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Agreement And Plan of Reorganization

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Sectors: Energy
Governing Law: California , View California State Laws
Effective Date: June 11, 2010
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Exhibit 10.1

AGREEMENT AND PLAN OF REORGANIZATION

AMONG

AMHN, INC.,

SHN ACQUISITION CORP.,

SPECTRUM HEALTH NETWORK, INC.,

AND

THE SOLE SHAREHOLDER OF

SPECTRUM HEALTH NETWORK, INC.

June 11, 2010

AGREEMENT AND PLAN OF REORGANIZATION

This Agreement and Plan of Reorganization (hereinafter the " Agreement" ) is entered into effective as of this 11th day of June 2010, by and among AMHN, Inc., a Utah corporation (hereinafter " Parent" ); SHN Acquisition Corp., a newly formed Delaware corporation and wholly owned subsidiary of Parent (hereinafter " Merger Sub" ); Spectrum Health Network, Inc., a Delaware corporation (hereinafter the " Company" or " Spectrum" ), and the Sole Shareholder of Spectrum listed on the signature page hereof (hereinafter the " Sole Shareholder" ).

RECITALS

WHEREAS, Parent desires to acquire the Company as a wholly-owned subsidiary and to issue shares of Parent' s Common Stock (as defined below) to the shareholders of the Company upon the terms and conditions set forth herein. Merger Sub is a wholly-owned subsidiary corporation of Parent that shall be merged into the Company; whereupon the Company shall be the surviving corporation of said merger and shall become a wholly-owned subsidiary of Parent (Merger Sub and the Company are sometimes collectively hereinafter referred to as the " Constituent Corporations" ).

WHEREAS, the boards of directors of each of Parent, Merger Sub and the Company deem it advisable and in the best interests of such corporations and their respective shareholders that Merger Sub merge with and into the Company pursuant to this Agreement and the Delaware Certificate of Merger (in the form attached hereto as Exhibit A) and pursuant to applicable provisions of law (such transaction hereafter referred to as the " Merger" ).

WHEREAS, Merger Sub has an authorized capitalization consisting of 1,000 shares of common stock, par value $0.001 per share, of which 1,000 shares shall be issued and outstanding and owned by Parent as of the closing of the Merger.

WHEREAS, Parent has an authorized capitalization consisting of 50,000,000 shares of common stock, par value $0.10 per share (" Parent Common Stock" ), of which 15,790,209 shares of Parent Common Stock shall be, as of the Effective Date ( as defined below), issued and outstanding and, except as may be set forth within the Disclosure Schedule of Parent, no shares of Parent Common Stock are reserved for issuance pursuant to options, warrants or other securities that are convertible into or exchangeable for Parent Common Stock, in each case as of the Effective Date.

WHEREAS, the Company has an authorized capitalization consisting of 1,000 shares of common stock, par value $0.001 per share (" Spectrum Common Stock" ), of which 1,000 shares are issued and outstanding as of the Effective Date.

NOW THEREFORE, for the mutual consideration set out herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:

AGREEMENT

1. Plan of Reorganization . The parties to this Agreement do hereby agree that Merger Sub shall be merged with and into the Company upon the terms and conditions set forth herein and in accordance with the provisions of the Delaware General Corporation Law. It is the intention of the parties hereto that this transaction qualify as a tax-free reorganization under Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, and related sections thereunder.

2. Terms of Merger . In accordance with the provisions of this Agreement and the requirements of applicable law, Merger Sub shall be merged with and into the Company as of the Effective Date (the terms " Closing" and " Effective Date" are defined in Section 6 hereof). The Company shall be the surviving corporation (hereinafter the " Surviving Corporation" ) and the separate existence of Merger Sub shall cease when the Merger shall become effective. Consummation of the Merger shall be upon the following terms and subject to the conditions set forth herein:

(a) Corporate Existence .

(i) Commencing with the Effective Date, the Surviving Corporation shall continue its corporate existence as a Delaware corporation and (i) it shall thereupon and thereafter possess all rights, privileges, powers, franchises and property (real, personal and mixed) of each of the Constituent Corporations; (ii) all debts due to either of the Constituent Corporations, on whatever account, all causes in action and all other things belonging to either of the Constituent Corporations shall be taken and deemed to be transferred to and shall be vested in the Surviving Corporation by virtue of the Merger without further act or deed; and (iii) all rights of creditors and all liens, if any, upon any property of any of the Constituent Corporations shall be preserved unimpaired, limited in lien to the property affected by such liens immediately prior to the Effective Date, and all debts, liabilities and duties of the Constituent Corporations shall thenceforth attach to the Surviving Corporation.

(ii) At the Effective Date, (i) the Certificate of Incorporation of the Company shall be the Certificate of Incorporation of the Surviving Corporation, and the Bylaws of the Company, as existing immediately prior to the Effective Date, shall be and remain the Bylaws of the Surviving Corporation; (ii) the members of the Board of Directors of the Company holding office immediately prior to the Effective Date shall be appointed the members of the Board of Directors of the Surviving Corporation (if on or after the Effective Date a vacancy exists on the Board of Directors of the Surviving Corporation, such vacancy may thereafter be filled in a manner provided by applicable law and the Bylaws of the Surviving Corporation); and (iii) until the Board of Directors of the Surviving Corporation shall otherwise determine, all persons who hold offices of the Company at the Effective Date shall be elected to hold the same offices of the Surviving Corporation.


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(b) Conversion of Securities . As of the Effective Date and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the securities of any of these corporations, each of the following shall occur:

(i) Each share of Spectrum Common Stock issued and outstanding immediately prior to the Effective Date shall be converted into 500 shares of Parent Common Stock (the " Conversion Ratio" ), an aggregate of 500,000 shares. All such shares of Spectrum Common Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and upon the execution and delivery of assignment and transfer of stock to receive certificates of Spectrum in accordance with the provisions of Section 4 hereof, certificates evidencing such number of shares of Parent Common Stock, respectively, into which such shares of Spectrum Common Stock were converted. The holders of rights to receive shares of Spectrum Common Stock outstanding immediately prior to the Effective Date shall receive their respective shares of Parent Common Stock. All shares issued to the holders of the capital stock of the Company will be subject to certain restrictions on any sale, assignment, transfer, encumbrance or other manner of disposition as more fully set forth below;

(ii) Any shares of capital stock of Spectrum held in the treasury of the Company immediately prior to the Effective Date shall automatically be canceled and extinguished without any conversion thereof and no payment shall be made with respect thereto; and

(iii) Each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Date shall remain in existence as one share of common stock of the Surviving Corporation, which shall be owned by Parent.

3. Delivery of Shares . Promptly after the Effective Date, Parent shall mail to the Sole Shareholder of Spectrum Common Stock at the address set forth on books of Parent, (i) a notice of the effectiveness of the Merger, and (ii) certificates representing the shares of Parent Common Stock into which the Sole Shareholder' s shares of Spectrum Common Stock were converted pursuant to the Merger (the " New Certificates" ), that such holder is entitled to receive.

4. Representations of Spectrum and its Major Shareholder . Spectrum and its Sole Shareholder hereby represent and warrant as follows, which warranties and representations shall also be true as of the Closing:

(a) As of the Effective Date, one thousand (1,000) shares of Spectrum Common Stock are issued and outstanding and there are no shares of Preferred Stock authorized. The foregoing shares represent all of the shares of the Company' s capital stock that will be issued and outstanding as of the Closing.

(b) The issued and outstanding shares of Spectrum Common Stock constitute duly authorized, validly issued shares of capital stock of the Company. All issued and outstanding shares of Spectrum Common Stock are fully paid and nonassessable.


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(c) The Spectrum audited financial statements for the year ended December 31, 2009 and its unaudited and reviewed financial statements for the quarter ended March 31, 2010, which have been made available to Parent (hereinafter referred to as the " Spectrum Financial Statements" ), fairly present the financial condition of the Company as of the date thereof and the results of its operations for the period covered. Other than as set forth in any schedule or Exhibit attached hereto, and except as may otherwise be set forth or referenced herein, there are no material liabilities or obligations, either fixed or contingent, not disclosed or referenced in the Company Financial Statements or in any exhibit thereto or notes thereto other than contracts or obligations occurring in the ordinary course of business since March 31, 2010; and no such contracts or obligations occurring in the ordinary course of business constitute liens or other liabilities which materially alter the financial condition of Spectrum as reflected in the Company Financial Statements. Spectrum has or will have at the Closing, good title to all assets shown on the Spectrum Financial Statements, subject only to dispositions and other transactions in the ordinary course of business, the disclosures set forth therein and liens and encumbrances of record. The Spectrum Financial Statements have been prepared in accordance with generally accepted accounting principles (except as may be indicated therein or in the notes thereto.)

(d) Except as set forth in Schedule 4(d), since March 31, 2010, there have not been any material adverse changes in the financial position of Spectrum except changes arising in the ordinary course of business, which changes will not materially and adversely affect the financial position of Spectrum.

(e) Spectrum is not a party to any material pending litigation or, to the knowledge (herein, " Knowledge" ), of its executive officers, and its Sole Shareholder, any governmental investigation or proceeding, not reflected in the Spectrum Financial Statements, and, to its and their Knowledge, no material litigation, claims, assessments or any governmental proceedings are threatened against the Company.

(f) Spectrum is in good standing in the State of Delaware, and is in good standing and duly qualified to do business in California and each other state where Spectrum is required to be so qualified except where the failure to so qualify would have no material negative impact on Spectrum.

(g) Spectrum has, or by the Closing will have, filed all material tax, governmental and/or related forms and reports (or extensions thereof) due or required to be filed in the ordinary course of business and has (or will have) paid or made adequate provisions for all taxes or assessments which have become due as of the Closing, except where the failure to do so would not have a material adverse effect on Spectrum.

(h) Spectrum has not materially breached any material agreement to which it is a party. Spectrum has made available to Parent copies of or access to all material contracts, commitments and/or agreements to which the Company is a party, including all contracts covering relationships or dealings with related parties or affiliates.

(i) Spectrum has no subsidiary corporations.


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(j) Spectrum has made its corporate financial records, minute books, and other corporate documents and records available for review to present management of Parent prior to the Closing, during reasonable business hours and on reasonable notice.

(k) Spectrum has the corporate power to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been or will prior to the Closing be duly authorized by the Board of Directors of Spectrum and by the Major Shareholder of Spectrum. The execution of this Agreement does not materially violate or breach any material agreement or contract to which Spectrum is a party, and Spectrum, to the extent required, has (or will have by Closing) obtained all necessary approvals or consents required by any agreement to which Spectrum is a party. The execution and performance of this Agreement will not violate or conflict with any provision of the Certificate of Incorporation or Bylaws of Spectrum.

(l) Information regarding Spectrum which has been delivered by Spectrum to Parent for use in connection with the Merger, is true and accurate in all material respects.

5. Representations of Parent, Merger Sub . Parent and Merger Sub hereby jointly and severally represent and warrant subject to the Disclosure Schedules of Parent as follows, each of which representations and warranties shall also be true as of the Closing:

(a) As of the Closing, the shares of Parent Common Stock to be issued and delivered to Spectrum shareholders hereunder and in connection herewith will, when so issued and delivered, constitute duly authorized, validly and legally issued, fully-paid, nonassessable shares of Parent Common Stock, will not be issued in violation of any preemptive or similar rights and will be issued free and clear of all liens and encumbrances.

(b) Parent and Merger Sub each have the corporate power to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby (i) have been duly authorized by the respective Boards of Directors of Parent and Merger Sub and by Parent as the sole stockholder of Merger Sub, and (ii) do not need to be approved or authorized by the stockholders of Parent. This Agreement has been duly executed and delivered by each of Parent and Merger Sub and constitutes a legal, valid and binding obligation of Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance with its terms except as enforcement may be limited by applicable bankruptcy, insolvency or other laws affecting creditor' s rights generally or by legal principles of general applicability governing the availability of equitable remedies. The execution and performance of this Agreement will not constitute a material breach of any agreement, indenture, mortgage, license or other instrument or document to which Parent, Merger Sub is a party or to which it is otherwise subject and will not violate any judgment, decree, order, writ, law, rule, statute, or regulation applicable to Parent, Merger Sub, or their respective properties. The execution and performance of this Agreement will not violate or conflict with any provision of the respective Articles of Incorporation or Certificate of Incorporation or by-laws of either Parent or Merger Sub.

(c) Parent has delivered to Spectrum a true and complete copy of its audited financial statements for the fiscal years ended December 31, 2009 and 2008 and the unaudited


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financial statements for the three months ended March 31, 2010 (the " Parent Financial Statements" ). The Parent Financial Statements are complete, accurate and fairly present the financial condition of Parent as of the dates thereof and the results of its operations for the periods then ended. Except as may be set forth in the Disclosure Schedules of Parent, there are no material liabilities or obligations either fixed or contingent not reflected therein. The Parent Financial Statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as may be indicated therein or in the notes thereto) and fairly present the financial position of Parent as of the dates thereof and the results of its operations and changes in financial position for the periods then ended. Merger Sub has no financial statements because it was recently formed solely for the purpose of effectuating the Merger and it has been, is and will remain inactive except for purposes of the Merger, and it has no assets, liabilities, contracts or obligations of any kind other than as incurred in the ordinary course of business in connection with its incorporation in Delaware. Parent has one subsidiary (other than Merger Sub) and does not have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business. Merger Sub has no subsidiaries or affiliates (other than Parent) and does not have any direct or indirect equity participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business.

(d) Since March 31, 2010, there have not been any material adverse changes in the financial condition of Parent. At the Closing, neither Parent nor Merger Sub shall have any material assets other than those reflected in the Parent Financial Statements. At Closing, Parent shall have entered into agreements effective as of the Effective Time to assume the assets and liabilities of Spectrum which at March 31, 2010 totaled $232,778 and $386,032 respectively.

(e) Neither Parent nor Merger Sub is a party to, or the subject of, any pending litigation, claims, or governmental investigation or proceeding not reflected in the Parent Financial Statements, and to the Knowledge of the Parent Chief Executive Officer, Parent and Merger Sub, there are no lawsuits, claims, assessments, investigations, or similar matters, threatened or contemplated against or affecting Merger Sub, Parent, or the management or properties of Parent or Merger Sub.

(f) Parent and Merger Sub are each duly organized, validly existing and in good standing under the laws of the jurisdiction of their incorporation; each has the corporate power to own, lease and operate its property and to carry on its business as now being conducted and is duly qualified to do business and in good standing to do business in any jurisdiction where so required except where the failure to so qualify would have no material negative impact. Neither corporation is required to be qualified to do business in any state other than the State of Delaware as to Merger Sub and Utah as to Parent.

(g) Parent and Merger Sub have each filed all federal, state, county and local income, excise, property and other tax, governmental and/or other returns, forms, filings, or reports, which are due or required to be filed by it prior to the date hereof or have obtained valid extensions therefor and have paid or made adequate provision in the Parent Financial Statements for the payment of all taxes, fees, or assessments which have or may become due pursuant to such returns, filings or reports or pursuant to any assessments received. Neither Parent nor Merger Sub is delinquent or obligated for any tax, penalty, interest, delinquency or charge and there are no tax liens or encumbrances applicable to either corporation.


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(h) At the Effective Date (without giving effect to the issuance of Parent Common Stock pursuant to the Merger), Parent' s authorized capital stock will consist of 50,000,000 shares of Parent Common Stock, of which 15,790,209 shares of Parent Common Stock will be issued and outstanding. Merger Sub' s capitalization consists solely of 1,000 authorized shares of common stock, par value $0.001 per share, of which 1,000 shares are outstanding, all of which are owned by Parent, free and clear of all liens, claims and encumbrances. All outstanding shares of capital stock of Parent and Merger Sub are, and shall be at Closing, validly issued, fully paid and nonassessable. Except as may be set forth in the Disclosure Schedule of Parent, there are no existing options, convertible or exchangeable securities, calls, claims, warrants, preemptive rights, registration rights or commitments of any character relating to the issued or unissued capital stock or other securities of either Parent or Merger Sub. There are no voting trusts, proxies or other agreements, commitments or understandings of any character to which Parent or Merger Sub is a party or by which Parent or Merger Sub is bound with respect to the voting of any capital stock of Parent or Merger Sub. There are no outstanding stock appreciation, phantom stock or similar rights with respect to any capital stock of Parent or Merger Sub. There are no outstanding obligations to repurchase, redeem or otherwise acquire any shares of capital stock of Parent or Merger Sub.

(i) Parent and Merger Sub have (and at the Closing they will have) disclosed in writing to the Company all events, conditions and facts materially affecting the business, financial conditions (including any liabilities, contingent or otherwise) or results of operations of either Parent or Merger Sub.

(j) The financial records, minute books, and other documents and records of Parent and Merger Sub have been made available to the Company prior to the Closing.

(k) Neither Parent nor Merger Sub has breached, nor is there any pending, or to the Knowledge of the Parent Chief Executive Officer, any existing or threatened claim that Parent or Merger Sub has breached, any of the terms or conditions of any agreements, contracts, commitments or other documents to which it is a party or by which it is, or its properties are bound. The execution and performance of this Agreement will not violate any provisions of applicable law or any agreement to which Parent or Merger Sub is subject. Each of Parent and Merger Sub hereby represent and warrant that it is not a party to any material contract or commitment that has not been disclosed to the Company in writing, and unless otherwise indicated herein, or indicated within the Parent Financial Statements and footnotes provided to Spectrum herein (which are incorporated by reference), each of Parent and Merger Sub hereby represents and warrants that there are no currently existing agreements with any affiliates, related or controlling persons or entities of Parent, Merger Sub or the Parent Chief Executive Officer.

(l) Parent has to its Knowledge complied with all material provisions relating to the issuan
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