Document:

EE EX_ 10.02 2014.03.31 Amendment No. 7

EXHIBIT 10.02

AMENDMENT NO. 7 TO FOUR CORNERS PROJECT CO-TENANCY AGREEMENT
THIS AMENDMENT NO. 7 TO FOUR CORNERS PROJECT CO-TENANCY AGREEMENT (this “Amendment”) is made and entered into as of December 30, 2013, by and among ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation (“Arizona”); EL PASO ELECTRIC COMPANY, a Texas corporation (“El Paso”); PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation (“New Mexico”); SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an agricultural improvement district, organized and existing under the laws of the State of Arizona (“Salt River Project”); SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation (“Edison”); and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation (“Tucson”).  Arizona, El Paso, New Mexico, Salt River Project, Edison and Tucson are herein collectively referred to as the “Parties”.
RECITALS
The Parties entered into the Four Corners Project Co-Tenancy Agreement, effective as of July 19, 1966, and amendments thereto through Amendment No. 6, dated February 3, 2000 (as amended by such amendments, the “Co-Tenancy Agreement”), providing, among other things, for the allocation of ownership in the Four Corners Project.
Arizona and Edison are parties to a Purchase and Sale Agreement, dated as of November 8, 2010 (the “Purchase Agreement”), providing, among other things, for the sale by Edison to Arizona, and the purchase by Arizona from Edison, of Edison’s interests in the Four Corners Project and the Facilities Switchyard (the “Edison Interest Transfer”).
Following the Edison Interest Transfer, Arizona, the owner of the Initial Four Corners Plant, intends to retire Units 1, 2 and 3 of the Initial Four Corners Plant.
This Amendment will take effect on the Amendment No. 7 Effective Date, as defined herein.
STATEMENT OF AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1.Defined Terms.  Defined terms used but not defined in this Amendment shall have the respective meanings ascribed to such terms in the Co-Tenancy Agreement.

2.Amendment of Section 1.  Section 1 is hereby amended to delete “SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation (hereinafter referred to as “Edison”);” from the eighth line thereof.

3.Amendment of Section 2.5.  Section 2.5 is hereby amended to substitute “Southern California Edison Company, a California corporation (hereinafter referred to as “Edison”)” for “Edison” in the first line thereof, and to add the following immediately following

the last sentence thereof:  “Amendment No. 7 to this Agreement (“Amendment No. 7”) provides, among other things, for updated ownership percentages as they existed following the consummation of the transfer to Arizona by Edison of Edison’s interests in the Four Corners Project pursuant to that certain Purchase and Sale Agreement, dated as of November 8, 2010 (the “Purchase Agreement”).  As of the effective date of Amendment No. 7, Edison is no longer a party to this Agreement, and all references to Edison as well as Edison’s designation as a Participant, as that term is defined in Section 5.27 herein, are limited to facts or matters occurring or agreements entered into prior to the effective date of Amendment No. 7.”

4.Amendment of Section 5.11(a).  Section 5.11(a) is hereby amended to delete the language after “Clerk,” in the sixth line and replace it with “as amended from time to time.”  References in the Co-Tenancy Agreement to the effective date thereof or of a particular provision or instrument shall mean the effective date of the original Co-Tenancy Agreement or of the particular provision or instrument when first referenced in the original Co-Tenancy Agreement as then amended.”

5.Amendment of Section 5.27.  Section 5.27 is hereby amended to delete “, Edison” in the second line thereof, to add the following clause immediately following “Project” in the third line thereof:  “, and, when referring specifically to facts or matters occurring or agreements entered into prior to the effective date of Amendment No. 7, Edison”,” and to add the following sentence immediately following the last sentence thereof:  “The term “Original Participants” shall refer to “Arizona, El Paso, New Mexico, Salt River Project, Edison and Tucson.”.

6.Amendment of Section 6.2.  Section 6.2 is hereby amended to read in full as follows:
“6.2  The Participants shall hold title to and own as tenants in common all the facilities forming part of the Four Corners Project (excluding the Common Facilities, the Switchyard Facilities, the New Facilities, the Related Facilities not included in the New Facilities, and the Reserve Auxiliary Power Source) as follows:
6.2.1  Arizona shall own an undivided 63% interest therein.
6.2.2  El Paso shall own an undivided 7% interest therein.
6.2.3  New Mexico shall own an undivided 13% interest therein.
6.2.4  Salt River Project shall own an undivided 10% interest therein.
6.2.5  Tucson shall own an undivided 7% interest therein.”
7.Amendment of Section 6.2(a).  Section 6.2(a) is hereby amended to read in full as follows:

“6.2(a)  The Participants shall hold title to and own as tenants in common the Related Facilities not included in the New Facilities existing on the effective date of Amendment No. 7 as follows:

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6.2(a)1  Arizona shall own an undivided 73.20% interest therein.
6.2(a)2  El Paso shall own an undivided 5.07% interest therein.
6.2(a)3  New Mexico shall own an undivided 9.42% interest therein.
6.2(a)4  Salt River Project shall own an undivided 7.24% interest therein.
6.2(a)5  Tucson shall own an undivided 5.07% interest therein.
The Participants shall hold title to and own as tenants in common all Related Facilities, including improvements thereto, acquired or constructed after the effective date of Amendment No. 7 as follows:
6.2(a)6  Arizona shall own an undivided 63% interest therein.
6.2(a)7  El Paso shall own an undivided 7% interest therein.
6.2(a)8  New Mexico shall own an undivided 13% interest therein.
6.2(a)9  Salt River Project shall own an undivided 10% interest therein.
6.2(a)10  Tucson shall own an undivided 7% interest therein.”
8.Amendment of Section 6.3.1.  Section 6.3.1 is hereby amended to substitute “63%” for “15%” in the first line thereof.

9.Amendment of Section 6.3.2.  Section 6.3.2 is hereby amended to substitute “[Reserved]” for the text thereof.

10.Amendment of Section 6.3(a)1.  Section 6.3(a)1 is hereby amended to substitute “Arizona” for “Edison” in the first line thereof.

11.Amendment of Section 6.4.1.  Section 6.4.1 is hereby amended to substitute “63%” for “15%” in the first line thereof.

12.Amendment of Section 6.4.2.  Section 6.4.2 is hereby amended to substitute “[Reserved]” for the text thereof.

13.Amendment of Section 6.5.  Section 6.5 is hereby amended read in full as follows:

“6.5  The Participants shall hold title to and own as tenants in common the Common Facilities and the Existing Related Facilities included in the New Facilities, in both cases, existing on the effective date of Amendment No. 7 as follows:
6.5.1  Arizona shall own an undivided 73.20% interest therein.
6.5.2  El Paso shall own an undivided 5.07% interest therein.

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6.5.3  New Mexico shall own an undivided 9.42% interest therein.
6.5.4  Salt River Project shall own an undivided 7.24% interest therein.
6.5.5  Tucson shall own an undivided 5.07% interest therein.
The Participants shall hold title to and own as tenants in common all Future Related Facilities, including improvements thereto, acquired or constructed after the effective date of Amendment No. 7 as follows:
6.5.6  Arizona shall own an undivided 63% interest therein.
6.5.7  El Paso shall own an undivided 7% interest therein.
6.5.8  New Mexico shall own an undivided 13% interest therein.
6.5.9  Salt River Project shall own an undivided 10% interest therein.
6.5.10  Tucson shall own an undivided 7% interest therein.”
14.Amendment of Section 6.6.1.  Section 6.6.1 is hereby amended to substitute “63%” for “15%” in the first line thereof.

15.Amendment of Section 6.6.2.  Section 6.6.2 is hereby amended to substitute “[Reserved]” for the text thereof.

16.Amendment of Section 6.7.  Section 6.7 is hereby amended to delete “Edison,” from the second line thereof.

17.Amendment of Section 6.8.  Section 6.8 is hereby amended to delete “Edison,” from the second line thereof.

18.Amendment of Section 6.9.  Section 6.9 is hereby amended to delete “Edison,” from the third line thereof.

19.Amendment of Section 7.1.1.  Section 7.1.1 is hereby amended to substitute “75.33%” for “43.33%” in the first line thereof.

20.Amendment of Section 7.1.2.  Section 7.1.2 is hereby amended to substitute “[Reserved]” for the text thereof.

21.Amendment of Section 7.2.1.  Section 7.2.1 is hereby amended to substitute “52.23%” for “40.23%” in the first line thereof.

22.Amendment of Section 7.2.2.  Section 7.2.2 is hereby amended to substitute “[Reserved]” for the text thereof.

23.Amendment of Section 7.3.1.  Section 7.3.1 is hereby amended to substitute “63%” for “15%” in the first line thereof.

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24.Amendment of Section 7.3.2.  Section 7.3.2 is hereby amended to substitute “[Reserved]” for the text thereof.

25.Amendment of Section 7.4.1.  Section 7.4.1 is hereby amended to substitute “57.90%” for “54.44%” in the first line thereof.

26.Amendment of Section 7.4.2.  Section 7.4.2 is hereby amended to substitute “[Reserved]” for the text thereof.

27.Amendment of Section 7.5.1.  Section 7.5.1 is hereby amended to substitute “62.45%” for “19.25%” in the first line thereof.

28.Amendment of Section 7.5.2.  Section 7.5.2 is hereby amended to substitute “[Reserved]” for the text thereof.

29.Amendment of Section 7.7.  Section 7.7 is hereby amended to delete “Edison,” from the second line thereof.

30.Amendment of Section 8.1.1.  Section 8.1.1 is hereby amended to substitute “63%” for “15%” in the first line thereof.

31.Amendment of Section 8.1.2.  Section 8.1.2 is hereby amended to substitute “[Reserved]” for the text thereof.

32.Amendment of Section 10.1.  Section 10.1 is hereby amended to read in full as follows:

		
	“10.1
	If, because of emergency or planned shutdowns of Common Facilities or Related Facilities or the curtailment for any cause in the use thereof, Units 1, 2, 3 (prior to their respective retirements), 4 and 5 are not all operable simultaneously and continuously at their Net Effective Generating Capacity, then the reduced capacity entitlement of each Participant, because of the inability to operate said Units simultaneously and continuously at their Net Effective Generating Capacity, shall be determined as follows:

Reduced Capacity Entitlement of 
Initial Four Corners Plant
C = N x NEGC1 
              NEGC2 
Reduced Capacity Entitlement of
Four Corners Project
CD1U = N x (NEGC2 - NEGC1) x P
                              NEGC2 

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Where:
C = Reduced capacity entitlement of Arizona in Initial Four Corners Plant.
CD 1U = With respect to each Participant, the reduced capacity entitlement of such Participant in the Four Corners Project.
N = Reduced Net Effective Generating Capacity of the Enlarged Four Corners Generating Station.
NEGC1 = The Net Effective Generating Capacity of the Initial Four Corners Plant at the time of such emergency or planned shutdown or curtailment.
NEGC2 = The Net Effective Generating Capacity of the Enlarged Four Corners Generating Station at the time of such emergency or planned shutdown or curtailment.
P = With respect to each Participant, such Participant’s percentage of Net Effective Generation under Section 8.1.”
33.Amendment of Section 10.3.  Section 10.3 is hereby amended to read in full as follows:

		
	“10.3
	Except as otherwise provided in this Section 10, no Participant shall exercise its rights relating to the Common Facilities or Related Facilities so as to endanger or unreasonably interfere with the operation of the Initial Four Corners Plant (prior to the retirement of each of Units 1, 2 and 3 of the Initial Four Corners Plant) or the Four Corners Project.”

34.Compliance with Section 13.11.2 and Section 13.12 of the Co-Tenancy Agreement.  In accordance with Section 13.11.2 of the Co-Tenancy Agreement, Arizona agrees to assume from and after the Amendment No. 7 Effective Date the obligations and duties of Edison under the Project Agreements.  In accordance with Section 13.12 of the Co-Tenancy Agreement, Arizona agrees that it shall not transfer or assign all or any portion of the Transfer Interest acquired by Arizona upon consummation of the Edison Interest Transfer without complying with Section 13 of the Co-Tenancy Agreement.

35.Amendment of Section 23.1.3. Section 23.1.3 is hereby amended to read in full as follows:

“23.1.3  Public Service Company of New Mexico
  c/o Secretary
  Main Offices
  Albuquerque, New Mexico 87158-1245”

36.Amendment of Section 23.1.5.  Section 23.1.5 is hereby amended to substitute “[Reserved]” for the text thereof.

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37.Amendment of Exhibit 2, Figure 1.  Figure 1 of Exhibit 2 is hereby replaced in its entirety by Figure 1 attached to this Amendment.

38.Amendment No. 7 Effective Date; Termination.  The “Amendment No. 7 Effective Date” means the date of consummation of the Edison Interest Transfer pursuant to the Purchase Agreement (the “Edison Transfer Closing Date”); provided, however, that this Amendment will terminate if (a) Arizona or Edison provides written notice to the Parties to the effect that the Edison Transfer Closing Date will not occur, or (b) the Purchase Agreement is terminated, or (c) the Edison Transfer Closing Date does not occur on or prior to December 31, 2013.

39.Notices.  Any notice provided for in this Amendment shall be deemed properly served, given or made if delivered in person or sent by registered or certified mail, postage prepaid, to the persons specified below:
Arizona Public Service Company
c/o Secretary
P.O. Box 53999
Phoenix, Arizona 85072 3999

El Paso Electric Company
c/o Secretary
P.O. Box 982
El Paso, Texas 79960

Public Service Company of New Mexico
c/o Secretary
Main Offices
Albuquerque, New Mexico 87158-1245

Salt River Project Agricultural
Improvement and Power District
c/o Secretary
P.O. Box 1980
Phoenix, Arizona 85281

Southern California Edison Company
c/o Secretary
P.O. Box 800
Rosemead, California 91770

Tucson Electric Power Company
c/o Secretary
P.O. Box 711
Tucson, Arizona 85702

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40.Effect of Amendment.  The Parties acknowledge and agree that (a) except as specifically amended by this Amendment, the Co-Tenancy Agreement is unamended, and (b) the Co-Tenancy Agreement, as amended by this Amendment, remains in full force and effect.

41.Counterparts; Facsimile.  This Amendment may be executed in any number of counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument.  Any facsimile copies hereof or signature hereon shall, for all purposes, be deemed originals.

8EE EX_10.03 2014.03.31 Amendment No.13

EXHIBIT 10.03
FOUR CORNERS PROJECT OPERATING AGREEMENT AMENDMENT NO. 13
		
	1.
	PARTIES:

The parties to this Amendment No. 13 (this “Amendment”) to the Four Corners Project Operating Agreement (the “Operating Agreement”) are: ARIZONA PUBLIC SERVICE COMPANY, an Arizona corporation; EL PASO ELECTRIC COMPANY, a Texas corporation; PUBLIC SERVICE COMPANY OF NEW MEXICO, a New Mexico corporation;  SALT  RIVER  PROJECT  AGRICULTURAL  IMPROVEMENT  AND POWER DISTRICT, an agricultural improvement district, organized and existing under the laws of the State of Arizona; SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation; and TUCSON ELECTRIC POWER COMPANY, an Arizona corporation, formerly known as Tucson Gas & Electric Company (collectively, hereinafter referred to as the “Participants”).

		
	2.
	RECITALS:

This Amendment is made with reference to the following facts, among others:

		
	2.1.
	The Operating Agreement has been amended by Amendment No. 1, dated August 5, 1974; Amendment No. 2, dated September 1, 1975; Amendment No. 3, dated March 23, 1981; Amendment No. 4, dated January 21, 1982; Amendment No. 5, dated January 11, 1982; Amendment No. 6, dated February 25, 1982; Amendment No. 7, dated January 1, 1983; Amendment No. 8, dated July 5, 1989; Amendment No.  9,  dated  October  6,  1989;  Amendment  No.  10,  dated  May  30,  1991; 

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Amendment  No.  11,  dated  May  23,  1997;  and  Amendment  No.  12,  dated February 3, 2000.

		
	2.2
	The Participants wish to now amend or otherwise modify the Operating Agreement in order to create a Switchyard Engineering and Operating Committee that will, in lieu of the Engineering and Operating Committee, oversee the operation and maintenance of the Switchyard Facilities, as provided for in this Amendment.

		
	2.3
	Capitalized terms not otherwise defined in this Amendment shall have the meanings given to them in the Operating Agreement.

		
	3.
	AGREEMENT:

For and in consideration of the premises and the mutual obligations of, and undertakings by, the Participants, as hereinafter provided in this Amendment, the Participants agree as follows:

		
	4.
	DEFINITIONS:

The term “Switchyard Facilities” shall have the meaning given to it in Section 5.72 of the Operating Agreement. Exhibit 1 of this Amendment, however, is included as a reference with respect to the ownership percentages of the Switchyard Facilities.

		
	5.
	COORDINATION COMMITTEE; CHANGE IN SCOPE OF RESPONSIBILITIES: 

The Operating Agreement is hereby amended by adding the following to Section 7.2:
		
	7.2.5.
	Exercise  general  supervision  over  the  Switchyard  Engineering  and Operating Committee.

		
	7.2.6.
	Consider and act upon all matters referred to the Coordination Committee by the Switchyard Engineering and Operating Committee.

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	6.
	ENGINEERING AND OPERATING COMMITTEE; CHANGE IN SCOPE OF RESPONSIBILITIES:

Section 8 of the Operating Agreement is hereby amended by adding the following to the end of Section 8.1:
The Engineering and Operating Committee’s functions and responsibilities set forth in this Operating Agreement shall no longer apply to the Switchyard Facilities, to the extent the continued application of such functions and responsibilities to the Switchyard Facilities after the effectiveness of this Amendment would be duplicative of, or inconsistent with, the functions and responsibilities of the Switchyard Engineering and Operating Committee for the Switchyard Facilities under this Operating Agreement or assigned to the Switchyard Engineering and Operating Committee by the Coordination Committee.

		
	7.
	SWITCHYARD ENGINEERING AND OPERATING COMMITTEE:

The Operating Agreement is hereby amended by adding Section 8A as follows:
8A.1. The Switchyard Engineering and Operating Committee is hereby established. It shall consist of not more than two representatives designated by each of the Participants. Each such representative shall be authorized by the Participant by whom he or she is designated to act on its behalf, with respect to those matters that are the responsibilities of the Switchyard Engineering and Operating Committee.
8A.2. The Switchyard Engineering and Operating Committee shall be and remain in existence during the term of the Operating Agreement; provided, however, that any action or determination of the Switchyard Engineering and Operating Committee shall require an affirmative vote of all Participants, acting through

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their respective representatives, that have an ownership interest in that portion of the Four Corners Project that is the subject matter of the action or determination. Only those Participants having an ownership interest in that portion of the Four Corners Project that is the subject matter of an action or determination may participate in the discussions relating to such action or determination; provided, however, that this restriction shall apply only when required by a regulatory authority with jurisdiction over the Participants(s), an applicable code of conduct, or a Participant’s reasonable competitive concerns.
8A.3.   The Switchyard Engineering and Operating Committee shall have the following functions and responsibilities for the Switchyard Facilities:
		
	8A.3.1. 
	Review and approve the following items to the extent related to the performance of Operating Work related to the Switchyard Facilities:

		
	8A.3.1.1.
	Practices and procedures for accounting for transmission losses applicable to the Switchyard Facilities.

		
	8A.3.1.2.
	The annual capital expenditures budget.               

		
	8A.3.1.3.
	The annual operating and maintenance budget.

		
	8A.3.1.4.
	The   written   statement   of   operating   and   maintenance practices and procedures.

		
	8A.3.1.5.
	Planned maintenance schedules.

		
	8A.3.1.6.
	Policies for establishing inventories of Emergency Spare Parts, and Materials, and Supplies.

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	8A.3.1.7. 
	Statistical  and  administrative  reports,  budgets  and information, and other similar records, and the form and preparation thereof, to be kept and performed by the Operating Agent.

		
	8A.3.1.8. 
	Procedures for determining the Capacity of the Switchyard Facilities.

		
	8A.3.1.9. 
	Procedures for capital and operating and maintenance expenditures.

		
	8A.3.1.10.
	Procedures for performance testing.

		
	8A.3.1.11.   
	Procedures for maintaining complete and accurate Power and Energy 

accounting, as applicable to the Switchyard Facilities only.
		
	8A.3.1.12.   
	In consultation with the Operating Agent and Engineering and 

Operating Committee, procedures for managing Operating 
Emergencies or curtailed operations.
		
	8A.3.2. 
	In conjunction with the Engineering and Operating Committee, establish the criteria under which Unit 3 will be tripped, in accordance with the Unit Tripping Agreement.

		
	8A.3.3. 
	Perform such  other  functions  and  responsibilities  as  may  be assigned to it from time to time by the Coordination Committee.

8A.4.   The Switchyard Engineering and Operating Committee shall have no authority to modify any of the provisions of the Operating Agreement.

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	8A.5. 
	The Switchyard Engineering and Operating Committee shall keep written minutes and records of all meetings, and any action or determination made by the Switchyard Engineering and Operating Committee shall be reduced to writing and shall become effective when signed by either representative of each Participant on the Switchyard Engineering and Operating Committee or an authorized alternate except that, in the event of an Operating Emergency, action may be taken or a determination may be made on the basis of oral approvals and such action or determination subsequently shall be reduced to writing.

		
	8A.6. 
	Each Participant shall notify the other Participants promptly of any change in the designation of its representatives on the Switchyard Engineering and Operating Committee. Any of the Participants may, by written notice to the other Participants, designate an alternate or substitute to act as such representative in the absence of any of its regular members or to act on specified occasions with respect to specified matters.

8A.7. The Switchyard Engineering and Operating Committee shall direct that, pursuant to FERC requirements, an ad hoc committee be formed to review all Participant and third party requests to add facilities or interconnect to the Switchyard Facilities.
8A.8. The Switchyard Engineering and Operating Committee shall have the authority to review and approve requests from any Participant to affix its name to Switchyard Facilities capital items, the granting of such approval only being subject to guidelines to be established by the Switchyard Engineering and Operating Committee as to the manner and location on which the name shall be affixed.

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	8.
	EXECUTION BY COUNTERPARTS:

This Amendment may be executed in any number of counterparts, and upon execution by all of the Participants, the counterparts shall have the same force and effect as an original instrument and as if all of the Participants had signed the same instrument. Any signature page of this Amendment may be detached from any counterpart of this Amendment without impairing the legal effect of any signature thereon, and may be attached to another counterpart of this Amendment identical in form hereto but having attached to it one or more signature pages.

		
	9.
	EFFECT OF AMENDMENTS:

Except as specifically amended or otherwise modified herein, the Operating Agreement, as previously amended, shall remain in full force and effect.

		
	10.
	EFFECTIVE DATE:

This Amendment shall be effective upon the date when executed by all of the Participants.

[Remainder of page intentionally left blank; signature page follows]

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	11.
	SIGNATURE CLAUSE:

The signatories hereto represent that they have been appropriately authorized to enter into this Amendment on behalf of the party for whom they sign. This Amendment is hereby executed as of the  1st day of December, 2010.
ARIZONA PUBLIC SERVICE COMPANY

By _______________________    

Its  _______________________    

EL PASO ELECTRIC COMPANY

By _______________________    

Its  _______________________    

PUBLIC SERVICE COMPANY OF NEW MEXICO

By _______________________    

Its  _______________________    

SOUTHERN CALIFORNIA EDISON COMPANY

By ______________________    

Its  ______________________    

TUCSON ELECTRIC POWER COMPANY

By _____________________    

Its  _____________________    

Review by SRP Legal Services        SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT

By:______________________        By: ______________________    

Printed Name:_____________        Its:  ______________________    

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