Exhibit 10.2
PURCHASE AND SALE AGREEMENT
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THIS PURCHASE AND SALE AGREEMENT (this "Agreement") is made and entered into as
of the 16th day of October, 1998 by and between Ascend Communications, Inc., a
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California corporation, having its principal office at 0000 Xxxxxx Xxx Xxxxxxx,
Xxxxxxx, Xxxxxxxxxx, 00000 ("Seller") and Network Access Solutions, Inc., a
Delaware corporation having its principal office at 000 Xxxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxxx, Xxxxxxxx 00000 ("Buyer").
WITNESSETH
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WHEREAS, Seller manufactures and owns all of the rights, title and interest in
and to the telecommunications network equipment described and identified on
Exhibit A hereto (individually and collectively such items of equipment being
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referred to as the "Equipment"); and
WHEREAS, Seller and Buyer have reached an understanding whereby Seller has
agreed to cause its affiliate, Ascend Credit Corporation ("Ascend Credit"), to
purchase from Seller and lease to Buyer the items of Equipment ordered from
Seller by the Buyer from time to time, with an option for Buyer to purchase the
leased Equipment from Ascend Credit at the termination of such lease.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Sale and Purchase of Equipment.
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(a) Subject to the terms and conditions set forth herein, Seller hereby
irrevocably agrees to sell to Buyer from time to time during the term
of this Agreement and to cause Ascend Credit to purchase from Seller
and lease to Buyer up to $95,000,000 worth of Equipment, as may be
selected by Buyer from the list of available Equipment set forth in
Exhibit A and detailed in a purchase order. Such Equipment shall be
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leased and sold on the terms and conditions of that certain Master
Lease Agreement No. 9314 between Buyer and Ascend Credit dated for
reference October 9, 1998, a copy of which is attached hereto as
Exhibit B (the "Lease Agreement").
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(b) In consideration for the Equipment, Buyer agrees to pay to Seller
***.
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*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
2. Term of Agreement.
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The term of this Agreement shall be 24 months from the date hereof.
3. Seller's Representations, Warranties and Covenants.
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Seller hereby represents, warrants and covenants to Buyer that:
(a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of California and has all requisite corporate
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby.
(b) All requisite corporate action has been authorized for the execution
and delivery to Buyer of this Agreement and the agreements
contemplated hereunder and for the performance of Seller's obligations
hereunder. This Agreement is a valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
(c) There are no actions, suits or proceedings pending or, to the best of
the knowledge of Seller, threatened against or affecting Seller or of
which the Equipment is the subject matter or any proceedings with
respect to Seller or any of the Equipment before any federal, state or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign that would in any way adversely
affect the transactions contemplated herein.
(d) Seller possesses valid legal rights in and title to all of the
Equipment, free from all pledges, liens, security interests,
encumbrances or charges.
(e) All necessary approvals and authority to enter into this Agreement and
bind Seller have been obtained, the person executing this Agreement on
behalf of Seller has express authority to do so and, in doing, to bind
Seller hereto and the execution of this Agreement by Seller does not
violate any provision of any by-law, charter, regulation or any other
governing authority of Seller.
(f) At such time as Buyer exercises its right to purchase the Equipment
under the Lease Agreement, Seller will transfer to Buyer all of its
right, title and interest in and to the Equipment, free and clear of
any Third Party (as defined herein below) rights or other
encumbrances, and Buyer shall have the right to sell, license, assign
or otherwise convey the Equipment to any Third Party. Seller shall
agree to execute any and all instruments and agreements to effect the
conveyance and assignment of the Equipment as Buyer may deem
necessary. The term "Third
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Party" as used herein means any person or entity that is not a party
to this Agreement.
(g) The Equipment delivered to Buyer shall materially conform with and
perform the functions set forth in the specifications attached hereto
as Exhibit A (the "Specifications") as are applicable to the Equipment
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and shall be free from defects in material or workmanship that impair
Buyer's use of the Equipment. If notified by Buyer of any such
defects in material or workmanship or nonconformity with the
Specifications, Seller shall, at its election and expense, repair or
replace any such defective Equipment. Any Equipment repaired or
replaced under this Section [3(g)] shall be subject to the provisions
of this Section [3(g)].
4. Buyer's Representations, Warranties and Covenants.
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Buyer hereby represents, warrants and covenants to Seller that:
(a) Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to enter into and perform this Agreement
and the transactions contemplated hereby.
(b) All requisite corporate action has been authorized for the execution
and delivery to Seller of this Agreement and the agreements
contemplated hereunder and for the performance of Buyer's obligations
hereunder. This Agreement is a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
(c) There are no actions, suits or proceedings pending or, to the best of
the knowledge of Buyer, threatened against or affecting Buyer or any
proceedings with respect to Buyer before any federal, state or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign that would in any way adversely
affect the transactions contemplated herein.
(d) All necessary approvals and authority to enter into this Agreement and
bind Buyer have been obtained, the person executing this Agreement on
behalf of Buyer has express authority to do so and, in doing, to bind
Buyer hereto and the execution of this Agreement by Buyer does not
violate any provision of any by-law, charter, regulation or any other
governing authority of Buyer.
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5. Seller Financing.
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Seller acknowledges that, as an inducement to Buyer to enter into this Agreement
and to commit a substantial portion of its network technology to Seller, Buyer
is relying on Seller, or its affiliate, to provide financing for all Equipment
purchases hereunder as well as operating capital financing in the manner
described in that certain Letter of Intent dated September 24, 1998, (the
"LOI"), a copy of which is attached hereto as Exhibit C as evidenced by
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Promissory Notes made by Buyer in favor of Seller, or its affiliate,
substantially in the form attached hereto as Exhibit D.
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***.
6. Indemnification.
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***
7. Limitation of Liability.
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NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, IN NO
EVENT, WHETHER AS A RESULT OF BREACH OF CONTRACT, WARRANTY, TORT (INCLUDING BUT
NOT LIMITED TO NEGLIGENCE OR INFRINGEMENT), SHALL SELLER OR BUYER BE LIABLE
UNDER THIS AGREEMENT FOR ANY CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY NATURE
WHATSOEVER, INCLUDING LOST PROFITS OF THE OTHER PARTY, BEFORE OR AFTER
ACCEPTANCE, WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE OR WHETHER A PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
8. Indemnity for Product Liability.
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Notwithstanding anything contained herein to the contrary, Seller agrees to
defend and indemnify Buyer, its officers, agents and employees, from and against
any damages, claims, demands, liabilities and expenses (including reasonable
attorneys' fees) that arise out of or result from the death or bodily injury to,
or damage to property of any third party resulting solely from a defect in the
Equipment delivered by Seller to Buyer. Seller shall pay all costs, damages and
reasonable attorneys' fees that a court awards as a result of such claim
provided that: (i) Seller has sole control of the defense and related settlement
negotiations; (ii) Buyer provides Seller with assistance, information and
authority reasonably necessary for Seller to perform its obligations under this
Section [8] and (iii) Buyer notifies Seller in writing within thirty (30) days
of the discovery of the claim.
9. Termination and Default.
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*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
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(a) Each of Seller and Buyer shall be entitled to terminate this Agreement
in whole or in part:
(i) if either party fails to observe, keep or perform any material
term or condition of this Agreement or repeatedly fails to
observe, keep or perform any non-material term or condition of
this Agreement, which repeated breaches collectively constitute a
material breach;
(ii) if a voluntary or involuntary petition is commenced by or against
either party under any laws relating to bankruptcy, insolvency,
reorganization, moratorium and creditors' rights and remedies
generally, and such voluntary or involuntary petition is not
withdrawn or dismissed, as applicable, within 30 days of filing;
or
(iii) if a party becomes insolvent because they are unable to pay
their debts in the ordinary course of business as they become
due, any substantial part of either party's property becomes
subject to any levy, seizure, assignment, application or sale for
or by any creditor or governmental agency or if a receiver shall
be appointed for either party.
(b) The party seeking to terminate this Agreement shall give the other
party written notice of any of the foregoing claimed to be a basis for
termination and the date of termination. The Agreement shall
terminate no less than fifteen 15 days after receipt of such notice in
the event of the occurrence under Section [9](a)(iii) above. In the
event of an occurrence of an event under Section [9](a)(i), a party in
breach shall have 30 days to cure, if curable, any such breach. In the
event that a party does not cure such breach within that cure period,
the non-breaching party may terminate this Agreement immediately upon
notice to the breaching party.
(c) Any and all provisions of this Agreement which by their nature or
terms contemplate survival beyond the expiration of this Agreement or
which are reasonably necessary to survive termination in order to
achieve their respective fundamental purposes, including, without
limitation, any provisions of this Agreement relating to and
specifically the Sections entitled Indemnification, Limitation of
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Liability, Indemnity for Product Liability, the provision contained in
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Section [3(g)] and Sections [10 through 18] relating to miscellaneous
matters, as applicable, shall survive and continue to bind the parties
following any termination of this Agreement.
10. Dispute Resolution.
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Any dispute arising out of or in connection with this Agreement shall be settled
by arbitration in Alameda, California under the Rules of the American
Arbitration Association ("Rules"), as
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modified by this Section [10]. The number of arbitrators shall be one (1). The
arbitrator shall be appointed by the parties, if both parties agree on an
arbitrator. If the parties are unable to agree on an arbitrator within fifteen
(15) days of the date of a request for arbitration made by any party hereto,
then the arbitrator shall be appointed in accordance with the Rules. The
decision of the arbitrator shall be delivered in writing to, and shall be
binding upon, the parties and judgment may be entered upon such award in any
court of competent jurisdiction.
11. Governing Law.
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This Agreement shall be governed by and construed in accordance with the laws of
the State of California, not including the conflicts of laws principles of that
jurisdiction.
12. Letter of Intent.
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The terms and conditions contained in Sections 1 through 8 and 10 through 11 of
the LOI that are not specifically addressed in the body of this Agreement are
incorporated herein by reference and made a part of this Agreement with the same
force and effect as though set forth in their entirety herein and the parties
hereto agree that they shall be bound by all such terms and conditions. In the
event of any conflict or inconsistency among the provisions of this Agreement
and the LOI, such conflict or inconsistency shall be resolved by giving
precedence to this Agreement and thereafter to the LOI.
13. Severability.
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In the event any provision of this Agreement shall be held invalid, illegal or
unenforceable by a court of competent jurisdiction, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
14. Headings.
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The headings of the sections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.
15. Counterparts.
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This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
16. Waivers and Amendments.
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Except as otherwise expressly provided herein, this Agreement or any provision
hereof may be amended, waived, discharged or terminated only by a statement in
writing signed by the parties hereto.
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17. Notices.
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Except as otherwise expressly provided herein, any notice required or permitted
hereunder shall be given in writing and shall be deemed to have been duly given
upon receipted personal delivery (professional courier permissible), receipted
certified delivery or registered mail delivery to the last address either party
(with respect to itself) furnishes to the other party in writing, or electronic
transmission, with a confirmation copy sent in the manner previously described.
Any notice or communication required or desired to be served, given or delivered
hereunder shall be in the form and manner specified below, and shall be
addressed to the party to be notified as follows:
If to Lender: Ascend Communications, Inc.
0000 Xxxxxx Xxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Jewels, Esq.
Telecopier: (000) 000-0000
If to Borrower: Networks Access Solutions, Inc.
000 Xxxxxxxxx Xx.
Xxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, CFO
Telecopier: (000) 000-0000
18. Effective Date.
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This Agreement shall become effective on the date first written above.
19. Entire Agreement.
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This document and the attached Exhibits represent the entire Agreement of the
parties with respect to its subject matter.
IN WITNESS WHEREOF the parties hereto have authorized their respective
representatives to execute this Agreement as of the day and year first herein
before written.
Seller:
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ASCEND COMMUNICATIONS , INC.
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By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
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Title: Treasurer
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Buyer:
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NETWORK ACCESS SOLUTIONS, INC.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Chief Financial Officer
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EXHIBIT A
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LIST OF AVAILABLE EQUIPMENT,
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SPECIFICATIONS (including Core Systems Publications Library, dated 2/98),
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ASCEND/NAS-CuNet SERVICE MARKETING PROGRAM PROPOSAL,
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AND PRICING
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Ascend's xDSL
Proposal for Network Access Solutions
For CopperNet Service
&
Financial Term Sheet
August 25, 1998
***
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*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
EXHIBIT B
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LEASE AGREEMENT
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(Filed as Exhibit 10.3)
EXHIBIT C
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LETTER OF INTENT
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To: Network Access Solutions, Inc.
From: Ascend Communications, Inc.
Date: 9/24/98
Re: NAS-CUNET SERVICE OFFERING Financing Proposal
Ascend offers the following to Network Access Solutions, Inc. herein referred to
as (NAS):
Credit Line
1. Equipment Financing: Ascend will provide equipment financing totaling
$95MM. The facility will be used for the purchase and subsequent lease
financing of Ascend equipment by NAS. The facility will be available for 24
months following the initial draws of moneys from the facility. Up to
$30,000,000 of the equipment financing is immediately available. The
remaining $65,000,000 of the equipment financing shall be available to NAS
at any point after the closing of the initial public offering the common
stock of NAS pursuant to a registration statement under the Securities Act
of 1933, as amended, and which yields gross proceeds to NAS in excess of
$50,000,000. If for any reason Ascend shall not make the remaining facility
available to NAS, then NAS has no further purchase commitment to Ascend.
There will no commitment fee or other fixed fees charged to NAS (other than
the lease payments themselves) outside of the lease financing under
agreement, for the use of the facility or reserve of unused capacity under
the facility.
Financing terms: ***
2. Working capital: Ascend will provide a working capital line of credit of
$5MM to be used at the sole discretion of NAS for the purchase of other
vendor's equipment in the event that Ascend cannot provide like equipment,
or to pay for operating expenses. The draws against this $5MM will be set
at a minimum of $1MM each. There will be no commitment or fixed fees
charged to NAS for the use of the facility or reserve of unused capacity
under the working capital facility other than the interest financing under
agreement per the terms of the promissory note.
. Financing terms: Ascend will extend financing for working capital in the
form of a secured promissory note. The note will be as follows: Each
Draw will be 42 months in duration beginning with the date of each draw.
Principal payments will be made on the basis of a 60 month linear
amortization starting with the 10th month. The interest rate will be at
8.5% per annum for the first 27 months' payments. The first 9 months'
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*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
payments will be at interest only. The next 18 months' payments will be
at the stated amortized rate. The remaining 15 months' payments will be
at an interest rate consistent with the prevailing "high-yield" bond
index and at the stated amortized rate. All accrued interest and
principal will be immediately due and payable at the end of the 42nd
month. There will be no penalty for prepayment in the working capital
financing. Monthly payments will be due on the 30th day of each month.
Payment to reflect the monthly aggregate amount due for all draws.
3. Security Interest: The Ascend equipment will secure the note.
4. Review of financial performance: Ascend will require NAS to provide
audited financials within 90 days of the close of each fiscal year end and
informal unaudited balance sheets and income statements within 60 days of
the close of each quarter. This requirement will be in effect after the
acceptance of the sales agreement, execution of related financing
agreements, and NAS's utilization of any financing under the Equipment
Financing Credit Line or the Working Capital Credit Line.
5. Mandatory prepayment: The principal indebtedness and all accrued but
unpaid interest in respect to the promissory note will become immediately
due and payable in the event of and upon a change of control, defined as
acquisition of more than 50% of the voting common equivalent shares of NAS
by any entity or person other than NAS' existing shareholders.
6. ***
7. ***
8. ***
9. ***
10. Shipping is FOB-ORIGIN-Alameda, CA (DSL technology) and Westford, MA (Core
Products)
11. Public Communication: Both parties agree that no public disclosure of terms
relating to this agreement will take place without mutual consent as to the
content and timing of such disclosure.
12. ***
Both sides recognize that this term sheet is not the definitive agreement. The
terms of this proposal will be set forth in a purchase agreement, a master lease
agreement, and secured promissory note; both parties will mutually agree upon
the terms and provisions of which; however, both parties represent that they are
not aware of any other substantive terms and conditions which would represent
material conditions precedent to Ascend
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*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission.
making the equipment financing facility and working capital line of credit
available to NAS.
Signed and accepted:
/s/ Xxxxx X. Xxxxxx 9/24/98 CFO
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NAS, Inc. Date:
/s/ Illegible 9/25/98
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Ascend Communications, Inc. Date:
EXHIBIT D
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PROMISSORY NOTES FOR VENDOR FINANCING
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AND OPERATING CAPITAL FINANCING
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(Filed as Exhibit 10.4)
