EXHIBIT 10.01
SETTLEMENT AGREEMENT
This Settlement Agreement, dated as of February 24, 2000, is entered into
between the City of Las Cruces, New Mexico ("City") and El Paso Electric Company
("EPE") (collectively, "the Parties").
WHEREAS, EPE has provided electric service in and around Las Cruces for
many years;
WHEREAS, the City has undertaken an effort to condemn EPE's distribution
system in Las Cruces in order to complete the establishment of its municipal
electric utility serving all of Las Cruces;
WHEREAS, the City and EPE, for many years, have been engaged in litigation
and regulatory proceedings in various courts and regulatory agencies concerning
the City's efforts, through the formation of a municipal electric utility, to
provide electric service to all of Las Cruces;
WHEREAS, on February 21, 2000, representatives of the City and EPE reached
an agreement, pursuant to court-ordered and court-supervised settlement
negotiations, on the terms of a Settlement Proposal, attached hereto as Exhibit
A and made a part hereof by reference, subject to final approval by the City of
its Council ("City Council"), and the Board of Directors of EPE;
WHEREAS, on February 24, 2000, the City Council, at a duly convened
meeting, gave final approval to the Settlement Proposal;
WHEREAS, the Board of Directors of EPE gave final approval to the
Settlement Proposal;
WHEREAS, the approved Settlement Proposal anticipates the preparation of a
more detailed final writing reflecting its terms;
WHEREAS, this Settlement Agreement constitutes that anticipated final
agreement;
WHEREAS, on April 3, 2000, the City Council adopted, at a duly convened
meeting, an ordinance (a copy of which is attached hereto as Exhibit B)
approving the conveyance to EPE of the West Mesa Substation property and certain
other interests in real property currently owned by the City;
WHEREAS, the City Council, at the same meeting of April 3, 2000, adopted an
ordinance (a copy of which is attached hereto as Exhibit C) granting EPE a
franchise;
WHEREAS, the City Council has authorized the City's Staff to take all steps
necessary to implement and accomplish the provisions of Exhibit A, to execute
this Settlement Agreement on behalf of the City, and to execute the documents
provided for in this Settlement Agreement; and
WHEREAS, the City and EPE desire to enter into this Settlement Agreement in
order to avoid further controversy between them and the incurrence of additional
costs of litigation.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the City and EPE (together the
"Parties") agree as follows:
1. Effective Date: This Settlement Agreement shall become immediately
--------------
effective as of the date it has been executed by duly authorized representatives
of both the City and EPE (the "Effective Date"). This Settlement Agreement may
be executed in multiple counterparts, each of which shall be an original, but
all of which together shall constitute one and the same Settlement Agreement.
2. Closing Date: The Closing Date for this Settlement Agreement shall be
------------
three (3) days after the Effective Date of this Settlement Agreement.
3. New Franchise Agreement: The City Council adopted, at a duly convened
-----------------------
meeting on April 3, 2000, an ordinance granting a franchise to EPE, which
franchise is attached hereto as Exhibit C. On or before the Closing Date, EPE
agrees to execute the Franchise Ordinance attached hereto as Exhibit C.
4. Transfer of Ownership of City Electric Utility Assets And City
--------------------------------------------------------------------
Electric Service Contracts:
--------------------------
a) On or before the Closing Date, the City shall do the following:
(1) Convey to EPE, free and clear of any and all encumbrances,
except those reservations contained in the patent and those
easements and restrictive covenants of record as shown in a
title policy to be obtained by the City, all of the City's
right, title and interest in the real property listed in
Exhibit D attached hereto. In connection with said title
policy, the City shall furnish at its expense a title policy
for the real property listed in Exhibit D in the amount of
$133,000.00, which policy shall contain only the usual
printed exceptions and exceptions for reservations in the
patent and any easements of record and restrictive covenants
of record as shown in the title policy. Prior to Closing,
the City will furnish to EPE a title binder in the above
amount. EPE at its own expense may eliminate any of the
usual printed exceptions which can be eliminated.
(2) Execute a Quitclaim Deed in favor of EPE conveying all of
the City's right, title and interest in the real property
listed in Exhibit D attached hereto, subject to reservations
in the patent, easements of record, and restrictive
covenants of record, if any, as shown in the title policy.
2
(3) Take any and all steps necessary to release any lis pendens
placed on any real property subject to this Settlement
Agreement.
(4) Convey to EPE, free and clear of any and all encumbrances,
all of the City's right, title and interest in the personal
property listed in Exhibit E attached hereto. In connection
with said conveyance, the City shall execute a Xxxx of Sale
in favor of EPE for the personal property listed in Exhibit
E attached hereto.
(5) Convey to EPE all of the City's right, title and interest in
the easements, right of way grants, and temporary use
permits listed in Exhibit F, which Exhibit the City
represents includes all of the easements, right of way
grants, and temporary use permits from third parties that
the City has been using in connection with its municipal
electric utility. In connection with said conveyance, the
City shall execute an Assignment of the Easements, an
Assignment of Right of Way Grants and Temporary Use Permits,
and a Grant Of Easements to EPE for the easements and other
interests which are listed in Exhibit F attached hereto.
(6) Execute an Assignment of all customer contracts to EPE which
are listed in Exhibit G attached hereto. The City represents
and warrants that the contracts listed in Exhibit G
constitute all of its contracts to provide electric service,
and that all such contracts are in writing. The City has
also informed EPE that it has provided electric service to
certain customers (including certain City departments and
the airport) not pursuant to contracts with these customers,
and EPE has informed the City that it intends to charge
these customers EPE's tariffed rates.
(7) Deliver to EPE copies of (A) all books and records relating
to the real and personal property and easements listed in
Exhibits D, E and F attached hereto, and (B) all books and
records relating to the customer contracts listed in Exhibit
G attached hereto. In fulfilling this commitment, the City
shall deliver to EPE records sufficient to demonstrate that
the City expended no less than FOUR MILLION, FIVE HUNDRED
THOUSAND DOLLARS ($4,500,000.00) for the construction of the
West Mesa Substation and related facilities being conveyed
hereunder to EPE, an amount that the City warrants and
represents that it in fact expended for such construction.
3
(8) Take any and all reasonable steps, including executing any
documents, that may be necessary or desirable promptly to
effectuate this transfer and assignment of property and
contracts.
b) The City represents and warrants each of the following as of the
Effective Date and through the time of the conveyances and
assignments required under this Settlement Agreement:
(1) The City (A) has good and marketable title in fee simple to
all real property listed in Exhibit D, and to all buildings,
structures and other improvements thereon, free and clear of
any and all encumbrances, except as shown in the title
policy to be obtained; (B) has good and marketable title to
all of the personal property and assets listed in Exhibit E,
free and clear of any and all encumbrances, and (C) upon
transfer to EPE of the real and personal property and assets
listed in Exhibits D and E, will thereby transfer to EPE
good and marketable title to said property and assets,
subject to no encumbrances, except as shown in the title
policy to be obtained.
(2) The City's municipal electric utility has complied with all
federal and state environmental laws applicable to the
property.
(3) The City has obtained all necessary environmental permits
applicable to the real property listed in Exhibit D, and any
such permits are in good standing and the City is in
compliance with all terms and conditions of such permits.
(4) The City is not aware of any ongoing investigation relating
to its municipal electric utility, or to any of the City
property that is the subject of the conveyances and
assignments required under this Settlement Agreement, by any
governmental agency concerning (A) any environmental law,
(B) any environmental remedial action, or (C) any claim of
losses or expenses arising from the release or threatened
release of a contaminant.
(5) The City is not aware, with respect to its municipal
electric utility or any of the property that is the subject
of the conveyances and assignments required under this
Settlement Agreement, of any judicial or administrative
proceeding, order, judgment, decree or settlement alleging
or addressing a violation of or liability under any
environmental law.
4
(6) The City has not received any notice or claim from any
governmental agency with respect to its municipal electric
utility, or any of the property that is the subject of the
conveyances and assignments required under this Settlement
Agreement, to the effect that the City is or may be liable
to any person as a result of the release or threatened
release of a contaminant.
(7) The City is not aware of any environmental encumbrance that
has attached to the real property listed in Exhibit D or the
buildings, structures and other improvements thereon.
(8) There is no asbestos containing material which is on or part
of the real property listed in Exhibit D or the buildings,
structures and other improvements thereon.
c) The City will inform the customers listed in Exhibit G of its
assignment of the City's rights in said contracts to EPE no later
than the Closing Date.
d) EPE shall not assume or be responsible for any liability or
obligation of the City relating to the property or customer
contracts being conveyed or assigned hereunder (as listed in
Exhibits D, E, F and G) arising from any act or omission prior to
the Closing Date, whether such liability or obligation is direct
or indirect, known or unknown, absolute or contingent. The City
agrees to indemnify and hold harmless EPE from any and all
claims, losses, expenses (including reasonable attorneys' fees),
liabilities and obligations arising from any act or omission
relating to the property or customer contracts being conveyed or
assigned hereunder (as listed in Exhibits D, E, F and G)
occurring prior to the Closing Date.
e) The City shall not assume or be responsible for any liability or
obligation of EPE relating to the property or customer contracts
being conveyed or assigned hereunder (as listed in Exhibits D, E,
F and G) arising from any act or omission after the Closing Date,
whether such liability or obligation is direct or indirect, known
or unknown, absolute or contingent. EPE agrees to indemnify and
hold harmless the City from any and all claims, losses, expenses
(including reasonable attorneys' fees), liabilities, and
obligations arising from any act or omission relating to the
property or customer contracts being conveyed or assigned
hereunder (as listed in Exhibits D, E, F and G) occurring after
the Closing Date.
5. Taxes: The City shall be responsible for any taxes for any period
-----
prior to the Closing Date attributable to the property and assets being conveyed
by the City pursuant to this Settlement Agreement. EPE shall be responsible for
any taxes for any
5
period after the Closing Date attributable to the property and assets being
conveyed to EPE pursuant to this Settlement Agreement.
6. Payment by EPE: EPE shall pay to the City by wire transfer on the
--------------
Closing Date the sum of TWENTY ONE MILLION DOLLARS ($21,000,000.00). The City,
prior to the Closing Date, will provide EPE with appropriate wiring
instructions.
7. Termination of Litigation and Regulatory Proceedings:
----------------------------------------------------
a) The Parties are currently involved in the following lawsuits and
regulatory proceedings:
(1) EPE v. City, CIV-98-566, pending in the United States
-----------
District Court for the District of New Mexico, which is
consolidated with CIV-99-259, described hereinafter.
(2) City v. EPE, CIV-99-259, pending in the United States
-----------
District Court for the District of New Mexico, which is
consolidated with CIV-98-566, and which CIV-99-259,
described above.
(3) City v. EPE, SC-97-2-000, pending before the Federal Energy
-----------
Regulatory Commission ("FERC").
(4) EPE, OA96-200-000, pending before FERC.
---
(5) SPS v. EPE, EL-98-44-000, pending before FERC.
----------
(6) City v. EPE, EL-99-10-000, pending before FERC.
-----------
(7) EPE, OA-97-686-000, pending before FERC.
---
b) The Parties agree to do the following on or before the Closing
Date to terminate the lawsuits and regulatory matters pending
between them:
(1) In CIV-98-0566, the Parties will execute and file with the
court a joint stipulation to voluntarily dismiss the case
without prejudice, each party to bear its own costs,
expenses and attorneys' fees.
(2) With respect to CIV-99-259, the Parties will take the
following actions in the federal district court and state
district court to dismiss the case and release to the City
the deposit, including interest thereon, that the City
deposited at the commencement of the case:
(A) The Parties will first execute and file a joint motion
6
for an order authorizing EPE and the City to file a
joint stipulated motion with the Third Judicial
Xxxxxxxx Xxxxx, Xxxxx xx Xxx Xxxxxx, Xxxxxx of Xxxx
Xxx, stipulating that the THIRTY-SEVEN MILLION DOLLARS
($37,000,000.00) deposited by the City on February 26,
1999, together with all interest accrued thereon, be
released and returned directly to the City, and
representing that the federal district court has
granted the Parties permission to request from the
Third Judicial District such a release of funds
directly to the City;
(B) Upon receipt of an order from the federal district
court granting the Parties' joint motion as described
in the preceding subparagraph 7(b)(2)(A), the Parties
will execute and file a conforming joint stipulated
motion with the Third Judicial Xxxxxxxx Xxxxx, Xxxxx xx
Xxx Xxxxxx, Xxxxxx of Xxxx Xxx; and present to the
State District Court an order closing Cause No. CV-99-
187 pending in the Third Judicial District, State of
New Mexico, and directing the Court Administrator to
pay to the City the sum of $37,000,000.00, plus accrued
interest.
(C) Upon receipt of an order from the state district court
granting the Parties' joint motion as described in
subparagraph 7(b)(2)(B), the Parties will execute and
file a joint motion in federal court, Cause No. CV-99-
259, for an order dismissing the case without
prejudice, each party to bear its own costs, expenses
and attorneys' fees, provided, however, that the court
shall maintain jurisdiction for the limited purpose of
enforcing and resolving disputes regarding this
Settlement Agreement, as provided in paragraph 21(a) of
this Settlement Agreement. The Parties shall also
present to the federal court an order consistent with
the above joint motion.
(3) In SC-97-2-000, OA-96-200-000, EL-98-44-000, EL-99-10-000,
and OA-97-686-000, pending at FERC, the Parties will execute
and file with FERC the Joint Notice attached hereto as
Exhibit H. It is understood that the City has no
reponsibility for obtaining dismissal of any pending FERC
case or vacating of any FERC order other than submitting to
FERC the Joint Notice attached hereto as Exhibit H.
7
8. City's Option to Purchase EPE's Distribution System:
---------------------------------------------------
a) In paragraph 4 of Exhibit A attached hereto, EPE has granted, and
does hereby grant, to the City an option to purchase the entirety
of EPE's electric distribution system within the City of Las
Cruces. This option is granted solely to the City and is not
assignable by the City.
(1) The option herein granted must be exercised by the City
within a period commencing on April 30, 2007 and ending on
July 30, 2007. The City shall exercise this option by giving
notice in writing by certified mail, return receipt
requested, to EPE at 000 X. Xxxxx, Xx Xxxx, Xxxxx, 00000-
1341, or such other address as EPE shall hereafter provide
to the City in writing, such notice to be effective upon the
date of mailing of said notice by the City.
(2) The City shall be required to take possession of EPE's
electric distribution system within the City of Las Cruces
pursuant to an exercise of its option no later than the
later of (A) one year from the date it provides EPE notice
hereunder of its exercise of the option, and (B) sixty (60)
days after severance of the City's distribution system from
EPE's distribution system has been completed in accordance
with the provisions of subparagraph 8(a)(5) below. The City
shall provide in writing to EPE no less than thirty (30)
days' advance notice of the date on which it will take
possession of EPE's distribution system, provided, however,
that in no event shall the date of possession be prior to
completion of severance.
(3) The property subject to the City's option hereunder and
under Exhibit A shall constitute the following, and if the
City exercises the option it must do so with respect to all
such property:
(A) the distribution system of EPE within the City of Las
Cruces as of the date the City takes possession of said
distribution system pursuant to the option herein,
including but not limited to all distribution lines and
substations within the City limits, all transmission
lines within the City limits of 115kv or above that are
necessary to operate the distribution system (subject
to receipt of all regulatory approvals necessary for
such conveyance), all real property on which such
distribution or transmission lines and substations are
located, and all fixtures on
8
such real property;
(B) all office buildings within the City of Las Cruces,
warehouses within the City of Las Cruces, (including
000 X. Xxxxx and 555 S. Compress, if owned by EPE at
the time of the City's exercise of its option)all real
property on which buildings are located, and all
fixtures on such real property;
(C) all books and records used in the operation and
maintenance of the distribution system on the date the
City takes possession.
(4) In the event that the City exercises its option as provided
for in this paragraph, and EPE owns and controls the
transmission system in and around Las Cruces at that time,
EPE shall not require the City to pay any amount for such
transmission service in excess of EPE's applicable FERC
tariffed rates, which rates as applied to the City shall not
include any "stranded costs" resulting from the City's
exercise of its option. At the time of transfer of the
distribution assets, EPE's distribution company shall also
assign or transfer to the City any transmission or
generation contracts in effect to provide generation service
to customers within the City limits.
(5) After the exercise of said option, the City and EPE shall
jointly prepare a severance plan to sever the City's
distribution system from EPE's distribution system, which
plan shall provide for a complete severance (similar in
degree and scope of separation to the proposed severance
plan submitted by EPE to the New Mexico Public Regulatory
Commission in Case No. 2957 before the NMPRC) between the
two distribution systems.
(A) After the exercise of the option, the City and EPE
shall immediately begin to work together to attempt to
prepare a joint severance plan. In the event that the
City and EPE are unable to agree on a joint severance
plan within ninety (90) days of the date of the mailing
of the City's notice of exercise of its option, the
City and EPE shall each designate within 15 days one
expert to assist in preparing a severance plan. Within
21 days of their appointment, the two experts shall
agree as to a third expert to assist in preparing such
severance plan. The severance plan shall be prepared
within
9
90 days of the appointment of the third expert unless
the third expert determines that additional time is
required. The severance plan adopted shall be that plan
which is agreed to by the majority vote of the three
experts. Each party will pay one-half of the third
expert's fees and costs.
(B) The City and EPE shall fully cooperate with each other
in the implementation of any severance plan. Because
severance will be for the purpose of enabling the City
to operate its own separate municipal electric utility,
all costs of construction, equipment, labor,
installation and repair necessary for implementation of
the severance plan shall be paid by the City.
(6) In the event the City exercises this option, the purchase
price shall be the book value (i.e., original cost less
----
depreciation plus capital additions) of the EPE property
described in paragraphs 8(a)(3)(A) and (B) above, plus an
amount equal to thirty (30%) percent in excess of such book
value, as of the date the City provides notice of intent to
exercise the option. For property owned by EPE at the time
of the filing of its FERC Form 1 as of December 31, 2006
that has not been the subject of any subsequent capital
additions, the book value for such property to be used in
calculating the purchase price hereunder shall be the book
value used by EPE in connection with its FERC Form 1 filing.
(A) The book value shall not include any stranded costs.
(B) On July 31, 2006, EPE shall furnish to the City the
book value as of December 31, 2005 of that EPE property
subject to the option included in EPE's' most recent
FERC Form 1 filing.
(C) The purchase price above provided for shall be due and
paid by the City by wire transfer, to an account
designated by EPE at the time, on or before the date
the City takes possession of the system.
(7) In the event the City exercises its option, the City will
not transfer, assign, convey, sell, lease, rent or otherwise
cede control of the distribution system to any other
corporation, person or entity for a period commencing two
(2) years from the date the City takes possession of said
system;
10
provided, however, it is expressly understood and agreed
that the City may subcontract for operation and maintenance
of said system and may contract for wholesale purchase of
electricity, including wholesale purchases of electricity
from EPE if the Parties reach agreement for such wholesale
purchase.
(8) On the date possession of said system is conveyed to the
City pursuant to this option, EPE will:
(A) Convey to the City, free and clear of all encumbrances,
except reservations contained in the patent, and those
easements and restrictive covenants of record as shown
in a title policy to be obtained by EPE, all of EPE's
right, title and interest in the real property
described in paragraph 8(a)(3) above. In connection
with said title policy, EPE shall furnish at its
expense a title policy for such real property in the
amount of the book value of such real property plus 30%
(calculated the same as for the purpose of calculating
the option purchase price hereunder), which policy
shall contain only the usual printed exceptions and
exceptions for reservation in the patent and any
easements of record and restrictive covenants of record
as shown in the title policy. EPE will furnish to the
City a title binder in such amount. The City at its own
expense may eliminate any of the usual printed
exceptions which can be eliminated.
(B) Execute a Quitclaim Deed in favor of the City conveying
all of EPE's right, title and interest in the real
property described in paragraph 8(b)(3) above, subject
to reservations in the patent, easements of record, and
restrictive covenants of record, if any, as shown in
the title policy.
(C) Execute a Xxxx of Sale in favor of the City for the
personal property described in paragraph 8(b)(3) above.
(D) Execute an Assignment of Easements to the City for all
easements belonging to EPE in the real property
described in paragraph 8(b)(3) above.
(E) EPE's distribution company shall execute an Assignment
to the City of all customer contracts for
11
the provision of electricity in the City of Las Cruces.
(F) Deliver to the City copies of all books and records
relating to the real and personal property described in
paragraph 8(b)(3) above, and all books and records
relating to the customer contracts referred to in the
preceding subparagraph.
(G) Take any and all reasonable steps, including executing
any documents, that may be necessary or desirable
promptly to effectuate such transfer and assignment of
property and contracts.
(9) In connection with the exercise of this option, EPE, at the
time of the conveyance of the property subject to the
option, shall represent and warrant with respect to the
property being conveyed as follows, unless EPE notifies the
City to the contrary at the time of the conveyance:
(A) EPE (i) has good and marketable title in fee simple to
all conveyed real property, and to all buildings,
structures and other improvements thereon, free and
clear of any and all encumbrances, except as shown in
the title policy to be obtained; (ii) has good and
marketable title to all of the other personal property
and assets to be conveyed, free and clear of any and
all encumbrances, and (iii) upon transfer to the City
of the real and personal property and assets, will
thereby transfer to the City good and marketable title
to the property and assets, subject to no encumbrances,
except as shown in the title policy to be obtained.
(B) EPE has complied with all federal and state
environmental laws applicable to the property.
(C) EPE has obtained all necessary environmental permits
applicable to the real property, and all such permits
are in good standing and EPE is in compliance with all
terms and conditions of such permits.
(D) EPE is not aware of any ongoing investigation by any
governmental agency relating to the property to be
conveyed concerning (i) any environmental law, (ii) any
environmental remedial action, or (iii) any
12
claim of losses or expenses arising from the release or
threatened release of a contaminant.
(E) EPE is not aware, with respect to the property to be
conveyed of any judicial or administrative proceeding,
order, judgment, decree or settlement alleging or
addressing a violation of or liability under any
environmental law.
(F) EPE has not received any notice or claim from any
governmental agency with respect to the property to be
conveyed to the effect that it is or may be liable to
any person as a result of the release or threatened
release of a contaminant.
(G) EPE is not aware of any environmental encumbrance that
has attached to the real property to be conveyed, or to
the buildings, structures and other improvements
thereon.
(H) There is no asbestos containing material which is on or
part of the real property to be conveyed or the
buildings, structures and other improvements thereon.
(10) At the time of conveyance pursuant to the option, the City
shall not assume or be responsible for any liability or
obligation of EPE in connection with the property being
conveyed incurred prior to the date of conveyance, whether
such liability or obligation is direct or indirect, known or
unknown, absolute or contingent, and EPE agrees to indemnify
and hold harmless the City from any and all losses and
expenses, including reasonable attorneys' fees, liabilities
and obligations arising from any act or omission occurring
prior to the date of conveyance.
(11) EPE shall not be responsible for any liability or obligation
of the City, direct or indirect, known or unknown, absolute
or contingent, that arises after the date of conveyance
pursuant to said option, and the City agrees to indemnify
and hold harmless EPE from any losses and expenses,
including reasonable attorneys' fees, liabilities and
obligations arising from any act or omission occurring prior
to the date of conveyance.
(12) EPE shall be responsible for any taxes attributable to EPE's
ownership of the property and assets transferred pursuant to
13
this Settlement Agreement to the City, which taxes accrue up
to the date of conveyance pursuant to this option and which
taxes arise from EPE's ownership of the property conveyed or
the electric service provided. The City will be responsible
for all taxes from the date of conveyance pursuant to the
option and thereafter in connection with the property
transferred pursuant to said option and the providing of
electric service by the City after conveyance pursuant to
the option.
9. City's Agreement to Forego Municipalization Efforts:
---------------------------------------------------
a) The City promises, covenants, and agrees that the City will take
no actions or engage in any negotiations prior to April 30, 2009
(1) to purchase, condemn, or otherwise acquire any part of the
electric distribution system owned by EPE, its successors, or
assigns, (2) to construct its own electric distribution system,
or (3) to establish a municipal electric utility, except as
provided in paragraph 8 of this Settlement Agreement.
b) Nothing in subparagraph 9(a) above is intended to alter any
rights that the City may have, to the extent provided by law, to
take advantage of retail wheeling and to be an aggregator.
10. City's Participation in New Mexico Stranded Cost Case: The City agrees
-----------------------------------------------------
that, in any future proceeding at the New Mexico Public Regulatory Commission
("NMPRC") to determine the amount of EPE's stranded costs attributable to EPE's
service in Las Cruces, the City shall not contest or oppose EPE's estimate of
its stranded costs, provided that the City may contest or oppose EPE's estimate
only if, and only to the extent that, EPE's estimate exceeds the amount
determined by the FERC in its May 26 Order in City of Las Cruces v. El Paso
Elec. Co., No. SC-97-2-000, including the FERC's determination that the stranded
cost amount was $52.9 million as of July 1, 1999 and has declined in time on a
daily basis since July 1, 1999. This Paragraph shall not apply to any NMPRC
proceeding that is unrelated to the determination of EPE's stranded costs. EPE
will notify the City in writing of any proceeding before the NMPRC which
involves issues of EPE's stranded cost attributable to EPE's service in Las
Cruces.
11. City's Release of EPE: The City, for itself and its successors and
---------------------
assigns, hereby releases and discharges EPE, its subsidiaries, successors,
predecessors and assigns, and their respective officers, directors, agents,
employees, consultants, attorneys and legal representatives, from any and all
claims, demands, causes of action, obligations, damages and liabilities of any
nature whatsoever, whether now known or unknown, arising from or relating in any
way to the City's past efforts to form a municipal electric utility, past
franchise agreements between the Parties, EPE's past use of right-of-ways to
provide electricity, or any acts or omissions that may have been subject to any
regulatory proceeding or litigation between the Parties; provided, however, that
up to and through April 30, 2000, EPE shall have a continuing obligation to pay
the two (2) percent fees of
14
gross revenue for use of City right-of-ways presently being paid.
12. EPE's Release of the City: EPE, for itself and its successors and
-------------------------
assigns, hereby releases and discharges the City, its successors, predecessors
or assigns, and its City Council, officers, employees, consultants, attorneys
and legal representatives, from any and all claims, demands, causes of action,
obligations, damages and liabilities of any nature whatsoever, whether now known
or unknown, arising in any way from EPE's opposition to the City's formation of
a municipal electric utility, the City's past effort to form an electric
utility, the past franchise agreements between the Parties, the City's
opposition to EPE's use of right-of-ways, or any act or omission that has been
the subject of any regulatory proceeding or litigation between the Parties.
13. Authority to Execute Agreement: The individuals executing this
------------------------------
Settlement Agreement on behalf of the City and EPE each represent that they have
read and understand the terms of this Settlement Agreement, that they have had
the benefit and advice of counsel of their choice in the negotiation and
execution of this Settlement Agreement, and that they possess full power and
authority to execute and deliver the Settlement Agreement on behalf of the
stated Parties.
14. No Admission of Liability: Nothing herein shall be construed as a
-------------------------
determination or admission by any party of any liability or wrongdoing, or as a
determination or admission by any party of any issue of fact or law previously
in dispute between the Parties.
15. Breaches of Representations: Each party recognizes that one party's
---------------------------
breach of any of the representations and warranties contained in this Settlement
Agreement will cause damage to the other party, and thus agrees to compensate,
indemnify and hold harmless the other party for any breach of any representation
or warranty.
16. Entire Agreement: This Settlement Agreement, including the exhibits
----------------
attached hereto, embodies the entire agreement between the Parties concerning
the matters dealt with herein and supersedes any and all prior agreements or
understandings as may relate to the matters dealt with herein.
17. Amendment: This Settlement Agreement may be amended only by an
---------
instrument in writing executed by both Parties.
18. Governing Law: This Settlement Agreement shall be governed by and
-------------
construed under the laws of the State of New Mexico.
19. Successors: This Settlement Agreement is binding on EPE's successors
----------
and assigns, and on the City's successors.
20. Partial Invalidity: Whenever possible, each provision of this
------------------
Settlement Agreement hereof shall be interpreted in such manner as to be
effective and valid under applicable law, but in case any one or more of the
provisions contained herein shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such provision
15
shall be ineffective to the extent, but only to the extent, of such invalidity,
illegality, or unenforceability without invalidating the remainder of such
invalid, illegal, or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.
21. Dispute Resolution:
------------------
a) The Parties agree that the United States District Court for the
District of New Mexico shall retain jurisdiction pursuant to this
Settlement Agreement for a period of one year from the Effective
Date for the purpose of enforcing this Settlement Agreement or
adjudicating any dispute arising out of, or relating to, this
Settlement Agreement.
b) With respect to any dispute between the Parties arising out of or
relating to this Settlement Agreement that arises more than one
year after the Effective Date, a party seeking resolution of such
dispute shall provide written notice to the other party
describing the existence and nature of the dispute. The Parties
shall then attempt to resolve the dispute within thirty (30) days
of such written notice by good faith negotiation. If the Parties
are unable to resolve a dispute by negotiation within thirty (30)
days, or such additional time as the Parties mutually agree is
appropriate to continue their efforts, the Parties shall submit
the dispute to binding arbitration before an arbitrator mutually
agreeable to the Parties who shall have expertise in the area of
dispute. In order to select the arbitrator, each party shall
submit to the other, no later than fourteen (14) days after the
termination of the negotiation period, a list of three proposed
arbitrators. Within seven (7) days thereafter, each party shall
respond to the other's list, indicating which of the proposed
arbitrators, if any, is acceptable. If more than one of the
proposed arbitrators is accepted, the Parties shall attempt to
reach an agreement regarding which of the accepted arbitrators is
to be selected; if the Parties are unable to so agree within
three (3) business days, one of the accepted arbitrators shall be
selected by lot. If none of the arbitrators on the Parties' lists
is accepted by the other party, the Parties shall repeat the
process. If the Parties remain unable to agree on an arbitrator
at that time, they shall submit the dispute to binding
arbitration administered by the American Arbitration Association,
in accordance with its Commercial Rules.
c) Judgment on any award rendered in an arbitration proceeding held
pursuant to paragraph 21(b) above may be entered in any court
having jurisdiction thereof. The arbitrator shall have the
authority to award any remedy or relief that a court of competent
jurisdiction could order or grant, including the issuance of a
mandatory
16
injunction, with the exception that punitive, exemplary or other
noncompensatory damages may not be awarded.
17
IN WITNESS OF THE ABOVE, the Parties have executed this Settlement
Agreement as of the date(s) indicated below.
CITY OF LAS CRUCES
By /s/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx, Interim
City Manager
APPROVED AS TO FORM:
By /s/ Xxxxxx Xxxxx
-------------------
City Attorney
EL PASO ELECTRIC COMPANY
By /s/ Xxxxx X. Xxxxxx
--------------------------
Xxxxx X. Xxxxxx, President
18
STATE OF NEW MEXICO )
ss.:
County of XXXX XXX )
This instrument was acknowledged before me this 3rd day of May, 2000, by
Xxxxx X. Xxxxxxx, Interim City Manager, City of Las Cruces.
/s/ Xxxxxx X. Xxxx
-------------------------------
Notary Public
My Commission Expires: 0-00-00
00
XXXXX XX XXXXX )
ss.:
County of EL PASO )
This instrument was acknowledged before me this 3rd day of May, 2000, by
Xxxxx X. Xxxxxx, President of El Paso Electric Company.
/s/ Xxxxxxxx Xxxx
---------------------------------
Notary Public
My Commission Expires: 03-24-2003
20
