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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
TAVA TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.0001 PER SHARE
- --------------------------------------------------------------------------------
(Title of Class of Securities)
872169107
- --------------------------------------------------------------------------------
(CUSIP Number)
Eric Cumming
Real Software Acquisition Sub #1, Inc.
818 Roeder Road, Suite 600, Silver Spring, MD 20910
(301) 608-0611
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 20, 1999
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box: / /
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-7(b) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
SEE the Notes).
(Continued on following page(s))
Page 1 of 5 Pages
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- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Real Software Acquisition Sub #1, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
N/A
- --------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d)
OR 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
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NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY --------------------------------------------------------------
OWNED 8 SHARED VOTING POWER
BY 1,591,240
EACH --------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH: --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,591,240
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.8%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*See Instructions Before Filling out!
Page 2 of 5 Pages
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ITEM 1. SECURITY AND ISSUER:
This statement relates to the Common Stock, par value $.0001 per share
("Common Stock"), of TAVA Technologies, Inc., a Colorado corporation
("Issuer"), whose principal executive offices are located at 7887 E.
Belleview Avenue, Suite 820, Englewood, Colorado 80111.
ITEM 2. IDENTITY AND BACKGROUND:
This statement is being filed by Real Software Acquisition Sub #1, Inc.,
a Colorado corporation ("Merger Sub"). The address of the principal business
office of Merger Sub is 818 Roeder Road, Suite 600, Silver Spring, Maryland
20910. Merger Sub is wholly owned by Real Software Holdings North America,
Inc., a Delaware corporation ("Real Holdings"), with its principal business
office at 818 Roeder Road, Suite 600, Silver Spring, Maryland 20910. Real
Holdings is wholly owned by Real Software NV, a Belgium corporation ("Real"),
with its principal business office at Kontichsesteenweg 38, Aartselaar,
B-2630, Belgium. Schedule I attached hereto sets forth certain additional
information with respect to each director and each executive officer of
Merger Sub, Real Holdings and Real.
Neither Merger Sub, Real Holdings or Real, nor, to Merger Sub's
knowledge, any person listed on Schedule I hereto, has been, during the last
five years (a) convicted of any criminal proceeding (excluding traffic
violations or similar misdemeanors) or (b) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, U.S. federal or state securities laws or finding any violations
with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS:
The securities were not acquired through purchase and no funds were used
for their acquisition. Beneficial ownership was obtained through Management
Voting and Exchange Agreements, each dated as of April 20, 1999 (the
"Management Voting and Exchange Agreements"), between Merger Sub and each of
John Jenkins, Douglas H. Kelsall, Larry B. Hagewood and Kevin Fallon (the
"Executives").
ITEM 4. PURPOSE OF TRANSACTION:
On April 20, 1999, TAVA, Real, Real Holdings and Merger Sub entered into
an Agreement and Plan of Reorganization (the "Merger Agreement") whereby,
within three business days after the satisfaction or waiver of certain
conditions precedent, (i) Merger Sub will be merged with and into TAVA, (ii)
each outstanding share of TAVA Common Stock (other than certain shares held
by Kevin Fallon) will be converted into the right to receive $8.00 and (iii)
TAVA will become a subsidiary of Real Holdings. If the merger is
consummated, TAVA's Board of Directors will be replaced by a Board of
Directors appointed by Real Holdings.
Page 3 of 5 Pages
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As a condition to entering into Merger Agreement, Real, Real Holdings
and Merger Sub required certain executive officers of TAVA to enter into
Management Voting and Exchange Agreements with Merger Sub. The Management
Voting and Exchange Agreements provided, among other things, that at any
meeting of TAVA stockholders held prior to termination of the Merger
Agreement the Executives will vote or cause to be voted all shares of Common
Stock beneficially owned by them in accordance with the recommendation of the
Board of Directors of TAVA. In addition, pursuant to the Management Voting
and Exchange Agreements, each Executive grants to Merger Sub an irrevocable
proxy coupled with an interest to vote such shares in accordance with the
recommendation of the Board of Directors of TAVA prior to termination of the
Merger Agreement.
Executives hold certain options to acquire shares of Common Stock which
are exerciseable within 60 days from the date hereof and which are subject to
the Management Voting and Exchange Agreements. However, Merger Sub expressly
disclaims beneficial ownership of the shares subject to such options,
pursuant to Rule 13d-4 of the Securities Exchange Act of 1934, because the
Management Voting and Exchange Agreements expressly prohibit exercise of such
options and, therefore, such options are not able to be voted pursuant to the
Management Voting and Exchange Agreements.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER:
Merger Sub has a shared power to vote or to direct the vote of 1,591,240
shares of TAVA Common Stock, which represents approximately 6.8% of the
outstanding shares of TAVA Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER:
Real, Real Holdings, Merger Sub and TAVA are parties to the Merger
Agreement. Merger Sub and each of the Executives are party to a Management
Voting and Exchange Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS:
Exhibit 2: Agreement and Plan of Reorganization; and
Exhibit 99: Form of Management Voting and Exchange Agreement.
Page 4 of 5 Pages
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After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: May 24, 1999 REAL ACQUISITION SUB #1, INC.
By: /s/ Eric Cumming
---------------------------------------
Name: Eric Cumming
Title: President
Page 5 of 5 Pages
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
REAL MERGER SUB #1, INC.
<TABLE>
<CAPTION>
- ------------------------------ ----------- -------------------------------
NAME AND BUSINESS ADDRESS CITIZENSHIP POSITION AND OCCUPATION
<S> <C> <C>
Eric Cumming U.S. President of The INC Group, Inc.
President and Director
818 Roeder Road
Suite 600
Silver Spring, Maryland 20910
David Holroyd U.S. Secretary of Real Acquisition Sub #1, Inc.
Secretary and Director
P.O. Box 1330
Sherborn, Massachussetts 01770
Rudy Hageman Belgium President of Real Software NV.
Director
Kontichsesteenweg 38
Aartselaar, B-2630
Belgium
Rick Weiss U.S. Vice President of The INC Group, Inc.
Director
The INC Group, Inc.
201 Commonwealth Court
Suite 190
Cary, North Carolina 27511
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
REAL SOFTWARE HOLDINGS NORTH AMERICA, INC.
<TABLE>
<CAPTION>
- ------------------------------ ----------- -------------------------------
NAME AND BUSINESS ADDRESS CITIZENSHIP POSITION AND OCCUPATION
<S> <C> <C>
Eric Cumming U.S. President of The INC. Group, Inc.
President and Director
818 Roeder Road
Suite 600
Silver Spring, Maryland 20910
David Holroyd U.S. Secretary of Real Acquisition Sub #1, Inc.
Secretary and Director
P.O. Box 1330
Sherborn, Massachussetts 01770
Rudy Hageman
I-1
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Director Belgium President of Real Software NV.
Kontichsesteenweg 38
Aartselaar, B-2630
Belgium
</TABLE>
DIRECTORS AND EXECUTIVE OFFICERS
REAL SOFTWARE NV
<TABLE>
<CAPTION>
- ------------------------------ ----------- -------------------------------
NAME AND BUSINESS ADDRESS CITIZENSHIP POSITION AND OCCUPATION
<S> <C> <C>
Rudy Hageman Belgium President of Real Software NV.
President and Chairman of the
Board
Kontichsesteenweg 38
Aartselaar, B-2630
Belgium
Alex Van der Velde Belgium Manager of N.V. Supply Chain Software
Kruisveldweg 134
Lier, 2500
Belgium
Mark Vanderheyden Belgium Technical Management, Research and
Schriekbos 69 Development of Real Software NV
Zoersel 2980
Belgium
Leo Meuris Belgium Chairman of N.V. Xenia
Permansheidestraat 58
Heist O/D berg 2220
Belgium
Jan Poppe Belgium Chairman of N.V. Sycron
Siemenslaan 12
Oostkamp 8020
Belgium
Paul Van der Spiegel Belgium General Manager of N.V. Telenet Operaties
Liersesteenweg 4
Mechelen 2800
Belgium
Johan Mussche Belgium Chairman and Executive Director of N.V.
Kwartrechtsteenweg 160 Spector Photo Group
Wetteren 9230
Belgium
Frank Swaelen Belgium Voorzitter van de Senaat
I-2
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<CAPTION>
- ------------------------------ ----------- -------------------------------
NAME AND BUSINESS ADDRESS CITIZENSHIP POSITION AND OCCUPATION
<S> <C> <C>
Leliestraat 82
Hove 2540
Belgium
Luc Luwel Belgium Kamer van Koophandel Antwerpe
Markgravestraat 12
Atwerpen 2000
Belgium
Marc Cockaerts Belgium Honorary chairman of KBC Bank
Patrijzenlaan 24
Kampenhout 1910
Belgium
</TABLE>
I-3
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("AGREEMENT"), dated as of April
20, 1999, by and among Real Software NV, a Belgium corporation ("REAL"), Real
Software Holdings North America, Inc., a Delaware corporation ("REAL
HOLDINGS"), Real Acquisition Sub #1, Inc., a Colorado corporation and a
wholly owned subsidiary of Real Holdings ("MERGER SUB"), and TAVA
Technologies, Inc., a Colorado corporation ("TAVA"). Merger Sub and TAVA are
hereinafter sometimes referred to as the "MERGING CORPORATIONS."
W I T N E S S E T H:
WHEREAS, the respective boards of directors of Real Holdings and TAVA
deem it desirable and in the best interests of their respective corporations
and their respective stockholders that Merger Sub be merged with and into
TAVA, pursuant to the provisions of Section 7-111-101 of the Colorado
Business Corporation Act (the "ACT") in exchange for the consideration
provided for in the Plan and Agreement of Merger attached hereto as EXHIBIT A
(the "PLAN OF MERGER") and in this Agreement and have proposed, declared
advisable, and approved such merger pursuant to this Agreement and the Plan
of Merger, which have been duly approved by resolutions of the respective
boards of directors of Real Holdings and TAVA;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and in order to set forth the
terms and conditions of the Merger (as hereinafter defined), the mode of
carrying the same into effect, and such other details and provisions as are
deemed necessary or proper, the parties hereto agree as follows:
ARTICLE I
MERGER
1.1 THE MERGER. Subject to and in accordance with the terms and
conditions of this Agreement and pursuant to the Plan of Merger, at the
Effective Time (as hereinafter defined) the parties hereto shall cause the
Merger Sub to be merged with and into TAVA (the "MERGER") by filing the Plan
of Merger, as contemplated by Section 7-111-105 of the Act, together with any
required related certificates, with the Secretary of State of the State of
Colorado, whereby the separate existence of Merger Sub shall cease, and TAVA
shall (i) continue as the surviving corporation (sometimes referred to herein
as the "SURVIVING CORPORATION") under the corporate name "TAVA Technologies,
Inc.," (ii) be governed by the laws of the State of Colorado, and (iii)
succeed to and assume all of the rights, properties and obligations of Merger
Sub and TAVA in accordance with Section 7-111-106 of the Act.
1.2 CLOSING DATE. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Baker &
Hostetler LLP, 303 East 17th Avenue, Suite 1100, Denver, Colorado 80203-1264, as
soon as reasonably practicable but no later than the third business day after
the satisfaction or waiver of the conditions set forth in ARTICLE V or at such
1
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other time and place and on such other date as Real Holdings and TAVA shall
agree. The date on which the Closing occurs is herein referred to as the
"CLOSING DATE."
1.3 EFFECTIVE TIME. As soon as practicable but no later than the
first business day following the Closing, the parties hereto will cause the
Merger to become effective by filing with the Secretary of State of the State
of Colorado, articles of merger in such form as required by, and executed in
accordance with, the relevant provisions of the Act (the time of filing the
articles of merger being the "EFFECTIVE TIME").
1.4 MATERIAL ADVERSE EFFECT. "MATERIAL ADVERSE EFFECT" or
"MATERIAL ADVERSE CHANGE" means (i) with respect to TAVA, any effect, change,
event, circumstance or condition which could reasonably be expected to
materially adversely affect the business, results of operations, financial
condition or prospects of TAVA or TAVA Y2k One, Inc., in each case including
its respective subsidiaries together with it taken as a whole, and (ii) with
respect to Real or Real Holdings, any effect, change, event, circumstance or
condition which could reasonably be expected to materially adversely affect
the ability of Real, Real Holdings or Merger Sub to consummate the
transactions set forth in this Agreement as the case may be.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF TAVA
TAVA represents and warrants, subject to the exceptions specifically
described in writing in the respective sections of the disclosure schedule
delivered by TAVA to Real Holdings and dated the date hereof (the "TAVA
DISCLOSURE SCHEDULE"), as follows:
2.1 ORGANIZATION AND STANDING. TAVA is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Colorado, has full requisite corporate power and authority to carry on its
business as it is currently conducted, and to own and operate the properties
currently owned and operated by it, and is duly qualified or licensed to do
business and is in good standing as a foreign corporation authorized to do
business in all jurisdictions in which the character of the properties owned
or the nature of the business conducted by it would make such qualification
or licensing necessary, except where the failure to be so qualified or
licensed could not reasonably be expected to have a Material Adverse Effect
on TAVA.
2.2 AUTHORIZATION; APPROVALS; NO VIOLATION.
2.2.1 AUTHORIZATION OF AGREEMENT. TAVA has all requisite
corporate power and authority to execute and deliver this Agreement and
the Plan of Merger and, subject to adoption of the Plan of Merger by the
holders of a majority of the outstanding shares of TAVA Common Stock (as
defined herein) in accordance with the applicable provisions of the Act
and TAVA's articles of incorporation, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by TAVA of this Agreement
and the Plan of Merger and the performance by TAVA of its obligations
hereunder and thereunder have been duly and
2
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validly authorized by all requisite corporate action on the part of TAVA
(other than the adoption of the Plan of Merger by the holders of a
majority of the outstanding shares of TAVA Common Stock in accordance
with the applicable provisions of the Act and TAVA's articles of
incorporation). This Agreement has been duly executed and delivered by
TAVA and (assuming due authorization, execution and delivery hereof by
the other parties hereto) constitutes the legal, valid and binding
obligation of TAVA, enforceable (subject to normal equity principles)
against TAVA in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally.
2.2.2 APPROVALS. Except for the applicable requirements, if any,
of (a) the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), (b) solely with respect to the conversion or exchange of certain
stock purchase options outstanding under the TAVA Employee Benefit Plans,
the Securities Act of 1933, as amended (the "SECURITIES ACT"), and state
securities or blue sky laws, (c) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations promulgated
thereunder, each as amended from time to time, (collectively, "HSR"),
(d) the filing and recordation of appropriate merger documents as
required by the Act and (e) those laws, regulations and orders of any
governmental authority noncompliance with which could not reasonably be
expected to have a Material Adverse Effect on TAVA, no filing or
registration with, no waiting period imposed by and no authorization of,
any governmental authority is required under any law, regulation or order
of any governmental authority applicable to TAVA to permit TAVA to
execute, deliver or perform this Agreement or the Plan of Merger or to
consummate the transactions contemplated hereby and thereby.
2.2.3 NO VIOLATION. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting
periods imposed by and receipt of all authorizations of governmental
authorities indicated as required in SECTION 2.2.2 and adoption of the
Plan of Merger by the holders of a majority of the outstanding shares of
TAVA Common Stock as required by the Act and TAVA's articles of
incorporation and except as set forth in Section 2.2.3 of the TAVA
Disclosure Schedule, neither the execution and delivery by TAVA of this
Agreement and the Plan of Merger nor the performance by TAVA of its
obligations hereunder and thereunder nor the consummation of the Merger
will (a) violate or breach the terms of or cause a default under (i) any
law, regulation or order of any governmental authority applicable to
TAVA, (ii) the articles of incorporation or bylaws of TAVA or (iii) any
contract or agreement to which TAVA or any of its subsidiaries is a party
or by which it or any of its properties or assets is bound, or (b) with
the passage of time, the giving of notice or the taking of any action by
a third person, have any of the effects set forth in clause (a) of this
Section, except in any such case for any matters described in this
Section (other than clause (ii) hereof) that could not reasonably be
expected to have Material Adverse Effect on TAVA.
2.3 CAPITALIZATION. The authorized capitalization of TAVA consists of
10,000,000 shares of preferred stock, par value $.0001 per share, of which as of
the date hereof no shares were issued and outstanding, and 200,000,000 shares of
common stock, par value $.0001 per share (the "TAVA
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COMMON STOCK"), of which at April 20, 1999, 23,290,021 shares were issued and
outstanding, 2,974,350 shares were reserved for issuance in conjunction with
various employee benefit plans, 340,994 shares were reserved for issuance
pursuant to certain warrants and other obligations set forth in Section 2.3
of the TAVA Disclosure Schedule and no shares of TAVA Common Stock were held
in TAVA's treasury. All of such outstanding shares are validly issued, fully
paid and nonassessable, and were not issued in violation of any preemptive
rights of any stockholder. Section 2.3 of the TAVA Disclosure Schedule sets
forth a complete list as of the date of this Agreement of all outstanding
options, warrants or obligations of any kind to issue any shares of capital
stock of TAVA, the owners thereof and the amounts owned. There are no
contracts, agreements or commitments or arrangements obligating TAVA to
redeem, purchase or acquire, or offer to purchase or acquire, any outstanding
capital stock of TAVA. There are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which TAVA is a
party or by which TAVA is bound with respect to the voting of any shares of
capital stock of TAVA.
2.4 SUBSIDIARIES. Section 2.4 of the TAVA Disclosure Schedule
lists each corporation, partnership, limited liability company and other
entity (each, a "SUBSIDIARY) of which more than 20% of the voting stock or
other equity interest is owned or controlled, directly or indirectly, by (i)
TAVA or (ii) any other person or entity that owns or controls, directly or
indirectly, TAVA or (iii) any other person or entity that controls, is
controlled by or is under common control with TAVA, in each case that is
existing as of the date of this Agreement, and shows as to each of such
Subsidiary the percentage of the total outstanding stock or other interests
thereof which is owned by TAVA. All outstanding shares of stock or other
interests of the Subsidiaries owned by TAVA are validly issued, fully paid,
and nonassessable, and TAVA has good and valid title thereto free and clear
of any mortgage, pledge, lien, charge, security interest, option, right of
first refusal, preferential purchase right, defect, encumbrance or other
right or interest of any other person (collectively, an "ENCUMBRANCE"). Each
such Subsidiary is a corporation, partnership, limited liability company or
other entity duly organized, validly existing, and in good standing under the
laws of the jurisdiction under which it is organized and has full requisite
corporate or other power and authority to own its property and carry on its
business as presently conducted by it and is, or on the Effective Time will
be, duly qualified or licensed to do business and is, or on the Effective
Time will be, in good standing as a foreign entity authorized to do business
in all jurisdictions in which the character of the properties owned or the
nature of the business conducted makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed could not
reasonably be expected to have a Material Adverse Effect on TAVA. As
hereinafter used in this ARTICLE II, the term "TAVA" also includes any and
all of its Subsidiaries, except where the context indicates to the contrary;
PROVIDED, HOWEVER, that for purposes of SECTIONS 2.7.1 and 2.21, the term
"TAVA" further includes any corporation, trade, business or entity under
common control with TAVA within the meaning of Section 414(b), (c), (m) or
(o) of the Code or Section 4001 of ERISA.
2.5 REPORTS AND FINANCIAL STATEMENTS. TAVA has previously furnished
or made available to Real Holdings true and complete copies of (a) all of TAVA's
annual reports filed with the Securities and Exchange Commission (the
"COMMISSION") pursuant to the Exchange Act, since June 30, 1996, (b) TAVA's
quarterly and other reports filed with the Commission since June 30, 1996,
(c) all definitive proxy solicitation materials filed by TAVA with the
Commission since June 30, 1996, and (d) any of TAVA's registration statements
declared effective by the Commission
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since June 30, 1996. The consolidated financial statements of TAVA included
in TAVA's most recent annual report on Form 10-K and most recent quarterly
report on Form 10-Q, and in any other report or registration statement filed
with the Commission by TAVA under the Exchange Act subsequent thereto
(collectively, the "TAVA REPORTS") (i) were prepared in accordance with the
published regulations of the Commission and in accordance with generally
accepted accounting principles applied on a consistent basis during the
periods involved and (ii) fairly present the financial position for TAVA as
of the dates thereof and the results of its operations and changes in
financial position for the periods then ended (except with respect to interim
period financial statements, for normal year-end adjustments which are not
material); the TAVA Reports were prepared in all material respects in
accordance with the requirements of the Securities Act of 1933, as amended
(the "SECURITIES ACT"), and the Exchange Act, as the case may be, and the
applicable rules and regulations of the Commission thereunder; and the TAVA
Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Since June 30, 1996, TAVA has filed with the Commission all
reports required to be filed by TAVA under the Securities Act and the
Exchange Act and the rules and regulations of the Commission.
2.6 LIABILITIES. TAVA does not have any material liabilities or
obligations, either accrued, absolute, contingent, or otherwise, or have any
knowledge of any potential material liabilities or obligations, other than
those (i) disclosed in the TAVA Reports or (ii) set forth in Section 2.6 of
the TAVA Disclosure Schedule.
2.7 ADDITIONAL TAVA INFORMATION. Set forth in Section 2.7 of the
TAVA Disclosure Schedule are true, complete and materially correct lists of
the following items (which will be periodically updated by TAVA and delivered
to Real Holdings through the Effective Time), and TAVA agrees that upon the
request of Real Holdings, it will furnish to TAVA true, complete and correct
copies of any documents referred to in such lists:
2.7.1 EMPLOYEE COMPENSATION PLANS. All Current TAVA Employee
Benefit Plans, related trusts, if applicable, and related third party
contracts, including all amendments thereto, the most recent report on
Form 5500 and the summary plan description for each Current TAVA Employee
Benefit Plan required to file such report or provide such description,
and the most recent favorable determination letter from the Internal
Revenue Service with respect to each Current TAVA Employee Benefit Plan
intended to be qualified within the meaning of Section 401(a) of the
Code.;
2.7.2 CERTAIN SALARIES. The names and salary rates of all
present officers and employees of TAVA whose current regular annual
salary rate is $100,000 or more, together with any bonuses paid or
payable to such persons for the fiscal year ended June 30, 1998, or since
that date, and, to the extent existing on the date of this Agreement, all
arrangements with respect to any bonuses to be paid to them from and
after the date of this Agreement;
2.7.3 EMPLOYEE AGREEMENTS. Any collective bargaining agreements
of TAVA with any labor union or other representative of employees,
including amendments,
5
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supplements, and understandings, and all employment and consulting
agreements of TAVA or with any TAVA employee;
2.7.4 GUARANTIES. All third party indebtedness, liabilities and
commitments of others as to which TAVA is a guarantor, endorser,
co-maker, surety, or accommodation maker, or is contingently liable
therefor (excluding liabilities as an endorser of checks and the like in
the ordinary course of business) and all letters of credit, whether
stand-by or documentary, issued by any third party;
2.7.5 ENVIRONMENTAL. All environmental orders and decrees
material to current operations conducted by TAVA and all environmental
audits, assessments, investigations and reviews conducted within the last
five years on any property owned or used by TAVA.
2.8 [Intentionally omitted]
2.9 NO UNDISCLOSED CONTRACTS OR DEFAULTS. Except as may be
specified in the TAVA Reports or Section 2.9 of the TAVA Disclosure Schedule,
TAVA is not a party to, or bound by, any material contract or arrangement of
any kind to be performed after the Effective Time, nor is TAVA in default in
any material obligation or covenant on its part to be performed under any
obligation, lease, contract, order or other arrangement. For purposes of
this SECTION 2.9, all contracts, agreements and arrangements with respect to
year 2000 remediation or Year 2000 Compliant services shall be material.
2.10 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
the TAVA Reports or in Section 2.10 of the TAVA Disclosure Schedule, other
than as a result of the transactions contemplated by this Agreement, since
December 31, 1998, there has not been:
2.10.1 FINANCIAL CHANGE. Any adverse change in the financial
condition, operations, assets, liabilities or business of TAVA which
could reasonably be expected to have a Material Adverse Effect on TAVA;
2.10.2 PROPERTY DAMAGE. Any damage, destruction, or loss to the
business or properties of TAVA (whether or not covered by insurance) that
could reasonably be expected to have a Material Adverse Effect on TAVA;
2.10.3 DIVIDENDS. Any declaration, setting aside, or payment of
any dividend or other distribution in respect of the TAVA Common Stock,
or any direct or indirect redemption, purchase or any other acquisition
by TAVA of any such stock;
2.10.4 CAPITALIZATION CHANGE. Any change in the capital stock or
in the number of shares or classes of TAVA's authorized or outstanding
capital stock as described in SECTION 2.3 (other than the issuance of
TAVA Common Stock upon the exercise of outstanding options to purchase
TAVA Common Stock or issuances pursuant to TAVA's Employee Stock Purchase
Plan ("ESPP"));
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2.10.5 LABOR DISPUTES. Any labor dispute (other than routine
grievances) with any significant group of TAVA's employees or independent
contractors; or
2.10.6 OTHER MATERIAL CHANGES. Any other event or condition known
to TAVA particularly pertaining to and adversely affecting the
operations, assets or business of TAVA which could reasonably be expected
to have a Material Adverse Effect on TAVA.
2.11 TAXES.
2.11.1 TAX RETURNS FILED; TAXES PAID. Except as set forth in
Section 2.11 of the TAVA Disclosure Schedule, and except with respect to
failures which, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on TAVA, (i) all returns and reports ("TAX
RETURNS") of or with respect to any and all taxes, charges, fees, levies,
assessments, duties or other amounts payable to any federal, state, local
or foreign taxing authority or agency, including, without limitation,
(x) income, franchise, profits, gross receipts, minimum, alternative
minimum, estimated, ad valorem, value added, sales, use, service, real or
personal property, capital stock, license, payroll, withholding,
disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall
profits, transfer and gains taxes, (y) customs, duties, imposts, charges,
levies or other similar assessments of any kind, and (z) interest,
penalties and additions to tax imposed with respect thereto ("TAX" or
"TAXES") which are required to be filed on or before the Closing by or
with respect to TAVA have been or will be duly and timely filed, (ii) all
items of income, gain, loss, deduction and credit or other items required
to be included in each such Tax Return have been or will be so included
and all information provided in each such Tax Return is and will be true,
correct and complete, (iii) all Taxes which have become or will become
due with respect to the period covered by each such Tax Return have been
or will be timely paid in full, (iv) all withholding Tax requirements
imposed on or with respect to TAVA have been or will be satisfied in full
in all respects, and (v) no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or late
payment of any such Tax.
2.11.2 OPEN RETURNS DISCLOSED. All Tax Returns of or with respect
to TAVA with unexpired or extended statutes of limitations which have
been audited by the applicable governmental authority are set forth in
Section 2.11 of the TAVA Disclosure Schedule.
2.11.3 EXTENSIONS DISCLOSED. Except as set forth in Section 2.11
of the TAVA Disclosure Schedule, there is not in force any extension of
time with respect to the due date for the filing of any Tax Return of or
with respect to TAVA or any waiver or agreement for any extension of time
for the assessment or payment of any Tax of or with respect to TAVA.
2.11.4 CLAIMS DISCLOSED. There is no claim against TAVA for any
Taxes, and no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return of or with respect to TAVA other
than those disclosed (and to which are attached true and complete copies
of all audit or similar reports) in Section 2.11 of the TAVA Disclosure
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Schedule or which could not reasonably be expected to have a Material
Adverse Effect on TAVA.
2.11.5 SCHEDULED TAX LIABILITIES SUFFICIENT. The total amounts
set up as liabilities for current and deferred Taxes in the financial
statements referred to in SECTION 2.5 of this Agreement are sufficient
to cover in all material respects the payment of all Taxes, whether or
not assessed or disputed, which are, or are hereafter found to be, or
to have been, due by or with respect to TAVA up to and through the
periods covered thereby.
2.11.6 TAX ALLOCATION AGREEMENTS. TAVA has previously delivered
to Real Holdings true and complete copies of each written Tax allocation
or sharing agreement and a true and complete description of each
unwritten Tax allocation or sharing arrangement affecting TAVA.
2.11.7 NO TAX LIENS. Except for statutory liens for current
Taxes not yet due, no material liens for Taxes exist upon the assets of
TAVA.
2.11.8 CHANGE OF ACCOUNTING METHOD. TAVA will not be required to
include any amount in income for any taxable period beginning after June
30, 1997 as a result of a change in accounting method of TAVA for any
taxable period of TAVA or pursuant to any agreement with any Tax
authority with respect to any such taxable period.
2.11.9 PARTNERSHIPS; FOREIGN CORPORATIONS. Except as set forth
in Section 2.11 of the TAVA Disclosure Schedule, none of the property of
TAVA is held in an arrangement for which partnership Tax Returns are
being filed, and TAVA does not own any interest in any controlled foreign
corporation (as defined in section 957 of the Code), passive foreign
investment company (as defined in section 1296 of the Code) or other
entity the income of which is required to be included in the income of
TAVA.
2.11.10 SAFE HARBOR LEASES; TAX-EXEMPT USE PROPERTY. Except
as set forth in Section 2.11 of the TAVA Disclosure Schedule, none of the
property of TAVA is subject to a safe-harbor lease (pursuant to
section 168(f)(8) of the Internal Revenue Code of 1954 as in effect after
the Economic Recovery Tax Act of 1981 and before the Tax Reform Act of
1986) or is "tax-exempt use property" (within the meaning of
section 168(h) of the Code) or "tax-exempt bond financed property"
(within the meaning of section 168(g)(5) of the Code).
2.11.11 SECTION 341(f) ELECTION. TAVA has not made an
election under section 341(f) of the Code.
2.12 INTELLECTUAL PROPERTY.
2.12.1 OWNERSHIP. Section 2.12 of the TAVA Disclosure Schedule
accurately identifies all software programs currently being marketed,
sold or licensed by TAVA and all software products or programs under
development by TAVA but not currently marketed (collectively, the
"SOFTWARE PROGRAMS"). Except as set forth in Section 2.2 of the TAVA
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Disclosure Schedule, TAVA owns full and unencumbered right and good and
valid title to the Software Programs, all material patents, trademarks,
service marks, trade names and copyrights (including registrations,
licenses and applications pertaining thereto) and all other intellectual
property rights, trade secrets and other confidential or proprietary
information, processes and formulae used in its businesses or otherwise
necessary for the conduct of its businesses (the "INTELLECTUAL
PROPERTY"), free and clear of all Encumbrances. Section 2.12 of the
TAVA Disclosure Schedule contains a complete list of all registered
trademarks and service marks, all reserved trade names, all registered
copyrights and all filed patent applications and issued patents used in,
or otherwise necessary for the conduct of, the business of TAVA as
presently conducted.
2.12.2 NOTICES. Section 2.12 of the TAVA Disclosure Schedule
sets forth the form and placement of the proprietary legends and
copyright notices displayed in or on the Software Programs. In no
instance has the eligibility of the Software Programs for protection
under applicable copyright law been forfeited to the public domain by
omission of any required notice or any other action.
2.12.3 PROTECTION. TAVA has in force the trade secret protection
program set forth in Section 2.12 of the TAVA Disclosure Schedule. To
TAVA's knowledge, there has been no violation of such program by any
person or entity. The source code and related technical system
documentation for the Software Programs (i) have at all times been
maintained by TAVA in strict confidence, (ii) have been disclosed by TAVA
only to employees and contractors (and to third parties' escrow agents
pursuant to source code escrow agreements) who have had a "need to know"
the contents thereof in connection with the performance of their duties
to TAVA and who have executed written agreements requiring the recipient
to keep the information in strict confidence.
2.12.4 PERSONNEL. All present and former employees, agents,
consultants and contractors of TAVA, who have contributed to or
participated in the conception and development of the Software Programs,
technical documentation, or Intellectual Property on behalf of TAVA have
executed nondisclosure agreements substantially in the form provided by
TAVA to Real Holdings.
2.12.5 THIRD-PARTY SOFTWARE. Section 2.12 of the TAV.nb
Disclosure Schedule contains a complete list of software libraries,
compilers and other third-party software used in the development of
the Software Programs. Section 2.12 of the TAVA Disclosure Schedule
lists all license agreements for the use of all such software and, if
any such software is not licensed, the basis of the use of such
software by TAVA. All use of each of such Software Program by TAVA has
been in full compliance with the respective license agreement or other
right of use listed in Section 2.12 of the TAVA Disclosure Schedule.
2.12.6 SOFTWARE PERFORMANCE. The Software Programs will
perform in accordance with the warranties set forth in the standard
end-user agreements listed in Section 2.14 of the TAVA Disclosure
Schedule when used as documented.
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2.12.7 NO INFRINGEMENT. The Software Programs do not infringe
and will not infringe any copyright or trade secret of any person or
entity, and, to the knowledge of TAVA, no part of the Software
Programs nor the use thereof for their intended purposes infringes or
will infringe any valid and subsisting patent or other exclusionary
right of any third party. No claims have been asserted against TAVA
by any person or entity as to the use of any of the Intellectual
Property, and, to the knowledge of TAVA, there is no basis for any
such claims.
2.12.8 INTEGRITY. Except with respect to demonstration or
trial copies, and only with respect to Software Programs as originally
delivered by TAVA to its clients and unaltered by third parties, no
portion of the Software Products contains any "back door," "time
bomb," "Trojan horse," "worm," "drop dead device," "virus" or other
software routines or hardware components designed to permit
unauthorized access; to disable or erase software, hardware, or data;
or to perform any other similar actions.
2.12.9 CONTRACT PERFORMANCE. TAVA has observed all material
provisions of, and performed all of their material obligations under,
the Licenses, including, but not limited to, the performance of its
product maintenance obligations. TAVA has not taken any action that
could cause, or failed to take any action, the failure of which could
cause, (i) any source code, trade secret or other Intellectual
Property relating to the Software Programs to be released from an
escrow or otherwise made available to any person or entity other than
those persons described in SECTION 2.12.3, or to be dedicated to the
public or otherwise placed in the public domain or (ii) any other
material adverse effect to the protection of the Software Programs
under trade secret, copyright, patent or other intellectual property
laws.
2.12.10 YEAR 2000. The Software Programs (i) are year 2000
compliant and compatible, which shall include, but is not limited to,
date data century recognition, and calculations that accommodate same
century and multi-century formulas and date values; (ii) operate or will
operate in accordance with their specifications prior to, during and
after the calendar year 2000 A.D.; and (iii) shall not end abnormally or
provide invalid or incorrect results as a result of date data,
specifically including date data which represents or references different
centuries or more than one century (collectively, "YEAR 2000 COMPLIANT").
2.13 ADEQUACY OF TECHNICAL DOCUMENTATION. The technical documentation
of the Software Programs (the "TECHNICAL DOCUMENTATION") includes the source
code (with comments, if any) for all Software Programs as listed on Section 2.13
of the TAVA Disclosure Schedule. The Technical Documentation also includes any
programs (including compilers), "workbenches," tools and higher level (or
"proprietary") languages necessary for the development, maintenance and
implementation of the Software Programs.
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2.14 SOFTWARE CONTRACTS.
2.14.1 END-USER AGREEMENTS. Section 2.14.1 of the TAVA
Disclosure Schedule sets forth a complete example of each of TAVA's
standard license agreements with respect to the Software Programs (the
"STANDARD LICENSES") and a complete list of each license of the
Software Programs which contains any material differences or
deviations from the Standard Licenses (together with the Standard
Licenses, the "LICENSES"). Except as set forth in Section 2.14.1 of
the TAVA Disclosure Schedule, all contracts identified in Section
2.14.1 of the TAVA Disclosure Schedule constitute only end-user
agreements, each of which grants the end user thereunder principally
the nonexclusive right and license to use an identified Software
Program and related user documentation, for internal purposes only, at
the sites specified in each agreement.
Section 2.14.1 of the TAVA Disclosure Schedule accurately
identifies each customer which generated 5% or more of TAVA's revenues
during the preceding four fiscal quarters.
2.14.2 MARKETING AGREEMENTS. Section 2.14.2 of the TAVA
Disclosure Schedule sets forth a complete list of all contracts,
agreements, licenses, or other commitments or arrangements in effect with
respect to the marketing, remarketing, distribution, licensing or
promotion of (i) the Software Programs or any other Technical
Documentation or the Intellectual Property by any independent
salesperson, distributor, sublicensor or other remarketer or sales
organization or (ii) any third party's software products by TAVA (the
"MARKETING AGREEMENTS").
Section 2.14.2 of the TAVA Disclosure Schedule accurately
identifies each marketing arrangement which generated 5% or more of
TAVA's revenues during the preceding four fiscal quarters.
2.14.3 NO ASSIGNMENT. Except as set forth in Section 2.14.3 of
the TAVA Disclosure Schedule, other than the Licenses and the Marketing
Agreements, TAVA has not granted, transferred or assigned any right or
interest in the Software Programs, the Technical Documentation or the
Intellectual Property to any person or entity.
2.15 THIRD-PARTY COMPONENTS IN SOFTWARE PROGRAMS. Except as set
forth in Section 2.15 of the TAVA Disclosure Schedule, the Software Programs
and Technical Documentation contain no programming or materials in which any
third party may claim superior, joint or common ownership, including any
right or license. Except as set forth in Section 2.15 of the TAVA Disclosure
Schedule, the Software Programs and Technical Documentation do not contain
derivative works of any programming or materials not owned in their entirety
by TAVA.
2.16 TITLE TO PROPERTIES. With minor exceptions which in the
aggregate are not material, and except for merchandise and other property
sold, used or otherwise disposed of in the ordinary course of business for
fair value, TAVA has good and valid title to or valid leasehold interests in
all its properties, interests in properties and assets, real and personal,
reflected in the most recent balance
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sheet of TAVA included in the TAVA Reports, free and clear of any Encumbrance
of any nature whatsoever, except (i) liens and Encumbrances reflected in the
most recent balance sheet of TAVA included in the TAVA Reports or in Section
2.16 of the TAVA Disclosure Schedule, (ii) liens for current taxes not yet
due and payable, and (iii) such imperfections of title, easements and
Encumbrances, if any, as are not substantial in character, amount, or extent
and do not and will not materially detract from the value, or interfere with
the present use, of the property subject thereto or affected thereby, or
otherwise materially impair business operations of TAVA. Except as set forth
in Section 2.16 of the TAVA Disclosure Schedule, all leases pursuant to which
TAVA leases (whether as lessee or lessor) any substantial amount of real or
personal property are in good standing, valid and effective; and there is
not, under any such leases, any existing or, to the knowledge of TAVA,
prospective default or event of default or event which with notice or lapse
of time, or both, would constitute a default by TAVA and in respect to which
TAVA has not taken adequate steps to prevent a default from occurring. The
buildings and premises of TAVA that are used in its business are in good and
sufficient operating condition and repair for the continued conduct of TAVA's
business on a basis consistent with past practice, subject to ordinary wear
and tear. All major items of equipment of TAVA are in good and sufficient
operating condition and in a state of reasonable maintenance and repair for
the continued conduct of TAVA's business on a basis consistent with past
practice, ordinary wear and tear excepted, and are free from any known
defects except as may be repaired by routine maintenance and such minor
defects as do not substantially interfere with the continued use thereof in
the conduct of normal operations.
2.17 LITIGATION. Except to the extent set forth in the TAVA Reports
or in Section 2.17 of the TAVA Disclosure Schedule:
2.17.1 GENERAL. There is no suit, action, or legal,
administrative, arbitration, or other proceeding pending to which TAVA is
a party or, to the knowledge of TAVA, might become a party or which
particularly affects TAVA, which would involve a liability in excess of
$100,000 or which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on TAVA;
2.17.2 ZONING. There are no changes in the zoning or building
ordinances directly affecting the real property or leasehold interests of
TAVA, pending or, to the knowledge of TAVA, threatened;
2.17.3 GOVERNMENTAL INVESTIGATIONS. Except as required pursuant
to HSR, no investigation or review by any governmental entity with
respect to TAVA or any of the transactions contemplated by this Agreement
is pending or, to TAVA's knowledge, threatened, nor has any governmental
entity indicated to TAVA an intention to conduct the same.
2.17.4 PRODUCT WARRANTY; YEAR 2000. There are no existing
liabilities or, to the knowledge of TAVA, potential liabilities, arising
from claims regarding the performance or design of the products and
services sold by TAVA either in the past or at present, including
liabilities potentially arising from services performed by TAVA to make
software, hardware or systems Year 2000 Compliant, for which adequate
reserves have not been established on
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the most recent balance sheet in the TAVA Reports, that in the aggregate
could reasonably be expected to have a Material Adverse Effect on TAVA.
2.18 ENVIRONMENTAL COMPLIANCE. Except as set forth in Section 2.18
of the TAVA Disclosure Schedule:
2.18.1 ENVIRONMENTAL CONDITIONS. There are no environmental
conditions or circumstances, such as the presence or release of any
hazardous substance, on any real property owned by TAVA as a result of
the actions of TAVA or, to its knowledge, of any third party or
otherwise, that could reasonably be expected to have a Material Adverse
Effect on TAVA.
2.18.2 PERMITS, ETC. TAVA has in full force and effect all
environmental permits, licenses, approvals and other authorizations
required to conduct its operations and is operating in material
compliance thereunder.
2.18.3 COMPLIANCE. TAVA's operations and use of its assets do
not violate any applicable federal, state or local law, statute,
ordinance, rule, regulation, order or notice requirement pertaining to
(a) the condition or protection of air, groundwater, surface water,
soil, or other environmental media, (b) the environment, including
natural resources or any activity which affects the environment, or
(c) the regulation of any pollutants, contaminants, waste, substances
(whether or not hazardous or toxic), including, without limitation,
the Comprehensive Environmental Response Compensation and Liability
Act (49 U.S.C. Section 9601 ET SEQ.), the Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 ET SEQ.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 1609 ET SEQ.), the
Clean Water Act (33 U.S.C. 1051 ET SEQ.), the Clean Air Act (42 U.S.C.
Section 7401 ET SEQ.), the Toxic Substances Control Act (17 U.S.C.
Section 2601 ET SEQ.), the Safe Drinking Water Act (42 U.S.C. Section 201
and Section 300f ET SEQ.), the Rivers and Harbors Act (33 U.S.C. Section
401 ET SEQ.), the Oil Pollution Act (33 U.S.C. Section 2701 ET SEQ.)
and analogous state and local provisions, as any of the foregoing may
have been amended or supplemented from time to time (collectively the
"APPLICABLE ENVIRONMENTAL LAWS"), except for violations which, either
singly or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on TAVA.
2.18.4 ENVIRONMENTAL CLAIMS. No notice has been served on TAVA
from any entity, governmental agency or individual regarding any
existing, pending or threatened investigation or inquiry related to
alleged violations under any Applicable Environmental Laws, or regarding
any claims for remedial obligations or contribution under any Applicable
Environmental Laws, other than any of the foregoing which, either singly
or in the aggregate, could not reasonably be expected to have a Material
Adverse Effect on TAVA.
2.18.5 RENEWALS. TAVA does not know of any reason it would not be
able to renew any of the permits, licenses, or other authorizations
required pursuant to any Applicable Environmental Laws to operate and use
any of TAVA's assets for their current purposes and uses.
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2.19 COMPLIANCE WITH OTHER LAWS. Except as set forth in the TAVA
Reports or in Section 2.19 of the TAVA Disclosure Schedule, TAVA is not in
violation of or in default with respect to, or in alleged violation of or
alleged default with respect to, the Occupational Safety and Health Act (29
U.S.C. Section 651 ET SEQ.) as amended ("OSHA"), or any other applicable law
or any applicable rule, regulation, or any writ or decree of any court or any
governmental commission, board, bureau, agency, or instrumentality, or
delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality, except for
violations or defaults which, either singly or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on TAVA.
2.20 FINDER'S FEE. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by TAVA, its
counsel and Prudential Securities Inc., its financial advisor, directly with
Real and Real Holdings, their counsel and their financial advisor, without
the intervention of any other person as the result of any act of TAVA, and so
far as is known to TAVA, without the intervention of any other person in such
manner as to give rise to any valid claim against any of the parties hereto
for a brokerage commission, finder's fee or any similar payments, other than
financial advisory fees to be paid by TAVA to Prudential Securities, Inc.
2.21 EMPLOYEE BENEFIT PLANS.
2.21.1 DEFINITIONS. For purposes of this Agreement: "ERISA"
shall mean the Employee Retirement Income Security Act of 1974, as
amended; "CODE" shall mean the Internal Revenue Code of 1986, as amended;
"TAVA EMPLOYEE BENEFIT PLAN" shall mean each (i) employee benefit plan
within the meaning of section 3(3) of ERISA (notwithstanding that such
plan may be exempt from some or all of ERISA by virtue of its status as a
"top hat" plan or other exempt plan) and (ii) personnel policy; stock
option plan or agreement; collective bargaining agreement; bonus plan or
arrangement; incentive award plan or arrangement; vacation policy;
severance pay plan, policy, or agreement; deferred compensation agreement
or arrangement; executive compensation or supplemental income
arrangement; consulting agreement; employment agreement; and other
employee benefit plan, agreement, arrangement, program, practice, or
understanding, which is sponsored, maintained, or contributed to by TAVA
for the benefit of the employees, former employees, independent
contractors, or agents of TAVA or has been so sponsored, maintained, or
contributed to at any time since 1974; "CURRENT TAVA EMPLOYEE BENEFIT
PLAN" shall mean each TAVA Employee Benefit Plan, which is sponsored,
maintained, or contributed to by TAVA as of the date of this Agreement or
has been so sponsored, maintained, or contributed to by TAVA at any time
within six years prior to the Effective Time; and "TAVA COMMONLY
CONTROLLED ENTITY" shall mean any corporation, trade, business, or entity
under common control with TAVA within the meaning of section 414(b), (c),
(m), or (o) of the Code or section 4001 of ERISA.
2.21.2 PRODUCTION OF DOCUMENTS. Schedule 2.21.2 provides a list
of each Current TAVA Employee Benefit Plan. True, correct, and complete
copies of each Current TAVA Employee Benefit Plan, related trusts, if
applicable, and related third party contracts, including all amendments
thereto, have been made available to Real Holdings and Merger
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Sub. There have also been made available to Real Holdings and Merger Sub
(i) the most recent report on Form 5500 and the summary plan description
for each Current TAVA Employee Benefit Plan required to file such report
or provide such description and (ii) the most recent favorable
determination letter from the Internal Revenue Service with respect to
each Current TAVA Employee Benefit Plan intended to be qualified within
the meaning of section 401(a) of the Code.
2.21.3 COMPLIANCE WITH LAW. With respect to the TAVA Employee
Benefit Plans: (i) neither TAVA nor any TAVA Commonly Controlled Entity
contributes to or has an obligation to contribute to, nor has either at
any time within six years prior to the Effective Time contributed to or
had an obligation to contribute to, a multiemployer plan within the
meaning of section 3(37) of ERISA; (ii) all obligations, whether arising
by operation of law or by contract, required to be performed with respect
to the TAVA Employee Benefit Plans have been substantially performed, and
there have been no material defaults, omissions, or violations by any
party with respect to the TAVA Employee Benefit Plans; (iii) all reports
and disclosures relating to the Current TAVA Employee Benefit Plans
required to be filed with or furnished to governmental agencies,
participants, or beneficiaries have been filed or furnished in accordance
with applicable law in a timely manner; (iv) each Current TAVA Employee
Benefit Plan, which is intended to be qualified under section 401(a)
of the Code, (A) satisfies in form the requirements of such section,
except to the extent amendments are not required by law to be made
until a date after the Effective Time, (B) has received a favorable
determination letter from the Internal Revenue Service regarding such
qualified status covering all amendments to such TAVA Employee Benefit
Plan, and (C) has not been operated in a way that would adversely
affect its qualified status; (v) there are no actions, suits, or
claims pending (other than routine claims for benefits) or, to the
knowledge of TAVA, threatened against, or with respect to, any of the
TAVA Employee Benefit Plans or their assets; (vi) all contributions
required to be made to the Current TAVA Employee Benefit Plans
pursuant to their terms and the provisions of ERISA, the Code, or any
other applicable law have been timely made; (vii) with respect to each
TAVA Employee Benefit Plan and each employee benefit plan (within the
meaning of section 3(3) of ERISA) sponsored or contributed to by any
TAVA Commonly Controlled Entity, which is or has been within six years
prior to the Effective Time subject to Title IV of ERISA, (A) there
has been no event or condition that presents a material risk of plan
termination, (B) no accumulated funding deficiency, whether or not
waived, within the meaning of section 302 of ERISA or section 412 of
the Code has been incurred, (C) no reportable event within the meaning
of section 4043 of ERISA (for which the disclosure requirements of
Regulation section 4043.1 ET SEQ. promulgated by the Pension Benefit
Guaranty Corporation ("PBGC") have not been waived) has occurred, (D)
no notice of intent to terminate such plan has been given under
section 4041 of ERISA, (E) no proceeding has been instituted under
section 4042 of ERISA to terminate such plan, (F) no liability to the
PBGC has been incurred, which liability has not been satisfied, (G)
the assets of such plan equal or exceed the actuarial present value of
the benefit liabilities, within the meaning of section 4041 of ERISA,
under such plan, based upon reasonable actuarial assumptions and the
asset valuation principles established by the PBGC, and (H) all
contributions (including installments) to such plan required by
section 302 of ERISA and section 412 of the Code
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have been timely made; (viii) no act, omission, or transaction has
occurred that would result in imposition on TAVA of (A) breach of
fiduciary duty liability damages under section 409 of ERISA, (B) a
civil penalty assessed pursuant to subsections (c), (i), or (l) of
section 502 of ERISA, or (C) a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code; (ix) to the knowledge of TAVA, there is no
matter pending (other than routine qualification determination
filings) with respect to any of the TAVA Employee Benefit Plans before
the Internal Revenue Service, the Department of Labor, the PBGC, or
other governmental authority; (x) each trust funding a Current TAVA
Employee Benefit Plan, which trust is intended to be exempt from
federal income taxation pursuant to section 501(c)(9) of the Code,
satisfies the requirements of such section and has received a
favorable determination letter from the Internal Revenue Service
regarding such exempt status and has not, since receipt of the most
recent favorable determination letter, been amended or operated in a
way that would adversely affect such exempt status; (xi) with respect
to any Current TAVA Employee Benefit Plan that is a group health plan,
all continuation of coverage obligations set forth in section 4980B of
the Code and section 601 through 609 of ERISA have been performed; and
(xii) each Current TAVA Employee Benefit Plan that is a welfare plan
within the meaning of section 3(1) of ERISA may be unilaterally
amended or terminated in its entirety without liability except as to
benefits vested and accrued thereunder prior to such amendment or
termination.
2.21.4 NO ADDITIONAL BENEFITS TRIGGERED. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not, except as set forth in Section 2.21.4 of
the TAVA Disclosure Schedule, (i) require TAVA or Real Holdings to make a
larger contribution to, or pay greater benefits or provide other rights
under, any Current TAVA Employee Benefit Plan than it otherwise would,
whether or not some other subsequent action or event would be required to
cause such payment or provision to be triggered, or (ii) create or give
rise to any additional vested rights or service credits under any Current
TAVA Employee Benefit Plan. Except as otherwise set forth on
SCHEDULE 2.21.4, TAVA is not a party to any agreement, nor has it
established any policy or practice, requiring it to make a payment or
provide any other form of compensation or benefit to any person
performing services for TAVA upon termination of such services that would
not be payable or provided in the absence of the consummation of the
transactions contemplated by this Agreement. In connection with the
consummation of the transactions contemplated by this Agreement, no
payments of money or other property, acceleration of benefits, or
provisions of other rights have or will be made hereunder, under any
agreement contemplated herein or under any Current TAVA Employee Benefit
Plan that would be reasonably likely to result in imposition of the
sanctions imposed under section 280G or 4999 of the Code, whether or not
some other subsequent action or event would be required to cause such
payment, acceleration, or provision to be triggered.
2.21.5 STOCK OPTION PLANS. Except as listed on SCHEDULE 2.21.5,
no TAVA Employee Benefit Plan grants or purports to grant any option,
warrant, or right entitling the holder thereof to purchase or otherwise
acquire any shares of stock of TAVA, and no such option, warrant, or
right is outstanding as of the Effective Time.
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2.21.6 EMPLOYEES. SCHEDULE 2.21.6 lists all individuals
performing services for TAVA as of the date of this Agreement and the
annual compensation or rate of pay and paid 1998 bonus for each, with
each such individual identified as (i) salaried or hourly, (ii) exempt or
nonexempt, (iii) union or nonunion, (iv) full-time or part-time,
(v) temporary, permanent, or leased; and (vi) active or nonactive (e.g.,
leave of absence, FMLA, disability, layoff, etc.).
2.22 INSURANCE. TAVA has held insurance issued by insurers against
such risks as companies engaged in its business, in accordance with
reasonable business practice, would customarily be insured. Section 2.22 of
the TAVA disclosure schedule contains a list of all insurance, including
descriptions of all coverage, special coverage or riders associated with year
2000 services, presently carried by TAVA or under which claims remain
outstanding.
2.23 INFORMATION FOR PROXY STATEMENT. All information and data
(including financial statements) concerning TAVA which is or will be included
in the proxy statement (the "PROXY STATEMENT") issued to TAVA's shareholders
in connection with the transactions contemplated by this Agreement will be
furnished by TAVA for inclusion therein and will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein not misleading.
2.24 FAIRNESS OPINION. TAVA has received a written opinion of
Prudential Securities Inc., dated as of the date hereof, for inclusion in the
Proxy Statement to the effect that the consideration to be paid by Real
Holdings pursuant to this Agreement is fair to the stockholders of TAVA from
a financial point of view. A copy of such written opinion is attached hereto
as EXHIBIT B.
2.25 INVESTMENT COMPANY. TAVA is not an "investment company," or an
"affiliated person of" or "promoter" or "principal underwriter" of an
investment company, as those terms are defined in the Investment Company Act
of 1940, as amended.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
REAL, REAL HOLDINGS AND MERGER SUB
Real, Real Holdings and Merger Sub represent and warrant as follows:
3.1 ORGANIZATION AND STANDING. Each of Real, Real Holdings and
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of their organization, has full
requisite corporate power and authority to carry on its business as it is
currently conducted, and to own and operate the properties currently owned
and operated by it and is duly qualified or licensed to do business and is in
good standing as a foreign corporation authorized to do business in all
jurisdictions in which the character of the properties owned or the nature of
the business conducted by it would make such qualification or licensing
necessary, except
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where the failure to be so qualified or licensed could not reasonably be
expected to have a Material Adverse Effect on Real Holdings.
3.2 AUTHORIZATION; APPROVALS; NO VIOLATION.
3.2.1 AUTHORIZATION OF AGREEMENT. Each of Real, Real Holdings
and Merger Sub has all requisite corporate power and authority to execute
and deliver this Agreement and the Plan of Merger and to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each of
Real, Real Holdings and Merger Sub of this Agreement and the Plan of
Merger, as the case may be, and the performance by each of Real, Real
Holdings and Merger Sub of its obligations hereunder and thereunder have
been duly and validly authorized by all requisite corporate action on the
part of each of Real, Real Holdings and Merger Sub. This Agreement has
been duly executed and delivered by each of Real, Real Holdings and
Merger Sub and (assuming due authorization, execution and delivery hereof
by the other parties hereto) this Agreement constitutes the legal, valid
and binding obligations of Real, Real Holdings and Merger Sub enforceable
(subject to normal equity principles) against Real, Real Holdings and
Merger Sub in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, debtor relief or
similar laws affecting the rights of creditors generally.
3.2.2 APPROVALS. Except for the applicable requirements, if any,
of (a) the Securities Act and state securities or blue sky laws with
respect to the conversion or exchange of certain stock purchase options
outstanding under TAVA Plans, (b) HSR, (c) the filing and recordation of
appropriate merger documents as required by Section 105 of the Act and
(d) those laws, regulations and orders of any governmental authority
noncompliance with which could not reasonably be expected to have a
Material Adverse Effect on Real or Real Holdings, no filing or
registration with, no waiting period imposed by and no authorization of,
any governmental authority is required under any law, regulation or order
of any governmental authority applicable to Real or Real Holdings or any
of its subsidiaries to permit Real Holdings to execute, deliver or
perform this Agreement or the Plan of Merger, or to consummate the
transactions contemplated hereby or thereby.
3.2.3 NO VIOLATION. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting
periods imposed by and receipt of all authorizations of governmental
authorities indicated as required in SECTION 3.2.2, neither the execution
and delivery by either Real, Real Holdings or Merger Sub of this
Agreement and the Plan of Merger, as the case may be, nor the performance
by either Real, Real Holdings or Merger Sub of its obligations hereunder
and thereunder will (a) violate or breach the terms of or cause a default
under (i) any law, regulation or order of any governmental authority
applicable to Real, Real Holdings or Merger Sub, (ii) the certificate of
incorporation or bylaws or organizational documents of Real, Real
Holdings or Merger Sub or (iii) any contract or agreement to which either
Real or Real Holdings is a party or by which it or any of its properties
or assets is bound, or (b) with the passage of time, the giving of notice
or the taking of any action by a third person, have any of the effects
set forth in clause (a) of this
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Section, except in any such case for any matters described in this
Section (other than clause (ii) hereof) that could not reasonably be
expected to have Material Adverse Effect on Real or Real Holdings.
3.3 ASSETS. On the date hereof, Real Holdings has no assets other
than the rights pursuant to the loan commitment documents attached hereto as
EXHIBIT C.
3.4 FINDER'S FEE. All negotiations relative to this Agreement and
the transactions contemplated hereby have been carried on by Real and Real
Holdings, their counsel and Broadview International, LLC, their financial
advisor, directly with TAVA, its counsel and their financial advisor, without
the intervention of any other person as the result of an act of Real or Real
Holdings and, so far as known to Real or Real Holdings, without the
intervention of any other person in such manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finder's
fee, or any similar payments.
3.5 INFORMATION FOR PROXY STATEMENT. All information and data
(including financial statements) concerning Real or Real Holdings which is or
will be included in the Proxy Statement will be furnished by Real Holdings
for inclusion therein and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements contained therein not misleading.
ARTICLE IV
OBLIGATIONS PENDING EFFECTIVE TIME
4.1 AGREEMENTS OF REAL, REAL HOLDINGS AND TAVA. Real, Real
Holdings and TAVA agree to take the following actions after the date hereof
and prior to the Effective Time:
4.1.1 HART-SCOTT-RODINO. Each party shall file such materials as
are required under the HSR Act with respect to the transactions
contemplated hereby and shall cooperate with the other party to the
extent necessary to assist the other party in the preparation of such
filings.
4.1.2 PROXY STATEMENT. As promptly as practicable after the
execution of this Agreement, Real Holdings and TAVA shall cooperate in
the preparation and prompt filing of the Proxy Statement with the
Commission with respect to the meeting of TAVA's stockholders called for
the purpose of, among other things, securing the adoption of the Plan of
Merger by the stockholders of TAVA in accordance with TAVA's articles of
incorporation and bylaws and the Act. TAVA shall use all reasonable
efforts to have the Proxy Statement cleared as promptly as practicable by
the Commission.
4.1.3 NOTICE OF MATERIAL DEVELOPMENT. Each of Real, Real
Holdings and TAVA will promptly notify the other party in writing of
(i) any event occurring subsequent to the date of this Agreement which
would render any representation or warranty of such party contained in
this Agreement untrue or inaccurate in any material respect, (ii) any
Material
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Adverse Effect on such party and (iii) any breach by such party of any
covenant or agreement contained in this Agreement.
4.2 ADDITIONAL AGREEMENTS OF TAVA. TAVA agrees that from the date
hereof to the Effective Time, except with the prior written consent of Real
Holdings, it will:
4.2.1 MAINTENANCE OF PRESENT BUSINESS. Other than as
contemplated by this Agreement, operate its business only in the usual,
regular, and ordinary manner so as to maintain the goodwill it now enjoys
and, to the extent consistent with such operation, use all reasonable
efforts to preserve intact its present business organization, keep
available the services of its present officers and employees, and
preserve its relationships with customers, suppliers, jobbers,
distributors, and others having business dealings with it, and in
connection therewith it shall not substantially deviate from its pricing
practices;
4.2.2 MAINTENANCE OF PROPERTIES. At its expense, maintain all of
its property and assets in customary repair, order, and condition,
reasonable wear and use and damage by fire or unavoidable casualty
excepted;
4.2.3 MAINTENANCE OF BOOKS AND RECORDS. Maintain its books of
accounts and records in the usual, regular, and ordinary manner, in
accordance with generally accepted accounting principles applied on a
consistent basis;
4.2.4 COMPLIANCE WITH LAW. Duly comply in all material respects
with all laws applicable to it and to the conduct of its business;
4.2.5 COMPLIANCE WITH AGREEMENT. At its expense, take all
commercially reasonable actions as may be necessary (i) to ensure that
the representations and warranties made by it herein are true and correct
at the Effective Time, (ii) to fully perform all covenants made by it
herein and (iii) to satisfy timely all other obligations imposed upon it
by this Agreement;
4.2.6 INSPECTION. Permit Real Holdings and its officers and
authorized representatives, during normal business hours, to inspect its
records and to consult with its officers, employees, attorneys, and
agents for the purpose of determining the accuracy of the representations
and warranties hereinabove made and the compliance with covenants
contained in this Agreement;
4.2.7 MAINTENANCE OF INTELLECTUAL PROPERTY. Not take any action
that would, or fail to take any action the failure of which would, cause
directly or indirectly any of its Intellectual Property to enter the
public domain or that could otherwise adversely affect its Intellectual
Property;
4.2.8 NO DELAY. Not take any action or enter into any
transaction which would materially affect the ability of TAVA to, or
materially delay TAVA's ability to, complete the transactions
contemplated by this Agreement; PROVIDED, that the exercise by the board
of
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directors of TAVA of its fiduciary duties in connection with a Superior
TAVA Transaction Proposal, pursuant to the terms of SECTION 4.2.14, shall
not be deemed a breach of this SECTION 4.2.8;
4.2.9 PROHIBITION OF CERTAIN EMPLOYMENT CONTRACTS. Not enter
into any contracts of employment or other agreements, which (i) cannot be
terminated on notice of 14 days or less without the payment of additional
compensation or consideration or (ii) provide for any increase in
compensation, including, without limitation, any modification of any
stock option agreements, outside the ordinary course of business
consistent with past practice, severance payments or benefits covering a
period beyond the termination date (other than those which Real Holdings
has previously approved) except as contemplated by this Agreement or as
may be required by law;
4.2.10 PROHIBITION OF CERTAIN LOANS. Not incur any borrowings
except (i) the prepayment by customers of amounts due or to become due
for goods sold or services rendered or to be rendered in the future,
(ii) trade payables incurred in the ordinary course of business, or
(iii) other borrowings incurred in the ordinary course of business to
finance normal operations;
4.2.11 PROHIBITION OF CERTAIN COMMITMENTS AND ACQUISITIONS.
Except as set forth in Section 4.2.11 of the TAVA Disclosure Schedule,
not enter into commitments (i) of a capital expenditure nature or incur
any contingent liability which would exceed $250,000, in the aggregate,
except (A) as may be necessary for the maintenance of existing facilities
and equipment in good operating condition and repair in the ordinary
course of business, or (B) as may be required by law, or (ii) for the
acquisition of any other business or any shares of capital stock of any
third party;
4.2.12 DISPOSAL OF ASSETS. Not sell, dispose of, or encumber, any
property or assets, except in the ordinary course of business;
4.2.13 MAINTENANCE OF INSURANCE. Maintain insurance (or self
insurance reserves) upon all its properties and with respect to the
conduct of its business of such kinds and in such amounts as is customary
in the type of business in which it is engaged, but not less than that
presently carried by it, which insurance (or self insurance reserves) may
be added to from time to time in its discretion;
4.2.14 TAVA ACQUISITION PROPOSALS.
4.2.14.1 NO SOLICITATION. Not directly or indirectly,
or authorize or permit any of its respective agents to:
(i) solicit, initiate, knowingly encourage (including by way of
furnishing information) or take any other action to facilitate,
any inquiry or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any acquisition or purchase
of a substantial amount of assets of, or any equity interest in,
TAVA or any merger, consolidation, business combination, sale of
substantially all assets, sale of securities, recapitalization,
liquidation, dissolution or
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similar transaction involving TAVA (other than the transactions
contemplated by this Agreement) or any other material corporate
transactions the consummation of which would, or could
reasonably be expected to, impede, interfere with, prevent or
materially delay the Merger (collectively, "TAVA TRANSACTION
PROPOSALS") or agree to or endorse any TAVA Transaction Proposal
or (ii) propose, enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to
another person any information with respect to its business,
properties or assets or any of the foregoing, or otherwise
cooperate in any way with, or assist or participate in,
facilitate or encourage, an effort or attempt by any other
person to do or seek any of the foregoing, PROVIDED, HOWEVER,
that the foregoing clauses (i) and (ii) shall not prohibit TAVA
from (A) furnishing information concerning TAVA and its
businesses, properties or assets to a third party who has made
an inquiry concerning a TAVA Transaction Proposal or (B)
engaging in discussions or negotiations with a third party who
has made an inquiry concerning a TAVA Transaction, but in each
case referred to in the foregoing clauses (A) and (B) only after
(x) the board of directors of TAVA concludes in good faith
following consultation with its outside counsel that such action
is reasonably necessary in order for the board of directors of
TAVA to comply with its fiduciary obligations to TAVA's
stockholders under applicable law and (y) such third party shall
have executed a confidentiality agreement in reasonably
customary form. If the board of directors of TAVA receives a
TAVA Transaction Proposal, then TAVA shall, as soon as is
practicable and in no event later than twelve (12) hours after
receipt of such proposal, inform Real Holdings of the terms and
conditions of such proposal and the identity of the person
making it and shall keep Real Holdings informed of the status
and any changes in terms of any such TAVA Transaction Proposal
and of the steps it is taking in response to such TAVA
Transaction Proposal. Nothing contained in this SECTION
4.2.14.1 shall prohibit TAVA or its board of directors from
making such disclosure to TAVA's stockholders or taking any
action which, in the good faith judgment of TAVA's board of
directors based on advice of its outside counsel, is required
under applicable law, including Rules 14d-9 and 14e-2
promulgated under the Exchange Act. For purposes of this
Agreement, the term "SUPERIOR TAVA TRANSACTION PROPOSAL" shall
mean a BONA FIDE TAVA Transaction Proposal that the board of
directors of TAVA determines in good faith after consultation
with (and based in part on the advice of) its independent
financial advisors to be more favorable to TAVA and TAVA's
stockholders than the Merger, is reasonably capable of being
financed and is not subject to any material contingencies
relating to financing.
4.2.14.2 ACCEPTANCE OF SUPERIOR TAVA TRANSACTION
PROPOSALS. If (i) this Agreement is terminated by TAVA or Real
Holdings pursuant to SECTION 6.1.5 hereof or (ii) TAVA enters into
an agreement which provides for Another TAVA Transaction (as
defined below) or Another TAVA Transaction is consummated (in each
case with any third party which after the date of this Agreement
and before termination of this Agreement has communicated to it a
TAVA Transaction Proposal), in either case within twelve months
after the date of termination of this Agreement, then, in any such
event unless this Agreement has been terminated solely
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due to TAVA's termination pursuant to SECTION 6.1.1, SECTION
6.1.4, SECTION 6.1.6, SECTION 6.1.7, or SECTION 6.1.9 TAVA shall
pay to Real Holdings simultaneously with termination by TAVA in
the case of the occurrence of any of the events specified in
clause (i) above, and immediately upon the first to occur of the
entering into an agreement providing for, or the consummation
of, Another TAVA Transaction in the case of clause (ii) above
(by wire transfer of immediately available funds to an account
designated by Real Holdings for such purpose), a fee (the
"BREAK-UP FEE") in an amount equal to Five Million Eight Hundred
Thousand Dollars ($5,800,000). For purposes of this SECTION
4.2.14.2, the term "ANOTHER TAVA TRANSACTION" shall mean any
transaction pursuant to which (i) any person, entity or group
(within the meaning of Section 13(d)(3) of the Exchange Act)
(each, a "THIRD PARTY") acquires 50% or more of the outstanding
TAVA Common Stock, (ii) a Third Party acquires 25% or more of
the total assets of TAVA taken as a whole, (iii) a Third Party
merges, consolidates or combines in any other way with TAVA
other than in a transaction in which holders of TAVA Common
Stock continue to own at least 75% of the equity of the
surviving corporation, or (iv) TAVA distributes or transfers to
its stockholders, by dividend or otherwise, assets constituting
25% or more of the market value or earning power of TAVA on a
consolidated basis (it being understood that stock of
Subsidiaries constitute assets of TAVA for purposes of this
SECTION 4.2.14.2).
4.2.15 NO AMENDMENT TO CERTIFICATE OF INCORPORATION, ETC. Without
the consent of Real Holdings, not amend its certificate of incorporation
or bylaws or other organizational documents or merge or consolidate with
or into any other corporation or change in any manner the rights of its
capital stock or the character of its business;
4.2.16 NO ISSUANCE, SALE, OR PURCHASE OF SECURITIES. Without the
consent of Real Holdings, not issue or sell, or issue options or rights
to subscribe for, or enter into any contract or commitment to issue or
sell (upon conversion or otherwise), any shares of its capital stock or
subdivide or in any way reclassify any shares of its capital stock, or
acquire, or agree to acquire, any shares of its capital stock; provided,
that nothing in this SECTION 4.2.16 shall restrict or prohibit the
issuance by TAVA of shares of TAVA Common Stock upon exercise of options
previously granted under existing benefit plans or warrants previously
issued to TAVA's lenders;
4.2.17 PROHIBITION ON DIVIDENDS. Without the consent of Real
Holdings, not declare or pay any dividend on shares of its capital stock
or make any other distribution of assets to the holders thereof;
4.2.18 SUPPLEMENTAL FINANCIAL STATEMENTS. Deliver to Real
Holdings, within 90 days after the end of the fiscal year ended June 30,
1999 the audited consolidated financial statements of TAVA included in
its report on Form 10-K. Deliver to Real Holdings, within 45 days after
the end of each fiscal quarter of TAVA beginning March 31, 1999 and
through the Effective Time, unaudited balance sheets and related
unaudited statements of income, retained earnings and cash flows as of
the end of each fiscal quarter of TAVA, and as of the
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corresponding fiscal quarter of the previous fiscal year. TAVA hereby
represents and warrants that such unaudited financial statements shall
(i) be complete in all material respects except for the omission of
notes and schedules contained in audited financial statements, (ii)
present fairly the financial condition of TAVA as at the dates indicated
and the results of operations for the respective periods indicated
(except for normal year-end adjustments which are not material), (iii)
shall have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as noted therein and
(iv) shall contain all adjustments which TAVA considers necessary for a
fair presentation of its results for each respective fiscal period;
4.2.19 NOTICE OF MATERIAL DEVELOPMENTS. Promptly furnish to Real
Holdings copies of all communications from TAVA to its stockholders and
all TAVA Reports. TAVA shall give prompt notice to Real Holdings of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any TAVA representation or warranty
contained in this Agreement to be untrue or inaccurate in any material
respect (it being understood that any materiality qualifications
contained in such representations and warranties shall be disregarded for
this purpose) at or prior to the Effective Time and (ii) any material
failure of TAVA to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this SECTION 4.2.19
shall not limit or otherwise affect the remedies available hereunder to
Real Holdings;
4.2.20 TAVA STOCKHOLDERS' MEETING. Call and hold a meeting of
stockholders of TAVA within 45 days after the Commission has indicated
that it has no further comments on the Proxy Statement for the purpose of
considering and acting upon a proposal to adopt the Plan of Merger. The
board of directors of TAVA shall recommend to the stockholders of TAVA
the adoption of this Agreement by the stockholders of TAVA and shall not
change such recommendation unless the board of directors of TAVA
concludes in good faith following advice of its outside counsel,
represented by a written opinion, that a change of recommendation is
reasonably necessary in order for the board of directors of TAVA to
comply with its fiduciary obligations to TAVA's stockholders under
applicable law; or
4.2.21 UNION CONTRACTS AND TAVA PLANS. Except as required by law,
without the written consent of Real Holdings, not directly or indirectly
(i) enter into or modify any collective bargaining agreement with any
labor union or other representative of employees, (ii) increase the
compensation or benefits of any employee of TAVA, (iii) amend or
terminate any TAVA Plan, or (iv) enter into or adopt any new employee
benefit plan, policy or arrangement.
4.2.22 YEAR 2000 CONTRACTS. From the date hereof until the
earlier of the termination of this Agreement or the Effective Time, TAVA
shall not, and shall not permit any of its subsidiaries to, enter into
any contract, agreement or binding commitment for the provision of
services related to year 2000 compatibility or compliance, or where the
stated purpose of such is year 2000 compatibility or compliance, as
described in SECTION 2.12.10,
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other than contracts that are substantially in the form of the standard
TAVA contracts for such services previously delivered to Real Holdings.
4.3 ADDITIONAL AGREEMENTS OF REAL AND REAL HOLDINGS. Real and Real
Holdings each agree that from the date hereof to the Effective Time, they will:
4.3.1 NO DELAY. Not take any action or enter into any
transaction which would materially affect the ability of Real Holdings
to, or materially delay Real Holdings' ability to, complete the
transactions contemplated by this Agreement;
4.3.2 NOTICE OF MATERIAL DEVELOPMENTS. Real Holdings shall give
prompt notice to TAVA of (i) the occurrence or non-occurrence of any
event the occurrence or non-occurrence of which would cause any Real
Holdings representation or warranty contained in this Agreement to be
untrue or inaccurate at or prior to the Effective Time and (ii) any
material failure of Real Holdings to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this
SECTION 4.3.2 shall not limit or otherwise affect the remedies available
hereunder to TAVA; and
4.3.3 COMPLIANCE WITH AGREEMENT. At its expense, take all
commercially reasonable actions as may be necessary (i) to ensure that
the representations and warranties made by it herein are true and correct
at the Effective Time, (ii) to fully perform all covenants made by it
herein and (iii) to satisfy timely all other obligations imposed upon it
by this Agreement.
4.3.4 AVAILABILITY OF MERGER CONSIDERATION. Within three
business days after the date on which all conditions precedent to the
Merger set forth in Section 5.2 are satisfied, have available for
transfer and deposit with the transfer agent at the Effective Time the
aggregate Merger Consideration to be paid by Real Holdings pursuant to
the Plan of Merger.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF TAVA. The obligations
of TAVA to consummate and effect the Merger shall be subject to the
satisfaction of the following conditions, or to the waiver thereof by TAVA in
the manner contemplated by SECTION 6.4 before the Effective Time:
5.1.1 REPRESENTATIONS AND WARRANTIES OF REAL AND REAL HOLDINGS
TRUE AT EFFECTIVE TIME. The representations and warranties of Real, Real
Holdings and Merger Sub herein contained shall be, in all respects, true
as of and at the Effective Time with the same effect as though made at
such date, except as affected by transactions permitted or contemplated
by this Agreement and except for those representations and warranties
that address matters only as of a particular date (which shall remain
true and correct as of such
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particular date), provided that any inaccuracies in such
representations and warranties will be disregarded if the
circumstances giving rise to all such inaccuracies (considered
collectively) do not constitute, and are not reasonably expected
to result in, a Material Adverse Effect on Real or Real Holdings
(it being understood that any materiality qualifications
contained in such representations and warranties shall be
disregarded for this purpose); Real and Real Holdings shall have
performed and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied
with by Real or Real Holdings before the Effective Time; and
Real Holdings shall have delivered to TAVA a certificate, dated
the Effective Time and signed by its chairman of the board or
chief executive officer and by its chief financial or accounting
officer to both such effects.
5.1.2 [Intentionally omitted]
5.1.3 TAVA STOCKHOLDER APPROVAL. At the meeting of stockholders
of TAVA to be held before the Effective Time, the Plan of Merger shall
have been adopted by the requisite vote of stockholders of TAVA Common
Stock under TAVA's certificate of incorporation and bylaws and the Act.
5.1.4 HART-SCOTT-RODINO, ETC. All waiting periods
required by HSR shall have expired with respect to the
transactions contemplated by this Agreement, or early
termination with respect thereto shall have been obtained
without the imposition of any governmental request or order
requiring the sale or disposition or holding separate (through a
trust or otherwise) of particular assets or businesses of Real
Holdings, its affiliates or any component of TAVA or other
actions as a precondition to the expiration of any waiting
period or the receipt of any necessary governmental approval or
consent. In addition, any approvals required under any state or
foreign laws comparable to HSR shall have been obtained.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF REAL HOLDINGS. The
obligations of Real Holdings to consummate and effect the Merger shall be
subject to the satisfaction of the following conditions, or to the waiver
thereof by Real Holdings in the manner contemplated by SECTION 6.4 before the
Effective Time:
5.2.1 REPRESENTATIONS AND WARRANTIES OF TAVA TRUE AT EFFECTIVE
TIME. The representations and warranties of TAVA herein contained shall
be, in all respects, true as of and at the Effective Time with the same
effect as though made at such date, except as affected by transactions
permitted or contemplated by this Agreement and except for those
representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such
particular date), provided that any inaccuracies in such representations
and warranties will be disregarded if the circumstances giving rise to
all such inaccuracies (considered collectively) do not constitute, and
are not reasonably expected to result in, a Material Adverse Effect on
TAVA (it being understood that any materiality qualifications contained
in such representations and warranties shall be disregarded for this
purpose); TAVA shall have performed and complied, in all material
respects, with all covenants required by this Agreement to be performed
or complied with by TAVA before the Effective Time; and TAVA shall have
delivered to Real Holdings a certificate, dated the
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Effective Time and signed by its chairman of the board or chief executive
officer and by its chief financial or accounting officer to both such
effects.
5.2.2 NO MATERIAL LITIGATION. (i) Except as set forth in Section
2.17 of the TAVA Disclosure Schedule, no suit, action, or other
proceeding shall be pending, or to TAVA's knowledge, threatened, before
any court or governmental agency which could reasonably be expected to
have a Material Adverse Effect on TAVA and (ii) no statute, rule,
regulation, order or injunction shall have been enacted, entered,
promulgated or enforced by any court or other tribunal or governmental
body or authority which prohibits the consummation of the Merger
substantially on the terms contemplated hereby.
5.2.3 TAVA STOCKHOLDER APPROVAL. At the meeting of stockholders
of TAVA to be held before the Effective Time, the Plan of Merger shall
have been adopted by the requisite vote of stockholders of TAVA Common
Stock under TAVA's certificate of incorporation and bylaws and the Act.
5.2.4 HART-SCOTT-RODINO, ETC. All waiting periods
required by HSR shall have expired with respect to the
transactions contemplated by this Agreement, or early
termination with respect thereto shall have been obtained
without the imposition of any governmental request or order
requiring the sale or disposition or holding separate (through a
trust or otherwise) of particular assets or businesses of Real
Holdings, its affiliates or any component of TAVA or other
actions as a precondition to the expiration of any waiting
period or the receipt of any necessary governmental approval or
consent. In addition, any approvals required under any state or
foreign laws comparable to HSR shall have been obtained.
5.2.5 CONSENT OF CERTAIN PARTIES IN PRIVITY WITH TAVA. The
holders of any material indebtedness of TAVA, the lessors of any material
property leased by TAVA, and the other parties to any other material
agreements to which TAVA is a party, whose consent to the Merger is
required as set forth in the TAVA Disclosure Schedule, shall have
consented to the Merger.
5.2.6 AGREEMENTS WITH KEY PERSONNEL. Each of Doug Kelsall, John
Jenkins, Larry Hagwood and Kevin Fallon shall have entered into
employment agreements with Newco, in form and substance satisfactory to
Newco, and Management Voting and Exchange Agreements, substantially in
the form attached hereto as EXHIBIT D.
ARTICLE VI
TERMINATION AND ABANDONMENT
6.1 TERMINATION. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated and the Merger
abandoned at any time (whether before or after the approval of this Agreement
by the stockholders of TAVA and Real Holdings) before the Effective Time:
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<PAGE>
6.1.1 BY MUTUAL CONSENT. By mutual written consent of Real
Holdings and TAVA.
6.1.2 BY REAL HOLDINGS BECAUSE OF CONDITIONS PRECEDENT. By Real
Holdings, if there has been a breach by TAVA of its representations,
warranties, covenants, or agreements set forth in this Agreement if, as a
result of such breach, the conditions set forth in SECTION 5.2.1 would
not be satisfied, and TAVA fails to cure such breach within 15 business
days after written notice thereof from Real Holdings (except that no cure
period shall be provided for any breach by TAVA which by its nature
cannot be cured).
6.1.3 BY REAL HOLDINGS BECAUSE OF MATERIAL ADVERSE CHANGE. By
Real Holdings, if there has been since December 31, 1998, a Material
Adverse Change with respect to TAVA which condition or event shall not
have been ameliorated such that it no longer constitutes a Material
Adverse Change within fifteen (15) business days following receipt by
TAVA of notice from Real Holdings (except that no cure period shall be
provided for any Material Adverse Change which by its nature cannot be
cured).
6.1.4 BY TAVA BECAUSE OF CONDITIONS PRECEDENT. By TAVA, if there
has been a breach by Real or Real Holdings of any of its representations,
warranties, covenants or agreements set forth in this Agreement if, as a
result of such breach, the conditions set forth in SECTION 5.1.1 would
not be satisfied, and Real or Real Holdings fails to cure such breach
within 15 business days after written notice thereof from TAVA (except
that no cure period shall be provided for any breach by Real or Real
Holdings which by its nature cannot be cured).
6.1.5 BY TAVA OR REAL HOLDINGS BECAUSE OF A SUPERIOR TAVA
TRANSACTION PROPOSAL. By TAVA or Real Holdings, if, before the Effective
Time, TAVA's board of directors shall have withdrawn, withheld or
modified in a manner adverse to Real Holdings its approval of this
Agreement or the Merger solely to the extent permitted by the terms,
conditions and procedures set forth in SECTION 4.2.14.1; PROVIDED, that
this Agreement shall not be terminated pursuant to this SECTION 6.1.5 by
TAVA unless TAVA has provided Real Holdings with two business days' prior
written notice of its intention to accept a Superior TAVA Transaction
Proposal, together with a detailed description of the terms and
conditions of such Superior TAVA Transaction Proposal.
6.1.6 BY REAL HOLDINGS OR TAVA BECAUSE OF STATUTE OR ORDER. By
Real Holdings or TAVA if (i) a statute, rule, regulation or executive
order shall have been enacted, entered or promulgated after the date of
this Agreement (and shall remain in effect) prohibiting the consummation
of the Merger substantially on the terms contemplated hereby or (ii) an
order, decree, ruling or injunction shall have been entered by a court of
competent jurisdiction after the date of this Agreement (and shall not
have been vacated, withdrawn or overturned) permanently restraining,
enjoining or otherwise prohibiting the consummation of the Merger
substantially on the terms contemplated hereby and such order, decree,
ruling or injunction shall have become final and non-appealable;
provided, that the party seeking to terminate this
28
<PAGE>
Agreement pursuant to this SECTION 6.1.6 shall have used its reasonable
best efforts to remove such injunction order, decree, ruling or
injunction.
6.1.7 BY REAL HOLDINGS OR TAVA IF MERGER NOT EFFECTIVE BY
SEPTEMBER 30, 1999. By either Real Holdings or TAVA, if all conditions
to consummation of the Merger shall not have been satisfied or waived on
or before September 30, 1999, other than as a result of a breach of this
Agreement by the terminating party.
6.1.8 BY REAL HOLDINGS OR TAVA IF MERGER NOT APPROVED BY
STOCKHOLDERS. By either Real Holdings or TAVA if (i) a meeting of the
stockholders of TAVA (including any adjournments thereof) shall have been
held and completed and TAVA's stockholders shall have taken a final vote
on a proposal to adopt the Plan of Merger and the Plan of Merger was not
adopted by the requisite vote of holders of TAVA Common Stock under
TAVA's certificate of incorporation and bylaws and the Act.
6.1.9 BY TAVA BECAUSE OF MATERIAL ADVERSE CHANGE. By TAVA, if
there has been since the date hereof, a Material Adverse Change with
respect to Real or Real Holdings which condition or event shall not have
been ameliorated such that it no longer constitutes a Material Adverse
Change within fifteen (15) business days following receipt by Real and
Real Holdings of notice from TAVA.
6.2 TERMINATION BY BOARD OF DIRECTORS. An election of Real
Holdings to terminate this Agreement and abandon the Merger as provided in
SECTION 6.1 shall be exercised on behalf of Real Holdings by its board of
directors. An election of TAVA to terminate this Agreement and abandon the
Merger as provided in SECTION 6.1 shall be exercised on behalf of TAVA by its
board of directors.
6.3 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to and in accordance with the
provisions of SECTION 6.1 hereof, this Agreement shall become void and have
no effect, without any liability on the part of any party hereto (or its
stockholders or controlling persons or directors or officers), except (i) the
provisions of SECTION 4.2.14.2 shall survive such termination and abandonment
and (ii) neither party shall be released or relieved from any liability
arising from any breach by such party of any of its representations,
warranties, covenants or agreements as set forth in this Agreement.
6.4 WAIVER OF CONDITIONS. Subject to the requirements of any
applicable law, any of the terms or conditions of this Agreement may be
waived at any time by the party which is entitled to the benefit thereof, by
action taken by its board of directors.
29
<PAGE>
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
7.1.1 From and after the Effective Time, Real shall cause the
Surviving Corporation to indemnify and hold harmless each present and
former director and officer of TAVA, determined as of the Effective Time,
against any claims, losses, liabilities, damages, judgments, fines, fees,
costs or expenses, including, without limitation, attorneys' fees and
disbursements incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or
occurring at or prior to the Effective Time (including, without
limitation, the Merger, the preparation, filing and mailing of the Proxy
Statement and the other transactions and actions contemplated by this
Agreement), whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that TAVA would have been
permitted, under applicable law, indemnification agreements existing on
the date hereof, the certificate of incorporation or bylaws of TAVA in
effect on the date hereof, to indemnify such person (and the Surviving
Corporation shall also advance expenses as incurred to the fullest extent
permitted under applicable law provided the person to whom expenses are
advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification).
7.1.2 From and after the Effective Time, Real shall cause the
subsidiaries of the Surviving Corporation to indemnify and hold harmless
each present and former director and officer of the subsidiaries of TAVA,
determined as of the Effective Time, against any claims, losses,
liabilities, damages, judgments, fines, fees, costs or expenses,
including, without limitation, attorneys' fees and disbursements incurred
in connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of
or pertaining to matters existing or occurring at or prior to the
Effective Time (including, without limitation, the Merger, the
preparation, filing and mailing of the Proxy Statement and the other
transactions and actions contemplated by this Agreement), whether
asserted or claimed prior to, at or after the Effective Time, to the
fullest extent that such subsidiaries of TAVA would have been permitted,
under applicable law, indemnification agreements existing on the date
hereof, the certificate of incorporation or bylaws of such subsidiaries
of TAVA in effect on the date hereof (or, in the event such subsidiaries
shall amend their certificate of incorporation or bylaws before the
Effective Time, to the fullest extent provided in such amended charter
documents up to the maximum indemnification protection otherwise provided
under the TAVA certificate of incorporation or bylaws in effect on the
date hereof), to indemnify such person (and the subsidiaries of the
Surviving Corporation shall also advance expenses as incurred to the
fullest extent permitted under applicable law provided the person to
whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not
entitled to indemnification).
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<PAGE>
7.1.3 For a period of six (6) years after the Effective Time,
Real shall cause the Surviving Corporation to maintain (to the extent
available in the market) in effect a directors' and officers' liability
insurance policy covering those directors and officers of TAVA and its
subsidiaries who are currently covered by TAVA's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered
to Real Holdings) with coverage in amount and scope at least as favorable
as TAVA's existing coverage (which coverage may also include an
endorsement providing tail coverage extending the period in which claims
may be made under such existing policy); provided that in no event shall
Real Holdings be required to expend per year for such coverage more than
an aggregate of 200% of the current annual premium expended by TAVA to
provide such coverage and provided, further, that if the annual premiums
of such insurance coverage exceed such amount, Real Holdings shall be
obligated to obtain a policy with the best coverage available, in the
reasonable judgment of the board of directors of Real Holdings, for a
cost not exceeding such amount.
7.2 STOCK OPTIONS.
7.2.1 Prior to the Effective Time, TAVA shall (i) cause the
Committee of the TAVA 1997 Stock Option and Stock Bonus Plan (the "1997
PLAN") to (a) accelerate the exercise period of all options issued under
the 1997 Plan (or portions thereof) that are or will be exercisable as of
the Effective Time, except for the options listed in SCHEDULE 7.2.1(a),
so that such exercise period ends immediately prior to the Effective Time
and all such unexercised options (or portions thereof) shall terminate
immediately prior to the Effective Time, and (b) permit the holders of
such options (or portions thereof) to exercise the options prior to the
Effective Time, (ii) cause the holders of the options listed in SCHEDULE
7.2.1(b) to agree to surrender such options to TAVA and, immediately
prior to the Effective Time, terminate such options, and (iii) cause the
Board of Directors of TAVA, in accordance with the terms the TAVA 1998
Non-Employee Director Stock Option Plan (the "1998 PLAN"), to provide for
the termination of all options issued under the 1998 Plan on the day
immediately preceding the Effective Date (the "OPTION TERMINATION DATE");
provided that the holders of the options under the 1998 Plan shall have
(a) the opportunity to exercise all exercisable options in the thirty day
period prior to the Option Termination Date and (b) notice of such
termination 30 days prior to the Option Termination Date.
7.2.2 At the Effective Time, the Surviving Corporation shall
(i) continue to maintain the 1997 Plan and the TAVA 1992 Incentive Stock
Option Plan (the "1992 Plan") and all surviving options under such Plans
and continue to maintain those Plans in accordance with their terms;
provided, that adjustments to the terms of the Plans may be made as
necessary in order for the Plans to apply to the stock of the Surviving
Corporation, (ii) establish a new stock option plan (the "NEW STOCK
OPTION PLAN"), and (iii) issue options under the New Stock Option Plan to
the employees in the number, at the exercise price, and on the terms of
the options set forth in SCHEDULE 7.2.1(b) and in accordance with the
terms in the New Stock Option Plan.
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<PAGE>
7.3 TAVA EMPLOYEE STOCK PURCHASE PLAN. As of the Effective Time,
the ESPP and each other stock option plan (except for the 1997 Plan and the
1992 Plan) shall be terminated. The rights of participants in the ESPP with
respect to any offering period underway under the ESPP immediately prior to
the Effective Time shall be determined by treating the last business day
prior to the Effective Time as the last day of such offering period and by
making such other pro-rata adjustments as may be necessary to reflect the
reduced offering period to the extent permitted by Section 423 of the Code
but otherwise treating such offering period as a fully effective and
completed offering period for all purposes of such plan. Prior to the
Effective Time, TAVA shall take all actions (including, if appropriate,
amending the terms of the ESPP) that are necessary to give effect to the
transactions contemplated by this SECTION 7.3.
ARTICLE VIII
MISCELLANEOUS
8.1 ENTIRETY. This Agreement and the attachments and Schedules
thereto and that certain confidentiality agreement dated October 26, 1998
embody the entire agreement among the parties with respect to the subject
matter hereof, and all prior agreements among the parties with respect
thereto are hereby superseded in their entirety.
8.2 COUNTERPARTS. Any number of counterparts of this Agreement may
be executed and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
instrument.
8.3 NOTICES AND WAIVERS. Any notice or waiver to be given to any
party hereto shall be in writing and shall be delivered by overnight courier,
sent by facsimile transmission or first class registered or certified mail,
postage prepaid.
IF TO REAL OR REAL HOLDINGS
Addressed to: With a copy to:
Real Software Holdings North America, Inc. Vinson & Elkins L.L.P.
818 Reoder Road, Suite 600 One American Center
Silver Springs, Maryland 20910 600 Congress Avenue, Suite 2700
Austin, Texas 78701
Attention: Eric Cumming Attention: Robert S. Baird and
Robert K. Hatcher
Facsimile: 301/608-2553 Facsimile: 512/236-3210
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<PAGE>
IF TO TAVA
Addressed to: With a copy to:
TAVA Technologies, Inc. Baker & Hostetler, LLP
7887 E. Belleview Avenue, Suite 820 303 E. 17th Street, Suite 1100
Englewood, Colorado 80111 Denver, Colorado 80203-1264
Attention: John Jenkins Attention: Thomas H. Maxfield
Facsimile:303/771-9786 Facsimile: 303/861-2307
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, shall be deemed to be received on the fifth
business day after so mailed, and if delivered by overnight courier or
facsimile to such address, upon delivery during normal business hours on any
business day.
8.4 TERMINATION OF REPRESENTATIONS, WARRANTIES, ETC. The
respective representations and warranties, covenants and agreements contained
in this Agreement shall expire with, and be terminated and extinguished by,
the Merger at the time of the consummation thereof on the Effective Time,
PROVIDED, HOWEVER, that this SECTION 8.4 shall not limit or otherwise effect
any covenant or agreement of the parties hereto which by its terms
contemplates performance after the Effective Time or after termination of
this Agreement.
8.5 TABLE OF CONTENTS AND CAPTIONS. The table of contents and
captions contained in this Agreement are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of any article,
section, or paragraph hereof.
8.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of and be enforceable by the successors and
assigns of the parties hereto.
8.7 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. It is hereby stipulated and declared to
be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, void or unenforceable.
8.8 APPLICABLE LAW; CONSENT TO JURISDICTION. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Delaware without regard to applicable principles of conflicts of
law, except to the extent that the laws of Colorado are mandatorily
applicable to the Merger. Each of the parties hereto hereby irrevocably
submits to the jurisdiction of any state or Federal court located in the
State of Colorado in any action or proceeding arising out of or relating to
this Agreement and the transactions contemplated hereby and each of the
parties irrevocably agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such court and irrevocably
waives and agrees not to assert, by way of motion,
33
<PAGE>
as a defense, counterclaim or otherwise, in any action or proceeding with
respect to this Agreement, (a) any claim that it is not personally subject to
the jurisdiction of the above-named courts for any reason other than the
failure to lawfully serve process, (b) that it or its property is exempt or
immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior
to judgment, attachment in aid of execution of judgment, execution of
judgment, or otherwise), and (c) to the fullest extent permitted by
applicable law, that (i) the suit, action or proceeding in any such court is
brought in an inconvenient forum, (ii) the venue of such suit, action or
proceeding is improper, and (iii) this Agreement, or the subject matter
hereof, may not be enforced in or by such courts. Any judicial proceeding by
TAVA against Real or Real Holdings or any affiliate thereof or by Real or
Real Holdings against TAVA or any affiliate of TAVA involving, directly or
indirectly, any matter arising out of or related to this Agreement shall be
brought only in a state or Federal court located in the United States.
8.9 PUBLIC ANNOUNCEMENTS. The parties agree that before the
Effective Time that they shall consult with each other before the making of
any public announcement regarding the existence of this Agreement, the
contents hereof or the transactions contemplated hereby, and to obtain the
prior approval of the other party as to the content of such announcement,
which approval shall not be unreasonably withheld. However, the foregoing
shall not apply to any announcement or written statement which, upon the
written advice of counsel, is required by law to be made, except that the
party required to make such announcement shall, whenever practicable, consult
with and solicit prior approval from such other party concerning the timing
and content of such legally required announcement or statement before it is
made.
8.10 DEFINITIONS. The following terms are defined in the indicated
place:
<TABLE>
<CAPTION>
Section or
Term Paragraph
---- ----------
<S> <C>
Act . . . . . . . . . . . . . . . . . . . . . . . Premises
Agreement . . . . . . . . . . . . . . . . . . . . Premises
Another TAVA Transaction . . . . . . . . . . . . 4.3.6.2
Applicable Environmental Laws . . . . . . . . . . 2.18.3
Break-Up Fee . . . . . . . . . . . . . . . . . . 4.3.6.2
Closing . . . . . . . . . . . . . . . . . . . . . 1.2
Closing Date . . . . . . . . . . . . . . . . . . 1.2
Code . . . . . . . . . . . . . . . . . . . . . . 2.21.1
Commission . . . . . . . . . . . . . . . . . . . 2.5
Current TAVA Employee Benefit Plan . . . . . . . 2.21.1
Current Real Holdings Employee Benefit Plan . . . 3.8.1
Effective Time . . . . . . . . . . . . . . . . . 1.3
Encumbrance . . . . . . . . . . . . . . . . . . . 2.4
ERISA . . . . . . . . . . . . . . . . . . . . . . 2.21.1
ESPP . . . . . . . . . . . . . . . . . . . . . . 2.10.4
Exchange Act . . . . . . . . . . . . . . . . . . 2.2.2
</TABLE>
34
<PAGE>
<TABLE>
<S> <C>
Real Holdings Disclosure Schedule . . . . . . . . Article III
HSR . . . . . . . . . . . . . . . . . . . . . . . 2.2.2
Intellectual Property . . . . . . . . . . . . . . 2.12.1
Licenses . . . . . . . . . . . . . . . . . . . . 2.14.1
Marketing Agreements . . . . . . . . . . . . . . 2.14.2
Material Adverse Effect . . . . . . . . . . . . . 1.4
Merger . . . . . . . . . . . . . . . . . . . . . 1.1
Merging Corporations . . . . . . . . . . . . . . Premises
OSHA . . . . . . . . . . . . . . . . . . . . . . 2.19
PBGC . . . . . . . . . . . . . . . . . . . . . . 2.21.3
Plan of Merger . . . . . . . . . . . . . . . . . Premises
Proxy Statement . . . . . . . . . . . . . . . . . 2.24
Securities Act . . . . . . . . . . . . . . . . . 2.5
Software Programs . . . . . . . . . . . . . . . . 2.12.1
Standard Licenses . . . . . . . . . . . . . . . . 2.14.1
Superior TAVA Transaction Proposal . . . . . . . 4.3.6.1
Surviving Corporation . . . . . . . . . . . . . . 1.1
Tax . . . . . . . . . . . . . . . . . . . . . . . 2.11.1
Tax Returns . . . . . . . . . . . . . . . . . . . 2.11.1
TAVA Common Stock . . . . . . . . . . . . . . . . 2.3
TAVA Commonly Controlled Entity . . . . . . . . . 2.19
TAVA Employee Benefit Plan . . . . . . . . . . . 2.19
TAVA Disclosure Schedule . . . . . . . . . . . . Article II
TAVA Reports . . . . . . . . . . . . . . . . . . 2.5
TAVA Transaction Proposals . . . . . . . . . . . 4.3.6.1
Technical Documentation . . . . . . . . . . . . . 2.13
Third Party . . . . . . . . . . . . . . . . . . . 4.3.6.2
Year 2000 Compliant . . . . . . . . . . . . . . . 2.12.10
</TABLE>
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Reorganization to be duly executed as of the date first above written.
REAL SOFTWARE NV
By: /s/ Rudy Hageman
Name: Rudy Hageman
Title: President
REAL SOFTWARE HOLDINGS NORTH AMERICA,
INC.
By:
Name:
Title:
REAL ACQUISITION SUB #1, INC.
By:
Name:
Title:
TAVA TECHNOLOGIES, INC.
By:
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Reorganization to be duly executed as of the date first above written.
REAL SOFTWARE NV
By:
Name:
Title:
REAL SOFTWARE HOLDINGS NORTH AMERICA,
INC.
By: /s/ Eric J. Cumming
Name: Eric J. Cumming
Title: President
REAL ACQUISITION SUB #1, INC.
By: /s/ Eric J. Cumming
Name: Eric J. Cumming
Title: President
TAVA TECHNOLOGIES, INC.
By:
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Reorganization to be duly executed as of the date first above written.
REAL SOFTWARE NV
By:
Name:
Title:
REAL SOFTWARE HOLDINGS NORTH AMERICA,
INC.
By:
Name:
Title:
REAL ACQUISITION SUB #1, INC.
By:
Name:
Title:
TAVA TECHNOLOGIES, INC.
By: /s/ John Jenkins
Name: John Jenkins
Title: CEO & President
<PAGE>
EXHIBIT A
PLAN AND AGREEMENT OF MERGER
Merging Merger Sub into TAVA
THIS PLAN AND AGREEMENT OF MERGER, dated as of _____ __, 1999 (this
"PLAN OF MERGER"), is by and between Real Acquisition Sub #1, Inc., a
Colorado corporation ("MERGER SUB") and a wholly owned subsidiary of Real
Software Holdings North America, Inc., a Delaware corporation ("REAL
HOLDINGS"), and TAVA Technologies, Inc., a Colorado corporation ("TAVA").
Merger Sub and TAVA are hereinafter sometimes referred to as the "MERGING
CORPORATIONS."
PRELIMINARY STATEMENT
This Plan of Merger is being entered into pursuant to an Agreement and
Plan of Reorganization dated as of April ___, 1999 (the "AGREEMENT") among
Real Software NV, Real Holdings, Merger Sub and TAVA.
The authorized capital stock of Merger Sub consists of 100,000,000
shares of common stock, par value $.01 per share ("Merger Sub Common Stock"),
of which 100 shares are outstanding, all of which are owned by Real Holdings.
The authorized capital stock of TAVA consists of 10,000,000 shares of
preferred stock, par value $.0001 per share, of which no shares are issued
and outstanding, and 200,000,000 shares of common stock, par value $.0001 per
share ("TAVA COMMON STOCK"), of which ________ shares are issued and
outstanding and an additional ___________ shares are reserved for issuance in
conjunction with various employee benefit plans, and __________ shares are
reserved for issuance pursuant to various warrants, and no shares are held in
TAVA's treasury.
The Boards of Directors of each of the Merging Corporations,
respectively, have approved the Agreement and this Plan of Merger.
Accordingly, in consideration of the premises, and the mutual
covenants and agreements herein contained, the parties hereto hereby agree,
subject to the terms and conditions hereinafter set forth, as follows:
A-1
<PAGE>
ARTICLE I
THE MERGER
1.1 SURVIVING CORPORATION. Subject to the adoption and approval of
this Plan of Merger by the requisite vote of the stockholders of each of the
Merging Corporations and to the other conditions hereinafter set forth,
Merger Sub and TAVA shall be, upon the Effective Time (as defined in SECTION
1.3 hereof), merged into a single surviving corporation, which shall be TAVA
(the "SURVIVING CORPORATION"), one of the Merging Corporations, which shall
continue its corporate existence and become a Colorado corporation governed
by and subject to the laws of that state.
1.2 STOCKHOLDER APPROVAL. This Agreement shall be submitted for
adoption and approval by the stockholders of each of the Merging Corporations
in accordance with their respective certificates of incorporation and the
applicable laws of the State of Colorado.
1.3 EFFECTIVE TIME. The merger of Merger Sub with and into TAVA
(the "MERGER") shall become effective upon the filing of a Certificate of
Merger with the Secretary of State of the State Colorado in accordance with
Section 7-111-105 of the Colorado Business Corporation Act. The time at
which the Merger shall become effective is referred to in this Agreement as
the "EFFECTIVE TIME."
1.4 NAME AND CONTINUED CORPORATE EXISTENCE OF SURVIVING
CORPORATION. At the Effective Time, the identity, existence, purposes,
powers, objects, franchises, rights, and immunities of TAVA shall continue
unaffected and unimpaired by the Merger, and the corporate identity,
existence, purposes, powers, objects, franchises, rights, and immunities of
Merger Sub shall be wholly merged into TAVA and TAVA shall be fully vested
therewith. Accordingly, at the Effective Time, the separate existence of
Merger Sub shall cease.
1.5 GOVERNING LAW AND CERTIFICATE OF INCORPORATION OF SURVIVING
CORPORATION. The laws of the State of Colorado shall govern the Surviving
Corporation. At the Effective Time, the Certificate of Incorporation of
Merger Sub shall be the certificate of incorporation of the Surviving
Corporation until further amended in the manner provided by law, provided
that at the Effective Time the certificate of incorporation of the Surviving
Corporation shall be amended so that the name of the Surviving Corporation
shall be "TAVA Technologies, Inc."
1.6 BYLAWS OF SURVIVING CORPORATION. Effective as of the Effective
Time, the bylaws of Merger Sub shall be the bylaws of the Surviving
Corporation until altered, amended, or repealed, or until new bylaws shall be
adopted in accordance with the provisions of law, the certificate of
incorporation and the bylaws.
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<PAGE>
1.7 DIRECTORS OF SURVIVING CORPORATION.
1.7.1 DIRECTORS OF SURVIVING CORPORATION. The board of directors
of the Surviving Corporation, who shall hold office until the first
annual meeting of stockholders of the Surviving Corporation next
following the Effective Time, shall be the board of directors of Merger
Sub.
1.7.2. VACANCIES. At or after the Effective Time, if a vacancy
shall exist for any reason in the board of directors of the Surviving
Corporation, such vacancy shall be filled in the manner provided in the
certificate of incorporation and/or bylaws of the Surviving Corporation.
1.8 CAPITAL STOCK OF SURVIVING CORPORATION. The authorized number
of shares of capital stock of the Surviving Corporation, and the par value,
designations, preferences, rights, and limitations thereof, and the express
terms thereof, shall be as set forth in the certificate of incorporation.
1.9 CONVERSION OF SECURITIES UPON MERGER.
1.9.1 GENERAL. The manner and basis of converting the issued and
outstanding shares of the capital stock of TAVA and Merger Sub shall be
as hereinafter set forth in this SECTION 1.9.
1.9.2 CONVERSION OF TAVA COMMON STOCK. At the Effective Time,
each share of TAVA Common Stock issued and outstanding immediately prior
to the Effective Time (other than 338,691 shares of TAVA Common Stock
held beneficially or of record by Kevin Fallon (the "SURVIVING COMMON
STOCK")), other than shares of TAVA Common Stock owned or held of record
by Real Holdings, without any action on the part of the holders thereof,
shall automatically become and be converted into the right to receive
$8.00 payable in cash to the holder thereof without interest thereon (the
"MERGER CONSIDERATION"). As of the Effective Time, all such shares of
TAVA Common Stock (other than the Surviving Common Stock), including
shares owned or held of record by Real Holdings, shall no longer be
outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
TAVA Common Stock (the "CERTIFICATES") shall cease to have any rights
with respect thereto, except the right to receive: (i) any unpaid
dividends payable on the TAVA Common Stock and (ii) cash in an amount
equal to the product that is obtained by multiplying (A) the Merger
Consideration by (B) the whole number of shares of TAVA Common Stock
surrendered. At the Effective Time and thereafter, each share of
Surviving Common Stock shall not be converted and shall continue as
Common Stock of the Surviving Corporation.
1.9.3 EXCHANGE OF TAVA COMMON STOCK CERTIFICATES. Prior to the
Effective Time, Real Holdings (after consultation with and approval of
TAVA) shall select a reputable bank or trust company to act as the
exchange agent under the Agreement and this Plan of Merger. As of the
Effective Time, Real Holdings shall deposit with the exchange agent, for
A-3
<PAGE>
the benefit of holders of shares of TAVA Common Stock, for exchange in
accordance with the Agreement and this Plan of Merger, the Merger
Consideration for each issued and outstanding share of TAVA Common Stock.
Promptly after the Effective Time, Real Holdings shall cause the exchange
agent to mail to each person who was, immediately prior to the Effective
Time, a holder of record of TAVA Common Stock a form of letter of
transmittal (mutually agreed to by Real Holdings and TAVA) and
instructions for use in effecting the surrender of stock certificates
that, prior to the Effective Time, represented shares of TAVA Common
Stock, in exchange for cash payment of the Merger Consideration.
Commencing at the Effective Time, each holder of an outstanding
certificate or certificates theretofore representing shares of TAVA
Common Stock may surrender the same to the exchange agent, and such
holder shall be entitled upon such surrender to receive in exchange
therefor cash in an amount equal to the product that is obtained by
multiplying (A) the Merger Consideration by (B) the whole number of
shares of TAVA Common Stock surrendered, and any unpaid dividends
payable in accordance with the Agreement or this Plan of Merger.
However, before surrender, each outstanding certificate representing
issued and outstanding TAVA Common Stock shall after the Effective Time
be deemed, for all purposes, only to evidence such right to receive
cash. In the event of a transfer of ownership of TAVA Common Stock
which is not registered in the transfer records of TAVA, the Merger
Consideration may be paid to a person other than the person in whose
name the certificate so surrendered is registered, if, upon
presentation to the exchange agent, such certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes required
by reason of the payment of the Merger Consideration to a person other
than the registered holder of such certificate or establish to the
reasonable satisfaction of Real Holdings that such tax has been paid or
is not applicable. If any stock certificate that, prior to the
Effective Time, represented shares of TAVA Common Stock shall have been
lost, stolen or destroyed, then, upon the making of an affidavit of
that fact by the person claiming such stock certificate to be lost,
stolen or destroyed (and, if required by Real Holdings, the posting by
such person of a bond in such reasonable amount as Real Holdings may
direct as indemnity against any claim that may be made against it with
respect to such stock certificate), Real Holdings shall cause the
exchange agent to issue in exchange for such lost, stolen or destroyed
stock certificate the Merger Consideration payable for such lost,
stolen or destroyed certificate in accordance with the Agreement and
this Plan of Merger.
1.9.4 CONVERSION OF MERGER SUB COMMON STOCK. At the Effective
Time, each share of Merger Sub Common Stock then issued and outstanding,
without any action on the part of the holder thereof, shall automatically
become and be converted into one share of Common Stock of the Surviving
Corporation.
1.10 ASSETS AND LIABILITIES.
1.10.1 ASSETS AND LIABILITIES OF MERGING CORPORATIONS BECOME THOSE
OF SURVIVING CORPORATION. At the Effective Time, all rights, privileges,
powers, immunities, and franchises of each of the Merging Corporations,
both of a public and private nature, and all property, real, personal,
and mixed, and all debts due on whatever account, as well as stock
subscriptions and all other chooses or things in action, and all and
every other interest of or
A-4
<PAGE>
belonging to or due to either of the Merging Corporations, shall be
taken by and shall be vested in the Surviving Corporation without
further act or deed, and all such rights, privileges, powers,
immunities, and franchises, property, debts, choses or things in
action, and all and every other interest of each of the Merging
Corporations shall be thereafter as effectually the property of the
Surviving Corporation as they were of the respective Merging
Corporations, and the title to any real or other property, or any
interest therein, whether vested by deed or otherwise, in either of the
Merging Corporations, shall not revert or be in any way impaired by
reason of the merger, PROVIDED, HOWEVER, that all rights of creditors
and all liens upon any properties of each of the Merging Corporations
shall be preserved unimpaired, and all debts, liabilities,
restrictions, obligations, and duties of the respective Merging
Corporations, including, without limitation, all obligations,
liabilities and duties as lessee under any existing lease, shall
thenceforth attach to the Surviving Corporation and may be enforced
against and by it to the same extent as if such debts, liabilities,
duties, restrictions and obligations had been incurred or contracted by
it. Any action or proceeding pending by or against either of the
Merging Corporations may be prosecuted to judgment as if the merger had
not taken place, or the Surviving Corporation may be substituted in
place of either of the Merging Corporations.
1.10.2 CONVEYANCES TO SURVIVING CORPORATION. The Merging
Corporations hereby agree, respectively, that from time to time, as and
when requested by the Surviving Corporation, or by its successors and
assigns, they will execute and deliver or cause to be executed and
delivered, all such deeds, conveyances, assignments, permits, licenses
and other instruments, and will take or cause to be taken such further or
other action as the Surviving Corporation, its successors or assigns, may
deem necessary or desirable to vest or perfect in or confirm to the
Surviving Corporation, its successors and assigns, title to and
possession of all the property, rights, privileges, powers, immunities,
franchises, and interests referred to in this SECTION 1.10.2 and
otherwise carry out the intent and purposes of this Agreement.
1.10.3 ACCOUNTING TREATMENT. The assets and liabilities of the
Merging Corporations shall be taken up on the books of the Surviving
Corporation in accordance with generally accepted accounting principles,
and the capital surplus and retained earnings accounts of the Surviving
Corporation shall be determined, in accordance with generally accepted
accounting principles, by the board of directors of the Surviving
Corporation. Nothing herein shall prevent the board of directors of the
Surviving Corporation from making any future changes in its accounts in
accordance with law.
1.10.4 UNCLAIMED MERGER CONSIDERATION; NO ESCHEAT. Subject to any
contrary provision of governing law, all consideration deposited with the
exchange agent or held by Real Holdings for the payment of the
consideration into which the outstanding shares of TAVA Common Stock
shall have been converted, and remaining unclaimed for one year after the
Effective Time, shall be paid or delivered to Real Holdings; and the
holder of any unexchanged certificate or certificates which before the
Effective Time represented shares of TAVA Common Stock shall thereafter
look only to Real Holdings for exchange or payment thereof upon surrender
of such certificate or certificates to Real Holdings.
A-5
<PAGE>
1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. Real Holdings, Merger
Sub and TAVA shall take all such reasonable and lawful action as may be
necessary or appropriate in order to effectuate the Merger as promptly as
possible. If, at any time after the Effective Time, any such further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of TAVA or Merger Sub, such
corporations shall direct their respective officers and directors to take all
such lawful and necessary action.
ARTICLE II
MISCELLANEOUS
2.1 COUNTERPARTS. This Plan of Merger may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to each of the other parties.
2.2 GOVERNING LAW. This Plan of Merger shall be governed by and
construed in accordance with the laws of the State of Colorado.
2.3 WAIVER AND AMENDMENT. Any provision of this Plan of Merger may
be waived at any time by the party that is, or whose stockholders are,
entitled to the benefits thereof. This Plan of Merger may not be amended or
supplemented at any time, except by an instrument in writing signed on behalf
of each party hereto. The waiver by any party hereto of any condition or of
a breach of another provision of this Plan of Merger shall not operate or be
construed as a waiver of any other condition or subsequent breach. The
waiver by any party hereto of any of the conditions precedent to its
obligations under this Plan of Merger shall not preclude it from seeking
redress for breach of this Plan of Merger other than with respect to the
condition so waived.
A-6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Plan of Merger
to be duly executed as of the date first above written.
REAL ACQUISITION SUB #1, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
TAVA TECHNOLOGIES, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
<PAGE>
SCHEDULE 7.2.1(a)
OPTIONS THAT DO NOT ACCELERATE
OPTIONS HELD BY JOHN JENKINS
<TABLE>
<CAPTION>
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1/28/1997 1/28/2008 NQ 200,000 $2.50 Current
1/28/1997 1/28/2007 NQ 150,000 $2.50 Current
1/28/1997 1/28/2007 NQ 86,260 $2.50 Current
</TABLE>
OPTIONS HELD BY DOUG KELSALL
<TABLE>
<CAPTION>
Grant Date Expiration Plan Type Options Option Price Vesting1
Date Outstanding
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2/17/1999 2/17/2007 NQ 23,367 $5.81 7,789 on 2/17/00
7,789 on 2/17/01
7,789 on 2/17/02
2/17/1999 2/17/2007 Incentive 51,633 $5.81 17,211 on 2/17/00
17,211 on 2/17/01
12,211 on 2/17/02
5/5/1997 5/4/2007 NQ 100,000 $2.49 100,000 on 5/5/99
5/5/1997 5/4/2007 NQ 27,721 $2.13 Current
</TABLE>
OPTION HELD BY LARRY HAGEWOOD
<TABLE>
<CAPTION>
Grant Date Expiration Plan Type Options Option Price Vesting2
Date Outstanding
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7/15/1997 7/15/2007 NQ 75,000 $3.66 75,000 on 7/15/99
7/15/1997 7/15/2007 NQ 16,173 $3.14 Current
</TABLE>
OPTIONS HELD BY KEVIN FALLON
<TABLE>
<CAPTION>
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2/8/1997 11/30/2006 NQ 66,666 $2.25 Current
2/8/1997 11/30/2006 NQ 66,667 $2.25 Current
2/8/1997 11/30/2006 NQ 36,897 $2.25 Current
</TABLE>
- -------------------
1 Pursuant to the Employment Agreement of Mr. Kelsall, all outstanding
options vest upon the Effective Time.
2 Pursuant to the Employment Agreement of Mr. Hagewood, all outstanding
options vest upon the Effective Time.
<PAGE>
SCHEDULE 7.2.1(b)
OPTIONS THAT ARE SURRENDERED AND TERMINATED
OPTIONS HELD BY JOHN JENKINS
<TABLE>
<CAPTION>
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1/28/1997 1/28/2008 NQ 200,000 $2.50 Current
1/28/1997 1/28/2007 NQ 150,000 $2.50 Current
1/28/1997 1/28/2007 NQ 86,260 $2.50 Current
</TABLE>
OPTIONS HELD BY DOUG KELSALL
<TABLE>
<CAPTION>
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2/17/1999 2/17/2007 NQ 23,367 $5.81 7,789 on 2/17/00
7,789 on 2/17/01
7,789 on 2/17/02
5/5/1997 5/4/2007 NQ 100,000 $2.49 100,000 on 5/5/99
5/5/1997 5/4/2007 NQ 27,721 $2.13 Current
</TABLE>
OPTION HELD BY LARRY HAGEWOOD
<TABLE>
<CAPTION>
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7/15/1997 7/15/2007 NQ 75,000 $3.66 75,000 on 7/15/99
7/15/1997 7/15/2007 NQ 16,173 $3.14 Current
</TABLE>
OPTIONS HELD BY KEVIN FALLON
<TABLE>
<CAPTION>
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
2/8/1997 11/30/2006 NQ 66,666 $2.25 Current
2/8/1997 11/30/2006 NQ 66,667 $2.25 Current
2/8/1997 11/30/2006 NQ 36,897 $2.25 Current
</TABLE>
<PAGE>
FORM OF MANAGEMENT VOTING AND EXCHANGE AGREEMENT
THIS MANAGEMENT VOTING AND EXCHANGE AGREEMENT (this "Agreement"),
dated as of April 20, 1999, is made by and between Real Acquisition Sub #1,
Inc., a Colorado corporation ("Merger Sub"), and _________________________
("Executive").
W I T N E S S E T H:
WHEREAS, Real Software NV, a Belgium corporation ("Real"), Real
Software Holdings North America, Inc., a Delaware corporation ("Real
Holdings"), Merger Sub and TAVA Technologies, Inc., a Colorado corporation
("TAVA"), are entering into an Agreement and Plan of Reorganization dated as
of the date hereof (as amended from time to time pursuant thereto, the
"Reorganization Agreement"), pursuant to which Merger Sub will merge with and
into TAVA (the "Merger") and all of the outstanding shares (other than
certain shares designated in the Plan of Merger) and, except as provided
herein, vested options to acquire shares of TAVA stock will be effectively
converted into the right to receive $8.00 (the "Merger Consideration") per
share, less the exercise price per share of any such options;
WHEREAS, Executive is currently the Chief Financial Officer and
Secretary of TAVA and is the holder of options to purchase _____ shares of
TAVA Common Stock and the direct or indirect record holder of ________ shares
of Common Stock, par value $0.0001 per share, of TAVA (the "TAVA Common
Stock) (such shares of TAVA Common Stock, together with any shares of capital
stock of TAVA acquired by Executive after the date hereof and during the term
of this Agreement, being collectively referred to herein as the "Stockholder
Shares");
WHEREAS, Merger Sub and Executive will execute an Employment Agreement
whereby Executive will become an employee of the corporation surviving the
Merger (the "Surviving Corporation"); and
WHEREAS, Real and Merger Sub are unwilling to proceed with the Merger
unless provision is made for continuity of management of TAVA and the
Surviving Corporation and Real and Merger Sub have required, as an indication
of Executive's willingness to continue as an employee of the Surviving
Corporation, that Executive maintain a substantial percentage of his interest
in TAVA and the Surviving Corporation, and as a condition to the willingness
of Real and Merger Sub to enter into the Reorganization Agreement, and as an
inducement to them to do so, Executive has agreed to the provisions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the premises set forth above, the
mutual promises set forth below, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows (terms defined in the Reorganization Agreement and
used but not defined herein having the meanings assigned to such terms in the
Reorganization Agreement):
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<PAGE>
ARTICLE I.
EXCHANGE
1.1 EXCHANGE OF SECURITIES. Immediately prior to the Effective
Time, Executive shall surrender to TAVA the options to purchase shares of
TAVA Common Stock listed on EXHIBIT A and Merger Sub shall irrevocably grant
and issue to Executive an equal number of options to purchase Surviving
Corporation Common Stock (the "New Options"), with equivalent terms, vesting
schedules and exercise prices, under a Stock Option Plan of Merger Sub. The
New Options shall not be treated as incentive stock options within the
meaning of section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code"). Executive understands and agrees that, pursuant to the Merger
and the terms of such options, the options to purchase TAVA Common Stock set
forth on EXHIBIT B shall not be converted into the right to receive the
Merger Consideration and shall continue to remain outstanding, unaffected by
the Merger, with the same terms (including vesting terms) as existed for such
options immediately prior to the Merger. Executive shall not exercise, amend
or otherwise change the status of such options prior to or at the Effective
Time. The Surviving Corporation Common Stock issuable upon exercise of the
New Options is referred to as the "Exchange Stock."
1.2 STATUS OF STOCK. Executive understands that at the time of the
execution of this Agreement the Exchange Stock has not been registered under
the Securities Act of 1933 (the "Securities Act") or any state securities
law, and that the Surviving Corporation does not currently intend to effect
any such registration. Executive agrees that the shares of Exchange Stock
are and shall be acquired for investment without a view to distribution,
within the meaning of the Securities Act, and shall not be sold, transferred,
assigned, pledged or hypothecated in the absence of an effective registration
statement for the shares under the Securities Act and applicable state
securities laws or an applicable exemption from the registration requirements
of the Securities Act and any applicable state securities laws. Executive
also agrees that the shares of Exchange Stock will not be sold or otherwise
disposed of in any manner which would constitute a violation of any
applicable securities laws, whether federal or state.
1.3 CERTAIN RESTRICTIONS. Executive agrees (i) that the
certificates representing the shares of Exchange Stock may bear such legend
or legends as the Surviving Corporation deems appropriate in order to assure
compliance with applicable securities laws, (ii) that Executive may not
transfer shares of Exchanged Stock, and the Surviving Corporation may refuse
to register any such transfer on its stock transfer records, unless Executive
provides the Surviving Corporation with a written opinion of legal counsel,
satisfactory to the Surviving Corporation, addressed to the Surviving
Corporation and satisfactory in form and substance to the Surviving
Corporation, to the effect that the proposed transfer may be made without
registration under the Securities Act, and (iii) that the Surviving
Corporation may give related instructions to its transfer agent, if any, to
stop registration of any such transfer of the shares of Exchange Stock.
1.4 CASHLESS EXERCISE. For a period of sixty (60) days beginning on
the date that is twenty two (22) months from the Effective Time, Executive shall
have the option to exercise any
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<PAGE>
or all of the New Options which are vested at such time, and pay the exercise
price of such exercised New Options in the form of a recourse note to the
Surviving Corporation, secured by the shares of Surviving Corporation Common
Stock issuable upon exercise of such New Options. In addition, to the extent
that the exercise of such New Options result in ordinary income to the
Executive for which the Surviving Corporation must satisfy withholding
obligations under applicable tax laws or regulations, the Surviving
Corporation shall loan to Executive the cash in the amount of such
withholding obligations resulting from such exercise. The original principal
amount of the note issued by Executive to the Surviving Corporation shall
equal the exercise price of the exercised New Options, plus the amount loaned
by the Surviving Corporation to the Executive pursuant to the immediately
preceding sentence. Such note shall bear interest at the rate the Surviving
Corporation pays interest to its general unsecured creditors and shall
mature, and the full principal amount, plus all accrued but unpaid interest,
shall become due and payable, on the date which is five (5) years after the
issuance of such note; PROVIDED, that Executive may prepay such note at any
time or from time to time without penalty and Executive shall apply (i) with
respect to shares of Surviving Corporation Common Stock subject to pledge
under this SECTION 1.4, the portion of proceeds of any sale, transfer or
further encumbrance of such shares representing the portion of the loan
attributable to such shares, which shall be the exercise price and the
withholding tax payable in respect of such shares, and (ii) a pro rata
portion of any proceeds from any sale, transfer or encumbrance of any other
shares of Surviving Corporation Common Stock, in each case to repay the
principal and interest on the note.
1.5 VALUATION ON EXERCISE OF OPTIONS.
(a) Upon exercise of New Options, the principles to be applied
in determining the value of the Surviving Corporation Common Stock issued
to Executive upon such exercise to be used for tax reporting purposes
shall include that the value shall be subject to a discount of 45% in the
first year following the Merger, 35% in the second year and 25% in the
third year arising out of the facts that (1) the Surviving Corporation is
not a reporting company under the Securities Exchange Act of 1934 or
other applicable laws, and (2) the price Real Holdings is willing to pay
Executive for such shares in the first three years following the Merger
reflects a percentage of the full value; PROVIDED, that if the Surviving
Corporation Common Stock issued to Executive is able to be sold, without
any remaining conditions to such sale, to Real Holdings pursuant to
Sections 1.3.1, 1.3.2 or 1.3.3 of the Shareholders Agreement for the
Surviving Corporation, then the value of such shares shall equal the
price that would be payable by Real Holdings. The valuation from which
any discount required by the preceding sentence is taken shall be the
Fair Market Value per share provided in Section 1.7 of the Shareholders
Agreement.
(b) If the Surviving Corporation shall determine that the
valuation of the Surviving Corporation Common Stock as determined under
SECTION 1.5(a) is manifestly unreasonable as a result of any
circumstance, the Surviving Corporation may report on the basis of the
closest valuation that the Surviving Corporation determines to not be
manifestly unreasonable.
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<PAGE>
(c) If (i) either (a) the Internal Revenue Service on audit of
Executive or Surviving Corporation determines that the amount of income
to Executive and/or compensation expense to Surviving Corporation should
be higher than the amount determined under SECTION 1.5(a) or (b) the
Surviving Corporation, pursuant to SECTION 1.5(b), reports a valuation
higher than the valuation determined pursuant to SECTION 1.5(a), and
(ii) as a result, Executive is required to pay additional tax on income
with respect to the exercise and Surviving Corporation is required to pay
less tax as a result of higher compensation expense with respect to the
exercise, then (iii) Surviving Corporation shall pay the amount of the
lessening of Surviving Corporation's tax to Executive, up to 80% of the
amount of additional tax so payable by Executive.
ARTICLE II.
COVENANTS OF EXECUTIVE
2.1 AGREEMENT TO VOTE. At any meeting of the stockholders of TAVA
held prior to the Termination Date, however called, and at every adjournment
or postponement thereof prior to the Termination Date, or in connection with
any written consent of the stockholders of TAVA given prior to the
Termination Date, Executive shall, and shall cause each individual, firm,
corporation, partnership, trust, limited liability company or other entity
(each, a "Person") controlled by Executive, other than TAVA and its
Subsidiaries (collectively, the "Executive Group") to, vote or cause to be
voted all Stockholder Shares and other TAVA Common Stock entitled to vote and
beneficially owned by such Persons in accordance with the recommendation of
the Board of Directors of TAVA. From the date of this Agreement through the
Termination Date, Executive hereby grants Merger Sub an irrevocable proxy
coupled with an interest to vote the Stockholder Shares in accordance with
the recommendation of the Board of Directors of TAVA.
2.2 PROXIES AND VOTING AGREEMENTS. Except as described in SECTION
2.1, Executive hereby revokes any and all previous proxies granted with
respect to matters set forth in SECTION 2.1. Prior to the Termination Date,
Executive shall not, and shall cause each member of the Executive Group not
to, enter into any agreement or understanding with any person other than
Merger Sub prior to the Termination Date, directly or indirectly, to vote,
grant any proxy or give instructions with respect to the voting of any
Stockholder Shares in any manner inconsistent with this Agreement.
2.3 NO SOLICITATION.
(a) From and after the date hereof until the Termination Date,
neither Executive nor any other member of the Executive Group will
directly or indirectly, solicit or encourage (including by way of
providing information) any prospective acquiror or the invitation or
submission of any inquiries, proposals or offers or any other efforts or
attempts that constitute, or may reasonably be expected to lead to, a
TAVA Transaction Proposal.
(b) Executive shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any parties
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<PAGE>
conducted heretofore by Executive or any representatives of Executive
with respect to any TAVA Transaction Proposal existing on the date
hereof.
(c) Prior to the Termination Date, Executive will promptly
notify Merger Sub of any requests for information made to Executive or
any representative of Executive or the receipt of any TAVA Transaction
Proposal made to Executive or any representative of Executive, including
the identity of the person or group engaging in such discussions or
negotiations, requesting such information or making such TAVA Transaction
Proposal, and the material terms and conditions of any TAVA Transaction
Proposal.
(d) Prior to the Termination Date, Executive shall not, and
each member of the Executive Group shall not, enter into any agreement
with any person that provides for, or in any way facilitates, a TAVA
Transaction Proposal.
(e) The provisions of this SECTION 2.3 do not prohibit
Executive, or other member of the Executive Group, from taking actions
expressly permitted by Section 4.2.14.1 of the Reorganization Agreement.
2.4 TRANSFER OF SHARES BY EXECUTIVE. Prior to the Termination
Date, Executive shall not (a) subject any of the Purchase Option Shares to,
or suffer to exist on any of the Purchase Option Shares, any lien, pledge,
security interest, charge or other encumbrance or restriction, other than
pursuant to this Agreement, or (b) sell, transfer, assign, convey or
otherwise dispose of any of the Purchase Option Shares (including any such
action by operation of law), other than a disposition by operation of law
pursuant to the Merger. Prior to the record date for the TAVA stockholder
meeting to vote on the Reorganization Agreement, neither Executive nor any
member of the Executive Group will sell, transfer, assign, convey or
otherwise dispose of any of the Stockholder Shares (including any such action
by operation of law).
2.5 OTHER ACTIONS. Prior to the Termination Date, neither
Executive nor any member of the Executive Group shall take any action that
would in any way restrict, limit, impede or interfere with the performance of
its obligations hereunder or the transactions contemplated hereby or by the
Reorganization Agreement.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
OF EXECUTIVE
Executive represents, warrants and covenants to Merger Sub that:
3.1 OWNERSHIP. Executive is as of the date hereof the beneficial
and record owner of the Stockholder Shares and has the sole right to vote the
Stockholder Shares. None of the Stockholder Shares is subject to any voting
trust or other agreement, arrangement or restriction with respect to the
voting of the Stockholder Shares, and no proxy, power of attorney or other
authorization has been granted with respect to any of the Stockholder Shares
other than as set forth herein. Upon
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delivery of any Purchase Option Shares upon exercise of the Purchase Option,
Merger Sub will acquire good title to such shares, free and clear of all
liens, pledges, security interests, charges or other encumbrances or
restrictions.
3.2 AUTHORITY AND NON-CONTRAVENTION. Executive has the right,
power and authority, and Executive has been duly authorized by all necessary
action (including consultation, approval or other action by or with any other
person), to execute, deliver and perform this Agreement and consummate the
transactions contemplated hereby. Such actions by Executive (a) require no
action by or in respect of, or filing with, any governmental entity with
respect to Executive, other than any required filings under the Exchange Act
or under the HSR Act, and (b) do not and will not contravene or constitute a
default under any provisions of applicable law or regulation or any
agreement, judgment, injunction, order, decree or other instrument binding on
Executive or result in the imposition of any lien, pledge, security interest,
charge or other encumbrance or restriction on any of the Stockholder Shares
(other than as provided in this Agreement with respect to Stockholder Shares).
3.3 BINDING EFFECT. This Agreement has been duly executed and
delivered by Executive and is the valid and binding agreement of Executive,
enforceable Executive in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights generally and by equitable principles to which
the remedies of specific performance and injunctive and similar forms of
relief are subject.
3.4 REASONABLE EFFORTS. Prior to the Termination Date, Executive
shall use reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with Merger Sub in
doing, all things necessary, proper or advisable to consummate and make
effective the Merger and the other transactions contemplated by the
Reorganization Agreement and this Agreement.
ARTICLE IV.
MISCELLANEOUS
4.1 CAPITALIZATION; COMMON STOCK ISSUANCES. At the Effective Time,
the authorized capital stock of the Company shall consist of 200,000,000
shares of Surviving Corporation Common Stock, of which 23,290,021 shares
shall be issued and outstanding and 2,974,350 shares shall be reserved for
issuance in connection with various employee benefit plans and 390,994 shares
shall be reserved for issuance pursuant to certain warrants. The Company
shall not issue any shares of Surviving Corporation Common Stock while
Executive owns any Stockholder Shares, other than issuances for fair value as
determined in good faith by the Board of Directors of the Company; PROVIDED,
that the Company may issue shares of Surviving Corporation Common Stock for
any amount of cash consideration, if the Company offers to Executive the
preemptive right to purchase its proportionate share of any such issuance.
Executive's "proportionate share" shall mean the number of shares of
Surviving Corporation Common Stock proposed to be issued and sold multiplied
by a fraction, the numerator of which is the number of shares of Surviving
Corporation Common Stock held by the Shareholder, and the denominator of
which is the number of shares of
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Surviving Corporation Common Stock outstanding (in each case, determined on a
fully diluted basis assuming full exercise and conversion of all outstanding
options, warrants, rights and other securities which are convertible or
exchangeable for shares of Surviving Corporation Common Stock, without regard
to vesting schedules or exercise periods, but excluding options for which the
exercise price is greater than the Fair Market Value (as defined in the
Shareholders Agreement, dated as of the date hereof, among Merger Sub, Real
Holdings and the other shareholders party thereto) and assuming that all
options are exercised by paying the exercise price in shares of stock).
4.2 EMPLOYMENT AGREEMENT. Executive and Merger Sub shall, within
thirty (30) days of the date hereof, enter into an employment agreement, to
be effective at the Effective Time and on terms mutually acceptable to
Executive and Merger Sub. Each of the terms of such new employment agreement
shall (i) incorporate the general concepts set forth on EXHIBIT C hereto, and
(ii) otherwise be on terms and conditions at least as favorable to Executive
as the employment agreement Executive presently has with TAVA.
4.3 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO REAL HOLDINGS TO: Real Software Holdings North America, Inc.
818 Reoder Road, Suite 600
Silver Springs, Maryland 20910
Attention: Eric Cumming
IF TO MERGER SUB TO: Real Acquisition Sub #1, Inc.
818 Reoder Road, Suite 600
Silver Springs, Maryland 20910
Attention: Eric Cumming
IF TO EXECUTIVE TO: ____________________________________
____________________________________
____________________________________
or to such other address as either party may furnish to the other in writing
in accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
4.4 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledge
and agree that irreparable damage would occur if for any reason Executive
fails to perform any of Executive's obligations under this Agreement, and
that Merger Sub would not have an adequate remedy at law for money damages in
such event. Accordingly, Merger Sub shall be entitled to seek specific
performance and injunctive and other equitable relief to enforce the
performance of this agreement by Executive without any requirement for the
securing or posting of any bond. This provision is without prejudice to any
other rights that Merger Sub may have against Executive for any failure to
perform its obligations under this Agreement.
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4.5 APPLICABLE LAW. This Agreement is entered into under, and
shall be governed for all purposes by, the laws of the state of Delaware.
4.6 NO WAIVER. No failure by either party hereto at any time to
give notice of any breach by the other party of, or to require compliance
with, any condition or provision of this Agreement shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
4.7 SEVERABILITY. If a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.
4.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.
4.9 HEADINGS. The Article and Section headings herein have been
inserted for purposes of convenience only and shall not be used for
interpretive purposes.
4.10 GENDER AND PLURALS. Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.
4.11 ASSIGNMENT. This Agreement, and the other documents
contemplated hereby, shall be binding upon and inure to the benefit of each
of the parties hereto and any successor of Merger Sub or the Surviving
Corporation, by merger or otherwise. Except as specifically provided in this
SECTION 4.11, this Agreement and the rights and obligations of the parties
hereunder are personal, and neither this Agreement nor any right, benefit, or
obligation of either party hereto shall be subject to voluntary or
involuntary assignment, alienation, or transfer, whether by operation of law
or otherwise, without the prior written consent of the other party.
4.12 DISPUTE RESOLUTION. Any controversy, dispute or claim for
indemnification arising pursuant to this Agreement (a "DISPUTE") shall be
resolved by binding arbitration administered by the American Arbitration
Association (the "AAA") in accordance with the terms of this SECTION 4.12,
the Commercial Arbitration Rules of the AAA, and, to the maximum extent
applicable, the United States Arbitration Act. Judgment on any matter
rendered by arbitrators may be entered in any court having jurisdiction. Any
arbitration shall be conducted before three arbitrators. The arbitrators
shall be individuals knowledgeable in the subject matter of the Dispute.
Each of the Surviving Corporation and the Executive shall select one
arbitrator by written notice to the Surviving Corporation and the Executive
within fifteen (15) days after a request by one party for arbitration and the
two arbitrators so selected shall select the third arbitrator. If the third
arbitrator is not selected within thirty (30) days after the request for an
arbitration, then any party may request the AAA to select the third
arbitrator. The arbitrators may engage engineers, accountants or other
consultants they deem necessary to render a conclusion in the arbitration
proceeding. To the
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maximum extent practicable, an arbitration proceeding hereunder shall be
concluded within 90 days of the filing of the Dispute with the AAA.
Arbitration proceedings shall be conducted in Denver, Colorado. Arbitrators
shall be empowered to impose sanctions and to take such other actions as the
arbitrators deem necessary to the same extent a judge could impose sanctions
or take such other actions pursuant to the Federal Rules of Civil Procedure
and applicable law. At the conclusion of any arbitration proceeding, the
arbitrators shall make specific written findings of fact and conclusions of
law. Subject to the limitations set forth in this Agreement, the arbitrators
shall have the power to award recovery of all costs and fees, including
attorney fees and disbursements, to the prevailing party. All fees of the
arbitrators and any engineer, accountant or other consultant engaged by the
arbitrators, shall be shared equally between the parties unless otherwise
awarded by the arbitrators.
4.13 ENTIRE AGREEMENT. This Agreement, together with the other
agreements contemplated hereby, constitutes the entire agreement of the
parties with regard to the subject matter hereof. Without limiting the scope
of the preceding sentence, all prior understandings and agreements among the
parties hereto relating to the subject matter hereof are hereby null and void
and of no further force and effect. Any modification of this Agreement will
be effective only if it is in writing and signed by each of the parties to be
bound by such modification.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the 20th day of April, 1999, to be effective as of the effective date of the
Merger.
REAL ACQUISITION SUB #1, INC.
By: /s/ Eric J. Cumming
Name: Eric J. Cumming
Title: President
EXECUTIVE
/s/ [EXECUTIVE]
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Vesting
Date Outstanding Price
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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EXHIBIT B
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Vesting
Date Outstanding Price
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
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<PAGE>
EXHIBIT C
TERMS TO BE INCLUDED IN EXECUTIVE EMPLOYMENT AGREEMENT
- - Term of Agreement: 3 years.
- - In the event of termination prior to expiration of agreement that is
either (a) by Merger Sub not for Cause, or (b) by Executive for Good
Reason, Executive shall receive:
(1) Severance payments for at least 12 months base salary; and
(2) Accelerated vesting of options granted through the date of
termination (unless such option grants specifically exclude
acceleration or such options are for shares of stock of Real
Holdings).
"Cause" shall be defined according to custom in the industry,
but in no event shall include simple negligence or disagreement
over management strategy or philosophy. "Good Reason" shall be
defined according to custom in the industry.
- - Compensation:
(1) Base salary equal to no less than base salary at the date hereof,
with annual review for increase as customary in the industry;
(2) Bonus program in accordance with the bonus program in place at
TAVA ninety (90) days prior to the date hereof;
(3) Merger Sub will consider the issuance of new options to purchase
shares of Surviving Corporation Common Stock or shares of Common
Stock of Real Holdings; and
(4) Fringe benefits no less valuable than those provided by TAVA to
Executive prior to the date hereof (including, but not limited to,
medical, dental, disability, life, directors and officers
liability insurance, and a 401(k) plan).
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