REORGANZATION AND MERGER AGREEMENT

EXHIBIT 2.1

REORGANZATION AND MERGER AGREEMENT

 

THIS REORGANIZATION AND MERGER  AGREEMENT, dated as of the 21st   day of May 2008 (this “Agreement”) is entered into by and among, CHINA TEL GROUP,INC . , a Nevada corporation (“CTG”), CHINACOMM ACQUISITION, INC, a California corporation (“CAI”), TRUSSNET USA, INC . , a Nevada corporation (“TUI”), and all the shareholders of TUI (collectively, the “TUI Shareholders”).  CTG, CAI, TUI and the TUI Shareholders are referred to singularly as a “Party” and collectively as the “Parties.”

WITNESSETH:

 

WHEREAS, the TUI Shareholders own all of the issued and outstanding shares of TUI (the “TUI Shares”);

WHEREAS, TUI is a party to a certain Framework Agreement by and between TUI and CECT-Chinacomm Communications Co, Ltd. (“Chinacomm”) dated April 7, 2008 (the “Framework Agreement”), which contemplates, among other things, a series of transactions between the parties thereof including, without limitation, jointly establishing a wholly-owned foreign invested enterprise in China, with forty-nine percent (49%) of its equity interests indirectly owned by TUI and fifty-one percent (51%) of its equity interests indirectly owned by Chinacomm (such transactions, the “WOFIE Transactions”).  The Framework Agreement is attached hereto as Exhibit B;

 

WHEREAS, CTG is in the business of exploration for gold and related minerals in British Columbia, Canada and wishes to expand its business;

 

WHEREAS, CAI is a wholly-owned subsidiary of CTG;

 

WHEREAS, the respective Boards of Directors of CTG, CAI, TUI and the TUI Shareholders have deemed it advisable and in the best interests of CTG, CAI, TUI and the TUI Shareholders that TUI be acquired by CTG, pursuant to the terms and conditions set forth in this Agreement;

 

WHEERAS, CTG, CAI, TUI and the TUI Shareholders propose to enter into this Agreement which provides, among other things, the TUI Shareholders will deliver the TUI Shares to CTG in exchange for the issuance by CTG of an aggregate number of shares of CTG’s common stock set forth in Section 2.01 of this Agreement, on the terms and conditions set forth herein (the “Share Exchange”), and that CAI be merged into TUI with TUI being the surviving corporation and becoming a wholly-owned subsidiary of CTG, and such additional items as more fully described in this Agreement; and

 

WHEREAS, the parties desire the transaction to qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended.

 

NOW, THEREFORE, in consideration, of the promises and of the mutual representations, warranties and agreements set forth herein, the Parties hereto agree as follows:

ARTICLE I

DEFINITIONS

“Affiliate”	with respect to any Party, a Person that directly or indirectly controls, is controlled by, or is under common control of such Party.  For the purpose of this definition, “control” means (i) ownership of more than fifty percent (50%) of the voting shares of a Person or (ii) the right or ability to direct the management or policies of a Person through ownership of voting shares or other securities, pursuant to a written agreement or otherwise;
“Business Day”	a day (other than a Saturday) on which banks in Nevada are open for business throughout their normal business hours;
“Closing”	the closing of the transactions contemplated by this Agreement;
“Completion”	completion of acquisition of the TUI Shares in accordance with the terms and conditions of this Agreement;
“Encumbrance”	any mortgage, charge, pledge, lien, (otherwise than arising by statute or operation of law), equities, hypothecation or other encumbrance, priority or security interest, preemptive right deferred purchase, title retention, leasing, sale-and-repurchase or sale-and-leaseback arrangement whatsoever over or in any property, assets or rights of whatsoever nature and includes any agreement for any of the same and reference to “Encumbrances” shall be construed accordingly;
“Exchange Act”	the US Securities Exchange Act of 1934;
“Person”	any individual, firm, company, government, state or agency of a state or any joint venture, association or partnership (whether or not having separate legal personality);
“Securities Act”	the US Securities Act of 1933;
“SEC”	the US Securities and Exchange Commission;
“US”	United States of America;
“United States Dollars” or “US$”	United States dollars;

(a)           Unless the context otherwise requires, as used in this Agreement:  (i) “including” means “including, without limitation”; (ii) words in the singular include the plural; (iii) words in the plural include the singular; (iv) words applicable to one gender shall be construed to apply to each gender; (v) the terms “hereof,” “herein,” “hereby,” “hereto” and derivative or similar words refer to this entire Agreement, including the Schedules hereto; (vi) the terms “Article,” “Section” and “Schedule” shall refer to the specified Article, Section or Schedule of or to this Agreement and references to paragraphs shall refer to the relevant paragraph of a specified Schedule and (vii) the term “day” shall refer to calendar days.

 

(b)           Titles and headings to Articles and Sections are inserted for convenience of reference only, and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

ARTICLE II

THE SHARE EXCHANGE AND MERGER

(a)           Subject to and upon the terms and conditions of this Agreement, on the Closng Date (as defined hereafter), CTG, through its wholly-owned subsidiary CAI, shall acquire all of the TUI Shares from the TUI Shareholders with all of the TUI Shares exchanged being free from all Encumbrances together with all rights now or hereafter attaching thereto.

 

(b)           In exchange for the delivery of the TUI Shares on the Closing Date, CTG shall deliver to the TUI Shareholders:

 

(i)           66,909,088 restricted shares of CTG’s Series A   common stock (the “CTG Series A Common Stock”), which CTG Series A Common Stock shall, at the Closing Date or immediately thereafter (after giving effect to the cancellation of 57,600,000 shares of restricted common stock contemplated by Section 8.06, shall represent 82.48% of CTG’s total issued and outstanding shares of Series A Common Stock; and

 

(ii)           66,909,088 shares of CTG’s Series B common stock (the “CTG Series B Common Stock”) with certain rights and privileges, including, but not limited to, the right to cast at all shareholders’ meetings or any shareholder action taken without a meeting, a total of ten (10) votes for every one (1) share of CTG Series B Common Stock held, which CTG Series B Common Stock shall be non-transferable and shall be redeemable by CTG, at CTG’s sole discretion, fifteen (15) years from the Closing Date at par value of $0.0001 per share (the aforementioned CTG Series A Common Stock and CTG Series B Common Stock are referred to herein collectively as the “Exchange Shares”); provided , however , that 2,000,000 shares of CTG Series A Common Stock and 2,000,000 shares of CTG Series B Common Stock to be delivered pursuant to subclause (i) of this Subsection 2.01(b) shall be held by Horwitz Cron & Jasper pursuant to a Shareholder’s Agreement between Bevan Cooney and TUI to be entered into by them on or prior to the Closing.

(c)           Upon execution of this Agreement, all of the Board Members of CTG, except George Alvarez, shall resign and CTG shall appoint four (4) nominees from the TUI Shareholders to CTG’s Board of Directors to serve, namely, Matthew Jennings, Mario Alvarez, Michael Sugarman and Colin Tay.

 

(d)           The Share Exchange shall take place upon the terms and conditions provided for in this Agreement and in accordance with applicable law. If the Closing does not occur as set forth in Section 2.02 of this Agreement due to one Party’s failure to perform, then the other Party may terminate the Agreement.

 

(e)           Following the Share Exchange, CAI will affect a short-form merger with TUI under the Nevada Revised Statutes whereby CAI shall be merged into TUI with TUI being the surviving corporation.

Section 2.02.    Closing Location.   The Closing of the Share Exchange and the other transactions contemplated by this Agreement will occur no later than May 31, 2008, or as soon thereafter as possible (the “Closing Date”), at a place and time mutually agreed by the Parties in writing.

Section 2.03.    TUI’s Closing Documents .  At the Closing, the TUI Shareholders and TUI will tender to CTG and CAI:

(b)           Original share certificates issued in the name of TUI representing all of the TUI Shares, duly endorsed for transfer by TUI and marked “cancelled for transfer” or as otherwise directed by CTG or its counsel, in accordance with the laws of the State of Nevada;

 

(c)           One (1) new share certificate issued by TUI in the name of CTG representing the TUI Shares;

 

(d)           A certified copy of the register of shareholders of TUI showing CTG as the registered owner of the TUI Shares; and

 

 

(e)           A certificate executed by a duly appointed officer of TUI and by the TUI Shareholders certifying that the conditions in Section 9.01(b) have been satisfied.

Section 2.04.    CTG’s Closing Documents.   At the Closing, CTG will tender to TUI and the TUI Shareholders:

(a)           A certified copy(ies) of resolutions of the Board of Directors of CTG in a form satisfactory to TUI and the TUI Shareholders, acting reasonably, authorizing:

 

(i)           the execution and delivery of this Agreement by CTG; and

 

(ii)           the issuance or transfer of the Exchange Shares to the TUI Shareholders;

(b)           Share certificates, registered in the name of the TUI Shareholders or such other names as the TUI Shareholders may unanimously direct, representing the Exchange Shares; and

 

(c)           A certificate executed by a duly appointed officer of CTG certifying that the conditions in Section 10.01(b) have been satisfied.

Section 2.05.    CAI ’s Closing Documents.   At the Closing, CAI will tender to TUI and the TUI Shareholders:

(b)           A certificate executed by a duly appointed officer of CAI certifying that the conditions in Section 10.01(b) have been satisfied.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

Section 3.01.    Each Party represents and warrants to the other Party that each of the warranties it makes is accurate in all respects and not misleading as at the date of this Agreement.

Section 3.02.    Each Party undertakes to disclose in writing to the other Party anything which is or may constitute a breach of or be inconsistent with any of the warranties immediately upon the same coming to its notice at the time of and after Completion.

Section 3.03.    Each Party agrees that each of the warranties it makes shall be construed as a separate and independent warranty and (except where expressly provided to the contrary) shall not be limited or restricted by reference to or inference from the terms of any other warranty or any other term of this Agreement.

Section 3.04.    Each Party acknowledges that the restrictions contained in Section 12.01 (Public Notices) and Section 12.10 (Confidentiality) shall continue to apply after the Completion under this Agreement without limit in time.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF CTG

Section 4.01.    Organization, Standing and Authority; Foreign Qualification. CTG is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as presently conducted and as proposed to be conducted and is duly qualified or licensed as a foreign corporation in good standing in each jurisdiction in which the character of its properties or the nature of its business activities require such qualification.

Section 4.02.    Corporate Authorization. The execution, delivery and performance by CTG of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of CTG, and this Agreement constitutes a valid and binding agreement of CTG. The Exchange Shares to be issued in accordance with this Agreement shall be duly authorized and, upon such issuance, will be validly issued, fully paid and non-assessable.

Section 4.03.    Capitalization.   CTG’s authorized capital stock currently consists solely of 500,000,000 shares of common stock, of which 76,808,000 shares are issued and outstanding as of the date hereof. All of such issued and outstanding shares of CTG’s common stock are duly authorized, validly issued, fully paid and non-assessable. Except as described on Schedule 4.03, there are no outstanding options, warrants, agreements or rights to subscribe for or to purchase, or commitments to issue, shares of CTG’s common stock or any other security of CTG or any plan for any of the foregoing. Except as set forth on Schedule 4.03, CTG is not obligated to register the resale of any of its common stock on behalf of any shareholder of CTG under the Securities Act.

Section 4.04.    Subsidiaries. CAI is the sole subsidiary, direct or indirect , of CTG.

Section 4.05.    SEC Filings.

(a)           CTG has delivered to TUI and the TUI Shareholders (i) CTG’s Annual Report on Form 10-KSB for the fiscal year ended June 30, 2007, containing CTG’s consolidated balance sheet at June 30, 2007 and consolidated statements of income, changes in stockholders' deficiency and cash flows of CTG for the period from September 19, 2005 (date of inception) to the fiscal year ended June 30, 2007, along with a copy of the audit report of Madsen & Associates, CPA’s Inc., Murray, Utah, independent auditors; and (ii) quarterly reports on Form 10-QSB for the quarters ended September 30 and December 31, 2007 (collectively, “CTG’s Reports”). To the best of CTG’s knowledge and belief, all of CTG’s Reports as of their respective dates (i) comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder, (ii) do not contain any untrue statement of a material fact, and (iii) do not omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

 

 

(b)           All documents which CTG is responsible for filing with the SEC or any regulatory agency in connection with this Agreement will comply as to form in all material respects with the requirements of applicable law, and all of the information relating to CTG in any document filed with the SEC or any other regulatory agency in connection with this Agreement or the transactions otherwise contemplated hereby shall be true and correct in all material respects.

Section 4.06.    Financial Statements. All consolidated financial statements included in CTG’s Reports, including the related notes, fairly present, in conformity with generally accepted accounting principles (“GAAP”) applied on a consistent basis (except as indicated therein), the consolidated financial position of CTG as of the dates thereof and the consolidated results of operations and changes in shareholders' equity and cash flows of CTG for the periods then ended, subject, in the case of the interim financial statements, to normal and recurring year-end audit adjustments and except that the interim financial statements do not contain all of the notes required by GAAP.

Section 4.07.    Articles of Incorporation and Bylaws. (a) CTG has heretofore delivered to TUI and the TUI Shareholders true, correct and complete copies of its Articles of Incorporation, certified by the Secretary of State of the State of Nevada and Bylaws or comparable instruments, certified by the corporate secretary thereof.

Section 4.08.    No Conflict.   The execution, delivery and performance of this Agreement and the completion of the transactions contemplated herein will not:

(a)           violate any provision of the Articles of Incorporation, Bylaws or other charter or organizational document of CTG;

 

(b)           violate, conflict with or result in the breach of any of the terms of, result in any modification of the effect of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any contract to which CTG is a party or by or to which either of its assets or properties, may be bound or subject;

 

(c)           violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, or any agreement with, or condition imposed by, any governmental or regulatory body, foreign or domestic, binding upon CTG or upon the securities, assets or business of CTG;

 

(d)           violate any statute, law or regulation of any jurisdiction as such statute, law or regulation relates to CTG or to the securities, properties or business of CTG; or

 

(e)           result in the breach of any of the terms or conditions of, constitute a default under, or otherwise cause an impairment of, any permit or license held by CTG.

Section 4.09.    Litigation. There is no litigation, suit, proceeding, action or claim at law or in equity, pending or to CTG’s best knowledge threatened against or affecting CTG or involving any of CTG’s property or assets, before any court, agency, authority or arbitration tribunal, including, without limitation, any product liability, workers' compensation or wrongful dismissal claims, or claims, actions, suits or proceedings relating to toxic materials, hazardous substances, pollution or the environment. CTG is not subject to or in default with respect to any notice, order, writ, injunction or decree of any court, agency, authority or arbitration tribunal.

Section 4.10.    Compliance with Laws. To the best knowledge of CTG, it has complied with all laws, municipal bylaws, regulations, rules, orders, judgments, decrees and other requirements and policies imposed by any governmental authority applicable to it, its properties or the operation of its business, except where the failure to comply will not have a material adverse effect on the business, properties, financial condition or earnings of CTG.

Section 4.11.    True and Correct Copies. All documents furnished or caused to be furnished to TUI and the TUI Shareholders by CTG are true and correct copies, and there are no amendments or modifications thereto except as set forth in such documents.

Section 4.12.    Compliance with Securities Act.   Neither CTG nor to the knowledge of CTG anyone authorized to act on its behalf has taken, or will take, any action that would subject the issuance or sale of the Exchange Shares hereunder to the registration requirements of Section 5 of the Securities Act; provided however, the availability of an exemption from the registration requirements of Section 5 is based upon the accuracy and completeness of the representations and warranties of TUI and the TUI Shareholders on which CTG will rely. In connection with the offer and sale of the Exchange Shares, CTG has not conducted any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media, or broadcast over radio, the Internet or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

Section 4.13.    Contracts.

(a)           There have been delivered or made available to TUI and the TUI Shareholders, or prior to the Closing there will have been delivered or made available to TUI and the TUI Shareholders, true, correct and complete copies of each of the contracts set forth in Schedule 4.13. Each such contract is valid, subsisting, in full force and effect and binding upon the parties thereto in accordance with its terms, and neither CTG nor any of its affiliates, as the case may be, is in default in any respect under any of them.

 

(b)           Except for the contracts set forth on Schedule 4.13 and excluding any obligation referenced in this Agreement, CTG is not a party to any:

 

(i)           contracts with any current or former officer, director, employee, consultant, agent or other representative having more than three (3) months to run from the date hereof or providing for an obligation to pay and/or accrue compensation of $100,000 or more per annum, or providing for the payment of fees or other consideration in excess of $100,000 in the aggregate to any officer or director of CTG, or to any other entity in which CTG has an interest;

 

 

(ii)           contracts for the purchase or sale of equipment or services that contain an escalation, renegotiation or re-determination clause or that can be cancelled without liability, premium or penalty only on ninety (90) days’ or more notice;

 

(iii)           contracts for the sale of any of its assets or properties or for the grant to any person of any preferential rights to purchase any of its or their assets or properties;

 

(iv)           contracts (including, without limitation, leases of real property) calling for an aggregate purchase price or payments in any one (1) year of more than $100,000 in any one case (or in the aggregate, in the case of any related series of contracts);

 

(v)           contracts relating to the acquisition by CTG of any operating business of, or the disposition of any operating business by, any other person;

 

(vi)           executory contracts relating to the disposition or acquisition of any investment or of any interest in any person;

 

(vii)           joint venture contracts or agreements;

 

(viii)         contracts under which CTG agrees to indemnify any party, other than in the ordinary course of business or in amounts not in excess of $100,000 or to share tax liability of any party;

 

(ix)           contracts containing covenants of CTG not to compete in any line of business or with any person in any geographical area or covenants of any other person not to compete with CTG in any line of business or in any geographical area;

 

(x)           contracts for or relating to computers, computer equipment, computer software or computer services; or

 

(xi)           contracts relating to the borrowing of money by CTG or the direct or indirect guarantee by CTG of any obligation for, or an agreement by CTG to service, the repayment of borrowed money, or any other contingent obligations in respect of indebtedness of any other Person, including, without limitation:

 

(A)           any contract with respect to lines of credit;

 

(B)           any contract to advance or supply funds to any other person other than in the ordinary course of business;

 

(C)           any contract to pay for property, products or services of any other person even if such property, products or services are not conveyed, delivered or rendered;

 

 

(D)           any keep-well, make-whole or maintenance of working capital or earnings or similar contract; or

 

(E)           any guarantee with respect to any lease or other similar periodic payments to be made by any other person; and

(xii)           any other material contract whether or not made in the ordinary course of business.

Section 4.14.    Operations of CTG.   Except as disclosed on Schedule 4.15 or as contemplated by this Agreement, since the latest filing date of CTG’s Reports, CTG has not:

(a)           amended its Articles of Incorporation or Bylaws or merged with or into or consolidated with any other person or entity, subdivided or in any way reclassified any shares of its capital stock or changed or agreed to change in any manner the rights of its outstanding capital stock or the character of its business;

 

(b)           issued, reserved for issuance, sold or redeemed, repurchased or otherwise acquired, or issued options or rights to subscribe to, or entered into any contract or commitment to issue, sell or redeem, repurchase or otherwise acquire, any shares of its capital stock or any bonds, notes, debentures or other evidence or indebtedness;

 

(c)           declared or paid any dividends or declared or made any other distributions of any kind to its shareholders;

 

(d)           made any change in its accounting methods or practices or made any change in depreciation or amortization policies, except as required by law or generally accepted accounting principles;

 

(e)           made any loan or advance to any of  its shareholders or to any of its directors, officers or employees, consultants, agents or other representatives, or made any other loan or advance, otherwise than in the ordinary course of business;

 

(f)           sold, abandoned or made any other disposition of any of its assets or properties;

 

(g)           granted or suffered any lien on any of its assets or properties;

 

(h)           entered into or amended any contracts to which it is a party, or by or to which it or its assets or properties are bound or subject which if existing on the date hereof would be required to be disclosed in Schedule 4.13;

 

(i)           made any acquisition of all or a substantial part of the assets, properties, securities or business of any other person or entity;

 

(j)           paid, directly or indirectly, any of its material liabilities before the same became due in accordance with its terms or otherwise than in the ordinary course of business;

 

(k)           terminated or failed to renew, or received any written threat (that was no subsequently withdrawn) to terminate or fail to renew, any contract that is or was material to the assets, liabilities, business, property, operations, prospects, results of operations or condition (financial or otherwise) of CTG; or

 

(l)           entered into any other contract or other transaction that materially increases the liabilities of CTG.

Section 4.15.    Absence of Certain Changes.   Since the latest filing date of CTG’s Reports, there has been no event, change or development which could have a material adverse effect on CTG.

Section 4.16.    Material Information.   This Agreement, the Schedules attached hereto and all other information provided, in writing, by CTG or representatives thereof to TUI and the TUI Shareholders, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary to make any statement contained herein or therein not misleading.  There are no facts or conditions which have not been disclosed to TUI and the TUI Shareholders in writing which, individually or in the aggregate, could have a material adverse effect on CTG or a material adverse effect on the ability of CTG to perform any of its obligations pursuant to this Agreement.

Section 4.17.    Brokerage.   No broker or finder has acted, directly or indirectly, for CTG nor did CTG incur any finder’s fee or other commission, in connection with the transactions contemplated by this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF CAI

Section 5.01.    Organization, Standing and Authority; Foreign Qualification. CAI is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to own, lease and operate its properties and to conduct its business as presently conducted and as proposed to be conducted and is duly qualified or licensed as a foreign corporation in good standing in each jurisdiction in which the character of its properties or the nature of its business activities require such qualification.

Section 5.02.    Corporate Authorization. The execution, delivery and performance by CAI of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of CAI, and this Agreement constitutes a valid and binding agreement of CAI.

Section 5.03.    Capitalization.   CAI’s authorized capital stock consists solely of 10,000,000 shares of common stock, of which 10,000 shares of common stock are issued and outstanding as of the date hereof; all of such issued and outstanding shares of CAI’s common stock are duly authorized, validly issued, fully paid and non-assessable. Except as described on Schedule 5.03, there are no outstanding options, warrants, agreements or rights to subscribe for or to purchase, or commitments to issue, shares of CAI’s common stock or any other security of CAI or any plan for any of the foregoing. Except as set forth on Schedule 5.03, CAI is not obligated to register the resale of any of its common stock on behalf of any shareholder of CAI under the Securities Act.

Section 5.04.    Subsidiaries. CAI has no subsidiary, direct or indirect.

Section 5.05.    Omitted.

Section 5.06.    Omitted.

Section 5.07.    Articles of Incorporation and Bylaws. (a) CAI has heretofore delivered to TUI and the TUI Shareholders true, correct and complete copies of its Articles of Incorporation, certified by the Secretary of State of the State of Nevada and Bylaws or comparable instruments, certified by the corporate secretary thereof.

Section 5.08.    No Conflict.   The execution, delivery and performance of this Agreement and the completion of the transactions contemplated herein will not:

(a)           violate any provision of the Articles of Incorporation, Bylaws or other charter or organizational document of CAI;

 

(b)           violate, conflict with or result in the breach of any of the terms of, result in any modification of the effect of, otherwise give any other contracting party the right to terminate, or constitute (or with notice or lapse of time or both constitute) a default under, any contract to which CAI is a party or by or to which either of its assets or properties, may be bound or subject;

 

(c)           violate any order, judgment, injunction, award or decree of any court, arbitrator or governmental or regulatory body against, or binding upon, or any agreement with, or condition imposed by, any governmental or regulatory body, foreign or domestic, binding upon CAI or upon the securities, assets or business of CAI;

 

(d)           violate any statute, law or regulation of any jurisdiction as such statute, law or regulation relates to CAI or to the securities, properties or business of CAI; or

 

(e)           result in the breach of any of the terms or conditions of, constitute a default under, or otherwise cause an impairment of, any permit or license held by CAI.

Section 5.09.    Litigation. There is no litigation, suit, proceeding, action or claim at law or in equity, pending or to CAI’s best knowledge threatened against or affecting CAI or involving any of CAI’s property or assets, before any court, agency, authority or arbitration tribunal, including, without limitation, any product liability, workers' compensation or wrongful dismissal claims, or claims, actions, suits or proceedings relating to toxic materials, hazardous substances, pollution or the environment. CAI is not subject to or in default with respect to any notice, order, writ, injunction or decree of any court, agency, authority or arbitration tribunal.

Section 5.10.    Compliance with Laws. To the best knowledge of CAI, it has complied with all laws, municipal bylaws, regulations, rules, orders, judgments, decrees and other requirements and policies imposed by any governmental authority applicable to it, its properties or the operation of its business, except where the failure to comply will not have a material adverse effect on the business, properties, financial condition or earnings of CAI.

Section 5.11.    True and Correct Copies. All documents furnished or caused to be furnished to TUI and the TUI Shareholders by CAI are true and correct copies, and there are no amendments or modifications thereto except as set forth in such documents.

Section 5.12.    Omitted.

 

Section 5.13.    Contracts.

(a)           There have been delivered or made available to TUI and the TUI Shareholders, at or prior to the Closing, true, correct and complete copies of each of the contracts set forth in Schedule 5.13. Each such contract is valid, subsisting, in full force and effect and binding upon the parties thereto in accordance with its terms, and neither CAI nor any of its affiliates, as the case may be, is in default in any respect under any of them.

 

(b)           Except for the contracts set forth on Schedule 5.13 and excluding any obligation referenced in this Agreement, CAI is not a party to any:

 

(i)           contracts with any current or former officer, director, employee, consultant, agent or other representative having more than three (3) months to run from the date hereof or providing for an obligation to pay and/or accrue compensation of $100,000 or more per annum, or providing for the payment of fees or other consideration in excess of $100,000 in the aggregate to any officer or director of CAI, or to any other entity in which CTG has an interest;

 

(ii)           contracts for the purchase or sale of equipment or services that contain an escalation, renegotiation or re-determination clause or that can be cancelled without liability, premium or penalty only on ninety (90) days’ or more notice;

 

(iii)           contracts for the sale of any of its assets or properties or for the grant to any person of any preferential rights to purchase any of its or their assets or properties;

 

(iv)           contracts (including, without limitation, leases of real property) calling for an aggregate purchase price or payments in any one (1) year of more than $100,000 in any one case (or in the aggregate, in the case of any related series of contracts);

 

 

(v)           contracts relating to the acquisition by CAI of any operating business of, or the disposition of any operating business by, any other person;

 

(vi)           executory contracts relating to the disposition or acquisition of any investment or of any interest in any person;

 

(vii)           joint venture contracts or agreements;

 

(viii)          contracts under which CAI agrees to indemnify any party, other than in the ordinary course of business or in amounts not in excess of $100,000 or to share tax liability of any party;

 

(ix)           contracts containing covenants of CAI not to compete in any line of business or with any person in any geographical area or covenants of any other person not to compete with CAI in any line of business or in any geographical area;

 

(x)           contracts for or relating to computers, computer equipment, computer software or computer services; or

 

(xi)           contracts relating to the borrowing of money by CAI or the direct or indirect guarantee by CAI of any obligation for, or an agreement by CAI to service, the repayment of borrowed money, or any other contingent obligations in respect of indebtedness of any other Person, including, without limitation:

 

(A)           any contract with respect to lines of credit;

 

(B)           any contract to advance or supply funds to any other person other than in the ordinary course of business;

 

(C)           any contract to pay for property, products or services of any other person even if such property, products or services are not conveyed, delivered or rendered;

 

(D)           any keep-well, make-whole or maintenance of working capital or earnings or similar contract; or

 

(E)           any guarantee with respect to any lease or other similar periodic payments to be made by any other person; and

(xii)           any other material contract whether or not made in the ordinary course of business.

Section 5.14.    Operations of CAI.   Except as disclosed on Schedule 5.14 or as contemplated by this Agreement, since the date of CAI’s inception, CAI has not:

(a)           amended its Articles of Incorporation or Bylaws or merged with or into or consolidated with any other person or entity, subdivided or in any way reclassified any shares of its capital stock or changed or agreed to change in any manner the rights of its outstanding capital stock or the character of its business;

 

(b)           issued, reserved for issuance, sold or redeemed, repurchased or otherwise acquired, or issued options or rights to subscribe to, or entered into any contract or commitment to issue, sell or redeem, repurchase or otherwise acquire, any shares of its capital stock or any bonds, notes, debentures or other evidence or indebtedness;

 

(c)           declared or paid any dividends or declared or made any other distributions of any kind to its shareholders;

 

(d)           made any change in its accounting methods or practices or made any change in depreciation or amortization policies, except as required by law or generally accepted accounting principles;

 

(e)           made any loan or advance to any of  its shareholders or to any of its directors, officers or employees, consultants, agents or other representatives, or made any other loan or advance, otherwise than in the ordinary course of business;

 

(f)           sold, abandoned or made any other disposition of any of its assets or properties;

 

(g)           granted or suffered any lien on any of its assets or properties;

 

(h)           entered into or amended any contracts to which it is a party, or by or to which it or its assets or properties are bound or subject which if existing on the date hereof would be required to be disclosed in Schedule 5.13;

 

(i)           made any acquisition of all or a substantial part of the assets, properties, securities or business of any other person or entity;

 

(j)           paid, directly or indirectly, any of its material liabilities before the same be