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HomeMy WebLinkAbout000711 Original ContractCity of Port Angeles Record #000711 This Memorandum of Understanding (this WOU") is made and entered into this day of 2013 (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"). lawma-mus 90101 A. Metrapolitan 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 "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 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, (the "WMDS Acquisition Agreement") pursuant to which CPI constructed a wireless mobile data system (the "WIVIDS System") for the City's ownership and use. In accordance with the WIVIDS Acquisition Agreement CPI completed the construction of the WIVIDS System and the City successfully completed all system acceptance testing in accordance with the WIVIDS 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 "WIVIDS OM&M Agreement") pursuant to which CPI provides operations, management and maintenance services for the WIVIDS System for the City. D. CPI's Sale to Wave Broadband. CPI and WaveDivision 1, 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 purchase and sale transaction between Wave and CPI (the "Transaction") is expected to close (the "Closing") on or before December 31, 2013, 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 Services Agreement as provided herein, (ii) the consent of the City to the assignment of the Services Agreement from CPI to Wave, (iii) the City's waiver of any rights under the Purchase Option, (iv) the consent of the City to the assignment of the ROW License from CPI to Wave, (v) the amendment of the ROW License as provided herein, (vi) the consent of the City to the assignment of the WIVIDS OM&M Agreement, and (vii) the City's confirmation of the status of the Services Agreement, the ROW License and the WIVIDS OM&M Agreement. 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 (as defined herein) 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 may justifiably rely on the statements made in the Factual Background. 2. Matters Relating to the Services Agreement. (a) Term. The term of the Services Agreement is hereby extended for an additional period of seven (7) years. As so extended, the Services Agreement will continue in full force and effect until September 6, 2024. The City shall retain its right to further extend the term of the Services Agreement for up to two additional one-year periods by providing notice in accordance with Section 2.4 [Agreement Term] of the Services Agreement, provided however, the monthly recurring fees for the Services may be increased during such one year periods in accordance with Section 2(b) of this MOU. M Pricing. The current service fees set forth in the Services Agreement 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, 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. (c) Purchase Option. The City hereby waives any and all of its rights under the Purchase Option. From and after the Closing the Purchase Option shall be eliminated in its entirety. (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 waives the Recall Rights. From and after the Closing the Recall Rights shall be eliminated in their entirety. 3. Matters Relating to the ROW License. (a) Term. The term of the ROW License is hereby extended 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 by providing notice in accordance with Section 2.4 [Agreement Term] of the Services Agreement, 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 waives any and all of its rights under the ROFR. From and after the Closing the ROFR shall be eliminated in its entirety. 4. Matters Relating to the Transaction. (a) Current Agreements. The Services Agreement (together with the Supplement), the ROW License, the WIVIDS Acquisition Agreement and the WIVIDS OM&M Agreement are referred to collectively as the "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, 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. Further, following Closing the City 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, the sole outstanding obligation of CPI under the WIVIDS 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. (b) City Representations. The City represents and warrants as follows: (i) true, complete and correct copies of the Current Agreement are attached hereto as Exhibit A (the Services Agreement together with the Supplement), Exhibit B (the ROW License), Exhibit C (the WIVIDS Acquisition Agreement), and Exhibit D (the WIVIDS OM&M Agreement), and the Current Agreements have not been amended or modified in any respect except as provided in this MOU; (ii) the Current Agreements constitute the entire understanding between CPI and the City with respect to the subject matter in each of such documents, respectively; (iii) the Current Agreements are in full force and effect and there are no uncured defaults or unpaid monetary, performance or other obligations thereunder; (iv) 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; (v) there are no pending claims pursuant to Section 4.15 [Warranties] of the WMDS OM&M Agreement and the City is not presently aware of the basis for any such claims; and (v) there are no existing facts or circumstances 2 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 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. 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. 6. 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 MOU shall be void A inito and of no force or effect if the Closing does not occur on or before January 30, 2014. Intending to be legally bound hereby, the parties have executed this MOU as of the First MOU Effective Date. [Remainder of Page is Blank; Signature Page Follows] [Signature Page] no Capacity ing Inc. By: Name: Title: City: City of Poft7Angeles By: Name: n I ej M ckc e.,) Title: Attest: City Clerk Approved as to Form: City Attorney