FORM OF MANAGEMENT VOTING AND EXCHANGE AGREEMENT
THIS MANAGEMENT VOTING AND EXCHANGE AGREEMENT (this "Agreement"),
dated as of April 20, 1999, is made by and between Real Acquisition Sub #1,
Inc., a Colorado corporation ("Merger Sub"), and _________________________
("Executive").
W I T N E S S E T H:
WHEREAS, Real Software NV, a Belgium corporation ("Real"), Real
Software Holdings North America, Inc., a Delaware corporation ("Real
Holdings"), Merger Sub and TAVA Technologies, Inc., a Colorado corporation
("TAVA"), are entering into an Agreement and Plan of Reorganization dated as
of the date hereof (as amended from time to time pursuant thereto, the
"Reorganization Agreement"), pursuant to which Merger Sub will merge with and
into TAVA (the "Merger") and all of the outstanding shares (other than
certain shares designated in the Plan of Merger) and, except as provided
herein, vested options to acquire shares of TAVA stock will be effectively
converted into the right to receive $8.00 (the "Merger Consideration") per
share, less the exercise price per share of any such options;
WHEREAS, Executive is currently the Chief Financial Officer and
Secretary of TAVA and is the holder of options to purchase _____ shares of
TAVA Common Stock and the direct or indirect record holder of ________ shares
of Common Stock, par value $0.0001 per share, of TAVA (the "TAVA Common
Stock) (such shares of TAVA Common Stock, together with any shares of capital
stock of TAVA acquired by Executive after the date hereof and during the term
of this Agreement, being collectively referred to herein as the "Stockholder
Shares");
WHEREAS, Merger Sub and Executive will execute an Employment Agreement
whereby Executive will become an employee of the corporation surviving the
Merger (the "Surviving Corporation"); and
WHEREAS, Real and Merger Sub are unwilling to proceed with the Merger
unless provision is made for continuity of management of TAVA and the
Surviving Corporation and Real and Merger Sub have required, as an indication
of Executive's willingness to continue as an employee of the Surviving
Corporation, that Executive maintain a substantial percentage of his interest
in TAVA and the Surviving Corporation, and as a condition to the willingness
of Real and Merger Sub to enter into the Reorganization Agreement, and as an
inducement to them to do so, Executive has agreed to the provisions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the premises set forth above, the
mutual promises set forth below, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows (terms defined in the Reorganization Agreement and
used but not defined herein having the meanings assigned to such terms in the
Reorganization Agreement):
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ARTICLE I.
EXCHANGE
1.1 EXCHANGE OF SECURITIES. Immediately prior to the Effective
Time, Executive shall surrender to TAVA the options to purchase shares of
TAVA Common Stock listed on EXHIBIT A and Merger Sub shall irrevocably grant
and issue to Executive an equal number of options to purchase Surviving
Corporation Common Stock (the "New Options"), with equivalent terms, vesting
schedules and exercise prices, under a Stock Option Plan of Merger Sub. The
New Options shall not be treated as incentive stock options within the
meaning of section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code"). Executive understands and agrees that, pursuant to the Merger
and the terms of such options, the options to purchase TAVA Common Stock set
forth on EXHIBIT B shall not be converted into the right to receive the
Merger Consideration and shall continue to remain outstanding, unaffected by
the Merger, with the same terms (including vesting terms) as existed for such
options immediately prior to the Merger. Executive shall not exercise, amend
or otherwise change the status of such options prior to or at the Effective
Time. The Surviving Corporation Common Stock issuable upon exercise of the
New Options is referred to as the "Exchange Stock."
1.2 STATUS OF STOCK. Executive understands that at the time of the
execution of this Agreement the Exchange Stock has not been registered under
the Securities Act of 1933 (the "Securities Act") or any state securities
law, and that the Surviving Corporation does not currently intend to effect
any such registration. Executive agrees that the shares of Exchange Stock
are and shall be acquired for investment without a view to distribution,
within the meaning of the Securities Act, and shall not be sold, transferred,
assigned, pledged or hypothecated in the absence of an effective registration
statement for the shares under the Securities Act and applicable state
securities laws or an applicable exemption from the registration requirements
of the Securities Act and any applicable state securities laws. Executive
also agrees that the shares of Exchange Stock will not be sold or otherwise
disposed of in any manner which would constitute a violation of any
applicable securities laws, whether federal or state.
1.3 CERTAIN RESTRICTIONS. Executive agrees (i) that the
certificates representing the shares of Exchange Stock may bear such legend
or legends as the Surviving Corporation deems appropriate in order to assure
compliance with applicable securities laws, (ii) that Executive may not
transfer shares of Exchanged Stock, and the Surviving Corporation may refuse
to register any such transfer on its stock transfer records, unless Executive
provides the Surviving Corporation with a written opinion of legal counsel,
satisfactory to the Surviving Corporation, addressed to the Surviving
Corporation and satisfactory in form and substance to the Surviving
Corporation, to the effect that the proposed transfer may be made without
registration under the Securities Act, and (iii) that the Surviving
Corporation may give related instructions to its transfer agent, if any, to
stop registration of any such transfer of the shares of Exchange Stock.
1.4 CASHLESS EXERCISE. For a period of sixty (60) days beginning on
the date that is twenty two (22) months from the Effective Time, Executive shall
have the option to exercise any
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or all of the New Options which are vested at such time, and pay the exercise
price of such exercised New Options in the form of a recourse note to the
Surviving Corporation, secured by the shares of Surviving Corporation Common
Stock issuable upon exercise of such New Options. In addition, to the extent
that the exercise of such New Options result in ordinary income to the
Executive for which the Surviving Corporation must satisfy withholding
obligations under applicable tax laws or regulations, the Surviving
Corporation shall loan to Executive the cash in the amount of such
withholding obligations resulting from such exercise. The original principal
amount of the note issued by Executive to the Surviving Corporation shall
equal the exercise price of the exercised New Options, plus the amount loaned
by the Surviving Corporation to the Executive pursuant to the immediately
preceding sentence. Such note shall bear interest at the rate the Surviving
Corporation pays interest to its general unsecured creditors and shall
mature, and the full principal amount, plus all accrued but unpaid interest,
shall become due and payable, on the date which is five (5) years after the
issuance of such note; PROVIDED, that Executive may prepay such note at any
time or from time to time without penalty and Executive shall apply (i) with
respect to shares of Surviving Corporation Common Stock subject to pledge
under this SECTION 1.4, the portion of proceeds of any sale, transfer or
further encumbrance of such shares representing the portion of the loan
attributable to such shares, which shall be the exercise price and the
withholding tax payable in respect of such shares, and (ii) a pro rata
portion of any proceeds from any sale, transfer or encumbrance of any other
shares of Surviving Corporation Common Stock, in each case to repay the
principal and interest on the note.
1.5 VALUATION ON EXERCISE OF OPTIONS.
(a) Upon exercise of New Options, the principles to be applied
in determining the value of the Surviving Corporation Common Stock issued
to Executive upon such exercise to be used for tax reporting purposes
shall include that the value shall be subject to a discount of 45% in the
first year following the Merger, 35% in the second year and 25% in the
third year arising out of the facts that (1) the Surviving Corporation is
not a reporting company under the Securities Exchange Act of 1934 or
other applicable laws, and (2) the price Real Holdings is willing to pay
Executive for such shares in the first three years following the Merger
reflects a percentage of the full value; PROVIDED, that if the Surviving
Corporation Common Stock issued to Executive is able to be sold, without
any remaining conditions to such sale, to Real Holdings pursuant to
Sections 1.3.1, 1.3.2 or 1.3.3 of the Shareholders Agreement for the
Surviving Corporation, then the value of such shares shall equal the
price that would be payable by Real Holdings. The valuation from which
any discount required by the preceding sentence is taken shall be the
Fair Market Value per share provided in Section 1.7 of the Shareholders
Agreement.
(b) If the Surviving Corporation shall determine that the
valuation of the Surviving Corporation Common Stock as determined under
SECTION 1.5(a) is manifestly unreasonable as a result of any
circumstance, the Surviving Corporation may report on the basis of the
closest valuation that the Surviving Corporation determines to not be
manifestly unreasonable.
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(c) If (i) either (a) the Internal Revenue Service on audit of
Executive or Surviving Corporation determines that the amount of income
to Executive and/or compensation expense to Surviving Corporation should
be higher than the amount determined under SECTION 1.5(a) or (b) the
Surviving Corporation, pursuant to SECTION 1.5(b), reports a valuation
higher than the valuation determined pursuant to SECTION 1.5(a), and
(ii) as a result, Executive is required to pay additional tax on income
with respect to the exercise and Surviving Corporation is required to pay
less tax as a result of higher compensation expense with respect to the
exercise, then (iii) Surviving Corporation shall pay the amount of the
lessening of Surviving Corporation's tax to Executive, up to 80% of the
amount of additional tax so payable by Executive.
ARTICLE II.
COVENANTS OF EXECUTIVE
2.1 AGREEMENT TO VOTE. At any meeting of the stockholders of TAVA
held prior to the Termination Date, however called, and at every adjournment
or postponement thereof prior to the Termination Date, or in connection with
any written consent of the stockholders of TAVA given prior to the
Termination Date, Executive shall, and shall cause each individual, firm,
corporation, partnership, trust, limited liability company or other entity
(each, a "Person") controlled by Executive, other than TAVA and its
Subsidiaries (collectively, the "Executive Group") to, vote or cause to be
voted all Stockholder Shares and other TAVA Common Stock entitled to vote and
beneficially owned by such Persons in accordance with the recommendation of
the Board of Directors of TAVA. From the date of this Agreement through the
Termination Date, Executive hereby grants Merger Sub an irrevocable proxy
coupled with an interest to vote the Stockholder Shares in accordance with
the recommendation of the Board of Directors of TAVA.
2.2 PROXIES AND VOTING AGREEMENTS. Except as described in SECTION
2.1, Executive hereby revokes any and all previous proxies granted with
respect to matters set forth in SECTION 2.1. Prior to the Termination Date,
Executive shall not, and shall cause each member of the Executive Group not
to, enter into any agreement or understanding with any person other than
Merger Sub prior to the Termination Date, directly or indirectly, to vote,
grant any proxy or give instructions with respect to the voting of any
Stockholder Shares in any manner inconsistent with this Agreement.
2.3 NO SOLICITATION.
(a) From and after the date hereof until the Termination Date,
neither Executive nor any other member of the Executive Group will
directly or indirectly, solicit or encourage (including by way of
providing information) any prospective acquiror or the invitation or
submission of any inquiries, proposals or offers or any other efforts or
attempts that constitute, or may reasonably be expected to lead to, a
TAVA Transaction Proposal.
(b) Executive shall immediately cease and cause to be
terminated any existing solicitation, initiation, encouragement,
activity, discussion or negotiation with any parties
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conducted heretofore by Executive or any representatives of Executive
with respect to any TAVA Transaction Proposal existing on the date
hereof.
(c) Prior to the Termination Date, Executive will promptly
notify Merger Sub of any requests for information made to Executive or
any representative of Executive or the receipt of any TAVA Transaction
Proposal made to Executive or any representative of Executive, including
the identity of the person or group engaging in such discussions or
negotiations, requesting such information or making such TAVA Transaction
Proposal, and the material terms and conditions of any TAVA Transaction
Proposal.
(d) Prior to the Termination Date, Executive shall not, and
each member of the Executive Group shall not, enter into any agreement
with any person that provides for, or in any way facilitates, a TAVA
Transaction Proposal.
(e) The provisions of this SECTION 2.3 do not prohibit
Executive, or other member of the Executive Group, from taking actions
expressly permitted by Section 4.2.14.1 of the Reorganization Agreement.
2.4 TRANSFER OF SHARES BY EXECUTIVE. Prior to the Termination
Date, Executive shall not (a) subject any of the Purchase Option Shares to,
or suffer to exist on any of the Purchase Option Shares, any lien, pledge,
security interest, charge or other encumbrance or restriction, other than
pursuant to this Agreement, or (b) sell, transfer, assign, convey or
otherwise dispose of any of the Purchase Option Shares (including any such
action by operation of law), other than a disposition by operation of law
pursuant to the Merger. Prior to the record date for the TAVA stockholder
meeting to vote on the Reorganization Agreement, neither Executive nor any
member of the Executive Group will sell, transfer, assign, convey or
otherwise dispose of any of the Stockholder Shares (including any such action
by operation of law).
2.5 OTHER ACTIONS. Prior to the Termination Date, neither
Executive nor any member of the Executive Group shall take any action that
would in any way restrict, limit, impede or interfere with the performance of
its obligations hereunder or the transactions contemplated hereby or by the
Reorganization Agreement.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND ADDITIONAL COVENANTS
OF EXECUTIVE
Executive represents, warrants and covenants to Merger Sub that:
3.1 OWNERSHIP. Executive is as of the date hereof the beneficial
and record owner of the Stockholder Shares and has the sole right to vote the
Stockholder Shares. None of the Stockholder Shares is subject to any voting
trust or other agreement, arrangement or restriction with respect to the
voting of the Stockholder Shares, and no proxy, power of attorney or other
authorization has been granted with respect to any of the Stockholder Shares
other than as set forth herein. Upon
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delivery of any Purchase Option Shares upon exercise of the Purchase Option,
Merger Sub will acquire good title to such shares, free and clear of all
liens, pledges, security interests, charges or other encumbrances or
restrictions.
3.2 AUTHORITY AND NON-CONTRAVENTION. Executive has the right,
power and authority, and Executive has been duly authorized by all necessary
action (including consultation, approval or other action by or with any other
person), to execute, deliver and perform this Agreement and consummate the
transactions contemplated hereby. Such actions by Executive (a) require no
action by or in respect of, or filing with, any governmental entity with
respect to Executive, other than any required filings under the Exchange Act
or under the HSR Act, and (b) do not and will not contravene or constitute a
default under any provisions of applicable law or regulation or any
agreement, judgment, injunction, order, decree or other instrument binding on
Executive or result in the imposition of any lien, pledge, security interest,
charge or other encumbrance or restriction on any of the Stockholder Shares
(other than as provided in this Agreement with respect to Stockholder Shares).
3.3 BINDING EFFECT. This Agreement has been duly executed and
delivered by Executive and is the valid and binding agreement of Executive,
enforceable Executive in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights generally and by equitable principles to which
the remedies of specific performance and injunctive and similar forms of
relief are subject.
3.4 REASONABLE EFFORTS. Prior to the Termination Date, Executive
shall use reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with Merger Sub in
doing, all things necessary, proper or advisable to consummate and make
effective the Merger and the other transactions contemplated by the
Reorganization Agreement and this Agreement.
ARTICLE IV.
MISCELLANEOUS
4.1 CAPITALIZATION; COMMON STOCK ISSUANCES. At the Effective Time,
the authorized capital stock of the Company shall consist of 200,000,000
shares of Surviving Corporation Common Stock, of which 23,290,021 shares
shall be issued and outstanding and 2,974,350 shares shall be reserved for
issuance in connection with various employee benefit plans and 390,994 shares
shall be reserved for issuance pursuant to certain warrants. The Company
shall not issue any shares of Surviving Corporation Common Stock while
Executive owns any Stockholder Shares, other than issuances for fair value as
determined in good faith by the Board of Directors of the Company; PROVIDED,
that the Company may issue shares of Surviving Corporation Common Stock for
any amount of cash consideration, if the Company offers to Executive the
preemptive right to purchase its proportionate share of any such issuance.
Executive's "proportionate share" shall mean the number of shares of
Surviving Corporation Common Stock proposed to be issued and sold multiplied
by a fraction, the numerator of which is the number of shares of Surviving
Corporation Common Stock held by the Shareholder, and the denominator of
which is the number of shares of
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Surviving Corporation Common Stock outstanding (in each case, determined on a
fully diluted basis assuming full exercise and conversion of all outstanding
options, warrants, rights and other securities which are convertible or
exchangeable for shares of Surviving Corporation Common Stock, without regard
to vesting schedules or exercise periods, but excluding options for which the
exercise price is greater than the Fair Market Value (as defined in the
Shareholders Agreement, dated as of the date hereof, among Merger Sub, Real
Holdings and the other shareholders party thereto) and assuming that all
options are exercised by paying the exercise price in shares of stock).
4.2 EMPLOYMENT AGREEMENT. Executive and Merger Sub shall, within
thirty (30) days of the date hereof, enter into an employment agreement, to
be effective at the Effective Time and on terms mutually acceptable to
Executive and Merger Sub. Each of the terms of such new employment agreement
shall (i) incorporate the general concepts set forth on EXHIBIT C hereto, and
(ii) otherwise be on terms and conditions at least as favorable to Executive
as the employment agreement Executive presently has with TAVA.
4.3 NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO REAL HOLDINGS TO: Real Software Holdings North America, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
IF TO MERGER SUB TO: Real Acquisition Sub #1, Inc.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
IF TO EXECUTIVE TO: ____________________________________
____________________________________
____________________________________
or to such other address as either party may furnish to the other in writing
in accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
4.4 SPECIFIC PERFORMANCE. Each of the parties hereto acknowledge
and agree that irreparable damage would occur if for any reason Executive
fails to perform any of Executive's obligations under this Agreement, and
that Merger Sub would not have an adequate remedy at law for money damages in
such event. Accordingly, Merger Sub shall be entitled to seek specific
performance and injunctive and other equitable relief to enforce the
performance of this agreement by Executive without any requirement for the
securing or posting of any bond. This provision is without prejudice to any
other rights that Merger Sub may have against Executive for any failure to
perform its obligations under this Agreement.
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4.5 APPLICABLE LAW. This Agreement is entered into under, and
shall be governed for all purposes by, the laws of the state of Delaware.
4.6 NO WAIVER. No failure by either party hereto at any time to
give notice of any breach by the other party of, or to require compliance
with, any condition or provision of this Agreement shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
4.7 SEVERABILITY. If a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.
4.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.
4.9 HEADINGS. The Article and Section headings herein have been
inserted for purposes of convenience only and shall not be used for
interpretive purposes.
4.10 GENDER AND PLURALS. Wherever the context so requires, the
masculine gender includes the feminine or neuter, and the singular number
includes the plural and conversely.
4.11 ASSIGNMENT. This Agreement, and the other documents
contemplated hereby, shall be binding upon and inure to the benefit of each
of the parties hereto and any successor of Merger Sub or the Surviving
Corporation, by merger or otherwise. Except as specifically provided in this
SECTION 4.11, this Agreement and the rights and obligations of the parties
hereunder are personal, and neither this Agreement nor any right, benefit, or
obligation of either party hereto shall be subject to voluntary or
involuntary assignment, alienation, or transfer, whether by operation of law
or otherwise, without the prior written consent of the other party.
4.12 DISPUTE RESOLUTION. Any controversy, dispute or claim for
indemnification arising pursuant to this Agreement (a "DISPUTE") shall be
resolved by binding arbitration administered by the American Arbitration
Association (the "AAA") in accordance with the terms of this SECTION 4.12,
the Commercial Arbitration Rules of the AAA, and, to the maximum extent
applicable, the United States Arbitration Act. Judgment on any matter
rendered by arbitrators may be entered in any court having jurisdiction. Any
arbitration shall be conducted before three arbitrators. The arbitrators
shall be individuals knowledgeable in the subject matter of the Dispute.
Each of the Surviving Corporation and the Executive shall select one
arbitrator by written notice to the Surviving Corporation and the Executive
within fifteen (15) days after a request by one party for arbitration and the
two arbitrators so selected shall select the third arbitrator. If the third
arbitrator is not selected within thirty (30) days after the request for an
arbitration, then any party may request the AAA to select the third
arbitrator. The arbitrators may engage engineers, accountants or other
consultants they deem necessary to render a conclusion in the arbitration
proceeding. To the
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maximum extent practicable, an arbitration proceeding hereunder shall be
concluded within 90 days of the filing of the Dispute with the AAA.
Arbitration proceedings shall be conducted in Denver, Colorado. Arbitrators
shall be empowered to impose sanctions and to take such other actions as the
arbitrators deem necessary to the same extent a judge could impose sanctions
or take such other actions pursuant to the Federal Rules of Civil Procedure
and applicable law. At the conclusion of any arbitration proceeding, the
arbitrators shall make specific written findings of fact and conclusions of
law. Subject to the limitations set forth in this Agreement, the arbitrators
shall have the power to award recovery of all costs and fees, including
attorney fees and disbursements, to the prevailing party. All fees of the
arbitrators and any engineer, accountant or other consultant engaged by the
arbitrators, shall be shared equally between the parties unless otherwise
awarded by the arbitrators.
4.13 ENTIRE AGREEMENT. This Agreement, together with the other
agreements contemplated hereby, constitutes the entire agreement of the
parties with regard to the subject matter hereof. Without limiting the scope
of the preceding sentence, all prior understandings and agreements among the
parties hereto relating to the subject matter hereof are hereby null and void
and of no further force and effect. Any modification of this Agreement will
be effective only if it is in writing and signed by each of the parties to be
bound by such modification.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the 20th day of April, 1999, to be effective as of the effective date of the
Merger.
REAL ACQUISITION SUB #1, INC.
By: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Title: President
EXECUTIVE
/s/ [EXECUTIVE]
EXHIBIT A
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Grant Date Expiration Plan Type Options Option Vesting
Date Outstanding Price
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EXHIBIT B
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Grant Date Expiration Plan Type Options Option Vesting
Date Outstanding Price
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EXHIBIT C
TERMS TO BE INCLUDED IN EXECUTIVE EMPLOYMENT AGREEMENT
- Term of Agreement: 3 years.
- In the event of termination prior to expiration of agreement that is
either (a) by Merger Sub not for Cause, or (b) by Executive for Good
Reason, Executive shall receive:
(1) Severance payments for at least 12 months base salary; and
(2) Accelerated vesting of options granted through the date of
termination (unless such option grants specifically exclude
acceleration or such options are for shares of stock of Real
Holdings).
"Cause" shall be defined according to custom in the industry,
but in no event shall include simple negligence or disagreement
over management strategy or philosophy. "Good Reason" shall be
defined according to custom in the industry.
- Compensation:
(1) Base salary equal to no less than base salary at the date hereof,
with annual review for increase as customary in the industry;
(2) Bonus program in accordance with the bonus program in place at
TAVA ninety (90) days prior to the date hereof;
(3) Merger Sub will consider the issuance of new options to purchase
shares of Surviving Corporation Common Stock or shares of Common
Stock of Real Holdings; and
(4) Fringe benefits no less valuable than those provided by TAVA to
Executive prior to the date hereof (including, but not limited to,
medical, dental, disability, life, directors and officers
liability insurance, and a 401(k) plan).
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