UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 16, 2006
----------------
SEAMLESS WI-FI, INC.
--------------------
(Exact name of registrant as specified in its charter)
Nevada 0-20259 33-0845463
------ ------- ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
800N. Rainbow Blvd, Suite 208,Las Vegas, Nevada 89107
----------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
775-588-2387
------------
Registrant's telephone number, including area code
None
----
(Former name or former address, changes since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
followings provisions (see General Instructions A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Section 1-Registrant's Business and Operations
-------------------------------------------------
Item 8.01 Other Events
On March 14, 2006 the registrant executed an "Asset Purchase and Investment
Agreement" acquiring the patents to a mini computer referred to as the ED which
is attached.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Seamless Wi-Fi, Inc.
----------------------
(Registrant)
March 16, 2006
----------------
Date
/s/ Albert R. Reda
---------------------
Albert R. Reda, President
Section 9 - Financial Statements and Exhibits
---------------------------------------------------
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements. None.
(b) Pro Forma Financial Information. None.
(c) Exhibits. Dated March 14, 2006.
ASSET PURCHASE AND INVESTMENT AGREEMENT
This ASSET PURCHASE AND INVESTMENT AGREEMENT ("Agreement"), is entered into this
---------
date March 14, 2006 (the "Effective Date") between SEAMLESS Wi-Fi, Inc., a
---------------
Nevada corporation with a principal place of business at 800 North Rainbow Blvd.
Suite 208, Las Vegas, Nevada 89107 ("SLWF"), and Vercel Development,
----
Inc.("VDI").
RECITALS
WHEREAS, VDI is a privately held corporation engaged in the business of
developing, among other products, a mini-computer known as the Entertainment
Device, illustrated in EXHIBIT A ("ED");
--
WHEREAS, SLWF is a publicly traded company traded on the OTCBB under the
stock symbol "SLWF" and is in the business of developing software and deploying
Wi-Fi to the hospitality industry; and
WHEREAS, VDI owns certain intellectual property embodied in the ED and
wishes to sell such intellectual property, and SLWF wishes to purchase the
intellectual property underlying the ED design that is owned by VDI on the terms
and conditions set forth herein.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as follows:
1. PURCHASE OF TECHNOLOGY
1.1. VDI agrees to and hereby does assign, transfer, convey and deliver
to SLWF, good and valid title to the Assigned Assets (as defined below), free
and clear of any encumbrances, on the terms and subject to the conditions set
forth in this Agreement. For purposes of this Agreement, the term "Assigned
--------
Assets" shall include (i) the issued U.S. patents listed on EXHIBIT B attached
------
hereto (the "Patents"), (ii) all know-how, trade secrets, discoveries, concepts,
-------
ideas, technologies, whether patentable or not, including processes, methods,
formulas and techniques, computer software (including source code but not
including software that is licensed or to be licensed from third parties),
abandoned patent applications or invention disclosures related to the Patents or
otherwise embodied in the ED, and (ii) any and all copyrights, copyright
registrations and copyrightable subject matter owned or controlled by VDI
related to the Patents or otherwise embodied in the ED.
1.2. VDI further agrees to and hereby does assign to SLWF all of the
right, title and interest in any other U.S. or foreign Letters Patent which may
issue based on the technology disclosed in the Patents, as well as all
divisions, continuations, reissues, re-examinations and extensions of the
Patents. VDI further acknowledges that included in this assignment is the right
to bring suit to enforce any of the Patents against activities which occurred
before the date of this Agreement.
1.3. VDI agrees to execute upon the request of SLWF any assignment
paper or other document reasonably necessary to evidence the assignment of the
rights hereunder to SLWF, and agrees to cooperate with SLWF in all other matters
relating to the assignment of these rights to SLWF.
1.4. Rights not specifically assigned are reserved to VDI. This
Agreement does not grant SLWF rights to use any of VDI's other inventions,
works, know-how, trade secrets, or product designs, other than those included in
the Assigned Assets.
2. INVESTMENT OBLIGATION
2.1. SLWF agrees to invest over 4 months for the development and
manufacturing of a next version of the ED (hereinafter, "EDV1"); provided,
----
however, that VDI provides commercially reasonable assistance to SLWF in the
development and manufacture of the EDV1.
2.2. The EDV1 design specifications, along with modifications, time
frames for dispersion of funds and production schedules shall be as set forth
in, which may be amended from time to time by mutual consent of the parties.
3. PAYMENT
3.1. SLWF hereby agrees to pay $500,000 to VDI, in accordance with the
schedule set forth in as consideration of the Assigned Assets purchased by SLWF.
3.2. Security interest. To secure the payment and performance of all
of its obligations under this Agreement, SLWF hereby grants to VDI a continuing
security interest in and to the following personal property of SLWF: (i) the
Patents and all other Assigned Assets; (ii) any other U.S. or foreign Letters
Patent which may issue based on the technology disclosed in the Patents, as well
as all divisions, continuations, reissues, re-examinations and extensions of the
Patents; and (iii) all accessions and additions to, substitutions for, and
replacements, products and proceeds of any of the foregoing (collectively, the
"Collateral"). This security interest will terminate when the final payment
under has been made.
3.3. SLWF will execute and deliver to VDI, concurrently with the
execution of this Agreement, and at any later time at the request of VDI, all
financing statements, instruments or other documents as VDI may request in a
form reasonably satisfactory to VDI to perfect and keep as a first priority
perfected security interest the security interest granted by Paragraph 3.2.
SLWF also authorizes VDI to file any amendments, continuations, statements, or
other instruments as may be reasonably necessary to continue or maintain the
perfection of VDI's security interest as a first priority perfected security
interest.
3.4. Unless and until the security interest granted by Paragraph 3.2
has been terminated and released, SLWF will not grant any other party nor will
it cause to exist a security interest in all or any part of the Collateral, and
will not sell or assign any of the Assigned Assets to any third party except as
permitted under Section 3.2.
3.5. Termination for breach. If SLWF at any time fails to make any
payment due under this Agreement, fails to make any report required under this
Agreement, makes an intentionally false report, or commits some other material
breach, and SLWF fails to remedy such default within 30 days after written
notice from VDI (sent as required under Section 11.3), then VDI may, at its
option, repurchase the Patents and the other Assigned Assets for a payment
equivalent to the total amount paid by SLWF to date. In that event, this
Agreement will terminate (including all payment obligations of SLWF provided for
under Section 4, except as provided in Section 8.2) on the date that VDI
tenders the repurchase price. If VDI does not tender the repurchase price
within 120 days after providing SLWF with notice of its intent to repurchase,
then VDI will forfeit its right to repurchase. Termination under this Paragraph
3.5 will not relieve SLWF of any royalty obligations accruing up to the time of
such termination.
3.6. Insurance. Beginning no later than the date on which production
of any Products by or for SLWF or its Affiliates commences, and for five years
after the termination of this Agreement, SLWF will maintain adequate commercial
general liability insurance, including bodily injury and property damage,
personal and advertising injury, completed operations, and product liability
coverages of no less than Two Million Dollars (U.S. $2,000,000.00) per
occurrence. The insurance will be provided by an insurance company having an
A.M. Best's rating of no less than A-V. SLWF will include VDI as an additional
insured on such policy. SLWF will provide VDI with a certificate evidencing
such coverage, and will provide VDI with at least 60 days prior written notice
of any cancellation or material change in such coverage.
4. ROYALTIES
4.1. SLWF will pay VDI royalties at the following rates, calculated as
a percentage of the "Net Wholesale Selling Price," on all sales of Products (as
defined below) by SLWF or its Affiliates:
- ten percent (10%) on all sales by SWLF or its Affiliates where SLWF
Initiated the relationship with the customer; and
- fifteen percent (15%) on all sales by SWLF or its Affiliates where VDI
identified the customer and introduced it to SLWF
- on sales by Licensees (as defined below), Twenty Dollars ($20.00) per ED
unit sold or ten percent (10%) on all ED sales, whichever is greater; and
ten percent (10%) on all sales of other Products including accessories.
"Net Wholesale Selling Price" means the gross wholesale selling price on all
sales of the Products after deductions for actual and customary trade discounts,
freight allowances, taxes, commissions, markdown allowances, and returns which
are accepted and credited. Such deductions on sales will not in the aggregate
exceed eight percent (8%) of the gross wholesale selling price, excluding
returns accepted and credited. No such deductions will be taken on transactions
between SLWF and any Affiliate. "Affiliate" means any entity of which SLWF or
any of its officers, directors, equity owners, or principals directly or
indirectly own more than 50% of the voting equity interests. "Products" means
the ED including the EDV1, and all other products that incorporate, utilize, or
are derived from the Assigned Assets, regardless of form, encasement or
configuration, and any line extensions thereto and accessories designed for use
with the ED. VDI will not be deemed to have initiated a relationship with a
customer if SLWF communicated with the customer or distributor regarding sales
of Products before VDI identified and introduced the customer to SLWF.
4.2 REPORTS. Within thirty days following the end of each calendar
quarter, starting with the quarter in which sale or licensing of the Products
begins, SLWF will submit to VDI a report covering the sales of the Products
during the preceding quarter, including sales by Affiliates, covering revenues
that SLWF received during the preceding quarter from any licensees to whom SLWF
grants the right to manufacture the ED or other Products ("Licensees"), and
covering sales by Licensees during the preceding quarter. With the report, SLWF
will transmit to VDI payment of the amounts due under Paragraphs 4.1 and 4.4.
The report will itemize SLWF's and Affiliates' and Licensees' sales of each
category or model of Products, and will itemize all deductions used to calculate
Net Wholesale Selling Price. SLWF will pay VDI interest at a rate of prime plus
four percent per annum or, if less, the maximum rate allowed by law, on any past
due royalties.
4.3 RECORDS. SLWF will keep and cause its Affiliates and Licensees to
keep, for a minimum of five years, full and accurate records regarding the
manufacture and sale of the Products, and of the revenue received from licensing
the Products, in sufficient detail to enable the payments due VDI to be
determined. VDI may, at its own expense, examine such records on ten days prior
written notice, not more often than once in any calendar year, for the purpose
of verifying the reports provided for in this Agreement. The examination will be
conducted by an independent certified public accountant or other auditing
professional and in such manner as to not unduly interfere with the business of
SLWF or its Affiliates or Licensees. If the examination reveals an underpayment
by SLWF of five percent (5%) or more of the royalties due VDI, SLWF will pay the
reasonable cost of the examination. VDI's representatives will not disclose to
any other person or entity any information acquired as a result of any such
examination, provided, however, that VDI will not be prevented from using and
disclosing such information in any action to enforce the rights of VDI under
this Agreement, or otherwise disclosing such information as required by law.
4.4 THIRD PARTY LICENSING. SLWF will pay VDI royalties on sales of Products
by SLWF's Licensees, at the rates set forth in Paragraph 4.1, based on the
Licensees' Net Wholesale Selling Price. If SLWF grants a license to an
Affiliate, VDI will be paid royalties under Section 4.1 based on such
Affiliate's sales.
5. REPRESENTATIONS AND WARRANTIES OF SLWF AND VDI
SLWF represents and warrants, to and for the benefit of VDI, as follows:
5.1. SLWF is a corporation organized, and validly existing and in good
standing under the laws of the State of Nevada.
5.2. SLWF has all requisite legal power and authority to enter into and
perform this Agreement in accordance with its terms. The execution and delivery
of this Agreement and the transactions contemplated hereby have been validly and
duly authorized by all necessary corporate action on the part of each and no
further authorization or approval is required.
5.3. SLWF has funds available to invest $500,000 over 4 months to
develop and begin production of the EDV1.
5.4. Neither the execution nor delivery by SLWF of this Agreement nor
compliance by SLWF with the terms and provisions hereof will (a) conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, the bylaws or articles of
incorporation of SLWF, any award of any arbitrator or any other agreement, any
regulation, law, judgment, order or the like to which SLWF is subject or any
contract, or (b) result in the creation of any lien upon all or any of the
Assigned Assets. SLWF is not a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness, any agreement relating
thereto, or any other contract or agreement which would restrict or otherwise
limit the transfer of the Assigned Assets after their assignment to SLWF.
5.5. No action, suit, proceeding or investigation is pending or
threatened against SLWF which, if decided adversely to SLWF, would prohibit the
transactions contemplated by this Agreement or which would have a material
adverse effect on SLWF's ability to consummate the transactions contemplated by
this Agreement.
5.6. There are no tax liens against any SLWF assets and there is no
basis for any such lien.
5.7. This Agreement and the Exhibits hereto, and all other documents
delivered by SLWF to VDI or their attorneys or agents in connection herewith or
therewith or with the transactions contemplated hereby or thereby, when taken as
a whole, do not contain any untrue statement of a material fact nor, to SLWF 's
knowledge, omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
VDI represents and warrants, to and for the benefit of SLWF, as follows:
5.8. VDI is a corporation organized, and validly existing and in good
standing under the laws of the State of California.
5.9. VDI has all requisite legal power and authority to enter into and
perform this Agreement in accordance with its terms. The execution and delivery
of this Agreement and the transactions contemplated hereby have been validly and
duly authorized by all necessary corporate action on the part of each and no
further authorization or approval is required.
5.10. VDI has good and marketable title in and to the Assigned Assets,
and such are not subject to any mortgage, pledge, lien, lease, claim,
encumbrance, charge, security interest, royalty obligations or other interest or
claim of any kind or nature whatsoever.
5.11. There are no material agreements or arrangements between VDI and
any third party which may be reasonably likely to have a material effect upon
VDI's title to and other rights respecting the Assigned Assets. VDI has the
sole right to bring actions for infringement or misappropriation of any of the
Assigned Assets.
5.12. VDI has taken and will take reasonable security measures to
protect the secrecy and confidentiality of all confidential information and
trade secrets included in the Assigned Assets. VDI has not taken any action or,
to its knowledge, failed to take an action that directly or indirectly caused
the confidential information included in the Assigned Assets to enter the public
domain or in any way affected VDI's absolute and unconditional ownership
thereof. No source code or object code in any Assigned Asset is subject to an
escrow and such source code has not been disclosed to any third party.
5.13. To VDI's knowledge, the use of the Assigned Assets in the conduct
of VDI's business has not and does not infringe or conflict with the rights of
others in any jurisdiction in the world.
5.14. VDI has not agreed to indemnify any third party for or against
any infringement of the Assigned Assets.
5.15. Neither the execution nor delivery by VDI of this Agreement nor
compliance by VDI with the terms and provisions hereof will (a) conflict with,
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, or result in any violation of, the bylaws or articles of
incorporation of VDI, any award of any arbitrator or any other agreement, any
regulation, law, judgment, order or the like to which VDI is subject or any
contract, or (b) result in the creation of any lien upon all or any of the
Assigned Assets. VDI is not a party to, or otherwise subject to any provision
contained in, any instrument evidencing indebtedness, any agreement relating
thereto or any other contract or agreement which restricts or otherwise limits
the transfer of the Assigned Assets.
5.16. No action, suit, proceeding or investigation is pending or
threatened against VDI, which (a) questions the validity of this Agreement or
the right of VDI to enter into this Agreement , nor seeks to prevent any of the
transactions contemplated under this Agreement, (b) is reasonably likely to have
a material adverse effect on the Assigned Assets, (c) challenges the ownership
or use, in any respect, of the Assigned Assets, or (d) challenges the rights of
VDI under or the validity of any of the Assigned Assets. There is no judgment,
decree, injunction, rule or order of any court, governmental department,
commission agency, instrumentality or arbitrator or other similar ruling
outstanding against VDI relating to the Assigned Assets or this transaction. No
action, suit, proceeding or investigation is pending or threatened by VDI
against any third party relating to the Assigned Assets.
5.17. VDI is not in violation of any laws, material governmental
orders, rules or regulations, whether federal, state or local, to which VDI are
subject except for any such violations which are not reasonably likely to have a
material adverse effect on SLWF.
5.18. VDI has not granted rights that are currently in existence to
manufacture, publish, produce, assemble, license or sell the Assigned Assets or
any of the underlying technology to any other person and is not bound by any
agreement which affects VDI's exclusive right to manufacture, publish, produce,
assemble, license, distribute or sell the Assigned Assets.
5.19. There are no tax liens against the Assigned Assets and there is
no basis for any such lien.
5.20. This Agreement and the Exhibits hereto, and all other documents
delivered by VDI to SLWF or their attorneys or agents in connection herewith or
therewith or with the transactions contemplated hereby or thereby, when taken as
a whole, do not contain any untrue statement of a material fact nor, to VDI's
knowledge, omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
SLWF acknowledges that VDI does not own the operating system software (under the
current design, Windows CE) to be used in the ED or any other third-party
software or components to be used in the ED, and that licenses for the operating
system and any other third-party software licenses or components must be
purchased separately by SLWF. VDI does not warrant that the Patents are valid
or enforceable or that the ED is subject to copyright or trade secret
protection, or that its rights in the ED would otherwise be sufficient to
prevent others from making the same or similar products.
6. INDEMNIFICATION.
6.1. VDI INDEMNITY. VDI and its successors agree to indemnify SLWF and
its affiliates, its subsidiaries, or its successors and hold them harmless from
and against any and all liabilities, losses, damages, costs or expenses
(including without limitation reasonable legal and expert witnesses' fees and
expenses) incurred by the SLWF, directly or indirectly, to the extent that such
liabilities, losses, damages, costs or expenses ("Damages") are occasioned by,
-------
caused by or arise out of:
6.1.1. any breach of any of the representations or warranties or failure to
perform any of the covenants made by the VDI in this Agreement, or any
certificate, exhibit, instrument or other document delivered pursuant to this
Agreement; or
6.1.2. any debts, claims, liabilities, or obligations of VDI, none of which
are being assumed by SLWF pursuant to this Agreement.
6.2. SLWF INDEMNITY. SLWF agrees to indemnify VDI and hold them
harmless from and against any and all liabilities, losses, damages, costs or
expenses (including without limitation reasonable legal and expert witnesses'
fees and expenses) incurred by the VDI to the extent that such Damages are
occasioned by, caused by or arise out of any breach of any of the
representations or warranties or failure to perform any of the covenants made
SLWF in this Agreement, or any certificate, exhibit, instrument or other
document delivered pursuant to this Agreement; or any debts, claims,
liabilities, or obligations of SLWF, none of which are being assumed by VDI
pursuant to this Agreement.
6.3. INDEMNIFICATION CLAIMS. If either party hereto wishes to assert an
indemnification claim against the other party hereto, under either Section 6.1.
or 6.2 respectively (the "Claimant"), such Claimant shall deliver to the other
--------
party a written notice setting forth:
6.3.1. The specific representation and warranty alleged to have been
breached by such other party;
6.3.2. A detailed description of the facts and circumstances giving rise to
the alleged breach of such representation and warranty; and
6.3.3. A detailed description of, and a reasonable estimate of the total
amount of, the Damages actually incurred or expected to be incurred by the
Claimant as a direct result of such alleged breach.
6.4. DEFENSE OF THIRD PARTY ACTIONS. If either party (the "Indemnified
-----------
Party") hereto receives notice or otherwise obtains knowledge of the
-----
commencement or threat of any claim, demand, dispute, action, suit, examination,
audit, proceeding, investigation, inquiry or other similar matter that may give
rise to an indemnification claim against the other party hereto (the
"Indemnifying Party"), then the Indemnified Party shall promptly deliver to the
-------------------
Indemnifying Party a written notice describing such complaint or the
commencement of such action or proceeding; provided, however, that the failure
to so notify the Indemnifying Party shall not relieve the Indemnifying Party
from liability under this Agreement with respect to such claim. The
Indemnifying Party shall have the right, upon written notice delivered to the
Indemnified Party within 20 days thereafter to assume the defense of such action
or proceeding, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of the fees and disbursements of such
counsel. In the event, however, that the Indemnifying Party declines or fails
to assume the defense of the action or proceeding or to employ counsel
reasonably satisfactory to the Indemnified Party, in either case within such 20
day period, then such Indemnified Party may employ counsel, reasonably
acceptable to the Indemnifying Party, to represent or defend it in any such
action or proceeding and the Indemnifying Party shall pay the reasonable fees
and disbursements of such counsel as incurred; provided, however, that the
Indemnifying Party shall not be required to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any jurisdiction in any
single action or proceeding. In any action or proceeding with respect to which
indemnification is being sought hereunder, the Indemnified Party or the
Indemnifying Party, whichever is not assuming the defense of such action, shall
have the right to participate in such litigation and to retain its own counsel
at such party's own expense. The Indemnifying Party or the Indemnified Party, as
the case may be, shall at all times use all commercially reasonable efforts to
keep the Indemnifying Party or the Indemnified Party, as the case may be,
reasonably apprised of the status of the defense of any action, the defense of
which they are maintaining, and to cooperate in good faith with each other with
respect to the defense of any such action. No Indemnified Party may settle or
compromise any claim or consent to the entry of any judgment with respect to
which indemnification is being sought hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld.
The Indemnifying Party shall not settle any claim or assertion, unless the
Indemnified Party consents in writing to such settlement, which consent shall
not be unreasonably withheld.
6.5. EXPIRATION OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties set forth in this Agreement shall terminate and
expire, and shall cease to be of any force or effect on the first anniversary of
the Effective Date, and all liability of SLWF and VDI with respect to such
representations and warranties shall thereupon be extinguished.
6.6. THRESHOLD. Neither the VDI nor the SLWF shall be required to make
any indemnification payment pursuant to Section 6.1 or 6.2, respectively, until
such time as the total amount of all Damages that have been directly or
indirectly suffered or incurred by an Indemnified Party, or to which an
Indemnified Party has or otherwise becomes subject to, exceeds $50,000 in the
aggregate. At such time as the total amount of such Damages exceeds $50,000 in
the aggregate, the Indemnified Party shall be entitled to be indemnified against
the full amount of such Damages (and not merely the portion of such Damages
exceeding $50,000).
7. TERMINATION FOR ABSENCE OF SALES ACTIVITY, INSOLVENCY.
If SLWF i) has not initiated commercial sale of a version of the ED,
either itself or through an Affiliate, within one year from when the development
of the EDV1 is completed and the device is ready for the initial production run,
ii) has stopped selling all Products after initial commercialization, including
the cessation of all Product sales through its Affiliates and Licensees anywhere
in the world, for a period of one year, or iii) is dissolved, becomes insolvent
or bankrupt, if bankruptcy proceedings are commenced by or against it, or if it
discontinues its business, then VDI will have the option to repurchase the
Patents and the other Assigned Assets for a payment equivalent to the total
amount paid by SLWF to date under ("Repurchase Right"). In order to exercise
VDI's Repurchase Right under clause i) or ii) above, however, VDI must provide
SLWF 60 days written notice of its intent to exercise the Repurchase Right
provided for under this Section 7.1. This Agreement will terminate on the date
that VDI tenders the repurchase price. If VDI does not tender the repurchase
price within 120 days after providing SLWF with the written notice of its intent
to exercise its Repurchase Right, then VDI will forfeit that Repurchase Right
but will not be foreclosed from exercising any other Repurchase Rights that may
arise subsequently under this Section 7.1. This Section 7.1 will not limit VDI's
rights with respect to security interest granted in Section 3.2.
8. RIGHTS UPON TERMINATION AND REPURCHASE.
8.1. If VDI exercises its Repurchase Right provided for above in Section 7,
or its repurchase rights under Section 3.5, all rights to the ED, the Patents
and the other Assigned Assets shall revert to VDI. SLWF will execute such
documents as are necessary to effect and record any such reassignment to VDI of
such rights; provided however, that SLWF will retain all rights, title and
interest to any improvements, enhancements or other modifications made by SLWF
to the Products (including to the EDVI), and all attendant intellectual property
rights associated therewith.
8.2. Upon exercise of the Repurchase Right provided for in Section 7, or
VDI's exercise of its repurchase rights under Section 3.5, SLWF and its
Affiliates and Licensees will have the right to dispose of existing inventory of
the ED and any other Products, whether completed or in the process of
manufacture, for a period of ninety days after termination, and may do so at
prices less than the normal wholesale price. SLWF will pay VDI royalties under
Paragraph 4 on such post-termination sales.
9. ASSIGNMENT.
9.1. After the security interest granted by Paragraph 3.2 has been
terminated and released, and if VDI has not provided SLWF with written notice of
a right to repurchase the Assigned Assets as provided under Paragraph 3.5 or 7
(or, if such notice was provided, the right to repurchase has expired under the
terms of Paragraph 3.5 or 7), SLWF may sell the Assigned Assets to a third
party so long as the purchaser agrees in writing with VDI to will pay to VDI
royalties and other consideration at the same rates as set forth under Paragraph
4.
9.2. Notwithstanding Paragraph 9.1, upon VDI's prior written consent, which
will not be unreasonably withheld, SLWF may assign this Agreement along with the
Assigned Assets to an entity succeeding to substantially all of SLWF's business,
provided that the assignee agrees in writing to be bound, in the place of SLWF,
by the provisions of this Agreement. Upon written notice to SLWF, VDI may
assign all or part of its rights to receive payment under this Agreement.
10. ADDITIONAL COVENANTS.
10.1. FURTHER ASSURANCES. Neither party shall not voluntarily undertake
any course of action which interferes in any way with the rights obtained by
hereunder or is otherwise inconsistent with the satisfaction of its obligations
or agreements set forth in this Agreement. VDI hereby agrees not to contest the
SLWF ownership of the Assigned Assets, or the exclusive right to manufacture,
market and sell ED Units, except as explicitly provided under this Agreement.
Both parties shall execute, acknowledge and deliver any further assignments,
conveyances and other assurances, documents and instruments of transfer,
consistent with the terms of this Agreement, which are reasonably requested and
prepared by the other party, and shall take any other action, consistent with
the terms of this Agreement, that may be reasonably requested and prepared by
the other party for the purpose of assigning, transferring, granting, conveying,
and confirming to the other party or reducing to its possession, any or all of
the Assigned Assets. The requesting party shall be solely responsible for all
out-of-pocket costs related to such requests.
10.2. CONFIDENTIALITY. Each of the parties hereto hereby covenants and
agrees that neither it, nor any of its employees, agents, officers or directors,
will at any time make use of, divulge or disclose to any person, firm or
corporation any trade secrets or confidential or proprietary information of the
other party, its business, financial condition, operations or otherwise
(including, without limitation, the terms and conditions of this Agreement and
any amendments thereto, and the specifications on Exhibit A), whatever the
source of such confidential or proprietary information ("Confidential
------------
Information"). Confidential Information will further includes all information
-----------
in tangible or intangible form that is marked or designated as confidential or
proprietary, or that, under the circumstances of its disclosure, should
reasonably be considered confidential. Confidential Information shall also
include the Assigned Assets, which as of the Effective Date, shall be considered
the Confidential Information of SLWF. Each of the parties agree to use at least
the same amount of care to protect the Confidential Information of the other
party as that party would use to protect its own Confidential Information.
10.3. Each party agrees that such Confidential Information concerning
the other party shall only be divulged or disclosed to its employees who have a
valid business reason to know such information and then only to the extent
required for the performance of such employee's duties.
10.4. Nothing herein shall restrict the right of any party to disclose
Confidential Information which is ordered to be disclosed pursuant to judicial
or other lawful governmental action, but only to the extent so ordered, or as
otherwise required by applicable law or regulation. If either party is served
with process to obtain any Confidential Information or subscriber records of the
other party, that party shall immediately notify the other party and permit the
other party to conduct the defense against disclosure. This confidentiality
obligation shall not apply to information which is in the public domain through
no act of the party desiring to disclose.
10.5. SAMPLES. SLWF will provide VDI, free of charge, from the first
shipment of the Products and annually thereafter, 12 samples of each model or
SKU of the Products sold by SLWF or an Affiliate. SLWF will sell to VDI, at
cost, such additional reasonable sample quantities of the ED and other Products
as VDI may request. VDI will not resell such samples.
10.6 As between SLWF and VDI, SLWF will be responsible for
insuring that the Products that it markets and sells conform to applicable
product safety laws and regulations.
11. MISCELLANEOUS.
11.1. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of Nevada applicable to
contracts between Nevada residents entered into and to be performed entirely
within the State of Nevada. Any action or proceeding brought by either party
against the other arising out of or related to this Agreement shall be brought
exclusively in a state or federal court in Clark County, Nevada
11.2. WAIVERS; CUMULATIVE REMEDIES. Any waiver, consent or the like
must be in writing. Any waiver by either party of any breach of this Agreement
by the other party shall not constitute a waiver of any other or subsequent
breach of this Agreement. All remedies, either under this Agreement or by law or
otherwise, afforded to the parties hereunder shall be cumulative and not
alternative.
11.3. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be effective upon receipt by
facsimile with a confirming copy sent by first-class mail, postage prepaid, or
five (5) days after deposit in the U.S. postal system by certified or registered
mail, return receipt requested, postage prepaid to the addresses first set forth
below such other address as a party may designate for itself by providing notice
hereunder:
11.4. ATTORNEYS' FEES. In any action brought to construe or enforce
this Agreement, the prevailing party shall receive in addition to any other
remedy to which it may be entitled, compensation for all costs incurred in
pursuing such action, including, but not limited to, reasonable attorneys' and
expert witnesses' fees and costs.
11.5. EXPENSES. Each party shall bear its own expenses and legal fees
incurred on its behalf with respect to this Agreement and the transaction
contemplated hereby.
11.6. SEVERABILITY. In case any provision of this Agreement is held to
be invalid or unenforceable, such provision shall be deemed amended to the
extent required to make it valid and enforceable and such amended provision and
the remaining provisions of this Agreement will remain in full force and effect.
11.7. TITLE AND HEADINGS. The titles and headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.8. SUCCESSOR AND ASSIGNS. The provisions hereof shall inure to the
benefit of, and be binding upon, the successors and assigns of the parties
hereto.
11.9. RIGHTS OF THIRD PARTIES. Nothing contained in this Agreement,
express or implied, shall be deemed to confer any rights or remedies upon, or
obligate any of the parties hereto, to any person or entity.
11.10. PUBLICITY. The terms of this Agreement shall be considered
Confidential Information of VDI and SLWF. Both parties agree that the specific
provisions hereof shall not be revealed or disclosed by it without the prior
written consent of the other except to the extent such disclosure is required by
applicable law or regulation.
11.11. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Exhibits hereto
and the other documents delivered pursuant hereto constitute the full,
exclusive, complete and entire understanding and agreement between the parties
with regard to the subject matter hereof and thereof and supersedes and revokes
all other previous discussions, understanding and agreements, whether oral or
written, between the parties with regard to the subject matter hereof. Any term
of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the affected
party. This Agreement is to be construed as if jointly drafted by both parties.
The words "include" or "including" do not limit the preceding words. This
Agreement may be executed in counterparts. Facsimile signatures are binding.
The parties hereto have caused this Agreement to be executed and delivered as of
the date first set forth above.
SLWF VDI
SEAMLESS WI-FI, INC VERCEL DEVELOPMENT, INC.
By: /s/ Albert Reda By: /s/ Derek Dotson
----------------------------- ----------------------------
Print Name: Albert Reda Print Name: Derek Dotson
-------------------- --------------------
Its: President Its: Chief Executive Officer
---------------------------- ---------------------------
EXHIBIT A
[GRAPHIC OMITED]
[GRAPHIC OMITED]
PRELIMINARY TARGET ED3 SPECIFICATIONS:
4 inch TFT screen with backlight minimum 1/4 vga
Transflective Touch Screen, OK in sunlight
128MB Flash ROM Minimum
128MB SDRAM or smaller if performance if OK
IrdA
820.11b/g
Bluetooth
SD MMC card with spring socket
Compact Flash type 2 socket with Vercel contact
Stereo Jack
Mono Speaker, Mono Mic jack
120 - 240VAC 50 - 60 Hz AC Adapter
Stylus high quality
USB 1.1(Client) for active sync
USB 2.0/OTG
Infra-red SIR (30 cm, 115.2Kbps)
Buttons: Cursor, MP3 player, Power, Game
Battery Charging LED, Activity LED
Reset Button
Removable Keyboard
Stereo Speakers mounted in
Docking Socket, charging, speakers, keyboard
EXHIBIT B
PATENTS ASSIGNED
U.S. Patent No. 6,825,832 U.S. Patent No. D454,347