AGREEMENT AND PLAN OF MERGER BY AND AMONG SEWARD SCIENCES, INC., ARISTON PHARMACEUTICALS, INC. AND SEWARD ACQUISITION CORP.
Exhibit
10.1
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
▇▇▇▇▇▇
SCIENCES, INC.,
ARISTON
PHARMACEUTICALS, INC.
AND
▇▇▇▇▇▇
ACQUISITION CORP.
This
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of
February 13, 2007, among ▇▇▇▇▇▇ Sciences, Inc., a Delaware corporation
(“Parent”), Ariston Pharmaceuticals, Inc., a Delaware corporation (“Ariston”),
and ▇▇▇▇▇▇ Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent (“▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Merger Sub (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of ▇▇▇▇▇▇
Merger Sub, respectively, and fair to and in the best interests of, ▇▇▇▇▇▇
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 ▇▇▇▇▇▇ 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:
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, ▇▇▇▇▇▇ Merger Sub shall be merged with and into Ariston (the “Merger”),
the separate corporate existence of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Merger
Sub shall vest in the Ariston Surviving Corporation, and all debts, liabilities
and duties of Ariston and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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
Parent’s Schedule 3.5 delivered to Ariston.
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 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 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 ▇▇▇▇▇▇
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 $0.001 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 $0.001 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 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 1.7, 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 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 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 representing Ariston Common Stock or Ariston Preferred Stock
(“Certificates”) are presented to Ariston Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.8 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.
1.9 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).
1.10 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 ▇▇▇▇▇▇ Merger Sub, the officers and directors of Parent and the
Ariston Surviving Corporation shall be fully authorized (in the name of ▇▇▇▇▇▇
Merger Sub, Ariston and otherwise) to take all such necessary
action.
1.11 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 of 1933, as amended (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 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 WERE 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 Bylaws.
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 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 ▇▇▇▇▇▇ Merger Sub of the Merger and the amendments
to
their respective certificates of incorporation (the “Stockholder Approvals”).
This 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 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 Bylaws, or
(ii) subject to obtaining the Required Approvals, conflict with, or constitute
a
default (or an event that with notice or lapse of time or both would become
a
default) under, or 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), an “Ariston
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
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 each 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, or calls or commitments of any character whatsoever relating
to,
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 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 U.S. 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 an Ariston 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 Securities and Exchange Commission (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 Agreement or (ii) would, if
there were an unfavorable decision, individually or in the aggregate, have
or
reasonably be expected to result in an Ariston 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 an Ariston 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 governmental authority,
except in each case as would not, individually or in the aggregate, have or
result in an Ariston 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 an Ariston 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 ▇▇▇▇▇▇ MERGER SUB
Each
of
Parent and ▇▇▇▇▇▇ Merger Sub, jointly and severally, hereby represents and
warrants to Ariston that:
3.1 Organization
of Parent and ▇▇▇▇▇▇ Merger Sub.
(a) Each
of
Parent and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Merger Sub as a whole or on the ability of Parent to consummate the transactions
contemplated by this Agreement; it being understood, however, 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Merger
Sub,
each as amended to date, and each such instrument is in full force and effect.
Neither Parent nor ▇▇▇▇▇▇ 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, $0.001 par value, of which there were 125,000 shares issued and
outstanding as of the date hereof and 10,000,000 shares of Preferred Stock,
$0.001 par value, of which there were no shares issued and outstanding as of
the
date hereof. The authorized capital stock of ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Merger Sub or any
agreement or document to which Parent or ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Merger Sub is a party or by which it is bound obligating Parent or
▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Merger Sub or obligating Parent or ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Merger
Sub.
3.4 Authority.
(a) Each
of
Parent and ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Merger Sub and, assuming the due authorization, execution and delivery by
Ariston, constitutes the valid and binding obligation of each of Parent and
▇▇▇▇▇▇ 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
▇▇▇▇▇▇ Merger Sub, do not, and the performance of this Agreement by each of
Parent and ▇▇▇▇▇▇ Merger Sub, will not (i) conflict with or violate the
Certificate of Incorporation or Bylaws of Parent, or ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Merger Sub is a party or by which Parent or
▇▇▇▇▇▇ 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 U.S. or foreign federal, state, local, municipal or other
governmental authority or agency, including any governmental division,
department, commission or other body (“Governmental Entity”) is required by or
with respect to any of Parent or ▇▇▇▇▇▇ 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
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 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 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 of the Parent as of September 30, 2006
is
hereinafter referred to as the “Parent Balance Sheet.” Except as disclosed in
the Parent Financials, the Parent does not have any liabilities (absolute,
accrued, contingent or otherwise) of a nature required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of the
Parent, except liabilities (i) provided for in the Parent Balance Sheet, or
(ii)
incurred since the date of the Parent Balance Sheet in the ordinary course
of
business consistent with past practices and which would not reasonably be
expected to have a Parent Material Adverse Effect.
(c) Parent
has heretofore furnished to Ariston a complete and correct copy of any
amendments or modifications to the Parent SEC Reports, if any, which have not
yet been filed with the SEC but which will be required to be filed, to
agreements, documents or other instruments which previously had been filed
by
the Parent with the SEC pursuant to the Securities Act or the Exchange
Act.
3.6 Absence
of Certain Changes or Events.
Except
as disclosed in the Parent SEC Reports filed prior to the date hereof or as
contemplated by this Agreement, since the date of the Parent Balance Sheet,
Parent has conducted business only in, and has not engaged in any material
transaction other than according to, the ordinary and usual course of such
businesses and there has not been (i) any change that individually or in the
aggregate, has had or is reasonably likely to have a Parent Material Adverse
Effect, (ii) any material damage, destruction or other casualty loss with
respect to any material asset or property owned, leased or otherwise used by
Parent or ▇▇▇▇▇▇ Merger Sub, whether or not covered by insurance, (iii) any
declaration, setting aside or payment of any dividend or other distribution
in
cash, stock or property in respect of the capital stock of Parent, except for
dividends or other distributions on its capital stock publicly announced prior
to the date hereof and except as expressly permitted hereby, (iv) any event
that
would constitute a violation of Section 4.1 or Section 4.2 hereof, if such
event
occurred after the date of this Agreement and prior to the Effective Time,
or
(v) any change by Parent in accounting principles, practices or
methods.
3.7 Tax
Matters.
(a) For
purposes of this Agreement, (i) “Taxes” shall mean all Federal, state, local,
foreign, provincial, territorial or other taxes, imports, tariffs, fees, levies
or other similar assessments or liabilities and other charges of any kind,
including income taxes, profits taxes, franchise taxes, ad valorem taxes, excise
taxes, withholding taxes, stamp taxes or other taxes of or with respect to
gross
receipts, premiums, real property, personal property, windfall profits, sales,
use, transfers, licensing, employment, social security, workers' compensation,
unemployment, payroll and franchises imposed by or under any law (meaning all
laws, statutes, ordinances and regulations of any governmental authority
including all decisions of any court having the effect of law), and any other
taxes, duties or assessments, together with all interest, penalties and
additions imposed with respect to such amounts, (ii) “Tax Returns” shall mean
any declaration, return, report, schedule, certificate, statement or other
similar document (including relating or supporting information) required to
be
filed with any Taxing Authority (as defined below), or where none is required
to
be filed with a Taxing Authority, the statement or other document issued by
the
applicable Taxing Authority in connection with any Tax, including, without
limitation, any information return, claim for refund, amended return or
declaration of estimated Tax, and (iii) “Taxing Authority” shall mean any
domestic, foreign, Federal, national, provincial, state, county or municipal
or
other local government or court, any subdivision, agency, commission or
authority thereof, or any quasi-governmental body exercising tax regulatory
authority.
(b) Parent
has (i) timely filed all Tax Returns that are required to have been filed by
it
with all appropriate Taxing Authorities (and all such returns are true and
correct and fairly reflect in all material respects its operations for tax
purposes), and (ii) timely paid all Taxes shown as owing on such Tax Returns
or
assessed by any Taxing Authority (other than Taxes the validity of which are
being contested in good faith by appropriate proceedings). Between September
30,
2006 and the Closing Date, neither Parent nor ▇▇▇▇▇▇ Merger Sub has incurred
(or
will incur) a Tax liability other than a Tax liability in the ordinary course
of
business and in accordance with past custom and practice. The assessment of
any
additional Taxes for periods for which Tax Returns have been filed is not
expected to exceed reserves made in accordance with GAAP and reflected in the
Parent Financial Statements and the Parent Balance Sheet and, to Parent's
knowledge, there are no material unresolved questions or claims concerning
Parent's Tax liability. Parent's Tax Returns have not been reviewed or audited
by any Taxing Authority and no deficiencies for any Taxes have been proposed,
asserted or assessed either orally or in writing against Parent or ▇▇▇▇▇▇ Merger
Sub that are not adequately reserved for in accordance with GAAP. No liens
exist
for Taxes (other than liens for Taxes not yet due and payable) with respect
to
any of the assets or properties of Parent or ▇▇▇▇▇▇ Merger Sub.
(c) Neither
Parent nor ▇▇▇▇▇▇ Merger Sub has outstanding any agreements or waivers
extending, or having the effect of extending, the statute of limitations with
respect to the assessment or collection of any Tax or the filing of any Tax
Return.
(d) Neither
Parent nor ▇▇▇▇▇▇ Merger Sub is a party to or bound by any tax-sharing
agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any Taxing
Authority).
(e) Parent
shall not be required to include in a taxable period ending after the Closing
Date any taxable income attributable to income that accrued in a prior taxable
period but was not recognized in any prior taxable period as a result of the
installment method of accounting, the long-term contract method of accounting,
the cash method of accounting or Section 481 of the Code or any comparable
provision of state, local or foreign Tax law, or for any other
reason.
(f) Parent
has complied in all material respects with all applicable laws relating to
the
payment and withholding of Taxes (including, without limitation, withholding
of
Taxes pursuant to Sections 1441, 1442, 3121, 3402 and 3406 of the Code or any
comparable provision of any state, local or foreign laws) and has, within the
time and in the manner prescribed by applicable law, withheld from and paid
over
to the proper Taxing Authorities all amounts required to be so withheld and
paid
over under applicable laws.
(g) The
NOLs
of Parent or ▇▇▇▇▇▇ Merger Sub are not, as of the date hereof, subject to
Sections 382 or 269 of the Code, Regulations Section 1.1502-21(c), or any
similar provisions or Regulations otherwise limiting the use of the NOLs of
Parent or ▇▇▇▇▇▇ Merger Sub.
(h) Parent
has never been a “United States real property holding company” (as such term is
defined in Section 897(c)(2) of the Code).
(i) Any
deficiency resulting from any audit or examination relating to Taxes of Parent
by any Taxing Authority has been timely paid.
(j) No
power
of attorney with respect to any Taxes has been executed or filed with any Taxing
Authority by or on behalf of Parent.
(k) The
total
adjusted tax basis of the assets of Parent equals or exceeds the sum of any
liabilities of Parent at the Closing.
(l) As
of the
date of this Agreement it is the present intention, and as of the date of the
Closing it will be the present intention, of Parent to continue, either in
the
form of Ariston as a wholly owned subsidiary of Parent or through a member
of
Parent’s “qualified group” (as defined in Regulations Section 1.368-1(d)(4)), at
least one significant historic business line of Ariston, or to use at least
a
significant portion of Ariston's historic business assets in a business, in
each
case within the meaning of Regulations Section 1.368-1(d). As of the date of
the
Merger, (i) Parent will own all of the outstanding stock or other equity
interests in ▇▇▇▇▇▇ Merger Sub, and (ii) Parent will be in “control” of
▇▇▇▇▇▇ Merger Sub within the meaning of Code Section 368(c). Parent has no
plan
or present intention to sell, transfer or otherwise dispose of any of the stock
of Ariston following the Merger, and Parent has no present plan or intention
to
cause Ariston to issue additional stock following the Merger, that in either
case would result in Parent’s not having “control” of Ariston within the meaning
of Code Section 368(c).
(m) Neither
Parent nor ▇▇▇▇▇▇ Merger Sub has taken or agreed to take any action or failed
to
take any action that would prevent the Merger from constituting a reorganization
within the meaning of Section 368(a) of the Code.
3.8 Patents
and Trademarks.
Parent
has no patents, trademarks, licenses, sublicenses, or any agreement relating
to
the ownership of use of any intellectual property.
3.9 Compliance;
Permits; Restrictions.
(a) Neither
Parent nor ▇▇▇▇▇▇ Merger Sub is in conflict with, or in default or violation
of
(i) any law, rule, regulation, order, judgment or decree applicable to Parent
or
▇▇▇▇▇▇ Merger Sub or by which its or any of their respective properties is
bound
or affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or ▇▇▇▇▇▇ Merger Sub is a party or by which Parent or ▇▇▇▇▇▇ Merger
Sub
or its or any of their respective properties is bound or affected except for
those conflicts, defaults or violations which would not be reasonably expected
to have a Parent Material Adverse Effect. To the knowledge of Parent, no
investigation or review by any Governmental Entity is pending or threatened
against Parent or ▇▇▇▇▇▇ Merger Sub, nor has any Governmental Entity indicated
in writing an intention to conduct the same, other than those which would not
reasonably be expected to have a Parent Material Adverse Effect. There is no
agreement, judgment, injunction, order or decree binding upon Parent or ▇▇▇▇▇▇
Merger Sub which has or would reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Parent or ▇▇▇▇▇▇
Merger Sub, any acquisition of material property by Parent or ▇▇▇▇▇▇ Merger
Sub
or the conduct of business by Parent as currently conducted.
(b) Parent
and ▇▇▇▇▇▇ Merger Sub hold all permits, licenses, variances, exemptions, orders
and approvals from Governmental Entities which are necessary to the conduct
of
the business of Parent except those the absence of which would not, individually
or in the aggregate, be reasonably likely to have a Parent Material Adverse
Effect, (collectively, the “Parent Permits”). Parent and ▇▇▇▇▇▇ Merger Sub are
in compliance in all material respects with the terms of the Parent
Permits.
3.10 Litigation.
As of
the date of this Agreement, there is no action, suit, proceeding, claim,
arbitration or investigation pending, including derivative suits brought by
or
on behalf of Parent, or as to which Parent or ▇▇▇▇▇▇ Merger Sub has received
any
written notice of assertion nor, to Parent's knowledge, is there a threatened
action, suit, proceeding, claim, arbitration or investigation against Parent
or
▇▇▇▇▇▇ Merger Sub seeking to delay, limit or enjoin the transactions
contemplated by this Agreement or which might reasonably be expected to have
a
Parent Material Adverse Effect.
3.11 Brokers'
and Finders' Fees.
Parent
has not incurred, nor will it incur, directly or indirectly, any liability
for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with this Agreement or any transaction contemplated hereby, other
than finders’ fees, the payment for which will be the sole responsibility of
Parent.
3.12 Labor
Agreements and Actions, Employee Benefit Plans.
(a) Neither
Parent nor ▇▇▇▇▇▇ Merger Sub is bound by or subject to (and none of their assets
or properties is bound by or subject to) any written or oral, express or
implied, contract, commitment or arrangement with any labor union, and no labor
union has requested or, to the knowledge of Parent, has sought to represent
any
of the employees, representatives, or agents of Parent or ▇▇▇▇▇▇ Merger Sub.
There is no strike or other labor dispute involving Parent or ▇▇▇▇▇▇ Merger
Sub
pending or, to the knowledge of Parent, threatened, nor is Parent aware of
any
labor organization activity involving its employees.
(b) Neither
Parent nor ▇▇▇▇▇▇ Merger Sub has ever sponsored, maintained, contributed to
or
had any liabilities or responsibilities for, any pension, profit-sharing or
other retirement, bonus, deferred compensation, employment agreement, severance
agreement, compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, long- or
short-term disability, fringe benefit, sick pay, or vacation pay, or other
employee benefit plan, program, agreement, or arrangement or policy.
(c) There
are
no employment agreements for any officers or employees of Parent.
3.13 Absence
of Liens and Encumbrances.
Each of
Parent and ▇▇▇▇▇▇ Merger Sub has good and valid title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used in its business, free
and
clear of any liens and encumbrances except (i) as reflected in the Parent
Financial Statements, (ii) for liens for taxes not yet due and payable and
(iii)
for such imperfections of title and encumbrances, if any, which would not be
reasonably expected to have a Parent Material Adverse Effect.
3.14 Environmental
Matters.
(a) Hazardous
Materials Activities.
Except
as would not reasonably be likely to result in a material liability to Parent
(in any individual case or in the aggregate), (i) neither Parent nor ▇▇▇▇▇▇
Merger Sub has transported, handled, treated, stored, used, manufactured,
distributed, disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any applicable law and (ii) neither Parent
nor ▇▇▇▇▇▇ Merger Sub has engaged in, Hazardous Materials Activities in
violation of any applicable law, rule, regulation, treaty or statute promulgated
by any Governmental Entity in effect prior to or as of the date hereof to
prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity.
(b) Environmental
Liabilities.
No
action, proceeding, revocation proceeding, amendment procedure, writ, injunction
or claim is pending, or to Parent's knowledge, threatened against Parent or
▇▇▇▇▇▇ Merger Sub concerning (i) any Parent Permit relating to any environmental
matter, (ii) any Hazardous Material or (iii) any Hazardous Materials Activity
of
Parent or ▇▇▇▇▇▇ Merger Sub. Parent is not aware of any fact or circumstance
which could involve Parent or ▇▇▇▇▇▇ Merger Sub in any environmental litigation
or impose upon Parent or ▇▇▇▇▇▇ Merger Sub any environmental
liability.
(c) Compliance
with Environmental Laws.
Each of
Parent, ▇▇▇▇▇▇
Merger Sub,
and
their respective predecessors and affiliates have complied and are in
compliance, in each case in all material respects, with all applicable laws,
rules, regulations, treaties and statutes promulgated by any Governmental Entity
in effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
3.15 Agreements.
Parent
is not a party to any written or oral agreements, except that Parent has entered
into retainer and engagement agreements with its audit and legal professionals
in the ordinary course of its business.
3.16 Board
Approval.
The
Board of Directors of each of Parent and ▇▇▇▇▇▇ Merger Sub has, as of the date
of this Agreement, (i) determined that the Merger is fair to, advisable and
in
the best interests of it and its stockholders, (ii) has approved the Share
Issuance and (iii) duly approved the Merger, this Agreement and the transactions
contemplated hereby.
3.17 Interim
Operations of ▇▇▇▇▇▇ Merger Sub.
▇▇▇▇▇▇
Merger Sub was formed solely for the purpose of engaging in the transactions
contemplated hereby and has engaged in no other business other than incident
to
its creation and this Agreement and the transactions contemplated
hereby.
3.18 Valid
Issuances.
The
Ariston Merger Consideration to be issued by Parent in the Merger, when issued
in accordance with the provisions of this Agreement, will be duly authorized,
validly issued, full paid and nonassessable, free of all liens and encumbrances
and not subject to preemptive rights and, subject to receipt of complete and
executed investor questionnaires from each holder of Ariston capital stock,
will
be exempt from the registration requirements of the Securities Act and
applicable blue sky laws.
ARTICLE
IV
CONDUCT
PRIOR TO THE EFFECTIVE TIME
4.1 Conduct
of Business by the Parties.
During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement pursuant to its terms or the Effective Time,
each of Ariston and Parent shall carry on their respective business in the
ordinary course and in substantial compliance with all applicable laws and
regulations, pay their respective debts and taxes when due subject to good
faith
disputes over such debts or taxes, pay or perform other material obligations
when due subject to good faith disputes over such obligations, and use their
commercially reasonable efforts consistent with past practices and policies
to
(i) preserve intact their present business organization, (ii) keep available
the
services of each of their present officers and employees, respectively, and
(iii) preserve their relationships with customers, suppliers, distributors,
licensors, licensees and others with which each party has business dealings
material to their respective business.
4.2 Covenants
of Parent.
Except
as permitted by the terms of this Agreement, without the prior written consent
of Ariston, during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement pursuant to its terms
or
the Effective Time, Parent shall not do any of the following and shall not
permit ▇▇▇▇▇▇ Merger Sub to do any of the following:
(a) Except
as
required by law, waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprise options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Except
as
required by applicable law, grant any severance or termination pay to any
officer or employee except pursuant to written agreements outstanding, or
policies existing, on the date hereof and as previously disclosed in writing
or
made available to Ariston, or adopt any new severance plan, or amend or modify
or alter in any manner any severance plan, agreement or arrangement existing
on
the date hereof;
(c) Declare,
set aside or pay any dividends on or make any other distributions (whether
in
cash, stock, equity securities or property) in respect of any capital stock
or
split, combine or reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for any capital stock;
(d) Purchase,
redeem or otherwise acquire, directly or indirectly, any shares of capital
stock
of Parent or ▇▇▇▇▇▇ Merger Sub, except (i) repurchases of unvested shares at
cost in connection with the termination of the employment relationship with
any
employee pursuant to stock option or purchase agreements in effect on the date
hereof (or any such agreements entered into in the ordinary course of business
consistent with past practice by Parent with employees hired after the date
hereof), and (ii) for the purpose of funding or providing benefits under any
stock option and incentive compensation plans, directors plans, and stock
purchase and dividend reinvestment plans in accordance with past
practice;
(f) Cause,
permit or submit to a vote of Parent's stockholders any amendments to the Parent
Charter Documents (or similar governing instruments of ▇▇▇▇▇▇ Merger Sub) other
than as provided in Section 6.1(g);
(g) Acquire
or agree to acquire by merging or consolidating with, or by purchasing any
equity interest in or a portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to enter into
any joint ventures, strategic partnerships or strategic
investments;
(h) Sell,
lease, license, encumber or otherwise dispose of any properties or assets except
in the ordinary course of business consistent with past practice, except for
the
sale, lease, licensing, encumbering or disposition of property or assets which
are not material, individually or in the aggregate, to the business of Parent
and ▇▇▇▇▇▇ Merger Sub;
(i) Incur
any
indebtedness for borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities or options, warrants, calls or other
rights to acquire any debt securities of Parent;
(j) Adopt
or
amend employee stock purchase or employee stock option plan, or enter into
any
employment contract or collective bargaining agreement (other than offer letters
and letter agreements entered into in the ordinary course of business consistent
with past practice with employees who are terminable “at will”), pay any special
bonus or special remuneration to any director or employee, or increase the
salaries, wage rates, compensation or other fringe benefits (including rights
to
severance or indemnification) of its directors, officers, employees or
consultants except, in each case, as may be required by law;
(k) (i)
Pay,
discharge, settle or satisfy any litigation (whether or not commenced prior
to
the date of this Agreement) or any material claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than
the payment, discharge, settlement or satisfaction, in the ordinary course
of
business consistent with past practice or in accordance with their terms, of
liabilities recognized or disclosed in the Parent Balance Sheet or incurred
since the date of such financial statements, or (ii) waive the benefits of,
agree to modify in any manner, terminate, release any person from or knowingly
fail to enforce the confidentiality or nondisclosure provisions of any agreement
to which Parent or ▇▇▇▇▇▇ Merger Sub is a party or of which Parent or ▇▇▇▇▇▇
Merger Sub is a beneficiary;
(l) Except
in
the ordinary course of business consistent with past practice, materially
modify, amend or terminate any agreements or waive, delay the exercise of,
release or assign any material rights or claims thereunder without providing
prior notice to Parent;
(m) Except
as
required by GAAP, revalue any of its assets or make any change in accounting
methods, principles or practices;
(n) Make
any
Tax election or accounting method change (except as required by GAAP)
inconsistent with past practice that, individually or in the aggregate, is
reasonably likely to adversely affect in any material respect the Tax liability
or Tax attributes of Parent or ▇▇▇▇▇▇ Merger Sub, settle or compromise any
material Tax liability or consent to any extension or waiver of any limitation
period with respect to Taxes;
(o) Take
any
action that would prevent the Merger from qualifying as a reorganization under
Section 368(a) of the Code or an exchange qualifying under Section 351 of the
Code; or
(p) Agree
in
writing or otherwise to take any of the actions described in Section 4.2 (a)
through (o) above.
4.3 Covenants
of Ariston.
Except
as disclosed in Schedule 4.3 delivered to Parent, during the period from the
date of this Agreement and continuing until the earlier of the termination
of
this Agreement pursuant to its terms or the Effective Time, Ariston shall not
(i) amend the Ariston Charter Documents (other than as provided in Section
6.1(g)), (ii) split, combine or reclassify its outstanding shares of capital
stock, (iii) declare, set aside or pay any dividend payable in cash, stock
or
property in respect of any capital stock, (iv) take any action that would
prevent the Merger from qualifying as a reorganization under Section 368(a)
of
the Code or a qualifying exchange under Section 351 of the Code, (v) conduct
its
business, other than in the ordinary course consistent with past practices,
or
as contemplated by this Agreement, (vi) issue any capital stock or any options,
warrants or other rights to subscribe for or purchase any capital stock or
any
securities convertible into or exchangeable or exercisable for, or rights to
purchase or otherwise acquire, any shares of the capital stock of Ariston,
except as contemplated in the Financing, or (vii) directly or indirectly redeem,
purchase, sell or otherwise acquire any capital stock of Ariston, except as
specifically contemplated by this Agreement.
ARTICLE
V
ADDITIONAL
AGREEMENTS
5.1 Public
Disclosure; Securities Law Filings.
Parent
and Ariston will consult with each other, and to the extent practicable, agree,
before issuing any press release or otherwise making any public statement with
respect to the Merger or this Agreement and will not issue any such press
release or make any such public statement prior to such consultation, except
as
may be required by law or any listing agreement with a national securities
exchange or Nasdaq, in which case reasonable efforts to consult with the other
party will be made prior to such release or public statement. The parties will
agree to the text of the joint press release announcing the signing of this
Agreement. In addition, Parent and Ariston agree to cooperate in the preparation
and filing of all filings required by applicable securities laws, including,
without limitation, current reports on Form 8-K and information required by
Rule
14f-1 under the Exchange Act.
5.2 Commercially
Reasonable Efforts; Notification.
(a) Upon
the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use commercially reasonable 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 Agreement, including
to
accomplish the following: (i) causing the conditions precedent set forth in
Article VI to be satisfied; (ii) obtaining all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities; (iii) making all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental Entities,
if any); (iv) avoiding any suit, claim, action, investigation or proceeding
by
any Governmental Entity challenging the Merger or any other transaction
contemplated by this Agreement; (v) obtaining all consents, approvals or waivers
from third parties required as a result of the transactions contemplated in
this
Agreement; (vi) defending any suits, claims, actions, investigations or
proceedings, whether judicial or administrative, challenging this Agreement
or
the consummation of the transactions contemplated hereby, including seeking
to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed; and (vii) executing or delivering
any
additional instruments reasonably necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this
Agreement.
(b) Parent
shall give prompt notice to Ariston upon becoming aware that any representation
or warranty made by it or ▇▇▇▇▇▇ Merger Sub contained in this Agreement has
become untrue or inaccurate, or of any failure of Parent or ▇▇▇▇▇▇ Merger Sub
to
comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement, in each
case, where the conditions set forth in Section 6.2(a) or Section 6.2(b) would
not be satisfied as a result thereof; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(c) Ariston
shall give prompt notice to Parent upon becoming aware that any representation
or warranty made by it contained in this Agreement has become untrue or
inaccurate, or of any failure of Ariston to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, where the conditions set
forth in Section 6.3(a) or Section 6.3(b) would not be satisfied as a result
thereof; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.3 Third
Party Consents.
On or
before the Closing Date, Parent and Ariston will each use its commercially
reasonable efforts to obtain any consents, waivers and approvals under any
of
its respective agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated
hereby.
5.4 Ariston
Stock Options and Warrants.
(a) At
the
Effective Time, each outstanding option to purchase shares of Ariston Common
Stock (each, an “Ariston Stock Option”) under the Ariston Option Plan or
otherwise, whether or not vested, shall, by virtue of the Merger, be assumed
by
Parent. Each Ariston Stock Option so assumed by Parent under this Agreement
will
continue to have, and be subject to, the same terms and conditions of such
options or warrants immediately prior to the Effective Time (including, without
limitation, any repurchase rights or vesting provisions and provisions regarding
the acceleration of vesting and exercisability on certain transactions), except
that (i) each Ariston Stock Option will be exercisable (or will become
exercisable in accordance with its terms) for that number of whole shares of
Parent Common Stock as determined pursuant to Section 1.6(a), and (ii) the
per
share exercise price for the shares of Parent Common Stock issuable upon
exercise of such assumed Ariston Stock Option will be equal to the exercise
price per share of Ariston Common Stock at which such Ariston Stock Option
was
exercisable immediately prior to the Effective Time, adjusted to give effect
to
the exchange ratio determined pursuant to Section 1.6(a). No vesting periods
for
Ariston Stock Options will accelerate as a result of the transaction
contemplated hereby. At the Effective Time, (i) all references in the related
stock option agreements to Ariston shall be deemed to refer to Parent and (ii)
Parent shall assume all of Ariston's obligations with respect to the Ariston
Stock Options as so amended.
(b) At
the
Effective Time, each outstanding warrant to purchase shares of Ariston Preferred
Stock or Ariston Common Stock (each, an “Ariston Warrant”), whether or not
vested, shall, by virtue of the Merger, be assumed by Parent. Each Ariston
Warrant so assumed by Parent under this Agreement will continue to have, and
be
subject to, the same terms and conditions of such options or warrants
immediately prior to the Effective Time (including, without limitation, any
repurchase rights or vesting provisions and provisions regarding the
acceleration of vesting and exercisability on certain transactions), except
that
(i) each Ariston Warrant will be exercisable (or will become exercisable in
accordance with its terms) for that number of whole shares of Parent Preferred
Stock or Parent Common Stock as determined pursuant to Section 1.6(a), and
(ii)
the per share exercise price for the shares of Parent Preferred Stock or Parent
Common Stock issuable upon exercise of such assumed Ariston Warrant will be
equal to the exercise price per share of Ariston Preferred Stock or Ariston
Common Stock at which such Ariston Stock Warrant was exercisable immediately
prior to the Effective Time, adjusted to give effect to the exchange ratio
determined pursuant to Section 1.6(a). No vesting periods for any Ariston
Warrants will accelerate as a result of the transaction contemplated hereby.
At
the Effective Time, (i) all references in the related stock warrant agreements
to Ariston shall be deemed to refer to Parent and (ii) Parent shall assume
all
of Ariston's obligations with respect to the Ariston Warrants as so amended.
(c) It
is
intended that the Ariston Stock Options assumed by Parent shall qualify
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent the Ariston Stock Options qualified as incentive
stock options immediately prior to the Effective Time and the provisions of
this
Section 5.4 shall be applied consistently with such intent.
5.5 Parent
Stock Options and Warrants.
At the
Effective Time, any outstanding options to purchase shares of Parent Common
Stock or Parent Preferred Stock, whether or not vested, and any outstanding
warrants to purchase shares of Parent Common Stock or Parent Preferred Stock,
whether or not then exercisable, shall, by virtue of the Merger, be
cancelled.
5.6 Parent
Board of Directors.
At the
Effective Time, the Board of Directors of Parent, in accordance with applicable
law and the Parent Charter Documents, shall take all necessary action (which
action may include the resignation of existing directors) to cause the Board
of
Directors of Parent, as of the Effective Time, to appoint each of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇ as directors of Parent.
5.7 Parent
Management.
At the
Effective Time, the Board of Directors of Parent, in accordance with applicable
law and the Parent Charter Documents shall take all necessary action to appoint
the officers of Ariston to the similar offices of Parent.
5.8 No
Negotiation.
Until
the Effective Date, or such time, if any, as this Agreement is terminated
pursuant to Article VII below, neither Parent nor Ariston shall, nor shall
they
permit any of their respective affiliates, directors, officers, employees,
investment bankers, attorneys or other agents, advisors or representatives
to,
directly or indirectly, (a) sell, offer or agree to sell its business, by sale
of shares or assets, merger or otherwise (each an “Acquisition Transaction”)
other than pursuant to this Agreement, (b) solicit or initiate the submission
of
any proposal for an Acquisition Transaction, or (c) participate in any
discussions or negotiations with, or furnish any information concerning its
business to, any corporation, person or other entity in connection with a
possible Acquisition Transaction other than pursuant to this
Agreement.
5.9 Limitation
of Liability.
Notwithstanding anything to the contrary contained in this Agreement, except
as
a result of a fraud perpetrated by such officer, director or stockholder, no
officer, director or stockholder of Parent or Merger Sub, or their respective
successors or affiliates, shall have any liability hereunder from and after
the
Closing Date.
ARTICLE
VI
CONDITIONS
TO THE MERGER
6.1 Conditions
to Obligations of Each Party to Effect the Merger.
The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions, any of which may be waived in writing by both Parent
and
Ariston:
(a) Stockholder
Approval.
This
Agreement shall have been adopted and the Merger shall have been duly approved
by the requisite vote under applicable law and the Ariston Charter Documents
by
the stockholders of Ariston, and Ariston stockholders holding less than 6%
of
the Ariston Preferred Stock and Ariston Common Stock shall have exercised
appraisal rights under the DGCL;
(b) No
Order.
No
Governmental Entity shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect and
which
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger;
(c) Schedules.
Each of
the parties hereto shall have delivered to each other complete and accurate
Schedules to this Agreement and such Schedules shall have been approved by
the
recipient;
(d) Intentionally
omitted;
(e) Officers’
Certificate.
Each
party shall have furnished to the other a certificate of its Chief Executive
Officer and chief financial officer, dated as of the Effective Date, in which
such officers shall certify that, to their best knowledge, the conditions set
forth in Section 6.2 or 6.3 (as applicable) have been fulfilled and are true
and
correct;
(f) Legal
Opinion.
Each
party shall have received a legal opinion from its legal counsel which opinion
may be based on customary reliance and subject to customary qualifications,
to
the effect that that the issuance of the Ariston Merger Consideration is exempt
from the registration requirements of the Securities Act; and
(g) Charter
Amendments.
Each of
Parent and Ariston shall have amended their respective Certificates of
Incorporation to be substantively identical (with the form of such Amended
and
Restated Certificate of Incorporation to be provided by Ariston).
6.2 Additional
Conditions to Obligations of Ariston.
The
obligation of Ariston to effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Ariston:
(a) Representations
and Warranties.
The
representations and warranties of Parent and ▇▇▇▇▇▇ Merger Sub set forth in
this
Agreement shall be true and correct as of the date of this Agreement and as
of
the Closing Date as if made on and as of the Closing Date (except to the extent
any such representation and warranty expressly speaks as of an earlier date)
and
Ariston shall have received a certificate signed on behalf of Parent by the
Chief Executive Officer of Parent to such effect; provided, however, that
notwithstanding anything herein to the contrary, this Section 6.2(a) shall
be
deemed to have been satisfied even if such representations or warranties are
not
so true and correct unless the failure of such representations or warranties
to
be so true and correct, individually or in the aggregate, has had, or is
reasonably likely to have, a Parent Material Adverse Effect;
(b) Agreements
and Covenants.
Each of
Parent and ▇▇▇▇▇▇ Merger Sub shall have performed or complied with, in all
material respects, all agreements and covenants required by this Agreement
to be
performed or complied with by them on or prior to the Closing Date, and Ariston
shall have received a certificate to such effect signed on behalf of each of
Parent and ▇▇▇▇▇▇ Merger Sub by an authorized officer of Ariston;
(c) Review.
Prior
to the Effective Time, Ariston shall have completed its review of the current
and certain past officers, directors and principal stockholders of Parent,
which
results of such review shall be satisfactory to Ariston;
(d) No
Closing Material Adverse Effect.
Since
the date hereof, there has not occurred a Parent Material Adverse Effect. For
purposes of the preceding sentence and Section 6.2(a), the occurrence of any
of
the following events or circumstances, in and of themselves and in combination
with any of the others, shall not constitute a Parent Material Adverse
Effect:
(1) any
litigation or threat of litigation filed or made after the date hereof
challenging any of the transactions contemplated herein or any stockholder
litigation or threat of stockholder litigation filed or made after the date
hereof resulting from this Agreement or the transactions contemplated herein
unless Ariston shall conclude that it has or could have a Material Adverse
Effect on the Parent and Ariston Surviving Corporation, taken as a whole;
and
(2) any
adverse change, event or effect that is demonstrated to be caused primarily
by
conditions generally affecting the United States economy;
(e) Corporate
Documents.
Ariston
shall have received a copy of the Certificate of Incorporation of each of the
Parent and ▇▇▇▇▇▇ Merger Sub, certified by the Secretary of State of the State
of Delaware evidencing the good standing of Parent and ▇▇▇▇▇▇ Merger Sub in
such
jurisdiction;
(f) Other
Agreements and Resignations.
Each of
the officers and directors of Parent and ▇▇▇▇▇▇ Merger Sub immediately prior
to
the Closing Date shall deliver duly executed resignations from their positions
with each such applicable corporation immediately upon the Closing
Date;
(g) Compliance
with Securities Law Requirements.
Parent
shall be in compliance in all material respects with all requirements of
applicable securities laws, including, without limitation, the filing of reports
required by Section 13 of the Exchange Act, and shall have taken all actions
with respect thereto as shall be required or reasonably requested by Ariston
in
connection therewith;
(h) Ariston
Financing. Ariston
shall have closed on at least $18,000,000 of gross proceeds from the sale of
the
Ariston Preferred Stock; and
(i) Redemption
of Parent Capital Stock.
Immediately prior to the Effective Time, Parent shall have redeemed at least
97%
of the outstanding shares of its capital stock for aggregate consideration
equal
to Parent’s liabilities immediately prior to the Effective Time.
6.3 Additional
Conditions to the Obligations of Parent and ▇▇▇▇▇▇ Merger Sub.
The
obligations of Parent and ▇▇▇▇▇▇ Merger Sub to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations
and Warranties.
The
representations and warranties of Ariston set forth in this Agreement shall
be
true and correct as of the date of this Agreement and as of the Closing Date
as
if made on and as of the Closing Date (except to the extent any such
representation and warranty expressly speaks as of an earlier date) and Parent
shall have received a certificate signed on behalf of Ariston by the Chief
Executive Officer of Ariston to such effect; provided, however, that
notwithstanding anything herein to the contrary, this Section 6.3(a) shall
be
deemed to have been satisfied even if such representations or warranties are
not
so true and correct unless the failure of such representations or warranties
to
be so true and correct, individually or in the aggregate, has had, or is
reasonably likely to have, an Ariston Material Adverse Effect;
(b) Agreements
and Covenants.
Ariston
shall have performed or complied with, in all material respects, all agreements
and covenants required by this Agreement to be performed or complied with by
it
at or prior to the Closing Date, and Parent shall have received a certificate
to
such effect signed on behalf of Ariston by an authorized officer of
Ariston;
(c) Minimum
Financing.
Ariston
shall have closed on at least $18,000,000 of gross proceeds from the sale of
the
Ariston Preferred Stock (the “Financing”);
(d) No
Closing Material Adverse Effect.
Since
the date hereof, there has not occurred an Ariston Material Adverse Effect.
For
purposes of the preceding sentence and Section 6.3(a), the occurrence of any
of
the following events or circumstances, in and of themselves and in combination
with any of the others, shall not constitute an Ariston Material Adverse
Effect:
(1) any
litigation or threat of litigation filed or made after the date hereof
challenging any of the transactions contemplated herein or any stockholder
litigation or threat of stockholder litigation filed or made after the date
hereof resulting from this Agreement or the transactions contemplated herein
unless Parent and ▇▇▇▇▇▇ Merger Sub, together, shall conclude that it has or
could have a Ariston Material Adverse Effect; and
(2) any
adverse change, event or effect that is demonstrated to be caused primarily
by
conditions generally affecting the United States economy;
(e) Audited
Financial Statements.
Ariston
shall have the audited financial statements that are required to be filed with
the SEC as an exhibit to the Current Report of Parent on Form 8-K, available
on
or before Closing; and
(f) Indemnity
Agreement.
Parent
and Ariston shall have entered into an indemnity agreement with Parent’s
directors and officers in a form to be mutually agreed upon by Parent and
Ariston.
ARTICLE
VII
TERMINATION,
AMENDMENT AND WAIVER
7.1 Termination.
This
Agreement may be terminated at any time prior to the Effective Time, whether
before or after the requisite approval of the stockholders of
Ariston:
(a) by
mutual
written consent duly authorized by the Boards of Directors of Parent and
Ariston; or
(b) by
either
Parent or Ariston if the Merger shall not have been consummated by March 31,
2007, which date will be automatically extended for up to 30 days if the
expiration of the Financing shall have been extended (such date, being the
“Outside Date”) for any reason; provided, however, that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose action or failure to act has been a principal cause of, or resulted in
the
failure of, the Merger to occur on or before such date if such action or failure
to act constitutes a breach of this Agreement; or
(c) by
either
Parent or Ariston if a Governmental Entity shall have issued an order, decree
or
ruling or taken any other action, in any case having the effect of permanently
restraining, enjoining or otherwise prohibiting the Merger, which order, decree,
ruling or other action shall have become final and nonappealable or any law,
order, rule or regulation is in effect or is adopted or issued, which has the
effect of prohibiting the Merger; or
(d) by
Parent, on the one hand, or Ariston, on the other, if any condition to the
obligation of any such party to consummate the Merger set forth in Section
6.2
(in the case of Ariston) or 6.3 (in the case of Parent) becomes incapable of
satisfaction prior to the Outside Date; provided, however, that the failure
of
such condition is not the result of a breach of this Agreement by the party
seeking to terminate this Agreement.
7.2 Fees
and Expenses.
All
Expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such Expenses whether
or not the Merger is consummated. As used in this Agreement, “Expenses” shall
include all reasonable out-of-pocket expenses (including, without limitation,
all fees and expenses of counsel, accountants, experts and consultants to a
party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement and all other matters relating
to
the closing of the Merger and the other transactions contemplated
hereby.
7.3 Amendment.
This
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective
Time;
provided, however, that, after the approval and adoption of this Agreement
by
the stockholders of Ariston, there shall not be any amendment that by law
requires further approval by the stockholders of Ariston without the further
approval of such stockholders. This Agreement may not be amended by the parties
hereto except by execution of an instrument in writing signed on behalf of
each
of Parent, Ariston and ▇▇▇▇▇▇ Merger Sub.
7.4 Extension;
Waiver.
At any
time prior to the Effective Time, any party hereto may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations
or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be
valid only if set forth in an instrument in writing signed on behalf of such
party. Delay in exercising any right under this Agreement shall not constitute
a
waiver of such right.
ARTICLE
VIII
CONTINUATION
OF BUSINESS
After
the
Effective Time of the Merger, Parent, either directly or through Ariston as
long
as Ariston is within Parent’s “qualified group” within the meaning of
Regulations Section 1.368-1(d)(4)(ii) (the “Qualified Group”), will continue at
least one significant historic business line of Ariston, or use at least a
significant portion of Ariston's historic business assets in a business, in
each
case within the meaning of Regulations Section 1.368-1(d), except that Ariston's
historic business assets may be transferred (a) to a corporation that is
another member of Parent’s Qualified Group, or (b) to an entity taxed as a
partnership if (i) one or more members of Parent’s Qualified Group have
active and substantial management functions as a partner with respect to
Parent’s historic business or (ii) members of Parent’s Qualified Group in
the aggregate own an interest in the partnership representing a significant
interest in Ariston's historic business, in each case within the meaning of
Regulations Section 1.368-1(d)(4)(iii).
ARTICLE
IX
GENERAL
PROVISIONS
9.1 Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed given on the day of delivery if delivered personally or sent via telecopy
(receipt confirmed) or on the second business day after being sent if delivered
by commercial delivery service, to the parties at the following addresses or
telecopy numbers (or at such other address or telecopy numbers for a party
as
shall be specified by like notice):
(a) if
to
Parent (prior to Closing):
▇▇▇▇▇▇
Sciences, Inc.
▇/▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, LLC
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
(b) if
to
Ariston or ▇▇▇▇▇▇ Merger Sub (or Parent subsequent to Closing), to
Ariston
Pharmaceuticals, Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Fax:
▇▇▇-▇▇▇-▇▇▇▇
With
a
copy to:
▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
W.
▇▇▇▇▇ Mannheim
Fax:
▇▇▇-▇▇▇-▇▇▇▇
9.2 Interpretation.
(a) When
a
reference is made in this Agreement to a Section, such reference shall be to
a
Section of this Agreement. Unless otherwise indicated the words “include,”
“includes” and “including” when used herein shall be deemed in each case to be
followed by the words “without limitation.” The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein
to
“the business of” an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference
to
the subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity.
(b) For
purposes of this Agreement, the term “knowledge” means with respect to a party
hereto, with respect to any matter in question, that any of the officers of
such
party has actual knowledge of such matter.
(c) For
purposes of this Agreement, the term “person” shall mean any individual,
corporation (including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or Governmental
Entity.
(d) For
purposes of this Agreement, an “agreement,” “arrangement,” “contract,”
“commitment” or “plan” shall mean a legally binding, written agreement,
arrangement, contract, commitment or plan, as the case may be.
9.3 Counterparts.
This
Agreement may be executed in one or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and delivered to
the
other party, it being understood that all parties need not sign the same
counterpart.
9.4 Entire
Agreement; Third Party Beneficiaries.
This
Agreement and the documents and instruments and other agreements among the
parties hereto as contemplated by or referred to herein constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof. Nothing in this Agreement
is intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement.
9.5 Severability.
In the
event that any provision of this Agreement, or the application thereof, becomes
or is declared by a court of competent jurisdiction to be illegal, void or
unenforceable, the remainder of this Agreement will continue in full force
and
effect and the application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the parties hereto.
The parties further agree to replace such void or unenforceable provision of
this Agreement with a valid and enforceable provision that will achieve, to
the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
9.6 Other
Remedies; Specific Performance.
Except
as otherwise provided herein, any and all remedies herein expressly conferred
upon a party will be deemed cumulative with and not exclusive of any other
remedy conferred hereby, or by law or equity upon such party, and the exercise
by a party of any one remedy will not preclude the exercise of any other remedy.
The parties hereto agree that irreparable damage would occur in the event that
any of the provisions of this 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 seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction,
this
being in addition to any other remedy to which they are entitled at law or
in
equity. In any action at law or suit in equity to enforce this Agreement or
the
rights of any of the parties hereunder, the prevailing party in such action
or
suit shall be entitled to receive a reasonable sum for its attorneys' fees
and
all other reasonable costs and expenses incurred in such action or
suit.
9.7 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law thereof.
9.8 Rules
of Construction.
The
parties hereto agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against
the
party drafting such agreement or document.
9.9 Assignment.
No
party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other parties.
Subject to the preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
9.10 Waiver
of Jury Trial.
EACH OF
PARENT, ARISTON AND ▇▇▇▇▇▇ MERGER SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE
ACTIONS OF PARENT, ARISTON AND ▇▇▇▇▇▇ MERGER SUB IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Remainder
of page is blank; signatures follow]
| ▇▇▇▇▇▇ Sciences, Inc. | ||
| |
|
|
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇ | |
| Name: | ▇▇▇▇ ▇▇▇▇▇ | |
| Title: | Authorized Signatory | |
| Ariston Pharmaceuticals, Inc. | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |
| Title: | Chief Executive Officer | |
| ▇▇▇▇▇▇ Acquisition Corp. | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |
| Title: | President | |