EXHIBIT 10.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
R&R ACQUISITION III, INC.,
ARISTON PHARMACEUTICALS, INC.
AND
ARISTON ACQUISITION CORP.
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and
entered into as of December 12, 2006, among R&R Acquisition
III, Inc., a
Delaware corporation ("Parent"), Ariston Pharmaceuticals, Inc., a
Delaware
corporation ("Ariston"), and Ariston Acquisition Corp., a Delaware
corporation
and a wholly-owned subsidiary of Parent ("Ariston Merger Sub").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement
and
in accordance with the Delaware General Corporation Law ("DGCL"),
Parent,
Ariston and Ariston Merger Sub intend to enter into a business
combination
transaction.
B. The Board of Directors of Ariston (i) has determined that the
Merger
(as defined in Section 1.2 below) is consistent with and in
furtherance of the
long-term business strategy of Ariston and fair to, and in the best
interests
of, Ariston and its stockholders, (ii) has approved this Agreement,
the Merger
and the other transactions contemplated by this Agreement, (iii)
has adopted a
resolution declaring the Merger advisable, and (iv) has determined
to recommend
that the stockholders of Ariston adopt this Agreement.
C. The Board of Directors of Parent (i) has determined that the
Merger
is consistent with and in furtherance of the long-term business
strategy of
Parent and fair to, and in the best interests of, Parent and its
stockholders,
(ii) has approved this Agreement, the Merger and the other
transactions
contemplated by this Agreement, (iii) has adopted a resolution
declaring the
Merger advisable, and (iv) has approved the issuance of shares of
Parent Common
Stock and Parent Preferred Stock (as defined below) pursuant to the
Merger (the
"Share Issuance").
D. The Board of Directors of Ariston Merger Sub (i) has determined
that
the Merger is consistent with and in furtherance of the long-term
business
strategy of Ariston Merger Sub, respectively, and fair to and in
the best
interests of, Ariston Merger Sub and its stockholders, (ii) has
approved this
Agreement, the Merger and the other transactions contemplated by
this Agreement,
(iii) has adopted a resolution declaring the Merger advisable, and
(iv) has
determined to recommend that the sole stockholder of Ariston Merger
Sub adopt
this Agreement.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable
consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties agree
as follows:
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ARTICLE I
THE MERGER
1.1 THE MERGER. At the Effective Time (as defined in Section
1.2
hereof) and subject to and upon the terms and conditions of this
Agreement and
the applicable provisions of the DGCL, Ariston Merger Sub shall be
merged with
and into Ariston (the "Merger"), the separate corporate existence
of Ariston
Merger Sub shall cease and Ariston shall continue as the surviving
corporation
and shall become a wholly-owned subsidiary of Parent. The surviving
corporation
after the Merger is sometimes referred to hereinafter as the
"Ariston Surviving
Corporation."
1.2 EFFECTIVE TIME. Unless this Agreement is earlier terminated
pursuant to Article VII hereof, the closing of the Merger and the
other
transactions contemplated by this Agreement (the "Closing") will
take place at
the offices of Parent's counsel, at a time and date to be specified
by the
parties, but in no event later than two (2) business days following
satisfaction
or waiver of the conditions set forth in Article VI hereof. The
date upon which
the Closing actually occurs is herein referred to as the "Closing
Date." On the
Closing Date, the parties hereto shall cause the Merger to be
consummated by
filing a Certificate of Merger or like instrument (a "Certificate
of Merger")
with the Secretary of State of the State of Delaware, in accordance
with the
relevant provisions of the DGCL (the times at which the Merger has
become fully
effective (or such later time as may be agreed in writing by
Ariston and
specified in the Certificate of Merger) is referred to herein as
the "Effective
Time").
1.3 EFFECT OF THE MERGER.
(a) At the Effective Time, the effect of the Merger shall be
as provided in the applicable provisions of the DGCL. Without
limiting the
generality of the foregoing, and subject thereto, at the Effective
Time, except
as provided herein, all the property, rights, privileges, powers
and franchises
of Ariston and Ariston Merger Sub shall vest in the Ariston
Surviving
Corporation, and all debts, liabilities and duties of Ariston and
Ariston Merger
Sub shall become the debts, liabilities and duties of the Ariston
Surviving
Corporation.
(b) Prior to or at the Effective Time, the properties and
assets of Parent and Ariston Merger Sub will be free and clear of
any and all
encumbrances, charges, claims equitable interests, liens, options,
pledges,
security interests, mortgages, rights of first refusal or
restrictions of any
kind and nature (collectively, the "Encumbrances"), except for such
liabilities,
accounts payable, debts, adverse claims, duties, responsibilities
and
obligations of every kind or nature, whether accrued or unaccrued,
known or
unknown, direct or indirect, absolute, contingent, liquidated or
unliquidated
and whether arising under, pursuant to or in connection with any
contract, tort,
strict liability or otherwise (collectively the "Liabilities") of
Parent which
shall be set forth in Section 3.5 attached hereto.
1.4 CERTIFICATES OF INCORPORATION; BYLAWS.
(a) Unless otherwise determined by Ariston prior to the
Effective Time, at the Effective Time, the Certificate of
Incorporation of
Ariston as in effect immediately prior to the Effective Time shall
be the
Certificate of Incorporation of the Ariston Surviving Corporation
at
<PAGE>
and after the Effective Time until thereafter amended in accordance
with the
DGCL and the terms of such Certificate of Incorporation.
(b) Unless otherwise determined by Ariston prior to the
Effective Time, (i) the Bylaws of Ariston as in effect immediately
prior to the
Effective Time shall be the Bylaws of the Ariston Surviving
Corporation at and
after the Effective Time, until thereafter amended in accordance
with the DGCL
and the terms of Certificate of Incorporation of the Ariston
Surviving
Corporation and such Bylaws.
1.5 ARISTON DIRECTORS AND OFFICERS.
(a) Unless otherwise determined by Ariston prior to the
Effective Time, the directors of Ariston immediately prior to the
Effective Time
shall be the directors of the Ariston Surviving Corporation and at
and after the
Effective Time, each to hold the office of a director of the
Ariston Surviving
Corporation in accordance with the provisions of the DGCL and the
Certificate of
Incorporation and Bylaws of the Ariston Surviving Corporation until
their
successors are duly elected and qualified.
(b) Unless otherwise determined by Ariston prior to the
Effective Time, the officers of Ariston immediately prior to the
Effective Time
shall be the officers of the Ariston Surviving Corporation at and
after the
Effective Time, each to hold office in accordance with the
provisions of the
Bylaws of the Ariston Surviving Corporation.
1.6 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions
of
this Agreement, at the Effective Time, by virtue of the Merger and
without any
action on the part of Parent, Ariston and Ariston Merger Sub or the
holders of
any of the following securities, the following shall occur:
(a) CONVERSION OF ARISTON CAPITAL STOCK. Each share of Common
Stock and Preferred Stock, par value $0.001 per share, of Ariston
(the "Ariston
Common Stock" and the "Ariston Preferred Stock," respectively)
issued and
outstanding immediately prior to the Effective Time (other than
shares held by
holders who have not consented to and approved the adoption of this
Agreement in
writing and who qualify under and have complied with all of the
provisions of
Section 262 of the DGCL) will be automatically converted (subject
to Section
1.6(d)), in the case of Ariston Common Stock, into one share of
Common Stock,
par value $0.0001 per share, of Parent (the "Parent Common Stock"),
and in the
case of Ariston Preferred Stock, into one share of Series A
Preferred Stock, par
value $0.0001 per share, of Parent (the "Parent Preferred Stock")
(such
aggregate shares of Parent Common Stock and Parent Preferred Stock,
being
referred to in this Agreement as the "Ariston Merger
Consideration"). If any
shares of Ariston Common Stock or Ariston Preferred Stock,
outstanding
immediately prior to the Effective Time are unvested or are subject
to a
repurchase option, risk of forfeiture or other condition under any
applicable
restricted stock purchase agreement or other agreement with
Ariston, then the
shares of Parent Common Stock or Parent Preferred Stock issued in
exchange for
such shares of Ariston Common Stock or Ariston Preferred Stock will
also be
unvested and subject to the same repurchase option, risk of
forfeiture or other
condition, and the certificates representing such shares of Parent
Common Stock
or Parent Preferred Stock may accordingly be
<PAGE>
marked with appropriate legends.
(b) ARISTON STOCK OPTIONS. At the Effective Time, the Ariston
Pharmaceuticals, Inc. 2003 Stock Option Plan (the "Ariston Option
Plan"), and
all options to purchase Ariston Common Stock then outstanding
thereunder, shall
be assumed by Parent in accordance with Section 5.4(a) hereof.
(c) ARISTON WARRANTS. At the Effective Time, all warrants to
purchase Ariston Common Stock or Ariston Preferred Stock then
outstanding shall
be assumed by Parent, and shall become exercisable for shares of
Parent Common
Stock or Parent Preferred Stock, as applicable, in accordance with
Section
5.4(b) hereof.
(d) ADJUSTMENTS TO ARISTON MERGER CONSIDERATION. Except as
described in Section 1.8, the Ariston Merger Consideration shall be
adjusted to
reflect appropriately the effect of any stock split, reverse stock
split, stock
dividend (including any dividend or distribution of securities
convertible into
or exercisable or exchangeable for Parent Common Stock, Parent
Preferred Stock,
Ariston Common Stock or Ariston Preferred Stock),
reorganization,
recapitalization, reclassification, combination, exchange of shares
or other
like change with respect to Parent Common Stock, Parent Preferred
Stock, Ariston
Common Stock or Ariston Preferred Stock occurring or having a
record date on or
after the date hereof and prior to the Effective Time.
(e) FRACTIONAL SHARES. No fraction of a share of Parent Common
Stock or Parent Preferred Stock will be issued by virtue of the
Merger. In lieu
thereof any fractional share will be rounded to the nearest whole
share of
Parent Common Stock (with .5 being rounded up).
1.7 REGISTRATION RIGHTS.
The Parent shall include in the registration statement that it
anticipates filing with the SEC on Form S-1 or similar form after
the Closing
Date (the "Registration Statement"), that includes the shares that
Ariston
contemplates selling in the Financing (defined below in Section
6.3(c)), the
shares of each of the current stockholders of Parent (the "Shellco
Stockholder
Shares"). If at any time following the Closing, the Parent shall
determine to
prepare and file with the SEC a registration statement relating to
an offering
for its own account or the account of others under the Securities
Act of any of
its equity securities (a "Subsequent Registration Statement"),
other than on
Form S-4 or Form S-8 (each as promulgated under the Securities
Act), and the
Shellco Stockholder Shares are not at such time covered by an
effective
registration statement permitting their resale, then the Parent
shall include in
the Subsequent Registration Statement the Shellco Stockholder
Shares. If the
Subsequent Registration Statement is being filed pursuant to a
third-party
written agreement obligating the Parent to file the same, the
holders of the
Shellco Stockholder Shares shall be entitled to receive all notices
and
documents sent by the Parent to the third-party whose securities
are being
registered pursuant to such Subsequent Registration Agreement.
1.8 NO FURTHER OWNERSHIP RIGHTS IN ARISTON COMMON STOCK AND
ARISTON
PREFERRED STOCK. All shares of Parent Common Stock or Parent
Preferred Stock
issued in accordance with
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the terms hereof shall be deemed to have been issued in full
satisfaction of all
rights pertaining to such shares of Ariston Common Stock and
Ariston Preferred
Stock. After the Effective Time, there shall be no further
registration of
transfers on the records of Ariston Surviving Corporation of shares
of Ariston
Common Stock and Ariston Preferred Stock which were outstanding
immediately
prior to the Effective Time. If, after the Effective Time,
Certificates are
presented to Ariston Surviving Corporation for any reason, they
shall be
canceled and exchanged as provided in this Article I.
1.9 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that
any
Certificates shall have been lost, stolen or destroyed, the Parent
shall issue
and pay in exchange for such lost, stolen or destroyed
Certificates, upon the
making of an affidavit of that fact by the holder thereof,
certificates
representing the shares of Parent Common Stock or Parent Preferred
Stock into
which the shares of Ariston Common Stock and Ariston Preferred
Stock represented
by such Certificates were converted pursuant to Section 1.6(a);
provided,
however, that the Parent may, in its discretion and as a condition
precedent to
the issuance of such certificates representing shares of Parent
Common Stock or
Parent Preferred Stock require the owner of such lost, stolen or
destroyed
Certificates to deliver a bond in such sum as it may reasonably
direct as
indemnity against any claim that may be made against Parent or
Ariston Surviving
Corporation with respect to the Certificates alleged to have been
lost, stolen
or destroyed.
1.10 TAX TREATMENT. It is intended by the parties hereto that
the
Merger shall constitute a reorganization within the meaning of
Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"). Each of
the parties
hereto adopts this Agreement as a "plan of reorganization" within
the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations
(the "Regulations"). Both prior to and after the Closing, each
party's books and
records shall be maintained, and all federal, state and local
income tax returns
and schedules thereto shall be filed in a manner consistent with
the Merger
being qualified as a reverse triangular merger under Section
368(a)(2)(E) of the
Code (and comparable provisions of any applicable state or local
laws); except
to the extent the Merger is determined in a final administrative or
judicial
decision not to qualify as a reorganization within the meaning of
Code Section
368(a).
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time
after
the Effective Time, any further action is necessary or desirable to
carry out
the purposes of this Agreement and to vest the Ariston Surviving
Corporation
(and/or its successor in interest) with full right, title and
possession to all
assets, property, rights, privileges, powers and franchises of
Ariston and
Ariston Merger Sub, the officers and directors of Parent and the
Ariston
Surviving Corporation shall be fully authorized (in the name of
Ariston Merger
Sub, Ariston and otherwise) to take all such necessary action.
1.12 RESTRICTIONS ON TRANSFER; LEGENDS. Any shares of Parent
Common
Stock or Parent Preferred Stock issued in the Merger will not be
transferable
except (1) pursuant to an effective registration statement under
the Securities
Act or (2) upon receipt by Parent of a written opinion of counsel
reasonably
satisfactory to Parent that is knowledgeable in securities laws
matters to the
effect that the proposed transfer is exempt from the registration
requirements
of
<PAGE>
the Securities Act and relevant state securities laws. Restrictive
legends
must be placed on all certificates representing shares of Parent
issued in the
Merger, substantially as follows:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF
ANY
STATE, AND ARE BEING OFFERED AND SOLD PURSUANT TO AN EXEMPTION FROM
THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
THESE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE
SECURITIES ACT OR SUCH OTHER LAWS."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ARISTON
Ariston hereby represents and warrants to Parent that:
2.1 SUBSIDIARIES. Ariston has no direct or indirect subsidiaries
other
than Pyrenees Pharmaceuticals, Inc.
2.2 ORGANIZATION AND QUALIFICATION. Ariston is an entity duly
incorporated or otherwise organized, validly existing and in good
standing under
the laws of the State of Delaware, with the requisite power and
authority to own
and use its properties and assets and to carry on its business as
currently
conducted. Ariston is not in violation of any of the provisions of
its
Certificate of Incorporation or By-Laws.
2.3 AUTHORIZATION, ENFORCEMENT. Ariston has the requisite
corporate
power and authority to enter into and to consummate the Merger. The
execution
and delivery of this Merger Agreement by Ariston and the
consummation by it of
the transactions contemplated hereby have been duly authorized by
all necessary
action on the part of Ariston and no further consent or action is
required by
Ariston, other than the Required Approvals (as defined below) and
the approval
of Ariston's stockholders and the approval of the stockholders of
Parent and
Ariston Merger Sub of the Merger and the amendments to their
respective
certificates of incorporation (the "Stockholder Approvals"). This
Merger
Agreement, when executed and delivered in accordance with the terms
hereof, will
constitute the valid and binding obligation of Ariston enforceable
against
Ariston in accordance with its terms, subject to the Stockholder
Approvals,
applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization,
moratorium and similar laws affecting creditors' rights and
remedies generally
and general principles of equity.
2.4 NO CONFLICTS. The execution, delivery and performance of
this
Merger Agreement by Ariston and the consummation by Ariston of the
Merger do not
and will not: (i) conflict with or violate any provision of
Ariston's
Certificate of Incorporation or By-Laws, or (ii) subject to
obtaining the
Required Approvals (as defined below), conflict with, or constitute
a default
(or an event that with notice or lapse of time or both would become
a default)
under, or
<PAGE>
give to others any rights of termination, amendment, acceleration
or
cancellation (with or without notice or lapse of time or both) of,
any
agreement, credit facility, debt or other instrument (evidencing
Ariston debt or
otherwise) or other understanding to which Ariston is a party or by
which any
material property or asset of Ariston is bound or affected, or
(iii) result in a
violation of any law, rule, regulation, order, judgment,
injunction, decree or
other restriction of any court or governmental authority as
currently in effect
to which Ariston is subject (including federal and state securities
laws and
regulations), or by which any material property or asset of Ariston
is bound or
affected; except in the case of each of clauses (ii) and (iii),
such as could
not, individually or in the aggregate (a) adversely affect the
legality,
validity or enforceability of the Merger, (b) have or result in a
material
adverse effect on the results of operations, assets, prospects,
business or
condition (financial or otherwise) of Ariston, taken as a whole, or
(c)
adversely impair Ariston's ability to perform fully on a timely
basis its
obligations under this Merger Agreement (any of (a), (b) or (c), a
"Material
Adverse Effect").
2.5 FILINGS, CONSENTS AND APPROVALS. Ariston is not required to
obtain
any consent, waiver, authorization or order of, give any notice to,
or make any
filing or registration with, any court or other federal, state,
local or other
governmental authority or other Person in connection with the
execution,
delivery and performance by Ariston of this Merger Agreement, other
than the
Stockholder Approvals and the filing with the Secretary of State of
Delaware of
a certificate of merger (collectively, the "Required
Approvals").
2.6 ISSUANCE OF THE SHARES. The Ariston Preferred Stock issued in
the
Financing will be duly authorized and validly issued, fully paid
and
nonassessable, free and clear of all liens at issuance. Assuming
the accuracy of
the purchaser's representations and warranties set forth in the
relevant
subscription agreements, no registration under the Securities Act
is required
for the offer and sale of the Ariston Preferred Stock by Ariston to
the
purchasers.
2.7 CAPITALIZATION. Ariston's certificate of incorporation, as
amended,
will at Closing authorize the issuance of up to 26,000,000 shares
of capital
stock, of which 20,000,000 shares will be designated as common
stock, par value
$.001 per share, and 6,000,000 shares as preferred stock, par value
$.001 per
share. As of the date hereof, Ariston has outstanding 4,462,291
shares of
Ariston Common Stock and no shares of preferred stock. Ariston also
currently
has outstanding options to purchase an additional 291,332 shares of
Ariston
Common Stock. Ariston has outstanding convertible indebtedness,
bridge warrants
and warrants issued in connection with the placement of
convertible
indebtedness, but the number of shares underlying these instruments
is
contingent upon the completion of the Financing and will be
determined based on
the price at which the Ariston Preferred Stock is sold in the
Financing.
Assuming the consummation of the Financing, additional warrants to
the placement
agents in the Financing will be issued and Ariston's CEO will be
entitled to an
additional stock option to offset dilution. In addition, Ariston
has contingent
obligations to issue additional Ariston Common Stock to the former
stockholders
of Pyrenees Pharmaceuticals, Inc. in connection with certain
milestones. Except
as described above or in connection with the Financing, (i) there
are no
outstanding options, warrants, script rights to subscribe to, calls
or
commitments of any character whatsoever relating to, or Ariston
Preferred Stock,
rights or obligations convertible into or exchangeable for, or
giving any Person
any right to subscribe for or acquire, any shares of Ariston's
Common Stock, or
contracts, commitments, understandings or arrangements by which
Ariston is or
may become bound to issue additional shares of Ariston Common Stock
or rights
convertible or
<PAGE>
exchangeable into shares of Ariston Common Stock and (ii) the
issuance and sale
of the Ariston Preferred Stock will not obligate Ariston to issue
shares of
Ariston Common Stock or Ariston Preferred Stock to any Person
(other than the
purchasers in the Financing) and will not result in a right of any
holder of
Ariston equity to adjust the exercise, conversion, exchange or
reset price under
such Ariston Preferred Stock.
2.8 FINANCIAL STATEMENTS. The financial statements of Ariston
previously delivered to Parent have been prepared in accordance
with generally
accepted accounting principles applied on a consistent basis during
the periods
involved ("GAAP"), except as may be otherwise specified in such
financial
statements or the notes thereto, and fairly present in all material
respects the
financial position of Ariston as of and for the dates thereof and
the results of
operations and cash flows for the periods then ended.
2.9 MATERIAL CHANGES. Except for the proposed Financing, since the
date
of the latest financial statements furnished to Parent: (i) there
has been no
event, occurrence or development that has had a Material Adverse
Effect, (ii)
Ariston has not incurred any liabilities (contingent or otherwise)
other than
(A) trade payables and accrued expenses incurred in the ordinary
course of
business consistent with past practice, and (B) liabilities not
required to be
reflected in Ariston's financial statements pursuant to GAAP or
required to be
disclosed in filings made with the SEC, (iii) Ariston has not
altered its method
of accounting or the identity of its auditors, (iv) Ariston has not
declared or
made any dividend or distribution of cash or other property to its
stockholders
except in the ordinary course of business consistent with prior
practice, or
purchased, redeemed or made any agreements to purchase or redeem
any shares of
its capital stock except consistent with prior practice or pursuant
to existing
Ariston stock option or similar plans, and (v) Ariston has not
issued any equity
shares to any officer, director or affiliate, except pursuant to
existing
Ariston stock option or similar plans.
2.10 LITIGATION. There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge
of Ariston,
threatened against or affecting Ariston or its properties before or
by any
court, arbitrator, governmental or administrative agency or
regulatory authority
(federal, state, county, local or foreign) (collectively, an
"Action") which:
(i) adversely affects or challenges the legality, validity or
enforceability of
this Merger Agreement or (ii) would, if there were an unfavorable
decision,
individually or in the aggregate, have or reasonably be expected to
result in a
Material Adverse Effect. Ariston is not nor has it ever been the
subject of any
Action involving a claim of violation of or liability under federal
or state
securities laws. There has not been, and to the knowledge of
Ariston, there is
not pending or contemplated, any investigation by the SEC involving
Ariston.
2.11 COMPLIANCE. Ariston is not: (i) in default under or in
violation
of (and no event has occurred that has not been waived that, with
notice or
lapse of time or both, would result in a default by Ariston under),
nor has
Ariston received notice of a claim that it is in default under or
that it is in
violation of, any material indenture, loan or credit agreement or
any other
material agreement or instrument to which it is a party or by which
it or any of
its properties is bound (whether or not such default or violation
has been
waived), which default or violation would have or result in a
Material Adverse
Effect, (ii) in violation of any order of any court, arbitrator or
governmental
body, or (iii) or has not been in violation of any statute, rule or
regulation
of any
<PAGE>
governmental authority, except in each case as would not,
individually or
in the aggregate, have or result in a Material Adverse Effect.
2.12 REGULATORY PERMITS. Ariston possesses or has applied for
all
certificates, authorizations and permits issued by the appropriate
federal,
state, local or foreign regulatory authorities necessary to conduct
its
business, except where the failure to possess such permits would
not,
individually or in the aggregate, have a Material Adverse Effect
("MATERIAL
PERMITS"), and Ariston has not received any notice of proceedings
relating to
the revocation or modification of any Material Permit.
2.13 LACK OF PUBLICITY. None of Ariston or any person acting on
its
behalf have engaged or will engage in any form of general
solicitation or
general advertising as those terms are used in Regulation D under
the Securities
Act in the United States with respect to the Financing or the
securities that
will be exchanged for Ariston Preferred Stock in the Merger,
including, without
limitation, any article, notice, advertisement or other
communication published
in any newspaper, magazine or similar media or broadcast over
television or
radio, regarding the Financing, nor did any such person sponsor any
seminar or
meeting to which potential investors were invited by, or any
solicitation of a
subscription by, a person not previously known to such investor in
connection
with investments in the Ariston Preferred Stock generally. None of
Ariston, its
subsidiaries or any person acting on its or their behalf have
engaged or will
engage in any form of directed selling efforts (as that term is
used in
Regulation S under the Securities Act) with respect to the Ariston
Preferred
Stock or the securities that will be exchanged for Ariston
Preferred Stock in
the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ARISTON MERGER SUB
Each of Parent and Ariston Sub, jointly and severally, hereby
represents and warrants to Ariston that:
3.1 ORGANIZATION OF PARENT AND ARISTON MERGER SUB.
(a) Each of Parent and Ariston Merger Sub is a corporation
duly organized, validly existing and in good standing under the
laws of the
jurisdiction of its incorporation; has the corporate power and
authority to own,
lease and operate its assets and property and to carry on its
business as now
being conducted; and is duly qualified to do business and in good
standing as a
foreign corporation in each jurisdiction in which the failure to be
so qualified
would have a Parent Material Adverse Effect. As used in this
Agreement, the term
"Parent Material Adverse Effect" means a material adverse effect on
the
condition (financial or otherwise), business, assets or results of
operations of
Parent and Ariston Merger Sub as a whole or on the ability of
Parent to
consummate the transactions contemplated by this Agreement; it
being understood,
however,
<PAGE>
that Parent's continuing incurrence of losses, as long as such
losses are in the
ordinary course of business shall not, alone, be deemed to be a
Parent Material
Adverse Effect.
(b) Parent has no subsidiaries other than Ariston Merger Sub.
(c) Parent has delivered or made available to Ariston a true
and correct copy of the Certificate of Incorporation and Bylaws of
each of
Parent and Ariston Merger Sub, each as amended to date, and each
such instrument
is in full force and effect. Neither Parent nor Ariston Merger Sub
is in
violation of any of the provisions of its Certificate of
Incorporation or Bylaws
or equivalent governing instruments.
3.2 CAPITAL STRUCTURE. The authorized capital stock of Parent
consists
of 75,000,000 shares of Common Stock, $0.0001 par value, of which
there were
2,500,000 shares issued and outstanding as of the date hereof and
10,000,000
shares of Preferred Stock, $0.0001 par value, of which there were
no shares
issued and outstanding as of the date hereof. The authorized
capital stock of
Ariston Merger Sub consists of 100 shares of Common Stock, par
value $0.0001 per
share, of which there were 100 shares issued and outstanding as of
the date
hereof. All outstanding shares of Parent and Ariston Merger Sub
Common Stock are
duly authorized, validly issued, fully paid and nonassessable, were
issued in
compliance with applicable securities laws and are not subject to
preemptive
rights created by statute, the Certificate of Incorporation or
Bylaws of Parent
and Ariston Merger Sub or any agreement or document to which Parent
or Ariston
Merger Sub is a party or by which it is bound. As of the date
hereof, Parent did
not have any options or warrants to purchase common stock
outstanding.
3.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. There are no
equity
securities, partnership interests or similar ownership interests of
any class of
Parent or Ariston Merger Sub, or any securities exchangeable or
convertible into
or exercisable for such equity securities, partnership interests or
similar
ownership interests issued, reserved for issuance or outstanding.
There are no
equity securities, partnership interests or similar ownership
interests of any
class of Ariston Merger Sub of Parent, or any security exchangeable
or
convertible into or exercisable for such equity securities,
partnership
interests or similar ownership interests issued, reserved for
issuance or
outstanding. There are no options, warrants, equity securities,
partnership
interests or similar ownership interests, calls, rights (including
preemptive
rights), commitments or agreements of any character to which Parent
or Ariston
Merger Sub is a party or by which it is bound obligating Parent or
Ariston
Merger Sub to issue, deliver or sell, or cause to be issued,
delivered or sold,
or repurchase, redeem or otherwise acquire, or cause the
repurchase, redemption
or acquisition, of any shares of capital stock of Parent or Ariston
Merger Sub
or obligating Parent or Ariston Merger Sub to grant, extend,
accelerate the
vesting of or enter into any such option, warrant, equity security,
partnership
interest or similar ownership interest, call, right, commitment or
agreement.
There are no registration rights and there are no voting trusts,
proxies or
other agreements or understandings with respect to any equity
security of any
class of Parent or with respect to any equity security partnership
interest or
similar ownership interest of any class of Ariston Merger Sub.
<PAGE>
3.4 AUTHORITY.
(a) Each of Parent and Ariston Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to
consummate the
transactions contemplated hereby. The execution and delivery of
this Agreement
and the consummation of the transactions contemplated hereby, have
been duly
authorized by all necessary corporate action on the part of each of
Parent and
Ariston Merger Sub, subject only to the adoption of this Agreement
by Parent's
stockholders and the filing and recordation of the Certificate of
Merger
pursuant to the DGCL. This Agreement has been duly executed and
delivered by
each of Parent and Ariston Merger Sub and, assuming the due
authorization,
execution and delivery by Ariston, constitutes the valid and
binding obligation
of each of Parent and Ariston Merger Sub, enforceable in accordance
with its
terms, except as enforceability may be limited by bankruptcy,
insolvency,
fraudulent transfer, reorganization, moratorium and other similar
laws and
general principles of equity. The execution and delivery of this
Agreement by
each of Parent and Ariston Merger Sub, do not, and the performance
of this
Agreement by each of Parent and Ariston Merger Sub, will not (i)
conflict with
or violate the Certificate of Incorporation or Bylaws of Parent, or
Ariston
Merger Sub, respectively, (collectively, the "Parent Charter
Documents"), (ii)
subject to compliance with the requirements set forth in Section
3.4(b) below,
conflict with or violate any law, rule, regulation, order, judgment
or decree
applicable to Parent or Ariston Merger Sub, respectively, or by
which its or any
of their respective properties is bound or affected or (iii) result
in any
breach of, or constitute a default (or an event that with notice or
lapse of
time or both would become a default) under, or impair any of,
Parent's or
Ariston Merger Sub's rights or alter the rights or obligations of
any third
party under, or to Parent's knowledge, give to others any rights of
termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien
or encumbrance on any of the properties or assets of Parent or
Ariston Merger
Sub, respectively, pursuant to, any note, bond, mortgage,
indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation
to which any of Parent or Ariston Merger Sub is a party or by which
Parent or
Ariston Merger Sub, or any of their respective properties are bound
or affected.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is
required by
or with respect to any of Parent or Ariston Merger Sub in
connection with the
execution and delivery of this Agreement or the consummation of the
transactions
contemplated hereby, except for (i) the filing of the Certificate
of Merger with
the Secretary of State of Delaware, (ii) such consents, approvals,
orders,
authorizations, registrations, declarations and filings as may be
required under
applicable federal and state securities laws (including under
Regulation D) and
(iii) such other consents, authorizations, filings, approvals and
registrations
which, if not obtained or made, individually or in the aggregate,
would not be
reasonably likely to have a Parent Material Adverse Effect.
3.5 PARENT SEC FILINGS; PARENT FINANCIAL STATEMENTS.
(a) The Parent has filed all forms, reports and documents
required to be filed with the Securities and Exchange Commission
(the "SEC").
All such required forms, reports and documents (including the
financial
statements, exhibits and schedules thereto and those documents that
the Parent
may file subsequent to the date hereof) are collectively referred
to herein as
the "Parent SEC Reports" and Parent has provided or made available
to Ariston
copies thereof and of all correspondence to or from the SEC with
respect to the
Parent. As of their
<PAGE>
respective dates, the Parent SEC Reports (i) were prepared in
accordance with
the requirements of the Securities Act of 1933, as amended (the
"Securities
Act") or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"),
as the case may be, and the rules and regulations of the SEC
thereunder
applicable to such Parent SEC Reports, and (ii) did not at the time
they were
filed (or if amended or superseded by a filing prior to the date of
this
Agreement, then on the date of such filing) contain any untrue
statement of a
material fact or omit to state a material fact required to be
stated therein or
necessary in order to make the statements therein, in the light of
the
circumstances under which they were made, not misleading.
(b) Each of the financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports (the
"Parent
Financials"), including any Parent SEC Reports filed after the date
hereof until
the Closing, as of their respective dates, (i) complied as to form
in all
material respects with the published rules and regulations of the
SEC with
respect thereto, (ii) was prepared in accordance with U.S.
generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the
periods involved (except as may be indicated in the notes thereto
or, in the
case of unaudited interim financial statements, as may be permitted
by the SEC
on Form 10-QSB under the Exchange Act) and (iii) fairly presented
the financial
position of the Parent at the respective dates thereof and the
consolidated
results of its operations and cash flows for the periods indicated,
except that
the unaudited interim financial statements were or are subject to
normal and
recurring year-end adjustments which were not, or are not expected
to be,
material in amount. The balance sheet
