Exhibit 10.58
SETTLEMENT, AMENDMENT AND MIGRATION AGREEMENT
THIS SETTLEMENT, AMENDMENT AND MIGRATION AGREEMENT (the "AGREEMENT") is
made and entered into as of the 31st day of August, 2001, by and among (i)
Network Access Solutions Corporation, a Delaware corporation ("NAS"), (ii) Covad
Communications Company, a California corporation ("COVAD"), and (iii) CapuNet,
LLC, a Maryland limited liability company ("CAPUNET," and, collectively with
Covad and NAS, the "PARTIES").
WHEREAS, pursuant to an agreement dated June 30, 2000, and amended March
15, 2000 and June 30, 2000, by and between CapuNet and Covad, Covad agreed to
provide digital subscriber line ("DSL") service to certain business customers of
CapuNet (as amended, the "SERVICES AGREEMENT");
WHEREAS, pursuant to a letter agreement dated February 28, 2001 (the "NOTE
AGREEMENT"), CapuNet delivered to Covad a Promissory Note in the amount of
$730,501.53 (the "NOTE" and, together with the Services Agreement and the Note
Agreement, the "CAPUNET AGREEMENTS") in consideration for continued delivery of
DSL service to CapuNet under the Services Agreement;
WHEREAS, NAS has agreed to purchase and assume certain assets and
liabilities of CapuNet on the terms and subject to the conditions of an Asset
Purchase Agreement, dated August 31, 2001 (the "PURCHASE AGREEMENT"), including
CapuNet's obligations under the CapuNet Agreements;
WHEREAS, in order to induce NAS to enter into the Purchase Agreement, Covad
has agreed to write down the liabilities represented by the CapuNet Agreements
through the date hereof for services rendered through August 31, 2001 to
$450,000.00; and
WHEREAS, the Parties wish to settle all claims and disputes, known and
unknown, past, present and future, between them with respect to liabilities
under the CapuNet Agreements through the date hereof and NAS and Covad desire
for NAS to assume the Services Agreement on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth in this Agreement, the sufficiency of which the Parties
acknowledge, it is agreed as follows:
1. SETTLEMENT AND RELEASE
(a) NAS hereby agrees to pay to Covad $450,000.00 in cash (the
"SETTLEMENT PAYMENT") in full, final and complete settlement of any and all
claims Covad may have against CapuNet and/or NAS and any of their
respective past and present affiliates, officers, directors, owners,
employees, limited or general partners, agents, successors and assigns,
arising out of or in any way connected with the liabilities of CapuNet
and/or NAS under, in connection with or with respect to the CapuNet
Agreements through the date hereof (the "PRIOR LIABILITIES").
(b) Covad hereby covenants not to ▇▇▇ on, and fully and forever
releases and discharges CapuNet and NAS, and any of their respective past
and present affiliates, directors, officers, owners, limited or general
partners, employees and agents, as well as their successors and assigns
from any and all claims, liabilities, damages, demands, and causes of
action or liabilities of any nature or kind, whether now known or unknown,
past, present, or future, arising out of or in any way connected with any
action, failure to act or obligation occurring, existing or arising prior
to the date hereof with respect to the CapuNet Agreements. This release
includes but is not limited to claims arising under federal, state or local
laws, shareholder derivative claims, claims for attorneys' fees or costs,
and any and all claims premised on contract, tort, or any other legal
theory. Covad expressly waives all rights it may have under Section 1542 of
the Civil Code of the State of California, which reads as follows, or any
similar provision:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED ITS SETTLEMENT WITH THE
DEBTOR.
(c) Covad hereby agrees that it will not encourage or assist any
individual or entity to assert, prosecute or litigate any claims,
liabilities, damages, demands, or causes of action or liabilities of any
nature or kind, or to assert, prosecute or file or litigate any judicial or
administrative charges or claims arising out of or in any way connected
with any action, failure to act or obligation occurring, existing or
arising prior to the date hereof with respect to the CapuNet Agreements,
including but not limited to shareholder derivative claims, against CapuNet
or NAS or their respective past and present affiliates, officers,
directors, owners, limited or general partners, employees, agents,
successors and assigns, unless required to provide testimony or documents
pursuant to a lawful subpoena or other compulsory legal process, provided
that Covad will provide each other Party with prior notice of any such
subpoena or other legal process, and shall give them the opportunity to
seek a protective order or take such other similar action to protect
against such disclosure.
(d) Covad hereby agrees to release the Collateral (as defined in the
Note) and to execute and file all documents and take any and all other
action that may be necessary or desirable to terminate any security
interests or other claims or rights Covad may have in or to the Collateral.
(e) CapuNet hereby covenants not to ▇▇▇ on, and fully and forever
releases and discharges Covad, and any of its respective past and present
affiliates, directors, officers, owners, limited or general partners,
employees and agents, as well as their successors and assigns from any and
all claims, liabilities, damages, demands, and causes of action or
liabilities of any nature or kind, whether now known or unknown, past,
present, or future, arising out of or in any way connected with any action,
failure to act or obligation occurring, existing or arising prior to the
date hereof with respect to the CapuNet Agreements. This release includes
but is not limited to claims arising under federal, state or local laws,
shareholder derivative claims, claims for attorneys' fees or costs, and any
and all claims premised on contract, tort, or any other legal theory.
CapuNet expressly waives all rights it may have under Section 1542 of the
Civil Code of the State of California, which reads as follows, or any
similar provision:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY IT MUST HAVE
MATERIALLY AFFECTED ITS SETTLEMENT WITH THE DEBTOR.
(f) CapuNet hereby agrees that it will not encourage or assist any
individual or entity to assert, prosecute or litigate any claims,
liabilities, damages, demands, or causes of action or liabilities of any
nature or kind, or to assert, prosecute or file or litigate any judicial or
administrative charges or claims arising out of or in any way connected
with any action, failure to act or obligation occurring, existing or
arising prior to the date hereof with respect to the CapuNet Agreements,
including but not limited to shareholder derivative claims, against Covad
or its respective past and present affiliates, officers, directors, owners,
limited or general partners, employees, agents, successors and assigns,
unless required to provide testimony or documents pursuant to a lawful
subpoena or other compulsory legal process, provided that CapuNet will
provide Covad with prior notice of any such subpoena or other legal
process, and shall give them the opportunity to seek a protective order or
take such other similar action to protect against such disclosure.
(g) NAS hereby covenants not to ▇▇▇ on, and fully and forever releases
and discharges Covad, and any of its respective past and present
affiliates, directors, officers, owners, limited or general partners,
employees and agents, as well as their successors and assigns from any and
all claims, liabilities, damages, demands, and causes of action or
liabilities of any nature or kind, whether now known or unknown, past,
present, or future, arising out of or in any way connected with any action,
failure to act or obligation occurring, existing or arising prior to the
date hereof with respect to the CapuNet Agreements. This release includes
but is not limited to claims arising under federal, state or local laws,
shareholder derivative claims, claims for attorneys' fees or costs, and any
and all claims premised on contract, tort, or any other legal theory. NAS
expressly waives all rights it may have under Section 1542 of the Civil
Code of the State of California, which reads as follows, or any similar
provision:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY IT MUST HAVE MATERIALLY AFFECTED ITS SETTLEMENT WITH THE
DEBTOR.
(h) NAS hereby agrees that it will not encourage or assist any
individual or entity to assert, prosecute or litigate any claims,
liabilities, damages, demands, or causes of action or liabilities of any
nature or kind, or to assert, prosecute or file or litigate any judicial or
administrative charges or claims arising out of or in any way connected
with any action, failure to act or obligation occurring, existing or
arising prior to the date hereof with respect to the CapuNet Agreements,
including but not limited to shareholder derivative claims, against Covad
or its respective past and present affiliates, officers, directors, owners,
limited or general partners, employees, agents, successors and assigns,
unless required to provide testimony or documents pursuant to a lawful
subpoena or other compulsory legal process, provided that NAS will provide
Covad with prior notice of any such subpoena or other legal process, and
shall give them the opportunity to seek a protective order or take such
other similar action to protect against such disclosure.
2. ASSIGNMENT AND AMENDMENT OF SERVICES AGREEMENT
(a) Covad hereby consents to the assignment by CapuNet to NAS of all
past, present and future rights and obligations of CapuNet under the
Services Agreement.
(b) The Parties agree that the Services Agreement shall be amended as
follows:
The table set forth on the first page of the Services Agreement that is
captioned "Exhibits - Terms - Page" shall be amended to replace the number
"25,000" in the cell designated "Volume Commitment - Terms" with the number
"0".
The following language will be added to Section 7 of the Terms and
Conditions attached to the Services Agreement: "Covad shall invoice Network
Access Solutions ("NAS") once a month by either providing a paper invoice
or a notification of billing. Fees shall be due upon receipt of the invoice
or the notification of billing and will be considered late if not paid
within 30 calendar days after notification of billing. If at any time NAS
fails to make a payment when due of an undisputed amount owed to Covad
under the Services Agreement with respect to an End User Circuit and fails
to pay such amount within thirty (30) days after receipt of notice from
Covad of such failure to pay, Covad shall have all rights to such End User
Circuit.. In the event of non-payment, NAS shall reasonably cooperate at
its own expense with Covad and Covad's designee(s) in assisting the
migration of such End User Circuit to Covad or one or more internet service
providers designated by Covad. Without limiting the foregoing, NAS shall,
with respect to each such End User Circuit, (a) refer End Users who contact
NAS to a support phone number and website(s) designated by Covad, (b)
provide a technical liaison to address NAS specific technical and
operational issues and (c) continue to provide and support all services
supplied to such End User Circuit in the ordinary course of business
consistent with past practice until such End-User Circuit has been migrated
to Covad or Covad's designee(s) or disconnected."
3. SALE AND MIGRATION OF DSL SERVICE
(a) Covad hereby consents to the sale by CapuNet to NAS of 1,328 DSL
circuits (each as listed on Schedule 1.2(b)(i) to the Purchase Agreement)
(the "NAS CIRCUITS") currently serviced by Covad under the Services
Agreement.
(b) The Parties hereby agree that the NAS Circuits will not be
transferred to NAS and will remain on the Covad network until one hundred
twenty (120) days from the date hereof (the "Interim Period"). Prior to
such time as each NAS Circuit is transferred to NAS, NAS agrees to continue
to operate such NAS Circuit in addition to all related backhaul circuits
and other network elements as they are currently maintained under the
Services Agreement and to pay the fees prescribed by the Services Agreement
for such NAS Circuits and network elements.
(c) Covad agrees not to oppose the transfer of the NAS Circuits and to
use its reasonable efforts to assist in such transfer. In any event, Covad
will attempt to complete the transfer of the NAS Circuits to NAS within
ninety (90) days of the end of the Interim Period. After an NAS Circuit is
transferred to NAS, such NAS Circuit will no longer be subject to the
Services Agreement and NAS will cease to have any obligation to Covad under
the Services Agreement with respect to such NAS Circuit. Once an NAS
Circuit is transferred to NAS, Covad shall not be liable for such NAS
Circuit. In addition, NAS hereby agrees to indemnify Covad and any of its
respective past and present affiliates, directors, officers, owners,
limited or general partners, employees and agents, as well as their
successors and assigns from any and all
claims, liabilities, damages, demands, and causes of action or liabilities
of any nature or kind arising out of such NAS Circuit.
(d) If at any time NAS fails to make a payment when due of an
undisputed amount owed to Covad under the Services Agreement with respect
to an NAS Circuit and fails to pay such amount within thirty (30) days
after receipt of notice from Covad of such failure to pay, Covad shall have
all rights to such NAS circuit. These rights shall include but not be
limited to all contracts and contract rights (including the right to
receive payments and the right to assume or reject the underlying
contracts), billing information, IP addresses and e-mail addresses,
customer premise equipment passwords and the right to solicit the end-users
serviced by such NAS Circuit(s) (the "Rights"). Notwithstanding anything
herein implying the contrary, the Rights shall consist only of assets, of
the type listed above, that relate to such NAS Circuit for which payment is
owed. In its sole discretion, instead of causing an NAS Circuit to be
transferred to itself or its designee, Covad shall have the right to
require NAS to reject the underlying end-user contract for such NAS Circuit
in connection with Covad's solicitation of the end-user, and Covad shall
give notice to NAS of its election to do so.
(e) Covad hereby agrees to indemnify NAS and any of its respective
past and present affiliates, directors, officers, owners, limited or
general partners, employees and agents, as well as their successors and
assigns from any and all claims, liabilities, damages, demands, and causes
of action or liabilities of any nature or kind arising out of NAS
Circuit(s) to which Covad asserts any rights as a result of non-payment by
NAS.
(f) NAS hereby agrees that approximately 200 DSL circuits subject to
the Asset Purchase Agreement that are outside areas currently serviced by
NAS shall be considered NAS Circuits, but shall continue to be serviced by
Covad subject to the Services Agreement, as amended hereby.
(g) NAS shall order and purchase all new DSL circuits, which it
provisions through Covad, pursuant to the terms of NAS' agreement with SBC
Communications Inc. NAS will only maintain the existing NAS Circuits
pursuant to the amended Service Agreement until migrated to the NAS
network. Covad, at its own discretion, may limit access to its customer
facing interface (i.e. xLink API) via the assumed CapuNet customer ID and
password to allow for only the maintenance of the NAS Circuits.
4. CLOSING
The obligations of the Parties hereunder will be subject to the following
conditions:
(a) NAS shall have received a certificate, dated the date hereof, from
an authorized representative of Covad to the effect that prior to the
closing of the Purchase Agreement the Prior Liabilities were written down
on the books of Covad to equal an aggregate of $450,000.00;
(b) The Parties shall be satisfied that all of the DSL circuits sold
by CapuNet to Earthlink, Inc. ("EarthLink") under the purchase agreement,
dated as of May 21, 2001, by and between CapuNet and EarthLink, shall have
been migrated to EarthLink's network;
(c) The closing of the Purchase Agreement shall have occurred with all
necessary signatures and closing documents; and
(d) Covad shall have received a wire transfer of the Settlement
Payment according to the following wire instructions:
Covad Communications Company
Acct # 4038-832663
ABA# 121 000 248
▇▇▇▇▇ Fargo Bank
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
5. GENERAL PROVISIONS
(a) No amendment, waiver or consent with respect to any provision of
this Agreement shall in any event be effective, unless the same shall be in
writing and signed by the Parties, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given.
(e) Any notice required to be given hereunder shall be sufficient if
in writing, and sent by courier service (with proof of service), facsimile
transmission, hand delivery (with proof of service) or certified or
registered mail (return receipt requested and first-class postage
pre-paid), addressed as follows:
If to NAS:
Network Access Solutions Corporation
Three Dulles Tech Center
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: 202-663-8007
If to Covad:
Covad Communications Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Covad Communications Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
If to CapuNet:
CapuNet, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Stein, Sperling, Bennett, Dejong, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: 301-340-8217
(or to such address as any party shall specify by written notice so given), and
shall be deemed to have been delivered as of the date so personally delivered or
mailed.
(f) Each provision of this Agreement shall be construed in such a
manner so as to give such provision the fullest legal force and effect
possible. To the extent any provision hereof (or part of such provision) is
held to be unenforceable or invalid when applied to a particular set of
facts, or otherwise, the unenforceability or invalidity of such provisions
(or part thereof) shall not affect the enforceability or validity of the
remaining provisions hereof (or the remaining parts of such provision),
which shall remain in full force and effect, nor shall such
unenforceability or invalidity render such provision (or part thereof)
inapplicable to other facts in the context of which such provision (or part
thereof) would be held legally enforceable and/or valid.
(g) This Agreement shall inure to the benefit of, and shall be binding
upon, the Parties and their respective heirs, executors or administrators,
personal or legal representatives, successors and assigns.
(h) The headings in this Agreement are inserted for convenience and
reference only and are not intended to be used in construing or
interpreting any of the provisions of this Agreement.
(i) This Agreement shall be construed and enforced in accordance with
the internal laws of the State of Delaware, without resort to any conflicts
or choice of laws principles.
(j) This Agreement may be executed in two (2) or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute the same instrument.
[SIGNATURES NEXT PAGE]
IN WITNESS WHEREOF, each of the Parties has executed this Agreement as of
the day and year first above written.
NETWORK ACCESS SOLUTIONS CORPORATION
By: /S/ ▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇
Title: CEO
COVAD COMMUNICATIONS COMPANY
By: /S/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: EVP, Marketing & Strategy
CAPUNET, LLC
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Member