Loading...
HomeMy WebLinkAboutC3. Dark Fiber Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager David Fine, Economic Development Specialist SUBJECT: Dark Fiber Lease Agreement between the City of Bozeman and Bozeman Fiber MEETING DATE: February 8, 2016 AGENDA ITEM TYPE: Consent RECOMMENDATION: Authorize the City Manager to sign the Dark Fiber Lease Agreement between Bozeman Fiber and the City of Bozeman. BACKGROUND: On August 24, 2015, the City Commission authorized the City Manager to sign a Memorandum of Understanding (MOU) between Bozeman Fiber and the City of Bozeman for the Lease of Dark Fiber. The MOU outlined the significant terms of a final dark fiber lease agreement. The final lease agreement, which was negotiated between counsel for Bozeman Fiber and the City of Bozeman legal department, is consistent with the MOU approved by the City Commission. FEATURES OF THE LEASE AGREEMENT: The Dark Fiber Lease Agreement under consideration includes the following terms: • A 10 year lease commitment for $556 per month, per location. (An 11% discount from what the City currently pays for its wide area network.) 23 • The City and Schools receive dark fiber at all of the locations where they currently need it for less than the monthly price of their current lit services. • The City receives the opportunity to reduce its lease payment by up to 10% after 5 years if there are significant price improvements in the dark fiber market. • The Lease includes a contingency allowing the City to terminate the Lease without penalty if Bozeman Fiber is unable to deliver access to the dark fiber by June 27, 2016. • Lease payment in future fiscal years is contingent on the appropriation of funds by the City Commission. FISCAL EFFECTS: • The Lease Agreement proposes a 10 year lease term for six (6) locations at a cost of $556 per location per month (an 11% discount off what the City currently pays for its wide area network.). • The cost of the 10 year lease for the City is $400,320. o The City will also incur one time connection fees of up to $2,500 per location for a total one-time cost not to exceed $15,000. • Pursuant to an Interlocal Agreement with the Bozeman Public Schools to procure dark fiber, the City will lease fiber for an additional 12 locations on behalf of the schools for a 10 year cost of $800,640. The City will be compensated by the Schools for this purchase under the terms of the Interlocal Agreement. The Schools will also incur one-time costs for connecting their 12 locations, not to exceed $30,000. • The City may also incur incidental maintenance fees for its leased fibers if the fiber is cut or damaged. ATTACHMENT: Dark Fiber Lease Agreement between the City of Bozeman and Bozeman Fiber 24 LINKED MATERIAL: August 24, 2015, City Commission Packet Material – Memorandum of Understanding between Bozeman Fiber and the City of Bozeman for the lease of Dark Fiber August, 24, 2015, City Commission Packet Material – Interlocal Agreement with Bozeman School District #7 for the Procurement of Dark Fiber for the use of the Schools January 26, 2015, City Commission Packet Material – Resolution No. 4576, adopting the Bozeman Fiber Master Plan and Feasibility Study 25 Page 1 DARK FIBER LEASE AGREEMENT THIS DARK FIBER LEASE AGREEMENT (“Agreement”) is made on ___________2016 (the “Effective Date”), by and between the City of Bozeman, a self governing municipal corporation organized and existing under its Charter and laws of the State of Montana with its principal offices located at 121 North Rouse, Bozeman, MT (“City” or “Lessee”) and Bozeman Fiber, a Montana non-profit corporation with its principal offices located at 2000 Commerce Way, Bozeman, MT (“BFI” or “Lessor”). City and BFI are at times collectively referred to hereinafter as the “Parties” or individually as “Party.” RECITALS 1. Bozeman Fiber (BFI), in accordance with the Bozeman Fiber Master Plan and Feasibility Study, is developing a community fiber optic network, in which BFI will be able to make available unactivated (“dark”) fiber optic network strands for the use and benefit of others. 2. The City desires to obtain dark fiber connectivity to certain City locations. 3. The City desires to facilitate dark fiber connectivity to initial locations of Bozeman School District #7, and the City possesses authority to procure dark fiber connectivity on the School District’s behalf. 4. BFI desires to provide dark fiber connectivity to initial City and School locations, and other locations as may be mutually agreed by the Parties. 5. The Parties executed a Memorandum of Understanding on or about August 24, 2015, outlining the substance of the Agreement that follows. NOW, THEREFORE, in consideration of mutual promises stated in this Agreement, the sufficiency of which is acknowledged by the Parties, the Parties agree as stated below. 1. TABLE OF EXHIBITS MADE PART OF THIS AGREEMENT Exhibit A: Initial City and School Locations Exhibit B: Description of Leased Fiber Exhibit C: Acknowledgement of Acceptance of Leased Fiber Exhibit D: Grant of Authority from Schools to City to Enter Into Fiber Lease 26 Page 2 2. DEFINITIONS 2.1. “Affiliates” means any person, firm, corporation, partnership, association, trust or other person or entity that controls, is controlled by or is under common control of the subject party. 2.2. “Agreement” means this Dark Fiber Lease Agreement, all Exhibits and Attachments thereto, any Addenda to which the Parties may agree from time to time, and any other provisions incorporated by reference. 2.3. “Cable” shall mean a bundle of fiber optic filaments or strands, installed and owned by Lessor, meeting or exceeding SMF 28 or any other applicable industry standard. A Cable is composed of several dark fiber filaments or strands. 2.4. “City Location(s)” mean those Locations owned or controlled by City. 2.5. “Acceptance Date” means that date on which installation of all or a portion of Leased Fiber is complete and City or Schools have accepted same or the Lease is deemed accepted as to such Leased Fiber pursuant to this Agreement. 2.6. “Effective Date” means that date upon which this Agreement is executed by both Parties. 2.7. “Engineering Study” means BFI’s technical evaluation and study of tasks, labor, materials, cost and other matters relating to deployment of the Network. 2.8. “Fiber Lease” means the leasehold interest in specified unactivated fiber optic strands within the Network, granted to City under this Agreement. 2.9. “Leased Fiber” means the dark optical fiber strands (“dark” as such term is commonly understood in the telecommunications industry, e.g., without electronics or optronics so that it is not “lit” or activated) on a route in the Network in which City has been granted a Fiber Lease pursuant to this Agreement. 2.10. “Location” means a specifically identified City or School site to be connected with Leased Fiber under this Agreement, at which the City or School may attach its own facilities. 2.11. “Maintenance” means work that must be performed upon or to Leased Fiber or the Network to ensure the continuity of an acceptable signal transmitted through the Leased Fiber (in conformance with the manufacturer’s specifications), or to ensure the safety and reliability of Leased Fiber or the Network. Unless otherwise agreed in writing, Maintenance shall not include any work associated 27 Page 3 with either non-Network equipment owned by an entity other than BFI, or equipment that sends, receives, interprets or modifies a signal or signal data. 2.12. “Network” means a fiber optic communication system including strands of fiber optic cable, hardware, equipment, and access locations and rights related thereto, without limitation, owned and/or controlled by BFI. 2.13. “Schools” means Bozeman School District Number 7. 2.14. “School Locations” means Locations owned or controlled by Bozeman School District Number 7. 3. TERM. 3.1. Initial Term. This Agreement shall be in full force and effective as of the date that both Parties have executed it (the Effective Date), and unless sooner terminated in accordance with its terms, shall remain in effect for an initial term of ten (10) years. 3.2. Renewal. The City shall have the right to renewal for an additional ten (10) year term by providing notice of such intent no less than six (6) months prior to the expiration date of the Term. The lease fee for the renewal term shall be negotiated by the parties, consistent with then market rates, but in no event greater than ten percent (10%) greater than the lease fee set forth in Section 4.3.1. The Parties will commence discussions for additional renewal of this Agreement no later than the 9th anniversary of any renewal term, or as soon as practicable thereafter. Any renewal shall be in writing, and executed by the Parties. Notwithstanding the foregoing, the parties may enter into any renewal containing such modifications as the Parties may agree. 4. DARK FIBER LEASE. 4.1. Fiber Lease. As of the Acceptance Date (set forth in Section 4.5) and under the terms and conditions of this Agreement, BFI grants a lease to City, for the use and benefit of the City and Schools, of the Leased Fiber, namely, the designated number of dark fiber optic strands to City and School Locations, in accordance with the initial route (as may be amended by BFI in its reasonable discretion, so long as there is no degradation in service or material increase in cost to the City or Schools) described in Exhibits A and B. Subject to the terms and conditions of this Agreement, City and Schools shall have the right to use, and the right to 28 Page 4 attach equipment to, the Leased Fiber at Locations. In no event shall any term or condition of this Agreement be construed to include any obligation of BFI to provide any equipment space, licenses, rights of way, or other consents for any attachments to or other uses of the Leased Fiber, in that equipment space and such usage rights are outside the scope of rights granted to City in the Leased Fiber and this Agreement. The Parties agree and understand that this Agreement does not involve the provision of Internet access service, telecommunication service, or any other transmission of data or signals by BFI. 4.2. Scope. The Fiber Lease granted to City includes an exclusive, undivided interest in the Leased Fiber. City shall not acquire any interest in the Network by virtue of this Agreement except the limited, exclusive right to use the Leased Fiber pursuant to this Agreement, nor in any proceeds from the disposition of any or all portions of the Network. Nothing in this Agreement grants to City or Schools an exclusive right to use that conduit in which Network fibers are located, as BFI maintains exclusive rights to use said conduit in its sole discretion, subject to any nonexclusive right in said conduit as may be necessary for City and Schools to use the Leased Fiber. 4.3. Lease Fee. 4.3.1. City shall be assessed and shall pay annually to BFI a lease fee for use of Leased Fiber, in the amount of $556.00 per month, per City and School Location to which BFI has provided access to Leased Fiber under this Agreement. The annual Lease fee shall be payable upon the Acceptance Date described in Section 4.5. 4.3.2. Market Adjustment. After five (5) years of service under the original Lease pricing, the Parties may engage in negotiations on Lease price with regard to the respective interests of the Parties. If the City identifies an identical dark fiber service that is available in the Bozeman market at a lower price point, and both Parties find that dark fiber offering to be a technically like product, City shall receive a discount on the remaining five (5) years of the Agreement for a price matching the competing service’s price, provided that the total discounted price may not be more than ten (10) percent less than the original Lease price. 4.4. Installation. BFI or BFI’s contractors, subcontractors, or other designees shall provide all labor, materials, and equipment required to install and test the Leased Fiber. BFI may charge a one-time, per-site Connection Charge, as described in Section 6.5. The Parties shall mutually agree to a schedule for all work contemplated by this Agreement. 29 Page 5 4.5. Fiber Acceptance Procedures. BFI shall be responsible for the testing of the Leased Fiber, which testing will be performed with industry accepted equipment, and BFI shall provide City a report of such test results. Upon completion and receipt of the test results, City shall have fifteen (15) working days to give BFI written notice of acceptance or to reject the test results and specify parts not in accordance with industry standards. (A sample Acknowledgement of Acceptance of Leased Fiber is provided as Exhibit C.) Failure of City to review and either accept or reject the test results within said fifteen (15) working days shall operate as constructive acceptance of the test results for purposes of acceptance in this Agreement. If within said fifteen (15) working days City gives BFI written notice of rejection of any of the Leased Fiber due to nonconformity with industry standards, BFI shall have forty-five (45) days after receiving said notice to remedy all defects or failures to conform the Leased Fiber to industry standards. If BFI fails to remedy all such defects or failures within forty-five (45) days after receiving notice from City of rejection, then the foregoing procedure shall repeat until acceptance or deemed acceptance of the Leased Fiber. The acceptance or deemed acceptance of the Leased Fiber shall be the “Acceptance Date.” 4.6. Configuration and Access to Leased Fiber; Splicing BFI shall have full and complete control for determining any routing configurations of, access to, and splicing on the Network (including the Leased Fiber); the location and configurations of all lateral spurs, manholes, handholes, and other access points; and all uses of the Network by BFI, City, Schools, and third parties. Except as otherwise required by law, nothing herein grants the City or Schools the right to own, control, maintain, repair, modify, and relocate the Network (including the Leased Fiber); to physically access to the Network (including the Leased Fiber and BFI’s manholes, handholes, and other access points); to encumber the Network in any manner; and, except as expressly stated in this Agreement, to use the Network. Notwithstanding the foregoing, City shall have the right to connect City’s communications equipment as authorized by BFI in its reasonable discretion with the endpoints of Leased Fiber. City may obtain access at points along the Leased Fiber only upon prior written approval by BFI in BFI’s reasonable discretion. 4.7. Replacement, Relocation and Condemnation. 4.7.1. BFI from time to time may replace, relocate or otherwise change or substitute any Leased Fiber(s), access point(s) and route(s), provided that no such voluntary change may reduce the number of Leased Fibers in the subject route(s) or result in City’s or School’s inability to use, as permitted by this Agreement, the Leased Fibers in the subject route(s) other than from midnight to 6:00 a.m. local time. The cost of any relocation or removal may be equitably apportioned among all then- current lessees and owners of that portion of the Network directly 30 Page 6 affected by such relocation, and City agrees to pay such costs as invoiced by BFI. Such equitable apportionment shall be made according to the number of fiber strand(s) leased or owned, unless BFI in its discretion determines that an alternative means of apportionment would produce a more equitable result. In the event such removal or relocation becomes necessary, BFI shall take all commercially reasonable efforts to minimize the impact on City and Schools. Any relocation undertaken as a result of a BFI decision or a City public works related project requiring such relocation shall be completed without cost to the City. To the extent that there is funding from the City or any other party to cover the cost of such relocation that is made available to other users of the rights of way, BFI shall be entitled to share in any relocation funds made available. 4.7.2. If any portion of the Network and/or rights necessary to provide the Leased Fiber become the subject of a condemnation proceeding which is not dismissed within one hundred eighty (180) days after the date of filing of such proceeding and which reasonably could be expected to result in a taking of a portion of the Network containing the Leased Fibers by any governmental agency or other party having the power of eminent domain, BFI may terminate the Fiber Lease. 4.8. Use of Leased Fiber. 4.8.1. City, at its sole expense, may use the Leased Fiber, and shall cause Schools to use the Leased Fiber, only (a) for lawful purposes and in compliance with all applicable federal, state and local laws, codes, rules and regulations (collectively, “Laws”), industry operations and safety standards and all applicable franchises, rights of way, leases, licenses, contracts and other obligations to third parties with respect to the Network; and (b) in a manner that will not interfere with or interrupt any of the Network or its use by BFI or other users. 4.8.2. City, at its sole expense, will obtain all Authorizations required for its and its lessees’, licensees’, invitees’, permittees’ and users’ business use of, and attachment to, the Leased Fiber, and all approvals for access into all City Locations, School Locations, POPs and colocation facilities, for the purpose of equipment installation, City’s periodic maintenance and services related thereto, and for the use thereof and of any building entrances, power, riser conduit, fiber optical strands or other building facilities at all such City and School Locations, POPs and colocation facilities. 4.8.3. City shall cause other users of Leased Fiber, including but not limited to Schools, to agree to be bound by the provisions of this Section. 31 Page 7 4.9. Removal of Equipment Upon Termination. City will remove from any property owned, leased or licensed by BFI all City and School property, equipment and other materials used in connection with the Leased Fiber within sixty (60) days from expiration, termination or rescission of any Term. Upon any substitution of any Leased Fiber or access point, City will remove from any substituted property all City or School property, equipment and other materials used in connection with the Leased Fiber. City will complete such removal in a manner that does not interfere with or damage the Network. If City fails to remove property within sixty (60) days from expiration, termination or rescission of any Term, BFI may, upon thirty (30) days prior written notice to City, deem such property to be abandoned, and BFI will make such disposition of the property as it deems necessary or advisable at City’s sole expense, with all proceeds delivered to City less reasonable expenses. BFI shall have the right to access City or School Locations for a reasonable time following any termination of this Agreement for the purpose of accessing and, in BFI’s sole discretion, removing, BFI property from such Locations. 4.10. Abandonment. In the event that BFI intends to abandon all or any part of the Network, Leased Fibers or access points (collectively, Network Facilities), BFI shall submit for the City’s and Schools’ approval a complete description of the Network Facilities and the date on which BFI intends to abandon the Network Facilities. Such notice shall be given no less than ninety (90) days prior to the intended date of abandonment. BFI will cooperate reasonably with City to take such action as is required to allow City and/or Schools to use and maintain any abandoned Network Facilities, or to provide City with an acceptable alternative as to the abandoned Network Facilities. If BFI abandons any Network Facilities, the City may, at its discretion, provide notice to BFI that it will assume ownership of all or any part of the abandoned Network Facilities. Upon thirty (30) days notice, the City will assume ownership of such abandoned Network Facilities. 5. MAINTENANCE. 5.1. Generally. BFI or its contractor, subcontractor, or other designee shall perform Maintenance of the Leased Fiber connecting City Locations in material accordance with BFI’s then current maintenance procedures. Maintenance shall be undertaken at BFI’s sole expense, with the exception of relocation expenses described in Section 4.7 or as otherwise stated in this Agreement. When conducting Maintenance on the Network, BFI shall exercise reasonable care to prevent interruption of City’s or School’s services or interference with the 32 Page 8 Leased Fiber. BFI shall not, however, be liable to City for any interruption to its services or interference with the operation of the system, unless such interruption and/or interference arises from the negligence or willful misconduct of BFI or its employees, agents, or representatives. To the extent any Maintenance of the Leased Fiber or any of the Network relates to (a) work necessitated by City’s or School’s negligence or willful misconduct, or (b) City’s or School’s elective maintenance or repair requests, City shall pay and reimburse BFI for one hundred percent (100%) of all reasonable costs, fees, and expenses incurred by BFI in connection therewith, notwithstanding any provision or implication to the contrary. 5.2. Routine and Emergency Maintenance. Routine maintenance requiring or causing signal interruption shall be coordinated between the Parties, and shall be provided in accordance with BFI’s then-current Network maintenance procedures. BFI shall perform emergency Maintenance and restoration of service as soon as reasonably possible after BFI learns or is notified by City or Schools that a problem exists. 5.3. Maintenance Relating to School Locations. Maintenance obligations concerning Leased Fiber connecting School Locations may be further addressed in a separate agreement between the Schools and BFI. BFI agrees to provide first-level technical support to Schools as may be described in such separate agreement. 6. CONNECTIONS TO LOCATIONS 6.1. Initial Locations. Each site shown on Exhibit A (“Initial Locations”) will receive a pair of dark fiber strands within the Network, in a ring configuration as described in Exhibit B. For sites that are on laterals off of the main BFI network rings, BFI will establish a collapsed ring utilizing two pair in each required lateral. 6.2. Additional Locations. The Parties may mutually agree in writing that other City and School Locations in addition to the Initial Locations shall be made part of this Agreement (“Additional Locations”). Unless stated otherwise, Additional Locations shall receive access to Leased Fiber as described in this Section 6.0. 6.3. Premises Entries and Demarcation Points. 6.3.1. City or Schools may request the location of premises entries and demarcation points for Leased Fiber at locations on and/or within 33 Page 9 buildings owned or controlled by City or Schools. The requested location must be described with specificity, and must be approved by BFI, which approval shall not be unreasonably withheld. Premises entries and demarcation points must be situated at a location suited for utility fiber assets. Demarcation points must be within fifty (50) feet of the building penetration, unless rigid conduit with a pull rope is present from the premises entry to the demarcation point and made available to BFI. In the event rigid conduit with a pull rope is not available, City may request that BFI provide it, at City’s expense. 6.3.2. At a single City or School Location with multiple buildings, City or School may, at its discretion, establish a premises entry at a single building, establishing a demarcation point at a mutually agreed location within such building. In such case service to other buildings on the parcel emanating from this demarcation point shall be at the sole expense and responsibility of City or School, as applicable. 6.3.3. BFI will extend fiber optic cables into buildings owned or controlled by City or School using City or School’s existing conduit structures, only if a clear proven path with a functioning pull-rope is present over the full path. Any requirements for new conduit or other construction necessary to reach the demarcation point within the premises shall be the responsibility of the City or School, but BFI will retain ownership of all fiber optic cables which remain on BFI’s side of the demarcation point. 6.3.4. In the course of its deployment of fiber optic cables serving City and Schools, BFI reserves the right to install additional fibers and associated infrastructure beyond that required for provision of the Leased Fiber. 6.4. Access by BFI. On reasonable request to, notice to and consent of City or Schools as to a mutually acceptable time, BFI shall be permitted reasonable access to the Network and/or Leased Fiber on the property of, and within a building owned or controlled by, such City or Schools for the purpose of installation and testing of Leased Fiber and in connection with Maintenance or an outage of the Network. BFI personnel and its agents shall, while on the premises of City or Schools, comply with all industry standard rules and regulations, and other regulations communicated to BFI by City or Schools including security requirements and, where required by government regulations as disclosed by City or Schools, receipt of satisfactory governmental clearances. 6.5. Connection Charge. City shall pay to BFI a one-time Connection Charge of up to $2,500.00 per initial City and School Location described in Exhibit A, payable upon the Acceptance 34 Page 10 Date. Connection Charges for potential Additional Locations shall be negotiated by the Parties. 7. CONTINGENCIES. 7.1. Timely Completion. BFI shall provide access to dark fiber at initial City and School Locations (as set forth in Exhibit A) no later than June 27, 2016. For purposes of this Section, “provide access” means the Acceptance Date pursuant to 4.5. City shall have the right to terminate the Fiber Lease as to a particular Location without penalty if this contingency is not met. Notwithstanding the foregoing, a failure to meet this contingency shall not be deemed a material breach of this Agreement, and City shall have no right in such case to pursue remedies for default described in Section 8.2. 7.2. Written Assurances. BFI shall provide the City written assurances acceptable to City by March 1, 2016 that BFI will be able to deliver access to dark fiber for the fees allowed by this Agreement by June 27, 2016. After March 1, 2016, BFI shall provide such further written assurances of satisfactory progress toward the June 27, 2016 delivery date that City may reasonably request from time to time. 7.3. City Appropriation of Funds. City shall undertake all reasonable steps to seek budget appropriations, to the extent permitted by law, in each fiscal year during the term of the Lease to meet its payment obligations under the Lease. Notwithstanding the foregoing, Lease payment in future fiscal years is contingent on the appropriation of funds by the City Commission. In the event that no funds or insufficient funds are appropriated by the City Commission for the next fiscal year for payments due under the Lease, the Lease will terminate on the last day of the fiscal year for which appropriations were received. 8. DEFAULT AND REMEDIES. 8.1. Events of Default. Each of the following events shall be considered events of default, the occurrence of which shall give the other Party the right to pursue remedies, to the extent described below, following written notice after the expiration of any stated cure periods: 8.1.1. The breach of any material provision of this Agreement that cannot be cured or, if such breach is of the type that can be cured but remains 35 Page 11 uncured thirty (30) days after the breaching Party receives written notice of such breach from the other Party (or, if the breach reasonably requires more than thirty (30) days to cure, the time to cure is extended as commercially reasonably required, provided the breaching Party is diligently pursuing cure of the breach); 8.1.2. A Party applies for or consents to the appointment of a receiver, trustee or similar officer for it or any substantial part of its property or assets, or any such appointment is made without such application or consent by such Party and remains undischarged for sixty (60) days; or 8.1.3. A Party files a petition in bankruptcy or makes a general assignment for the benefit of creditors. 8.2. Remedies in the Event of Default by City. 8.2.1. In the event of a default by City, BFI may (i) recover damages caused by such breach, to the extent permitted by law, or (ii) obtain the equitable remedy of specific performance. 8.2.2. In addition to all other rights and remedies, BFI may take action to correct City’s breach that adversely impacts operation or use of the Network in any way, and recover from City BFI’s reasonable costs and expenses incurred thereby (payable within thirty (30) days of City’s receipt of an invoice for said costs and expenses). If BFI seeks enforcement of its remedies through an attorney or some other legal procedure or action, BFI is entitled to collect from City reasonable attorneys’ fees (including those related to mitigation of damages) and expenses incurred (payable within thirty (30) days of City’s receipt of an invoice for said costs and expenses). 8.3. Remedies in the Event Default by BFI. In the event of a default by BFI, City, in its sole discretion, may (i) recover damages caused by such breach, to the extent permitted by law, or (ii) obtain the equitable remedy of specific performance. If City seeks enforcement of its remedies through an attorney or some other legal procedure or action, City is entitled to collect from BFI reasonable attorneys’ fees (including those related to mitigation of damages and including salary and costs of City Attorney) and expenses incurred (payable within thirty (30) days of City’s receipt of an invoice for said costs and expenses). 9. MISCELLANEOUS PROVISIONS. 9.1. City’s Right of First Refusal. In the event that BFI engages in any action to sell the Network, City shall have a right of first refusal to purchase the Network assets at fair market value pursuant to an independent appraisal. 36 Page 12 9.2. Intellectual Property. This Agreement does not grant any right, title, license or interest under any copyrights, inventions, patents, trademarks, trade names, service marks or other intellectual property now or hereafter owned or controlled by BFI or City. 9.3. Limitation of Liability and Indemnification. 9.3.1. NOTWITHSTANDING ANYTHING TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES; AND WHETHER BASED ON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, STRICT LIABILITY, OR ANY OTHER TORT OR LEGAL THEORY ARISING OUT OF OR RELATING TO THIS AGREEMENT, REGARDLESS OF WHETHER ANY PARTY HAD BEEN ADVISED OF OR COULD HAVE FORESEEN THE POSSIBILITY OF SUCH DAMAGES. NOTWITHSTANDING ANYTHING TO THE CONTRARY, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER OR ANY THIRD PARTY(IES) FOR ANY CLAIMS, DAMAGE, LOSS, COST OR EXPENSE ARISING FROM, OR HAVE RESPONSIBILITY FOR (a) ANY INFORMATION PASSING THROUGH THE NETWORK, OUTAGE, INCORRECT OR DEFECTIVE OR UNAUTHORIZED TRANSMISSION OR ANY CONSEQUENCES OF ANY OF THE FOREGOING, OR (b) ANY UNAUTHORIZED ACT, OMISSION, EQUIPMENT OR SERVICES OF ANY THIRD PARTY. 9.3.2. Except as otherwise provided herein, each party agrees to be responsible to the other party for damages, including reasonable attorneys’ fees, incurred by the non-defaulting party and arising from the willful misconduct or negligent acts or omissions of party or its agents, employees or contractors, causing such damage, except to the extent attributable to or caused by the negligence or willful misconduct of other party, its agents, employees or contractors. Neither party shall be responsible to indemnify or hold the other party harmless from any claims, demands or actions brought by third parties. 9.3.3. Each action and claim against BFI arising under or relating to this Agreement shall be made only against BFI as a corporation, and any liability relating thereto shall be enforceable only against BFI’s corporate assets. City shall not seek to pierce the corporate veil or otherwise seek to impose any liability relating to, or arising from, this Agreement against any BFI employee, manager, officer, or director. Each of such persons is an intended beneficiary of the mutual promises set forth in this Section. Each action and claim against City arising under or relating to this Agreement shall be made only against City as a municipal corporation, and any liability relating thereto shall be enforceable only against City’s 37 Page 13 assets. BFI shall not seek to impose any liability relating to, or arising from, this Agreement against any City employee, manager, officer, or director. Each of such persons is an intended beneficiary of the mutual promises set forth in this Section. 9.4. No Warranties. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, BFI MAKES NO WARRANTIES AND EXCLUDES AND DISCLAIMS ALL WARRANTIES, EXPRESS AND IMPLIED AND STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY AND ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE NETWORK, LEASED FIBER, ANY EQUIPMENT, CONSTRUCTION, INSTALLATION, MAINTENANCE, REPAIR AND ANY OTHER SERVICE(S), ITEM(S) OR ASSET(S) PROVIDED BY OR ON BEHALF OF BFI. 9.5. Taxes and Impositions. 9.5.1. To the extent that BFI incurs or is required or permitted to collect from City any charges that result from the application, enforcement or interpretation of existing, new or revised laws, actions taken by governmental or quasi-governmental regulatory authorities, or judicial acts or decisions that directly or indirectly impose costs on BFI (including, without limitation, those arising out of local, state, federal and foreign agency, governmental and quasi-governmental actions, programs or requirements relating to the Network, Leased Fiber, franchises, permits, access and compensation) in connection with BFI furnishing any Leased Fiber, or having governmental approvals and/or rights of way applicable thereto, BFI may collect from City either a pro rata share of any said charges or, if greater, the portion thereof that arises out of this Agreement, the Leased Fiber or City’s use thereof. 9.5.2. City will calculate and remit any and all fees and assessments, including, without limitation, franchise fees, license fees, right-of-way fees, taxes and any other assessment against City for City’s use of the Leased Fiber (collectively, “Assessments”) with respect to licensing, leasing, providing service to end-users or to the extent City is required to calculate or pay Assessments. Assessments may be made by any third party, and BFI will not direct or notify City to pay any Assessments and shall not be directly or indirectly responsible for City’s calculating or remitting Assessments. 9.6. Assignment. The Parties may not assign or otherwise transfer the Lease or its rights or obligations to another party, either in whole or in part, without the other Party’s consent, such consent not to be unreasonably withheld. 38 Page 14 9.7. Notices. 9.7.1. Operational Notices and Routine Maintenance For operational notices and Maintenance matters: To Bozeman Fiber: Bozeman Fiber 2000 Commerce Way Bozeman, MT 59715 Sid Boswell, Network Operator 540-951-4400 (Wide Open Networks) sboswell@wideopennetworks.us To City of Bozeman: City of Bozeman 20 East Olive St. Bozeman, MT 59715 Scott McMahan, IT Manager 406-582-2277 smcmahan@bozeman.net 9.7.2. Contractual Notices Any notices required to be given by the terms of this Agreement shall be deemed sufficiently given when in writing and delivered to the applicable address, currently being: To Bozeman Fiber: Bozeman Fiber Anthony Cochenour, Board President 2000 Commerce Way Bozeman, MT 59715 acochenour@hopliteindustries.com To City of Bozeman: City of Bozeman P.O. Box 1230 Bozeman, MT 59715-1230 Scott McMahan, IT Manager smcmahan@bozeman.net 39 Page 15 9.7.3. Notices under Section 8 (Default and Remedies) will be sent by certified U.S. Postal Service, return receipt requested, or by commercial overnight delivery service, or by facsimile, and will be deemed delivered, if sent by U.S. Postal Service, five (5) days after deposit, or if sent by facsimile, on the first business day after verification of facsimile transmission, or if sent by commercial overnight delivery service, one (1) business day after deposit therewith. 9.7.4. A Party’s notice address may be changed by said Party on notice to the other Party. 9.8. Force Majeure. Neither Party will be in breach of this Agreement resulting from delay or prevention of performance of such Party which is caused by an act or event beyond the reasonable control of such Party (“Force Majeure”). Force Majeure includes, for example, an action or requirement or request by governmental authority (including, without limitation, moratorium on any activities related to this Agreement), third-party labor dispute or other inaction or demand, flood, hurricane, earthquake, fire, lightning, epidemic, reasonably unanticipated regulatory changes, war, riot, civil disturbance, vandalism, failures of materials or availability of materials, power or transmission link failures, radiation and hazardous substances, and extreme temperature. The Party claiming applicability of Force Majeure will notify the other Party promptly thereof. Such notice will specify the anticipated length of delay, the cause of the delay and a timetable by which any remedial measures will be implemented. 9.9. Confidentiality. 9.9.1. In General If either Party provides or has provided confidential or proprietary information (“Confidential Information”) designated as such to the other Party, the receiving Party shall hold such information in confidence and shall afford it the same care and protection that it affords to its own confidential and proprietary information (which in any case shall be not less than reasonable care) to avoid disclosure to or unauthorized use by any third party, except as otherwise provided below. This Agreement and its terms shall not be deemed the Confidential Information of both Parties. All Confidential Information, unless otherwise specified in writing, shall remain the property of the disclosing Party and shall be used by the receiving Party only for the intended purposes set forth in this Agreement. Except as otherwise required by law, after the receiving Party’s need for Confidential Information has expired, or upon the 40 Page 16 reasonable request of the disclosing Party, or promptly following the termination or expiration of this Agreement, the receiving Party shall destroy or return to the disclosing Party all Confidential Information, including all copies of such information, and all notes, summaries, or other writings reflecting Confidential Information. The receiving Party shall not reproduce Confidential Information, except to the extent reasonably necessary to perform under this Agreement, or as otherwise may be permitted in writing by the disclosing Party. 9.9.2. Exceptions The foregoing provisions of this section shall not apply to (i) any required disclosures to any government authority, (ii) disclosures required under applicable state or local government open records laws, (iii) any Confidential Information or any provisions of this Agreement which becomes publicly available, other than through the Party claiming this exception, or is required to be disclosed by law, (iv) Confidential Information that is independently developed by the receiving Party without breach of any obligation of confidentiality; (v) Confidential Information that becomes available to the Party claiming this exception without restriction from an unrelated third party, or becomes relevant to the settlement of any dispute or enforcement or defense of either Party’s rights under this Agreement, provided that appropriate protective measures shall be taken to preserve the confidentiality of such Confidential Information to the extent permissible in accordance with such settlement or enforcement process; (vi) disclosures of this Agreement to any proposed permitted assignee provided that each such proposed assignee agrees to be bound by confidentiality obligations no less stringent than those set forth herein; or (vii) disclosures by either Party of the physical route of the Network and/or Leased Fiber for marketing and sales-related purposes. 9.10. Survival. Indemnification obligations, limitation of liability, provisions which by their terms survive and accrued obligations to pay or reimburse fees, costs, expenses or other sums in connection with this Agreement will survive the expiration, termination and rescission of this Agreement and continue in full force and effect for the greater of (a) three (3) years after said expiration, termination and/or rescission, or (b) the period of the statute of limitations applicable thereto. 9.11. No Press Release. Neither Party shall issue or make a public announcement or media or press release regarding this Agreement, or grant any interview regarding this Agreement, without the written consent of the other Party. 41 Page 17 9.12. Payments. City shall remit payment within thirty (30) days of receipt of any monthly invoice. If a portion of any invoice is disputed, the undisputed amount shall be payable when due. Upon resolution of any billing dispute and determination of the correct amount that is due, the remainder, if any, shall become due and payable within thirty (30) days. If within a reasonable period of time not to exceed sixty (60) days from the date of the disputed invoice, the Parties cannot determine or agree upon the correct amount of the disputed charge, either Party may exercise all remedies available at law or equity. 9.13. Insurance. The Parties shall each maintain liability insurance, including liability for bodily injury and property damage, written by a company licensed to do business in Montana, covering its liabilities and obligations pursuant to this Agreement with combined single limits of at least $1,000,000 per occurrence and $2,000,000 aggregate. City’s liability policy shall name BFI as an additional insured and BFI’s liability policy shall name the City as an additional insured. The Parties also shall maintain Workers’ Compensation insurance to meet the requirements of the Workers’ Compensation Laws of Montana where applicable, provided that such coverage shall be at least $500,000 per accident; and comprehensive automobile liability insurance covering the ownership, operation and maintenance of all owned, non-owned and hired motor vehicles used in connection with this Agreement, with limits of at least $1,000,000 per occurrence for bodily injury and property damage. Certificate(s) of insurance evidencing such insurance coverage of each Party shall be provided to the other Party annually. Said insurance policies shall be obtained and maintained with companies rated “A” or better by Best’s Key Rating Guide. The limits set forth above are minimum limits and will not be construed to limit liability. Each Party shall immediately inform the other Party of termination or non-renewal of any required insurance coverage for any reason. 9.14. Compliance with Third Party Provisions. If any asset is not owned by BFI but instead is leased, licensed or otherwise used by BFI pursuant to an agreement with one or more third parties (each a “Third Party Agreement”), City is bound by and subject to each term and condition of such agreement(s) which is of the type which “flows through” to City or which City’s compliance is needed as to City as a sublessee, sublicensee or similar interest holder, as applicable, notwithstanding any provision to the contrary in this Agreement, provided that a copy of each such agreement has been provided to the City. By way of example, if under any Third Party Agreement the term as to any Leased Fiber terminates, timeframes are specified, any third party has approval and/or performance rights, then, respectively, as to the Fiber Lease 42 Page 18 under this Agreement applicable to the Third Party Agreement, said Fiber Lease shall terminate, timeframes specified in this Agreement shall be reduced or extended if needed to enable compliance with such Third Party Agreement, and applicable third parties shall have their approval and performance rights (e.g., use being subject to any agreement by which the third party is bound; relocation rights). Additionally, the provisions benefiting BFI under this Agreement shall be construed to also benefit the entity(ies) as may be applicable in Third Party Agreements as applicable; by way of example, the covenant that no intellectual property rights are included shall extend to third parties under Third Party Agreements, if applicable under the applicable Third Party Agreement. City will cooperate with BFI and said third parties in said compliance, including, without limitation, City will not knowingly cause any default under the Third Party Agreements. If BFI’s usage rights under any Third Party Agreement terminates and if BFI relocates the portion of the Network so terminated, the provisions in this Agreement applicable to involuntary relocation shall apply. 9.15. Nondiscrimination. BFI agrees that all hiring by BFI of persons performing under the Lease will be on the basis of merit and qualifications. BFI will have a policy to provide equal employment opportunity in accordance with all applicable state and federal anti- discrimination laws, regulations, and contracts. BFI will not refuse employment to a person, bar a person from employment, or discriminate against a person in compensation or in a term, condition, or privilege of employment because of race, color, religion, creed, political ideas, sex, age, marital status, national origin, actual or perceived sexual orientation, gender identity, physical or mental disability, except when the reasonable demands of the position require an age, physical or mental disability, marital status or sex distinction. BFI will be subject to and comply with Title VI of the Civil Rights Act of 1965; Section 140, Title 2, United States Code, and all regulations promulgated thereunder. BFI will require these nondiscrimination terms of its subcontractors providing services under the Lease. 9.16. Other Provisions. 9.16.1. The headings of the Sections are strictly for convenience and will not be construed as amplifying or limiting any of the terms, provisions or conditions of the Sections. 9.16.2. If any provision of this Agreement is held invalid, illegal or unenforceable, in whole or in part, neither the validity of the remaining part of such provision nor the validity of the remaining provisions of this Agreement will be in any way affected thereby and shall be construed so as to give effect to the intent of the Parties to the extent permissible. 43 Page 19 9.16.3. Except as otherwise provided in this Agreement, this Agreement may be amended only by a written instrument signed and delivered by both Parties. 9.16.4. No failure or delay in exercising any right, power or privilege under this Agreement will operate as a waiver, except as expressly provided in this Agreement. No course of dealing between the Parties shall operate as a waiver of any of the rights under this Agreement, or provided by Laws or equity. 9.16.5. This Agreement may be executed in multiple counterparts, each of which will constitute one and the same instrument. 9.16.6. A signed copy of this Agreement delivered by email, facsimile or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement; and an electronically stored copy (i.e., PDF) thereof shall serve the same purpose as an original document. 9.16.7. This Agreement and the rights and obligations of the Parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Montana without regard to Montana’s conflict of law principles. Any dispute arising out of this Agreement shall be filed in a court of competent jurisdiction in Gallatin County, Montana. 9.16.8. Each Party represents to the other Party that (a) it is duly organized, validly existing and in good standing under the laws of the state of its organization, and is authorized to do business in Montana, (b) it has all requisite power and authority to enter into and perform its obligations under this Agreement, (c) the person(s) signing this Agreement on its behalf has/have full power and authority to sign on its behalf and to bind it thereto, and (d) this Agreement, when executed, will become the legal, valid and binding obligation of such Party. 9.16.9. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes any and all prior negotiations, understandings and agreements with respect hereto, whether oral or written, including but not limited to the Memorandum of Understanding executed by the Parties on or about August 24, 2015. 9.16.10. Each Party will take such further action and execute and deliver such additional agreements and instruments to the extent necessary to consummate this Agreement and the transactions contemplated by this Agreement. 44 Page 20 9.16.11. This Agreement is not intended to create nor shall it be construed to create any partnership, joint venture, or employment relationship between BFI and City for any purpose, action or transaction, and no Party shall be liable for the payment or performance of any debts, obligations, or liabilities of the other Party, unless expressly assumed in writing. Each Party covenants that it shall not act in a manner which may be construed to be inconsistent with the foregoing nor otherwise act, or purport to act on behalf of, the other Party except as may be expressly authorized in writing by the other Party. 9.16.12. Each party warrants and represents to the other party for its reliance that it’s entering into, performing and the City’s receiving and using Leased Fiber under this Agreement does not and will not violate, breach, interfere with or terminate any agreement(s) to which City or BFI is a party. *** CITY OF BOZEMAN: BOZEMAN FIBER: By: By: Print Name: Print Name: Title: Title: Date: Date: 45 EXHIBIT A INITIAL CITY AND SCHOOL LOCATIONS City of Bozeman 1. City Hall 121 N. Rouse Ave 2. Professional Building 20 East Olive St 3. Bozeman Public Library 626 East Main St 4. Law and Justice Center (City) 615 S. 16th Ave (Collapsed Ring) 5. Bridger Park Garage, 26 East Mendenhall Street 6. Fire 3 and 911 1705 Vaquero Pkwy (Collapsed Ring) Bozeman Public Schools 1. Bozeman High School 205 North 11th Ave 2. Chief Joseph Middle School 4255 Kimberwicke (Collapsed Ring) 3. Sacajawea Middle School 3525 South 3rd Ave. (Collapsed Ring) 4. Emily Dickinson Elementary School 2435 Annie Street 5. Hawthorne Elementary School 114 North Rouse 6. Hyalite Elementary School 3600 West Babcock 7. Irving Elementary School 611 South 8th 8. Longfellow Elementary School 516 South Tracy 9. Meadowlark Elementary School 4415 Durston Road 10.Morning Star Elementary School 830 Arnold Street (Collapsed Ring) 11.Whittier Elementary School 511 North 5th 12.Willson Building 404 West Main Street 46 EXHIBIT B DESCRIPTION OF FIBER NETWORK Bozeman Fiber (BFI) will provide the City of Bozeman with access to two dark fiber strands connecting school locations according to the diagrams and written descriptions below. The dark fibers will be consecutive strands in a single buffer tube. Fiber strands will be single mode, low water peak fibers manufactured by a major U.S. brand. Unless otherwise agreed by the parties, fiber strands will be terminated in a wall mounted patch panel installed adjacent to the building entry in each location. Along certain points in the route and in each drop the fiber will be provided in a collapsed ring where strands can be used to create a ring network architecture, however the strands will be in the same physical cable. Diagram 1: Bozeman Public Schools Dark Fiber Ring Routes in the attached mapping are subject to changes during construction. 47 Ring 1 - Bozeman Schools: Fiber connections will be provided between locations as follows: - Two fiber strands will be provided from the termination points at Bozeman High School to Bridger Alternative High School along routes shown in the map. - Two fiber strands will be provided from the termination points at Bridger Alternative High School to Emily Dickenson Elementary School along routes shown in the map. - Two fiber strands will be provided from the termination points at Emily Dickenson Elementary School to Chief Joseph Middle School along routes shown in the map. - Two fiber strands will be provided from the termination points at Chief Joseph Middle School to Meadowlark Elementary School along routes shown in the map. - Two fiber strands will be provided from the termination points at Meadowlark Elementary School to Hyalite Elementary School along routes shown in the map. - Two fiber strands will be provided from the termination points at Hyalite Elementary School to the Irving Elementary School along routes shown in the map. - Two fiber strands will be provided from the termination points at Irving Elementary School to Sacajawea Middle School along routes shown in the map. - Two fiber strands will be provided from the termination points at Sacajawea Middle School to Morning Star Elementary School along routes shown in the map. - Two fiber strands will be provided from the termination points at Morning Star Elementary School to Longfellow Elementary School along routes shown in the map. - Two fiber strands will be provided from the termination points at Longfellow Elementary School to Hawthorne Elementary School along routes shown in the map. - Two fiber strands will be provided from the termination points at Hawthorne Elementary School to Whittier Elementary School along routes shown in the map. - Two fiber strands will be provided from the termination points at Whittier Elementary School to Bozeman High School along routes shown in the map. Diagram 2: Bozeman City Buildings Dark Fiber Ring 48 Ring 2 - Bozeman City Buildings: Fiber connections will be provided between locations as follows: - Two fiber strands will be provided from the termination points at Bozeman City Hall to the Bozeman Public Library along routes shown in the map. - Two fiber strands will be provided from the termination points at the Bozeman Public Library to Professional Building along routes shown in the map. - Two fiber strands will be provided from the termination points at Professional Building to Justice Center along routes shown in the map. - Two fiber strands will be provided from the termination points at Justice Center to Fire 3 and 911 along routes shown in the map. - Two fiber strands will be provided from the termination points at Fire 3 and 911 to Bridger Park Garage along routes shown in the map. - Two fiber strands will be provided from the termination points at Bridger Park Garage to City Hall along routes shown in the map. Network Map The network map demonstrating proposed routes and connections to initial sites is for illustrative purposes only. Routes are subject to change in the discretion of BFI, consistent with the Agreement. 49 MSU Innovation Campus Hospital Bozeman High School Meadowlark Elementary School Sacajawea Middle School Wilson Building Chief Joseph Middle School County Detention Center County Rest Home Bridger Alternative High School Hyalite Elementary School Morning Star Elementary School MSU Emily Dickinson Elementary School Bozeman Public Library Whittier Elementary School Fire 3 and 911 Fire 1 Law and Justice Center Health Department Irving Elementary School Fire 2 Hawthorne Elementary School Longfellow Elementary School Judge Guenther Memorial Center County Courthouse Professional Building County Fairgrounds Beall Park Center Bozeman City Hall County Public Assistance Source: Esri, DigitalGlobe, GeoEye, Earthstar Geographics, CNES/Airbus DS, USDA, USGS, AEX, Getmapping, Aerogrid, IGN, IGP, swisstopo, and the GIS User Community ¯ Legend Fiber Infrastructure UG Aerial Bank CAI Future Medical Date: 1/28/2016 0 0.45 0.9 1.35 1.80.225 Miles 50 EXHIBIT C ACKNOWLEDGMENT OF ACCEPTANCE The Parties acknowledge and agree that the fiber optic strands serving <<Location>>, pursuant to that Agreement between the undersigned Parties dated _____________, 201__ (the “Agreement”), have been accepted or deemed accepted by City as of the date provided below. This acceptance date is the agreed Acceptance Date of said Leased Fibers pursuant to Section 4.5 of the Agreement. This Acknowledgment of Acceptance is incorporated by reference into the Agreement on the terms and conditions of the Agreement. The terms and conditions of the Agreement remain in full force and effect except as may have been previously modified or amended in any writing(s) signed by the Parties. Acceptance Date of Leased Fibers: ___________________, 201__ In witness whereof, the Parties have signed this Acknowledgment of Acceptance. Bozeman Fiber: By: Name: Title: City of Bozeman: By: Name: Title:___________________________________ 51 EXHIBIT D GRANT OF AUTHORITY FROM BOZEMAN SCHOOL DISTRICT #7 TO CITY TO ENTER INTO FIBER LEASE 52 53 54 55 56 57 58