EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
AMARU, INC.
A NEVADA CORPORATION
AND
M2B WORLD PTE LTD., A SINGAPORE CORPORATION
EFFECTIVE AS OF FEBRUARY 19, 2004
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, is made and entered into
this 19th day of February, 2004, by and between Amaru One, Inc., a Nevada
corporation ("Amaru") and M2B World Pte Ltd., a Singapore corporation ("M2B"),
and certain shareholders of M2B listed on the attached Schedule I ("M2B
Shareholders"), and specifically incorporated herein by reference (M2B and M2B
Shareholders shall be hereinafter jointly referred to as "M2B Parties").
PREMISES
A. This Agreement provides for the reorganization of M2B with and into
Amaru, with M2B becoming a wholly-owned subsidiary of Amaru, and in connection
therewith, the exchange of the outstanding common stock of M2B into shares of
common voting stock of Amaru, all for the purpose of effecting a tax-free
reorganization pursuant to sections 351, 354 and 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended ("IRC"). On the terms and conditions set forth
herein, the parties hereby adopt the Plan of Reorganization embodied in this
Agreement.
B. The boards of directors of M2B and Amaru have determined, subject to
the terms and conditions set forth in this Agreement, that the exchange
contemplated hereby, as a result of which M2B would become a wholly owned
subsidiary of Amaru is desirable and in the best interests of their
shareholders. This Agreement is being entered into for the purpose of setting
forth the terms and conditions of the proposed exchange.
AGREEMENT
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF
M2B AND M2B SHAREHOLDERS
M2B and each of M2B Shareholders, individually and neither jointly nor
severally, represents and warrants to Amaru, except as disclosed in this
Agreement or in the case of any representation qualified by its terms to a
particular Schedule, as hereinafter defined, of M2B attached hereto, that the
statements made in this Article I will be correct and complete at the Effective
Date, as hereinafter defined, provided, however, if there is no Effective Date,
then no party shall be liable for any inaccuracy.
SECTION 1.1 SHAREHOLDERS. Each of the M2B Shareholders is the owner of
all of the issued and outstanding shares of the capital stock of M2B attributed
to such Shareholder on Schedule I; each M2B Shareholder has full legal title to
all M2B Shares described in Schedule I as being owned by such M2B Shareholder
free from any and all claims, liens or other encumbrances. M2B Shareholders have
the unqualified right to sell, transfer, and dispose of their respective M2B
Shares subject to the applicable securities laws and the laws of bankruptcy,
insolvency and general creditors' rights. Each M2B Shareholder represents and
warrants that, in regards to such M2B Shareholder's shares of M2B, such M2B
Shareholder has full right and authority to execute this Agreement and to
transfer his shares of M2B to Amaru.
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SECTION 1.2 ORGANIZATION. M2B is a corporation duly organized, validly
existing, and in good standing under the laws of Singapore and has the corporate
power and is duly authorized, qualified, franchised and licensed under all
applicable laws, regulations, ordinances and orders of public authorities to own
all of its properties and assets and to carry on its business in all material
respects as it is now being conducted, including qualification to do business as
a foreign corporation in the jurisdiction in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. Included in the M2B Schedules (as hereinafter defined) are
complete and correct copies of the articles of incorporation, bylaws and
amendments thereto of M2B as in effect on the date hereof. The execution and
delivery of this Agreement does not and the consummation of the transactions
contemplated by this Agreement in accordance with the terms hereof will not
violate any provision of M2B's articles of incorporation or bylaws. M2B has full
power, authority and legal right and has taken all action required by law, its
articles of incorporation, its bylaws or otherwise to authorize the execution
and delivery of this Agreement.
SECTION 1.3 CAPITALIZATION. The authorized capitalization of M2B
consists of a total of 14.3 million ordinary shares (the "M2B Common Shares").
As of the date of this Agreement, 14.3 million of the authorized ordinary shares
are issued and outstanding. All issued and outstanding shares are legally
issued, fully paid and nonassessable and are not issued in violation of the
preemptive or other rights of any person. Except as may be disclosed in M2B
Schedules, M2B has no other securities, warrants or options authorized or
issued.
SECTION 1.4 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Except as
otherwise set forth in the M2B Schedules, M2B does not have any other
subsidiaries and does not own, beneficially or of record, any shares of any
other corporation. For purposes herein, all references to M2B shall include M2B
and all of its subsidiaries.
SECTION 1.5 FINANCIAL INFORMATION.
(a) Attached hereto as Schedule 1.5 are audited financial
statements from the inception of M2B until 31 January, 2004 (the "M2B
Financial Statements").
(b) M2B has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties), except for taxes accrued but not
yet due and payable;
(c) M2B has filed all state, federal and local income tax
returns, including extensions of such tax returns, if any, required to
be filed by it from inception to the date hereof, if any;
(d) The books and records, financial and others, of M2B are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices; and
(e) Except as and to the extent disclosed herein and the M2B
Schedules, M2B has no material contingent liabilities, direct or
indirect, matured or unmatured.
SECTION 1.6 INFORMATION. The information concerning M2B set forth in
this Agreement and in the M2B Schedules to the best of M2B's knowledge, is
complete and accurate in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact required to make
the statements made, in light of the circumstances under which they were made,
not misleading.
SECTION 1.7 OPTIONS AND WARRANTS. Except as may otherwise be disclosed
herein on Schedule 1.7, there are no existing options, warrants, calls or
commitments of any character to which M2B is a party and by which it is bound.
Pursuant to the existing option agreements (see Schedule 1.7 Options),
appropriate adjustments shall be made in the number of shares for which such
options may be exercised based upon the exchange rate at which each share of
common stock M2B shall be exchanged for certain number of shares of Amaru (see
Section 3.2 of this Agreement).
SECTION 1.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in this Agreement, the M2B Schedules, or as otherwise disclosed to Amaru, since
31 January, 2004:
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(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of M2B; or (ii)
any damage, destruction or loss to M2B (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets or condition of M2B;
(b) M2B has not: (i) amended its articles of incorporation or
bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to shareholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights of
value which in the aggregate are extraordinary or material considering
the business of M2B; (iv) made any material change in its method of
management, operation or accounting other than in its ordinary course
of business; (v) entered into any other material transaction; (vi) made
any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee; (vii) increased the rate of
compensation; or (viii) made any increase in any profit sharing, bonus,
deferred compensation, insurance, pension, retirement or other employee
benefit plan, payment or arrangement made to, for, or with its
officers, directors or employees.
(c) M2B has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed to
borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contin gent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent M2B balance sheet
and current liabilities incurred since that date in the ordinary course
of business; (iv) sold or transferred, or agreed to sell or transfer,
any of its assets, properties or rights (except assets, properties or
rights not used or useful in its business which, in the aggregate have
a value of less than $10,000); (v) made or permitted any amendment or
termination of any contract, agreement or license to which it is a
party if such amendment or termination is material, considering the
business of M2B; or (vi) issued, delivered or agreed to issue or
deliver any stock, bonds or other corporate securities, including
debentures (whether authorized and unissued or held as treasury stock);
and
(d) to the best knowledge of M2B, it has not become subject to
any law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties,
assets or condition of M2B.
SECTION 1.9 TITLE AND RELATED MATTERS. Except as provided herein or in
the M2B Schedules, M2B has good and marketable title to and is the sole and
exclusive owner of all of its properties, inventory, interests in properties and
assets, real and personal including technical information, copyrights,
trademarks, service marks and tradenames (collectively, the "Assets") which are
reflected in the M2B Schedules or acquired after that date (except properties,
interests in properties and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges or encumbrances except: (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will
not, materially detract from or interfere with the present or proposed use of
the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the M2B Schedules. Except as set forth in the M2B Schedules, M2B owns free and
clear of any liens, claims, encumbrances, royalty interests or other
restrictions or limitations of any nature whatsoever, any and all products it is
currently manufacturing, including the underlying technology and data, and all
procedures, techniques, marketing plans, business plans, methods of management
or other information utilized in connection with M2B's business. Except as set
forth in the M2B Schedules, no third party has any right to, and M2B has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any product, technology, data, trade secrets, know-how,
proprietary techniques, trademarks, service marks, trade names or copyrights
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a materially adverse affect on the business,
operations, financial conditions or income of M2B or any material portion of its
properties, assets or rights.
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SECTION 1.10 LITIGATION AND PROCEEDINGS. To the best of M2B's knowledge
and belief, there are no actions, suits, proceedings or investigations pending
or threatened by or against M2B or affecting M2B or its properties, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse affect on the business, operations, financial condition or
income of M2B. M2B does not have any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality or
of any circumstances which, after reasonable investigation, would result in the
discovery of such a default.
SECTION 1.11 CONTRACTS.
(a) Except as included or described in the M2B Schedules,
there are no material contracts, agreements, franchises, license
agreements or other commitments to which M2B is a party or by which it
or any of its assets, products, technology or properties are bound;
(b) Except as included or described in the M2B Schedules or
reflected in the most recent M2B balance sheet, M2B is not a party to
any oral or written: (i) contract for the employment of any officer or
employee which is not terminable on thirty (30) days or less notice;
(ii) profit sharing, bonus, deferred compensation, stock option,
severance pay, pension benefit or retirement plan, agreement or
arrangement covered by Title IV of the Employee Retirement Income
Security Act, as amended; (iii) agreement, contract or indenture
relating to the borrowing of money; (iv) guaranty of any obligation,
other than one on which M2B is a primary obligor, for collection and
other guaranties of obligations, which, in the aggregate do not exceed
more than one year or providing for payments in excess of $10,000 in
the aggregate; (v) consulting or other similar contracts with an
unexpired term of more than one year or providing for payments in
excess of $10,000 in the aggregate; (vi) collective bargaining
agreements; (vii) agreement with any present or former officer or
director of M2B; or (viii) contract, agreement or other commitment
involving payments by it of more than $10,000 in the aggregate; and
(c) To M2B's knowledge, all contracts, agreements, franchises,
license agreements and other commitments to which M2B is a party or by
which its properties are bound and which are material to the operations
of M2B taken as a whole, are valid and enforceable by M2B in all
respects, except as limited by bankruptcy and insolvency laws and by
other laws affecting the rights of creditors generally.
SECTION 1.12 MATERIAL CONTRACT DEFAULTS. Except as set forth in the M2B
Schedules, to the best of M2B's knowledge and belief, M2B is not in default in
any material respect under the terms of any outstanding contract, agreement,
lease or other commitment which is material to the business, operations,
properties, assets or condition of M2B, and there is no event of default in any
material respect under any such contract, agreement, lease or other commitment
in respect of which M2B has not taken adequate steps to prevent such a default
from occurring.
SECTION 1.13 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which M2B is a
party or to which any of its properties or operations are subject.
SECTION 1.14 GOVERNMENTAL AUTHORIZATIONS. To the best of M2B's
knowledge and except as provided herein or in the M2B Schedules, M2B has all
licenses, franchises, permits or other governmental authorizations legally
required to enable M2B to conduct its business in all material respects as
conducted on the date hereof. Except for compliance with federal and state
securities and corporation laws, as hereinafter provided, no authorization,
approval, consent or order of, or registration, declaration or filing with, any
court or other governmental body is required in connection with the execution
and delivery by M2B of this Agreement and the consummation by M2B of the
transactions contemplated hereby.
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SECTION 1.15 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of M2B's
knowledge, except as disclosed in the M2B Schedules, M2B has complied with all
applicable statutes and regulations of any federal, state or other governmental
entity or agency thereof, except to the extent that noncompliance would not
materially and adversely affect the business, operations, properties, assets or
condition of M2B or would not result in M2B's incurring any material liability.
SECTION 1.16 INSURANCE. Except as disclosed on Schedule 1.16, M2B has
no insurable properties and no insurance policies will be in effect at the
Closing Date, as hereinafter defined.
SECTION 1.17 APPROVAL OF AGREEMENT. The majority shareholders and the
board of directors of M2B have authorized the execution and delivery of this
Agreement by M2B and have approved the transactions contemplated hereby.
SECTION 1.18 MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as disclosed
herein and in the M2B Schedules, there exists no material contract, agreement or
arrangement between M2B and any predecessor and any person who was at the time
of such contract, agreement or arrangement an officer, director or person owning
of record, or known by M2B to own beneficially, ten percent (10%) or more of the
issued and outstanding M2B Common Shares and which is to be performed in whole
or in part after the date hereof. In all of such transactions, the amount paid
or received, whether in cash, in services or in kind, has been during the full
term thereof, and is required to be during the unexpired portion of the term
thereof, no less favorable to M2B than terms available from otherwise unrelated
parties in arms length transactions. There are no commitments by M2B, whether
written or oral, to lend any funds to, borrow any money from or enter into any
other material transactions with, any such affiliated person.
SECTION 1.19 LABOR RELATIONS. M2B has never had a work stoppage
resulting from labor problems. To the best knowledge of M2B, no union or other
collective bargaining organization is organizing or attempting to organize any
employee of M2B.
SECTION 1.20 PREVIOUS SALES AND ISSUANCE OF SECURITIES. Since
inception, M2B has issued M2B Common Shares and Preferred Shares in reliance
upon applicable exemptions from the registration requirements under the laws of
the jurisdiction of Singapore and other applicable state and federal securities
laws, to the shareholders listed on Schedule I. The shares of M2B Common Stock
and Preferred Stock issued to the M2B Shareholders are legally issued, fully
paid and nonassessable and are not issued in violation of the preemptive or
other rights of any person.
SECTION 1.21 REORGANIZATION RELATED REPRESENTATIONS.
(a) following the Effective Date, M2B will continue its
historic business or use a significant portion of its historic business
assets in its business;
(b) M2B is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of IRC;
(c) M2B is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the IRC.
SECTION 1.22 M2B SCHEDULES. Upon execution hereof, M2B will deliver to
Amaru the following schedules, which are collectively referred to as the "M2B
Schedules" and which consist of separate schedules dated as of the date of this
Agreement and instruments and data as of such date, complete, true and correct
in all material respects:
(a) copies of the articles of incorporation, bylaws and all
minutes of shareholders' and directors' meetings of M2B;
(b) the financial information of M2B referenced hereinabove in
Section 1.5;
(c) a list indicating the name and address of the shareholders
of M2B, together with the number of shares owned by them;
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(d) the M2B Business Plan which includes, among other matters,
information concerning all of M2B's material licenses, permits and
other governmental authorizations, requests or applications therefor,
pursuant to which M2B carries on or proposes to carry on its business
(except those which in the aggregate, are immaterial to the present or
proposed business of M2B), as well as a description of any material
adverse change in the business operations, property, inventory, assets
or condition of M2B since the most recent M2B balance sheet required to
be provided pursuant to Section 1.7; and
M2B shall cause the M2B Schedules and the instruments and data
delivered to Amaru hereunder to be updated after the date hereof up to and
including the Closing Date, as hereinafter defined.
SECTION 1.23 TAXES. M2B has complied with applicable tax filing
requirements, if any.
SECTION 1.24 ADDITIONAL INFORMATION AVAILABLE. M2B will make available
to Amaru the opportunity to ask questions and receive answers concerning
acquisition of M2B shares in this transaction, and to obtain any additional
information related thereto which M2B possesses or can acquire without
unreasonable effort or expense.
SECTION 1.25 LIMITATION ON LIABILITY. Notwithstanding anything to the
contrary contained in this Agreement, M2B shall not have any liability for any
misrepresentation or breach of any representation or warranty contained in this
Article I, if Amaru has actual knowledge of such misrepresentation or breach.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
OF AMARU
As an inducement to, and to obtain the reliance of M2B, Amaru
represents and warrants as follows:
SECTION 2.1 ORGANIZATION. Amaru is a corporation duly organized,
validly existing and in good standing under the laws of the state of Nevada and
has the corporate power and is duly authorized, qualified, franchised and
licensed under all applicable laws, regulations, ordinances and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the Amaru Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation,
amended articles of incorporation (collectively, hereinafter referred to as the
"articles of incorporation"), bylaws of Amaru as in effect on the date hereof
and a certificate of Good Standing. The execution and delivery of this Agreement
does not and the consummation of the transactions contemplated by this Agreement
in accordance with the terms hereof will not, violate any provision of Amaru's
articles of incorporation or bylaws. Amaru has taken all action required by law,
its articles of incorporation, its bylaws or otherwise to authorize the
execution and delivery of this Agreement. Amaru has full power, authority and
legal right and has taken all action required by law, its articles of
incorporation, bylaws or otherwise to consummate the transactions herein
contemplate.
SECTION 2.2 CAPITALIZATION. The authorized capitalization of Amaru
consists of 20 million shares of Common Stock, par value $0.001 per share, of
which 500,000 shares are issued and outstanding, and 5 million shares of
Preferred Stock, $0.001 par value, of which no shares are issued nor
outstanding. All issued and outstanding shares are legally issued, fully paid
and nonassessable and are not issued in violation of the preemptive or other
rights of any person. Except as may be disclosed in Amaru Schedules, Amaru has
no other securities, warrants or options authorized or issued.
SECTION 2.3 SUBSIDIARIES. At the Closing, other than as disclosed
herein, Amaru shall own no securities or have any interest in any corporation,
partnership, or other form of business organization, including its current
subsidiaries.
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SECTION 2.4 FINANCIAL STATEMENTS.
(a) Attached hereto as Schedule 2.4 are audited financial
statements for the years ended December 31, 2001 and December 31, 2002,
together with the related footnotes and report thereon of the auditors
rendering such reports (the "Amaru Financial Statements"). The Amaru
Financial Statements are correct and complete in all respects and
fairly present, in accordance with generally accepted accounting
principles ("GAAP"), consistently applied, the consolidated financial
position of Amaru as of such dates and the results of operations and
changes in financial position for such periods all in accordance with
GAAP. The Amaru Financial Statements comply with the requirements of
Regulation S-X of the Securities and Exchange Commission and the
provisions of the Securities Act of 1933 (the "1933 Act") and will be
suitable for inclusion in any subsequent filing with any state or
federal regulatory agency under the Securities Exchange Act of 1934
(the "1934 Act"). As of the date of this Agreement, Amaru does not have
any source of revenues. Accordingly, Amaru's independent public
accountant, issued an opinion in its Independent Auditor's Report for
the fiscal year ended December 31, 2002 questioning the ability of
Amaru to continue as a going concern. An investment in Amaru Shares
involves a high degree of risk. M2B shareholders should review and
carefully consider the disclosure materials attached hereto as Exhibit
"A", including the risk factors contained therein, prior to executing
this Agreement;
(b) The books and records, financial and others, of Amaru are
in all material respects complete and correct and have been maintained
in accordance with good business accounting practices;
(c) Amaru has no liabilities with respect to the payment of
any federal, state, county, local or other taxes, current or accrued
(including any deficiencies, interest or penalties);
(d) Amaru has filed all state, federal and local income tax
returns, including extensions of such tax returns, if any, required to
be filed by it from inception to the date hereof, if any;
(e) except as and to the extent disclosed herein and the Amaru
Schedules, Amaru has no material contingent liabilities, direct or
indirect, matured or unmatured.
SECTION 2.5 INFORMATION. The information concerning Amaru as set forth
in this Agreement and in the Amaru Schedules, to the best of Amaru's knowledge,
is complete and accurate in all material respects and does not contain any
untrue statement of a material fact or omit to state a material fact required to
make the statements made, in light of the circumstances under which they were
made, not misleading.
SECTION 2.6 OPTIONS AND WARRANTS. Except as may otherwise be disclosed
herein on Schedule 2.6, there are no existing options, warrants, calls or
commitments of any character to which Amaru is a party and by which it is bound.
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described
herein or in the Amaru Schedules, since September 30, 2003:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of Amaru; or (ii)
any damage, destruction or loss to Amaru (whether or not covered by
insurance) materially and adversely affecting the business, operations,
properties, assets or condition of Amaru;
(b) Amaru has not: (i) amended its articles of incorporation
or bylaws; (ii) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kind
whatsoever to shareholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights of
value which in the aggregate are extraordinary or material considering
the business of Amaru; (iv) made any material change in its method of
management, operation or accounting other than in its ordinary course
of business; (v) entered into any other material transaction; (vi) made
any accrual or arrangement for or payment of bonuses or special
compensation of any kind or any severance or termination pay to any
present or former officer or employee; (vii) increased the rate of
compensation; or (viii) made any increase in any profit sharing, bonus,
deferred compensation, insurance, pension, retirement or other employee
benefit plan, payment or arrangement made to, for, or with its
officers, directors or employees.
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(c) Except as disclosed to M2B or as included in the Amaru
Schedules, Amaru has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof; (ii) borrowed or agreed to
borrow any funds or incurred or become subject to, any material
obligation or liability (absolute or contingent) except liabilities
incurred in the ordinary course of business; (iii) paid any material
obligation or liability (absolute or contingent) other than current
liabilities reflected in or shown on the most recent Amaru balance
sheet and current liabilities incurred since that date in the ordinary
course of business; (iv) sold or transferred, or agreed to sell or
transfer, any of its assets, properties or rights (except assets,
properties or rights not used or useful in its business which, in the
aggregate have a value of less than $10,000); (v) made or permitted any
amendment or termination of any contract, agreement or license to which
it is a party if such amendment or termination is material, considering
the business of Amaru; or (vi) issued, delivered or agreed to issue or
deliver any stock, bonds or other corporate securities, including
debentures (whether authorized and unissued or held as treasury stock);
and
(d) to the best knowledge of Amaru, it has not become subject
to any law or regulation which materially and adversely affects, or in
the future may adversely affect, the business, operations, properties,
assets or condition of Amaru.
SECTION 2.8 TITLE AND RELATED MATTERS. As of the Closing Date, Amaru
will own no real, personal or intangible property, other than as disclosed
herein.
SECTION 2.9 LITIGATION AND PROCEEDINGS. There are no actions, suits or
proceedings pending or, to the best of Amaru's knowledge and belief, threatened
by or against or affecting Amaru, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind that would have a material adverse effect on the
business, operations, financial condition, income or business prospects of
Amaru. Amaru does not have any knowledge of any default on its part with respect
to any judgment, order, writ, injunction, decree, award, rule or regulation of
any court, arbitrator or governmental agency or instrumentality.
SECTION 2.10 CONTRACTS. On the Closing Date and other than as disclosed
herein in Schedule 2.9 or otherwise:
(a) There are no material contracts, agreements, franchises,
license agreements, or other commitments to which Amaru is a party or
by which it or any of its properties are bound;
(b) Amaru is not a party to any contract, agreement,
commitment or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree or award
which materially and adversely affects, or in the future may (as far as
Amaru can now foresee) materially and adversely affect, the business,
operations, properties, assets or conditions of Amaru; and
(c) Amaru is not a party to any material oral or written: (i)
contract for the employment of any officer or employee; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension, benefit or retirement plan, agreement or arrangement covered
by Title IV of the Employee Retirement Income Security Act, as amended;
(iii) agreement, contract or indenture relating to the borrowing of
money; (iv) guaranty of any obligation for the borrowing of money or
otherwise, excluding endorsements made for collection and other
guaranties of obligations, which, in the aggregate exceeds $1,000; (v)
consulting or other similar contract with an unexpired term of more
than one year or providing for payments in excess of $10,000 in the
aggregate; (vi) collective bargaining agreement; (vii) agreement with
any present or former officer or director of Amaru; or (viii) contract,
agreement, or other commitment involving payments by it of more than
$10,000 in the aggregate.
SECTION 2.11 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which Amaru is a
party or to which any of its properties or operations are subject.
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SECTION 2.12 MATERIAL CONTRACT DEFAULTS. To the best of Amaru's
knowledge and belief, Amaru is not in default in any material respect under the
terms of any outstanding contract, agreement, lease or other commitment which is
material to the business, operations, properties, assets or condition of Amaru,
and there is no event of default in any material respect under any such
contract, agreement, lease or other commitment in respect of which Amaru has not
taken adequate steps to prevent such a default from occurring.
SECTION 2.13 GOVERNMENTAL AUTHORIZATIONS. To the best of Amaru's
knowledge, Amaru has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by Amaru of the transactions contemplated hereby.
SECTION 2.14 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of
Amaru's knowledge and belief, Amaru has complied with all applicable statutes
and regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
Amaru or would not result in Amaru's incurring any material liability.
SECTION 2.15 INSURANCE. Amaru has no insurable properties and no
insurance policies will be in effect at the Closing Date, as hereinafter
defined.
SECTION 2.16 APPROVAL OF AGREEMENT. The board of directors of Amaru has
authorized the execution and delivery of this Agreement by Amaru and has
approved the transactions contemplated hereby. The approval of this Agreement by
Amaru's shareholders is not required.
SECTION 2.17 MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as stated
herein or in the Amaru Schedules, as of the Closing Date there will exist no
material contract, agreement or arrangement between Amaru and any person who was
at the time of such contract, agreement or arrangement an officer, director or
person owning of record, or known by Amaru to own beneficially, ten percent
(10%) or more of the issued and outstanding common stock of Amaru and which is
to be performed in whole or in part after the date hereof. Amaru has no
commitment, whether written or oral, to lend any funds to, borrow any money from
or enter into any other material transactions with, any such affiliated person.
SECTION 2.18 LABOR RELATIONS. Amaru has never had a work stoppage
resulting from labor problems. Amaru has no employees other than its officers
and directors.
SECTION 2.19 TAXES. (a) Except as provided in Schedule 2.19, Amaru has
timely filed (within the applicable extension periods) with the appropriate
governmental agencies all governmental tax returns, information returns, tax
reports and declarations which are monetary liabilities. All governmental tax
returns, information returns, tax reports and declarations filed by Amaru for
years for which the statute of limitations has not run (the "Tax Returns") are
correct in all material respects. Amaru has timely paid (or has collected and
paid over in the case of sales, use or similar taxes) all taxes, additions to
tax, penalties, interest, assessments, deposits, and other governmental charges
imposed by law upon it or any of its properties, tangible or intangible assets,
income, receipts, payrolls, transactions, capital, net worth and franchises, or
upon the sale, use or delivery of any item sold by the Company, other than as
may be disclosed in the Schedule of Taxes. Except as set forth in the Schedule
of Taxes, no tax returns have been examined by the Internal Revenue Service or
any other governmental authority. Except as may be disclosed in the Schedule of
Taxes or in any document delivered to Amaru therewith, Amaru (i) is not
currently being audited with respect to any tax, assessment or other
governmental charge; (ii) has not received formal or informal notice from any
governmental agency that an audit or investigation with respect to any tax,
assessment or other governmental charge is to be initiated; (iii) is not
formally or informally discussing material pending ruling requests or other
material tax or assessment issues with the Internal Revenue Service or any other
governmental taxing authority in connection with any matter concerning any
member of Amaru's group; or (iv) has not been formally or informally notified of
any potential tax or assessment issue which the Internal Revenue Service or any
9
other governmental taxing authority intends to raise in connection with any
matter concerning any member of Amaru's group. Except (i) as may be disclosed in
the Schedule of Taxes, or (ii) in connection with any pending audit or
investigation, Amaru has not granted or proposed any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment or
collection of, or any offer in compromise of any governmental tax. The accruals
and reserves for taxes reflected in the financial statements are adequate to
cover substantially all taxes (including additions to tax, interest, penalties,
and other charges or assessments, if any) which become due and payable or
accruable by reason of the business conducted by Amaru through the Closing Date
herein. Amaru is not now or has it ever been a corporation which meets the tests
of Section 542(b)(2) of the Internal Revenue Code. Amaru has not participated
in, or is required to participate in, for any period prior to the date of this
Agreement the filing of any consolidated tax return other than (i) as set forth
in the Schedule of Taxes, or (ii) as a member of an affiliated group of which
Amaru is the common parent.
SECTION 2.20 REPORTING ACT DOCUMENTS. Except as set forth in Amaru's
Schedules, Amaru has, in all reporting act documents, complied in all material
respects with the reporting requirements of the Exchange Act and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
The information contained in each reporting act document of Amaru, to the best
of Amaru's knowledge, is true and correct in all material respects as of the
date thereof, and no reporting act document contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading as of the date thereof.
To the best knowledge of current management of Amaru, there is no negative
matters, such as pending investigation or formal inquiry, which are outstanding
concerning Exchange Act reports filed by Amaru prior to the Closing.
SECTION 2.21 AMARU SCHEDULES. Upon execution hereof, Amaru shall
deliver to M2B the following schedules, which are collectively referred to as
the "Amaru Schedules" which are dated the date of this Agreement, all complete,
true and accurate in all material respects:
(a) complete and correct copies of the articles of
incorporation, bylaws and Certificate of Good Standing of Amaru as in
effect as of the date of this Agreement;
(b) copies of all financial statements of Amaru identified in
Section 2.4(a);
(c) the description of any material adverse change in the
business, operations, property, assets, or condition of Amaru since
September 30, 2003 required to be provided pursuant to Section 2.6; and
(d) any other information, together with any required copies
of documents, required to be disclosed in the Amaru Schedules under
this Agreement.
Amaru shall cause the Amaru Schedules and the instruments to be
delivered to M2B hereunder to be updated after the date hereof up to and
including the Closing Date.
SECTION 2.22 ADDITIONAL INFORMATION AVAILABLE. Amaru will make
available to each M2B Shareholder the opportunity to ask questions and receive
answers concerning the acquisition of Amaru Common Stock in the transaction, and
to obtain any additional information which Amaru possesses or can acquire
without unreasonable effort or expense.
SECTION 2.23 LIMITATION ON LIABILITY. Notwithstanding anything to the
contrary contained in this Agreement, Amaru shall not have any liability for any
misrepresentation or breach of any representation or warranty contained in this
Article II, if M2B or any of the M2B Shareholders has actual knowledge of such
misrepresentation or breach.
ARTICLE III
EXCHANGE PROCEDURE
SECTION 3.1 DELIVERY OF M2B SECURITIES. On the Closing Date, the
holders of the M2B Common Shares shall deliver to Amaru (i) certificates or
other documents evidencing all of the issued and outstanding M2B Common Shares,
duly endorsed in blank or with executed stock power attached thereto in
transferrable form; and (ii) Investment Letters, the form of which is attached
hereto as Exhibit "B".
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SECTION 3.2 ISSUANCE OF AMARU COMMON SHARES. (a) In exchange for all of
the M2B Common and Preferred Shares tendered pursuant to Section 3.1, Amaru
shall instruct its Transfer Agent to issue an aggregate of 19,500,000
"restricted" Amaru Common Shares and 143,000 "restricted" Amaru Preferred Shares
to the M2B shareholders on a pro rata basis and shall cause such shares to be
delivered to M2B. Each Amaru Preferred Share shall contain the immediate
conversion right to convert 1 Preferred Share to 38.461538 Common Shares. Each
share of M2B shall be exchanged for 1.3636363 Common Shares of Amaru and 100
Preferred Shares of Amaru (based on the total issuance of 19,500,000 Amaru
Common Shares and 143,000 Amaru Preferred Shares, which are convertible to a
total of 5,500,000 Common Shares, for the total of 25,000,000 Common Shares ).
Amaru Preferred Shares can be converted into Amaru Common Shares upon the
effectiveness of the increase of the Company's authorized common shares to
200,000,000.
(b) No fractional Amaru Common Shares shall be issued pursuant
to this Section 3.2. In lieu of such fractional shares, all shares to
be issued shall be rounded up or down to the nearest whole share.
(c) The total of 19,500,000 Common Shares and 143,000
Preferred Shares to be issued to the M2B shareholders by Amaru (the
"M2B Shares") are not being registered under the Securities Act of
1933, as amended (the "Act") and are issued in reliance on the
exemptions from the registration requirements provided by Regulation D,
and are to be issued as "restricted securities", as that term is
defined in Rule 144 promulgated under the Act, and that the
certificates representing the M2B Shares will bear a legend to that
effect, substantially in the form set forth below:
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF CERTAIN STATES,
AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (II) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER
THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION
OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
APPLICABLE STATE LAW IS AVAILABLE.
SECTION 3.3 UNDERTAKINGS.
(a) Upon execution hereof or as soon thereafter as practical,
management of Amaru and M2B shall execute, acknowledge and deliver (or
shall cause to be executed, acknowledged and delivered) any and all
certificates, opinions, financial statements, schedules, agreements,
resolutions, rulings or other instruments required by this Agreement to
be so delivered, together with such other items as may be reasonably
requested by the parties hereto and their respective legal counsel in
order to effectuate or evidence the transactions contemplated hereby,
subject only to the conditions to Closing referenced hereinbelow.
(b) M2B hereby undertakes and provides assurances to Amaru
that it will file a current report on Form 8-K within 15 days of the
Closing in compliance with the Exchange Act, with the audited financial
statements of M2B and the pro forma statements required by the Exchange
Act and by Regulation S-B by amendment of the Form 8-K within the time
parameters established by the Exchange Act, and will otherwise comply
with the reporting requirements of the Exchange Act.
SECTION 3.4 CLOSING. The closing ("Closing") of the transactions
contemplated by this Agreement shall be as of the date in which all of the
shareholders of M2B have approved the terms of this Agreement, all conditions to
Closing referenced in this Agreement have been satisfied or waived by M2B and
all documentation referenced herein is delivered to the respective party herein,
which shall be the date of February 25, 2004, unless a different date is
mutually agreed to in writing by the parties hereto ("Closing Date").
SECTION 3.5 TERMINATION.
(a) This Agreement may be terminated by the board of directors
of either Amaru or M2B at any time prior to the Closing Date if:
11
(i) there shall be any action or proceeding before
any court or any governmental body which shall seek to
restrain, prohibit or invalidate the transactions contemplated
by this Agreement and which, in the judgment of such board of
directors, made in good faith and based on the advice of its
legal counsel, makes it inadvisable to proceed with the
exchange contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions; or
(iii) the conditions described in Article VI below
have not been satisfied in full; or
In the event of termination pursuant to this paragraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder
and each party shall bear all of the expenses incurred by it in
connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated;
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of Amaru if M2B shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the representations
or warranties of M2B contained herein shall be inaccurate in any
material respect, which noncompliance or inaccuracy is not cured after
20 days' written notice thereof is given to M2B. If this Agreement is
terminated pursuant to this paragraph (b) of this Section 3.5, this
Agreement shall be of no further force or effect and no obligation,
right or liability shall arise hereunder; and
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of M2B if Amaru shall
fail to comply in any material respect with any of its covenants or
agreements contained in this Agreement or if any of the representations
or warranties of Amaru contained herein shall be inaccurate in any
material respect, which noncompliance or inaccuracy is not cured after
20 days written notice thereof is given to Amaru. If this Agreement is
terminated pursuant to this paragraph (c) of Section 3.5, this
Agreement shall be of no further force or effect and no obligation,
right or liability shall arise hereunder.
(d) This Agreement shall be terminated if the Closing of the
transactions contemplated in this Agreement have not occurred by the
Closing Date as that term is defined in Section 3.4.
SECTION 3.6 DIRECTORS OF AMARU. Upon the Closing, the present members
of Amaru's Board of Directors shall tender their resignations SERIATIM so that
the following person is appointed a director of Amaru in accordance with
procedures set forth in the Amaru bylaws: Xxxxx Xxxxx . Each director shall hold
office until his successor shall have been duly elected and shall have qualified
or until his or her earlier death, resignation or removal.
SECTION 3.7 OFFICERS OF AMARU. Upon the Closing, the present officers
of Amaru shall tender their resignations and provide Amaru with applicable
releases concerning their respective employment agreements. Simultaneous
therewith, the following persons shall be elected as officers of Amaru in
accordance with procedures set forth in the Amaru bylaws:
NAME OFFICE
---- ------
Xxxxx Xxxxx Chief Executive Officer
and President
Xxxxx Xxxxx Chief Financial Officer and Secretary
SECTION 3.8 EFFECTIVE DATE. The parties hereto hereby agree that the
Effective Date of the transaction proposed herein shall be 5:00 P.M. Pacific
Standard Time on January__, 2004, unless the parties agree otherwise, in
writing.
SECTION 3.9. NAME CHANGE. Upon the Effective Date, the Company's name
shall be changed to "M2B World, Inc."
12
ARTICLE IV
SPECIAL COVENANTS
SECTION 4.1 ACCESS TO PROPERTIES AND RECORDS. Amaru and M2B will each
afford to the officers and authorized representatives of the other full access
to the properties, books and records of Amaru and M2B, as the case may be, in
order that each may have full opportunity to make such reasonable investigation
as it shall desire to make of the affairs of the other and each will furnish the
other with such additional financial and operating data and other information as
to the business and properties of Amaru and M2B, as the case may be, as the
other shall from time to time prior to Closing reasonably request. In addition,
Amaru shall provide to M2B subsequent to Closing all information necessary to
allow M2B to properly prepare and file all reports required to be filed pursuant
to the Exchange Act, including all information concerning Amaru's subsidiaries
which existed prior to Closing.
SECTION 4.2 INFORMATION FOR AMARU PUBLIC REPORTS. M2B will furnish
Amaru with all information concerning M2B and the M2B Shareholders, including
all financial statements, required for inclusion in any public report to be
filed by Amaru pursuant to the Securities Act, the Exchange Act, or any other
applicable federal or state law. M2B covenants that all information so furnished
to Amaru, including the financial statements described in Section 1.4, shall be
true and correct in all material respects without omission of any material fact
required to make the information stated not misleading. Similarly, Amaru will
provide all information concerning its history and operations reasonably
requested by M2B.
SECTION 4.3 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE AMARU
COMMON SHARES TO BE ISSUED IN THE EXCHANGE. The consummation of this Agreement,
including the issuance of the Amaru Common Shares to the shareholders of M2B as
contemplated hereby, constitutes the offer and sale of securities under the
Securities Act, and applicable state statutes. Such transaction shall be
consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, INTER ALIA, upon the
circumstances under which the M2B shareholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, M2B shall cause to
be delivered, and the M2B shareholders shall deliver to Amaru, the Investment
Letters and Purchasers' Questionnaires referenced in Section 3.1. The
shareholders of M2B shall receive disclosure materials attached hereto as
Exhibit "A".
SECTION 4.4 THIRD PARTY CONSENTS. Amaru and M2B agree to cooperate with
each other in order to obtain any required third party consents to this
Agreement and the transactions herein contemplated.
SECTION 4.5 ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the
Closing Date and except as set forth in the Amaru or M2B Schedules or
as permitted or contemplated by this Agreement, M2B and Amaru, to the
extent applicable, will each use its best efforts to:
(i) carry on its business in substantially the same
manner as it has heretofore;
(ii) maintain and keep its properties in states of
good repair and condition as at present, except for
depreciation due to ordinary wear and tear and damage due to
casualty;
(iii) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
(iv) perform in all material respects all of its
obligations under material contracts, leases and instruments
relating to or affecting its assets, properties and business;
(v) maintain and preserve its business organization
intact, to retain its key employees and to maintain its
relationship with its material suppliers and customers; and
13
(vi) fully comply with and perform in all material
respects all obligations and duties imposed on it by all
federal and state laws and all rules, regulations and orders
imposed by federal or state governmental authorities.
(b) From and after the date of this Agreement until the
Closing Date, neither Amaru nor M2B will, without the prior consent of
the other party:
(i) except as otherwise specifically set forth
herein, make any change in their respective certificates or
articles of incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding
shares of capital stock, except as may otherwise be required
by law, or effect any stock split or otherwise change its
capitalization, except as provided herein;
(iii) enter into or amend any employment, severance
or similar agreements or arrangements with any directors or
officers;
(iv) grant, confer or award any options, warrants,
conversion rights or other rights not existing on the date
hereof to acquire any shares of its capital stock; or
(v) purchase or redeem any shares of its capital
stock, except as disclosed herein.
SECTION 4.6 INDEMNIFICATION.
(a) M2B and its officers and directors hereby agree to
indemnify Amaru and each of the officers, agents and directors of Amaru
as of the date of execution of this Agreement against any loss,
liability, claim, damage or expense (including, but not limited to, any
and all expense whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or threatened
or any claim whatsoever), to which it or they may become subject
incurred as a result of M2B's breach of any representation, warranty or
covenant made by M2B in this Agreement. The indemnification provided
for in this paragraph shall survive the Closing and consummation of the
transactions contemplated hereby and termination of this Agreement for
a period of 18 months; and
(b) Amaru and its officers and directors hereby agrees to
indemnify M2B and each of the officers, agents, directors and current
shareholders of M2B as of the Closing Date against any loss, liability,
claim, damage or expense (including, but not limited to, any and all
expense whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened or any claim
whatsoever), to which it or they may become subject incurred as a
result of Amaru's breach of any representation, warranty or covenant
made by Amaru in this Agreement and particularly the representation
regarding no liabilities referred to in Section 2.4(b). The
indemnification provided for in this Section shall survive the Closing
and consummation of the transactions contemplated hereby and
termination of this Agreement for a period of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
OF AMARU
The obligations of Amaru under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
SECTION 5.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by M2B in this Agreement were true when made and shall be true
at the Closing Date with the same force and effect as if such representations
and warranties were made at the Closing Date (except for changes therein
permitted by this Agreement), and M2B shall have performed or complied with all
covenants and conditions required by this Agreement to be performed or complied
with by M2B prior to or at the Closing. Amaru shall be furnished with a
certificate, signed by a duly authorized officer of M2B and dated the Closing
Date, to the foregoing effect.
14
SECTION 5.2 M2B'S APPROVAL OF AGREEMENT. The Board of Directors and
shareholders of M2B, if such shareholders' approval is so required under
Singapore law, shall have approved this Agreement and the transactions
contemplated thereby as described in Section 4.1.
SECTION 5.3 OFFICER'S CERTIFICATE. Amaru shall have been furnished with
a certificate dated the Closing Date and signed by a duly authorized officer of
M2B to the effect that no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of M2B, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agree ment or, to the extent not disclosed in the M2B Schedules, by or
against M2B which might result in any material adverse change in any of the
assets, properties, business or operations of M2B.
SECTION 5.4 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of M2B.
SECTION 5.5 OTHER ITEMS. Amaru shall have received such further
documents, certificates or instruments relating to the transactions contemplated
hereby as Amaru may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF M2B
The obligations of M2B under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
SECTION 6.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by Amaru in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein permitted by this Agreement)
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date, and Amaru shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by Amaru prior to or at the Closing. M2B shall have been furnished
with a certificate, signed by a duly authorized executive officer of Amaru and
dated the Closing Date, to the foregoing effect.
SECTION 6.2 OFFICER'S CERTIFICATE. M2B shall be furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
Amaru to the effect that no litigation, proceeding, investigation or inquiry is
pending or, to the best knowledge of Amaru, threatened, which might result in an
action to enjoin or prevent the consummation of the transactions contemplated by
this Agreement or, to the extent not disclosed in the Amaru Schedules, by or
against Amaru which might result in any material adverse change in any of the
assets, properties, business or operations of Amaru.
SECTION 6.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of Amaru.
SECTION 6.5 COMPLIANCE WITH REPORTING REQUIREMENTS. As of the Closing
Date, Amaru shall be current in, and in compliance with all requirements of, all
filings required to be tendered to the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
SECTION 6.6 AMARU'S TRADING STATUS. As of the Closing Date, as defined
herein, Amaru's Common Stock is not trading in any public market.
SECTION 6.7 NO LIABILITIES. As of the Closing Date, as defined herein
the Amaru balance sheet and the notes thereto, shall reflect that Amaru has: (i)
no receivables; (ii) no accounts payable; (iii) except as stated herein or in
the Amaru Schedules, no liabilities, whether absolute, accrued, known or
unknown, contingent or otherwise, whether due or to become due, including,
without limitation, liabilities as guarantor under any guaranty or other
governmental charges.
SECTION 6.8 OTHER ITEMS. M2B shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as M2B may reasonably request.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.1 BROKERS AND FINDERS. Except as set forth in Schedule 7.1,
each party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby based on any alleged agreement or understanding between the
indemnifying party and such third person, whether express or implied from the
actions of the indemnifying party.
SECTION 7.2 LAW. FORUM AND JURISDICTION. This Agreement shall be
construed and interpreted in accordance with the laws of the State of
California.
SECTION 7.3 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to Amaru: Amaru , Inc.
000 Xxxxxxx Xxxxxx Xx., Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
With copies to: Xxxxx X. Xxxxx, Esq.
Law Offices of Xxxxx X. Xxxxx
610 Newport Center Dr., Suite 1400
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
If to M2B: M2B World Pte Ltd.
00 Xxxxxxx Xxxxxx, #00-00 Xxxxx Xxxxxxxx Xxxxxxxx
Xxxxxxxxx 000000
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
SECTION 7.4 ATTORNEYS' FEES. The prevailing party in any proceeding
brought to enforce or interpret any provision of this Agreement shall be
entitled to recover its reasonable attorney's fees, costs and disbursements
incurred in connection with such proceeding, including but not limited to the
costs of experts, accountants and consultants and all other costs and services
reasonably related to the proceeding, including those incurred in any bankruptcy
or appeal, from the non-prevailing party or parties.
SECTION 7.5 CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
SECTION 7.6 SCHEDULES; KNOWLEDGE. Each party is presumed to have full
knowledge of all information set forth in the other party's schedules delivered
pursuant to this Agreement.
SECTION 7.7 THIRD PARTY BENEFICIARIES. This contract is solely between
Amaru and M2B and, except for the M2B shareholders or as otherwise specifically
provided herein, no director, officer, shareholder, employee, agent, independent
contractor or any other person or entity shall be deemed to be a third party
beneficiary of this Agreement.
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SECTION 7.8 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
SECTION 7.9 SURVIVAL; TERMINATION. The representations, warranties and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated for three years.
SECTION 7.10 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original and
all of which taken together shall be but a single instrument. This Agreement may
be executed by providing facsimile signatures by the parties hereto, however,
the original signatures shall be delivered within five (5) business days from
the date of execution of this Agreement.
SECTION 7.11 AMENDMENT OR WAIVER. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
SECTION 7.12 INCORPORATION OF RECITALS. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
SECTION 7.13 EXPENSES. Each party herein shall bear all of their
respective costs and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions provided for herein
and the preparation therefor.
SECTION 7.14 HEADINGS; CONTEXT. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
SECTION 7.15 BENEFIT. This Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
SECTION 7.16 PUBLIC ANNOUNCEMENTS. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
SECTION 7.17 SEVERABILITY. In the event that any particular provision
or provisions of this Agreement or the other agreements contained herein shall
for any reason hereafter be determined to be unenforceable, or in violation of
any law, governmental order or regulation, such unenforceability or violation
shall not affect the remaining provisions of such agreements, which shall
continue in full force and effect and be binding upon the respective parties
hereto.
SECTION 7.18 FAILURE OF CONDITIONS; TERMINATION. In the event any of
the conditions specified in this Agreement shall not be fulfilled on or before
the Closing Date, either of the parties have the right either to proceed or,
upon prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not affect
the right of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
SECTION 7.19 NO STRICT CONSTRUCTION. The language of this Agreement
shall be construed as a whole, according to its fair meaning and intendment, and
not strictly for or against either party hereto, regardless of who drafted or
was principally responsible for drafting the Agreement or terms or conditions
hereof.
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SECTION 7.20 EXECUTION KNOWING AND VOLUNTARY. In executing this
Agreement, the parties severally acknowledge and represent that each: (a) has
fully and carefully read and considered this Agreement; (b) has been or has had
the opportunity to be fully apprized of its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
SECTION 7.21 JOINT PREPARATION. This Agreement is to be deemed to have
been prepared jointly by the parties hereto and any uncertainty or ambiguity
existing herein, if any, shall not be interpreted against any party, but shall
be interpreted according to the application of the rules of interpretation for
arm's length agreements.
SECTION 7.22 ARBITRATION AND VENUE. Any controversy arising out of or
relating to this Agreement or any modification or extension thereof, including
any claim for damages and/or rescission, shall be settled by arbitration in Los
Angeles, Singapore in accordance with the Commercial Arbitration Rules of the
American Arbitration Association before one arbitrator. The arbitrator sitting
in any such controversy shall have no power to alter or modify any express
provisions of this Agreement or to render any award which by its terms effects
any such alteration, or modification. The parties consent to the jurisdiction of
the Superior Court of Singapore, and of the United States District Court for the
Central District of Singapore for all purposes in connection with such
arbitration including the entry of judgment on any award. The parties consent
that any process or notice of motion or other application to either of said
courts, and any paper in connection with arbitration, may be served by certified
mail or the equivalent, return receipt requested, or by personal service or in
such manner as may be permissible under the rules of the applicable court or
arbitration tribunal, provided a reasonable time for appearance is allowed. Each
of the parties shall, subject to the award of the arbitrators, pay an equal
share of the arbitrators' fees except the arbitrators shall have the power to
award recovery of all costs (including the attorneys' fees, administrative fees,
arbitrators' fees and court fees) to the prevailing party, as determined by the
arbitrators. This section shall survive the termination of this Agreement.
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IN WITNESS WHEREOF, the corporate parties hereto have caused this
Agreement to be executed by their respective officers, hereunto duly authorized,
and entered into as of the date first above written.
AMARU, INC.
ATTEST:
/s/ Xxxxx Xxxxxxx By: /s/ Xxxxx Xxxxxxx
---------------------------- -------------------------------
Secretary or President
Assistant Secretary
ATTEST: M2B WORLD PTE LTD.
By: /s/ Xxxxx Xxxxx
---------------------------- -------------------------------
Secretary or President
Assistant Secretary
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M2B SHAREHOLDER:
Name:____________________________
By:______________________________
Its:_____________________________
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SCHEDULE I
LIST OF M2B SHAREHOLDERS
ON FILE WITH M2B'S CORPORATE RECORDS
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EXHIBIT "A"
DISCLOSURE MATERIALS
FORMS 10-QSB FILED FOR THE QUARTERS ENDED MARCH 31, JUNE 30 AND SEPTEMBER 30,
2003; FORM 10-KSB FILED FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003; FORMS 8-K
FILED IN 2004 AND ANY OTHER PROXY MATERIALS FILED BY THE COMPANY.
EXHIBIT "B"
FORM OF INVESTMENT LETTER AND POWER OF ATTORNEY
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INVESTMENT LETTER AND POWER OF ATTORNEY
February 19, 2004
Amaru , Inc.
000 Xxxxxxx Xxxxxx Xx., Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
Ladies & Gentlemen:
The undersigned herewith deposits certificate(s) for shares of common
stock and/or preferred stock of M2B World Pte Ltd., ("M2B"), as described below
(endorsed, or having executed stock powers attached) in acceptance of and
subject to the terms and conditions of that certain Agreement and Plan of
Reorganization (the "Agreement"), between M2B and Amaru, Inc. ("Amaru" or the
"Company"), dated February 19, 2004, receipt of which is hereby acknowledged, in
exchange for shares of Common and Preferred Stock of Amaru (the "Exchange
Shares"). If any condition precedent to the Agreement is not satisfied within
the relevant time parameters established in the Agreement (or any extension
thereof), the certificate(s) are to be returned to the undersigned.
The undersigned hereby represents, warrants, covenants and agrees with
you that, in connection with the undersigned's acceptance of the terms of the
Agreement and Exchange Shares and as of the date of this letter:
1. The undersigned has received and has read the Agreement, and hereby
agrees to and accepts the terms and conditions of the Agreement.
2. The undersigned appointed Xxxxx Xxxxx, M2B's Chief Executive Officer
("Attorney") as its lawful attorney and agent with full power to execute this
letter and any amendments to the Agreement pursuant to the Arranger Agreement
and Letter dated February 16, 2004, which amendments would have been approved by
the majority of the M2B's shareholders, on behalf of the undersigned and further
grants unto the Attorney, full power and authority to do and perform each and
every act necessary to be done to complete the same, subject only to removal or
substitution by the undersigned upon written notification to the Attorney of the
foregoing.
3. The undersigned is aware that his, her or its acceptance of the
Exchange Shares is irrevocable, absent an extension of the Expiration Date of
any material change to any of the terms and conditions of the Agreement.
4. The undersigned warrants full authority to deposit all shares
referred to above and that Amaru will acquire a good and unencumbered title
thereto.
5. The undersigned has full power and authority to enter into this
agreement and that this agreement constitutes a valid and legally binding
obligation of the undersigned.
6. The undersigned represents that the undersigned is_____/ is
not_____an "Accredited Investor" as that term is defined in Section 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Act"), because the undersigned meets one or more of the requirements set forth
in Section 501 of regulation D.
7. By execution hereof, the undersigned hereby confirms that the Amaru
common stock to be received in exchange for M2B common stock and/or preferred
stock (the "Securities"), will be acquired for investment for the undersigned's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the undersigned has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By execution hereof, the undersigned further represents the
undersigned does not have any contract, undertaking, agreement or arrangement
with any third party, with respect to any of the Securities.
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8. The undersigned understands that the Securities are being issued
pursuant to available exemption thereto and have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or under any state
securities laws. The undersigned understands that no registration statement has
been filed with the United States Securities and Exchange Commission nor with
any other regulatory authority and that, as a result, any benefit which might
normally accrue to a holder such as me by an impartial review of such a
registration statement by the Securities and Exchange Commission or other
regulatory authority will not be forthcoming. The undersigned understands that
he/she/it cannot sell the Securities unless such sale is registered under the
1933 Act and applicable state securities laws or exemptions from such
registration become available. In this connection the undersigned understands
that the Company has advised the Transfer Agent for the Common Shares that the
Securities are "restricted securities" under the 1933 Act and that they may not
be transferred by the undersigned to any person without the prior consent of the
Company, which consent of the Company will require an opinion of my counsel to
the effect that, in the event the Securities are not registered under the 1933
Act, any transfer as may be proposed by the undersigned must be entitled to an
exemption from the registration provisions of the 1933 Act. To this end, the
undersigned acknowledges that a restrictive legend will be placed upon the
certificate representing the Securities and that the Transfer Agent has been
advised of such facts.
9. The undersigned represents that it is experienced in evaluation and
investing in securities of companies and acknowledges that he/she/it is able to
fend for itself, can bear the economic risk of this investment and has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Securities.
10. The undersigned represents that all information provided by the
undersigned herein is true and correct as of the date thereof.
IN WITNESS WHEREOF, the undersigned has duly executed this Investment
Letter as of the date indicated hereon.
Dated: __________________________, 2004
Very truly yours,
_______________________________________
(signature)
_______________________________________
(print name in full)
________________________________________________________________________________
( address)
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