AGREEMENT
AGREEMENT
This
Purchase Agreement (this “Agreement”) is made by and between Arch Management
Services Inc. (the “Buyer”) and Xxxxxxx Energy International Limited (the
“Seller”) as of September 1, 2006.
This
Agreement sets forth the terms and conditions upon which the Seller is conveying
to the Buyer its full and complete 90% interest including all tangible and
intangible assets and rights in the joint venture agreement it formed with
certain Chinese entities that provides for the development of plant facilities
for and the manufacture of fuel ethanol in the People’s Republic of China
(hereinafter the “Assets”), in exchange for five million (5,000,000) shares of
the common stock of the Buyer, restricted as described below in Section 3.04,
each share having a par value of US $.01. Such shares (the “Shares”) shall
represent 32.98% of the issued and outstanding shares of common stock of Buyer
after the Closing, as hereinafter defined.
In
consideration of the mutual covenants, conditions and warranties contained
herein, the parties hereby agree as follows:
I.
SALES OF THE ASSETS AND ASSIGNMENT OF DEBT
1.01 Assets
being Sold.
Subject
to the terms and conditions of this Agreement, the Seller is selling, assigning,
and delivering the Assets, which are listed in Schedule 1.01A, to the Buyer
at
the closing provided for in Section 1.03 hereof (the "Closing"), free and clear
of all liens, charges, claims, or encumbrances of whatsoever nature, other
than
as described herein.
1.02 Consideration.
At the
Closing, the Seller is transferring to the Buyer all right, title and interest
in and to the Assets.
1.03 Closing.
The
Closing of the transactions contemplated by this Agreement will take place
prior
to September 15, 2006.
II.
REPRESENTATIONS AND WARRANTIES BY THE BUYER.
The
Buyer
hereby represents and warrants as follows:
2.01
Organization,
Capitalization, etc.
(a) Buyer
is
a corporation duly organized, validly existing, and in good standing under
the
laws of Nevada, and is qualified in no other state.
(b) The
authorized capital stock of Buyer consists of 100,000,000 shares of common
stock
of which 10,162,750 are validly issued and outstanding, fully paid and
non-assessable.
(c)
Buyer
has the corporate power and authority to carry on its business as presently
conducted.
2.02 No
Violation.
Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation or default under
any term or provision of the Certificate of Incorporation or Bylaws of Buyer,
or
of any contract, commitment, indenture, other agreement or restriction of any
kind or character to which Buyer is a party or by which Buyer is
bound.
2.03 Tax
Returns.
Buyer
has duly filed all tax reports and returns required to be filed by it and has
fully paid all taxes and other charges claimed to be due from it by federal,
state, or local taxing authorities (including without limitation those due
in
respect of its properties, income, franchises, licenses, sales, and payrolls);
there are no liens upon any of Buyer's property or assets; there are not now
any
pending questions relating to, or claims asserted for, taxes or assessments
asserted against Buyer.
2.04 Undisclosed
Liabilities.
Except
to the extent reflected or reserved against in its, balance sheet, Buyer as
of
that date and as of the date hereof, has no liabilities or obligations of any
nature, where absolute, accrued, contingent, or otherwise and whether due or
to
become due. Further, the Buyer does not know or have any reasonable grounds
to
know of any basis for the assertion against Buyer of any liability or
obligation, as of, of any nature or in any amount not fully reflected or
reserved against in the balance sheets.
2.05 Absence
of Certain Changes.
Other
than as disclosed in its most recent Form10-KSB for the period ending November
30th,
2005
and Form 10-QSB for the period ending May 31, 2006, Buyer has not:
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(a) Suffered
any material adverse change in financial condition, assets, liabilities,
business, or prospects;
(b) Incurred
any obligation or liability (whether absolute, accrued, contingent, or
otherwise) other than in the ordinary course of business and consistent with
past practice;
(c) Permitted
or allowed any of its assets, tangible or intangible, to be mortgaged, pledged,
or subjected to any liens or encumbrances;
(d) Written
down the value of any inventory or written-off as uncollectible any notes or
accounts receivable or any portion thereof, except for write-offs of such items
in the ordinary course of business and at a rate no greater than during the
fiscal year ended;
(e) Cancelled
any other debts or claims or waived any rights of substantial value, or sold
or
transferred any of its assets or properties, tangible or intangible, other
than
sales of inventory or merchandise made in the ordinary course of business and
consistent with past practice; and
(f) Declared,
paid, or set aside for payment to its stockholders any dividend or other
distribution in respect of its capital stock or redeemed or purchased or
otherwise acquired any of its capital stock or any options relating thereto
or
agreed to take any such action.
2.06 Litigation.
There
are
no actions, proceedings, or investigations pending or, to the knowledge of
Buyer, threatened against Buyer, and Buyer does not know or have any reason
to
know of any basis for any such action, proceeding, or investigation. There
is no
event or condition of any kind or character pertaining to the business, assets,
or prospects of Buyer that may materially and adversely affect such business,
assets or prospects.
2.07 Disclosure.
The
Buyer has disclosed to the Seller all facts material to the assets, prospects,
and business of it. No representation or warranty by the Buyer contained in
this
Agreement, and no statement contained in any instrument, list, certificate,
or
writing furnished to the Seller pursuant to the provisions hereof or in
connection with the transaction contemplated hereby, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading or
necessary in order to provide a prospective purchaser of the business of Buyer
with proper information as to Buyer and its affairs.
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2.08 SEC
Filing.
Buyer
has
filed all reports required to be filed with the United States Securities and
Exchange Commission (hereinafter the “SEC”). The Seller acknowledges receipt of
copies of all filings made with the SEC and further acknowledges that all
reports have been filed. In the event any amendments must be filed to said
reports as a result of this agreement and issuance of Shares by the Buyer to
the
Seller, the Seller agrees to assume and pay all costs and expenses incurred
in
connection therewith, including but not limited to legal and accounting fees,
and file the same.
III.
REPRESENTATIONS AND WARRANTIES BY THE SELLER.
The
Seller hereby represents and warrants as follows:
3.01 Organization,
etc.
The
Seller is a corporation duly organized, validly existing, and in good standing
under the laws of Canada.
3.02 Authority.
The
execution and delivery of this Agreement by the Seller and the consummation
by
the Seller of the transactions contemplated hereby have been duly authorized
and
approved by Seller.
3.03 No
Violation.
Neither
the execution nor the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will constitute a violation or default under
any term or provision of the certificate of incorporation or Bylaws of the
Seller, or of any contact, commitment, indenture, or other agreement or
restriction of any kind or character to which the Seller is a party or by which
the Seller is bound.
3.04 Representations
Regarding the payment in Shares.
(a) The
Shares issued for herein may not be transferred, encumbered, sold, hypothecated,
or otherwise disposed of to any person, without the express prior written
consent of Buyer and the prior opinion of counsel for Buyer that such
disposition will not violate federal and/or state securities acts. Disposition
shall include, but is not limited to acts of selling, assigning, transferring,
pledging, encumbering, hypothecating, and any form of conveying, whether
voluntary or not;
(b) To
the
extent that any federal, and/or state securities laws shall require, the Seller
hereby agrees that any Shares acquired pursuant to this Agreement shall be
without preference as to assets;
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(c) The
Seller acknowledges that the Shares have not been registered under the
Securities Act or any state securities laws and that their transfer and sale
is
restricted. The Seller further agrees that the certificate evidencing the Shares
he acquires pursuant to this Agreement will have the following legend placed
thereon:
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. OR 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.
(d) Buyer
is
under no obligation to register or seek an exemption under any federal and/or
state securities acts for any stock of Buyer or to cause or permit such stock
to
be transferred in the absence of any such registration or exemption and that
the
Seller herein must hold such stock indefinitely unless such stock is
subsequently registered under any federal and/or state securities acts or an
exemption from registration is available; and
(e) The
Seller has had the opportunity to ask questions to the Buyer and has received
additional information from Buyer to the extent that Buyer possessed such
information, or could acquire it without unreasonable effort or expense
necessary to evaluate the merits and risks of any investment in Buyer. Further,
the Buyer has delivered to Seller and Seller acknowledges receipt of the
following: (1) All material books and records of Buyer; (2) all material
contracts and documents relating to the proposed transactions; (3) all financial
statements of the Buyer; and (4) an opportunity to question the Buyer and the
appropriate executive officers.
3.05
Title
to Assets.
Seller
warrants that it is the sole owner and holds the rights in the Joint Venture
agreement and the property is free and clear of any and all claims, security
interests and encumbrances of third parties. In the event that anyone claims
title to or any interest in said asset and debt, Seller agrees to defend any
action or claim so instituted by such third parties at its own
expense.
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IV.
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
4.01 Survival
of Representations.
All
representations, warranties, and agreements made by any party in this Agreement
or pursuant hereto shall survive the execution and delivery hereof and any
investigation at any time made by or on behalf of any party.
4.02 Indemnification.
The
parties agree to indemnify each other and hold each other harmless from and
in
respect of any assessment, loss, damage, liability, cost, and expense (including
without limitation interest, penalties, and reasonable attorneys' fees) in
excess of $1,000 in the aggregate, imposed upon or incurred by the non-breaching
party or any subsidiary of the non-breaching party resulting from a breach
of
any agreement, representation, or warranty of the breaching party. Assertion
by
the non-breaching party of its right to indemnification under this Section
4.02
shall not preclude the assertion by the non-breaching party of any other rights
or the seeking of any other remedies against the breaching party, it being
acknowledged that each party has all remedies available under applicable
law.
V.
MISCELLANEOUS.
5.01 Expenses.
All fees
and expenses incurred by the Seller in connection with the transactions
contemplated by this Agreement shall be borne by the Seller and all fees and
expenses incurred by the Buyer in connection with the transactions contemplated
by this Agreement shall be borne by the Buyer.
5.02 Further
Assurances.
From
time
to time, at a party's request and without further consideration, the other
party, will execute and transfer such documents and will take such action as
the
party may reasonably request in order to effectively consummate the transactions
herein contemplated.
5.03 Parties
in Interest.
All the
terms and provisions of this Agreement shall be binding upon, shall inure to
the
benefit of, and shall be enforceable by the prospective heirs, beneficiaries,
representatives, successors, and assigns of the parties hereto.
5.04 Prior
Agreements; Amendments.
This
Agreement supersedes all prior agreements and understandings between the parties
with respect to the subject matter hereof. This Agreement may be amended only
by
a written instrument duly executed by the parties hereto or their respective
successors or assigns.
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5.05 Headings.
The
section and paragraph headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretations
of
this Agreement.
5.06 Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws applicable in the State of New York without regard to its rules concerning
conflict-of-laws. The venue of any action brought under this Agreement will
be
in any state or federal court located in the State of New York.
5.07 Notices.
All
notices, requests, demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered or mailed
(registered or certified mail, postage prepaid, return receipt requested) as
follows:
If
to the
Seller:
Xxxxxxxxx
Xxxxxxxx
485
McGill, Suite 800
Montreal
(Quebec)
X0X
0X0
Xxxxxx
Attn:
Xxxxxx Xxxxxxxx, Esq.
If
to the
Buyer:
0000,
Xxxxx-Xxxxxx
Xxxxxx
000
Xxxxxx-Xxxxxx
(Xxxxxx)
X0X
0X0
Xxxxxx
Attn:
Xxxxx Xxx Xxxxx Xxxx
5.08 Effect.
In
the
event any portion of this Agreement is deemed to be null and void under any
state or federal law, all other portions and provisions not deemed void or
voidable shall be given full force and effect.
5.09
Time.
Time is
expressly made of the essence of this Agreement.
5.10 Counterparts.
This
Agreement may be executed simultaneously in one or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
Seller and the Buyer, on the date first above written.
BUYER:
By:
/s/
Xxxxx Xxx Xxxx Xxxxx
Name: Xxxxx
Xxx
Xxxx Xxxxx
Title: President
and CEO
SELLER:
Xxxxxxx
Energy International Limited
By:
/s/
Xxxxxx Xxxxxxx
Name: Xxxxxx
Xxxxxxx
Title: Secretary
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Schedule
1.01A
JOINT
VENTURE AGREEMENT
