Unassociated Document


     

    COMMON
      STOCK PURCHASE

     

    AGREEMENT

     

    Date
      as of November 1st
      2006

     

    by
      and among

     

    ARCH
      MANAGEMENT SERVICES INC.

     

    and

     

    THE
      PURCHASERS LISTED ON EXHIBIT A

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    TABLE
      OF
      CONTENTS

    


    Page

     

    
      
        	
                ARTICLE
                  I

              	
                Purchase
                  and Sale of Common Stock and Warrants

              	
                1

              
	
                Section
                  1.1

              	
                Purchase
                  and Sale of Common Stock and Warrants.

              	
                1

              
	
                Section
                  1.2

              	
                Purchase
                  Price and Closing

              	
                2

              
	 	 	 
	
                ARTICLE
                  II

              	
                Representations
                  and Warranties

              	
                2

              
	
                Section
                  2.1

              	
                Representations
                  and Warranties of the Company

              	
                2

              
	
                Section
                  2.2

              	
                Representations
                  and Warranties of the Purchasers

              	
                8

              
	 	 	 
	
                ARTICLE
                  III

              	
                Covenants

              	
                12

              
	
                Section
                  3.1

              	
                Securities
                  Compliance

              	
                12

              
	
                Section
                  3.2

              	
                Registration
                  and Listing

              	
                12

              
	
                Section
                  3.3

              	
                Inspection
                  Rights

              	
                13

              
	
                Section
                  3.4

              	
                Compliance
                  with Laws

              	
                13

              
	
                Section
                  3.5

              	
                Keeping
                  of Records and Books of Account

              	
                13

              
	
                Section
                  3.6

              	
                Reporting
                  Requirements

              	
                13

              
	
                Section
                  3.7

              	
                Other
                  Agreements

              	
                13

              
	
                Section
                  3.8

              	
                Subsequent
                  Financings; Right of First Refusal

              	
                14

              
	
                Section
                  3.9

              	
                Use
                  of Proceeds

              	
                16

              
	
                Section
                  3.10

              	
                Reporting
                  Status

              	
                16

              
	
                Section
                  3.11

              	
                Disclosure
                  of Transaction

              	
                16
                  

              
	
                Section
                  3.12

              	
                Disclosure
                  of Material Information

              	
                16

              
	
                Section
                  3.13

              	
                Pledge
                  of Securities

              	
                16

              
	
                Section
                  3.14

              	
                Registration
                  Statements

              	
                17

              
	 	 	 
	
                ARTICLE
                  IV

              	
                Conditions

              	
                15

              
	
                Section
                  4.1

              	
                Conditions
                  Precedent to the Obligation of the Company to Close and to Sell
                  the
                  Securities

              	
                15

              
	
                Section
                  4.2

              	
                Conditions
                  Precedent to the Obligation of the Purchasers to Close and to Purchase
                  the
                  Securities

              	
                16

              
	 	 	 
	
                ARTICLE
                  V

              	
                Certificate
                  Legend

              	
                17

              
	
                Section
                  5.1

              	
                Legend

              	
                19

              
	 	 	 
	
                ARTICLE
                  VI

              	
                Indemnification

              	
                19

              
	
                Section
                  6.1

              	
                General
                  Indemnity.

              	
                19

              
	
                Section
                  6.2

              	
                Indemnification
                  Procedure

              	
                20

              
	 	 	 
	
                ARTICLE
                  VII

              	
                Miscellaneous

              	
                21

              
	
                Section
                  7.1

              	
                Fees
                  and Expenses

              	
                21

              
	
                Section
                  7.2

              	
                Specific
                  Performance; Consent to Jurisdiction; Venue.

              	
                21

              
	
                Section
                  7.3

              	
                Entire
                  Agreement; Amendment

              	
                22

              
	
                Section
                  7.4

              	
                Notices

              	
                22

              
	
                Section
                  7.5

              	
                Waivers

              	
                23

              
	
                Section
                  7.6

              	
                Headings

              	
                23

              
	
                Section
                  7.7

              	
                Successors
                  and Assigns

              	
                23

              
	
                Section
                  7.8

              	
                Governing
                  Law

              	
                23
                  

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        TABLE
          OF
          CONTENTS

        (continued)

         

        Page

      

       

      
        	
                Section
                  7.9

              	
                Survival

              	
                23

              
	
                Section
                  7.10

              	
                Counterparts

              	
                24

              
	
                Section
                  7.11

              	
                Publicity

              	
                24

              
	
                Section
                  7.12

              	
                Severability

              	
                24

              
	
                Section
                  7.13

              	
                Further
                  Assurances

              	
                24

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      COMMON
        STOCK PURCHASE AGREEMENT

      


      This
        COMMON STOCK PURCHASE AGREEMENT dated as of November 1st,
        2006
        (this “Agreement”)
        by and
        between Arch Management Services Inc., a Nevada corporation (the "Company"),
        and
        the purchasers listed on Exhibit
        A
        attached
        hereto (each a "Purchaser"
        and
        collectively, the "Purchasers"),
        for
        the purchase and sale of shares of the Company’s common stock, par value $0.001
        per share (the “Common
        Stock”)
        by the
        Purchasers. 

      


      The
        parties hereto agree as follows:

       

      ARTICLE
        I

       

      PURCHASE
        AND SALE OF COMMON STOCK AND WARRANTS

       

      Section
        1.1      Purchase
        and Sale of Common Stock and Warrants. 

       

      (a)      Upon
        the following terms and conditions, the Company shall issue and sell to the
        Purchasers, and the Purchasers shall purchase from the Company, an aggregate
        of
        275,000 shares of Common Stock (the “Shares”)
        at a
        price per share of $2.00 (the “Per
        Share Purchase Price”)
        for an
        aggregate purchase price of $550,000 (the “Purchase
        Price”).
        The
        Company and the Purchasers are executing and delivering this Agreement in
        accordance with and in reliance upon the exemption from securities registration
        afforded by Section 4(2) of the U.S. Securities Act of 1933, as amended,
        and the
        rules and regulations promulgated thereunder (the "Securities Act"), including
        Regulation D ("Regulation D"), and Regulation S (“Regulation S”) promulgated
        thereunder. and/or upon such other exemption from the registration requirements
        of the Securities Act as may be available with respect to any or all of the
        investments to be made hereunder. 

       

      (b)      Upon
        the following terms and conditions, the Purchasers shall be issued (i) Series
        A
        Warrants, in substantially the form attached hereto as Exhibit
        B
        (the
        "Series
        A Warrants"),
        to
        purchase the number of shares of Common Stock equal to fifty percent of the
        number of Shares purchased pursuant to the terms hereof, such amount to be
        set
        forth opposite such Purchaser’s name on Exhibit
        A
        attached
        hereto. The Warrants shall have an exercise price of $2.50 per Warrant (as
        defined in the respective Warrant) and shall be exercisable as stated therein.
        Any shares of Common Stock issuable upon exercise of the Warrants (and such
        shares when issued) are herein referred to as the “Warrant
        Shares”.
        The
        Shares, the Warrants and the Warrant Shares are sometimes collectively referred
        to herein as the “Securities”.
        

       

      Purchase
        Price and Closing.
        Subject
        to the terms and conditions hereof, the Company agrees to issue and sell
        to the
        Purchasers and, in consideration of and in express reliance upon the
        representations, warranties, covenants, terms and conditions of this Agreement,
        the Purchasers, severally but not jointly, agree to purchase the number of
        Shares and Warrants, in each case, set forth opposite their respective names
        on
Exhibit
        A
        attached
        hereto. The closing of the purchase and sale of the Shares and Warrants to
        be
        acquired by the Purchasers from the Company under this Agreement shall take
        place at the offices of Arch Management Services Inc., 6600 Trans-Canada,
        Suite
        519, Pointe-Claire, Quebec, H9R 4S2 (the “Closing”)
        at
        11:59 p.m., Montreal time (i) on or before November 1st
        , 2006;
provided,
        that
        all of the conditions set forth in Article IV hereof and applicable to the
        Closing shall have been fulfilled or waived in accordance herewith, or (ii)
        at
        such other time and place or on such date as the Purchasers and the Company
        may
        agree upon (the "Closing
        Date").
        Subject to the terms and conditions of this Agreement, at the Closing the
        Company shall deliver or cause to be delivered to each Purchaser (i) a
        certificate registered in the name of such Purchaser representing the number
        of
        Shares that such Purchaser is purchasing pursuant to the terms hereof and
        (ii) a
        Series A Warrant, to purchase such number of shares of Common Stock as is
        set
        forth opposite the name of such Purchaser on Exhibit
        A
        attached
        hereto. At the Closing, each Purchaser shall deliver its Purchase Price by
        wire
        transfer to an account designated by the Company.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        II

       

      REPRESENTATIONS
        AND WARRANTIES

       

      Section
        2.1      Representations
        and Warranties of the Company.
        The
        Company hereby represents and warrants to the Purchasers, as of the date
        hereof
        and the Closing Date (except as set forth on the Schedule of Exceptions attached
        hereto with each numbered Schedule corresponding to the section number herein),
        as follows:

       

      (a)      Organization,
        Good Standing and Power.
        The
        Company is a corporation duly incorporated, validly existing and in good
        standing under the laws of the State of Nevada and has the requisite corporate
        power to own, lease and operate its properties and assets and to conduct
        its
        business as it is now being conducted. The Company does have Subsidiaries
        (as
        defined in Section 2.1(g)) and does not own securities of any kind in any
        other
        entity except as set forth on Schedule
        2.1(g.
        The
        Company and each such Subsidiary (as defined in Section 2.1(g)) is duly
        qualified as a foreign corporation to do business and is in good standing
        in
        every jurisdiction in which the nature of the business conducted or property
        owned by it makes such qualification necessary except for any jurisdiction(s)
        (alone or in the aggregate) in which the failure to be so qualified will
        not
        have a Material Adverse Effect. For the purposes of this Agreement,
        "Material
        Adverse Effect"
        means
        any effect on the business, results of operations, prospects, assets or
        condition (financial or otherwise) of the Company that is material and adverse
        to the Company and its subsidiaries, taken as a whole, and/or any condition,
        circumstance, factor or situation (including, without limitation, an
        investigation by the Securities and Exchange Commission (the “Commission”))
        that
        would prohibit or otherwise materially interfere with the ability of the
        Company
        from entering into and performing any of its obligations under the Transaction
        Documents (as defined below) in any material respect.

       

      (b)      Authorization;
        Enforcement.
        The
        Company has the requisite corporate power and authority to enter into and
        perform this Agreement and the Warrants, the ("Transaction
        Documents")
        and to
        issue and sell the Securities in accordance with the terms hereof. The
        execution, delivery and performance of the Transaction Documents by the Company
        and the consummation by it of the transactions contemplated thereby have
        been
        duly and validly authorized by all necessary corporate action, and no further
        consent or authorization of the Company, its Board of Directors or stockholders
        is required. When executed and delivered by the Company, each of the Transaction
        Documents shall constitute a valid and binding obligation of the Company
        enforceable against the Company in accordance with its terms, except as such
        enforceability may be limited by applicable bankruptcy, reorganization,
        moratorium, liquidation, conservatorship, receivership or similar laws relating
        to, or affecting generally the enforcement of, creditor's rights and remedies
        or
        by other equitable principles of general application.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (c)      Capitalization.
        The
        authorized capital stock of the Company as of November 1st,
        2006 is
        set forth on Schedule
        2.1(c)
        hereto.
        All of the outstanding shares of the Common Stock and any other outstanding
        security of the Company have been duly and validly authorized. Except as
        set
        forth in this Agreement and as set forth on Schedule
        2.1(c)
        hereto,
        no shares of Common Stock or any other security of the Company are entitled
        to
        preemptive rights or registration rights and there are no outstanding options,
        warrants, scrip, rights to subscribe to, call or commitments of any character
        whatsoever relating to, or securities or rights convertible into, any shares
        of
        capital stock of the Company. Furthermore, except as set forth in this Agreement
        and as set forth on Schedule
        2.1(c)
        hereto,
        there are no contracts, commitments, understandings, or arrangements by which
        the Company is or may become bound to issue additional shares of the capital
        stock of the Company or options, securities or rights convertible into shares
        of
        capital stock of the Company. Except for customary transfer restrictions
        contained in agreements entered into by the Company in order to sell restricted
        securities or as provided on Schedule
        2.1(c)
        hereto,
        the Company is not a party to or bound by any agreement or understanding
        granting registration or anti-dilution rights to any person with respect
        to any
        of its equity or debt securities. Except as set forth on Schedule
        2.1(c),
        the
        Company is not a party to, and it has no knowledge of, any agreement or
        understanding restricting the voting or transfer of any shares of the capital
        stock of the Company. 

       

      (d)      Issuance
        of Securities.
        The
        Shares and the Warrants to be issued at the Closing have been duly authorized
        by
        all necessary corporate action and, when paid for and issued in accordance
        with
        the terms hereof and the Warrants, respectively, the Shares and the Warrant
        Shares will be validly issued, fully paid and nonassessable and free and
        clear
        of all liens, encumbrances and rights of refusal of any kind and the holders
        shall be entitled to all rights accorded to a holder of Common Stock.


       

      (e)      No
        Conflicts.
        The
        execution, delivery and performance of the Transaction Documents by the Company
        and the consummation by the Company of the transactions contemplated hereby
        and
        thereby, and the issuance of the Securities as contemplated hereby, do not
        and
        will not (i) violate or conflict with any provision of the Company's Articles
        of
        Incorporation (the “Articles”)
        or
        Bylaws (the “Bylaws”),
        each
        as amended to date, or any Subsidiary's comparable charter documents, (ii)
        conflict with, or constitute a default (or an event which 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 of, any agreement,
        mortgage, deed of trust, indenture, note, bond, license, lease agreement,
        instrument or obligation to which the Company or any of its Subsidiaries
        is a
        party or by which the Company or any of its Subsidiaries' respective properties
        or assets are bound, or (iii) result in a violation of any federal, state,
        local
        or foreign statute, rule, regulation, order, judgment or decree (including
        federal and state securities laws and regulations) applicable to the Company
        or
        any of its Subsidiaries or by which any property or asset of the Company
        or any
        of its Subsidiaries are bound or affected, except, in all cases, other than
        violations pursuant to clauses (i) or (iii) (with respect to federal and
        state
        securities laws) above, except, for such conflicts, defaults, terminations,
        amendments, acceleration, cancellations and violations as would not,
        individually or in the aggregate, have a Material Adverse Effect. Neither
        the Company nor any of its Subsidiaries is required under federal, state,
        foreign or local law, rule or regulation to obtain any consent, authorization
        or
        order of, or make any filing or registration with, any court or governmental
        agency in order for it to execute, deliver or perform any of its obligations
        under the Transaction Documents or issue and sell the Securities in accordance
        with the terms hereof (other than any filings, consents and approvals which
        may
        be required to be made by the Company under applicable state and federal
        securities laws, rules or regulations or any registration provisions provided
        in
        a Registration Rights Agreement).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (f)      Commission
        Documents, Financial Statements.
        The
Common
        Stock of the Company is registered pursuant to Section 12(b) or 12(g) of
        the
        Securities Exchange Act of 1934, as amended (the "Exchange
        Act"),
        and the Company
        has timely filed all reports, schedules, forms, statements and other documents
        required to be filed by it with the Commission pursuant to the reporting
        requirements of the Exchange Act (all of the foregoing including filings
        incorporated by reference therein being referred to herein as the "Commission
        Documents").
        At
        the times of their respective filings, the Form 10-QSB for the fiscal quarters
        ended August 31st,
        2006,
        and (the "Form
        10-QSB")
        and
        the Form 10-KSB for the fiscal year ended November 30th
        , 2005
        (the “Form
        10-KSB”)
        complied in all material respects with the requirements of the Exchange Act
        and
        the rules and regulations of the Commission promulgated thereunder and other
        federal, state and local laws, rules and regulations applicable to such
        documents, and the Form 10-QSB and Form 10-KSB did not 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 light
        of
        the circumstances under which they were made, not misleading. As of their
        respective dates, the financial statements of the Company included in the
        Commission Documents complied as to form in all material respects with
        applicable accounting requirements and the published rules and regulations
        of
        the Commission or other applicable rules and regulations with respect thereto.
        Such financial statements have been prepared in accordance with generally
        accepted accounting principles ("GAAP")
        applied on a consistent basis during the periods involved (except (i) as
        may be
        otherwise indicated in such financial statements or the Notes thereto or
        (ii) in
        the case of unaudited interim statements, to the extent they may not include
        footnotes or may be condensed or summary statements), and fairly present
        in all
        material respects the financial position of the Company and its Subsidiaries
        as
        of the dates thereof and the results of operations and cash flows for the
        periods then ended (subject, in the case of unaudited statements, to normal
        year-end audit adjustments). 

       

      (g)      Subsidiaries.
        Schedule
        2.1(g)
        hereto
        sets forth each Subsidiary of the Company, showing the jurisdiction of its
        incorporation or organization and showing the percentage of each person's
        ownership of the outstanding stock or other interests of such Subsidiary.
        For
        the purposes of this Agreement, "Subsidiary"
        shall
        mean any corporation or other entity of which at least a majority of the
        securities or other ownership interest having ordinary voting power (absolutely
        or contingently) for the election of directors or other persons performing
        similar functions are at the time owned directly or indirectly by the Company
        and/or any of its other Subsidiaries. All of the outstanding shares of capital
        stock of each Subsidiary have been duly authorized and validly issued, and
        are
        fully paid and nonassessable. There are no outstanding preemptive, conversion
        or
        other rights, options, warrants or agreements granted or issued by or binding
        upon any Subsidiary for the purchase or acquisition of any shares of capital
        stock of any Subsidiary or any other securities convertible into, exchangeable
        for or evidencing the rights to subscribe for any shares of such capital
        stock.
        Neither the Company nor any Subsidiary is subject to any obligation (contingent
        or otherwise) to repurchase or otherwise acquire or retire any shares of
        the
        capital stock of any Subsidiary or any convertible securities, rights, warrants
        or options of the type described in the preceding sentence except as set
        forth
        on Schedule
        2.1(g)
        hereto.
        Neither the Company nor any Subsidiary is party to, nor has any knowledge
        of,
        any agreement restricting the voting or transfer of any shares of the capital
        stock of any Subsidiary.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (h)      No
        Material Adverse Change.
        Since
        August 31st,
        2006,
        the Company has not experienced or suffered any Material Adverse
        Effect.

       

      (i)      No
        Undisclosed Liabilities.
        Since
        August 31st,
        2006,
        neither the Company nor any of its Subsidiaries has incurred any liabilities,
        obligations, claims or losses (whether liquidated or unliquidated, secured
        or
        unsecured, absolute, accrued, contingent or otherwise) other than those incurred
        in the ordinary course of the Company's or its Subsidiaries respective
        businesses or which, individually or in the aggregate, are not reasonably
        likely
        to have a Material Adverse Effect.

       

      (j)      No
        Undisclosed Events or Circumstances.
        Since
        August 31st
        2006, no
        event or circumstance has occurred or exists with respect to the Company
        or its
        Subsidiaries or their respective businesses, properties, prospects, operations
        or financial condition, which, under applicable law, rule or regulation,
        requires public disclosure or announcement by the Company but which has not
        been
        so publicly announced or disclosed. 

       

      (k)      Actions
        Pending.
        There
        is no action, suit, claim, investigation, arbitration, alternate dispute
        resolution proceeding or other proceeding pending or, to the knowledge of
        the
        Company, threatened against the Company or any Subsidiary which questions
        the
        validity of this Agreement or any of the other Transaction Documents or any
        of
        the transactions contemplated hereby or thereby or any action taken or to
        be
        taken pursuant hereto or thereto. There is no action, suit, claim,
        investigation, arbitration, alternate dispute resolution proceeding or other
        proceeding pending or, to the knowledge of the Company, threatened against
        or
        involving the Company, any Subsidiary or any of their respective properties
        or
        assets, which individually or in the aggregate, could reasonably be expected,
        if
        adversely determined, to have a Material Adverse Effect. There are no
        outstanding orders, judgments, injunctions, awards or decrees of any court,
        arbitrator or governmental or regulatory body against the Company or any
        Subsidiary or any officers or directors of the Company or Subsidiary in their
        capacities as such, which individually or in the aggregate, could reasonably
        be
        expected to have a Material Adverse Effect. 

       

      (l)      Compliance
        with Law.
        The
        business of the Company and the Subsidiaries has been and is presently being
        conducted in accordance with all applicable federal, state and local
        governmental laws, rules, regulations and ordinances, except as set forth
        in the
        Commission Documents or such that, individually or in the aggregate, the
        noncompliance therewith could not reasonably be expected to have a Material
        Adverse Effect. The Company and each of its Subsidiaries have all franchises,
        permits, licenses, consents and other governmental or regulatory authorizations
        and approvals necessary for the conduct of its business as now being conducted
        by it unless the failure to possess such franchises, permits, licenses, consents
        and other governmental or regulatory authorizations and approvals, individually
        or in the aggregate, could not reasonably be expected to have a Material
        Adverse
        Effect.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (m)      Taxes.
        The Company and each of the Subsidiaries has accurately prepared and filed
        all
        federal, state and other tax returns required by law to be filed by it, has
        paid
        or made provisions for the payment of all taxes shown to be due and all
        additional assessments, and adequate provisions have been and are reflected
        in
        the financial statements of the Company and the Subsidiaries for all current
        taxes and other charges to which the Company or any Subsidiary is subject
        and
        which are not currently due and payable. Except as disclosed on Schedule
        2.1(m)
        hereto, none of the federal income tax returns of the Company or any Subsidiary
        have been audited by the Internal Revenue Service. The Company has no knowledge
        of any additional assessments, adjustments or contingent tax liability (whether
        federal or state) of any nature whatsoever, whether pending or threatened
        against the Company or any Subsidiary for any period, nor of any basis for
        any
        such assessment, adjustment or contingency.

       

      (n)      Certain
        Fees.
        The
        Company has not employed any broker or finder or incurred any liability for
        any
        brokerage or investment banking fees, commissions, finders' structuring fees,
        financial advisory fees or other similar fees in connection with the Transaction
        Documents.

       

      (o)      Disclosure.
        To the
        best of the Company's knowledge, neither this Agreement or the Schedules
        hereto
        nor any other documents, certificates or instruments furnished to the Purchasers
        by or on behalf of the Company or any Subsidiary in connection with the
        transactions contemplated by this Agreement contain any untrue statement
        of a
        material fact or omit to state a material fact necessary in order to make
        the
        statements made herein or therein, in the light of the circumstances under
        which
        they were made herein or therein, not misleading.

       

      (p)      Operation
        of Business.
        The
        Company and each of the Subsidiaries owns or possesses the rights to all
        trademarks, domain names (whether or not registered) and any patentable
        improvements or copyrightable derivative works thereof, websites and
        intellectual property rights relating thereto, service marks, trade names,
        copyrights, licenses and authorizations which are necessary for the conduct
        of
        its business as now conducted without any conflict with the rights of
        others.

       

      (q)      Environmental
        Compliance.
        The
        Company and each of its Subsidiaries have obtained all material approvals,
        authorization, certificates, consents, licenses, orders and permits or other
        similar authorizations of all governmental authorities, or from any other
        person, that are required under any Environmental Laws. “Environmental Laws”
shall mean all applicable laws relating to the protection of the environment
        including, without limitation, all requirements pertaining to reporting,
        licensing, permitting, controlling, investigating or remediating emissions,
        discharges, releases or threatened releases of hazardous substances, chemical
        substances, pollutants, contaminants or toxic substances, materials or wastes,
        whether solid, liquid or gaseous in nature, into the air, surface water,
        groundwater or land, or relating to the manufacture, processing, distribution,
        use, treatment, storage, disposal, transport or handling of hazardous
        substances, chemical substances, pollutants, contaminants or toxic substances,
        material or wastes, whether solid, liquid or gaseous in nature. To the best
        of
        the Company’s knowledge, the Company has all necessary governmental approvals
        required under all Environmental Laws as necessary for the Company’s business or
        the business of any of its subsidiaries. To the best of the Company’s knowledge,
        the Company and each of its subsidiaries are also in compliance with all
        other
        limitations, restrictions, conditions, standards, requirements, schedules
        and
        timetables required or imposed under all Environmental Laws. Except for such
        instances as would not individually or in the aggregate have a Material Adverse
        Effect, there are no past or present events, conditions, circumstances,
        incidents, actions or omissions relating to or in any way affecting the Company
        or its subsidiaries that violate or may violate any Environmental Law after
        the
        Closing Date or that may give rise to any environmental liability, or otherwise
        form the basis of any claim, action, demand, suit, proceeding, hearing, study
        or
        investigation (i) under any Environmental Law, or (ii) based on or related
        to
        the manufacture, processing, distribution, use, treatment, storage (including
        without limitation underground storage tanks), disposal, transport or handling,
        or the emission, discharge, release or threatened release of any hazardous
        substance. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (r)      Books
        and Records; Internal Accounting Controls.
        The
        records and documents of the Company and its Subsidiaries accurately reflect
        in
        all material respects the information relating to the business of the Company
        and the Subsidiaries, the location and collection of their assets, and the
        nature of all transactions giving rise to the obligations or accounts receivable
        of the Company or any Subsidiary. The Company and each of its Subsidiaries
        maintain a system of internal accounting controls sufficient, in the judgment
        of
        the Company's board of directors, to provide reasonable assurance that (i)
        transactions are executed in accordance with management's general or specific
        authorizations, (ii) transactions are recorded as necessary to permit
        preparation of financial statements in conformity with generally accepted
        accounting principles and to maintain asset accountability, (iii) access
        to
        assets is permitted only in accordance with management's general or specific
        authorization and (iv) the recorded accountability for assets is compared
        with
        the existing assets at reasonable intervals and appropriate actions are taken
        with respect to any differences.

       

      (s)      Material
        Agreements.
        Except for the Transaction Documents (with respect to clause (i) only), as
        disclosed in the Commission Documents or as would not be reasonably likely
        to
        have a Material Adverse Effect, (i) the Company and each of its Subsidiaries
        have performed all obligations required to be performed by them to date under
        any written or oral contract, instrument, agreement, commitment, obligation,
        plan or arrangement, filed or required to be filed with the Commission (the
        "Material
        Agreements"),
        (ii) neither the Company nor any of its Subsidiaries has received any notice
        of
        default under any Material Agreement and, (iii) to the best of the Company's
        knowledge, neither the Company nor any of its Subsidiaries is in default
        under
        any Material Agreement now in effect. 

       

      (t)      Transactions
        with Affiliates.
        There
        are no loans, leases, agreements, contracts, royalty agreements, management
        contracts or arrangements or other continuing transactions between (a) the
        Company, any Subsidiary or any of their respective customers or suppliers
        on the
        one hand, and (b) on the other hand, any officer, employee, consultant or
        director of the Company, or any of its Subsidiaries, or any person owning
        any
        capital stock of the Company or any Subsidiary or any member of the immediate
        family of such officer, employee, consultant, director or stockholder or
        any
        corporation or other entity controlled by such officer, employee, consultant,
        director or stockholder, or a member of the immediate family of such officer,
        employee, consultant, director or stockholder which, in each case, is required
        to be disclosed in the Commission Documents or in the Company’s most recently
        filed definitive proxy statement on Schedule 14A, that is not so disclosed
        in
        the Commission Documents or in such proxy statement. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (u)      Securities
        Act of 1933.
        Based
        in material part upon the representations herein of the Purchasers, the Company
        has complied and will comply with all applicable federal and state securities
        laws in connection with the offer, issuance and sale of the Securities
        hereunder. Neither the Company nor anyone acting on its behalf, directly
        or
        indirectly, has or will sell, offer to sell or solicit offers to buy any
        of the
        Securities or similar securities to, or solicit offers with respect thereto
        from, or enter into any negotiations relating thereto with, any person, or
        has
        taken or will take any action so as to bring the issuance and sale of any
        of the
        Securities under the registration provisions of the Securities Act and
        applicable state securities laws, and neither the Company nor any of its
        affiliates, nor any person acting on its or their behalf, has engaged in
        any
        form of general solicitation or general advertising (within the meaning of
        Regulation D under the Securities Act) in connection with the offer or sale
        of
        any of the Securities.

       

      (v)      ERISA.
        No
        liability to the Pension Benefit Guaranty Corporation has been incurred with
        respect to any Plan by the Company or any of its Subsidiaries which is or
        would
        be materially adverse to the Company and its Subsidiaries. The execution
        and
        delivery of this Agreement and the issuance and sale of the Securities will
        not
        involve any transaction which is subject to the prohibitions of Section 406
        of
        the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or in
        connection with which a tax could be imposed pursuant to Section 4975 of
        the
        Internal Revenue Code of 1986, as amended, provided that, if any of the
        Purchasers, or any person or entity that owns a beneficial interest in any
        of
        the Purchasers, is an “employee pension benefit plan” (within the meaning of
        Section 3(2) of ERISA) with respect to which the Company is a “party in
        interest” (within the meaning of Section 3(14) of ERISA), the requirements of
        Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in
        this
        Section 2.1(aa), the term “Plan” shall mean an “employee pension benefit plan”
(as defined in Section 3 of ERISA) which is or has been established or
        maintained, or to which contributions are or have been made, by the Company
        or
        any Subsidiary or by any trade or business, whether or not incorporated,
        which,
        together with the Company or any Subsidiary, is under common control, as
        described in Section 414(b) or (c) of the Code.

       

      (w)      No
        Integrated Offering.
        N/A

       

      (x)      Sarbanes-Oxley
        Act. 
        The Company is in substantial compliance with the applicable provisions of
        the
        Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and
        regulations promulgated thereunder, that are effective and intends to comply
        substantially with other applicable provisions of the Sarbanes-Oxley Act,
        and
        the rules and regulations promulgated thereunder, upon the effectiveness
        of such
        provisions.

      


      Section
        2.2      Representations
        and Warranties of the Purchasers.
        Each of
        the Purchasers hereby represents and warrants to the Company with respect
        solely
        to itself and not with respect to any other Purchaser as follows as of the
        date
        hereof and as of the Closing Date:

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (a)      Organization
        and Standing of the Purchasers.
        If the Purchaser is an entity, such Purchaser is a corporation, limited
        liability company or partnership duly incorporated or organized, validly
        existing and in good standing under the laws of the jurisdiction of its
        incorporation or organization.

       

      (b)      Authorization
        and Power.
        Each
        Purchaser has the requisite power and authority to enter into and perform
        the
        Transaction Documents and to purchase the Securities being sold to it hereunder.
        The execution, delivery and performance of the Transaction Documents by each
        Purchaser and the consummation by it of the transactions contemplated hereby
        have been duly authorized by all necessary corporate or partnership action,
        and
        no further consent or authorization of such Purchaser or its Board of Directors,
        stockholders, or partners, as the case may be, is required. When executed
        and
        delivered by the Purchasers, the other Transaction Documents shall constitute
        valid and binding obligations of each Purchaser enforceable against such
        Purchaser in accordance with their terms, except as such enforceability may
        be
        limited by applicable bankruptcy, insolvency, reorganization, moratorium,
        liquidation, conservatorship, receivership or similar laws relating to, or
        affecting generally the enforcement of, creditor's rights and remedies or
        by
        other equitable principles of general application.

       

      (c)      No
        Conflict.
        The
        execution, delivery and performance of the Transaction Documents by the
        Purchaser and the consummation by the Purchaser of the transactions contemplated
        thereby and hereby do not and will not (i) violate any provision of the
        Purchaser’s charter or organizational documents, (ii) conflict with, or
        constitute a default (or an event which 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 of, any agreement, mortgage, deed
        of
        trust, indenture, note, bond, license, lease agreement, instrument or obligation
        to which the Purchaser is a party or by which the Purchaser’s respective
        properties or assets are bound, or (iii) result in a violation of any federal,
        state, local or foreign statute, rule, regulation, order, judgment or decree
        (including federal and state securities laws and regulations) applicable
        to the
        Purchaser or by which any property or asset of the Purchaser are bound or
        affected, except, in all cases, other than violations pursuant to clauses
        (i) or
        (iii) (with respect to federal and state securities laws) above, except,
        for
        such conflicts, defaults, terminations, amendments, acceleration, cancellations
        and violations as would not, individually or in the aggregate, materially
        and
        adversely affect the Purchaser’s ability to perform its obligations under the
        Transaction Documents. 

       

      (d)      Acquisition
        for Investment.
        Each
        Purchaser is purchasing the Shares and Warrants on behalf of fully managed
        accounts of third parties for the purpose of investment and not with a view
        to
        or for sale. Each Purchaser does not have a present intention to sell any
        of the
        Shares or Warrants, provided,
        however,
        that by
        making the representations herein, such Purchaser does not agree to hold
        the
        Shares or the Warrants for any minimum or other specific term and reserves
        the
        right to dispose of the Shares or the Warrants at any time in accordance
        with
        Federal and state securities laws applicable to such disposition. Each Purchaser
        acknowledges that it (i) has such knowledge and experience in financial and
        business matters such that Purchaser is capable of evaluating the merits
        and
        risks of Purchaser's investment in the Company, (ii) is able to bear the
        financial risks associated with an investment in the Securities and (iii)
        has
        been given full access to such records of the Company and the Subsidiaries
        and
        to the officers of the Company and the Subsidiaries as it has deemed necessary
        or appropriate to conduct its due diligence investigation.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (e)      Rule
        144.
        Each
        Purchaser understands that the Securities must be held indefinitely unless
        such
        Securities are registered under the Securities Act or an exemption from
        registration is available. Each Purchaser acknowledges that such person is
        familiar with Rule 144 of the rules and regulations of the Commission, as
        amended, promulgated pursuant to the Securities Act ("Rule
        144"),
        and
        that such Purchaser has been advised that Rule 144 permits resales only under
        certain circumstances. Each Purchaser understands that to the extent that
        Rule
        144 is not available, such Purchaser will be unable to sell any Securities
        without either registration under the Securities Act or the existence of
        another
        exemption from such registration requirement.

       

      (f)      General.
        Each
        Purchaser understands that the Securities are being offered and sold in reliance
        on a transactional exemption from the registration requirements of federal
        and
        state securities laws and the Company is relying upon the truth and accuracy
        of
        the representations, warranties, agreements, acknowledgments and understandings
        of such Purchaser set forth herein in order to determine the applicability
        of
        such exemptions and the suitability of such Purchaser to acquire the Securities.
        Each Purchaser understands that no United States federal or state agency
        or any
        government or governmental agency has passed upon or made any recommendation
        or
        endorsement of the Securities.

       

      (g)      No
        General Solicitation.
        Each
        Purchaser acknowledges that the Securities were not offered to such Purchaser
        by
        means of any form of general or public solicitation or general advertising,
        or
        publicly disseminated advertisements or sales literature, including (i) any
        advertisement, article, notice or other communication published in any
        newspaper, magazine, or similar media, or broadcast over television or radio,
        or
        (ii) any seminar or meeting to which such Purchaser was invited by any of
        the
        foregoing means of communications. Each Purchaser, in making the decision
        to
        purchase the Securities, has relied upon independent investigation made by
        it
        and has not relied on any information or representations made by third
        parties.

       

      (h)      Accredited
        Investor.
        Each
        Purchaser is an “accredited investor” (as defined in Rule 501 of Regulation D),
        and such Purchaser has such experience in business and financial matters
        that it
        is capable of evaluating the merits and risks of an investment in the
        Securities. Such Purchaser is not required to be registered as a broker-dealer
        under Section 15 of the Exchange Act and such Purchaser is not a broker-dealer.
        Each Purchaser acknowledges that an investment in the Securities is speculative
        and involves a high degree of risk. 

       

      (i)      Certain
        Fees.
        The
        Purchasers have not employed any broker or finder or incurred any liability
        for
        any brokerage or investment banking fees, commissions, finders' structuring
        fees, financial advisory fees or other similar fees in connection with the
        Transaction Documents.

       

      (j)      Independent
        Investment.
        No
        Purchaser has agreed to act with any other Purchaser for the purpose of
        acquiring, holding, voting or disposing of the Securities purchased hereunder
        for purposes of Section 13(d) under the Exchange Act, and each Purchaser
        is
        acting independently with respect to its investment in the Securities.


       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

                  (k)      Regulation
        S Representations.
        

      


      (1)      The
        Purchaser acknowledges and agrees that the Company shall, and shall instruct
        its
        transfer agent to, refuse to register any transfer of the Common Stock issued
        hereunder not made in accordance with the provisions of Regulation S, pursuant
        to registration under the U.S. Securities Act of 1933, or pursuant to an
        available exemption from registration.

      


      (2)      The
        Purchaser understands and acknowledges that the Shares, have not been registered
        under the Securities Act of 1933 as amended (the "Act") and are being offered
        in
        reliance upon the exemptions provided in Regulation S of the Act and the
        Rules
        and Regulations adopted thereunder. Accordingly, the Shares may not be offered
        or sold in the U.S. or to U.S. persons (as such term is used in Regulation
        S)
        unless the securities are registered under the Act, or an exemption for the
        regulation requirements is available. Furthermore, hedging transactions
        involving the Shares may not be conducted unless in compliance with the Act.
        The
        Purchaser makes the following representations and warranties to the Company
        with
        the intent that the same may be relied upon in determining the suitability
        of
        the Purchaser as a purchaser of securities:

      


      (3)      The
        Purchaser did not receive the offer for the Company for the Shares (the
“Offer”), nor was he, she or it solicited to purchase the Shares, in the United
        States; that this Agreement has not been executed or delivered by the Purchaser
        in the United States, and neither the Purchaser nor any person acting on
        behalf
        of the Purchaser has engaged, directly or indirectly, in any negotiations
        with
        respect to the Offer or this Agreement in the United States;

      


      (4)      The
        Purchaser is not a U.S. person (i.e., (i) an individual resident in the U.S.;
        (ii) a partnership or corporation organized or incorporated in the United
        States; (iii) an estate of which any executor or administrator is a U.S.
        person;
        (iv) a trust of which any trustee is a U.S. person; (; (v) an agency or branch
        of a foreign entity located in the U.S.; or (vi) a partnership or corporation
        (A) organized or incorporated under the laws of any foreign jurisdiction
        and (B)
        formed by a U.S. person principally for the purpose of investing in securities
        not registered under the U.S. Securities Act, unless it is organized or
        incorporated, and owned, by accredited investors (as defined in Rule 501
        under
        the U.S. Securities Act) who are not individuals, estates or trusts), and
        is not
        acquiring the Shares for the account or benefit of a U.S. person;

      


      (5)      The
        Purchaser is not purchasing the Shares as a result of or subsequent to (i)
        any
        advertisement, article, notice or other communication published in any
        newspaper, magazine or other publication or broadcast over television or
        radio
        in the U.S.; (ii) any promotional seminar or meeting in the U.S., or (iii)
        any
        solicitation by a person not previously known to him or it in connection
        with
        investments in securities generally; and

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (6)      The
        Shares have not been registered under the Act or under any state securities
        laws
        and that the Purchaser agrees to transfer his, her or its Shares in the U.S.
        or
        to, or for the account or benefit of, U.S. persons only if (i) the Shares
        are
        duly registered under the Act and all applicable state securities laws; or
        (ii)
        there is an exemption from registration under the Act, including any exemption
        from the registration requirements of the Act which may be available pursuant
        to
        Regulation S, and all applicable state securities laws; that prior to any
        such
        transfer the Company may require, as a condition affecting a transfer of
        the
        Shares, an opinion of counsel in form and substance satisfactory to the Company
        as to the registration or exemption therefrom under the Act and applicable
        state
        securities laws; that the Company is under no obligation to register the
        Shares
        under the U.S. Securities Act or any applicable state securities laws on
        its or
        his or her behalf or to assist it or him or her in complying with any exemption
        from such registration except as provided in the Registration Rights
        Agreement;

      


      (7)      The
        Shares will be acquired on behalf of fully managed accounts of third parties
        for
        investment purposes only, and not with a view to, or for sale and with no
        present intention or reselling any part of the Shares.

      


      (8)      The
        Purchaser agrees not to sell, pledge, transfer, dispose of, or otherwise
        deal
        with or engage in hedging transactions involving, his or her Shares or any
        portion thereof except as otherwise permitted herein, unless and until counsel
        for the Company shall have determined that the intended disposition or action
        is
        permissible and does not violate the Securities Act or any applicable state
        securities laws, or the rules and regulations thereunder.

      


                  (l)      Jurisdiction
        of Residence.
        The
        Purchasers jurisdiction of residence as set forth on the signature page hereto
        is true and correct.

      


                  (m)      Section
        13(d) Compliance.
        The
        Purchaser hereby states that he/she is acquainted with the requirements of
        Section 13(d) of the Securities Exchange Act of 1934 and the rules and
        regulations issued thereunder. The Purchaser understands that, as a result
        of
        its acquisition of Shares, and in order to comply with Section 13(d) and
        the
        rules and regulations issued thereunder, Purchaser may be required to file
        a
        Schedule 13D and hereby agrees to make such filing if so required.

       

      ARTICLE
        III

       

      COVENANTS

       

      The
        Company covenants with each Purchaser as follows, which covenants are for
        the
        benefit of each Purchaser and their respective permitted assignees.

       

      Section
        3.1      Securities
        Compliance.
        The
        Company shall notify the Commission in accordance with its rules and
        regulations, of the transactions contemplated by any of the Transaction
        Documents and shall take all other necessary action and proceedings as may
        be
        required and permitted by applicable law, rule and regulation, for the legal
        and
        valid issuance of the Securities to the Purchasers, or their respective
        subsequent holders.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        3.2      Registration
        and Listing.
        The
        Company shall use its reasonable best efforts to cause its Common Stock to
        continue to be registered under Sections 12(b) or 12(g) of the Exchange Act,
        to
        comply in all respects with its reporting and filing obligations under the
        Exchange Act, to comply with all requirements related to any registration
        statement filed pursuant to this Agreement, and to not take any action or
        file
        any document (whether or not permitted by the Securities Act or the rules
        promulgated thereunder) to terminate or suspend such registration or to
        terminate or suspend its reporting and filing obligations under the Exchange
        Act
        or Securities Act, except as permitted herein. The Company shall use its
        reasonable best efforts to continue the listing or trading of its Common
        Stock
        on the OTC Bulletin Board or any successor market. The Company will promptly
        file any required "Listing Application" for, or in connection with, the issuance
        and delivery of the Shares and the Warrant Shares.

       

      Section
        3.3      Intentionally
        Omitted.

       

      Section
        3.4     Compliance
        with Laws.
        The
        Company shall comply, and cause each Subsidiary to comply, with all applicable
        laws, rules, regulations and orders, noncompliance with which would be
        reasonably likely to have a Material Adverse Effect.

       

      Section
        3.5      Keeping
        of Records and Books of Account.
        The
        Company shall keep and cause each Subsidiary to keep adequate records and
        books
        of account, in which complete entries will be made in accordance with GAAP
        consistently applied, reflecting all financial transactions of the Company
        and
        its Subsidiaries, and in which, for each fiscal year, all proper reserves
        for
        depreciation, depletion, obsolescence, amortization, taxes, bad debts and
        other
        purposes in connection with its business shall be made.

       

      Section
        3.6      Reporting
        Requirements.
        If the
        Company ceases to file its periodic reports with the Commission, or if the
        Commission ceases making these periodic reports available via the Internet
        without charge, then the Company shall furnish the following to each Purchaser
        so long as such Purchaser shall be obligated hereunder to purchase the
        Securities or shall beneficially own Shares or Warrant Shares:

       

      (a)      Quarterly
        Reports filed with the Commission on Form 10-QSB as soon as available, and
        in
        any event within forty-five (45) days after the end of each of the first
        three
        fiscal quarters of the Company; 

       

      (b)      Annual
        Reports filed with the Commission on Form 10-KSB as soon as available, and
        in
        any event within ninety (90) days after the end of each fiscal year of the
        Company; and 

       

      (c)      Copies
        of all notices, information and proxy statements in connection with any
        meetings, that are, in each case, provided to holders of shares of Common
        Stock,
        contemporaneously with the delivery of such notices or information to such
        holders of Common Stock.

       

      Section
        3.7      Other
        Agreements.
        The
        Company shall not enter into any agreement in which the terms of such agreement
        would restrict or impair the right or ability to perform of the Company or
        any
        Subsidiary under any Transaction Document.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        3.8      Subsequent
        Financings; Right of First Refusal.
        (a) For a period of
        ninety
        (90) days following the effective date of a registration statement providing
        for
        the resale of the Shares and the Warrant Shares (the “Effectiveness
        Date”),
        the
        Company covenants and agrees that it will not, without the prior written
        consent
        of the holders of a majority of the Shares outstanding at the time consent
        is
        required, enter into any subsequent offer or sale to, or exchange with (or
        other
        type of distribution to), any third party (a "Subsequent
        Financing"),
        of
        Common Stock or any securities convertible, exercisable or exchangeable into
        Common Stock, including convertible debt securities (collectively, the
        "Financing
        Securities"),
        except for a Permitted Financing. A "Permitted
        Financing"
        shall
        mean (i) the Company’s issuance of Common Stock and warrants therefore in
        connection with a merger and/or acquisition or consolidation, (ii) the issuance
        of shares of Common Stock or warrants therefore in connection with strategic
        license agreements so long as such issuances are not for the purpose of raising
        capital, (iii) the Company’s issuance of Common Stock or the issuance or grants
        of options to purchase Common Stock pursuant to the Company’s stock option plans
        and employee stock purchase plans as they now exist, and (iv) the issuance
        of
        Common Stock upon the exercise or conversion of any securities outstanding
        on
        the date hereof. 

       

      Section
        3.9      Use
        of
        Proceeds.
        The
        proceeds from the sale of the Shares will be used by the Company for working
        capital and general corporate purposes.

      


      Section
        3.10      Reporting
        Status. So
        long
        as a Purchaser beneficially owns any of the Securities, the Company shall
        timely
        file all reports required to be filed with the Commission pursuant to the
        Exchange Act, and the Company shall not terminate its status as an issuer
        required to file reports under the Exchange Act even if the Exchange Act
        or the
        rules and regulations thereunder would permit such termination. 

      


      Section
        3.11      Disclosure
        of Transaction.
        The
        Company shall issue a press release describing the material terms of the
        transactions contemplated hereby (the “Press
        Release”)
        on the
        day of the Closing; provided,
        however,
        that if
        Closing occurs after 4:00 P.M. Eastern Time on any Trading Day but in no
        event
        later than one hour after the Closing, the Company shall issue the Press
        Release
        no later than 9:00 A.M. Eastern Time on the first Trading Day following the
        Closing Date. The Company shall also file with the Commission a Current Report
        on Form 8-K (the “Form
        8-K”)
        describing the material terms of the transactions contemplated hereby (and
        attaching as exhibits thereto this Agreement and the form of each series
        of
        Warrant) as soon as practicable following the date of execution of this
        Agreement but in no event more than two (2) Trading Days following the date
        of
        execution of this Agreement, which Press Release and Form 8-K shall be subject
        to prior review and comment by the Purchasers. "Trading Day" means any day
        during which the principal exchange on which the Common Stock is traded shall
        be
        open for trading. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        3.12      Disclosure
        of Material Information.
        The
        Company covenants and agrees that neither it nor any other person acting
        on its
        behalf has provided or will provide any Purchaser or its agents or counsel
        with
        any information that the Company believes constitutes material non-public
        information, unless prior thereto such Purchaser shall have executed a written
        agreement regarding the confidentiality and use of such information.  The
        Company understands and confirms that each Purchaser shall be relying on
        the
        foregoing representations in effecting transactions in securities of the
        Company.

       

      Section
        3.13      Pledge
        of Securities.
        The
        Company acknowledges and agrees that the Securities may be pledged by a
        Purchaser in connection with a bona fide
        margin
        agreement or other loan or financing arrangement that is secured by the Common
        Stock. The pledge of Common Stock shall not be deemed to be a transfer, sale
        or
        assignment of the Common Stock hereunder, and no Purchaser effecting a pledge
        of
        Common Stock shall be required to provide the Company with any notice thereof
        or
        otherwise make any delivery to the Company pursuant to this Agreement or
        any
        other Transaction Document; provided that a Purchaser and its pledgee shall
        be
        required to comply with the provisions of Article V hereof in order to effect
        a
        sale, transfer or assignment of Common Stock to such pledgee. At the Purchasers'
        expense, the Company hereby agrees to execute and deliver such documentation
        as
        a pledgee of the Common Stock may reasonably request in connection with a
        pledge
        of the Common Stock to such pledgee by a Purchaser.

       

      Section
        3.14      Registration
        Statements.
        The
        Company may file a registration statement under the Securities Act registering
        shares of its equity securities issued in connection with a Permitted Financing
        at any time.

       

      ARTICLE
        IV

       

      CONDITIONS

       

      Section
        4.1      Conditions
        Precedent to the Obligation of the Company to Close and to Sell the
        Securities.
        The
        obligation hereunder of the Company to close and issue and sell the Securities
        to the Purchasers at the Closing is subject to the satisfaction or waiver,
        at or
        before the Closing of the conditions set forth below. These conditions are
        for
        the Company's sole benefit and may be waived by the Company at any time in
        its
        sole discretion.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (a)      Accuracy
        of the Purchasers’ Representations and Warranties.
        The
        representations and warranties of each Purchaser shall be true and correct
        in
        all material respects as of the date when made and as of the Closing Date
        as
        though made at that time, except for representations and warranties that
        are
        expressly made as of a particular date, which shall be true and correct in
        all
        material respects as of such date.

       

      (b)      Performance
        by the Purchasers.
        Each
        Purchaser shall have performed, satisfied and complied in all material respects
        with all covenants, agreements and conditions required by this Agreement
        to be
        performed, satisfied or complied with by the Purchasers at or prior to the
        Closing Date.

       

      (c)      No
        Injunction.
        No
        statute, rule, regulation, executive order, decree, ruling or injunction
        shall
        have been enacted, entered, promulgated or endorsed by any court or governmental
        authority of competent jurisdiction which prohibits the consummation of any
        of
        the transactions contemplated by this Agreement.

       

      (d)      Delivery
        of Purchase Price.
        The
        Purchase Price for the Shares shall have been delivered to the Company on
        the
        Closing Date.

       

      (e)      Delivery
        of Transaction Documents.
        The
        Transaction Documents shall have been duly executed and delivered by the
        Purchasers to the Company.

       

      Section
        4.2      Conditions
        Precedent to the Obligation of the Purchasers to Close and to Purchase the
        Securities.
        The
        obligation hereunder of the Purchasers to purchase the Securities and consummate
        the transactions contemplated by this Agreement is subject to the satisfaction
        or waiver, at or before the Closing, of each of the conditions set forth
        below.
        These conditions are for the Purchasers’ sole benefit and may be waived by the
        Purchasers at any time in their sole discretion.

       

      (a)      Accuracy
        of the Company's Representations and Warranties.
        Each of
        the representations and warranties of the Company in this Agreement and the
        Registration Rights Agreement shall be true and correct in all material respects
        as of the Closing Date, except for representations and warranties that speak
        as
        of a particular date, which shall be true and correct in all material respects
        as of such date.

       

      (b)      Performance
        by the Company.
        The
        Company shall have performed, satisfied and complied in all material respects
        with all covenants, agreements and conditions required by this Agreement
        to be
        performed, satisfied or complied with by the Company at or prior to the Closing
        Date.

       

      (c)      No
        Suspension, Etc.
        Trading in the Common Stock shall not have been suspended by the Commission
        or
        the OTC Bulletin Board (except for any suspension of trading of limited duration
        agreed to by the Company, which suspension shall be terminated prior to the
        Closing), and, at any time prior to the Closing Date, trading in securities
        generally as reported by Bloomberg Financial Markets ("Bloomberg")
        shall not have been suspended or limited, or minimum prices shall not have
        been
        established on securities whose trades are reported by Bloomberg, or on the
        New
        York Stock Exchange, nor shall a banking moratorium have been declared either
        by
        the United States or New York State authorities.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (d)      No
        Injunction.
        No
        statute, rule, regulation, executive order, decree, ruling or injunction
        shall
        have been enacted, entered, promulgated or endorsed by any court or governmental
        authority of competent jurisdiction which prohibits the consummation of any
        of
        the transactions contemplated by this Agreement.

       

      (e)      No
        Proceedings or Litigation.
        No
        action, suit or proceeding before any arbitrator or any governmental authority
        shall have been commenced, and no investigation by any governmental authority
        shall have been threatened, against the Company or any Subsidiary, or any
        of the
        officers, directors or affiliates of the Company or any Subsidiary seeking
        to
        restrain, prevent or change the transactions contemplated by this Agreement,
        or
        seeking damages in connection with such transactions.

       

      (f)      Shares
        and Warrants.
        At or
        prior to the Closing, the Company shall have delivered to the Purchasers
        certificates representing the Shares (in such denominations as each Purchaser
        may request) and the Warrants. 

       

      (g)      Secretary's
        Certificate.
        The
        Company shall have delivered to the Purchasers a secretary's certificate,
        dated
        as of the Closing Date, as to (i) the resolutions adopted by the Board of
        Directors approving the transactions contemplated hereby, (ii) the Articles,
        (iii) the Bylaws, each as in effect at the Closing, and (iv) the authority
        and
        incumbency of the officers of the Company executing the Transaction Documents
        and any other documents required to be executed or delivered in connection
        therewith.

       

      (h)      Officer's
        Certificate.
        On the
        Closing Date, the Company shall have delivered to the Purchasers a certificate
        signed by an executive officer on behalf of the Company, dated as of the
        Closing
        Date, confirming the accuracy of the Company's representations, warranties
        and
        covenants as of the Closing Date and confirming the compliance by the Company
        with the conditions precedent set forth in paragraphs (b)-(e) of this Section
        4.2 as of the Closing Date (provided that, with respect to the matters in
        paragraphs (d) and (e) of this Section 4.2, such confirmation shall be based
        on
        the knowledge of the executive officer after due inquiry).

       

      (i)      Registration
        Rights Agreement.
        N/A

       

      (j)      Material
        Adverse Effect.
        No
        Material Adverse Effect shall have occurred at or before the Closing
        Date.

       

      ARTICLE
        V

       

      CERTIFICATE
        LEGEND 

       

      Section
        5.1      Legend.
        Each
        certificate representing the Securities shall be stamped or otherwise imprinted
        with legends substantially in the following form (in addition to any legend
        required by applicable state securities or "blue sky" laws):

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      THE
        SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE NOT BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
        ACT")
        OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
        DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
        STATE SECURITIES LAWS OR ARCH MANAGEMENT SERVICES INC. SHALL HAVE RECEIVED
        AN
        OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
        ACT
        AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
        REQUIRED.

       

      THE
        SECURITY OR SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
        UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
        OR ANY
        STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD TO ANY PERSON EXCEPT
        AS
        SET FORTH IN THE FOLLOWING SENTENCE. THE HOLDER HEREOF AGREES THAT: (1) IT
        WILL
        NOT RESELL OR OTHERWISE TRANSFER THE SHARES EVIDENCED HEREBY EXCEPT (A) IN
        AN
        OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S
        OR (B)
        PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
        SECURITIES ACT (IF AVAILABLE) OR ANOTHER THEN AVAILABLE EXEMPTION UNDER THE
        SECURITIES ACT AND STATE SECURITIES LAWS OR, (C) IN A TRANSACTION THAT DOES
        NOT
        REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE LAWS,
        OR
        (D) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
        UNDER
        THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH
        TRANSFER); (2) PRIOR TO ANY SUCH TRANSFER, IT WILL FURNISH TO ARCH MANAGEMENT
        SERVICES INC. AND THE TRANSFER AGENT FOR THE COMMON STOCK SUCH CERTIFICATIONS,
        LEGAL OPINIONS, OR OTHER INFORMATION AS ARCH MANAGEMENT SERVICES INC. OR
        SUCH
        TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING
        MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
        REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR STATE SECURITIES LAWS;
        AND
        (3) IT WILL DELIVER TO EACH PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY
        IS
        TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. FURTHERMORE,
        HEDGING TRANSACTIONS INVOLVING THE SECURITIES EVIDENCED HEREBY MAY NOT BE
        CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      The
        Company agrees to reissue certificates representing any of the Shares and
        the
        Warrant Shares, without the legend set forth above if at such time, prior
        to
        making any transfer of any such Shares or Warrant Shares, such holder thereof
        shall give written notice to the Company describing the manner and terms
        of such
        transfer and removal as the Company may reasonably request. Such proposed
        transfer and removal will not be effected until: (a) either (i) the Company
        has
        received an opinion of counsel reasonably satisfactory to the Company, to
        the
        effect that the registration of the Shares or Warrant Shares under the
        Securities Act is not required in connection with such proposed transfer,
        (ii) a
        registration statement under the Securities Act covering such proposed
        disposition has been filed by the Company with the Commission and has become
        effective under the Securities Act, (iii) the Company has received other
        evidence reasonably satisfactory to the Company that such registration and
        qualification under the Securities Act and state securities laws are not
        required, or (iv) the holder provides the Company with reasonable assurances
        that such security can be sold pursuant to Rule 144 under the Securities
        Act;
        and (b) either (i) the Company has received an opinion of counsel reasonably
        satisfactory to the Company, to the effect that registration or qualification
        under the securities or "blue sky" laws of any state is not required in
        connection with such proposed disposition, or (ii) compliance with applicable
        state securities or "blue sky" laws has been effected or a valid exemption
        exists with respect thereto. The Company will respond to any such notice
        from a
        holder within five (5) business days. In the case of any proposed transfer
        under
        this Section 5.1, the Company will use reasonable efforts to comply with
        any
        such applicable state securities or "blue sky" laws, but shall in no event
        be
        required, (x) to qualify to do business in any state where it is not then
        qualified, (y) to take any action that would subject it to tax or to the
        general
        service of process in any state where it is not then subject, or (z) to comply
        with state securities or “blue sky” laws of any state for which registration by
        coordination is unavailable to the Company. The restrictions on transfer
        contained in this Section 5.1 shall be in addition to, and not by way of
        limitation of, any other restrictions on transfer contained in any other
        section
        of this Agreement. Whenever
        a certificate representing the Shares or Warrant Shares is required to be
        issued
        to a Purchaser without a legend, in lieu of delivering physical certificates
        representing the Shares or Warrant Shares, provided the Company's transfer
        agent
        is participating in the Depository Trust Company ("DTC")
        Fast Automated Securities Transfer program, the Company shall use its reasonable
        best efforts to cause its transfer agent to electronically transmit the Shares
        or Warrant Shares to a Purchaser by crediting the account of such Purchaser's
        Prime Broker with DTC through its Deposit Withdrawal Agent Commission
        ("DWAC")
        system (to the extent not inconsistent with any provisions of this
        Agreement).

       

      ARTICLE
        VI

       

      INDEMNIFICATION

       

      Section
        6.1      General
        Indemnity.
        The
        Company agrees to indemnify and hold harmless the Purchasers (and their
        respective directors, officers, affiliates, agents, successors and assigns)
        from
        and against any and all losses, liabilities, deficiencies, costs, damages
        and
        expenses (including, without limitation, reasonable attorneys’ fees, charges and
        disbursements) incurred by the Purchasers as a result of any inaccuracy in
        or
        breach of the representations, warranties or covenants made by the Company
        herein. Each Purchaser severally but not jointly agrees to indemnify and
        hold
        harmless the Company and its directors, officers, affiliates, agents, successors
        and assigns from and against any and all losses, liabilities, deficiencies,
        costs, damages and expenses (including, without limitation, reasonable
        attorneys’ fees, charges and disbursements) incurred by the Company as result of
        any inaccuracy in or breach of the representations, warranties or covenants
        made
        by such Purchaser herein. The maximum aggregate liability of each Purchaser
        pursuant to its indemnification obligations under this Article VI shall not
        exceed the portion of the Purchase Price paid by such Purchaser
        hereunder.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        6.2      Indemnification
        Procedure.
        Any party entitled to indemnification under this Article VI (an "indemnified
        party") will give written notice to the indemnifying party of any matters
        giving
        rise to a claim for indemnification; provided, that the failure of any party
        entitled to indemnification hereunder to give notice as provided herein shall
        not relieve the indemnifying party of its obligations under this Article
        VI
        except to the extent that the indemnifying party is actually prejudiced by
        such
        failure to give notice. In case any such action, proceeding or claim is brought
        against an indemnified party in respect of which indemnification is sought
        hereunder, the indemnifying party shall be entitled to participate in and,
        unless in the reasonable judgment of the indemnifying party a conflict of
        interest between it and the indemnified party exists with respect to such
        action, proceeding or claim (in which case the indemnifying party shall be
        responsible for the reasonable fees and expenses of one separate counsel for the
        indemnified parties), to assume the defense thereof with counsel reasonably
        satisfactory to the indemnified party. In the event that the indemnifying
        party
        advises an indemnified party that it will not contest such a claim for
        indemnification hereunder, or fails, within thirty (30) days of receipt of
        any
        indemnification notice to notify, in writing, such person of its election
        to
        defend, settle or compromise, at its sole cost and expense, any action,
        proceeding or claim (or discontinues its defense at any time after it commences
        such defense), then the indemnified party may, at its option, defend, settle
        or
        otherwise compromise or pay such action or claim. In any event, unless and
        until
        the indemnifying party elects in writing to assume and does so assume the
        defense of any such claim, proceeding or action, the indemnified party's
        costs
        and expenses arising out of the defense, settlement or compromise of any
        such
        action, claim or proceeding shall be losses subject to indemnification
        hereunder. The indemnified party shall cooperate fully with the indemnifying
        party in connection with any negotiation or defense of any such action or
        claim
        by the indemnifying party and shall furnish to the indemnifying party all
        information reasonably available to the indemnified party which relates to
        such
        action or claim. The indemnifying party shall keep the indemnified party
        fully
        apprised at all times as to the status of the defense or any settlement
        negotiations with respect thereto. If the indemnifying party elects to defend
        any such action or claim, then the indemnified party shall be entitled to
        participate in such defense with counsel of its choice at its sole cost and
        expense. The indemnifying party shall not be liable for any settlement of
        any
        action, claim or proceeding effected without its prior written consent.
        Notwithstanding anything in this Article VI to the contrary, the indemnifying
        party shall not, without the indemnified party's prior written consent, settle
        or compromise any claim or consent to entry of any judgment in respect thereof
        which imposes any future obligation on the indemnified party or which does
        not
        include, as an unconditional term thereof, the giving by the claimant or
        the
        plaintiff to the indemnified party of a release from all liability in respect
        of
        such claim. The indemnification required by this Article VI shall be made
        by
        periodic payments of the amount thereof during the course of investigation
        or
        defense, as and when bills are received or expense, loss, damage or liability
        is
        incurred, so long as the indemnified party irrevocably agrees to refund such
        moneys if it is ultimately determined by a court of competent jurisdiction
        that
        such party was not entitled to indemnification. The indemnity agreements
        contained herein shall be in addition to (a) any cause of action or similar
        rights of the indemnified party against the indemnifying party or others,
        and
        (b) any liabilities the indemnifying party may be subject to pursuant to
        the
        law.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VII

       

      MISCELLANEOUS

       

      Section
        7.1      Fees
        and Expenses.
        Each
        party shall pay the fees and expenses of its advisors, counsel, accountants
        and
        other experts, if any, and all other expenses, incurred by such party incident
        to the negotiation, preparation, execution, delivery and performance of this
        Agreement; provided,
        however,
        that
        the Company shall pay all actual attorneys' fees and expenses (including
        disbursements and out-of-pocket expenses) incurred by the Purchasers in
        connection with (i) the preparation, negotiation, execution and delivery
        of this
        Agreement and the transactions contemplated thereunder, which payment shall
        be
        made at Closing and shall not exceed $15,000 (plus disbursements in an amount
        not to exceed $5,000), (ii) the filing and declaration of effectiveness by
        the
        Commission of the Registration Statement (as defined in the Registration
        Rights
        Agreement) and (iii) any amendments, modifications or waivers of this Agreement
        or any of the other Transaction Documents. In addition, the Company shall
        pay
        all reasonable fees and expenses incurred by the Purchasers in connection
        with
        the enforcement of this Agreement or any of the other Transaction Documents,
        including, without limitation, all reasonable attorneys' fees and expenses.
         

       

      Section
        7.2      Specific
        Performance; Consent to Jurisdiction; Venue. 

       

      (a)      The
        Company and the Purchasers acknowledge and agree that irreparable damage
        would
        occur in the event that any of the provisions of this Agreement or the other
        Transaction Documents were not performed in accordance with their specific
        terms
        or were otherwise breached. It is accordingly agreed that the parties shall
        be
        entitled to an injunction or injunctions to prevent or cure breaches of the
        provisions of this Agreement or the other Transaction Documents and to enforce
        specifically the terms and provisions hereof or thereof, this being in addition
        to any other remedy to which any of them may be entitled by law or
        equity.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b)      The
        parties agree that venue for any dispute arising under this Agreement will
        lie
        exclusively in the state or federal courts located in New York, New York,
        and
        the parties irrevocably waive any right to raise forum non conveniens or
        any
        other argument that New York is not the proper venue. The parties irrevocably
        consent to personal jurisdiction in the state and federal courts of the state
        of
        New York. The Company and each Purchaser consent to process being served
        in any
        such suit, action or proceeding by mailing a copy thereof to such party at
        the
        address in effect for notices to it under this Agreement and agrees that
        such
        service shall constitute good and sufficient service of process and notice
        thereof. Nothing in this Section 7.2 shall affect or limit any right to serve
        process in any other manner permitted by law. The Company and the Purchasers
        hereby agree that the prevailing party in any suit, action or proceeding
        arising
        out of or relating to the Securities or this Agreement shall be entitled
        to
        reimbursement for reasonable legal fees from the non-prevailing
        party.

       

      Section
        7.3      Entire
        Agreement; Amendment.
        This
        Agreement and the Transaction Documents contain the entire understanding
        and
        agreement of the parties with respect to the matters covered hereby and,
        except
        as specifically set forth herein or in the other Transaction Documents, neither
        the Company nor any Purchaser make any representation, warranty, covenant
        or
        undertaking with respect to such matters, and they supersede all prior
        understandings and agreements with respect to said subject matter, all of
        which
        are merged herein. No provision of this Agreement may be waived or amended
        other
        than by a written instrument signed by the Company and the Purchasers holding
        at
        least a majority of all Shares then held by the Purchasers. Any amendment
        or
        waiver effected in accordance with this Section 7.3 shall be binding upon
        each
        Purchaser (and their permitted assigns) and the Company. 

       

      Section
        7.4      Notices.
        Any
        notice, demand, request, waiver or other communication required or permitted
        to
        be given hereunder shall be in writing and shall be effective (a) upon hand
        delivery by telecopy or facsimile at the address or number designated below
        (if
        delivered on a business day during normal business hours where such notice
        is to
        be received), or the first business day following such delivery (if delivered
        other than on a business day during normal business hours where such notice
        is
        to be received) or (b) on the second business day following the date of mailing
        by express courier service, fully prepaid, addressed to such address, or
        upon
        actual receipt of such mailing, whichever shall first occur. The addresses
        for
        such communications shall be:

       

      
        	
                If
                  to the Company:

              	
                ARCH
                  MANAGEMENT SERVICES INC.

              
	 	
                6600
                  Trans-Canada, suite 519

              
	 	
                Pointe-Claire,
                  Quebec, Canada

              
	 	
                H9R
                  4S2 

              
	 	
                Attention:
                  James Leung, President and CEO

              
	 	
                Tel.
                  No.: 514-771-3795

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      

        
          	
                  With
                    copies (which copies 

                
	
                  shall
                    not constitute notice 

                
	
                  to
                    the Company) to:

                	
                  Mr.
                    Travis Gering, Esq.

                
	 	
                  WUERSCH
                    & GERING, LLP

                
	 	
                  100,
                    Wall Street, 21st Floor

                
	 	
                  New
                    York, NY 10005

                
	 	 
	 	
                  Tel.
                    No.: (212) 509-5050

                
	 	
                  Fax
                    No.: (212) 509-9559

                
	 	 
	
                  If
                    to any Purchaser:

                	
                  At
                    the address of such Purchaser set forth on Exhibit A to this
                    Agreement. 

                


        

         

      

      Any
        party
        hereto may from time to time change its address for notices by giving written
        notice of such changed address to the other party hereto.

       

      
        Section
          7.5      Waivers.
          No
          waiver by either party of any default with respect to any provision, condition
          or requirement of this Agreement shall be deemed to be a continuing waiver
          in
          the future or a waiver of any other provision, condition or requirement
          hereof,
          nor shall any delay or omission of any party to exercise any right hereunder
          in
          any manner impair the exercise of any such right accruing to it
          thereafter.

         

        Section
          7.6      Headings.
          The
          article, section and subsection headings in this Agreement are for convenience
          only and shall not constitute a part of this Agreement for any other purpose
          and
          shall not be deemed to limit or affect any of the provisions
          hereof.

         

        Section
          7.7      Successors
          and Assigns.
          This
          Agreement shall be binding upon and inure to the benefit of the parties
          and
          their successors and assigns. After the Closing, the assignment by a party
          to
          this Agreement of any rights hereunder shall not affect the obligations
          of such
          party under this Agreement. Subject to Section 5.1 hereof, the Purchasers
          may
          assign the Securities and its rights under this Agreement and the other
          Transaction Documents and any other rights hereto and thereto without the
          consent of the Company.

         

        Section
          7.8      Governing
          Law.
          This
          Agreement shall be governed by and construed in accordance with the internal
          laws of the State of New York, without giving effect to any of the conflicts
          of
          law principles which would result in the application of the substantive
          law of
          another jurisdiction. This
          Agreement shall not be interpreted or construed with any presumption against
          the
          party causing this Agreement to be drafted.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        Section
          7.9      Survival.
          The representations and warranties of the Company and the Purchasers shall
          survive the execution and delivery hereof and the Closing until the second
          anniversary of the Closing Date, except the agreements and covenants set
          forth
          in Articles I, III, V, VI and VII of this Agreement shall survive the execution
          and delivery hereof and the Closing hereunder.

      

       

      Section
        7.10 Counterparts.
        This
        Agreement may be executed in any number of counterparts, all of which taken
        together shall constitute one and the same instrument and shall become effective
        when counterparts have been signed by each party and delivered to the other
        parties hereto, it being understood that all parties need not sign the same
        counterpart. 

       

      Section
        7.11 Publicity.
        The
        Company agrees that it will not disclose, and will not include in any public
        announcement, the names of the Purchasers without the consent of the Purchasers,
        which consent shall not be unreasonably withheld or delayed, or unless and
        until
        such disclosure is required by law, rule or applicable regulation, and then
        only
        to the extent of such requirement. 

       

      Section
        7.12 Severability.
        The
        provisions of this Agreement are severable and, in the event that any court
        of
        competent jurisdiction shall determine that any one or more of the provisions
        or
        part of the provisions contained in this Agreement shall, for any reason,
        be
        held to be invalid, illegal or unenforceable in any respect, such invalidity,
        illegality or unenforceability shall not affect any other provision or part
        of a
        provision of this Agreement and this Agreement shall be reformed and construed
        as if such invalid or illegal or unenforceable provision, or part of such
        provision, had never been contained herein, so that such provisions would
        be
        valid, legal and enforceable to the maximum extent possible.

       

      Section
        7.13 Further
        Assurances.
        From
        and after the date of this Agreement, upon the request of the Purchasers
        or the
        Company, the Company and each Purchaser shall execute and deliver such
        instruments, documents and other writings as may be reasonably necessary
        or
        desirable to confirm and carry out and to effectuate fully the intent and
        purposes of this Agreement and the Warrants.

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

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

      

        
          	 	 	
                  ARCH
                    MANAGEMENT SERVICES INC. 

                
	 	 	 
	 	
                  By:

                	
                    

                
	 	 	
                  
                    

                  

                  Name:
                    James Leung

                
	
                   

                	 	
                  Title:
                    President and CEO

                
	 	 	 
	
                  Purchaser:

                	 	 
	 	
                  By:


                	
                   

                
	 	 	
                  
                    

                  

                  Name:
                    Daniel; Lacher, Dominik Brüschweiler 

                
	
                   

                	 	
                  Title:
                    First Vice President, Assistant Vice
                    President

                


        

      

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A 

      LIST
        OF PURCHASERS

       

      
        
          	
                  Names
                    and Addresses

                	
                   

                	
                  Investment
                    Amount, Number of Shares

                
	
                  of
                    Purchaser

                	 	
                  & Warrants
                    Purchased  

                
	 	 	 
	
                  VP
                    Bank (Schweiz)AG

                	 	
                  Investment
                    Amount: $550,000

                
	
                  Bleicherweg
                    50, CH-8027, Zurich

                	 	
                  Shares:
                    275,000

                
	
                  Switzerland

                	
                   

                	
                  Series
                    A Warrant: 137,500

                
	 	 	 
	
                  No
                    Tax ID: n/a

                	 	 


        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      


      EXHIBIT
        B

      FORM
        OF SERIES A WARRANT


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      EXHIBIT
        C

      


      (N\A)


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        2.1 (c)

       

      Authorized
        Capital Stock of the Company: 100,000,000 shares

       

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      


      SCHEDULE
        2.1 (g)

       

      Joint
        Venture:

       

      XINJIANG
        YAJIA DISTILLERY CO. LIMITED

       

      Hami
        Guangdong Industry Processing Zone

       

      Registered
        Capital: RMB10,000,000

       

      Investors:

       

      Xinjiang
        Wangye Distillery Co., Ltd.

       

      Capital
        :
        RMB500,000

       

      Guangdong
        Kecheng Trade Co., Ltd.

       

      Capital
        :
        RMB500,000

       

      Arch
        Management Services Inc.

       

      Capital:
        RMB9,000,000