DEVELOPMENT FEE AGREEMENT
This Development Fee Agreement (the "Agreement") is made and entered into
as of February 25, 1997 by and between SPECTRANET INTERNATIONAL, a corporation
created and organized pursuant to the laws of the State of California ("SNI")
and the CITY OF ANAHEIM, a municipal corporation created and organized pursuant
to the laws of the State of California ("City").
RECITALS:
A. The City, SNI and SpectraNet Anaheim ("SNA"), the wholly owned
subsidiary of SNI, intend to enter into the Universal Telecommunications Service
Participation Agreement ("UTS Participation Agreement") and related agreements
pursuant to which SNI and SNA will construct, own, finance, manage and operate a
telecommunications system in the City.
B. In order to give appropriate recognition to the efforts of the City to
assist SNI and SNA in developing the telecommunications system in the City and
to support SNI's efforts to develop similar telecommunications systems in other
cities or public entities, the Parties desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
conditions contained herein and the City's agreement to support actively SNI's
efforts to develop telecommunications systems in other cities or public
entities, the Parties agree as follows:
1. SNI will pay the City a development fee ("Development Fee") as
described in this Agreement.
2. The Development Fee will be paid from SNI corporate funds within
thirty (30) days after the closing of the financing for the construction of each
"Additional Network," as defined herein, or the commencement of construction of
such Additional Network, whichever occurs first. As used herein, the term
"Additional Network" means (a) any expansion of the telecommunications system
being developed by SNA in the City into one or more adjacent or nearby cities,
including without limitation the cities of Santa Xxx and Orange, where SNA
enters into a revenue sharing agreement with any such city, and (b) any separate
telecommunications system developed by any other subsidiary of SNI that holds a
Certificate of Public Convenience and Necessity issued by the California Public
Utilities Commission and enters into a revenue sharing arrangement with one or
more public entities. Once a Development Fee is paid with respect to an
Additional Network, no further Development Fee will be payable in connection
with any expansion of that Additional Network.
3. SNI shall pay the City the following amounts for each Additional
Network as to which the financing closes within the indicated year (subject to
the provisions of Section 5):
First Year $300,000.00
Second Year $200,000.00
Third Year $100,000.00
Fourth Year $100,000.00
Fifth Year $100,000.00
Thereafter, no Development Fee shall be paid.
4. The first year, as described in Section 3, shall commence with the
closing of the financing for the first Additional Network or the commencement of
construction of the first Additional Network, whichever occurs first.
5. In the event that a definitive agreement to develop, own and operate
an Additional Network is executed by SNI or its affiliate with a public entity
prior to the expiration of the Fifth Year, but the closing of the financing for
such Additional Network does not occur until after expiration of the Fifth Year,
then SNI shall nonetheless pay the Development Fee attributable to such
Additional Network to the City, provided that the closing of the financing for
such Additional Network occurs.
6. A failure by SNI to pay such amounts when due shall be deemed an
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Event of Default pursuant to the UTS Participation Agreement.
7. This Agreement may be executed in one or more duplicate counterparts
and when signed by both Parties shall constitute a binding agreement.
SPECTRANET INTERNATIONAL, a California
corporation
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Title: Xxxxxx X. Xxxx, CEO
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CITY OF ANAHEIM, a municipal corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Title: Xxxxxx X. Xxxxxxxx, General Manager
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ATTEST:
/s/ Xxxxxxx X. Xxxx
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City Clerk
APPROVED AS TO FORM:
XXXX X. XXXXX, CITY ATTORNEY
By: /s/ Xxxxxx Xxx Xxxxx
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Assistant City Attorney
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