MASTER LEASE AGREEMENT Exhibit 10.18
No. A
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This Master Lease Agreement (the "MLA") is entered into by and between
Ascend Credit Corporation ("Lessor"), having its principal place of business at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and FASTNET Corporation (f/k/a YOU
TOOLS CORPORATION) ("Lessee"), having its principal place of business at Two
▇▇▇▇▇▇▇▇ Place, #130, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
1. LEASE AGREEMENT. Lessor agrees to lease to Lessee, and Lessee agrees
to lease from Lessor, the equipment (the "Equipment") referenced in each of
the Schedules (the "Schedule" or "Schedules") which incorporate this MLA
therein (the "Lease"). So long as no Event of Default has occurred or is
continuing, Lessor agrees to lease to Lessee the groups of Equipment
described on each Schedule, subject to the following conditions, which Lessor
in its sole discretion may elect to waive with respect to a Schedule: (i)
that in no event shall Lessor be obligated to lease Equipment to Lessee
hereunder where the aggregate purchase of all Equipment leased to Lessee
hereunder would exceed [*]; (ii) the Equipment leased hereunder shall only be
Equipment manufactured by either Ascend Communications, Inc. or Lucent
Technologies or its affiliates; (iii) that [*] hereunder will be available to
the Lessee for Equipment leases upon execution; (iv) that the remaining [*]
hereunder will be available to the Lessee for Equipment leases upon Lessee
providing Lessor with verification that a minimum of [*] in new equity has
been received; (v) that the lease amount shall not include more than 10% for
freight, installation, maintenance, professional services and taxes and that
such amounts above the limit will be paid for by the Lessee; and (vi) no new
leases shall be issued after June 30, 2000.
2. TERM. Each Lease shall be effective upon the execution of the MLA and
the related Schedule by the Lessor and the Lessee. The lease term (the "Lease
Term") of the Equipment referenced in each of the Schedules shall commence on
the rent commencement date specified in each Schedule (the "Rent Commencement
Date"). The Rent Commencement Date shall be the date 30 days from the date that
the Equipment is shipped by the supplier (the "Ship Date") as evidenced by a
shipping document provided by the supplier related to the Equipment (the
"Shipping Document"). Lessor will provide Lessee with a copy of the Shipping
Document evidencing the Ship Date.
3. RENT. The rent (the "Rent") for the Equipment referenced in any Schedule
shall be as stated in such Schedule and shall be payable according to the
provisions of such Schedule. If any amount payable under a Schedule is not
received by Lessor within 10 days of the due date, Lessee agrees to pay an
Overdue Charge, as defined herein, with respect to such amount.
4. SELECTION AND ASSIGNMENT. Lessee will select the type, quantity and
Supplier
[*] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the
Securities and Exchange Commission.
(subject to above) of each item of Equipment designated in a Schedule, and
Lessee hereby assigns to Lessor all of its right, title and interest in and to
the related equipment purchase agreement, a copy of which has been provided to
Lessor by Lessee (the "Agreement"). The Agreement may be amended with the
consent of Lessor. Any such assignment with respect to Equipment shall become
binding upon Lessor when Lessor and Lessee have entered into a Lease with
respect to such Equipment and as of the Rent Commencement Date referenced in
such Lease. Upon such an assignment becoming effective, Lessor shall be
obligated to purchase the Equipment from the Supplier in accordance with the
provisions of the Agreement. It is expressly agreed that Lessee shall at all
times remain liable to Supplier under the Agreement to perform all duties and
obligations of Lessee thereunder, except for the obligation to purchase the
Equipment to the extent expressly assumed by the Lessor hereunder, and that the
Lessee shall be entitled to the same rights of the purchaser of the Equipment
under the Agreement, except such right, title and interest in the Equipment
retained exclusively by the Lessor as owner of the Equipment. Lessor shall have
no liability for a Supplier's failure to meet the terms and conditions of the
Agreement.
5. DELIVERY AND INSTALLATION. Lessee shall be responsible for payment of
all transportation, packing, installation, testing and other charges associated
with the delivery, installation or use of any Equipment which are not included
in the Agreement with respect to such Equipment.
6. WARRANTIES. LESSOR MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE EQUIPMENT, ITS MERCHANTABILITY,
OR ITS FITNESS FOR A PARTICULAR PURPOSE. LESSOR SHALL NOT BE LIABLE TO LESSEE
OR ANY OTHER PERSON FOR DIRECT, INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL
DAMAGES ARISING FROM LESSEE'S USE OF THE EQUIPMENT, OR FOR DAMAGES BASED ON
STRICT OR ABSOLUTE TORT LIABILITY OR LESSOR'S PASSIVE NEGLIGENCE. LESSEE HEREBY
ACKNOWLEDGES THAT ANY MANUFACTURER'S OR SUPPLIER'S WARRANTIES WITH RESPECT TO
THE EQUIPMENT ARE FOR THE BENEFIT OF BOTH LESSOR AND LESSEE. NOTWITHSTANDING
THE FOREGOING, LESSEE'S OBLIGATIONS TO PAY EACH RENT PAYMENT DUE, OR OTHERWISE
PERFORM ITS OBLIGATIONS, UNDER THIS LEASE ARE ABSOLUTE AND UNCONDITIONAL.
7. TITLE TO AND LOCATION OF EQUIPMENT. Lessor shall retain title to each
item of Equipment. Lessee, at its expense, shall protect Lessor's title and keep
the Equipment free from all claims, liens, encumbrances and legal processes.
The Equipment is personal property and is not to be regarded as part of the real
estate on which it may be situated. If requested by Lessor, Lessee will, at
Lessee's expense, furnish a landlord or mortgagee waiver with respect to the
Equipment. The Equipment shall not be removed from the location specified in
the Schedule without the written consent of Lessor. Lessee shall, upon Lessor's
request, affix and maintain plates, tags or other identifying labels, showing
Lessor's ownership of the Equipment in a prominent position on the Equipment .
8. USE OF EQUIPMENT, INSPECTION AND REPORTS. The use of the Equipment by
Lessee shall conform with all applicable laws, insurance policies, and
warranties of the manufacturer or Supplier of the Equipment. Lessor shall have
the right to inspect the Equipment
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at the premises where the Equipment is located. Lessee shall notify Lessor
promptly of any claims, liens, encumbrances or legal processes with respect to
the Equipment.
9. FURTHER ASSURANCES. Lessee shall execute and deliver to lessor such
instruments as Lessor deems necessary for the confirmation of this Lease and
Lessor's rights hereunder. Lessor is authorized to file financing statements
signed only by the Lessor in accordance with the Uniform Commercial Code, or
financing statements signed by Lessor as Lessee's attorney-in-fact. Any such
filing with respect to the Equipment leased pursuant to a true lease shall not
be deemed evidence of any intent to create a security interest under the Uniform
Commercial Code.
10. MAINTENANCE AND REPAIRS. Lessee shall, at its expense, maintain each
item of Equipment in good condition, normal wear and tear excepted. Lessee
shall not make any addition, alteration, or attachment to the Equipment without
Lessor's prior written consent. Lessee shall make no repair, addition,
alteration or attachment to the Equipment which interferes with the normal
operation or maintenance thereof, creates a safety hazard, or might result in
the creation of a mechanic's or materialman's lien.
11. LESSOR'S PERFORMANCE OF LESSEE'S OBLIGATIONS. If Lessee fails to perform
any of its obligations under a Lease, Lessor may perform any act or make any
payment which Lessor deems necessary for the maintenance and preservation of the
Equipment subject thereto and Lessor's title thereto. All sums so paid by
Lessor (together with all related Overdue Charges), and reasonable attorneys'
fees incurred by Lessor in connection therewith, shall be additional rent
payable to Lessor on demand. The performance of any such act or the making of
any such payment by Lessor shall not be deemed a waiver or release of any
obligation or default on the part of Lessee.
12. INDEMNIFICATION. Lessee assumes liability for, and hereby agrees to
indemnify, protect and hold harmless, Lessor, and its agents, employees,
officers, directors, partners and successors and assigns, from and against, all
liabilities, obligations, losses, damages, injuries, claims, demands, penalties,
actions, costs and expenses, including, without limitation, reasonable
attorneys' fees, of whatever kind and nature, in contract or in tort, arising
out of the use, condition, operation, ownership, selection, delivery, leasing or
return of any item of Equipment, regardless of when, how and by whom operated,
or any failure on the part of Lessee to perform or comply with any of its
obligations under a Lease, excluding, however, any of the foregoing which result
from the gross negligence or willful misconduct of Lessor. Such indemnities and
assumptions of liabilities and obligations shall continue in full force and
effect, notwithstanding the expiration or other termination of such Lease.
Nothing contained in any Lease shall authorize Lessee to operate the Equipment
subject thereto so as to incur or impose any liability on, or obligation for or
on behalf of, Lessor.
13. NO OFF-SET. All Rents shall be paid by Lessee irrespective of any
off-set, counterclaim, recoupment, defense or other right which Lessee may have
against Lessor, the manufacturer or Supplier of the Equipment or any other
party.
14. ASSIGNMENT BY LESSEE. Lessee shall not, without Lessor's prior written
consent, (a) sell, assign, transfer, pledge, hypothecate, or otherwise dispose
of, encumber or suffer to exist a lien upon or against, any of the Equipment or
any Lease or any interest therein, by operation of
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law or otherwise, or (b) sublease or lend any of the Equipment or permit any of
the Equipment to be used by anyone other than Lessee.
15. ASSIGNMENT BY LESSOR. Lessor may assign, sell or encumber its interest
in any of the Equipment and any Lease. Upon Lessor's written consent, Lessee
shall pay directly to the assignee of any such interest all Rent and other sums
due under an assigned Lease. THE RIGHTS OF ANY SUCH ASSIGNEE SHALL NOT BE
SUBJECT TO ANY ABATEMENT, DEDUCTION, OFF-SET, COUNTERCLAIM, RECOUPMENT, DEFENSE
OR OTHER RIGHT WHICH LESSEE MAY HAVE AGAINST LESSOR OR ANY OTHER PERSON OR
ENTITY. Notwithstanding the foregoing, any such assignment (a) shall be subject
to Lessee's right to possess and use the Equipment subject to a Lease so long as
Lessee is not in default thereunder, and (b) shall not release any of Lessor's
obligations hereunder.
16. RETURN OF EQUIPMENT. Unless Lessee has exercised its option, if any, to
renew a lease or purchase the Equipment subject thereto, upon expiration of the
then current Lease Term of such Lease, Lessee shall, at its expense, cause such
Equipment to be removed, disassembled, and placed in the same condition as when
delivered to Lessee (reasonable wear and tear excepted) and properly crate such
Equipment for shipment and deliver it to a common carrier designated by Lessor.
Lessee will ship such Equipment, F.O.B. destination, to any address specified in
writing by Lessor within the continental United States. All additions,
attachments, alterations and repairs made or placed upon any of the Equipment
shall become part of such Equipment and shall be the property of Lessor.
17. EVENTS OF DEFAULT. The occurrence of any of the following shall be
deemed to constitute an Event of Default hereunder: (a) Lessee fails to pay
Rent, any other amount it is obligated to pay under a Lease or any other amount
it is obligated to pay to Lessor and does not cure such failure within 10 days
of such amount becoming due; (b) Lessee fails to perform or observe any
obligation or covenant to be performed or observed by Lessee hereunder or under
any Schedule, including, without limitation, supplying all requested
documentation, and does not cure such failure within 10 days of receiving
written notice thereof from Lessor; (c) the occurrence and continuance of any
default under any other lease or agreement for borrowed money made between
Ascend Communications, Inc. or its affiliates or successors, and the Lessee; (d)
any warranty, representation or statement made or furnished to Lessor by or on
behalf of Lessee is proven to have been false in any material respect when made
or furnished; (e) the attempted sale or encumbrance by Lessee of the Equipment,
or the making of any levy, seizure or attachment thereof or thereon; or (f) the
dissolution, termination of existence, discontinuance of business, insolvency,
or appointment of a receiver of any part of the property of Lessee, assignment
by Lessee for the benefit or creditors, the commencement of proceedings under
any bankruptcy, reorganization or arrangement laws by or against Lessee, or any
other act of bankruptcy on the part of Lessee.
18. REMEDIES OF LESSOR. At any time after the occurrence of any Event of
Default, Lessor may exercise one or more of the following remedies: (a) Lessor
may terminate any or all of the Leases with respect to any or all items of
Equipment subject thereto; (b) Lessor may recover from Lessee all Rent and other
amounts then due and to become due under any or all of the Leases; (c) Lessor
may take possession of any or all items of Equipment, wherever the same may be
located, without demand or notice, without any court order or other process of
law and
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without liability to Lessee for any damages occasioned by such taking of
possession, and any such taking of possession shall not constitute a termination
of any Lease; (d) Lessor may demand that Lessee return any or all items or
Equipment to Lessor in accordance with Paragraph 16; and (e) Lessor may pursue
any other remedy available at law or in equity, including, without limitation,
seeking damages, specific performance or an injunction.
Upon repossession or return of any item of the Equipment, Lessor shall
sell, lease or otherwise dispose of such item in a commercially reasonable
manner, with or without notice and on public or private bid, and apply the net
proceeds thereof (after deducting the estimated fair market value of such item
at the expiration of the term of the applicable Lease, in the case of a sale, or
the rents due for any period beyond the scheduled expiration of such Lease, in
the case of any subsequent lease of such item, and all expenses, including,
without limitation, reasonable attorneys' fees, incurred in connection
therewith) towards the Rent and other amounts due under such Lease, with any
excess net proceeds to be retained by Lessor.
Each of the remedies under this Lease shall be cumulative, and not
exclusive, and in addition to any other remedy referred to herein or otherwise
available to Lessor in law or in equity. Any repossession or subsequent sale or
lease by Lessor of any item of Equipment shall not bar an action for a
deficiency as herein provided, and the bringing of an action or the entry of
judgment against Lessee shall not bar Lessor's right to repossess any or all
items of Equipment.
19. CREDIT AND FINANCIAL INFORMATION. Within 90 days of the close of each of
Lessee's fiscal years, Lessee shall deliver to Lessor a copy of Lessee's annual
report, if any, and an audited balance sheet and profit and loss statement with
respect to such year. Within 30 days after the end of each of Lessee's fiscal
months, Lessee shall deliver to Lessor a balance sheet and profit and loss
statement for such month and, if requested, any other additional information
regarding historical or projected operating performance reasonably requested by
Lessor, all of which shall be certified by an officer of Lessee. Upon Lessee
becoming a publicly traded company, fiscal year and reporting requirements will
change to 120 days and the monthly reporting requirements will change to fiscal
quarters and be due 60 days after each quarter.
20. INSURANCE. As of the date that risk of loss for the Equipment passes
from the Supplier to the Lessee under the terms of the Agreement, Lessee shall
obtain and maintain through the end of the Lease Term of each Lease (and any
renewal or extension thereof), at its own expense, property damage and personal
liability insurance and insurance against loss or damage to the Equipment,
including, without limitation, loss by fire (with extended coverage), theft and
such other risks of loss as are customarily insured against with respect to the
types of Equipment leased hereunder and by the types of businesses in which such
Equipment will be used by Lessee. Such insurance shall be in such amounts, with
such deductibles, in such form and with such insurers as shall be satisfactory
to Lessor; provided, however, that the amount of the Insurance against loss or
damage to the Equipment shall not be less than the greater of the replacement
value of the Equipment, from time to time, or the original purchase price of the
Equipment. Each insurance policy shall name Lessee as an insured and Lessor as
an additional insured or loss payee, and shall contain a clause requiring the
insurer to give Lessor at least 30 days prior written notice of any alteration
in the terms of such policy or of the cancellation thereof. Lessee shall
furnish to Lessor a certificate of insurance or other evidence satisfactory to
Lessor that such insurance coverage is in effect; provided, however, that Lessor
shall be under no
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duty either to ascertain the existence of or to examine such insurance policy or
to advise Lessee in the event such insurance coverage shall not comply with the
requirements hereof. Lessee shall give Lessor prompt notice of any damage to, or
loss of, any of the Equipment, or any part thereof, or any personal injury or
property damage occasioned by the use of any of the Equipment.
21. TAXES. Lessee hereby assumes liability for, and shall pay when due, and,
on a net after-tax basis, shall indemnify, protect and hold harmless Lessor
against all fees, taxes and governmental charges (including, without limitation,
interest and penalties) of any nature imposed on or in any way relating to
Lessor, Lessee, any item of Equipment or any Lease, except state and local
taxes on or measured by Lessor's net income (other than any such tax which is in
substitution for or relieves Lessee from the payment of taxes it would otherwise
be obligated to pay or reimburse to Lessor as herein provided) and federal taxes
on Lessor's net income. Lessee shall, at its expense, file when due with the
appropriate authorities any and all tax and similar returns, and reports
required to be filed with respect thereto, for which it has indemnified Lessor
hereunder or, if requested by Lessor, notify Lessor of all such requirements and
furnish Lessor with all information required for Lessor to effect such filings.
Any fees, taxes or other charges paid by Lessor upon failure of Lessee to make
such payments shall, at Lessor's option, become immediately due from Lessee to
Lessor and shall be subject to the Overdue Charge from the date paid by Lessor
until the date reimbursed by Lessee.
22. SEVERABILITY. If any provision of any Lease is held to be invalid by a
court of competent jurisdiction, such invalidity shall not affect the other
provisions of such Lease or any provision of any other Lease.
23. NOTICES. All notices hereunder shall be in writing and shall be deemed
given when sent by certified mail, postage prepaid, return receipt requested,
addressed to the party to which it is being sent at its address set forth herein
or to such other address as such party may designate in writing to the other
party.
24. AMENDMENTS, WAIVERS AND EXTENSIONS. This MLA and each Schedule
constitute the entire agreement between Lessor and Lessee with respect to the
Lease of the Equipment subject to such Schedule, and supersede all previous
communications, understandings, and agreements, whether oral or written, between
the parties with respect to such subject matter. No provision of any Lease may
be changed, waived, amended or terminated except by a written agreement,
specifying such charge, waiver, amendment or termination, signed by both Lessee
and Lessor, except that Lessor may insert, on the appropriate schedule, the
serial number of Equipment, after delivery of such Equipment, and the Rent
Commencement Date for the Equipment. No waiver by Lessor of any Event of Default
shall be construed as a waiver of any future Event of Default or any other Event
of Default. At the expiration of the Lease Term with respect to a Lease, upon
notice given by Lessee at least ninety (90) days prior thereto, (a) such Lease
shall be renewed or the Equipment subject thereto shall be purchased under the
terms and conditions set forth herein for a term and rent amount or purchase
price, as the case may be, to be agreed upon, or (b) if no such agreement is
reached prior to the expiration of such Lease Term or such notice specifies that
Lessee intends to return the Equipment, then Lessee shall return the Equipment
to Lessor in the manner prescribed in Paragraph 16 of this MLA. In the absence
of Lessor's timely receipt of the notice contemplated by the preceding
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sentence, the Lease shall be automatically extended, on a month-to-month basis,
until terminated (upon notice by either party given at least ninety (90) days
prior to the end of the month on which the termination is to be effective) or
until renewed or the Equipment subject thereto is purchased by agreement of the
parties. Unless otherwise agreed, Lessee shall continue to pay rent for each
month following such Lease Term until the Equipment subject to such Lease is
returned pursuant to Paragraph 16 of this MLA.
25. CONSTRUCTION. This MLA shall be governed by and construed in accordance
with the internal laws, but not the choice of laws provisions, of the State of
California. The titles of the sections of this MLA are for convenience only and
shall not define or limit any of the terms or provisions hereof. Time is of the
essence in each of the provisions hereof.
26. PARTIES. This MLA shall be binding upon, and inure to the benefit of,
the permitted assigns, representatives and successors of the Lessor and Lessee.
If there is more than one Lessee named in this MLA, the liability of each shall
be joint and several.
27. COUNTERPARTS. Each Lease may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute but one and the same instrument.
28. OVERDUE CHARGE. Overdue Charge shall mean an amount equal to 2% per
month of any payment under a Lease which is past due, including, without
limitation, any amounts not included in any payment of Rent hereunder, or the
highest charge permitted by law, whichever is lower.
The person executing this MLA on behalf of Lessee hereby certifies that he or
she has read, and is duly authorized to execute, this MLA.
Accepted by:
Ascend Credit Corporation LESSEE: FASTNET Corporation
(f/k/a YOU TOOLS CORPORATION)
BY /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BY:/s/ ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
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NAME: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ NAME: ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
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TITLE: Assistant Treasurer TITLE: Chief Executive Officer
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DATE: June 29, 1999 DATE: June 29, 1999
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TO: FASTNET CORPORATION
FROM: ASCEND COMMUNICATIONS, INC.
DATE: 5/3/99
RE: FINANCING PROPOSAL
1. CREDIT LINE-EQUIPMENT FINANCING: Ascend will provide Ascend equipment
purchase (of which up to [*]% may be used for freight, installation,
maintenance, professional services, and taxes) financing of approximately
$[20,000,000] in the form of an operating lease, 36 months in duration.
The first three months shall be interest only at [*]%, followed by 33
months at a monthly lease factor rate of [*] against the purchase
price. FastNet shall have the option of purchasing the equipment for the
then fair market value at the end of the lease.
Up to $[*] of the facility shall be made available upon the
execution of all required documentation. An additional $[*]
shall be made available upon FastNet's receipt of not less than
$[*] in new equity.
2. SECURITY INTEREST. The Lease will be secured via the Ascend equipment.
Upon the receipt of each shipment, FastNet shall be required to provide
Ascend with a list detailing the installation locations of each piece of
equipment, along with serial numbers, if applicable.
3. REVIEW OF FINANCIAL PERFORMANCE. Ascend will require FastNet to provide
audited financials within 90 days of the close of each fiscal year end
and monthly financials within 45 days of the close of each month after
the acceptance of the sales agreement and execution of related financing
agreements. Upon FastNet becoming a public company, audited financials
shall be required within 120 days of fiscal year end and quarterly
financials shall be required within 60 days of quarter end.
4. ADDITIONAL INFORMATION: Ascend shall require FastNet from time to time
to provide addition information regarding operating or projected
performance.
5. OBSERVER RIGHTS: Ascend requests maintaining observer's rights only to
assign one representative of Ascend to hold a non-voting, observer's
position to attend board of director's meetings at will.
[*] We are seeking confidential treatment of these terms, which have been
omitted. The confidential portion has been filed separately with the
Securities and Exchange Commission.
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Both sides recognize that this term sheet is not the definitive agreement. The
terms of this proposal will be set forth in the lease agreement, both parties
will mutually agree upon the terms and provisions of which. If Ascend does not
receive an executed copy of this term sheet by 6/1/99, it shall become null and
void.
Signed and accepted:
/s/▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
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FASTNET Corporation Ascend Communications, Inc.
Date: 5/30/99 Date: 5/30/99
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