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
August 28, 2001
Date of Report
August 16, 2001
(Date of Earliest Event Reported)
TRADING SOLUTIONS.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
Nevada 333-85787 88-0425691
(State or other (Commission File No.) (IRS Employer I.D. No.)
Jurisdiction)
2 Rodeo Court, Toronto, Ontario Canada M2M 4M3
(Address of Principal Executive Offices)
416-512-2356
Registrant's Telephone Number
(Former Name or Former Address if changed Since Last Report)
Item 1. Changes in Control of Registrant.
Pursuant to an Exchange Agreement dated August 18, 2001
between the Company and Springland Beverages, Inc., 15,542,500
shares of the Company were exchanged for all of the issued and
outstanding shares of Springland Beverages, Inc. making
Springland Beverages, Inc. a wholly owned subsidiary of the
Company. This transaction created a change in control of the
Company. Mr. Ralph Moyal received 15,000,000 of the exchanged
shares placing him in a position of owning 81.5% of the Company.
Also, pursuant to the Exchange Agreement, Mr. Moyal will become a
director of the Company and the current officers and directors
will resign. In addition to the shares issued, 602,772 warrants
were issued to the shareholders of Springland Beverages, Inc. to
purchase an equal number of the Company's shares. The warrants
expire September 16, 2001.
Item 2. Acquisition or Disposition of Assets.
Pursuant to an Exchange Agreement dated August 18, 2001
between the Company and Springland Beverages, Inc., 15,542,500
shares of the Company were exchanged for all of the issued and
outstanding shares of Springland Beverages, Inc. making
Springland Beverages, Inc. a wholly owned subsidiary of the
Company. The shares were issued to the seven original
shareholders of Springland Beverages, Inc. In addition to the
shares issued, 602,772 warrants were issued to the shareholders
of Springland Beverages, Inc. to purchase an equal number of the
Company's shares. The warrants expire September 16, 2001.
The Company will pursue the bottled water and related
beverage market through Springland Beverages, Inc. The Company's
new address is 2 Rodeo Court, Toronto, Ontario Canada M2M 4M3,
telephone 416-512-2356. The email address rmoyal@idirect.com.
Business of the Company
The Company will operate through its wholly owned
subsidiary, Springland Beverages, Inc., an Ontario corporation.
Springland intends to supply natural spring water and water
related beverages, initially in the U.S. market but eventually as
a global operation.
Springland has secured an option to purchase land on which
an existing certified and approved source of natural spring water
exists. Additionally, the Company has registered the trademarks
"Springland" and "Aurora" in both the United States and Canada.
The Company is in the process of negotiating the purchase of an
operating beverage plant. The Company intends to identify
operating beverage and beverage related companies for future
acquisitions.
Natural spring water is defined by the U. S. Food and Drug
Administration as "bottled water derived from an underground
formation from which water flows naturally to the surface of the
earth." Springland's potential source of water meets this
definition as evidenced by studies conducted on the lands
including a reporting letter from the Ontario Ministry of the
Environment. The water source the is under the option held by
Springland is located on approximately 62 acres with two major
spings. The Ontario Ministry of the Environment has
2
issued permits allowing for 150,000 imperial gallons per day
for 300 days on an annual basis. The permits were originally
issued in 1984 and subsequently renewed in 1993 until the year
2003.
In the realm of nonalcoholic drinks, consumers spend more
money on carbonated soft drinks than anything else. The sector
is dominated by three major competitors that together control
nearly 80% of the global market. Coca-Cola controls
approximately 50% of the market, followed by Pepsi at about 21%
and Cadbury Schweppes at 7%. For many years the nonalcoholic
sector has engaged in a power struggle between the Cola War
principals, Coke and Pepsi. The industry giants have begun
looking to the non-carbonated beverage sector and relying on new
product introduction for growth.
World wide consumption of natural spring water is a $35
billion market. In the U.S. water sales rose 13.9% in 1999 to
$5.2 billion according to Beverage Marketing Corporation. The
bottled water market is divided into two distinct categories: non-
carbonated which accounts for approximately 91% of bottled water
sales and carbonated which accounts for approximately 9% of
bottled water sales. Bottled water continues to have increased
sales. In 2000, the segment rose some 28%. Sales volume rose
8.3% to 5 billion gallons, twice what it was in 1992. Wholesale
dollars increased 9.3%. Currently, per capita consumption of
bottled water is at an all time high of 18.2 gallons.
Following the acquisition of an operating plant, the Company
plans to initiate an aggressive marketing campaign to establish
the Springland name. The Company will strive for corporate brand
identification by increasing exposure within the water and water
related industry. The Company intends to develop sales
literature, demonstration materials and direct response
promotions. In addition, the Company intends to use direct mail,
fax and telemarketing campaigns for sales generation. The
Company recognizes that advertising and promotion must be done
aggressively in order to accomplish sales goals. Along with ad
campaigns, the Company will release key press releases and
reports to appropriate journals and market specific trade shows.
Trade show marketing may include informational brochures and
giveaways.
Facilities
Until such time as the Company complete a plant acquisition,
the President of the Company, Ralph Moyal is providing office
space at no cost to the Company. The address is 2 Rodeo Court,
Toronto, Ontario Canada M2M 4M3, telephone 416-512-2356.
Management
Effective September 7, 2001, Mr. Ralph Moyal will be the
sole officer and director. Mr. Moyal was the Chief Executive and
then later was the Chairman of Blue Mountain Beverages and
founder of Distribution Canada, Inc. In 1995 he retired as the
President of Blue Mountain Beverages and has been self employed
since that time. He has over 30 years in the food and beverage
industry and was selected two years consecutively as Ontario's
Top 100 Entrepreneurs by the Ontario Business Journal.
3
Until such time as the Company begins operations and
generates revenue, Mr. Moyal will not receive any salary or
compensation other than reimbursement for expenses on behalf of
the Company.
Item 4. Changes in Registrant's Certifying Accountant
The Company's independent auditor for the years ended March
30, 2000 and 2001 was Richard Hawkins of Hawkins Accounting. In
August 2001, the Company terminated the engagement of Hawkins
Accounting as its independent auditor to lower expenses and
provide an auditor located closer to the Company. The Board of
Directors researched and approved the accounting firm of Freedman &
Goldberg to serve as independent auditor of the
Company for the year ended September 30, 2001 and any interim
periods. The Company has been advised that neither Freedman
& Goldberg nor any of their members or associates has
any relationship with the Company or any of its affiliates,
except in the firm's proposed capacity as the Company's
independent auditor.
During the fiscal years ended March 30, 2000 and 2001, and
any subsequent interim periods, the financial statements of the
Company did not contain any adverse opinion or disclaimer of
opinion from the Company's former independent auditor, and were
not modified as to uncertainty, audit scope, or accounting
principles, except the reports issued by Hawkins Accounting
contained a statement expressing doubt about the ability of the
Company to continue as a going concern due to its status as a
development stage company with no significant operating results.
During the year ended March 30, 2000, and from that date to the
present, there were no disagreements with the former independent
auditor on any matter of accounting principles, financial
statement disclosure, or auditing scope or procedure which, if
not resolved to the former independent auditor's satisfaction,
would have caused it to make reference to the subject matter of
the disagreement in connection with its audit report.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
Interim Financial Statements as of June 30, 2001 (unaudited)
To be filed within 60 days
Interim Financial Statements as of March 31, 2001 (unaudited)
Notice to Reader
Interim Balance Sheet as of March 31, 2001
Interim Statement of Deficit for the Period October 1,
2000 to March 31, 2001
Interim Statement of Loss for the Period October 1,
2000 to March 31, 2001
Notes to Interim Financial Statements
4
Audited Financial Statements as of September 30, 2000
Auditors Report
Balance Sheet as of September 30, 2000
Statement of Deficit for the Year Ended September 30, 2000
Statement of Loss for the Year Ended September 30, 2000
Statement of Cash Flows for the Year Ended September 30, 2000
Notes to Financial Statements
Audited Financial Statements as of September 30, 1999
Auditors Report
Balance Sheet as of September 30, 1999
Statement of Deficit for the Year Ended September 30, 1999
Statement of Loss for the Year Ended September 30, 1999
Statement of Cash Flows for the Year Ended September 30, 1999
Notes to Financial Statements
(b) Pro Forma Financial Information.
To be filed within 60 days.
(c) Exhibits.
Exhibit SEC Description of Exhibit
Number Reference
1 2 Exchange Agreement
3 16 Letter on Change in Certifying Accountant
Item 8. Change in Fiscal Year.
On August 28, 2001, the Board of Directors determined it is
in the Company's best interest to change its fiscal year to be
the same as its wholly owned subsidiary. Therefore, the Company
will change its fiscal year from March 31 to September 30. The
Form 10-KSB for the period ending September 30, 2001 will cover
the transition period.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned hereunto duly authorized.
Date: August 31, 2001 TRADING SOLUTIONS.COM, INC.
By:/s/ Ralph Moyal
Ralph Moyal, President
5
GOLDBAND Philip Goldband, B. Comm., C.A., CFP
& Jeff Goldberg, B.B.A., M.B.A., C.A.
GOLDBERG, LLP Leon Elmaleh, B.B.A., C.A.
David Levine, BSc., B. Comm., C.A., Principal
CHARTERED 15 Coldwater Road Toranto, Ontario M3B 1Y8
ACCOUNTANTS Tel.(416)441-9292 Fax.(416)441-2766 Website: www.ggca.com
NOTICE TO READER
We have compiled the interim balance sheet of Springland
Beverages Inc. as at March 31, 2001 and the interim statements of
loss and deficit for the period October 1, 2000 to March 31, 2001
from information provided by management. We have not audited,
reviewed or otherwise attempted to verify the accuracy or
completeness of such information. Readers are cautioned that
these statements may not be appropriate for their purpose.
/s/ Goldband & Goldberg, LLP
TORONTO, June 13, 2001 CHARTERED ACCOUNTANTS
Represented in the United States by a member firm of L A. L. P A.
6
SPRINGLAND BEVERAGES IN
INTERIM BALANCE SHEET
MARCH 31, 2001
(Unaudited - See Notice to Reader)
ASSETS
March 31 September 30
2001 2000
(6 Months) (12 months)
Current
Bank $ 3,400 $ 6,430
Deposit on land 75,000 75,000
Prepaid and sundry assets 2,492 1,946
80,892 83,376
Other (Note 1) 26,838 24,406
$ 107,730 $ 107,782
LIABILITIES
Current
Accounts payable and accrued liabilities $ 13,706 $ 8,820
Advances from director 20,965 16,525
34,671 25,345
SHAREHOLDERS' EQUITY
Capital Stock (Note 2) 110,001 110,001
Deficit (36,942) (27,564)
73,059 82,437
$ 107,730 $ 107,782
7
SPRINGLAND BEVERAGES IN.
INTERIM STATEMENT OF DEFICIT
FOR THE PERIOD OCTOBER 1, 2000 TO MARCH 31, 2001
(Unaudited - See Notice to Reader)
March 31 September 30
2001 2000
(6 Months) (12 months)
Deficit, beginning of period $ 27,564 $ 5,684
Net loss 9,378 21,880
Deficit, end of period $ 36,942 $ 27,564
8
SPRINGLAND BEVERAGES INC.
INTERIM STATEMENT OF LOSS
FOR THE PERIOD OCTOBER 1, 2000 TO MARCH 31, 2001
(Unaudited - See Notice to Reader)
March 31 September 30
2001 2000
(6 Months) (12 months)
REVENUE $ - $ -
EXPENSES
Advertising and promotion 734 2,229
Amortization 558 634
Office and general 1,545 2,402
Professional fees 3,160 10,069
Rent 1,500 3,000
Telephone 734 1,784
Travel 1,147 1,762
9,378 21,880
NET LOSS $(9,378) $(21,880)
9
SPRINGLAND BEVERAGES INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
MARCH 31, 2001
1. OTHER
March 31 September 30
Accumulated 2001 2000
Cost Amortization Net Net
Trademark $ 11,978 $ 677 $ 11,301 $ 8,460
Deferred legal costs 16,355 818 5,537 15,946
$ 28,333 $ 1,495 $ 26,838 $ 24,406
2. CAPITAL STOCK
Authorized
Unlimited Common shares
Unlimited Preference shares
Issued
550,001 Common shares for consideration of 110,001.
10
GOLDBAND Philip Goldband, B.Comm., C.A., CFP
& Jeff Goldberg, B.B.A., M.B.A., C.A.
GOLDBERG, LLP Leon Elmaleh, B.B.A., C.A.
David Levine, BSc., B. Comm., C.A., Principal
CHARTERED 15 Coldwater Road Toranto, Ontario M3B 1Y8
ACCOUNTANTS Tel.(416)441-9292 Fax.(416)441-2766 Website: www.ggca.com
To the Shareholders of
Springland Beverages Inc.
AUDITORS'REPORT
We have audited the balance sheet of Springland Beverages Inc. as
at September 30, 2000 and the statements of loss, deficit and
cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at
September 30, 2000 and the results of its operations and its cash
flows for the year then ended in accordance with generally
accepted accounting principles.
TORONTO, April 12,2001 CHARTERED ACCOUNTANTS
Represented in the United States by a member firm of I.A.L.P.A.
11
SPRINGLAND BEVERAGES INC.
BALANCE SHEET
SEPTEMBER 30,2000
ASSETS
2000 1999
Current
Bank $ 6,430 $ 650
Deposit on land 75,000 -
Prepaid and sundry assets 1,946 -
83,376 650
Other (Note 3) 24,406 6,113
$ 107,782 $ 6,763
LIABILITIES
Current
Accounts payable and accrued liabilities $ 8,820 $ 6,243
Advances from shareholder (Note 4) 16,525 6,203
25,345 12,446
SHAREHOLDERS' EQUITY
Capital Stock (Note 5) 110,001 1
Deficit (27,564) (5,684)
82,437 (5,683)
$ 107,782 $ 6,763
APPROVED ON BEHALF OF THE BOARD:
_____________________________________ Director
_____________________________________ Director
12
SPRINGLAND BEVERAGES INC.
STATEMENT OF DEFICIT
FOR THE YEAR ENDED SEPTEMBER 30,2000
2000 1999
Deficit, beginning of year $ 5,684 $ 4,178
Net loss 21,880 1,506
Deficit, end of year $ 27,564 $ 5,684
13
SPRINGLAND BEVERAGES INC.
STATEMENT OF LOSS
FOR THE YEAR ENDED SEPTEMBER 30,2000
2000 1999
REVENUE $ - $ -
EXPENSES
Advertising and promotion 2,229 -
Amortization 634 161
Office and general 2,402 -
Professional fees 10,069 1,345
Rent 3,000 -
Telephone 1,784 -
Travel 1,762 -
21,880 1,506
NET LOSS $(21,880) $ (1,506)
14
SPRINGLAND BEVERAGES INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30,2000
2000 1999
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES
OPERATING
Cash from operations
Net loss $ (21,880) $ (1,506)
Charges to earnings not involving cash:
Amortization 634 161
(21,246) (1,345)
Net change in non-cash working capital
balances related to operations (Note 6) (64,413) 3,376
(85,659) 2,031
FINANCING
Issuance of common shares 110,000 -
INVESTING
Increase in other assets (18,928) (2,639)
CHANGE IN CASH DURING THE YEAR 5,413 (608)
CASH, beginning of year 650 1,258
CASH, end of year $ 6,063 $ 650
15
SPRINGLAND BEVERAGES INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2000
1. FINANCIAL STATEMENTS
The company was incorporated under the laws of the Province of
Ontario on February 19, 1997.
2. SIGNIFICANT ACCOUNTING POLICIES
Intangibles - Trademarks
The trademark "SPRINGLAND" was registered in July 1999. Trademark
costs are being amortized on a straight-line basis over 40 years.
Intangibles - Deferred Legal Costs
Deferred legal costs represent legal fees incurred to date in
order to accomplish a potential Initial Public Offering (IPO).
These fees are being amortized on a straight-line basis over 20
years.
Foreign Currency Translation
Monetary assets and liabilities are translated into Canadian
dollars at year end exchange rates. Revenue and expense items are
translated at average rates of exchange during the period.
Resulting exchange gains or losses are included in earnings.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that effect the amounts reported
in the financial statements and accompanying notes. Actual
results could differ from these estimates.
3. OTHER
Accumulated 2000 1999
Cost Amortization Net Net
Trademark $ 8,987 $ 527 $ 8,460 $ 6,113
Deferred legal costs 16,355 409 15,946 -
$ 25,342 $ 936 $ 24,406 $ 6,113
16
SPRINGLAND BEVERAGES INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2000
4. ADVANCES FROM SHAREHOLDER
Advances from the controlling shareholder of the company are non-
interest bearing, due on demand and are unsecured.
5. CAPITAL STOCK
Authorized
Unlimited Common shares
Unlimited Preference shares
Issued
550,001 Common shares for consideration of $ 110,00 1.
During the year the company issued 550,000 common shares and
611,110 warrants out of treasury for $ 110,000. Each warrant
entitles the holder to purchase an additional common share for 50
cents for a period of 2 years following the expiration of any
statutory holding period.
6. NET CHANGE IN NON-CASH WORKING CAPITAL
2000 1999
Deposit on land $ (75,000) $ -
Prepaid and sundry assets (1,946) -
Accounts payable and accrued liabilities 2,577 2,751
Advances from shareholder 9,956 625
$ (64,413) $ 3,376
7. FINANCIAL INSTRUMENTS
The company's short-term financial instruments comprising cash,
deposit on land, prepaid and sundry assets, accounts payable and
accrued liabilities and advances from shareholder are carried at
cost, which, due to their short term nature, approximates their
fair value.
17
GOLDBAND Philip Goldband, B. Comm., C.A., CFP
& Jeff Goldberg, B.B.A., M.B.A., C.A.
GOLDBERG LLP Leon Elmaleh, B.B. A.,C.A.
CHARTERED 15 Coldwater Road Toronto, Ontario M3B 1Y8
ACCOUNTANTS Tel.(416)441-9292 Fax(416)441-2766 Website: www.ggca
To the Shareholder of
Springland Beverages Inc.
AUDITORS'REPORT
We have audited the balance sheet of Springland Beverages Inc. as
at September 30, 1999 and the statements of loss, deficit and
cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at
September 30, 1999 and the results of its operations and its cash
flows for the year then ended in accordance with generally
accepted accounting principles.
DON MILLS, November 16,1999 CHARTERED ACCOUNTANTS
18
SPRINGLAND BEVERAGES INC.
BALANCE SHEET
SEPTEMBER 30,1999
ASSETS
1999 1998
Current
Bank $ 650 $ 1,258
Other (Note 3) 6,113 3,635
$ 6,763 $ 3,493
LIABILITIES
Current
Accounts payable and accrued liabilities $ 6,244 $ 3,493
Advances from shareholder (Note 4) 6,202 5,577
12,446 9,070
SHAREHOLDER'S DEFICIENCY
Capital Stock (Note 5) 1 1
Deficit (5,684) (4,178)
(5,683) (4,177)
$ 6,763 $ 4,893
APPROVED ON BEHALF OF THE BOARD:
______________________________________ Director
______________________________________ Director
19
SPRINGLAND BEVERAGES INC.
STATEMENT OF DEFICIT
FOR THE YEAR ENDED SEPTEMBER 30,1999
1999 1998
Deficit, beginning of year $ 4,178 $ 2,425
Net loss 1,506 1,753
Deficit, end of year $ 5,684 $ 4,178
20
SPRINGLAND BEVERAGES INC.
STATEMENT OF LOSS
FOR THE YEAR ENDED SEPTEMBER 30,1999
1999 1998
REVENUE $ - $ -
EXPENSES
Amortization 161 95
Interest and bank charges 145 120
Office and general - 338
Professional fees 1,200 1,200
1,506 1,753
NET LOSS $ 1,506 $ 1,753
21
SPRINGLAND BEVERAGES INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30,1999
1999 1998
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES
OPERATING
Cash from operations
Net loss $ (1,506) $ (1,753)
Charges to earnings not involving cash:
Amortization 161 95
(1,345) (1,658)
Net change in non-cash working capital
balances related to operations (Note 6) 3,376 2,481
2,031 823
INVESTING
Increase in other assets (2,639) (812)
CHANGE IN CASH DURING THE YEAR (608) 11
CASH, beginning of year 1,258 1,247
CASH, end of year $ 650 $ 1,258
22
SPRINGLAND BEVERAGES INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,1999
1. FINANCIAL STATEMENTS
The company was incorporated under the laws of the Province of
Ontario on February 19, 1997.
2. SIGNIFICANT ACCOUNTING POLICIES
Intangibles
The trademark "SPRINGLAND" was registered in July 1999. Trademark
costs are being amortized on a straight-line basis over 40 years.
3. OTHER
Accumulated 1999 1998
Cost Amortization Net Net
Trademark $ 6,414 $ 301 $ 6,113 $ 3,635
4. ADVANCES FROM SHAREHOLDER
Advances from the shareholder of the company are non-interest
bearing, due on demand and are unsecured.
5. CAPITAL STOCK
Authorized
Unlimited Common shares
Unlimited Preference shares
Issued
15,000,000 Common shares for consideration of $ 1.
23
SPRINGLAND BEVERAGES INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,1999
6. NET CHANGE IN NON-CASH WORKING CAPITAL
1999 1998
Accounts payable and accrued liabilities $ 2,751 $ 830
Advances from shareholder 625 1,651
$ 3,376 $ 2,481
7. SUBSEQUENT EVENTS
Subsequent to the year end, the Company issued 550,000 common
shares and 611,110 warrants out of treasury for $ 110,000. Each
warrant entitles the holder to purchase an additional common
share for 50 cents for a period of 2 years following the
expiration of any statutory holding period.
8. YEAR 2000 READINESS
The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Data-sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using year 2000 dates is
processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something
other than a date. The effects of the Year 2000 Issue may be
experienced before, on or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may
range from minor issues to significant systems failure which
could affect an entity's ability to conduct normal business
operations. It is not possible to be certain that all aspects of
the Year 2000 Issue affecting the entity, including those related
to the efforts of affiliates, suppliers, or other third parties
will be fully resolved. The Company, however has evaluated their
systems and feel that they will be compatible with the Year 2000.
24
AGREEMENT AND PLAN OF EXCHANGE
Between
TRADING SOLUTIONS.COM, INC.
SPRINGLAND BEVERAGES, INC.
and
THE STOCKHOLDERS OF
SPRINGLAND BEVERAGES, INC.
Dated August 16, 2001
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 1
ARTICLE II. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF SBI
2.01 Organization 3
2.02 Non-contravention 3
2.03 Authorization of Transaction 4
2.04 Subsidiaries 4
2.05 Capitalization 4
2.06 Financial Statements 4
2.07 Absence of Certain Changes or Events 5
2.08 Title and Related Matters 5
2.09 Tax Matters 6
2.10 Litigation and Proceedings 6
2.11 Contracts 6
2.12 Material Contract Defaults 7
2.13 Governmental Authorizations 7
2.14 Compliance With Laws and Regulations 7
2.15 Insurance 7
2.16 Transactions With Affiliates 7
2.17 Labor Relations 8
2.18 Foreign Business Practices 8
2.19 Information 8
2.20 SBI Schedules 8
ARTICLE III. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF TSI
3.01 Organization 9
3.02 Non-contravention 9
3.03 Authorization of Transaction 10
3.04 Subsidiaries 10
3.05 Capitalization 10
3.06 Financial Statements 10
3.07 Absence of Certain Changes or Events 11
3.08 Title and Related Matters 11
3.09 Tax Matters 11
3.10 Litigation and Proceedings 12
3.11 Contracts 12
3.12 Material Contract Defaults 12
3.13 Governmental Authorizations 12
3.14 Compliance With Laws and Regulations 12
3.15 Insurance 13
3.16 Labor Relations 13
3.17 Foreign Business Practices 13
3.18 Information 13
3.19 TSI Schedules 14
ii
Page
ARTICLE IV. PLAN OF EXCHANGE
4.01 Exchange of TSI Stock and SBI Stock 14
4.02 Exchange of TSI Warrants and SBI Warrants 15
ARTICLE V. SPECIAL COVENANTS
5.01 Access to Properties and Records 15
5.02 Actions Prior to Closing 15
5.03 Special Covenants and Representations
Regarding the Exchanged TSI Stock and Warrants 15
5.04 Indemnification 16
5.05 Third Party Indemnity 17
5.06 Third Person Consents and Certificates 17
5.07 SBI Asset Purchase 17
5.08 Termination 18
5.09 Officer and Director Resignations 18
5.010 Share Leakage Agreement 19
ARTICLE VI. CLOSING
6.01 Closing 19
6.02 Closing Events 19
ARTICLE VII. CONDITIONS PRECEDENT TO OBLIGATIONS OF TSI
7.01 Accuracy of Representations 19
7.02 Litigation Certificates 19
7.03 No Material Adverse Change 19
7.04 Good Standing 19
7.05 Consents/Agreements 19
7.06 Other Items 20
ARTICLE VIII. CONDITIONS PRECEDENT TO OBLIGATIONS
OF SBI AND THE STOCKHOLDERS
8.01 Accuracy of Representations 20
8.02 Litigation Certificate 20
8.03 No Material Adverse Change 20
8.04 Good Standing 20
8.05 Consents/Agreements 20
8.06 Other Items 20
iii
Page
ARTICLE IX. MISCELLANEOUS
9.01 Brokers 20
9.02 Governing Law 21
9.03 Notices 21
9.04 Attorneys' Fees 21
9.05 Third Party Beneficiaries 21
9.06 Entire Agreement 21
9.07 Counterparts 22
9.08 Amendment or Waiver 22
9.09 Post Closing Filings 22
EXHIBITS
Exhibit A Adherance Agreement
Exhibit B Form of TSI Warrant
Exhibit C Share Leakage Agreement
Exhibit D Escrow Agreement
Exhibit E Third Party Indemnity Agreement
iv
AGREEMENT AND PLAN OF EXCHANGE
THIS AGREEMENT AND PLAN OF EXCHANGE is made and entered into
as of this 16th day of August 2001, by and between TRADING
SOLUTIONS.COM, INC., a Nevada corporation, SPRINGLAND BEVERAGES,
INC., an Ontario corporation, and the STOCKHOLDERS of Springland
Beverages, Inc., identified on individual Adherence Agreements in
the form of Exhibit A.
Premises
This Agreement provides for the acquisition by TSI of all of
the issued and outstanding shares and warrants of SBI solely in
exchange for voting shares and warrants of TSI on the terms and
conditions hereinafter provided, all for the purpose of effecting
a so-called "tax-free" reorganization pursuant to section
368(a)(1)(B) of the Internal Revenue Code of 1986.
Agreement
NOW, THEREFORE, on the stated premises and for and in
consideration of the mutual covenants and agreements hereinafter
set forth and the mutual benefits to the Parties to be derived
herefrom, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
Adverse Consequences means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines,
costs, reasonable amounts paid in settlement,
liabilities, obligations, taxes, liens,
losses, expenses, and fees, including court
costs and reasonable attorneys' fees and
expenses.
Affiliate has the meaning set forth in Rule
12b-2 of the regulations promulgated under
the Securities Exchange Act of 1934, as
amended.
Agreement means this Agreement and Plan of
Exchange dated August __, 2001.
Closing means the acts by the Parties
of issuing, executing, and/or delivering the
TSI Stock, SBI Stock, TSI Warrants, SBI
Warrants, certificates of officers,
schedules, and other instruments provided for
in Articles VI, VII, and VIII of this
Agreement.
Common Stock means the duly authorized common
stock, par value $0.001, of TSI.
Exchanged TSI Stock means the Common Stock of TSI to be
issued to the Stockholders pursuant to this
Agreement.
Exchanged TSI Warrants means 602,772 warrants to purchase
common shares of TSI at an exercise price of
$0.50 per share that expire September 16,
2001, to be issued to certain Stockholders
pursuant to this Agreement.
1
GAAP means the United States
generally accepted accounting principles as
in effect from time to time.
Knowledge means actual knowledge after
reasonable investigation.
Material means, when used as an adjective in
conjunction with an event, condition,
circumstance, effect, or other item, that
there is a substantial likelihood that a
reasonable person would attach importance to
the event, condition, circumstance, effect,
or item in evaluating the Party to which it
relates and the transactions herein
contemplated.
Nevada Corporation Law means the corporation law of the state
of Nevada set forth in Chapter 78 of the
Nevada Revised Statutes, as amended.
Ordinary Course of Business means the ordinary course of
business consistent with past custom and
practice (including with respect to quantity
and frequency).
Party means any one or more of TSI,
SBI, or the Stockholders, as the context
indicates.
Person means an individual, a
partnership, a corporation, an association, a
joint stock company, a trust, a joint
venture, an unincorporated organization, or a
governmental entity (or any department,
agency, or political subdivision thereof).
SBI is Springland Beverages, Inc.,
an Ontario corporation and a Party to this
Agreement.
SBI Schedules means the schedules of SBI
identified in Section 2.20 of this Agreement.
SBI Stock means ____________ 15,542,500
common shares of SBI, which are all of the
issued and outstanding shares of the capital
stock of SBI.
SBI Warrants means 602,772 warrants to purchase
common shares of SBI at an exercise price of
$0.50 per share that expire on September 16,
1999 which are all of the issued and
outstanding warrants of SBI.
SEC means the Securities and
Exchange Commission.
Securities Act means the Securities Act of 1933,
as amended.
Security Interest means any mortgage, pledge, lien,
encumbrance, charge, or other security
interest, other than: (a) mechanic's,
materialmen's, and similar liens; (b) liens
for taxes not yet due and payable or for
taxes that the taxpayer is contesting in good
faith through appropriate proceedings; (c)
purchase money liens and liens securing
rental payments under capital lease
arrangements; and (d) other liens arising in
the Ordinary Course of Business and not
incurred in connection with the borrowing of
money.
2
Stockholder(s) is one or more of the stockholders
of SBI who are parties to this Agreement and
identified either on the signature pages of
this Agreement or on individual Adherence
Agreements in the form of Exhibit A (who are
the holders of all the SBI Stock).
Subsidiary means any corporation with respect
to which a specified Person (or a Subsidiary
thereof) owns a majority of the common stock
or has the power to vote or direct the voting
of sufficient securities to elect a majority
of the directors.
Tax means any federal, state,
local, or foreign income, gross receipts,
license, payroll, employment, excise,
severance, stamp, occupation, premium,
windfall profits, environmental, customs
duties, capital stock, franchise, profits,
withholding, social security (or similar),
unemployment, disability, real property,
personal property, sales, use, transfer,
registration, value added, alternative or add-
on minimum, estimated, or other tax of any
kind whatsoever, including any interest,
penalty, or addition thereto, whether
disputed or not.
Tax Return means any return, declaration,
report, claim for refund, or information
return or statement relating to Taxes,
including any schedule or attachment thereto,
and including any amendment thereof.
TSI is Trading Solutions.com,
Inc., a Nevada corporation and a Party to
this Agreement.
TSI Schedules means the schedules of TSI
identified in Section 3.19 of this Agreement.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF SBI
As an inducement to, and to obtain the reliance of, TSI, SBI
represents and warrants as follows:
Section 2.01 Organization. SBI is a corporation duly
organized, validly existing, and in good standing under the laws
of the province of Ontario. SBI has the corporate power and is
duly authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry
on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign
corporation in the territories or provinces in which the
character and location of the assets owned by it or the nature of
the business transacted by it requires qualification, except in
such jurisdictions, if any, where the failure to be so qualified
would not, either individually or in the aggregate, have a
material adverse effect on the business, properties, or assets of
SBI. Included in the SBI Schedules (as hereinafter defined) are
complete and correct copies of the articles of incorporation, as
amended, and bylaws of SBI as in effect on the date hereof.
Section 2.02 Non-contravention. The execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with
the terms hereof will not: violate any provision of the articles
of incorporation, charter, or bylaws of SBI; result in the
3
breach of, constitute a default under, result in the acceleration
of, create in any Person the right to accelerate, terminate,
modify, cancel, or require any notice under, any material
agreement, contract, lease, license, instrument, or other
arrangement to which SBI is a party or by which it is bound or to
which any of its assets is subject; or, violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government,
governmental agency, or court to which SBI is subject.
Section 2.03 Authorization of Transaction. SBI has full
power and authority, and has taken all action required by law,
its articles of incorporation and bylaws, and otherwise to
execute and deliver this Agreement and to perform its obligations
hereunder. Without limiting the generality of the foregoing, the
board of directors of SBI has duly authorized the execution,
delivery, and performance of this Agreement by SBI. This
Agreement represents the valid and binding obligation of SBI
enforceable in accordance with its terms, except as limited by
bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally.
Section 2.04 Subsidiaries. SBI has no Subsidiaries, and
owns no shares of the capital stock or equity interest of any
other corporation or business entity.
Section 2.05 Capitalization. The authorized
capitalization of SBI consists of unlimited common shares without
nominal or par value, of which 15,542,500 shares are currently
issued and outstanding. All issued and outstanding shares are
legally issued, fully paid, and non-assessable and not issued in
violation of the pre-emptive or other rights of any Person.
Except for the SBI Warrants and as otherwise disclosed herein and
in the SBI Schedules, there are no existing options, warrants,
calls, or commitments of any character relating to the authorized
and unissued SBI common shares, except options, warrants, calls,
or commitments, if any, to which SBI is not a party and by which
it is not bound. Except as disclosed herein and in the SBI
Schedules, there are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or similar
rights with respect to SBI.
Section 2.06 Financial Statements.
(a) The SBI Schedules contain the unaudited balance
sheet of SBI at March 31, 2001, and the related unaudited
statements of loss and cash flows for the six months then
ended; and the audited balance sheets of SBI as of September
30, 2000 and 1999, and the related audited statements of
loss, deficit, and cash flows for each year in the two year
period ended December 31, 2000, together with the notes to
such statements and the opinion of Goldband & Goldberg, LLP,
chartered accountants, with respect thereto.
(b) All such financial statements have been prepared
in accordance with GAAP, which was applied on a consistent
basis throughout the periods covered, present fairly as of
their respective dates the financial condition of SBI and
the results of operations of SBI, are correct and complete,
and are consistent with the books and records of SBI (which
books and records are correct and complete).
(c) SBI did not have as of the date of its March 31,
2001 balance sheet any liabilities or obligations (whether
known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or
unliquidated, and due or to become due), including any
liability for Taxes, except for (i) liabilities set forth on
said balance sheet of SBI, and (ii) liabilities disclosed in
this Agreement or the SBI Schedules.
4
Section 2.07 Absence of Certain Changes or Events. Except
as described herein or in the SBI Schedules, since March 31,
2001, the date of the most recent balance sheet of SBI:
(a) There has not been (i) any material adverse change
in the business, operations, properties, assets, or
condition of SBI; or (ii) any damage, destruction, or loss
to SBI (whether or not covered by insurance) materially and
adversely affecting its business, operations, properties,
assets, or financial condition.
(b) SBI has not (i) amended its articles of
incorporation, charter, or bylaws; (ii) declared or made, or
agreed to declare or make, any payment of dividends or
distributions of any assets of any kind whatsoever to
stockholders, or purchased or redeemed, or agreed to
purchase or redeem, any of its capital stock; (iii) waived
any rights of value which in the aggregate are extraordinary
or material considering its business; (iv) made any material
change in its method of management, operation, or
accounting; (v) entered into any other material transaction;
(vi) made any accrual or arrangement for payment of bonuses
or special compensation of any kind or any severance or
termination pay to any Person; or (vii) made any increase in
any profit sharing, bonus, deferred compensation, insurance,
pension, retirement, or other employee benefit plan,
payment, or arrangement made to, for, or with its officers,
directors, Affiliates, or employees, except in the Ordinary
Course of Business.
(c) SBI has not (i) granted or agreed to grant any
options, warrants, or other rights for its stocks, bonds, or
other corporate securities calling for the issuance thereof;
(ii) borrowed or agreed to borrow any funds or incurred, or
become subject to, any material obligation or liability
(absolute or contingent),; (iii) paid any obligation or
liability (absolute or contingent) other than current
liabilities reflected in or shown on the March 31, 2001 SBI
balance sheet, and current liabilities incurred since that
date in the Ordinary Course of Business, including, the
costs incurred in connection with the transactions
contemplated by this Agreement; (iv) sold or transferred, or
agreed to sell or transfer, any of its assets, properties,
or rights (except assets, properties, or rights not used or
useful in its business which, in the aggregate, have a value
of less than $1,000), or canceled, or agreed to cancel, any
debts or claims in excess of reserves reflected on the
schedule of accounts receivable included in the SBI
Schedules and additions thereto (except debts or claims
which, in the aggregate, are of a value of less than
$1,000); or (v) made or permitted any amendment or
termination of any contract, agreement, or license to which
it is a party if such amendment or termination is material,
considering its business.
(d) To the Knowledge of SBI, it has not become subject
to any law or regulation which materially and adversely
affects, or in the future may adversely affect its business
as conducted on the date hereof.
Section 2.08 Title and Related Matters. SBI has good and
marketable title to all of its properties, interests in
properties, and assets, real and personal, which are reflected in
the March 31, 2001 SBI balance sheet or acquired after that date
(except properties, interests in properties, and assets sold or
otherwise disposed of since such date in the Ordinary Course of
Business or as provided in this Agreement or the SBI Schedules),
free and clear of all Security Interests, except as disclosed in
the SBI Schedules. Except as set forth in the SBI Schedules, SBI
owns free and clear of any Security Interests any and all
trademarks, service marks, tradenames, copyrights, procedures,
techniques, marketing plans, business plans, methods of
management, intellectual property, and other information utilized
in connection with its business. Except as set forth in the SBI
Schedules, no Person has any right to, and SBI has not received
any notice of, infringement of, or conflict with, asserted rights
of others with respect to any marketing rights,
5
trade secrets, know-how, proprietary techniques, trademarks,
service marks, tradenames, copyrights, or intellectual property,
which, if the subject of an unfavorable decision, ruling, or
finding, would have a materially adverse effect on the business,
operations, financial condition, income, or business of SBI and
its Subsidiaries, or any material portion of its properties,
assets, or rights.
Section 2.09 Tax Matters.
(a) To the Knowledge of SBI, SBI has filed, or will
have filed prior to the Closing, all Tax Returns that it was
required to file as of the date of Closing, except where
extensions were obtained. All such Tax Returns were correct
and complete in all material respects. All Taxes owed by
SBI (as shown on any Tax Return) have been paid, except
where extensions were obtained. SBI is not currently the
beneficiary of any extension of time within which to file
any Tax Return, except as disclosed in the SBI Schedules.
No claim has ever been made by an authority in a
jurisdiction where SBI does not file Tax Returns that it is
or may be subject to taxation by that jurisdiction. There
are no Security Interests on any of the assets of SBI that
arose in connection with any failure (or alleged failure) to
pay any Tax.
(b) SBI has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor,
stockholder, or other Person.
(c) Except as disclosed in the SBI Schedules, no
Stockholder, director, or officer (or employee responsible
for Tax matters) reasonably expects any authority to assess
against SBI any additional Taxes for any period for which
Tax Returns have been filed. Except as disclosed in the SBI
Schedules, there is no dispute or claim concerning any Tax
liability of SBI either (i) claimed or raised by an
authority in writing or, (ii) as to which any of the
Stockholders, directors, and officers (and employees
responsible for Tax matters) has knowledge based upon
personal contact with any agent of such authority. The SBI
Schedules include a list of all Tax Returns filed with
respect to SBI for all taxable periods ending on or after
October 1, 1998, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are
the subject of audit. SBI has made available to TSI correct
and complete copies of all Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to
by SBI since October 1, 1998.
(d) SBI has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
Section 2.10 Litigation and Proceedings. Except as set
forth in the SBI Schedules, there are no actions, suits,
proceedings, or investigations pending or, to the Knowledge of
SBI, threatened by or against it or affecting its properties, at
law or in equity, before any court or other governmental agency
or instrumentality, domestic or foreign, or before any arbitrator
of any kind. To the Knowledge of SBI, there is no material
default on its part with respect to any judgment, order, writ,
injunction, decree, award, or ruling of any court, arbitrator, or
governmental agency or instrumentality.
Section 2.11 Contracts.
(a) Except as included or described herein or in the
SBI Schedules, there are no contracts, agreements,
franchises, license agreements, or other commitments to
which SBI is a party or by which its properties are bound.
6
(b) All contracts, agreements, franchises, license
agreements, and other commitments to which SBI is a party or
by which its properties are bound and which are material to
its operations are valid and enforceable by it in all
respects, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors
generally.
(c) Except as included or described in the SBI
Schedules or reflected in the March 31, 2001 SBI balance
sheet, SBI is not a party to any oral or written: (i)
contract for the employment of any officer or employee which
is not terminable on 30 days or less notice; (ii) profit
sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan,
agreement, or arrangement; (iii) agreement, contract, or
indenture relating to the borrowing of money; (iv) guaranty
of any obligation, other than one on which it is a primary
obligor, for the borrowing of money or otherwise, excluding
endorsements made for collection and other guaranties of
obligations which, in the aggregate, do not exceed $1,000;
(v) consulting or other similar contracts with an unexpired
term of more than one year or providing for payments in
excess of $1,000 in the aggregate; (vi) collective
bargaining agreement; (vii) agreement with any present or
former officer or director; or (viii) contract, agreement,
or other commitment involving payments by it of more than
$25,000 in the aggregate.
Section 2.12 Material Contract Defaults. Except as
disclosed in the SBI Schedules, SBI is not in default in any
respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to its business,
operations, properties, assets, or business condition, and there
is no event of default or other event which, with notice or lapse
of time or both, would constitute a default in any material
respect under any such contract, agreement, lease, or other
commitment in respect of which it has not taken adequate steps to
prevent such a default from occurring.
Section 2.13 Governmental Authorizations. Except as set
forth in the SBI Schedules, SBI has all licenses, franchises,
permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material
respects as conducted on the date hereof. Except for compliance
with the Securities Act contemplated by Section 5.03 of this
Agreement, no material authorization, approval, consent, or order
of, or registration, declaration, or filing with, any court or
other governmental body is required in connection with the
execution and delivery by SBI of this Agreement and the
consummation by SBI of the transactions contemplated hereby.
Section 2.14 Compliance With Laws and Regulations. SBI
has complied with all applicable statutes and regulations of any
country, state, provincial, municipal, or local governmental
entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business,
operations, properties, assets, or business condition of SBI, and
except to the extent non-compliance would not result in any
material liability. SBI will deliver at closing, a legal opinion
as to the issuance of its shares and the corporate status of SBI.
Section 2.15 Insurance. All the insurable properties of
SBI are insured in accordance with industry standards against all
risks customarily insured against by persons operating similar
properties in localities where such properties are located and
under valid and enforceable policies by insurers of recognized
responsibility.
Section 2.16 Transactions With Affiliates. Set forth in
the SBI Schedules is a description of every material contract,
agreement, or arrangement between SBI and any Affiliate during
the period beginning October 31, 1998, and ending on the date of
Closing.
7
Section 2.17 Labor Relations. SBI has not had a work
stoppage resulting from labor problems. No union or other
collective bargaining organization is organizing or attempting to
organize any employee of SBI.
Section 2.18 Foreign Business Practices. To the Knowledge
of SBI, no officer, director, employee, Affiliate, or Stockholder
of SBI has made any offer, payment, promise to pay, or
authorization of the payment of any money, or offer, gift,
promise to give, or authorization of the giving of anything of
value for the purpose of assisting SBI in obtaining or retaining
business for or with, or directing business to, any Person, to:
(a) Any foreign official for purposes of, (i)
influencing any act or decision of such foreign official in
his official capacity, (ii) inducing such foreign official
to do or omit to do any act in violation of the lawful duty
of such official, or (iii) inducing such foreign official to
use his influence with a foreign government or
instrumentality thereof to affect or influence any act or
decision of such government or instrumentality;
(b) Any foreign political party or official thereof or
any candidate for foreign political office for purposes of,
(i) influencing any act or decision of such party, official,
or candidate in its or his official capacity, (ii) inducing
such party, official or candidate to do or omit to do an act
in violation of the lawful duty of such party, official, or
candidate, or (iii) inducing such party, official, or
candidate to use its or his influence with a foreign
government or instrumentality thereof to affect or influence
any act or decision of such government or instrumentality;
or
(c) To any Person, while knowing that all or a portion
of such money or thing of value will be offered, given, or
promised, directly or indirectly, to any foreign official,
to any foreign political party or official thereof, or to
any candidate for foreign political office, for purposes of,
(i) influencing any act or decision of such foreign
official, political party official, or candidate in his or
its official capacity, (ii) inducing such foreign official,
political party, party official, or candidate to do or omit
to do any act in violation of the lawful duty of such
foreign official, political party, party official, or
candidate, or (iii) inducing such foreign official,
political party, party official, or candidate to use or its
influence with a foreign government or instrumentality
thereof to affect or influence any act or decision of such
government or instrumentality.
Section 2.19 Information. The information concerning SBI
set forth in this Agreement and in the SBI Schedules is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the
circumstances under which they are made, not misleading.
Section 2.20 SBI Schedules. No later than two business
days prior to Closing, SBI will deliver to TSI the following
documents and information, which are collectively referred to as
the "SBI Schedules." Thereafter, SBI shall provide to TSI all
materials and information requested, including any information
requested to verify any information furnished:
(a) complete and correct copies of the articles of
incorporation, as amended, and bylaws of SBI in effect as of
the date of Closing;
(b) the financial statements of SBI identified in
paragraph 2.06(a);
(c) the income Tax Returns of SBI identified in
paragraph 2.09(c);
8
(d) a description of all real property owned and/or
leased by SBI, together with a description of every Security
Interest in respect thereof;
(e) copies of all material agreements, arrangements,
contracts, or other instruments to which SBI is a party or
by which it or its properties are bound required to be
provided by Section 2.11 hereof, together with a description
of all oral contracts, leases, agreements, and other
instruments to which SBI is a party or by which it or its
properties are bound;
(f) copies of all licenses, permits, and other
governmental authorizations (or requests or applications
therefor) pursuant to which SBI carries on or proposes to
carry on its business (except those which, in the aggregate,
are immaterial to the present or proposed business of SBI);
(g) a description of any material change in the
business, operations, property, inventory, assets, or
condition of SBI since March 31, 2001 required to be
provided pursuant to Section 2.07 hereof;
(h) a description of transactions with Affiliates
required to be described by Section 2.16; and
(l) a schedule setting forth any other information,
together with any copies of documents, required to be
disclosed in the SBI Schedules by Sections 2.01 through
2.19.
With respect to any separate items that are part of the SBI
Schedules delivered before or after the date of this Agreement to
TSI or its representatives by SBI or its representatives, SBI may
provide to TSI as the full or partial schedule required by this
Section 2.20, a list specifying the items so delivered. SBI
shall cause the SBI Schedules and the instruments and data to be
delivered to TSI hereunder to be updated after the date of
delivery up to and including the date of Closing.
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF TSI
As an inducement to, and to obtain the reliance of, SBI and
the Stockholders, TSI represents and warrants as follows:
Section 3.01 Organization. TSI is a corporation duly
organized, validly existing, and in good standing under the laws
of the state of Nevada. TSI has the corporate power and is duly
authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry
on its business in all material respects as it is now being
conducted, including qualification to do business as a foreign
corporation in the states in which the character and location of
the assets owned by it or the nature of the business transacted
by it requires qualification, except in such jurisdictions, if
any, where the failure to be so qualified would not, either
individually or in the aggregate, have a material adverse effect
on the business, properties, or assets of TSI. Included in the
TSI Schedules (as hereinafter defined) are complete and correct
copies of the articles of incorporation, as amended, and bylaws
of TSI as in effect on the date hereof.
Section 3.02 Non-contravention. The execution and
delivery of this Agreement does not, and the consummation of the
transactions contemplated by this Agreement in accordance with
the terms hereof
9
will not: violate any provision of the articles of
incorporation, charter, or bylaws of TSI; result in the breach
of, constitute a default under, result in the acceleration of,
create in any Person the right to accelerate, terminate, modify,
cancel, or require any notice under, any material agreement,
contract, lease, license, instrument, or other arrangement to
which TSI is a party or by which it is bound or to which any of
its assets is subject; or, violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which TSI is subject.
Section 3.03 Authorization of Transaction. TSI has full
power and authority, and has taken all action required by law,
its articles of incorporation and bylaws, and otherwise to
execute and deliver this Agreement and to perform its obligations
hereunder. Without limiting the generality of the foregoing, the
board of directors of TSI has duly authorized the execution,
delivery, and performance of this Agreement by TSI. This
Agreement represents the valid and binding obligation of TSI
enforceable in accordance with its terms, except as limited by
bankruptcy and insolvency laws and by other laws affecting the
rights of creditors generally.
Section 3.04 Subsidiaries. TSI has no Subsidiaries, and
owns no shares of the capital stock or equity interest of any
other corporation or business entity.
Section 3.05 Capitalization. The authorized
capitalization of TSI is 20,000,000 shares of Common Stock, of
which 2,861,000 shares are currently issued and outstanding. All
issued and outstanding shares are legally issued, fully paid, and
non-assessable and not issued in violation of the pre-emptive or
other rights of any Person. Except for the TSI Warrants and as
otherwise disclosed herein and in the TSI Schedules there are no
existing options, warrants, calls, or commitments of any
character relating to the authorized and unissued TSI Common
Stock, except options, warrants, calls, or commitments, if any,
to which TSI is not a party and by which it is not bound. There
are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to
TSI.
Section 3.06 Financial Statements.
(a) The TSI Schedules contain the audited balance
sheet of TSI at March 31, 2001, and the related audited
statements of operations and cash flows for the twelve
months then ended, including the notes to such statements;
and the audited balance sheet of TSI as of March 31, 2000,
and the related audited statements of operations,
stockholders' equity, and cash flows for the period form
date of inception (May 14, 1999) to March 31, 2000, together
with the notes to such statements and the opinion of Hawkins
Accounting, independent accountants, with respect thereto.
(b) All such financial statements have been prepared
in accordance with GAAP on a consistent basis throughout the
periods covered, present fairly as of their respective dates
the financial condition of TSI and the results of operations
of TSI, are correct and complete, and are consistent with
the books and records of TSI (which books and records are
correct and complete).
(c) TSI did not have as of the date of its March 31,
2001, balance sheet any material liabilities or obligations
(whether known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or
unliquidated, and due or to become due), including any
liability for Taxes, except for (i) liabilities set forth on
said balance sheet of TSI, and (ii) liabilities disclosed in
this Agreement or the TSI Schedules, and (iii) legal fees
expected to be approximately $15,000 which TSI agrees to
pay.
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Section 3.07 Absence of Certain Changes or Events. Except
as described herein or in the TSI Schedules, since the date of
the March 31, 2001, TSI balance sheet:
(a) There has not been (i) any material adverse change
in the business, operations, properties, assets, or
condition of TSI; or (ii) any damage, destruction, or loss
to TSI (whether or not covered by insurance) materially and
adversely affecting its business, operations, properties,
assets, or financial condition;
(b) TSI has not (i) amended its articles of
incorporation, charter, or bylaws; (ii) waived any rights of
value which in the aggregate are extraordinary or material
considering its business; or, (iii) entered into any other
material transaction;
(c) TSI has not (i) granted or agreed to grant any
options, warrants, or other rights for its stocks, bonds, or
other corporate securities calling for the issuance thereof;
(ii) borrowed or agreed to borrow any funds or incurred, or
become subject to, any obligation or liability (absolute or
contingent),; or (iii) made or permitted any amendment or
termination of any contract, agreement, or license to which
it is a party if such amendment or termination is material,
considering its business.
(d) To the Knowledge of TSI, it has not become subject
to any law or regulation which materially and adversely
affects, or in the future may adversely affect its business
as conducted on the date hereof.
Section 3.08 Title and Related Matters. TSI has good and
marketable title to all of its properties, inventory, interests
in properties, and assets, real and personal, which are reflected
in the December 31, 2000 TSI balance sheet or acquired after that
date (except properties, interests in properties, and assets sold
or otherwise disposed of since such date in the Ordinary Course
of Business), free and clear of all Security Interests, except as
disclosed in the TSI Schedules. Except as set forth in the TSI
Schedules, TSI owns free and clear of any Security Interests any
and all trademarks, service marks, tradenames, copyrights,
procedures, techniques, marketing plans, business plans, methods
of management, intellectual property, and other information
utilized in connection with its business. Except as set forth in
the TSI Schedules, no Person has any right to, and TSI has not
received any notice of infringement of, or conflict with,
asserted rights of others with respect to any marketing rights,
trade secrets, know-how, proprietary techniques, trademarks,
service marks, tradenames, copyrights, or intellectual property,
which, if the subject of an unfavorable decision, ruling, or
finding, would have a materially adverse affect on the business,
operations, financial condition, income, or business of TSI, or
any material portion of its properties, assets, or rights.
Section 3.09 Tax Matters.
(a) TSI has filed, or will have filed prior to the
Closing, all Tax Returns that it was required to file as of
the date of Closing. All such Tax Returns were correct and
complete in all respects. All Taxes owed by TSI (as shown
on any Tax Return) have been paid. TSI currently is not the
beneficiary of any extension of time within which to file
any Tax Return. No claim has ever been made by an authority
in a jurisdiction where TSI does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction.
There are no Security Interests on any of the assets of TSI
that arose in connection with any failure (or alleged
failure) to pay any Tax.
11
(b) TSI has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor,
stockholder, or other Person.
(c) No TSI director or officer (or employee
responsible for Tax matters) reasonably expects any
authority to assess against TSI additional Taxes for any
period for which Tax Returns have been filed, except as
disclosed in the TSI Schedules. There is no dispute or
claim concerning any Tax liability of TSI either (i) claimed
or raised by an authority in writing or, (ii) as to which
any of the TSI directors and officers (and employees
responsible for Tax matters) has knowledge based upon
personal contact with any agent of such authority, except as
disclosed in the TSI Schedules. The TSI Schedules include a
list of all federal, state, local, and foreign income Tax
Returns filed with respect to any of TSI and its
Subsidiaries for taxable periods commencing on or after May
14, 1999, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are
the subject of audit. TSI has made available to SBI and the
Stockholders correct and complete copies of all federal
income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by TSI since May
14, 1999.
(d) TSI has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
Section 3.10 Litigation and Proceedings. Except as set
forth in the TSI Schedules, there are no actions, suits,
proceedings, or investigations pending or, to the Knowledge of
any of TSI and its Subsidiaries, threatened by or against it or
affecting its properties, at law or in equity, before any court
or other governmental agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind. TSI has no
Knowledge of any material default on its part with respect to any
judgment, order, writ, injunction, decree, award, or ruling of
any court, arbitrator, or governmental agency or instrumentality.
Section 3.11 Contracts. All contracts, agreements,
franchises, license agreements, and other commitments to which
TSI is a party or by which its properties are bound and which are
material to its operations are valid and enforceable by it in all
respects, except as limited by bankruptcy and insolvency laws and
by other laws affecting the rights of creditors generally.
Section 3.12 Material Contract Defaults. Except as
disclosed in the TSI Schedules, TSI is not in default in any
respect under the terms of any outstanding contract, agreement,
lease, or other commitment which is material to its business,
operations, properties, assets, or business condition, and there
is no event of default or other event which, with notice or lapse
of time or both, would constitute a default in any respect under
any such contract, agreement, lease, or other commitment in
respect of which it has not taken adequate steps to prevent such
a default from occurring.
Section 3.13 Governmental Authorizations. Except as set
forth in the TSI Schedules, TSI has all licenses, franchises,
permits, and other governmental authorizations that are legally
required to enable it to conduct its business in all material
respects as conducted on the date hereof. Except for compliance
with the Securities Act as contemplated by Section 5.03 of this
Agreement, no material authorization, approval, consent, or order
of, or registration, declaration, or filing with, any court or
other governmental body is required in connection with the
execution and delivery by TSI of this Agreement and the
consummation by TSI of the transactions contemplated hereby.
Section 3.14 Compliance With Laws and Regulations. TSI
has complied with all applicable statutes and regulations of any
country, state, provincial, municipal, or local governmental
entity or agency
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thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations,
properties, assets, or business condition of TSI, and except to
the extent non-compliance would not result in any material
liability. The Company's stock is traded on the OTC Bulletin
Board under the symbol "TSLU" and to the knowledge of the Company
is not nor has ever been subject to any stop order or suspension
of trading. TSI will deliver at closing a legal opinion
regarding the corporate and SEC status of the Company.
Section 3.15 Insurance. All the insurable properties of
TSI are insured in accordance with industry standards against all
risks customarily insured against by persons operating similar
properties in localities where such properties are located and
under valid and enforceable policies by insurers of recognized
responsibility.
Section 3.16 Labor Relations. TSI has not had a work
stoppage resulting from labor problems. No union or other
collective bargaining organization is organizing or attempting to
organize any employee of TSI.
Section 3.17 Foreign Business Practices. To the Knowledge
of TSI, no officer, director, employee, Affiliate, or stockholder
of TSI has made any offer, payment, promise to pay, or
authorization of the payment of any money, or offer, gift,
promise to give, or authorization of the giving of anything of
value for the purpose of assisting TSI in obtaining or retaining
business for or with, or directing business to, any Person, to:
(a) Any foreign official for purposes of, (i)
influencing any act or decision of such foreign official in
his official capacity, (ii) inducing such foreign official
to do or omit to do any act in violation of the lawful duty
of such official, or (iii) inducing such foreign official to
use his influence with a foreign government or
instrumentality thereof to affect or influence any act or
decision of such government or instrumentality;
(b) Any foreign political party or official thereof or
any candidate for foreign political office for purposes of,
(i) influencing any act or decision of such party, official,
or candidate in its or his official capacity, (ii) inducing
such party, official or candidate to do or omit to do an act
in violation of the lawful duty of such party, official, or
candidate, or (iii) inducing such party, official, or
candidate to use its or his influence with a foreign
government or instrumentality thereof to affect or influence
any act or decision of such government or instrumentality;
or
(c) To any Person, while knowing that all or a portion
of such money or thing of value will be offered, given, or
promised, directly or indirectly, to any foreign official,
to any foreign political party or official thereof, or to
any candidate for foreign political office, for purposes of,
(i) influencing any act or decision of such foreign
official, political party official, or candidate in his or
its official capacity, (ii) inducing such foreign official,
political party, party official, or candidate to do or omit
to do any act in violation of the lawful duty of such
foreign official, political party, party official, or
candidate, or (iii) inducing such foreign official,
political party, party official, or candidate to use or its
influence with a foreign government or instrumentality
thereof to affect or influence any act or decision of such
government or instrumentality.
Section 3.18 Information. The information concerning TSI
set forth in this Agreement and in the TSI Schedules is complete
and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a material
fact required to make the statements made, in light of the
circumstances under which they are made, not misleading.
13
Section 3.19 TSI Schedules. At or before the Closing, TSI
will deliver to SBI and the Stockholders the following documents
and information, which are collectively referred to as the "TSI
Schedules." Thereafter, TSI shall provide to SBI and the
Stockholders all materials and information requested, including
any information requested to verify any information furnished:
(a) complete and correct copies of the articles of
incorporation, as amended, and bylaws of TSI in effect as of
the date of Closing;
(b) a copy of the Annual Report on Form 10-K for the
year ended March 31, 2001;
(c) the quarterly reports on Form 10-QSB of TSI for
the periods ended June 30, September 30, and December 31,
2000;
(d) the income Tax Returns of TSI identified in
paragraph 3.09(c);
(e) a description of any material change in the
business, operations, property, inventory, assets, or
condition of TSI since March 31, 2001, required to be
provided pursuant to Section 3.07 hereof; and
(f) a schedule setting forth any other information,
together with any copies of documents, required to be
disclosed in the TSI Schedules by Sections 3.01 through
3.18.
With respect to any separate items that are part of the TSI
Schedules delivered before or after the date of this Agreement to
SBI and the Stockholders or their representatives by TSI or its
representatives, TSI may provide to SBI and the Stockholders as
the full or partial schedule required by this Section 3.19, a
list specifying the items so delivered. TSI shall cause the TSI
Schedules and the instruments and data to be delivered to SBI and
the Stockholders hereunder to be updated after the date of
delivery up to and including the date of Closing.
ARTICLE IV
PLAN OF EXCHANGE
Section 4.01 Exchange of Exchanged TSI Stock and SBI
Stock. Pursuant to this Agreement, all SBI Stock shall be
conveyed, transferred, and assigned to TSI in exchange for
15,542,500 shares of Exchanged TSI Stock on the date of Closing.
At the Closing, the Stockholders shall deliver to TSI stock
certificates representing all issued and outstanding shares of
SBI Stock, each certificate duly endorsed for transfer with
signature guarantees, and receive in exchange therefor one or
more certificates representing in the aggregate that number of
shares of Exchanged TSI Stock set forth opposite the name of each
Stockholder on the Adherance Agreement signed and delivered by
each Stockholder. The shares of Exchanged TSI Stock issued
pursuant to this Section 4.01 shall be, when issued, legally
issued, fully paid, and non-assessable, and TSI shall provide the
legal opinion of its legal counsel to such effect. It is the
intent of the Parties that the exchange be effected as a so-
called "tax-free" reorganization pursuant to section 368(a)(1)(B)
of the Internal Revenue Code of 1986, and the Parties covenant
and agree to reflect the exchange as such on all financial
statements, Tax Returns, filings, and other documents identifying
or referring to the exchange contemplated by this Agreement.
Upon consummation of this Agreement, the Shareholders of SBI will
hold in the aggregate 84.45% of the outstanding stock of TSI.
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Section 4.02 Exchange of Exchanged TSI Warrants and SBI
Warrants. Pursuant to this Agreement, all SBI Warrants shall be
conveyed, transferred, and assigned to TSI in exchange for
602,772 Exchanged TSI Warrants on the date of Closing in the form
attached hereto as Exhibit B. At the Closing, the Stockholders
holding SBI Warrants shall deliver to TSI the certificates or
instruments representing all outstanding SBI Warrants, each duly
endorsed for transfer with signature guarantees, and receive in
exchange therefor one or more instruments representing in the
aggregate that number of Exchanged TSI Warrants set forth
opposite the name of each Stockholder on the Adherance Agreement
signed and delivered by each Stockholder.
ARTICLE V
SPECIAL COVENANTS
Section 5.01 Access to Properties and Records. TSI and
SBI will each afford to the officers and authorized
representatives of the other, and to the Stockholders, full
access to its properties, books, and records in order that each
may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of the other, and each
will furnish the other with such additional financial and
operating data and other information as to its business and
properties as the other shall from time to time reasonably
request.
Section 5.02 Actions Prior to Closing.
(a) From and after the date of this Agreement, SBI
will: (i) carry on its business in substantially the same
manner as it has heretofore; (ii) maintain and keep its
properties in states of good repair and condition as at
present, except for depreciation due to ordinary wear and
tear and damage due to casualty; (iii) maintain in full
force and effect insurance comparable in amount and in scope
of coverage to that now maintained by it; (iv) perform in
all material respects all of its obligation under material
contracts, leases, and instruments relating to or affecting
its assets, properties, and business; (v) use its best
efforts to maintain and preserve its business organization
intact, to retain its key employees, and to maintain its
relationship with its material suppliers and customers; and
(vi) fully comply with and perform in all material respects
all obligations and duties imposed on it by all federal and
state laws and all rules, regulations, and orders imposed by
federal or state governmental authorities.
(b) From and after the date of this Agreement until
the date of Closing Date, SBI will not: (i) make any change
in its articles of incorporation or bylaws; (ii) take any
action described in Section 2.07 (all except as permitted
therein or as disclosed in the SBI Schedules); or (iii)
enter into or amend any contract, agreement, or other
instrument of any of the types described in the SBI
Schedules, except that SBI may enter into or amend any
contract, agreement, or other instrument in the Ordinary
Course of Business.
Section 5.03 Special Covenants and Representations
Regarding the Exchanged TSI Stock and Warrants. The consummation
of this Agreement and the transactions herein contemplated,
including the issuance of the Exchanged TSI Stock and Warrants to
the Stockholders as contemplated hereby, constitutes the offer
and sale of securities under the Securities Act and applicable
state securities statutes. Such transactions shall be
consummated in reliance on exemptions from the registration and
prospectus delivery requirements of such statutes, which depend,
inter alia, upon the circumstances under which the Stockholders
acquire such securities. TSI covenants and agrees that it will
take all action required for it to rely on exemptions from the
registration and qualification requirements of the Securities Act
and applicable
15
state statutes for the issuance and delivery to the Stockholders
of the Exchanged TSI Stock and Warrants as provided in this
Agreement. By acceptance of the Exchanged TSI Stock and
Warrants, each Stockholder agrees that all offers and sale of the
Exchanged TSI Stock and Warrants prior to the expiration of a
period commencing on the date of Closing and ending one-year
thereafter shall only be made in compliance with the safe harbor
contained in Regulation S, pursuant to the registration
provisions under the Securities Act, or pursuant to an exemption
from registration, and all offers and sales after the expiration
of the one-year period shall be made only pursuant to such
registration or to such exemption from registration. The
Stockholders acknowledge that the securities are "restricted
securities" within the meaning of Rule 144 under the Securities
Act. TSI is bound to refuse to effect any transfer of the
Exchanged TST Stock and Warrants not made in compliance with the
safe harbor contained in Regulation S, pursuant to the
registration provisions under the Securities Act, or pursuant to
an exemption from registration.
Section 5.04 Indemnification.
(a) All of the representations and warranties of the
Parties contained in this Agreement shall survive the
Closing hereunder and continue in full force and effect for
a period of one year thereafter. In the event any Party
breaches (or in the event any third Person alleges facts
that, if true, would mean any Party has breached) any of its
representations and warranties contained herein, provided a
written claim for indemnification against the breaching
Party is made within any applicable survival period
specified in this paragraph (a) of Section 5.04, then the
breaching Party (the "Indemnifying Party") agrees to
indemnify the other Parties (the "Indemnified Parties") from
and against the entirety of any Adverse Consequences the
Indemnified Parties may suffer through and after the date of
the claim for indemnification (including any Adverse
Consequences the Indemnified Parties may suffer after the
end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by
the breach (or the alleged breach); provided, however, that
no Indemnifying Party shall have any obligation to indemnify
any Indemnified Party from and against any Adverse
Consequences resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or alleged breach)
of any representation, warranty, or covenant of the
Indemnifying Party until the Indemnified Parties have
suffered Adverse Consequences by reason of all such breaches
(or alleged breaches) in excess of a $5,000 aggregate
threshold, at which point the Indemnifying Party will be
obligated to indemnify the Indemnified Parties from and
against all such Adverse Consequences relating back to the
first dollar; and provided further, that the maximum
obligation to indemnify all Indemnified Parties from and
against Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or
alleged breach) of any representation, warranty, or covenant
of the Indemnifying Party shall not exceed $200,000 in the
aggregate.
(b) If any third Person shall notify any Indemnified
Party with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against
any Indemnifying Party under this Section 5.04, then the
Indemnified Party shall promptly notify each Indemnifying
Party thereof in writing; provided, however, that no delay
on the part of the Indemnified Party in notifying any
Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced. Any
Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel
of it choice reasonably satisfactory to the Indemnified
Party so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim
that the Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any Adverse
Consequences the Indemnified
16
Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim,
(ii) the Indemnifying Party provides the Indemnified Party
with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial
resources to defend against the Third Party Claim and
fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (iv)
settlement of, or an adverse judgment with respect to, the
Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom
or practice materially adverse to the continuing business
interests of the Indemnified Party, and (v) the Indemnifying
Party conducts the defense of the Third Party Claim actively
and diligently. So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in
accordance with this paragraph, the Indemnified Party may
retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, the
Indemnified Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and
the Indemnifying Party will not consent to the entry of any
judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably). In the
event any of the conditions in clauses (i) through (v) of
this paragraph is or becomes unsatisfied, the Indemnified
Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in
connection therewith), the Indemnifying Party will reimburse
the Indemnified Party promptly and periodically for the
costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and the
Indemnifying Party will remain responsible for any Adverse
Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest extent
provided in this Section 5.04.
Section 5.05 Third Party Indemnity. The current president
of TSI at this date, in considerations for SBI's execution of
this Agreement, has concurrently executed a Third Party Indemnity
Agreement in the Form attached hereto as Exhibit E, wherein they
have agreed after the Closing to indemnify and hold TSI harmless
from any and all liability, including costs of suit and
attorneys' fees, resulting from any claims which might be brought
against TSI in the future as a result of the original issuance of
securities by TSI in the 504 private placement dated May 1999 and
in the SB-2 registration statement dated April 14, 2000 based on
applicable state and/or federal securities laws.
Section 5.06 Third Person Consents and Certificates. The
Parties agree to cooperate with each other in order to obtain any
required third Person consents to this Agreement and the
transactions herein contemplated.
Section 5.07 SBI Asset Purchase. SBI has entered into an
agreement for the acquisition of a company with on-going
operations and gross revenue of approximately US $3 million. (the
"Acquisition"). All of the Exchanged TSI Stock and Warrants
shall be delivered to and held in escrow with Lehman Walstrand
and Associates, LLC as escrow agent. Exhibit D contains the
terms of the Escrow Agreement in full. The Escrow Agreement
provides that SBI agrees to consummate an acquisition of an
operating company with gross revenue of at least US $3 million,
either over the last 12 months, or over its preceding fiscal
year. The Exchanged TSI Stock and Warrants will be released
from escrow at such time as SBI achieves $3 million in gross
revenue. During the term of the Escrow Agreement, SBI agrees
that no additional shares of TSI will be issued including
options, warrants or any other security of TSI to any officer,
director or control person. During the term of the Escrow
17
Agreement, TSI shares may only be issued for purposes of
financing or acquisitions. The parties agree that the Company
will not engage in a debt or equity spiral financing for a term
of two years following the closing of this transaction. Within
three days following written notice to the escrow agent that the
Acquisition has been closed in accordance with the terms set
forth in the SBI Schedules, the Escrow Agent will deliver the
Exchanged TSI Stock and Warrants to the Stockholders as provided
herein.
Section 5.08 Termination. This Agreement may be
terminated by the board of directors of any Party at any time
prior to the Closing if:
(a) There shall be any actual or threatened action or
proceeding before any court or any governmental body which
shall seek to restrain, prohibit, or invalidate the
transactions contemplated by this Agreement and which, in
the judgment of such board of directors, made in good faith
and based on the advice of its legal counsel, makes it
inadvisable to proceed with the transactions contemplated by
this Agreement;
(b) Any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions or in the judgment
of such board of directors, made in good faith and based on
the advice of counsel, there is substantial likelihood that
any such approval will not be obtained or will be obtained
only on a condition or conditions which would be unduly
burdensome, making it inadvisable to proceed with the
transactions contemplated hereby;
(c) There shall have been any change after the date of
the March 31, 2001 SBI balance sheet in its assets,
properties, business, or financial condition, which could
have a material adverse effect on the value of the business,
except any changes disclosed in the SBI Schedules;
(d) There shall have been any change after the date of
the March 31, 2001 TSI balance sheet in its assets,
properties, business, or financial condition, which could
have a material adverse effect on the value of the business,
except any changes disclosed in the TSI Schedules, which
shall be disclosed as soon as TSI has Knowledge of the
change;
(e) The Parties shall fail to obtain the consents or
waivers required of any third Person to consummate the
transactions contemplated by this Agreement; or
(f) Any Party shall fail to comply in any material
respect with any of its covenants or agreements contained in
this Agreement or if any of the representations or
warranties of any Party contained herein shall be inaccurate
in any material respect.
(e) There has been a stop order or suspension of
trading in TSI's stock.
In the event of termination pursuant to this Section 5.07, no
obligation, right, or liability shall arise hereunder, and each
Party shall bear all of the expenses incurred by it in connection
with the negotiation, drafting, and execution of this Agreement
and the transactions herein contemplated.
Section 5.09 Officer and Director Resignations. At
Closing, the officers of TSI shall resign and the directors of
TSI shall resign and concurrently appoint replacements to fill
the vacancies on the Board of Directors of TSI after the Closing,
said replacements to be such persons as SBI shall in writing
designate to TSI. The TSI designated directors shall not be
subject to any "Bad Boy" provisions as defined in Section
3(a)(39) of the Securities Exchange Act of 1934.
18
Section 5.10 Share Leakage Agreement. The parties agree
to a Share Leakage Agreement , designated as Exhibit C to this
Agreement and attached hereto.
ARTICLE VI
CLOSING
Section 6.01 Closing. The Closing of the transactions
contemplated by this Agreement shall occur on such other date
and at such time as the Parties may agree; provided, that the
exchange contemplated by this Agreement is effective as of August
16, 2001.
Section 6.02 Closing Events. At the Closing, each of the
respective Parties hereto shall execute, acknowledge, and deliver
(or shall cause to be executed, acknowledged, and delivered) any
and all certificates, financial statements, schedules,
agreements, resolutions, rulings, or other instruments required
by this Agreement to be so delivered at or prior to the Closing,
together with such other items as may be reasonably requested by
the Parties hereto and their respective legal counsel in order to
effectuate or evidence the transactions contemplated hereby.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF TSI
The obligations of TSI under this Agreement are subject to
the satisfaction, at or before the Closing, of the following
conditions:
Section 7.01 Accuracy of Representations. The
representations and warranties made by SBI and the Stockholders
in this Agreement were true when made and shall be true as of the
date of Closing with the same force and effect as if such
representations and warranties were made at and as of the date of
Closing (except for changes therein permitted by this Agreement),
and SBI and the Stockholders shall have performed or complied
with all covenants and conditions required by this Agreement to
be performed or complied with by them prior to or at the Closing.
TSI shall be furnished with certificates signed by a duly
authorized officer of SBI dated the date of Closing to the
foregoing effect.
Section 7.02 Litigation Certificates. TSI shall have been
furnished with certificates dated the date of Closing and signed
by a duly authorized officer of SBI to the effect that no
litigation, proceeding, investigation, or inquiry is pending
which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement.
Section 7.03 No Material Adverse Change. Prior to the
Closing, there shall not have occurred any material adverse
change in the financial condition, business, or operations of
SBI.
Section 7.04 Good Standing. TSI shall have received a
certificate of good standing from the Ministry of Consumer and
Commercial Relations of the province of Ontario dated as of a
date within ten days prior to the Closing certifying that SBI is
in good standing as a corporation in such province.
Section 7.05 Consents/ Agreements. The Parties shall have
obtained any third Person consents pursuant to Section 5.05.
19
Section 7.06 Other Items. TSI shall have received such
further documents, certificates, or instruments relating to the
transactions contemplated hereby as TSI may reasonably request.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SBI AND THE STOCKHOLDERS
The obligations of SBI and the Stockholders under this
Agreement are subject to the satisfaction, at or before the
Closing, of the following conditions:
Section 8.01 Accuracy of Representations. The
representations and warranties made by TSI in this Agreement were
true when made and shall be true as of the date of Closing with
the same force and effect as if such representations and
warranties were made at and as of the date of Closing (except for
changes therein permitted by this Agreement), and TSI shall have
performed or complied with all covenants and conditions required
by this Agreement to be performed or complied with by it prior to
or at the Closing. SBI and the Stockholders shall be furnished
with a certificate, signed by a duly authorized officer of TSI
and dated the date of Closing, to the foregoing effect.
Section 8.02 Litigation Certificate. SBI and the
Stockholders shall have been furnished with a certificate dated
the date of Closing and signed by a duly authorized officer of
TSI to the effect that no litigation, proceeding, investigation,
or inquiry is pending which might result in an action to enjoin
or prevent the consummation of the transactions contemplated by
this Agreement.
Section 8.03 No Material Adverse Change. Prior to the
Closing, there shall not have occurred any material adverse
change in the financial condition, business, or operations of
TSI.
Section 8.04 Good Standing. SBI and the Stockholders
shall have received a certificate of good standing from the
Secretary of State of the state of Nevada dated as of a date
within ten days prior to the Closing certifying that TSI is in
good standing as a corporation in such state.
Section 8.05 Consents/ Agreements. The Parties shall have
obtained any third Person consents pursuant to Section 5.05,
which will include the resignation of the officers and directors
of TSI in favor of the appointment of the designees of SBI by all
required action of the board of directors of TSI.
Section 8.06 Other Items. SBI and the Stockholders shall
have received such further documents, certificates, or
instruments relating to the transactions contemplated hereby as
they may reasonably request.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Brokers. The Parties agree that there were
no finders or brokers involved in bringing the Parties together
or who were instrumental in the negotiation, execution, or
consummation of this Agreement. The Parties each agree to
indemnify the other against any claim by any Person for any
commission, brokerage, or finders' fee arising from the
transactions contemplated hereby based on any alleged agreement
or understanding between the indemnifying Party and such Person,
whether express or implied from the actions of the indemnifying
Party.
20
Section 9.02 Governing Law. This Agreement shall be
governed by, enforced, and construed under and in accordance with
the laws of the United States of America and, with respect to
matters of state law, with the laws of Nevada.
Section 9.03 Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if
personally delivered to it or sent by registered mail or
certified mail, postage prepaid, or by prepaid telegram addressed
as follows:
If to TSI, to: Trading Solutions.com, Inc.
Attn: Natalie Shahvaran, President
200 Comino Aguajito, Suite 200
Monterey, CA 93940
With copies to: Lehman Walstrand & Associates,
LLC
Attn: Cletha A. Walstrand
8 East Broadway, Suite 620
Salt Lake City, Utah 84111
If to SBI or
the Stockholders, to: Springland Beverages, Inc.
Attn: Ralph Moyal
2 Rodeo Court
Toronto, Ontario
Canada M2M 4M3
With copies to: Davis and Associates
In Care of Concierge
Ritz Carlton
4375 Admiralty Way
Marina Del Ray, CA 90292
davis@securities-attys.com
or such other addresses as shall be furnished in writing by any
Party in the manner for giving notices hereunder, and any such
notice or communication shall be deemed to have been given as of
the date so delivered, mailed, or telegraphed.
Section 9.04 Attorneys' Fees. In the event that any Party
institutes any action or suit to enforce this Agreement or to
secure relief from any default hereunder or breach hereof, the
breaching Party or Parties shall reimburse the non-breaching
Party or Parties for all costs, including attorneys' fees,
incurred in connection therewith and in enforcing or collecting
any judgment rendered therein.
Section 9.05 Third Party Beneficiaries. This Agreement is
solely between the Parties hereto, and except as specifically
provided herein, and in the Exhibits hereto, no director,
officer, stockholder, employee, agent, independent contractor, or
any other Person shall be deemed to be a third party beneficiary
of this Agreement.
Section 9.06 Entire Agreement. This Agreement, including
the exhibits and schedules hereto, represents the entire
agreement between the Parties relating to the subject matter
hereof, including the letter of Intent dated May 7, 2001, which
is merged into this Agreement. This Agreement fully and
completely
21
expresses the agreement of the Parties. There are no other
courses of dealing, understandings, agreements, representations,
or warranties, written or oral, except as set forth herein.
Section 9.07 Counterparts. This Agreement may be executed
in multiple counterparts, each of which shall be deemed an
original and all of which taken together shall be but a single
instrument.
Section 9.08 Amendment or Waiver. Every right and remedy
provided herein shall be cumulative with every other right and
remedy, whether conferred herein, at law, or in equity, and may
be enforced concurrently herewith, and no waiver by any Party of
the performance of any obligation by the other Parties shall be
construed as a waiver of the same or any other default then,
theretofore, or thereafter occurring or existing. At any time
prior to the Closing, this Agreement may be amended by a writing
signed by all Parties hereto with respect to any of the terms
contained herein, and any term or condition of this Agreement may
be waived or the time for performance hereof may be extended by a
writing signed by the Party or Parties for whose benefit the
provision is intended.
Section 9.09 Post Closing Filings. From and after the
date of Closing and continuing for a term of two years
thereafter, TSI shall file timely in accordance with the
Securities Exchange Act of 1934 and the regulations adopted
thereunder all reports required to be filed by Section 13(d) of
said Act and maintain a current listing and description of TSI in
Standard & Poors Corporation Records.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement, or caused this Agreement to be executed by their
officers hereunto duly authorized, as of the date first above-
written.
TRADING SOLUTIONS.COM, INC.
By: /s/ Natalie Shahvaran
Natalie Shahvaran, President
SPRINGLAND BEVERAGES, INC.
By: /s/ Ralph Moyal
Ralph Moyal, President
22
Exhibit A to
Agreement and Plan of Exchange
ADHERENCE AGREEMENT
The undersigned, the record and beneficial owner of the
number of common shares of or warrants of Springland Beverages,
Inc. ("SBI") set forth below, hereby agrees to be bound by the
Agreement and Plan of Exchange by and among Trading
Solutions.com, Inc. ("TSI"), SBI, and the Stockholders of SBI
dated as of August 16, 2001 (the "Agreement") as though the
undersigned were an original signatory to the Agreement. All
capitalized terms used herein shall have the same meaning
ascribed to such terms in the Agreement.
The undersigned hereby represents, warrants, and agrees as
follows:
(a) The execution and delivery of the Agreement does
not, and the consummation of the transactions contemplated
by the Agreement in accordance with the terms hereof will
not: result in the breach of, constitute a default under,
result in the acceleration of, create in any Person the
right to accelerate, terminate, modify, cancel, or require
any notice under, any material agreement, contract, lease,
license, instrument, or other arrangement to which the
undersigned is a party or by which the undersigned is bound;
or, violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which the undersigned is subject.
(b) The undersigned has full power and authority, and
has taken all action required by law and otherwise to
execute and deliver the Agreement and to perform its
obligations thereunder. The Agreement represents the valid
and binding obligation of the undersigned enforceable in
accordance with its terms, except as limited by bankruptcy
and insolvency laws and by other laws affecting the rights
of creditors generally.
(c) Except for compliance with the Securities Act
contemplated by Section 5.03 of the Agreement, no
authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or
other governmental body is required in connection with the
execution and delivery by the undersigned of the Agreement
and the consummation by the undersigned of the transactions
contemplated thereby.
(d) The undersigned is the legal and beneficial owner
of the SBI Stock and SBI Warrants set forth below, free and
clear of any claims, charges, equities, liens, security
interests, and encumbrances whatsoever, and the undersigned
has full right, power, and authority to transfer, assign,
convey, and deliver the SBI Stock and SBI Warrants; and
delivery of such stock and warrants at the Closing will
convey to TSI good and marketable title to the SBI Stock and
SBI Warrants free and clear of any claims, charges,
equities, liens, security interests, and encumbrances
whatsoever.
(e) The undersigned is not a U.S. person as that term
is defined under Regulation S.
(f) The undersigned is outside the United States as of
the date of the execution and delivery of this Agreement.
23
(g) The undersigned is acquiring the Exchanged TSI
Stock and Exchanged TSI Warrants for its own account and not
on behalf of any U.S. person, and the undersigned is the
sole beneficial owner of the securities, and has not pre-
arranged any sale with purchasers in the United States.
(h) The undersigned acknowledges that the Exchanged
TSI Stock and Exchanged TSI Warrants have not been
registered under the Securities Act and agrees that all
offers and sale of the Exchanged TSI Stock and Exchanged TSI
Warrants prior to the expiration of a period commencing on
the date of the Closing and ending one-year thereafter shall
only be made in compliance with the safe harbor contained in
Regulation S, pursuant to the registration provisions under
the Securities Act, or pursuant to an exemption from
registration, and all offers and sales after the expiration
of the one-year period shall be made only pursuant to such
registration or to such exemption from registration. The
undersigned acknowledges that the Exchanged TSI Stock and
Exchanged TSI Warrants are "restricted securities" within
the meaning of Rule 144 under the Securities Act.
(i) The undersigned understands that in the view of
the Securities and Exchange Commission ("SEC") the statutory
basis for the exemption claimed for this transaction would
not be present if the offering of securities, although in
technical compliance with Regulation S, is part of a plan or
scheme to evade the registration provisions of the
Securities Act. The undersigned is acquiring the Exchanged
TSI Stock and Exchanged TSI Warrants for investment purposes
and has no present intention to sell the securities in the
United States or to a U.S. Person or for the account or
benefit of a U.S. Person either now or after any fixed
period of time. The undersigned will not engage in any
hedging transactions with respect to the Exchanged TSI Stock
and Exchanged TSI Warrants except in compliance with the
Securities Act.
(j) The Subscriber is an "accredited investor" as
defined by Regulation D as set forth below:
According to Rule 501(a) of Regulation D, "accredited
investor" means any person who comes within any of the
following categories, or who the Issuer reasonable
believes comes within any of the following categories,
at the time of the sale of the Shares to that person:
(i) Any bank as defined in section 3(a)(2) of the Act,
or any savings and loan association or other
institution as defined in section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity;
any broker or dealer registered pursuant to section 15
of the Securities Exchange Act of 1934; an insurance
company as defined in section 2(13) of the Act; an
investment company registered under the Investment
Company Act of 1940 or a business development company
as defined in section 2(a)(48) of that Act; a Small
business Investment Company licensed by the U.S. Small
Business Administration under section 301(c) or (d) of
the Small Business Investment Act of 1958; any plan
established and maintained by a State, its political
subdivisions, or any agency or instrumentality of a
State or its political subdivisions, for the benefit of
its employees, if such plan has total assets in excess
of $5,000,000; any employee benefit plan within the
meaning of the Employee Retirement Income Security Act
of 1974, if the investment decision is made by a plan
fiduciary, as defined in section 3(21) of such Act,
which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or
if the employee benefit plan has total assets in excess
of
24
$5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited
investors;
(ii) Any private business development company as
defined in section 202(a)(22) of the Investment
Advisers Act of 1940;
(iii) Any organization described in section 501(c)(3)
of the Internal Revenue Code, corporation,
Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in
excess of $5,000,000;
(iv) Any director, executive officer, or general
partner of the issuer of the securities being offered
or sold, or any director, executive officer, or general
partner of that issuer;
(v) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time
of his purchase exceeds $1,000,000;
(vi) Any natural person who had individual income in
excess of $200,000 in each of the two most recent years
or joint income with that person's spouse in excess of
$300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the
current year;
(vii) Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in
section 30.506(b)(2)(ii); and
(viii) Any entity in which all of the equity owners
are accredited investors.
(k) To the Knowledge of the undersigned, the
information concerning the undersigned and SBI set forth in
the Agreement under Article II and this Adhereance Agreement
is complete and accurate in all material respects and does
not contain any untrue statement of a material fact or omit
to state a material fact required to make the statements
made, in light of the circumstances under which they are
made, not misleading.
_______________________________________
Print Name
Dated : August __, 2001
_______________________________________
Signature
Address:
_______________________________________
_______________________________________
_______________________________________
Number of shares of SBI Stock:____________________
Number of SBI Warrants:____________________
25
Exhibit B to
Agreement and Plan of Exchange
[To be inserted]
Form of TSI Warrant
26
Exhibit C to Agreement and Plan of Exchange
LOCKUP AGREEMENT WITH SHAREHOLDER
NATALIE SHAHVARAN, ("Shareholder") and TRADING SOLUTIONS.COM,
INC. ("TSI"), enter into this Agreement effective this 16th day
of August, 2001.
Shareholder currently owns a total of 1,250,000 shares of the
outstanding Common Stock of TSI (the "Shares") of which 1,190,000
shares will be subjected to this lockup agreement. As of this
date and prior to the consummation of an Agreement and Plan of
Reorganization by TSI with SBI, the Shareholder was a controlling
person of TSI.
To consummate the aforesaid Agreement and Plan of Reorganization
by TSI with SBI, Shareholder agrees to restrict for public resale
the shares such that no more than the following amounts of the
Shares will be sold at the following times over a period
commencing immediately following the consummation of the
Agreement and Plan of Reorganization between TSI and SBI, and
continuing for a period of two years thereafter (hereinafter the
"Leakout Period")
1. During the first twelve months of the Leakout Period,
Shareholder agrees to sell no more than 59,500 shares through a
market transaction in any one calendar month.
2. In the second twelve months of the Leakout Period,
Shareholder agrees to sell no more than 39,667 shares through a
market transaction in any one calendar month.
Provided, however, that if any of the Shares permitted to be
sold in any one month are not sold in that month, such
Shares may be aggregated with and sold in any subsequent
months.
The Shareholder has the right to transfer or sell the Shares
through a private transaction, provided that the new owner agrees
to comply with the terms of this Lockup agreement.
The above restriction is a contractual restriction entered into
for valuable consideration by and between Shareholder and TSI,
and is not impacted by applicable securities laws, which may or
may not permit the public sale of the aforesaid Shares into the
public markets. In connection with any such sale of the Shares
by Shareholder, Shareholder in addition to the above
restrictions, shall first comply with all U.S. Federal and State
securities laws, which generally require either the registration
of the shares for sale, or an exemption therefrom.
There shall be typed onto the certificates evidencing the Shares,
or permanently attached thereto, a legend to the following
effect:
THESE SHARES ARE SUBJECT TO CERTAIN CONTRACTUAL
RESTRICTIONS ON PUBLIC AND/OR PRIVATE RESALE FOR A PERIOD
ENDING ON __________, 2003.
If TSI engages in a debt or equity spiral financing during the
Leakout Period, this agreement becomes null and void and the
legend will be removed from all remaining Shares. If TSI files a
registration statement to register any insider or affiliate
shares, the Shareholder will get an equal amount of shares
released from the lock up agreement.
WHEREFORE, the parties have entered into this Agreement on the
date set forth above.
TRADING SOLUTIONS.COM, INC. NATALIE SHAHVARAN
BY: /s/ Ralph Moyal /s/ Natalie Shahvaran
27
Exhibit D to Agreement and Plan of Exchange
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, made and entered into as of this
16th day of November, 2000August 2001 (this "Agreement"), by and
among RALPH MOYAL ("Moyal"), Natalie Shahvaran ("Shahvaran"),
Robert Strahl ("Strahl"), and LEHMAN WALSTRAND & ASSOCIATES, LLC
(hereinafter referred to as the "Escrow Agent").
W I T N E S S E T H:
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements herein contained and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Appointment of Escrow Agent. Moyal, Shahvaran and
Strahl hereby appoint Lehman Walstrand & Associates, LLC as
Escrow Agent in accordance with the terms and conditions of this
Agreement and Lehman Walstrand & Associates, LLC hereby accepts
such appointment as Escrow Agent.
2. Deposit of Escrow Property. Moyal has caused to be
deposited with the Escrow Agent 15,000,000 shares of common stock
(the "Escrow Property") in connection with the purchase of shares
of Common Stock for the purchase of common stock of Trading
Solutions.com, Inc. ("TSLU") pursuant to that certain Exchange
Agreement by and between the Sellers and Purchasers identified
therein dated as of the date hereof (the "Exchange Agreement").
3. Release or Termination of Escrow. The parties
hereto expressly agree that the escrow created by this Agreement
shall operate and work as follows and the Escrow Agent covenants
and agrees to hold, record, and distribute the Escrow Property
pursuant to the provisions of this Paragraph 3. The Escrow
Property shall be immediately released to Moyal upon the Escrow
Agent's receipt of an executed copy of the Agreement of Purchase
and Sale and a certification from the trustee in bankruptcy that
the acquired company had revenues in excess of US $3 million
either over the last 12 months, or over its preceding fiscal
year. In the event that Trading Solutions.com, Inc. consummates
an acquisition of an operating company other than as identified
above with gross revenue of at least US $3 million, either over
the last 12 months, or over its preceding fiscal year, Moyal
and/or his successors and assigns shall provide such evidence as
to the consummation of the acquisition together with a written
request for release of the Escrow Property to the Escrow Agent
(the "Escrow Demand") who shall promptly provide a copy of the
Escrow Demand to Shahvaran and Strahl at the address provided by
Shahvaran and Strahl to the Escrow Agent. 24 hours after receipt
of the Escrow Demand, the Escrow Agent shall release to Moyal
(and/or his successors and assigns, as applicable) from the
Escrow Property the Property set forth in the Escrow Demand
unless the Escrow Agent shall have received a written notice of
objection (an "Escrow Objection") from Shahvaran and Strahl
within such 24 hour period. If the Escrow Agent receives an
Escrow Objection, it shall not be required to release the
disputed property from the Escrow Property until it has received
either a notice of a final non-appealable determination by a
court of competent jurisdiction or a notice signed by Moyal,
Shahvaran and Strahl. Moyal has the right
28
to pledge the escrowed securities to a financial institution,
provided that they agree in writing to be bound by this escrow
agreement.
4. Termination of Escrow. Upon the delivery and
transfer of the Escrow Property as provided in Paragraph 3, or
upon the one year anniversary of this Agreement; provided,
however, that Sections 5 through 12 hereof shall survive such
expiration and termination.
5. Dispute Among Parties. In the event that a dispute
arises among the parties hereto with respect to the terms of this
Escrow Agreement or any other matter related hereto, and such
dispute between the parties hereto is sufficient, in the sole and
exclusive discretion of the Escrow Agent, to justify its doing
so, the Escrow Agent shall tender into the registry or custody of
any court of competent jurisdiction the Escrow Property, together
with such legal pleadings as it deems appropriate, and thereupon
shall be discharged from all further duties and liabilities under
this Escrow Agreement.
6. Further Assurances. At any time and from time to
time the parties agree to take such actions and to execute and
deliver such documents as may be reasonably necessary to
effectuate the purposes and intent of this Agreement.
7. Reliance by the Escrow Agent on Third Parties. In
performing its obligations hereunder, the Escrow Agent may act in
reliance upon any instrument or signature in good faith believed
by it to be genuine, and the Escrow Agent may assume that any
person purporting to give a notice, request, consent or
instruction or acknowledge receipt in connection with the
provisions hereof has been duly authorized to do so and that the
same is properly made or given. The Escrow Agent may rely upon
any order, judgment, certification, demand or other writing
delivered to it without being required to determine the propriety
or validity thereof or of the service thereof or the jurisdiction
of any court.
8. Escrow Agent Resignation. The Escrow Agent may
resign and thereupon be discharged of its duties as Escrow Agent
hereunder by giving written notice thereof to the parties hereto.
Such resignation shall not take effect until the expiration of 30
calendar days after the giving of such notice or the earlier
receipt by the resigning Escrow Agent of an instrument of
acceptance executed by a successor escrow agent and subscribed
and consented to by each of the parties hereto and the delivery
by the resigning Escrow Agent to such successor of all Escrow
Property and Escrow Shares then held by the resigning Escrow
Agent hereunder or if no successor is appointed, by delivery of
such Escrow Property and Escrow Shares to a court of competent
jurisdiction and it shall thereby be discharged of its duties and
responsibilities hereunder, the parties hereto hereby consenting
and submitting to the personal jurisdiction of said court and
agreeing to waive all rights to contest said jurisdiction in
connection with any such action by the resigning Escrow Agent or
any matter arising out of this Agreement or in connection
therewith. In the event that the Escrow Agent shall resign and
be discharged as aforesaid, the resigning Escrow Agent shall be
free to act as counsel to a party hereto or any of its affiliates
or shareholders with respect to any and all actions and disputes
in which such party or any of its affiliates or shareholders may
have an interest adverse to that of the other parties. The
parties hereby acknowledge their awareness that the Escrow Agent
has acted as counsel to the Company and its affiliated persons or
entities and hereby waive any objection to any past or future
representation.
9. Escrow Agent's Duties. The Escrow Agent shall have
no duties or obligations hereunder except as expressly set forth
herein, shall be responsible only for the performance of such
duties and obligations, shall not be required to take any action
otherwise than in accordance with the terms hereof and shall not
be in any manner liable or responsible for any loss or damage
arising by reason of any act or omission to act by it hereunder
or in connection with any of the transactions
29
contemplated hereby, including, but not limited to, any loss that
may occur by reason of forgery, false representations, the
exercise of its discretion in any particular manner or for any
other reason, except for its gross negligence or willful neglect.
10. Liability of Escrow Agent; Legal Process.
(a) The Escrow Agent shall not be bound by any
notice of, or demand with respect to, any waiver, modification,
amendment, termination, cancellation, rescission or supersession
of this Agreement, unless the same shall be in writing and signed
by the parties hereto. In the event of any controversy or
dispute arising hereunder or with respect to the construction
hereof or any action to be taken by the Escrow Agent hereunder,
the Escrow Agent shall not incur any liability for any action or
omission to act by it in good faith. The good faith of the
Escrow Agent shall be conclusively presumed with respect to any
action or omission taken by it in accordance with the advice of
independent counsel selected by such Escrow Agent.
(b) The Escrow Agent may institute or defend any
action or legal process involving any matter referred to herein
which in any manner affects such Escrow Agent or its obligations
or liabilities hereunder, as the case may be, but shall not be
required to institute or defend such action or process unless or
until requested to so do by all of the affected parties hereunder
(other than any party who has instituted such action), and then
only upon receiving full indemnity of an amount and of such
character as the Escrow Agent shall require, against any and all
claims, liabilities, judgments, attorneys' fees and other
expenses of every kind in relation thereto.
11. Indemnification of Escrow Agent. Each, Moyal,
Shahvaran and Strahlof the Company and the Investors, jointly and
severally agree to save harmless, defend and indemnify the Escrow
Agent against any and all losses, liabilities, claims, costs,
damages, judgments, attorneys' fees, expenses, obligations,
taxes, assessments, actions, suits or charges made against the
Escrow Agent or which it may incur or sustain in carrying out its
responsibilities hereunder, otherwise than as a result of its
gross negligence or willful neglect.
12. Notices. All notices, demands, requests and
communications required or contemplated hereunder shall be
effective only if given in writing and shall be deemed to have
been given when delivered by personal service or sent by
nationally recognized express delivery service or express mail,
or three days after being deposited in the mail and sent by
registered or certified mail, postage prepaid, addressed, in the
in case of express delivery or mail, as follows:
If to Escrow Agent:
Lehman Walstrand & Associates, LLC
620 Judge Building 8 East Broadway
Salt Lake City, Utah 84111-2204
Attn: Cletha A. Walstrand, Esq.
Tel. No.: (801) 532-7858
Fax No.: (801) 363-1715
If to Moyal:
Ralph Moyal
2 Rodeo Court
Toronto, Ontario
Canada M2M 4M3
30
If to Shahvaran and Strahl:
Natalie Shahvaran and Robert Strahl
2251 San Diego Ave. #B-275
San Diego, CA 92110
natalieshah@yahoo.com
13. Disclaimer. The Escrow Agent is to be considered
and regarded as a depository only, and shall not be responsible
or liable for the sufficiency or correctness as to form, manner
of execution, validity or enforceability of any instrument
deposited under this Agreement, nor as to the identity,
authority, or rights of any person executing the same; and its
duties hereunder shall be limited to the safekeeping of the
Escrow Property received by it as Escrow Agent and for the
transfer and delivery of the same in accordance with this
Agreement.
14. Miscellaneous.
14.1 No Third-Party Beneficiary. Nothing in this
Agreement expressed or implied is intended or shall be construed
upon or given to any person, other than the parties hereto, any
rights or remedies under or by reason of this Agreement.
14.2 Severability. If any term or provision of this
Agreement or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable,
the remainder of this Agreement or the application of such term
or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be
valid and enforceable to the extent permitted by law.
14.3 Successors and Assigns. The provisions hereof
shall inure to the benefit of and be binding upon the parties
hereto and their respective successors, heirs, executors,
administrators, and assigns.
14.4 No Waiver. No course of dealing between any of
the parties hereto and no delay or failure in exercising any
rights hereunder shall operate as a waiver of or otherwise
prejudice any rights of a party hereunder.
14.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEVADA, WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
14.6 Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the subject
matter hereof and supersedes any prior oral or written Agreement,
representations, promises or course of dealings.
14.7 Amendments and Waivers. Neither this Agreement
nor any of the terms hereof may be terminated, amended or waived
orally, but only by an instrument in writing executed by the
parties hereto.
14.8 Headings, etc. The headings of the various
subdivisions of this Agreement are for convenience of reference
only and shall not define nor limit or otherwise affect any of
the terms or provisions hereof. All pronouns shall be deemed to
refer to the masculine, feminine, neuter, singular or plural as
the identity of the person or persons referred to may require.
31
14.9 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
[Counterpart Signature Page to Escrow Agreement]
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first set forth above.
LEHMAN WALSTRAND & ASSOCIATES, LLC
By: /s/ Cletha A. Walstrand
Name: Cletha A. Walstrand
Title: Partner
/s/ Ralph Moyal
Ralph Moyal
/s/ Natalie Shahvaran
Natalie Shahvaran
/s/ Robert Strahl
Robert Strahl
32
Exhibit E to Agreement and Plan of Exchange
PERSONAL INDEMNIFICATION AGREEMENT
In connection with the execution and consummation of that
certain Agreement and Plan of Exchange between Trading
Solutions.com, Inc. ("TSI") and Springland Beverages, Inc., and
the stockholders of Springland Beverages, Inc., dated August 16,
2001, a true copy of which is attached hereto (the "Agreement"),
and for valuable consideration, receipt of which is hereby
acknowledged, including specifically but not by way of
limitation, Springland Beverages, Inc.'s execution of the
Agreement and its consummation of same, undersigned, who was the
Chief Executive Officer of, and a principal shareholder of TSI,
up to the point of consummation of said Agreement, hereby
personally indemnifies TSI, its successors, and assigns as
follows:
Undersigned hereby indemnifies TSI, its successors and
assigns, and holds them harmless, from any and all
liability, including costs of suit and attorneys' fees
resulting from any and all claims, lawsuits and/or
government or judicial proceedings brought against TSI,
its officers, directors and/or principal shareholders
brought as a result of any original issuance by TSI of
shares either through the May 1999 Regulation D, Rule
504 offering (180,000 shares) or through the April 14,
2000 SB-2 Registration Statement (101,000 shares).
Undersigned has consulted with her own attorney prior to
execution of this Personal Indemnification Agreement.
/s/ Natalie Shahvaran
Natalie Shahvaran
Date: August 16, 2001
33
PERSONAL INDEMNIFICATION AGREEMENT
In connection with the execution and consummation of that
certain Agreement and Plan of Exchange between Trading
Solutions.com, Inc. ("TSI") and Springland Beverages, Inc.,
("SBI") and the stockholders of Springland Beverages, Inc., dated
August 16, 2001, a true copy of which is attached hereto (the
"Agreement"), and for valuable consideration, receipt of which is
hereby acknowledged, including specifically but not by way of
limitation, Trading Solution.com Inc.'s execution of the
Agreement and its consummation of same, undersigned, who was the
Chief Executive Officer of, and a principal shareholder of SBI,
up to the point of consummation of said Agreement, hereby
personally indemnifies SBI, its successors, and assigns as
follows:
Undersigned hereby indemnifies SBI, its successors and
assigns, and holds them harmless, from any and all
liability, including costs of suit and attorneys' fees
resulting from any and all claims, lawsuits and/or
government or judicial proceedings brought against SBI,
its officers, directors and/or principal shareholders
brought as a result of any issuance by SBI of shares.
Further, Undersigned hereby indemnifies against any and
all liability regarding representations and warranties
made by SBI regarding the corporate status of SBI and
SBI's authority to enter the Exchange Agreement with
TSI.
Undersigned has consulted with his own attorney prior to
execution of this Personal Indemnification Agreement.
/s/ Ralph Moyal
Ralph Moyal
Date: August 16, 2001
34
HAWKINS ACCOUNTING
CERTIFIED PUBLIC ACCOUNTANT 17415 S. Monterey Road #200
Morgan Hill, California 95037
(408) 776-9455 FAX (408) 776-8979
August 30, 2001
Trading Solutions.com, Inc.
2 Rodeo Court
Toronto, Ontario
Canada M2M 4M3
I have reviewed Item 4, "Changes in Certifying Accountant"
included in the Form 8-K to be included in the filing with the
Securities and Exchange Commission. I agree with the information
included therein.
/s/ Hawkins Accounting
Hawkins Accounting
35