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HomeMy WebLinkAbout000711 Amendment #0007'1 '1 AMENDED AND RESTATED MEMORANDUM OF UNDERSTANDING This Amended and Restated Memorandum of Understanding (this "MOU") is made and entered into this day of February/9?,�_2 014 (the "MOU Effective Date") by and between the City of Port Angeles, a Washington municipal corporation (the "City"), and Capacity Provisioning Inc., a Washington corporation ("CPI"). This MOU amends and restates in its entirety that prior Memorandum of Understanding dated December 19, 2013, by and between the City and CPI. Factual Background A. Metropolitan Area Network Services. On March 30, 2010, the City and CPI entered into that certain Metropolitan Area Network Services Agreement pursuant to which CPI is providing wide area networking, point-to-point fiber optic communications services, Internet access services, on-call network consulting services and other telecommunications services to the City (collectively, the "MAN Services") in exchange for certain non-recurring charges and monthly recurring fees as described in the Services Agreement. On December 20, 2011, CPI and the City entered into a Supplement to the Metropolitan Area Network Services Agreement (the "Supplement"), which sets forth the terms and conditions for commercial use of the City-owned site as authorized in Section 4.5 of the Metropolitan Area Network Services Agreement (the Metropolitan Area Network Services Agreement, as amended by the Supplement, is referred to herein as the "Services Agreement"). The Services Agreement provides for an initial term that will expire on September 6, 2017. The Services Agreement also provides in Section 5.9 [City Right to Purchase] that under certain circumstances the City shall have a right to purchase the core switching equipment, customer premises equipment, telecommunications facilities and site drops owned by CPI and used in connection with the provision of the MAN Services to the City (the "Purchase Option"), and further provides in Section 5.5 [Subcontracts/Assignment] that any assignment or transfer of CPI's right, title or interest under the Services Agreement will be subject to the City's prior written approval. B. Right-of-Way License. On March 19, 2013, the City and CPI entered into that certain Right-of-Way License Renewal No. 2 (the "ROW License") pursuant to which the City granted CPI a license to construct, maintain, operate and use a telecommunication system in the public streets, alleys and rights-of-way in the City to provide private telecommunications services to public institutions and business end users in the City. CPI provides certain of such services pursuant to the Services Agreement. The ROW License provides for a term of five (5) years that will expire on March 18, 2018. The ROW License also provides in Section 14 [Sale or Transfer] that any assignment or transfer of CPI's right, title or interest under the ROW License will be subject to the City's prior written approval and that the City shall have the right of first refusal to acquire the telecommunications system owned by CPI, in the event of any transfer, assignment or sale (the "ROFR"). C. Wireless Mobile Data System. On December 20, 2011, CPI and the City entered into a Wireless Mobile Data System Acquisition and Integration Agreement, as subsequently amended on July 19, 2012 and again on September 12, 2012 (as amended, the "WMDS Acquisition Agreement"), pursuant to which CPI constructed a wireless mobile data system (the "WMDS System")for the City's ownership and use. In accordance with the WMDS Acquisition Agreement CPI completed the construction of the WMDS System and the City successfully 1 Memorandum of Understanding completed all system acceptance testing in accordance with the WMDS Acquisition Agreement and accepted the WMDS System. On December 20, 2011, CPI and the City entered into a Wireless Mobile Data System Operation, Management and Maintenance Services Agreement (the "WMDS OM&M Agreement") pursuant to which CPI provides operations, management and maintenance services for the WMDS System for the City. D. CPI's Sale to Wave Broadband. CPI and WaveDivision I, LLC, a Washington limited liability company d/b/a Wave Broadband ("Wave"), have agreed in principal that CPI will sell to Wave substantially all of CPI's tangible and intangible assets and business operations, including without limitation the Services Agreement the ROW License, and the WMDS OM&M Agreement. (The Services Agreement, the ROW License, and the WMDS OM&M Agreement are referred to collectively as the "Current Agreements".) The purchase and sale transaction between Wave and CPI (the "Transaction") is expected to close (the "Closing") on or before March 1, 2014, and is expressly subject to the receipt of various regulatory approvals and third party consents and the satisfaction of other closing conditions among which are (i)the amendment of the Current Agreements as provided herein, (ii) the consent of the City to the assignment of the Current Agreements from CPI to Wave, (iii)the City's waiver of any rights under the Purchase Option, and (iv)the City's confirmation of the status of the Current Agreements. As part of the Closing, Wave will acknowledge in writing that it will be bound and obligated to fully perform and carry out all duties, obligations, and liabilities of CPI to the City under the terms and provisions of all of the Current Agreements between CPI and the City that accrue from and after the Closing. Understanding and Agreement IN CONSIDERATION of the agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Representations. The statements made in the Factual Background set forth above are true and correct and incorporated herein for all purposes. The parties each represent that the other party and Wave may justifiably rely on the statements made in the Factual Background. 2. Matters Relating to the Services Agreement and the WMDS OM&M Agreement. (a) Term. The term of each of the Services Agreement and the WMDS OM&M Agreement is hereby extended and shall continue in full force and effect until September 6, 2024. The City shall retain its right to further extend the term of each of the Services Agreement and the WMDS OM&M Agreement for up to two additional one-year periods by providing notice, as applicable, in accordance with (i) Section 2.4 [Agreement Term] and Section 5.1 [Notices] of the Services Agreement or (ii) Section 1 [Agreement Term] and Section 4.5 [Notices] of the WMDS OM&M Agreement; provided however, the monthly recurring fees for the MAN Services and the monthly recurring fees payable by the City pursuant to the WMDS OM&M Agreement may be increased during each such one year extension periods in accordance with Section 2(b) of this MOU. 2 Memorandum of Understanding (b) Pricing. The fees for each of the MAN Services provided to the City as of the MOU Effective Date pursuant to the Services Agreement and the fees for the services provided to the City as of the MOU Effective Date pursuant to the WMDS OM&M Agreement are set forth on Schedule 1, attached hereto and made a part hereof by this reference (the "Current Fees List"). The fees set forth on the Current Fees List will remain in effect through September 5, 2017. On September 6, 2017 and annually thereafter for the remainder of the term of the Service Agreement and the remainder of the term of the WMDS OM&M Agreement, any and all of the service fees and charges thereunder may be increased by up to five percent (5%) per year plus an amount equal to the increase, if any, in City-imposed taxes or fees related to the services provided pursuant to the Services Agreement or the WMDS OM&M Agreement. (c) Purchase Option. The City hereby irrevocably waives any and all of its rights under the Purchase Option. Effective from and after the Closing, Section 5.9 [City Right to Purchase] of the Services Agreement is hereby amended to delete the Purchase Option in its entirety and the Purchase Option shall be of no further force or effect. (d) Recall Rights. The City has not exercised its rights pursuant to Section 2.6 or Section 2.10(3) of the Services Agreement to recall the use of any of the dark fibers granted to CPI (the "Recall Rights"). The City hereby irrevocably waives any and all of its rights under the Recall Rights. Effective from and after the Closing, Section 2.6 or Section 2.10(3) of the Services Agreement are hereby amended to delete the Recall Rights in their entirety and the Recall Rights shall be of no further force or effect. (e) Limited Right to Discontinue Service. Section 3.2 of the Services Agreement grants the City the right to discontinue sites serviced under the Services Agreement by providing ninety(90) days' written notice to CPI. The parties hereby amend Section 3.2 of the Services Agreement to amend and limit the City's rights to discontinue service under Section 3.2 (upon ninety (90) days' prior written notice of termination) only as follows: (1) At any time,the City may terminate service to a site serviced under the Services Agreement if such site is removed from City inventory, sold, or transferred, provided that the City, at least 30 days prior to the effective date of termination, orders other or additional services for other existing or replacement sites with the same or greater value as the services being terminated (each, a "Transferred Site"); and (2) Beginning from September 6, 2017, the City may terminate service to a site serviced under the Services Agreement only for (i) those services that are identified as a "Terminable Service" on the Current Fees List attached as Schedule 1 to this MOU or (ii)Transferred Sites. With respect to any Transferred Site for which the City terminate services pursuant to Section 3.2, as amended above, the City shall give 30 days' written notice in the event 3 Memorandum of Understanding that any such Transferred Site is subsequently reacquired by the City, and such reacquired site shall be added back to the Services Agreement. 3. Matters Relating to the ROW License. (a) Term. The term of the ROW License is hereby extended and shall continue in full force and effect until September 6, 2024. In the event the City determines to extend the term of the Services Agreement for up to two additional one-year periods pursuant to Section 2(a) of this MOU, then the term of the ROW License shall be extended automatically such that it is coterminous with the Service Agreement. (b) ROFR. The City hereby irrevocably waives any and all of its rights under the ROFR. Effective from and after the Closing, Section 14 of the ROW License is hereby amended to delete the ROFR in its entirety and the ROFR shall be of no further force or effect. 4. Matters Relating to the Transaction. (a) Current Agreements. On the condition that as part of the Closing Wave acknowledges in writing that it will be bound by and obligated to fully perform and carry out all duties, obligations and liabilities of CPI to the City under the terms and provisions of the Current Agreements, as amended hereby,that accrue from and after the Closing (substantially in the form of Acknowledgment attached to this MOU), then the City consents to the assignment of all of CPI's right, title and interest in the Current Agreements, as amended hereby, and the delegation of CPI's obligations under the Current Agreements, as amended hereby, to Wave, effective as of and subject to the Closing, and the City releases CPI, effective on the Closing, from all obligations and liabilities under the Current Agreements that accrue from and after the Closing and the City releases Wave, effective on the one-year anniversary of the Closing, from all obligations and liabilities under the Current Agreements that arise or accrue prior to the Closing. Further, following Closing the City irrevocably consents to Wave's assignment of the Current Agreements to (i) Wave's successor in a consolidation, merger or acquisition, (ii) an entity under common control with, controlled by or in control of Wave, or (iii) a lender, as an assignment of collateral to secure credit extended to Wave or its parent company. For the elimination of doubt, CPI is not assigning to Wave, and Wave shall have no obligations with respect to,the WMDS Acquisition Agreement, and the sole outstanding obligation of CPI under the WMDS Acquisition Agreement is set forth in Section 4.15 [Warranties] thereof, which obligation will expire and be of no further force or effect on May 21, 2014. The City represents that there are no pending claims pursuant to Section 4.15 [Warranties] of the WMDS Acquisition Agreement and the City is not presently aware of the basis for any such claims. (b) City Representations. The City represents and warrants as follows: (i) true, complete and correct copies of the Current Agreements are attached hereto as Exhibit A (the Services Agreement together with the Supplement), Exhibit B (the ROW License), and Exhibit C (the WMDS OM&M Agreement); (ii)the Current Agreements 4 Memorandum of Understanding have not been amended or modified in any respect except as provided in this MOU; (iii) the Current Agreements constitute the entire understanding between CPI and the City with respect to the subject matter in each of such documents, respectively; (iv) the Current Agreements are in full force and effect and there are no uncured defaults (and the City is not presently aware of the basis for any defaults) or unpaid monetary, performance or other obligations thereunder; (v) there are no unpaid liquidated damages that have been assessed pursuant to Section 5.7 [Violations and Remedies] of the Services Agreement and there are no pending assessments or any basis for same; and (vi)there are no existing facts or circumstances that with or without the giving of notice or the passage of time, or both, would constitute a default of any term or condition of the Current Agreements. (c) Fiber Optic WAN Use Agreement. The City and Wave are parties to a Fiber Optic WAN Use Agreement originally made on August 27, 2002, and as subsequently amended on December 31, 2002, and again on December 3, 2003 (as so amended, the "WAN Agreement"). The effectiveness of this MOU is expressly conditioned on and subject to an acknowledgement in writing by Wave at the Closing (substantially in the form of Acknowledgment attached to this MOU) that the WAN Agreement is ratified and remains in full force and effect and that nothing in this MOU affects any term or condition of the WAN Agreement. The City represents and warrants that there are no existing facts or circumstances that with or without the giving of notice or the passage of time, or both, would constitute a default of any term or condition of the WAN Agreement. 5. Notices. From and after the Closing, all notices from the City under the Current Agreements shall be directed to Wave Broadband, at 401 Kirkland Park Place, Suite 500, Kirkland, WA 98033, Attn:James A. Penney, Executive Vice President, and all applicable provisions of the Current Agreements (including, without limitation, Section 5.1 of the Services Agreement, Section 4.5 of the WMDS OM&M Agreement, and Section 15.2(b) of the ROW License) are hereby amended accordingly. 6. Miscellaneous. Except as expressly modified by this MOU, all terms, conditions and provisions of the Current Agreements shall continue in full force and effect as set forth therein and are hereby ratified and confirmed. In the event of a conflict between the terms and conditions of the Current Agreements and the terms and conditions of this MOU, the terms and conditions of this MOU shall prevail. This MOU may not be modified or rescinded except in a writing signed by the Parties. Wave and its affiliates, successors and assigns are intended third party beneficiaries of this MOU. This MOU may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This Agreement shall be governed by and construed in accordance with the laws of the State of Washington, without regard to its principles of conflict of laws. Each party represents and warrants to the other that it has full power and authority to enter into and perform this MOU. 7. Conditional Effectiveness of this MOU. The effectiveness of this MOU is expressly conditioned on and subject to the occurrence of the Closing of the Transaction. This 5 Memorandum of Understanding MOU shall be void ab inito and of no force or effect if the Closing does not occur on or before March 1, 2014. [Remainder of Page is Blank;Signature Page Follows] 6 Memorandum of Understanding [Signature Page] Intending to be legally bound hereby, the parties have executed this MOU as of the MOU Effective Date. CPI: Capacity P vi-5 ing Inc. By: /1 Name: (.- ICAZ4 efa N0s0✓ Title: VP City: City of P ngeles By: Name: at,tel Mcteaen Title: C s�dw1 Vrnn&'!j4-- Attest: c Ci erk Approved as to Form: r City Attorney 7 Memorandum of Understanding FORM OF ACKNOWLEDGEMENT This Acknowledgement is entered into by WaveDivision I, LLC, a Washington limited liability company d/b/a Wave Broadband ("Wave"), pursuant to that certain Amended and Restated Memorandum of Understanding dated February_, 2014(the "MOU"), by and between the City of Port Angeles, a Washington municipal corporation (the "City"), and Capacity Provisioning Inc., a Washington corporation ("CPI"). All capitalized terms used herein without being defined shall have their respective meanings as set forth in the MOU. Pursuant to Section 4(a) of the MOU, Wave hereby acknowledges to the City that, effective as of and following the Closing, it will be bound by and obligated to fully perform and carry out all duties, obligations and liabilities of CPI to the City under the terms and provisions of the Current Agreements, as amended by the MOU, which accrue from and after the Closing. Pursuant to Section 4(c) of the MOU, Wave hereby acknowledges to the City that, effective as of the Closing, the WAN Agreement is ratified and remains in full force and effect and that nothing in the MOU affects any term or condition of the WAN Agreement. Dated: 12014 WaveDivision I, LLC By: Name: Title: Acknowledgement Memorandum of Understanding FORM OF ACKNOWLEDGEMENT This Acknowledgement is entered into by WaveDivision I, LLC, a Washington limited liability company d/b/a Wave Broadband ("Wave"), pursuant to that certain Amended and Restated Memorandum of Understanding dated February 26 2014(the "MOU"), by and between the City of Port Angeles, a Washington municipal corporation (the"City"),and Capacity Provisioning Inc.,a Washington corporation ("CPI"). All capitalized terms used herein without being defined shall have their respective meanings as set forth in the MOU. Pursuant to Section 4(a)of the MOU,Wave hereby acknowledges to the City that,effective as of and following the Closing, it will be bound by and obligated to fully perform and carry out all duties, obligations and liabilities of CPI to the City under the terms and provisions of the Current Agreements, as amended by the MOU,which accrue from and after the Closing. Pursuant to Section 4(c) of the MOU,Wave hereby acknowledges to the City that, effective as of the Closing,the WAN Agreement is ratified and remains in full force and effect and that nothing in the MOU affects any term or condition of the WAN Agreement. Dated: FebLuar_y 2014 WaveDivision I, LLC By: . Name: Pt Title: Acknowledgement Memorandum of Understanding SCHEDULE 1 Current Fees List Schedule 1 Memorandum of Understanding EXHIBIT A Services Agreement (together with the Supplement) Exhibit A Memorandum of Understanding EXHIBIT B ROW License Exhibit B Memorandum of Understanding EXHIBIT C WMDS OM&M Agreement Exhibit C Memorandum of Understanding