-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LcaFGY+6zGI9H1FddxYCIX99sgyKiA9TaD/UZicNiQkuC5jBiesfGZEcP+osCNjs Mti0XRAzuv3N0ixe3CYtSg== 0001065949-00-000016.txt : 20000307 0001065949-00-000016.hdr.sgml : 20000307 ACCESSION NUMBER: 0001065949-00-000016 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000229 ITEM INFORMATION: FILED AS OF DATE: 20000303 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WATCHOUT INC CENTRAL INDEX KEY: 0000736314 STANDARD INDUSTRIAL CLASSIFICATION: OIL ROYALTY TRADERS [6792] IRS NUMBER: 840959153 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-11424 FILM NUMBER: 560895 BUSINESS ADDRESS: STREET 1: 20283 STATE ROAD 7 STREET 2: SUITE #400 CITY: BOCA RATON STATE: FL ZIP: 33498 BUSINESS PHONE: (561) 482-9420 MAIL ADDRESS: STREET 1: 1900 N W CORP BLVD STREET 2: SUITE 400 E CITY: BOCA RATON STATE: FL ZIP: 33431 FORMER COMPANY: FORMER CONFORMED NAME: WHITE CLOUD EXPLORATION INC DATE OF NAME CHANGE: 19920703 8-K 1 FORM 8-K 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. -------------- (Exact name of registrant as specified in its charter) Utah 0114244 84-0959153 - ---------------- ------------- ------------ (State or other (Commission (IRS Employer jurisdiction of File Number) Identification No.) incorporation) 20283 State Road 7, Suite #400, Boca Raton, FL 33498 ---------------------------------------------------------- (NEW ADDRESS) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (561) 482-9420 1 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. 2 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 3 EX-10.1 2 SHARE PURCHASE AGREEMENT EXHIBIT 10.1 SHARE PURCHASE AGREEMENT - M. JOHNSON & ASSOCIATES COMMUNICATIONS, INC. 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. 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. 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. 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. 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. 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. 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. - ------------------------------- BUYER: WatchOut! Inc. d/b/a Innovative Cybersystems - -------------------------------- Kevin Waltzer, President 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. EX-10.2 3 SHARE PURCHASE AGREEMENT EXHIBIT 7.2 SHARE PURCHASE AGREEMENT - WIRELESSON.COM 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 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 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. 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. 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". 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. 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. 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 #: 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 _________________________________ K. Nadine Shand _________________________________ Trent Taylor BUYER: WatchOut! Inc. d/b/a Innovative Cybersystems Corp. Per:_____________________________ Kevin Waltzer, President 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. 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. EX-10.3 4 LETTER OF INTENT EXHIBIT 7.3 LETTER OF INTENT - INTERNATIONAL MERCANTILE CORPORATION a/k/a MICROMATIX.NET, INC. 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). 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. 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 (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 -----END PRIVACY-ENHANCED MESSAGE-----