Agreement and Plan of Merger
among
Take-Two Interactive Software Inc.,
JAG Acquisition Corp.
(its wholly-owned subsidiary)
and
▇▇▇▇ of All Games, Inc.
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August 22, 1998
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TABLE OF CONTENTS
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1. The Merger............................................................... 1
1.1. The Merger.................................................... 1
1.2. Effective Date................................................ 1
1.3. Effect of the Merger.......................................... 2
1.4. Certificate of Incorporation; Code of
Regulations................................................... 2
1.5. Directors and Officers of Surviving Corporation............... 2
1.6. Conversion of Securities...................................... 3
2. Representations and Warranties as to JAG................................. 3
2.1. Organization, Standing and Power.............................. 3
2.2. Capitalization................................................ 4
2.3. Ownership of JAG Capital Stock................................ 4
2.4. Interests in Other Entities................................... 5
2.5. Authority..................................................... 5
2.6. Noncontravention.............................................. 6
2.7. Financial Statements.......................................... 6
2.8. Absence of Undisclosed Liabilities............................ 7
2.9. Guaranties.................................................... 7
2.10. Accounts and Notes Receivable................................. 7
2.11. Absence of Changes............................................ 8
2.12. Litigation.................................................... 8
2.13. No Violation of Law........................................... 8
2.14. Properties.................................................... 8
2.15. Intangibles/Inventions........................................ 9
2.16. Systems and Software.......................................... 9
2.17. Tax Matters................................................... 10
2.18. Insurance..................................................... 11
2.19. Banks; Powers of Attorney..................................... 11
2.20. Employee Arrangements......................................... 11
2.21. ERISA......................................................... 12
2.22. Environmental Matters......................................... 12
2.23. Business Practices and Commitments............................ 12
2.24. Certain Business Matters...................................... 13
2.25. Certain Contracts............................................. 13
2.26. Customers and Suppliers....................................... 14
2.27. Approvals/Consents............................................ 14
2.28. Information as to JAG......................................... 14
2.29. Pooling of Interests.......................................... 14
2.30 Securities Act Representation ................................ 15
3. Representations and Warranties as to TTIS and
Subsidiary............................................................... 15
3.1. Organization, Standing and Power.............................. 15
3.2. Interests in Other Entities................................... 16
3.3. Capitalization................................................ 16
3.4. Authority..................................................... 17
3.5. Noncontravention.............................................. 17
3.6. Litigation.................................................... 18
3.7. No Violation of Law........................................... 18
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3.8. Accounts and Notes Receivable................................. 18
3.9. Properties.................................................... 19
3.10. Systems and Software.......................................... 19
3.11. Intangibles/Inventions........................................ 20
3.12. Tax Matters................................................... 20
3.13. Securities and Exchange Commission Filings;
Financial Statements.......................................... 21
3.14. Stock Issuable in Merger...................................... 22
3.15. Absence of Changes............................................ 22
3.16. Environmental Matters......................................... 22
3.17. Approvals/Consents............................................ 23
3.18. Pooling of Interests.......................................... 23
3.19. Information as to TTIS and Subsidiary......................... 23
4. Indemnification.......................................................... 23
4.1. Indemnification by the Shareholders........................... 23
4.2. Indemnification by TTIS and Subsidiary........................ 24
4.3. Third Party Claims............................................ 24
4.4. Limitation.................................................... 25
4.5. Assistance.................................................... 26
5. Covenants................................................................ 26
5.1. Investigation................................................. 26
5.2. Non Compete Covenant.......................................... 26
5.3. Consummation of Transaction................................... 27
5.4. Cooperation/Further Assurances................................ 27
5.5. Accuracy of Representations................................... 27
5.6. Notification of Certain Matters............................... 27
5.7. Broker........................................................ 28
5.8. No Solicitation of Transactions............................... 28
5.9. Prohibited Conduct............................................ 28
5.10. Tax-Free Reorganization....................................... 31
5.11. Pooling of Interests.......................................... 31
5.12. Payment of Taxes Upon Merger.................................. 31
5.13. Stock Options................................................. 31
5.14. Employment Agreements......................................... 31
5.15. Registration Rights Agreement................................. 31
5.16. Business Office............................................... 32
5.17 TTIS Board of Director ....................................... 32
6. Conditions of Merger..................................................... 32
6.1. Conditions to Obligations of TTIS and Subsidiary
to Effect the Merger.......................................... 32
(a) Accuracy of Representations and Warranties............ 32
(b) Performance of Agreements............................. 32
(c) Results of Investigation.............................. 32
(d) Board Authorization................................... 32
(e) Pooling of Interests.................................. 33
(f) Affiliate Letters..................................... 33
(g) Financing Arrangements................................ 33
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(h) Tangible Net Worth.................................... 33
(i) Opinion of Counsel for JAG............................ 33
(j) Litigation............................................ 33
(k) Consents and Approvals................................ 33
(l) Date of Consummation.................................. 34
(m) Validity of Transactions.............................. 34
(n) No Material Adverse Change............................ 34
(o) Employment Agreements................................. 34
(p) Closing Certificate................................... 34
6.2. Conditions to Obligations of JAG and the
Shareholders to Effect the Merger............................ 34
(a) Accuracy of Representations and Warranties............ 34
(b) Performance of Agreements............................. 35
(c) Board Authorization................................... 35
(d) Litigation............................................ 35
(e) Consents and Approvals................................ 35
(f) Pooling of Interests.................................. 35
(g) Opinion of Counsel for TTIS and the subsidiary........ 35
(h) No Material Adverse Change............................ 36
(i) Date of Consummation.................................. 36
(j) Validity of Transactions.............................. 36
(k) Stock Options......................................... 36
(l) Employment Agreements................................. 36
(m) Registration Rights Agreement......................... 36
(n) Closing Certificate................................... 36
7. The Closing.............................................................. 36
7.1. Deliveries by TTIS and Subsidiary at the Closing............. 37
7.2. Deliveries by JAG and/or the Shareholders at the
Closing...................................................... 37
7.3. Other Deliveries............................................. 38
8. Termination, Amendment and Waiver........................................ 38
8.1. Termination.................................................. 38
8.2. Effect of Termination........................................ 39
8.3. Fees and Expenses............................................ 39
8.4. Waiver....................................................... 40
9. Survival of Representations and Warranties............................... 40
10. General Provisions...................................................... 40
10.1. Notices...................................................... 40
10.2. Severability................................................. 41
10.3. Entire Agreement............................................. 41
10.4. Amendment.................................................... 41
10.5 Schedules ................................................... 41
10.6. No Assignment................................................ 41
10.7. Governing Law................................................ 41
10.8. Counterparts................................................. 43
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of August 22, 1998 (the "Agreement"),
among Take-Two Interactive Software, Inc., a Delaware corporation ("TTIS"); JAG
Acquisition Corp., a Delaware corporation wholly-owned subsidiary of TTIS
("Subsidiary"); ▇▇▇▇ of All Games, Inc., an Ohio corporation ("JAG"); ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇"). ▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ are sometimes referred to as the
"Shareholders."
W I T N E S S E T H :
WHEREAS, JAG is in the business of distributing computer software (the
"Business"); and
WHEREAS, TTIS desires to acquire all of the outstanding capital stock of
JAG; and
WHEREAS, the Board of Directors of TTIS, the Board of Directors of
Subsidiary, TTIS as the sole shareholder of Subsidiary, and the Board of
Directors of JAG and Shareholders have: (a) determined that it is in the best
interests of their respective companies for the Subsidiary to be merged with and
into JAG upon the terms and subject to the conditions set forth herein; and (b)
approved the merger of the Subsidiary with and into JAG (the "Merger") in
accordance with the Delaware General Corporation Law of the State of Delaware
("Delaware Law") and the General Corporation Law of the State of Ohio ("Ohio
Law"), and upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto do hereby agree as follows:
1. The Merger.
1.1. The Merger. At the Effective Date (as defined in Section 1.2),
and subject to and upon the terms and conditions of this Agreement,
Delaware Law and Ohio Law, Subsidiary shall be merged with and into JAG,
the separate corporate existence of the Subsidiary shall cease, and JAG
shall continue as the surviving corporation, operating as a wholly-owned
subsidiary of TTIS. JAG, as the surviving corporation after the Merger, is
hereinafter sometimes referred to as the "Surviving Corporation."
1.2. Effective Date. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in
Section 6, unless this Agreement shall have been terminated and the
transactions contemplated herein shall have been abandoned pursuant to
Section 8.1, Subsidiary and JAG shall cause the Merger to be consummated by
filing a Certificate of Merger (the "Certificate of Merger") with the
Secretaries of State of the States of Delaware and Ohio in the form of
Exhibit A and making such other filings as may be required by Delaware Law
and Ohio Law, in such form as required by and executed in accordance with
such laws (the time of the last of such filings to be made being the
"Effective Date").
1.3. Effect of the Merger. At the Effective Date, the effect of the
Merger shall be as provided in the applicable provisions of Delaware Law
and Ohio Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Date, all the rights, privileges, powers,
franchises and all property (real, personal and mixed) of the Subsidiary
and all debts due the Subsidiary as listed on Schedule 1.3.A shall vest in
JAG, and all debts, liabilities, obligations and duties of the Subsidiary
as listed on Schedule 1.3.B shall become the debts, liabilities,
obligations and duties of JAG.
1.4. Certificate of Incorporation; Code of Regulations.
(a) The Certificate of Incorporation of JAG, as in effect
immediately prior to the Effective Date (annexed hereto as Exhibit B),
shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by law or such Certificate of
Incorporation.
(b) The Code of Regulations of JAG, as in effect immediately
prior to the Effective Date (annexed hereto as Exhibit C), shall be
the Code of Regulations of the Surviving Corporation until thereafter
amended as provided by law or by the Certificate of Incorporation of
the Surviving Corporation or the By-Laws of the Surviving Corporation.
1.5. Directors and Officers of Surviving Corporation.
(a) ▇▇▇▇ ▇▇▇▇▇, the sole director of the Subsidiary shall, at the
Effective Date, be the duly appointed director of the Surviving
Corporation, to hold office in accordance with applicable law, the
Certificate of Incorporation and By-Laws of the Surviving Corporation
until resignation, removal or replacement.
(b) Each of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇, shall,
at the Effective Date, be duly nominated and appointed as Chief
Executive Officer, President, Chairman of the Board and Senior Vice
President, respectively, of the Surviving Corporation, and shall
constitute the initial officers
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of the Surviving Corporation, in each case to serve at the pleasure of
the Board of Directors of JAG until their respective resignation,
removal or placement.
1.6. Conversion of Securities. At the Effective Date, by virtue of the
Merger and without any action on the part of TTIS, Subsidiary, JAG or the
Shareholders:
(a) The outstanding shares of JAG Capital Stock (as defined in
Section 2.2 hereof) shall be converted into the right to receive an
aggregate of 2,750,000 shares of Common Stock, $.01 par value per
share, of TTIS ("TTIS Common Stock") (hereafter referred to as the
"Share Consideration"), to be distributed to the Shareholders, pro
rata, as set forth in Schedule 1.6(a). All such shares of JAG Capital
Stock, when so converted, shall no longer be outstanding and shall
automatically be cancelled and become Treasury Stock subject to
issuance pursuant to Section 1.6(e).
(b) Any warrant or option convertible or exchangeable into JAG
Capital Stock shall be cancelled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
(c) From and after the Effective Date, the holders of
certificates evidencing ownership of shares of JAG Capital Stock shall
cease to have any rights with respect to the shares of JAG Capital
Stock.
(d) No fractional shares of TTIS Common Stock shall be issued in
connection with the Merger and the Shareholders will be issued a whole
share of TTIS Common Stock in lieu of any fractional shares.
(e) Each share of the common stock, par value $.01 per share, of
the Subsidiary issued and outstanding at the Effective Date shall be
converted into the right to receive one fully paid and nonassessable
share of common stock of the Surviving Corporation.
2. Representations and Warranties as to JAG. Each of the Shareholders and
JAG, jointly and severally, represents and warrants to TTIS and Subsidiary as
follows:
2.1. Organization, Standing and Power. JAG is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Ohio, with full corporate power and corporate authority to (i)
own, lease and operate its properties, (ii) carry on the Business as
currently conducted by it and (iii) execute and deliver, and perform under
this Agreement and each other agreement and instrument to be executed and
delivered by it pursuant hereto. Except as set forth on Schedule 2.1, there
are no states or jurisdictions in which the
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character and location of any of the properties owned or leased by JAG, or
the conduct of the Business makes it necessary for JAG to qualify to do
business as a foreign corporation. True and complete copies of the
Certificate of Incorporation of JAG and all amendments thereof, and of the
Code of Regulations of JAG, as amended to date, have heretofore been
furnished to TTIS. JAG's minute books contain complete and accurate records
of all meetings and other corporate actions of JAG's stockholders and Board
of Directors (including committees of its Board of Directors).
2.2. Capitalization. (a) The authorized capital stock of JAG consists
of: 750 shares of common stock, no par value (the "JAG Common Stock"), of
which 100 shares of JAG Common Stock are outstanding. The shares of JAG
Common Stock and JAG Preferred Stock are sometimes hereinafter collectively
referred to as "JAG Capital Stock". All of the JAG Capital Stock is duly
authorized, validly issued, fully paid and nonassessable. Schedule 2.2 sets
forth a true and complete list of the holders of all outstanding shares of
JAG Capital Stock, and the holders of all outstanding options and warrants
issued by JAG, which shares, options and warrants are held by them in the
amounts set forth on Schedule 2.2. Except as contemplated by the Merger and
except as set forth on Schedule 2.2, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of JAG or obligating JAG
to issue or sell any shares of capital stock of or other equity interests
in JAG. There is no personal liability, and there are no preemptive rights
with regard to the capital stock of JAG, and no right-of-first refusal or
similar catch-up rights with regard to such capital stock. Except as set
forth on Schedule 2.2 and except for the transactions contemplated by this
Agreement, there are no outstanding contractual obligations or other
commitments or arrangements of JAG to (A) repurchase, redeem or otherwise
acquire any shares of JAG Capital Stock (or any interest therein) or (B) to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any other entity, or (C) issue or distribute
to any person any capital stock of JAG, or (D) issue or distribute to
holders of any of the capital stock of JAG any evidences of indebtedness or
assets of JAG. All of the outstanding securities of JAG have been issued
and sold by JAG in full compliance with applicable federal and state
securities laws.
2.3. Ownership of JAG Capital Stock. Except as listed on Schedule 2.3,
the Shareholders have good and marketable title to all of the issued and
outstanding shares of JAG Capital Stock, free and clear of any and all
liens, adverse claims, security interests, pledges, mortgages, charges and
encumbrances of any nature whatsoever ("Liens"), and on the Closing Date
(as defined in Section 7 hereof) will own all of the JAG Capital Stock,
free and clear of any and all Liens, including, but not
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limited to, any claims by any present or former stockholders of JAG.
2.4. Interests in Other Entities.
(a) JAG does not have any direct or indirect subsidiaries or own,
directly or indirectly, of record or beneficially, shares of voting
stock or other equity securities in any other corporation.
(b) None of the Shareholders (individually or jointly): (i) own,
directly or indirectly, of record or beneficially, any shares of
voting stock or other equity securities of any other corporation
engaged in the same or similar business to that business engaged in by
JAG at the Effective Date (other than not more than one percent (1%)
of the publicly-traded capital stock of corporations engaged in such
business held solely for investment purposes); (ii) have any ownership
interest, direct or indirect, of record or beneficially, in any
unincorporated entity engaged in the same or similar business to that
business engaged in by JAG at the Effective Date; or (iii) have any
obligation, direct or indirect, present or contingent, (A) to purchase
or subscribe for any interest in, advance or loan monies to, or in any
way make investments in, any other person or entity engaged in the
same or similar business to that business engaged in by JAG at the
Effective Date, or (B) to share any profits or capital investments or
both from a entity engaged in the same or similar business to that
business engaged in by JAG at the Effective Date.
2.5. Authority. The execution and delivery by JAG of this Agreement
and of all of the agreements to be executed and delivered by JAG pursuant
hereto (collectively, the "JAG Documents"), the performance by JAG of its
obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of JAG (including,
but not limited to, the unanimous consents of the Board of Directors of JAG
and of the Shareholders) and JAG has all necessary corporate power and
corporate authority with respect thereto. The Shareholders are individuals
having all necessary capacity, power and authority to execute and deliver
this Agreement and such other agreements to be executed and delivered by
either of them pursuant hereto (collectively, the "Shareholder Documents")
and to consummate the transactions contemplated hereby and thereby. This
Agreement is, and when executed and delivered by JAG and the Shareholders,
each of the other agreements to be delivered by either or both of them
pursuant hereto will be, the valid and binding obligations of JAG and the
Shareholders, to the extent they are parties thereto, in accordance with
their respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or
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other laws affecting the rights of creditors generally and subject to the
rules of law governing (and all limitations on) specific performance,
injunctive relief, and other equitable remedies.
2.6. Noncontravention. Except as set forth on Schedule 2.6, neither
the execution and delivery by JAG or the Shareholders of this Agreement or
of any other JAG Documents or Shareholder Documents to be executed and
delivered by either or both of them, nor the consummation of any of the
transactions contemplated hereby or thereby, nor the performance by either
or both of them of any of their respective obligations hereunder or
thereunder, will (nor with the giving of notice or the lapse of time or
both would) (a) conflict with or result in a breach of any provision of the
Certificate of Incorporation, By-Laws or other constituent documents of
JAG, each as amended to date, or (b) give rise to a default, or any right
of termination, cancellation or acceleration, or otherwise be in conflict
with or result in a loss of contractual benefits to any of them, under any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which
either or both of them is a party or by which either or both of them or any
of their respective assets may be bound, or require any consent, approval
or notice under the terms of any such document or instrument, or (c)
violate any order, writ, injunction, decree, law, statute, rule or
regulation of any court or governmental authority which is applicable to
either or both of them, or (d) result in the creation or imposition of any
lien, adverse claim, restriction, charge or encumbrance upon any of the
assets of JAG (the "Assets") or the JAG Capital Stock, or (e) interfere
with or otherwise adversely affect the ability of JAG to carry on the
Business after the Effective Date on substantially the same basis as is now
conducted by JAG.
2.7. Financial Statements. JAG has heretofore delivered to each of
TTIS and Subsidiary (a) its financial statements consisting of the audited
balance sheets at December 31, 1996 and 1997, and the related statements of
income, stockholders' equity and cash flows for the two (2) years then
ended, which have been audited by ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.,
independent certified public accountants, and (b) its unaudited balance
sheet at June 30, 1998 (the "Balance Sheet") statements of income and
stockholders' equity and cash flows for the six months ended June 30, 1998
(collectively, the "JAG Financial Statements"). The JAG Financial
Statements were prepared in accordance with generally accepted accounting
principles ("GAAP"), consistently applied, and present fairly the financial
position of JAG as at the dates thereof and the results of operations for
the periods and the cash flow indicated. The books and records of JAG are
complete and correct, have been maintained in accordance with good business
practices, and accurately reflect the basis for the financial condition,
results
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of operations and cash flow of JAG as set forth in the JAG Financial
Statements.
2.8. Absence of Undisclosed Liabilities. JAG has no liabilities or
obligations of any nature whatsoever, whether accrued, matured, unmatured,
absolute, contingent, direct or indirect or otherwise, which have not been
(a) in the case of liabilities and obligations of a type customarily
reflected on a corporate balance sheet, prepared in accordance with GAAP,
set forth on the Balance Sheet, or (b) incurred in the ordinary course of
business since June 30, 1998, or (c) in the case of other types of
liabilities and obligations, described in Schedule 2.8, or (d) incurred,
consistent with past practice, in the ordinary course of business of JAG
(in the case of liabilities and obligations of the type referred to in
clause (a) above).
2.9. Guaranties. Schedule 2.9 hereto is a complete and accurate list
and summary description of all written guaranties currently in effect
heretofore issued by the Shareholders to any bank or other lender in
connection with any credit facilities extended by such creditors to JAG or
issued by the Shareholders in connection with any other contracts or
agreements for the benefit of JAG (collectively, the "Guaranties"),
including the name of such creditor and the amount of the indebtedness,
together with any interest and fees currently owing and expected to be
outstanding as of the Effective Date.
2.10. Accounts and Notes Receivable/Inventories.
(a) The accounts and notes receivable which are reflected on the
Balance Sheet are good and collectible in the ordinary course of
business at the aggregate recorded amounts thereof, less the
respective amount of the allowances for doubtful accounts and notes
receivable, if any, reflected thereon, and are not subject to offsets
other than in the ordinary course of business. The accounts and notes
receivable of JAG which were added after June 30, 1998, are good and
collectible in the ordinary course of business, less the respective
amount of the allowances for doubtful accounts and notes receivable,
if any, reflected on the books and records of JAG (which allowances
were established on a basis consistent with prior practice), and are
not subject to offsets.
(b) The inventories reflected on the Balance Sheet consist of
items of a quality and quantity usable or saleable in the ordinary
course of business, except for obsolete materials, slow-moving items,
materials of below standard quality and not readily marketable items,
all of which have been (i) written down to net realizable value or
(ii) adequately reserved against on the books and records of JAG. All
inventories are stated at the lower of cost or market.
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2.11. Absence of Changes. Since June 30, 1998, there have not been (a)
any adverse change (other than as is normal in the ordinary course of
business) in the condition (financial or otherwise), assets, liabilities,
business, prospects, results of operations or cash flows of JAG (including,
without limitation, any such adverse change resulting from damage,
destruction or other casualty loss, whether or not covered by insurance),
(b) any waivers by JAG of any right, or cancellation of any debt or claim,
of substantial value, (c) any declarations, set asides or payments of any
dividend or other distributions or payments in respect of the JAG Capital
Stock, or (d) any changes in the accounting principles or methods which are
utilized by JAG.
2.12. Litigation. Except as set forth in Schedule 2.12, there are no
claims, suits or actions, or administrative, arbitration or other
proceedings or governmental investigations, pending or, to the best
knowledge of JAG and the Shareholders, threatened, against or relating to
JAG or the Shareholders, the transactions contemplated hereby or any of the
Assets. There are no judgments, orders, stipulations, injunctions, decrees
or awards in effect which relate to JAG, this Agreement, the transactions
contemplated, the Business or any of the Assets, the effect of which is (a)
to limit, restrict, regulate, enjoin or prohibit any business practice of
JAG in any area, or the acquisition by JAG of any properties, assets or
businesses, or (b) otherwise materially adverse to the Business, any of the
Assets or JAG Capital Stock.
2.13. No Violation of Law. To the best knowledge of the Shareholders
and JAG, JAG is not engaging in any activity or omitting to take any action
as a result of which it is in violation of any law, rule, regulation,
zoning or other ordinance, statute, order, injunction or decree, or any
other requirement of any court or governmental or administrative body or
agency, applicable to JAG, the Business or any of the Assets, including,
but not limited to, those relating to: occupational safety and health
matters; issues of environmental and ecological protection (e.g., the use,
storage, handling, transport or disposal of pollutants, contaminants or
hazardous or toxic materials or wastes, and the exposure of persons
thereto); business practices and operations; labor practices; employee
benefits; and zoning and other land use laws and regulations.
2.14. Properties. Except as set forth on Schedule 14A, all plants,
structures and equipment which are utilized in the Business, or are
material to the condition (financial or otherwise) of JAG are owned or
leased by JAG, are free and clear of all Liens, are in good operating
condition and repair (ordinary wear and tear excepted), and are adequate
and suitable for the purposes for which they are used. Schedule 2.14B sets
forth all (a) real property which is owned, leased (whether as lessor or
lessee) or subject to contract or
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commitment of purchase or sale or lease (whether as lessor or lessee) by
JAG, or which is subject to a title retention or conditional sales
agreement or other security device, and (b) tangible personal property
which is owned, leased (whether as lessor or lessee) or subject to contract
or commitment of purchase or sale or lease (whether as lessor or lessee) by
JAG.
2.15. Intangibles/Inventions. Schedule 2.15 identifies (by a summary
description) the Intangibles (as defined below), the ownership thereof and,
if applicable, JAG's authority for use of the same, which Schedule is
complete and correct and encompasses: (A) all United States and foreign
patents, trademark and trade name registrations, trademarks and trade
names, brandmarks and brand name registrations, servicemarks and
servicemark registrations, assumed names and copyrights and copyright
registrations, (collectively, the "Marks") owned in whole or in part or
used by JAG, and all applications therefor, (B) all inventions,
discoveries, improvements, processes, formulae, technology, know-how,
processes and other intellectual property, proprietary rights and trade
secrets relating to the Business (collectively, the "Inventions") and (C)
all licenses and other agreements to which JAG is a party or otherwise
bound which relate to any of the Intangibles or the Inventions or JAG's use
thereof in connection with the Business (collectively, the "Licenses, and
together with the Marks and the Inventions, the "Intangibles"). No
violations of the terms of any of the aforesaid licenses and/or agreements
have occurred. Except as disclosed on Schedule 2.15, (A) JAG owns or is
authorized to use in connection with the Business all of the Intangibles;
(B) no proceedings have been instituted, are pending, or to the best
knowledge of JAG and the Shareholders, are threatened which challenge the
rights of JAG with respect to the Intangibles or its use thereof in
connection with the Business and/or the Assets or the validity thereof and,
there is no valid basis for any such proceedings; (C) neither JAG's
ownership of the Intangibles nor their use thereof in connection with the
Business and/or the Assets violates any laws, statutes, ordinances or
regulations, or has at any time infringed upon or violated any rights of
others, or is being infringed by others; (D) none of the Intangibles, or
JAG's use thereof in connection with the Business and/or the Assets is
subject to any outstanding order, decree, judgment, stipulation or any
lien, security interest or other encumbrance; and (E) JAG has not granted
any license to third parties with regard to its Intangibles.
2.16. Systems and Software. JAG owns or has the right to use pursuant
to lease, license, sublicense, agreement, or permission all computer
hardware, software and information systems listed on Schedule 2.16 and
necessary for the operation of the businesses of JAG as presently conducted
(collectively, "Systems"). Each System owned or used by JAG immediately
prior to the Effective Date will be owned or available for use by JAG on
identical terms and conditions immediately subsequent to the
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Effective Date. With respect to each System owned by a third party and used
by JAG pursuant to lease, license, sublicense, agreement or permission: (a)
the lease, license, sublicense, agreement or permission covering the System
is legal, valid, binding, enforceable, and in full force and effect; (b)
the lease, license, sublicense, agreement or permission will continue to be
legal, valid, binding, enforceable, and in full force and effect on
identical terms following the Effective Date; (c) no party to any such
lease, license, sublicense, agreement or permission is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, and permit termination, modification or
acceleration thereunder; (d) no party to any such lease, license,
sublicense, agreement or permission has repudiated any provision thereof;
(e) JAG has not granted any sublicense, sublease or similar right with
respect to any such lease, license, sublicense, agreement or permission;
(f) JAG's use and continued use of such Systems does not and will not
interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any intellectual property rights of third parties as a
result of the continued operation of the Business.
2.17. Tax Matters.
(a) Except as listed on Schedule 2.17, JAG has filed with the
appropriate governmental agencies all tax returns and reports required
to be filed by it, and has paid in full or contested in good faith or
made adequate provision for the payment of, Taxes (as defined herein)
shown to be due or claimed to be due on such tax returns and reports.
The provisions for Taxes which are set forth on the Balance Sheet are
adequate for all accrued and unpaid taxes of JAG as of June 30, 1998,
whether (i) incurred in respect of or measured by income of JAG for
any periods prior to the close of business on that date, or (ii)
arising out of transactions entered into, or any state of facts
existing, on or prior to such date. JAG has duly withheld all payroll
taxes, FICA and other federal, state and local taxes and other items
requiring to be withheld by it from employer wages, and has duly
deposited the same in trust for or paid over to the proper taxing
authorities. JAG has not executed or filed with any taxing authority
any agreement extending the periods for the assessment or collection
of any Taxes, and is not a party to any pending or, to the best
knowledge of JAG and the Shareholders, threatened, action or
proceeding by any governmental authority for the assessment or
collection of Taxes. Within the past three years, the United States
federal income tax returns of JAG have not been examined by the
Internal Revenue Service ("the IRS"), nor has any states taxing
authority examined any merchandize, personal property, sales or use
tax returns of JAG.
(b) JAG (i) has not agreed to or been required to make any
adjustment pursuant to Section 481(a) of the
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Code of 1986, as amended (the "Code"), (ii) has no
knowledge that the IRS or any other taxing authority has proposed any
such adjustment or change in accounting method, and (iii) has no
application pending with any governmental authority requesting
permission for any change in accounting method.
(c) As used herein, the term "Taxes" means all federal, state,
county, local and other taxes and governmental assessments, including
but not limited to income taxes, estimated taxes, withholding taxes,
excise taxes, ad valorem taxes, payroll related taxes (including but
not limited to premiums for worker's compensation insurance and
statutory disability insurance), employment taxes, franchise taxes and
import duties, together with any related liabilities, penalties,
fines, additions to tax or interest.
2.18. Insurance. Schedule 2.18 is a complete and correct list and
summary description of all contracts and policies of insurance relating to
any of the Assets, the Business or the Shareholders in which JAG is an
insured party, beneficiary or loss payable payee. Such policies are in full
force and effect, all premiums due and payable with respect thereto have
been paid, and no notice of cancellation or termination has been received
by JAG with respect to any such policy.
2.19. Banks; Powers of Attorney. Schedule 2.19 is a complete and
correct list showing (a) the names of each bank in which JAG has an account
or safe deposit box and the names of all persons authorized to draw thereon
or who have access thereto, and (b) the names of all persons, if any,
holding powers of attorney from JAG.
2.20. Employee Arrangements. Schedule 2.20 is a complete and correct
list and summary description of all (a) union, collective bargaining,
employment, management, termination and consulting agreements to which JAG
is a party or otherwise bound, and (b) compensation plans and arrangements;
bonus and incentive plans and arrangements; deferred compensation plans and
arrangements; pension and retirement plans and arrangements; profit-sharing
and thrift plans and arrangements; stock purchase and stock option plans
and arrangements; hospitalization and other life, health or disability
insurance or reimbursement programs; holiday, sick leave, severance,
vacation, tuition reimbursement, personal loan and product purchase
discount policies and arrangements; and other plans or arrangements
providing for benefits for employees of JAG. Said Schedule also lists the
names and compensation of all employees of JAG whose earnings during the
last fiscal year were $25,000 or more (including bonuses and other
incentive compensation), and all employees who are expected to receive at
least said amount in respect of the current fiscal year.
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2.21. ERISA. JAG neither maintains nor is obligated to contribute to
an "employee pension benefit plan" as such term is defined in Section 3(2)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and JAG "welfare benefit plan", as such term is defined in
Section 3(1) of ERISA.
2.22. Environmental Matters. JAG and each of its subsidiaries has
obtained and is in compliance with the terms and conditions of all required
permits, licenses, registrations and other authorizations required under
Environmental Laws (as hereinafter defined). To the best knowledge of the
Shareholders and JAG, no asbestos in a friable condition, equipment
containing polychlorinated biphenyls, leaking underground or above-ground
storage tanks are contained in or located at any facility currently, or was
contained or located at any facility previously owned, leased or controlled
by JAG or any subsidiary of JAG heretofore in existence. JAG has not
released, discharged or disposed of on, under or about any facility
currently or previously owned, leased or controlled by JAG, any Hazardous
Substance (as hereinafter defined), and to the best knowledge of JAG and
the Shareholders, no third party has released, discharged or disposed of
on, under or about any facility currently or previously owned, leased or
controlled by JAG, and Hazardous Substances. JAG is in compliance with all
applicable Environmental Laws. JAG has fully disclosed to TTIS all past and
present noncompliance with, or liability under, Environmental Laws, and all
past discharges, emissions, leaks, releases or disposals by it of any
substance or waste regulated under or defined by Environmental Laws that
have formed or could reasonably be expected to form the basis of any claim,
action, suit, proceeding, hearing or investigation under any applicable
Environmental Laws. JAG has not received notice of any past or present
events, conditions, circumstances, activities, practices, incidents,
actions or plans of JAG or its subsidiaries that have resulted in or
threaten to result in any common law or legal liability, or otherwise form
the basis of any claim, action, suit, proceeding, hearing or investigation
under, any applicable Environmental Laws. For purposes of this Section
2.22, (a) "Environmental Laws: mean applicable federal, state, local and
foreign laws, regulations and codes relating in any respect to pollution or
protection of the environment and (b) "Hazardous Substances" means any
toxic, caustic or otherwise dangerous substance (whether or not regulated
under federal, state or local environmental statutes, rules, ordinances, or
orders), including (i) "hazardous substance" as defined in 42 U.S.C.
Section 9601, and (ii) petroleum products, derivatives, byproducts and
other hydrocarbons.
2.23. Business Practices and Commitments. Set forth on Schedule 2.23
is a description of and a list and the amount of all of JAG's outstanding
obligations with respect to (i) JAG's rebate and volume discount practice
and obligations,
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(ii) JAG's allowance and customer return practice and obligations, (iii)
JAG's co-op advertising and other promotional practices, and (iv) JAG's
warranty practice and obligations as each of the foregoing relate to the
customers and suppliers of JAG.
2.24. Certain Business Matters. Except as is set forth in Schedule
2.24, (a) JAG is not a party to or bound by any publishing,
distributorship, dealership, sales agency, franchise or similar agreement
which relates to the sale or distribution of any of the products and
services of the Business, (b) JAG has no sole-source supplier of
significant goods or services (other than utilities) with respect to which
practical alternative sources are not available on comparable terms and
conditions, (c) there are no pending or, to the best knowledge of JAG and
the Shareholders, threatened labor negotiations, work stoppages or work
slowdowns involving or affecting the Business, and no union representation
questions exist, and there are no organizing activities, in respect of any
of the employees of JAG, (d) the product and service warranties given by
JAG or by which it is bound (complete and correct copies or descriptions of
which have heretofore been delivered by JAG to TTIS) entail no greater
obligations than are customary in the Business, (e) neither JAG nor the
Shareholders is a party to or bound by any agreement which limits its or
his, as the case may be, freedom to compete in any line of business or with
any person, or which is otherwise materially burdensome to JAG or the
Shareholders, and (f) JAG is not a party to or bound by any agreement in
which any officer, director or stockholder of JAG (or any affiliate of any
such person) has, or had when made, a direct or indirect material interest.
2.25. Certain Contracts. Schedule 2.25 is a complete and correct list
of all material contracts, commitments, obligations and understandings
which are not set forth in any other Schedule delivered hereunder and to
which JAG is a party or otherwise bound, except for (a) purchase orders
from vendors or customers and (b) each of those which (i) were made in the
ordinary course of business and (ii) either (A) are terminable by JAG (and
will be terminable by JAG) without liability, expense or other obligation
on 30 days' notice or less, or (B) may be anticipated to involve aggregate
payments to or by JAG of $50,000 (or the equivalent) or less calculated
over the full term thereof, and (C) are not otherwise material to the
Business. Complete and correct copies of all contracts, commitments,
obligations and undertakings set forth on any of the Schedules delivered
pursuant to this Agreement have been furnished by JAG to TTIS. Except as
expressly stated on any of such Schedules, (1) each of agreements listed on
Schedule 2.25 is in full force and effect, no other person or entity which
is a party thereto or otherwise bound thereby is in material default
thereunder, and no event, occurrence, condition or act exists which does
(or which with the giving of notice or the lapse of time or both would)
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give rise to a material default or right of cancellation, acceleration or
loss of contractual benefits thereunder; (2) there has been no threatened
cancellations thereof, and there are no outstanding disputes thereunder;
and (3) each of them is fully assignable without the consent, approval,
order or any waiver by, or any other action of or with any individual or
individuals, without the payment of any penalty, the incurrence of any
additional debt, liability or obligation of any nature whatsoever or the
change of any term.
2.26. Customers and Suppliers. Schedule 2.26 sets forth a complete and
correct list, as of June 30, 1998, of (a) the 20 largest customers of the
Business and the amount for which each such customer was invoiced, and (b)
the 20 largest suppliers of the Business and the amount of goods and
services purchased from each such supplier. There are no (i) threatened
cancellations by the aforesaid customers or suppliers with respect to the
Business, (ii) outstanding disputes by such customers or suppliers with JAG
and the Business, or (iii) any adverse changes in the business relationship
between the Business and any such customer or supplier. To the best
knowledge of the Shareholders and JAG, the aforesaid suppliers and
customers will continue their respective relationships with the Business
after the Closing Date on substantially the same basis as now exists.
2.27. Approvals/Consents. Except as set forth on Schedule 2.27, JAG
currently holds all governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and franchises which are
necessary for the operation of the Business, all of which are in full force
and effect and are transferable pursuant to the transaction contemplated
hereby without the payment of any penalty, the incurrence of any additional
debt, liability or obligation of any nature whatsoever or the change of any
term. Schedule 2.27 is a complete and correct list of all such governmental
and administrative consents, permits, appointments, approvals, licenses,
certificates and franchises. No material violations of the terms thereof
have heretofore occurred or are known by the Shareholders to exist as of
the date of this Agreement.
2.28. Information as to JAG. None of the representations or warranties
made by the Shareholders in this Agreement is, or contained in any of the
JAG Documents to be executed and delivered hereto will be, false or
misleading with respect to any material fact, or omits to state any
material fact necessary in order to make the statements therein contained
not misleading.
2.29. Pooling of Interests. Each of the parties hereto intends that
the Merger be accounted for under the pooling of interests methods under
the requirements of ▇▇▇ ▇▇. ▇▇ of the AICPA, as amended by the SFAS Board
and the related interpretations of the AICPA, the SFAS Board and the rules
and
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regulations of the SEC. Neither JAG nor the Shareholders has, through the
date of this Agreement, taken or agreed to take any action which would
impair the ability of JAG to account for the business combination to be
effected by the Merger as a pooling of interests. Except as set forth on
Schedule 2.29:
(a) Neither JAG nor the Shareholders own or will have, since the
date two years prior to the Effective Date, owned any shares of TTIS
Common Stock, nor shall JAG have been a subsidiary or a division of
another entity since the date two years prior to the Effective Date.
(b) JAG has no equity investments or rights to purchase equity
investments of any kind in TTIS other than as pursuant to this
Agreement and the other agreements referenced herein; and
(c) JAG has not disposed of a significant amount of assets other
than in the ordinary course of business since the date two years prior
to the Effective Date.
The equity transactions and the capital stock transactions for JAG and
for each Shareholder since the date two years prior to the date hereof are
set forth on Schedule 2.29.
2.30. Securities Act Representation. Except in accordance with the
Registration Rights Agreement (as defined in Section 5.16), each
Shareholder is acquiring the TTIS Common Stock solely for investment
purposes, with no intention of distributing or reselling any such stock or
any interest therein. Each Shareholder is aware that the TTIS Common Stock
will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"), and that neither the TTIS Common Stock nor any interest
therein may be sold, pledged, or otherwise transferred unless the TTIS
Common Stock is registered under the Securities Act or qualifies for an
exemption under the Securities Act.
3. Representations and Warranties as to TTIS and Subsidiary. TTIS and
Subsidiary, jointly and severally, represent and warrant to JAG and the
Shareholders as follows:
3.1. Organization, Standing and Power. Each of TTIS and Subsidiary is
a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, the laws of the jurisdiction of their
respective incorporation, with full corporate power and corporate authority
to (i) own, lease and operate its properties, (ii) carry on its business as
currently conducted by it and (iii) execute and deliver, and perform under
this Agreement and each other agreement and instrument to be executed and
delivered by it pursuant hereto. Except as set forth on Schedule 3.1, there
are no states or jurisdictions in which the character and location of any
of the properties owned or leased by TTIS or the Subsidiary,
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or the conduct of their respective business operations makes it necessary
for TTIS or the Subsidiary to qualify to do business as a foreign
corporation. True and complete copies of the Certificate of Incorporation
of TTIS and all amendments thereof, and of the By-laws of TTIS, as amended
to date, have heretofore been furnished to JAG.
3.2. Interests in Other Entities. Schedule 3.2 sets forth a true and
complete list of all direct or indirect subsidiaries of TTIS (other than
the Subsidiary) that are material to the financial condition of TTIS and it
subsidiaries, together with the jurisdiction of incorporation of each such
subsidiary and the percentage of each such subsidiary's outstanding capital
stock owned by TTIS or another of TTIS's subsidiaries. Each of such
subsidiaries are duly organized corporations, validly existing and in good
standing under the laws of the jurisdiction of its respective incorporation
(as well as all applicable foreign jurisdictions necessary to its business
operations) and have the requisite corporate power and authority and
governmental authority to own, operate or lease the properties that each
purports to own, operate or lease and to carry on its business as it is now
being conducted.
3.3. Capitalization.
(a) The authorized capital stock of TTIS consists of 50,000,000
shares of TTIS Common Stock and 5,317,000 shares of Preferred Stock,
par value $.01 per share (of which 1,850,000 shares of Series A
Preferred Stock, $.01 par value per share, are outstanding). As of the
date hereof, (i) 12,103,863 shares of TTIS Common Stock are issued and
outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable, (ii) 1,186,784 (both plan and non-plan) shares
of TTIS Common Stock are issuable upon exercise of options and (iii)
913,164 shares of TTIS Common Stock are reserved for future issuance
upon exercise of outstanding common stock purchase warrants.
(b) The outstanding shares of capital stock of each of the
subsidiaries of TTIS, including the Subsidiary, are duly authorized,
validly issued, fully paid and nonassessable, and, except as set forth
on Schedule 3.3, such shares are owned by TTIS, directly or
indirectly, free and clear of all Liens and limitations on TTIS's
voting rights. Except as noted on Schedule 3.3, there are no options,
warrants or similar right outstanding with respect to shares of
capital stock of any subsidiary.
(c) Except as set forth in the SEC Reports (as defined in Section
3.13 hereof) and on Schedule 3.3, and except for the transactions
contemplated by this Agreement, there are no outstanding contractual
obligations or other commitments or arrangements of TTIS to (A)
repurchase, redeem or otherwise
-16-
acquire any shares of the capital stock of TTIS (or any interest
therein) or (B) to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other
entity, or (C) issue or distribute to any person any capital stock of
TTIS, or (D) issue or distribute to holders of any of the capital
stock of TTIS any evidences of indebtedness or assets of TTIS. All of
the outstanding securities of TTIS have been issued and sold by TTIS
in full compliance with applicable federal and state securities laws.
3.4. Authority. The execution and delivery by TTIS and Subsidiary of
this Agreement and of each agreement to be executed and delivered by either
of them pursuant hereto (collectively, the "TTIS Documents"), the
performance by each of them of its obligations hereunder and thereunder,
and the consummation of the transactions contemplated hereby and thereby,
have been duly and validly authorized by all necessary corporate action on
the part of TTIS and Subsidiary, and TTIS and Subsidiary have all necessary
corporate power and corporate authority with respect thereto. This
Agreement is, and when executed and delivered by TTIS and Subsidiary each
other TTIS Document will be, the valid and binding obligation of TTIS or
Subsidiary, as the case may be to the extent it is a party thereto, in
accordance with the respective terms, thereof, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the rights of creditors generally and subject to the rules of law
governing (and all limitations on) specific performance, injunctive relief,
and other equitable remedies.
3.5. Noncontravention. Except as set forth on Schedule 3.5, neither
the execution and delivery by TTIS or the Subsidiary of this Agreement or
of any other document, agreement or instrument to be executed and delivered
by either or both of them, nor the consummation of any of the transactions
contemplated hereby or thereby, nor the performance by either or both of
them of any of their respective obligations hereunder or thereunder, will
(nor with the giving of notice or the lapse of time or both would) (a)
conflict with or result in a breach of any provision of the Certificate of
Incorporation, By-Laws or other constituent documents of TTIS or the
Subsidiary, each as amended to date, or (b) give rise to a default, or any
right of termination, cancellation or acceleration, or otherwise be in
conflict with or result in a loss of contractual benefits to either or both
of them, under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation to which either or both of them is a party or by which either or
both of them or any of their respective assets may be bound, or require any
consent, approval or notice under the terms of any such document or
instrument, or (c) violate any order, writ, injunction, decree, law,
statute, rule or regulation of any court or governmental authority which is
applicable to either or both of them, or (d)
-17-
result in the creation or imposition of any lien, adverse claim,
restriction, charge or encumbrance upon any of the assets of TTIS or the
capital stock of TTIS, or (e) interfere with or otherwise adversely affect
the ability of TTIS to carry on its business operations after the Effective
Date in substantially the same basis as are now conducted by TTIS.
3.6. Litigation. Except as set forth in the SEC Reports or on Schedule
3.4, there are no claims, suits or actions, or administrative, arbitration
or other proceedings or governmental investigations, pending or, to the
best knowledge of TTIS and the Subsidiary, threatened, against or relating
to TTIS or the Subsidiary or the transactions contemplated hereby. There
are no judgments, orders, stipulations, injunctions, decrees or awards in
effect which relate to TTIS, the Subsidiary, this Agreement or the
transactions contemplated hereby, the effect of which is (a) to limit,
restrict, regulate, enjoin or prohibit any business practice of TTIS in any
area, or the acquisition by TTIS of any properties, assets or businesses,
or (b) otherwise materially adverse to the TTIS Common Stock.
3.7. No Violation of Law. To the best knowledge of TTIS and the
Subsidiary, neither TTIS nor the Subsidiary is engaging in any activity or
omitting to take any action as a result of which it is in violation of any
law, rule, regulation, zoning or other ordinance, statute, order,
injunction or decree, or any other requirement of any court or governmental
or administrative body or agency, applicable to TTIS, the Subsidiary or the
businesses of either or both of them, including, but not limited to, those
relating to: occupational safety and health matters; issues of
environmental and ecological protection (e.g., the use, storage, handling,
transport or disposal of pollutants, contaminants or hazardous or toxic
materials or wastes, and the exposure of persons thereto); business
practices and operations; labor practices; employee benefits; and zoning
and other land use laws and regulations.
3.8. Accounts and Notes Receivable/Inventories.
(a) The accounts and notes receivable of TTIS which are reflected
on the financial statements set forth in the SEC Reports are good and
collectible in the ordinary course of business at the aggregate
recorded amounts thereof, less the respective amount of the allowances
for doubtful accounts and notes receivable, if any, reflected thereon,
and are not subject to offsets other than in the ordinary course of
business. The accounts and notes receivable of TTIS which were added
after April 30, 1998, are good and collectible in the ordinary course
of business, less the respective amount of the allowances for doubtful
accounts and notes receivable, if any, reflected on the books and
records of TTIS (which allowances were established on a basis
consistent with prior practice), and are not subject to offsets.
-18-
(b) The inventories reflected on the latest balance sheet
contained in the SEC Reports consist of items of a quality and
quantity usable or saleable in the ordinary course of business, except
for obsolete materials, slow-moving items, materials of below standard
quality and not readily marketable items, all of which have been (i)
written down to net realizable value or (ii) adequately reserved
against on the books and records of TTIS. All inventories are stated
at the lower of cost or market.
3.9. Properties. All plants, structures and equipment which are
material to the condition (financial or otherwise) of TTIS or the
Subsidiary are owned or leased by TTIS operations or the Subsidiary, as
applicable, are free and clear of all Liens except as otherwise disclosed
in the SEC Reports, are in good operating condition and repair (ordinary
wear and tear excepted), and are adequate and suitable for the purposes for
which they are used. The SEC Reports and Schedule 3.9 sets forth all (a)
real property which is owned, leased (whether as lessor or lessee) or
subject to contract or commitment of purchase or sale or lease (whether as
lessor or lessee) by TTIS or the Subsidiary, or which is subject to a title
retention or conditional sales agreement or other security device, and (b)
except for furniture, personal computers and personal property having a
value less than $500.00 located at its various facilities, tangible
personal property which is owned, leased (whether as lessor or lessee) or
subject to contract or commitment of purchase or sale or lease (whether as
lessor or lessee) by TTIS or the Subsidiary.
3.10. Systems and Software. TTIS owns or has the right to use pursuant
to lease, license, sublicense, agreement, or permission all Systems
necessary for the operation of the businesses of TTIS as presently
conducted. Each System owned or used by TTIS immediately prior to the
Effective Date will be owned or available for use by TTIS on identical
terms and conditions immediately subsequent to the Effective Date. With
respect to each System owned by a third party and used by TTIS pursuant to
lease, license, sublicense, agreement or permission: (a) the lease,
license, sublicense, agreement or permission covering the System is legal,
valid, binding, enforceable, and in full force and effect; (b) the lease,
license, sublicense, agreement or permission will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical
terms following the Effective Date; (c) no party to any such lease,
license, sublicense, agreement or permission is in breach or default, and
no event has occurred which with notice or lapse of time would constitute a
breach or default, and permit termination, modification or acceleration
thereunder; (d) no party to any such lease, license, sublicense, agreement
or permission has repudiated any provision thereof; (e) TTIS has not
granted any sublicense, sublease or similar right with respect to any such
lease, license, sublicense, agreement or permission; (f)
-19-
TTIS's use and continued use of such Systems does not and will not
interfere with, infringe upon, misappropriate, or otherwise come into
conflict with, any intellectual property rights of third parties as a
result of the continued operation of the Business.
3.11. Intangibles/Inventions. Schedule 3.11 identifies (by a summary
description) the Intangibles, the ownership thereof and, if applicable,
TTIS's authority for use of the same, which Schedule is complete and
correct and encompasses: (A) all Marks owned in whole or in part or used by
TTIS, and all applications therefor, (B) all inventions, discoveries,
improvements, processes, formulae, technology, know-how, processes and
other intellectual property, proprietary rights and trade secrets relating
to the business of TTIS (collectively, the "Inventions") and (C) all
licenses and other agreements to which TTIS is a party or otherwise bound
which relate to any of the TTIS Intangibles or the TTIS Inventions or
TTIS's use thereof in connection with the Business (collectively, the "TTIS
Licenses, and together with the Marks and the TTIS Inventions, the "TTIS
Intangibles"). No violations of the terms of any of the aforesaid licenses
and/or agreements have occurred. Except as disclosed on Schedule 3.11, (A)
TTIS owns or is authorized to use in connection with its business all of
the TTIS Intangibles; (B) no proceedings have been instituted, are pending,
or to the best knowledge of TTIS, are threatened which challenge the rights
of TTIS with respect to the TTIS Intangibles or its use thereof in
connection with the business operations of TTIS or the validity thereof
and, there is no valid basis for any such proceedings; (C) neither TTIS's
ownership of the TTIS Intangibles nor its use thereof in connection with
its business operations violates any laws, statutes, ordinances or
regulations, or has at any time infringed upon or violated any rights of
others, or is being infringed by others; (D) none of the TTIS Intangibles,
or TTIS's use thereof in connection with its business operations is subject
to any outstanding order, decree, judgment, stipulation or any lien,
security interest or other encumbrance; and (E) TTIS has not granted any
license to third parties with regard to it the TTIS Intangibles.
3.12. Tax Matters.
(a) Except as listed on Schedule 3.12, TTIS has filed with the
appropriate governmental agencies all tax returns and reports required
to be filed by it, and has paid in full or contested in good faith or
made adequate provision for the payment of, Taxes shown to be due or
claimed to be due on such tax returns and reports. The provisions for
Taxes which are set forth on TTIS' balance sheet set forth in its
latest Form 10- QSB for the three months ended April 30, 1998 are
adequate for all accrued and unpaid taxes of TTIS as of April 30,
1998, whether (i) incurred in respect of or measured by income of TTIS
for any periods prior to the close of business on that date, or
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(ii) arising out of transactions entered into, or any state of facts
existing, on or prior to such date. TTIS has duly withheld all payroll
taxes, FICA and other federal, state and local taxes and other items
requiring to be withheld by it from employer wages, and has duly
deposited the same in trust for or paid over to the proper taxing
authorities. TTIS has not executed or filed with any taxing authority
any agreement extending the periods for the assessment or collection
of any Taxes, and is not a party to any pending or, to the best
knowledge of TTIS, threatened, action or proceeding by any
governmental authority for the assessment or collection of Taxes.
Within the past three years, the United States federal income tax
returns of TTIS have not been examined by the IRS, nor has any states
taxing authority examined any merchandize, personal property, sales or
use tax returns of TTIS.
(b) TTIS (i) has not agreed to or been required to make any
adjustment pursuant to Section 481(a) of the Code, (ii) has no
knowledge that the IRS or any other taxing authority has proposed any
such adjustment or change in accounting method, and (iii) has no
application pending with any governmental authority requesting
permission for any change in accounting method.
3.13. Securities and Exchange Commission Filings; Financial
Statements.
(a) TTIS has filed on ▇▇▇▇▇ all forms, reports, statements and
documents required to be filed with the Securities and Exchange
Commission ("SEC") (collectively, the "SEC Reports"), as set forth in
Schedule 3.13, each of which has complied in form in all material
respects with the applicable requirements of the Securities Act or the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
applicable, each as in effect on the date so filed. None of such
reports (including but not limited to any financial statements or
schedules included or incorporated by reference therein) filed by
TTIS, when filed (except to the extent revised or superseded by a
subsequent filing with the SEC) contained any untrue statement of a
material fact.
(b) Each of the consolidated financial statements contained in
the SEC Reports has been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may otherwise be indicated
in the notes thereto) and each presents fairly, in all material
respects, the consolidated financial position of TTIS and its
subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flow position for the periods
indicated.
(c) Except as and to the extent set forth on the balance sheet of
TTIS and its subsidiaries as at April 30, 1998, including the notes
thereto, TTIS and its subsidiaries
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taken as a whole, do not have any liabilities or obligations, whether
or not accrued, contingent or otherwise, that would be required to be
included on a balance sheet prepared in accordance with GAAP, except
for liabilities or obligations incurred in the ordinary course of
business since April 30, 1998, none of which would, individually or in
the aggregate, have a material adverse effect on the financial
condition, or results of the operations or cash flows of TTIS and its
subsidiaries, on a consolidated basis.
3.14. Stock Issuable in Merger. The Share Consideration, when issued,
will be duly authorized and validly issued, fully paid and non-assessable,
will be delivered hereunder free and clear of any liens, adverse claims,
security interests, pledges, mortgages, charges and encumbrances of any
nature whatsoever, except that the shares of TTIS Common Stock constituting
the Share Consideration are not registered and will be subject to
restrictions on transfers under the Securities Act.
3.15. Absence of Changes. Since April 30, 1998, there have not been
(a) any material adverse change (other than as is normal in the ordinary
course of business, in the condition (financial or otherwise), assets,
liabilities, business, prospects, results of operations or cash flows of
TTIS and Subsidiary (including, without limitation, any such adverse change
resulting from damage, destruction or other casualty loss, whether or not
covered by insurance), (b) any waivers by TTIS or Subsidiary of any right,
or cancellation of any debt or claim, of substantial value, (c) any
declarations, set asides or payments of any dividend or other distributions
or payments in respect of the TTIS Common Stock, or (d) any changes in the
accounting principles or methods which are utilized by TTIS or Subsidiary.
3.16. Environmental Matters. TTIS and the Subsidiary have obtained and
are in compliance with the terms and conditions of all required permits,
licenses, registrations and other authorizations required under
Environmental Laws. To the best knowledge of TTIS and the Subsidiary, no
asbestos in a friable condition, equipment containing polychlorinated
biphenyls, leaking underground or above-ground storage tanks are contained
in or located at any facility currently, or was contained or located at any
facility previously owned, leased or controlled by TTIS or the Subsidiary.
Neither TTIS nor the Subsidiary has released, discharged or disposed of on,
under or about any facility currently or previously owned, leased or
controlled by TTIS, any Hazardous Substance, and to the best knowledge of
TTIS and the Subsidiary, no third party has released, discharged or
disposed of on, under or about any facility currently or previously owned,
leased or controlled by TTIS, Hazardous Substances. TTIS is in compliance
with all applicable Environmental Laws. TTIS has fully disclosed to JAG all
past and present noncompliance with, or liability under, Environmental
Laws, and all past discharges, emissions, leaks,
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releases or disposals by it of any substance or waste regulated under or
defined by Environmental Laws that have formed or could reasonably be
expected to form the basis of any claim, action, suit, proceeding, hearing
or investigation under any applicable Environmental Laws. TTIS has not
received notice of any past or present events, conditions, circumstances,
activities, practices, incidents, actions or plans of TTIS or the
Subsidiary that have resulted in or threaten to result in any common law or
legal liability, or otherwise form the basis of any claim, action, suit,
proceeding, hearing or investigation under, any applicable Environmental
Laws.
3.17. Approvals/Consents. Except as set forth on Schedule 3.17, TTIS
and the Subsidiary currently hold all governmental and administrative
consents, permits, appointments, approvals, licenses, certificates and
franchises which are necessary for the operation of its Business
operations, all of which are in full force and effect and are transferable
pursuant to the transaction contemplated hereby without the payment of any
penalty, the incurrence of any additional debt, liability or obligation of
any nature whatsoever or the change of any term. Schedule 3.17 is a
complete and correct list of all such governmental and administrative
consents, permits, appointments, approvals, licenses, certificates and
franchises. No material violations of the terms thereof have heretofore
occurred or are known by TTIS or the Subsidiary to exist as of the date of
this Agreement.
3.18. Pooling of Interests. Each of the parties hereto intends that
the Merger be accounted for under the pooling of interests methods under
the requirements of ▇▇▇ ▇▇. ▇▇ of the AICPA, as amended by the SFAS Board
and the related interpretations of the AICPA, the SFAS Board and the rules
and regulations of the SEC. Neither TTIS nor the Subsidiary has, through
the date of this Agreement, taken or agreed to take any action which would
impair the ability of TTIS to account for the business combination to be
effected by the Merger as a pooling of interests.
3.19. Information as to TTIS and Subsidiary. None of the
representations or warranties made by TTIS or Subsidiary in this Agreement,
or contained in any of the TTIS Documents, to be executed and delivered
hereto, is or will be, false or misleading with respect to any material
fact, or omits to state any material fact necessary in order to make the
statements therein contained not misleading.
4. Indemnification.
4.1. Indemnification by the Shareholders. Each of JAG (before the
Effective Date) and the Shareholders, jointly and severally, hereby
indemnifies and agrees to defend and hold harmless each of TTIS and
Subsidiary from and against any and all
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losses, obligations, deficiencies, liabilities, claims, damages, costs and
expenses (including, without limitation, the amount of any settlement
entered into pursuant hereto, and all reasonable legal and other expenses
incurred in connection with the investigation, prosecution or defense of
any matter indemnified pursuant hereto) which either of them may sustain,
suffer or incur and which arise out of, are caused by, relate to, or result
or occur from or in connection with any misrepresentation of a fact
contained in any representation of JAG and/or the Shareholders contained
in, or the breach by JAG, or the Shareholders of any warranty or covenant
made by any one or all of them in, any JAG Document and/or any Shareholder
Document. The foregoing indemnification shall also apply to direct claims
by TTIS and/or Subsidiary against the Shareholders.
4.2. Indemnification by TTIS and Subsidiary. Each of TTIS and
Subsidiary, jointly and severally, indemnifies and agrees to defend and
hold harmless each of JAG (before the Effective Date) and the Shareholders
from and against any and all losses, obligations, deficiencies,
liabilities, claims, damages, costs and expenses (including, without
limitation, the amount of any settlement entered into pursuant hereto, and
all reasonable legal and other expenses incurred in connection with the
investigation, prosecution or defense of any matter indemnified pursuant
hereto), which it or he may sustain, suffer or incur and which arise out
of, are caused by, relate to, or result or occur from or in connection with
any misrepresentation of a fact contained in any representation of TTIS
and/or Subsidiary contained in, or the breach by TTIS or Subsidiary of any
warranty or covenant made by either or both of them in, any TTIS Document.
The foregoing indemnification shall also apply to direct claims by JAG or
the Shareholders against TTIS and/or Subsidiary.
4.3. Third Party Claims. If a claim by a third party is made against
any party or parties hereto and the party or parties against whom said
claim is made intends to seek indemnification with respect thereto under
Subsections 4.1 or 4.2, the party or parties seeking such indemnification
shall promptly notify the indemnifying party or parties, in writing, of
such claim; provided, however, that the failure to give such notice shall
not affect the rights of the indemnified party or parties hereunder except
to the extent that such failure materially and adversely affects the
indemnifying party or parties due to the inability to timely defend such
action. The indemnifying party or parties shall have 10 business days after
said notice is given to elect, by written notice given to the indemnified
party or parties, to undertake, conduct and control, through counsel of
their own choosing (subject to the consent of the indemnified party or
parties, such consent not to be unreasonably withheld) and at their sole
risk and expense, the good faith settlement or defense of such claim, and
the indemnified party or parties shall cooperate with the indemnifying
parties in connection therewith; provided: (a) all
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settlements require the prior reasonable consultation with the indemnified
party and the prior written consent of the indemnified party, which consent
shall not be unreasonably withheld, and (b) the indemnified party or
parties shall be entitled to participate in such settlement or defense
through counsel chosen by the indemnified party or parties, provided that
the fees and expenses of such counsel shall be borne by the indemnified
party or parties. So long as the indemnifying party or parties are
contesting any such claim in good faith, the indemnified party or parties
shall not pay or settle any such claim; provided, however, that
notwithstanding the foregoing, the indemnified party or parties shall have
the right to pay or settle any such claim at any time, provided that in
such event they shall waive any right of indemnification therefor by the
indemnifying party or parties. If the indemnifying party or parties do not
make a timely election to undertake the good faith defense or settlement of
the claim as aforesaid, or if the indemnifying parties fail to proceed with
the good faith defense or settlement of the matter after making such
election, then, in either such event, the indemnified party or parties
shall have the right to contest, settle or compromise (provided that all
settlements or compromises require the prior reasonable consultation with
the indemnifying party and the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld) the claim at their
exclusive discretion, at the risk and expense of the indemnifying parties.
4.4. Limitation. Notwithstanding the provisions of this Section 4, the
indemnification obligations shall not be applicable except to the extent
that the aggregate of all indemnifiable amounts sought against the
indemnifying parties exceeds $250,000; provided, however, in no event shall
the maximum liability of each Shareholder exceed the amounts, determined by
the following formulas:
==========================================================================================
Number of TTIS
Percentage of Common Stock Multiplied Maximum
Name JAG Ownership Received By Liability
------------------------------------------------------------------------------------------
▇▇▇▇▇ 45% 1,237,500 ("X") $_______
------------------------------------------------------------------------------------------
▇▇▇▇▇▇ 50% 1,375,000 ("X") $_______
------------------------------------------------------------------------------------------
▇▇▇▇▇▇ 5% 137,500 ("X") $_______
------------------------------------------------------------------------------------------
Total: 100% 2,750,000 ("X") $_______
==========================================================================================
"X" = the average of the closing bid price per share of the TTIS Common Stock on
the five trading days immediately proceeding the Closing Date.
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4.5. Assistance. Regardless of which party is controlling the defense
of any claim, each party shall act in good faith and shall provide
reasonable documents and cooperation to the party handling the defense.
5. Covenants
5.1. Investigation.
(a) Between the date hereof and the Closing Date, TTIS and/or
Subsidiary, on the one hand, and JAG and the Shareholders, on the
other hand, may, directly and through their representatives, make such
investigation of each other corporate party and their respective
businesses and assets of the other corporate party or parties as each
deems necessary or advisable (the entity and/or its representatives
making such investigation being the "Investigating Party"), but such
investigation shall not affect any of the representations and
warranties contained herein or in any instrument or document delivered
pursuant hereto. In furtherance of the foregoing, the Investigating
Party shall have reasonable access, during normal business hours after
the date hereof, to all properties, books, contracts, commitments and
records of each other, and shall furnish to the other and their
representatives such financial and operating data and other
information as may from time to time be reasonably requested relating
to the transactions contemplated by this Agreement. Each of TTIS and
Subsidiary, on the one hand, and JAG and the Shareholders, on the
other, and the respective management, employees, accountants and
attorneys of the corporate parties shall cooperate fully with the
Investigating Party in connection with such investigation.
(b) The parties hereto hereby agree that all confidential
information of a party to which an Investigating Party obtains access
shall be deemed "Confidential Information." As used in this Section,
the term "Confidential Information" shall mean any and all information
(verbal and written) relating to the Business, including, but not
limited to, information relating to: identity and description of goods
and services used; purchasing; costs; pricing; sources; machinery and
equipment; technology; research, test procedures and results;
customers and prospects; marketing; and selling and servicing;
(c) After the Effective Date each of the Shareholders agrees not
to, at any time, directly or indirectly, use, communicate, disclose or
disseminate any Confidential Information in any manner whatsoever
except such disclosures which are necessary to comply with their
duties as officers of the Surviving Corporation.
5.2. Non-Compete Covenant. Each of the Shareholders hereby
acknowledges and confirms that, in connection with the Merger, such
Shareholder has agreed to certain non-
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compete and other restrictive covenants which are set forth in such
Shareholder's respective Employment Agreements (as hereinafter defined)
entered into pursuant to this Agreement.
5.3. Consummation of Transaction. Each of the parties hereto hereby
agrees to use its best efforts to cause all conditions precedent to his or
its obligations (and to the obligations of the other parties hereto to
consummate the transactions contemplated hereby) to be satisfied,
including, but not limited to, using all reasonable efforts to obtain all
required (if so required by this Agreement) consents, waivers, amendments,
modifications, approvals, authorizations, novations and licenses; provided,
however, that nothing herein contained shall be deemed to modify any of the
absolute obligations imposed upon any of the parties hereto under this
Agreement or any agreement executed and delivered pursuant hereto.
5.4. Cooperation/Further Assurances.
(a) Each of the parties hereto hereby agrees to fully cooperate
with the other parties hereto in preparing and filing any notices,
applications, reports and other instruments and documents which are
required by, or which are desirable in the reasonable opinion of any
of the parties hereto, or their respective legal counsel, in respect
of, any statute, rule, regulation or order of any governmental or
administrative body in connection with the transactions contemplated
by this Agreement.
(b) Each of the parties hereto hereby further agrees to execute,
acknowledge, deliver, file and/or record, or cause such other parties
to the extent permitted by law to execute, acknowledge, deliver, file
and/or record such other documents as may be required by this
Agreement and as TTIS and/or Subsidiary, on the one hand, and/or JAG
and/or the Shareholders, on the other, or their respective legal
counsel may reasonably require in order to document and carry out the
transactions contemplated by this Agreement.
5.5. Accuracy of Representations. Each party hereto agrees that prior
to the Effective Date he or it will enter into no transaction and take no
action, and will use his or its best efforts to prevent the occurrence of
any event (but excluding events which occur in the ordinary course of
business and events over which such party has no control), which would
result in any of his or its representations, warranties or covenants
contained in this Agreement or in any agreement, document or instrument
executed and delivered by him or it pursuant hereto not to be true and
correct, or not to be performed as contemplated, at and as of the time
immediately after the occurrence of such transaction or event.
5.6. Notification of Certain Matters. JAG and the Shareholders shall
give prompt notice to TTIS and Subsidiary, and
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TTIS or Subsidiary shall give prompt notice to JAG and the Shareholders, as
the case may be, of (a) the occurrence, or nonoccurrence, or any event the
occurrence, or nonoccurrence, of which would be likely to cause any
representation contained in this Agreement to be untrue or inaccurate in
any material respect at or prior to the Effective Date and (b) any material
failure of JAG and/or the Shareholders, on the one hand, and of TTIS and/or
Subsidiary, on the other, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by him or it hereunder;
provided, however, that the delivery of any notice pursuant to this
Subsection 5.6 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
5.7. Broker. Each of TTIS, Subsidiary, JAG, and the Shareholders
represents and warrants to the other parties that no broker or finder was
engaged or dealt with in connection with any of the transactions
contemplated by this Agreement, and each of the parties shall indemnify and
hold the other harmless from and against any and all claims or liabilities
asserted by or on behalf of any alleged broker or finder for broker's fees,
finder's fees, commissions or like payments.
5.8. No Solicitation of Transactions. Prior to the earlier of the
Effective Date or the termination of this Agreement, neither JAG nor any of
the Shareholders will, directly or indirectly, through any director,
officer, employee, investment banker, financial advisor, attorney,
accountant or other agent or representative of JAG otherwise, solicit,
initiate or encourage the submission of proposals or offers from any person
relating to any acquisition or purchase of all or (other than in the
ordinary course of business) any portion of the JAG Capital Stock, Assets
or Business of, or any equity interest in, JAG, or any business combination
with JAG (other than the Merger contemplated hereby) and other than with
TTIS and/or Subsidiary, participate in any negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other person to do or seek any of
the foregoing. JAG and the Shareholders shall immediately cease and cause
to be terminated any existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing (other than in
respect of the transaction contemplated hereby). JAG and the Shareholders
shall promptly notify TTIS if any such proposal or offer, or any inquiry or
contact with any person with respect thereto, is made and shall, in any
such notice to TTIS, indicate in reasonable detail the identity of the
offeror and the terms and conditions of any proposal or offer.
5.9. Prohibited Conduct. Each of JAG and the Shareholders, jointly and
severally, covenants and agrees that, during the period from the date
hereof to the Effective Date,
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except pursuant to the terms hereof or unless TTIS shall otherwise agree in
writing, the Business shall be conducted only, and JAG shall not take any
action except, in the ordinary course of business and in a manner
consistent with past practice and in compliance with applicable laws; and
JAG shall use its best efforts to preserve intact its Assets, the Business
and the business organization of JAG, to keep available the services of the
present officers, employees and consultants of JAG, and to preserve the
present relationships of JAG with customers, suppliers and other persons
with whom JAG has business relations. By way of illustration, and not
limitation, neither JAG nor the Shareholders shall, between the date of
this Agreement and the Effective Date, directly or indirectly, do or
propose or commit to do, any of the following without the prior written
consent of TTIS:
(a) (i) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of the JAG Capital Stock, or
(ii) split, combine or reclassify any of the JAG Capital Stock or
issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of the JAG Capital Stock, or
otherwise;
(b) authorize for issuance, issue, deliver, sell or agree to
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise), pledge or otherwise encumber, any shares of
JAG Capital Stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any
such shares, voting securities convertible securities or any other
securities or equity equivalents;
(c) (i) increase the compensation payable or to become payable to
any officer, director, employees or consultant of JAG, except pursuant
to the terms of contracts, policies or benefit arrangements in effect
on the date hereof, or (ii) grant any severance or termination pay to,
or enter into any employment or severance agreement with, any
director, officer, other employee or consultant of JAG or any of its
subsidiaries, except pursuant to the terms of contracts, policies and
benefit arrangements in effect on the date hereof, or (iii) establish,
adopt, enter into or amend any collective bargaining (other than in
accordance with past practice), bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers, employees or consultants of JAG;
(d) amend the Certificate of Incorporation, By-Laws or other
comparable charter or organizational documents of JAG or alter through
merger, liquidation, reorganization,
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restructuring, or in any other fashion, the corporate structure or
ownership of JAG;
(e) acquire, or agree to acquire, (i) by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets
of, or by any other manner, any business or corporation, partnership,
joint venture, association or other business organization or division
thereof, or (ii) any assets that are material, individually or in the
aggregate, to JAG, except purchases consistent with past practice;
(f) sell, lease, license, mortgage or otherwise encumber or
subject to any lien, security interest, pledge or encumbrance or
otherwise dispose of any of the Assets, except sales in the ordinary
course of business consistent with past practice;
(g) permit JAG to incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt
securities of JAG, guarantee any debt securities of another person, or
enter into any arrangement having the economic effect of any of the
foregoing, except for (i) short-term borrowings incurred in the
ordinary course of business consistent with past practice, and (ii)
the existing Provident Bank Facility disclosed in Schedule 5.9(g).
(h) except in the ordinary course of business, enter into any
agreement, contract, commitment, involving a commitment on the part of
JAG to purchase, sell, lease or otherwise dispose of assets or require
payment by JAG in excess of $50,000;
(i) make any capital expenditures;
(j) adopt a plan of complete or partial liquidation of JAG or
resolutions providing for or authorizing such a liquidation or the
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization of JAG;
(k) cause JAG to recognize any labor union (unless legally
required to do so) or enter into or amend any collective bargaining
agreement;
(l) change any accounting principles used by JAG, unless required
by the Financial Accounting Standards Board;
(m) make any tax election of, or settle, compromise any income
tax liability of, or file any federal income tax return prior to the
last day (including extensions) prescribed by law, in the case of any
of the foregoing, material to the business, financial condition or
results of the operations of JAG and its subsidiaries, if any, taken
as a whole;
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(n) settle or compromise any litigation in which JAG is a
defendant (whether or not commenced prior to the date of this
Agreement) or settle, pay or compromise any claims not required to be
paid, which payments are individually in an amount in excess of $5,000
and in the aggregate in an amount in excess of $25,000; and
(o) authorize any of, or commit or agree to take any of, the
foregoing actions.
5.10. Tax-Free Reorganization. Each of the parties hereto agree to use
all reasonable efforts to cause the Merger to be treated as a
reorganization within the meaning of Section 368(a) of the Code, and to
obtain the opinion of its respective counsel. Each party shall make, and
shall use all reasonable efforts to cause those of its respective
shareholders that counsel to the parties shall reasonably request to make,
such representations and provide certificates as counsel to the parties
shall reasonably request to enable them to render such opinions.
5.11. Pooling of Interests. Neither JAG nor the Shareholders shall
take any action which would adversely affect the likelihood of treating,
for financial reporting purposes, the Merger as a "pooling of interests."
5.12. Payment of Taxes Upon Merger. The Shareholders shall be
responsible for, and shall pay, any and all sales, use, purchase, transfer
and similar taxes (real estate or otherwise), and any and all filing,
recording, registration and similar fees, arising out of the transfer of
JAG Capital Stock pursuant to the Merger.
5.13. Stock Options. At the Effective Date, TTIS shall reserve an
additional 250,000 shares of TTIS Common Stock under its 1997 Stock Option
Plan (the "1997 Plan") for the granting of incentive stock options to the
key employees of the Surviving Corporation listed on Schedule 5.13 after
the Effective Date. All such options shall be granted pursuant to the terms
and conditions of the 1997 Plan.
5.14. Employment Agreements. At the Effective Date, each of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇ shall enter into an employment
agreement with the Surviving Corporation in the form of Exhibits D, E, F
and G hereto, respectively (the "Employment Agreements").
5.15. Registration Rights Agreement. At the Closing, TTIS shall enter
into a registration rights agreement with the Shareholders, substantially
in the form attached hereto as Exhibit H (the "Registration Rights
Agreement"), with respect to a portion of the Share Consideration.
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5.16. Business Office. Cincinnati, Ohio shall be the principal place
of business for the Surviving Corporation for the next five (5) years.
5.17. TTIS Board of Directors. The members of the board of directors
of TTIS (the "TTIS Board") shall use their best efforts to have appointed
and elected ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as a member of the TTIS Board, effective
within three (3) days of the Closing Date, to hold such office in
accordance with applicable law, the Certificate of Incorporation of TTIS
and its By-Laws until his resignation, removal or replacement.
6. Conditions of Merger.
6.1. Conditions to Obligations of TTIS and Subsidiary to Effect the
Merger. The respective obligations of TTIS and Subsidiary to effect the
Merger shall be subject to the fulfillment at or prior to the Effective
Date of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of each of JAG and the Shareholders
contained in any Shareholders Document or JAG Document delivered by
either or both of them shall have been true when made, and, in
addition, shall be true in all material respects on and as of the
Closing Date with the same force and effect as though made on and as
of the Closing Date.
(b) Performance of Agreements. Each of JAG and the Shareholders,
as the case may be, shall have performed, observed and complied in all
material respects with all of their obligations, covenants and
agreements, and shall have satisfied or fulfilled in all material
respects conditions contained in any Shareholders Document or JAG
Document and required to be performed, observed or complied with, or
to be satisfied or fulfilled, by JAG or the Shareholders at or prior
to the Effective Date.
(c) Results of Investigation. TTIS and Subsidiary shall be
satisfied with the results of any investigation of the business and
affairs of JAG undertaken by them pursuant to Subsection 5.1 hereof,
including, without limitation, satisfaction that the transaction would
be "accretive" to the Earnings Per Share (fully diluted basis) of TTIS
for the 1998 fiscal year.
(d) Board Authorization. Approval by the Board of Directors and
the shareholders of JAG with respect to the execution and delivery of,
and the performance by JAG of its obligations under, this Agreement
and the transactions contemplated hereunder.
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(e) Pooling of Interests. TTIS shall have received an opinion, in
form attached as Exhibits I-1 and I-2, from each of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, LLP and Price Waterhouse Coopers, LLP, independent
auditors of JAG and TTIS, respectively, to the effect that the Merger
will be treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, such accountants may rely upon reasonable
representations and certificates of JAG and TTIS and their respective
directors, officers and shareholders.
(f) Affiliate Letters. TTIS shall have received a letter in
substantially the form annexed hereto as Exhibit J from each of JAG,
its officers and directors, the holders of JAG Capital Stock (or other
securities of JAG) and any of its other "affiliates" within the
meaning of Rule 145 of the Securities Act.
(g) Financing Arrangements. TTIS and JAG shall have executed a
definitive agreement consistent with the term sheet attached hereto as
Schedule 6.1(g) with respect to financing arrangements with respect to
the on-going operations of JAG.
(h) Tangible Net Worth. JAG shall have at least $1,800,000 of
Tangible Net Worth as of the Closing Date. For purposes hereof,
"Tangible Net Worth" shall mean the amount reflected on JAG's Balance
Sheet as "Stockholder's Equity."
(i) Opinion of Counsel for JAG. TTIS and Subsidiary shall have
received an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.L.L., counsel
for JAG and the Shareholders, dated the Closing Date, in substantially
the form of Exhibit K hereto.
(j) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions
contemplated hereby, and no claim, suit, action, inquiry,
investigation or proceeding in which it will be, or it is, sought to
restrain, prohibit or change the terms of or obtain damages or other
relief in connection with this Agreement or any of the transactions
contemplated hereby, shall have been instituted or threatened by any
person or entity, and which, in the reasonable judgment of TTIS (based
on the likelihood of success and material consequences of such claim,
suit, action, inquiry or proceeding), makes it inadvisable to proceed
with the consummation of such transactions.
(k) Consents and Approvals. All consents, waivers, approvals,
licenses and authorizations by third parties
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and governmental and administrative authorities (and all amendments or
modifications to existing agreements with third parties) (the
"Consents") including, without limitation, all Consents from the
primary lending institutions of each of JAG, TTIS and the
Subsidiaries, required as a precondition to the performance by JAG and
the Shareholders of their respective obligations hereunder and under
any agreement delivered pursuant hereto, or which in TTIS's reasonable
judgment are necessary to continue unimpaired, subsequent to the
Effective Date, any rights in and to the Assets and/or the Business
which could be impaired by the Merger, shall have been duly obtained
and shall be in full force and effect.
(l) Date of Consummation. The Merger shall have been consummated
on or prior to August 31, 1998, or such later date as the parties
shall agree by a written instrument signed by all of them.
(m) Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all
agreements, instruments, opinions, certificates and other documents
delivered by JAG and the Shareholders pursuant hereto, shall be
satisfactory in all material respects to TTIS and its counsel.
(n) No Material Adverse Change. Except as otherwise provided by
this Agreement, there shall not have occurred after the date hereof,
in the reasonable judgment of TTIS, a material adverse change in the
financial or business condition of JAG.
(o) Employment Agreements. Each of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ and ▇▇▇▇▇▇ shall have executed and delivered their respective
Employment Agreements.
(p) Closing Certificate. Each of the Shareholders shall have
furnished TTIS and Subsidiary with certificates, all dated the Closing
Date, to the effect that all the representations and warranties of JAG
and the Shareholders are true and complete and all covenants to be
performed by JAG or the Shareholders at or as of the Closing have been
performed and conditions to be satisfied at or as of the Closing have
been waived or satisfied.
6.2. Conditions to Obligations of JAG and the Shareholders to Effect
the Merger. The obligations of JAG and the Shareholders to effect the
Merger shall be subject to the fulfillment at or prior to the Effective
Date of the following conditions:
(a) Accuracy of Representations and Warranties. The
representations and warranties of TTIS and Subsidiary contained in any
TTIS Documents delivered by either
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TTIS or Subsidiary or both of them shall have been true when made,
and, in addition, shall be true in all material respects, on and as of
the Closing Date with the same force and effect as though made on and
as of the Closing Date.
(b) Performance of Agreements. Each of TTIS and Subsidiary shall
have performed, observed and complied, in all material respects, with
all obligations, covenants and agreements, and shall have satisfied or
fulfilled in all material respects all conditions contained in any
TTIS Document and required to be performed, observed or complied with,
or satisfied or fulfilled, by TTIS and Subsidiary of them at or prior
to the Closing Date.
(c) Board Authorization. Approval by the TTIS Board of the
execution and delivery of, and the performance by TTIS of its
obligations under, this Agreement and the transactions contemplated
thereunder.
(d) Litigation. No order of any court or administrative agency
shall be in effect which restrains or prohibits the transactions
contemplated hereby, and no claim, suit, action, inquiry,
investigation or proceeding in which it will be, or it is, sought to
restrain, prohibit or change the terms of or obtain damages or other
relief in connection with this Agreement or any of the transactions
contemplated hereby shall have been instituted or threatened by any
person or entity, and which in the reasonable judgment of the
Shareholders (based on the likelihood of success and material
consequences of such claim, suit, action, inquiry or proceeding),
makes it inadvisable to proceed with the consummation of such
transactions.
(e) Consents and Approvals. All consents, waivers, approvals,
licenses and authorizations by third parties and governmental and
administrative authorities (and all amendments and modifications to
existing agreements with third parties) required as a precondition to
the performance by TTIS and Subsidiary of their respective obligations
hereunder and under any agreement delivered pursuant hereto, shall
have been duly obtained and shall be in full force and effect.
(f) Pooling of Interests. TTIS shall have received an opinion, in
form attached as Exhibits I-1 and I-2, from each of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇, LLP and Price Waterhouse Coopers, LLP, independent
auditors of JAG and TTIS, respectively, to the effect that the Merger
will be treated for federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code.
(g) Opinion of Counsel for TTIS and the Subsidiary. JAG shall
have received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP, counsel for TTIS
and the Subsidiary, dated the Closing Date, in substantially the form
of Exhibit L hereto.
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(h) No Material Adverse Change. Except as otherwise provided by
this Agreement, there shall not have occurred after the date hereof,
in the reasonable judgment of JAG, a material adverse change in the
financial or business condition of TTIS and its subsidiaries, taken as
a whole.
(i) Date of Consummation. The Merger shall have been consummated
on or prior to August 31, 1998, or such later date as the parties
shall agree by a written instrument signed by all of them.
(j) Validity of Transactions. The validity of all transactions
contemplated hereby, as well as the form and substance of all
agreements, instruments, opinions, certificates and other documents
delivered by TTIS and Subsidiary pursuant hereto, shall be
satisfactory in all material respects to the Shareholders and its
counsel.
(k) Stock Options. TTIS shall have authorized the issuance
pursuant to its 1997 Plan of options to purchase up to an aggregate of
250,000 shares of the TTIS Common Stock to key employees of the
Surviving Corporation listed on Schedule 5.13.
(l) Employment Agreements. The Surviving Corporation shall have
executed and delivered to each of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
and ▇▇▇▇▇▇ their respective Employment Agreements.
(m) Registration Rights Agreement. TTIS shall have entered into
the Registration Rights Agreement.
(n) Closing Certificate. Each of TTIS and Subsidiary shall have
furnished JAG with certificates, each executed by their respective
presidents, dated the Closing Date, to the effect that all the
representations and warranties of TTIS or Subsidiary, as the case may
be, are true and complete in all material respects and all covenants
to be performed by each of TTIS or Subsidiary, as the case may be, at
or as of the Closing have been performed in all material respects and
conditions to be satisfied at or as of the Closing have been waived or
satisfied in all material respects.
7. The Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8, the closing of the Merger (the "Closing") will take place at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP as promptly as practicable (and in any event within five
business days) after satisfaction or waiver of the conditions set forth in
Section 6 but in no event later than August 31, 1998 (the "Closing Date"); or
such later date as shall have been fixed by a written instrument signed by the
parties.
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7.1. Deliveries by TTIS and Subsidiary at the Closing. At the Closing,
TTIS and Subsidiary shall deliver the following:
(a) stock certificate(s), representing the Share Consideration
registered in the names of the Shareholders;
(b) copies of (i) resolutions adopted by the TTIS Board
authorizing TTIS to execute and deliver the TTIS Documents to which it
is a party, to perform its obligations thereunder and to effect the
Merger upon the terms and subject to the conditions set forth therein,
and (ii) resolutions adopted by the board of directors of the
Subsidiary, and the written consent of the sole shareholder,
authorizing Subsidiary to execute and deliver the Subsidiary Documents
to which it is a party, to perform its obligations thereunder and to
effect the Merger upon the terms and subject to the conditions set
forth therein, duly certified by the Secretaries or Assistant
Secretaries of TTIS and the Subsidiary, respectively;
(c) certificates of the Secretary or Assistant Secretary of each
of TTIS and Subsidiary certifying as to the incumbency and specimen
signatures of the officers of TTIS and Subsidiary executing the TTIS
Documents on behalf of such corporation;
(d) confirmation, in the form of satisfactory to the parties
hereto, from the States of Delaware and Ohio that the Certificate of
Merger of the Subsidiary with and into JAG has been filed with such
Secretaries of State; together with a copy of the executed form of
such agreement;
(e) the Registration Rights Agreement duly executed by TTIS;
(f) the Employment Agreements, duly executed by the Surviving
Corporation; and
(g) the incentive stock options pursuant to Section 5.13.
7.2. Deliveries by JAG and/or the Shareholders at the Closing. At the
Closing, JAG and/or the Shareholders, as applicable, shall deliver to TTIS
and/or Subsidiary, as the case may be, the following:
(a) stock certificate(s) representing the JAG Capital Stock, duly
executed by the Shareholders;
(b) a copy of the resolutions of the Board of Directors of JAG,
and the written consent of the Shareholders, authorizing JAG to
execute and deliver the JAG Documents, to perform its obligations
thereunder and to effect the Merger upon
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the terms and conditions thereunder, duly certified by the Secretary
or assistant Secretary of JAG;
(c) certificates of the Secretary or Assistant Secretary of JAG
certifying as to the incumbency and specimen signatures of the
officers of JAG executing the JAG Documents on behalf of such
corporation;
(d) the Employment Agreements, duly executed by ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇▇;
(e) the Registration Rights Agreement duly executed by the
Shareholders; and
(f) the Investment Representation Agreement, in the form of
Exhibit M, duly executed by the Shareholders.
7.3. Other Deliveries. In addition, the parties shall execute and
deliver such other documents as may be required by this Agreement and as
either of them or their respective counsel may reasonably require in order
to document and carry out the transactions contemplated by this Agreement.
8. Termination, Amendment and Waiver.
8.1. Termination. This Agreement may be terminated at any time prior
to the Effective Date:
(a) By mutual consent of the Boards of Directors of TTIS and JAG;
or
(b) By TTIS, on the one hand, or JAG and the Shareholders, on the
other hand, if any of the conditions precedent with respect to the
other party, as set forth in Sections 6.1 and 6.2, respectively, have
not been satisfied or waived on or before the Closing Date.
(c) By TTIS, on the one hand, or JAG and the Shareholders, on the
other hand, if (i) the Merger shall not have been consummated by
August 31, 1998, or such later date as the parties shall have fixed by
written instrument signed by the parties hereto; provided, however,
that the right to terminate this Agreement under this Subsection shall
not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Effective Date to occur on or before such date or (ii)
a court of competent jurisdiction or governmental, regulatory or
administrative agency or commission shall have issued an order, decree
or ruling or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their reasonable efforts to
vacate), in each case permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement.
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(d) By TTIS, on the one hand, or by JAG and the Shareholders, on
the other hand, if, in the reasonable judgment of TTIS or JAG and the
Shareholders, as the case may be, (and provided such parties are not
then in material breach of their respective obligations hereunder), it
shall have been determined that the transaction contemplated by this
Agreement has become inadvisable or impracticable by reason of the
institution or threat by state, local or federal governmental
authorities or by any other person of material litigation or
proceedings against TTIS or JAG.
(e) By TTIS, on the one hand, or JAG and the Shareholders, on the
other hand, if, in the reasonable judgment of TTIS or JAG or the
Shareholders, as the case may be (and provided such parties are not
then in material breach of their respective obligations hereunder), it
shall be determined that the business or financial condition of the
other unrelated corporate party hereto has been materially and
adversely affected since the date of its last balance sheet (to wit,
April 30, 1998 as to TTIS and June 30, 1998 as to JAG), whether by
reason of changes, developments or operations in the normal course of
business or otherwise.
8.2. Effect of Termination. In the event of the termination of this
Agreement as provided in this Section 8, this Agreement shall, forthwith
become null and void and there shall be no liability on the part of any
party hereto and nothing herein shall relieve any party from liability for
any wilful breach hereof. Such termination shall not, however, affect the
obligations of the parties with respect to any Confidential Information
exchanged by the parties pursuant to Section 5.1 hereof.
8.3. Fees and Expenses.
(a) TTIS and the Subsidiary, on the one hand, and the
Shareholders, on the other hand, shall bear their own expenses in
connection with the transactions contemplated hereby; provided,
however, that TTIS and/or the Subsidiary shall reimburse JAG for the
reasonable legal and other professional fees incurred by JAG in
connection with this transaction, up to a maximum amount of $50,000,
in the event that the Merger is not consummated by any reason other
than JAG's failure to meet the tangible net worth requirement of
Section 6.1(h).
(b) TTIS shall issue 50,000 shares of TTIS Common Stock to JAG
(which stock will not be registered under the Act) in the event that
the Merger is terminated by the TTIS Board for any reason other than a
decision to terminate the Merger pursuant to Sections 6.1(c), (e),
(g), (h) and (k) hereof or with respect to the granting of
registration rights, in which event TTIS shall have no obligation to
issue any shares to JAG.
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8.4. Waiver. At any time prior to the Effective Date, any party hereto
may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party
or parties to be bound thereby.
9. Survival of Representations and Warranties.
Each of the parties hereto hereby agrees that: (i) representations and
warranties made by or on behalf of him or it in this Agreement or in any
document or instrument delivered pursuant hereto with respect to tax matters,
environmental compliance and ERISA matters shall survive the respective statutes
of limitations for such matters; and (ii) all other representations or
warranties made herein shall survive the Closing Date for a period of two (2)
years after the Effective Date.
10. General Provisions.
10.1. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the earlier of the date delivered or mailed if
delivered personally, by overnight courier or mailed by express, registered
or certified mail (postage prepaid, return receipt requested) or by
facsimile transmittal, confirmed by express, certified or registered mail,
to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice, except that notices of changes
of address shall be effective upon receipt):
If to TTIS or Subsidiary: Take-Two Interactive Software, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to JAG or
the Shareholders: ▇▇▇▇ of All Games, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.L.L.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
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Attn: J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
10.2. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the greatest extent possible.
10.3. Entire Agreement. This Agreement and the agreements referred to
herein constitute the entire agreement, and supersede all prior agreements
and undertakings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof.
10.4. Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
10.5. Schedules. All references in this Agreement to Schedules shall
mean the schedules identified in this Agreement, which are incorporated
into this Agreement and shall be deemed a part of the representations and
warranties to which they relate. To the extent a disclosure has been made
by TTIS, Subsidiary, JAG or the Shareholders on any Schedule, it shall be
in writing, shall indicate the section pursuant to which it is being
delivered, and shall be initialed by the delivering party. For purposes of
this Agreement, information which is necessary to make a given Schedule
complete and accurate, but is omitted therefrom, shall nevertheless be
deemed to be contained therein if it is contained on any other Schedule;
but only if such information appears on such other Schedule in such form
and detail that it is responsive to the requirements of such given
Schedule.
10.6. No Assignment. This Agreement shall not be assigned by operation
of law or otherwise, and any assignment shall be null and void.
10.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York without
regard to its choice of law principles. Each of TTIS, Subsidiary, JAG and
the Shareholders hereby irrevocably and unconditionally consents to submit
to the jurisdiction of the courts of the State of New York and of the
United States located in the County of ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇
-▇▇-
▇▇▇▇ for any litigation arising out of or relating to this Agreement and
the transactions contemplated hereby waives any objection to the laying of
venue of any such litigation in such courts and agrees not to plead or
claim that such litigation brought in any such courts has been brought in
an inconvenient forum.
[END OF PAGE - SECTION 10.8 AND SIGNATURE PAGE FOLLOWS]
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10.8. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, but all
of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of Take-Two Interactive Software, Inc.,
Subsidiary, JAG, Ltd., by their respective officers thereunto duly authorized,
the Shareholders, individually, have caused this Agreement to be executed as of
the date first written above.
TAKE-TWO INTERACTIVE SOFTWARE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board
JAG ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
▇▇▇▇ OF ALL GAMES, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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