EXHIBIT 10.2
Contract No. 97TX-10014
11/27/96
LICENSE AGREEMENT
EXECUTED BY THE
UNITED STATES OF AMERICA
DEPARTMENT OF ENERGY
ACTING BY AND THROUGH THE
BONNEVILLE POWER ADMINISTRATION
AND
ELECTRIC LIGHTWAVE, INC.
[Asterisks herein denote confidential material which has been omitted pursuant
to a request for confidential treatment. Such material has been filed
separately with the Securities and Exchange Commission.]
TABLE OF CONTENTS
Page
----
SECTION
1. DEFINITIONS........................................ 2
2. TERM............................................... 9
3. EXHIBITS........................................... 11
4. AMENDMENTS......................................... 11
5. MILESTONE SCHEDULE................................. 11
6. OWNERSHIP.......................................... 11
7. LICENSE............................................ 13
8. PERFORMANCE CRITERIA............................... 14
9. XXX CAPITAL SPENDING............................... 16
10. BUSINESS PLAN...................................... 16
11. MARKET PRICE ASSESSMENT............................ 17
12. PAYMENT............................................ 18
13. MAINTENANCE, REPAIR, AND RESTORATION OF THE CABLE.. 21
14. REGENERATOR BUILDING(S)............................ 28
15. RIGHTS AND OBLIGATIONS CONCERNING THE CABLE........ 28
16. RELOCATION OF THE CABLE............................ 36
17. REPRESENTATIONS AND WARRANTIES..................... 38
18. AUDIT PROCEDURES................................... 41
19. INSURANCE.......................................... 42
20. DEFAULT............................................ 47
21. TERMINATION........................................ 51
22. INDEMNIFICATION; WAIVER OF DAMAGES................. 53
23. DISPUTE RESOLUTION................................. 55
24. GENERAL............................................ 56
Exhibit A (Route)
Exhibit B (Payment Specifications)
Exhibit C (Milestone Schedule)
Exhibit D (Fiber Specifications)
This LICENSE AGREEMENT (Agreement), by the UNITED STATES OF AMERICA
(Government), Department of Energy, acting by and through the BPA POWER
ADMINISTRATION (BPA), and Electric Lightwave, Incorporated (XXX), a corporation
organized and existing under the laws of the State of Delaware. Both BPA and
XXX may be referred to herein individually as "Party" and collectively as
"Parties."
W I T N E S S E T H :
WHEREAS BPA owns the Cable and Cable accessories; and
WHEREAS BPA shall retain 12 of the 36 fibers in the Cable for its own use,
which will give BPA fiber optic cable capacity in excess of that which is needed
to operate its transmission communications along the Route; and
WHEREAS BPA is the licensor and XXX is the licensee for 24 of the 36 fibers
in the Cable; and
WHEREAS BPA constructs and installs the Cable; and
WHEREAS BPA shall direct and oversee the design and installation of the
Cable upon the Route; and
WHEREAS BPA desires to grant a license for a period of time to XXX (as
hereinafter defined) respecting the Commercial Fiber as defined below, along the
Route under the terms and conditions contained herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
obligations and agreements herein contained, the Parties hereby agree as
follows:
1. DEFINITIONS
The following terms, when used in this Agreement, shall have the meanings
set forth in this section:
2
(a) "BPA Capital Cost" means the direct and indirect costs BPA incurs,
using prudent electric utility practices, to develop and construct the
Cable along the Route. Direct costs include, but not limited to,
Environment, Surveying and Mapping, Design, Land, Material,
Construction, and Labor. Such costs incurred up to 12 months after
Energization shall be included. Indirect costs (overheads) shall be
included as part of BPA Capital Cost and applied at a fixed rate of 40
percent to all direct costs. Interest costs, implicit or otherwise,
will be excluded. BPA shall use its best efforts to manage to the
cost of development and construction of the Cable to, or below, [*].
(b) "BPA Facilities" means all BPA-owned and/or leased structures,
buildings, land, access roads, and equipment along the Route.
(c) "BPA Fiber" means 12 dark optical fibers within the Cable designated
for BPA's exclusive use and control.
(d) "Cable" means a BPA-owned cable, containing 36 optical fibers, single-
mode, nondispersion shifted and/or dispersion shifted, to be installed
along the Route.
(e) "Cable Accessories' means the equipment necessary for the attachment
of the Cable to the BPA Facilities, including splice boxes.
(f) "Cable Specifications" means the drawings and specifications regarding
the Cable hardware and materials incorporated into the construction
project.
(g) "Commercial Fiber" means the 24 dark optical fibers within the Cable
licensed to XXX under this License Agreement.
(h) "Dark Fiber Lease Value" means the sum of all dark fiber lease
payments received by XXX for Commercial Fiber.
----------
* Confidential material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
3
(i) "Diverse Fibers" means 4 dark optical fibers within the Cable reserved
for diverse switching paths for a SONET ring in order to achieve
optimum network robustness and reliability.
(j) "XXX Transport Service(s)" means Transport Service(s) used by XXX in
the delivery of End-User Service(s).
(k) "XXX Transport Service Value(s)" means the sum of the values for all
the XXX Transport Service(s) within the Commercial Fiber as described
in Exhibit B.
(l) "End-User" means the customer(s) of XXX.
(m) "End-User Service(s) means services provided to the End-User, other
than Transport Service(s) and Other Service(s).
(n) "End-User Transport Service Value(s)" means the sum of all payments
received by XXX from End-User(s) for Transport Service sales.
(o) "Energization" means the time when the Cable is fully installed and
the fiber meets testing criteria agreed to by the Parties.
(p) "Fiber Specifications" means the performance attributes of the fiber
within the Cable as described in Exhibit B.
(q) "Gross Revenue Value(s) (GRV)" means the sum of ELI's Transport
Service Value(s) plus End-User Transport Service Value(s) plus Dark
Fiber Lease Value(s) plus Other Service Value(s).
(r) "Interest Rate" means .05 percent per day (18.25 percent per annum) to
be compounded daily to the unpaid balance.
4
(s) "License" means the License granted to XXX in section 7(a).
(t) "Originating and Terminating Markets" means the areas in and around
the cities along the Route. The cities in Oregon include Portland and
The Dalles. The cities in Washington include: Yakima, Spokane,
Wenatchee, Ellensburg, Pasco, Richland, and Kennewick; as well as
other cities adjacent to the Route.
(u) "Other Transport Service(s)" means services sold over the Commercial
Fiber at the Optical Carrier level (e.g. XX0, XX0, XX00, OC48).
(v) "Other Transport Service Value(s)" means the sum of all payments
received by XXX for Other Transport Services.
(w) "Regenerator Building(s)" means the building(s) along the Route, owned
and operated by XXX, that house the terminal and regenerator equipment
including any optronics or electronics required by XXX to make use of
the XXX Fibers. For the purpose of this Agreement, the Regenerator
Building(s) include conduit and fiber optic cable from the Regenerator
Building(s) up to the nearest fiber optic splice box on the Route or
the nearest substation fence, at BPA's discretion.
(x) "Route" means the Cable path as described in Exhibit A.
(y) "Transport Services" means individual DSO, DS 1, and DS3 circuits used
or sold as bulk transport by XXX for long-haul traffic on the
Commercial Fiber as described below:
(1) "Digital Signal Zero (DS0)" means: one (1) 64 Kilobits per second
(Kbps) or 56 Kbps digital, pulse coded modulated voice channel;
5
(2) "Digital Signal One (DS1)" means: (A) in the U.S. Digital
hierarchy, digital signal level 1 indicates a 1.544 megabytes per
second (Mbps) data signal; and (B) also referred to as a T I in
the U.S. time-division multiplexing hierarchy, digital signal
level 1 (DS1) indicates the first level of multiplexing. It is
defined as 24 DS0 (64 Kbps) circuits multiplexed into a 1.544
Mbps data signal; and
(3) "Digital Signal Level Three (DS3)" means: (A) In the U.S. Digital
hierarchy, digital signal level 3 indicates a 44.736 Mbps data
signal, often delivered to customers via optical fiber systems,
also referred to as T; (B) in the U.S. time-division multiplexing
hierarchy, digital signal level 3 (DS3) indicates the third level
of multiplexing. It is defined as 28 DS1 (1.544 Mbps) signals,
with added overhead bits, multiplexed onto a 44.736 Mpbs data
signal; and (C) high capacity access service that provides
capacity equivalent to 28 DS1 circuits, 7 DS2 channels, or 672
voice grade special access circuits; also used generically to
describe digital data transmission services operating over fiber
optic lines at transmission speed of 44.6 Mbps.
2. TERM
(a) This Agreement shall be effective at 2400 hours on the date of
execution by both Parties (Effective Date) and shall continue in
effect for a period of 15 years after Energization, unless sooner
terminated or extended in accordance with the terms of this Agreement.
(b) The term of this Agreement shall be extended only by mutual agreement
of the Parties. The Agreement may be extended for two separate 5-year
renewal periods. Either Party shall notify the other Party at least
90 days prior to the expiration date of this Agreement if the
notifying Party decides to exercise its renewal option. The other
Party shall have 45 calendar days to accept or reject the renewal
option. The terms and conditions of this
6
Agreement applicable to the initial 15-year period may be modified or
renegotiated before each Renewal Period(s) upon mutual agreement by
the Parties.
(c) All obligations incurred and outstanding including Indemnification,
under section 22 shall survive the expiration or termination of this
Agreement; provided that sections 23 and 24(h) shall survive
expiration or termination for 3 years.
3. EXHIBITS
Exhibit A (Route); Exhibit B (Payment Specifications); Exhibit C (Milestone
Schedule); Exhibit D (Fiber Specifications); and Exhibit E (Detailed
Restoration Plan) are incorporated into and made a part of this Agreement.
4. AMENDMENTS
This Agreement may be amended upon the written agreement of both Parties.
5. MILESTONE SCHEDULE
Energization of the Cable is currently scheduled for December 1, 1997. On
or before July 15, 1997, BPA and XXX agree to complete an evaluation of the
milestones, described in Exhibit C, required to complete construction and
Energization of the Cable. The evaluation shall determine if Exhibit C
will be revised to reflect an earlier, or later, Energization date.
6. OWNERSHIP
(a) Each Party shall own its own electronic and optronic devices necessary
to transmit signals over the fibers each Party controls as specified
in this Agreement.
(b) BPA shall own all structures, improvements, and components obtained
for or installed on BPA Facilities and the Route in accordance with
this Agreement.
7
(c) Title and ownership of the Cable Accessories, Regenerator Building(s),
and related equipment within the Regenerator Building(s) furnished by
XXX shall be and remain the property of XXX, except that BPA shall
gain title to and ownership of such equipment which cannot be removed
without damage to BPA Facilities at termination of this Agreement.
7. LICENSE
(a) EXCLUSIVITY
BPA hereby grants to XXX an exclusive License to use the Commercial
Fiber and to manage the Diverse Fibers. This right shall remain
exclusive as long as XXX meets or exceeds the Performance Criteria
described in section 8.
(b) ACCESS TO THE ROUTE
XXX shall have escorted access to the Route for the purposes of
performing its rights and obligations under this Agreement. BPA shall
have the right to use the Route, BPA Fiber, or any portion thereof,
together with the right to enter upon the Route, or any portion
thereof, at all times, for any and all purposes. BPA shall retain the
right to use the BPA Fiber for its own internal electric system
network and utility business purposes.
(c) NO PROPERTY INTEREST
This Agreement shall not confer upon XXX any ownership or possessory
interest in the Route or other property owned by BPA except as
provided herein, and XXX agrees that it shall never make any claim of
such interest based upon this Agreement.
8
8. PERFORMANCE CRITERIA
(a) Pursuant to section 7(a), the cumulative GRV must be equal to or
greater than the cumulative Performance Criteria (calculated from
previous and current years).
ELI's PERFORMANCE CRITERIA shall be calculated as a percentage of the
Revenue Forecast listed in Table A.
The PERCENTAGE applied to the Revenue Forecast shall be [*], in year
one, and [*] for the following years, except that, following the year
that the cumulative annual GRV for all years is equal to or greater
than BPA Capitol Cost, the percentage used thereafter for calculating
Performance Criteria will be [*].
ANNUAL GRV equals the sum of the monthly GRVs over a given 12-month
period. Unless otherwise agreed to by the Parties, the first 12-month
period (Year 1) shall commence 30 calendar days following
Energization.
TABLE A
YEAR[*] REVENUE FORECAST[*]
----------
* Confidential material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
9
SAMPLE PERFORMANCE CRITERIA CALCULATION[*]
A B C D E F G
(b) BPA RIGHTS
(1) If at any time following an audit of performance within 60 days
of the conclusion of each annual period, XXX fails to meet, on a
cumulative basis, the Performance Criteria, BPA, at its
discretion, may determine the License to be nonexclusive and BPA
shall have the right to use any unused portion of the Commercial
Fiber for any purpose.
(2) In the event ELI's rights to use the Commercial Fiber becomes
nonexclusive, XXX shall cooperate with BPA to allow co-location
of other users of the Commercial Fiber in ELI's Regenerator
Buildings, based on available space. The Parties shall agree to
the amount of reasonable compensation to be charged to the co-
locating users.
----------
* Confidential material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
10
9. XXX CAPITAL SPENDING
XXX shall make capital investments to provision the Commercial Fiber with
electronics, optronics, buildings, other infrastructure, and fiber
connectivity with Local Exchange Carrier networks and Inter-Exchange
Carrier networks, at a sufficient level to meet the Revenue Forecast listed
in Table A of section 8(a).
10. BUSINESS PLAN
XXX shall develop a Business Plan that describes ELI's proposal for
marketing, managing, and utilizing the Cable along the Route. The Business
Plan shall include, but is not limited to, ELI's marketing strategy for
telecommunications service(s) along the Route, customer service, sales
strategy for all Transport Services, accounting, billing and collections
standards, strategy for maintaining XXX fibers, and plan for maintaining
compliance with all regulatory requirements or relevant State regulatory
authorities and the Federal Communications Commission. Unless otherwise
agreed to by the Parties, XXX shall complete the Business Plan 6 months
from the date of execution of this Agreement. Prior to finalization of the
Business Plan, BPA shall have the right to review ELI's Business Plan for
consistency with this Agreement, however, BPA shall not be involved in
ELI's decisions regarding the marketing, pricing, managing, and use of the
Commercial Fiber. XXX shall use its best efforts, consistent with
reasonable commercial practices, to maximize the GRV generated pursuant to
the License.
11. MARKET PRICE ASSESSMENT
(a) BPA shall procure, under separate agreement, the services of a market
assessment consultant(s) to assess market prices of bulk transport
services and provide reports to BPA.
(b) BPA and XXX agree to equally share in the costs of procuring the
services described above.
(c) The market assessment consultant shall be responsible for acquiring
quotes, calculating an average, and delivering market assessment
reports to BPA at some planned interval, using the methodology agreed
to by BPA and XXX. BPA and
11
XXX shall within 120 calendar days from execution of this Agreement,
make their best effort to agree to the methodology.
(d) BPA agrees to allow XXX to participate in the development of the
methodology for assessing market price(s) to be used under this
Agreement.
(e) XXX agrees to use the current data provided to BPA by the market
assessment consultant as a basis for setting XXX Transport Service
Value(s) for each XXX Transport Service, depending on when the XXX
Transport Service is placed in service by XXX. The XXX Transport
Service Value for any specific XXX Transport Service will remain in
effect for a period of 36 months, after which the XXX Transport
Service must be re-valued based on the current market assessment data.
(f) The agreed to methodology may be changed by mutual agreement of BPA
and XXX.
12. PAYMENT
(a) XXX agrees to pay BPA monthly, according to the Payment Specifications
described in Exhibit B. In addition to ELI's monthly payment to BPA,
XXX shall include a monthly report of all transactions. The report
will allow BPA to account for the GRV generated each month. Both
Parties shall agree on a reporting format to be used, prior to ELI's
first payment to BPA.
(b) For the purposes of determining the monthly payment required under
this Agreement, any Transport Services originating in the Originating
and Terminating Markets, or any Transport Services originating in
western Washington (west of Cascade Mountain Range), and terminating
in
12
Originating and Terminating Markets, excluding Portland, Oregon, will
be included in the accounting to determine GRV.
(c) Unless otherwise agreed to by the Parties, accounting of the GRV shall
begin 30 calendar days following Energization. Payment shall be
received by BPA from XXX by the last day of each month for GRV
calculated on the previous calendar months' transactions. Payments
shall be sent to the address identified in (f) below.
(d) Payments to BPA for revenue generated by XXX from use of the
Commercial fiber (or portion thereof) before Energization shall be
based on the GRV of such services and calculated using the 46 percent
Payment Factor, as described in Exhibit B. All payments, including
payments based on Early Service Revenues, shall be credited toward
ELI's accumulative monthly payments to BPA to determine Payment
Factor.
(e) EARLY SERVICE REVENUES
Revenues generated by XXX, using the Commercial Fibers, before
Energization (as described in section 8), shall be accumulated as a
credit against the Performance Criteria in Year 1.
(f) Payment shall be made by wire transfer. XXX shall pay by wire
transfer using procedures established by BPA's Financial Services
Group. Wire transfer amounts are due and payable on the Due Date.
The Customer may pay its xxxx by mail provided the following
conditions are met:
(1) XXX gives BPA 30 days' notice of its intent to pay by mail; and
(2) XXX ensures that BPA receives full payment by the Due Date.
Payments shall be mailed to:
BPA Accounting Operation - FRO
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
13
(g) Payments not received by BPA when due shall bear interest at the
Interest Rate from the date payment was due until the date payment is
made to BPA. Late payments shall be collected pursuant to the Debt
Collection Act, 1982, Pub. L. No. 97-365.
(h) BPA may purchase from XXX any commercial telecommunications service
XXX offers business customers generally. The price charged by XXX for
any such service shall be the lowest price then charged by XXX to
similarly situated commercial customers for a similar service or group
of services.
13. MAINTENANCE, REPAIR, AND RESTORATION OF THE CABLE
(a) MAINTENANCE OF THE CABLE
(1) During the term of this Agreement, BPA shall be responsible for
the physical routine maintenance of the Cable and the Cable
Accessories. BPA shall maintain the Cable and the Route at all
times in good working order and in a safe condition, in
conformity with the Cable Specifications and all applicable laws
and regulations.
(2) BPA shall pay all costs associated with the routine maintenance
of the Cable.
(3) XXX shall be responsible for maintenance of its property,
including the Regenerator Building(s) along the Route.
(b) DETAILED RESTORATION PLAN
(1) Restoration activities will be integral to ensuring successful
implementation of this Agreement. Timely restoration is
dependent upon the timely coordination and cooperation between
BPA and XXX.
14
(2) The Parties agree to jointly, within 120 days of the execution of
this Agreement by both Parties, develop a Detailed Restoration
Plan (Exhibit E), which shall upon its completion, become part of
this Agreement.
(3) The following provisions described in sections (c) and (d) below
shall form the principles and basis for the development of a
Detailed Restoration Plan.
(c) RESTORATION PRIORITIES AND GENERAL REQUIREMENTS
(1) BPA's obligation to maintain and repair the Cable and any
activities incidental thereto shall be subordinate to, and shall
not conflict with, BPA's rightful use and operation of its
transmission facilities. In the event both BPA's transmission
facilities and the Cable require maintenance or repair, the
restoration of the Cable shall be at all times subordinate to the
restoration of BPA's transmission facilities, unless otherwise
agreed to by BPA in advance. The restoration of BPA's
telecommunications system shall take priority over restoration
activities related with the Commercial Fiber. In the event that
ELI's License becomes nonexclusive pursuant to section 8, the
Commercial Fiber used by XXX shall take priority over restoration
activities related to any fibers used by any other users of the
Commercial Fiber.
(2) Any and all BPA, XXX representatives, or other users of the
Commercial Fiber that construct, install, repair, replace, or
otherwise handle the Cable, Cable Accessories, Commercial Fiber,
BPA Fiber, or any related materials and equipment shall be
properly trained and equipped to meet all current industry
standards.
15
(3) A BPA representative must be onsite during all repair and
restoration work to perform functions such as safety watch,
protection of BPA's transmission facilities, and obtain line
clearances.
(4) The Party performing the repair and restoration shall use prudent
business methods to acquire the most cost-effective restoration
procedures and materials available given the Cable
Specifications, Fiber Specifications, and current industry
standards.
(5) BPA shall require all employees or agents of XXX or any other
users of the Commercial Fiber who work near BPA's transmission
facilities to demonstrate that they have been properly trained
and equipped to perform the work. The Parties shall agree in
advance what constitutes proper training and reasonable costs.
The costs of agreed upon training of XXX employees, agents of
XXX, or other users of the Commercial Fiber shall be borne by
XXX.
(6) A BPA representative shall have the authority to stop any work
activities or equipment functions for reasons that he or she
determines in good faith to involve potential health hazards,
safety concerns, and potential disruption to BPA's operating
system. BPA will make reasonable efforts to coordinate with XXX
in case of such events.
(d) RESTORATION OF THE CABLE
(1) BPA shall immediately, upon notification from XXX of interruption
in service, failure, disrepair, impairment, or other need for
repair or restoration of the Commercial Fiber, begin to mobilize
BPA crews and make its continuous best effort to achieve such
necessary repair or restoration, including making its best effort
to have maintenance personnel at the affected site within 4 hours
after receipt of such notice,
16
PROVIDED, HOWEVER, subject to Section 13(c)(1), that in the event
any of ELI's rights are interrupted pursuant to Section 23(a),
repairs and restoration shall be made as expeditiously as
possible. XXX recognizes that the 4 hour response time
represents optimal conditions, and may be impossible to achieve
when responding to certain remote locations. Actual response
times will be influenced by factors such as the terrain, weather
conditions present at the time the request is made, and the
actual mileage from BPA's dispatch station to the fault site.
(2) For purposes of this section, best efforts means activities and
performance consistent with prudent utility practice, existing
contract provisions for BPA's hourly employees ("Collective
Agreement between BPA and Columbia Power Trades Council"), and
response times that do not jeopardize the health and safety of
BPA employees, agents of BPA, XXX employees, or agents of XXX.
(3) The Detailed Restoration Plan shall set forth the roles and
responsibilities of the respective Parties, and shall address
issues regarding logistical considerations, response interval
factors, communication between the Parties, sequential activity
requirements, and other related items which would impact response
time and restoration intervals. The aforementioned issues will
be taken into consideration in the determination of whether BPA
has used its best efforts in such restoration or repair
activities. The Detailed Restoration Plan will also set forth
financial penalties, if any, to be paid to XXX by BPA for failure
to use its best efforts on any repair or restoration, including
the mobilization effort as set forth above.
17
14. REGENERATOR BUILDING(S)
(a) XXX shall have sole responsibility for the expense and acquisition of
any property necessary for its equipment along the Route. If space is
available at BPA substations, such space shall be provided to XXX at
BPA's "bare land" lease rate under a separate agreement.
(b) XXX shall provide and own, except as provided in section 6(d), Cable
Accessories, splice boxes, and other components necessary for the
operation of the Commercial Fiber.
(c) XXX shall have sole responsibility for obtaining electric power and
any land rights for Regenerator Building(s).
(d) XXX shall have sole responsibility for the physical maintenance and
environmental compliance associated with the Regenerator Building(s)
and the grounds around the Regenerator Building(s).
15. RIGHTS AND OBLIGATIONS CONCERNING THE CABLE
(a) GENERAL
In the event that XXX requires capacity (other than Transport
Service(s)) along the Route, BPA and XXX shall agree in writing on how
those transactions shall be valued.
XXX shall not use Commercial Fiber for commercial activities not
accounted for in this Agreement.
XXX agrees to utilize the Commercial Fiber for all XXX capacity needs,
existing or arising along the Route and between the Originating and
Terminating Markets, except for diversity needs, and subject to ELI's
18
existing contractual obligations. XXX shall use its best efforts to
transition as quickly as possible from existing contractual
obligations in satisfying the requirements of the preceding sentence.
(b) PERMITS
BPA shall acquire all necessary regulatory or governmental permits and
approvals required for construction of the Cable along the Route, and
XXX shall, at its cost, cooperate and provide BPA with such
information as BPA may reasonably request from XXX in connection with
such permits and approvals. XXX shall acquire all necessary
regulatory or governmental permits and approvals necessary for ELI's
use of the Commercial Fiber for telecommunications services, including
Transport Service(s) and Dark Fiber Leases, and any permits and/or
approvals that may be required for the Regenerator Building(s). XXX
shall not rely upon BPA to acquire from any other Federal agency any
necessary regulatory or governmental permits and approvals.
When feasible, BPA shall, at its cost, cooperate and provide XXX with
such information as XXX may reasonably request from BPA in connection
with acquiring permits, easements, or additional rights-of-way for the
Regenerator Building(s); provided that XXX indemnifies and holds
harmless BPA from any future liability resulting from such actions.
(c) TAXES, MECHANIC'S LIENS, AND ENCUMBRANCES
XXX shall pay its own income taxes, as well as all franchise fees and
other fees and taxes resulting from ELI's License or use of the
Commercial Fiber. XXX shall keep the Route free and clear from all
liens and encumbrances resulting from ELI's use of the Commercial
Fiber. If XXX does not pay the foregoing taxes and fees when such
become due, and such nonpayment results in the imposition of a lien
on, or encumbrance of, the Route, then BPA shall have the right, but
not the obligation, to pay all amounts due and discharge such lien or
encumbrance, upon 30 calendar days' prior written
19
notice to XXX. In the event BPA causes such liens or encumbrances to
be discharged, XXX shall reimburse BPA upon demand together with
interest thereon at the Interest Rate, accruing from the date that BPA
makes payment discharging such liens or encumbrances until the date
BPA receives full reimbursement from XXX. XXX shall have the absolute
right to dispute or challenge any tax or fee assessed on its use of
the Commercial Fiber.
(d) ACCESS ROADS
XXX may use BPA's access roads to access the Regenerator Building(s),
provided that heavy vehicles or other equipment being used on the
access road will not at any time impair the use of the access road by
BPA. Access to the roads shall be limited to the times and frequency
required for maintenance and operation of the Regenerator Building(s)
and equipment, and any repair and restoration of the Cable pursuant to
section 13. XXX shall, at ELI's expense, repair any damage to the
access roads caused as a result of XXX use of the access roads. ELI's
shall acquire access easements to the Regenerator Building(s) where
BPA access roads are not available.
(e) ENVIRONMENTAL COMPLIANCE ACTIVITIES
(1) BPA shall be responsible for compliance with the National
Environmental Policy Act (NEPA) and shall acquire all necessary
permits associated with the project operations, maintenance, and
construction of the Cable. XXX shall, at its expense, cooperate
and provide BPA with such information as it may reasonably
request in connection with such compliance and permits. The
project activities will be limited to construction and operation
of cable, hardware, Regenerator Building(s), access roads and
distribution lines if needed for Regenerator Building(s). If any
mitigation measures are required along the Route as part of the
NEPA compliance activities, these measures will be performed by
BPA at the sole cost of BPA. Contacts with the local landowners
will be performed by BPA-appointed
20
representatives. Any landowner compensation required as part of
the NEPA and project activities will be made by BPA. All of the
compliance and permitting activities undertaken by BPA pursuant
to this paragraph (e) shall be at the cost and expense of BPA.
(2) BPA and XXX agree neither they nor anyone acting on their behalf
will bring, keep, or use Hazardous Materials at or on the Route
(including regenerators) except for those necessary for use in
their respective businesses, in which case they are to be
handled, stored, used, and disposed of in compliance with
applicable laws, regulations, and ordinances.
(3) BPA agrees to indemnify and hold XXX harmless from any and all
claims, damages, fines, judgments, penalties, costs, liabilities,
or losses arising from or due to the presence of Hazardous
Materials at or on the Route (including regenerators) if BPA or
its agent, contractor, employees, or invitees is responsible for
the introduction of the Hazardous Materials. This indemnity
shall specifically include, without limitation, any and all costs
due to Hazardous Materials which flow, diffuse, migrate, or
percolate into, onto or under the property, or from the property
to neighboring property or groundwater after the Agreement
commences; however, it shall not include the cost of repairing
ELI's equipment.
(4) XXX agrees to indemnify and hold BPA harmless from any and all
claims, damages, fines, judgments, penalties, costs, liabilities,
or losses arising from or due to the presence of Hazardous
Materials at or on the Route (including regenerators) if XXX or
its agent, contractor, employee, or invitees is responsible for
the introduction of the Hazardous Materials. This indemnity
shall specifically include, without limitation, any and all costs
due to Hazardous Materials which flow, diffuse, migrate, or
percolate into, onto or under the
21
property, or from the property to neighboring property or
groundwater after the Agreement commences; however, it shall not
include the cost of repairing BPA's equipment.
(5) Hazardous Materials, as used herein, shall mean all materials
which have been determined to be hazardous to health or the
environment by virtue of being: (A) a hazardous waste as defined
by the Resource Conservation and Recovery Act; (B) a hazardous
substance as defined in the Comprehensive Environment,
Compensation, and Liability Act; (C) a substance regulated by the
Toxic Substances Control Act; and (D) substances regulated by the
Federal Insecticide, Fungicide, Rodenticide Act in accordance
with the applicability provisions of such Act. Reference to
specific statutes include amendments as they are made from time-
to-time, as well as the regulations promulgated thereunder.
16. RELOCATION OF THE CABLE
In the event that the Cable may require relocation or replacement during
the term of this Agreement, the cost of such relocation or replacement
shall be allocated as follows:
(a) If requested by ELI, ELI shall pay all such costs;
(b) If requested by BPA due to requirements necessary to provide
economical and reliable electric power, BPA shall pay all such costs;
(c) If the Cable must be relocated due to the order of any court,
governmental agency, or in conjunction with the operational needs of
BPA, BPA shall, in consultation with XXX, designate a new route for
the Cable. The costs associated with such required relocation that
are not paid by a third party, shall be paid by BPA. XXX shall be
responsible for any relocation
22
costs associated with ELI's Regenerator Building(s), XXX-owned cable,
and XXX-owned terminal equipment.
17. REPRESENTATIONS AND WARRANTIES
(a) XXX
XXX represents and warrants to BPA as follows:
(1) XXX is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware. XXX is
duly qualified to do business and is in good standing in the
States of Oregon and Washington. XXX covenants that it will
maintain any necessary Federal, State, or local compliance needed
to continue to do business in the States of Oregon and
Washington. XXX has full power and authority to execute,
deliver, and perform its obligations under this Agreement. The
execution of this Agreement by XXX has been duly and validly
authorized by all necessary action on the part of XXX. This
Agreement is a legal, valid, and binding obligation of XXX,
enforceable against XXX in accordance with its terms. The
execution and delivery of this Agreement by XXX and the
performance of the terms, covenants, and conditions contained
herein will not violate the articles of the corporation, or
bylaws of XXX, or any applicable law or regulation or any order
of court or arbitrator, and will not conflict with and will not
constitute a material breach of, or default under, the provisions
of any contract by which XXX is bound. Except as otherwise
stated herein, no approval, authorization, or other action by any
governmental authority or filing with any such authority which
has not been obtained or accomplished is required in connection
with the execution, delivery, and performance by XXX of this
Agreement.
23
(2) Any assignment of the License of this Agreement to parties not
owned by Citizens Utilities shall be with the written consent of
BPA, such consent shall not be unreasonably withheld.
(3) There are no known actions, suits, or proceedings pending or
overtly threatened against XXX before any court or administrative
agency that would materially impair ELI's performance of its
obligations under this Agreement.
(4) XXX has made no other representations or warranties outside of
this Agreement and BPA acknowledges and agrees that it is not
relying on any other representations or warranties.
(b) BPA
BPA represents and warrants to XXX as follows:
(1) BPA is duly authorized to execute this Agreement. This Agreement
constitutes a legal and valid obligation of BPA enforceable in
accordance with its terms to the full extent provided by law.
The enforceability of this Agreement is qualified as to:
Limitations imposed by bankruptcy laws of the United States,
insolvency, reorganization, arrangement, moratorium, or other
laws relating to or affecting the enforcement of creditor's
rights generally.
(2) Upon execution of this Agreement, BPA warrants that there are no
known conflicts with this Agreement and that this Agreement does
not constitute a material breach of or a default under any
constitutional provision, law, or administrative regulation, or
violate any judgment, decree, or other instrument, or any other
contract related to the Route to which BPA is a Party or to which
BPA or any of its property or assets is subject.
24
(3) BPA has made no other representations or warranties outside of
this Agreement and XXX acknowledges and agrees that it is not
relying on any other representations or warranties.
(c) NO BPA WARRANTY CONCERNING ROUTE
BPA makes no representation or warranty whatsoever concerning the
physical characteristics of the Route. XXX acknowledges that neither
BPA nor any of BPA's officers, employees, representatives,
contractors, or subcontractors or agents have made any such
representation, nor is BPA or XXX entering into this Agreement in
reliance upon any such representation or warranty.
18. AUDIT PROCEDURES
(a) RECORDS
The Parties shall maintain true and correct sets of records in
connection with the performance of this Agreement. XXX shall retain
records of all transactions with supporting documentation related
thereto for a period of not less than 3 years after the term of a
specific transaction has expired and receipt of final payment by XXX
to BPA. The records in connection with each financial transaction
shall include an accounting of gross revenues, revenue shares, and
billing and collection.
(b) AUDIT RIGHTS
Either Party shall have the right to perform an audit of each other's
books, records, and documents used in or relating to the costs to
construct, repair, and maintain the site and improvements under this
Agreement. Such audit may be performed within 36 months after the
date that either Party renders a xxxx or refund voucher. Each Party
shall be responsible for all expenses incurred by such Party in the
performance of an audit pursuant to this section. In the event that
the Parties agree that the Auditing Party's audit is
25
determined to be correct, the Non-Auditing Party shall reimburse the
Auditing Party the agreed upon amount. In the event that the Non-
Auditing Party disagrees with the results of the other Party's audit,
and resolution is not reached between the Parties, the Parties agree
to resolve the dispute pursuant to Section 23 of this Agreement.
(c) BPA reserves the right to conduct technical audits, including physical
inspection of the number, type, and use of circuits, including
Transport Service(s) sold, used, and administered by XXX using the
Commercial Fiber.
19. INSURANCE
(a) GENERAL
At all times during the term of this Agreement and the License term,
XXX, at its own cost and expense, shall provide the insurance
specified by this section.
(b) EVIDENCE REQUIRED
On the Effective Date of this Agreement, XXX shall provide BPA with a
certificate of insurance (Certificate of Insurance) executed by an
authorized representative of the insurer(s) evidencing that XXX
insurance complies with this section. A copy of all required
endorsements shall be attached to and form a part of the Certificate
of Insurance.
(c) NOTICE OF CANCELLATION, REDUCTION, OR MATERIAL CHANGE IN COVERAGE
Policies shall be endorsed to provide BPA with 30 calendar days' prior
written notice of any cancellation, reduction, or material change in
coverage. If insurance coverage is due to be canceled, reduced, or
materially changed, XXX shall, within 30 calendar days before the
effective date of such cancellation, reduction, or material change,
obtain the coverage required under this Section 19 and provide to BPA
documentation evidencing such coverage. XXX shall be responsible for
the costs of any damage, liability, or
26
injury occurring during any period of cancellation, reduction, or
material change in insurance coverage to the extent such costs are not
otherwise covered by insurance; provided that XXX shall not be
responsible for the costs of any damage, liability, or injury
occurring during any such period if such damage, liability, or injury
was caused by BPA's gross negligence or willful misconduct.
(d) QUALIFYING INSURERS
Policies shall be issued by companies which hold a current
policyholders alphabetic and financial size category rating of not
less than A:X according to Best's Insurance Reports.
(e) INSURANCE REQUIRED
(1) LIABILITY
Commercial general liability insurance for bodily injury
(including death) and property damage shall provide limits of not
less than $10 million per occurrence.
(A) Coverage included shall be:
(i) premises and operations;
(ii) broad form property damage;
(iii) products and completed operations;
(iv) blanket contractual liability;
(v) personal injury liability;
(vi) cross-liability and severability of interests;
and
27
(vii) independent contractors liability.
(B) Coverage shall be endorsed to include the following:
(i) inclusion of BPA, its officers, representatives,
agents, and employees as an additional insured as
respects services or operations in connection
with this Agreement; and
(ii) stipulation that the insurance is primary
insurance and that no insurance or self-insurance
of BPA will be called upon to contribute to a
loss.
(2) BUSINESS AUTOMOBILE LIABILITY INSURANCE
Business Automobile Liability Insurance for bodily injury
(including death) and property damage shall provide total limits
of not less than $2 million combined single limit per occurrence
to all owned, non-owned, and hired vehicles.
(3) WORKERS' COMPENSATION/EMPLOYER'S LIABILITY INSURANCE
Statutory Workers' Compensation and Employer's Liability
Insurance for not less than $1 million per occurrence shall apply
to employer's liability coverage for all employees engaged in
services or operations under this Agreement. The policy shall
include broad form all-States/other States coverage.
(f) SPECIAL PROVISIONS
(1) The foregoing requirements as to the types and limits of
insurance coverage to be maintained by XXX, and any approval of
said insurance by BPA or XXX, are not intended to and shall not
in any manner limit
28
or qualify the liabilities and obligations otherwise assumed by
XXX pursuant to this Agreement, including, but not limited to,
the provisions concerning indemnification.
(2) BPA acknowledges that some insurance requirements contained in
this Section 19 may be fulfilled by a funded self-insurance
program of XXX or its parent company, Citizens Utilities.
However, this shall not in any way limit liabilities assumed by
XXX under this Agreement. Any self-insurance program must be
first approved in writing by BPA.
20. DEFAULT
(a) EVENTS OF DEFAULT
If either Party is in material breach or default (Defaulting Party),
under this Agreement, the other Party (Non-Defaulting Party) may
notify in writing the Defaulting Party that it is in material breach
or default, such notice to be effective upon its receipt by the
Defaulting Party. Material breach or default under this Agreement
shall include, but is not limited to the following:
(1) failure to make any payment when due hereunder; with the
exception of payments that become payable during periods of Force
Majeure as provided in Section 24(a)(2).
(2) failure to perform any obligations required to be observed or
performed hereunder;
(3) any representation or warranty made by one Party to the other
herein proving incorrect in any material respect as of the date
of the making thereof;
(4) XXX files a voluntary petition in bankruptcy, or a petition in
bankruptcy is filed against XXX and not dismissed within 60 days,
29
or XXX is adjudicated as bankrupt or insolvent, or files any
petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution,
or similar relief under any present or future Federal, State, or
other statute, law, or regulation relating to bankruptcy,
insolvency, or other relief for debtors, or seeks or consents to
or acquiesces in the appointment of any trustee, receiver,
custodian, liquidator, or similar official of XXX, or makes any
general assignment for the benefit of creditors;
(5) material interference by a Party to the other Party's operations;
or
(6) failure to make restitution for any damage to a Party's real
property or equipment caused as a result of the negligent or
willful acts or omissions of the other Party when such damage
causes material interference to a Party's operations.
(b) REMEDIES
(1) DEFAULTING PARTY'S RIGHT TO CURE
The Defaulting Party shall have the right to cure any material
breach or default under this Agreement within 30 calendar days
after the receipt by the Defaulting Party of notification of such
material breach or default. In the case of any material breach
or default which may not reasonably be cured within 30 calendar
days, other than in the case of a breach of Section 20(a)(1), the
Defaulting Party shall have the right to provide the Non-
Defaulting Party with a plan for the appropriate actions to cure
such material breach or default, which plan shall be subject to
the approval of the Non-Defaulting Party, which approval shall
not be unreasonably withheld. Within 30 calendar days of
submission of the plan, the Defaulting Party must commence
diligently pursuing appropriate action under the plan to cure the
material breach or default, and unless otherwise agreed to by
30
the Parties, such material breach or default shall be cured
within 90 calendar days of submission of the plan, failing which
the Non-Defaulting Party may forthwith and without further notice
terminate this Agreement.
(2) RIGHTS AND REMEDIES UPON TERMINATION
Any Party terminating this Agreement under Section 21 shall have
the additional right to cure any material breach or default of
the Defaulting Party to preserve the Non-Defaulting Party's
rights that may be prejudiced as a result of such material breach
or default and exercise and pursue all other rights and remedies
available to it under applicable law.
(3) RIGHTS AND REMEDIES CUMULATIVE
Except as otherwise provided in this Agreement, any right or
remedy afforded to either XXX or BPA under any provision of this
Agreement is in addition to, and not in lieu of, all rights or
remedies afforded either XXX or BPA under any other provision of
this Agreement, by law or otherwise.
21. TERMINATION
(a) Termination of this Agreement may occur in the following instances:
(1) By the Non-Defaulting Party, after the time period for the
Defaulting Party to cure a material breach or default has
expired;
(2) By either Party, if the Party claiming Force Majeure has not
satisfactorily performed any obligations delayed due to the Force
Majeure within 1 year of the notice of the Force Majeure event;
or
(3) Pursuant to Partial Invalidity terms, Section 24(d) of this
Agreement.
31
(b) Subject to Section 20(b), the Terminating Party shall give the other
Party 30 calendar days advance written notice of Termination, which
Termination shall become effective 30 calendar days after the receipt
of such notice by the other Party.
22. INDEMNIFICATION; WAIVER OF DAMAGES
(a) INDEMNIFICATION BY XXX
(1) To the extent allowed by law, XXX shall release and indemnify,
defend, and hold harmless BPA and each of its directors,
officers, agents, representatives, subcontractors, and employees
(the "BPA Indemnitees") from and against any and all claims: (A)
for injury to or death of a person, including an employee of BPA
or an XXX Indemnity; (B) for loss of or damage to property
resulting directly or indirectly from ELI's performance or
nonperformance of this Agreement; or (C) for any Claims against
BPA by customers of XXX or others doing business with XXX, except
in the cases of clauses (A) and (B) only, to the extent that such
Claim is the result of the gross negligence or willful misconduct
of a BPA Indemnity.
(2) If gross negligence or willful misconduct of a BPA Indemnity has
contributed to a Claim, XXX shall not be obligated to indemnify
the BPA Indemnitees for the proportionate share of such Claims
caused by such negligence or willful misconduct. BPA shall have
the right, at its own cost, to retain counsel, and to monitor, or
participate in the defense of any Claim that is covered by ELI's
indemnity hereunder.
32
(b) INDEMNIFICATION BY BPA
(1) To the extent allowed under the Federal Tort Claims Act, BPA
shall release and indemnify, defend, and hold harmless XXX and
each of its directors, officers, agents, representatives,
subcontractors, and employees (the "XXX Indemnitees") from and
against any and all claims for injury to or death of a person,
including an employee of BPA or an XXX Indemnity, or for loss of
or damage to property resulting directly or indirectly from BPA's
performance or nonperformance of this Agreement, except to the
extent that such claim is the result of the gross negligence or
willful misconduct of a, XXX Indemnity. In no event shall BPA be
required to indemnify XXX Indemnities against claims against XXX
by customers of XXX or others doing business with XXX.
(2) If gross negligence or willful misconduct of an XXX Indemnity has
contributed to a claim, BPA shall not be obligated to indemnify
the XXX Indemnitees for the proportionate share of such claims
caused by such negligence or willful misconduct. XXX shall have
the right, at its own cost, to retain counsel, to monitor, or
participate in the defense of any claim that is covered by BPA's
indemnity hereunder.
(c) WAIVER OF CERTAIN DAMAGES
Each Party hereby waives any right to consequential, incidental,
special or indirect damages, or damages for lost profits or exemplary
damages with respect to any claim arising out of or related to this
Agreement. The Parties acknowledge that the foregoing waiver shall
not prejudice the right of indemnity respecting any claim under this
Section 22.
23. DISPUTE RESOLUTION
(a) Pending resolution of a disputed matter, the Parties shall continue
performance of their respective obligations hereunder, provided that
neither Party shall be required to take any action pending such
resolution which it has been advised by
33
counsel, or which it reasonably believes, is unlawful or not permitted
pursuant to applicable regulations or permit requirements. Any
controversy between the Parties rising out of this Agreement or breach
thereof, or out of performance under this Agreement, is subject to the
mediation process described below. If not resolved by mediation, then
the matter must be submitted to the American Arbitration Association
("AAA") for arbitration before a sole arbitrator.
(b) A meeting will be held promptly between the Parties to attempt in good
faith to negotiate a resolution of the dispute. The meeting will be
attended by individuals with decision-making authority regarding the
dispute. If within 30 calendar days after such meeting the Parties
have not succeeded in resolving the dispute, within 30 calendar days
thereafter, upon the written notice from either Party to the other
Party, submit the dispute to a mutually acceptable third-party
mediator who is acquainted with dispute resolution methods. The
mediation shall be non-binding. If the dispute is not resolved by
mediation, either Party may initiate an arbitration with the AAA, upon
the written notice from either Party to the other Party. The dispute
shall be resolved by arbitration under the rules and administration of
the AAA (except that service of process, pleadings, motions and orders
on BPA shall be as prescribed by the Federal Rules of Civil
Procedures), and judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. Neither
Party is entitled to seek or recover punitive damages in considering
or fixing any award under these proceedings.
34
(c) The costs of mediation and arbitration, including any mediator's fees,
AAA administration fee, the arbitrators fee, and costs for the use of
facilities during the hearings, shall be borne equally by the Parties.
Reasonable attorneys' fees may be awarded to the prevailing Party
(provided such a Party can clearly be determined from the proceedings)
at the discretion of the arbitrator. Each Party's other costs and
expenses will be borne by the Party incurring them.
24. GENERAL
(a) FORCE MAJEURE
(1) As used in this Agreement, the term "Force Majeure" means acts of
God (including but not limited to, earthquakes, fires, floods,
windstorms, landslides, and ice storms); strikes, lockouts, or
other labor disputes; acts of public enemy; wars, riots, and
insurrection; epidemics; civil disturbances; explosions; train
derailments; breakdown or failure of machinery or facilities
(excluding the Cable and Cable Accessories); accidents to
machinery or equipment (excluding the Cable and Cable
Accessories), and delay in delivery of equipment to the extent
such occurrences are beyond the reasonable control of the
Parties; electrical disturbance originating in or transmitted
through such Party's electrical system or equipment or any
electrical system with which such Party's system or equipment is
interconnected; and any other event, cause, or condition beyond
the Party's reasonable control, which, by the exercise of
reasonable diligence, prevents the operation of the Cable and
prevents the Party claiming Force Majeure from performing its
obligations under this Agreement;
35
(2) If either Party is unable to carry out its obligations under this
Agreement as a result of an event, cause, or condition of Force
Majeure, the Party claiming Force Majeure shall give notice and
full particulars of such Force Majeure in writing to the other
Party within 5 calendar days after the occurrence of the Force
Majeure event, cause, or condition. Any obligations that such
Party claims it is unable to perform due to an event, cause, or
condition of Force Majeure shall be suspended during the
continuance of such event of Force Majeure. The Party claiming
Force Majeure shall use reasonable efforts to remedy and minimize
the effects of such event of Force Majeure with all reasonable
dispatch. For purposes of this Agreement, the Parties are
obligated to make payments during periods of Force Majeure;
PROVIDED, HOWEVER, XXX shall not be obligated to make payments
during periods of Force Majeure when XXX is unable to provide
service under the terms of the agreement with ELI's customers.
Interest shall not accrue on payments that become payable to
either Party during the period of any Force Majeure.
(3) Neither Party shall be liable under this Agreement, or considered
to be in material breach or default under this Agreement, on
account of any delay in or failure of performance due to Force
Majeure unless specifically stated in this Agreement. In the
event that XXX continues to receive revenue from End-Users under
this Agreement during a Force Majeure event, XXX will not be
excused from performing its payment under this Agreement.
(b) NOTICES
All notices and other communications under this Agreement shall be
properly given only if made in writing; and
(1) mailed by certified mail, return receipt requested, postage
prepaid; or
36
(2) delivered by facsimile transmission followed by certified mail to
the Party's at the address or facsimile number set forth in this
Section 24(b) or such other address or facsimile number as such
Party may designate by notice to the other Party. Such notices
and other communications shall be effective on the date of
receipt. If any such notice or communication is not received or
cannot be delivered due to a change in the address of the
receiving Party of which notice was not previously given to the
sending Party or due to a refusal to accept by the receiving
Party, such notice or other communication shall be effective on
the date delivery is attempted.
If to BPA: The BPA Power Administration
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attn: To be identified under separate letter
with a copy to: The BPA Power Administration
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attn: To be identified under separate letter
If to XXX: Electric Lightwave, Inc.
0000 XX. Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX
Attn: Legal Affairs
Phone: (360) 000- 0000
FAX: (000) 000-0000
(c) ASSIGNMENT
XXX shall not sell, assign, lease, sublease, sub-license or otherwise
allow use of ELI's License under this Agreement to any person or
entity without BPA's written approval; which approval shall not be
unreasonably withheld. Notwithstanding the foregoing, XXX may assign
in writing its rights and responsibilities under this Agreement to a
corporate parent, subsidiary, or commonly owned affiliate, upon
written notification to BPA, and a guarantee by its parent company,
Citizens Utilities, to perform the obligation of XXX
37
under this Agreement. Any permitted assignment or other transfer of
rights hereunder shall be in writing and shall specify that the
assignee or other transferee is bound by the terms and conditions of
this Agreement to the same extent as if it were the original named
party instead of XXX hereunder. In the event that XXX xxxxx, assigns,
leases, subleases, or otherwise allows use of ELI's License under this
Agreement, XXX or its assigned entity shall designate a single point-
of-contact to BPA for all activities relating to this Agreement. A
sale, transfer, or distribution (by way of a dividend or otherwise) in
one or a series of transactions of 50 percent or more of the capital
stock of the entity that holds the License shall be deemed to be an
assignment of the License.
(d) PARTIAL INVALIDITY
If any provision of this Agreement is determined by a proper court to
be invalid, illegal, or unenforceable, such invalidity, illegality, or
unenforceability shall not affect the performance of other provisions
of this Agreement, and this Agreement shall remain in full force and
effect without such invalid, illegal, or unenforceable provision;
provided that if any such invalid, illegal, or unenforceable provision
results in frustration of this Agreement, such that XXX cannot perform
under Section 13, BPA shall have the right to terminate in accordance
with Section 2 1.
(e) GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
Federal law.
(f) TERMS GENERALLY
The defined terms in this Agreement shall apply equally to both the
singular and the plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding
masculine, feminine, and neuter forms. The term "person" includes
individuals, corporations, partnerships, trusts, other legal entities,
organizations and associations, and
38
any Government or governmental agency or authority. The words
"include," "includes," and "including," shall be deemed to be followed
by the phrase "without limitation." The words "approval," "consent,"
and "notice," shall be deemed to be preceded by the word "written."
(g) RELATIONSHIP OF THE PARTIES
Nothing in this Agreement is intended or shall be deemed to constitute
a partnership, agency, or joint venture relationship between or among
the Parties hereto. The performance by the Parties of all duties and
obligations hereunder shall be as independent contractors and not as
agents of the other Party, and no persons employed or utilized by a
performing Party shall be considered employees or agents of the other.
(h) WAIVERS
No waiver of any provision or breach of this Agreement shall be
effective unless such waiver is in writing and signed by the waiving
Party and any such waiver shall not be deemed a waiver of any other
provision of this Agreement or any other breach of this Agreement.
(i) CONFIDENTIALITY
If and to the extent any information or documents furnished by one
Party to the other under this Agreement is confidential or proprietary
to the furnishing Party, the receiving Party shall treat such
information or documents as confidential and proprietary and shall
take reasonable steps to protect against the unauthorized use or
disclosure of such information or documents; PROVIDED, HOWEVER, that
such information and documents are conspicuously marked or otherwise
clearly identified as confidential or proprietary when furnished; and
PROVIDED, FURTHER, that this Section 24(g) shall not apply to
information or documents in the public domain or to information or
documents required to be disclosed by any law, rule, regulation,
order, or other requirement of any governmental authority having
jurisdiction. If a Freedom of Information Act, or Congressional
request is received by BPA for such written information or documents,
BPA must promptly
39
notify XXX of such request and will, further, notify XXX if BPA is
required to disclose such written information or documents.
(j) NO THIRD-PARTY BENEFICIARIES
This Agreement creates rights and obligations only between the Parties
hereto. The Parties hereto expressly do not intend to create any
obligations or promise of performance to any other third person or
entity nor have the Parties conferred any rights or remedy upon any
third person or entity, other
40
than the Parties hereto, their respective successor or assigns to
enforce this Agreement.
(k) MISCELLANEOUS
Neither Party shall make public announcement of this Agreement or the
transactions contemplated by this Agreement without the prior consent
of the other Party, unless such public announcement is necessary to
comply with applicable law. This Agreement shall benefit and bind XXX
and BPA and their respective permitted successors and assigns. Time
is of the essence of this Agreement. This Agreement may be executed
in counterparts, each of which shall be an original, but all of which
shall constitute one and the same Agreement. This Agreement may not
be amended or modified except by a written instrument signed by XXX
and BPA.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement in two
counterparts.
UNITED STATES OF AMERICA
Department of Energy
BPA Power Administration
Name: /s/ Xxxxxx X. Xxxx
----------------------------------
Acting Senior Vice President,
Transmission Business Line
Date: November 27, 1996
---------------------
ACCEPTED:
ELECTRIC LIGHTWAVE, INC.
By: /s/ Xxxxxxx Xxxxxx
--------------------------
Name: Xxxxxxx Xxxxxx
------------------------
(Print/Type): VP Finance
----------------
Title: VP Finance
------------------------
Date: 11/27/96
-------------------------
41
Exhibit A, Page 1 of 6
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
ROUTE DESCRIPTION
The following Route description is a best estimate of how the Route will be laid
out. Difficulties may arise along the Route that will require BPA to make
adjustments that could alter the final Route.
XXXX - XXXXXXXX FIBER ROUTE SEGMENT
XXXX SUBSTATION TO NORTH BONNEVILLE SUBSTATION - 36.0 MILES
Xxxxxxx Control Center
North Xxxxxxxxxx - Xxxx No. 2
AFV 187 (37/2) To AFX.1 (1/1)
Xxxxxxx Xxxxxxxxx No. 1
FY 703 (151/5)
Fiber Optic Wood Pole
AMV 4 (1/1A)
Substation Dead End Structure
Bay 11, 230 kV Switchyard
North Bonneville Substation
NORTH BONNEVILLE SUBSTATION TO BIG EDDY SUBSTATION - 50.2 MILES
Substation Dead End Structure
Bay 13, 230 kV Switchyard
North Bonneville Substation
North Bonneville - Midway No. 1
AS 1 (1/1) To HB 152 (29/2)
Fiber Optic Wood Pole Parallel To XxXxxx - Xxxx No. 1
AMV 5 (116/3) To AMV 88 (97/4A)
Spearfish Tap To Xxxxxxxxx - Goldendale No. 1
4/3 To 1/1
Fiber Optic Wood Pole
AMV 89 (2/4A) To AMV 90 (2/4B)
Big Eddy Midway No. 1
AN 5 (2/3) To AN 2 (1/2)
The Dalles Powerhouse - Big Eddy Switchyard Line No. 1
EN 3 (1/3) To EN 4 (1/4)
Substation Dead End Structure
Bay 10, 115 kV Switchyard
Big Eddy Substation
42
Exhibit A, Page 2 of 6
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
BIG EDDY SUBSTATION TO XXXX DAY SUBSTATION - 18.9 MILES
Substation Dead End Structure
Bay 35. 230 kV Switchyard
Big Eddy Substation
Fiber Optic Wood Pole
AMV 130 (1/1) To AMV 131 (1/2)
Substation Dead End Structure
Bay 9E, 500 kV Switchyard
Big Eddy Substation
Xxxx Day Big Eddy No. 2
BG 79 (19/4) To BG 1 (1/1)
Substation Dead End Structure
Bay 11W, 500 kV Switchyard
Xxxx Day Substation
XXXX DAY SUBSTATION TO XXXXX SUBSTATION - 30.3 MILES
Substation Dead End Structure
Bay 6E, 500 kV Switchyard
Xxxx Day Substation
Xxxxx Xxxx Day No. 1
CD 658 (31/1) To CD 521A (1/1)
Fiber Optic Wood Pole
AMV 92 (46/1A)
Xxxxx Substation
XXXXX SUBSTATION TO XXXXXX SUBSTATION - 45.5 MILES
Fiber Optic Wood Pole
AMV 92 (46/1A)
Xxxxx Substation
XxXxxx Xxxxx Xx. 0
XX 000X (46/1) To CD 394 (19/5)
Fiber Optic Wood Pole
AAM 94 (19/4A) To AMV 96 (19/4C)
XxXxxx Xxxxx No. 1
CD 393 (19/3) To CD 312 (2/2)
Fiber Optic Wood Pole
AMV 98 (2/1A)
XxXxxx Roundup No. 1
TL 9 (2/8) To TL 1 (1/1)
Substation Dead End Structure
Bay 10, 230 kV Switchyard
XxXxxx Substation
43
Exhibit A, Page 3 of 6
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
XXXXXX SUBSTATION TO FRANKLIN SUBSTATION - 26.5 MILES
Substation Dead End Structure
Bay 2, 69 kV Switchyard
XxXxxx Substation
Fiber Optic Wood Pole
AMV 99 (1/7A) To AMV 100 (1/7B)
XxXxxx Xxxxxxxx Xx. 0
XX 0 (1/7) To SN 149R (20/8)
Fiber Optic Wood Pole Parallel To XxXxxx - Xxxxxxxx No. 2
AMV 101 (21/1) To AMV 119 (24/5)
XxXxxx Xxxxxxxx Xx. 0
Xx 0 (24/6) To ABH 1 (27/7)
Substation Dead End Structure
Bay 5, 230 kV Switchyard
Franklin Substation
XXXXXXXX - XXXX FIBER ROUTE SEGMENT
FRANKLIN SUBSTATION TO XXXXXX SUBSTATION - 21.0 MILES
Substation Dead End Structure
Bay 9, 115 kV Switchyard
Xxxxxxxx Xxxxxxxxxx
Xxxxxx Xxxxxxxx Xx. 0
XX 000 (21/13) To UH 1 (1/1)
Substation Dead End Structure
Bay 5, 115 kV Switchyard
Xxxxxx Substation
XXXXXX SUBSTATION TO XXXX SUBSTATION - 3.9 MILES
Substation Dead End Structure
Bay 19, 230 kV Switchyard
Xxxxxx Substation
Midway Xxxxxx No. 2
AFA 143 (29/6) To AFA 130 (27/4)
Lower Monumental - Xxxx No. 1
ACF 183 (39/2) To ACF 191 (40/5)
Substation Dead End Structure
Bay 8, 500 kV Switchyard
Xxxx Substation
44
Exhibit A, Page 4 of 6
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
XXXX SUBSTATION TO HANFORD SUBSTATION - 19.6 MILES
Midway Xxxxxx No. 2
AFA 130 (27/4) To AFA 74 (15/3)
Xxxx Xxxxxxx No. 1
AAV 54 (11/3) To CA 261 (18/4)
Substation Dead End Structure
Bay 4, 500 kV Switchyard
Hanford Substation
HANFORD SUBSTATION TO MIDWAY SUBSTATION - 14.3 MILES
Midway Xxxxxx No. 2
AFA 74 (15/3) To AFA 10 (2/3)
Midway Xxxxxx No. 1
TV 11 (2/3) To TV 1 (1/1)
Substation Dead End Structure
Bay 7, 115 kV Switchyard
Midway Substation
MIDWAY SUBSTATION TO MOXEE SUBSTATION - 34.0 MILES
Substation Dead End Structure
Bay 4, 115 kV Switchyard
Midway Substation
Midway Moxee No. 1
YC 1A (1/1) To YC 222 (34/8)
Substation Dead End Structure
Bay 4, 115 kV Switchyard
Moxee Substation
MOXEE SUBSTATION TO XXXXXXX SUBSTATION - 40.0 MILES
Substation Dead End Structure
Bay 9, 115 kV Switchyard
Moxee Substation
Columbia Moxee No. 1
YD 1 (66/10) To FF 388A (26/5)
Substation Dead End Structure
Bay 5W (26/4), 500 kV Switchyard
Xxxxxxx Substation
45
Exhibit A, Page 5 of 6
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
XXXXXXX SUBSTATION TO COLUMBIA SUBSTATION - 26.0 MILES
Substation Dead End Structure
Bay 5E (26/3), 500 kV Switchyard
Xxxxxxx Substation
Columbia Moxee No. 1
FF 389A (26/2) To FF 442 (19/1)
Olympia Grand Coulee No. 1
AF 664 (137/5) To AF 736 (155/3)
Substation Dead End Structure
Bay 17, 230 kV Switchyard
Columbia Substation
COLUMBIA SUBSTATION TO VALHALLA SUBSTATION - 5.4 MILES
Substation Dead End Structure
Bay 5, 230 kV Switchyard
Columbia Substation
Rocky Reach - Columbia No. 1
AC 98 (21/3) To AC 79 (17/3)
Columbia Valhalla No. 1
NJ 34 (4/9) To NJ 47 (5/12)
Substation Dead End Structure
Bay 5, 115 kV Switchyard
Valhalla Substation
VALHALLA SUBSTATION TO XXXXXXX SUBSTATION - 16.7 MILES
Rocky Reach - Columbia No. 1
AC 79 (17/3) To AC 7 (2/2)
Xxxxxxx Xxxxxxx Xx. 0
XX 00 (0/0) Xx XX, 00 (1/1)
Substation Dead End Structure
Bay 3, 500 kV Switchyard
Xxxxxxx Substation
46
Exhibit A, Page 6 of 6
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
XXXXXXX SUBSTATION TO CHIEF XXXXXX SUBSTATION - 44.6 MILES
Substation Dead End Structure
Bay 4, 500 kV Switchyard
Xxxxxxx Substation
Chief Xxxxxx - Xxxxxxx No. 1
GU 221 (45/6) To GU 10 (2/3)
Grand Coulee - Chief Xxxxxx Xx. 0
XX 000 (33/1) To FB 261 (33/5)
Substation Dead End Structure
Bay 10, 230 kV Switchyard
Chief Xxxxxx Substation
CHIEF XXXXXX SUBSTATION TO GRAND COULEE SUBSTATION - 31.7 MILES
Grand Coulee - Chief Xxxxxx Xx. 0
XX 000 (33/1) To FB 1R (1/1)
Substation Xxxx Xxx Xxxxxxxxx
Xxx X00, 230 kV Switchyard
Grand Coulee Substation
GRAND COULEE SUBSTATION TO MONROE CONTROL CENTER - 82.9 MILES
Substation Dead End Structure
Bay Y19, 230 kV Switchyard
Grand Coulee Substation
Grand Coulee - Xxxx No. 5
AH 14R (1/1) To AH 413 (82/4)
Grand Coulee Xxxx
XX 717 (82/8) To ZC 729 (84/2)
Monroe Control Center
47
Exhibit B, Page 1 of 4
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
PAYMENT SPECIFICATIONS
ELI's MONTHLY PAYMENT to BPA will equal GRV multiplied by the Payment Factor.
The PAYMENT FACTOR equals forty-six percent (46%) until ELI's accumulative
monthly payments to BPA exceed BPA Capital Costs, after which the Payment Factor
will equal [*] for the remainder of the contract.
The GRV will be determined using the following formula:
GRV = ELITSV + EUTRSV + DFLV + OSV
Where:
GRV = GROSS REVENUE VALUE
ELITSV = XXX TRANSPORT SERVICE VALUE(S)
EUTSV = END-USER TRANSPORT SERVICE VALUE(S)
DFLV = DARK FIBER LEASE VALUE(S)
OSV = OTHER SERVICE VALUE(S)
----------
* Confidential material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
48
Exhibit B, Page 2 of 4
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
SAMPLES OF REPORTING SUMMARY
AND ANNUAL REVENUE SPLIT
The samples below are not based on actual data generated, but to be used for
sample purposes only. The Annual Revenue Split, shown on page two of this
Exhibit, demonstrates how the payment calculation is to be applied to a given
GRV, and the Summary Report specifies the information and format XXX shall use
for reporting information to BPA.
49
Exhibit B, Page 3 of 4
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
51
ELECTRIC LIGHTWAVE, INC.
BPA PORTLAND . SPOKANE
ECONOMIC ANALYSIS [*]
WHOLESALE LONGHAUL REVENUE
Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Total
Revenue Growth yrs 11-15 [*]
Revenue:
Portland to Tri Cities[*]
Portland to Spokane[*]
Portland to Yakima[*]
Spokane to Yakima[*]
Spokane to Tri Cities[*]
Yakima to Tri Cities[*]
Seattle to Spokane[*]
Seattle to Yakima[*]
Seattle to Tri-Cities[*]
Dark Fiber Lease[*]
Total Revenue[*]
BPA Share of Revenue[*]
--------------------
BPA CAPITAL INVESTMENT[*]
----------------------
Backbone:
Number of Miles[*]
Outside Plant[*]
Joint Venture Share[*]
CASH FLOWS
----------
BPA
---
Capital Expenses[*]
BPA Revenue Sharing[*]
Total[*]
Internal Rate of Return[*]
NPV[*]
----------
* Confidential Material has been omitted pursuant to a request for
confidential treatment. Such material has been filed separately with the
Securities and Exchange Commission.
50
Exhibit B, Page 4 of 4
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
TABLE X
MONTH 6
ACCOUNT SUMMARY
ACCOUNT VALUES FOR
NAME START DATE SERVICE TYPE UNIT PRICE # OF UNITS THE MONTH
XXX 12-97 DS3 $3,000 8 $24,000
XXX 1-98 DS3 $3,000 1 $3,500
XXX 2-98 DS3 $3,700 1 $3,500
XXX 3-98 DS3 $3,300 6 $19,800
XXX 6-98 DS3 $3,200 1 $3,200
A 1-98 DS1 $1,020 2 $2,040
A 12-97 DS3 $3,100 1 $3,100
B dark fiber $50 6* $60,000
C dark fiber $43 4* $34,400
D 4-98 OC3 $100,000 1 $100,000
D 1-98 DS1 $1,020 1 $1,020
D 2-98 DS3 $3,200 1 $3,200
E dark fiber $51 4* $41,000
F 4-98 DS1 $940 5 $4,700
MONTHLY GRV: $303,660
* @ 200 miles per fiber
51
Exhibit C, Page 1 of 1
Contract No. 97TX-10014
XXX Telecommunications Corporation
Effective on the Effective Date
MILESTONE SCHEDULE
4, 1996 Qtr 1, 1997 Xxx 0, 0000 Xxx 3, 1997 Qtr 4, 1997 Qtr 1, 1
ID Task Name Durat Start Finish Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
1 Franklin- 272 11/15/9 12/1/9 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Xxxx
2
3 Design 163 11/15/9 7/1/9 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
4
5 Order cable 87 12/16/9 4/15/9 XXXXXXXXXXXXXXXXXXXXXXXX
& hardware
6
7 Cable 120 8/1/9 8/1/9 XXXXXXXXXXXXXXXXXXXXXXXXXXX
delivery
8
9 Schedule Od 7/15/9 7/15/9
review
10
11 Instal- 196 3/3/9 12/1/9 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
lation
contract
52
Exhibit D, Page 1 of 1 Contract No. 97TX-
10014 XXX Telecommunications Corporation
Effective on the Effective Date
COMMERCIAL FIBER SPECIFICATIONS
BPA shall provide specifications for the Commercial Fiber no later than 30 days
following the execution of this Agreement.
The specifications provided shall meet or exceed current Corning optical fiber
specifications.
53
