Document:

Unassociated Document

     

    COMMON
      STOCK PURCHASE

     

    AGREEMENT

     

    Date
      as of November 1st
      2006

     

    by
      and among

     

    ARCH
      MANAGEMENT SERVICES INC.

     

    and

     

    THE
      PURCHASERS LISTED ON EXHIBIT A

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    TABLE
      OF
      CONTENTS

    

    Page

     

    
      
        	
                ARTICLE
                  I

              	
                Purchase
                  and Sale of Common Stock and Warrants

              	
                1

              
	
                Section
                  1.1

              	
                Purchase
                  and Sale of Common Stock and Warrants.

              	
                1

              
	
                Section
                  1.2

              	
                Purchase
                  Price and Closing

              	
                2

              
	 	 	 
	
                ARTICLE
                  II

              	
                Representations
                  and Warranties

              	
                2

              
	
                Section
                  2.1

              	
                Representations
                  and Warranties of the Company

              	
                2

              
	
                Section
                  2.2

              	
                Representations
                  and Warranties of the Purchasers

              	
                8

              
	 	 	 
	
                ARTICLE
                  III

              	
                Covenants

              	
                12

              
	
                Section
                  3.1

              	
                Securities
                  Compliance

              	
                12

              
	
                Section
                  3.2

              	
                Registration
                  and Listing

              	
                12

              
	
                Section
                  3.3

              	
                Inspection
                  Rights

              	
                13

              
	
                Section
                  3.4

              	
                Compliance
                  with Laws

              	
                13

              
	
                Section
                  3.5

              	
                Keeping
                  of Records and Books of Account

              	
                13

              
	
                Section
                  3.6

              	
                Reporting
                  Requirements

              	
                13

              
	
                Section
                  3.7

              	
                Other
                  Agreements

              	
                13

              
	
                Section
                  3.8

              	
                Subsequent
                  Financings; Right of First Refusal

              	
                14

              
	
                Section
                  3.9

              	
                Use
                  of Proceeds

              	
                16

              
	
                Section
                  3.10

              	
                Reporting
                  Status

              	
                16

              
	
                Section
                  3.11

              	
                Disclosure
                  of Transaction

              	
                16
                  

              
	
                Section
                  3.12

              	
                Disclosure
                  of Material Information

              	
                16

              
	
                Section
                  3.13

              	
                Pledge
                  of Securities

              	
                16

              
	
                Section
                  3.14

              	
                Registration
                  Statements

              	
                17

              
	 	 	 
	
                ARTICLE
                  IV

              	
                Conditions

              	
                15

              
	
                Section
                  4.1

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

              	
                15

              
	
                Section
                  4.2

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

              	
                16

              
	 	 	 
	
                ARTICLE
                  V

              	
                Certificate
                  Legend

              	
                17

              
	
                Section
                  5.1

              	
                Legend

              	
                19

              
	 	 	 
	
                ARTICLE
                  VI

              	
                Indemnification

              	
                19

              
	
                Section
                  6.1

              	
                General
                  Indemnity.

              	
                19

              
	
                Section
                  6.2

              	
                Indemnification
                  Procedure

              	
                20

              
	 	 	 
	
                ARTICLE
                  VII

              	
                Miscellaneous

              	
                21

              
	
                Section
                  7.1

              	
                Fees
                  and Expenses

              	
                21

              
	
                Section
                  7.2

              	
                Specific
                  Performance; Consent to Jurisdiction; Venue.

              	
                21

              
	
                Section
                  7.3

              	
                Entire
                  Agreement; Amendment

              	
                22

              
	
                Section
                  7.4

              	
                Notices

              	
                22

              
	
                Section
                  7.5

              	
                Waivers

              	
                23

              
	
                Section
                  7.6

              	
                Headings

              	
                23

              
	
                Section
                  7.7

              	
                Successors
                  and Assigns

              	
                23

              
	
                Section
                  7.8

              	
                Governing
                  Law

              	
                23
                  

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        TABLE
          OF
          CONTENTS

        (continued)

         

        Page

      

       

      
        	
                Section
                  7.9

              	
                Survival

              	
                23

              
	
                Section
                  7.10

              	
                Counterparts

              	
                24

              
	
                Section
                  7.11

              	
                Publicity

              	
                24

              
	
                Section
                  7.12

              	
                Severability

              	
                24

              
	
                Section
                  7.13

              	
                Further
                  Assurances

              	
                24

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      COMMON
        STOCK PURCHASE AGREEMENT

      

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

      

      The
        parties hereto agree as follows:

       

      ARTICLE
        I

       

      PURCHASE
        AND SALE OF COMMON STOCK AND WARRANTS

       

      Section
        1.1      Purchase
        and Sale of Common Stock and Warrants. 

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        II

       

      REPRESENTATIONS
        AND WARRANTIES

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

      (w)      No
        Integrated Offering.
        N/A

       

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

      

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

                  (k)      Regulation
        S Representations.
        

      

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

      

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

      

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

      

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

      

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

      

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

      

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

      

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

      

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

       

      ARTICLE
        III

       

      COVENANTS

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

      Section
        3.3      Intentionally
        Omitted.

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

      

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

      

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      ARTICLE
        IV

       

      CONDITIONS

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

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

       

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

       

      (i)      Registration
        Rights Agreement.
        N/A

       

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

       

      ARTICLE
        V

       

      CERTIFICATE
        LEGEND 

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

      ARTICLE
        VI

       

      INDEMNIFICATION

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      ARTICLE
        VII

       

      MISCELLANEOUS

       

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

       

      Section
        7.2      Specific
        Performance; Consent to Jurisdiction; Venue. 

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

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

       

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

       

      
        	
                If
                  to the Company:

              	
                ARCH
                  MANAGEMENT SERVICES INC.

              
	 	
                6600
                  Trans-Canada, suite 519

              
	 	
                Pointe-Claire,
                  Quebec, Canada

              
	 	
                H9R
                  4S2 

              
	 	
                Attention:
                  James Leung, President and CEO

              
	 	
                Tel.
                  No.: 514-771-3795

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      

        
          	
                  With
                    copies (which copies 

                
	
                  shall
                    not constitute notice 

                
	
                  to
                    the Company) to:

                	
                  Mr.
                    Travis Gering, Esq.

                
	 	
                  WUERSCH
                    & GERING, LLP

                
	 	
                  100,
                    Wall Street, 21st Floor

                
	 	
                  New
                    York, NY 10005

                
	 	 
	 	
                  Tel.
                    No.: (212) 509-5050

                
	 	
                  Fax
                    No.: (212) 509-9559

                
	 	 
	
                  If
                    to any Purchaser:

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

                

        

         

      

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

       

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

         

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

         

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

         

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

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

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

      

       

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

       

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

       

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

       

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

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK]

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

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

      

        
          	 	 	
                  ARCH
                    MANAGEMENT SERVICES INC. 

                
	 	 	 
	 	
                  By:

                	
                    

                
	 	 	
                  
                    

                  

                  Name:
                    James Leung

                
	
                   

                	 	
                  Title:
                    President and CEO

                
	 	 	 
	
                  Purchaser:

                	 	 
	 	
                  By:

                	
                   

                
	 	 	
                  
                    

                  

                  Name:
                    Daniel; Lacher, Dominik Brüschweiler 

                
	
                   

                	 	
                  Title:
                    First Vice President, Assistant Vice
                    President

                

        

      

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      EXHIBIT
        A 

      LIST
        OF PURCHASERS

       

      
        
          	
                  Names
                    and Addresses

                	
                   

                	
                  Investment
                    Amount, Number of Shares

                
	
                  of
                    Purchaser

                	 	
                  & Warrants
                    Purchased  

                
	 	 	 
	
                  VP
                    Bank (Schweiz)AG

                	 	
                  Investment
                    Amount: $550,000

                
	
                  Bleicherweg
                    50, CH-8027, Zurich

                	 	
                  Shares:
                    275,000

                
	
                  Switzerland

                	
                   

                	
                  Series
                    A Warrant: 137,500

                
	 	 	 
	
                  No
                    Tax ID: n/a

                	 	 

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      EXHIBIT
        B

      FORM
        OF SERIES A WARRANT

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        C

      

      (N\A)

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      SCHEDULE
        2.1 (c)

       

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

       

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      

      SCHEDULE
        2.1 (g)

       

      Joint
        Venture:

       

      XINJIANG
        YAJIA DISTILLERY CO. LIMITED

       

      Hami
        Guangdong Industry Processing Zone

       

      Registered
        Capital: RMB10,000,000

       

      Investors:

       

      Xinjiang
        Wangye Distillery Co., Ltd.

       

      Capital
        :
        RMB500,000

       

      Guangdong
        Kecheng Trade Co., Ltd.

       

      Capital
        :
        RMB500,000

       

      Arch
        Management Services Inc.

       

      Capital:
        RMB9,000,000Unassociated 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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          2 -

        
          

        

      

      
        
        

      

    

     

    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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          3 -

        
          

        

      

      
        
        

      

    

     

    (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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          4 -

        
          

        

      

      
        
        

      

    

     

    (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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          5 -

        
          

        

      

      
        
        

      

    

     

    “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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          6 -

        
          

        

      

      
        
        

      

    

     

    (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.

     

    
      
        
        

      

      
        -
          8 -

        
          

        

      

      
        
        

      

    

     

    (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:
                  

              
	 	 	
                _______________________________

              
	 	 	
                _______________________________

              
	 	 	
                _______________________________

              

      

    

    
      
      

    

    
      
        
        

      

      
        -
          14 -

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