WATCHOUT!,INC.
7272 WISCONSIN AVE. #300
BETHESDA, MARYLAND 20814
(888) 261-2887
December 29, 2000
VIA HAND DELIVERED:
WIRELESSON.COM ltd
&
EXPANDED SYSTEMS SOLUTION INC.
Attn: ALLAN BEZANSON
Re: Letter of Intent
Dear Mr. Bezanson:
This letter will serve to confirm our recent discussions regarding the
proposed acquisition by WatchOut! Inc. ("WO") of Wirelesson.com AND Expanded
Systems Solutions Inc., (the "Company"). Such purchase and the related
transactions described herein are collectively referred to as the "Investment."
The following numbered paragraphs reflect our understanding of the matters
described in them, but are not to constitute a complete statement of, or a
legally binding or enforceable agreement or commitment on the part of WatchOut!,
Inc. or Company with respect to the matters, described therein, except for
numbered paragraphs 6(A-C). This Letter of Intent does, however, set forth a
good faith intention of the parties to enter into a more definitive agreement
regarding the Relationship between the parties. ("Definitive Agreement").
1. Structure and Terms. Until additional due diligence is completed we
are suggesting an outline for the acquisition as stated:
A.) We are prepared to pay 1,000,000 million shares of Rule 144
stock to purchase the remaining 92% outstanding in
Wirelesson.com and Expanded Systems Solutions Inc. We would be
willing to provide a put @ $.80 USD a share.
B.) Base upon analysis of the current staff we would provide
three-year employment contracts to the existing management
staff that was deem essential including production bonus based
upon obtaining their production targets. Glenn Boyd and
Grahame Entwistle will be deemed essential employees.
C.) We would assume the responsibility for the operational
expenses, and provide additional capital for the operation. We
expect to designate $2 million CDN.from our capital raise to
expand the operation of Wirelesson.
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D.) The principles (Glenn Boyd and Grahame Entwistle) of Expanded
Systems would receive a bonus of $1.8-million dollars CDN
worth of stock based upon if they were ably to maintain the
actually revenue in the amount of $600,000 CDN (minus the
accounting games) for the next two years.
E.) Watchout is to complete a registration statement in January.
Upon the registration statement becoming effective the two
principles of Expanded Systems Solutions Inc. would each
become eligible to receive $100,000CDN. The condition for the
payment is that the Company must be profitable and the payment
would be paid over four quarters. The first half of the
payment is unconditional of the profitable.
F.) Watchout would be required to payoff the loan to NOVALINK
FINANCE LTD in the amount of $300,000 CDN. The condition for
the payment is that the payments would be paid in six payments
commencing on or before September 1, 2001.
G.) Protec Trading Inc. would receive cash payment of $100,000 USD
on or before July 1, 2001.
2. Board of Directors. The definitive agreement described below will
include provisions whereby WO will agree that upon the effective date of the
Agreement, the Board of Directors of WO will be three with one vacancies being
tilled by individuals chosen solely by Company, and two director remaining.
Wirelesson's appointed director will sit on the compensation committee, audit
committee and would have veto power for the issuance of free trading stock
3. Operation of the Business. At all times prior to the closing of the
Acquisition or the abandonment of the proposed transactions described herein,
the Company and WO 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), without notifying
each other in advance, in writing.
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. Upon execution of counterparts of this Letter by you, the following
lettered paragraphs will constitute the legally binding and enforceable
agreement of WatchOut, Inc. and Company in consideration of their mutual
undertakings as to the matters described herein:
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A. Best Efforts - WatchOut, Inc. and Company will negotiate in
good faith and use their best efforts to arrive at a mutually acceptable
Definitive Agreement for approval, execution, and delivery on the earliest
reasonably practicable date.
B. Confidentiality - The parties hereto acknowledge that in
the negotiation of the Definitive Agreement each will obtain and learn
confidential information of the other, and each covenants and agrees that it
shall not divulge, either in writing or orally, any information of a
confidential nature to which it becomes privy which is not otherwise available
to the public generally or contained in any filing or report to a public agency,
by virtue of this Agreement or the performance of their respective duties and
obligations hereunder, but shall maintain such information in confidence;
provided, however, that to the extent necessary to carry out their respective
duties hereunder, such information as is necessary to such performance may be
shared by employees of the respective parties, but shall not be divulged to any
third party. For purposes of enforcing the foregoing provisions, such
confidential information which either party may be privy to of the other shall
be deemed "trade secrets." The provisions of this paragraph shall be binding
upon both parties and shall survive expiration or termination of this Agreement.
Any breach or violation of the provisions of this paragraph shall entitle the
aggrieved party to injunctive relief to restrain any existing or future
disclosure of such information or material in addition to any other relief,
including the recovery of damages, available at law.
If a Definitive Agreement is not executed by the parties, each party will return
to the other all materials containing or reflecting any trade secrets and will
not retain any copies, extracts, or other reproductions thereof.
C. Except with respect to the provisions of paragraphs A-C,
either party hereto may terminate this letter, and thereafter this letter shall
have no further force and effect and the parties shall have no further
obligations hereunder if the Definitive Agreement is not signed on or before
January 15, 2001 at 12:00 noon eastern standard time, if such terminating party
is not in breach of any of the binding provisions hereof.
7. Due Diligence. At all times through the preparation of definitive
agreements and the closing of the Acquisition, WO 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 WO.
This shall include a review of Company's financial statements. Company shall
have the same due diligence rights regarding WO as set forth herein.
8. 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 January 15, 2001
9. 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
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<PAGE>
agreed that the legal rights and obligations of the parties shall arise only
pursuant to definitive agreements regarding the Investment (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 6 above, shall be binding on the parties upon the
execution and delivery of this letter.
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.
By: /s/ Todd Violette
-------------------------------------
Todd Violette, Chairman of Board
Acknowledged, Confirmed and
Agreed To:
Wirelesson.com
/s/ Allan Bezanson
--------------------------
Allan Bezanson
Expanded Systems
/s/ Glenn Boyd
--------------------------
Glenn Boyd
/s/ Grahame Entwistle
--------------------------
Grahame Entwistle
