Exhibit
10.3: Merger Agreement
AGREEMENT AND PLAN OF
MERGER
by and among
SARS Corporation,
Environmental Insulation,
Inc.
EI Acquisition
Corp.,
ESDD, LLC,
ESDD Acquisition
Corp.,
Alternatech, Inc.,
Alternatech Acquisition
Corp.,
Swank Enterprises, Inc. d/b/a Art
and Print, Inc.,
A&P Acquisition
Corp.,
Associated Mechanical,
Inc.,
R.J. Power Plumbing & Heating
Company,
Dated as of May 22,
2009
AGREEMENT AND PLAN OF
MERGER
This Agreement
and Plan of Merger (the “ Merger
Agreement ”) dated as of May 21, 2009, by and among
SARS Corporation (“ SARS ”), a corporation
formed under the laws of the State of Nevada, and/or its assignees,
Environmental Insulation, LLC (“ EI ”), a
limited liability company formed under the laws of Nevada, EI
Acquisition Corp. (the “ EI Merger Sub ”), a
corporation to be formed under the laws of the State of Nevada and
a wholly owned subsidiary of SARS, ESDD, LLC (“ ESDD
”), a limited liability company formed under the laws of the
State of Tennessee, ESDD Acquisition Corp., a corporation to be
formed under the laws of the State of Nevada and a wholly owned
subsidiary of SARS (the “ ESDD Merger Sub ”),
Alternatech, Inc. (“ Alternatech ”), a
corporation formed under the laws of the State of Illinois,
Alternatech Acquisition Corp. (the “ Alternatech Merger
Sub ”), a corporation to be formed under the laws of the
State of Nevada and a wholly owned subsidiary of SARS, Associated
Mechanical, Inc. (“ AMI ”), a corporation formed
under the laws of the State of Illinois, AMI Acquisition Corp. (the
“ AMI Merger Sub ”), a corporation to be formed
under the laws of the State of Nevada and a wholly owned subsidiary
of SARS, Swank Enterprises, Inc. (“ SEI ”) d/b/a
Art and Print, Inc. (“ A&P ”), a corporation
formed under the laws of the State of Illinois, A&P Acquisition
Corp. (the “ A&P Merger Sub ”), a
corporation to be formed under the laws of the State of Nevada and
a wholly owned subsidiary of SARS and R.J. Power
Plumbing & Heating Company (“ RJP ”), a
corporation formed under the laws of the State of Illinois, RJP
Acquisition Corp. ( the “RJP Merger Sub
”), a corporation to be formed under the laws of the State of
Nevada and a wholly owned subsidiary of
SARS. Hereinafter, SARS, EI, EI the Merger Sub, ESDD,
the ESDD Merger Sub, Alternatech, the Alternatech Merger Sub, AMI,
the AMI Merger Sub, A&P, the A&P Merger Sub, RJP and the
RJP Merger Sub, are individually referred to herein as a “
Party ” and collectively as the “ Parties
.”
WHEREAS , SARS proposes to acquire EI, ESDD,
Alternatech, AMI, A&P, and RJP, pursuant to a merger
transaction whereby, pursuant to the terms and subject to the
conditions of this Merger Agreement, EI, ESDD,
Alternatech, AMI, A&P, RJP, shall become wholly owned
subsidiaries of SARS through the merger of the EI Merger Sub with
and into EI, through the merger of the ESDD Merger Sub with and
into ESDD, through the merger of the Alternatech Merger Sub with
and into Alternatech, through the merger of the AMI Merger Sub with
and into AMI, through the merger of the A&P Merger Sub with and
into A&P and through the merger of the RJP Merger Sub with and
into RJP (the “ Merger
”). Hereinafter, EI, ESDD, Alternatech, AMI,
A&P and RJP shall collectively be referred to in this Merger
Agreement as the “ Acquisition Entities ,” as if
they were the same entity, and for purposes this Merger Agreement,
be deemed to be the same entity; and the EI Merger Sub, the ESDD
Merger Sub, the Alternatech Merger Sub, the AMI Merger Sub, the
A&P Merger Sub and the RJP Merger Sub shall be collectively
referred to in this Merger Agreement as the “ Merger
Subs ,” as if they were the same entity, and for purposes
of this Merger Agreement, be deemed to be the same
entity;
WHEREAS , the Board of Directors of SARS has (i)
determined that the Merger with the Acquisition Entities is
advisable and in the best interests of SARS and of SARS’
stockholders and presents an opportunity to achieve long-term
strategic and financial benefits; (ii) approved the Merger and this
Merger Agreement; and (iii) determined to recommend that SARS
approve the Merger and approve and adopt this Merger
Agreement;
WHEREAS , the respective Boards of Directors of the
Acquisition Entities have (i) determined that a Merger with SARS is
advisable and in the best interests of the Acquisition Entities and
their stockholders and presents an opportunity to achieve long-term
strategic and financial benefits; (ii) approved the Merger and this
Merger Agreement; and (iii) determined to recommend that the
stockholders of the Acquisition Entities to approve the Merger and
approve and adopt this Merger Agreement; and
WHEREAS , in the Merger, one hundred percent (100%) of
all issued and outstanding shares of capital stock and member units
of the Acquisition entities shall be exchanged (the “
Share Exchange ”) for Two Million Five Hundred U.S.
Dollars ($2,500,000) and thirty million (30,000,000) shares of
restricted common stock of SARS (the “ Merger
Shares”), which Merger Shares, when issued pursuant to
the Share Exchange, shall represent approximately, but no less
than, seventy five percent (75%) of the voting power of
SARS after the Closing.
NOW,
THEREFORE , in
consideration of the premises and the mutual covenants,
representations and warranties contained herein, the Parties,
intending to be legally bound, hereby agree as follows:
CERTAIN
DEFINITIONS
As used in this
Merger Agreement, the following terms shall have the meanings set
forth below:
“
Applicable Law ” means any domestic or foreign law,
statute, regulation, rule, policy, guideline or ordinance
applicable to the businesses of the Parties or the
Merger.
“Knowledge” means, in the case of SARS and the Acquisition
Entities, a particular fact or other matter of which its Chief
Executive Officer or the Chief Financial Officer or Managers is
actually aware or which a prudent individual serving in such
capacity could be expected to discover or otherwise become aware of
in the course of conducting a diligent review or investigation of
the corporation and its business and
affairs.
“
Lien ” means, with respect to any property or asset,
any mortgage, lien, pledge, charge, security interest, claim,
encumbrance, royalty interest, any other adverse claim of any kind
in respect of such property or asset, or any other restrictions or
limitations of any nature whatsoever.
“
Material Adverse Effect ” with respect to any entity
or group of entities means any event, change or effect that has or
would have a materially adverse effect on the assets, liabilities,
business, prospects, condition (financial, or otherwise), or
results of operations of such entity or group of entities, taken as
a whole.
“
Person ” means any individual, corporation,
partnership, trust or unincorporated organization or a government
or any agency or political subdivision thereof.
“
Surviving Entity ” or “ Surviving
Entities ” shall mean the Acquisition Entities as the
surviving entity or surviving entities in the Merger as provided in
Section 1.05.
“
Tax ” (and, with correlative meaning, “
Taxes ” and “ Taxable ”)
means:
(i) any income,
alternative or add-on minimum tax, gross receipts tax, sales tax,
use tax, ad valorem tax, transfer tax, franchise tax, profits tax,
license tax, withholding tax, payroll tax, employment tax, excise
tax, severance tax, stamp tax, occupation tax, property tax,
environmental or windfall profit tax, custom, duty or other tax,
impost, levy, governmental fee or other like assessment or charge
of any kind whatsoever together with any interest or any penalty,
addition to tax or additional amount imposed with respect thereto
by any governmental or Tax authority responsible for the imposition
of any such tax (domestic or foreign);
(ii) any
liability for the payment of any amounts of the type described in
clause (i) above as a result of being a member of an affiliated,
consolidated, combined or unitary group for any Taxable period;
and
(iii) any
liability for the payment of any amounts of the type described in
clauses (i) or (ii) above as a result of any express or implied
obligation to indemnify any other person.
“ Tax
Return ” means any return, declaration, form, and claim
for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
ARTICLE I
THE TRANSACTIONS
SECTION
1.01 THE
SHARE EXCHANGE
Consideration . On
the Closing Date, (as hereinafter defined), the Share Exchange
shall be consummated, in which the Acquisition Entities shall
exchange one hundred percent (100%) of all issued and outstanding
shares of the capital stock and member units of the Acquisition
Entities, collectively referred to as the “ Exchange
Shares ,” and all of the assets of the Acquisition
Entities, in exchange for the following consideration, according to
the following terms:
(a) SARS
shall raise, and upon receipt, shall tender up to Two Million Five
Hundred Thousand U.S. Dollars ($2,500,000), which shall be secured
in connection with the Execution (defined herein, below) and the
Closing (defined herein, below) in order to satisfy certain
identified liabilities, provide working capital and facilitate the
restructuring of the balance sheets for the Surviving Entities
resulting from the Merger (the “ Financing
”). The Financing shall be a condition subsequent
to the Closing;
(b) The
Acquisition Entities shall receive thirty million (30,000,000)
shares of SARS’ restricted common stock shares, on a pro rata
basis, otherwise known herein as the “ Merger Shares
”;
(c) Following
the Closing Date, the Parties will undertake, to the best of their
abilities, to release Mark and Susan Swank from their personal
guarantees for lines of credit for and/or loans to the Acquisition
Entities. However, the Parties acknowledge that the
release of Mark and Susan Swank from their personal guarantees for
lines of credit for and/or loans to the Acquisition Entities shall
be subject to the final approval and acceptance by the bank(s)
associated with the lines of credit for and/or loans to the
Acquisition Entities;
(d) The
Parties agree to enter into an “earn-out” arrangement,
such that upon the Acquisition Entities’ achievement of
mutually agreed upon gross revenue and earnings before interest,
taxes, depreciation and amortization (“ EBITDA
”) dollar figures, the Acquisition Entities shall
allocate a fixed dollar amount to retire certain lines
of credit for and/or loans to the Acquisition Entities;
(e) Post
Closing, in the event the Financing does not occur, any of the
Exchange Shares have been delivered to SARS shall be immediately
returned to the Acquisition Entities;
(f) Subject
to the Financing, SARS shall assume the liabilities of the
Acquisition Entities, as disclosed on Schedule 1.01 (e)
attached hereto, which are estimated to equal approximately Eight
Million Seven Hundred Seventy Five Thousand U.S. Dollars
($8,775,000), which estimate is subject to confirmation resulting
from the completion the due diligence process as conducted by the
Parties, prior to the Closing Date. Schedule
1.01 shall be amended and revised, subject to customary due
diligence, and a final copy shall be provided to SARS prior to the
Closing; and
(g) Subject
to the Financing, SARS shall secure a credit facility to effectuate
the assumption of certain liabilities as agreed between the
Parties, in order to consolidate such liabilities into one (1)
central credit facility.
Upon the terms
and subject to the conditions set forth in this Merger Agreement
and in accordance with the Nevada Revised Statutes, Tennessee
Limited Liability Company Act and the Illinois Business Corporation
Act of 1983, at the Effective Time (defined herein, below), all the
Exchange Shares shall be cancelled and converted into the right to
receive the Merger Shares. In connection therewith, the
following terms shall apply:
(a)
Exchange Agent . Legal counsel for SARS
(The Otto Law Group, PLLC) shall act as the exchange agent (the
“ Exchange Agent ”) for the purpose of
exchanging the Exchange Shares for the Merger
Shares. At or prior to the Closing, SARS shall
deliver to the Exchange Agent the Merger Shares.
(b)
Conversion of Securities .
(i)
Conversion of Acquisition Entities’ Securities
. At the Effective Time (defined herein, below), by
virtue of the Merger and without any action on the part of SARS,
the Acquisition Entities and the Merger Subs or the holders of any
of their respective securities agree to the following:
(1) Each
of the issued and outstanding shares the Exchange Shares,
immediately prior to the Effective Time (defined herein, below),
shall be converted into and represent the right to receive, and
shall be exchangeable for a pro rata allocation the Merger
Shares.
(2) All
of the Exchange Shares shall no longer be outstanding and shall
automatically be canceled, retired and shall cease to exist, and
each holder of a certificate representing any such shares shall
cease to have any rights with respect thereto, except the right to
receive the Merger Shares to be issued pursuant to this Section
1.02 upon the surrender of such certificate in accordance with
Section 1.08, without interest. No fractional shares may
be issued; but each fractional share that would result from the
Merger will be rounded to the nearest number of whole
shares.
(3) The
Merger Shares acquired in the Share Exchange shall represent, when
issued, the equivalent of approximately, but no less than, seventy
five percent (75%) of SARS’ issued and outstanding common
stock at the Effective Time (defined, herein below).
(ii)
Conversion of Merger Sub Stock . At the Effective
Time (defined, herein below), by virtue of the Merger and without
any action on the part of the Acquisition Entities and Merger Subs
and SARS, or the holders of any of their respective securities,
each share of capital stock of the Merger Subs outstanding,
immediately prior to the Effective Time (defined herein, below),
shall be converted into one (1) unit of EI membership
units, one (1) unit of ESDD membership units, one (1) share of
capital stock of Alternatech, one (1) share of the capital stock of
AMI, one (1) share of capital stock of A&P and one (1) share of
the capital stock of RJP, each respectively a “ Surviving
Entity ,” (collectively referred to as the “
Surviving Entities ”) and the shares of capital stock
of the Surviving Entities so issued in such conversion shall
constitute the only outstanding shares of capital stock of the
Surviving Entities and the Surviving Entities shall be wholly owned
subsidiaries of SARS.
(c)
Exemption from Registration . The Parties intend
that the issuance of the Merger Shares to the Acquisition Entities
shall be exempt from the registration requirements of the
Securities Act of 1933, as amended, (the “ Securities
Act ”) pursuant to Section 4(2) of the Securities Act and
the rules and regulations promulgated thereunder.
The
execution of this Merger Agreement (the “
Execution ” otherwise known as the “
Execution Date ”) will take place at the offices of
The Otto Law Group, PLLC, no later than June 25, 2009, unless
otherwise extended by a signed written Merger Agreement of the
Parties.
The closing of
the Share Exchange and the Merger (the “ Closing
” or the “ Closing Date ”) will take place
no later than June 25, 2009, at the offices of The Otto Law Group,
PLLC, within one (1) business day following the satisfaction or
waiver of the covenants set forth in Article IV, and the conditions
precedent set forth in Article V, or at such other date as SARS and
the Acquisition Entities shall agree, but in any event no later
than June 30, 2009 unless otherwise extended by a signed written
Merger Agreement of the Parties. The Parties reserve the
right to mutually agree to the extension of the Closing Date for
two (2) thirty (30) day periods, for an aggregate of sixty (60)
days (the “ Extension ”).
SECTION
1.05 MERGER
EFFECTIVE TIME.
The Effective Time (the “ Effective
Time ”) shall occur upon the date of filing the
Certificates of Merger with the requisite Secretary of
State’s office, with respect to the individual entities
involved, as described below. The date on which the
Effective Time occurs is referred to as the “ Effective
Date .” Provided that this Merger Agreement
has not been terminated pursuant to Article VI, the Parties will
cause the Certificate of Merger to be filed with the respective
Secretary of State’s office as soon as practicable after the
Closing.
(a) EI Merger Sub
. At
the Effective Time and subject to and upon the terms and conditions
of this Merger Agreement, the EI Merger Sub shall, and SARS shall
cause the EI Merger Sub, to merge with and into EI in accordance
with the provisions of the Nevada Revised Statutes the separate
corporate existence of the EI Merger Sub shall cease and EI shall
continue as the Surviving Entity. The Effective Time
shall occur upon the filing with the Nevada Secretary of State,
executed in accordance with the applicable provisions of the Nevada
Secretary of State.
(b) ESDD Merger Sub
. At
the Effective Time and subject to and upon the terms and conditions
of this Merger Agreement, the ESDD Merger Sub shall, and SARS shall
cause the ESDD Merger Sub, to merge with and into ESDD in
accordance with the provisions of the Nevada Revised Statutes and
the Tennessee Limited Liability Company Act, the separate corporate
existence of the ESDD Merger Sub shall cease and ESDD shall
continue as the Surviving Entity. The Effective Time
shall occur upon the filing with the Nevada Secretary of State and
the Tennessee Department of State a Certificate of Merger, executed
in accordance with the applicable provisions of the Tennessee
Department of State.
(c) Alternatech Merger Sub
. At
the Effective Time and subject to and upon the terms and conditions
of this Merger Agreement, the Alternatech Merger Sub shall, and
SARS shall cause the Alternatech Merger Sub, to merge with and into
Alternatech in accordance with the provisions of the Nevada Revised
Statutes and the Illinois Business Corporation Act of 1983 the
separate corporate existence of the Alternatech Merger Sub shall
cease and Alternatech shall continue as the Surviving
Entity. The Effective Time shall occur upon the filing
with the Nevada Secretary of State and the Illinois Secretary of
State a Certificate of Merger, executed in accordance with the
applicable provisions of the Illinois Secretary of
State.
(d) AMI Merger Sub
. At
the Effective Time and subject to and upon the terms and conditions
of this Merger Agreement, the AMI Merger Sub shall, and SARS shall
cause the AMI Merger Sub, to merge with and into AMI in accordance
with the provisions of the Nevada Revised Statutes and the Illinois
Business Corporation Act of 1983 the separate corporate existence
of the AMI Merger Sub shall cease and AMI shall continue as the
Surviving Entity. The Effective Time shall occur upon
the filing with the Nevada Secretary of State and the Illinois
Secretary of State a Certificate of Merger, executed in accordance
with the applicable provisions of the Nevada Secretary of State and
the Illinois Secretary of State.
(e) A&P Merger Sub
. At
the Effective Time and subject to and upon the terms and conditions
of this Merger Agreement, the A&P Merger Sub shall, and SARS
shall cause the A&P Merger Sub, to merge with and into A&P
in accordance with the provisions of the Nevada Revised Statutes
and the Illinois Business Corporation Act of 1983 the separate
corporate existence of the A&P Merger Sub shall cease and
A&P shall continue as the Surviving Entity. The
Effective Time shall occur upon the filing with the Nevada
Secretary of State and the Illinois Secretary of State a
Certificate of Merger, executed in accordance with the applicable
provisions of the Nevada Secretary of State and the Illinois
Secretary of State.
(f)
RJP Merger Sub
. At
the Effective Time and subject to and upon the terms and conditions
of this Merger Agreement, the RJP Merger Sub shall, and SARS shall
cause the RJP Merger Sub, to merge with and into RJP in accordance
with the provisions of the Nevada Revised Statutes and the Illinois
Business Corporation Act of 1983 the separate corporate existence
of the RJP Merger Sub shall cease and RJP shall continue as the
Surviving Entity. The Effective Time shall occur upon
the filing with the Nevada Secretary of State and the Illinois
Secretary of State a Certificate of Merger, executed in accordance
with the applicable provisions of the Illinois Secretary of
State.
SECTION
1.06 EFFECT
OF THE MERGER.
The Merger
shall have the effect set forth in and by the Nevada Revised
Statute §92A, the Tennessee Department of State and Illinois
Compiled Statute §805 ILCS 5/11.25. Without
limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the properties, rights, privileges, powers
and franchises of the Acquisition Entities and Merger Subs shall
vest in each company’s respective Surviving Entity, and all
debts, liabilities and duties of the Acquisition Entities and
Merger Subs shall become the debts, liabilities and duties of each
company’s respective Surviving Entity.
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CERTIFICATE
OF INCORPORATION AND BYLAWS; DIRECTORS
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(a) The
Certificate of Incorporation and Bylaws of the Acquisition
Entities, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and Bylaws of the
Surviving Entities immediately following the Merger.
(b) The
members, directors and officers of the Acquisition Entities
immediately prior to the Merger shall be the directors and officers
of the Surviving Entities following the Merger.
(a) The
Exchange Shares issued pursuant to the Share Exchange and the
Merger Shares will not be registered under the Securities Act, or
the securities laws of any state, and cannot be transferred,
hypothecated, sold or otherwise disposed of until: (i) a
registration statement with respect to such securities is declared
effective under the Securities Act; or (ii) SARS receives an
opinion of counsel for the Shareholders, reasonably satisfactory to
counsel for SARS, stating that an exemption from the registration
requirements of the Securities Act is available.
The
certificates representing the Merger Shares which are being issued
to the shareholders shall contain a legend substantially as
follows:
“THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY
NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED
EFFECTIVE UNDER SUCH ACT, OR SARS CORPORATION RECEIVES AN OPINION
OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR
SARS CORPORATION THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS AVAILABLE.”
SECTION
1.09 EXCHANGE
OF CERTIFICATES.
(a)
Surrender of Shares . Upon the Effective Time,
the Acquisition Entities shall be required to surrender all the
Exchange Shares to the Exchange Agent, and each shall be entitled
upon such surrender to receive, respectively, in exchange therefore
certificates representing the pro rata number of Merger Shares,
which shall be disclosed on Schedule 1.09 prior to the
Closing and attached hereto, into which the Exchange Shares
theretofore represented by the stock transfer forms so surrendered
shall have been exchanged pursuant to this Merger
Agreement. Until so surrendered, each outstanding
certificate which, prior to the Effective Time, representing the
Exchange Shares shall be deemed for all corporate purposes, subject
to the further provisions of this Article I, to evidence the
ownership of the number of whole Merger Shares for which such
Exchange Shares have been so exchanged. No dividend
payable to holders of the Merger Shares of record as of any date
subsequent to the Effective Time shall be paid to the owner of any
certificate which, prior to the Effective Time, representing the
Exchange Shares, until such certificate or certificates
representing the Exchange Shares together with a stock transfer
form, are surrendered as provided in this Article I or pursuant to
letters of transmittal or other instructions with respect to lost
certificates provided by the Exchange Agent.
(b)
Full Satisfaction of Rights . All Merger Shares
for which the Exchange Shares shall have been exchanged pursuant to
this Article I shall be deemed to have been issued in full
satisfaction of all rights pertaining to the Exchange
Shares.
(c)
Exchange of Certificates . All certificates
representing the Exchange Shares converted into the right to
receive Merger Shares pursuant to this Article I shall be furnished
to SARS subsequent to delivery thereof to the Exchange Agent
pursuant to this Merger Agreement.
(d)
Closing of Transfer Books . On the Effective
Date, the stock transfer book of the Acquisition Entities shall be
deemed to be closed and no transfer of the Exchange Shares shall
thereafter be recorded thereon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF
SARS
SARS and where
applicable, the Merger Subs hereby jointly and severally
represent and warrant to the Acquisition Entities, as of the date
of this Merger Agreement, as of the Closing Date and as of the
Effective Time, as follows:
SECTION
2.01 ORGANIZATION,
STANDING AND POWER
SARS is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada, and has corporate
power and authority to (i) conduct its business as presently
conducted by it, (ii) to enter into and perform this Merger
Agreement; and (iii) to carry out the transactions contemplated by
this Merger Agreement. The EI Merger Sub is a
corporation to be formed under the laws of the State of Nevada, and
will have the corporate power and authority to enter into and
perform this Merger Agreement and to carry out the transactions
contemplated by this Merger Agreement. The ESDD Merger
Sub is a corporation to be formed under the laws of the State of
Nevada, and will have the corporate power and authority to enter
into and perform this Merger Agreement and to carry out the
transactions contemplated by this Merger Agreement. The
Alternatech Merger Sub is a corporation to be formed under the laws
of the State of Nevada, and will have the corporate power and
authority to enter into and perform this Merger Agreement and to
carry out the transactions contemplated by this Merger Agreement.
The AMI Merger Sub is a corporation to be formed under the laws of
the State of Nevada, and will have the corporate power and
authority to enter into and perform this Merger Agreement and to
carry out the transactions contemplated by this Merger
Agreement. In addition, the A&P Merger Sub is a
corporation to be formed under the laws of the State of Nevada, and
will have the corporate power and authority to enter into and
perform this Merger Agreement and to carry out the transactions
contemplated by this Merger Agreement. Finally, the RJP Merger Sub
is a corporation to be formed under the laws of the State of
Nevada, and will have the corporate power and authority to enter
into and perform this Merger Agreement and to carry out the
transactions contemplated by this Merger Agreement.
SECTION
2.02 RELEVANT
SUBSIDIARIES
(a) EI Merger
Sub . SARS will own all of the outstanding capital
stock of the EI Merger Sub, a corporation to be formed under the
laws of the State of Nevada and prior to the date hereof and
through the Effective Date; the EI Merger Sub shall not conduct any
operating business, become a party to any agreements, or incur any
liabilities or obligations.
(b) ESDD Merger
Sub . SARS will own all of the outstanding capital
stock of the ESDD Merger Sub, a corporation to be formed under the
laws of the State of Nevada and prior to the date hereof and
through the Effective Date; the ESDD Merger Sub shall not conduct
any operating business, become a party to any agreements, or incur
any liabilities or obligations.
(c)
Alternatech Merger Sub . SARS will own all of the
outstanding capital stock of the Alternatech Merger Sub, a
corporation to be formed under the laws of the State of Nevada and
prior to the date hereof and through the Effective Date; the
Alternatech Merger Sub shall not conduct any operating business,
become a party to any agreements, or incur any liabilities or
obligations.
(d)
AMI Merger Sub . SARS will own all of the
outstanding capital stock of the AMI Merger Sub, a corporation to
be formed under the laws of the State of Nevada and prior to the
date hereof and through the Effective Date; the AMI Merger Sub
shall not conduct any operating business, become a party to any
agreements, or incur any liabilities or obligations.
(e)
A&P Merger Sub . SARS will own all of the
outstanding capital stock of the A&P Merger Sub, a corporation
to be formed under the laws of the State of Nevada and prior to the
date hereof and through the Effective Date; the A&P Merger Sub
shall not conduct any operating business, become a party to any
agreements, or incur any liabilities or obligations.
(f)
RJP Merger Sub . SARS will own all of the
outstanding capital stock of the RJP Merger Sub, a corporation to
be formed under the laws of the State of Nevada and prior to the
date hereof and through the Effective Date; the RJP Merger Sub
shall not conduct any operating business, become a party to any
agreements, or incur any liabilities or obligations.
SECTION
2.03
CAPITALIZATION
(a) There
are five hundred fifty million (550,000,000) shares of capital
stock of SARS authorized, consisting of five hundred million
(500,000,000) shares of common stock, $0.001 par value per share
(the “ SARS Common Shares ”) and fifty million
(50,000,000) shares of preferred stock, $0.001 per share (“
SARS Preferred Shares”) . Prior to the
Closing of this Merger Agreement, there will be ten million
(10,000,000) SARS Common Shares issued and outstanding, and
five million
(5,000,000) SARS Preferred Shares issued and
outstanding. It is acknowledged, that following the
Closing Date, there will be approximately forty million
(40,000,000) shares of Common Stock issued and outstanding, and
five million (5,000,000) shares of Preferred Stock issued and
outstanding.
(b) It
is acknowledged that as of the Closing Date, the individuals named,
which shall be disclosed on Schedule 2.03 and attached
hereto prior to the Closing, collectively, will own of record and
beneficially up to approximately thirty million (30,000,000) of the
issued and outstanding SARS Common Shares, constituting seventy
five percent (75%) of such shares. Five Million
(5,000,000) SARS Common Shares shall be reserved for issuance to as
part of the employee stock option plan for SARS. There exist no
other outstanding rights, warrants, options or agreements for the
exchange of SARS Common or Preferred Shares except as provided in
this Merger Agreement.
(c) All
outstanding SARS Common Shares are validly issued, fully paid,
non-assessable, not subject to pre-emptive rights and have been
issued in compliance with all state and federal securities laws or
other Applicable Law. The Merger Shares issuable to the
Acquisition Entities, on a pro rata basis, pursuant to the Merger
and the Share Exchange will, when issued pursuant to this Merger
Agreement, be duly and validly authorized and issued, fully paid
and non-assessable.
SECTION
2.04 AUTHORITY
FOR MERGER AGREEMENT
The execution,
delivery, and performance of this Merger Agreement by each of SARS,
the Merger Subs have been duly authorized by all necessary
corporate and shareholder action, and this Merger Agreement, upon
its execution by the Parties, will constitute the valid and binding
obligation of each of SARS and the Merger Subs, enforceable against
each of them in accordance with and subject to its terms, except as
enforceability may be affected by bankruptcy, insolvency or other
laws of general application affecting the enforcement of creditors'
rights. The execution and consummation of the
transactions contemplated by this Merger Agreement and compliance
with its provisions by SARS, the Merger Subs will not violate any
provision of Applicable Law and will not conflict with or result in
any breach of any of the terms, conditions, or provisions of, or
constitute a default under, SARS's Articles of Incorporation, the
EI Merger Sub’s Certificate of Incorporation, the ESDD Merger
Sub’s Certificate of Incorporation, the Alternatech Merger
Sub’s Certificate of Incorporation, the AMI Merger
Sub’s Certificate of Incorporation, the A&P Merger
Sub’s Certificate of Incorporation, the RJP Merger
Sub’s Certificate of Incorporation or any of their respective
Bylaws, in each case as amended, or, in any material respect, any
indenture, lease, loan agreement or other agreement or instrument
to which SARS is a party or by which it or any of its properties is
bound, or any decree, judgment, order, statute, rule or regulation
applicable to SARS and the Merger Subs.
SECTION
2.05 FINANCIAL
CONDITION
(a) The financial
statements were prepared in accordance with generally accepted
accounting principles and to the best of its Knowledge fairly
reflect the financial condition of SARS as of the dates stated and
the results of its operations for the periods presented.
(b) Without in any
manner reducing or otherwise mitigating the representations
contained herein, Acquisition Entities, its legal counsel and
accountants shall have the opportunity to meet with the accountants
and attorneys of the SARS to discuss the financial condition of
SARS during reasonable business hours and in a manner that does not
interfere with the normal operation of business of
SARS. SARS shall make available to Acquisition Entities
all books and records of SARS, with particular specificity, those
items listed in schedule 3.04(a) .
SECTION
2.06
CERTAIN CHANGES OR EVENTS
Since March 13,
2009, as reported in SARS’ 8-K filed by SARS with the
Securities and Exchange Commission (“ SEC”) and
except as contemplated by this Merger Agreement:
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there have been
no Material Adverse Changes in the business, operations,
properties, assets, or condition of SARS;
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(b) SARS
has not (i) amended its Articles of Incorporation, other than to
changes its name from “SARS Corporation” to “FAST
Technologies, Inc.”; (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
outstanding capital stock; (iii) made any material change in its
method of management, operation, or accounting; (iv) entered into
any material transaction, not otherwise disclosed on Schedule
2.06 and attached hereto prior to the Closing; or (v) made any
accrual or arrangement for payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee;
(c) SARS
has not (i) borrowed or agreed to borrow any funds or incurred, or
become subject to, any material obligation or liability (absolute
or contingent), except as otherwise disclosed on Schedule
2.06 to be attached hereto prior to the Closing and except
liabilities incurred in the ordinary course of business; (ii) paid
any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent
SARS balance sheet, and current liabilities incurred since that
date in the ordinary course of business; (iii) sold or transferred,
or agreed to sell or transfer, any material assets, properties, or
rights, or canceled, or agreed to cancel, any material debts or
claims; (iv) made or permitted any material amendment or
termination of any contract, agreement, or license to which it is a
party; (v) entered into any outstanding rights, warrants, options
or agreements for the capital stock of SARS.
SECTION
2.07 GOVERNMENTAL
AND THIRD PARTY CONSENTS
No consent,
waiver, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or
commission or other federal, state,
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