53
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER
between
REALITY WIRELESS NETWORKS, INC
and
GENESIS ELECTRONICS, INC.
Dated as of November 10, 2004
TABLE OF CONTENTS
ARTICLE I DEFINITIONS ...................................................... 4
SECTION 1.01 Certain Defined Terms ............................. 4
ARTICLE II THE MERGER ...................................................... 8
SECTION 2.01 The Merger ........................................ 8
SECTION 2.02 Closing ........................................... 8
SECTION 2.03 Effective Time .................................... 9
SECTION 2.04 Effect of the Merger .............................. 9
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation ................. 9
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion of Securities .......................... 10
SECTION 3.02 Exchange of Securities Other than Treasury Shares . 10
SECTION 3.03 Stock Transfer Books .............................. 12
SECTION 3.04 No Fractional Share Certificates .................. 13
SECTION 3.05 Options to Purchase Company Common Stock .......... 13
SECTION 3.06 Unvested Stock .................................... 14
SECTION 3.07 Certain Adjustments ............................... 14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF GENESIS ....................... 15
SECTION 4.01 Organization and Qualification; Subsidiaries ...... 15
SECTION 4.02 Certificate of Incorporation and Bylaws ........... 15
SECTION 4.03 Capitalization .................................... 15
SECTION 4.04 Authority Relative to This Agreement .............. 16
SECTION 4.05 No Conflict; Required Filings and Consents ........ 17
SECTION 4.06 Permits; Compliance with Laws ..................... 17
SECTION 4.07 Financial Statements .............................. 18
SECTION 4.08 Absence of Certain Changes or Events .............. 18
SECTION 4.09 Employee Benefit Plans; Labor Matters ............. 18
SECTION 4.10 Certain Tax Matters ............................... 20
SECTION 4.11 Contracts ......................................... 20
SECTION 4.12 Litigation ........................................ 20
SECTION 4.13 Purposely Left Blank .............................. 20
SECTION 4.14 Intellectual Property ............................. 20
SECTION 4.15 Taxes ............................................. 22
SECTION 4.16 Insurance ......................................... 23
SECTION 4.17 Properties ........................................ 23
SECTION 4.18 Business Activity Restriction ..................... 23
SECTION 4.19 Certain Business Practices ........................ 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF REALITY WIRELESS
SECTION 5.01 Organization and Qualification; Subsidiaries ...... 24
SECTION 5.02 Certificate of Incorporation and Bylaws ........... 24
SECTION 5.03 Capitalization .................................... 25
SECTION 5.04 Authority Relative to this Agreement .............. 25
SECTION 5.05 No Conflict; Required Filings and Consents ........ 26
SECTION 5.06 Permits; Compliance with Laws ..................... 26
SECTION 5.07 SEC Filings; Financial Statements ................. 27
SECTION 5.08 Absence of Certain Changes of Events .............. 28
SECTION 5.09 Employee Benefits; Labor Markets .................. 28
SECTION 5.10 Certain Tax Matters ............................... 29
SECTION 5.11 Contracts ......................................... 30
SECTION 5.12 Litigation ........................................ 30
SECTION 5.13 Purposely Left Blank .............................. 30
SECTION 5.14 Intellectual Property ............................. 30
SECTION 5.15 Taxes ............................................. 32
SECTION 5.16 Insurance ......................................... 32
SECTION 5.17 Properties ........................................ 33
SECTION 5.18 Business Activity Restriction ..................... 33
SECTION 5.19 Certain Business Practices ........................ 33
ARTICLE VI COVENANTS ....................................................... 34
SECTION 6.01 Conduct of Business by Company Pending the Closing 34
SECTION 6.02 Notices of Certain Events ......................... 36
SECTION 6.03 Access to Information; Confidentiality ............ 36
SECTION 6.04 No Solicitation of Transactions ................... 38
SECTION 6.05 Tax-Free Transaction .............................. 39
SECTION 6.06 Control of Operations ............................. 39
SECTION 6.07 Further Action; Consents; Filings ................. 39
SECTION 6.08 Additional Reports ................................ 40
SECTION 6.09 Purposely Left Blank ................................... 40
SECTION 6.10 Conduct of Business by Reality Wireless ................ 40
ARTICLE VII ADDITIONAL AGREEMENTS .......................................... 42
SECTION 7.01 Board and Stockholders' Meetings .................. 42
SECTION 7.02 Certain Settlements ............................... 43
SECTION 7.03 Completion of Certain Schedules ................... 43
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SECTION 7.04 Completion of Genesis Reports ..................... 44
SECTION 7.05 Public Announcements .............................. 44
SECTION 7.06 OTCBB Listing ..................................... 45
SECTION 7.07 Blue Sky .......................................... 45
ARTICLE VIII CONDITIONS TO THE MERGER ...................................... 45
SECTION 8.01 Conditions to the Obligations of Each Party to
Consummate the Merger ............................. 45
SECTION 8.02 Conditions to the Obligations of Company .......... 46
SECTION 8.03 Conditions to the Obligations of Reality Wireless . 47
ARTICLE IX POST-CLOSING COVENANTS .......................................... 48
SECTION 9.01 Audited Financials of Genesis ..................... 48
ARTICLE X TERMINATION, AMENDMENT AND WAIVER ................................ 48
SECTION 10.01 Termination ....................................... 48
SECTION 10.02 Effect of Termination ............................. 49
SECTION 10.03 Amendment ......................................... 49
SECTION 10.04 Waiver ............................................ 50
SECTION 10.05 Expenses .......................................... 50
ARTICLE X GENERAL PROVISIONS ............................................... 50
SECTION 11.01 Non-Survival of Representations and Warranties .... 50
SECTION 11.02 Notices ........................................... 50
SECTION 11.03 Severability ...................................... 51
SECTION 11.04 Assignment; Binding Effect; Benefit ............... 51
SECTION 11.05 Incorporation of Exhibits ......................... 52
SECTION 11.06 Governing Law ..................................... 52
SECTION 11.07 Waiver of Jury Trial .............................. 52
SECTION 11.08 Headings; Interpretation .......................... 52
SECTION 11.09 Counterparts ...................................... 53
SECTION 11.10 Entire Agreement .................................. 53
SCHEDULES AND EXHIBITS
EXHIBITS
SCHEDULES
SCHEDULE Reality Wireless Disclosure Schedule
SCHEDULE Genesis Disclosure Schedule
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (as amended, supplemented or otherwise
modified from time to time, this "Agreement"), dated as of November 10, 2004
(the "Execution Date"), among Reality Wireless Networks, Inc., a Nevada
corporation ("Reality Wireless") and GENESIS ELECTRONICS, INC., a Delaware
corporation ("Genesis"):
W I T N E S S E T H:
WHEREAS, the boards of directors of Reality Wireless and Genesis
have determined that it is advisable and in the best interests of their
respective companies and stockholders to enter into a business combination by
means of the merger of Genesis into Reality Wireless (the "Merger") and have
approved and adopted this Agreement;
WHEREAS, upon the terms and subject to the conditions of this
Agreement and in accordance with the Nevada Revised Statutes (the "NRS") and the
Corporations Code of the State of Delaware (the "DE Code"), Reality Wireless
will acquire all of the common stock of Genesis through statutory merger of
Genesis into Reality Wireless;
WHEREAS, for United States Federal income tax purposes, it is
intended that the Merger shall qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (together with
the rules and regulations promulgated thereunder, the "Code"), and that this
Agreement shall be, and hereby is, adopted as a plan of reorganization for
purposes of Section 368 of the Code;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms
Unless the context otherwise requires, the following terms, when
used in this Agreement, shall have the respective meanings specified below (such
meanings to be equally applicable to the singular and plural forms of the terms
defined):
"Affiliate" shall mean, with respect to any person, any other person
that controls, is controlled by or is under common control with the first
person.
"Blue Sky Laws" shall mean state securities or "blue sky" laws.
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"Business day" shall mean any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in New York.
"Competing Transaction" shall mean any of the following involving
Genesis or Reality Wireless, as the case may be (other than the Merger):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 20% or more of the assets of such party and its
subsidiaries, taken as a whole, in a single transaction or series of
transactions;
(iii) any license, joint venture or other arrangement pursuant
to which Genesis provides or permits access to all or a majority of its data (on
a value basis) to a third party;
(iv) any tender offer or exchange offer for 80% or more of the
outstanding voting securities of such party or the filing of a registration
statement under the Securities Act in connection therewith;
(v) any person having acquired beneficial ownership or the
right to acquire beneficial ownership of, or any "group" (as such term is
defined under Section 13(d) of the Exchange Act) having been formed that
beneficially owns or has the right to acquire beneficial ownership of, 80% or
more of the outstanding voting securities of such party;
(vi) any solicitation in opposition to the approval of this
Agreement by the stockholders of such party; or
(vii) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the foregoing.
"Confidential Information" shall mean information regarding each party
and its business, including the whole or a portion of the knowledge or know-how
regarding the specifications, methods, standards, processes and operating
procedures of the party, which is hereby acknowledged as proprietary to each
party, and shall include all discussions and correspondence regarding the
business relationship created between the parties in connection with this
Agreement (including but not limited to strategies and plans regarding such
business relationship).
"$" shall mean United States Dollars.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"Expenses" shall mean, with respect to any party hereto, all
documented out-of-pocket expenses (including, without limitation, all fees and
expenses of counsel, accountants, investment bankers, experts and consultants to
a party hereto and its affiliates) incurred by such party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of its obligations pursuant to this Agreement and the
consummation of the Merger, the preparation, printing, filing and mailing of the
Registration Statement and the Joint Proxy Statement, the solicitation of
stockholder approvals, the filing of HSR Act notice ("HSR Act" shall mean the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, together with
the rules and regulations promulgated thereunder.), if any, and all other
matters related to the transactions contemplated hereby and the closing of the
Merger.
"Genesis Disclosure Schedule" shall mean the disclosure schedule
delivered by Genesis to Reality Wireless prior to the Closing of this Agreement
and forming a part hereof.
"Genesis Intellectual Property" shall mean all patents (including,
without limitation, all U.S. and foreign patents, patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, re-examinations and extensions thereof), design rights, trademarks,
trade names and service marks (whether or not registered), trade dress, Internet
domain names, copyrights (whether or not registered) and any copyright renewal
rights, sui generis database rights, statistical models, technology, inventions,
supplier lists, trade secrets, know-how, computer software programs or
applications in both source and object code form, databases, technical
documentation of such software programs ("Technical Documentation"),
registrations and applications for any of the foregoing and all other tangible
or intangible proprietary information or materials that were material to
Genesis's business or are currently used in Genesis's business in any product,
technology or process (i) currently being or formerly manufactured, published or
marketed by Genesis or (ii) previously or currently under development for
possible future manufacturing, publication, marketing or other use by Genesis.
"Genesis Material Adverse Effect" shall mean any change in or effect
on the business of Genesis that, individually or in the aggregate (taking into
account all other such changes or effects), is, or is reasonably likely to be,
materially adverse to the business, assets, liabilities, financial condition or
results of operations of Genesis, taken as a whole, except to the extent that
any such change in or effect results from (i) changes in general economic
conditions or changes affecting the industry generally in which Genesis operates
(provided that such changes do not affect Genesis in a materially
disproportionate manner), and (ii) any litigation or loss of customers or
revenues that Genesis successfully bears the burden of proving arose from
Genesis entering into this Agreement.
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"Genesis Stock Plans" shall mean Genesis's Stock Option Plan.
"Governmental Entity" shall mean any United States Federal, state or
local or any foreign governmental, regulatory or administrative authority,
agency or commission or any court, tribunal or arbitral body.
"Governmental Order" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Entity.
"IRS" shall mean the United States Internal Revenue Service.
"Law" shall mean any Federal, state, foreign or local statute, law,
ordinance, regulation, rule, code, order, judgment, decree, other requirement or
rule of law of the United States or any other jurisdiction, and any other
similar act or law.
"Person" shall mean an individual, corporation, partnership, limited
partnership, limited liability company, limited liability partnership,
syndicate, person (including, without limitation, a "person" as defined in
Section 13(d)(3) of the Exchange Act), trust, association, entity or government
or political subdivision, agency or instrumentality of a government.
"Reality Wireless Disclosure Schedule" shall mean the disclosure
schedule delivered by Reality Wireless to Genesis prior to the execution of this
Agreement and forming a part hereof.
"Reality Wireless Material Adverse Effect" shall mean any change in or
effect on the business of Reality Wireless and the Reality Wireless Subsidiaries
that, individually or in the aggregate (taking into account all other such
changes or effects), is, or is reasonably likely to be, materially adverse to
the business, assets, liabilities, financial condition or results of operations
of Reality Wireless and the Reality Wireless Subsidiaries, taken as a whole,
except to the extent that any such change in or effect results from (i) changes
in general economic conditions or changes affecting the industry generally in
which Reality Wireless operates (provided that such changes do not affect
Reality Wireless in a materially disproportionate manner) and (ii) any
litigation or loss of customers or revenues that Reality Wireless successfully
bears the burden of proving arose from Reality Wireless entering into this
Agreement; provided, however, that in no event shall a decrease in the trading
price of Reality Wireless Common Stock or litigation relating thereto be
considered an Reality Wireless Material Adverse Effect.
"Reality Wireless Stock Plans" shall mean Reality Wireless's 2003 Stock
Plan.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
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"Subsidiary" shall mean, with respect to any person, any corporation,
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary of such person) owns,
directly or indirectly, a majority of the stock or other equity interests, the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
"Tax" shall mean (i) any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity or taxing authority, including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital stock,
payroll, employment, social security, workers' compensation, unemployment
compensation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; and customers' duties, tariffs and similar
charges; (ii) any liability for the payment of any amounts of the type described
in (i) as a result of being a member of an affiliated, combined, consolidated or
unitary group for any taxable period; and (iii) any liability for the payment of
amounts of the type described in (i) or (ii) as a result of being a transferee
of, or a successor in interest to, any Person or as a result of an express or
implied obligation to indemnify any person.
"Tax Return" shall mean any return, statement or form (including,
without limitation, any estimated tax reports or return, withholding tax reports
or return and information report or return) required to be filed with respect to
any Taxes.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger
Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the NRS and the DE Code, at the Effective Time
(as defined in Section 2.03), Genesis shall be merged with and into Reality
Wireless. As a result of the Merge the separate corporate existence of Genesis
shall cease and Reality shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
SECTION 2.02 Closing
Unless this Agreement shall have been terminated and the Merger herein
contemplated shall have been abandoned pursuant to Section 10.01, and subject to
the satisfaction or waiver of the conditions set forth in Article VIII, the
consummation of the Merger shall take place as promptly as practicable (and in
any event within three business days) after satisfaction or waiver of the
conditions set forth in Article VIII, at a closing (the "Closing") to be held at
8
the offices of The Otto Law Group, PLLC, 900 Fourth Avenue, Suite 3140, Seattle,
Washington 98164, unless another date, time or place is agreed to by Reality
Wireless and Genesis.
SECTION 2.03 Effective Time
At and after the time of the Closing, the parties shall cause the
Merger to be consummated by filing a certificate of merger (the "Certificate of
Merger") with the Secretary of State of the State of Nevada in such form as
required by, and executed in accordance with the relevant provisions of the NRS
and the DE Code (the date and time of such filing, or such later date and time
as may be set forth therein, being the "Effective Time").
SECTION 2.04 Effect of the Merger
At the Effective Time, the effect of the Merger shall be as provided in
the applicable provisions of the NRS and the DE Code. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of Genesis and Reality
Wireless shall vest in Reality as the Surviving Corporation, and all debts,
liabilities and duties of Genesis and Reality shall become the debts,
liabilities and duties of Reality as the Surviving Corporation.
SECTION 2.05 Certificate of Incorporation; Bylaws; Directors and
Officers
Unless otherwise agreed by Reality Wireless and Genesis before the
Effective Time, at the Effective Time:
(a) the officers of Genesis immediately prior to the Effective Time
shall be the officers of the Surviving Corporation (defined herein) from and
after the Effective Time, in each case until their successors are elected or
appointed and qualified or until their resignation or removal; and
(b) the Directors of Genesis immediately prior to the Effective Time
shall be the Directors of the Surviving Corporation from and after the Effective
Time, in each case until their successors are elected or appointed and qualified
or until their resignation or removal and, immediately prior to the Effective
Time, all Directors of Reality Wireless shall resign their positions.
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ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Conversion of Securities
At the Effective Time, by virtue of the Merger, and without any
action on the part of Reality Wireless or Genesis or the holders of any of the
following securities:
(a) all the shares of Common Stock of Genesis ("Genesis Common
Stock") issued and outstanding immediately before the Effective Time (excluding
those held in the treasury of Genesis or owned by any wholly owned subsidiary of
Genesis) and all rights in respect thereof, shall, forthwith cease to exist and
be converted into and become exchangeable for ninety-seven percent (97%) of
issued shares (the "Common Exchange Ratio") of common stock, $.001 par value, of
Reality Wireless ("Reality Wireless Common Stock");
(b) each share of Genesis Common Stock held in the treasury of
Genesis immediately prior to the Effective Time shall be canceled and retired
and, with respect to the retired shares, no shares of stock or other securities
of Reality Wireless, the Surviving Corporation or any other corporation shall be
issuable, and no payment or other consideration shall be made; and
(c) shares of Reality Common Stock exchanged or issued in connection
with this Section 3.01 shall bear restrictive legends limited sale to third
parties, subject to: (1) the provisions of Rule 144 of the Securities Act of
1933, (2) a "reoffer prospectus" in compliance with Form S-8, or (3) a valid
registration statement. The parties hereby represent and warrant that
shareholders in connection this Section 3.01 shall not sell the Shares expect as
provided in (1), (2) and/or (3) of this Section or an otherwise valid exception
to the Securities Act.
SECTION 3.02 Exchange of Securities Other than Treasury Shares
(a) Exchange Agent. Prior to the Effective Time, Reality Wireless
shall enter into an agreement with its transfer agent, Pacific Stock Transfer,
Inc., to act as exchange agent for the Merger (the "Exchange Agent") and the
Exchange Agent, as Genesis hereby acknowledges.
(b) Reality Wireless to Provide Stock. Promptly after the Effective
Time, Reality Wireless shall make available to the Exchange Agent for the
benefit of the holder of Genesis Common Stock and Genesis Preferred Stock,
certificates of Reality Wireless Common Stock and Reality Wireless Preferred
Stock ("Reality Wireless Certificates") representing the number of whole shares
of Reality Wireless Common Stock and Reality Wireless Preferred Stock issuable
pursuant to Section 3.01(a) and (b) in exchange for shares of Genesis Common
10
Stock and Genesis Preferred Stock outstanding immediately prior to the Effective
Time.
(c) Exchange Procedures. The Exchange Agent shall mail to each
holder of record of certificates of Genesis Common Stock and Preferred Stock
("Genesis Certificates"), whose shares were converted into the right to receive
shares of Reality Wireless Common Stock and Preferred Stock promptly after the
Effective Time (and in any event no later than three business days after the
Effective Time): (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Genesis Certificates shall
pass, only upon receipt of the Genesis Certificates by the Exchange Agent, and
shall be in such form and have such other provisions as Reality Wireless may
reasonably specify); and (ii) instructions for use in effecting the surrender of
the Genesis Certificates in exchange for Reality Wireless Certificates. Upon
surrender of a Genesis Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Reality Wireless, together
with such letter of transmittal, duly completed and validly executed, and such
other documents as may be reasonably required by the Exchange Agent, the holder
of such Genesis Certificate shall be entitled to receive in exchange therefor a
Reality Wireless Certificate representing the number of whole shares of Reality
Wireless Common Stock and Preferred Stock that such holder has the right to
receive pursuant to this Article III, and the Genesis Certificate so surrendered
shall forthwith be canceled. Until so surrendered, each outstanding Genesis
Certificate that, prior to the Effective Time, represented shares of Genesis
Common Stock and Preferred Stock will be deemed from and after the Effective
Time, for all corporate purposes other than the payment of dividends and
distributions, to evidence the ownership of the number of full shares of Reality
Wireless Common Stock and Preferred Stock into which such shares of Genesis
Common Stock and Preferred Stock shall have been so converted.
(d) Lost, Stolen or Destroyed Genesis Certificates. In the event
any Genesis Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Genesis
Certificates, upon the making of an affidavit of that fact by the holder
thereof, an Reality Wireless Certificate representing such shares of Reality
Wireless Common Stock and Preferred Stock as may be required pursuant to this
Article III; provided, however, that Reality Wireless may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Genesis Certificates to indemnify Reality Wireless
against any claim that may be made against Reality Wireless, the Surviving
Corporation or the Exchange Agent with respect to the Genesis Certificates
alleged to have been lost, stolen or destroyed.
(e) Distributions With Respect to unexchanged shares. No dividends
or other distributions with respect to Reality Wireless Common Stock and
Preferred Stock with a record date after the Effective Time will be paid to the
holder of any unsurrendered Genesis Certificate with respect to the shares of
Reality Wireless Common Stock and Preferred Stock represented thereby until the
holder of record of such Genesis Certificate shall surrender such Genesis
Certificate. Subject to the effect of applicable escheat or similar laws,
following surrender of any such Genesis Certificate, there shall be paid to the
record holder of the Reality Wireless Certificates issued in exchange therefor,
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without interest, at the time of such surrender, the amount of any such
dividends or other distributions with a record date after the Effective Time
theretofore payable (but for the provisions of this Section 3.02(e)) with
respect to such shares of Reality Wireless Common Stock and Preferred Stock.
(f) Transfer of Ownership. If any Reality Wireless Certificate is
to be issued in a name other than that in which the Genesis Certificate
surrendered in exchange therefor is registered, it will be a condition of the
issuance thereof that the Genesis Certificate so surrendered will be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Reality Wireless or any agent
designated by it any transfer or other taxes required by reason of the issuance
of a Reality Wireless Certificate for shares of Reality Wireless Common Stock
and Preferred Stock in any name other than that of the registered holder of the
Genesis Certificate surrendered, or established to the satisfaction of Reality
Wireless or any agent designated by it that such tax has been paid or is not
payable.
(g) Termination of Exchange Agent Funding. Any Reality Wireless
Certificates held by the Exchange Agent which have not been delivered to holders
of Genesis Certificates pursuant to this Article III within six (6) months after
the Effective Time shall promptly be paid or delivered, as appropriate, to
Reality Wireless, and thereafter holders of Genesis Certificates who have not
theretofore complied with the exchange procedures outlined in and contemplated
by this Section 3.02 shall thereafter look only to Reality Wireless (subject to
abandoned property, escheat and similar laws) only as general creditors thereof
for their claim for shares of Reality Wireless Common Stock, any cash in lieu of
fractional shares of Reality Wireless Common Stock and Preferred Stock and any
dividends or distributions (with a record date after the Effective Time) with
respect to Reality Wireless Common Stock and Preferred Stock to which they are
entitled.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 3.02, none of the Exchange Agent, the Surviving Corporation or any party
hereto shall be liable to any person in respect of any shares of Reality
Wireless Common Stock and Preferred Stock or cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
SECTION 3.03 Stock Transfer Books
(a) At the Effective Time, the stock transfer books of Genesis shall
each be closed, and there shall be no further registration of transfers of
shares of Genesis Common and Preferred Stock thereafter on the records of any
such stock transfer books. In the event of a transfer of ownership of shares of
Genesis Common and Preferred Stock that is not registered in the stock transfer
records of Genesis at the Effective Time, a certificate or certificates
representing the number of full shares of Reality Wireless Common and Preferred
Stock into which such shares of Genesis Common and Preferred Stock shall have
been converted shall be issued to the transferee in accordance with Section 3.04
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hereof if the certificate or certificates representing such shares of Genesis
Common and Preferred Stock is or are surrendered as provided in Section 3.02(c)
hereof, accompanied by all documents required to evidence and effect such
transfer and by evidence of payment of any applicable stock transfer tax.
SECTION 3.04 No Fractional Share Certificates
(a) No scrip or fractional share Reality Wireless Certificate shall
be issued upon the surrender for exchange of Genesis Certificates, but such
fractional share shall be rounded up to the nearest whole share.
SECTION 3.05 Options and Warrants to Purchase Genesis Common Stock
At the Effective Time, each option or warrant granted by Genesis to
purchase shares of Genesis Common Stock ("Genesis Stock Options and Warrants"),
which is outstanding and unexercised immediately prior to the Effective Time
shall be assumed by Reality Wireless, and the Genesis Stock Options and Warrants
shall be converted into an option or warrant, as the case may be, to purchase
shares of Reality Wireless Common Stock in such number and at such exercise
price as provided below and otherwise having the same terms and conditions as in
effect immediately prior to the Effective Time (except to the extent that such
terms, conditions and restrictions may be altered in accordance with their terms
as a result of the Merger contemplated hereby and except that all references in
each such Genesis Stock Option to Genesis shall be deemed to refer to Reality
Wireless):
(a) the number of shares of Reality Wireless Common Stock to be
subject to the new option or warrant, as the case may be, shall be equal to the
product of (x) the number of shares of Genesis Common Stock for which the
Genesis option or warrant provided divided by the number of issued and
outstanding shares of Genesis Common Stock immediately prior to the Effective
Time (including that pursuant to such option or warrant) and (y) ninety-seven
one hundredths (0.97) of the issued and outstanding common stock in Reality
Wireless immediately following the Closing (the conversion product referred to
as the "Exchange Ratio")
(b) the exercise price per share of Reality Wireless Common Stock
under the new option or warrant shall be equal to (x) the exercise price per
share of Genesis Common Stock in effect under the original Genesis Stock Option
immediately prior to the Effective Time divided by (y) the Exchange Ratio; and
(c) in effecting such assumption and conversion, the aggregate
number of shares of Reality Wireless Common Stock to be subject to each assumed
Genesis Stock Option and Warrant will be rounded down, if necessary, to the next
whole share and the aggregate exercise price shall be rounded up, if necessary,
to the next whole cent (for the purpose of providing that the intrinsic value of
such Genesis Stock Options and Warrants shall be preserved at the Effective
Time).
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(d) the adjustments provided herein with respect to any options that
are "incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with the requirements of Section 424(a) of the
Code so as to retain their character as incentive stock options. The assumption
of the outstanding Genesis Stock Options and Warrants in the Merger and their
conversion into options for Reality Wireless Common Stock will not result in any
accelerated vesting of those options or the shares purchasable thereunder other
than as contemplated in presently existing agreements to which the Genesis is a
party, copies of which agreements have been provided to Reality Wireless, and
the vesting schedule in effect for each Genesis Stock Option immediately prior
to the Effective Time shall remain in full force after the assumption thereof by
Reality Wireless.
SECTION 3.06 Unvested Stock
At the Effective Time, any unvested shares of Genesis Common Stock
awarded to employees, directors or consultants pursuant to any of Genesis's
plans or arrangements and outstanding immediately prior to the Effective Time
shall be converted into unvested shares of Reality Wireless Common Stock in
accordance with the Exchange Ratio and shall remain subject to the same terms,
restrictions and vesting schedule as in effect immediately prior to the
Effective Time, except to the extent by their terms such unvested shares of
Genesis Common Stock vest at the Effective Time and copies of the relevant
agreements governing such vesting have been provided to Reality Wireless. All
outstanding rights which Genesis may hold immediately prior to the Effective
Time to repurchase unvested shares of Genesis Common Stock shall be assigned to
Reality Wireless in the Merger and shall thereafter be exercisable by Reality
Wireless upon the same terms and conditions in effect immediately prior to the
Effective Time, except that the shares purchasable pursuant to such rights and
the purchase price payable per share shall be adjusted to reflect the Exchange
Ratio.
SECTION 3.07 Certain Adjustments
If between the Execution Date and the Effective Time, the
outstanding shares of Reality Wireless Common Stock or Genesis Common Stock
shall be changed into a different number of shares by reason of any
reclassification, recapitalization, split-up, combination or exchange of shares,
or any dividend payable in stock or other securities shall be declared thereon
with a record date within such period, or the number of shares of Genesis Common
Stock on a fully diluted basis is in excess of that specified in Section 4.03
and disclosed in Section 4.03 of the Genesis Disclosure Schedule (regardless of
whether such excess is a result of an additional issuance of capital stock or a
correction to such Sections), then the Exchange Ratio established pursuant to
the provisions of Section 3.01 shall be adjusted accordingly to provide to each
of Reality Wireless, on the one hand, and the holders of Genesis Common Stock in
the aggregate, on the other hand, the same economic effect as contemplated by
this Agreement prior to such reclassification, recapitalization, split-up,
combination, exchange, dividend or increase.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GENESIS
Genesis hereby represents and warrants to Reality Wireless, subject
to the exceptions specifically disclosed in writing in the Genesis Disclosure
Schedule, of which all such exceptions are referenced to a specific
representation set forth in this Article IV or are otherwise clearly applicable
to representations hereof not specifically referenced, that at the time of
Closing:
SECTION 4.01 Organization and Qualification; Subsidiaries
(a) Genesis and each directly and indirectly owned subsidiary of
Genesis (the "Genesis Subsidiaries") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of the
jurisdiction of its incorporation or organization, as the case may be, and has
the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. Genesis
and each Genesis Subsidiary is duly qualified or licensed to do business, and is
in good standing (to the extent applicable), in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary.
(b) Section 4.01 of the Genesis Disclosure Schedule sets forth, as
of the Execution Date, a true and complete list of each Genesis Subsidiary,
together with (i) the jurisdiction of incorporation or organization of each
Genesis Subsidiary and the percentage of each Genesis Subsidiary's outstanding
capital stock or other equity interests owned by Genesis or another Genesis
Subsidiary and (ii) an indication of whether each Genesis Subsidiary is a
"Significant Subsidiary" as defined in Regulation S-X under the Exchange Act.
Except as set forth in Section 4.01 of the Genesis Disclosure Schedule, neither
Genesis owns an equity interest in any partnership or joint venture arrangement
or other business entity.
SECTION 4.02 Certificate of Incorporation and Bylaws
The copies of Genesis's certificate of incorporation and bylaws
previously provided to Reality Wireless by Genesis are true, complete and
correct copies thereof. Such certificate of incorporation and bylaws are in full
force and effect. Genesis is not in violation of any of the provisions of its
certificate of incorporation or bylaws.
SECTION 4.03 Capitalization
The authorized capital stock of Genesis consists of 20,000,000
shares of Genesis Common Stock and zero shares of preferred stock ("Genesis
Preferred Stock"). As of the date hereof, (i) 7,458,789 shares of Genesis Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) zero shares of Genesis Common Stock are held in the
treasury of Genesis, (iii) zero shares of Genesis Common Stock are held by
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Genesis Subsidiaries, (iv) 1,338,055 shares of Genesis Common Stock are reserved
for future issuance pursuant to Genesis Stock Options, (v) zero shares of
Genesis Common Stock are reserved for future issuance pursuant to Genesis
Warrants, and (vi) zero shares of Genesis Preferred Stock are outstanding. The
name of each holder of a Genesis Stock Option and/or Warrant, the grant date of
each Genesis Stock Option, and the number of shares of Genesis Common Stock for
which each Genesis Stock Option and Warrant is exercisable and the exercise
price of each Genesis Stock Option are set forth in Section 4.03 of the Genesis
Disclosure Schedule. Except for shares of Genesis Common Stock issuable pursuant
to Genesis Stock Plans, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character obligating Genesis to
issue or sell any shares of capital stock of, or other equity interests in,
Genesis. All shares of Genesis Common Stock subject to issuance as aforesaid,
upon issuance prior to the Effective Time on the terms and conditions specified
in the instruments pursuant to which they are issuable, will be duly authorized,
validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Genesis to repurchase, redeem or otherwise acquire
any shares of Genesis Common Stock or any capital stock of any Genesis
Subsidiary. Each outstanding share of capital stock of each Genesis Subsidiary
is duly authorized, validly issued, fully paid and nonassessable and each such
share owned by Genesis or another Genesis Subsidiary is free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Genesis's or such other Genesis Subsidiary's voting
rights, charges and other encumbrances of any nature whatsoever. There are no
material outstanding contractual obligations of Genesis to provide funds to, or
make any material investment (in the form of a loan, capital contribution or
otherwise) in, any Genesis Subsidiary or any other person.
SECTION 4.04 Authority Relative to This Agreement
Genesis has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Genesis and the consummation by Genesis of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Genesis are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Genesis and, assuming the due authorization, execution and delivery by the other
parties hereto, constitute legal, valid and binding obligations of Genesis,
enforceable against Genesis in accordance with their terms, subject to the
effect of any applicable bankruptcy, moratorium, insolvency, reorganization or
other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may limit the
availability of remedies (whether in a proceeding at law or in equity).
16
SECTION 4.05 No Conflict; Required Filings and Consents
(a) The execution and delivery of this Agreement by Genesis does
not, and the performance by Genesis of its obligations hereunder and the
consummation of the Merger will not, (i) conflict with or violate any provision
of the certificate of incorporation or bylaws of Genesis or any equivalent
organizational documents of any Genesis Subsidiary, (ii) assuming that all
filings and notifications described in Section 4.05(b) have been made, conflict
with or violate any Law applicable to Genesis or by which any property or asset
of Genesis is bound or affected or (iii) result in any material breach of or
constitute a material default (or an event which with the giving of notice or
lapse of time or both could reasonably be expected to become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
material property or asset of Genesis pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation.
(b) Except as may arise solely by virtue of the nature of Reality
Wireless's business, the execution and delivery of this Agreement by Genesis
does not, and the performance by Genesis of its obligations hereunder and the
consummation of the Merger will not, require any consent, approval,
authorization or permit of, or filing by Genesis with or notification by Genesis
to, any Governmental Entity, except pursuant to applicable requirements of the
Exchange Act, the Securities Act, Blue Sky Laws, state takeover laws, and the
filing and recordation of the Certificate of Merger as required by the NRS and
the DE Code.
SECTION 4.06 Permits; Compliance with Laws
Genesis is in possession of all franchises, grants, authorizations,
licenses, establishment registrations, product listings, permits, easements,
variances, exceptions, consents, certificates, identification and registration
numbers, approvals and orders of any Governmental Entity materially necessary
for Genesis to own, lease and operate its properties or to offer or perform its
services or to develop, produce, store, distribute and market its products or
otherwise to carry on its business as it is now being conducted (collectively,
the "Genesis Permits"), and, as of the Execution Date, none of the Genesis
Permits has been suspended or cancelled nor is any such suspension or
cancellation pending or, to the knowledge of Genesis, threatened. Neither
Genesis is in conflict with, or in default or violation of, (i) any Law
applicable to Genesis or by which any property or asset of Genesis is bound or
affected or (ii) any material Genesis Permits. Section 4.06 of the Genesis
Disclosure Schedule sets forth, as of the Execution Date, all actions,
proceedings, investigations or surveys pending or, to the knowledge of Genesis,
threatened against Genesis that could reasonably be expected to result in the
suspension or cancellation of any other material Genesis Permit. Genesis has not
received from any Governmental Entity any written notification with respect to
possible material conflicts, defaults or violations of Laws.
17
SECTION 4.07 Financial Statements
(a) Genesis has timely filed all forms, reports, statements and
documents required to be filed by it with any Governmental Entities. Each form,
report, statement and document referred to in this paragraph was prepared in all
material respects in accordance with the requirements of applicable Law. No
Genesis Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the
SEC, any stock exchange or any other comparable Governmental Entity.
(b) When presented to Reality Wireless within 45 days from the
Execution Date, the Genesis Reports (defined in Section 7.04 below) will present
fairly, in all material respects, the financial position of Genesis as at the
respective dates thereof and for the respective periods indicated therein,
except as otherwise noted therein (subject, in the case of unaudited statements,
to normal and recurring immaterial year-end adjustments).
SECTION 4.08 Absence of Certain Changes or Events
Since September 15, 2004, Genesis has conducted their businesses in
all material respects only in the ordinary course consistent with past practice
and, since such date, there has not been (i) any material changes in or effect
on the business, assets, liabilities, financial condition or results of
operations of Genesis or the Genesis Subsidiaries, (ii) any event (other than
events within the scope of Section 4.10) that could reasonably be expected to
prevent or materially delay the performance of Genesis's obligations pursuant to
this Agreement and the consummation of the Merger by Genesis, (iii) any material
change by Genesis in its accounting methods, principles or practices, (iv) any
issuance or sale of any stock, notes, bonds or other securities other than
pursuant to the exercise of outstanding securities, or entering into any
agreement with respect thereto, or the issuances of options under the Genesis
Stock Plans, (v) any amendment to Genesis's certificate of incorporation or
bylaws, (vi) other than in the ordinary course of business consistent with past
practice, any (1) purchase, sale, assignment or transfer of any material assets,
(2) mortgage, pledge or existence of any lien, encumbrance or charge on any
material assets or properties, tangible or intangible except for liens for Taxes
not yet delinquent, or (3) waiver of any rights of material value or
cancellation or any material debts or claims, (vii) any incurrence of any
material liability (absolute or contingent), except for current liabilities and
obligations incurred in the ordinary course of business consistent with past
practice, (viii) any incurrence of any damage, destruction or similar loss,
whether or not covered by insurance, materially affecting the business or
properties of Genesis, or (ix) any entering into any transaction of a material
nature other than in the ordinary course of business, consistent with past
practice.
SECTION 4.09 Employee Benefit Plans; Labor Matters
(a) Genesis Disclosure Schedule lists each employee benefit fund,
plan, program, arrangement and contract (including, without limitation, any
"pension" plan, fund or program, as defined in Section 3(2) of ERISA, and any
18
"employee benefit plan", as defined in Section 3(3) of ERISA and any plan,
program, arrangement or contract providing for severance; medical, dental or
vision benefits; life insurance or death benefits; disability benefits, sick pay
or other wage replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation; bonus or
incentive pay or other material fringe benefits) ("Benefit Plans"), maintained,
sponsored or contributed to or required to be contributed to by Genesis (the
"Genesis Benefit Plans"). With respect to each Genesis Benefit Plan, Genesis has
delivered or made available to Reality Wireless a true, complete and correct
copy of (i) such Genesis Benefit Plan (of, if not written, a written summary of
its material terms) and the most recent summary plan description, if any,
related to such Genesis Benefit Plan, (ii) each trust agreement or other funding
arrangement relating to such Genesis Benefit Plan, (iii) the most recent annual
report filed with the IRS with respect to such Genesis Benefit Plan, (iv) the
most recent actuarial report or financial statement relating to such Genesis
Benefit Plan and (v) the most recent determination letter, if any, issued by the
IRS with respect to such Genesis Benefit Plan and any pending request for such a
determination letter. Neither Genesis nor, to the knowledge of Genesis, any
other person or entity, has any express commitment, whether legally enforceable
or not, to modify, change or terminate any Genesis Benefit Plan, other than with
respect to a modification, change or termination required by ERISA or the Code.
(b) Genesis has made available to Reality Wireless true, complete
and correct copies of (i) all employment agreements with officers and all
consulting agreements of Genesis and each Genesis Subsidiary, (ii) all severance
plans, agreements, programs and policies of Genesis and each Genesis Subsidiary
with or relating to their respective employees, directors or consultants, and
(iii) all plans, programs, agreements and other arrangements of Genesis and each
Genesis Subsidiary with or relating to their respective employees, directors or
consultants which contain "change of control" provisions. No payment or benefit
which may be required to be made by Genesis or which otherwise may be required
to be made under the terms of any Genesis Benefit Plan or other arrangement will
constitute a parachute payment under Code Section 280(G)(1), and the
consummation of the transactions contemplated by this Agreement will not, alone
or in conjunction with any other possible event (including termination of
employment), (i) entitle any current or former employee or other service
provider of Genesis to severance benefits or any other payment, compensation or
benefit (including forgiveness of indebtedness), except as expressly provided by
this Agreement, or (ii) accelerate the time of payment or vesting, or increase
the amount of compensation or benefit due any such employee or service provider.
(c) Neither Genesis is a party to, or has any obligations under or
with respect to, any collective bargaining or other labor union contract
applicable to persons employed by Genesis and no collective bargaining agreement
is being negotiated by Genesis or any person or entity that may obligate Genesis
thereunder. As of the Execution Date, there is no labor dispute, strike, union
organizing activity or work stoppage against Genesis pending or, to the
knowledge of Genesis, threatened which may substantially interfere with the
respective business activities of Genesis. As of the Execution Date, to the
19
knowledge of Genesis, none of Genesis, any Genesis Subsidiary, or any of their
respective representatives or employees has committed any unfair labor practice
in connection with the operation of the respective businesses of Genesis, and
there is no charge or complaint filed against Genesis by or with the National
Labor Relations Board or any comparable Governmental Entity pending or
threatened in writing.
SECTION 4.10 Certain Tax Matters
To Genesis's knowledge, neither Genesis, nor to Genesis's knowledge,
any of its affiliates, has taken or agreed to take any action (other than
actions contemplated by this Agreement) that could be expected to prevent the
Merger from constituting a "reorganization" under Section 368 of the Code.
Genesis is not aware of any agreement or plan to which Genesis or any of its
affiliates is a party or other circumstances relating to Genesis or any of its
affiliates that could reasonably be expected to prevent the Merger from
qualifying as a reorganization under Section 368 of the Code.
SECTION 4.11 Contracts
Section 4.11 of the Genesis Disclosure Schedule sets forth a list of
each contract or agreement that is material to the business, assets,
liabilities, financial condition or results of operations of Genesis and Genesis
Subsidiaries, taken as a whole (each, a "Material Contract"). Neither Genesis is
in material violation of or in default under (nor does there exist any condition
which with the passage of time or the giving of notice could reasonably be
expected to cause such a material violation of or material default under) any
Material Contract. Each Material Contract is in full force and effect and is a
legal, valid and binding obligation of Genesis or a Genesis Subsidiary and, to
the knowledge of Genesis, each of the other parties thereto, enforceable in
accordance with its terms.
SECTION 4.12 Litigation
With the exception of the those items listed in Section 4.12 of the
Genesis Disclosure Schedule, there is no material suit, claim, action,
proceeding or investigation pending or, to the knowledge of Genesis, threatened
against Genesis, and, to the knowledge of Genesis, there are no existing facts
or circumstances that could reasonably be expected to result in such a suit,
claim, action, proceeding or investigation. Genesis is not aware of any facts or
circumstances which could reasonably be expected to result in the denial of
insurance coverage under policies issued to Genesis and Genesis Subsidiaries in
respect of such material suits, claims, actions, proceedings and investigations.
Neither Genesis is subject to any material outstanding order, writ, injunction
or decree or any material outstanding order, writ, injunction or decree.
SECTION 4.13 Purposely Left Blank
SECTION 4.14 Intellectual Property
20
(a) Section 4.14(a) of the Genesis Disclosure Schedule contains a
true and complete list of Genesis's patents, patent applications, registered
trademarks, trademark applications, trade names, registered service marks,
service mark applications, Internet domain names, Internet domain name
applications, copyright registrations and applications and other filings and
formal actions made or taken pursuant to Federal, state, local and foreign laws
by Genesis to protect its interests in Genesis Intellectual Property, and
includes details of all due dates for further filings, maintenance, payments or
other actions falling due in respect of Genesis Intellectual Property within
twelve (12) months of the Effective Time. All of Genesis's patents, patent
applications, registered trademarks, and trademark applications, and registered
copyrights remain in good standing with all fees and filings due as of the date
hereof. Genesis has previously provided Reality Wireless with a list of all
other trademarks and service marks which are material to Genesis's business.
(b) Genesis has made all registrations that Genesis (including any
of its subsidiaries) is required to have made in relation to the processing of
data, and is in good standing with respect to such registrations with all fees
due as of the Effective Time duly made.
(c) Genesis Intellectual Property contains only those items and
rights which are: (i) owned by Genesis; (ii) in the public domain; or (iii)
rightfully used by Genesis pursuant to a valid and enforceable license or other
agreement (the "Genesis Licensed Intellectual Property"), the parties, date,
term and subject matter of each such license or other agreement (each, a
"License Agreement") being set forth on Section 4.14(c) of the Genesis
Disclosure Schedule. Genesis has all rights in Genesis Intellectual Property
necessary to carry out Genesis's current activities and, to the knowledge of
Genesis, Genesis's future activities to the extent such future activities are
already planned, including without limitation, to the extent required to carry
out such activities, rights to make, use, reproduce, modify, adopt, create
derivative works based on, translate, distribute (directly and indirectly),
transmit, display and perform publicly, license, rent and lease and, other than
with respect to Genesis Licensed Intellectual Property, assign and sell, Genesis
Intellectual Property.
(d) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Genesis Intellectual
Property, product, work, technology or process as now used or offered or
proposed for use, licensing or sale by Genesis does not infringe on any patent,
design right, trademark, trade name, service mark, trade dress, Internet domain
name, copyright, database, statistical model, technology, invention, supplier
list, trade secret, know-how, computer software program or application of any
person, anywhere in the World. Genesis has not received notice of any claims (i)
challenging the validity, effectiveness or, other than with respect to Genesis
Licensed Intellectual Property, ownership by Genesis of any Genesis Intellectual
Property, or (ii) to the effect that the use, distribution, licensing,
sublicensing, sale or any other exercise of rights in any product, work,
technology or process as now used or offered or proposed for use, licensing,
sublicensing or sale by Genesis or its agents or use by its customers infringes
or will infringe on any intellectual property or other proprietary or personal
21
right of any person. To the knowledge of Genesis, no such claims have been
threatened by any person, nor are there any valid grounds for any bona fide
claim of any such kind. All of the rights within Genesis Intellectual Property
are enforceable and subsisting. To the knowledge of Genesis, there is no
unauthorized use, infringement or misappropriation of any Genesis Intellectual
Property by any third party, employee or former employee.
(e) All personnel, including employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of Genesis Intellectual Property on behalf of Genesis, have executed
nondisclosure agreements and either (i) have been a party to an enforceable
"work-for-hire" arrangement or agreements with Genesis in accordance with
applicable national and state law that has accorded Genesis full, effective,
exclusive and original ownership of all tangible and intangible property thereby
arising, or (ii) have executed appropriate instruments of assignment in favor of
Genesis as assignee that have conveyed to Genesis effective and exclusive
ownership of all tangible and intangible property thereby arising.
(f) Genesis is not, nor as a result of the execution or delivery of
this Agreement, nor in performance of Genesis's obligations hereunder, will
Genesis be, in violation of any material license, sublicense, agreement or
instrument to which Genesis is a party or otherwise bound, nor will execution or
delivery of this Agreement, or performance of Genesis's obligations hereunder,
cause the diminution, termination or forfeiture of any Genesis Intellectual
Property.
(g) Genesis has taken all reasonable steps, in accordance with
normal industry practice, to preserve and maintain complete notes and records
relating to Genesis Intellectual Property to cause the same to be readily
identified and available.
(h) Genesis Intellectual Property is free and clear of any and all
mortgages, pledges, liens, security interests, conditional sale agreements,
encumbrances or charges of any kind.
(i) Except as set forth in the Genesis Disclosure Schedule, Genesis
(including its subsidiaries) does not owe any royalties or other payments to
third parties in respect of Genesis Intellectual Property. All royalties or
other payments set forth in the Genesis Disclosure Schedule that have accrued
prior to the Effective Time have been paid.
SECTION 4.15 Taxes
(a) Genesis and each of the Genesis Subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax purposes of which
Genesis is or has been a member, have properly completed and timely filed all
Tax Returns required to be filed by them and have paid all Taxes shown thereon
to be due. Genesis has provided adequate accruals in accordance with generally
accepted accounting principles in its latest financial statements included in
the Genesis Reports for any Taxes that have not been paid, whether or not shown
as being due on any Tax Returns. Genesis has no material liability for unpaid
22
Taxes accruing after the date of Genesis's latest financial statements included
in the Genesis Reports.
(b) There is no material claim for Taxes that is a lien against the
property of Genesis or is being asserted against Genesis other than liens for
Taxes not yet due and payable.
SECTION 4.16 Insurance
Genesis and each Genesis Subsidiary is presently insured, and during
each of the past three calendar years has been insured, against such risks, as
to Genesis's knowledge, that companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. The policies of
fire, theft, liability and other insurance maintained with respect to the assets
or businesses of Genesis and Genesis Subsidiaries provide, to Genesis's
knowledge, adequate coverage against loss. Genesis has heretofore made available
to Reality Wireless a complete and correct list as of the date hereof of all
insurance policies maintained by Genesis or the Genesis Subsidiaries, and has
made available to Reality Wireless complete and correct copies of all such
policies, together with all riders and amendments thereto. All such policies are
in full force and effect and all premiums due thereon have been paid to the date
hereof. Genesis have complied in all material respects with the terms of such
policies.
SECTION 4.17 Properties
Genesis has good title, free and clear of all material mortgages,
liens, pledges, charges or other encumbrances to all their material tangible
properties and assets, real, personal or mixed, reflected in the Genesis
Reports, other than (i) any properties or assets that have been sold or
otherwise disposed of in the ordinary course of business since the date of such
financial statements, (ii) liens disclosed in the notes to such financial
statements and (iii) liens arising in the ordinary course of business after the
date of such financial statements. All buildings, and all fixtures, equipment
and other property and assets that are material to its business on a
consolidated basis, held under leases or sub-leases by Genesis are held under
valid instruments enforceable in accordance with their respective terms, subject
to applicable laws of bankruptcy, insolvency or similar laws relating to
creditors' rights generally and to general principles of equity (whether applied
in a proceeding in law or equity). Substantially all of Genesis's and the
Genesis Subsidiaries' equipment in regular use has been reasonably maintained
and is in serviceable condition, reasonable wear and tear excepted.
SECTION 4.18 Business Activity Restriction
There is no non-competition or other similar agreement, commitment,
judgment, injunction, order or decree to which Genesis is a party or subject to
that has or could reasonably be expected to have the effect of prohibiting or
impairing the conduct of business by Genesis. Genesis has not entered into any
agreement under which Genesis is restricted in any material respect from
selling, licensing or otherwise distributing any of its technology or products
23
to, or providing services to, customers or potential customers or any class of
customers, in any geographic area, during any period of time or in any segment
of the market or line of business.
SECTION 4.19 Certain Business Practices
Neither Genesis nor any Genesis Subsidiary nor any directors,
officers, agents or employees of Genesis or any Genesis Subsidiary (in their
capacities as such) has (i) used any funds of the Genesis for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity or (ii) made any unlawful payment by the Genesis to foreign
or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF REALITY WIRELESS
Reality Wireless hereby represents and warrants to Genesis, subject
to the exceptions specifically disclosed in the Reality Wireless Disclosure
Schedule, of which all such exceptions are referenced to a specific
representation set forth in this Article V or are otherwise clearly applicable
to representations hereof not specifically referenced, that at the time of
Closing:
SECTION 5.01 Organization and Qualification; Subsidiaries
(a) Reality Wireless and each directly and indirectly owned
subsidiary of Reality Wireless (the "Reality Wireless Subsidiaries") has been
duly organized and is validly existing and in good standing (to the extent
applicable) under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted. Reality
Wireless, and each Reality Wireless Subsidiary is duly qualified or licensed to
do business, and is in good standing (to the extent applicable), in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing
necessary.
(b) Section 5.01 of the Reality Wireless Disclosure Schedule sets
forth, as of the Execution Date, a true and complete list of each Reality
Wireless Subsidiary, together with the jurisdiction of incorporation or
organization.
SECTION 5.02 Certificate of Incorporation and Bylaws
The copies of each of Reality Wireless's certificate of
incorporation and bylaws previously provided to Genesis by Reality Wireless are
true, complete and correct copies thereof. Such certificates of incorporation
and bylaws are in full force and effect.
24
SECTION 5.03 Capitalization
The authorized capital stock of Reality Wireless consists of
500,000,000 6,998,144 of which are validly issued, fully paid and nonassessable
shares of Reality Wireless Common Stock and 100,000,000 shares of preferred
stock none of which are issued. No shares of Reality Wireless Common Stock are
held in the treasury of the Genesis and no shares of Reality Wireless Common
Stock are held by any Reality Wireless Subsidiaries. As of the Execution Date,
no shares of Reality Wireless Common Stock are reserved for future issuance
pursuant to outstanding options and warrants to purchase Reality Wireless Common
Stock ("Reality Wireless Stock Options and Warrant"). Except for the any shares
of Reality Wireless Common Stock issuable pursuant to the any Reality Wireless
Stock Plan, and pursuant to this Agreement, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character to which
Reality Wireless is a party or by which Reality Wireless is bound relating to
the issued or unissued capital stock of Reality Wireless or any Reality Wireless
Subsidiary or obligating Reality Wireless or any Reality Wireless Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in,
Reality Wireless or any Reality Wireless Subsidiary. All shares of Reality
Wireless Common Stock subject to issuance as aforesaid, upon issuance prior to
the Effective Time on the terms and conditions specified in the instruments
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable. There are no outstanding contractual obligations
of Reality Wireless or any Reality Wireless Subsidiary to repurchase, redeem or
otherwise acquire any shares of Reality Wireless Common Stock or any capital
stock of any Reality Wireless Subsidiary. Each outstanding share of capital
stock of each Reality Wireless Subsidiary is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by Reality Wireless or
another Reality Wireless Subsidiary is free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on Reality Wireless's or such other Reality Wireless Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever. There
are no material outstanding contractual obligations of Reality Wireless or any
Reality Wireless Subsidiary to provide funds to, or make any material investment
(in the form of a loan, capital contribution or otherwise) in, any Reality
Wireless Subsidiary or any other person.
SECTION 5.04 Authority Relative to this Agreement
Reality Wireless has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Reality Wireless and the consummation by Reality Wireless of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action, and no other corporate proceedings on the part
of Reality Wireless are necessary to authorize this Agreement or to consummate
such transactions (other than the approval of this Agreement and the Merger by
the holders of a majority of the outstanding shares of Reality Wireless Common
Stock). This Agreement has been duly executed and delivered by each of Reality
Wireless and, assuming the due authorization, execution and delivery by Genesis,
25
constitutes a legal, valid and binding obligation of each of Reality Wireless,
enforceable against Reality Wireless in accordance with its terms.
SECTION 5.05 No Conflict; Required Filings and Consents
(a) The execution and delivery of this Agreement by Reality Wireless
and does not, and the performance by Reality Wireless of its obligations
hereunder and the consummation of the Merger will not, (i) conflict with or
violate any provision of the articles of incorporation or bylaws of Reality
Wireless or any equivalent organizational documents of any Reality Wireless
Subsidiary, (ii) assuming that all consents, approvals, authorizations and
permits described in Section 5.05(b) have been obtained and all filings and
notifications described in Section 5.05(b) have been made, conflict with or
violate any Law applicable to Reality Wireless or any other Reality Wireless
Subsidiary or by which any property or asset of Reality Wireless or any Reality
Wireless Subsidiary is bound or affected or (iii) unless as otherwise set forth
in the Reality Wireless Disclosure Schedule, result in any material breach of or
constitute a material default (or an event which with the giving of notice or
lapse of time or both could reasonably be expected to become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
material property or asset of Reality Wireless or any Reality Wireless
Subsidiary pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation.
(b) Except as may arise solely from the nature of Genesis's
business, Reality Wireless's execution and delivery of this Agreement does not,
and Reality Wireless's performance of its obligations hereunder and the
consummation of the Merger will not require any consent, approval, authorization
or permission of, or notification by Reality Wireless to, any Governmental
Entity, except pursuant to applicable requirements of the Exchange Act, the
Securities Act, Blue Sky Laws, the rules and regulations of the OTCBB and the
filing and recordation of the Certificate of Merger as required by the NRS and
the DE Code.
SECTION 5.06 Permits; Compliance with Laws
Reality Wireless is in possession of all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity materially necessary for Reality Wireless to own, lease and
operate its properties or to offer or perform its services or to develop,
produce, store, distribute and market its products or otherwise to carry on its
business as it is now being conducted (collectively, the "Reality Wireless"),
and, as of the Execution Date, none of the Reality Wireless Permits has been
suspended or cancelled nor is any such suspension or cancellation pending or, to
the knowledge of Reality Wireless, threatened. Neither Reality Wireless is in
conflict with, or in default or violation of, (i) any Law applicable to Reality
Wireless or by which any property or asset of Reality Wireless is bound or
affected or (ii) any material Reality Wireless Permits. Section 4.06 of the
26
Reality Wireless Disclosure Schedule sets forth, as of the Execution Date, all
actions, proceedings, investigations or surveys pending or, to the knowledge of
Reality Wireless, threatened against Reality Wireless that could reasonably be
expected to result in the suspension or cancellation of any other material
Reality Wireless Permit. Reality Wireless has not received from any Governmental
Entity any written notification with respect to possible material conflicts,
defaults or violations of Laws.
SECTION 5.07 SEC Filings; Financial Statements
(a) During the past two (2) years, Reality Wireless has timely filed
all forms, reports, statements and documents that it is required to file (A)
with the SEC and the OTCBB (collectively, together with any such forms, reports,
statements and documents Reality Wireless may file subsequent to the date hereof
until the Closing, the "Reality Wireless Reports") and (B) with any other
Governmental Entities. Each Reality Wireless Report (i) was prepared in
accordance with the requirements of the Securities Act, the Exchange Act or the
OTCBB, as the case may be, substantially in all respects and (ii) did not at the
time it was filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading. Each form, report, statement and document
referred to in clause (B) of this paragraph was prepared in all material
respects in accordance with the requirements of applicable Law. No Reality
Wireless Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with the
SEC, the OTCBB, any other stock exchange or any other comparable Governmental
Entity.
(b) Except as is provided in the Reality Wireless Reports, each of
the consolidated financial statements (including, in each case, any notes
thereto) contained in the Reality Wireless Reports was prepared in accordance
with U.S. GAAP applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each presented fairly, in
all material respects, the consolidated financial position of Reality Wireless
and the consolidated Reality Wireless Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, except as otherwise
noted therein (subject, in the case of unaudited statements, to normal and
recurring immaterial year-end adjustments).
(c) Except as and to the extent set forth or reserved against on the
consolidated balance sheet of Reality Wireless and the Reality Wireless
Subsidiaries as reported in the Reality Wireless Reports, including the notes
thereto, none of Reality Wireless or any Reality Wireless Subsidiary has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that are would be to be reflected on a balance sheet or in notes
thereto prepared in accordance with U.S. GAAP, except for liabilities or
obligations incurred in the ordinary course of business consistent with past
practice since December 31, 2003 that have not had and could not reasonably be
expected to have, individually or in the aggregate, an Reality Wireless Material
Adverse Effect.
27
SECTION 5.08 Absence of Certain Changes or Events
Since September 15, 2004, Reality Wireless has conducted their
businesses in all material respects only in the ordinary course consistent with
past practice and, since such date, there has not been (i) any material changes
in or effect on the business, assets, liabilities, financial condition or
results of operations of Reality Wireless or the Reality Wireless Subsidiaries,
(ii) any event (other than events within the scope of Section 5.10) that could
reasonably be expected to prevent or materially delay the performance of Reality
Wireless' obligations pursuant to this Agreement and the consummation of the
Merger by Reality Wireless, (iii) any material change by Reality Wireless in its
accounting methods, principles or practices, (iv) any issuance or sale of any
stock, notes, bonds or other securities other than pursuant to the exercise of
outstanding securities, or entering into any agreement with respect thereto, or
the issuances of options under any Reality Wireless stock plan, (v) any
amendment to Reality Wireless's certificate of incorporation or bylaws, (vi)
other than in the ordinary course of business consistent with past practice, any
(1) purchase, sale, assignment or transfer of any material assets, (2) mortgage,
pledge or existence of any lien, encumbrance or charge on any material assets or
properties, tangible or intangible except for liens for Taxes not yet
delinquent, or (3) waiver of any rights of material value or cancellation or any
material debts or claims, (vii) any incurrence of any material liability
(absolute or contingent), except for current liabilities and obligations
incurred in the ordinary course of business consistent with past practice,
(viii) any incurrence of any damage, destruction or similar loss, whether or not
covered by insurance, materially affecting the business or properties of Reality
Wireless, or (ix) any entering into any transaction of a material nature other
than in the ordinary course of business, consistent with past practice.
SECTION 5.09 Employee Benefit Plans; Labor Matters
(a) Reality Wireless Disclosure Schedule lists each employee benefit
fund, plan, program, arrangement and contract (including, without limitation,
any "pension" plan, fund or program, as defined in Section 3(2) of ERISA, and
any "employee benefit plan", as defined in Section 3(3) of ERISA and any plan,
program, arrangement or contract providing for severance; medical, dental or
vision benefits; life insurance or death benefits; disability benefits, sick pay
or other wage replacement; vacation, holiday or sabbatical; pension or
profit-sharing benefits; stock options or other equity compensation; bonus or
incentive pay or other material fringe benefits) ("Benefit Plans"), maintained,
sponsored or contributed to or required to be contributed to by Reality Wireless
(the " Reality Wireless Benefit Plans"). With respect to each Reality Wireless
Benefit Plan, Reality Wireless has delivered or made available to Genesis a
true, complete and correct copy of (i) such Reality Wireless Benefit Plan (of,
if not written, a written summary of its material terms) and the most recent
summary plan description, if any, related to such Reality Wireless Benefit Plan,
(ii) each trust agreement or other funding arrangement relating to such Reality
Wireless Benefit Plan, (iii) the most recent annual report filed with the IRS
with respect to such Reality Wireless Benefit Plan, (iv) the most recent
actuarial report or financial statement relating to such Reality Wireless
Benefit Plan and (v) the most recent determination letter, if any, issued by the
28
IRS with respect to such Reality Wireless Benefit Plan and any pending request
for such a determination letter. Neither Reality Wireless nor, to the knowledge
of Reality Wireless, any other person or entity, has any express commitment,
whether legally enforceable or not, to modify, change or terminate any Reality
Wireless Benefit Plan, other than with respect to a modification, change or
termination required by ERISA or the Code.
(b) Reality Wireless has made available to Genesis a true, complete
and correct copies of (i) all employment agreements with officers and all
consulting agreements of Reality Wireless and each Reality Wireless Subsidiary,
(ii) all severance plans, agreements, programs and policies of Reality Wireless
and each Reality Wireless Subsidiary with or relating to their respective
employees, directors or consultants, and (iii) all plans, programs, agreements
and other arrangements of Reality Wireless and each Reality Wireless Subsidiary
with or relating to their respective employees, directors or consultants which
contain "change of control" provisions. No payment or benefit which may be
required to be made by Reality Wireless or which otherwise may be required to be
made under the terms of any Reality Wireless Benefit Plan or other arrangement
will constitute a parachute payment under Code Section 280(G)(1), and the
consummation of the transactions contemplated by this Agreement will not, alone
or in conjunction with any other possible event (including termination of
employment), (i) entitle any current or former employee or other service
provider of Reality Wireless to severance benefits or any other payment,
compensation or benefit (including forgiveness of indebtedness), except as
expressly provided by this Agreement, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation or benefit due any such employee
or service provider.
(c) Neither Reality Wireless is a party to, or has any obligations
under or with respect to, any collective bargaining or other labor union
contract applicable to persons employed by Reality Wireless and no collective
bargaining agreement is being negotiated by Reality Wireless or any person or
entity that may obligate Reality Wireless thereunder. As of the Execution Date,
there is no labor dispute, strike, union organizing activity or work stoppage
against Reality Wireless pending or, to the knowledge of Reality Wireless,
threatened which may substantially interfere with the respective business
activities of Reality Wireless. As of the Execution Date, to the knowledge of
Reality Wireless, none of Reality Wireless, any Reality Wireless Subsidiary, or
any of their respective representatives or employees has committed any unfair
labor practice in connection with the operation of the respective businesses of
Reality Wireless, and there is no charge or complaint filed against Reality
Wireless by or with the National Labor Relations Board or any comparable
Governmental Entity pending or threatened in writing.
SECTION 5.10 Certain Tax Matters
To Reality Wireless' knowledge, neither Reality Wireless, nor to
Reality Wireless' knowledge, any of its affiliates, has taken or agreed to take
any action (other than actions contemplated by this Agreement) that could be
expected to prevent the Merger from constituting a "reorganization" under
Section 368 of the Code. Reality Wireless is not aware of any agreement or plan
29
to which Reality Wireless or any of its affiliates is a party or other
circumstances relating to Reality Wireless or any of its affiliates that could
reasonably be expected to prevent the Merger from qualifying as a reorganization
under Section 368 of the Code.
SECTION 5.11 Contracts
Section 5.11 of the Reality Wireless Disclosure Schedule sets forth
a list of each contract or agreement that is material to the business, assets,
liabilities, financial condition or results of operations of Reality Wireless
and Reality Wireless Subsidiaries, taken as a whole (each, a "Material
Contract"). Neither Reality Wireless nor any Reality Wireless Subsidiary is in
material violation of or in default under (nor does there exist any condition
which with the passage of time or the giving of notice could reasonably be
expected to cause such a material violation of or material default under) any
Material Contract. Each Material Contract is in full force and effect and is a
legal, valid and binding obligation of Reality Wireless or a Reality Wireless
Subsidiary and, to the knowledge of Reality Wireless, each of the other parties
thereto, enforceable in accordance with its terms.
SECTION 5.12 Litigation
With the exception of those items listed in Section 5.12 of the
Reality Wireless Disclosure Schedule, there is no material suit, claim, action,
proceeding or investigation pending or, to the knowledge of Reality Wireless,
threatened against Reality Wireless or any Reality Wireless Subsidiary, and, to
the knowledge of Reality Wireless, there are no existing facts or circumstances
that could reasonably be expected to result in such a suit, claim, action,
proceeding or investigation. Reality Wireless is not aware of any facts or
circumstances which could reasonably be expected to result in the denial of
insurance coverage under policies issued to Reality Wireless and Reality
Wireless Subsidiaries in respect of such material suits, claims, actions,
proceedings and investigations. Neither Reality Wireless nor any Reality
Wireless Subsidiary is subject to any material outstanding order, writ,
injunction or decree or any material outstanding order, writ, injunction or
decree.
SECTION 5.13 Purposely Left Blank
SECTION 5.14 Intellectual Property
(a) Section 5.14(a) of the Reality Wireless Disclosure Schedule
contains a true and complete list of Reality Wireless's patents, patent
applications, registered trademarks, trademark applications, trade names,
registered service marks, service mark applications, Internet domain names,
Internet domain name applications, copyright registrations and applications and
other filings and formal actions made or taken pursuant to Federal, state, local
and foreign laws by Reality Wireless to protect its interests in Reality
Wireless Intellectual Property, and includes details of all due dates for
further filings, maintenance, payments or other actions falling due in respect
30
of Reality Wireless Intellectual Property within twelve (12) months of the
Effective Time. All of Reality Wireless's patents, patent applications,
registered trademarks, and trademark applications, and registered copyrights
remain in good standing with all fees and filings due as of the date hereof.
Reality Wireless has previously provided Reality Wireless with a list of all
other trademarks and service marks which are material to Reality Wireless's
business.
(b) Reality Wireless has made all registrations that Reality
Wireless (including any of its subsidiaries) is required to have made in
relation to the processing of data, and is in good standing with respect to such
registrations as to all fees due as of the Effective Time duly made.
(c) Reality Wireless Intellectual Property contains only those items
and rights which are: (i) owned by Reality Wireless; (ii) in the public domain;
or (iii) rightfully used by Reality Wireless pursuant to a valid and enforceable
license or other agreement (the "Reality Wireless Licensed Intellectual
Property").
(d) The reproduction, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any Reality Wireless
Intellectual Property, product, work, technology or process as now used or
offered or proposed for use, licensing or sale by Reality Wireless does not
infringe on any patent, design right, trademark, trade name, service mark, trade
dress, Internet domain name, copyright, database, statistical model, technology,
invention, supplier list, trade secret, know-how, computer software program or
application of any person, anywhere in the World. Reality Wireless has not
received notice of any claims (i) challenging the validity, effectiveness or,
other than with respect to Reality Wireless Licensed Intellectual Property,
ownership by Reality Wireless of any Reality Wireless Intellectual Property, or
(ii) to the effect that the use, distribution, licensing, sublicensing, sale or
any other exercise of rights in any product, work, technology or process as now
used or offered or proposed for use, licensing, sublicensing or sale by Reality
Wireless or its agents or use by its customers infringes or will infringe on any
intellectual property or other proprietary or personal right of any person. To
the knowledge of Reality Wireless, no such claims have been threatened by any
person, nor are there any valid grounds for any bona fide claim of any such
kind. All of the rights within Reality Wireless Intellectual Property are
enforceable and subsisting. To the knowledge of Reality Wireless, there is no
unauthorized use, infringement or misappropriation of any Reality Wireless
Intellectual Property by any third party, employee or former employee.
(e) All personnel, including employees, agents, consultants and
contractors, who have contributed to, or participated in, the conception and
development of Reality Wireless Intellectual Property on behalf of Reality
Wireless have executed nondisclosure agreements and either (i) have been a party
to an enforceable "work-for-hire" arrangement or agreements with Reality
Wireless in accordance with applicable national and state law which accordes
Reality Wireless full, effective, exclusive and original ownership of all
tangible and intangible property thereby arising, or (ii) have executed
appropriate instruments of assignment in favor of Reality Wireless as assignee
31
that have conveyed to Reality Wireless effective and exclusive ownership of all
tangible and intangible property thereby arising.
(f) Reality Wireless is not, nor as a result of the execution or
delivery of this Agreement, nor performance of Reality Wireless's obligations
hereunder, will Reality Wireless be in violation of any material license,
sublicense, agreement or instrument to which Reality Wireless is a party or
otherwise bound, nor will execution or delivery of this Agreement, or
performance of Reality Wireless's obligations hereunder, cause the diminution,
termination or forfeiture of any Reality Wireless Intellectual Property.
(g) Reality Wireless has taken all reasonable steps, in accordance
with normal industry practice, to preserve and maintain complete notes and
records relating to Reality Wireless Intellectual Property to cause the same to
be readily identified and available.
(h) Reality Wireless Intellectual Property is free and clear of any
and all mortgages, pledges, liens, security interests, conditional sale
agreements, encumbrances or charges of any kind.
(i) Except as set forth in the Reality Wireless Disclosure Schedule,
Reality Wireless (including its subsidiaries) does not owe any royalties or
other payments to third parties in respect of Reality Wireless Intellectual
Property. All royalties or other payments set forth in the Reality Wireless
Disclosure Schedule that have accrued prior to the Effective Time have been
paid.
SECTION 5.15 Taxes
(a) Reality Wireless and each of the Reality Wireless Subsidiaries,
and any consolidated, combined, unitary or aggregate group for Tax purposes of
which Reality Wireless or any Reality Wireless Subsidiary is or has been a
member, have properly completed and timely filed all Tax Returns required to be
filed by them and have paid all Taxes shown thereon to be due. Reality Wireless
has provided adequate accruals in accordance with generally accepted accounting
principles in its latest financial statements included in the Reality Wireless
Reports for any Taxes that have not been paid, whether or not shown as being due
on any Tax Returns. Reality Wireless and the Reality Wireless Subsidiaries have
no material liability for unpaid Taxes accruing after the date of Reality
Wireless's latest financial statements included in the Reality Wireless Reports.
(b) There is no material claim for Taxes that is a lien against the
property of Reality Wireless or any Reality Wireless Subsidiary or is being
asserted against Reality Wireless or any Reality Wireless Subsidiary other than
liens for Taxes not yet due and payable.
SECTION 5.16 Insurance
Reality Wireless and each Reality Wireless Subsidiary is presently
insured, and during each of the past three calendar years has been insured,
32
against such risks, as to Reality Wireless's knowledge, that companies engaged
in a similar business would, in accordance with good business practice,
customarily be insured. The policies of fire, theft, liability and other
insurance maintained with respect to the assets or businesses of Reality
Wireless and Reality Wireless Subsidiaries provide, to Reality Wireless's
knowledge, adequate coverage against loss. Reality Wireless has heretofore made
available to Reality Wireless a complete and correct list as of the date hereof
of all insurance policies maintained by Reality Wireless or the Reality Wireless
Subsidiaries, and has made available to Reality Wireless complete and correct
copies of all such policies, together with all riders and amendments thereto.
All such policies are in full force and effect and all premiums due thereon have
been paid to the date hereof. Reality Wireless and the Reality Wireless
Subsidiaries have complied in all material respects with the terms of such
policies.
SECTION 5.17 Properties
Reality Wireless and the Reality Wireless Subsidiaries have good
title, free and clear of all material mortgages, liens, pledges, charges or
other encumbrances to all their material tangible properties and assets, real,
personal or mixed, reflected in the Reality Wireless Reports, other than (i) any
properties or assets that have been sold or otherwise disposed of in the
ordinary course of business since the date of such financial statements, (ii)
liens disclosed in the notes to such financial statements and (iii) liens
arising in the ordinary course of business after the date of such financial
statements. All buildings, and all fixtures, equipment and other property and
assets that are material to its business on a consolidated basis, held under
leases or sub-leases by Reality Wireless or any Reality Wireless Subsidiary are
held under valid instruments enforceable in accordance with their respective
terms, subject to applicable laws of bankruptcy, insolvency or similar laws
relating to creditors' rights generally and to general principles of equity
(whether applied in a proceeding in law or equity). Substantially all of Reality
Wireless's and the Reality Wireless Subsidiaries' equipment in regular use has
been reasonably maintained and is in serviceable condition, reasonable wear and
tear excepted.
SECTION 5.18 Business Activity Restriction
There is no non-competition or other similar agreement, commitment,
judgment, injunction, order or decree to which Reality Wireless is a party or
subject to that has or could reasonably be expected to have the effect of
prohibiting or impairing the conduct of business by Reality Wireless. Reality
Wireless has not entered into any agreement under which Reality Wireless is
restricted in any material respect from selling, licensing or otherwise
distributing any of its technology or products to, or providing services to,
customers or potential customers or any class of customers, in any geographic
area, during any period of time or in any segment of the market or line of
business.
SECTION 5.19 Certain Business Practices
Neither Reality Wireless nor any Reality Wireless Subsidiary nor any
directors, officers, agents or employees of Reality Wireless or any Reality
Wireless Subsidiary (in their capacities as such) has (i) used any funds of the
33
Reality Wireless for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity or (ii) made any unlawful
payment by the Reality Wireless to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended.
ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business by Genesis Pending the Closing
Genesis agrees that, between the Execution Date and the Closing,
unless Reality Wireless otherwise agrees in writing, and except as a result of
entering into this Agreement (1) the respective businesses of Genesis shall be
conducted only in, and Genesis shall not take any action except in, the ordinary
course of business consistent with past practice and (2) Genesis shall use all
reasonable efforts to keep available the services of such of the current
officers, significant employees and consultants of Genesis and to preserve the
current relationships of Genesis with such of the corporate partners, customers,
suppliers and other persons with which Genesis has significant business
relations in order to preserve substantially intact its business organization.
Additionally, by way of amplification and not limitation, Genesis shall not,
between the Execution Date and the Closing, directly or indirectly, do, or agree
to do, any of the following without the prior written consent of Reality
Wireless and except as a result of entering into this Agreement:
(a) amend or otherwise change its certificate of incorporation or
bylaws or equivalent organizational documents;
(b) with the exception of issuances of Genesis Common Stock as set
forth in Section 6.01(b) of the Genesis Disclosure Schedule, issue, sell,
pledge, dispose of, grant, transfer, lease, license, guarantee or encumber, or
authorize the issuance, sale, pledge, disposition, grant, transfer, lease,
license or encumbrance of any shares of capital stock of Genesis of any class,
or securities convertible into or exchangeable or exercisable for any shares of
such capital stock, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of Genesis, other than
the issuance of shares of Genesis Common Stock pursuant to the exercise of stock
options or warrants theretofore outstanding as of the Execution Date;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or person or any division
thereof; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person (other than Genesis and
34
Genesis Subsidiaries) for borrowed money or make any loans or advances, other
than routine employee loans to employees other than Genesis officers (not to
exceed $1,000 to any individual), material to the business, assets, liabilities,
financial condition or results of operations of Genesis, taken as a whole, other
than in the ordinary course of business consistent with past practice; (iii)
terminate, cancel or request any material change in, or agree to any material
change in, any Genesis Material Contract or other License Agreement; (iv) make
or authorize any capital expenditure, other than capital expenditures in the
ordinary course of business consistent with past practice and which expenditures
shall not exceed, in the aggregate, $50,000 for Genesis taken as a whole; or (v)
enter into or amend any contract, agreement, commitment or arrangement that, if
fully performed, would not be permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except that any Genesis Subsidiary may pay dividends or
make other distributions to Genesis or any other Genesis Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(f) amend or change the period (or permit any acceleration,
amendment or change unless required pursuant to the terms of existing agreements
of Genesis previously provided to Reality Wireless) of exercisability of options
granted under the Genesis Stock Plans or authorize cash payments in exchange for
any Genesis Stock Options and Warrants granted under any of such plans;
(g) reserved;
(h) other than in the ordinary course of business consistent with
past practices or pursuant to existing agreements of Genesis previously provided
to Reality Wireless, increase the compensation payable or to become payable to
its directors, officers, consultants or employees, grant any rights to severance
or termination pay to, or enter into any employment or severance agreement which
provides benefits upon a change in control of Genesis that would be triggered by
the Merger with, any director, officer, consultant or other employee of Genesis
who is not currently entitled to such benefits from the Merger, establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer, consultant or employee of Genesis, except to the extent required by
applicable Law or the terms of a collective bargaining agreement, or enter into
or amend any contract, agreement, commitment or arrangement between Genesis and
any of Genesis's directors, officers, consultants or employees;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise);
35
(j) make any change with respect to Genesis's accounting policies,
principles, methods or procedures, including, without limitation, revenue
recognition policies, other than as required by U.S. GAAP;
(k) make any material Tax election or settle or compromise any
material Tax liability; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any action
which would make any of the representations or warranties of Genesis contained
in this Agreement untrue or incorrect in any material respect or result in any
of the conditions to the Merger set forth herein not being satisfied.
SECTION 6.02 Notices of Certain Events
Each of Reality Wireless and Genesis shall give prompt notice to the
other of (i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the Merger; (ii)
any notice or other communication from any Governmental Entity in connection
with the Merger; (iii) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge, threatened against, relating to or involving or
otherwise affecting Reality Wireless or the Reality Wireless Subsidiaries or
Genesis, respectively, or that relate to the consummation of the Merger; (iv)
the occurrence of a default or event that, with the giving of notice or lapse of
time or both, will become a default under any Reality Wireless Material Contract
or Genesis Material Contract, respectively; and (v) any change that could
reasonably be expected to have an Reality Wireless Material Adverse Effect or a
Genesis Material Adverse Effect, respectively, or to delay or impede the ability
of either Reality Wireless or Genesis, respectively, to perform their respective
obligations pursuant to this Agreement and to effect the consummation of the
Merger.
SECTION 6.03 Access to Information; Confidentiality
(a) Except as required pursuant to any confidentiality agreement or
similar agreement or arrangement to which Reality Wireless or Genesis is a party
or pursuant to applicable Law or the regulations or requirements of any stock
exchange or other regulatory organization with whose rules a party hereto is
required to comply, from the Execution Date to the Effective Time, Reality
Wireless and Genesis shall (and shall cause the Reality Wireless Subsidiaries
and Genesis Subsidiaries, respectively, to) (i) provide to the other (and its
officers, directors, employees, accountants, consultants, legal counsel, agents
and other representatives (collectively, "Representatives")) access at
reasonable times upon prior notice to its and its subsidiaries' officers,
employees, agents, properties, offices and other facilities and to the books and
records thereof, and (ii) furnish promptly such information concerning its and
its subsidiaries' business, properties, contracts, assets, liabilities and
personnel as the other party or its Representatives may reasonably request. All
such investigations and access shall be conducted in a manner as not to
interfere unreasonably with the business operations of the Genesis. No
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investigation conducted pursuant to this Section 6.03 shall affect, substitute
for, or be deemed to modify any representation or warranty made in this
Agreement.
(b) Confidential Information.
(i) The parties shall not, and each agree to cause its
Affiliates (as defined below) not to use the Confidential Information
gained for its benefit, nor to disclose, communicate or divulge, or use
for the direct or indirect benefit of any other person, firm,
association, partnership, corporation or other entity, such
Confidential Information. All Confidential Information shall be the
sole property of the party from which it arises (the "Disclosing
Party"), and the party receiving such information (a "Receiving Party")
hereby assigns to the Disclosing Party any rights the Receiving Party
Company may acquire (by whatever means) in such Confidential
Information. The parties agree that a Receiving Party shall not use
Confidential Information in any manner competitive with the business of
the Disclosing Party. The parties agree that neither a Disclosing Party
nor its Affiliates shall have any liability to a Receiving Party or its
Affiliates resulting from the use of Confidential Information.
(ii) Each party agrees that it shall treat the other party's
Confidential Information with the same degree of care and security as
it treats its own Confidential Information, but in no event shall such
care and security be less than a reasonable standard.
(iii) Each party also agrees to limit disclosure of and access
to the other party's Confidential Information to only those employees
and representatives who are required to have access to such
Confidential Information for the purpose of evaluating and consummating
the proposed Closing, and agrees that prior to disclosure or access to
the other Party's Confidential Information that representatives or
agents of a Receiving Party shall be informed of the confidential
nature of the other Party's Confidential Information.
(c) Exceptions.
(i) Notwithstanding the prohibitions in Section 1 above, each
Party's obligation to maintain the Non-Disclosure of the disclosing
party's Confidential Information shall not include the following
exceptions: (i) information as was known by the receiving party prior
to disclosure by the disclosing party as evidenced by the written
records of the receiving party prepared in the ordinary course of
business prior to the date of disclosure; (ii) information disclosed to
the receiving party by a third party, unless the third party was under
a duty not to disclose or use the information or unless the third party
was not in rightful possession of such information; or (iii)
information generally known in the pertinent trade.
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(ii) In the event that a Receiving Party is requested or
required (by oral questions, interrogatories, requests for information
or documents in legal proceedings, subpoena, civil injunctive demand,
or other similar process) to disclose any of the Disclosing party's
Confidential Information, the Receiving Party shall provide the
Disclosing Party with prompt written notice of any such request or
requirement so that the Disclosing Party may seek a protective order or
appropriate remedy and/or waive compliance with the provisions of this
Agreement. If, in the absence of a protective order or other remedy or
the recipient of a waiver by the Disclosing Party, the Receiving Party
shall be legally compelled to disclose the Disclosing Party's
Confidential Information to any tribunal, the Receiving Party may,
without liability hereunder, disclose to such tribunal, that portion of
the Disclosing Party's Confidential Information which is legally
required to be disclosed.
(d) Survival. The parties acknowledge that the execution of this
Agreement does not guarantee that the parties will consummate the Closing. Each
party agrees to act in good faith regarding the due diligence activities and
negotiations in connection with the Closing. Each party agrees to be bound by
the terms of this Agreement regardless of whether the parties consummate the
Closing. Upon a party's written request, each party agrees to promptly return
copies of any and all of the other party's Confidential Information, and all
analysis, compilations, studies, notes or other documents (including electronic
media) to the extent containing such Confidential Information, to the other
party.
SECTION 6.04 No Solicitation of Transactions
Until this Agreement has been terminated as provided herein, Genesis
shall not, directly or indirectly, and shall cause its Representatives not to,
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing nonpublic information), any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its
stockholders) that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person in furtherance of such inquiries or to obtain a
Competing Transaction, or agree to or endorse any Competing Transaction, or
authorize or permit any of Genesis's Representatives or subsidiaries, or any
Representative retained by Genesis's subsidiaries, to take any such action. Any
violation of the restrictions set forth in this Section 6.04 by any
Representative of Genesis, whether or not such Person is purporting to act on
behalf of Genesis or otherwise, shall be deemed to be a breach of this Section
6.04 by Genesis. Genesis shall notify Reality Wireless promptly if any proposal
or offer, or any inquiry or contact with any person with respect thereto,
regarding a Competing Transaction is made, such notice to include the identity
of the person making such proposal, offer, inquiry or contact, and the terms of
such Competing Transaction, and shall keep Reality Wireless apprised, on a
current basis, of the status of such Competing Transaction and of any
modifications to the terms thereof. Genesis immediately shall cease and cause to
be terminated all existing discussions or negotiations with any parties
38
conducted heretofore with respect to a Competing Transaction. Genesis shall not
release any third party from, or waive any provision of, any confidentiality or
standstill agreement to which it is a party.
SECTION 6.05 Tax-Free Transaction
From and after the Execution Date, each party hereto shall use all
reasonable efforts to cause the Merger to qualify, and shall not knowingly take
any actions or cause any actions to be taken which could reasonably be expected
to prevent the Merger from qualifying as a "reorganization" under Section 368(a)
of the Code.
SECTION 6.06 Control of Operations
Nothing contained in this Agreement shall give Reality Wireless,
directly or indirectly, the right to control or direct the operations of Genesis
prior to the Effective Time.
SECTION 6.07 Further Action; Consents; Filings
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the Merger, (ii) obtain from Governmental Entities any
consents, licenses, permits, waivers, approvals, authorizations or orders
required to be obtained or made by Reality Wireless or Genesis or any of their
respective subsidiaries in connection with the authorization, execution and
delivery of this Agreement and the consummation of the Merger and (iii) make all
necessary filings, and thereafter make any other required or appropriate
submissions, with respect to this Agreement and the Merger required under (A)
the rules and regulations of the OTCBB, (B) the Securities Act, the Exchange Act
and any other applicable Federal or state securities Laws, and (C) any other
applicable Law. The parties hereto shall cooperate and consult with each other
in connection with the making of all such filings, and none of the parties shall
file any such document if any of the other parties shall have reasonably
objected to the filing of such document. No party shall consent to any voluntary
extension of any statutory deadline or waiting period or to any voluntary delay
of the consummation of the Merger at the behest of any Governmental Entity
without the consent and agreement of the other parties hereto, which consent
shall not be unreasonably withheld or delayed.
(b) Each of Genesis and Reality Wireless shall provide (or will
cause their respective subsidiaries to provide) any required notices to third
persons and undertake, and cause their respective subsidiaries to undertake,
reasonable efforts to obtain any consents from third persons required and/or
proper (as determined in good faith by Reality Wireless with respect to such
notices or consents to be delivered or obtained by Genesis) to consummate the
transactions contemplated by this Agreement.
39
SECTION 6.08 Additional Reports
Upon written request, Genesis and Reality Wireless shall each
furnish to the other copies of any reports of the type referred to in Sections
4.07 and 5.06 which it files with the SEC on or after the date hereof, and
Genesis and Reality Wireless, as the case may be, hereby covenant and warrant
that as of the respective dates thereof, such reports will 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. Any unaudited
consolidated interim financial statements included in such reports (including
any related notes and schedules) will fairly present in all material respects
the financial position of Genesis and its consolidated subsidiaries or Reality
Wireless and its consolidated subsidiaries, as the case may be, as of the dates
thereof and the results of operations and changes in financial position or other
information including therein for the periods or as of the date then ended
(subject, where appropriate, to normal year-end adjustments), in each case in
accordance with past practice and U.S. GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto).
SECTION 6.09 Purposely Left Blank
SECTION 6.10 Conduct of Business by Reality Wireless.
Reality Wireless agrees that, between the Execution Date and the
Effective Time, unless Genesis shall otherwise agree in writing, and except as a
result of entering into this Agreement (1) the respective businesses of Reality
Wireless and the Reality Wireless Subsidiaries shall be conducted only in, and
Reality Wireless and the Reality Wireless Subsidiaries shall not take any action
except in, the ordinary course of business consistent with past practice and (2)
Reality Wireless shall use all reasonable efforts to keep available the current
officers, significant employees and consultants of Reality Wireless and the
Reality Wireless Subsidiaries to ensure completion of any and all matters and
the execution of any and all documents necessary to complete the Merger. By way
of amplification and not limitation, neither Reality Wireless nor any Reality
Wireless Subsidiary shall, between the Execution Date and the Effective Time,
directly or indirectly, do, or agree to do, any of the following without the
prior written consent of Genesis that shall be deemed to include Genesis's
assent to Reality Wireless Disclosure Schedule and except as a result of
entering into this Agreement:
(a) amend or otherwise change its certificate of incorporation or
bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale, pledge,
disposition, grant, transfer, lease, license or encumbrance of, (i) any shares
of capital stock of Reality Wireless or any Reality Wireless Subsidiary of any
class, or securities convertible into or exchangeable or exercisable for any
shares of such capital stock, or any options, warrants or other rights of any
kind to acquire any shares of such capital stock, or any other ownership
40
interest (including, without limitation, any phantom interest), of Reality
Wireless or any Reality Wireless Subsidiary, or (ii) any property or assets of
Reality Wireless or any Reality Wireless Subsidiary except entering into
alliance agreements or providing products and services in the ordinary course of
business consistent with past practice;
(c) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization or person or any division
thereof; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person (other than Reality
Wireless and Reality Wireless Subsidiaries) for borrowed money or make any loans
or advances, other than routine employee loans to employees other than Reality
Wireless officers (not to exceed $1,000 to any individual), material to the
business, assets, liabilities, financial condition or results of operations of
Reality Wireless and the Reality Wireless Subsidiaries, taken as a whole; (iii)
make or authorize any capital expenditure; or (iv) enter into or amend any
contract, agreement, commitment or arrangement that, if fully performed, would
not be permitted under this Section 6.01(c);
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock, except that any Reality Wireless Subsidiary may pay
dividends or make other distributions to Reality Wireless or any other Reality
Wireless Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(f) amend or change the period (or permit any acceleration,
amendment or change unless required pursuant to the terms of existing agreements
of Reality Wireless previously provided to Genesis) of exercisability of options
granted under the Reality Wireless Stock Plans or authorize cash payments in
exchange for any Reality Wireless Stock Options granted under any of such plans;
(g) amend the terms of, repurchase, redeem or otherwise acquire, or
permit any Reality Wireless Subsidiary to repurchase, redeem or otherwise
acquire, any of its securities or any securities of any Reality Wireless
Subsidiary or propose to do any of the foregoing;
(h) increase the compensation payable or to become payable to its
directors, officers, consultants or employees, grant any rights to severance or
termination pay to, or enter into any employment or severance agreement which
provides benefits upon a change in control of Reality Wireless that would be
triggered by the Merger with, any director, officer, consultant or other
employee of Reality Wireless or any Reality Wireless Subsidiary who is not
currently entitled to such benefits, establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer, consultant or employee
41
of Reality Wireless or any Reality Wireless Subsidiary, except to the extent
required by applicable Law or the terms of a collective bargaining agreement, or
enter into or amend any contract, agreement, commitment or arrangement between
Reality Wireless or any Reality Wireless Subsidiary and any of Reality
Wireless's directors, officers, consultants or employees;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise);
(j) make any change with respect to Reality Wireless's accounting
policies, principles, methods or procedures, including, without limitation,
revenue recognition policies, other than as required by U.S. GAAP;
(k) make any material Tax election or settle or compromise any
material Tax liability; or
(l) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take any action
which would make any of the representations or warranties of Reality Wireless
contained in this Agreement untrue or incorrect in any material respect or
result in any of the conditions to the Merger set forth herein not being
satisfied.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Board and Stockholders' Meetings
(a) Genesis shall call and hold the Genesis Board and Stockholders'
Meeting as promptly as practicable after the date hereof for the purpose of
voting upon the approval of this Agreement and the Merger and Genesis shall use
all reasonable efforts to hold the Genesis Board and Stockholders' Meeting on
the same day and as soon as practicable after the Execution Date. Genesis shall
use all reasonable efforts to solicit from its board and stockholders the
approval of this Agreement and the Merger and shall take all other action
necessary or advisable to secure the vote or consent of the board stockholders
required to approve the Merger. Genesis shall take all other action necessary
or, in the opinion of the other parties hereto, advisable to promptly and
expeditiously secure any vote or consent of the board and stockholders required
by applicable Law and Genesis's certificate of incorporation and bylaws to
effect the Merger.
(b) Reality Wireless shall call and hold the Reality Wireless Board and
Stockholders' Meeting as promptly as practicable after the date hereof for the
purpose of voting upon the approval of this Agreement, the Merger, the name
change of Reality Wireless to "Genesis Electronics, Inc.," the issuance of
shares required to consummate the Merger, and for any additional undertaking set
for in the Disclosure Schedule that require(s) authorized corporate action, and
42
Reality Wireless shall use all reasonable efforts to hold any additional Reality
Wireless Board and Stockholders' Meetings necessary after the Execution Date.
Nothing herein shall prevent Reality Wireless or Reality Wireless from
adjourning or postponing the Reality Wireless Stockholders' Meeting if there are
insufficient shares of Reality Wireless Common Stock necessary to conduct
business at their respective meetings of the stockholders. Unless Reality
Wireless's board of directors has withdrawn its recommendation of this Agreement
and the Merger in compliance with Section 6.04, Reality Wireless shall take all
action necessary or advisable to secure the vote or consent of stockholders
required to approve the Merger, any reverse-split of the issued and outstanding
shares of Reality Wireless's common stock (if such reverse-split is indicated as
a condition to the Closing in the Closing Documents to this Agreement), the name
change of Reality Wireless to "Genesis Electronics, Inc." and the issuance of
shares required to consummate the Merger. Reality Wireless shall use all
reasonable efforts to solicit from its stockholders proxies, if necessary, in
favor of the Merger, the reverse-split of the issued and outstanding shares of
Reality Wireless's common stock, the name change of Reality Wireless to "Genesis
Electronics, Inc." and the issuance of shares required to consummate the Merger
and shall take all other action necessary or advisable to secure the vote or
consent of stockholders required by the NRS or applicable stock exchange
requirements to obtain such approval. Reality Wireless shall take all other
action necessary or, in the opinion of the other parties hereto, advisable to
promptly and expeditiously secure any vote or consent of stockholders required
by applicable Law and such party's certificate of incorporation and bylaws to
effect the Merger, the name change of Reality Wireless to "Genesis Electronics,
Inc." and the issuance of shares required to consummate the Merger, and for any
undertaking set for in the Disclosure Schedule that require(s) authorized
corporate action
SECTION 7.02 Certain Settlements
Notwithstanding any provision in this Agreement to the contrary, after
the execution date, (a) Reality Wireless shall be permitted to enter into the
agreements listed in Section 7.02 of the Reality Wireless Disclosure Schedule,
and (b) Genesis shall be permitted to enter into the agreements listed in
Section 7.02 of the Genesis Disclosure Schedule.
SECTION 7.03 Completion of Certain Schedules
(a) Genesis acknowledge that the schedules to this Agreement to be
completed by Reality Wireless have not been prepared or are incomplete as of the
date hereof (such unprepared or incomplete schedules being the "Reality Wireless
Incomplete Schedules"). Reality Wireless shall deliver to Genesis and its
counsel for their review a complete and accurate version of the Reality Wireless
Incomplete Schedules (as so revised, the "Reality Wireless Final Proposed
Schedules") not later than 45 days after the Execution Date of this Agreement.
Reality Wireless shall also provide Genesis with copies of any supporting
documents and such access to those officers and other employees of Reality
Wireless and other representatives as may be reasonably requested by Genesis and
its legal counsel in connection with their review of the Reality Wireless Final
43
Proposed Schedules. Notwithstanding anything herein to the contrary, Genesis
shall have the right to terminate this Agreement by written notice to Reality
Wireless in the event that Genesis, in its sole discretion, is not satisfied
with the Reality Wireless Final Proposed Schedules.
(b) Reality Wireless acknowledge that the schedules to this Agreement
to be completed by Genesis have not been prepared or are incomplete as of the
date hereof (such unprepared or incomplete schedules being the "Genesis
Incomplete Schedules"). Genesis shall deliver to Reality Wireless and its
counsel for their review a complete and accurate version of the Genesis
Incomplete Schedules (as so revised, the "Genesis Final Proposed Schedules") not
later than 45 days after the Execution Date of this Agreement. Genesis shall
also provide Reality Wireless with copies of any supporting documents and such
access to those officers and other employees of Reality Wireless and other
representatives as may be reasonably requested by Reality Wireless and its legal
counsel in connection with their review of the Genesis Final Proposed Schedules.
Notwithstanding anything herein to the contrary, Genesis shall have the right to
terminate this Agreement by written notice to Reality Wireless in the event that
Genesis, in its sole discretion, is not satisfied with the Genesis Final
Proposed Schedules.
SECTION 7.04 Completion of Genesis Reports.
(a) Reality Wireless acknowledge that the financial statements to be
presented by Genesis to Reality Wireless (the "Genesis Reports") have not been
prepared or are incomplete as of the date hereof. Genesis shall deliver to
Reality Wireless and its counsel for their review a complete and accurate
version of the Genesis Reports not later than 45 days after the Execution Date
of this Agreement. Genesis shall also provide Reality Wireless with copies of
any supporting documents and such access to those officers and other employees
of Reality Wireless and other representatives as may be reasonably requested by
Reality Wireless and its legal counsel in connection with their review of the
Genesis Reports. Notwithstanding anything herein to the contrary, Reality
Wireless shall have the right to terminate this Agreement by written notice to
Genesis in the event that Reality Wireless, in its sole discretion, is not
satisfied with the Genesis Reports.
SECTION 7.05 Public Announcements
The initial press release concerning the Merger shall be a joint
press release and, thereafter and until the Effective Time, Reality Wireless and
Genesis shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or the
Merger and shall not issue any such press release or make any such public
statement without the prior written approval of the other, except to the extent
required by applicable Law or the requirements of the rules and regulations of
the OTCBB, in which case the issuing party shall use all reasonable efforts to
consult with the other party before issuing any such release or making any such
public statement.
44
SECTION 7.06 OTCBB Symbol Change
Prior to the Effective Time, Reality Wireless shall file with the
OTCBB a Symbol Change Form to change the OTCBB symbol of Reality Wireless on the
Effective Date. The new symbol shall be determined by Genesis.
SECTION 7.07 Blue Sky and Federal Securities Law
Reality Wireless shall use all reasonable efforts to obtain prior to
the Effective Time all necessary permits and approvals required under Blue Sky
Laws and federal securities law to permit the distribution of the shares of
Reality Wireless Common Stock to be issued in accordance with the provisions of
this Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions of the Obligations of Each Party to
Consummate the Merger.
The obligations of the parties hereto to consummate the Merger are
subject to the satisfaction or, if permitted by applicable Law, waiver of the
following conditions:
(a) this Agreement and the Merger shall have been duly approved by
the requisite vote of the board of directors and stockholders of Genesis in
accordance with the NRS and the DE Code and by the requisite vote of the board
of directors of Reality Wireless in accordance with the rules of the NRS, the DE
Code and OTCBB;
(b) no court of competent jurisdiction shall have issued or entered
any order, writ, injunction or decree, and no other Governmental Entity shall
have issued any order, which is then in effect and has the effect of making the
Merger illegal or otherwise prohibiting its consummation;
(c) all consents, approvals and authorizations legally required to
be obtained to consummate the Merger shall have been obtained from all
Governmental Entities, except where the failure to obtain any such consent,
approval or authorization could not reasonably be expected to result in an
Reality Wireless Material Adverse Effect or a Genesis Material Adverse Effect.
(d) Current Liabilities of Reality shall not exceed $50,000 as
reflected in the most recent Closing Schedules and the Reports.
45
SECTION 8.02 Conditions to the Obligations of Genesis
The obligations of Genesis to consummate the Merger, or to permit
the consummation of the Merger are subject to the satisfaction or, if permitted
by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of Reality Wireless
contained in this Agreement shall be true, complete and correct in all respects
both when made and on, and as of, the Effective Time and (other than
representations and warranties which address matters only as of a certain date
which shall be so true, complete and correct as of such certain date), except
for any failures to be true, complete and correct which do not, in the
aggregate, have an Reality Wireless Material Adverse Effect, and Genesis shall
have received a certificate of the Chief Executive Officer and Chief Financial
Officer of Reality Wireless to such effect;
(b) Reality Wireless shall have performed or complied in all
material respects with all covenants required by this Agreement to be performed
or complied with by it on or prior to the Effective Time and Genesis shall have
received a certificate of the Chief Executive Officer of Reality Wireless to
that effect;
(c) There shall have been no Reality Wireless Material Adverse
Effect since the Execution Date;
(d) All consents of third parties required pursuant to the terms of
any Material Contract as a result of the Merger shall have been obtained; and
(e) Reality Wireless shall have obtained all necessary consents from
the State of California to consummate the Merger;
(g) Genesis shall be satisfied with its due diligence review of Reality
Wireless;
(h) the amendment to the Certificate of Incorporation of Reality
Wireless changing the name of Reality Wireless to "Genesis Electronics, Inc."
and the reverse-split (if any) shall have been approved by the shareholders of
Reality Wireless via a consent in lieu of a special meeting of the shareholders
such that a proxy solicitation is not necessary to obtain shareholder;
(i) Genesis shall be satisfied, in its sole discretion, with the
conversion of certain debts of certain creditors of Reality Wireless (the
"Reality Wireless Creditors") into the common stock of Reality Wireless, which
satisfaction shall be evidenced in writing signed by Reality Wireless, and the
Reality Wireless Creditors shall have executed Settlement and Release Agreements
satisfactory to Genesis;
(j) Genesis shall have been issued ---------------------- shares of the
common stock of Reality Wireless immediately following the reverse-split as
Merger consideration; and
46
(l) Reality Wireless shall have changed Reality Wireless's name from
"Reality Wireless Networks, Inc.," to "Genesis Electronics, Inc." (the "Name
Change"), and changed Reality Wireless's symbol on the OTCBB from "RWLN," to
such symbol as is requested by Genesis, subject to the approval of NASDAQ (the
"Symbol Change"). Reality Wireless and Genesis agree to cooperate fully with the
other and to execute and deliver all necessary documents and notices and to give
such further written assurances, and to take any other action as may be
reasonably requested by any other party to evidence, reflect and effect the Name
Change and Symbol Change.
SECTION 8.03 Conditions to the Obligations of Reality Wireless
The obligations of Reality Wireless to consummate the Merger are
subject to the satisfaction or waiver of the following further conditions:
(a) each of the representations and warranties of Genesis contained
in this Agreement shall be true, complete and correct in all respects both when
made and on, and as of, the Effective Time and (other than representations and
warranties which address matters only as of a certain date which shall be so
true, complete and correct as of such certain date), except for any failures to
be true, complete and correct which do not, in the aggregate, have a Genesis
Material Adverse Effect, and Reality Wireless shall have received a certificate
of the Chief Executive Officer and Chief Financial Officer of Genesis to such
effect;
(b) Genesis shall have performed or complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and Reality Wireless shall
have received a certificate of the Chief Executive Officer of Genesis to that
effect;
(c) there shall have been no Genesis Material Adverse Effect since
the Execution Date;
(d) all consents of third parties required pursuant to the terms of
any Material Contract as a result of the Merger shall have been obtained;
(e) the employees of Genesis set forth on Schedule 8.03(e) of the
Genesis Disclosure Schedule shall have accepted employment with Reality Wireless
and shall have entered into employment and non-competition agreements;
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ARTICLE IX
POST-CLOSING COVENANTS
Section 9.01 Audited Financials of Genesis
As soon as is practicable after the Closing, but in no event later
than fifty (50) days after the Closing, Genesis's shall provide audited
financial statements to Reality Wireless so as to comply with the SEC filing
obligations of Reality Wireless pursuant to the 34 Act.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01 Termination
This Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, notwithstanding any requisite adoption and
approval of this Agreement, as follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Reality Wireless and Genesis;
(b) Reserved;
(c) by either Reality Wireless or Genesis, if any Governmental
Order, writ, injunction or decree preventing the consummation of the Merger
shall have been entered by any court of competent jurisdiction and shall have
become final and nonappealable;
(d) by Genesis, if (i) the board of directors of Reality Wireless
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Genesis or its stockholders, (ii) the board of
directors of Reality Wireless shall have recommended to the stockholders of
Reality Wireless a Competing Transaction, or (iii) the board of directors of
Genesis resolves to take any of the actions described above;
(e) by Reality Wireless or Genesis, if (i) this Agreement and the
Merger shall fail to receive the requisite votes for approval at the Genesis
Stockholders' Meeting or any adjournment or postponement thereof or (ii) if the
vote on the issue of the shares to be issued in connection with the Merger shall
fail to receive the requisite votes for approval at the Reality Wireless
Shareholders' Meeting or any adjournment or postponement thereof;
(f) by Reality Wireless, upon a breach of any representation,
warranty, covenant or agreement on the part of Genesis set forth in this
Agreement, or if any representation or warranty of Genesis shall have become
untrue, incomplete or incorrect, in either case such that the conditions set
48
forth in Section 8.03 would not be satisfied (a "Terminating Genesis Breach");
provided, however, that if such Terminating Genesis Breach is curable by Genesis
through the exercise of its reasonable efforts within 20 days and for so long as
Genesis continues to exercise such reasonable efforts, Reality Wireless may not
terminate this Agreement under this Section 10.01(f); and provided, further that
the preceding proviso shall not in any event be deemed to extend any date set
forth in paragraph (b) of this Section 10.01; or
(g) by Genesis, upon breach of any representation, warranty,
covenant or agreement on the part of Reality Wireless set forth in this
Agreement, or if any representation or warranty of Reality Wireless shall have
become untrue, incomplete or incorrect, in either case such that the conditions
set forth in Section 8.02 would not be satisfied (a "Terminating Reality
Wireless Breach"); provided, however, that if such Terminating Reality Wireless
Breach is curable by Reality Wireless through the exercise of its reasonable
efforts within 20 days and for so long as Reality Wireless continues to exercise
such reasonable efforts, Genesis may not terminate this Agreement under this
Section 10.01(g); and provided, further that the preceding proviso shall not in
any event be deemed to extend any date set forth in paragraph (b) of this
Section 10.01.
(h) The right of any party hereto to terminate this Agreement
pursuant to this Section 10.01 will remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party hereto,
any person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the execution of
this Agreement.
SECTION 10.02 Effect of Termination
Except as provided in Section 10.05, in the event of termination of
this Agreement pursuant to Section 10.01, this Agreement shall forthwith become
void, there shall be no liability under this Agreement on the part of any party
hereto or any of its affiliates or any of its or their officers or directors,
and all rights and obligations of each party hereto shall cease; provided,
however, that nothing herein shall relieve any party hereto from liability for
the willful or intentional breach of any of its representations and warranties
or the willful or intentional breach of any of its covenants or agreements set
forth in this Agreement. No termination of this Agreement shall affect the
obligation of the parties contained in the Confidentiality Agreements, which
shall survive termination of this Agreement and remain in full force and effect
in accordance with their terms.
SECTION 10.03 Amendment
This Agreement may be amended by the parties hereto by action taken
by or on behalf of their respective boards of directors at any time prior to the
Effective Time; provided, however, that, after the approval of this Agreement by
the stockholders of Genesis, no amendment may be made that changes the amount or
type of consideration into which Genesis common stock will be converted pursuant
to this Agreement. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
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SECTION 10.04 Waiver
At any time prior to the Effective Time, any party hereto may (a)
extend the time for or waive compliance with the performance of any obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
SECTION 10.05 Expenses
All Expenses incurred in connection with this Agreement and the
Merger shall be paid by the party incurring such Expenses, whether or not the
Merger is consummated.
ARTICLE XI
GENERAL PROVISIONS
SECTION 11.01 Non-Survival of Representations and Warranties
The representations and warranties in this Agreement shall terminate
at the Effective Time or upon the termination of this Agreement pursuant to
Section 10.01, as the case may be. This Section 11.01 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time.
SECTION 11.02 Notices
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by telecopy or facsimile,
by registered or certified mail (postage prepaid, return receipt requested) or
by a nationally recognized courier service to the respective parties at the
following addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 11.02):
(a) if to Genesis:
Genesis Electronics, Inc.
423 S. Padre Juan Avenue
Ojai, CA 93023 (CONTINUED)
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with a copy to:
The Otto Law Group, PLLC
900 Fourth Ave., Suite 3140
Seattle, WA 98164
(b) if to Reality Wireless:
Reality Wireless Networks, Inc.,
4906 Point Fosdick Dr., Suite 102
Gig Harbor, WA 98335
with a copy to:
The Otto Law Group, PLLC
900 Fourth Ave., Suite 3140
Seattle, WA 98164
SECTION 11.03 Severability
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the Merger is not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner to the fullest extent permitted by
applicable Law in order that the Merger may be consummated as originally
contemplated to the fullest extent possible.
SECTION 11.04 Assignment; Binding Effect; Benefit
Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
parties hereto. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Notwithstanding anything contained
in this Agreement to the contrary, other than Section 7.04, nothing in this
Agreement, expressed or implied, is intended to confer on any person other than
the parties hereto or their respective successors and permitted assigns any
rights or remedies under or by reason of this Agreement.
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SECTION 11.05 Incorporation of Exhibits
The Reality Wireless Disclosure Schedule, the Genesis Disclosure
Schedule and all Exhibits attached hereto and referred to herein are hereby
incorporated herein and made a part of this Agreement for all purposes as if
fully set forth herein.
SECTION 11.06 Governing Law
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF WASHINGTON OTHER THAN CONFLICT OF LAWS
PRINCIPLES THEREOF DIRECTING THE APPLIDETION OF ANY LAW OTHER THAN THAT OF
DELAWARE. COURTS WITHIN THE STATE OF WASHINGTON WILL HAVE JURISDICTION OVER ALL
DISPUTES BETWEEN THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT
AND THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY. THE PARTIES
HEREBY CONSENT TO AND AGREE TO SUBMIT TO THE JURISDICTION OF SUCH COURTS. EACH
OF THE PARTIES HERETO WAIVES, AND AGREES NOT TO ASSERT IN ANY SUCH DISPUTE, TO
THE FULLEST EXTENT PERMITTED BY APPLIDEBLE LAW, ANY CLAIM THAT (I) SUCH PARTY IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURTS, (II) SUCH PARTY AND
SUCH PARTY'S PROPERTY IS IMMUNE FROM ANY LEGAL PROCESS ISSUED BY SUCH COURTS OR
(III) ANY LITIGATION COMMENCED IN SUCH COURTS IS BROUGHT IN AN INCONVENIENT
FORUM.
SECTION 11.07 Waiver of Jury Trial
EACH PARTY HERETO HEREBY IRREVODEBLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT
CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.
SECTION 11.08 Headings; Interpretation
The descriptive headings contained in this Agreement are included
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
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SECTION 11.09 Counterparts
This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed and delivered shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
SECTION 11.10 Entire Agreement
This Agreement (including the Exhibits, the Reality Wireless
Disclosure Schedule and the Genesis Disclosure Schedule) and the Confidentiality
Agreements constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto unless made
in writing and signed by all parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
and Plan of Merger between Reality Wireless Networks, Inc., and Genesis
Electronics, Inc., to be executed as of the date first written above by their
respective officers thereunto duly authorized.
REALITY WIRELESS NETWORKS, INC.
By:
---------------------------------
Name: Steve Careaga
Title: Chief Executive Officer
GENESIS ELECTRONICS, INC.
By:
---------------------------------
Name: Jerry S. Bessa
Title: CEO & President
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