SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: February 29, 2000
WATCHOUT!, INC.
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(Exact name of registrant as specified in its charter)
Utah 0114244 84-0959153
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
20283 State Road 7, Suite #400, Boca Raton, FL 33498
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(NEW ADDRESS)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 482-9420
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Innovative Cybersystems Corp. has completed the terms of its acquisition
contract of shares of WatchOut!, Inc. and has acquired 6,376,922 shares from
David Galoob, Robert Galoob, and Archangel Holdings, LTD. collectively. Certain
conditions were waived regarding the transaction involving negotiation of debt.
Innovative Cybersystems Corp. has options to purchase an additional 1,750,000
common shares from David and Robert Galoob.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
1. WatchOut!, Inc. d/b/a Innovative Cybersystems Corporation has entered
into a Share Purchase Agreement to purchase 51% of the outstanding stock of M.
Johnson & Associates Communications, Inc. which owns rights to market
connectivity to a high speed communications network in Washington, D.C.
2. WatchOut!, Inc. d/b/a Innovative Cybersystems Corporation has agreed to
acquire an interest in a telecommunications company, WirelessOn.com in Canada
for up to $2,750,000 which would purchase up to 455,172 shares (27.5%) of
WirelessOn.com.
3. WatchOut!, Inc. d/b/a Innovative Cybersystems Corporation has signed a
Letter of Intent to invest in International Mercantile Corp., also known as
MicroMatix.net, for preferred stock in an amount up to $500,000.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
None.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None.
ITEM 5. OTHER EVENTS
None.
ITEM 6. RESIGNATION AND APPOINTMENT OF DIRECTORS
Jack Russell has resigned as an officer and director of WatchOut!, Inc. and
Innovative Cybersystems Corporation.
Michelle Long has resigned as a director of WatchOut!, Inc.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIALS, & EXHIBITS
Exhibits:
10.1 Share Purchase Agreement -
M. Johnson & Associates Communications, Inc.
10.2 Share Purchase Agreement - WirelessOn.com
10.3 Letter of Intent - International Mercantile Corporation a/k/a
MicroMatix.net, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 2, 2000 WatchOut!, Inc.
By:/s/Kevin Waltzer
Kevin Waltzer, President
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EXHIBIT 10.1
SHARE PURCHASE AGREEMENT -
M. JOHNSON & ASSOCIATES COMMUNICATIONS, INC.
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SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement"), between M. JOHNSON &
ASSOCIATES COMMUNICATIONS, INC. ("MJAC") a Maryland Corporation, referred to as
"SELLERS", and WatchOut! Inc. d/b/a Innovative Cybersystems (WatchOut!), a Utah
corporation, referred to as "BUYER".
W I T N E S S E T H:
A. WHEREAS, WatchOut! Inc. is a corporation organized under the laws of
Utah.
B. WHEREAS, MJAC is a corporation organized under the laws of Maryland.
C. WHEREAS, SELLER is willing to sell, and BUYER desires to purchase
certain issued and outstanding shares of capital stock in MJAC, as specified on
Exhibit A.
D. WHEREAS, WatchOut! and MJAC will benefit from the transactions
contemplated hereby and desire to implement the contemplated transaction.
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
THE CONSIDERATION
SELLERS shall sell and cause to be delivered and BUYER shall purchase
the shares of MJAC common stock as specified on Exhibit A. The transactions
contemplated by this Agreement shall be completed at a closing ("Closing") on a
closing date which shall be on or before February 25, 2000. The purchase price
for the MJAC shares to be paid by BUYER to SELLERS is 2,500,000 shares of
Buyer's stock.
ARTICLE II
DELIVERY OF SHARES
The certificates representing all of the shares which shall be
purchased shall be delivered and conveyed by SELLERS to BUYER with duly
executed stock powers, upon receipt of the consideration by SELLERS.
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ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLERS AS TO MJAC
These representations or warranties are made by SELLERS as individuals,
and as officers and directors of MJAC.
SELLERS hereby represent, warrant, and covenant to BUYER as follows:
3.1 MJAC is a corporation duly organized, validly existing and in good
standing under the laws of Maryland, and has the corporate power and authority
to carry on its business as it is now being conducted. The Articles of
Incorporation of MJAC and amendments, copies of which have been delivered to
BUYER, are complete and accurate, and the minute books of MJAC, which will be
delivered to BUYER contain a complete and accurate record of all material
actions taken at, all meetings of the shareholders and Board of Directors of
MJAC.
3.2 The aggregate number of shares which MJAC is authorized to issue is
100,000 shares with a par value of $.01 per share, of which, 100 shares are
issued and outstanding. Such shares are fully paid and non-assessable. MJAC has
no outstanding options, warrants or other rights to purchase, or subscribe to,
or securities convertible into or exchangeable for any shares of capital stock.
3.3 SELLERS have complete and unrestricted power to enter into and, upon
receipt of the appropriate approvals as required by law, to consummate the
transactions contemplated by this Agreement.
3.4 SELLERS own the common shares of MJAC free and clear of all liens
and encumbrances, and are authorized to sell such shares to BUYER, subject only
to the pledge agreements and debts recited hereinafter
3.5 SELLERS who represent MJAC shall not enter into or consummate any
transactions other than those required in the normal course of business, prior
to the Closing Date and will pay no dividend, or increase the compensation of
officers and will not enter into any other business agreement or transaction,
prior to closing date.
3.6 The representations and warranties of SELLERS shall be true and correct
as of the date hereof and as of the Closing Date.
3.7 SELLERS have delivered to buyer all of the corporate books and records
of MJAC for review. SELLERS will also deliver to buyer on or before the Closing
Date any reports relating to the financial and business condition of MJAC which
occur after the date of this Agreement and any other reports sent generally to
its shareholders after the date of this Agreement.
3.8 No representation or warranty by SELLERS in this Agreement or any
certificate delivered pursuant hereto contains any untrue statement of a
material fact or omits to state any material fact necessary to make such
representation or warranty not misleading.
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3.9 Buyer shall have the ability to appoint 1 board member to MJAC's Board
of Directors once they own 51% of Seller.
3.10 SELLERS have delivered to buyer financial statements of MJAC. All such
financial statements, herein sometimes called " Financial Statements" are (and
will be) complete and correct in all material respects and, together with the
notes to these financial statements, present fairly the financial position and
results of operations of the periods indicated. All financial statements of MJAC
will have been prepared in accordance with generally accepted accounting
principles, and will be "unqualified" except as to "going concern."
3.11 Since the dates of the MJAC Financial Statements, there have not been
any material adverse changes in the business or condition, financial or
otherwise, of MJAC. MJAC does not have any material liabilities or obligations,
secured or unsecured, except as shown in the financial statements.
3.12 There are no pending legal proceedings or regulatory proceedings
involving MJAC, there are no legal proceedings or regulatory proceedings
involving material claims pending, or, to the knowledge of the officers of MJAC,
threatened against MJAC or affecting any of their assets or properties, and MJAC
is not in any material breach or violation of or default under any contract or
instrument to which MJAC is a party.
3.13 MJAC shall not enter into or consummate any transactions prior to the
Closing Date and will pay no dividend, or increase the compensation of officers
and will not enter into any agreement or transaction, without consent of BUYER.
3.14 The representations and warranties of SELLERS shall be true and
correct as of the date hereof and as of the Closing Date.
3.15 MJAC has no employee benefit plan in effect at this time.
3.16 No representation or warranty in this Agreement, or any certificate
delivered pursuant hereto contains any untrue statement of a material fact or
omits to state any material fact necessary to make such representation or
warranty not misleading.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER
No representations or warranties are made by any director, officer,
employee, or shareholder of buyer as individuals, except as and to the extent
stated in this Agreement or in a separate written statement.
BUYER hereby represents, warrants, and covenants to SELLERS as follows:
4.1 BUYER is a corporation duly organized, validly existing, and in good
standing under the laws of the state of, Utah and has the corporate power and
authority and to carry on its business as it is now being conducted.
4.2 BUYER has complete and unrestricted power to enter into this agreement;
and, to consummate the transactions contemplated by this Agreement.
4.3 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
BUYER will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of BUYER.
4.4 The execution of this Agreement has been duly authorized and approved
by the BUYER S Board of Directors.
4.5 The representations and warranties of BUYER shall be true and correct
as of the date hereof and as of the Closing Date.
ARTICLE V
OBLIGATIONS OF THE PARTIES PENDING THE CLOSING DATE
5.1 At all times prior to the Closing Date during regular business hours,
each party will permit the other to examine its books and records to the extent
the same are relevant to the purchase of the shares of MJAC and the books and
records of its subsidiaries and will furnish copies thereof on request. It is
recognized that, during the performance of this Agreement, each party may
provide the other party with information which is confidential or proprietary
information. During the term of this Agreement, and for two years following the
earlier of the Closing or the termination of this Agreement, the recipient of
such information shall protect such information from disclosure to persons,
other than members of its own or affiliated organizations and its professional
advisers, in the same manner as it protects its own confidential or proprietary
information from unauthorized disclosure, and not use such information to the
competitive detriment of the disclosing party. In addition, if this Agreement is
terminated for any reason, each party shall promptly destroy, return, or cause
to be returned all documents or other written records of such confidential or
proprietary information, together with all copies of such writings and, in
addition, shall either furnish or cause to be furnished, or shall destroy, or
shall maintain with such standard of care as is exercised with respect to its
own confidential or proprietary information, all copies of all documents or
other written records developed or prepared by such party on the basis of such
confidential or proprietary information. No information shall be considered
confidential or proprietary if it is (a) information already in the possession
of the party to whom disclosure is made, (b) information acquired by the party
to whom the disclosure is made from other sources, or (c) information in the
public domain or generally available to interested persons or which at a later
date passes into the public domain or becomes available to the party to whom
disclosure is made without any wrongdoing by the party to whom the disclosure is
made.
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5.2 SELLERS and BUYER shall promptly provide each other with information as
to any significant developments in the performance of this Agreement, and shall
promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
5.3 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
PROCEDURE FOR CLOSING
6.1 At the Closing Date, the purchase and sale shall be effected with share
certificates of MJAC together with stock powers executed in blank, being
delivered to escrow agent for all shares which may be purchased in accordance
with Exhibit "A".
ARTICLE VII
CONDITIONS PRECEDENT TO THE
CONSUMMATION OF THE PURCHASE
The following are conditions precedent to the consummation of the Agreement
on or before the Closing Date:
7.1 SELLERS and BUYER shall each have performed and complied with all of
their respective obligations hereunder which are to be complied with or
performed on or before the Closing Date and SELLERS and BUYER shall provide one
another at the Closing with a certificate to the effect that such party has
performed each of the acts and undertakings required to be performed by it on or
before the Closing Date pursuant to the terms of this Agreement.
7.2 This Agreement and the transactions contemplated herein shall have been
duly and validly authorized, approved and adopted by SELLERS, and buyer in
accordance with the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any public
authority to restrain, enjoin or prohibit the transactions contemplated herein,
or which might subject any of the parties hereto or their directors or officers
to any material liability, fine, forfeiture or penalty on the grounds that the
transactions contemplated hereby, the parties hereto or their directors or
officers, have violated any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby, and the
parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which if decided adversely to any party hereto or its directors or officers
MJAC would materially and adversely affect the business, assets, or financial
position of MJAC.
7.4 The representations and warranties made by SELLERS and by BUYER in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date.
7.5 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of Buyer.
However, either BUYER or SELLER may issue at any time any press release or other
public statement it believes on the advice of its counsel it is obligated to
issue to avoid liability under the law relating to disclosures, but the party
issuing such press release or public statement shall make a reasonable effort to
give the other party prior notice of and opportunity to participate in such
release or statement.
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ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to the Closing
Date:
(a) By mutual consent of SELLERS and BUYER;
(b) By either party, if any condition set forth in Article VII relating to
the other party has not been met or has not been waived;
(c) By BUYER and SELLER if any suit, action or other proceeding shall be
pending or threatened by the federal or a state government before any court or
governmental agency, in which it is sought to restrain, prohibit or otherwise
affect the consummation of the transactions contemplated hereby;
(d) By any party, if there is discovered any material error, misstatement
or omission in the representations and warranties of another party;
8.2 Any of the terms or conditions of this Agreement may be waived at any
time by the party, which is entitled to the benefit thereof.
ARTICLE IX
TERMINATION COVENANTS, OF REPRESENTATIONS, AND WARRANTIES
The respective covenants, representations and warranties of the parties
hereto as contained herein shall survive the Closing for a period of two years.
ARTICLE X
MISCELLANEOUS
10.1 This Agreement embodies the entire agreement between the parties, and
there have been and are no agreements, representations or warranties among the
parties other than those set forth herein, referenced herein, or those provided
for herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument.
10.3 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other assurances as are
deemed necessary, the party requested to do so will use commercially reasonable
efforts to provide such executed instruments or do all things necessary or
proper to carry out the purpose of this Agreement.
10.4 This Agreement may be amended only in writing duly executed by all
parties hereto.
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10.5 Any notices, requests, or other communications required or permitted
hereunder shall be delivered personally or sent by overnight courier service,
fees prepaid, addressed as follows:
SELLERS:
To: M. Johnson & Associates Communications, Inc.
1023 N. Charles Street
Suite R3I
Baltimore, MD 21202
Copy to: John Browning
Attorney at Law
102 W. Pennsylvania Ave.
Suite 600
Towson, MD 21204
BUYERS:
To: Innovative Cybersystems Corp.
20283 State Road 7, #400
Boca Raton, FL 33498
copy to: Deborah K. Hausman
Attorney at Law
20283 State Road 7, #400
Boca Raton, FL 33498
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
IN WITNESS WHEREOF, THE PARTIES HAVE SET THEIR HANDS THIS 25TH day of
February, 2000.
SELLER: M. JOHNSON & ASSOCIATES COMMUNICATIONS, INC.
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BUYER: WatchOut! Inc. d/b/a Innovative Cybersystems
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Kevin Waltzer, President
<PAGE>
EXHIBIT A
Buyer shall purchase 51% ownership of M. JOHNSON & ASSOCIATES COMMUNICATIONS,
INC. from the present shareholders with one payment of 2,500,000 shares of
Buyers stock payable on March 15, 2000.
EXHIBIT 7.2
SHARE PURCHASE AGREEMENT - WIRELESSON.COM
<PAGE>
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement"), between WirelessOn.com Ltd
(WIRELESSON.COM or the Company )and the following individual shareholders:
Patricia Pelech 75,000
Bo Pelech 150,000
Allan Bezanson 225,000
Jim Everett 50,000
plus option for 50,000@ $0.10 per share vesting pursuant to option agreement
Catalyst Venture Limited 70,000
Icon Enterprises Limited 75,000
Acil Associates Limited 80,000
Virtual Jukebox Inc. 225,000
Gregory M. Chornoboy 42,000
Michael Koury 16,000
K. Nadine Shand 42,000
Trent Taylor 10,000
Number of shares held or to be issued to present shareholders of
WirelessonOn.Com is 1,200,000 common shares prior to Closing Date herein
referred to as SHAREHOLDERS, AND Wirelesson.Com and Shareholders are herein
collectively referred to as "SELLERS", and WatchOut!, Inc. d/b/a Innovative
Cybersystems, a Utah corporation (as BUYER).
W I T N E S S E T H:
A. WHEREAS, WatchOut! Inc., is a corporation organized under the laws of Utah.
B. WHEREAS, SELLERS are willing to sell, and BUYER desires to purchase certain
issued and outstanding shares of capital stock in WirelessOn.com, as specified
on Exhibit A.
C. WHEREAS, WatchOut! and SELLERS will benefit from the transactions
contemplated hereby and desire to implement the contemplated transaction.
D. WHEREAS, Sellers are willing to issue treasury common shares to BUYER as per
Schedule "A".
NOW, THEREFORE, it is agreed among the parties as follows:
ARTICLE I
THE CONSIDERATION
SELLERS shall sell and cause to be delivered and BUYER shall purchase the shares
of WirelessOn.com common stock as specified on Exhibit A. The transactions
contemplated by this Agreement shall be completed at a closing ("Closing") on a
closing date which shall be on or before February 11, 2000. The purchase price
for 455,172 common shares of WirelessOn.com stock to be paid by BUYER to
WirelessOn.Com is, $2,750.000, (Canadian). It shall be paid in accordance with
the terms set out in "Schedule A" This shall then represent
<PAGE>
27.5% of then total issued and outstanding shares of the company being
1,655,172 common shares of WirelessOn.com.
BUYER shall purchase from SHAREHOLDERS common share held by them in accordance
with the terms set out in Schedule "A".
ARTICLE II
DELIVERY OF SHARES
The certificates representing all of the shares which shall be purchased shall
be delivered and conveyed by SELLERS to BUYER with duly executed stock powers,
upon receipt of the consideration by SELLERS in accordance with the receipt of
the consideration on the dates set out in Schedule "A".
ARTICLE III
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF SELLERS AS TO WIRELESSON.COM
These representations or warranties are made by SELLERS as individuals, and as
officers and directors of WirelessOn.com.
SELLERS hereby represent, warrant, and covenant to BUYER as follows:
3.1 WirelessOn.com is a corporation duly organized, validly existing and in
good standing under the laws of Ontario, Canada, and has the corporate power and
authority to carry on its business as it is now being conducted. The Articles of
Incorporation of WirelessOn.com and amendments, copies of which have been
delivered to BUYER, are complete and accurate, and the minute books of
WirelessOn.com, which will be delivered to BUYER contain a complete and
accurate record of all material actions taken at, all meetings of the
shareholders and Board of Directors of WirelessOn.com.
3.2 The aggregate number of shares which WIRELESSON.COM is authorized to
issue is an unlimited number of shares with no par value per share, of which,
1,200,000 shares are issued and outstanding as at the date of Closing. Such
shares are fully paid and non- assessable. WIRELESSON.COM has no outstanding
options, warrants or other rights to purchase, or subscribe to, or securities
convertible into or exchangeable for any shares of capital stock.
3.3 SELLERS have complete and unrestricted power to enter into and,
upon receipt of the appropriate approvals as required by law, to consummate the
transactions contemplated by this Agreement.
3.4 SELLERS own the common shares of WIRELESSON.COM free and clear of all
liens and encumbrances, and are authorized to sell such shares to BUYER, subject
only to the pledge agreements and debts recited hereinafter
<PAGE>
3.5 SELLERS who represent WIRELESSON.COM shall not enter into or consummate
any transactions other than those required in the normal course of business,
prior to the Closing Date and will pay no dividend, or increase the compensation
of officers and will not enter into any other business agreement or transaction,
prior to closing date.
3.6 The representations and warranties of SELLERS shall be true and correct
as of the date hereof and as of the Closing Date.
3.7 SELLERS have delivered to buyer all of the corporate books and
records of WIRELESSON.COM for review, true and correct copies of
WIRELESSON.COM's tax returns since August, 1999. SELLERS will also deliver to
buyer on or before the Closing Date any reports relating to the financial and
business condition of WIRELESSON.COM which occur after the date of this
Agreement and any other reports sent generally to its shareholders after the
date of this Agreement.
3.8 No representation or warranty by SELLERS in this Agreement or any
certificate delivered pursuant hereto contains any untrue statement of a
material fact or omits to state any material fact necessary to make such
representation or warranty not misleading.
3.9 SELLERS will cause WIRELESSON.COM to notify Buyer prior to any Board
meeting and to allow Buyer to be represented. Buyer shall have the ability to
appoint one board member once they own 27.5% of Seller and a majority of the
Board once they have 51% of the issued and outstanding shares of Seller. The
Board shall then be comprised of 5 members of which 2 shall be appointed by the
minority shareholders.
3.10 SELLERS shall deliver within 45 days of February 10, 2000 to buyer
audited financial statements of WIRELESSON.COM dated December 31, 1999 financial
statements in accordance with Canadian GAAP standards. All such financial
statements, herein sometimes called " Financial Statements" are (and will be)
complete and correct in all material respects and, together with the notes to
these financial statements, present fairly the financial position and results of
operations of the periods indicated. All financial statements of WIRELESSON.COM
will have been prepared in accordance with generally accepted accounting
principles, and will be "unqualified" except as to "going concern."
3.11 Since the dates of the WIRELESSON.COM Financial Statements, there have
not been any material adverse changes in the business or condition, financial or
otherwise, of WIRELESSON.COM. WIRELESSON.COM Does not have any material
liabilities or obligations, secured or unsecured, except as shown in the
financial statements.
3.12 There are no pending legal proceedings or regulatory proceedings
involving WIRELESSON.COM, there are no legal proceedings or regulatory
proceedings involving material claims pending, or, to the knowledge of the
officers of WIRELESSON.COM, threatened against WIRELESSON.COM or affecting any
of their assets or properties, and WIRELESSON.COM is not in any material breach
or violation of or default under any contract or instrument to which
WIRELESSON.COM is a party.
<PAGE>
3.13 WIRELESSON.COM shall not enter into or consummate any transactions
prior to the Closing Date and will pay no dividend, or increase the compensation
of officers and will not enter into any agreement or transaction, without
consent of BUYER. Closing date shall be deemed to be February 11, 2000.
3.14 The representations and warranties of SELLERS shall be true and
correct as of the date hereof and as of the Closing Date.
3.15 WIRELESSON.COM has no employee benefit plan in effect at this time.
3.16 No representation or warranty in this Agreement, or any certificate
delivered pursuant hereto contains any untrue statement of a material fact or
omits to state any material fact necessary to make such representation or
warranty not misleading.
3.17 SELLERS warrant and represent that at closing those debts listed on
Exhibit B and those incurred in the ordinary course of business and those listed
in the financial statements as OF THE 31ST December 1999, shall be the sole and
only debts of WirelessOn.com and sellers agree to indemnify and hold buyer
harmless from any other debt whatsoever not listed thereon.
ARTICLE IV
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF BUYER
No representations or warranties are made by any director, officer, employee, or
shareholder of buyer as individuals, except as and to the extent stated in this
Agreement or in a separate written statement.
BUYER hereby represents, warrants, and covenants to SELLERS as follows:
4.1 BUYER is a corporation duly organized, validly existing, and in good
standing under the laws of the state of, Utah and has the corporate power and
authority and to carry on its business as it is now being conducted.
4.2 BUYER has complete and unrestricted power to enter into this
agreement; and, to consummate the transactions contemplated by this Agreement.
4.3 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
BUYER will conflict with or result in a breach or violation of the Articles of
Incorporation or Bylaws of BUYER.
4.4 The execution of this Agreement has been duly authorized and approved
by the BUYER S Board of Directors.
4.5 The representations and warranties of BUYER shall be true and correct
as of the date hereof and as of the Closing Date.
<PAGE>
ARTICLE V
OBLIGATIONS OF THE PARTIES PENDING THE CLOSING DATE
5.1 At all times prior to the Closing Date during regular business hours,
each party will permit the other to examine its books and records to the extent
the same are relevant to the purchase of the shares of WIRELESSON.COM and the
books and records of its subsidiaries and will furnish copies thereof on
request. It is recognized that, during the performance of this Agreement, each
party may provide the other party with information which is confidential or
proprietary information. During the term of this Agreement, and for two years
following the earlier of the Closing or the termination of this Agreement, the
recipient of such information shall protect such information from disclosure to
persons, other than members of its own or affiliated organizations and its
professional advisers, in the same manner as it protects its own confidential or
proprietary information from unauthorized disclosure, and not use such
information to the competitive detriment of the disclosing party. In addition,
if this Agreement is terminated for any reason, each party shall promptly
destroy, return, or cause to be returned all documents or other written records
of such confidential or proprietary information, together with all copies of
such writings and, in addition, shall either furnish or cause to be furnished,
or shall destroy, or shall maintain with such standard of care as is exercised
with respect to its own confidential or proprietary information, all copies of
all documents or other written records developed or prepared by such party on
the basis of such confidential or proprietary information. No information shall
be considered confidential or proprietary if it is (a) information already in
the possession of the party to whom disclosure is made, (b) information acquired
by the party to whom the disclosure is made from other sources, or (c)
information in the public domain or generally available to interested persons or
which at a later date passes into the public domain or becomes available to the
party to whom disclosure is made without any wrongdoing by the party to whom the
disclosure is made.
5.2 SELLERS and BUYER shall promptly provide each other with information as
to any significant developments in the performance of this Agreement, and shall
promptly notify the other if it discovers that any of its representations,
warranties and covenants contained in this Agreement or in any document
delivered in connection with this Agreement was not true and correct in all
material respects or became untrue or incorrect in any material respect.
5.3 All parties to this Agreement shall take all such action as may be
reasonably necessary and appropriate and shall use their best efforts in order
to consummate the transactions contemplated hereby as promptly as practicable.
ARTICLE VI
PROCEDURE FOR CLOSING
6.1 At the Closing Date, the purchase and sale shall be effected with share
certificates of WIRELESSON.COM together with stock powers executed in blank,
being delivered to escrow agent for all shares which may be purchased in
accordance with Exhibit "A" with delivery of $150,000 (CND). Seller shall issue
shares proportionate to the receipt of funds as set out in Schedule "A".
<PAGE>
ARTICLE VII
CONDITIONS PRECEDENT TO THE
CONSUMMATION OF THE PURCHASE
The following are conditions precedent to the consummation of the
Agreement on or before the Closing Date:
7.1 SELLERS and BUYER shall each have performed and complied with all of
their respective obligations hereunder which are to be complied with or
performed on or before the Closing Date and SELLERS and BUYER shall provide one
another at the Closing with a certificate to the effect that such party has
performed each of the acts and undertakings required to be performed by it on
or before the Closing Date pursuant to the terms of this Agreement.
7.2 This Agreement and the transactions contemplated herein shall have been
duly and validly authorized, approved and adopted by SELLERS, and buyer in
accordance with the applicable laws.
7.3 No action, suit or proceeding shall have been instituted or shall have
been threatened before any court or other governmental body or by any public
authority to restrain, enjoin or prohibit the transactions contemplated herein,
or which might subject any of the parties hereto or their directors or officers
to any material liability, fine, forfeiture or penalty on the grounds that the
transactions contemplated hereby, the parties hereto or their directors or
officers, have violated any applicable law or regulation or have otherwise acted
improperly in connection with the transactions contemplated hereby, and the
parties hereto have been advised by counsel that, in the opinion of such
counsel, such action, suit or proceeding raises substantial questions of law or
fact which if decided adversely to any party hereto or its directors or officers
WirelessOn.com would materially and adversely affect the business, assets, or
financial position of WIRELESSON.COM.
7.4 The representations and warranties made by SELLERS and by BUYER in this
Agreement shall be true as though such representations and warranties had been
made or given on and as of the Closing Date.
7.5 Since the dated of the WIRELESSON.COM Financial Statements, there have
not been any material adverse changes in the business or condition, financial,
or otherwise, of WIRELESSON.COM. WIRELESSON.COM does not have any material
liabilities or obligations, secured or unsecured except as shown on current
financials (whether accrued, absolute, contingent or otherwise).
7.6 All outstanding liabilities of WIRELESSON.COM to SELLERS or SELLERS'
affiliates, save and except as disclosed in the financial statements of
WirelessOn.com, shall be waived prior to or concurrent with closing. Such waiver
shall be deemed and treated as additional paid in capital and shall constitute
additional basis in sellers stock.
7.7 Creditors of WIRELESSON.COM shall have executed written agreements
prior to Closing Date, providing for a payment schedule, as may be required by
buyer.
<PAGE>
7.8 No press release or public statement will be issue relating to the
transactions contemplated by this Agreement without prior approval of Buyer.
However, either BUYER or WIRELESSON.COM may issue at any time any press release
or other public statement it believes on the advice of its counsel it is
obligated to issue to avoid liability under the law relating to disclosures, but
the party issuing such press release or public statement shall make a reasonable
effort to give the other party prior notice of and opportunity to participate in
such release or statement.
ARTICLE VIII
TERMINATION AND ABANDONMENT
8.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to the Closing
Date:
(a) By mutual consent of SELLERS and BUYER;
(b) By either party, if any condition set forth in Article VII relating to
the other party has not been met or has not been waived;
(c) By BUYER and SELLER if any suit, action or other proceeding shall be
pending or threatened by the federal or a state government before any court or
governmental agency, in which it is sought to restrain, prohibit or otherwise
affect the consummation of the transactions contemplated hereby;
(d) By any party, if there is discovered any material error, misstatement
or omission in the representations and warranties of another party;
(e) By BUYER'S at BUYER election if SELLERS do not deliver, or indicates to
BUYER that it will not deliver, WirelessOn.com financial arrangements with all
creditors of WIRELESSON.COM, in form and substance satisfactory to both BUYER
and SELLERS.
8.2 Any of the terms or conditions of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof.
ARTICLE IX
TERMINATION COVENANTS, OF REPRESENTATIONS, AND WARRANTIES
The respective covenants, representations and warranties of the parties
hereto as contained herein shall survive the Closing for a period of two years.
<PAGE>
ARTICLE X
MISCELLANEOUS
10.1 This Agreement embodies the entire agreement between the parties, and
there have been and are no agreements, representations or warranties among the
parties other than those set forth herein, referenced herein, or those provided
for herein.
10.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument.
10.3 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other assurances as are
deemed necessary, the party requested to do so will use commercially reasonable
efforts to provide such executed instruments or do all things necessary or
proper to carry out the purpose of this Agreement.
10.4 This Agreement may be amended only in writing duly executed by all
parties hereto.
10.5 Any notices, requests, or other communications required or permitted
hereunder shall be delivered personally or sent by overnight courier service,
fees prepaid, addressed as follows:
SELLERS:
To: Bodnaruk & Capone
370 King Street West
Suite 416, P.O. Box 49
Toronto, Ontario
M5V 1J9
Attention: P. Capone
Fax #: 416-593-5359
BUYERS:
To: Innovative Cybersystems Corp.
20283 State Road 7, #400
Boca Raton, FL 33498
Fax #:
copy to: Deborah K. Hausman
Attorney at Law
20283 State Road 7, #400
Boca Raton, FL 33498
Fax #:
<PAGE>
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
10.6 BUYER agrees that, as controlling shareholder of WirelessOn.com, it
will not cause or allow any reverse splits, or consolidations of shares for a
period of 18 months following closing hereunder.
IN WITNESS WHEREOF, THE PARTIES HAVE SET THEIR HANDS THIS 10TH day of February
2000.
SELLERS:
_________________________________
Patricia Pelech
_________________________________
Bo Pelech
_________________________________
Allan Bezanson
_________________________________
Jim Everett
Catalyst Venture Limited
Per:____________________________
Icon Enterprises Limited
Per:____________________________
Acil Associates Limited
Per:_____________________________
Virtual Jukebox Inc.
Per:_____________________________
_________________________________
Gregory M. Chornoboy
_________________________________
Michael Koury
<PAGE>
_________________________________
K. Nadine Shand
_________________________________
Trent Taylor
BUYER:
WatchOut! Inc. d/b/a
Innovative Cybersystems Corp.
Per:_____________________________
Kevin Waltzer, President
<PAGE>
EXHIBIT A
1. PAYMENT DATES
February 11, 2000 $150,000 (CND) ***
February 18, 2000 $150,000 (CND)
February 29, 2000 $200,000 (CND)
MARCH 29, 2000 $2,250,000(CND)
---------------
$2,750,000 representing 455,172
common shares to the Buyer
2. The Buyer's percentage will remain 27.5 % during this time being March 29,
2000 regardless of dilution. (Such time period is subject to 7 days grace
period).
3. Buyer shall also purchase 282,000 shares of the shares from the present
Shareholders proportionately to their present shareholdings in the Company being
23.5% of 1.2 million shares with a payment of $2,360,000 (CND) payable on April
15, 2000.
4. On March 15th the Buyer will present to selling Shareholders the option to
receive shares in WatchOut in lieu of the cash payment contemplated in paragraph
3 above of $2,260,000 in such proportions of cash and or shares of WatchOut as
directed by the selling Shareholder to WatchOut! prior to April 7th, 2000.
5. Buyer shall then, for the next 18 months have the option to purchase the
remaining 918,000 shares presently held by the Shareholders in WirelessOn.com
for $8,750,000 (CND) or the present remaining shareholder of WirelessOn.com may
choose to allow the purchase of these shares with shares of Buyer at a 35%
discount to bid at time of purchase. If however, Buyer does not purchase the
remaining ownership interest, the Seller may buy back 2% of the stock from Buyer
for $350,000 (CND). In the event that the Buyer does not exercise the option,
the Buyer and the selling shareholders agree to cause the directors of the
company to take such proceedings so as to cause the company to become a public
trading entity in Canada or the United States with all present shareholders
being treated on an equal basis.
6. Once the first payment is received by Seller, Seller shall insure that the
governing documents of WirelessOn.com shall require a 66% shareholder vote on
any and all major changes affecting the Company including but not limited to
mergers, acquisitions, acquiring debt.
<PAGE>
EXHIBIT B
Promissory Note payable by WirelessOn.com to Novalink Finance Ltd. in the amount
of $300,000.00.
Interest shall be payable on the Promissory Note monthly in arrears at the CIBC
prime rate of interest plus 1%.
Principle on the note shall commence to be paid once the Company is positive
EBITDA amortized over 1 year payable monthly from commencement of the term.
The Promissory Note shall be secured in the ordinary course against the assets
of the company.
EXHIBIT 7.3
LETTER OF INTENT - INTERNATIONAL MERCANTILE CORPORATION
a/k/a MICROMATIX.NET, INC.
<PAGE>
November 19, 1999
International Mercantile Corporation
a/k/a MicroMatix.net, Inc.
1111 Kneeh Avenue
Baltimore, Maryland
Attn: Mr. Frederic Richardson
Re: Letter of Intent
Dear Sirs:
This letter will serve to confirm our recent discussions regarding the
proposed issuance to and purchase by WatchOut! Inc. d/b/a Innovative
Cybersystems Corporation (the "Buyer") of certain preferred shares of
International Mercantile Corporation a/k/a MicroMatix.net, Inc. (the "Company").
Such preferred stock investment and the related transactions described herein
are collectively referred to as the "Investment".
1. STRUCTURE AND TERMS. The investment will be structured as a purchase by the
Buyer from the Company of authorized but unissued preferred shares of the
Company (the "Preferred Stock") which will have rights, powers, preferences and
limitations as set forth in a certificate of designations to be mutually agreed
upon and effective at the time of closing, which will include the following:
A. DIVIDENDS. The holders of the Preferred Stock shall be entitled to
receive, if, as and when any dividend or distribution is declared or paid on the
common stock of the Company from time to time, an equal per share dividend
(calculated as if the Preferred Stock had been converted into common stock of
the Company, in accordance with paragraph 1(c) below, on the record date
established to determine the holders entitled to receive such dividend or
distribution).
B. LIQUIDATION PREFERENCE. The Preferred Stock will, upon any liquidation,
dissolution or winding up of the Company, rank senior to all other capital stock
of the Company, and will entitle the holders thereof to receive, out of the
assets available for distribution to stockholders, aggregate amounts equal to
the aggregate purchase price paid for the Preferred Stock (including, to the
extent applicable, the immediate cancellation of any remaining payment
obligations under paragraph 2 below).
<PAGE>
C. CONVERSION. The Preferred Stock shall be convertible in whole (but not
in part), at any time at the option of the holders of a majority of the
Preferred Stock, into a number of shares of Class A common stock of the Company
equal to 30% of the fully diluted common stock of the Company (on a pro forma
basis, after giving effect to such conversion and the exercise or conversion of
all then outstanding options, warrants, convertible securities or other rights
to acquire common stock of the Company). In addition to such optional conversion
rights, the Preferred Stock shall automatically convert, in whole, into a number
of shares of Class A common stock of the Company equal to 30% of the fully
diluted common stock of the Company (calculated as aforesaid), on the earlier of
(i) the later of (A) the first sale of shares of common stock by the Company,
subsequent to the closing of the Investment, pursuant to a registered
underwritten public offering of common stock of the Company, (B) the
consummation of the Company's proposed acquisition of or business combination
with __________ or any other entity satisfactory to the holders of a majority of
the Preferred Stock, or (C) February 15, 2000, or (ii) July 31, 2000.
D. VOTING RIGHTS. In addition to any separate class voting rights provided
by applicable law, the Preferred Stock shall have the right to vote with the
common stock of the Company (voting as a single class) on all matters submitted
or required to be submitted to the stockholders of the Company for their vote,
consent or approval. The Preferred Stock shall collectively be entitled to a
number of votes equal to the number of shares of common stock of the Company
into which the Preferred Stock would be convertible on the record date
established for such vote, consent or approval (or, if no such record date is
established, then the date on which such vote, consent or approval is taken or
obtained).
2. PURCHASE PRICE. In consideration of the issuance and sale of the Preferred
Stock to the Buyer, the Buyer shall pay to the Company the aggregate sum of
$500,000, which shall be payable in immediately available funds (a) $100,000 on
December 1, 1999, (b) $150,000 on December 31, 1999, and (c) $250,000 on
February 1, 2000. Such installments will be payable without interest, and may be
prepaid (in whole or in part) at any time at the Buyer's option. Payment of such
amounts will be secured by shares of common stock of the Buyer, which will be
deposited into escrow with the Buyer's counsel, who shall act as escrow holder
and deliver or return such shares pursuant to an escrow agreement in form
satisfactory to the Company, the Buyer, the pledgor and such escrow agent. The
initial collateral will consist of 100,000 shares of common stock of the Buyer,
which will be placed in escrow at the time of closing; and, in conjunction with
each scheduled payment as aforesaid, the number of shares held by the escrow
agent will be adjusted so as to equal that number determined by dividing (i) the
remaining installment payments due in respect of the Preferred Stock as provided
here, by (ii) the arithmetic mean average of the average of the bid and ask
prices of the common stock of the Buyer for the five (5) trading days ending
three (3) business days prior to the subject scheduled payment date.
<PAGE>
3. BOARDS OF DIRECTORS. The Definitive Agreement described below will include
provisions whereby the Company will agree that (a) upon the payment of the
second installment under paragraph 2 above, the Board of Directors of the
Company will be expanded to eight members, with the vacancy thereby created
being filled by Kevin Waltzer (or, in the event that Mr. Waltzer has died or is
disabled on such date, another individual designated by the Buyer), (b) upon the
payment of the final installment under paragraph 2 above, the Board of Directors
of the Company will be increased to nine members, with the vacancy thereby
created being filled by John J. Russell (or, in the event that Mr. Russell has
died or is disabled on such date, another individual designated by the Buyer),
and (c) the Board of Directors of the Company will not otherwise be increased at
any time when the Preferred Stock is outstanding. The Definitive Agreement will
also contain a provision whereby, at such time as Mr. Waltzer (or another
individual designated by the Buyer) is installed on the Board of Directors of
the Company, Frederic Richardson (or, in the event that Mr. Richardson has died
or is disabled on such date, another individual designated by the Company) will
be added to the Board of Directors of the Buyer.
4. OPERATION OF THE BUSINESS. At all times prior to the closing of the
Investment or the abandonment of the proposed transactions described herein, the
Company will conduct its business solely in the ordinary course, and will not
enter into any material transaction outside of the ordinary course, including
but not limited to issuing any additional capital stock of the Company (other
than upon the exercise or conversion of any options, warrants, convertible
securities or other rights outstanding on the date hereof), incurring any
indebtedness for money borrowed or any other material indebtedness, changing its
methods of payment of accounts payable or collection of accounts receivable, or
paying any dividends, distributions, fees or other payments to stockholders,
directors, executive officers or other affiliates of the Company (other than
normal compensation and expense reimbursements in the ordinary course of
business consistent with past practice).
5. EXPENSES. Each party will be responsible for the payment of its own costs and
expenses (including, without limitation, professional fees of its attorneys,
accountants and other advisors) in connection with these transactions.
6. DUE DILIGENCE. At all times through the preparation of definitive agreements
and the closing of the Combination, the Buyer and its representatives will be
afforded the opportunity to conduct a full due diligence investigation of the
assets, business, financial condition, management and prospects of the Company,
the results of which due diligence investigation shall be satisfactory to the
Buyer.
7. CLOSING DATE. Subject to satisfactory completion of due diligence and the
Definitive Agreement described below, it is anticipated that the closing of the
Investment will occur on or before December 15, 1999.
8. CONCLUSION. This letter represents only an expression of our mutual intention
at this time and shall not be construed or deemed to represent an agreement or
agreement to agree as to any Investment or other transaction. It is expressly
understood and agreed that the legal rights and obligations of the parties shall
arise only pursuant to definitive agreements regarding the Investment
<PAGE>
(collectively, the "Definitive Agreement"), containing customary
representations, warranties, covenants and agreements of the parties thereto and
in form and content mutually satisfactory to such parties and their legal
counsel; provided, however, that notwithstanding the otherwise non-binding
nature of this letter, the provisions of paragraph 5 above, and the next
succeeding paragraph below, shall be binding on the parties upon the execution
and delivery of this letter.
Notwithstanding the foregoing, from the date of execution of this letter of
intent by the Company through and including the earlier of December 15, 1999 or
the execution of a Definitive Agreement, and thereafter as provided in the
Definitive Agreement, the Company agrees that it will not (and will not permit
any of its shareholders, directors, officers, or affiliates to) negotiate with
or enter into any commitments, agreements or understandings with any person,
firm or corporation (other than the Buyer) in respect of any sale of capital
stock or assets of the Seller, any merger, consolidation or corporate
reorganization, or any other such transaction relating to the Seller or any
portion of its business.
If the foregoing accurately reflects the substance of our understanding at this
time, please so indicate by signing a copy of this letter of intent in the space
provided below.
Very truly yours,
WATCHOUT! INC., d/b/a Innovative
Cybersystems Corporation
By:________________________
Acknowledged, Confirm and
Agreed to:
INTERNATIONAL MERCANTILE CORPORATION, a/k/a MicroMatix.net, Inc.
By:_________________________________
Frederic Richardson, Chairman
