SHARE EXCHANGE AGREEMENT
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THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is made as of the 6th day
of November, 1998 by and among Clariti Telecommunications International, Ltd.,
a Delaware (U.S.) corporation formerly known as Sigma Alpha Group, Ltd.
("Clariti"); Xxxxxxxx Xxxx Holdings, Ltd., a corporation formed under the laws
of the British Virgin Islands ("CHH") and GlobalFirst Holdings Limited, a
corporation formed under the laws of the United Kingdom ("GlobalFirst").
BACKGROUND
A. Clariti wishes to acquire one hundred percent (100%) of the issued and
outstanding stock of GlobalFirst.
B. CHH owns and is authorized to transfer one hundred percent (100%) of
the outstanding stock of GlobalFirst (the "GlobalFirst Shares"). (CHH is
sometimes hereinafter referred to as "Seller").
C. At or prior to the Closing Date, CHH shall deliver to Clariti
appropriate documentation authorizing and effectuating a transfer of the
GlobalFirst Shares owned by CHH to Clariti in accordance with the terms and
conditions of this Agreement .
NOW THEREFORE, in consideration of the premises and of the respective
covenants, representations and warranties contained herein, intending to be
legally bound, the parties hereby agree as follows:
1. AGREEMENT TO EXCHANGE AND PURCHASE SHARES.
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1.1 Exchange of Shares.
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1.1.1 Transfer of GlobalFirst Shares. At the Closing (defined in
Section 1.6), Seller shall sell, transfer, assign, convey and deliver to
Clariti all right, title and interest in or to the GlobalFirst Shares, which
shall be free and clear of any and all liens, claims, charges, pledges,
security interests or other encumbrances of any nature whatsoever. At the
Closing Date, Seller shall deliver to Clariti stock certificates representing
the GlobalFirst Shares, each certificate to be duly endorsed in blank or with
stock powers annexed thereto duly endorsed in blank, in proper form for
transfer of the GlobalFirst Shares to Clariti upon delivery.
1.1.2 Issuance of Clariti Shares. Simultaneously with the
transfer and assignment of the GlobalFirst Shares in accordance with Section
1.1.1 and in full and complete consideration of its receipt thereof, Clariti
shall cause to be issued to Seller Seventy-Six Million Five Hundred and
Seventy-One Thousand Five Hundred (76,571,500) shares of Clariti's common stock
$.001 par value (the "Clariti Common Stock Issued to Seller"). The Clariti
Common Stock Issued to Seller shall be issued in the names of CHH and/or its
designees in such proportions and amounts as CHH shall direct Clariti at
Closing. All certificates representing the Clariti Common Stock Issued to
Seller shall be delivered to CHH.
1.1.3 Failure To Deliver the Stock. If at the Closing Seller
should refuse or fail to deliver any of the GlobalFirst Shares, provided that
Clariti has satisfied all of its obligations hereunder to be performed at or
prior to the Closing, and all of the conditions precedent to the obligations of
GlobalFirst and CHH set forth in Section 8 hereof have been satisfied, Clariti
may terminate this Agreement without any further liability on its part
whatsoever or accept delivery of such of the GlobalFirst Shares as are tendered
at the Closing.
1.1.4 Conditions Precedent. Clariti shall not be obligated to
consummate the transactions set forth in Paragraphs 1.1.1 and 1.1.2 hereof (the
"Exchange of Shares") prior to the consummation of the transactions set forth
in Paragraphs 1.2 hereof (the "Purchase of Shares").
1.2 Purchase of Additional Shares. Subject to satisfaction of the
conditions precedent set forth in Section 1.1.4, at the Closing, CHH and/or its
designee shall pay Clariti the sum of Ten Million Eight Hundred and Fifty
Thousand U.S. Dollars (USD $10,850,000), by certified check or wire transfer,
in exchange for Clariti's issuance to CHH and/or its designee of Six Million
One Hundred and Ninety-Nine Thousand Nine Hundred and Twenty-Nine (6,199,929)
shares of Clariti's common stock $.001 par value (the "Additional Clariti
Common Stock Sold to Seller").
1.3 Absence of Encumbrances on Common Stock. The Clariti Common Stock
Issued to Seller and the Additional Clariti Common Stock Sold to Seller
(collectively, the "Clariti Common Stock of Seller") shall be free and clear of
any and all liens, claims, charges, pledges, security interests or other
encumbrances of any nature whatsoever. At the Closing, Clariti shall deliver to
Seller stock certificates representing the Clariti Common Stock of Seller.
1.4 Board of Directors. Simultaneously with the date hereof,
the Board of Directors of Clariti shall appoint The Xxxx Xxxxx Clanmorris as a
director to serve on the Board of Directors of Clariti.
1.5 Closing. The consummation of the transactions contemplated by
this Agreement shall take place on December 15, 1998 or such other date as
shall be mutually agreed upon by the parties in writing and shall take place at
the offices of Pennsylvania Merchant Group located in West Conshohocken,
Pennsylvania, at 1:00 p.m. or at such other date and time mutually agreed to by
the parties (the "Closing" or the "Closing Date").
2. COVENANTS OF CHH AND GLOBALFIRST. CHH and GlobalFirst, severally, with
respect to itself only, hereby agree to perform and comply with the following
covenants:
2.1 Conduct of Business Pending Closing. From and after the date
hereof until the Closing Date, GlobalFirst and each of the Wholly-Owned
Subsidiaries (as defined in Section 3.6.) (hereinafter, GlobalFirst and the
Wholly-Owned Subsidiaries shall be collectively referred to as the "Companies")
shall:
2.1.1 Maintain its existence in good standing;
2.1.2 Maintain the general character of its business and conduct
its business in the ordinary and usual manner;
2.1.3 Maintain business and accounting records consistent with
such Company's past practices;
2.1.4 Maintain its properties in accordance with past practice:
2.1.5 Use commercially reasonable efforts to preserve its
business intact and to preserve the goodwill of their customers and others
having business relations with any of the Companies; and
2.1.6 Immediately notify Clariti of any change or condition
adversely impacting such covenants.
2.2 Prohibited Actions Pending Closing. Unless otherwise provided for
herein or approved by Clariti in writing, from the date hereof until the
Closing Date, GlobalFirst shall cause each of the Companies not to take any of
the following actions, except (i) in order to comply with the terms of any
contract, agreement or instrument to which any of the Companies is a party or
by which any of the Companies is bound, (ii) as required in order to comply
with any law, rule, regulation, court order or judgment or (iii) as set forth
and described in Schedule 2.2, which schedule shall be delivered to Clariti by
no later than November 20, 1998 and which schedule shall, to the knowledge of
GlobalFirst and CHH, disclose all of the following actions:
2.2.1 Amend or otherwise change its respective certificates or
articles of incorporation, bylaws or other governing documents;
2.2.2 Issue or sell or authorize for issuance or sale, or grant
any options or make other agreements with respect to, any shares of its capital
stock, any bonds or any other of its securities;
2.2.3 Declare, set aside, make or pay any dividend or other
distribution to their shareholders, or redeem, purchase or otherwise acquire,
directly or indirectly, any of their capital stock, or authorize or effect any
split-up or any recapitalization or make any changes in its authorized or
issued capital stock;
2.2.4 Sell, transfer or otherwise dispose of or agree to sell,
transfer or dispose of any of its assets, except assets sold, used or consumed
in the ordinary course of business;
2.2.5 Take any action prior to the Closing Date that would
breach any of the representations and warranties contained in this Agreement;
or
2.2.6 Operate the business of any of the Companies in any way
other than in the ordinary course of business.
2.3 Access. From and after the date hereof until the Closing, CHH
and GlobalFirst, jointly and severally, shall cause the respective
shareholders, directors, officers, employees, consultants, independent
certified public accountants, counsel and other agents and representatives of
each of the Companies (the "GlobalFirst Representatives") to afford to three
(3) representatives of Clariti, subject to each of such representatives of
Clariti executing and delivering to GlobalFirst confidentiality agreements in
the form attached to this Agreement as Exhibit A ("Confidentiality
Agreements"): (i) free and full access at all reasonable times during ordinary
business hours to all of each Companies' properties, customer lists, contracts,
books, records and other property, including all computerized information and
data bases and any tax returns, financial statements, budgets, projections,
operating reports and related information, whether completed or otherwise and
(ii) the right to: (a) consult with the GlobalFirst Representatives at all
reasonable times during ordinary business hours, (b) to take a physical
inventory of any of the Companies or to audit all or any part of the Companies'
books and records, through an independent certified public accountant of
Clariti or otherwise, (c) review and copy the work papers and other records of
any independent certified public accountants of any of the Companies and such
additional financial and operating data and other information as to the
business and properties of any of the Companies as Clariti shall from time to
time reasonably require for the purpose of evaluating the Companies and the
transactions contemplated in this Agreement; provided, however, that any such
investigations shall not affect or otherwise diminish or obviate in any way any
of the representations and warranties of CHH and GlobalFirst.
2.4 Post Closing Affirmative Covenants. From and after the Closing,
Clariti, GlobalFirst and CHH jointly and severally (hereinafter referred to as
the "Covenantors") shall, to the extent not in contravention of (i) any
applicable law, rule, regulation, court order, judgment, or decree, (ii) the
certificate of incorporation of Clariti (until and unless the same is
appropriately amended to allow such action by vote of its shareholders and all
required corporate action under applicable law), (iii) any contract, agreement
or instrument to which Clariti, GlobalFirst and CHH are parties or by which
they or any of their properties are bound, or (iv) any fiduciary duties or
legal duties of officers, directors or shareholders of Clariti to Clariti, to
the minority shareholders of Clariti, or to others, take the following actions:
2.4.1 Clariti Wireless. Cause to be incorporated, immediately
following Closing, a wholly-owned subsidiary of Clariti, which shall be called
Clariti Wireless International, Ltd., a Delaware corporation ("Clariti
Wireless"). The officers of Clariti Wireless shall correspond substantially to
those officers presently serving as officers of Clariti as of the date hereof:
(i) the Board of Directors of Clariti Wireless shall consist of the directors
presently serving as directors of Clariti as of the date hereof, which
directors shall hold a majority of the Board seats and (ii) Clariti shall
transfer those of its assets as are listed in Schedule 2.4.1 hereto to Clariti
Wireless, which schedule shall be delivered to GlobalFirst no later than
November 30, 1998.
2.4.2 Use of Proceeds. If and to the extent determined by the
Board of Directors of Clariti after the Closing, in its reasonable business
judgment, provide the necessary funding for Clariti Wireless to roll-out its
digital voice pager known as [name withheld for reasons of confidentiality].
2.4.3 Board of Directors. Cause a person designated by a
majority of those members of the Board of Directors of Clariti as of the date
hereof, and a person designated by CHH, to be appointed to the Board of
Directors of Clariti, each to serve as a Director on such Board for a minimum
term of three (3) years commencing on the Closing Date. The parties shall cause
the Bylaws of Clariti to reflect that (i) the Board of Directors of Clariti
shall consist of not less than three nor more than twelve directors, each to be
elected by a vote of the shareholders of Clariti, no cumulative voting being
allowed, or by vote of a majority of the directors present at a meeting of the
Board of Directors at which a quorum is present, to serve until his successor
is elected and qualified, and (ii) actions by the Board of Directors may be
taken by action of a majority of the directors present and voting at a meeting
of the Board of Directors at which at least a majority of the total number of
Directors are present, constituting a quorum for the conduct of business, or as
otherwise permitted pursuant to the Delaware General Business Corporation Law.
2.4.4 Future Share Issuances. For a period of three (3) years
commencing with the Closing Date, Clariti shall not issue: (i) any preferred
stock or other class or series of stock which has superior rights to the
existing common stock or (ii) any additional shares, whether voting or
nonvoting, of any class of stock, if after giving effect to such issue, the
aggregate, combined percentage interest in Clariti of the record shareholders
of Clariti as of the date of this Agreement would then be less than ten percent
(10%), unless such additional shares shall be issued to a third party in an
arms' length transaction in exchange for fair market value or in a transaction
as to which Clariti receives a fairness opinion from a nationally recognized
investment banking firm selected by its Board of Directors.
2.5 Post Closing Negative Covenants. For a period commencing
with the Closing Date and continuing until the earlier to occur of: (i) the
date which is three (3) years from the Closing Date or (ii) the date on which
the Board of Directors of Clariti determine not to fund the roll-out of [name
deleted for reasons of confidentiality] in accordance with Section 2.4.2, the
Covenantors shall not, without the unanimous consent of the Board of Directors
of Clariti, and subject to any fiduciary duties or legal duties of officers,
directors or shareholders of Clariti:
2.5.1 Make any material change in the business operations of
Clariti Wireless;
2.5.2 Voluntarily liquidate or dissolve Clariti Wireless;
2.5.3 Alter, amend or repeal any provision of Clariti Wireless
Bylaws; or
2.5.4 Sell, lease, exchange or otherwise dispose of all or
substantially all of the assets of Clariti Wireless;
3. REPRESENTATIONS AND WARRANTIES BY CHH AND GLOBALFIRST. CHH and
GlobalFirst, hereby severally, with respect to itself only, represent and
warrant to Clariti that, the statements contained in this Section 3 are true,
correct and complete in all material respects as of the date of this Agreement
and shall be true, correct and complete in all material respects as of the
Closing, except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be arranged to correspond to the lettered and numbered sections
contained in this Section 3. All schedules referenced in this Section 3 shall
be delivered by CHH and/or GlobalFirst to Clariti by no later than November 20,
1998.
3.1 Organization and Authorization. CHH is a corporation, duly
organized, validly existing and in good standing under the laws of the British
Virgin Islands. GlobalFirst is a corporation, duly organized, validly existing
and in good standing under the laws of the United Kingdom. Each of CHH and
GlobalFirst is duly qualified and in good standing in every other jurisdiction
where the failure to be so qualified would have a material adverse effect on
its business. Each of CHH and GlobalFirst has all requisite corporate power
and authority and, except as set forth in Schedule 3.1 hereto, all necessary
licenses and permits to carry on its business as it has been and is now being
conducted and to own, lease and operate the properties used in connection
therewith, except for such licenses and permits the failure to have which would
not have a material adverse effect on the business and operations of CHH,
GlobalFirst and their affiliates, taken as a whole. The execution and delivery
of this Agreement, and the actions contemplated hereby have been duly
authorized by all necessary corporate action by the Board of Directors of CHH
and GlobalFirst and their respective shareholders, which are the only corporate
approvals required by CHH and GlobalFirst, such Board of Directors' approval
having been lawfully and validly obtained.
3.2 Capitalization. The total authorized capital stock of GlobalFirst
consists of one million (1,000,000) shares of common stock one pound par value
of which, the GlobalFirst Shares have been validly issued and are outstanding
and are fully paid and nonassessable. All of the GlobalFirst Shares were issued
in compliance with all applicable federal, state and foreign securities laws
and regulations, have been duly and validly authorized and issued and are fully
paid and nonassessable, free of preemptive rights , and to CHH's and
GlobalFirst's knowledge, with no liability attaching to the ownership thereof.
None of the GlobalFirst Shares have been issued in violation of any
stockholder's preemptive rights.
3.3 Options. Except as set forth on Schedule 3.3 hereto, there are no
existing agreements, subscriptions, options, warrants, puts, calls,commitments,
pledges, assignments, trusts (voting or otherwise), or rights of any kind
whatsoever granting to any person or entity any interest in or the right to
purchase or otherwise acquire from GlobalFirst or from CHH, at any time, or
upon the happening of any stated event, any securities of CHH or GlobalFirst,
whether or not presently issued or outstanding, nor are there any outstanding
securities of CHH or GlobalFirst of any type which are convertible into or
exchangeable for shares or other securities of CHH or GlobalFirst, nor are
there any agreements, subscriptions, options, warrants, calls, commitments or
rights of any kind whatsoever granting to any person or entity any interest in
or the right to purchase or otherwise acquire from GlobalFirst, or from CHH,
any securities so convertible or exchangeable, nor are there any proxies,
agreements or understandings with respect to the voting or transferability of
any shares or securities of GlobalFirst or of CHH.
3.4 Freedom to Contract. The execution and delivery of this Agreement
by CHH and GlobalFirst does not and the performance by them of their
obligations hereunder will not: (a) violate or conflict with any provision of
the Certificates or Articles of Incorporation or Bylaws of CHH or GlobalFirst,
or any amendments thereto or restatements thereof, (b) to the knowledge of CHH
and GlobalFirst, violate any of the terms, conditions or provisions of any law
or order of any court or governmental authority or (c) to the knowledge of CHH
and GlobalFirst, result in a material violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any agreement, instrument or obligation,
oral or written, to which CHH or GlobalFirst is a party (whether as an original
party or as an assignee or successor) or by which any of them or any of their
respective properties is bound.
3.5 Charter and Organizational Documents. On or before November 20,
1998, CHH and GlobalFirst shall deliver to Clariti a copy that is true, correct
and complete in all material respects of the certificate or articles of
incorporation, by-laws and any other governing documents of CHH and GlobalFirst
and each of the Wholly-Owned Subsidiaries (as defined in Section 3.6), and any
amendments thereto or restatements thereof. The corporate or other minute books
of GlobalFirst and each Wholly Owned Subsidiary, which shall be made available
to Clariti at any time prior to Closing, accurately reflect in all material
>PAGE>
respects all corporate action required to be passed upon by the stockholders
and boards of directors of GlobalFirst and each Wholly Owned Subsidiary,
respectively. The stock certificate books and stock transfer ledgers of
GlobalFirst and each Wholly Owned Subsidiary, which shall be made available to
Clariti for inspection prior to the Closing, are true, correct and complete in
all material respects. To the knowledge of GlobalFirst, all stock transfer
taxes levied or payable with respect to all transfers of shares of GlobalFirst
and each Wholly Owned Subsidiary prior to the date hereof have been paid and
appropriate transfer tax stamps affixed.
3.6 Wholly-Owned Subsidiaries. GlobalFirst owns one hundred percent
(100%) of the ownership interests of the corporations listed on Schedule 3.6
hereto (the "Wholly Owned Subsidiaries"). Schedule 3.6 also includes a general
description of each Wholly Owned Subsidiaries' current operations, its assets
and liabilities and annual revenue and profit (loss) figures. Each Wholly
Owned Subsidiary is a corporation, duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each Wholly Owned
Subsidiary is qualified to do business in each jurisdiction where the failure
to be so qualified would have a material adverse effect on the business of such
Wholly Owned Subsidiary. Each Wholly Owned Subsidiary has all requisite
corporate power and authority and all necessary licenses and permits to carry
on its business as it has been and is now being conducted and to own, lease and
operate the properties used in connection therewith where the failure to have
such licenses or permits would have a material adverse effect on the businesses
of such Wholly Owned Subsidiary. Except for its ownership interests in each
Wholly Owned Subsidiary and except for such additional contract interests in
other entities as are set forth in Schedule 3.6, GlobalFirst does not, directly
or indirectly, have any ownership or other interest in, or control of, any
corporation, partnership, joint venture, business association or other entity
(whether as an original party or as an assignee or successor).
3.7 Directors and Officers. Schedule 3.7 contains a true, correct and
complete list of the directors and officers of CHH, GlobalFirst and each Wholly
Owned Subsidiary.
3.8 Financial Statements. CHH and GlobalFirst shall furnish to
Clariti, on or before November 15, 1998, copies of the financial statements
described in this Section 3.8 below (the "Financial Statements").
3.8.1 The financial statements to be furnished to Clariti for the
Companies include:
A. Audited consolidating balance sheets and statements of
income, stockholders' equity and cash flows for GlobalFirst and each of the
Wholly-Owned Subsidiaries, for the calendar years ended December 31, 1996 and
1997 prepared in accordance with generally accepted accounting principals
applied on a consistent basis.
B. Unaudited consolidated [and consolidating] balance
sheets and statements of income, for the year-to-date periods ending on
September 30, 1998 (the "Most Recent Financial Statements"), August 31, 1998
and July 31, 1998 (collectively, the "Interim Statements"), prepared from the
Companies' respective books and records, but subject to normal year end
adjustments and consolidating adjustments, and without footnotes.
The above-described financial statements fairly present the financial position
of the Companies as of the date thereof and the results of operations of the
Companies for the periods presented, subject to normal consolidating and
year-end adjustments with respect to the results of operations. Except as set
forth in any of the Interim Statements (defined below), or in Schedule 3.8.1
hereto, since June 30, 1998 with respect to GlobalFirst and December 31, 1997
with respect to the other Companies, there has been no: (a) material adverse
change in the financial condition, results of operations, assets, liabilities,
business or prospects of GlobalFirst, or to the knowledge of GlobalFirst, any
of the Companies, (b) material liability or obligation of any nature whatsoever
(or the GlobalFirst's knowledge, any contingent liability or obligation)
incurred by GlobalFirst, or to GlobalFirst's knowledge, any of the Companies,
other than current liabilities or obligations incurred in the ordinary course
of business,(c) material change in the accounting methods or practices followed
by any of the Companies or (d) other event or condition of any character which
has materially adversely affected GlobalFirst's, or to GlobalFirst's knowledge,
any of the Companies' assets, business or prospects.
3.9 Absence of Undisclosed Liabilities. Except as set forth in
Schedule 3.9 hereto, or except for amounts stated or properly reserved for in
the Most Recent Financial Statements or liabilities incurred after the date
thereof in the ordinary course of business, to the knowledge of CHH and
GlobalFirst, none of the Companies have any material liabilities, obligations
or contingencies. On or before November 20, 1998, CHH and GlobalFirst shall
provide to Clariti copies, true, correct and complete in all material respects,
of all debt instruments, including, without limitation, any loan agreement or
promissory note, security agreement, or other evidence of any indebtedness or
lien in an original principal amount in excess of One Hundred Thousand Dollars
($100,000), to which GlobalFirst is a party, and shall cause each of the
Companies to present to Clariti copies of such documents with respect to any
indebtedness or lien in an original principal amount in excess of One Hundred
Thousand Dollars ($100,000), to which such Company is a party.
3.10 Title to Properties. To the knowledge of CHH and GlobalFirst,
each of the Companies has good and marketable title to all properties and
assets (a) reflected on the Financial Statements or acquired after the date
thereof (except for properties and assets sold or otherwise disposed of in the
ordinary course of business since the date of the Most Recent Financial
Statements), subject only to: (a) statutory liens arising or incurred in the
ordinary course of business with respect to which the underlying obligations
are not delinquent, (b) with respect to personal property, the rights of
customers of the Companies with respect to inventory or work in progress under
orders or contracts entered into by the Companies in the ordinary course of
business, (c) liens reflected in the Financial Statements or notes thereto, or
(d) liens for taxes not yet delinquent.
3.11 Other Contracts and Documents. Except as disclosed in some other
Schedule hereto, Schedule 3.11 lists all material written executory contracts
in effect as of the date hereof, which exceeds One Hundred Thousand Dollars
($100,000) in value, to which GlobalFirst or any of the Companies is a party
(whether as an original party or an assignee or successor). On or before
November 20, 1998, GlobalFirst shall provide Clariti with copies of material
written executory contracts to which any of the Companies is a party (whether
as an original party or an assignee or successor) which: (a) was not made in
the ordinary course of business; (b) as of the, date hereof exceeds or at any
time prior to the date hereof exceeded Five Hundred Thousand Dollars ($500,000)
in value; and/or (c) either (i) restricts any of the Companies or any of their
respective employees from engaging in business or from competing in any line of
business with any other parties or (ii) provides for a line of credit or
guarantee, pledge of undertaking of the indebtedness of any other person or
entity. Also included on Schedule 3.11 is a description and summary of all
proposed acquisitions, mergers, consolidations or similar transactions
involving the Companies (the "Acquisitions"), as of the date on which such
Schedule 3.11 was prepared. GlobalFirst shall make available to representatives
of Clariti, upon written request, for their review, subject to the provisions
of Section 2.3, true and correct copies of all material agreements, documents
and information of or relating to such Acquisitions. Except as set forth in
Schedule 3.11, there are no existing agreements, options, commitments or rights
with, to or in any third party to acquire any assets or properties, real,
personal or mixed, or any interest therein, of any of the Companies, except for
those contracts entered into by any of the Companies in the ordinary course of
business.
3.12 Absence of Default. Except as set forth in Schedule 3.12 and
except such instances of non-compliance as would have a material adverse effect
on the business and operations of GlobalFirst and all of the Companies taken as
a whole to the knowledge of CHH and GlobalFirst, the Companies have complied in
all material respects with and performed all of their respective material
obligations required to have been performed prior to the date hereof under all
material contracts, agreements and leases to which any of them is a party
(whether as an original party or as an assignee or successor) as of the date
hereof, and are not in default in any material respect under any contract,
agreement, lease, undertaking, commitment or other obligation; and to the
knowledge of CHH and GlobalFirst, no event has occurred which, with or without
the giving of notice, lapse of time or both, would constitute a default
thereunder in any material respect. CHH and GlobalFirst have no knowledge that
any party has failed to comply with or perform any of its material obligations
required to have been performed prior to the date hereof under any material
contract, agreement or lease to which any of the Companies is a party (whether
as an original party or as an assignee or successor) as of the date hereof, or
that any event has occurred which, with or without the giving of notice, lapse
of time or both, would constitute a material default by such party thereunder.
3.13 Distributions, Satisfactions, Obligations. Except as set forth
in Schedule 3.13 hereto, since the date of the Most Recent Financial
Statements, to the knowledge of CHH and GlobalFirst, none of the Companies has:
(a) Issued any other shares of its capital stock, bonds or any
other of its securities;
(b) Incurred any obligations or liabilities for money borrowed
or any additional debt in an original principal amount greater than U.S.
$100,000 other than trade debt, or assumed, guaranteed or otherwise become
responsible for any obligation of any other party in a principal amount greater
than U.S. $100,000, or agreed to so do;
(c) Incurred any material obligations or liabilities in an
amount in excess of U.S. $100,000, other than in the ordinary course of
business;
(d) Mortgaged or pledged or subjected to lien, charge or other
encumbrance, any of its assets, tangible or intangible, except for capital
leases, equipment leases, and liens securing debt in an amount less than U.S.
$100,000, or in the ordinary course of business;
(e) Declared, set aside or made or paid any dividend or other
distribution to any its stockholders, partners or members; or redeemed,
purchased or otherwise acquired, directly or indirectly, any of its capital
stock or ownership interest, or authorized or effected any split-up or any
recapitalization or made any changes in its authorized or issued capital stock;
(f) Sold, transferred or disposed of any of its assets for
consideration in excess of U.S. $ 100,000 or having a book value in excess of
U.S. $50,000, except assets used or consumed in the ordinary course of business
and obsolete equipment and equipment which has been replaced in the ordinary
course of business;
(g) Suffered any material adverse change in its business,
material damage to its assets, disruption of business or losses, whether
covered by insurance or not, or waived any rights of substantial value; or
(h) Operated its business in any way other than in the ordinary
course.
3.14 Litigation. Except as disclosed on Schedule 3.14, as the same
may be updated, from time to time, by GlobalFirst or CHH prior to Closing,
there are no material actions, suits, material labor disputes or arbitrations,
legal or administrative proceedings pending against the Companies, and to the
knowledge of CHH and GlobalFirst, no actions, suits, material labor disputes or
arbitrations, legal or administrative proceedings or investigations have been
threatened against the Companies or any of their respective assets, properties
or businesses. Except as set forth on Schedule 3.14, neither the Companies,
nor the assets, properties or business of any of them, is subject to any
material judgment, order, writ, injunction or decree of any court, governmental
agency or arbitration tribunal which has or will have a material adverse effect
on the Companies taken as a whole, on a consolidated basis.
3.15 Compliance with Laws. To the knowledge of CHH and GlobalFirst,
each of the Companies has complied with, and is not in violation of, any law,
ordinance or governmental rule or regulation to which it or its business or its
assets and properties (real, personal and intangibles) is subject, which in the
event of any noncompliance, would have a material adverse effect on the
business, operations, prospects, properties, assets or condition (financial or
otherwise) of such Company. To the knowledge of CHH and GlobalFirst, none of
the Companies has received any claim or notice of any violation of any
building, zoning, fire, health or employment laws, ordinances, rules or
regulations relating to the properties, assets, premises, business or employees
of the Companies which has not been fully remedied, which violation would have
a material adverse effect on the business, operations, prospects, properties,
assets or condition (financial or otherwise) of the Companies.
3.16 Tax Matters. To the knowledge of CHH and GlobalFirst, each of
the Companies has filed all required federal, state, county, local, foreign and
other tax returns and reports, paid all taxes shown to have been due on such
returns and reports, including interest and penalties with respect thereto, and
withheld all amounts required to have been withheld by the Companies from
employees or workers for income taxes, social security and other payroll taxes.
To the knowledge of CHH and GlobalFirst, except as set forth in Schedule 3.17,
none of the Companies is a party to any pending action by any governmental
authority for assessment or collection of taxes, or party to any dispute or,
to CHH's and GlobalFirst's knowledge, threatened dispute in which an adverse
determination would have a material adverse effect on the business, operations,
properties, or financial condition of the Companies.
4. REPRESENTATIONS AND WARRANTIES BY SELLER AND GLOBALFIRST. Each of
Seller and GlobalFirst, severally with respect to itself only, represents and
warrants to Clariti as follows:
4.1 Title to Shares. The Seller presently owns, controls and is
authorized to transfer one hundred percent (100%) of the outstanding shares of
GlobalFirst. Seller is the lawful record and the beneficial owner of, and has
good and marketable title to one hundred percent (100%) of the GlobalFirst
Shares. Seller owns the GlobalFirst Shares free and clear of any and all liens,
claims, charges, pledges, security interests, warrants, puts, calls, trusts
(voting or otherwise) or rights of any kind granting any interest in or right
to purchase any of the GlobalFirst Shares or other encumbrances of any nature
whatsoever ("Liens").
4.2 Power and Capacity. GlobalFirst and Seller have and will have at
Closing the full right, power and capacity (a) to execute, deliver and perform
this Agreement and (b) to perform all other transactions contemplated to be
performed by it hereunder. Seller, severally with respect to himself or itself
only, has the full right, power and capacity to sell, transfer and deliver the
GlobalFirst Shares owned by such Seller to Clariti under and pursuant to the
terms of this Agreement. This Agreement is a valid and binding obligation of
Seller and GlobalFirst. Simultaneously upon delivery of and payment for the
GlobalFirst Shares pursuant to this Agreement, the Seller shall transfer to
Clariti good and marketable record and beneficial title to the GlobalFirst
Shares held by Seller, free and clear of any and all Liens.
4.3 Restricted Shares. Seller represents and warrants as follows:
4.3.1 The Clariti Common Stock of Seller (hereinafter referred to
as the "Clariti Stock") received or to be received from Clariti pursuant to
this Agreement are (a) being acquired for Seller's own account and not with the
present view towards the distribution thereof without compliance with
securities laws and (b) is subject to certain restrictions on transferability
as provided under the Securities Act. Seller agrees that Seller will not
dispose of the Clariti Stock except (1) pursuant to an effective registration
statement under the Securities Act, or (ii) in any other transaction which, in
the opinion of Clariti's securities counsel, is exempt from registration under
the Securities Act, or the rules and regulations of the Securities and Exchange
Commission ("SEC") thereunder.
4.3.2 The Clariti Stock is being offered and sold under
exemptions from the registration provisions of the Securities Act including,
but not limited to Sections 3(b), 4(2) and 4(6) of the Securities Act and
Regulation D promulgated thereunder; that Seller is purchasing the Clariti
Stock without being furnished any offering literature, a prospectus or offering
memorandum; that this transaction has not been scrutinized by the SEC or by any
administrative agency charged with the administration of securities laws of any
state; that all information, documents, records and books pertaining to this
investment and Clariti have been made available upon request to Seller and
Seller's representatives, including Seller's attorney, accountant and/or
purchaser representative.
4.3.3 Seller has read and considered the SEC Reports (as
hereinafter defined) and understands that investments in the Clariti Stock are
accompanied by a degree of risk, and there are substantial restrictions on the
transferability of the Clariti Stock.
4.3.4 Seller is able to (a) bear the economic risk of this
investment, (b) hold the Clariti Stock indefinitely and (c) presently afford a
complete loss of this investment.
4.3.5 Seller has adequate means of providing for current business
needs and business contingencies and has no need for liquidity in this
investment.
4.3.6 Seller has such knowledge and expertise in financial and
business matters and is capable of evaluating the merits and risk of investment
in the Clariti Stock and of making an informed investment decision. Seller
confirms that in making the decision to purchase the Clariti Stock, Seller has
relied solely upon Seller's independent investigations by Seller and/or
Seller's representatives, including Seller's own professional tax, legal and
other advisors and that Seller and such representatives and advisors have been
given the opportunity to ask questions of and to receive answers from, persons
acting on behalf of Clariti concerning the terms and conditions of this
offering, Clariti's business and associated risks and to obtain any additional
nformation, to the extent such persons possess such information or can acquire
it without unreasonable effort or expense.
4.3.7 Seller confirms that: (i) the Clariti Stock is being
acquired by Seller in good faith solely for Seller's own account and investment
purposes only and is not being purchased for resale, resyndication,
distribution, subdivision or fractionalization thereof and (ii) Seller has no
contract or arrangement with any person to sell, transfer or pledge to any
person the Clariti Stock or any part thereof, any interest therein or any
rights thereto. Seller has no present plans to enter into any such contract or
arrangement.
4.3.8 Seller understands that neither the SEC nor any other
federal or state agency has passed upon or made any recommendation or
endorsement of the Clariti Stock. Seller further acknowledges that the Clariti
Stock has not been registered under the Securities Act or under any state
securities laws. Seller therefore acknowledges that the Clariti Stock cannot
be sold unless such stock is subsequently registered under the Securities Act
and applicable state laws or unless an exemption from such registration is
available. Seller further understands that Clariti is relying upon the truth
and accuracy of Seller's representations, declarations and warranties made
herein by offering the Clariti Stock for sale to Seller without having first
registered same under the Securities Act.
4.3.9 Seller realizes that, in the absence of the availability of
Rule 144, any disposition the Clariti Stock may require compliance with the
registration provisions of the Securities Act and state securities laws or
exemption provisions thereunder.
4.3.10 Seller consents to stop transfer instructions being placed
with the transfer agent for the Clariti Stock and the placement of a legend on
all certificates evidencing the purchase of the Clariti Stock which legend
shall be in form substantially as follows:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THE SALE OR OTHER
DISPOSITION OF THESE SHARES IS RESTRICTED AND IN ANY EVENT IS PROHIBITED UNLESS
THE HOLDER OF THIS CERTIFICATE RECEIVES AN OPINION OF COUNSEL, WHICH OPINION IS
SATISFACTORY TO CLARITI AND ITS COUNSEL, THAT SUCH SALE OR OTHER DISPOSITION
CAN BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY STATE
SECURITIES LAWS.
4.3.11 Seller is an "accredited investor" as such term is defined
in Rule 502 of Regulation D promulgated under the Securities Act of 1933, as
amended.
4.3.12 Seller acknowledges that Seller understands the meaning of
the legal consequences of the representations, acknowledgments and warranties
contained in this Section 4.4 and hereby agrees to indemnify and hold harmless
Clariti and its officers, directors, attorneys and representatives, against any
and all loss, damage and/or liability, including costs and reasonable attorneys
fees, due to or arising out of a breach of any representation, warranty
undertaking or acknowledgement of Seller contained in this Section 4.4 or
arising out of the sale of the Clariti Stock by Seller in violation of the
Securities Act or any other applicable state or federal securities laws.
4.3.13 Seller acknowledges that no general solicitation or
general advertising regarding the offering (including communications published
in any newspaper, magazine or similar broadcast) has been received by or
communicated to Seller and no public solicitation or advertisement with respect
to the offering of the Clariti Stock has been made to the Seller.
4.3.14 Seller represents that Seller is not affiliated with or
associated with any member of the National Association of Securities Dealers,
Inc. (the "NASD") and that GlobalFirst is not in control of, controlled by, or
under common control with any person or entity that is affiliated or associated
with any member of the NASD.
5. COVENANTS OF CLARITI. Clariti hereby covenants and agrees with CHH and
GlobalFirst as follows:
5.1 Conduct of Business Pending Closing. From the date hereof until
the Closing Date, Clariti shall:
5.1.1 Maintain its existence in good standing;
5.1.2 Maintain the general character of its business and conduct
its business in the ordinary and usual manner;
5.1.3 Maintain business and accounting records consistent with
its past practices;
5.1.4 Maintain its properties in accordance with past practice;
5.1.5 Use commercially reasonable efforts to preserve its
business intact, to preserve the goodwill of its customers and others having
business relations with Clariti or any of its subsidiaries and to keep
available to Clariti the services of its present officers and employees; and
5.1.6 Immediately notify CHH and GlobalFirst of any change or
condition adversely impacting such covenants.
5.2 Prohibited Actions Pending Closing. Unless otherwise provided for
herein or approved in writing by CHH and GlobalFirst, from the date hereof
until the Closing Date, Clariti shall not take the following actions, except
(i) as required in order to comply with the terms of any contract, agreement or
instrument to which Clariti is a party or by which Clariti is bound; (ii) as
required in order to comply with any law, rule, regulation, court order or
judgment or (iii) as set forth and described in Schedule 5.2 which schedule
shall be delivered to GlobalFirst and CHH by no later than November 20, 1998
and which schedule shall, to the knowledge of Clariti, disclose all of the
following actions:
5.2.1 Amend or otherwise change its certificate of incorporation,
bylaws or other governing documents;
5.2.2 Operate the business of Clariti in any way other than in
the ordinary course;
5.2.3 Authorize or issue shares of any class or series of equity
securities or securities convertible into or exercisable for any equity
securities;
5.2.4 Restructure, reclassify or otherwise modify or amend the
terms of its common stock or any other class or series of equity securities or
securities convertible into or exercisable for any equity securities of
Clariti.
5.2.5 Voluntarily liquidate, dissolve or wind-up Clariti, make
any filing under any state or federal bankruptcy, insolvency or reorganization
law or other law for relief from creditors or the protection of debtors, make
any assignment for the benefit of creditors or consent to the appointment of a
receiver for itself or any part of its property, or conduct any form of
recapitalization or reorganization of Clariti (other than pursuant to the terms
hereof); or
5.2.6 Merge or consolidate with or into any other entity, or
permit any other entity to consolidate or merge with or into Clariti, or
participate (other than pursuant to the terms hereof) in a share exchange with
or sell, license, lease, transfer, mortgage, pledge, encumber, contribute, or
otherwise dispose of all or any substantial part of its assets (tangible or
intangible), or all or any substantial part of it intellectual property, to any
other person or entity, or enter into any transaction series of related
transactions which results in a change in the person or persons exercising
control of Clariti immediately prior to such transactions, other than (i) sales
of assets in the ordinary course of business, or (ii) licenses granted in the
ordinary course of business.
5.3 Access. From and after the date hereof until the Closing, Clariti
shall cause its directors, officers, employees, consultants, independent
certified public accountants, counsel, officers, agents and representatives
(the "Clariti Representatives") to afford to three (3) representatives of
Seller, subject to each of such representatives of Seller executing and
delivering to Clariti, Confidentiality Agreements in the form attached to this
Agreement as Exhibit A: (i) free and full access at all reasonable times during
ordinary business hours to Clariti's properties, customer lists, contracts,
books, records and other property, including all computerized information and
data bases and any tax returns, financial statements, budgets, projections,
operating reports and related information, whether completed or otherwise; and
(ii) the right to (a) consult with the Clariti Representatives at reasonable
times during ordinary business hours, (b) to take a physical inventory of
Clariti or to audit all or any part of Clariti's books and records, through
an independent certified public accountants designated by GlobalFirst or CHH,
or otherwise, (c) review and copy the work papers and other records of any
independent certified public accountants of Clariti and such additional
financial and operating data and other information as to the business and
properties of Clariti as Seller shall from time to time reasonably require;
provided, however, that any such investigations shall not affect or otherwise
diminish or obviate in any way any of the representations and warranties of
Clariti.
6. REPRESENTATIONS AND WARRANTIES OF CLARITI. Clariti represents and
warrants to CHH and GlobalFirst that the statements contained in this Section 6
are true, correct and complete in all material respects as of the date of this
Agreement and shall be true, correct and complete in all material respects as
of the Closing, except as set forth in the Disclosure Schedules, which
Disclosure Schedules shall be arranged to correspond to the lettered and
numbered sections contained in this Section 6. All schedules referenced in
this Section 6 shall be delivered to GlobalFirst by no later than November 20,
1998.
6.1 Organization and Authorization. Clariti is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Clariti is duly qualified and in good standing in every other
jurisdiction in which it presently engages in business, in which such
qualification is required, and where the failure to be so qualified would have
a material adverse effect on the business of Clariti. Clariti has all requisite
corporate power and authority and all necessary licenses and permits to carry
on its business as it has been and is now being conducted and to own, lease and
operate the properties used in connection therewith, except for such licenses
and permits the failure to have would not have a material adverse effect on its
business and operations. The execution and delivery by Clariti of this
Agreement and the performance of its obligations hereunder have been authorized
by all necessary corporate action.
6.2 Capitalization.
6.2.1 The total authorized shares of Clariti's common stock
consists of 50,000,000 shares of common stock ($.001 par value) as of the date
hereof and as a condition of Closing, will consist of three hundred million
(300,000,000) shares of common stock ($.001 par value) as of the Closing Date,
of which 32,893,883 are issued and outstanding as of the date hereof (the
"Clariti's Outstanding Shares"). In addition, Clariti has outstanding warrants
and options for 5,980,000 shares, all of which have been reserved for issuance
by Clariti. All of Clariti's Outstanding Shares were issued in compliance with
all applicable federal, state and foreign securities laws and regulations, have
been duly and validly authorized and issued and are fully paid and
nonassessable, free of preemptive rights, and to Clariti's knowledge, with no
liability attaching to the ownership thereof. None of the Clariti's Outstanding
Shares have been issued in violation of any stockholder's preemptive rights.
6.2.2 The Clariti Common Stock of Seller shall be issued in
compliance with all applicable federal, state and foreign securities laws and
regulations, will be duly and validly authorized, fully paid and nonassessable,
and issued free of preemptive rights with no liability attaching to the
ownership thereof. None of the Clariti Common Stock of Seller shall be issued
in violation of any stockholder's preemptive rights. As of the Closing, CHH
will own the Clariti Common Stock Issued to CHH free and clear of any Liens
except as otherwise provided in Section 1.1.2.
6.2.3 Except as disclosed in the SEC Reports (defined in Section
6.4) there are no existing agreements, subscriptions, options, warrants, calls,
commitments, trusts (voting or otherwise), or rights of any kind whatsoever
granting to any person or entity any interest in or the right to purchase or
otherwise acquire from Clariti, at any time, or upon the happening of any
stated event, any securities of or ownership interest in Clariti, whether or
not presently issued or outstanding, nor are there any outstanding securities
of Clariti or any other entity which are convertible into or exchangeable for
shares or other securities of Clariti, nor are there any agreements,
subscriptions, options, warrants, calls, commitments, trusts (voting or
otherwise), or rights of any kind whatsoever granting to any person or entity
any interest in or the right to purchase or otherwise acquire from Clariti or
any other entity any securities so convertible or exchangeable, nor are there
any proxies, agreements or understandings with respect to the voting or
transferability of any shares or securities of Clariti.
6.3 Freedom to Contract. The execution and delivery of this Agreement
by Clariti does not and the performance by it of its obligation hereunder will
not (a) violate or conflict with any provision of the Certificate of
Incorporation or Bylaws of Clariti, or any amendments thereto or restatements
thereof, (b) to the knowledge of Clariti, violate any of the terms, conditions
or provisions of any law or order of any court or governmental authority or
(c) to the knowledge of Clariti, result in a material violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation or acceleration) under,
any of the terms, conditions or provisions of any agreement, instrument or
obligation, oral or written, to which Clariti is a party (whether as an
original party or as an assignee or successor) or by which any of them or any
of their respective properties is bound.
6.4 SEC Reports.
6.4.1 On or before November 20, 1998, Clariti shall furnish to
CHH Clariti's: (i) Amendment No. 2 to Annual Report on Form 10-KSB for the
fiscal year ending July 31, 1997 and the Annual Report on Form 10-KSB for the
fiscal year ended June 30, 1998 (the "Most Recent Forms 10-KSB");
(ii) Amendment No. 1 to Quarterly Report on Form 10-QSB for the quarter ended
April 30, 1998 and Quarterly Reports on Form 10-QSB for the quarters ended
January 31, 1998 and October 31, 1997 (collectively, the "Forms 10-QSB"): and
(iii) Forms 8-K filed March 4, 1998, April 24, 1998 and August 7, 1998
(collectively, items (i), (ii) and (iii) shall hereinafter be referred to as
the "SEC Reports"). As of their respective dates, the SEC Reports complied
with the applicable requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
6.4.2 Since the respective date as of which information is given
in the SEC Reports: (i) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of Clariti or any of its subsidiaries whether or not arising
in the ordinary course of business, (ii) there have been no transactions
entered into by Clariti or any of its subsidiaries, other than those in the
ordinary course of business, and (iii) there has been no dividend or
distribution of any kind declared, paid or made by Clariti on any class or its
capital stock.
6.5 Clariti Financial Statements. The unaudited consolidated balance
sheet, the consolidated statements of operations and the consolidated
statements of cash flow of Clariti and its subsidiaries, together with all
notes and schedules thereto, in each case as included in the Forms 10-QSB, are
hereinafter referred to collectively as the "Clariti Interim Financial
Statements." The audited consolidated balance sheets, statements of
operations, statements of stockholders' equity and statements of cash flow of
Clariti and its subsidiaries, together with all notes and schedules thereto, in
each case as included in the Most Recent Forms 10-KSB, are hereinafter referred
to collectively as the "Clariti Audited Financial Statements." The Clariti
Audited Financial Statements and the Clariti Interim Financial Statements are
collectively referred to hereinafter as the "Clariti Financial Statements."
6.5.1 The Clariti Interim Financial Statements and Clariti
Financial Statements: (i) were prepared in accordance with GAAP, subject only
in the case of the Clariti Interim Financial Statements to normal year end
adjustments and without footnotes.; (ii) are correct and complete in all
material respects; (iii) fairly presented the financial position of Clariti on
the date of filing of said financial statements with the SEC; and (iv) fully
disclose all material liabilities, obligations or contingencies required to be
disclosed under GAAP, including, without limitation, whether any such
liabilities, obligations or contingencies affect any properties of any of
Clariti (except for this Agreement) limit or restrain Clariti from declaring,
setting aside, authorizing or making payment of any dividend or any
distribution, whether in cash or property. Except as set forth in Schedule
6.5.1 or in the Form 8-K filed August 7, 1998, since June 30, 1998, there has
been no: (a) material adverse change in the financial condition, results of
operations, assets, liabilities, business or prospects of Clariti, (b) material
liability or obligation of any nature whatsoever (contingent or otherwise)
incurred by Clariti, other than current liabilities or obligations incurred in
the ordinary course of business, (c) change in the accounting methods or
practices followed by Clariti or (d) other event or condition of any character
which has materially adversely affected Clariti's assets,business or prospects.
6.6 Title to Properties. To the knowledge of Clariti, Clariti has
good and marketable title to all properties and assets (a) reflected on the
Clariti Financial Statements or acquired after the date thereof (except for
properties and assets sold or otherwise disposed of in the ordinary course of
business since the date of the Clariti Interim Financial Statements), subject
only to: (a) statutory liens arising or incurred in the ordinary course of
business with respect to which the underlying obligations are not delinquent,
(b) with respect to personal property, the rights of customers of Clariti with
respect to inventory or work in progress under orders or contracts entered into
by Clariti in the ordinary course of business, (c) liens reflected in the
Clariti Financial Statements or notes thereto, or (d) liens for taxes not yet
delinquent.
6.7 Compliance with Laws. To the knowledge of Clariti, Clariti and
its subsidiaries have complied with, and none of them is in violation of any,
law, ordinance or governmental rule or regulation to which they or their
business or assets and properties (real, personal and intangibles) is subject,
which in the event of any noncompliance, would have a material adverse effect
on the business, operations, prospects, properties, assets or condition
(financial or otherwise) of Clariti and its subsidiaries taken as a whole. To
the knowledge of Clariti, neither Clariti nor any of its subsidiaries has
received any claim or notice of any violation of any building, zoning, fire,
health or employment laws, ordinances, rules or regulations relating to the
properties, assets, premises, business or employees of Clariti or any of its
subsidiaries which has not been fully remedied, which violation would have a
material adverse effect on the business, operations, prospects, properties,
assets or condition (financial or otherwise) of Clariti and its subsidiaries
taken as a whole.
6.8 Other Contracts and Documents. Except as disclosed in some other
schedule hereto, Schedule 6.8 lists all material written executory contracts in
effect of the date hereof,which exceeds One Hundred Thousand Dollars ($100,000)
in value, to which Clariti is a party (whether as an original party or an
assignee or successor). On or before November 20, 1998, Clariti shall provide
GlobalFirst with copies of all material written executory contracts to which
Clariti is a party (whether as an original party or an assignee or successor)
which: (a) was not made in the ordinary course of business; (b) as of the date
hereof exceeds or at any time prior to the date hereof exceeded Five Hundred
Thousand Dollars($500,000) in value; and/or (c) either (i) restricts Clariti or
any of its employees from engaging in business or from competing in any line of
business with any other parties or (ii) provides for a line of credit or
guarantee, pledge of undertaking of the indebtedness of any other person or
entity. There are no existing agreements, options, commitments or rights with,
to or in any third party to acquire any assets or properties, real, personal or
mixed, or any interest therein, of Clariti, except for those contracts entered
into by Clariti in the ordinary course of business.
6.9 Absence of Default. Except as set forth in Schedule 6.9, and
except in such instances of non-compliance as would have a material and adverse
effect on the business and operations of Clariti and its subsidiaries taken as
a whole, to the knowledge of Clariti, Clariti and its subsidiaries have
complied in all material respects with and performed all of their respective
material obligations required to have been performed prior to the date hereof
under all material contracts, agreements and leases to which any of them is a
party (whether as an original party or as an assignee or successor) as of the
date hereof, and are not in default in any material respect under any contract,
agreement, lease, undertaking, commitment or other obligation; and to the
knowledge of Clariti and its subsidiaries, no event has occurred which, with or
without the giving of notice, lapse of time or both, would constitute a default
thereunder in any material respect. Clariti has no knowledge that any party has
failed to comply with or perform all of its material obligations required to
have been performed prior to the date hereof under any material contract,
agreement or lease to which Clariti or any of its subsidiaries is a party
(whether as an original party or as an assignee or successor) as of the date
hereof, or that any event has occurred which, with or without the giving of
notice, lapse of time or both, would constitute a material default by such
party thereunder.
6.10 Distributions, Satisfactions, Obligations. Except as set forth in
Schedule 6.10, since the date of the Clariti Interim Financial Statements, to
the knowledge of Clariti, Clariti has not:
(a) Issued any other shares of its capital stock, bonds or any
other of its securities;
(b) Incurred any obligations or liabilities for money borrowed,
or any additional debt in an original principal amount greater than U.S.
$100,000 other than trade debt, or assumed, guaranteed or otherwise become
responsible for the obligations of any other party in a principal amount
greater than U.S. $100,000, or agreed to so do;
(c) Incurred any material obligations or liabilities, in an
amount in excess of U.S. $100,000, other than in the ordinary course of
business;
(d) Mortgaged or pledged or subjected to lien, charge or other
encumbrance, any of its assets, tangible or intangible, except for capital
leases, equipment leases, or in the ordinary course of business;
(e) Declared, set aside or made or paid any dividend or other
distribution to any its stockholders, partners or members; or redeemed,
purchased or otherwise acquired, directly or indirectly, any of its capital
stock or ownership interest, or authorized or effected any split-up or any
recapitalization or made any changes in its authorized or issued capital stock;
(f) Sold, transferred or disposed of any of its assets except
assets used or consumed in the ordinary course of business and obsolete
equipment and equipment which has been replaced in the ordinary course of
business;
(g) Suffered any material adverse change in its business,
material damage to its assets, disruption of business or losses, whether
covered by insurance or not, or waived any rights of substantial value; or
(h) Operated its business in any way other than in the ordinary
course.
6.11 Litigation. Except as disclosed on Schedule 6.11, as the same
may be updated, from time to time, by Clariti prior to Closing, there are no
material actions, suits, material labor disputes or arbitrations, legal or
administrative proceedings pending against Clariti, and to the knowledge of
Clariti, no actions, suits, material labor disputes or arbitrations, legal or
administrative proceedings or investigations are contemplated or threatened
against Clariti or any of its subsidiaries or any of their respective assets,
properties or businesses. Except as set forth on Schedule 6.11, neither
Clariti, its subsidiaries, nor the assets, properties or business of any of
them, is subject to any judgment, order, writ, injunction or decree of any
court, governmental agency or arbitration tribunal which has, or will have, a
material adverse effect on Clariti and its subsidiaries taken as a whole, on a
consolidated basis.
6.12 Tax Matters. To the knowledge of Clariti, except as may be
disclosed in the SEC Reports or in Schedule 6.12, Clariti and its subsidiaries
have filed all required federal, state, county, local, foreign and other tax
returns and reports, paid all taxes shown to have been due on such returns and
reports, including interest and penalties with respect thereto,and withheld all
amounts required to have been withheld from employees or workers for income
taxes, social security and other payroll taxes. To the knowledge of Clariti,
except as disclosed in the SEC Reports or in Schedule 6.12, neither Clariti nor
any of its subsidiaries is a party to any pending action by any governmental
authority for assessment or collection of taxes, or party to any dispute or, to
the knowledge of Clariti, threatened dispute in which an adverse determination
would have a material adverse effect on the business, operations, properties,
or financial condition of the Clariti.
6.13 Charter and Organizational Documents. On or before November 20,
1998, Clariti shall deliver to GlobalFirst a copy that is true, correct and
complete in all material respects of the certificate or articles of
incorporation, by-laws and any other governing documents of Clariti, and any
amendments thereto or restatements thereof. The corporate or other minute books
of Clariti, which shall be made available to CHH and GlobalFirst prior to
Closing, accurately reflect in all material respects all corporate action
required to be passed upon by the stockholders and boards of directors of
Clariti. The stock certificate books and stock transfer ledgers of Clariti,
which shall be made available to CHH and GlobalFirst for inspection prior to
the Closing, are true, correct and complete in all material respects. To the
knowledge of Clariti, all stock transfer taxes levied or payable with respect
to all transfers of shares of Clariti prior to the date hereof have been paid
and appropriate transfer tax stamps affixed.
7. CONDITIONS PRECEDENT TO CLARITI'S OBLIGATIONS. All obligations of
Clariti under this Agreement are subject to the fulfillment or satisfaction, at
the Closing, of each of the following conditions precedent (any one or more of
which may be waived in writing in whole or in part by Clariti):
7.1 Delivery of GlobalFirst Shares and Payment. Seller shall have
delivered to Clariti the GlobalFirst Shares and all sums due under Section 1
hereof.
7.2 Representations and Warranties True as of Closing Date. The
representations and warranties of GlobalFirst and/or Seller contained in this
Agreement shall be true, correct and complete on and as of the date hereof and
shall be true, correct and complete on and as of the Closing Date with the same
effect as though such representations and warranties were made on and as of the
Closing Date, except for changes in the ordinary course of business which,
individually or in the aggregate, do not constitute an adverse change to the
Companies.
7.3 Compliance with this Agreement. Seller and GlobalFirst shall
have performed and complied with in all material respects all agreements and
conditions contained in this Agreement that are required to be performed or
complied with by them prior to or at the Closing including, without limitation,
furnishing Clariti with all information reasonably requested by Clariti
pursuant hereto.
7.4 Notifications and Consents. Seller and GlobalFirst shall have
timely given notice required to be given by them to any third party in
connection with the consummation of the transactions contemplated hereby,
including, without limitation, required notices to the holders of any
indebtedness of the Companies, and any governmental bodies or regulatory
agencies, where the failure to give such notice would have an adverse effect on
the businesses of the Companies. Seller and GlobalFirst shall have received
each consent or approval required to be given by any such third party in
connection with the consummation of the transactions contemplated hereby,
where, in the reasonable judgment of Clariti, the failure to receive such
consent or approval would have an adverse effect on the businesses of the
Companies.
7.5 Seller and GlobalFirst's Certificates. Clariti shall have been
furnished with a certificate dated the Closing Date and signed by the Secretary
or an Assistant Secretary of Seller and each of the Companies, setting forth
(i) the names, signatures and positions of the officers of the Seller and/or
Companies who have executed this Agreement or any other document executed by
the Seller and/or Companies and delivered to Clariti at the Closing as a
document pursuant to or subject to this Agreement, and (ii) a copy of the
resolutions adopted by the board of directors of the Seller and Companies
authorizing the execution, delivery and performance of this Agreement.
7.6 Satisfaction of Due Diligence. Clariti, in its sole, absolute and
non-reviewable discretion, shall be satisfied with its findings resulting from
its due diligence inquiries including, without limitation, the financial
position of the Companies, the business operations of the Companies and any and
all matters of or relating to the ownership and operations of the Companies.
This condition shall be deemed satisfied unless Clariti shall deliver written
notice to CHH by no later than the Closing Date of its dissatisfaction of any
such findings. In the event Clariti is not satisfied with its findings
resulting from its due diligence inquiries, this Agreement shall be null and
void and none of the parties shall have any claims of any kind against any of
the other parties.
8. CONDITIONS PRECEDENT TO GLOBALFIRST AND SELLER' OBLIGATIONS. All
obligations of GlobalFirst and the Seller under this Agreement are subject to
the fulfillment or satisfaction prior to or at the Closing, of each of the
following conditions precedent (any one or more of which may be waived in
writing in whole or in part by GlobalFirst and CHH):
8.1 Delivery of Clariti Shares. Clariti shall have delivered to CHH,
stock certificates representing the Clariti Common Stock of Seller in
accordance with Section 1.
8.2 Representations and Warranties True as of Closing Date. The
representations and warranties of Clariti contained in this Agreement shall be
true, correct and complete at and as of the date hereof and shall be true,
correct and complete on and as of the Closing Date with the same effect as
though such representations and warranties were made on and as of the Closing
Date, except for changes in the ordinary course of business which, individually
or in the aggregate, do not constitute an adverse change to Clariti.
8.3 Compliance with this Agreement. Clariti shall have performed and
complied in all material respects with all agreements and conditions contained
in this Agreement that are required to be performed or complied with by it
prior to or at the Closing including, without limitation, furnishing CHH and
GlobalFirst with all information reasonably requested by CHH and GlobalFirst
pursuant hereto.
8.4 Notifications and Consents. Clariti shall have timely given all
notices required to be given by it to any third party in connection with the
consummation of the transactions contemplated hereby, including, without
limitation, required notices to the holders of any indebtedness of Clariti and
any governmental bodies or regulatory agencies, where the failure to give such
notice would have an adverse effect on the businesses of Clariti and its
subsidiaries. Clariti shall have received each consent or approval required to
be given by any such third party in connection with the consummation of the
transactions contemplated hereby, where, in the reasonable judgment of CHH and
GlobalFirst, the failure to receive such consent or approval would have an
adverse effect on the business of Clariti.
8.5 Secretary's Certificate. CHH and GlobalFirst shall have been
furnished with a certificate dated the Closing Date and signed by the Secretary
or an Assistant Secretary of Clariti, setting forth (i) the names, signatures
and positions of the officers of Clariti who have executed this Agreement or
any other document executed by Clariti and delivered to CHH and GlobalFirst at
the Closing as a document pursuant to or subject to this Agreement, and (ii) a
copy of the resolutions adopted by the board of directors of Clariti
authorizing the execution, delivery and performance of this Agreement.
8.6 Satisfaction of Due Diligence. CHH and GlobalFirst, in their
sole, absolute and non-reviewable discretion, shall be satisfied with their
findings resulting from their due diligence inquiries including, without
limitation, the financial position of Clariti, the business operations of
Clariti and any and all matters of or relating to the ownership and operations
of Clariti. This condition shall be deemed satisfied unless either CHH or
GlobalFirst shall deliver written notice to Clariti by no later than the
Closing Date of dissatisfaction of any such findings. In the event either CHH
or GlobalFirst is not satisfied with its findings resulting from its due
diligence inquiries, this Agreement shall be null and void and none of the
parties shall have any claims of any kind against any of the other parties.
8.7 Clariti Approval. The Board of Directors and a majority of the
stockholders of Clariti shall authorize and file an amendment to the
certificate of incorporation of Clariti increasing the number of authorized
shares of Clariti's common stock to three hundred million (300,000,000) shares
(the "Certificate of Amendment").
8.8 Amendment of Certificate of Incorporation. Clariti shall have
filed the Certificate of Amendment with the Secretary of State of the State of
Delaware and shall have delivered to GlobalFirst a certified copy of the
Certificate of Amendment.
9. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants and agreements made by each party in this Agreement, in
any Schedule hereto or in any list, certificate, documents or written statement
furnished or delivered by any such party pursuant hereto shall survive the
Closing hereunder and continue in full force and effect (i) with respect to the
representations and warranties contained in Section 3.17 and 6.12, for a period
of five (5) years following the Closing Date, and (ii) with respect to all
other representations, warranties and covenants, for a period of one (1) year
following the Closing Date, notwithstanding any investigation conducted before
or after the Closing or the decision of any party to complete the Closing. In
furtherance of the foregoing, and not by way of limitation, the affirmative and
negative covenants and obligations of the Covenantors as set forth in Sections
2.4 and 2.5 hereof shall survive Closing and shall remain a continuing
obligation of such parties for a period of three (3) years following the
Closing Date.
10. MISCELLANEOUS.
10.1 Brokers' And Finders' Fees. The parties hereby represent and
warrant to each other that all negotiations relative to this Agreement have
been carried on by it directly without the intervention of any person or entity
who or which may be entitled to a brokerage fee or other commission in respect
of the execution of this Agreement or the consummation of the transactions
contemplated hereby. The parties hereby agree to indemnify and hold each other
harmless against any and all claims, losses, liabilities or expenses which may
be asserted against it as a result of such party or any of its affiliates'
dealings, arrangements or agreements with or any such other person or entity.
10.2 Press Releases. Except as required by law or under the rules
and regulations of the SEC, no party shall issue any press release nor
otherwise make public any information with respect to this Agreement nor the
transactions contemplated thereby, prior to the Closing Date, without the
consent of the other.
10.3 Assignment and Binding Effect. This Agreement may not be
assigned by any party hereto without the prior written consent of all the other
parties hereto. All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, legal representatives, successors and permitted assigns of the parties
hereto.
10.4 Notices. Except as otherwise specifically provided herein, all
notices, requests, demands, and other communications hereunder must be in
writing and shall be given by prepaid certified or registered mail, return
receipt requested, or by a nationally recognized overnight delivery service,
addressed to the principal offices of each part or to such other address as
shall have been designated in writing by any party. All notices, requests,
demands and other communications hereunder shall be effective on the earlier of
(i) when received or (ii) two (2) business days after being deposited in the
mails, certified or registered mail, postage prepaid or the next business day
if sent by such nationally recognized overnight delivery service, and addressed
as aforesaid, except that notice of change of address shall be effective only
from the date of its receipt. For purposes hereof, the following are the
principal offices:
If to GlobalFirst or the Seller:
One Xxxxxx Xxxxxx Xxxxxxxx
Xxxxxx XX00XX
If to Clariti:
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn.: Xxxxx X. Xxxxxxx, Chief Executive Officer
With a copy to:
Xxxxx Xxxxxxxx & XxXxxxxx, LLP
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000
Attn.: Xxxx X. XxXxxxxx, Esquire
10.5 Entire Agreement; Amendments; Waivers; Expenses. This Agreement
(including the Schedules and Exhibits hereto) and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
among the parties with regard to the subject matter hereof. Changes in or
additions to this Agreement may be made only by written instrument executed by
the parties. Any and all previous agreements and understandings between or
among the parties regarding the subject matter hereof, whether written or oral,
are superseded by this Agreement. The parties shall bear their own expenses in
connection with this Agreement.
10.6 Severability. In case any provisions of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
10.7 Knowledge. The term "knowledge" means actual knowledge after
reasonable investigation.
10.8 General. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument. This Agreement shall be
construed and enforced as a contract under seal in accordance with, and the
rights of the parties shall be governed by, the laws of the Commonwealth of
Pennsylvania. Any and all legal proceedings concerning the infringement,
breach, or contemplated breach of this Agreement be filed in the Commonwealth
of Pennsylvania, Philadelphia County, only and the parties hereto consent to
such jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Share Exchange Agreement
to be duly executed and delivered as of the day and year first above written.
CLARITI:
Clariti Telecommunications International,
Ltd., a Delaware corporation
s/Xxxxx X. Xxxxxxx
------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
CHH:
Xxxxxxxx Xxxx Holdings Ltd., a British
Virgin Islands corporation
s/Xxxxxx Xxxxxx
------------------
Director
GLOBALFIRST:
GlobalFirst Holdings Ltd., a United
Kingdom corporation
s/Xxxx Xxxxxx
------------------
Director
EXHIBIT "1"
to
Share Exchange Agreement
made by and among
Clariti Telecommunications International, Ltd. ("Clariti");
Xxxxxxxx Hall Holdings, Ltd. ("CHH") and
GlobalFirst Holdings, Ltd. ("GlobalFirst")
LIST OF DISCLOSURE SCHEDULES
----------------------------
Schedule Schedule
Reference Title
--------------- ---------------------------------------
Schedule 2.2 Permitted Actions
Schedule 2.4.1 Transfer of Assets to Clariti Wireless
Schedule 3.1 Licenses and Permits
Schedule 3.3 Options
Schedule 3.6 Wholly-Owned Subsidiaries
Schedule 3.7 Directors and Officers
Schedule 3.8.1 Material Changes
Schedule 3.9 Absence of Undisclosed Liabilities
Schedule 3.11 Other Contracts, Documents
Acquisitions, Mergers, Consolidations, etc.
Schedule 3.12 Absence of Default
Schedule 3.13 Distributions, Satisfactions, Obligations
Schedule 3.14 Litigation - Seller and GlobalFirst
Schedule 3.17 Tax Matters-CHH and GlobalFirst
Schedule 5.2 Prohibited Actions Pending Closing
Schedule 6.5.1 Interim Financial Statements and Financial
Statements-Clariti
Schedule 6.8 Material Executory Contracts
Schedule 6.9 Absence of Default
Schedule 6.10 Distributions, Satisfactions and Obligations
Schedule 6.11 Litigation - Clariti
Schedule 6.12 Tax Matters-Clariti
EXHIBIT "A"
to
Share Exchange Agreement
made by and among
Clariti Telecommunications International, Ltd. ("Clariti");
Xxxxxxxx Xxxx Holdings, Ltd. ("CHH") and
GlobalFirst Holdings, Ltd. ("GlobalFirst")
CONFIDENTIALITY AGREEMENT
-------------------------
This Agreement is made and entered into as of November 6, 1998, by and between:
Clariti Telecommunications International, Ltd., a Delaware (U.S.) corporation
formerly known as Sigma Alpha Group, Ltd. ("Clariti"); and Xxxxxxxx Hall
Holdings, Ltd., a corporation formed under the laws of the British Virgin
Islands ("CHH"), and GlobalFirst Holdings, Ltd., a corporation formed under the
laws of the United Kingdom ("GlobalFirst" and, together with CHH, "Seller").
BACKGROUND
----------
A. Clariti and Seller are the parties to that certain Share Exchange
Agreement made as of November 6, 1998, pursuant to which Clariti may acquire
from CHH one hundred percent (100%) of the issued and outstanding stock of
GlobalFirst (the "Share Exchange Agreement").
B. Clariti wishes to conduct due diligence inquiries of the Companies (as
defined in the Share Exchange Agreement), including, without limitation, with
respect to the financial position and business operations of the Companies and
any and all matters of or relating to the ownership and operations of the
Companies.
C. Seller wishes to conduct due diligence inquiries of Clariti,
including, without limitation, with respect to the financial position and
business operations of Clariti and any and all matters of or relating to the
ownership and operations of Clariti.
NOW THEREFORE, in consideration of the premises and the respective agreements
and covenants contained herein, intending to be legally bound, the parties
hereby agree as follows:
1. Due Diligence.
-------------
1.1 Due Diligence by Clariti. From and after the date hereof until
the Closing (as defined in the Share Exchange Agreement), Seller shall cause
the respective shareholders, directors, officers, employees, consultants,
independent certified public accountants, counsel and other agents and
representatives of each of the Companies (the "GlobalFirst Representatives") to
afford to three (3) representatives of Clariti: (i) free and full access at all
reasonable times during ordinary business hours to all of the properties,
customer lists, contracts, books, records and other property, including all
computerized information and data bases and any tax returns, financial
statements, budgets, projections, operating reports and related information,
whether completed or otherwise, of each of the Companies and (ii) the right to:
(a) consult with the GlobalFirst Representatives at all reasonable times during
ordinary business hours, (b) take a physical inventory of any of the Companies
or to audit all or any part of any of the Companies' books and records, through
an independent certified public accountant of Clariti or otherwise, and (c)
review and copy the work papers and other records of any independent certified
public accountants of any of the Companies and such additional financial and
operating data and other information as to the business and properties of any
of the Companies as Clariti shall from time to time reasonably require for the
purpose of evaluating the Companies and the transactions contemplated in the
Share Exchange Agreement.
1.2 Due Diligence by Seller. From and after the date hereof until
the Closing, Clariti shall cause its directors, officers, employees,
consultants, independent certified public accountants, counsel, officers,
agents and representatives (the "Clariti Representatives") to afford to three
(3) representatives of Seller: (i) free and full access at all reasonable times
during ordinary business hours to Clariti's properties, customer lists,
contracts, books, records and other property, including all computerized
information and data bases and any tax returns, financial statements, budgets,
projections, operating reports and related information, whether completed or
otherwise; and (ii) the right to (a) consult with the Clariti Representatives
at reasonable times during ordinary business hours, (b) to take a physical
inventory of Clariti or to audit all or any part of Clariti's books and
records, through independent certified public accountants designated by
Seller, or otherwise, (c) review and copy the work papers and other records of
any independent certified public accountants of Clariti and such additional
financial and operating data and other information as to the business and
properties of Clariti as Seller shall from time to time reasonably require for
the purpose of evaluating Clariti and the transactions contemplated in the
Share Exchange Agreement.
2. Definitions.
-----------
Hereinafter, each party shall be "Disclosing Party" with respect to
its information and "Receiving Party" with respect to the information received
from the other party.
"Confidential Information" shall mean any information disclosed to
Receiving Party by Disclosing Party orally, in writing or in model or other
tangible form that is generally not known to the public, whether of a
technical, business or other nature, and which is clearly identified at the
time of disclosure as confidential or proprietary (or other similar
designation). Confidential Information shall include all: tangible material,
including, without limitation, written or printed documents and computer disks
or tapes, whether machine or user readable, financial statements and
projections (except those already voluntarily disclosed to the public domain
by Disclosing Party ), methods of operation, specifications, drawings, samples,
designs, construction and process information, formulae, trade secrets, know-
how, models, reports, forecasts, current or historical data, computer programs
or files and all other technical financial or business data, regarding the
business affairs, products (whether patented or unpatented), and services of a
party, both written and unwritten, which are clearly identified at the time of
disclosure as confidential or proprietary (or other similar designation).
Confidential Information shall include all oral discussions, and their content,
regarding information which has been previously identified as "Confidential
Information." Confidential Information shall include all specific information
transmitted orally and clearly identified at the time of disclosure as
confidential or proprietary (or other similar designation).
3. Exclusions.
----------
Notwithstanding any other provision of this Agreement, the parties
acknowledge that Confidential Information shall not include any information
which is: (a) publicly known or becomes publicly known through no act or
omission by Receiving Party; (b) already known to Receiving Party at the time
of disclosure as evidenced by written documents; (c) rightfully received by
Receiving Party from a third party without breach of this Agreement; (d)
approved for release by express written authorization of Disclosing Party; (f)
independently developed by Receiving Party without use of Confidential
Information.
4. Exception.
----------
Receiving Party may disclose Confidential Information in accordance
with judicial and other governmental order, provided Receiving Party first
gives Disclosing Party reasonable notice prior to any such disclosure in order
to permit Disclosing Party an opportunity to protect the confidentiality of
such Confidential Information.
5. Security; Notice of Restrictions; Persons Bound.
-----------------------------------------------
Disclosing Party shall take reasonable care and reasonable security
precautions (in no event less than the security precautions it takes to protect
its own Confidential Information) to keep confidential any and all Confidential
Information received from Disclosing Party. In furtherance of the foregoing,
and not in limitation thereof, Receiving Party may disclose Confidential
Information only to those GlobalFirst Representatives or Clariti
Representatives, as the case may be, who have a need to know such Confidential
Information. Receiving Party shall inform its GlobalFirst Representatives and
Clariti Representatives, as the case may be, who handle such information that
it is Confidential Information hereunder and shall not to be disclosed to
others. Receiving Party shall advise each person to whom Receiving Party
discloses any Confidential Information of the requirement for confidentiality
under this Agreement and cause each such person to be bound by this Agreement.
6. Prohibitions.
------------
6.1 Receiving Party shall not reverse engineer, decompile or
disassemble any software or hardware products disclosed to Receiving Party.
Receiving Party further agrees to use Disclosing Party's Confidential
Information only for the purpose contemplated by the Share Exchange Agreement.
6.2 Prior to the earlier to occur of the Closing or the date
occurring five (5) years after the termination of the Share Exchange Agreement,
Receiving Party, directly or indirectly, shall not: (i) solicit or service in
any way, on behalf of such party or on behalf of or in conjunction with others,
any client or customer, or prospective client or customer, which has been
solicited or serviced by Disclosing Party; or (ii) solicit for employment,
employ or engage as an independent contractor, any person who is employed by
Disclosing Party, or induce any such person to leave the employ of Disclosing
Party.
7. Notice of Violation.
-------------------
Receiving Party shall notify Disclosing Party immediately upon
discovery of any unauthorized use or disclosure of Confidential Information, or
any other breach of this Agreement by Receiving Party, and shall cooperate with
Disclosing Party in every reasonable way to help Disclosing Party regain
possession or control of such Confidential Information to prevent its further
unauthorized use.
8. Return of Confidential Information.
----------------------------------
Receiving Party shall return all originals, copies, reproductions, and
summaries of Confidential Information at Disclosing Party's request, or at
Disclosing Party's option, certify destruction of the same.
9. Access for Compliance.
---------------------
Disclosing Party may visit Receiving Party's premises, with reasonable
prior notice and during normal business hours, to review Receiving Party's
compliance with the terms of this Agreement.
10. Property Right.
--------------
Receiving Party agrees that Disclosing Party's Confidential
Information is and shall at all times remain the exclusive property of
Disclosing Party, constitute valuable trade secrets of Disclosing Party, and
that the unauthorized disclosure or use of such Confidential Information by
Receiving Party shall cause irreparable harm to Disclosing Party. In the event
of any actual or threatened violation of the restrictions set forth herein by
Receiving Party, Disclosing Party shall be entitled, in addition to any other
remedy, to preliminary and permanent injunctive relief.
11. Miscellaneous.
-------------
11.1 Attorney's Fees. If at any time any party hereto retains one or
more attorneys to enforce any covenant or agreement of any other party hereto,
or to defend itself against any claim by any other party, whether or not suit
is filed, and such party is substantially successful in recovering its claim,
then such party's reasonable attorney's fees, expenses and litigation costs, if
any, shall be due and payable by the other party, this covenant to survive the
termination of this Agreement.
11.2 Assignment and Binding Effect. This Agreement may not be
assigned by any party hereto without the prior written consent of all the other
parties hereto. All of the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, legal representatives, successors and permitted assigns of the parties
hereto.
11.3 Notices. The terms of Section 10.4 (titled "Notices") of the
Share Exchange Agreement are hereby incorporated by reference herein.
11.4 Entire Agreement; Amendments; Waivers; Expenses. This Agreement
constitutes the full and entire understanding and agreement among the parties
with regard to the subject matter hereof. Headings appearing herein are merely
for convenience and shall not in any way alter the construction or meaning of
any provision hereof. Changes in or additions to this Agreement may be made
only by written instrument executed by the parties. Any and all previous
agreements and understandings between or among the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement. The waiver by either party of any breach or violation of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach or violation hereof. The failure of any party to insist,
in any one or more instances, upon performance of any term, condition or
restriction of this Agreement shall not be construed as a waiver or
relinquishment of any rights or remedies granted hereunder for the future
performance of any such term, condition or restriction. The parties shall bear
their own expenses in connection with this Agreement.
11.5 Severability. In case any provisions of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
11.6 Benefit. Neither party may assign any of its rights or
obligations hereunder without the express written consent of the other party.
Except as prohibited hereunder, this Agreement shall inure to and shall be
binding upon the parties hereto and their respective successors and assigns.
11.7 General. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument. This Agreement shall be
construed and enforced as a contract under seal in accordance with, and the
rights of the parties shall be governed by, the laws of the Commonwealth of
Pennsylvania. Any and all legal proceedings concerning the infringement,
breach, or contemplated breach of this Agreement shall be filed in the
Commonwealth of Pennsylvania, Philadelphia County, only and the parties hereto
consent to such jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
CLARITI:
Clariti Telecommunications International,
Ltd., a Delaware corporation
s/Xxxxx X. Xxxxxxx
------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
CHH:
Xxxxxxxx Xxxx Holdings Ltd., a British
Virgin Islands corporation
s/Xxxxxx Xxxxxx
------------------
Director
GLOBALFIRST:
GlobalFirst Holdings Ltd., a United
Kingdom corporation
s/Xxxx Xxxxxx
------------------
Director
