Exhibit
10.20


 


LETTER
OF INTENT


 


The purpose of this
Letter of Intent is to set forth the principal terms and conditions of certain
transactions (the “Transactions”) involving:


 


1. Shareholder
Transactions.  The transfer by
Helaine Levy, Dana Pitt, Tracy Pitt and Lindsay Pitt (together, the
“Shareholders”) of all of the issued and outstanding capital stock (“OTC
Stock”) of Old Tucson Company, an Arizona corporation (“OTC”) to Public Media
Works, Inc., a Delaware corporation (“PMW”) and the elimination by the
Shareholders of all unsecured indebtedness of OTC to them (the “Shareholder
Debt”) and


 


2. Debt Restructuring.
The restructuring by Cornerstone Capital Management and Southwest Holdings,
Ltd. (the “Secured Creditors”) of certain secured indebtedness of OTC held by
them (“Secured Debt”).


 


This Letter of Intent is
intended to enable the parties to proceed with due diligence activities and the
preparation of definitive documentation relating to the Transactions
(“Definitive Documentation”).


 


The signatures of the
undersigned parties shall constitute their good faith expression of intent to
proceed with the completion of the Transactions in accordance with the terms
hereof.  However this Letter of Intent
is not intended to be and does not constitute the legally binding obligation of
the parties.


 


	
  Shareholder Transactions

  	
   

  	
  At Closing, the
  Shareholders will transfer to PMW all of OTC Stock.  Immediately prior to but contingent upon closing, the
  Shareholders will contribute the Shareholder Debt to the capital of OTC.  As a result, OTC will have no further
  liability to the Shareholders for the Shareholder Debt.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In consideration of the
  foregoing, PMW will issue to the Shareholders a total of 750,000 fully paid
  and non-assessable shares of PMW Common Stock (“PMW Shares”).  The PMW Shares will be issued to the
  Shareholders in proportion to their ownership of OTC Shares.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The holders of the PMW
  Shares shall have piggy-back rights with respect to any registrations filed
  by PMW subsequent to the date of issuance.

  
	
   

  	
   

  	
   

  
	
  Debt Restructuring

  	
   

  	
  As of October 31,
  2003, the Secured Debt consisted of approximately $4,791,772 in principal and
  approximately $420,906 of accrued interest. 
  At Closing, the Secured Creditors shall cause the Secured Debt to be restructured
  as 

  



 

















 


	
   

  	
   

  	
  follows:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.  Accrued interest as of Closing shall be
  added to the principal amount.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.  The interest rate shall become 2% over
  Bank One prime not to exceed 8% per annum or be less than 4%.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.  Interest on the Secured Debt from the date
  of Closing shall be accrued through December 31, 2004.  Commencing February 1, 2005 and on
  the first day of each month thereafter, interest shall be payable monthly.  Payments of principal on the Secured Debt
  (“Principal Payments”) shall be made in the amount of $200,000 on
  February 5, 2006 and $50,000 on the fifth day of each third month
  thereafter until February 5, 2009. 
  Commencing May 5, 2009 and on the 5th day of each third
  month thereafter, Principal Payments in the amount of $100,000 will be
  made.  The entire principal balance of
  and all accrued interest on the Secured Debt shall be payable on
  February 14, 2014.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.  PMW shall pledge the OTC Stock as
  additional security for the Secured Debt.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  5.  PMW will make additional covenants
  concerning the operations and assets of OTC to be negotiated prior to
  Closing.  Such covenants will involve
  such matters as the sale or encumbrance of the assets of OTC, physical
  changes to Old Tucson, the achievement of the Milestones (as defined below),
  etc.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Prepayment.  The Secured Debt may be prepaid at any
  time by PMW without penalty on not less than 60 days written notice during
  which time, the Secured Creditors may elect to exercise their Conversion
  Rights (as defined below).  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Conversion Rights.  At the option of the Secured Creditors,
  the Secured Debt may be converted into PMW Common Stock at a conversion price
  (“Conversion Price”) equal to 80% of the average of the bid price for the
  initial 30 days of trading of PMW Common Stock on NASDAQ, NASDAQ-Small Cap,
  the NASD Bulletin Board or American Stock Exchange, or other national
  exchange registered with the SEC, as the case may be.  In the event PMW should at any time or
  from time to time after the Closing Date effect a split

  



 


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  or subdivision of the
  outstanding shares of PMW Common Stock or issue a dividend or make any other
  distribution payable in additional shares of PMW Common Stock or other
  securities or rights convertible into, or entitling the holder thereof to
  receive directly or indirectly, additional shares of PMW Common Stock
  (hereinafter referred to as “Common Stock Equivalents”) without payment of
  any consideration by such holder for the additional shares of PMW Common
  Stock or the Common Stock Equivalents (including the additional shares of PMW
  Common Stock issuable upon conversion or exercise thereof), then the
  Conversion Price shall be appropriately decreased so that the number of
  shares of PMW Common Stock issuable upon conversion of the Secured Debt shall
  be increased in proportion to such increase of outstanding shares and, upon
  Conversion, Secured Creditors shall have the right to receive any Common
  Stock Equivalents with respect to the PMW Common Stock issued upon such
  conversion on the same basis as if they had converted the Secured Debt prior
  to such event.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Piggy-Back Rights.  The Secured Creditors shall have
  piggy-back rights for the shares of Common Stock issuable on exercise of the
  Conversion Right with respect to any registration statements filed by PMW.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Advances After 10/15/03.  All advances made by the Secured Creditors
  to OTC after October 15, 2003 will not bear interest and shall be paid
  in full by PMW at Closing.

  
	
   

  	
   

  	
   

  
	
  Due Diligence - PMW

  	
   

  	
  PMW shall be entitled
  to perform a full due diligence review of the business, operations, finances,
  properties and assets, contracts and all other aspects of OTC (“OTC Due
  Diligence Materials”) for period of thirty (30) days from the date of this
  Letter of Intent (“Due Diligence Period”). 
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  OTC agrees to make
  available to PMW for review and analysis the OTC Due Diligence Materials and
  provide reasonable access to the Company’s facilities and equipment.  

  
	
   

  	
   

  	
   

  
	
  Due Diligence – OTC/Secured Creditors

  	
   

  	
  OTC and the Secured
  Creditors shall be entitled to perform a full due diligence review of the
  business, operations, finances, properties and assets, contracts and all
  other aspects of PMW (“PMW Due Diligence Materials”) during the Due Diligence
  Period.  

  



 


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  PMW agrees to make
  available to OTC and the Secured Creditors for review and analysis the PMW
  Due Diligence Materials.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Within ten (10) days
  from the date of this Letter of Intent, PMW shall furnish to the Shareholders
  and the Secured Creditors its plan for improving the facilities and
  operations of Old Tucson in order to make it a performing asset (the
  “Business Plan”).  The Business Plan
  shall set forth a capital budget for making physical improvements to Old
  Tucson and an operations plan.  The
  Business Plan shall include measurable and identifiable performance
  milestones (the “Milestones”) and a twelve month operating budget.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The PMW Due Diligence
  Materials shall include all reports and other documents filed with the
  Securities and Exchange Commission including, without limitation, PMI’s
  Forms10Q-SB, 10K-SB, and 8-K, Form SB-2 registration statement and PMW’s
  current private placement memorandum.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Definitive Documents

  	
   

  	
  Within ten (10) days
  following the conclusion of the Due Diligence Period, Definitive
  Documentation will be completed.  The
  parties shall be responsible for their own costs and attorneys fees in
  connection with the Transactions.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Definitive Documentation
  will include an agreement by which the Shareholders (as to the PMW Shares)
  and the Secured Creditors (as to shares issuable upon conversion of the
  Secured Debt) become parties to the PMW Shareholder Rights Agreement.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Definitive Documentation
  shall contain representations, warranties and covenants and indemnifications
  by PMW typical to a transaction of this nature.

  
	
   

  	
   

  	
   

  
	
  Closing Conditions

  	
   

  	
  Closing of the
  Transactions shall be subject to the following conditions:  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1.  PMW can demonstrate to the Shareholders’
  and Secured Creditors’ satisfaction that OTC’s trade creditors will be paid
  immediately following Closing or that arrangements satisfactory to such
  creditors have been made.  OTC’s
  creditors for this purpose shall include JNJ.  

  



 


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  2.  PMW shall be satisfied with the results of
  its due diligence.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3. The Shareholders and
  Secured Creditors shall be satisfied with the Business Plan and PMW’s plans
  for returning OTC to profitability.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  4.  PMW’s payment of the Recent Advances.

  
	
   

  	
   

  	
   

  
	
  Confidentiality

  	
   

  	
  The terms and
  conditions of this Letter of Intent and the Transactions will be held by OTC
  and PMW in strict confidence and will not be disclosed to anyone, other than
  legal counsel, agents and representatives who need to know such information
  in connection with the Transactions or otherwise as advisable, after approval
  by the parties.  PMW may disclose the
  existence of this Letter of Intent in its Private Placement Memorandum but
  may not represent or imply that either OTC, the Shareholders or the Secured
  Creditors (or any of their respective directors, officers, shareholders,
  partners or members) are affiliated with PMW or involved in the offering of
  securities by PMW.  OTC may disclose
  the existence of the Letter of Intent to its employees and creditors.  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Neither OTC nor PMW
  shall issue any press release or other public announcement concerning the
  subject matter of this Letter of Intent without the express written consent
  of the other.

  
	
   

  	
   

  	
   

  
	
  Timetable: Definitive

  Documentation/Closing
  Date

  	
   

  	
  Unless Definitive
  Documentation has been prepared and Closing scheduled to take place on or
  before January 15, 2004 (the “Closing Date”), this Letter of Intent
  shall expire and be of no further binding effect upon the parties.

  
	
   

  	
   

  	
   

  
	
  General Conditions

  	
   

  	
  The terms of this
  Letter of Intent are meant solely to set forth the agreements in principle of
  the parties and to allow them to move forward with the Due Diligence Period,
  the preparation of Definitive Documentation and the determination of the
  feasibility of the tax and other aspects of the Transaction.  Except for the provision relating to the
  payment of costs and expenses above, nothing contained herein, whether agreed
  or implied, shall impose any obligation of any kind upon any of the parties
  hereto.  In addition to the other
  conditions and agreements set forth above, Closing will be subject to: (i)
  PMW’s, the 

  



 


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  Shareholders’ and the
  Secured Parties’ satisfaction with the results of their due diligence reviews
  (ii) the satisfaction by respective counsel of the parties with the structure
  of the Transaction (iii) the parties respective satisfaction and approval
  with the Definitive Documentation and (iv) the obtaining of any and all
  required third party or governmental consents.

  



 


	
  DATED:   December       ,
  2003

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Public Media Works, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ THOMAS A. SZABO

  
	
   

  	
   

  	
  By: THOMAS A. SZABO

  
	
   

  	
   

  	
  Its:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Shareholders:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Helaine Levy

  
	
   

  	
   

  	
  Helaine Levy

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Dana Pitt

  
	
   

  	
   

  	
  Dana Pitt

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Lindsay Pitt

  
	
   

  	
   

  	
  Lindsay Pitt

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Tracy Pitt

  
	
   

  	
   

  	
  Tracy Pitt

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Cornerstone Capital Management Ltd., a corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ DONALD PITT

  
	
   

  	
   

  	
  By: DONALD PITT

  
	
   

  	
   

  	
  Its: PRESIDENT

  



 


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  Southwest Holdings, Ltd, a corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ DAVID GOLDSTEIN

  
	
   

  	
   

  	
  By: DAVID GOLDSTEIN

  
	
   

  	
   

  	
  Its: VP

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Old Tucson Company, a corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ HELAINE LEVY

  
	
   

  	
   

  	
  By: HELAINE LEVY

  
	
   

  	
   

  	
  Its: PRESIDENT

  



 


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