Document:

Exhibit
      10.1

    

    AGREEMENT
      AND PLAN OF MERGER

    BY
      AND AMONG

    SEWARD
      SCIENCES, INC.,

    ARISTON
      PHARMACEUTICALS, INC.

    AND

    SEWARD
      ACQUISITION CORP.

    

    This
      AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of
      February 13, 2007, among Seward Sciences, Inc., a Delaware corporation
      (“Parent”), Ariston Pharmaceuticals, Inc., a Delaware corporation (“Ariston”),
      and Seward Acquisition Corp., a Delaware corporation and a wholly-owned
      subsidiary of Parent (“Seward 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 Seward 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 Seward Merger Sub (i) has determined that the Merger is
      consistent with and in furtherance of the long-term business strategy of Seward
      Merger Sub, respectively, and fair to and in the best interests of, Seward
      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 Seward 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, Seward Merger Sub shall be merged with and into Ariston (the “Merger”),
      the separate corporate existence of Seward 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 Seward Merger
      Sub shall vest in the Ariston Surviving Corporation, and all debts, liabilities
      and duties of Ariston and Seward 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 Seward 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 Seward
      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 Seward Merger Sub, the officers and directors of Parent and the
      Ariston Surviving Corporation shall be fully authorized (in the name of Seward
      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 Seward 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 SEWARD MERGER SUB

    

    Each
      of
      Parent and Seward Merger Sub, jointly and severally, hereby represents and
      warrants to Ariston that:

    

    3.1 Organization
      of Parent and Seward Merger Sub.

    

    (a) Each
      of
      Parent and Seward 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 Seward
      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 Seward 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 Seward Merger
      Sub,
      each as amended to date, and each such instrument is in full force and effect.
      Neither Parent nor Seward 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 Seward 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 Seward 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 Seward Merger Sub or any
      agreement or document to which Parent or Seward 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 Seward 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 Seward 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 Seward Merger Sub is a party or by which it is bound obligating Parent or
      Seward 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 Seward
      Merger Sub or obligating Parent or Seward 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 Seward Merger
      Sub.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    3.4 Authority.

    

    (a) Each
      of
      Parent and Seward 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 Seward 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 Seward
      Merger Sub and, assuming the due authorization, execution and delivery by
      Ariston, constitutes the valid and binding obligation of each of Parent and
      Seward 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
      Seward Merger Sub, do not, and the performance of this Agreement by each of
      Parent and Seward Merger Sub, will not (i) conflict with or violate the
      Certificate of Incorporation or Bylaws of Parent, or Seward 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 Seward 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 Seward 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 Seward 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 Seward Merger Sub is a party or by which Parent or
      Seward 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 Seward 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 Seward 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 Seward 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 Seward 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 Seward Merger Sub.

    

    (c) Neither
      Parent nor Seward 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 Seward 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 Seward 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 Seward 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 Seward Merger Sub, and (ii) Parent will be in “control” of
      Seward 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 Seward 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 Seward 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
      Seward 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 Seward Merger Sub is a party or by which Parent or Seward 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 Seward 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 Seward
      Merger Sub which has or would reasonably be expected to have the effect of
      prohibiting or materially impairing any business practice of Parent or Seward
      Merger Sub, any acquisition of material property by Parent or Seward Merger
      Sub
      or the conduct of business by Parent as currently conducted.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (b) Parent
      and Seward 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 Seward 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 Seward 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
      Seward 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 Seward 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 Seward Merger Sub.
      There is no strike or other labor dispute involving Parent or Seward 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 Seward 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 Seward 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 Seward
      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 Seward 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
      Seward 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 Seward Merger Sub. Parent is not aware of any fact or circumstance
      which could involve Parent or Seward Merger Sub in any environmental litigation
      or impose upon Parent or Seward Merger Sub any environmental
      liability.

    

    (c) Compliance
      with Environmental Laws.
      Each of
      Parent, Seward
      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 Seward 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 Seward Merger Sub.
      Seward
      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 Seward 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 Seward 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;

    

    (e) Issue,
      deliver, sell, authorize, pledge or otherwise encumber or propose any of the
      foregoing with respect to any shares of capital stock or any securities
      convertible into shares of capital stock, or subscriptions, rights, warrants
      or
      options to acquire any shares of capital stock or any securities convertible
      into shares of capital stock, or enter into other agreements or commitments
      of
      any character obligating it to issue any such shares or convertible securities,
      or any equity-based awards (whether payable in shares, cash or otherwise) other
      than the issuance, delivery and/or sale of shares of Parent Common Stock (as
      appropriately adjusted for stock splits and the like) pursuant to the exercise
      of stock options or warrants outstanding as of the date of this
      Agreement;

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (f) Cause,
      permit or submit to a vote of Parent's stockholders any amendments to the Parent
      Charter Documents (or similar governing instruments of Seward 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 Seward 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 Seward Merger Sub is a party or of which Parent or Seward
      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 Seward 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 Seward Merger Sub contained in this Agreement has
      become untrue or inaccurate, or of any failure of Parent or Seward 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 Malcolm
      Morville, Michael Weiser, Jason Stein, Stephen Rocamboli, David Saks and David
      Shinko 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 Seward 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 Seward 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 Seward 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 Seward Merger Sub, certified by the Secretary of State of the State
      of Delaware evidencing the good standing of Parent and Seward Merger Sub in
      such
      jurisdiction;

     

    (f) Other
      Agreements and Resignations.
      Each of
      the officers and directors of Parent and Seward 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 Seward Merger Sub.
      The
      obligations of Parent and Seward 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 Seward 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 Seward 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):

     

    Seward
      Sciences, Inc.

    c/o
      Paramount BioCapital Investments, LLC

    787
      Seventh Avenue, 48th
      Floor

    New
      York,
      New York 10019

    Attn:
      Timothy Hofer

    Fax:
      (212) 554-4300

    

    (b)    if
      to
      Ariston or Seward Merger Sub (or Parent subsequent to Closing), to

    

    Ariston
      Pharmaceuticals, Inc.

    205
      Newbury Street

    Suite
      407

    Framingham,
      MA 01701

    Attn:
      Malcolm Morville

    Fax:
      508-665-4266

    

    With
      a
      copy to:

    

    Wyrick
      Robbins Yates & Ponton LLP

    4101
      Lake
      Boone Trail, Suite 300 

    Raleigh,
      North Carolina 27607

    Attn:
      W.
      David Mannheim

    Fax:
      919-781-4865

     

    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 SEWARD 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 SEWARD MERGER SUB IN THE NEGOTIATION,
      ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

     

    [Remainder
      of page is blank; signatures follow]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of
      Merger to be executed by their duly authorized respective officers as of the
      date first written above.

     

    
      	 	 	 
	 	Seward Sciences,
              Inc.
	 
 	 
 	 
 
	 	By:  	/s/
              Matt
              Davis
	 	Name: 	Matt Davis 
	 	Title: 	Authorized
              Signatory 

    

     

    
      	 	 	 
	 	Ariston
              Pharmaceuticals, Inc.
	 
 	 
 	 
 
	 	By:  	/s/
              Malcom
              Morville
	 	Name: 	Malcolm Morville 
	 	Title: 	Chief Executive
              Officer 

    

     

    
      	 	 	 
	 	Seward Acquisition
              Corp.
	 
 	 
 	 
 
	 	By:  	/s/
              Timothy M.
              Hofer
	 	Name: 	Timothy M. Hofer 
	 	Title: 	PresidentSECURED
      TERM NOTE

     

    FOR
      VALUE
      RECEIVED, each of PNEUTECH INC., a corporation organized under the laws of
      Canada (“Pneutech”),
      ROUSSEAU CONTROLS INC., a corporation organized under the laws of Canada
      (“Rousseau”),
      and
      HYDRAMEN FLUID POWER LIMITED, a corporation organized under the laws of Ontario
      (“Hydramen”
      together with Pneutech and Rousseau, each a “Company”
and
      collectively, the “Companies”),
      jointly and severally (solidarily), promises, to pay to LAURUS MASTER FUND,
      LTD., c/o M&C Corporate Services Limited, P.O. Box 309 GT, Ugland House,
      South Church Street, George Town, Grand Cayman, Cayman Islands, Fax:
      345-949-8080 (the “Holder”)
      or its
      registered assigns or successors in interest, the sum of Two Million Dollars
      (Cnd.$2,000,000), together with any accrued and unpaid interest hereon, on
      May
      9, 2007 (the “Maturity
      Date”)
      if not
      sooner indefeasibly paid in full.

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in those certain General Security Agreements and Deeds of Hypothec, as
      the
      case may be, dated as of the date hereof by and between each of the Companies
      and the Holder (as amended, restated, modified and/or supplemented from time
      to
      time, collectively, the “Security
      Agreements”).

     

    The
      following terms shall apply to this Secured Term Note (this “Note”):

     

    ARTICLE
      I

    INTEREST
      AND REDEMPTION

     

    1.1 Contract
      Rate.
      Subject
      to Sections 2.2 and 3.10, interest payable on the outstanding principal amount
      of this Note (the “Principal
      Amount”)
      shall
      accrue at a rate per annum equal to the sum of (i) the “prime rate” published in
      The Wall Street Journal from time to time (the “Prime
      Rate”),
      plus
      two percent (2%) (the “Cash
      Contract Rate”),
      plus
      (ii) five percent (5%) (the “PIK
      Contract Rate”)
      (the
      sum of (i) and (ii) shall be referred to as the “Contract
      Rate”).
      The
      Cash Contract Rate shall be increased or decreased as the case may be for each
      increase or decrease in the Prime Rate in an amount equal to such increase
      or
      decrease in the Prime Rate; each change to be effective as of the day of the
      change in the Prime Rate. Interest shall be (i) calculated on the basis of
      a 360
      day year, and (ii) payable monthly, in arrears, commencing on December 1, 2006,
      on the first business day of each consecutive calendar month thereafter through
      and including the Maturity Date, and on the Maturity Date, whether by
      acceleration or otherwise (each date upon which interest shall be so payable,
      an
“Interest
      Payment Date”).
      Through any Interest Payment Date, interest on the Principal Amount that shall
      have accrued at the Cash Contract Rate and shall remain unpaid as of such
      Interest Payment Date (for any Interest Payment Date, a “Cash
      Interest Amount”)
      shall
      be paid in immediately available funds by the Companies to the Holder on such
      Interest Payment Date. Through any Interest Payment Date, interest on the
      Principal Amount that shall have accrued at the PIK Interest Rate and shall
      remain unpaid as of such Interest Payment Date (for any Interest Payment Date,
      a
“PIK
      Interest Amount”)
      shall
      not be paid on such Interest Payment Date. All outstanding PIK Interest Amounts
      shall be due and payable on the Maturity Date. Notwithstanding any other
      provision of this Note, the Companies may, in their sole discretion, pay any
      PIK
      Interest Amount on any Interest Payment Date in immediately available funds
      without any premium or penalty.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.2 Optional
      Redemption in Cash.
      The
      Companies may prepay this Note (“Optional
      Redemption”)
      by
      paying to the Holder a sum of money equal to one hundred percent (100%) of
      the
      Principal Amount outstanding at such time together with accrued but unpaid
      Cash
      Interest Amounts and PIK Interest Amounts and any and all other sums due,
      accrued or payable to the Holder arising under this Note, the Security
      Agreements or any Ancillary Agreement (the “Redemption
      Amount”)
      outstanding on the Redemption Payment Date (as defined below). The Companies
      shall deliver to the Holder a written notice of redemption (the “Notice
      of Redemption”)
      specifying the date for such Optional Redemption (the “Redemption
      Payment Date”),
      which
      date shall be within seven (7) business days after the date of the Notice of
      Redemption (the “Redemption
      Period”).
      On
      the Redemption Payment Date, the Redemption Amount must be paid in good funds
      to
      the Holder. In the event the Companies fail to pay the Redemption Amount on
      the
      Redemption Payment Date as set forth herein, then such Redemption Notice will
      be
      null and void. For purposes hereof, the term “Ancillary
      Agreement”
means
      all documents, agreements, instruments, security agreements, mortgages and
      deeds
      of hypothecs executed by or on behalf of any Company to Holder, relating to
      this
      Note or to the transactions contemplated by this Note or otherwise relating
      to
      the relationship between or among any Company and Holder, as each of the same
      may be amended, supplemented, restated or otherwise modified from time to
      time.

     

    1.3 Canada
      Interest Act.
      For the
      purpose of complying with the Interest Act (Canada), it is expressly stated
      that
      where interest is calculated pursuant hereto at a rate based upon a 360-day
      period (for the purposes of this Section, the “first rate”), the yearly rate or
      percentage of interest to which the first rate is equivalent is the first rate
      multiplied by the actual number of days in the calendar year in which the same
      is to be ascertained and divided by 360, and the parties hereto acknowledge
      that
      there is a material distinction between the nominal and effective rates of
      interest and that they are capable of making the calculations necessary to
      compare such rates and that the calculations herein are to be made using the
      nominal rate method and not on any basis that gives effect to the principle
      of
      deemed reinvestment of interest.

     

    ARTICLE
      II

    EVENTS
      OF DEFAULT

     

    2.1 Events
      of Default.
      The
      occurrence of any of the following events set forth in this Section 2.1 shall
      constitute an event of default (“Event
      of Default”)
      hereunder:

     

    (a) Failure
      to Pay.
      The
      Companies fail to pay when due any installment of principal, interest or other
      fees hereon in accordance herewith, or the Companies fail to pay any of the
      other Obligations when due, and, in any such case, such failure shall continue
      for a period of three (3) days following the date upon which any such payment
      was due.

     

    (b) Breach
      of Covenant.
      Any
      Company breaches any covenant or any other term or condition of this Note in
      any
      material respect and such breach, if subject to cure, continues for a period
      of
      fifteen (15) days after the occurrence thereof.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c) Breach
      of Representations and Warranties.
      Any
      representation, warranty or statement made or furnished by any Company in this
      Note, the Security Agreements or any Ancillary Agreement shall at any time
      be
      false or misleading in any material respect on the date as of which made or
      deemed made.

     

    (d) Default
      Under Other Agreements.
      The
      occurrence of any default (or similar term) in the observance or performance
      of
      any agreement or condition relating to any indebtedness for borrowed money,
      including indebtedness owing by any Company to Greystone Business Credit II
      LLC
      and/or Federal Partners, L.P. beyond the period of grace (if any), the effect
      of
      which default is to cause, or permit the holder or holders of such indebtedness
      or beneficiary or beneficiaries of such contingent obligation to cause, such
      indebtedness to become due prior to its stated maturity or such contingent
      obligation to become payable.

     

    (e) Material
      Adverse Effect.
      Any
      change or the occurrence of any event which could reasonably be expected to
      have
      a Material Adverse Effect (as defined below). “Material
      Adverse Effect”
shall
      mean a material adverse effect on (a) the business, assets, liabilities,
      condition (financial or otherwise), properties, operations or prospects of
      any
      Company individually or the Companies taken as a whole, (b) any Company’s
      ability to pay or perform the Obligations in accordance with the terms hereof,
      the Security Agreement or any Ancillary Agreement, (c) the value of the
      Collateral or the Hypothecated Property, the Liens on the Collateral or the
      Hypothecated Property or the priority of any such Lien or (d) the practical
      realization of the benefits of the Holder’s rights and remedies under this Note,
      the Security Agreements and any Ancillary Agreements.

     

    (f) Bankruptcy.
      Any
      Company shall (i) apply for, consent to or suffer to exist the appointment
      of,
      or the taking of possession by, a receiver, interim receiver, custodian, trustee
      or liquidator or like official of itself or of all or a substantial part of
      its
      property, (ii) make a general assignment for the benefit of creditors, (iii)
      commence a voluntary case or proceeding under applicable federal or foreign
      bankruptcy laws (as now or hereafter in effect), save and except for the
      proceedings referred to below under Sub-Section 2.1(h), (iv) be adjudicated
      a
      bankrupt, (v) acquiesce to, without challenge within ten (10) days of the filing
      thereof, or failure to have dismissed, within thirty (30) days, any petition
      or
      proceeding filed against it in any involuntary case or proceeding under such
      bankruptcy laws, or (vi) take any action for the purpose of effecting any of
      the
      foregoing.

     

    (g) Judgments.
      Attachments or levies in excess of $50,000 in the aggregate are made upon any
      Company’s assets or a judgment is rendered against any Company’s property
      involving a liability of more than $50,000 which shall not have been vacated,
      discharged, stayed or bonded within thirty (30) days from the entry
      thereof.

     

    (h) Insolvency/CCAA
      Proceedings.
      Any
      Company shall (i) cease operations of its present business or (ii) fail to
      file
      a plan of arrangement pursuant to the Companies’ Creditors Arrangement Act
      (Canada) in the court file bearing number 500-11-028846-067 of the Quebec
      Superior Court, District of Montreal by December 5, 2006 and such plan of
      arrangement is not approved by the requisite majority of its creditors and
      sanctioned by such Court on or before February 5, 2007.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (i) Change
      of Control.
      A
      Change of Control (as defined below) shall occur with respect to any Company,
      unless the Holder shall have expressly consented to such Change of Control
      in
      writing. A “Change
      of Control”
shall
      mean any event or circumstance as a result of any Company merging or
      consolidating with, or selling all or substantially all of its assets to, any
      other person or entity.

     

    (i) Indictment;
      Proceedings.
      The
      indictment or threatened indictment of any Company or any executive officer
      of
      any Company under any criminal statute, or commencement or threatened
      commencement of criminal or civil proceeding against any Company or any
      executive officer of any Company pursuant to which statute or proceeding
      penalties or remedies sought or available include forfeiture of any of the
      property of any Company.

     

    (j) Default
      Under Other Agreements.
      (i) An
      Event of Default shall occur under and as defined in any Security Agreement
      or
      any Ancillary Agreement, (ii) any Company shall breach any term or provision
      of
      any other agreement in any material respect and such breach, if capable of
      cure,
      continues unremedied for a period of fifteen (15) days after the occurrence
      thereof, (iii) any Company attempts to terminate, challenges the validity of,
      or
      its liability under, any other agreement, (iv) any proceeding shall be brought
      to challenge the validity, binding effect of any other agreement or (v) any
      other agreement ceases to be a valid, binding and enforceable obligation of
      any
      Company (to the extent such Company is a party thereto).

     

    (k) Use
      of
      Proceeds.
      Any
      Company shall use the proceeds of this Note for any purpose other than as
      permitted under Section 3.12 hereof.

     

    2.2 Default
      Interest.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Companies shall, jointly and severally, pay additional interest on the
      outstanding principal balance of this Note in an amount equal to two percent
      (2%) per month, and all outstanding obligations under this Note, the Security
      Agreements and each Ancillary Agreement, including unpaid interest, shall
      continue to accrue interest at such additional interest rate from the date
      of
      such Event of Default until the date such Event of Default is cured or
      waived.

     

    2.3 Default
      Payment.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Holder, at its option, may demand repayment in full of all obligations and
      liabilities owing by Companies to the Holder under this Note, the Security
      Agreements and/or any Ancillary Agreement and/or may elect, in addition to
      all
      rights and remedies of the Holder under the Security Agreements and any
      Ancillary Agreement and all obligations and liabilities of the Companies under
      the Debtor Agreements, to require the Companies to make a default payment
      (“Default
      Payment”).
      The
      Default Payment shall be one hundred thirty percent (130%) of the outstanding
      principal amount of this Note, plus accrued but unpaid interest, all other
      fees
      then remaining unpaid, and all other amounts payable hereunder. The Default
      Payment shall be applied first to any fees due and payable to the Holder
      pursuant to this Note, the Security Agreements and/or the Ancillary Agreements,
      then to accrued and unpaid interest due on this Note and then to the outstanding
      principal balance of this Note. The Default Payment shall be due and payable
      immediately on the date that the Holder has demanded payment of the Default
      Payment pursuant to this Section 2.3.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      III

    MISCELLANEOUS

     

    3.1 Issuance
      of New Note.
      Upon
      any partial redemption of this Note, a new Note containing the same date and
      provisions of this Note shall, at the request of the Holder, be issued by the
      Companies to the Holder for the principal balance of this Note and interest
      which shall not have been paid as of such date. Subject to the provisions of
      Article III of this Note, the Companies shall not pay any costs, fees or any
      other consideration to the Holder for the production and issuance of a new
      Note.

     

    3.2 Cumulative
      Remedies.
      The
      remedies under this Note shall be cumulative.

     

    3.3 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    3.4 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively given: (a) upon personal delivery to the party notified,
      (b)
      when sent by confirmed telex or facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day, (c) five days after
      having been sent by registered or certified mail, return receipt requested,
      postage prepaid, or (d) one day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. All communications shall be sent to the Companies at the address set
      forth below the signature of the Companies hereto, and to the Holder at the
      address at the address set forth below the signature of the Holder hereto,
      with
      a copy to Laurus Capital Management, LLC, Attn: Portfolio Services, 825 Third
      Avenue, 17th
      Floor,
      New York, New York 10022, facsimile number (212) 541-4410, or at such other
      address as the Companies or the Holder may designate by ten days advance written
      notice to the other parties hereto.

     

    3.5 Amendment
      Provision.
      The
      term “Note” and all references thereto, as used throughout this instrument,
      shall mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented, and any successor instrument
      as such successor instrument may be amended or supplemented.

     

    3.6 Assignability.
      This
      Note shall be binding upon each Company and their respective successors and
      assigns, and shall inure to the benefit of the Holder and its successors and
      assigns. No Company may assign any of its obligations under this Note without
      the prior written consent of the Holder, any such purported assignment without
      such consent being null and void.

     

    
      
        
        

      

      
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    3.7 Cost
      of Collection.
      In case
      of any Event of Default under this Note, the Companies shall, jointly and
      severally, pay the Holder the Holder’s reasonable costs of collection, including
      reasonable attorneys’ fees.

     

    3.8 Governing
      Law, Jurisdiction and Waiver of Jury Trial.

     

    (a) THIS
      NOTE
      SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAW.

     

    (b) EACH
      COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
      IN
      THE COUNTY OF NEW YORK, STATE OF NEW YORK OR THE QUEBEC SUPERIOR COURT, FOR
      THE
      DISTRICT OF MONTREAL SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
      ANY
      CLAIMS OR DISPUTES BETWEEN ANY COMPANY, ON THE ONE HAND, AND THE HOLDER, ON
      THE
      OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER RELATED AGREEMENTS
      OR TO
      ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE, THE SECURITY AGREEMENTS
      OR
      ANY ANCILLARY AGREEMENTS; PROVIDED, THAT EACH COMPANY ACKNOWLEDGES THAT ANY
      APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF
      THE
      COUNTY OF NEW YORK, STATE OF NEW YORK OR THE QUEBEC SUPERIOR COURT, FOR THE
      DISTRICT OF MONTREAL; AND FURTHER PROVIDED, THAT NOTHING IN THIS NOTE SHALL
      BE
      DEEMED OR OPERATE TO PRECLUDE THE HOLDER FROM BRINGING SUIT OR TAKING OTHER
      LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS, TO REALIZE
      ON
      THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
      JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE HOLDER. EACH COMPANY EXPRESSLY
      SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
      COMMENCED IN ANY SUCH COURT, AND EACH COMPANY HEREBY WAIVES ANY OBJECTION WHICH
      IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
      NON CONVENIENS. EACH COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS,
      COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT
      SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED
      OR CERTIFIED MAIL ADDRESSED TO SUCH COMPANY AT THE ADDRESS SET FORTH BENEATH
      THE
      SIGNATURE OF SUCH COMPANY HERETO AND THAT SERVICE SO MADE SHALL BE DEEMED
      COMPLETED UPON THE EARLIER OF SUCH COMPANY’S ACTUAL RECEIPT THEREOF OR THREE (3)
      DAYS AFTER DEPOSIT IN THE U.S. OR CANADIAN MAILS, PROPER POSTAGE
      PREPAID.

     

    (c) EACH
      COMPANY DESIRES THAT ITS DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
      APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS
      OF
      THE JUDICIAL SYSTEM AND OF ARBITRATION, EACH COMPANY HERETO WAIVES ALL RIGHTS
      TO
      TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
      WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND/OR ANY
      COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
      RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, THE SECURITY
      AGREEMENTS OR ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
      THERETO.

     

    
      
        
        

      

      
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    3.9 Judgment
      Currency.
      If for
      the purpose of obtaining judgment in any court it is necessary to convert an
      amount due hereunder in the currency in which it is due (the “Original
      Currency”)
      into
      another currency (the “Second
      Currency”),
      the
      rate of exchange applied shall be that at which, in accordance with normal
      banking procedures, the Holder could purchase in the New York foreign exchange
      market, the Original Currency with the Second Currency on the date two (2)
      business days preceding that on which judgment is given. Each Company agrees
      that its obligation in respect of any Original Currency due from it hereunder
      shall, notwithstanding any judgment or payment in such other currency, be
      discharged only to the extent that, on the business day following the date
      the
      Holder receives payment of any sum so adjudged to be due hereunder in the Second
      Currency, the Holder may, in accordance with normal banking procedures,
      purchase, in the New York foreign exchange market, the Original Currency with
      the amount of the Second Currency so paid; and if the amount of the Original
      Currency so purchased or could have been so purchased is less than the amount
      originally due in the Original Currency, each Company agrees as a separate
      obligation and notwithstanding any such payment or judgment to indemnify the
      Holder against such loss. The term “rate of exchange” in this Section 3.9 means
      the spot rate at which the Holder, in accordance with normal practices, is
      able
      on the relevant date to purchase the Original Currency with the Second Currency,
      and includes any premium and costs of exchange payable in connection with such
      purchase.

     

    3.10 Severability.
      In the
      event that any provision of this Note is invalid or unenforceable under any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provision of this Note.

     

    3.11 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum rate permitted by such law, any payments in excess
      of such maximum rate shall be credited against amounts owed by the Companies
      to
      the Holder and thus refunded to the Companies.

     

    3.12 Use
      of
      Proceeds.
      The
      Companies shall use the proceeds of the loans made under this Note solely to
      purchase inventory in the ordinary course of their business.

     

    3.13 Payment.
      Upon
      execution of this Note by each Company and the Holder, the Companies shall
      jointly and severally (solidarily) pay to Laurus Capital Management, LLC, the
      investment advisor of the Holder, a non-refundable payment in an amount equal
      to
      three and one-half percent (3.50%) of the original principal amount of this
      Note. Such payment shall be deemed fully earned on the date hereof and shall
      not
      be subject to rebate or proration for any reason.

     

    
      
        
        

      

      
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    3.14 Taxes.
      The
      Companies shall, jointly and severally (solidarily), pay principal, interest
      and
      all other amounts payable hereunder, or under the Security Agreements or any
      Ancillary Agreement, without any deduction whatsoever, including any deduction
      for any set-off or counterclaim or deduction or withholding for any taxes,
      levies, imposts, deductions, charges or withholdings of whatever kind or nature.
      

     

    The
      Companies agree to indemnify and hold harmless the Holder for the full amount
      of
      taxes (including any taxes imposed or assessed by any jurisdiction on amounts
      payable under the Note and any withholdings or remittances required by law
      to be
      made by the Holder on any payments made by the Companies thereunder, but
      excluding other taxes that are imposed on or measured solely by net income
      or
      profits) paid by the Holder as a result of the transactions contemplated by
      this
      Note or any other Ancillary Agreements and any liability (including penalties,
      interest, additions to tax and expenses) arising therefrom or with respect
      thereto, whether or not such taxes were correctly or legally asserted. Payment
      under this indemnification shall be made within five (5) business days after
      the
      date the Holder makes written demand therefor to the Companies.

     

    If
      any
      Company shall be required by law to deduct or withhold any taxes from or in
      respect of any sum payable hereunder to the Holder, then:

    

    (a) the
      sum
      payable to the Holder shall be increased as necessary so that after making
      all
      required deductions and withholdings, the Holder receives an amount equal to
      the
      sum it would have received had no such deductions or withholdings been
      made;

     

    (b) such
      Company shall make such deductions and withholdings;

     

    (c) such
      Company shall pay the full amount deducted or withheld to the relevant taxing
      authority or other authority in accordance with applicable law;

     

    (d) without
      duplication of amounts paid under clause (a) above, each Company shall also
      pay
      to the Holder for the account of the Holder, at the time interest is paid,
      all
      additional amounts which the Holder specifies as necessary to preserve the
      after-tax yield the Holder would have received if such taxes had not been
      imposed; and

     

    (e) without
      duplication of amounts paid under clauses (a) and (d), the applicable Company
      shall indemnify and save harmless the Holder from and in respect of any taxes
      required by them to be paid, deducted or withheld and remitted.

     

    Each
      Company shall file when due all tax returns and other reports which it is
      required to file, pay or provide for the payment, on or prior to the time when
      due or delinquent, of all taxes, fees, assessments, and other governmental
      charges against it or upon its property, income and franchises, make all
      required withholding and other tax remittances and deposits, and establish
      adequate reserves for the payment of all such items, and shall provide to the
      Holder, upon request, satisfactory evidence of its timely compliance with the
      foregoing.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Notwithstanding
      anything contained herein to the contrary, the provisions of this Section 3.14
      shall survive the expiration or termination of this Note and the other Ancillary
      Agreements.

     

    3.15 Joint
      and Several Liability.

     

    (a) All
      obligations and liabilities under this Note (the “Obligations”)
      shall
      be joint and several (solidary), and the Companies shall make payment upon
      the
      maturity of the Obligations by acceleration or otherwise, and the Obligations
      on
      the part of the Companies shall in no way be affected by any extensions,
      renewals and forbearance granted by the Holder to any Company, failure of the
      Holder to give any Company any notice, any failure of the Holder to pursue
      to
      preserve its rights against any Company, the release by the Holder of any
      collateral now or hereafter acquired by any Company, and such agreement by
      any
      Company to pay upon any notice issued pursuant hereto is unconditional and
      unaffected by prior recourse by the Holder to any Company or any collateral
      for
      such Company’s Obligations or the lack thereof.

     

    (b) Each
      Company expressly waives any and all rights of subrogation, reimbursement,
      indemnity, exoneration, contribution or any other claim which such Company
      may
      now or hereafter have against the other or other person or entity directly
      or
      contingently liable for the Obligations, or against or with respect to any
      other’s property (including, without limitation, any property which is
      collateral for the Obligations), arising from the existence or performance
      of
      this Note, until all Obligations have been indefeasibly paid in full and this
      Note and the Ancillary Agreements have been irrevocably terminated.

     

    (c) Each
      Company represents and warrants to the Holder that (i) Companies have one or
      more common shareholders, directors and officers, (ii) the businesses and
      corporate activities of Companies are closely related to, and substantially
      benefit, the business and corporate activities of Companies, (iii) the financial
      and other operations of Companies are performed on a combined basis as if
      Companies constituted a consolidated corporate group, (iv) Companies will
      receive a substantial economic benefit from entering into this Note and will
      receive a substantial economic benefit from the application of each amount
      hereunder, in each case, whether or not such amount is used directly by any
      Company and (v) all loans hereunder are for the exclusive and indivisible
      benefit of the Companies as though, for purposes of this Note, the Companies
      constituted a single entity.

     

    3.16 Security
      Interest/Hypothec.
      The
      Holder has been granted (i) a security interest in certain assets of each
      Company and (ii) a hypothec on certain assets of Pneutech and Rousseau as more
      fully described in the Security Agreements to secure, inter
      alia,
      each of
      the Companies’ joint and several (solidary) obligations under this
      Note.

     

    3.17 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the
      other.

     

    3.18 Registered
      Obligation.
      This
      Note is intended to be a registered obligation within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i) and each Company (or its agent) shall
      register this Note (and thereafter shall maintain such registration) as to
      both
      principal and any stated interest. Notwithstanding any document, instrument
      or
      agreement relating to this Note to the contrary, transfer of this Note (or
      the
      right to any payments of principal or stated interest thereunder) may only
      be
      effected by (i) surrender of this Note and either the reissuance by the
      Companies of this Note to the new holder or the issuance by the Companies of
      a
      new instrument to the new holder, or (ii) transfer through a book entry system
      maintained by each Company (or its agent), within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i)(B).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    3.19 Language.
      The
      parties have requested that this Note and the other documents contemplated
      hereby or relating hereto be drawn up in the English language. Les parties
      ont
      requis que cette convention ainsi que tous les documents qui y sont envisagés ou
      qui s’y rapportent soient rédigés en langue anglaise.

     

    [Balance
      of page intentionally left blank; signature page follows]

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF,
      each
      Company has caused this Secured Term Note to be signed in its name effective
      as
      of this ___ day of November, 2006.

    
      	 	 	 
	 	PNEUTECH
              INC.
	 	 	 
	
            	By:  	
              /s/
                MICHAEL LUTHER

            
	 	 	
              

              Name:
                Michael Luther

              Title:
                CEO

            
	 	 	 
	 	 	 
	 	
              ROUSSEAU
                CONTROLS INC.

            
	 	 	 
	 	By:  	
              /s/
                MICHAEL LUTHER

            
	 	 	
              

              Name:
                Michael Luther

              Title:
                CEO

            
	 	 	 
	 	 	 
	 	
              HYDRAMEN
                FLUID POWER LIMITED

            
	 	 	 
	 	By:  	
              /s/
                MICHAEL LUTHER

            
	 	
              

              Name:
                Michael Luther

              Title:
                CEO

            

    

     

    
      
        
        

      

      
        11

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