AGREEMENT AND PLAN OF MERGER

Exhibit 10.1

 

AGREEMENT AND PLAN OF MERGER

 

 

THIS AGREEMENT AND PLAN OF MERGER is made as of the 16 ^th day of April, 2007

 

AMONG:

 

CTT INTERNATIONAL DISTRIBUTORS INC. , a corporation formed pursuant to the laws of the State of Delaware and having an office for business located at Suite 305 – South Tower, 5811 Cooney Road, Richmond, British Columbia, V6X 3M1, Canada

 

(“CTT”)

 

AND:

 

RELIABLECOM ACQUISITION CORP. , a body corporate formed pursuant to the laws of the State of Delaware and a wholly owned subsidiary of CTT

 

(the "Acquirer")

 

AND:

 

RELIABLECOM, INC. , a body corporate formed pursuant to the laws of the State of Delaware and having an office for business located at 1942 Williamsbridge Road, Bronx, NY 10461

 

("Reliablecom")

 

AND:

 

KAPADIA HOLDINGS, INC. , a body corporate formed pursuant to the laws of the State of Delaware and having an office for business located at 1942 Williamsbridge Road, Bronx, NY 10461

(the “Reliablecom Shareholder”)

 

 

WHEREAS:

 

A.

Reliablecom is a Delaware corporation engaged in the business of _ the distribution of prepaid phone cards ;

 

B.

The Reliablecom Shareholder owns 20,000,000 Reliablecom Shares, which together with 10,000,000 Reliablecom Shares issuable immediately prior to the Closing of the transactions contemplated hereby pursuant to the conversion of outstanding Reliablecom indebtedness constitute 100% of the presently issued and outstanding Reliablecom Shares;

 

C.

CTT is a reporting company whose common stock is quoted on the NASD “Bulletin Board” and which is in the e-commerce business, buys and takes possession of excess electronic and computer inventory for resale and facilitates the sale of merchandise of other retailers, cataloguers or manufacturers through its website;

 

D.

The respective Boards of Directors of CTT, Reliablecom and the Acquirer deem it advisable and in the best interests of CTT, Reliablecom and the Acquirer that Reliablecom merge with and into the Acquirer (the "Merger") pursuant to this Agreement and the Certificate of Merger, and the applicable provisions of the laws of the State of Delaware; and

 

 

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E.

It is intended that the Merger shall qualify for United States federal income tax purposes as a reorganization within the meaning of Section 368 of the Internal Revenue Code of 1986, as amended.

 

NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises and the mutual covenants, agreements, representations and warranties contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

 

ARTICLE 1

DEFINITIONS AND INTERPRETATION

 

Definitions

 

1.1

In this Agreement the following terms will have the following meanings:

 

(a)

“ Acquisition Shares ” means the 15,000,000 CTT Common Shares  and 300,000 CTT Preferred Shares to be issued to the shareholders of Reliablecom at Closing pursuant to the terms of the Merger;

 

(b)

“ Agreement ” means this agreement and plan of merger among CTT, the Acquirer, Reliablecom, and the Reliablecom Shareholder;

 

(c)

“ CTT Accounts Payable and Liabilities ” means all accounts payable and liabilities of CTT, on a consolidated basis, due and owing or otherwise constituting a binding obligation of CTT and its subsidiaries (other than a CTT Material Contract) as of September 30, 2006 as set forth is Schedule “B” hereto;

 

(d)

“ CTT Accounts Receivable ” means all accounts receivable and other debts owing to CTT, on a consolidated basis, as of September 30, 2006 as set forth in Schedule “C” hereto;

 

(e)

“ CTT Assets ” means the undertaking and all the property and assets of the CTT Business of every kind and description wheresoever situated including, without limitation, CTT Equipment, CTT Inventory, CTT Material Contracts, CTT Accounts Receivable, CTT Cash, CTT Intangible Assets and CTT Goodwill, and all credit cards, charge cards and banking cards issued to CTT;

 

(f)

“ CTT Bank Accounts ” means all of the bank accounts, lock boxes and safety deposit boxes of CTT and its subsidiaries or relating to the CTT Business as set forth in Schedule “D” hereto;

 

(g)

“ CTT Business ” means all aspects of any business conducted by CTT and its subsidiaries;

 

(h)

“ CTT Cash ” means all cash on hand or on deposit to the credit of CTT and its subsidiaries on the Closing Date;

 

(i)

“ CTT Common Shares ” means the shares of common stock in the capital of CTT;

 

 

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(j)

“ CTT Debt to Related Parties ” means the debts owed by CTT and its subsidiaries to any affiliate, director or officer of CTT as described in Schedule “E” hereto;

 

(k)

“ CTT Equipment ” means all machinery, equipment, furniture, and furnishings used in the CTT Business, including, without limitation, the items more particularly described in Schedule “F” hereto;

 

(l)

“ CTT Financial Statements ” means, collectively, the audited consolidated financial statements of CTT for the fiscal year ended December 31, 2005, together with the unqualified auditors' report thereon, and the unaudited consolidated financial statements of CTT for the nine month period ended September 30, 2006, true copies of which are attached as Schedule “A” hereto;

 

(m)

“ CTT Goodwill” means the goodwill of the CTT Business including the right to all corporate, operating and trade names associated with the CTT Business, or any variations of such names as part of or in connection with the CTT Business, all books and records and other information relating to the CTT Business, all necessary licenses and authorizations and any other rights used in connection with the CTT Business;

 

(n)

“ CTT Insurance Policies ” means the public liability insurance and insurance against loss or damage to the CTT Assets and the CTT Business as described in Schedule “G” hereto;

 

(o)

“ CTT Intangible Assets " means all of the intangible assets of CTT and its subsidiaries, including, without limitation, CTT Goodwill, all trademarks, logos, copyrights, designs, and other intellectual and industrial property of CTT and its subsidiaries;

 

(p)

“ CTT Inventory ” means all inventory and supplies of the CTT  Business as of  September 30, 2006, as set forth in Schedule “H” hereto;

 

(q)

“ CTT Material Contracts ” means the burden and benefit of and the right, title and interest of CTT and its subsidiaries in, to and under all trade and non-trade contracts, engagements or commitments, whether written or oral, to which CTT or its subsidiaries are entitled whereunder CTT or its subsidiaries are obligated to pay or entitled to receive the sum of $10,000 or more including, without limitation, any pension plans, profit sharing plans, bonus plans, loan agreements, security agreements, indemnities and guarantees, any agreements with employees, lessees, licensees, managers, accountants, suppliers, agents, distributors, officers, directors, attorneys or others which cannot be terminated without liability on not more than one month's notice, and those contracts listed in Schedule “I” hereto;

 

(r)

“CTT Preferred Shares ” means the shares of CTT series A preferred stock.

 

(s)

“ Closing ” means the completion, on the Closing Date, of the transactions contemplated hereby in accordance with Article 9 hereof;

 

(t)

“ Closing Date ” means the day on which all conditions precedent to the completion of the transaction as contemplated hereby have been satisfied or waived;

 

(u)

“ Effective Time ” means the date of the filing of an appropriate Certificate of Merger in the form required by the State of Delaware, which certificate shall provide that the Merger shall become effective upon such filing;

 

 

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(v)

“ Merger ” means the merger, at the Effective Time, of Reliablecom and the Acquirer pursuant to this Agreement and Plan of Merger;

 

(w)

“ Merger Consideration ” means the Acquisition Shares;

 

(x)

“ Place of Closing ” means the offices of Sichenzia Ross Friedman Ference LLP, or such other place as CTT and Reliablecom may mutually agree upon;

 

(y)

“ State Corporation Law ” means the General Corporation Law of the State of Delaware;

 

(z)

“ Surviving Company ” means the Acquirer following the merger with Reliablecom;

 

(aa)

“ Reliablecom Accounts Payable and Liabilities ” means all accounts payable and liabilities of Reliablecom, due and owing or otherwise constituting a binding obligation of Reliablecom (other than a Reliablecom Material Contract) as of December 31, 2006 as set forth in Schedule “K” hereto;

 

(bb)

“ Reliablecom Accounts Receivable ” means all accounts receivable and other debts owing to Reliablecom, as of December 31, 2006 as set forth in Schedule “L” hereto;

 

(cc)

“ Reliablecom Assets “ means the undertaking and all the property and assets of the Reliablecom Business of every kind and description wheresoever situated including, without limitation, Reliablecom Equipment, Reliablecom Inventory, Reliablecom Material Contracts, Reliablecom Accounts Receivable, Reliablecom Cash, Reliablecom Intangible Assets and Reliablecom Goodwill, and all credit cards, charge cards and banking cards issued to Reliablecom;

 

(dd)

“ Reliablecom Bank Accounts ” means all of the bank accounts, lock boxes and safety deposit boxes of Reliablecom or relating to the Reliablecom Business as set forth in Schedule “M” hereto;

 

(ee)

“ Reliablecom Business ” means all aspects of the business conducted by Reliablecom;

 

(ff)

“ Reliablecom Cash ” means all cash on hand or on deposit to the credit of Reliablecom on the Closing Date;

 

(gg)

“ Reliablecom Debt to Related Parties ” means the debts owed by Reliablecom and its subsidiaries to the Reliablecom Shareholder or to any family member thereof, or to any affiliate, director or officer of Reliablecom or the Reliablecom Shareholder as described in Schedule “N”;

 

(hh)

“ Reliablecom Equipment ” means all machinery, equipment, furniture, and furnishings used in the Reliablecom Business, including, without limitation, the items more particularly described in Schedule “O” hereto;

 

(ii)

“ Reliablecom Financial Statements ” means collectively, the audited consolidated financial statements of Reliablecom for the five month period from inception through December 31, 2006, together with the unqualified auditors' report thereon, true copies of which are attached as Schedule “J” hereto.  Subject to the consent of CTT, unaudited financial statements for the same period shall be acceptable;

 

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(jj)

“ Reliablecom Goodwill ” means the goodwill of the Reliablecom Business together with the exclusive right of CTT to represent itself as carrying on the Reliablecom Business in succession of Reliablecom subject to the terms hereof, and the right to use any words indicating that the Reliablecom Business is so carried on including the right to use the name "Reliablecom” or “Reliablecom International" or any variation thereof as part of the name of or in connection with the Reliablecom Business or any part thereof carried on or to be carried on by Reliablecom, the right to all corporate, operating and trade names associated with the Reliablecom Business, or any variations of such names as part of or in connection with the Reliablecom Business, all telephone listings and telephone advertising contracts, all lists of customers, books and records and other information relating to the Reliablecom Business, all necessary licenses and authorizations and any other rights used in connection with the Reliablecom Business;

 

(kk)

“ Reliablecom Insurance Policies ” means the public liability insurance and insurance against loss or damage to Reliablecom Assets and the Reliablecom Business as described in Schedule “P” hereto;

 

(ll)

“ Reliablecom Intangible Assets ” means all of the intangible assets of Reliablecom, including, without limitation, Reliablecom Goodwill, all trademarks, logos, copyrights, designs, and other intellectual and industrial property of Reliablecom and its subsidiaries;

 

(mm)

“ Reliablecom Inventory ” means all inventory and supplies of the Reliablecom Business as of December 31, 2006 as set forth in Schedule “Q” hereto;

 

(nn)

“ Reliablecom Material Contracts ” means the burden and benefit of and the right, title and interest of Reliablecom in, to and under all trade and non-trade contracts, engagements or commitments, whether written or oral, to which Reliablecom is entitled in connection with the Reliablecom Business whereunder Reliablecom is obligated to pay or entitled to receive the sum of $10,000 or more including, without limitation, any pension plans, profit sharing plans, bonus plans, loan agreements, security agreements, indemnities and guarantees, any agreements with employees, lessees, licensees, managers, accountants, suppliers, agents, distributors, officers, directors, attorneys or others which cannot be terminated without liability on not more than one month's notice, and those contracts listed in Schedule “R” hereto; and

 

(oo)

“ Reliablecom Shares ” means all of the issued and outstanding shares of Reliablecom's equity stock.

 

 

Any other terms defined within the text of this Agreement will have the meanings so ascribed to them.

 

Captions and Section Numbers

 

1.2

The headings and section references in this Agreement are for convenience of reference only and do not form a part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any provision thereof.

 

 

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Section References and Schedules

 

1.3

Any reference to a particular “Article”, “section”, “paragraph”, “clause” or other subdivision is to the particular Article, section, clause or other subdivision of this Agreement and any reference to a Schedule by letter will mean the appropriate Schedule attached to this Agreement and by such reference the appropriate Schedule is incorporated into and made part of this Agreement.  The Schedules to this Agreement are as follows:

 

 

Information concerning CTT

 

Schedule “A”

CTT Financial Statements

Schedule “B”

CTT Accounts Payable and Liabilities

Schedule “C”

CTT Accounts Receivable

Schedule “D”

CTT Bank Accounts

Schedule “E”

CTT Debts to Related Parties

Schedule “F”

CTT Equipment

Schedule “G”

CTT Insurance Policies

Schedule “H”

CTT Inventory

Schedule “I”

CTT Material Contracts

 

Information concerning Reliablecom

 

Schedule “J”

Reliablecom Financial Statements

Schedule “K”

Reliablecom Accounts Payable and Liabilities

Schedule “L”

Reliablecom Accounts Receivable

Schedule “M”

Reliablecom Bank Accounts

Schedule “N”

Reliablecom Debts to Related Parties

Schedule “O”

Reliablecom Equipment

Schedule “P”

Reliablecom Insurance Policies

Schedule “Q”

Reliablecom Inventory

Schedule “R”

Reliablecom Material Contracts

 

Agreements

 

Schedule “S”

Form of Subscription Agreement for Common Stock

Schedule “T”

Form of Employment Agreement between CTT and Sajid Kapadia

Schedule “U”

Form of Certificate of Designation of Series A Preferred Stock

Schedule “V”

Form of Standstill Agreement

 

 

Severability of Clauses

 

1.4

If any part of this Agreement is declared or held to be invalid for any reason, such invalidity will not affect the validity of the remainder which will continue in full force and effect and be construed as if this Agreement had been executed without the invalid portion, and it is hereby declared the intention of the parties that this Agreement would have been executed without reference to any portion which may, for any reason, be hereafter declared or held to be invalid.

 

 

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ARTICLE 2

THE MERGER

 

The Merger

 

2.1

At Closing, Reliablecom shall be merged with and into the Acquirer pursuant to this Agreement and Plan of Merger and the separate corporate existence of Reliablecom shall cease and the Acquirer, as it exists from and after the Closing, shall be the Surviving Company.

 

Effect of the Merger

 

2.2

The Merger shall have the effect provided therefor by the State Corporation Law. Without limiting the generality of the foregoing, and subject thereto, at Closing (i) all the rights, privileges, immunities, powers and franchises, of a public as well as of a private nature, and all property, real, personal and mixed, and all debts due on whatever account, including without limitation subscriptions to shares, and all other choses in action, and all and every other interest of or belonging to or due to Reliablecom or the Acquirer, as a group, subject to the terms hereof, shall be taken and deemed to be transferred to, and vested in, the Surviving Company without further act or deed; and all property, rights and privileges, immunities, powers and franchises and all and every other interest shall be thereafter as effectually the property of the Surviving Company, as they were of Reliablecom and the Acquirer, as a group, and (ii) all debts, liabilities, duties and obligations of Reliablecom and the Acquirer, as a group, subject to the terms hereof, shall become the debts, liabilities and duties of the Surviving Company and the Surviving Company shall thenceforth be responsible and liable for all debts, liabilities, duties and obligations of Reliablecom and the Acquirer, as a group, and neither the rights of creditors nor any liens upon the property of Reliablecom or the Acquirer, as a group, shall be impaired by the Merger, and may be enforced against the Surviving Company.

 

Certificate of Incorporation; Bylaws; Directors and Officers

 

2.3

The Certificate of Incorporation of the Surviving Company from and after the Closing shall be the Certificate of Incorporation of the Acquirer until thereafter amended in accordance with the provisions therein and as provided by the applicable provisions of the State Corporation Law.  The Bylaws of the Surviving Company from and after the Closing shall be the Bylaws of Reliablecom as in effect immediately prior to the Closing, continuing until thereafter amended in accordance with their terms, the Certificate of Incorporation of the Surviving Company and as provided by the State Corporation Law.  The Directors of the Acquirer at the Effective Time shall continue to be the Directors of Reliablecom.

 

Conversion of Securities

 

2.4

At the Effective Time, by virtue of the Merger and without any action on the part of the Acquirer, Reliablecom or the Reliablecom Shareholder or any other shareholder of Reliablecom, the shares of capital stock of each of Reliablecom and the Acquirer shall be converted as follows:

 

(a)

Capital Stock of the Acquirer . Each issued and outstanding share of the Acquirer's capital stock shall continue to be issued and outstanding and shall be converted into one share of validly issued, fully paid, and non-assessable common stock of the Surviving Company. Each stock certificate of the Acquirer evidencing ownership of any such shares shall continue to evidence ownership of such shares of capital stock of the Surviving Company.

 

 

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(b)

Conversion of Reliablecom Shares . Each fifty (50) Reliablecom Shares that are issued and outstanding at the Effective Time shall automatically be cancelled and extinguished and converted, without any action on the part of the holder thereof, into the right to receive at the time and in the amounts described in this Agreement an amount of (i) CTT Common Shares equal to 15,000,000 divided by the number of Reliablecom Shares outstanding immediately prior to Closing, plus (ii) CTT Preferred Shares equal to 300,000 divided by the number of Reliablecom Shares outstanding immediately prior to Closing. All such Reliablecom Shares, when so converted, shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such shares shall cease to have any rights with respect thereto, except the right to receive the Acquisition Shares paid in consideration therefor upon the surrender of such certificate in accordance with this Agreement.

 

Adherence with Applicable Securities Laws

 

2.5

The Reliablecom Shareholder agrees that it is acquiring the Acquisition Shares for investment purposes and will not offer, sell or otherwise transfer, pledge or hypothecate any of the Acquisition Shares issued to them (other than pursuant to an effective Registration Statement under the Securities Act of 1933 , as amended) directly or indirectly unless:

 

(a)

the sale is to CTT;

 

(b)

the sale is made pursuant to the exemption from registration under the Securities Act of 1933,as amended, provided by Rule 144 thereunder; or

 

(c)

the Acquisition Shares are sold in a transaction that does not require registration under the Securities Act of 1933, as amended, or any applicable United States state laws and regulations governing the offer and sale of securities, and the vendor has furnished to CTT an opinion of counsel to that effect or such other written opinion as may be reasonably required by CTT.

 

The Reliablecom Shareholder acknowledges that the certificates representing the Acquisition Shares shall bear the following legend:

 

NO SALE, OFFER TO SELL, OR TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE SHALL BE MADE UNLESS A REGISTRATION STATEMENT UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, IN RESPECT OF SUCH SHARES IS THEN IN EFFECT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SAID ACT IS THEN IN FACT APPLICABLE TO SAID SHARES.

 

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

OF CTT

 

Representations and Warranties

 

3.1

CTT represents and warrants in all material respects to Reliablecom, with the intent that Reliablecom will rely thereon in entering into this Agreement and in approving and completing the transactions contemplated hereby, that:

 

CTT - Corporate Status and Capacity

 

(a)

Incorporation . CTT is a corporation duly incorporated and validly subsisting under the laws of the State of Delaware, and is in good standing with the office of the Secretary of State for the State of Delaware;

 

 

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(b)

Carrying on Business . CTT does not currently conduct business, except for the actual operations of the corporation which are carried on in Vancouver, BC, Canada and does carry on any other material business activity in any other jurisdictions. CTT is duly authorized to carry on such business in Vancouver, BC, Canada.  The nature of the CTT Business does not require CTT to register or otherwise be qualified to carry on business in any other jurisdictions;

 

(c)

Corporate Capacity . CTT has the corporate power, capacity and authority to own the CTT Assets and to enter into and complete this Agreement;

 

(d)

Reporting Status; Listing . CTT is required to file current reports with the Securities and Exchange Commission pursuant to section 12(g) of the Securities Exchange Act of 1934, the CTT Common Shares are quoted on the NASD "Bulletin Board”, and all reports required to be filed by CTT with the Securities and Exchange Commission or NASD have been timely filed;

 

Acquirer - Corporate Status and Capacity

 

(e)

Incorporation . The Acquirer is a corporation duly incorporated and validly subsisting under the laws of the State of Delaware, and is in good standing with the office of the Secretary of State for the State of Delaware;

 

(f)

Carrying on Business . Other than corporate formation and organization, the Acquirer has not carried on business activities to date.

 

(g)

Corporate Capacity . The Acquirer has the corporate power, capacity and authority to enter into and complete this Agreement;

 

CTT - Capitalization

 

(h)

Authorized Capital . The authorized capital of CTT consists of 30,000,000 CTT Common Shares, $0.0001 par value and 5,000,000 shares of preferred stock. $0.0001 par value, of which 11,017,101 CTT Common Shares are presently issued and outstanding, 300,000 CTT Preferred Shares are presently authorized and  no shares of undesignated preferred stock are presently issued or outstanding;

 

(i)

No Option . No person, firm or corporation has any agreement or option or any right capable of becoming an agreement or option for the acquisition of CTT Common Shares or for the purchase, subscription or issuance of any of the unissued shares in the capital of CTT;

 

(j)

Capacity . CTT has the full right, power and authority to enter into this Agreement on the terms and conditions contained herein;

 

Acquirer Capitalization

 

(k)

Authorized Capital . The authorized capital of the Acquirer consists of 200 shares of common stock, $0.0001 par value, of which one share of common stock is presently issued and outstanding;

 

(l)

No Option . No person, firm or corporation has any agreement or option or any right capable of becoming an agreement or option for the acquisition of any common or preferred shares in Acquirer or for the purchase, subscription or issuance of any of the unissued shares in the capital of Acquirer;

 

 

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(m)

Capacity . The Acquirer has the full right, power and authority to enter into this Agreement on the terms and conditions contained herein;

 

CTT - Records and Financial Statements

 

(n)

Charter Documents . The charter documents of CTT and the Acquirer have not been altered since the incorporation of each, respectively, except as filed in the record books of CTT or the Acquirer, as the case may be;

 

(o)

Corporate Minute Books . The corporate minute books of CTT and its subsidiaries are complete and each of the minutes contained therein accurately reflect the actions that were taken at a duly called and held meeting or by consent without a meeting. All actions by CTT and its subsidiaries which required director or shareholder approval are reflected on the corporate minute books of CTT and its subsidiaries. CTT and its subsidiaries are not in violation or breach of, or in default with respect to, any term of their respective Certificates of Incorporation (or other charter documents) or by-laws.

 

(p)

CTT Financial Statements . The CTT Financial Statements present fairly, in all material respects, the assets and liabilities (whether accrued, absolute, contingent or otherwise) of CTT, on a consolidated basis, as of the respective dates thereof, and the sales and earnings of the CTT Business during the periods covered thereby, in all material respects and have been prepared in substantial accordance with generally accepted accounting principles consistently applied;

 

(q)

CTT Accounts Payable and Liabilities . There are no material liabilities, contingent or otherwise, of CTT or its subsidiaries which are not disclosed in Schedule “B” hereto or reflected in the CTT Financial Statements except those incurred in the ordinary course of business since the date of the said schedule and the CTT Financial Statements, and neither CTT nor its subsidiaries have guaranteed or agreed to guarantee any debt, liability or other obligation of any person, firm or corporation. Without limiting the generality of the foregoing, all accounts payable and liabilities of CTT and its subsidiaries as of September 30, 2006 are described in Schedule “B” hereto;

 

(r)

CTT Accounts Receivable . All the CTT Accounts Receivable result from bona fide business transactions and services actually rendered without, to the knowledge and belief of CTT, any claim by the obligor for set-off or counterclaim;

 

(s)

CTT Bank Accounts . All of the CTT Bank Accounts, their location, numbers and the authorized signatories thereto are as set forth in Schedule “D” hereto;

 

(t)

No Debt to Related Parties . Except as disclosed in Schedule “E” hereto, neither CTT nor its subsidiaries are, and on Closing will not be, materially indebted to any affiliate, director or officer of CTT except accounts payable on account of bona fide business transactions of CTT incurred in normal course of the CTT Business, including employment agreements, none of which are more than 30 days in arrears;

 

(u)

No Related Party Debt to CTT . No director or officer or affiliate of CTT is now indebted to or under any financial obligation to CTT or its subsidiaries on any account whatsoever, except for advances on account of travel and other expenses not exceeding $5,000 in total;

 

 

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(v)

No Dividends . No dividends or other distributions on any shares in the capital of CTT have been made, declared or authorized since the date of CTT Financial Statements;

 

(w)

No Payments . No payments of any kind have been made or authorized since the date of the CTT Financial Statements to or on behalf of officers, directors, shareholders or employees of CTT or its subsidiaries or under any management agreements with CTT or its subsidiaries, except payments made in the ordinary course of business and at the regular rates of salary or other remuneration payable to them;

 

(x)

No Pension Plans . There are no pension, profit sharing, group insurance or similar plans or other deferred compensation plans affecting CTT or its subsidiaries;

 

(y)

No Adverse Events . Since the date of the CTT Financial Statements

 

(i)

there has not been any material adverse change in the financial position or condition of CTT, its subsidiaries, its liabilities or the CTT Assets or any damage, loss or other change in circumstances materially affecting CTT, the CTT Business or the CTT Assets or CTT’ right to carry on the CTT Business, other than changes in the ordinary course of business,

 

(ii)

there has not been any damage, destruction, loss or other event (whether or not covered by insurance) materially and adversely affecting CTT, its subsidiaries, the CTT Business or the CTT Assets,

 

(iii)

there has not been any material increase in the compensation payable or to become payable by CTT to any of CTT’ officers, employees or agents or any bonus, payment or arrangement made to or with any of them,

 

(iv)

the CTT Business has been and continues to be carried on in the ordinary course,

 

(v)

CTT has not waived or surrendered any right of material value,

 

(vi)

Neither CTT nor its subsidiaries have discharged or satisfied or paid any lien or encumbrance or obligation or liability other than current liabilities in the ordinary course of business, and

 

(vii)

no capital expenditures in excess of $10,000 individually or $30,000 in total have been authorized or made.

 

CTT - Income Tax Matters

 

(z)

Tax Returns . All tax returns and reports of CTT and its subsidiaries required by law to be filed have been filed and are true, complete and correct, and any taxes payable in accordance with any return filed by CTT and its subsidiaries or in accordance with any notice of assessment or reassessment issued by any taxing authority have been so paid;

 

 

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(aa)

Current Taxes . Adequate provisions have been made for taxes payable for the current period for which tax returns are not yet required to be filed and there are no agreements, waivers, or other arrangements providing for an extension of time with respect to the filing of any tax return by, or payment of, any tax, governmental charge or deficiency by CTT or its subsidiaries.  CTT is not aware of any contingent tax liabilities or any grounds which would prompt a reassessment including aggressive treatment of income and expenses in filing earlier tax returns;

 

CTT - Applicable Laws and Legal Matters

 

(bb)

Licenses . CTT and its subsidiaries hold all licenses and permits as may be requisite for carrying on the CTT Business in the manner in which it has heretofore been carried on, which licenses and permits have been maintained and continue to be in good standing except where the failure to obtain or maintain such licenses or permits would not have a material adverse effect on the CTT Business;

 

(cc)

Applicable Laws . Neither CTT nor its subsidiaries have been charged with or received notice of breach of any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which they are subject or which apply to them the violation of which would have a material adverse effect on the CTT Business, and to CTT’ knowledge, neither CTT nor its subsidiaries are in breach of any laws, ordinances, statutes, regulations, bylaws, orders or decrees the contravention of whi