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Voip Equipment Purchase And Services Agreement

Purchase and Sale Agreement

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Date: 10/27/2006
Law Firm: Snow, Christensen Martineau    

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Exhibit 10.20





THIS AGREEMENT is made and entered into on this _ 25 th _ day of October, 2006, by and between Onasi, Inc., a Utah corporation dba OnSat (“OnSat”) with its principal offices in Park City, Utah, and Viper Networks, Inc., a Nevada corporation (“Viper”) with its principal offices in San Diego, California. (The forgoing are at times herein referred to collectively as the “Parties.”)




A.   OnSat is engaged in the business of designing, installing and servicing satellite-based Internet services and related equipment in remote domestic and international locations, and is currently authorized and contracted to provide those services to residents of the Navajo Nation under contract no. C22052 Master Agreement Internet and Transmission Services dates 11-30-01 as modified under modification no. 10 dated 1-15-06. OnSat is interested in expanding its Internet-based services within the Navajo Nation (the “Territory”) to include telecommunication services using Voice-Over-Internet protocol;


B.   Viper is engaged in the business of designing and marketing Voice over Internet Protocol (“VOIP”) products and services and is interested in expanding its subscription market and related services into the Navajo Nation and desires to engage with OnSat as its exclusive reseller of those services within that market, with the potential for expansion into other OnSat service markets.


C.   OnSat desires to engage with Viper as its sole-source provider of VOIP products and services within the Navajo Nation market, with the potential for further market expansion.


D.   The parties have heretofore agreed on the material terms of an agreement between them, to the foregoing purposes and desire now to formalize that agreement, on the terms and conditions herein.


NOW, THEREFORE, in consideration of the foregoing and the mutual agreements and covenants contained herein, the Parties hereby agree as follows:


1.   Effective Date and Initial Term . This Agreement shall be effective as of ___ 10-25-06 _______ or, if later, the date on which Viper obtains commitments for loan financing in amounts sufficient to finance the purchase of equipment necessary hereto, which amount is estimated to be not less than the amount provided on Exhibit 1, Item 1 (the “Viper Financing”). The Initial Term hereunder shall expire on June 30, 2010, and shall renew for successive one-year terms unless either party shall notify the other, in writing, not later than 90 days prior to the end of the Initial Term (or any extension then in effect), of its desire to terminate. Notwithstanding the forgoing, the Initial Term shall expire upon any termination of OnSat’s contract C22052 with the Navajo Nation prior to the date set forth herein, provided said termination is not due to the default or breach of the contract by OnSat.


2.   Financing as a Condition Precedent . The parties understand and acknowledge that the Viper Financing referenced in paragraph 1 is a condition precedent to the parties’ respective obligations hereunder and that, in the event of Viper’s inability to obtain such financing commitment within thirty





(30) days of the date hereof, despite the exercise of commercially reasonable efforts, either party may terminate this agreement and shall rescind and return any transfer of property hereunder.  


3.   Viper As Exclusive VOIP Provider . For the term of this Agreement, as extended or renewed hereunder, and provided that Viper shall provide functional and serviceable VOIP services within the Territory, OnSat shall contract exclusively with Viper for such services and shall neither promote nor market nor represent any VOIP service or products similar to those offered by Viper without Viper’s prior written consent. Similarly, and for said term, Viper shall contract exclusively with OnSat and shall neither act to interfere with, compete with or circumvent OnSat’s contractual relationship with the Navajo Nation and with actual or potential subscribers within the Territory. The parties agree that each shall also afford the other a reasonable right of first refusal to join in a similar agreement in connection with other remote, satellite-based Internet markets in which both are or have the potential for market expansion before contracting with others to provide equipment or services in connection with such expansions or new markets.


4.   Purchase and Maintenance of Equipment In Place.


a.   Access Point Equipment Purchased . Viper hereby agrees to purchase from OnSat and OnSat agrees to sell to Viper various Wireless service base equipment (“Access Equipment”) currently installed, in place and operational within the Territory and necessary to the VOIP services, comprising 900 MHz access points, related server equipment and antennas, as identified and itemized in greater detail at Schedule 1(a) attached hereto.


b.   Purchase Price . Viper agrees to pay to OnSat a total of $1,411,000.00 for the Access Equipment, which amount shall be payable in authorized common shares of Viper (OTC: VPER), at exchange rate equal to the average closing price of publicly-traded VPER shares over the 30-day period preceding the Effective Date of this Agreement or in preferred shares of Viper convertible into the same number of common shares (the “Viper Shares”). OnSat acknowledges and understands that said shares are restricted from public sale in accordance with applicable SEC rules and regulations and may not be readily marketable for an indefinite period. The Viper Shares will be split between two certificates; one for 10,000,000 (ten million) common shares (the “Retained Shares”) and the second for the balance of the Viper Shares previously calculated (the “Resale Shares”); collectively the “Viper Shares.”


c.   Documentation and Rescission Upon Failure of Condition . The purchase and sale of the Access Equipment under this paragraph shall be documented by a Bill of Sale itemizing all Access Equipment. Notwithstanding, in the event that Viper is unable to obtain the Viper Financing as provided in paragraph 1 above, said sale shall be reversed and rescinded, and OnSat shall return to Viper, in exchange for Viper’s return of the Bill of Sale, the Viper Shares received in connection with said purchase transaction.


d.   Equipment Maintenance and Use . OnSat shall be responsible to service, maintain, and replace all Access Equipment, as required to maintain service to the Territory, for Viper, and, in consideration of such continued maintenance and service, and in further consideration for the VOIP rates paid to Viper hereunder, OnSat shall have continued rights and license to use said Access Equipment to provide OnSat’s Internet connectivity and services within the Territory (the “OnSat Territory License”).





OnSat shall provide to Viper regular reports of the serviceability of the Access Equipment and shall timely advise of the failures of reasonable repairs and any resulting replacement.


e.   Risk of Loss . The risk of loss and responsibilities to insure the Access Equipment shall remain with OnSat for the life of this Agreement as additional consideration for the OnSat Territory License. Upon the execution and delivery to Viper of the Bill of Sale hereunder, and prior to the Viper Financing funding, OnSat shall deliver to Viper an original certificate of insurance naming Viper and the Viper Financing lender(s) as additional named insured.


f.   Property Taxes and/or Use Taxes . OnSat shall be responsible for the payment of all property and/or use taxes accessed on the Access Equipment as additional consideration for the OnSat Territory License.


g.   Resale/Repurchase of Access Equipment . Viper has the right and option, at its sole choice, to resell the Access Equipment (subject to adjustment for repairs and replacements of said equipment under subparagraph (d) above) back to OnSat on June 30, 2010 or, at Viper’s option, such earlier date as 27,000 VOIP users have active subscriptions within the Territory. For its part, OnSat has the right and option, at its sole choice, and in consideration of the surrender of the Resale Shares, to repurchase the Access Equipment from Viper subject to the terms of the Viper Financing, at any time after June 30, 2008 or upon any earlier of any of the following occurrences: (i) Viper bankruptcy; (ii) Viper’s default under this Agreement; or (iii) any reduction or dilution of the market value of Viper shares for a consecutive period of 90 days below 50% of the valuation upon which the purchase price for the Access Equipment was calculated. In the event of the exercise by either party of the options granted herein, OnSat agrees to return or to cause to be returned to Viper the Resale Shares received in subparagraph (b) above and Viper agrees to provide to OnSat a Bill of Sale for the Access Equipment. Viper and OnSat agree that the stock certificate representing the Resale Shares and a Bill of Sale reconveying the Access Equipment to OnSat will be held in escrow by Snow, Christensen & Martineau (“Snow”) until such time as either party shall exercise the option granted to it hereunder, or until each has waived its rights to do so, in writing. In the event of an exercise by either party of the option to resell or repurchase the Access Equipment and upon delivery to Snow and to the other party of written notice of that exercise, Snow will return the Resale Share certificate to Viper and deliver the Bill of Sale to OnSat. Notwithstanding the foregoing, Viper’s option to resell the Access Equipment and OnSat’s option to repurchase the Access Equipment shall expire as of July 10, 2010, at which time the Resale Share certificate will be released into OnSat’s possession and the Bill of Sale shall be returned to Viper


5.   VOIP Subscriber Services on OnSat Network  


a.   Viper’s VOIP products and services (the “VOIP Services”) will be marketed and sold within the Territory through OnSat, under it current and exclusive contract with the Navajo Nation. For that purpose, Viper appoints OnSat as its sole and exclusive reseller of Viper VOIP Services within the Territory, and on the terms and conditions outlined herein. OnSat shall also be Viper’s sole source for all required subscriber equipment, which shall be compatible with the Access Equipment, and provided at the prices provided herein.





b.   Viper will initially purchase from OnSat and OnSat shall maintain for use in connection with the sale and delivery of Viper’s VOIP Services within the Territory, the number of VOIP subscriber kits and at a unit cost as provided on Exhibit 1, Item 5(b) and comprising the following (collectively, the “Subscriber Equipment”):




900 MHz modem




VOIP Broadband Phone Adaptor (“BPA”) box (LlnkSys model no. 2102 or equivalent as tested by Viper)




Subscriber-side antenna 








VOIP Services, and




Standard telephone handset (as required)


c.   From and after Viper’s purchase of the Subscriber Equipment (the “Inventory”), Viper shall own all such equipment; however, OnSat shall maintain and protect said Inventory until installation is accepted by the subscriber, to be used for subscriber installations.


d.   Viper’s obligation to purchase Subscriber Equipment is limited to the quantities and dates, as detailed in the attached as Schedule 5(d). If installations would exceed these Inventory levels OnSat, at its option, will either:




Fund the purchase of additional Inventory, until the next scheduled Viper purchase, to satisfy all or part of the additional sales demand, or




Delay the installation of new Subscriber Equipment until he next Inventory purchase by Viper.


6.   Service Wholesale Rates, Commissions, Marketing Costs : The parties agree to the following rates and commissions to apply for the Initial Term. Said rates may be adjusted thereafter upon annual renewals upon the written consent and agreement of both parties.


a.   From subscriber charges for VOIP services, OnSat shall pay to Viper the following for each subscriber:


i.   the amount provided on Exhibit 1, Item 6(a)(i) for each installation under a two (2) year VOIP services contract of Subscriber Equipment as collected, such installation fee will generally be paid by the Navajo Communities/Navajo Nation under OnSat’s Sole Source Agreement with the Navajo Nation;


ii.   the monthly amount provided on Exhibit 1, Item 6(a)(ii) for each monthly billed unlimited (as defined) subscription services account (the “Monthly Account”) in advance on the 5 th of each month for unlimited (as defined) monthly calls within the continental US (48 states);


iii.   the amount provided on Exhibit 1, Item 6(a)(iii) per minute for prepaid phone card sales, for other than unlimited calling plans, and for excess unlimited average usage (as defined)





for actual continental US usage, billed by the minute, as such card sales are made or usage incurred in arrears on the 5 th of each month;


iv.   the percentage provided on Exhibit 1, Item 6(a)(iv) of Viper’s published rates for all calls made outside of the continental US, billed by the minute, as such card sales are made or usage incurred in arrears on the 5 th of each month; and


v.   the amount provided on Exhibit 1, Item 6(a)(v) for the early cancellation of a Monthly Account in arrears on the 5 th of each month.


b.   In turn, Viper shall pay to OnSat the following by the 5 th of each month:


vi.   a flat monthly fee of the amount provided on Exhibit 1, Item 6(b)(vi) for marketing and sales services for the first twelve (12) months of the Initial Term following funding of the Viper Financing, then 50% of the amount provided on Exhibit 1, Item 6(b)(vi) per month until the last twelve (12) months of the Initial Term then zero (the “Marketing Fee”). Upon renewal(s) of this Agreement the Marketing Fee of 50% of the amount provided on Exhibit 1, Item 6(b)(vi) per month will be reinstated until the last twelve (12) months of the Renewal Term then zero;


vii.   the monthly amount provided on Exhibit 1, Item 6(b)(vii) for each monthly unlimited subscription services account for use of OnSat satellite bandwidth in advance on the 5 th of each month;


viii.   a the percentage provided on Exhibit 1, Item 6(b)(viii) commission on the Viper’s net monthly subscription services revenue (6(a)(ii) minus 6(b)(vii) for OnSat’s sales, engineering and customer support services in advance on the 5 th of each month; and


ix.   a the percentage provided on Exhibit 1, Item 6(b)(ix) commission on Viper’s monthly revenue billed under 6(a)(iii) and 6(a)(iv) above in arrears as additional consideration for OnSat’s sales, engineering and customer support services.


c.   The term unlimited subscription services account refers to the contract between OnSat and the individual subscriber not the delivery of the aggregate continental US calling minutes during a month for these individual subscribers as paid by OnSat to Viper. For the purpose of this Agreement between Viper and OnSat additional usage minutes, as defined below, will be paid to Viper as follows:


x.   individual subscriber continental US minutes in excess of the number of minutes provided on Exhibit 1, Item 6(c)(x) during a monthly billing cycle will be paid at the amount provided on Exhibit 1, Item 6(c)(x) per minute in arrears on the 5 th of each month; and


xi.   the aggregate continental US minutes provided to all subscriber’s during a month in excess of the product of the number of minutes provided on Exhibit 1, Item 6(c)(xi) times the numbers of subscribers during the month will be paid at the amount provided on Exhibit 1, Item 6(c)(xi) per minute in arrears on the 5 th of each month.





d.   Any applicable sales, use, personal property, excise or other taxes (other than income or corporate franchise taxes) which attach to the sales of the VOIP services or which OnSat is required to pay or collect on or as a result of the rights granted hereunder shall be the sole responsibility of OnSat, which shall hold Viper harmless therefrom. Viper shall be responsible for any property tax attaching to equipment owned by Viper, excluding the Access Equipment, and the unsold Inventory and all such liability shall be deemed to be included in the rates payable hereunder.


e.   All payments and allowances payable between the parties shall be shall be calculated and reconciled by the parties quarterly on a calendar basis.


7.   Services Installation and Marketing. In consideration of the rates and payments between the parties as outlined in this Agreement, the parties shall bear responsibility for marketing, selling, promoting, installing and servicing Viper’s VOIP services and equipment for subscribers on OnSat’s existing satellite-based Internet network and related system within the Territory, as follows:




Viper Duties .


i.   Viper shall provide provisional interface for the VOIP network and other interconnecti

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