Unassociated Document


     

    THE
      SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES
      HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS
      AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR (III)
      THE
      COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
      SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES
      ACT
      OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE OR PROVINCIAL SECURITIES
      LAWS.

    


    SUBJECT
      TO THE PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00
      P.M. EASTERN TIME ON NOVEMBER 1ST, 2008 (the “EXPIRATION DATE”).

    


    No.W-A-_

     

    ARCH
      MANAGEMENT SERVICES INC,

     

    WARRANT
      TO PURCHASE 137 500 SHARES OF

    COMMON
      STOCK, PAR VALUE $0.001 PER SHARE

    SERIES
      A

    


    For
      VALUE
      RECEIVED, VP Bank (Schweiz) AG (“Warrantholder”), is entitled to purchase,
      subject to the provisions of this Warrant, from Arch Managements Services Inc.,
      a Nevada corporation (“Company”), at any time not later than 5:00 P.M., Eastern
      time, on the Expiration Date (as defined above), at an exercise price per share
      equal to Two Dollars and Fifty cents ($2.50) (the exercise price in effect
      being
      herein called the “Warrant Price”), 137,500 shares
      (“Warrant Shares”) of the Company’s Common Stock, par value $0.001 per share
      (“Common Stock”). The number of Warrant Shares purchasable upon exercise of this
      Warrant and the Warrant Price shall be subject to adjustment from time to time
      as described herein.

    


    Section
      1.      Registration.
      The
      Company shall maintain books for the transfer and registration of the Warrant.
      Upon the initial issuance of this Warrant, the Company shall issue and register
      the Warrant in the name of the Warrantholder.

    


    Section
      2.
            Transfers.
      As
      provided herein, this Warrant may be transferred only pursuant to a registration
      statement filed under the Securities Act of 1933, as amended (the “Securities
      Act”), or an exemption from such registration. Subject to such restrictions, the
      Company shall transfer this Warrant from time to time upon the books to be
      maintained by the Company for that purpose, upon surrender thereof for transfer
      properly endorsed or accompanied by appropriate instructions for transfer and
      such other documents as may be reasonably required by the Company, including,
      if
      required by the Company, an opinion of its counsel to the effect that such
      transfer is exempt from the registration requirements of the Securities Act,
      to
      establish that such transfer is being made in accordance with the terms hereof,
      and a new Warrant shall be issued to the transferee and the surrendered Warrant
      shall be canceled by the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
      3.
      Exercise of Warrant. Subject to the
      provisions hereof, the Warrantholder may exercise this Warrant in whole or
      in
      part at any time prior to its expiration upon surrender of the Warrant, together
      with delivery of the duly executed Warrant exercise form attached hereto as
      Appendix A (the “Exercise Agreement”) and payment by cash, certified check or
      wire transfer of funds (or, in certain circumstances, by cash-less exercise
      as
      provided in Section 18 below) for the aggregate Warrant Price for that number
      of
      Warrant Shares then being purchased, to the Company during normal business
      hours
      on any business day at the Company’s principal executive offices (or such other
      office or agency of the Company as it may designate by notice to the
      Warrantholder). The Warrant Shares so purchased shall be deemed to be issued
      to
      the Warrantholder or the Warrantholder’s designee, as the record owner of such
      shares, as of the close of business on the date on which this Warrant shall
      have
      been surrendered (or evidence of loss, theft or destruction thereof and security
      or indemnity satisfactory to the Company), the Warrant Price shall have been
      paid and the completed Exercise Agreement shall have been delivered.
      Certificates for the Warrant Shares so purchased, representing the aggregate
      number of shares specified in the Exercise Agreement, shall be delivered to
      the
      Warrantholder within a reasonable time, not exceeding three (3) business days,
      after this Warrant shall have been so exercised. The certificates so delivered
      shall be in such denominations as may be requested by the Warrantholder and
      shall be registered in the name of the Warrantholder or such other name as
      shall
      be designated by the Warrantholder. If this Warrant shall have been exercised
      only in part, then, unless this Warrant has expired, the Company shall, at
      its
      expense, at the time of delivery of such certificates, deliver to the
      Warrantholder a new Warrant representing the number of shares with respect
      to
      which this Warrant shall not then have been exercised. As used herein, “business
      day” means a day, other than a Saturday or Sunday, on which banks in New York
      City are open for the general transaction of business. Each exercise hereof
      shall constitute the re-affirmation by the Warrantholder that the
      representations and warranties contained in Section 5 of the Purchase Agreement
      (as defined below) are true and correct in all material respects with respect
      to
      the Warrantholder as of the time of such exercise. 

    


    Section
      4.
            Compliance
      with the Securities Act of 1933.
      Except
      as provided in the Purchase Agreement (as defined below), the Company may cause
      the legend set forth on the first page of this Warrant to be set forth on each
      Warrant or similar legend on any security issued or issuable upon exercise
      of
      this Warrant, unless counsel for the Company is of the opinion as to any such
      security that such legend is unnecessary.

    


    Section
      5.
            Payment
      of Taxes.
      The
      Company will pay any documentary stamp taxes attributable to the initial
      issuance of Warrant Shares issuable upon the exercise of the Warrant; provided,
      however, that the Company shall not be required to pay any tax or taxes which
      may be payable in respect of any transfer involved in the issuance or delivery
      of any certificates for Warrant Shares in a name other than that of the
      Warrantholder in respect of which such shares are issued, and in such case,
      the
      Company shall not be required to issue or deliver any certificate for Warrant
      Shares or any Warrant until the person requesting the same has paid to the
      Company the amount of such tax or has established to the Company’s reasonable
      satisfaction that such tax has been paid. The Warrantholder shall be responsible
      for income taxes due under federal, state or other law, if any such tax is
      due.

     

    
      
        
        

      

      
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    Section
      6.
            Mutilated
      or Missing Warrants.
      In case
      this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall
      issue in exchange and substitution of and upon cancellation of the mutilated
      Warrant, or in lieu of and substitution for the Warrant lost, stolen or
      destroyed, a new Warrant of like tenor and for the purchase of a like number
      of
      Warrant Shares, but only upon receipt of evidence reasonably satisfactory to
      the
      Company of such loss, theft or destruction of the Warrant, and with respect
      to a
      lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect
      thereto, if requested by the Company.

    


    Section
      7.
            Reservation
      of Common Stock.
      The
      Company hereby represents and warrants that there have been reserved, and the
      Company shall at all applicable times keep reserved until issued (if necessary)
      as contemplated by this Section 7, out of the authorized and unissued shares
      of
      Common Stock, sufficient shares to provide for the exercise of the rights of
      purchase represented by this Warrant. The Company agrees that all Warrant Shares
      issued upon due exercise of the Warrant shall be, at the time of delivery of
      the
      certificates for such Warrant Shares, duly authorized, validly issued, fully
      paid and non-assessable shares of Common Stock of the Company.

    


    Section
      8.       Adjustments.
      Subject
      and pursuant to the provisions of this Section 8, the Warrant Price and number
      of Warrant Shares subject to this Warrant shall be subject to adjustment from
      time to time as set forth hereinafter.

    


    (a)
            If the Company shall, at any time or from
      time to time while this Warrant is outstanding, pay a dividend or make a
      distribution on its Common Stock in shares of Common Stock, subdivide its
      outstanding shares of Common Stock into a greater number of shares or combine
      its outstanding shares of Common Stock into a smaller number of shares or issue
      by reclassification of its outstanding shares of Common Stock any shares of
      its
      capital stock (including any such reclassification in connection with a
      consolidation or merger in which the Company is the continuing corporation),
      then the number of Warrant Shares purchasable upon exercise of the Warrant
      and
      the Warrant Price in effect immediately prior to the date upon which such change
      shall become effective, shall be adjusted by the Company so that the
      Warrantholder thereafter exercising the Warrant shall be entitled to receive
      the
      number of shares of Common Stock or other capital stock which the Warrantholder
      would have received if the Warrant had been exercised immediately prior to
      such
      event upon payment of a Warrant Price that has been adjusted to reflect a fair
      allocation of the economics of such event to the Warrantholder. Such adjustments
      shall be made successively whenever any event listed above shall
      occur.

     

    
      
        
        

      

      
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    (b)
            If any capital reorganization,
      reclassification of the capital stock of the Company, consolidation or merger
      of
      the Company with another corporation in which the Company is not the survivor,
      or sale, transfer or other disposition of all or substantially all of the
      Company’s assets to another corporation shall be effected, then, as a condition
      of such reorganization, reclassification, consolidation, merger, sale, transfer
      or other disposition, lawful and adequate provision shall be made whereby each
      Warrantholder shall thereafter have the right to purchase and receive upon
      the
      basis and upon the terms and conditions herein specified and in lieu of the
      Warrant Shares immediately theretofore issuable upon exercise of the Warrant,
      such shares of stock, securities or assets as would have been issuable or
      payable with respect to or in exchange for a number of Warrant Shares equal
      to
      the number of Warrant Shares immediately theretofore issuable upon exercise
      of
      the Warrant, had such reorganization, reclassification, consolidation, merger,
      sale, transfer or other disposition not taken place, and in any such case
      appropriate provision shall be made with respect to the rights and interests
      of
      each Warrantholder to the end that the provisions hereof (including, without
      limitation, provision for adjustment of the Warrant Price) shall thereafter
      be
      applicable, as nearly equivalent as may be practicable in relation to any shares
      of stock, securities or assets thereafter deliverable upon the exercise hereof.
      The Company shall not effect any such consolidation, merger, sale, transfer
      or
      other disposition unless prior to or simultaneously with the consummation
      thereof the successor corporation (if other than the Company) resulting from
      such consolidation or merger, or the corporation purchasing or otherwise
      acquiring such assets or other appropriate corporation or entity shall assume
      the obligation to deliver to the Warrantholder, at the last address of the
      Warrantholder appearing on the books of the Company, such shares of stock,
      securities or assets as, in accordance with the foregoing provisions, the
      Warrantholder may be entitled to purchase, and the other obligations under
      this
      Warrant. The provisions of this paragraph (b) shall similarly apply to
      successive reorganizations, reclassifications, consolidations, mergers, sales,
      transfers or other dispositions.

    


    (c)
            In case the Company shall fix a payment date
      for the making of a distribution to all holders of Common Stock (including
      any
      such distribution made in connection with a consolidation or merger in which
      the
      Company is the continuing corporation) of evidences of indebtedness or assets
      (other than cash dividends or cash distributions payable out of consolidated
      earnings or earned surplus or dividends or distributions referred to in Section
      8(a)), or subscription rights or warrants, the Warrant Price to be in effect
      after such payment date shall be determined by multiplying the Warrant Price
      in
      effect immediately prior to such payment date by a fraction, the numerator
      of
      which shall be the total number of shares of Common Stock outstanding multiplied
      by the Market Price (as defined below) per share of Common Stock immediately
      prior to such payment date, less the fair market value (as determined by the
      Company’s Board of Directors in good faith) of said assets or evidences of
      indebtedness so distributed, or of such subscription rights or warrants, and
      the
      denominator of which shall be the total number of shares of Common Stock
      outstanding multiplied by such Market Price per share of Common Stock
      immediately prior to such payment date. “Market Price” as of a particular date
      (the “Valuation
      Date”),
      shall
      mean the following with respect to any class of securities: (A) if such security
      is then listed on a national stock exchange, the Market Price shall be the
      average closing bid price of such security in the most recent five (5) Trading
      Days during which such security has traded prior to the Valuation Date; (B)
      if
      such security is then included in The Nasdaq Stock Market, Inc. (“Nasdaq”),
      the
      Market Price shall be the average closing price of such security in the most
      recent five (5) Trading Days during which such security has traded prior to
      the
      Valuation Date or, if no such closing sale price is available, the average
      of
      the high bid and the low ask prices quoted on Nasdaq for the five (5) Trading
      Days prior to the Valuation Date; (C) if such security is then included in
      the
      Over-the-Counter Bulletin Board, the Market Price shall be the weighted average
      sales prices of one share of such security on the Over-the-Counter Bulletin
      Board for the five (5) Trading Days prior to the Valuation Date or, if no such
      sales prices for the five (5) Trading Days are available, the average of the
      high bid and the low ask prices quoted on the Over-the-Counter Bulletin Board
      for the five (5) Trading Days prior to the Valuation Date; or (D) if such
      security is then included in the “pink sheets,” the Market Price shall be the
      weighted average sales prices of one share of such security on the “pink sheets”
for the five (5) Trading Days prior to the Valuation Date or, if no such closing
      sale price is available, the average of the high bid and the low ask price
      quoted on the “pink sheets” for the five (5) Trading Days prior to the Valuation
      Date; provided, however, that if the Common Stock is not then listed on a
      national stock exchange or quoted on Nasdaq, the Bulletin Board or such other
      exchange or association, or included in the “pink sheets”, the fair market value
      of one share of Common Stock as of the Valuation Date, shall be determined
      in
      good faith by the Board of Directors of the Company and the Warrantholder.
      If
      the Common Stock is not then listed on a national securities exchange, the
      Bulletin Board or such other exchange or association, or included in the “pink
      sheets”, the Board of Directors of the Company shall respond promptly, in
      writing, to an inquiry by the Warrantholder prior to the exercise hereunder
      as
      to the fair market value of a share of Common Stock as determined by the Board
      of Directors of the Company. In the event that the Board of Directors of the
      Company and the Warrantholder are unable to agree upon the fair market value
      in
      respect of subpart (c) hereof, the Company and the Warrantholder shall jointly
      select an appraiser, who is experienced in such matters. The decision of such
      appraiser shall be final and conclusive, and the cost of such appraiser shall
      be
      borne equally by the Company and the Warrantholder. Such adjustment shall be
      made successively whenever such a payment date is fixed.

     

    
      
        
        

      

      
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    (d)
            An adjustment to the Warrant Price shall
      become effective immediately after the payment date in the case of each dividend
      or distribution and immediately after the effective date of each other event
      which requires an adjustment.

    


    (e)
            In the event that, as a result of an
      adjustment made pursuant to this Section 8, the Warrantholder shall become
      entitled to receive any shares of capital stock of the Company other than shares
      of Common Stock, the number of such other shares so receivable upon exercise
      of
      this Warrant shall be subject thereafter to adjustment from time to time in
      a
      manner and on terms as nearly equivalent as practicable to the provisions with
      respect to the Warrant Shares contained in this Warrant.

    


    (f)
            Except as provided in subsection (g) hereof,
      if and whenever the Company shall issue or sell, or is, in accordance with
      any
      of subsections (f)(l) through (f)(7) hereof, deemed to have issued or sold,
      any
      shares of Common Stock for no consideration or for a consideration per share
      less than the Warrant Price in effect immediately prior to the time of such
      issue or sale, then and in each such case (a “Trigger
      Issuance”)
      the
      then-existing Warrant Price, shall be reduced, as of the close of business
      on
      the effective date of the Trigger Issuance, to a price determined as
      follows:

    


    Adjusted
      Warrant Price = (A
      x
      B) + D

    A+C

    


    where

    


    “A”
      equals the number of shares of Common Stock outstanding, including Additional
      Shares of Common Stock (as defined below) deemed to be issued hereunder,
      immediately preceding such Trigger Issuance;

     

    
      
        
        

      

      
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    “B”
      equals the Warrant Price in effect immediately preceding such Trigger
      Issuance;

    


    “C”
      equals the number of Additional Shares of Common Stock issued or deemed issued
      hereunder as a result of the Trigger Issuance; and

    


    “D”
      equals the aggregate consideration, if any, received or deemed to be received
      by
      the Company upon such Trigger Issuance; provided, however, that in no event
      shall the Warrant Price after giving effect to such Trigger Issuance be greater
      than the Warrant Price in effect prior to such Trigger Issuance.

    


    For
      purposes of this subsection (f), “Additional Shares of Common Stock” shall mean
      all shares of Common Stock issued by the Company or deemed to be issued pursuant
      to this subsection (f), other than Excluded Issuances (as defined in subsection
      (g) hereof).

    


    For
      purposes of this subsection (f), the following subsections (f)(l) to (f)(7)
      shall also be applicable:

    


    (f)(1)
            Issuance
      of Rights or Options.
      In case
      at any time the Company shall in any manner grant (directly and not by
      assumption in a merger or otherwise) any warrants or other rights to subscribe
      for or to purchase, or any options for the purchase of, Common Stock or any
      stock or security convertible into or exchangeable for Common Stock (such
      warrants, rights or options being called “Options” and such convertible or
      exchangeable stock or securities being called “Convertible Securities”) whether
      or not such Options or the right to convert or exchange any such Convertible
      Securities are immediately exercisable, and the price per share for which Common
      Stock is issuable upon the exercise of such Options or upon the conversion
      or
      exchange of such Convertible Securities (determined by dividing (i) the sum
      (which sum shall constitute the applicable consideration) of (x) the total
      amount, if any, received or receivable by the Company as consideration for
      the
      granting of such Options, plus (y) the aggregate amount of additional
      consideration payable to the Company upon the exercise of all such Options,
      plus
      (z), in the case of such Options which relate to Convertible Securities, the
      aggregate amount of additional consideration, if any, payable upon the issue
      or
      sale of such Convertible Securities and upon the conversion or exchange thereof,
      by (ii) the total maximum number of shares of Common Stock issuable upon the
      exercise of such Options or upon the conversion or exchange of all such
      Convertible Securities issuable upon the exercise of such Options) shall be
      less
      than the Warrant Price in effect immediately prior to the time of the granting
      of such Options, then the total number of shares of Common Stock issuable upon
      the exercise of such Options or upon conversion or exchange of the total amount
      of such Convertible Securities issuable upon the exercise of such Options shall
      be deemed to have been issued for such price per share as of the date of
      granting of such Options or the issuance of such Convertible Securities and
      thereafter shall be deemed to be outstanding for purposes of adjusting the
      Warrant Price. Except as otherwise provided in subsection 8(f)(3), no adjustment
      of the Warrant Price shall be made upon the actual issue of such Common Stock
      or
      of such Convertible Securities upon exercise of such Options or upon the actual
      issue of such Common Stock upon conversion or exchange of such Convertible
      Securities.

     

    
      
        
        

      

      
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    (f)(2)
            Issuance
      of Convertible Securities.
      In case
      the Company shall in any manner issue (directly and not by assumption in a
      merger or otherwise) or sell any Convertible Securities, whether or not the
      rights to exchange or convert any such Convertible Securities are immediately
      exercisable, and the price per share for which Common Stock is issuable upon
      such conversion or exchange (determined by dividing (i) the sum (which sum
      shall
      constitute the applicable consideration) of (x) the total amount received or
      receivable by the Company as consideration for the issue or sale of such
      Convertible Securities, plus (y) the aggregate amount of additional
      consideration, if any, payable to the Company upon the conversion or exchange
      thereof, by (ii) the total number of shares of Common Stock issuable upon the
      conversion or exchange of all such Convertible Securities) shall be less than
      the Warrant Price in effect immediately prior to the time of such issue or
      sale,
      then the total maximum number of shares of Common Stock issuable upon conversion
      or exchange of all such Convertible Securities shall be deemed to have been
      issued for such price per share as of the date of the issue or sale of such
      Convertible Securities and thereafter shall be deemed to be outstanding for
      purposes of adjusting the Warrant Price, provided that (a) except as otherwise
      provided in subsection 8(f)(3), no adjustment of the Warrant Price shall be
      made
      upon the actual issuance of such Common Stock upon conversion or exchange of
      such Convertible Securities and (b) no further adjustment of the Warrant Price
      shall be made by reason of the issue or sale of Convertible Securities upon
      exercise of any Options to purchase any such Convertible Securities for which
      adjustments of the Warrant Price have been made pursuant to the other provisions
      of subsection 8(f).

     

    (f)(3)
            Change
      in Option Price or Conversion Rate.
      Upon
      the happening of any of the following events, namely, if the purchase price
      provided for in any Option referred to in subsection 8(f)(l) hereof, the
      additional consideration, if any, payable upon the conversion or exchange of
      any
      Convertible Securities referred to in subsections 8(f)(l) or 8(f)(2), or the
      rate at which Convertible Securities referred to in subsections 8(f)(l) or
      8(f)(2) are convertible into or exchangeable for Common Stock shall change
      at
      any time (including, but not limited to, changes under or by reason of
      provisions designed to protect against dilution), the Warrant Price in effect
      at
      the time of such event shall forthwith be readjusted to the Warrant Price which
      would have been in effect at such time had such Options or Convertible
      Securities still outstanding provided for such changed purchase price,
      additional consideration or conversion rate, as the case may be, at the time
      initially granted, issued or sold. On the termination of any Option for which
      any adjustment was made pursuant to this subsection 8(f) or any right to convert
      or exchange Convertible Securities for which any adjustment was made pursuant
      to
      this subsection 8(f) (including without limitation upon the redemption or
      purchase for consideration of such Convertible Securities by the Company),
      the
      Warrant Price then in effect hereunder shall forthwith be changed to the Warrant
      Price which would have been in effect at the time of such termination had such
      Option or Convertible Securities, to the extent outstanding immediately prior
      to
      such termination, never been issued.

     

    
      
        
        

      

      
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    (f)(4)
            Stock
      Dividends.
      Subject
      to the provisions of this Section 8(f), in case the Company shall declare a
      dividend or make any other distribution upon any stock of the Company (other
      than the Common Stock) payable in Common Stock, Options or Convertible
      Securities, then any Common Stock, Options or Convertible Securities, as the
      case may be, issuable in payment of such dividend or distribution shall be
      deemed to have been issued or sold without consideration.

    


    (f)(5)
            Consideration
      for Stock.
      In case
      any shares of Common Stock, Options or Convertible Securities shall be issued
      or
      sold for cash, the consideration received therefor shall be deemed to be the
      net
      amount received by the Company therefor, after deduction therefrom of any
      expenses incurred or any underwriting commissions or concessions paid or allowed
      by the Company in connection therewith. In case any shares of Common Stock,
      Options or Convertible Securities shall be issued or sold for a consideration
      other than cash, the amount of the consideration other than cash received by
      the
      Company shall be deemed to be the fair value of such consideration as determined
      in good faith by the Board of Directors of the Company, after deduction of
      any
      expenses incurred or any underwriting commissions or concessions paid or allowed
      by the Company in connection therewith. In case any Options shall be issued
      in
      connection with the issue and sale of other securities of the Company, together
      comprising one integral transaction in which no specific consideration is
      allocated to such Options by the parties thereto, such Options shall be deemed
      to have been issued for such consideration as determined in good faith by the
      Board of Directors of the Company. If Common Stock, Options or Convertible
      Securities shall be issued or sold by the Company and, in connection therewith,
      other Options or Convertible Securities (the “Additional Rights”) are issued,
      then the consideration received or deemed to be received by the Company shall
      be
      reduced by the fair market value of the Additional Rights (as determined using
      the Black-Scholes option pricing model or another method mutually agreed to
      by
      the Company and the Warrantholder). The Board of Directors of the Company shall
      respond promptly, in writing, to an inquiry by the Warrantholder as to the
      fair
      market value of the Additional Rights. In the event that the Board of Directors
      of the Company and the Warrantholder are unable to agree upon the fair market
      value of the Additional Rights, the Company and the Warrantholder shall jointly
      select an appraiser, who is experienced in such matters. The decision of such
      appraiser shall be final and conclusive, and the cost of such appraiser shall
      be
      borne evenly by the Company and the Warrantholder.

    


    (f)(6)
            Record
      Date.
      In case
      the Company shall take a record of the holders of its Common Stock for the
      purpose of entitling them (i) to receive a dividend or other distribution
      payable in Common Stock, Options or Convertible Securities or (ii) to subscribe
      for or purchase Common Stock, Options or Convertible Securities, then such
      record date shall be deemed to be the date of the issue or sale of the shares
      of
      Common Stock deemed to have been issued or sold upon the declaration of such
      dividend or the making of such other distribution or the date of the granting
      of
      such right of subscription or purchase, as the case may be.

     

    
      
        
        

      

      
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    (f)(7)
            Treasury
      Shares.
      The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company or any of its
      wholly-owned subsidiaries, and the disposition of any such shares (other than
      the cancellation or retirement thereof) shall be considered an issue or sale
      of
      Common Stock for the purpose of this subsection (f).

    


    (g)
            Anything herein to the contrary
      notwithstanding, the Company shall not be required to make any adjustment of
      the
      Warrant Price in the case of the issuance of (A) capital stock, Options or
      Convertible Securities issued to directors, officers, employees or consultants
      of the Company in connection with their service as directors of the Company,
      their employment by the Company or their retention as consultants by the Company
      pursuant to an equity compensation program approved by the Board of Directors
      of
      the Company or the compensation committee of the Board of Directors of the
      Company, (B) shares of Common Stock issued upon the conversion or exercise
      of
      Options or Convertible Securities issued prior to the date hereof, provided
      such
      securities are not amended after the date hereof to increase the number of
      shares of Common Stock issuable thereunder or to lower the conversion or
      exercise price thereof, (C) securities issued pursuant to that certain Purchase
      Agreement dated November 1st, 2006, among the
      Company and the Investors named therein (the “Purchase Agreement”) and
      securities issued upon the exercise or conversion of those securities, and
      (D)
      shares of Common Stock issued or issuable by reason of a dividend, stock split
      or other distribution on shares of Common Stock (but only to the extent that
      such a dividend, split or distribution results in an adjustment in the Warrant
      Price pursuant to the other provisions of this Warrant) (collectively, “Excluded
      Issuances”).

    


    (h)      Upon
      any adjustment to the Warrant Price pursuant to Section 8(f) above, the number
      of Warrant Shares purchasable hereunder shall be adjusted by multiplying such
      number by a fraction, the numerator of which shall be the Warrant Price in
      effect immediately prior to such adjustment and the denominator of which shall
      be the Warrant Price in effect immediately thereafter.

    


    Section
      9.      Fractional
      Interest.
      The
      Company shall not be required to issue fractions of Warrant Shares upon the
      exercise of this Warrant. If any fractional share of Common Stock would, except
      for the provisions of the first sentence of this Section 9, be deliverable
      upon
      such exercise, the Company, in lieu of delivering such fractional share, shall
      pay to the exercising Warrantholder an amount in cash equal to the Market Price
      of such fractional share of Common Stock on the date of exercise.

    


    Section
      10.       Extension
      of Expiration Date.
      N\A

     

    
      
        
        

      

      
        -
          9 -

        
          

        

      

      
        
        

      

    

     

    Section
      11.       Benefits.
      Nothing
      in this Warrant shall be construed to give any person, firm or corporation
      (other than the Company and the Warrantholder) any legal or equitable right,
      remedy or claim, it being agreed that this Warrant shall be for the sole and
      exclusive benefit of the Company and the Warrantholder.

    


    Section
      12.       Notices
      to Warrantholder.
      Upon
      the happening of any event requiring an adjustment of the Warrant Price, the
      Company shall promptly give written notice thereof to the Warrantholder at
      the
      address appearing in the records of the Company, stating the adjusted Warrant
      Price and the adjusted number of Warrant Shares resulting from such event and
      setting forth in reasonable detail the method of calculation and the facts
      upon
      which such calculation is based. Failure to give such notice to the
      Warrantholder or any defect therein shall not affect the legality or validity
      of
      the subject adjustment.

    


    Section
      13.       Identity
      of Transfer Agent.
      The
      Transfer Agent for the Common Stock is Pacific Stock Transfer Company. Upon
      the
      appointment of any subsequent transfer agent for the Common Stock or other
      shares of the Company’s capital stock issuable upon the exercise of the rights
      of purchase represented by the Warrant, the Company will mail to the
      Warrantholder a statement setting forth the name and address of such transfer
      agent.

    


    Section
      14.      Notices.
      Unless
      otherwise provided, any notice required or permitted under this Warrant shall
      be
      given in writing and shall be deemed effectively given as hereinafter described
      (i) if given by personal delivery, then such notice shall be deemed given upon
      such delivery, (ii) if given by telex or facsimile, then such notice shall
      be
      deemed given upon receipt of confirmation of complete transmittal, (iii) if
      given by mail, then such notice shall be deemed given upon the earlier of (A)
      receipt of such notice by the recipient or (B) three days after such notice
      is
      deposited in first class mail, postage prepaid, and (iv) if given by an
      internationally recognized overnight air courier, then such notice shall be
      deemed given one business day after delivery to such carrier. All notices shall
      be addressed as follows: if to the Warrantholder, at its address as set forth
      in
      the Company’s books and records and, if to the Company, at the address as
      follows, or at such other address as the Warrantholder or the Company may
      designate by ten days’ advance written notice to the other:

    


    If
      to the
      Company:

    Attention:
      Mr. James Leung

    Arch
      Management Services Inc.

    6600 
      Trans-Canada Highway, Suite 519

    Pointe-Claire,
      Quebec, Canada H9R4S2

    Email: 
      leungppp@gmail.com

    Telephone: 
      514-771-3795

    Fax:           
      514-695-6319

    


    
      
        
        

      

      
        -
          10 -

        
          

        

      

      
        
        

      

    

     

    With
      a
      copy to:

    


    Attention:
      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

    


    Section
      15.       Registration
      Rights.
      N\A

    


    Section
      16.       Successors.
      All the
      covenants and provisions hereof by or for the benefit of the Warrantholder
      shall
      bind and inure to the benefit of its respective successors and assigns
      hereunder. 

    


    Section
      17.       Governing
      Law; Consent to Jurisdiction; Waiver of Jury Trial.
      This
      Warrant shall be governed by, and construed in accordance with, the internal
      laws of the State of New York, without reference to the choice of law provisions
      thereof. The Company and, by accepting this Warrant, the Warrantholder, each
      irrevocably submits to the exclusive jurisdiction of the courts of the State
      of
      New York located in New York County and the United States District Court for
      the
      Southern District of New York for the purpose of any suit, action, proceeding
      or
      judgment relating to or arising out of this Warrant and the transactions
      contemplated hereby. Service of process in connection with any such suit, action
      or proceeding may be served on each party hereto anywhere in the world by the
      same methods as are specified for the giving of notices under this Warrant.
      The
      Company and, by accepting this Warrant, the Warrantholder, each irrevocably
      consents to the jurisdiction of any such court in any such suit, action or
      proceeding and to the laying of venue in such court. The Company and, by
      accepting this Warrant, the Warrantholder, each irrevocably waives any objection
      to the laying of venue of any such suit, action or proceeding brought in such
      courts and irrevocably waives any claim that any such suit, action or proceeding
      brought in any such court has been brought in an inconvenient forum.
EACH
      OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES
      ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
      WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
      WAIVER.

    


        Section
      18.
      Cashless
      Exercise.
      N/A

     

    
      
        
        

      

      
        -
          11 -

        
          

        

      

      
        
        

      

    

     

    Section
      19.      Limitations
      on Exercise.
      Notwithstanding anything to the contrary contained herein, the number of Warrant
      Shares that may be acquired by the Warrantholder upon any exercise of this
      Warrant (or otherwise in respect hereof) shall be limited to the extent
      necessary to insure that, following such exercise (or other issuance), the
      total
      number of shares of Common Stock then beneficially owned by such Warrantholder
      and its Affiliates and any other Persons whose beneficial ownership of Common
      Stock would be aggregated with the Warrantholder's for purposes of Section
      13(d)
      of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), does
      not exceed 9.999% of the total number of issued and outstanding shares of Common
      Stock (including for such purpose the shares of Common Stock issuable upon
      such
      exercise). For such purposes, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder. This provision shall not restrict the number of shares
      of Common Stock which a Holder may receive or beneficially own in order to
      determine the amount of securities or other consideration that such Holder
      may
      receive in the event of a transaction contemplated by Section 8 of this Warrant.
      By written notice to the Company, the Warrantholder may waive the provisions
      of
      this Section 19, but any such waiver will not be effective until the 61st day
      after delivery of such notice, nor will any such waiver effect any other
      Warrantholder.

    


    Section
      20.       No
      Rights as Stockholder.
      Prior
      to the exercise of this Warrant, the Warrantholder shall not have or exercise
      any rights as a stockholder of the Company by virtue of its ownership of this
      Warrant.

    


    Section
      21.       Amendment
      or Waiver.
      Any
      term of this Warrant may be amended or waived (including the adjustment
      provisions included in Section 8 of this Warrant) upon the written consent
      of
      the Company and the holders of Company Warrants representing at least 50% of
      the
      number of shares of Common Stock then subject to all outstanding Company
      Warrants (the “Majority
      Holders”);
      provided,
      that
      (x) any such amendment or waiver must apply to all Company Warrants; and (y)
      the
      number of Warrant Shares subject to this Warrant, the Warrant Price and the
      Expiration Date may not be amended, and the right to exercise this Warrant
      may
      not be altered or waived, without the written consent of the
      Warrantholder.

    


    Section
      22.       Section
      Headings.
      The
      section headings in this Warrant are for the convenience of the Company and
      the
      Warrantholder and in no way alter, modify, amend, limit or restrict the
      provisions hereof.

     

    
      
        
        

      

      
        -
          12 -

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as
      November 1st,
      2006.

     

    
      	 	 	 	 
	 	ARCH MANAGEMENT SERVICES
              INC.
	 
 	 	 
 	 
 
	 	 	By:  	  
	 	 	Name:	
              
                

              

              James Leung

            
	 	 	Title: 	President


    

     

    
      
        
        

      

      
        -
          13 -

        
          

        

      

      
        
        

      

    

     

    APPENDIX
      A

    ARCH
      MANAGEMENT SERVICES INC.

    WARRANT
      EXERCISE FORM

    


    To
      Arch
      Management Services Inc.:

    


    The
      undersigned hereby irrevocably elects to exercise the right of purchase
      represented by the within Warrant (“Warrant”) for, and to purchase thereunder by
      the payment of the Warrant Price and surrender of the Warrant, _______________
      shares of Common Stock (“Warrant Shares”) provided for therein, and requests
      that certificates for the Warrant Shares be issued as follows: 

    


    _______________________________

    Name

    ________________________________

    Address

    ________________________________

    ________________________________

    Federal
      Tax ID or Social Security No.

    


    and
      delivered by  (certified
      mail to the above address, or electronically)

    (provide
      DWAC Instructions:___________________), or 

    (other
      specify): _________________________________). 

    


    and,
      if
      the number of Warrant Shares shall not be all the Warrant Shares purchasable
      upon exercise of the Warrant, that a new Warrant for the balance of the Warrant
      Shares purchasable upon exercise of this Warrant be registered in the name
      of
      the undersigned Warrantholder or the undersigned’s Assignee as below indicated
      and delivered to the address stated below.

    

      
        	
                Dated:
                  ___________________, 2006

              	 	 
	 	 	 
	
                Note:
                  The signature must correspond with

              	 	 
	
                the
                  name of the Warrantholder as written

              	 	 
	
                on
                  the first page of the Warrant in every

              	 	
                ______________________________

              
	
                particular,
                  without alteration or enlargement

              	 	
                Name
                  (please print)

              
	
                or
                  any change whatever, unless the Warrant

              	 	 
	
                has
                  been assigned.

              	 	
                ______________________________

              
	 	 	
                ______________________________

              
	
                Signature:
                  __________________________

              	 	
                Address

              
	 	 	
                ______________________________

              
	 	 	
                Federal
                  Identification or

              
	 	 	
                Social
                  Security No.

              
	 	 	 
	 	 	
                Assignee:
                  

              
	 	 	
                _______________________________

              
	 	 	
                _______________________________

              
	 	 	
                _______________________________

              


      

    

    
      
      

    

    
      
        
        

      

      
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          14 -