each party acknowledges that it will cooperate with the other party
and will provide all information and documentation requested by the other party for the purpose
of completing a due diligence review in a prompt and timely manner.  Specifically, the parties
agree as follows:


	 	        (a)
ProCare shall provide HK copies of ProCare’s Form 10-KSB reports filed for
the fiscal years ended 1998, 1999 and 2000 and any Current Reports on Form 8-K
filed in 2000 and 2001. ProCare shall also provide HK with copies of all state
and federal tax returns filed by or on behalf of ProCare for the years 1998,
1999 and 2000. 






	 	        (b)
HK shall provide ProCare with copies of each letter of intent relating to the
acquisition targets of HK identified in paragraph 2 above, audited financial
statements for HK and the acquisition target companies for the period since
inception through completion of the most recent fiscal year, or for years ended
December 31, 1999 and 2000, if shorter, and federal and state income and other
tax returns filed by each of such entities for the same years and periods. 






	 	        (c)
At least five days prior to Closing, HK shall provide to ProCare a list of
HK’s shareholders, number of shares of ProCare common stock to be issued in
connection with the Merger, addresses and social security numbers for each
persons or entity to which ProCare shares are to be issued at the Closing. 






        9.
 Closing. The parties shall use their best efforts to cause the
Closing of the Merger to occur by May 4, 2000, subject to extension to May 15,
2001 by mutual consent. If the Merger is not completed by May 30,2001, Procare
may, at its option, terminate the agreement to merge, unless the delay is caused
by Procare. Both ProCare and HK shall use best commercial efforts to complete
their due diligence review, if any, of the parties to the transaction by April
29, 2001. The Closing shall be subject to the following additional conditions: 


	 	        (a)
A definitive Plan and Agreement of Merger (“Merger Agreement”) which
shall include the terms and conditions summarized in this Letter of Intent, and
other terms customary in such an agreement, shall be prepared by counsel to
Procare, approved and signed by the parties and approved by the requisite boards
of directors and shareholders of ProCare and HK. 






	 	        (b)
Any acquired approval by shareholders of HK in order to effect the transaction
in accordance with applicable corporate law shall have been received. The
Officers and Directors of HK shall so certify and shall also certify as to other
facts and conditions identified in the Merger Agreement. 






	 	        (c)
The Board of Directors of HK shall determine to its satisfaction that the
issuance of shares to the shareholders of HK shall not be a taxable event for
the holders thereof. 






	 	        (d)
The Board of Directors of both companies shall have approved the Merger in
accordance with applicable corporate law. 






	 	        (e)
HK shall deliver a complied balance sheet and income statement to ProCare for
its most recent fiscal year and for the quarter ended March 31, 2001 in a format
suitable to be included in a filing on Form 8-K by ProCare. An audit of the
financial statements for HK from inception through March 31, 2001 by the outside
auditing firm of HK shall be completed within 75 days of the Closing and shall
be filed by ProCare with the Securities and Exchange Commission as part of a
Current Report on Form 8-K in accordance with the Exchange Act. 






	 	        (f)
ProCare shall prepare and timely file with the SEC all reports and other filings
required by the Exchange Act through the date of Closing. 






	 	        (g)
ProCare and HK shall jointly prepare and deliver to the respective shareholders
such information concerning the Merger as may be necessary to obtain all
required shareholder approvals and for the Merger transaction to qualify as
exempt from the registration requirements of the Securities Act by virtue of
Rule 506 adopted under Regulation D thereof. 






	 	        (h)
At the Closing of the Merger all outstanding shares of capital stock of HK, and
the stock of the Merged Entities, of whatever class or designation shall be
surrendered and exchanged for a total of 14,880,000 restricted shares of ProCare
common stock. Following the Closing there shall be no options, warrants or other
right to acquire additional shares of ProCare except for exchange rights
described in this subparagraph, the Merged Entities shall be owned, directly or
indirectly, by Procare, and there shall be 16,000,000 shares of ProCare common
stock issued and outstanding. 






        10.
Preparation of Documents.  Legal counsel for ProCare and HK shall prepare all
documents  necessary  to complete the  transactions  described in this letter of
intent,  including  the merger  agreement,  shareholder  approvals  and  related
matters.


        11.
Expenses.  Each party shall be responsible  for its respective  costs and
expenses.


        12.
Conduct Pending Closing. Pending the completion of the transaction described
in this amended and restated letter of intent, ProCare and HK shall each carry
on their respective businesses in the ordinary course and each shall preserve
and protect its business and assets and complete and make each and every filing
which may be required under applicable state or federal law. ProCare shall issue
no additional shares, and shall enter into no material agreements and shall
otherwise undertake no action which might be deemed to adversely affect the
rights of any of the parties to this anticipated transaction. Neither party
shall make any disclosure concerning the terms of the intended transaction
except as may be required by applicable laws or in order to properly complete
the transaction. Neither party nor any affiliate of either party shall purchase
or sell any securities of the other party until after the Closing. 


        13.
Confidentiality. Each party agrees to hold all information heretofore or
hereafter obtained from the other or their respective advisors in strict
confidence and to use the information so obtained only for the purpose of
evaluating the transaction. In the event that no definitive agreement is
reached, or if reached, is thereafter terminated, each party agrees to promptly
return all such information in written form and any copies thereof to the other
party. 


        14.
Modification. The terms of this amended and restated letter of intent may
not be  modified  without  the  express  written  consent of each of the parties
hereto.


        15.
Assignability.  This amended and  restated  letter of intent shall not be
assignable  by either party hereto  without the express  written  consent of the
other party.


        16.
Counterparts.  This amended and restated letter of intent may be executed in
counterparts,  each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.


        17.
 Non-binding. Except for the provisions of Section 5(a), 11, 12, and
13, this letter of intent (i) is intended as a statement of the parties’
mutual intentions only, (ii) is not intended to be, and shall not constitute, a
binding or enforceable agreement between the parties and (iii) is not intended
to impose any obligation whatsoever on either party. 


        18.
Agreements  with Marsik.  Robert W. Marsik,  President of Procare,  shall
agree, in the Merger Agreement, to indemnify and hold harmless, ProCare from and
against  any  liability  or claim,  including  but not  limited to any claim for
unpaid corporate income taxes or penalties which may be asserted against ProCare
at any time for two years from the  Closing of the  Merger,  and such  agreement
shall survive the Closing. In addition,  Marsik shall agree that for a period of
one year from the  Closing,  neither he nor his wife shall sell more than 15,000
shares of  ProCare  publicly  in any 30 day  period  without  the prior  written
consent of Procare.  Procare  shall  enter into a  Registration  agreement  with
Marsik at the  Closing  pursuant to which  ProCare  shall agree to include up to
130,000  restricted  shares of ProCare  common stock that Marsik may at the time
own in any  Registration  Statement  on an  applicable  form  filed  by  ProCare
(“Piggyback  Registration”).  The terms of the Piggyback  Registration
agreement shall be the terms customarily included in such an agreement.


        To
confirm that the foregoing accurately sets forth our mutual intentions regarding
the proposed transaction, please sign a copy of this letter of intent in the
place set forth below and return or fax the signed letter of intent, together
with certified or wire transfer funds of $50,000, payable to ProCare Industries,
Ltd. 



            
             
             
             
             
             
              
             
       Sincerely,



            
             
             
             
             
             
              
             
       PROCARE INDUSTRIES, LTD.

            
             
             
              
             
             


             
                
               
             
                
             
                  
        By: /s/ Robert W. Marsik     

             
             
             
             
             
             
              
             
             Robert
W. Marsik, President




            
             
             
             
             
             
              
             
       HK UTILITY CONSTRUCTION, INC.

            
             
             
              
             
             


             
                
               
             
                
             
                  
        By: /s/ Chris Kessen   
      

             
             
             
             
             
             
              
             
             
Chris Kessen, President