Exhibit 2.1
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 XXXX xxxx
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 0-000-000 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 0-000-000 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 0-000-000 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 Xxxxx & Xxxxxxxxx
LLP, 000 Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000-0000, 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 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
2
been duly and 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
Xxxx-Xxxxx-Xxxxxx 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 Common Stock"), of which at
3
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
4
Commission 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
5
employees, including amendments, 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"));
6
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
7
the TAVA Disclosure 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
8
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 TAVA
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.
9
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.
10
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
11
recent balance 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
12
which adequate reserves have not been established on 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.
13
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
14
Merger 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 have been timely
15
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.
16
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 where the failure
17
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 Section, except in any such case for any matters
18
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 Xxxx-Xxxxx-Xxxxxx. 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
19
Material 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
20
this Agreement; provided, that the exercise by the board of 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 similar transaction involving TAVA
22
(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 due
22
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
23
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, other than contracts that are
substantially in the form of the standard TAVA contracts for such
services previously delivered to Real Holdings.
24
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 particular date),
25
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 Xxxx-Xxxxx-Xxxxxx, 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 Effective Time and signed by its
26
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 Xxxx-Xxxxx-Xxxxxx, 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 Xxxx Xxxxxxx, Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx and Xxxxx Xxxxxx 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.
27
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:
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.
28
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 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.
29
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.
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
30
advances if it is ultimately determined that such person is not
entitled to indemnification).
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
31
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.
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. Xxxxxx & Xxxxxx L.L.P.
000 Xxxxxx Xxxx, Xxxxx 000 One American Center
Xxxxxx Xxxxxxx, Xxxxxxxx 00000 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxxx Attention: Xxxxxx X. Xxxxx and
Xxxxxx X. Xxxxxxx
Facsimile: 301/608-2553 Facsimile: 512/236-3210
32
If to TAVA
Addressed to: With a copy to:
TAVA Technologies, Inc. Xxxxx & Xxxxxxxxx, LLP
0000 X. Xxxxxxxxx Xxxxxx, Xxxxx 000 000 X. 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxx Attention: Xxxxxx X. Xxxxxxxx
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, as a defense, counterclaim or otherwise, in any action or
33
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:
Section or
Term Paragraph
----- ----------
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
34
Section or
Term Paragraph
----- ----------
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
35
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/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: President
REAL SOFTWARE HOLDINGS NORTH
AMERICA, INC.
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: President
REAL ACQUISITION SUB #1, INC.
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: President
TAVA TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
Title: CEO & President
SCHEDULE 7.2.1(a)
OPTIONS THAT DO NOT ACCELERATE
Options Held by Xxxx Xxxxxxx
--------------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
Options Held by Xxxx Xxxxxxx
--------------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Price Vesting1
Date Outstanding
--------------------------------------------------------------------------------
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 5/05/99
5/5/1997 5/4/2007 NQ 27,721 $2.13 Current
--------------------------------------------------------------------------------
Option Held by Xxxxx Xxxxxxxx
--------------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Price Vesting2
Date Outstanding
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
Options Held by Xxxxx Xxxxxx
--------------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
1 Pursuant to the Employment Agreement of Xx. Xxxxxxx, all outstanding options
vest upon the Effective Time.
2 Pursuant to the Employment Agreement of Xx. Xxxxxxxx, all outstanding options
vest upon the Effective Time.
SCHEDULE 7.2.1(b)
OPTIONS THAT ARE SURRENDERED AND TERMINATED
Options Held by Xxxx Xxxxxxx
--------------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
Options Held by Xxxx Xxxxxxx
--------------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
--------------------------------------------------------------------------------
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 5/05/99
5/5/1997 5/4/2007 NQ 27,721 $2.13 Current
--------------------------------------------------------------------------------
Option Held by Xxxxx Xxxxxxxx
--------------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
Options Held by Xxxxx Xxxxxx
--------------------------------------------------------------------------------
Grant Date Expiration Plan Type Options Option Price Vesting
Date Outstanding
--------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------
