AGREEMENT AND PLAN OF MERGER
EXHIBIT
2
AGREEMENT
AND PLAN OF MERGER (“Merger
Agreement”)
made
this 18th day of May, 2006 by and among Cirracor, Inc., a Nevada corporation
(“Cirracor”),
and
Panda Ethanol, Inc., a Delaware corporation (the “Company”),
and
Grove Panda Investments, LLC (“Cirracor
Stockholder”)
Recitals:
A. The
respective Boards of Directors of Cirracor and the Company have determined
that
a merger of the Company with and into Cirracor (the “Merger”),
with
Cirracor being the surviving corporation, upon the terms and subject to the
conditions set forth in this Merger Agreement, would be fair and in the best
interests of their respective shareholders, and such Boards of Directors have
approved such Merger, pursuant to which the shares of Common Stock of the
Company (“Company
Stock”)
and
the shares of Common Stock of Cirracor (“Cirracor
Stock”)
issued
and outstanding immediately prior to the Effective Time of the Merger (as
defined in Section 1.03), other than Dissenting Shares (as defined in Section
2.01(c)), will be converted into the number of shares of Common Stock of Public
Company determined by application of the applicable Exchange Ratios (defined
below).
B. Cirracor,
the Cirracor Stockholder and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also
to
prescribe various conditions to the Merger.
C. For
federal income tax purposes, the parties intend that the Merger shall qualify
as
a reorganization under the provisions of Section 368 of the Internal Revenue
Code of 1986, as amended (the “Code”).
NOW,
THEREFORE, in consideration of the representations, warranties, covenants and
agreements contained in this Merger Agreement, the parties agree as
follows:
ARTICLE
I
The
Merger
1.01 The
Merger.
Upon
the terms and subject to the conditions set forth in this Merger Agreement,
and
in accordance with the Delaware General Corporation Law and the Nevada General
Corporation Law (each, a “Merger
Statute”
and,
collectively, the “Merger
Statutes”)
which
shall govern the merger contemplated hereby, the Company shall be merged with
and into Cirracor at the Effective Time of the Merger. At the Effective Time
of
the Merger, the separate existence of the Company shall cease, and Cirracor
shall continue as the surviving corporation (hereinafter sometimes referred
to
as the “Public
Company”)
under
the name Panda Ethanol, Inc. and assume all liabilities of the
Company.
1.02 Closing.
Unless
this Merger Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to Section 7.01 and subject
to
the satisfaction or waiver of the conditions set forth in Article VI, the
closing of the Merger (the “Closing”)
will
take place at 10:00 a.m. central time on the business day after satisfaction
of
the conditions set forth in Article VI (or as soon as practicable thereafter
following satisfaction or waiver of the conditions set forth in Article VI)
(the
“Closing
Date”),
at
the offices of Xxxxxx and Xxxxx, LLP, 000 Xxxx Xx., Xxxxx 0000, Xxxxxx,
Xxxxx 00000, unless another date, time or place is agreed to in writing by
the
parties hereto.
1.03 Effective
Time of Merger.
As soon
as practicable following the satisfaction or waiver of the conditions set forth
in Article VI, the parties shall file articles of merger (the “Articles
of Merger”)
in the
form attached hereto as Exhibit
A,
to
which shall be attached the Amended and Restated Articles of Incorporation
of
Public Company, reflecting the name change to Panda Ethanol, Inc., in
substantially the form included as the second page of Exhibit A,
executed in accordance with the relevant provisions of the Nevada Merger
Statute, and shall make all other filings or recordings required under the
Merger Statutes. The Merger shall become effective at such time as the Articles
of Merger are duly filed with the Secretary of State of Nevada and the
certificate of merger (the “Certificate
of Merger”)
is
duly filed with the Secretary of State of Delaware, or at such other time as
Cirracor and the Company shall agree should be specified in the Articles of
Merger and the Certificate of Merger (the time the Merger becomes effective
being the “Effective
Time of the Merger”).
Cirracor and the Company shall use reasonable efforts to have the Closing Date
and the Effective Time of the Merger to be the same day.
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1.04 Effects
of the Merger.
The
Merger shall have the effects set forth in the applicable provisions of the
Delaware General Corporation Law and Nevada General Corporation
Law.
1.05 Articles
of Incorporation; Bylaws; Purposes.
(a) The
Articles of Incorporation of the Public Company shall be the Amended and
Restated Articles of Incorporation attached to the Articles of Merger until
thereafter changed or amended as provided therein or by applicable
law.
(b) The
Bylaws of the Public Company shall be the Bylaws attached hereto as Exhibit
B
until
thereafter changed or amended as provided therein or by applicable
law.
(c) The
purposes of the Public Company and the total number of its authorized capital
stock shall be as set forth in its Articles of Incorporation until such time
as
such purposes and such number may be amended as provided in the Articles of
Incorporation of the Public Company and by applicable law.
1.06 Directors.
The
directors of the Company at the Effective Time of the Merger shall be the
directors of the Public Company, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified,
as
the case may be.
1.07 Officers.
The
officers of the Company at the Effective Time of the Merger shall be the
officers of the Public Company, until the earlier of their resignation or
removal or until their respective successors are duly elected and qualified,
as
the case may be.
ARTICLE
II
Effect
of the Merger on the
Capital
Stock of the Constituent Corporations
2.01 Effect
on Capital Stock.
As of
the Effective Time of the Merger, by virtue of the Merger and without any action
on the part of the holders of shares of Company Stock or of Cirracor
Stock:
(a) Stock
of Cirracor.
Provided that, immediately prior to the Effective Time of the Merger, Cirracor
shall have effected a reverse stock split whereby each share of Cirracor Stock
outstanding shall be converted into 0.340885 of a share of Cirracor Stock (the
“Reverse
Stock Split”),
each
share of Cirracor Stock issued and outstanding immediately prior to the
Effective Time of the Merger shall remain one share of Public Company Stock
(“Cirracor
Exchange Ratio”)
amounting in the aggregate to 1,200,000 shares, and all such shares taken
together shall represent four percent (4%) of the issued and outstanding Public
Company Stock. Certificates representing shares of Public Company Stock shall
be
issued in exchange for certificates representing that number of shares of
Cirracor Stock as is determined by multiplying a share of Cirracor Stock by
the
Cirracor Exchange Ratio.
(b) Conversion
of Company Stock.
Except
as otherwise provided herein, each issued and outstanding share of Company
Stock
shall be converted into one share of Public Company Stock (“Company
Exchange Ratio”).
Certificates representing shares of Public Company Stock shall be issued in
exchange for certificates representing the number of shares of Company Stock,
on
a one-for-one basis.
(c) Dissenting
Shares.
Notwithstanding anything in this Merger Agreement to the contrary, shares of
Company Stock or Cirracor Stock issued and outstanding immediately prior to
the
Effective Time of the Merger held by a holder (if any) who has the right to
demand payment for and an appraisal of such shares in accordance with the Merger
Statutes (“Dissenting Shares”) shall not be converted into a right to receive
merger consideration unless such holder fails to perfect or otherwise loses
such
holder's right to such payment or appraisal, if any. If, after the Effective
Time of the Merger, such holder fails to perfect or loses any such right to
appraisal, each such share of such holder shall be treated as a share that
had
been converted as of the Effective Time of the Merger into the right to receive
merger consideration in accordance with this Section 2.01. The parties shall
give prompt notice to Cirracor and the Company of any demands received by either
party for appraisal of shares of Common Stock, and Cirracor and the Company
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The parties shall not, except with the prior written
consent of each other, make any payment with respect to, or settle or offer
to
settle, any such demands.
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(d) Cancellation
and Retirement of Company.
As of
the Effective Time of the Merger, all shares of Company Stock issued and
outstanding immediately prior to the Effective Time of the Merger, shall no
longer be outstanding and shall automatically be cancelled and retired and
shall
cease to exist, and each holder of a certificate representing any such shares
of
Company Stock shall cease to have any rights with respect thereto, except the
right to receive certificates representing the applicable merger consideration
to be issued in consideration therefore upon surrender of such certificates
and
the right of holders of Dissenting Shares to receive payment for their
Dissenting Shares.
2.02 Exchange
Ratio.
The
“Exchange Ratio” is defined as follows: The Exchange Ratio with respect to the
Cirracor Stock is set forth in Section 2.01(a) and is referred to as the
Cirracor Exchange Ratio. The Exchange Ratio with respect to the Company Stock
is
set forth in Section 2.01(b) and is referred to as the Company Exchange
Ratio.
2.03 Pre-Merger
Increase in Issued and Outstanding Shares of Company Capital
Stock.
Prior
to the Closing, Cirracor agrees that the Company may issue and sell to
institutional or accredited investors up to approximately $110,815,000 of Common
Stock at a price of $8.83 per share. The parties also agree that, effective
as
of immediately after the Effective Time of the Merger and for a period of
twenty-four (24) months thereafter, no more than fifteen percent (15%) of the
shares outstanding as of the Effective Time of the Merger shall be reserved
for
grant or issuance under any stock option plans.
2.04 Surrender
of Certificates.
(a) Exchange
Agent.
As of
the Effective Time of the Merger, the Public Company shall deposit with such
bank or trust company as may be designated by the Company and reasonably
acceptable to Cirracor (the “Exchange
Agent”),
for
the benefit of the holders of shares of Cirracor Stock and Company Stock, for
exchange in accordance with this Section 2.04, through the Exchange Agent,
Public Company Stock issuable pursuant to Section 2.01(a) and (b) in exchange
for outstanding shares of Cirracor Stock and Company Stock. At the time of
such
deposit, the Public Company shall irrevocably instruct the Exchange Agent to
deliver the Public Company Stock to Cirracor’s stockholders and Company’s
stockholders after the Effective Time of the Merger in accordance with the
procedures set forth in this Section 2.04, subject to Sections 2.04 (f) and
(g).
(b) Exchange
Procedures.
As soon
as reasonably practicable after the Effective Time of the Merger, the Exchange
Agent shall mail to each holder of record of Cirracor Stock and Company Stock,
a
letter of transmittal, with instructions for use in surrendering the Cirracor
Stock for Public Company Stock pursuant to the Cirracor Exchange Ratio and
surrendering the Company Stock for Public Company Stock pursuant to the Company
Exchange Ratio. Upon surrender of a certificate representing Cirracor Stock
or
Company Stock for cancellation to the Exchange Agent, together with such letter
of transmittal, duly completed and validly executed, and such other documents
as
may reasonably be required by the Exchange Agent, the holder of such certificate
of Cirracor Stock or Company Stock shall be entitled to receive in exchange
therefor that number of whole shares of Public Company Stock in accordance
with
the Cirracor Exchange Ratio or the Company Exchange Ratio, as applicable, and
the certificate of Cirracor Stock or Company Stock so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Cirracor
Stock
or Company Stock that is not registered in the transfer records of Cirracor
or
the Company, a certificate evidencing the proper number of shares of Public
Company may be issued in exchange therefor to a person other than the person
in
whose name the certificate so surrendered is registered if such certificate
shall be properly endorsed or otherwise be in proper form for transfer and
the
person requesting such issuance shall pay any transfer or other taxes required
by reason of the issuance of shares of Public Company Stock to a person other
than the registered holder of such certificate or establish to the satisfaction
of Public Company that such tax has been paid or is not applicable. Until
surrendered as contemplated by this Section 2.04(b), each certificate of
Cirracor Stock and Company Stock shall be deemed at any time after the Effective
Time of the Merger to represent only the right to receive upon such surrender
Public Company Stock pursuant to the Cirracor Exchange Ratio or the Company
Exchange Ratio, plus certain dividends or other distributions in accordance
with
Section 2.04(c).
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(c) Distributions
with Respect to Unexchanged Shares.
No
dividends or other distributions declared or made with respect to shares of
Public Company Stock with a record date after the Effective Time of the Merger
shall be paid to the holder of any unsurrendered certificate with respect to
Cirracor Stock or Company Stock represented thereby, if any, and all such
dividends and other distributions shall be paid by the Public Company to the
Exchange Agent, until the surrender of such certificate in accordance herewith.
Subject to the effect of applicable escheat or similar laws, following surrender
of any such certificate there shall be paid to the holder of whole Public
Company Shares issued in exchange therefor, without interest, (i) at the time
of
such surrender, the amount of dividends or other distributions with a record
date after the Effective Time of the Merger theretofore paid with respect to
such whole Public Company Shares and (ii) at the appropriate payment date,
the
amount of dividends or other distributions with a record date after the
Effective Time of the Merger but prior to such surrender and with a payment
date
subsequent to such surrender payable with respect to such whole Public Company
Shares.
(d) No
Further Ownership Rights.
All
certificates evidencing Public Company Stock issued (including any dividends
or
other distributions paid pursuant to Section 2.04(c)) shall be deemed to have
been issued and paid in full satisfaction of all rights pertaining to the shares
of Cirracor Stock or Company Stock, as applicable, formerly represented by
such
certificates. At the close of business on the day on which the Effective Time
of
the Merger occurs, the stock transfer books of Cirracor and the Company shall
be
closed, and there shall be no further registration of transfers on the stock
transfer books of the Cirracor or the Company of the shares of Cirracor Stock
or
Company Stock, as applicable, that were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
certificates of Cirracor Stock or Company Stock are presented to the Public
Company or the Exchange Agent for transfer or any other reason, they shall
be
canceled and exchanged as provided herewith.
(e) Fractional
Shares.
No
fractional shares of Public Company Stock shall be issued in the Merger. The
aggregate merger consideration to be issued to the holder of a certificate
previously evidencing Cirracor Stock or Company Stock shall be rounded up to
the
nearest whole share of Public Company Stock.
(f) Termination
of Exchange of Shares.
Any
portion of the Cirracor Stock or Company Stock (and any dividends or
distributions thereon) that remain undistributed to the holders of the
certificates for six months after the Effective Time of the Merger shall be
delivered to the Public Company, upon demand, and any holders of the
certificates who have not theretofore complied with this Article II shall
thereafter look only to the Public Company for, and, subject to Section 2.04(g),
the Public Company shall remain liable for payment of their claim for Public
Company Stock pursuant to the Cirracor Exchange Ratio or the Company Exchange
Ratio, as applicable, certain dividends and other distributions in accordance
with Section 2.05(c).
(g) No
Liability.
Notwithstanding anything to the contrary in this Section
2.04,
none of the Exchange Agent, the Public Company or any party to this Merger
Agreement shall be liable to a holder of Cirracor Stock or Company Stock for
any
amount properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(h) Lost,
Stolen or Destroyed Company Certificate.
In the
event any certificates of Cirracor Stock or Company Stock shall have been lost,
stolen or destroyed, the Exchange Agent shall issue in exchange for such lost,
stolen or destroyed certificate, upon the making of an affidavit and indemnity
of that fact by the holder thereof in a form that is reasonably acceptable
to
the Exchange Agent, the number of Public Company Stock as required pursuant
to
the Cirracor Exchange Ratio or the Company Exchange Ratio, as applicable;
provided, however, that the Public Company may, in its reasonably commercial
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificates to deliver a bond in such
sum as it may reasonably direct against any claim that may be made against
the
Public Company or the Exchange Agent with respect to the certificates alleged
to
have been lost, stolen or destroyed.
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ARTICLE
III
Representations
and Warranties
3.01 Representations
and Warranties of the Company.
Except
as set forth in the disclosure schedule delivered to Cirracor and the Cirracor
Stockholder by the Company at the time of the execution of this Merger Agreement
(the “Company
Disclosure Schedule”),
or a
certain schedule included in the Company Disclosure Schedule, as of the date
of
this Merger Agreement and as of the Closing Date, the Company represents and
warrants to Cirracor and the Cirracor Stockholder as follows:
(a) Organization,
Standing and Corporate Power.
The
Company is duly organized, validly existing and in good standing under the
laws
of the State of Delaware and has the requisite corporate power and authority
to
carry on its business as now being conducted. The Company is duly qualified
or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not have a material adverse effect (as defined in Section
9.02)
with respect to the Company. Panda Hereford Ethanol L.P. (“Panda
Hereford”)
is a
Company Subsidiary and is duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite partnership power
and authority to carry on its business as now being conducted. Panda Hereford
is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing
of
its properties makes such qualification or licensing necessary, other than
in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect
(as
defined in Section 9.02) with respect to the Company. Attached as Schedule
3.01(a)
of the
Company Disclosure Schedule are complete and correct copies of the Certificate
of Incorporation and Bylaws of the Company.
(b) Subsidiaries.
The
only direct or indirect subsidiaries of the Company (each, a “Company
Subsidiary”
and,
collectively, the “Company
Subsidiaries”)
are
listed in Schedule
3.01(b)
of the
Company Disclosure Schedule. All the outstanding shares of capital stock of
each
such Company Subsidiary which is a corporation have been validly issued and
are
fully paid and nonassessable and, except as set forth in Schedule 3.01(b)
of the
Company Disclosure Schedule, all ownership interests in Company Subsidiaries
are
owned (of record and beneficially) by the Company, free and clear of all Liens.
Except for the capital stock, limited liability company interests or partnership
interests of the Company Subsidiaries, the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, business association, joint venture or other entity.
(c) Capital
Structure.
The
authorized capital stock of the Company is as set forth in the Cap Table
attached hereto as Exhibit
C.
Except
as set forth in Exhibit
C,
as of
the date hereof no shares of capital stock or other equity securities of the
Company are issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of the Company are duly authorized, validly issued, fully
paid
and nonassessable and not subject to preemptive rights. There are no outstanding
bonds, debentures, notes or other indebtedness or other securities of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of
the
Company may vote. Except as set forth in Exhibit
C,
there
are no outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company is
a
party or by which it is bound obligating the Company to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock
or
other equity or voting securities of the Company or obligating the Company
to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. There are no
outstanding contractual obligations, commitments, understandings or arrangements
of the Company to repurchase, redeem or otherwise acquire or make any payment
in
respect of any shares of capital stock of the Company. Except as set forth
on
Schedule
3.01(c)
of the
Company Disclosure Schedule, there are no agreements or arrangements pursuant
to
which the Company is or could be required to register shares of Company Stock
or
other securities under the Securities Act of 1933, as amended (the “Securities
Act”)
or
other agreements or arrangements with or among any security holders of the
Company with respect to securities of the Company.
5
(d) Authority;
Noncontravention.
The
Company has the requisite corporate and other power and authority to enter
into
this Merger Agreement and to consummate the Merger. Subject to obtaining Company
Stockholder Approval (as defined in Section 3.01(m)), the execution and delivery
of this Merger Agreement by the Company and the consummation by the Company
of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Merger Agreement has been
duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law. The execution and delivery of this Merger Agreement do
not,
and the consummation of the transactions contemplated by this Merger Agreement
and compliance with the provisions hereof will not, conflict with, or result
in
any breach or violation of, or default (with or without notice or lapse of
time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of or “put” right with respect to any obligation or to loss of a
material benefit under, or result in the creation of any lien upon any of the
properties or assets of the Company under, (i) the Certificate of Incorporation
or Bylaws of the Company, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to the Company, its properties or assets, or
(iii) subject to the governmental filings and other matters referred to in
the
following sentence, any judgment, order, decree, statute, law, ordinance, rule,
regulation or arbitration award applicable to the Company, its properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any federal, state or local government
or any court, administrative agency or commission or other governmental
authority, agency, domestic or foreign (a “Governmental
Entity”),
is
required by or with respect to the Company in connection with the execution
and
delivery of this Merger Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except, with respect to this
Merger Agreement, for the filing of the Certificate of Merger with the Secretary
of State of Delaware by the Company and the filing of the Articles of Merger
with the Secretary of State of Nevada by Cirracor, and except where the failure
to have such consent, approval, order or authorization of, or registration,
declaration or filing with, or notice to, any Governmental Entity would not
have
a material adverse effect on the Company.
(e) Absence
of Certain Changes or Events.
Except
as set forth on Schedule
3.01(e)
of the
Company Disclosure Schedule, since December 31, 2005 with respect to Panda
Hereford, there is not and has not been: (i) any material adverse change with
respect to Panda Hereford; (ii) any condition, event or occurrence which
individually or in the aggregate could reasonably be expected to have a material
adverse effect or give rise to a material adverse change with respect to Panda
Hereford; (iii) any event which, if it had taken place following the execution
of this Merger Agreement, would not have been permitted by Section 4.01 without
prior consent of Cirracor; or (iv) any condition, event or occurrence which
could reasonably be expected to prevent, hinder or materially delay the ability
of the Company to consummate the transactions contemplated by this Merger
Agreement. The Company was formed on May 1, 2006.
(f) Litigation;
Labor Matters; Compliance with Laws.
(i) There
is
no suit, action or proceeding or investigation pending or, to the best of the
Company’s knowledge, threatened against or affecting the Company or Panda
Hereford that, individually or in the aggregate, could reasonably be expected
to
have a material adverse effect with respect to the Company or Panda Hereford
or
prevent, hinder or materially delay the ability of the Company to consummate
the
transactions contemplated by this Merger Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or Panda Hereford having, or which, insofar
as
reasonably could be foreseen by the Company, in the future could have, any
such
effect.
(ii) Neither
the Company nor Panda Hereford is a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is it the subject of any proceeding asserting
that it has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment
nor
is there any strike, work stoppage or other labor dispute involving it pending
or, to its the best of its knowledge, threatened, any of which could have a
material adverse effect with respect to the Company or Panda
Hereford.
(iii) The
conduct of the business of the Company and Panda Hereford complies in all
material respects with all statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees or arbitration awards applicable thereto that,
individually or in the aggregate, are material to the conduct of the Company’s
or Panda Hereford’s business, as applicable.
6
(g) Tax
Returns and Tax Payments.
Each of
the Company and Panda Hereford have timely filed or timely filed an extension
for all Tax Returns required to be filed by it, has paid all Taxes shown thereon
to be due and, to the best of the Company’s knowledge, has provided adequate
reserves in its financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns. No material claim for unpaid
Taxes has been made or become a lien against the property of the Company or
Panda Hereford or is being asserted against the Company or Panda Hereford,
no
audit of any Tax Return of the Company or Panda Hereford is being conducted
by a
tax authority, and no extension of the statute of limitations on the assessment
of any Taxes has been granted by the Company or Panda Hereford and is currently
in effect. As used herein, “taxes” shall mean all taxes of any kind, including,
without limitation, those on or measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium value added,
property or windfall profits taxes, customs, duties or similar fees,,
assessments or charges of any kind whatsoever, together with any interest and
any penalties, additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign. As used herein, “Tax Return” shall
mean any return, report or statement required to be filed with any governmental
authority with respect to Taxes.
(h) Environmental
Matters.
To its
knowledge, except for noncompliance that would not reasonably be expected to
have a material adverse effect on the Company or Panda Hereford, the Company
and
Panda Hereford are in compliance with all applicable Environmental Laws.
“Environmental Laws” means all applicable federal, state and local statutes,
rules, regulations, ordinances, orders, and decrees relating to the protection
of the public health, welfare, and environment including, without limitation,
those relating to the storage, handling, and use of chemicals and other
hazardous materials (including without limitation petroleum or any fraction
thereof) or other materials regulated because of their effect or potential
effect on human health and the environment, those relating to the Release,
generation, processing, treatment, storage, transportation, investigation,
removal, remediation or other management of waste materials of any kind, and
those relating to the protection of environmentally sensitive areas.
“Release”
shall
mean release, disposal, spilling, leaking, migration, pouring, emission,
emptying, discharge, injection, escape, transmission, leaching, or
dumping.
(i) Material
Contracts.
The
Company has provided or made available to Cirracor copies of all material
contracts, agreements, commitments, arrangements, leases, policies or other
instruments to which it or Panda Hereford is a party or by which it or Panda
Hereford is bound (“Material
Contracts”)
all of
which are listed on Schedule
3.01(i)
of the
Company Disclosure Schedule. Neither the Company nor Panda Hereford is , nor
have either of them received any notice or has any knowledge that any other
party is, in default in any respect under any Material Contract; and, to the
best of the Company’s knowledge, there has not occurred any event that with the
lapse of time or the giving of notice or both would constitute such a material
default. For purposes of this Merger Agreement, a Material Contract means any
contract, agreement or commitment to which the Company is a party (i) with
expected receipts or expenditures in excess of $100,000, (ii) requiring the
Company to indemnify any person, (iii) granting exclusive rights to any party,
or (iv) evidencing indebtedness for borrowed or loaned money in excess of
$100,000 or more, including guarantees of such indebtedness.
(j) Properties.
Each of
the Company and Panda Hereford has good title to all the tangible properties
and
tangible assets reflected in the latest balance sheet of the Company or Panda
Hereford as being owned by the Company or Panda Hereford or acquired after
the
date thereof which are, individually or in the aggregate, material to the
Company's business or Panda Hereford’s business (except properties sold or
otherwise disposed of since the date thereof in the ordinary course of
business), free and clear of all liens.
(k) Patents
and Trademarks.
The
Company and Panda Hereford have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
trade secrets, inventions, copyrights, licenses and other intellectual property
rights and similar rights necessary or material for use in connection with
their
respective businesses and which the failure to so have could have a material
adverse effect (collectively, the “Intellectual
Property Rights”).
Neither the Company nor Panda Hereford has received notice (written or
otherwise) that the Intellectual Property Rights used by the Company or Panda
Hereford violates or infringes upon the rights of any person. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another person of any of the Intellectual
Property Rights. The Company and Panda Hereford have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of the
Intellectual Property Rights, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect.
7
(l) Board
Recommendation.
The
Board of Directors of the Company has unanimously determined that the terms
of
the Merger are fair to and in the best interests of the stockholders of the
Company and has recommended that the holders of the shares of Company Stock
approve the Merger.
(m) Required
Company Stockholder Approval.
The
affirmative vote or consent of a majority of the issued and outstanding shares
of the Company Stock is the only vote or consent of the holders of any class
of
the Company’s securities necessary to approve the Merger (the “Company
Stockholder Approval”).
3.02 Representations
and Warranties of Cirracor and the Cirracor Stockholder.
Cirracor and the Cirracor Stockholder solely as to its status as set forth
in
Section 3.02(a), its authority as set forth in Section 3.02(d) and its
acquisition of Cirracor Stock as set forth in Section 3.02(u) but not as to
any
matter pertaining to Cirracor represent and warrant as of the date of this
Merger Agreement and as of the Closing Date to the Company as
follows:
(a) Organization,
Standing and Corporate Power.
Cirracor is duly organized, validly existing and in good standing under the
laws
of the State of Nevada, and has the requisite corporate power and authority
to
carry on its business as now being conducted. Cirracor is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not have a material adverse effect with respect to Cirracor.
Cirracor has delivered to the Company complete and correct copies of its
Articles of Incorporation and Bylaws and such Articles of Incorporation (or
other organization documents) and Bylaws of Cirracor are included in
Schedule 3.02(a)
of the
disclosure statement delivered to the Company by Cirracor at the time of the
execution of this Merger Agreement (the “Cirracor Disclosure Schedule”). The
Cirracor Stockholder is duly organized, validly existing and in good standing
under the laws of the State of Delaware as is applicable, and has the requisite
corporate power and authority to carry on its business as now being conducted.
(b) Subsidiaries.
The
only direct or indirect subsidiaries of Cirracor (each, a “Cirracor
Subsidiary”
and,
collectively, the “Cirracor
Subsidiaries”)
are
listed in Schedule
3.02(b)
of the
Cirracor Disclosure Schedule. All the outstanding shares of capital stock of
each such Cirracor Subsidiary which is a corporation have been validly issued
and are fully paid and nonassessable and, except as set forth in Schedule 3.02(b)
of the
Cirracor Disclosure Schedule, are owned (of record and beneficially) by
Cirracor, free and clear of all Liens. Except for the capital stock of its
subsidiaries, all of which are corporations, Cirracor does not own, directly
or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, business association, joint venture or other entity.
(c) Capital
Structure.
As of
the date hereof, the authorized capital stock of Cirracor consists of 50,000,000
shares of Cirracor Stock, $0.001 par value, of which 3,520,250 shares of
Cirracor Stock are issued and outstanding. As of the date of this Merger
Agreement, the Cirracor Stockholder owns (and at Closing will own at least)
2,500,000 shares of Cirracor Stock which are and, after giving effect to the
Reverse Stock Split, at the Effective Time of the Merger will be free and clear
of all liens, claims and encumbrances. As of the Effective Time of the Merger,
the authorized capital stock of Cirracor Common Stock shall consist of
50,000,000 shares of Cirracor Stock, $0.001 par value, of which 1,200,000 shares
of Cirracor Stock shall be issued and outstanding. No shares of Cirracor Stock
are or shall be issuable upon the exercise of outstanding warrants, convertible
notes and options, and no shares of Cirracor Stock are or shall be reserved
for
issuance pursuant to Cirracor stock plans or any other plan, contract or
obligation. 5,000,000 shares of Cirracor Preferred Stock, $0.001 par value,
are
authorized, none of which is or shall be issued and outstanding. Except as
set
forth above, no shares of capital stock or other equity securities of Cirracor
or shall be issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of Cirracor are, and all shares which may be issued pursuant
to
this Merger Agreement shall be, when issued, duly authorized, validly issued,
fully paid and nonassessable and, not subject to preemptive rights, and issued
in compliance with all applicable state and federal laws concerning the issuance
of securities. Except as set forth in Schedule
3.02(c)
of the
Cirracor Disclosure Schedule, there are no outstanding bonds, debentures, notes
or other indebtedness or other securities of Cirracor having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of Cirracor may vote. Except as set forth
above, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Cirracor or any of its subsidiaries is a party or by which any of them is bound
obligating Cirracor or any its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
equity securities of Cirracor or any of its subsidiaries or obligating Cirracor
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity securities
of Cirracor or any of its subsidiaries or obligating Cirracor or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking. There
are no outstanding contractual obligations, commitments, understandings or
arrangements of Cirracor or any of its subsidiaries to repurchase, redeem or
otherwise acquire or make any payment in respect of any shares of capital stock
of Cirracor or any of its subsidiaries.
8
(d) Authority;
Noncontravention.
Cirracor and the Cirracor Stockholder have all requisite corporate authority
to
enter into this Merger Agreement and to consummate the transactions contemplated
by this Merger Agreement. Subject to obtaining the Cirracor Stockholder Approval
(as defined in Section 3.02(y) with regard to Cirracor, the execution and
delivery of this Merger Agreement by Cirracor and the Cirracor Stockholder
and
the consummation by Cirracor and the Cirracor Stockholder of the transactions
contemplated by this Merger Agreement have been (or at Closing will have been)
duly authorized by all necessary corporate action on the part of Cirracor or
the
Cirracor Stockholder. This Merger Agreement has been duly executed and delivered
by and constitutes a valid and binding obligation of Cirracor and Cirracor
Stockholder, enforceable against Cirracor and Cirracor Stockholder, as
applicable, in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law. The execution and delivery
of
this Merger Agreement do not, and the consummation of the transactions
contemplated by this Merger Agreement and compliance with the provisions of
this
Merger Agreement will not, conflict with, or result in any breach or violation
of, or default (with or without notice or lapse of time, or both) under, or
give
rise to a right of termination, cancellation or acceleration of or “put” right
with respect to any obligation or to loss of a material benefit under, or result
in the creation of any lien upon any of the properties or assets of Cirracor
or
any of its subsidiaries or the Cirracor Stockholder under, (i) the Articles of
Incorporation or bylaws of Cirracor or the comparable charter or organizational
documents of any Cirracor Subsidiary or the Cirracor Stockholder, (ii) any
loan
or credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Cirracor,
any
Cirracor Subsidiary, the Cirracor Stockholder or their respective properties
or
assets, or (iii) subject to the governmental filings and other matters referred
to in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule, regulation or arbitration award applicable to Cirracor, any
Cirracor Subsidiary, Cirracor Stockholder or their respective properties or
assets, other than, in the case of clauses (ii) and (iii), any such conflicts,
breaches, violations, defaults, rights, losses or liens that individually or
in
the aggregate could not have a material adverse effect with respect to Cirracor
or the Cirracor Stockholder or could not prevent, hinder or materially delay
the
ability of Cirracor or the Cirracor Stockholder to consummate the transactions
contemplated by this Merger Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to,
any
Governmental Entity is required by or with respect to Cirracor, any other
Cirracor Subsidiary or the Cirracor Stockholder in connection with the execution
and delivery of this Merger Agreement by Cirracor or the Cirracor Stockholder
or
the consummation by Cirracor or the Cirracor Stockholder of any of the
transactions contemplated by this Merger Agreement, except for the filing of
the
Articles of Merger with the Secretary of State of Nevada by Cirracor and the
filing of the Certificate of Merger with the Secretary of State of Delaware
by
the Company and such other consents, approvals, orders, authorizations,
registrations, declarations, filings or notices as may be required under the
“blue sky” laws of various states and except where the failure to have such
consent, approval, order or authorization of, or registration, declaration
or
filing with, or notice to, any Governmental Entity would not have a material
adverse effect on Cirracor or the Cirracor Stockholder.
(e) S.E.C.
Documents; Undisclosed Liabilities.
Except
as
set
forth on Schedule
3.02(e)
of the
Cirracor Disclosure Schedule,
Cirracor has timely filed all reports, schedules, forms, statements and other
documents as required by the Securities and Exchange Commission (the
“S.E.C.”)
and
Cirracor has delivered or made available to the Company all reports, schedules,
forms, statements and other documents filed with the S.E.C. (collectively,
and
in each case including all exhibits and schedules thereto and documents
incorporated by reference therein, the “Cirracor
S.E.C. Documents”).
As of
their respective dates, the Cirracor S.E.C. Documents complied in all material
respects with the requirements of the Securities Act or the Securities Exchange
Act of 1934 (the “Exchange Act”), as the case may be, and the rules and
regulations of the S.E.C. promulgated thereunder applicable to such Cirracor
S.E.C. Documents, and none of the Cirracor S.E.C. Documents (including any
and
all consolidated financial statements included therein) as of such date
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent revised or superseded by a subsequent filing
with the S.E.C. (a copy of which has been provided to the Company prior to
the
date of this Merger Agreement), none of the Cirracor S.E.C. Documents contains
any untrue statement of a material fact or omits to state any material fact
or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of
Cirracor included in such Cirracor S.E.C. Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the S.E.C. with respect thereto, have been prepared
in
accordance with generally accepted accounting principles (except, in the case
of
unaudited consolidated quarterly statements, as permitted by Form 10-QSB of
the
S.E.C.) applied on a consistent basis during the periods involved (except as
may
be indicated in the notes thereto) and fairly present the consolidated financial
position of Cirracor and its consolidated subsidiaries as of the dates thereof
and the consolidated results of operations and changes in cash flows for the
periods then ended (subject, in the case of unaudited quarterly statements,
to
normal year-end audit adjustments as determined by Cirracor’s independent
accountants). Neither Cirracor nor any Cirracor Subsidiary has, and at the
Effective Time of the Merger neither Cirracor nor any of such Cirracor
Subsidiaries shall have, any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) which, individually or in the
aggregate, exceed $100,000, not including expenses incurred pursuant to Section
5.05 below.
9
(f) Absence
of Certain Changes or Events.
Except
as disclosed in the Cirracor S.E.C. Documents, since September 30, 2005,
Cirracor has conducted its business only in the ordinary course consistent
with
past practice in light of its current business circumstances, and there is
not
and has not been: (i) any material adverse change with respect to Cirracor;
(ii)
any condition, event or occurrence which, individually or in the aggregate,
could reasonably be expected to have a material adverse effect or give rise
to a
material adverse change with respect to Cirracor; (iii) any event which, if
it
had taken place following the execution of this Merger Agreement, would not
have
been permitted by Section 4.01 without the prior consent of the Company; or
(iv) any condition, event or occurrence which could reasonably be expected
to
prevent, hinder or materially delay the ability of Cirracor to consummate the
transactions contemplated by this Merger Agreement.
(g) Litigation;
Labor Matters; Compliance with Laws.
(i) There
is
no suit, action or proceeding or investigation pending or, to the best of
Cirracor’s knowledge, threatened against or affecting Cirracor that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect with respect to Cirracor or prevent, hinder or
materially delay the ability of Cirracor to consummate the transactions
contemplated by this Merger Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against Cirracor having, or which, insofar as reasonably could be foreseen
by
Cirracor, in the future could have, any such effect.
(ii) Cirracor
does not have any employees and is not a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization, nor is it the subject of any proceeding asserting
that it has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions of employment
nor
is there any strike, work stoppage or other labor dispute involving it pending
or, to its the best of its knowledge, threatened, any of which could have a
material adverse effect with respect to Cirracor.
(iii) Cirracor
is not, and previously has not been, in violation in any material respect of
any
material statute, law, regulation, ordinance, rule, judgment, order, decree
or
arbitration award applicable to Cirracor or its business, including applicable
securities laws and regulations. Cirracor has not received notice of any
noncompliance with the foregoing, nor is it aware of any claims or threatened
claims in connection therewith. Cirracor has never conducted any operations
or
engaged in any business transactions whatsoever other than as set forth in
the
reports Cirracor has previously filed with the SEC.
10
(h) Benefit
Plans.
Cirracor is not a party to any collective bargaining agreement or any bonus,
pension, profit sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) under which Cirracor currently
has an obligation to provide benefits to any current or former employee, officer
or director of Cirracor.
(i) Certain
Employee Payments;
ERISA.
Cirracor is not a party to any employment agreement which could result in the
payment to any current, former or future director or employee of Cirracor of
any
money or other property or rights or accelerate or provide any other rights
or
benefits to any such employee or director as a result of the transactions
contemplated by this Merger Agreement, whether or not (i) such payment,
acceleration or provision would constitute a “parachute payment” (within the
meaning of Section 280G of the Code), or (ii) some other subsequent action
or
event would be required to cause such payment, acceleration or provision to
be
triggered. Cirracor does not maintain or have any obligation to make
contributions to, any employee benefit plan within the meaning of
Section (e)(3) of the United States Employee Retirement Income
Security Act of 1974, as amended or any other retirement, profit sharing, stock
option, stock bonus or employee benefit plan.
(j) Tax
Returns and Tax Payments.
Except
as set forth on Schedule
3.02(j)
of the
Cirracor Disclosure Schedule, Cirracor has timely filed all Tax Returns required
to be filed by it, has paid all Taxes shown thereon to be due and, to the best
of Cirracor’s knowledge, has provided adequate reserves in its financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any returns. No material claim for unpaid Taxes has been made or become
a
lien against the property of Cirracor or is being asserted against Cirracor,
no
audit of any Tax Return of Cirracor is being conducted by a tax authority,
and
no extension of the statute of limitations on the assessment of any Taxes has
been granted by Cirracor and is currently in effect.
(k) Environmental
Matters.
Without
limiting the foregoing, Cirracor and any other person or entity for whose
conduct Cirracor is legally held responsible are and have been in material
compliance with all applicable Environmental Laws. Neither Cirracor nor any
other person or entity for whose conduct Cirracor is legally responsible, has
(i) received any notice, demand, request for information, or administrative
or other inquiry relating to any alleged violation of an Environmental Law,
any
Release of any Hazardous Substance, or the institution of any suit, action,
claim or proceeding alleging such violation or Release or investigation by
any
governmental authority or any third party of any such Release or alleged
violation, (ii) manufactured, generated, treated, stored, handled,
processed, Released, transported or disposed of any Hazardous Substance on,
under, from or at any of Cirracor’s properties or any other properties,
(iii) become aware or received notice of the Release or disposal of any
Hazardous Substances on, under, to, from or at any of Cirracor’s properties or
any other properties, (iv) become aware or received notice of any actual or
potential material liability on the part of Cirracor relating to any Hazardous
Substance at or arising from any of Cirracor’s operations, properties or any
other properties owned or operated (either presently or in the past) by Cirracor
or any other person for whose conduct Cirracor is legally responsible, or
(v) become aware of or received notice of any actual or potential liability
on the part of Cirracor for the costs of response to or remediation of hazardous
substances at or arising from any properties owned or operated by Cirracor
or
any other person for whose conduct Cirracor is or may be held responsible.
For
purposes of this Merger Agreement, the term “Hazardous Substance” shall mean
materials regulated because of their effect or potential effect on human health
and the environment, and includes, without limitation, “hazardous substances”
and “pollutants or contaminants”, as those terms are defined in any
Environmental Law, petroleum, including any fraction thereof, “natural gas,
natural liquids, liquefied natural gas, or synthetic gas usable for fuel,” any
“solid waste,” or “hazardous waste” as those terms are used in any Environmental
Law any toxic or hazardous materials or substances, asbestos, buried
contaminants, chemicals, flammable explosives, or radioactive materials.
No Environmental Law imposes any obligation upon Cirracor arising out of or
as a
condition to any transaction contemplated hereby, including, without limitation,
any requirement to modify or to transfer any permit or license, any requirement
to file any notice or other submission with any governmental authority, the
placement of any notice, acknowledgment, or covenant in any land records, or
the
modification of or provision of notice under any agreement, consent order,
or
consent decree.
11
(l) Material
Contracts.
Cirracor does not have any Material Contracts to which it is a party or by
which
it is bound.
(m) Properties.
Cirracor neither owns nor leases any real property or other tangible
assets.
(n) Patents
and Trademarks.
Cirracor
and the Cirracor Subsidiaries have, or have rights to use, all Intellectual
Property Rights necessary or material for use in connection with their
respective businesses and which the failure to so have could have a material
adverse effect. Neither Cirracor nor any Cirracor Subsidiary has received notice
(written or otherwise) that the Intellectual Property Rights used by Cirracor
or
any Cirracor Subsidiary violates or infringes upon the rights of any person.
To
the knowledge of Cirracor, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another person of any of the
Intellectual Property Rights. Cirracor and the Cirracor Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of the Intellectual Property Rights, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a material
adverse effect.
(o) No
Brokers. Cirracor
has not employed any investment banker, business consultant, financial advisor,
broker or finder in connection with the transactions contemplated by this Merger
Agreement, or incurred any liability for any investment banking, business
consultancy, financial advisory, brokerage or finders’ fees or commissions in
connection with the transactions contemplated hereby.
(p) Listing
and Maintenance.
Cirracor
has not received notice from the Over-the-Counter Bulletin Board to the effect
that Cirracor is not in compliance with the listing maintenance requirements
of
such trading market. Cirracor is, and has no reason to believe that it will
not
in the foreseeable future continue to be, in compliance with all such listing
and maintenance requirements.
(q) Board
Recommendation.
The
Board of Directors of Cirracor has unanimously determined that the terms of
the
Merger are fair to and in the best interests of the stockholders of Cirracor
and
has recommended that the holders of the shares of Cirracor Stock approve the
Merger.
(r) Financial
Statements.
Cirracor
has delivered to the Company a true and complete copy of its audited financial
statements for the fiscal years ended September 30, 2003, 2004 and 2005, and
the
unaudited financial statements for the interim period ending March 31,
2006 (the “Cirracor
Financial Statements”).
The
Cirracor Financial Statements are complete, accurate and fairly present the
financial condition of Cirracor as of the dates thereof and the results of
its
operations for the periods then ended. There are no material liabilities or
obligations either fixed or contingent not reflected therein as of the dates
thereof, subject to normal year-end adjustments as to unaudited interim periods.
The Cirracor 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 Cirracor as of the dates thereof and the results of its
operations and changes in financial position for the periods then
ended.
(s) Disclosure.
Cirracor
has (and at the Closing 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 Cirracor.
(t) Records.
The
financial records, minute books, and other documents and records of Cirracor
have been delivered to the Company prior to the date hereof. The records and
documents of Cirracor that have been delivered to the Company constitute all
of
the records and documents of Cirracor.
(u) Securities
Laws.
Cirracor has complied with all of the provisions relating to the issuance of
shares, and for the registration thereof, under the Securities Act, other
applicable securities laws, and all applicable blue sky laws in connection
with
any and all of its stock issuance. There are no outstanding, pending or
threatened stop orders or other actions or investigations relating thereto
involving federal and state securities laws. The Cirracor Stockholder complied
with all of the provisions relating to the acquisition of Cirracor Stock under
the Securities Act, other applicable securities law, and all applicable blue
sky
laws in connection with all of the Cirracor Stock acquired by it.
(v) Information
Provided.
All
information regarding Cirracor which has been provided to the Company by
Cirracor or set forth in any document or other communication, disseminated
to
any former, existing or potential stockholders of Cirracor or to the public
or
filed with the S.E.C. or any state securities regulators or authorities was
true, complete, accurate in all material respects at the time it was provided,
was not misleading, and was and is in full compliance with all securities laws
and regulations.
12
(w) No
Undisclosed Liabilities.
There
is no basis for any assertion against Cirracor of any material liabilities
or
obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due or to become due, including, without limitation, any liability
for taxes (including e-commerce sales or other taxes), interest, penalties
and
other charges payable with respect thereto except for up to a maximum of
$100,000 of liabilities plus expenses incurred pursuant to Section 5.05
below. Neither the execution and delivery of this Merger Agreement nor the
consummation of the transactions contemplated hereby will (a) result in any
payment (whether severance pay, unemployment compensation or otherwise) becoming
due from Cirracor to any person or entity, including without limitation any
employee, director, officer or affiliate or former employee, director, officer
or affiliate of Cirracor, (b) increase any benefits otherwise payable to
any person or entity, including without limitation any employee, director,
officer or affiliate or former employee, director, officer or affiliate of
Cirracor, or (c) result in the acceleration of the time of payment or
vesting of any such benefits.
(x) No
Conflict with Company Business.
No
aspect
of Cirracor’s past or present business, operations, or assets is of such a
character as would restrict or otherwise hinder or impair Cirracor from carrying
on the business of the Company as it is presently being conducted by the
Company.
(y)
Required
Cirracor Stockholder Approvals.
The
affirmative vote or consent of a majority of the issued and outstanding shares
of the Cirracor Stock is the only vote or consent required to approve the
Reverse Stock Split and the Merger. (“Cirracor
Stockholder Approval”).
(z) No
Untrue Statement.
No
representation or warranty by Cirracor or Cirracor Stockholder contained in
this
Merger Agreement and no statement contained in any certificate, schedule or
other communication furnished pursuant to or in connection with the provisions
hereof contains or shall contain any untrue statement of a material fact or
omit
to state a material fact necessary in order to make the statements therein
not
misleading. There is no current or prior event or condition of any kind or
character pertaining to Cirracor that may reasonably be expected to have a
material adverse effect on Cirracor or the Company. Except as specifically
indicated elsewhere in this Merger Agreement, all documents delivered by
Cirracor in connection herewith have been and will be complete originals, or
exact copies thereof.
ARTICLE
IV
Covenants
Relating to Conduct of Business Prior to Merger
4.01 Conduct
of Company and Cirracor.
From
the date of this Merger Agreement and until the earlier of the Effective Time
of
the Merger, or until the prior termination of this Merger Agreement, the Company
and Cirracor shall not, and the Cirracor Stockholder shall cause Cirracor not
to, unless mutually agreed to in writing:
(a) engage
in
any transaction except for (i) transactions in the normal and ordinary
course of business of the Company and the Company Subsidiaries, including the
development and financing of current and future ethanol projects pursuant to
the
Company’s and its Subsidiaries’ ethanol project business, (ii) the sale by
the Company of shares of its Common Stock as contemplated herein, (iii) the
assumption of the approximately $99,600,000 term loan, the approximately
$52,000,000 letter of credit and the approximately $5,000,000 working capital
to
be obtained in connection with the proposed project financing for Panda Hereford
(the “Senior
Secured Project Debt”)
and
$35,900,000 term loan obtained in connection with the proposed financing for
Panda Hereford (the “Subordinated
Project Debt”),
subject to future adjustment and (iv) the Reverse Stock Split;
(b) except
as
set forth in Section 4.01(a), sell, assign or otherwise transfer any of their
assets, or cancel or compromise any debts or claims relating to their assets,
other than for fair value, in the ordinary course of business, and consistent
with past practice;
(c) except
as
set forth in Section 4.01(a), fail to use reasonable efforts to preserve intact
their present business organizations, keep available the services of their
employees and preserve its material relationships with customers, suppliers,
licensors, licensees, distributors and others, to the end that its good will
and
on-going business not be impaired prior to the Effective Time of the
Merger;
13
(d) except
as
set forth in Section 4.01(a), suffer or permit any material adverse change
to
occur with respect to the Company and Cirracor or their business or assets;
or
(e) make
any
material change with respect to their business in accounting or bookkeeping
methods, principles or practices, except as required by generally accepted
accounting principles.
ARTICLE
V
Additional
Agreements
5.01 Stockholder
Approval.
Cirracor will, as soon as practicable following the execution of the Merger
Agreement, call, give notice of, convene and hold a meeting of its stockholders
(the “Stockholder
Meeting”)
for
the purpose of obtaining the Cirracor Stockholder Approval. As soon as
practicable following the later of the Company providing Cirracor (i) the
Company’s audited financial statements for use in the Proxy Statement (as
defined below) or (ii) all reasonably necessary information regarding the
Company as required for disclosure in the Proxy Statement, Cirracor shall file
with the S.E.C. a preliminary and final definitive proxy statement (such
preliminary and final definitive proxy statement, and any amendments or
supplements thereto, collectively, the “Proxy Statement”) pursuant to Rule 14a-3
under the Exchange Act, and shall cause the Proxy Statement to be mailed to
the
holders of the Cirracor Stock. Cirracor agrees to provide the Company and its
counsel with any written or oral comments Cirracor or its counsel may receive
from the S.E.C. with respect to such Proxy Statement promptly after the receipt
of such comments. Cirracor shall also provide the Company and its counsel a
reasonable opportunity to review each of the filings relating to the Proxy
Statement prior to its filing with the S.E.C. or dissemination to the holders
of
the Cirracor Stock and to participate, including by way of discussions with
the
S.E.C., in the response of Cirracor to such comments. The Board of Directors
of
Cirracor will take all lawful action to regarding such approval, including,
without limitation, the timely mailing of the Proxy Statement. At the
Stockholder Meeting, the Cirracor Stockholder will vote all of its Cirracor
Stock in favor of the Reverse Stock Split, the Merger Agreement, the Merger
and
the transactions contemplated thereby. The Company will, as promptly as
practicable following the availability of its audited financial statements,
call, give notice of, convene and hold a meeting of its stockholders, or obtain
the written consent of the holders of at least a majority of the outstanding
Company Stock, for the purpose of obtaining the Company Stockholder
Approval.
5.02 Access
to Information; Confidentiality.
(a) Each
of
the Company and Cirracor shall, and shall cause its officers, employees,
counsel, financial advisors and other representatives to, afford to the other
party and its representatives reasonable access during normal business hours
during the period prior to the Effective Time of the Merger to its properties,
books, contracts, commitments, personnel and records and, during such period,
each of the Company and Cirracor shall, and shall cause its officers, employees
and representatives to, furnish promptly to the other party all information
concerning its business, properties, financial condition, operations and
personnel as such other party may from time to time reasonably request. For
the
purposes of determining the accuracy of the representations and warranties
of
the Company and Cirracor set forth herein and compliance by the Company and
Cirracor of their obligations hereunder, during the period prior to the
Effective Time of the Merger, Cirracor shall provide the Company and its
representatives, and the Company shall provide Cirracor and its representatives,
with reasonable access during normal business hours to its properties, books,
contracts, commitments, personnel and records as may be necessary to enable
such
party to confirm the accuracy of the representations and warranties of the
other
party set forth herein and compliance by the Company and Cirracor with its
obligations hereunder, and, during such period, Cirracor shall, and shall cause
the Cirracor Subsidiaries, officers, employees and representatives to, furnish
promptly to the Company upon its request (i) a copy of each report,
schedule, registration statement and other document filed by it during such
period pursuant to the requirements of federal or state securities laws and
(ii)
all other information concerning its business, properties, financial condition,
operations and personnel as such other party may from time to time reasonably
request. Except as required by law, each of the Company, and Cirracor will
hold,
and will cause its respective directors, officers, employees, accountants,
counsel, financial advisors and other representatives and affiliates to hold,
any nonpublic information in confidence.
14
(b) No
investigation pursuant to this Section 5.02 shall affect any representations
or
warranties of the parties herein or the conditions to the obligations of the
parties hereto.
5.03 Reasonable
Best Efforts.
Upon
the terms and subject to the conditions set forth in this Merger Agreement,
each
of the parties agrees to use its reasonable best efforts to take, or cause
to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable
to
consummate and make effective, in the most expeditious manner practicable,
the
Merger and the other transactions contemplated by this Merger Agreement.
Cirracor and the Company will use their reasonable best efforts and cooperate
with one another (i) in promptly determining whether any filings are required
to
be made or consents, approvals, waivers, permits or authorizations are required
to be obtained (or, which if not obtained, would result in an event of default,
termination or acceleration of any agreement or any put right under any
agreement) under any applicable law or regulation or from any governmental
authorities or third parties, including parties to loan agreements or other
debt
instruments and including such consents, approvals, waivers, permits or
authorizations as may be required to transfer the assets and related liabilities
of the Company to the Public Company in the Merger, in connection with the
transactions contemplated by this Merger Agreement, and (ii) in promptly making
any such filings, in furnishing information required in connection therewith
and
in timely seeking to obtain any such consents, approvals, permits or
authorizations. Cirracor and the Company shall mutually cooperate in order
to
facilitate the achievement of the benefits reasonably anticipated from the
Merger.
5.04 Public
Announcements.
Cirracor, the Cirracor Stockholder and the Company will consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Merger Agreement, including making any SEC
filing, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law or court process. The parties agree that the initial press release or
releases to be issued with respect to the transactions contemplated by this
Merger Agreement shall be mutually agreed upon prior to the issuance thereof,
including the initial Form 8-K to be filed announcing that the parties have
entered into the Merger Agreement. Notwithstanding the foregoing, Company may
disclose the contemplated Merger in letters, proxy materials, information
statements, consents and other documents sent to the Company’s stockholders and
Cirracor may disclose the contemplated Merger and related transactions in
letters, proxy statements, information statements, consents and other documents
sent to Cirracor’s stockholders. Cirracor and the Company acknowledge that the
Public Company must file with the S.E.C., within four business days after the
Closing Date, a Current Report on Form 8-K describing the Merger and other
information required by the S.E.C. to be included in such report (the “8-K”).
Prior to the Closing Date, Cirracor, the Cirracor Stockholder and the Company
will cooperate with each other in preparing the 8-K and any amendments thereto,
commonly called the Super 8-K.
5.05 Payments;
Expenses.
All
costs and expenses incurred in connection with this Merger Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses; provided,
however,
Cirracor shall not incur costs and expenses through the Closing Date in excess
of $125,000.
5.06 Directorships.
Upon
the Effective Time of the Merger, the Board of Directors of the Public Company
shall consist of the directors of the Company immediately prior to the Merger,
who each shall be designated to serve until his or her respective successor
is
duly elected and qualified or until he or she resigns, dies or is removed.
5.07 No
Solicitation.
Except
as set forth in Section 2.03, during the term of this Merger Agreement none
of
the Company, Cirracor and the Cirracor Stockholder shall authorize or permit
any
of its officers, directors, agents, representatives, or advisors to (a) solicit,
initiate, execute or encourage or take any action to facilitate the submission
of inquiries, proposals or offers from any person relating to any matter
concerning any merger, consolidation, business combination, recapitalization
or
similar transaction involving the Company or Cirracor (other than the
transaction contemplated by this Merger Agreement) or any other transaction,
the
consummation of which would or could reasonably be expected to impede, interfere
with, prevent or delay the Merger or which would or could be expected to dilute
the benefits to the Company of the transactions contemplated hereby. The
Company, Cirracor and the Cirracor Stockholder will immediately cease and cause
to be terminated any existing activities, discussions and negotiations with
any
parties conducted heretofore with respect to any of the foregoing.
15
ARTICLE
VI
Conditions
Precedent
6.01 Conditions
to Each Party’s Obligation to Effect the Merger.
The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver, on or prior to the Closing Date, of the following
conditions:
(a) Stockholder
Approval.
The
Company Stockholder Approval and the Cirracor Stockholder Approval shall have
been obtained.
(b) OTCBB
Clearance.
The
shares of Public Company Stock shall have been cleared for quotation on the
Over-the-Counter Bulletin Board.
(c) No
Injunctions or Restraints.
No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect.
(d) No
Dissent.
Holders
of no more than five percent (5%) of the issued and outstanding shares of the
Company’s Common Stock shall have asserted their appraisal rights with respect
to the Merger.
(e) Equity
Financing and Debt Issuance.
The
Company shall have closed the planned sale of its Common Stock to institutional
or accredited investors with gross proceeds therefrom of not less than
approximately $110,815,000 and have assumed the Senior Secured Project Debt
and
the Subordinated Project Debt.
(f) Reverse
Stock Split.
The
Reverse Stock Split shall have been approved at the Stockholder Meeting and
effected by all applicable filings pursuant to the Nevada General Corporation
Law.
6.02 Conditions
to Obligations of Cirracor.
The
obligations of Cirracor to effect the Merger are further subject to the
following conditions:
(a) Representations
and Warranties.
The
representations and warranties of the Company set forth in this Merger Agreement
shall be true and correct in all material respects, in each case as of the
date
of this Merger Agreement and as of the Closing Date as though made on and as
of
the Closing Date, except for those representations and warranties which speak
of
an earlier date which shall be true and correct as of such date. Cirracor shall
have received a certificate signed on behalf of the Company by the president
of
the Company to such effect.
(b) Performance
of Obligations of the Company.
The
Company shall have performed the obligations required to be performed by it
under this Merger Agreement at or prior to the Closing Date (except for such
failures to perform as have not had or could not reasonably be expected, either
individually or in the aggregate, to have a material adverse effect with respect
to the Company or adversely affect the ability of the Company to consummate
the
transactions herein contemplated or perform its obligations hereunder), and
Cirracor shall have received a certificate signed on behalf of the Company
by
the president of the Company to such effect.
(c) Consents,
etc.
Cirracor
shall have received evidence, in form and substance reasonably satisfactory
to
it, that such licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and other third parties
as
necessary in connection with the transactions contemplated hereby have been
obtained.
16
(d) No
Litigation.
There
shall not be pending or threatened by any Governmental Entity any suit, action
or proceeding (or by any other person any suit, action or proceeding which
has a
reasonable likelihood of success), (i) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by this Merger Agreement or seeking to obtain from Cirracor or
any
Cirracor Subsidiary any damages that are material in relation to Cirracor and
the Cirracor Subsidiaries taken as a whole, (ii) seeking to prohibit or limit
the ownership or operation by the Company, any Company Subsidiary, Cirracor
or
any Cirracor Subsidiary of any material portion of the business or assets of
the
Company, any Company Subsidiary, Cirracor or any Cirracor Subsidiary, or to
dispose of or hold separate any material portion of the business or assets
of
the Company, any Company Subsidiary, Cirracor or any Cirracor Subsidiary, as
a
result of the Merger or any of the other transactions contemplated by this
Merger Agreement, (iii) seeking to prohibit the Company or any Company
Subsidiary from effectively controlling in any material respect the business
or
operations of the Company, or (iv) that could reasonably be expected to result
in criminal or material uninsured or unindemnifiable personal liability on
the
part of one or more directors of Cirracor.
(e) Filing
of Certificate of Merger.
The
Company shall have filed in the office of the Secretary of State of Delaware
or
other office of each jurisdiction in which such filings are required, all
applications, certificates and other documents, and pay all fees, as shall
be
necessary for the Merger to become effective, including the Certificate of
Merger.
(f) Registration
Rights Agreement.
The
Registration Rights Agreement in substantially the form attached hereto as
Exhibit
D
shall
have been executed by the Public Company regarding the shares of Public Company
Stock acquired in the Merger by the Cirracor Stockholder.
6.03 Conditions
to Obligation of the Company.
The
obligation of the Company to effect the Merger is further subject to the
following conditions:
(a) Representations
and Warranties.
The
representations and warranties of Cirracor and the Cirracor Stockholders set
forth in this Merger Agreement shall be true and correct in all material
respects, in each case as of the date of this Merger Agreement and as of the
Closing Date as though made on, and as of, the Closing Date, except for those
representations and warranties which speak of an earlier date which shall be
true and correct as of such date. The Company shall have received a certificate
signed on behalf of Cirracor by the president of Cirracor and the Cirracor
Stockholder to such effect.
(b) Performance
of Obligations of Cirracor.
Cirracor and the Cirracor Stockholder shall have performed the obligations
required to be performed by them under this Merger Agreement at, or prior to,
the Closing Date (except for such failures to perform as have not had or could
not reasonably be expected, either individually or in the aggregate, to have
a
material adverse effect with respect to Cirracor or adversely affect the ability
of Cirracor to consummate the transactions herein contemplated or perform its
obligations hereunder), and the Company shall have received a certificate signed
on behalf of Cirracor by the president of Cirracor and the Cirracor Stockholder
to such effect.
(c) No
Litigation.
There
shall not be pending or threatened by any Governmental Entity or any other
person any suit, action or proceeding, (i) which could reasonably be expected,
if adversely determined, to result in liability on the part of one or more
directors of the Company, (ii) challenging or seeking to restrain or prohibit
the consummation of the Merger or any of the other transactions contemplated
by
this Merger Agreement, (iii) seeking to prohibit or limit the ownership or
operation by the Company, any Company Subsidiary, Cirracor or any Cirracor
Subsidiary, or to dispose of or hold separate any material portion of the
business or assets of the Company, any Company Subsidiary, Cirracor or of any
Cirracor Subsidiary, as a result of the Merger, (iv) seeking to prohibit the
Company or any Company Subsidiary from effectively controlling in any material
respect the business or operations of the Company or (v) that could reasonably
be expected to result in criminal or material uninsured or unindemnifiable
personal liability on the part of one or more directors of the
Company.
(d) Consents,
etc.
The
Company shall have received evidence, in form and substance reasonably
satisfactory to it, that such licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties as necessary in connection with the transactions contemplated
hereby, or to conduct the business of the Public Company after the Merger,
have
been obtained.
(e) Filing
of Articles of Merger.
Cirracor shall have filed in the office of the Secretary of State of Nevada
or
other office of each jurisdiction in which such filings are required, all
applications, certificates and other documents, and pay all fees, as shall
be
necessary for the Merger to become effective, including the Articles of
Merger.
17
(f) No
Dissent.
Holders
of no more than five percent (5%) of the shares of issued and outstanding
capital stock of Cirracor shall have asserted their dissenters or appraisal
rights with respect to the Merger.
(g) Pledge
Agreement.
The
Pledge Agreement, in substantially the form attached hereto as Exhibit
E
(the
“Pledge
Agreement”),
shall
have been executed by the Cirracor Stockholder and the Collateral Agent (as
defined below) pursuant to which the Cirracor Stockholder shall have pledged
the
Pledged Shares (as defined below) to the Public Company and shall have deposited
with the Collateral Agent the Pledged Shares and the Pledged Shares shall have
been deposited with the Collateral Agent.
(h) Legal
Opinion.
The
Company shall have received a legal opinion from Cirracor’s securities counsel,
Xxxxx Xxxxxx, Esq., in a form reasonably acceptable to the Company dated the
Closing Date providing legal opinions regarding issues, including, but not
limited to the following: (i) the organization and good standing of Cirracor
and
the Cirracor Subsidiaries, (ii) the authority of Cirracor to enter into and
perform its obligations under this Agreement, (iii) the enforceability of the
Merger Agreement and the documents related thereto, (iv) the lack of conflict,
violation of law or filings resulting from Cirracor entering into or performing
its obligations under the Agreement, (v) Cirracor’s capital stock, including due
authorization, valid issuance, fully paid and non-assessable regarding the
outstanding shares of Cirracor Stock and (vi) the lack of litigation against
Cirracor.
(i) Releases.
All the
concerned officers, directors and employees of Cirracor, including, but not
limited to, Xxxx Xxxxxxxx and Xxxx Xxxxxx, but excluding Xxxxxx Xxxxxx, shall
have provided Cirracor with releases (each, a “Release”
and
collectively, the “Releases”)
in
substantially the form attached hereto as Exhibit
F-1.
Cirracor shall use its reasonable best efforts to cause Xxxxxxx XxXxxxx to
provide it with a Release. Xxxx Xxxxx and Xxxxxxxxxxx X. Xxxxxxxx shall have
provided Cirracor with releases in substantially the form attached hereto as
Exhibit
F-2.
ARTICLE
VII
Termination,
Amendment and Waiver
7.01 Termination.
This
Merger Agreement may be terminated and abandoned at any time prior to the
Effective Time of the Merger:
(a) by
mutual
written consent of Cirracor and the Company;
(b) by
either
Cirracor or the Company, if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining
or
otherwise prohibiting the Merger, and such order, decree, ruling or other action
shall have become final and nonappealable;
(c) by
Cirracor, if the Merger shall not have been consummated on or before December
31, 2006; provided
that
such failure has not occurred as a proximate result of the failure of Cirracor
to perform its obligations under this Merger Agreement required to be performed
at, or prior to, the Effective Time of the Merger, in which event Cirracor
may
not terminate this Merger Agreement pursuant to this provision for a period
of
10 days following its cure of such failure; provided,
further,
that if
the Company requests an extension of the Closing after this date and Cirracor
consents in writing, then Cirracor may not terminate this Merger Agreement
under
this provision until the expiration of such extension period;
(d)
by
the
Company, if (i) the Proxy Statement shall not have been cleared by the SEC
on or
before the 90th
day
after the later of the Company providing Cirracor (x) the Company’s audited
financial statements for use in the Proxy Statement or (y) all reasonably
necessary information regarding the Company as required for disclosure in the
Proxy Statement or (ii) the Merger has not been consummated within 30 days
after
the SEC clears the Proxy Statement ; provided
that
such failure has not occurred as a proximate result of the failure of the
Company to perform its obligations under this Merger Agreement required to
be
performed at, or prior to, the Effective Time of the Merger, in which event
the
Company may not terminate this Merger Agreement pursuant to this provision
for a
period of 10 days following its cure of such failure; provided,
further,
that if
Cirracor requests an extension of the Closing after this date and the Company
consents in writing, then the Company may not terminate this Merger Agreement
under this provision until the expiration of such extension period;
18
(e) by
Cirracor, if a material adverse change shall have occurred relative to the
Company, which change constitutes a material breach and is not curable or,
if
curable, is not cured within thirty (30) days after written notice of such
breach is given by Cirracor to the Company;
(f) by
Cirracor, if the Company willfully fails to perform in any material respect
any
of its material obligations under this Merger Agreement, which constitutes
a
material breach and is not curable or, if curable, is not cured within thirty
(30) days after written notice of such breach is given by Cirracor to the
Company;
(g) by
the
Company, if a material adverse change shall have occurred relative to Cirracor
or the Cirracor Stockholder, which change constitutes a material breach and
is
not curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by the Company to Cirracor;
(h) by
the
Company, if Cirracor or the Cirracor Stockholder willfully fails to perform
in
any material respect any of their respective material obligations under this
Merger Agreement, which constitutes a material breach and is not curable, or
if
curable, is not cured within thirty (30) days after written notice of such
breach is given by the Company to Cirracor or the Cirracor Stockholder;
(i) by
Cirracor, if the Company has a stockholder meeting to obtain the Company
Stockholder Approval and such Company Stockholder Approval is not obtained,
including at any adjournment of the stockholder meeting.
(j) by
the
Company, if the Cirracor Stockholder Approval is not obtained at the Stockholder
Meeting, including at any adjournment of the Stockholder Meeting.
7.02 Effect
of Termination.
In the
event of termination of this Merger Agreement by either the Company or Cirracor
provided in Section 7.01, this Merger Agreement shall forthwith become void
and
have no effect, without any liability or obligation on the part of Cirracor,
the
Cirracor Stockholder or the Company, other than the provisions of the last
sentence of Section 5.02(a), Section 5.04, Section 5.05 and this Section 7.02.
Nothing contained in this Section shall relieve any party for any breach of
the
representations, warranties, covenants or agreements set forth in this Merger
Agreement.
7.03 Amendment.
This
Merger Agreement may not be amended except by an instrument in writing signed
on
behalf of each of the parties. Such amendment or amendments may be made with
the
approval of the Board of Directors of the Company, Cirracor and the Cirracor
Stockholder and without the further approval of the stockholders of either
the
Company or Cirracor so long as such change does not amend the terms of the
Merger Agreement to the material detriment of such stockholders,
respectively.
7.04 Extension;
Waiver.
Subject
to Sections 7.01(c) and (d), at any time prior to the Effective Time of the
Merger, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies
in
the representations and warranties of the other party contained in this Merger
Agreement or in any document delivered pursuant to this Merger Agreement, (c)
waive compliance with any of the agreements of the other party contained in
this
Merger Agreement, or (d) waive any of the conditions contained in this Merger
Agreement to the performance of the waiving party’s obligations hereunder. Any
agreement on the part of a party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
The failure of any party to this Merger Agreement to assert any of its rights
under this Merger Agreement or otherwise shall not constitute a waiver of such
rights.
7.05 Procedure
for Termination, Amendment, Extension or Waiver.
A
termination of this Merger Agreement pursuant to Section 7.01, an amendment
of
this Merger Agreement pursuant to Section 7.03 or an extension or waiver of
this
Merger Agreement pursuant to Section 7.04 shall, in order to be effective,
require in the case of Cirracor or the Company, the approval thereof by action
of not less than a majority of the members then in office of its Board of
Directors.
19
7.06 Return
of Documents.
In the
event of termination of this Merger Agreement for any reason, Cirracor, the
Cirracor Stockholder and Company will return to the other party all of the
other
party’s documents, work papers, and other materials (including copies) relating
to the transactions contemplated in this Merger Agreement, whether obtained
before or after execution of this Merger Agreement. Cirracor, the Cirracor
Stockholder or Company will not use any information so obtained from the other
party for any purpose and will take all reasonable steps to have such other
party’s information kept confidential.
ARTICLE
VIII
Indemnification
and Related Matters
8.01 Survival
of Representations and Warranties.
The
representations and warranties in this Merger Agreement or in any instrument
delivered pursuant to this Merger Agreement shall survive for a period of two
years after the Effective Time of the Merger. Any representation or warranty
that would otherwise terminate in accordance with this Section 8.01 will
continue to survive if written notice of a claim shall be given under this
Article VIII on or prior to the second anniversary of the Effective Time of
the
Merger until the related claim for indemnification shall have been satisfied
or
otherwise resolved as provided in this Article VIII.
8.02 Indemnification.
(a) Each
of
the Company and the Public Company, as the surviving corporation in the Merger,
hereby agrees to indemnify and hold harmless Cirracor and the Cirracor
Stockholder (in the aggregate, in proportion to Cirracor Stockholder's ownership
of the capital stock of Cirracor, on a fully diluted basis) and each of their
affiliates and their respective fiduciaries, directors, officers, controlling
persons, representatives and agents against and hold them harmless from any
loss, liability, claim, damage or expense (including reasonable legal fees
and
expenses and costs of investigation) (a “Loss”)
arising, directly or indirectly, out of or in connection with (i) any material
breach of any representation or warranty of the Company contained in this Merger
Agreement, or (ii) any breach of any covenant or agreement of the Company
contained in this Merger Agreement.
(b) Cirracor
(solely prior to the Effective Time of the Merger) and the Cirracor Stockholder
(both prior to and after the Effective Time of the Merger) hereby jointly and
severally agree to indemnify and hold harmless the Company and the Public
Company, as the surviving corporation in the Merger, and each of their
affiliates and their respective fiduciaries, directors, officers, controlling
persons, representatives and agents against and hold them harmless from any
Loss
arising, directly or indirectly, out of or in connection with (i) any material
breach of any representation or warranty of Cirracor or the Cirracor Stockholder
contained in this Merger Agreement, (ii) any breach of any covenant or agreement
of Cirracor or the Cirracor Stockholder contained in this Merger Agreement,
(iii) any liabilities of (x) Cirracor in excess of the $100,000 cap described
in
Sections 3.02(e) and 3.02(w) plus the costs and expenses set forth in Section
5.05 with a $125,000 cap occurring or accruing prior to the Effective Time
of
the Merger, including but not limited to any securities law violations or (y)
the Cirracor Stockholder occurring or accruing at anytime; or (iv) any claim
by
any Cirracor stockholder related to any acquisition of shares of Cirracor Stock
by the Cirracor Stockholder. The sole recourse of the Company and the Public
Company shall have against the Cirracor Stockholder for any such Loss shall
be
to the Pledged Shares, unless the Loss arises, directly or indirectly, out
of or
in connection with any breach of a representation or warranty that was knowing,
intentional, grossly negligent or reckless (each, a "Significant
Breach"),
in
which event the Company’s and the Public Company’s recourse against the Cirracor
Stockholder shall not be limited to the Pledged Shares. Instead, with respect
to
any Loss resulting from a Significant Breach that cannot be fully satisfied
by
recourse to all of the Pledge Shares, then in addition to all of the Pledged
Shares, such indemnity shall continue against the Cirracor Stockholder
responsible.
(c) In
furtherance of the foregoing, at the Effective Time of the Merger, the Cirracor
Stockholder shall pledge or cause to be pledged to the Public Company an
aggregate of at least 700,000 shares of Public Company Stock and such Pledged
Shares shall be deposited with an independent collateral agent to secure the
indemnification obligations of the Cirracor Stockholder under this Article
VIII.
Such Pledged Shares will be governed by the terms of the Pledge Agreement with
an independent collateral agent selected by the Public Company and reasonably
acceptable to the Cirracor Stockholder (the “Collateral
Agent”).
The
Cirracor Stockholder by virtue of the approval of this Merger Agreement, (i)
consents to, and will cause and authorize the Public Company on its behalf
to,
deposit the Pledged Shares with the collateral agent, and (ii) agrees to be
bound by the indemnification provisions of this Article VIII.
20
(d) In
the
event any indemnified party (an “Indemnified
Party”)
should
have a claim against an indemnifying party (an “Indemnifying
Party”)
pursuant to this Article VIII, the Indemnified Party shall notify the
Indemnifying Party of a claim promptly (and in any event within ten (10)
Business Days after receiving any written notice from a third party) following
the Indemnified Party becoming aware of the same (the “Indemnification
Notice”).
The
failure by an Indemnified Party to so notify the Indemnifying Party shall not
relieve the Indemnifying Party from any liability that it may have to such
Indemnified Party under this Article VIII, except to the extent that the
Indemnifying Party has been materially prejudiced by such failure. If the
Indemnifying Party does not deliver a written notice of its objection to all
or
any part of such claim or demand to the Indemnified Party within ten (10)
Business Days of its receipt of the Indemnification Notice (such lack of notice
being a deemed “Indemnification
Acceptance”),
then
the Indemnifying Party shall be deemed to have accepted such claim or demand
and
shall promptly pay or cause to be paid the amount claimed or demanded by the
Indemnified Party. If there is not an Indemnification Acceptance by the
Indemnifying Party, the Indemnified Party may initiate arbitration pursuant
to
the Commercial Arbitration Rules (the “Rules”)
of the
American Arbitration Association (“AAA”),
which
arbitration shall be held in Dallas, Texas. When the Indemnified Party initiates
arbitration, it shall select one arbitrator who shall be a practicing, licensed
Texas attorney, judge or former judge and provide notice of such arbitrator
to
the Indemnifying Party and the AAA. Within fifteen (15) days after receipt
of
such demand, the Indemnifying Party shall name its arbitrator who shall be
a
practicing, licensed Texas attorney, judge or former judge. If the Indemnifying
Party fails or refuses to name a second arbitrator, the AAA shall name a second
arbitrator. The two arbitrators shall, within fifteen (15) days of the
designation of the second arbitrator select an impartial third arbitrator who
shall be a practicing, licensed Texas attorney, judge or former judge; provided,
however, if the two arbitrators are not able to agree on a third arbitrator
with
such fifteen (15) day period, either party may request the AAA to select an
impartial third arbitrator who shall be a practicing, licensed attorney, judge
or former judge. All other matters relating to the arbitration shall be governed
by the Rules. Whichever party does not prevail at the arbitration shall pay
all
costs for the arbitration, including, but not limited to, the reasonable fees
and expenses of the prevailing party, including reasonable attorney’s fees. The
final arbitration decision shall be issued within 150 days of the date
arbitration was initiated. Arbitration is the sole dispute resolution mechanism
for an indemnification disputes, and all arbitration awards are final and may
be
enforced in any state or federal court in Dallas County, Texas. Any claim by
the
Indemnified Party for which there is an Indemnification Acceptance or a final
arbitration decision declaring that the Indemnifying Party should provide
indemnification to the Indemnified Party is referred to herein as an
“Indemnifiable
Claim.”
With
respect to an Indemnifiable Claim, the Public Company shall not authorize the
Collateral Agent to exercise the remedies set forth in the Pledge Agreement
until at least 30 days from the date the claim is an Indemnifiable Claim (the
“30
Day Cure Period”).
During
such period, the Cirracor Stockholder may satisfy the Indemnifiable Claim by
wire transfer or bank check of sufficient funds and obtain a release by the
Collateral Agent of a portion of the Pledged Shares with the number of such
Pledged Shares being released being based on the current valuation as follows:
(i) if the Public Company Stock is listed for trading on a national securities
exchange or is quoted on the Nasdaq National Market or the Nasdaq SmallCap
Market, then the current value per share shall be the average closing price
of a
Public Company Share over a 30 day period immediately preceding the date the
final amount of the Indemnifiable Claim is determined; (ii) if the Public
Company Stock is quoted on the over the counter market, then the current value
per share shall be the average of the closing bid price and asked price over
a
30 day period immediately preceding the date the final amount of the
Indemnifiable Claim is determined; and (iii) otherwise the fair market value
of
a Public Company Share as determined in good faith by the Board of Directors
of
the Public Company and provided to the Collateral Agent.
(e) To
the
extent the proceeds of sale pursuant to the Pledge Agreement are not sufficient
to satisfy its indemnification obligations hereunder, the Cirracor Stockholder
shall not be obligated for any remaining amounts except as set forth in Section
8.02(b) above with respect to a Significant Breach, in which event the Cirracor
Stockholder shall promptly pay any remaining amounts owed by wire transfer
or
bank check.
21
(f) The
Pledge Agreement shall provide that (i) unless on or prior to the one year
anniversary of the Effective Time of the Merger, the Public Company provides
an
Indemnification Notice to the Cirracor Stockholder and the Collateral Agent
regarding a claim (i) for which the Indemnifying Party has provided an
Indemnification Acceptance or (ii) that the Indemnifying Party has not provided
an Indemnification Acceptance and the Indemnified Party has initiated the
arbitration process described in Section 8.02(d) to have such claim declared
an
Indemnifiable Claim, then 50% of the Pledged Shares shall be released by the
Collateral Agent to the Cirracor Stockholder without the need of any consent
thereto by the Public Company and (ii) unless on or prior to the two year
anniversary of the Effective Time of the Merger, (x) the Public Company provides
an Indemnification Notice to the Cirracor Stockholder and the Collateral Agent
regarding a claim (i) for which the Indemnifying Party has provided an
Indemnification Acceptance or (ii) that the Indemnifying Party has not provided
an Indemnification Acceptance and the Indemnified Party has initiated the
arbitration process described in Section 8.02(d) to have such claim declared
an
Indemnifiable Claim and/or (y) there are claims still outstanding for which
an
Indemnification Notice was previously provided that were either accepted by
the
Indemnifying Party pursuant to an Indemnification Acceptance or the Indemnified
Party has initiated the arbitration process described in Section 8.02(d), the
remaining Pledged Shares shall be released by the Collateral Agent to the
Cirracor Stockholder without the need of any consent thereto by the Public
Company. The customary fees and expenses of the Collateral Agent shall be shared
equally by the Public Company and the Cirracor Stockholder as set forth in
the
Pledge Agreement.
8.03 Third
Party Claims.
(a) With
regard to claims by third parties, in the event any Indemnifying Party notifies
the Indemnified Party within ten (10) Business Days after receiving the
Indemnification Notice that the Indemnifying Party is assuming the defense
thereof: (i) the Indemnifying Party will defend the Indemnified Party against
the matter with counsel of its choice (and at its expense) reasonably
satisfactory to the Indemnified Party; (ii) the Indemnified Party may retain
separate co-counsel at its sole cost and expense (except that the Indemnifying
Party will be responsible for the fees and expenses of the separate co-counsel
to the extent the Indemnified Party reasonably concludes that the counsel the
Indemnifying Party has selected has a conflict of interest); (iii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the matter without the written consent of the
Indemnifying Party which consent shall not be unreasonably withheld; and (iv)
the Indemnifying Party will not consent to the entry of any judgment with
respect to the matter, or enter into any settlement which does not include
a
provision whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto, and, in a settlement
or compromise which does not involve only the payment of money by the
Indemnifying Party, without the prior written consent of the Indemnified Party
which consent shall not be unreasonably withheld.
(b) With
regard to claims by third parties, in the event the Indemnifying Party does
not
notify the Indemnified Party within ten (10) Business Days after the Indemnified
Party has received an Indemnification Notice that the Indemnifying Party is
assuming the defense thereof, then the Indemnified Party shall have the right,
subject to the provisions of this Article VIII, to undertake the defense,
compromise or settlement of such claim for the account of the Indemnifying
Party. Unless and until the Indemnifying Party assumes the defense of any claim,
the Indemnifying Party shall advance to the Indemnified Party any of its
reasonable attorneys' fees and other costs and expenses incurred in connection
with the defense of any such action or proceeding. Each Indemnified Party shall
agree in writing prior to any such advance that, in the event it receives any
such advance, such Indemnified Party shall reimburse the Indemnifying Party
for
such fees, costs and expenses to the extent that it shall be determined that
it
was not entitled to indemnification under this Article IX.
(d) In
the
event that the Indemnifying Party undertakes the defense of any claim, the
Indemnifying Party will keep the Indemnified Party advised as to all material
developments in connection with such claim, including, but not limited to,
promptly furnishing the Indemnified Party with copies of all material documents
filed or served in connection therewith.
22
ARTICLE
IX
General
Provisions
9.01 Notices.
All
notices, requests, claims, demands and other communications under this Merger
Agreement shall be in writing and shall be deemed given if delivered personally
or sent by facsimile, electronic mail, or overnight courier (providing proof
of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a)
|
if
to Cirracor, to:
|
Cirracor,
Inc.
0000
Xxxxxx Xx, Xxxxx 000
Xxxxxxxxx,
XX 00000
(b)
|
if
to Cirracor Stockholder, to:
|
Grove
Panda Investments, LLC
000
X.
Xxxxxxx Xx. #000
Xxxxxxx
Xxxxx, XX 00000
Attn:
Xxxxx Xxxxxx
(c)
|
if
to the Company, to:
|
Panda
Ethanol, Inc.
0000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Facsimile:
(000) 000-0000
Attn:
General Counsel
(d)
|
if
to the Public Company after the Effective Time of the Merger,
to:
|
Panda
Ethanol, Inc.
0000
Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Facsimile:
(000) 000-0000
Attn:
General Counsel
9.02 Definitions.
For
purposes of this Merger Agreement:
(a) an
“affiliate” of any person means another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person;
(b) “material
adverse change” or “material adverse effect” means, when used in connection with
the Company or Cirracor, any change or effect that either individually or in
the
aggregate with all other such changes or effects is materially adverse to the
business, assets, properties, condition (financial or otherwise) or results
of
operations of such party and its subsidiaries taken as a whole (after giving
effect in the case of Cirracor to the consummation of the Merger);
(c) “person”
means an individual, corporation, partnership, joint venture, association,
trust, unincorporated organization or other entity; and
(d) a
“subsidiary” of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which
is
sufficient to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, fifty percent (50%)
or more of the equity interests of which) is owned directly or indirectly by
such first person.
9.03 Interpretation.
When a
reference is made in this Merger Agreement to a Section, Exhibit or Schedule,
such reference shall be to a Section of, or an Exhibit or Schedule to, this
Merger Agreement unless otherwise indicated. The headings contained in this
Merger Agreement are for reference purposes only and shall not affect in any
way
the meaning or interpretation of this Merger Agreement. Whenever the words
“include”, “includes” or “including” are used in this Merger Agreement, they
shall be deemed to be followed by the words “without limitation”.
23
9.04 Entire
Agreement; No Third-Party Beneficiaries.
This
Merger Agreement and the other agreements referred to herein constitute the
entire agreement, and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter of this
Merger Agreement. This Merger Agreement is not intended to confer upon any
person other than the parties any rights or remedies.
9.05 Governing
Law.
This
Merger Agreement shall be governed by, and construed in accordance with, the
laws of the State of Texas, regardless of the laws that might otherwise govern
under applicable principles of conflicts of laws thereof.
9.06 Assignment.
Neither
this Merger Agreement nor any of the rights, interests or obligations under
this
Merger Agreement shall be assigned, in whole or in part, by operation of law
or
otherwise by any of the parties without the prior written consent of the other
parties. Subject to the preceding sentence, this Merger Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
9.07 Enforcement.
The
parties agree that irreparable damage would occur in the event that any of
the
provisions of this Merger Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Merger Agreement and to enforce specifically the terms and provisions
of
this Merger Agreement in any court of the United States located in the State
of
Texas, this being in addition to any other remedy to which they are entitled
at
law or in equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of the courts of Texas in the event any
dispute arises out of this Merger Agreement or any of the transactions
contemplated by this Merger Agreement to the extent such courts would have
subject matter jurisdiction with respect to such dispute, (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction or venue by motion
or other request for leave from any such court, and (c) agrees that it will
not
bring any action relating to this Merger Agreement or any of the transactions
contemplated by this Merger Agreement in any state court other than such
court.
9.08 Severability.
Whenever possible, each provision or portion of any provision of this Merger
Agreement will be interpreted in such manner as to be effective and valid under
applicable law but, if any provision or portion of any provision of this Merger
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality
or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Merger Agreement will be reformed, construed
and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained
herein.
9.09 Counterparts.
This
Merger Agreement may be executed in one or more identical counterparts, all
of
which shall be considered one and the same instrument and shall become effective
when one or more such counterparts shall have been executed by each of the
parties and delivered to the other parties.
24
IN
WITNESS WHEREOF, the undersigned have caused their duly authorized officers
to
execute this Merger Agreement as of the date first above written.
CIRRACOR,
INC.
|
||
|
|
|
Date: | By: | /s/ Xxxx Xxxxxx |
Xxxx Xxxxxx
President
|
GROVE PANDA INVESTMENTS, LLC | ||
|
|
|
Date: | By: | /s/ Xxxxx Xxxxxx |
Xxxxx Xxxxxx
Manager/Authorised Signatory
|
PANDA ETHANOL, INC. | ||
|
|
|
Date: | By: | /s/ Xxxxxx Xxxxx |
Xxxxxx Xxxxx
Vice President of
Finance
|
25
Index
to
Schedules and
Exhibits
Exhibits
|
||
Exhibit
|
A
|
Amended
Restated Articles of Incorporation of Public Company
|
Exhibit
|
B
|
Form
of Public Company Bylaws
|
Exhibit
|
C
|
Cap
Table
|
Exhibit
|
D
|
Form
of Registration Rights Agreement
|
Exhibit
|
E
|
Form
of Pledge Agreement
|
Exhibit
|
F-1
|
Form
of Release
|
Exhibit
|
F-2
|
Form
of Special Release
|
Schedules
|
||
Schedule
|
3.01(a)
|
Company
Certificate of Incorporation and Bylaws
|
Schedule
|
3.01(b)
|
Subsidiaries
of Company/Liens on Subsidiaries
|
Schedule
|
3.01(c)
|
Agreement
Regarding Company Stock
|
Schedule
|
3.01(e)
|
Certain
Company Changes
|
Schedule
|
3.01(i)
|
Material
Contracts
|
Schedule
|
3.02(a)
|
Cirracor
Articles of Incorporation and Bylaws
|
Schedule
|
3.02(b)
|
Cirracor
Subsidiaries/ Liens on Subsidiaries
|
Schedule
|
3.02(c)
|
Voting
Securities
|
Schedule
|
3.02(e)
|
Late
SEC Filings
|
Schedule
|
3.02(j)
|
Late
Tax Returns
|
26