Exhibit 10.25
SETTLEMENT AGREEMENT
This "Settlement Agreement" is executed on May 15, 2000, by and between
the UNITED STATES OF AMERICA, Department of Energy, acting by and through the
BONNEVILLE POWER ADMINISTRATION ("Bonneville) and ELECTRIC LIGHTWAVE, INC.
("ELI"), a corporation organized and existing under the laws of the State of
Delaware. Both Bonneville and ELI may be referred to herein individually as
"Party" and collectively as "Parties".
RECITALS
WHEREAS, the Parties heretofore entered into separate License
agreements regarding ELI's use of fiber-optic cable installed by Bonneville on
its power transmission system, three (3) of which remain in effect (Agreement
Numbers 97TX-10072, 97TX-10080 and 98TX-10143, collectively, the "Existing
Agreements").
WHEREAS, various disputes have arisen between the Parties concerning
their rights, obligations and performance under the terms of the Existing
Agreements, which disputes have led to litigation, now on appeal before the U.S.
Court of Appeals for the Ninth Circuit, Electric Lightwave, Inc. v. Bonneville
Power Administration, Case No. 99-35593; and three separate arbitration
proceedings, including any counterclaims, now pending through the American
Arbitration Association (Case Nos. 23 19800010 99, 23 198 00085 99, and 23 198
00011 00).
WHEREAS, both Parties desire to resolve their disputes by reforming and
replacing each of the Existing Agreements with a single new License Agreement.
WHEREAS, each Party desires to release the other Party from present and
future claims, counterclaims and causes of action arising under the Existing
Agreements, except as to the provisions expressly preserved by section 2 below,
upon payment of the liquidated amounts specified herein, and to seek dismissal
with prejudice of all litigation and arbitration proceedings relating to the
Existing Agreements.
NOW THEREFORE, the Parties mutually covenant and agree as follows:
1) Each Party acknowledges the contemporaneous execution of a new "license
Agreement" which becomes effective upon execution (referenced therein as
the "Effective Date"), and which comprehensively specifies all prices,
terms and conditions pursuant to which Bonneville has granted a twenty-year
(20)License providing ELI with the right to access and the exclusive right
to use, resell, sublicense and or exchange the full electromagnetic
capacity of certain designated Bonneville optical fibers. A copy of the
executed License Agreement is attached hereto as Exhibit A.
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2) Each of the Existing Agreements is hereby terminated with no further force
or effect on either Party, excepting only:
a) the indemnification provisions thereof, which shall survive and remain
in effect until satisfied or until applicable statutes of limitations
expires, but only concerning reimbursement of any third-party claims
regarding actions, taken or omitted by either Party with respect to
any Existing Agreement prior to the Effective Date,
b) the insurance provisions thereof, which shall survive and remain in
effect until all applicable claims are recovered or until applicable
statutes of limitations expire, but only concerning reimbursement of
any third-party claims regarding actions, taken or omitted by ELI with
respect to any Existing Agreement prior to the Effective Date, and
c) the confidentiality provisions thereof, regarding which the Parties
hereby restate and reaffirm their intention to protect the
confidentiality of each Existing Agreement, which contain proprietary
ELI business information and all proprietary or otherwise confidential
information exchanged between them in performance thereof.
3) Except as specifically reserved pursuant to section 2 above, each Party
hereby irrevocably releases, and covenants not to sue, the other Party
regarding any and all past, present and future claims, counterclaims, and
other causes of action, arising from or relating to any of the Existing
Agreements, including but not limited to demands for payment or
performance, regardless of whether such claims, counterclaims, or causes of
action have been previously made, identified, or quantified. Bonneville
hereby acknowledges receipt from ELI of the following amounts:
a) Exactly $1,100,000.00 which is the liquidated sum of all amounts that
are, have been, or may ever be, due and payable by ELI to Bonneville
under any and all of the Existing Agreements through and including May
15, 2000, the date on which each of the Existing Agreements is
terminated pursuant to section 2 above, except as preserved by
sections 2(a) and 2(b) thereof, and
b) Exactly [*], which satisfies all ELI obligations under section 10 of
Contract No. 98TX-10143 regarding the purchase, installation and
testing of certain "BPA Terminal Equipment", which equipment is part
of "Bonneville Facilities", as defined in section 1(b) of the License
Agreement.
4) Bonneville hereby acknowledges the contemporaneous execution of the
Guaranty between Bonneville and ELI's corporate parent, Citizens Utilities
Company ("Citizens"), which, as stated with greater detail therein,
provides for Citizens' guarantee of ELI's License fees and Annual
Maintenance Payments, specified in sections 8(a) and 8(b) of the License
Agreement, and Liquidated Damages payment specified in section 16(b)(4) of
the License Agreement, throughout the term of the License Agreement but
subject to an aggregate limit of $20,000,000.00. A copy of the executed
Guaranty is attached hereto as Exhibit B.
* Confidential material has been omitted pursuant to a request for confidential
treatment. Such material has been filed separately with the Securities and
Exchange Commission.
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5) ELI shall move to dismiss, with prejudice and without award of costs or
attorney fees to either Party, all existing litigation and arbitration
actions between ELI and Bonneville. Each Party hereby acknowledges that the
relevant pleadings have been signed by their respective counsel. ELI shall
file such pleadings on or before May 17, 2000, with date-stamped copies
thereof to be furnished to Bonneville within four (4) days thereafter.
Nothing contained in this Settlement Agreement is intended by either Party
to constitute an admission of liability or acknowledgement of fact,
allegation, or claim that has been or could have been made.
6) The Parties shall treat this Settlement Agreement and the License
Agreement, Exhibit A, particularly the pricing provisions thereof, as
confidential and proprietary and shall take reasonable steps to protect
them against unauthorized use or disclosure. If a request is received under
the Freedom of Information Act, 5 U.S.C. 552, Bonneville shall promptly
notify ELI of such request to accord ELI reasonable time within which to
seek to enjoin any administratively determined disclosure. Neither Party
shall make initial public announcement of this Settlement Agreement without
the prior review by the other Party, unless such public announcement is
necessary to comply with applicable law.
7) Each Party represents and warrants that the individual executing this
Settlement Agreement on its behalf is unconditionally authorized to do so
with full authority to bind such party to each and every provision of this
Settlement Agreement.
IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement in
two counterparts.
ELECTRIC LIGHTWAVE, INC. UNITED STATES OF AMERICA
Department of Energy
Bonneville Power Administration
By: /s/ Rudy J. Graf By: /s/ Robert C. Lahmann
Name: Rudy J. Graf Name: Robert C. Lahmann
Title: Chief Executive Officer Title: Transmission Account Executive
Date: 5/15/00 Date: 5/15/00
Exhibits:
Exhibit A: License Agreement
Exhibit B: Guaranty Agreement
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