DEBT CONVERSION AGREEMENT
This Debt Conversion Agreement (this "Agreement") is made and entered into
as of the 15th day of November, 2001, by and between SPORTSNUTS, INC.(formerly
known as XxxxxxXxxx.xxx International, Inc.), a Delaware corporation (the
"Company"), and XXXXXXX MANAGEMENT PROFIT SHARING PLAN AND TRUST, (the "Xxxxxxx
Trust"), collectively referred to hereinafter as the "Parties" or individually
as a "Party."
R E C I T A L S
WHEREAS, Lender has previously loaned certain amounts to the Company
pursuant to a Convertible Promissory Note dated February 1, 2000 in the
principal amount of Four Hundred Fifty Thousand Dollars ($450,000.00) executed
by the Company in favor of Lender a copy of which is attached hereto as Exhibit
"A" (the "Note");
WHEREAS, as of November 15, 2001 One Hundred Twenty-six Thousand Two
Hundred Sixty-Eight Dollars and Forty-nine Cents ($126,268.49) unpaid interest
has accrued on the Note (the "Accrued Interest");
WHEREAS, pursuant to the terms of the Note, the Parties desire to convert
the Accrued Interest payable on the Note as of November 15, 2001 into restricted
Common Stock of the Company, as more fully described herein; and
WHEREAS, upon the conversion of the Accrued Interest, the Parties desire to
cancel the obligation of the Company with respect to payment of the Accrued
Interest due as of November 15, 2001.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
conditions, representations, and warranties contained in this Agreement, the
Company and the Xxxxxxx Trust hereby agree as follows:
1. Conversion to Common Stock; Cancellation of Expenditures
Subject to the terms and conditions of this Agreement, the Parties hereby
agree to convert the Accrued Interest consisting of $126,268.49 into Twelve
Million Two Hundred Sixty-eight Thousand (12,268,000) shares of restricted
Common Stock of the Company (the "Stock"), resulting in a cancellation of the
Accrued Interest due as of November 15, 2001.
2. Representations and Warranties of the Company
As a material inducement to the Xxxxxxx Trust to enter into this Agreement,
the Company makes the following representations and warranties to the Xxxxxxx
Trust:
2.1 Authority. The issuance of the Stock to the Xxxxxxx Trust upon the
terms and conditions set forth herein has been authorized by all requisite
corporate action;
2.2 Validity of Stock. The Stock, when issued by the Company in accordance
with the terms of this Agreement, shall be duly and validly issued, fully paid,
and nonassessable.
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3. Representations and Warranties of Xxxxx
As a material inducement to the Company to enter into this Agreement, the
Xxxxxxx Trust makes the following representations and warranties to the Company:
3.1 Purchase Entirely for Own Account. The Stock is being acquired by the
Xxxxxxx Trust for its own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and the Xxxxxxx Trust
has no present intention of selling, granting any participation in, or otherwise
distributing the same.
3.2 Restricted Securities. The Xxxxxxx Trust understands that the Stock it
is acquiring hereunder is characterized as "restricted securities" under the
U.S. federal securities laws inasmuch as it is being acquired from the Company
in a transaction not involving a public offering and that, under such laws and
applicable regulations, such securities may not be resold without registration
or the availability of an exemption from the registration requirement under the
Securities Act. In this connection, Lender represents that it is familiar with
Rule 144 promulgated by the U.S. Securities and Exchange Commission ("SEC"), as
presently in effect, which allows for the resale of "restricted securities" in
certain instances.
3.3 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Xxxxxxx Trust further agrees not to make
any disposition of all or any portion of the Stock in the United States unless
and until:
(a) there is then in effect a registration statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) The Xxxxxxx Trust shall have notified the Company of the proposed
disposition and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, the Xxxxxxx Trust shall have furnished the Company
with an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act.
3.4 Legends and Stop-Transfer Orders. The Xxxxxxx Trust understands that
the certificate(s) evidencing the Stock may bear the following (or similar)
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED WITHIN IN THE
UNITED STATES UNLESS THE SAME ARE REGISTERED UNDER THE SECURITIES ACT
OF 1933, OR THE COMPANY RECEIVES AN OPINION FROM COUNSEL SATISFACTORY
TO IT THAT SUCH REGISTRATION IS NOT REQUIRED.
The certificate(s) for the Stock may also bear any legend required by any
applicable state securities law. In addition to these legends, the Company shall
make a notation of these restrictions on transfer in its stock records and shall
issue appropriate stop-transfer orders to its transfer agent in the event these
securities are attempted to be sold without compliance with the requirements of
this Section.
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4. Miscellaneous
4.1 Modifications and Waivers. This Agreement may not be amended or
modified, nor may the rights of any party hereunder be waived, except by a
written document that is executed by the Company and the Xxxxxxx Trust.
4.2 Assignment. This Agreement is and shall be binding upon and inure to
the benefit of the Parties hereto and their respective successors and assigns.
4.3 Rights and Obligations of Third Parties. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the Parties hereto and
their respective successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
third parties to any party to this Agreement, nor shall any provision give any
third party any right of subrogation or action against any Party to this
Agreement.
4.4 Notices. Any notice, request, consent, or other communication hereunder
shall be in writing, and shall be sent by one of the following means: (i) by
registered or certified first class mail, postage prepaid; (ii) by facsimile
transmission; (iii) by reputable overnight courier service; or (iv) by personal
delivery, and shall be properly addressed as follows:
If to the Company, to: If to the Xxxxxxx Trust, to:
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxxxx, Trustee
SportsNuts, Inc. -------------------------------
00000 Xxxxx 000 Xxxx, Xxxxx 000 -------------------------------
Xxxx Xxxx Xxxx, XX 00000 Tele: (___) __________
Tele: (000) 000-0000 Fax: (___) __________
Fax: (000) 000-0000
or to such other address or addresses as the Company or Purchaser shall
hereafter designate to each other in writing. Notices sent by mail or by courier
shall be effective three (3) days after they are sent, and notices delivered
personally by facsimile shall be effective at the time of delivery thereof.
4.5 Entire Agreement. This Agreement, including the Exhibits hereto,
constitutes the entire agreement between the Parties hereto in relation to the
subject matter hereof. Any prior written or oral negotiations, correspondence,
or understandings relating to the subject matter hereof shall be superseded by
this Agreement and shall have no force or effect.
4.6 Severability. If any provision which is not essential to the
effectuation of the basic purpose of this Agreement is determined by a court of
competent jurisdiction to be invalid and contrary to any existing or future law,
such invalidity shall not impair the operation of the remaining provisions of
this Agreement.
4.7 Headings. The headings of the Sections of this Agreement are inserted
for convenience of reference only and shall not affect the construction or
interpretation of any provisions hereof.
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4.8 Exhibits. The exhibits attached hereto and referred to herein are a
part of this Agreement for all purposes. Terms which are defined in this
Agreement shall have the same meanings when used in such exhibits.
4.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be an original,
but all of which together shall constitute one and the same instrument.
4.10 Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of Utah without regard to the law of
conflict of laws.
4.11 Delays or Omissions. No delay or omission to exercise any right,
power, or remedy accruing to either party, upon any breach or default of the
other party under this Agreement, shall impair any such right, power, or remedy,
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent, or approval of any kind or character on the part of
either party of any breach or default by the other party under this Agreement,
or any waiver of any provisions or conditions of this Agreement must be made in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to either party, shall be cumulative and not alternative.
IN WITNESS WHEREOF, the Company and the Xxxxxxx Trust have each caused this
Agreement to be executed by their duly authorized representatives as of the day
and year first above written.
SPORTSNUTS, INC.
(formerly known as XxxxxxXxxx.xxx International, Inc.)
By:/s/ Xxxxxxx X. Xxxxx, President
----------------------------------------------------
Xxxxxxx X. Xxxxx, President
XXXXXXX MANAGEMENT PROFIT SHARING PLAN AND TRUST
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------------
Xxxxxx X. Xxxxxxx, Trustee
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EXHIBIT "A"
CONVERTIBLE PROMISSORY NOTE
DATED FEBRUARY 1, 2000
[Filed as an Exhibit to the Company's Annual Report on Form 10-KSB,
filed with the Commision on March 30, 2000.]
