DISTRIBUTION, ASSIGNMENT AND ASSUMPTION
AGREEMENT
DISTRIBUTION, ASSIGNMENT
AND ASSUMPTION AGREEMENT , dated as of February 24, 2005 (the
"Agreement"), by and among LUNA POWER COMPANY, LLC , a
Delaware limited liability company (the "Company"), TUCSON
ELECTRIC POWER COMPANY , an Arizona corporation ("TEP"),
PNMR DEVELOPMENT AND MANAGEMENT CORPORATION , a New Mexico
corporation ("PNMR Development"), and PHELPS DODGE ENERGY
SERVICES, LLC , a Delaware limited liability company ("PDES")
(TEP, PNMR Development and PDES are sometimes individually referred
to herein as a "Participant" and collectively as the
"Participants").
RECITALS
1.
On November 12, 2004, PNM Resources, Inc. ("PNMR"), PDES and TEP
purchased all right, title and interest in and to the Company
(formerly known as Duke Energy Luna, LLC) which owns a partially
constructed approximately 570 MW (nominal) combined cycle natural
gas-fired electric generation facility located in Luna County, New
Mexico (together with all contract rights, Permits, water rights
and other related assets, the "Luna Energy Facility" or the
"Project").
2.
On the same date, PNMR, PDES and TEP entered into a Transaction
Agreement setting out their mutual intent, as the purchasers of the
Company, to, among other things, make one or more in-kind
distributions to each of the Participants (or, in the case of PNMR,
to an affiliate) of the assets and properties of the Company so
that each of the Participants (or its designee) would own a
thirty-three and one third percent (33 1/3%) undivided ownership
interest in such assets and properties.
3.
Pursuant to the Transaction Agreement and resolutions duly adopted
by PNMR, PDES and TEP on or prior to the date hereof, the Company
desires to convey a thirty-three and one third percent (33 1/3%)
undivided ownership interest in certain assets and properties owned
by the Company, as more particularly described below, and PNMR
Development, PDES and TEP desire to assume all obligations of the
Company under the assigned assets identified below.
4.
Capitalized terms used herein without definition shall have the
meanings assigned to them for purposes of the Transaction
Agreement.
NOW THEREFORE, it is agreed as
follows:
1. Assignment and
Conveyance of Undivided Interests. The Company hereby distributes, assigns,
transfers and conveys to each of PNMR Development, PDES, and TEP,
respectively, an equal 33 1/3% undivided interest in the Luna
Energy Facility (but excluding the Excluded Assets referred to in
Section 2), including, without limitation, each of the following
assets and properties associated therewith, and the Participants
hereby accept such interest:
A.
The real property
identified as the "Power Plant Site" and the real property
identified as the "Wellfield Sites" (including water rights
associated therewith), all as more particularly described in
Schedule 1A hereto;
B.
The permits identified in Schedule 1B hereto, subject to
appropriate regulatory notifications, filings, or other
requirements, if any (it being understood that certain permits may
be in the name of the Operating Agent);
C.
The contracts set forth in Schedule 1C hereto; and
D.
The personal property and equipment described in Schedule 1D
hereto.
2. Excluded
Assets. The assignment and conveyance made pursuant to
Section 1 shall expressly exclude the following assets or
properties (the "Excluded Assets"), ownership of which Excluded
Assets shall remain in the Company until such time as the Company,
through its Members, shall determine to distribute such assets or
properties to the Participants:
A. The
easements, licenses and rights-of-way (the "Easements") described
in Schedule 2A hereto; and
B. The
contracts (the "Excluded Contracts") described in Schedule 2B
hereto.
3.
No Additional Consideration . No
additional consideration shall be paid by the Participants to the
Company in connection with the assignment and conveyance provided
for herein.
4.
Assumption of Obligations . The Participants agree to assume and to
be bound by and to perform all of the terms and conditions,
covenants and undertakings of the permits and contracts that are
the subject of this Agreement.
5
.
Proration of taxes . Taxes that may be payable
with respect to any of the assets being assigned and conveyed
pursuant to this Agreement shall be prorated among the Participants
in accordance with the Participants' undivided ownership
interests.
6.
Further Assurances . The Company and the
Participants shall at any time and from time to time and without
additional consideration take such actions and deliver such
documents as may be necessary to effectuate the purposes of this
Agreement. In particular, they shall execute all deeds and
other instruments that may be required to carry into the effect the
purposes of this Agreement.
7.
Governing Law . This Agreement is subject to
New Mexico law, without regard to conflicts of law
principles.
8.
Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed to be an
original, but all of such counterparts shall together constitute
one original. This Agreement may also be executed by
facsimile signature and any such executed copies shall be deemed
executed and delivered and fully enforceable.
[Remainder of Page Left
Intentionally Blank]
IN WITNESS WHEREOF, the undersigned
have executed this Distribution, Assignment and Assumption
Agreement as of the 24 th day of February,
2005.
LUNA POWER COMPANY, LLC
By: /s/
Choi Lee
Name: Choi
Lee
Title: Manager
PHELPS DODGE ENERGY SERVICES, LLC
By: /s/ Choi
Lee
Name: Choi Lee
Title: Vice President
TUCSON ELECTRIC POWER COMPANY
By: /s/ Michael J. DeConcini
Name: Michael J. DeConcini
Title: Senior Vice President
PNMR DEVELOPMENT AND MANAGEMENT CORPORATION
By: /s/ Hugh W. Smith
Name: Hugh W. Smith
Title: President
Schedule 1A
Description of Power Plant
Site
The Southwest ¼ of the
Southwest ¼, the Northwest ¼ of the Southwest ¼, and
the Southeast ¼ of the Southwest ¼ of Section 16,
Township 23 South, Range 9 West, New Mexico Prime Meridian, Luna
County, New Mexico, being more particularly described as
follows:
BEGINNING at the Southwest Corner, a found 5/8"
rebar, which is common with the Southwest corner of said Section
16, on the center line of Arrowhead Drive, a 60' wide roadway,
THENCE N 02䓣'21" E a distance of 1319.89 feet along the West
line of the said Southwest ¼ of the Southwest ¼ to a
found Culak Surv-Kap, THENCE N 02䓤'05" E a
distance of 1319.51 feet along the West line of the Northwest
¼ of the Southwest ¼ to a Culak Surv-Kap at the Northwest
corner of the said Northwest ¼ of the Southwest ¼, THENCE
S 88䓢'28" E a distance of 1321.25 feet along the North line
of the said Northwest ¼ of the Southwest ¼ to a found
Culak Surv-Kap at the Northeast corner of the said Northwest ¼
of the Southwest ¼, THENCE S 02$#17636'30" W a distance of
1322.37 feet along the East line of the said Northwest ¼ of
the Southwest ¼ to a found Culak Surv-Kap at the Southeast
corner of the said Northwest ¼ of the Southwest ¼, THENCE
S 88$#17629'34" E a distance of 1320.57 feet along the North line
of the said Southeast ¼ of the Southwest ¼ to a found
Culak Surv-Kap at the Northeast corner of the said Southeast ¼
of the Southwest ¼, THENCE S 02$#17635'23" W a distance of
1325.04 feet along the East line of the said Southeast ¼ of
the Southwest ¼ to a found P/K nail in rock at the South
¼ of said Section 16 on the centerline of the said Arrowhead
Drive, THENCE N 88$#17621'36" W a distance of 2641.50
feet along the South line of said Section 16 and the centerline of
said Arrowhead Drive to the PLACE OF BEGINNING, containing 120.221
acres, more or less.
Description of Wellfield
Sites
The real property and/or water rights described
in the following deeds and other instruments of record:
1. Warranty
Deed from Steve and Lorraine Franzoy to Duke Energy Luna, LLC dated
April 9, 2002, filed at Reception Number 2002-01826 in the
Real Property Records of Luna County, New Mexico
2. General
Warranty Deed from Donald R. and Lila M. Gardner to Duke Energy
Luna, LLC dated February 15, 2002 filed at Reception Number
2002-00897 in the Real Property Records of Luna County, New
Mexico
3. Special
Warranty Deed from Forrest H. Hill to Duke Energy Luna, LLC dated
October 17, 2001 filed in the State of New Mexico, County of Luna
Reception Number 2001-05183
4. Warranty
Deed from Hurt Cattle Company, Inc. to Duke Energy Luna, LLC dated
October 4, 2001 filed at Reception Number 2001-04909 in the Real
Property Records of Luna County, New Mexico
5. General
Warranty Deed from James W. and Juanita H. Lang to Duke Energy
Luna, LLC dated June 6, 2002 at Reception No. 2002-02852 in the
Real Property Records of Luna County, New Mexico
6. Warranty
Deed from Bert W. Timmons to Duke Energy Luna, LLC dated January
23, 2002 filed at Reception No. 2002-00424 in the Real Property
Records of Luna County, New Mexico
7. Special
Warranty Deed from Ward T. Bell to Duke Energy Luna, LLC dated
March 12, 2002 field at Reception No. 2002-01440 in the Real
Property Records of Luna County, New Mexico
8. Warranty
Deed from Owen W. and Elizabeth A. Barker to Duke Energy Luna, LLC
dated October 5, 2001 filed at Reception No. 2001-04919 in the Real
Property Records of Luna County, New Mexico
9. Special
Warranty Deed from Shelby C. Phillips, III to Duke Energy Luna, LLC
dated October 30, 2001 filed in State of New Mexico, County of Luna
Reception Number 2001-05532
10. Warranty
Deed from Kent and Vivian Nicoll to Duke Energy Luna, LLC dated
January 7, 2002 filed at Reception No. 2002-00087 in the Real
Property Records of Luna County, New Mexico
11. General
Warranty Deed from J. Arza Nicoll to Duke Energy Luna, LLC dated
January 18, 2002 filed in the State of New Mexico, County of Luna
Reception Number 2002-00319
12. Correction
Warranty Deed from Paul I. and Brenda L. Offutt to Duke Energy
Luna, LLC dated May 31, 2002 filed at Reception Number 2002-02693
in the Real Property Records of Luna County, New Mexico
13. Special
Warranty Deed from Olin J. and Ruth J. Offutt as Trustees of the
Olin J. Offutt and Ruth Offutt Revocable Trust dated November 1,
1995 to Duke Energy Luna, LLC dated November 16, 2001 filed at
Reception No. 2002-00284 in the Real Property Records of Luna
County, New Mexico
14. General
Warranty Deed from Edmund E. and Alice Ogaz to Duke Energy Luna,
LLC dated April 24, 2002 filed at Reception No. 2002-02076 in the
Real Property Records of Luna County, New Mexico
15. General
Warranty Deed from Gilbert J. and Catherine C. Cramer Revocable
Trust to Duke Energy Luna, LLC dated January 17, 2002 filed at
Reception No. 2002-00285 in the Real Property Records of Luna
County, New Mexico
16. Special
Warranty Deed from Ruben V. and Antonia P. Diaz to Duke Energy
Luna, LLC dated March 1, 2002 filed at Reception No. 2002-01169 in
the Real Property Records of Luna County, New Mexico
17. General
Warranty Deed from Louisa B. Valdespino to Duke Energy Luna, LLC
dated January 24, 2002 filed at Reception No. 2002-00413 in the
Real Property Records of Luna County, New Mexico
18. Special
Warranty Deed from Raymond and Carol L. Viramontes to Duke Energy
Luna, LLC dated November 15, 2001 filed at Reception Number
2001-05740 in the Real Property Records of Luna County, New
Mexico
19. Special
Warranty Deed from Bobby D. and Barbara June Waldrop to Duke Energy
Luna, LLC dated May 29, 2002 filed at Reception No. 2002-02658 in
the Real Property Records of Luna County, New Mexico
20. Special
Warranty Deed from Bobby D. and Barbara June Waldrop to Duke
Energy, LLC dated October 29, 2001 filed in the State of New
Mexico, County of Luna Reception Number 2001-05293
21. Change
of Ownership of Water Right of No. M-1730 from Steve and
Lorraine Franzoy to Duke Energy Luna, LLC filed at Reception No.
2002-06403 in the Real Property Records of Luna County, New
Mexico
22. Change
of Ownership of Water Right No. M-526-A from Forrest H. Hill
to Duke Energy Luna, LLC filed at Reception No. 2002-06364 in the
Real Property Records of Luna County, New Mexico
23. Water
Rights Warranty Deed from Hurt Cattle Company, Inc. to Duke Energy
Luna, LLC dated July 12, 2002 filed at Reception number 2002-03584
in the Real Property Records of Luna County, New Mexico
24. Change
of Ownership of Water Right No. M-448 et al, from Hurt Cattle
Company to Duke Energy Luna, LLC filed at Reception No. 2002-06500
in the Real Property Records of Luna County, New Mexico
25. Change
of Ownership of Water Right No. M-253 from James W. and Juanita H.
Lang to Duke Energy Luna, LLC
26. Change
of Ownership of Water Right No. M-545 from Bert W. Timmons to Duke
Energy Luna, LLC filed at Reception No. 2002-06352 in the Real
Property Records of Luna County, New Mexico
27. Change
of Ownership of Water Right No. M-480 from Ward T. Bell and
Linda M. Bell to Duke Energy Luna, LLC filed at Reception No.
2002-06501 in the Real Property Records of Luna County, New
Mexico
28. Change
of Ownership of Water Right No. M-460, et al, from Owen W.
Barker and Elizabeth A. Barker to Duke Energy Luna, LLC filed at
Reception No. 2002-06518 in the Real Property Records of Luna
County, New Mexico
29. Change
of Ownership of Water Right No. M-1715 from Shelby C.
Phillips, III to Duke Energy Luna, LLC filed at Reception No.
2002-06505 in the Real Property Records of Luna County, New
Mexico
30. Change
of Ownership of Water Right No. M-456 from Shelby C. Phillips, III
to Duke Energy Luna, LLC filed at Reception No. 2002-06504 in the
Real Property Records of Luna County, New Mexico
31. Change
of Ownership of Water Right No. M-455 from Shelby C. Phillips, III
to Duke Energy Luna, LLC filed at Reception No. 2002-06503 in the
Real Property Records of Luna County, New Mexico
32. Change
of Ownership of Water Right No. M-454 from Shelby C. Phillips, III
to Duke Energy Luna, LLC filed at Reception No. 2002-06502 in the
Real Property Records of Luna County, New Mexico
33. Change
of Ownership of Water Right No. M-531 from Joseph K. Nicoll to Duke
Energy Luna, LLC filed at Reception No. 2002-06354 in the Real
Property Records of Luna County, New Mexico
34. Change
of Ownership of Water Right No. M-532 from Joseph K. Nicoll to Duke
Energy Luna, LLC filed at Reception No. 2002-06353 in the Real
Property Records of Luna County, New Mexico
35. Change
of Ownership of Water Right No. M-527 from J. Arza Nicoll to Duke
Energy Luna, LLC filed at Reception No. 2002-06404 in the Real
Property Records of Luna County, New Mexico
36. Change
of Ownership of Water Right No. M-483 from Olin J. Offutt to Duke
Energy Luna, LLC filed at Reception No. 2002-06507 in the Real
Property Records of Luna County, New Mexico
37. Change
of Ownership of Water Right No. M-493 from Edmund E. Ogaz to Duke
Energy Luna, LLC filed at Reception No. 2002-06499 in the Real
Property Records of Luna County, New Mexico
38. Change
of Ownership of Water Right No. M-526 from Gilbert T. Cramer to
Duke Energy Luna, LLC filed at Reception No. 2002-06401 in the Real
Property Records of Luna County, New Mexico
39. Change
of Ownership of Water Right No. M-442 et al. from Ruben V. and
Antonia P. Diaz to Duke Energy Luna, LLC filed at Reception No.
2002-06399 in the Real Property Records of Luna County, New
Mexico
40. Change
of Ownership of Water Rights No. M-533 (M-534) from Louisa B.
Valdespino to Duke Energy Luna, LLC filed at Reception No.
2002-06355 in the Real Property Records of Luna County, New
Mexico
41. Change
of Ownership of Water Right No. M1649 from Raymond and Carol L.
Viramontes to Duke Energy Luna, LLC filed at Reception No.
2002-06517 in the Real Property Records of Luna County, New
Mexico
42. Change
of Ownership of Water Right No. M-478 from Raymond and Carol
Viramontes to Duke Energy Luna, LLC filed at Reception No.
2002-06356 in the Real Property Records of Luna County, New
Mexico
43. Change
of Ownership of Water Right No. M-462-A from Bobby D. and Barbara
J. Waldrop to Duke Energy Luna, LLC filed at Reception No.
2002-06506 in the Real Property Records of Luna County, New
Mexico
44. Change
of Ownership of Water Right No. M-480-A from Bobby D. and Barbara
J. Waldrop to Duke Energy Luna, LLC filed at Reception No.
2002-06510 in the Real Property Records of Luna County, New
Mexico
45. Letter
dated September 24, 2002 from Modrall Sperling (Counsel for Duke
Energy Luna, LLC) to the New Mexico State Engineer Office
withdrawing Application to Change Place and Purpose of Use of
Underground Water No. M-496
46. Change
of Ownership of Water Rights from Donald L. and Lila M. Garner to
Duke Energy Luna, LLC filed at Reception No. 2002-06402 in the Real
Property Records of Luna County, New Mexico
47. The
permits set forth in items 13-40 on Schedule 1B.
Schedule 1B
Permits
Unexpired
Permits
1. Order
of the New Mexico Public Regulation Commission dated October 27,
2000 accepting the Stipulation prepared by Duke Energy Luna, LLC,
the Staff of the Utility Division of the New Mexico Public
Regulation Commission, the New Mexico Industrial Energy Consumers,
and Public Service Company of New Mexico, submitted to the New
Mexico Public Regulation Commission on October 17, 2000
2. Final
Order of the New Mexico Public Regulation Commission dated March
27, 2001 approving the siting and location of the Luna Energy
Facility and associated 3,200 feet of 345 kV connecting
transmission line
3. Prevention
of Significant Deterioration Permit No. PSD-NM-2450 issued December
29, 2000 from the State of New Mexico Environment Department Air
Quality Bureau
4. Prevention
of Significant Deterioration Permit No. PSD-NM-2450-M1 issued June
11, 2002 from the State of New Mexico Environment Department Air
Quality Bureau
5. Administrative
Permit Revision to Prevention of Significant Deterioration Permit
No. PSD-NM-2450-M1 issued May 29, 2003 from the State of New Mexico
Environment Department Air Quality Bureau
6. Acid
Rain Permit No. P209A issued to Duke Energy Luna, LLC by the State
of New Mexico Environment Department Air Quality Bureau dated
January 24, 2001
7. Permit
No. 4844 to Construct a Dam (for evaporation ponds) issued to Duke
Energy Luna, LLC by the State of New Mexico Office of the State
Engineer on January 23, 2002
8. Certificate
of Construction and Operation and Proof of Completion (for OSE File
No. 4844) issued February 12, 2004 by the State of New Mexico
Office of the State Engineer (for the evaporation ponds)
9. Notification
from US EPA dated September 15, 2004 issued to Duke Energy Luna,
LLC acknowledging receipt of Notice of Intent for coverage under
the NPDES General Permit for Storm Water Discharges from
Construction Activity. Coverage under the permit for the
plant site began on December 22, 2003.
10. Undated
letter from the New Mexico Environment Department Hazardous Waste
Bureau acknowledging receipt of RCRA Notification of Regulated
Waste Activity and issuing EPA ID Number NMR000006338 to Duke
Energy Luna, LLC
11. Discharge
Plan Approval issued by the State of New Mexico Environment
Department to Duke Energy Luna, LLC dated February 22,
2001
12. Determination
of No Hazard to Air Navigation issued to Duke Energy Luna, LLC by
the Federal Aviation Administration dated April 12, 2001
(Transmission towers or plant stacks in existing utility
corridor)
13. Permit
to Change Place and Purpose of Use of Well M-1730 dated September
23, 2002 issued by the State of New Mexico State Engineer Office.
(Property conveyed by Franzoy)
14. Permit
to Change Place and Purpose of Use No. M-526-A dated October 17,
2001 issued by the State of New Mexico State Engineer Office
(Property conveyed by Hill)
15. Permit
to Change Location of Well No. M-526-S dated July 10, 2002 issued
by the State of New Mexico State Engineer Office (Property
conveyed by Hill)
16. Permit
to Change Place and Purpose of use of underground waters (File Nos.
M-448, M-469, M-474) dated February 20, 2001 as amended by
State Engineer Order and Revised Permit (File Nos. M-166 and M-167,
and M-448, M-469 and M-474) dated April 3, 2001
(a) Permit
to Change Location of Well No. M-469 dated October 15, 2002 issued
by the State of New Mexico State Engineer Office (Property
conveyed by Hurt Cattle Co .)
(b) Permit
to Change Location of Well No. M-469-S-2 dated October 15, 2002
issued by the State of New Mexico State Engineer Office (
Property conveyed by Hurt Cattle Co .)
17. Permit
to Change Place and Purpose of Use No. M-253 dated May 29, 2002
issued by the State of New Mexico State Engineer Office
(Property conveyed by Lang)
18. Permit
to Change Place and Purpose of Use No. M-545 dated May 29, 2002
issued by the State of New Mexico State Engineer Office
(Property conveyed by Timmons)
19. Permit
to Change Place and Purpose of Use No. M-480 dated November 28,
2001 issued by the State of New Mexico State Engineer Office
(Property conveyed by Bell)
