Exhibit 10.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made and entered
into as of April 15, 2001 by and among SportsNuts, Inc., a Delaware corporation
("SN"), SNI Merger Sub, Inc., a Utah corporation ("Newco"), Rocky Mountain
Sports Alliance, Inc., a Utah corporation ("RMSA"), and Mr. Xxxxx Xxxxx, the
sole shareholder of RMSA ("Xx. Xxxxx").
RECITALS
A. The respective Boards of Directors of SN, Newco, and RMSA have
determined that it is desirable that Newco be merged with and into RMSA in a
statutory merger pursuant to this Agreement and in accordance with Utah law and
that upon the effective date of such merger (the "Merger") the outstanding
shares of the Common Stock of RMSA ("RMSA Common Stock") shall be exchanged for
shares of the Common Stock of SN ("SN Common Stock"), subject to the terms and
conditions of this Agreement.
B. Xx. Xxxxx is the sole shareholder of RMSA.
C. The parties desire to adopt a tax free plan of reorganization
pursuant to the provision of Sections 368(a)(1)(A) of the Internal Revenue Code
of 1954, as amended, upon the terms and conditions herein set forth.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual agreements, representations, and warranties contained herein, the parties
agree as follows:
ARTICLE I
PLAN OF MERGER
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1.1 Actions to be Taken. Upon performance of all the covenants and
obligations of the parties contained herein and upon fulfillment (or waiver) of
all the conditions to the obligations of the parties contained herein, at the
Effective time of the Merger (as hereinafter defined) and pursuant to the Utah
Revised Business Corporation Act (the "Act"), the following shall occur:
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1.1.1 The respective Board of Directors and shareholders of
Newco and RMSA have duly adopted and approved this Agreement in
accordance with the applicable provisions of the Act.
1.1.2 Newco shall be merged with and into RMSA, which shall be
the surviving corporation (the "Surviving Corporation"). The separate
existence and corporate organization of Newco shall cease as of the
Effective Time of the Merger and thereupon RMSA and Newco shall be a
single corporation, the name of which shall be Rocky Mountain Sports
Alliance, Inc., and as the Surviving Corporation, shall succeed,
insofar as permitted by law, to all the rights, assets, liabilities,
and obligations of RMSA and Newco in accordance with the Act.
1.1.3 The Articles of Incorporation of Newco as in effect
immediately prior to the Effective time of the Merger shall continue in
full force and shall remain the articles of incorporation of the
Surviving Corporation until amended as provided by law.
1.1.4 The Bylaws of Newco shall be and remain the bylaws of
the Surviving Corporation until amended as provided by law.
1.1.5 Until changed in accordance with the articles of
incorporation and bylaws of the Surviving Corporation, Xxxxx Xxxxx and
Xxxxxxx Xxxxx shall be the directors of the Surviving Corporation.
1.1.6 Until changes in accordance with the articles of
incorporation and bylaws of the Surviving Corporation, the following
persons shall be the officers of the Surviving Corporation:
Name
Office
Xxxxx Xxxxx
President and Secretary
1.1.7 As soon as practicable after the terms and conditions of
this Agreement have been satisfied, and upon consummation of the
closing referred to in Article 10 hereof (the "Closing"), articles of
merger consistent with this Agreement in the form prescribed by, and
properly executed in accordance with, the Act, in form and substance
satisfactory to the parties hereto (the "Articles of Merger"), shall be
filed with the Utah Division of Corporations. The Merger shall become
effective on the date on which the Articles of Merger are properly
filed with the Utah Division of Corporations. As used in this
Agreement, the "Effective Time of the Merger" shall mean the date and
time of filing with the Utah Division of Corporations.
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1.2 Common Stock of Surviving Corporation. At the Effective Time of the
Merger, each of the issued and outstanding shares of common stock of Newco
shall, by virtue of the Merger and without any action on the part of SN, be
canceled and retired and shall cease to exist, and SN shall cease to have any
rights with respect to such shares of Newco common stock, except the right to
receive shares of common stock of RMSA.
ARTICLE II
CONVERSION OF STOCK
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2.1 Conversion of RMSA Common Stock. Subject to the adjustments set
forth in Section 2.2 below, each share of RMSA Common Stock that is issued and
outstanding on the Effective Date shall, by virtue of the Merger and without
further action by the holder of such shares or by any other person, be converted
into and exchanged for Three Million Eight Hundred Thousand (3,800,000) fully
paid and nonassessable shares of Common Stock, $0.002 par value, of SN.
2.2 Surrender and Exchange of Outstanding Certificates of RMSA Common
Stock; Status of Outstanding Certificates. The conversion of shares of RMSA
Common Stock as provided for by this Agreement shall occur automatically upon
the Effective Date without further action by the holders thereof. Each holder of
a certificate or certificates theretofore representing a share or shares of RMSA
Common Stock shall, within 90 days after the Effective Date, surrender his share
certificate or certificates to the Surviving Corporation and upon such surrender
shall be entitled to receive in exchange therefore a certificate or certificates
representing the number of shares of SN Common Stock into which his shares of
RMSA Common Stock shall have been converted as aforesaid.
2.3 Fractional Shares. No certificates or scrip representing fractional
shares of SN Common Stock shall be issued upon the surrender for exchange of
certificates representing RMSA Common Stock. In the event of fractions, the
number of shares of SN Common Stock to be distributed to any shareholder of RMSA
pursuant to the Merger shall be rounded down to the nearest whole number of
shares.
ARTICLE III
REPURCHASE OPTION
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Xx. Xxxxx shall, during the three (3) year period following the date of
this Agreement, have the right, but not the obligation, to repurchase all of the
RMSA Common Stock in exchange
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for Two Million Eight Hundred and Fifty Thousand (2,850,000) shares of SN Common
Stock upon the occurrence of any of the following:
3.1 Bankruptcy. The commencement of a case or proceeding under the
Federal bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency, reorganization or other
similar law, or any other case or proceeding to be adjudicated bankrupt or
insolvent, or the consent by it to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of SN or of any substantial part of its property, or the
making by it of any assignment for the benefit of creditors, or the taking of
corporate action by SN in furtherance of any of the foregoing.
3.2 Litigation or Foreclosure on Material Assets. The commencement of
any litigation or foreclosure proceeding against SN or any of its assets, the
result of which would substantially impair SN's ability to operate its business
as presently constituted.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF RMSA AND XX. XXXXX
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RMSA and Xx. Xxxxx hereby jointly and severally represents and warrants
to SN and Newcothat, except as set forth in the Schedules attached hereto, the
matters set forth in this Section III are true and correct.
4.1 Organization and Capitalization of RMSA.
4.1.1 Corporate Organization and Good Standing. RMSA is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Utah and is not qualified to do business as a
foreign corporation in any jurisdiction. The nature of the businesses
conducted or properties owned by RMSA does not require RMSA to be
qualified in any other jurisdiction. RMSA has all corporate power and
authority to own, lease, and operate its properties and to conduct its
business as such business is presently conducted.
4.1.2 Capitalization. RMSA has a duly authorized capital stock
constituting of 1,000,000 shares of Common Stock, of which 380,000
shares are issued and outstanding on the date hereof, all of which are
fully paid and nonassessable. There are no outstanding options,
warrants, or rights to purchase shares of RMSA's capital stock or any
other securities of RMSA and there are no outstanding securities
convertible into RMSA Common Stock or other securities of RMSA.
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4.2 Charter Documents. RMSA has heretofore delivered to SN true and
complete copies of RMSA's Articles of Incorporation and all amendments thereto
to date (certified by the State of Utah) and true and complete copies of Bylaws
as amended to date. The entire contents of the corporation minute books of RMSA
has been delivered to SN and include the records of all actions, resolutions,
and meetings of the directors and the shareholders of RMSA. All meetings of the
directors and the shareholders of RMSA were duly called, noticed (or waivers of
notice obtained), and held.
4.3 Subsidiaries. RMSA does not own, directly or indirectly, any of the
outstanding capital stock, or rights to acquire any capital stock, or securities
convertible into capital stock, of any corporation, or any participating
interest in any partnership, joint venture, or other business enterprise.
4.4 No Other Securities Outstanding. On the Effective Date there will
be no issued and outstanding equity or debt securities of RMSA other than the
3,800,000 shares of RMSA Common Stock now issued and outstanding. There are no
outstanding registration rights with respect to any of RMSA's securities. RMSA
has at all times complied in all material respects with all requirements of the
federal and state securities laws applicable to it or its securities.
4.5 Authorization for Agreement. The execution and performance of this
Agreement by RMSA has been duly authorized by its Board of Directors and
shareholders, and, when executed and delivered, will constitute the valid and
binding obligation of RMSA, subject to the conditions hereof.
4.6 No Breach of Statute or Contract. Neither the execution nor
performance of this Agreement by RMSA or Xx. Xxxxx will (i) violate any statute,
license, or regulation of any governmental authority or (ii) result in the
default by RMSA or Xx. Xxxxx of any judgment, order, rule, or regulation or any
court of administrative agency, or (iii) at the Effective Date, breach, conflict
with, or result in a breach of any agreement to which RMSA or Xx. Xxxxx is a
party, or by which RMSA or Xx. Xxxxx may be bound, or (iv) result in the
creation of any lien or
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encumbrance upon, or give others any rights in, RMSA's properties, assets,
contracts, licenses, or business, or (v) violate the Articles of Incorporation
or Bylaws of RMSA.
4.7 Ability to Conduct the Business. RMSA is not a party to, subject
to, or bound by any agreement or any judgment, writ, or order of any court or
governmental body or any arbitrator which could prevent the use of its assets or
the conduct of its business in accordance with its present practices after the
Effective Date.
4.8 Contracts and Commitments.
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4.8.1 List of RMSA Contracts. RMSA has heretofore delivered to
SN true, complete, and correct copies of all material contracts and
other commitment to which RMSA is a party, together with all amendment
thereto.
4.8.2 Certain Contracts; Accounts Receivable. RMSA has
provided to SN and Newco: (i) all insurance policies and bonds in force
on the date hereof, with respect to RMSA and the date on which each
such policy was put in force and the date on which it expires, (ii) the
names and locations of all banks and other depositories in which RMSA
has accounts or safe deposit boxes and the names of persons authorized
to sign checks, drafts, or other instruments drawn thereon or to have
access thereto, (iii) all mortgage, indenture, promissory note, deeds
or trust, loan or credit agreements or similar agreements, or
modifications thereof, to which RMSA is a party and all amounts thereof
and (iv) all accounts receivable of RMSA
4.8.3 No Default. RMSA is not in default under any of the
contracts, agreements, lease, license or other commitment to which it
is a party, other than defaults, if any, which will not result in any
material loss or liability, and all such contracts, agreements, leases,
licenses or other commitments are valid and binding obligations of RMSA
and the other parties thereto.
4.8.4 Suppliers and Customers. RMSA has furnished to SN a list
of all suppliers and customers with whom it does business, and will
further furnish to SN all information within RMSA's control which SN
may request with respect to such suppliers or customers.
4.10 Employee Relations.
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4.10.1 RMSA has furnished to SN a true and complete payroll
roster, of all employees of RMSA for the pay period ending March 31,
2001, showing the rate of pay for each such person, the gross payments
made for each person for the month ended March 31, 2001, the gross
payments made for each such person for the 12-month period ending
December 31, 2000, the names of all pensioned employees of RMSA whose
pensions are unfunded, if any, and their ages and their current annual
unfunded pension rates, all bonus, incentive compensation, profit
sharing, pension, retirement, stock purchase, stock option, stock
warrants, deferred compensation, hospitalization, group insurance, and
any other fringe benefit plans of RMSA; and a summary description with
respect to the funding of all employee benefit and pension programs of
RMSA.
4.10.2 Terminable Agreements. RMSA is not a party to any
contract with any of its respective employees, agents, consultants,
advisors, salesmen, sales representative, distributors, or customers
that is not terminable by RMSA without liability, penalty, or premium
on 30 days' notice or which requires the payment of severance or other
terminations pay to employees.
4.10.3 Compliance with Employee Laws. RMSA has complied in all
material respects with all applicable laws or regulation relating to
the employment of labor, including those relating to wages, hours,
collective bargaining, workmen's compensation insurance,
non-discrimination in employment and the withholding and payment of
taxes and contribution, and have complied in all material respects with
the Occupational Safety and Health Act. RMSA has withheld all amounts
required by law or agreement to be withheld from wages or any tax or
penalty for failure to comply with the foregoing owed by RMSA.
4.11 Litigation. There is no suit, action, arbitration, proceeding, or
investigation pending or threatened by or against RMSA or its business,
properties, assets, licenses, permits or goodwill, or by or against any of its
officers or director, or against or affecting the Merger contemplated by this
Agreement, before any court or before or by any governmental department, bureau,
commission, board, agency, or instrumentality, nor does RMSA know of any basis
for any such action, proceeding, or investigation.
4.12 Patents, Trademarks. To the best knowledge and belief of RMSA
and Xx. Xxxxx:(i) None of the services performed or products manufactured,
sold, leased, or licensed by RMSA or any trademarks, trade names, trade secrets
or copyrights used by RMSA infringes the patent, industrial property, trademark,
trade name, trade secrets, proprietary rights, or copyrights of any
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other party; (ii) RMSA has in force all license or other agreements necessary
for the performance of its services; (iii) as of the Effective Date, all right,
title, and interest in and to any and all of the writings, inventions,
discoveries, trademarks, trade names, trade secrets, copyrights, copyright
applications, patents and patent applications being used by RMSA are owned or
licensed by RMSA and RMSA has taken all steps reasonably necessary to protect
its interest therein; (iv) RMSA is not making use of any patentable or
unpatentable invention, or any confidential information or trade secret of any
former employer or any present or past employee of RMSA; (v) except for the
normal rights of a shareholder, no officer or director of RMSA has any interest
in any property, real or personal, tangible or intangible, including inventions,
patents, patent applications, copyrights, trade secrets, trademarks or trade
names used in or pertaining to the business of RMSA.
4.13 Disclosure. No representation or warranty by RMSA or Xx. Xxxxx
contained in this agreement and no statement contained in any certificate, list,
exhibit, or other instrument specified in this Agreement, whether heretofore
furnished to SN or hereafter required to be furnished to SN, contains or will
contain any untrue statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SN AND NEWCO
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SN and Newco represents and warrants to RMSA and Xx. Xxxxx that, the
matters set forth in this Section IV are true and correct.
5.1 Organization and Capitalization of Newco. Newco is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Utah. Newco has all corporate power an authority to own, lease, and
operate its properties and to conduct its businesses as such business is
presently conducted. Newco has a duly authorized capital stock consisting of
1,000,000 shares of Common Stock of which 100 shares of Common Stock and no
shares of Preferred Stock are issued and outstanding on the date hereof, all of
which are fully paid and non-assessable. SN has delivered to RMSA true and
complete copies of Newco's Certificate of Incorporation and Bylaws as amended to
date.
5.2 Authorization for Agreement. The execution and performance of this
Agreement by SN and Newco has been duly authorized by SN's and Newco's Boards of
Directors and shareholders, and, when executed and delivered, will constitute
the valid and binding obligation of SN, subject to the conditions hereof.
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5.3 Ability to Conduct Business. SN and Newco is not a party to,
subject to, or bound by any agreement or any judgment, order, writ, injunction
or decree of any court or of any governmental body or of any arbitrator which
could prevent the use of SN's and Newco's assets or the conduct of SN's and
Newco's business in accordance with their present practices after the Effective
Date.
ARTICLE VI
ACCESS TO INFORMATION
---------------------
6.1 Access. From and after the date hereof and until the Effective
Date, RMSA agrees that SN and its authorized representatives shall have access
during normal business hours to all properties, facilities, books, records,
contacts, and documents of RMSA and that RMSA shall furnish or cause to be
furnished to SN and its authorized representatives copies of all documents and
all information with respect to the affairs and business of RMSA as SN may
reasonably request.
6.2 Confidentiality and Nondisclosure. All information which shall have
been furnished or disclosed by SN and/or Newco or RMSA to the other pursuant to
this Agreement shall be held in confidence and shall not be disclosed to any
person other than their respective employees, directors, legal counsel,
accountants, or financial advisors who have a need to have access to such
information. In the event that the transactions contemplated by this Agreement
are not consummated, all properties, facilities, books, records, contracts,
documents, and other information furnished or disclosed by SN and/or Newco or
RMSA to the other pursuant to this Agreement shall, upon demand, be returned to
the other.
ARTICLE VII
CONDUCT OF RMSA'S BUSINESS PENDING THE EFFECTIVE DATE
-----------------------------------------------------
Unless expressly consented to in writing by SN and Newco from and after
the date of this Agreement and until the Effective Date or the termination or
abandonment of this Agreement pursuant to the terms hereof:
7.1 Carry On in Regular Course. RMSA shall conduct its business only in
the ordinary course, diligently and substantially in the same manner as before
and shall not: (i) make or institute any unusual or novel methods of
manufacture, purchase, sale, lease, management, service, accounting or
operation, (ii) grant any increase in the rate of pay or the benefits or
compensation of any officer or employee, (iii) enter into, amend, or terminate
any contract or
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commitment not in the usual or ordinary course of business and consistent with
past practice, or (iv) incur, assume, or guarantee any indebtedness other than
indebtedness incurred in the usual and ordinary course of business for goods or
services or pursuant to existing commitments or agreements previously disclosed
in writing to SN under this Agreement.
7.2 Organization and Capitalization. RMSA shall not (i) amend its
Articles of Incorporation or Bylaws or change its officer or directors or (ii)
issue any additional capital stock or other securities of RMSA or grant any
warrants, options, or rights to purchase or acquire any capital stock or other
securities of RMSA, or (iii) merge or consolidate with any other corporation or
acquire all or substantially all of the stock, business, or asset or any other
person or entity or sell, assign or transfer substantially all of RMSA's assets
to any other person or entity.
7.3 Banking; Insurance. No change will be made affecting RMSA's banking
relationships and RMSA shall open no new bank or other deposit accounts. RMSA
will maintain in full force and effect all policies of insurance now in effect
and will give all notices and present all claims under all policies in a timely
fashion.
7.4 Preservation of Organization. RMSA will use its best efforts to (i)
preserve the business organization of RMSA intact, (ii) keep available to the
Surviving Corporation the present key officers and employees of RMSA, (iii)
preserve for the Surviving Corporation the relationships of RMSA with its
suppliers and customers and other having business relationship with it, and (iv)
take all steps reasonably necessary to maintain, preserve, and protect the
intangible assets owned or licensed by RMSA.
7.5 No Default. RMSA will perform and comply in all material re-
spects with all contracts, commitments, and obligations by which RMSA is bound.
ARTICLE VIII
INDEMNITIES
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8.1 General Indemnity. RMSA and Xx. Xxxxx hereby jointly and severally
agrees to indemnify and hold SN harmless from and against any and all losses,
claims, damages, expenses, obligations and liabilities (including reasonable
attorneys' fees) which are incurred by SN and which arise or result from, or are
related to, any of the following:
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8.1.1 Any breach of this Agreement by RMSA or Xx. Xxxxx or
any failure by RMSA or Xx. Xxxxx to perform any of their respective
representations, warranties, covenants, conditions or agreements set
forth in this Agreement;
8.1.2 Any representation or warranty made herein by RMSA or
Xx. Xxxxx proving to have been false or incorrect in any material re-
spect at the time it was made;
8.1.3 Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses relating to any
event or occurrence for which indemnity may be sought under subsections
(a), (b), or (c) above, including without limitation all legal fees and
expenses incident to any of the foregoing or incurred in investigating
or attempting to avoid or defend the same, or to avoid the imposition
thereof, or in enforcing this indemnity.
ARTICLE IX
MISCELLANEOUS PROVISIONS
------------------------
9.1 Nature and Survival of Representations. All statements contained in
any certificate, schedule or document delivered by or on behalf of any of the
parties pursuant to this Agreement shall be deemed representations and
warranties by the respective parties hereunder. All representations and
warranties made by the parties each to the other in this Agreement or pursuant
hereto shall survive the consummation of the transactions contemplated by this
Agreement, notwithstanding any investigation heretofore or hereafter made by
either of them or on behalf of either of them.
9.2 Governing Law; Severability. This Agreement shall be governed by
and construed according to the laws of the State of Utah. If any provision of
this Agreement is found by any court of competent jurisdiction to be illegal or
unenforceable, then such provision shall be deemed modified as necessary to make
it legal and enforceable and the remaining provisions of this Agreement shall be
unaffected and shall remain in full force and effect.
9.3 Entire Agreement; Amendments. This Agreement, together with the
Exhibits and Schedules hereto, which are incorporated herein by this reference
as part of this Agreement, set forth the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior
representations, understandings, discussions, and agreements of the parties,
whether oral or written, with respect to the same subject matter. At any time
prior to the Effective Date of the Merger, the parties hereto may amend any
provision of this Agreement;
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provided, however, that if any such amendment changes any of the principal terms
of this Agreement then this Agreement, as so amended, shall be re-submitted to
the shareholders of SN and RMSA for their approval. Any amendment to this
Agreement shall be evidenced by a writing signed by all the parties hereto.
9.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto.
9.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed by certified or registered mail, with first-class postage paid, addressed
as follows:
SN: Xxxxxxx X. Xxxxx, President
SportsNuts, Inc.
00000 Xxxxx 000 Xxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxx 00000
RMSA: Xxxxx Xxxxx, President
Rocky Mountain Sports Alliance, Inc.
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9.6 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.
9.7 Headings. The headings in the sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SPORTSNUTS, INC. ("SN") SNI MERGER SUB, INC. ("NEWCO")
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------------- -------------------------------
Xxxxxxx X. Xxxxx, President Xxxxxxx X.Xxxxx, President
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ROCKY MOUNTAIN SPORTS ALLIANCE, INC. ("RMSA")
May 31, 2001
By: /s/ Xxxxx Xxxxx
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Xxxxx Xxxxx, President
/s/ Xxxxx Xxxxx
-------------------------------------------
Xxxxx Xxxxx, as sole
shareholder of Rocky Mountain Sports Alliance, Inc.
