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

            	
              1

            
	 	 	 
	
              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

            	
              9

            
	 	 	 
	
              ARTICLE
                III

            	
              Covenants

            	
              13

            
	
              Section
                3.1

            	
              Securities
                Compliance

            	
              13

            
	
              Section
                3.2

            	
              Registration
                and Listing

            	
              13

            
	
              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

            	
              14

            
	
              Section
                3.7

            	
              Other
                Agreements

            	
              14

            
	
              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

            	
              16

            
	
              Section
                4.1

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

            	
              16

            
	
              Section
                4.2

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

            	
              17

            
	 	 	 
	
              ARTICLE
                V

            	
              Certificate
                Legend

            	
              18

            
	
              Section
                5.1

            	
              Legend

            	
              19

            
	 	 	 
	
              ARTICLE
                VI

            	
              Indemnification

            	
              20

            
	
              Section
                6.1

            	
              General
                Indemnity.

            	
              20

            
	
              Section
                6.2

            	
              Indemnification
                Procedure

            	
              20

            
	 	 	 
	
              ARTICLE
                VII

            	
              Miscellaneous

            	
              22

            
	
              Section
                7.1

            	
              Fees
                and Expenses

            	
              22

            
	
              Section
                7.2

            	
              Specific
                Performance; Consent to Jurisdiction; Venue.

            	
              22

            
	
              Section
                7.3

            	
              Entire
                Agreement; Amendment

            	
              23

            
	
              Section
                7.4

            	
              Notices

            	
              23

            
	
              Section
                7.5

            	
              Waivers

            	
              24

            
	
              Section
                7.6

            	
              Headings

            	
              24

            
	
              Section
                7.7

            	
              Successors
                and Assigns

            	
              24

            
	
              Section
                7.8

            	
              No
                Third Party Beneficiaries

            	
              24

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF
        CONTENTS

      (continued)

      Page

    

     

    
      	
              Section
                7.9

            	
              Governing
                Law

            	
              24

            
	
              Section
                7.10

            	
              Survival

            	
              24

            
	
              Section
                7.11

            	
              Counterparts

            	
              24

            
	
              Section
                7.12

            	
              Publicity

            	
              25

            
	
              Section
                7.13

            	
              Severability

            	
              25

            
	
              Section
                7.14

            	
              Further
                Assurances

            	
              25

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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
      approximately 750,000 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 $1,500,000 (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 solely for its own account
      for
      the purpose of investment and not with a view to or for sale in connection
      with
      distribution. Each Purchaser does not have a present intention to sell any
      of
      the Shares or Warrants, nor a present arrangement (whether or not legally
      binding) or intention to effect any distribution of any of the Shares or
      Warrants to or through any person or entity; 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) a dealer holding an
      account for a customer; (vi) an agency or branch of a foreign entity located
      in
      the U.S.; or (vii) 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 solely for the account of the Purchaser, for investment
      purposes only, and not with a view to, or for sale in connection with, any
      distribution thereof and with no present intention of distributing 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 XL GENERATION INTERNATIONAL 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      No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
      7.9      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
      7.10      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
      7.11      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
      7.12      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
      7.13      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
      7.14      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.

     

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    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: 

            
	 	 	Title: 
	 	 	 



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT
      A 

    LIST
      OF PURCHASERS

     

    
      
        	
                Names
                  and Addresses

              	
                 

              	
                Investment
                  Amount, Number of Shares

              
	
                of
                  Purchaser

              	 	
                & Warrants
                  Purchased  

              
	 	 	 
	
                Portu
                  Finance Inc.

              	 	
                Investment
                  Amount: $500,000

              
	
                Calle
                  50

              	 	
                Shares:
                  250 000

              
	
                No.
                  102 Edificio Universal

              	 	
                Series
                  A Warrant: 125,000

              
	
                Panama
                  City, Republic of Panama

              	 	 
	 	 	 
	
                No
                  Tax ID: 

              	 	 
	 	 	 
	 	 	
                Investment
                  Amount: $500,000

              
	 	 	
                Shares:
                  250,000

              
	 	
                 

              	
                Series
                  A Warrant: 125,000

              
	 	 	 
	
                No
                  Tax ID: 

              	 	 
	 	 	 
	 	 	
                Investment
                  Amount: $500,000

              
	 	 	
                Shares:
                  250,000

              
	 	
                 

              	
                Series
                  A Warrant: 125,000

              
	 	 	 
	
                No
                  Tax ID: 

              	 	 


      

    

    

      
        
          
          

        

        
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    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