<PAGE>
Exhibit 10.107
NAVAJO PROJECT
CO-TENANCY AGREEMENT
AMONG
ARIZONA PUBLIC
SERVICE COMPANY
DEPARTMENT OF WATER AND POWER
OF THE CITY OF LOS ANGELES
NEVADA POWER COMPANY
SALT RIVER PROJECT AGRICULTURAL
IMPROVEMENT AND POWER DISTRICT
TUCSON GAS & ELECTRIC COMPANY
THE UNITED STATES OF AMERICA
DWP No. 10498
<PAGE>
NAVAJO PROJECT
CO-TENANCY AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION
TITLE
PAGE
<S>
<C>
<C>
1.
PARTIES
1
2.
RECITALS
1
3.
AGREEMENT
4
4.
EFFECTIVE DATE
4
5.
DEFINITIONS
4
5.1
Accounting Practice
4
5.2
Arizona Water Permit
4
5.3
Ash Disposal Area
5
5.4
Auditing Committee
5
5.5
Capacity
5
5.6
Capital Additions
5
5.7
Capital Betterments
5
5.8
Capital Improvements
6
5.9
Capital Replacements
6
5.10 Coal
Supply Agreement
6
5.11
Component of the Transmission System
6
5.12
Conditional Partial Assignment
6
5.13
Contracting Officer
6
5.14
Contracts for Interim
Sale of United
States' Entitlement
7
5.15
Coordinating Committee
8
5.16
Co-Tenants
8
5.17 Date
of Firm Operation
8
5.18
Energy
8
5.19
Generation
Entitlement Share
8
5.20
Incremental Series Capacitors
9
5.21
Indenture of Lease
9
5.22
Memorandum Transmission Agreement
9
5.23
Navajo Generating Station
9
5.24
Navajo Plant Site
9
5.25
Navajo Project
10
5.26
Navajo Tribe
10
5.27 Net
Effective Generating Capability
10
5.28
Operating Agent
10
5.29
Participants
10
5.30
Participation Agreement
10
5.31 Power
10
5.32
Project Agreements
10
5.33
Project Series Capacitors
11
5.34
Project Manager
11
5.35
Pumping Plant Site
12
</TABLE>
i
<PAGE>
Navajo Project
Co-Tenancy Agreement
Table of Contents
<TABLE>
<CAPTION>
SECTION
TITLE
PAGE
<S>
<C>
<C>
5.36 Rail
Loading Site
12
5.37
Railroad
12
5.38
Secretary
12
5.39
Section 323 Grants
12
5.40
Southern Transmission System
12
5.41
Station Engineering and Operating Committee
12
5.42
Station Work
12
5.43
Transmission System
13
5.44
Transmission Engineering and Operating Committee 13
5.45
Transmission Work
13
5.46 Units
of Property
13
5.47 Water
Service Contract
13
5.48 Water
Service Contract Assignment
13
5.49
Western Transmission System
14
6.
OWNERSHIPS AND TITLES
14
7.
ENTITLEMENT TO NAVAJO GENERATING STATION
CAPACITY AND ENERGY
19
8. USE
OF THE TRANSMISSION SYSTEM
19
9.
ADMINISTRATION
23
10.
NONPARTITIONMENT
28
11.
MORTGAGE AND TRANSFER OF INTERESTS
29
12.
RIGHT OF FIRST REFUSAL
32
13.
DESTRUCTION
36
14.
SEVERANCE OF IMPROVEMENTS
38
15.
CAPITAL IMPROVEMENTS
38
16.
INTERESTS HELD FOR THE USE AND BENEFIT OF
THE UNITED STATES
39
17.
REIMBURSEMENT FOR COSTS AND EXPENSES
42
18.
DEFAULTS AND COVENANTS REGARDING OTHER AGREEMENTS
42
19.
ARBITRATION
48
20.
ACTIONS PENDING RESOLUTION OF DISPUTES
52
21. TERM
AND RIGHTS OF CO-TENANTS UPON TERMINATION
53
22.
COVENANTS RUNNING WITH THE LAND
54
23.
RELATIONSHIP OF PARTICIPANTS
55
24. FEES
56
25.
UNCONTROLLABLE FORCES
56
26.
GOVERNING LAW
57
27.
BINDING OBLIGATIONS
57
28.
NONDEDICATION OF FACILITIES
58
29.
ENVIRONMENTAL PROTECTION
58
30.
ASSIGNMENT OF INTERESTS
62
31. USE
OF FACILITIES OF LOS ANGELES
62
</TABLE>
ii
<PAGE>
Navajo Project
Co-Tenancy Agreement
Table of Contents
<TABLE>
<CAPTION>
SECTION
TITLE
PAGE
<S>
<C>
<C>
32.
NOTICES
63
33.
MISCELLANEOUS PROVISIONS CONCERNING THE PROJECT AGREEMENTS
64
34.
NAVAJO PROJECT GENERAL CONTRACT PROVISIONS
67
35.
COMPLIANCE WITH COMPACTS
67
</TABLE>
EXHIBITS
A
NAVAJO GENERATING STATION
B & B-B
TRANSMISSION SYSTEM
C
NAVAJO PROJECT GENERAL PROVISIONS
iii
<PAGE>
NAVAJO PROJECT
CO-TENANCY AGREEMENT
1.
PARTIES: The parties to this Co-Tenancy Agreement are: THE UNITED
STATES
OF
AMERICA, hereinafter referred to as the "United States", acting
through
the
Secretary of the Interior, his duly appointed successor or his
duly
authorized
representative; ARIZONA PUBLIC SERVICE COMPANY, an Arizona
corporation, hereinafter referred to as "Arizona"; DEPARTMENT OF
WATER AND
POWER OF
THE CITY OF LOS ANGELES, a department organized and existing
under the
Charter of the City of Los Angeles, a municipal corporation of
the State
of California, hereinafter referred to as "Los Angeles"; NEVADA
POWER
COMPANY, a Nevada corporation, hereinafter referred to as
"Nevada";
SALT RIVER
PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an
agricultural improvement district organized and existing under the
laws of
the State
of Arizona, hereinafter referred to as "Salt River Project";
and
TUCSON GAS
Section ELECTRIC COMPANY, an Arizona corporation, hereinafter
referred
to as "Tucson".
2.
RECITALS: This Co-Tenancy Agreement is made with refer ence to
the
following
facts, among others:
2.1 By the Colorado River Basin Project Act (82 Stat. 885) the
Congress
of the United States authorized the construction, operation and
maintenance of the
1
<PAGE>
Central Arizona
Project. Pursuant to Section 303 of said Act, the
Secretary
is authorized to enter into agreements with non-Federal
interests
proposing to construct thermal generating Power plants whereby
the United
States shall acquire the right to such portions of their
Capacity,
including the delivery of Power and Energy over the appurtenant
transmission facilities to mutually agreed upon delivery points, as
he
determines
are required in connection with the operation of the Central
Arizona
Project.
2.2 The Secretary has determined that the acquisition of a right
to
a portion
of the Capacity of the Navajo Project is the most feasible plan
for
supplying the Power requirements of the Central Arizona Project
and
augmenting
the Lower Colorado River Basin Development Fund.
2.3 As of September 30, 1969, the Participants and Southern
California
Edison Company entered into the Memorandum Transmission
Agreement
(Contract No. 14-06-300-2140), which establishes the terms and
conditions
for the interconnection of the Transmission System at Moenkopi
Switchyard
with the existing 500 kv transmission line from the Four
Corners
Generating Station to the Eldorado Substation. These terms and
conditions
are to be the basis for a more definitive agreement.
2.4 As of September 29, 1969 the Co-Tenants and the Navajo
Tribe
entered
into the Indenture of Lease
2
<PAGE>
wherein
the Co-Tenants leased the Navajo Plant Site, Pumping Plant
Site,
Ash
Disposal Area, Rail Loading Site, and certain related rights on
certain
real property located within the Navajo Reservation.
2.5 By the provisions of said Indenture of Lease, approval was
obtained
from the Navajo Tribe for the grants by the Secretary of
rights-of-way for a railroad, coal conveyor and portions of the
Transmission System. Such approval was also obtained by way of
a
resolution
from the Hopi Tribal Council.
2.6 The Participants entered into the Participation Agreement,
which
provides the basic principles for their participation in the
Navajo
Project.
These principles are intended to be the basis of more
definitive
agreements, including this Co-Tenancy Agreement.
2.7 As of January 17, 1969, Salt River Project entered into a
Water
Service
Contract with the United States (Contract No. 14-06-400-5033),
relating
to the diversion and consumptive use of specified amounts of
water
annually. In addition, the Arizona Water Permit was issued by
the
State Land
Commissioner of the State of Arizona on September 4, 1969,
granting
to the Salt River Project a permit to appropriate and use a
specified
amount of water in conjunction with the operation of a thermal
electric
generating plant. By a Water Service Contract Assignment dated
as of
December 22, 1969, Salt
3
<PAGE>
River
Project assigned to the Co-Tenants undivided interests in the
Water
Service
Contract and the Arizona Water Permit.
2.8 As of June 1, 1970, the Co-Tenants entered into the Coal
Supply
Agreement
with Peabody Coal Company, relating to a supply of coal for the
Navajo
Generating Station.
2.9 The Participants desire by this Co-Tenancy Agreement to
establish
terms and conditions relating to their interests in and their
ownership
of the Navajo Project and to establish certain rights and
obligations under the Project Agreements.
3.
AGREEMENT: The Participants agree as follows:
4.
EFFECTIVE DATE: This Co-Tenancy Agreement shall become effective
when it
has been
duly executed and delivered on behalf of all the Participants.
5.
DEFINITIONS: The following terms, when used herein, shall have
the
meanings
specified:
5.1 ACCOUNTING PRACTICE: Generally accepted accounting
principles,
in
accordance with the Federal Power Commission's "Uniform System
of
Accounts
Prescribed for Public Utilities and Licensees (Class A and
Class
B)", in
effect on January 1, 1970, and as such system of accounts may
be
amended from
time to time.
5.2 ARIZONA WATER PERMIT: Permit No. A-3244 issued by the State
Land
Commissioner of the State of
4
<PAGE>
Arizona on
September 4, 1969, granting to the Salt River Project a permit
to
appropriate and use water in conjunction with the operation of
a
thermal
electric generating plant, which said permit has a priority
date
of
December 18, 1964.
5.3 ASH DISPOSAL AREA: The area for the disposal of ash
resulting
from the
operation of the Navajo Generating Station described on Exhibit
4
to the
Indenture of Lease.
5.4 AUDITING COMMITTEE: A committee established pursuant to and
which will
exercise the functions described in the Project Agreements.
5.5 CAPACITY: Electrical rating expressed in megawatts (mw) or
megavolt-amperes (mva).
5.6 CAPITAL ADDITIONS: Any Units of Property, land or land
rights
which are
added to the Navajo Project and which do not substitute for any
existing
Units of Property, land or land rights constituting a part of
the
Navajo
Project, and which in accordance with Accounting Practice would
be
capitalized.
5.7 CAPITAL BETTERMENTS: The improvement of land or land rights
or
the
enlargement or improvement of any Units of Property constituting
a
part of
the Navajo Project or the substitution thereof, where such
substitution constitutes an enlargement or improvement as compared
with
that for
which it is substituted, which
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<PAGE>
in
accordance with Accounting Practice would be capitalized.
5.8 CAPITAL IMPROVEMENTS: All or any Capital Additions, Capital
Betterments, or Capital Replacements.
5.9 CAPITAL REPLACEMENTS: The substitution of any Units of
Property
for other
Units of Property constituting a part of the Navajo Project,
where such
substitution does not constitute an enlargement or improvement
of that
for which it is substituted, which in accordance with
Accounting
Practice
would be capitalized.
5.10 COAL SUPPLY AGREEMENT: The Navajo Station Coal Supply
Agreement
entered
into as of June 1, 1970, by and between Peabody Coal Company
and
the
Co-Tenants, relating to a supply of coal for the Navajo
Generating
Station.
5.11 COMPONENT OF THE TRANSMISSION SYSTEM: Any of the components
of
the
Transmission System as described in Exhibit B hereto.
5.12 CONDITIONAL PARTIAL ASSIGNMENT: An assignment which the
Co-Tenants
may obtain from Peabody Coal Company covering the coal areas
dedicated
under the terms and conditions of the Coal Supply Agreement.
5.13 CONTRACTING OFFICER: The Secretary, his duly appointed
successor
or his duly authorized representative.
5.14 CONTRACTS FOR INTERIM SALE OF UNITED STATES'
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<PAGE>
ENTITLEMENT: The contracts by which the United States has
contracted with
other
Participants and Southern California Edison Company for the
interim
sale of
United States' entitlement of Navajo Project until required for
other
purposes of the Colorado River Basin Project Act. These
contracts
are:
5.14.1 Contract with Department of Water and Power of the City
of Los Angeles for Interim Sale of United States' Entitlement
of
Navajo Project, Contract No. 14-06-300-2133, dated as of
September
30, 1969;
5.14.2 Contract with Nevada Power Company for Interim Sale of
United States' Entitlement of Navajo Project, Contract No.
14-06-300-2134, dated as of September 30, 1969;
5.14.3 Contract with Southern California Edison Company for
Interim Sale of United States' Entitlement of Navajo Project,
Contract No. 14-06-300-2135, dated as of September 30, 1969;
5.14.4 Contract with Salt River Project Agricultural
Improvement and Power District for Interim Sale of United
States'
Entitlement of Navajo Project, Contract No. 14-06-300-2136,
dated
as of September 30, 1969;
5.14.5 Contract with Arizona Public Service Company for
Interim Sale of United States' Entitlement
-7-
<PAGE>
of Navajo Project, Contract No. 14-06-300-2137, dated as of
September 30, 1969; and
5.14.6 Contract with Tucson Gas Electric Company for Interim
Sale of United States' Entitlement of Navajo Project, Contract
No.
14-06-300-2138, dated as of September 30, 1969.
5.15 COORDINATING COMMITTEE: A committee established pursuant
to
and which
will exercise the functions described in the Project
Agreements.
5.16 CO-TENANTS: Any one or all of the parties hereto, other
than
the United
States.
5.17 DATE OF FIRM OPERATION: The date established in accordance
with
the
Project Agreements on which each unit of the Navajo Generating
Station
is
determined by the Station Engineering and Operating Committee to
be
reliable
as a source of generation and on which that unit can reasonably
be
expected to operate continuously at its rated Capacity.
5.18 ENERGY: Kilowatt-hours (kwh).
5.19 GENERATION ENTITLEMENT SHARE. The percentage entitlement
of
each
Participant in each unit of the Navajo Generating Station. Each
Participant's percentage is as follows:
5.19.1 Arizona
= 14.0 percent.
5.19.2 Los
Angeles
= 21.2 percent.
5.19.3 Nevada
= 11.3 percent.
-8-
<PAGE>
5.19.4 Salt River
Project = 21.7
percent.
5.19.5 Tucson
= 7.5 percent.
5.19.6 United
States
= 24.3 percent.
5.20 INCREMENTAL SERIES CAPACITORS: Series capacitors described
in
the
Memorandum Transmission Agreement and in any subsequent Project
Agreement(s) superseding the Memorandum Transmission Agreement
which will
serve the
purposes described therein for "incremental series capacitors".
5.21 INDENTURE OF LEASE: The Indenture of Lease dated as of the
29th
day of
September, 1969, by and between the Navajo Tribe and the
Co-Tenants.
5.22 MEMORANDUM TRANSMISSION AGREEMENT: The Memorandum
Transmission
Agreement
dated as of the 30th day of September, 1969 (Contract No.
14-06-300-2140), by and between Southern California Edison Company
and the
Participants.
5.23 NAVAJO GENERATING STATION: Three coal-fired steam electric
generating
units, to be constructed at the Navajo Plant Site, each having
a
nameplate rating of 750 mw and, subject to final design, an
estimated
Net Effective
Generating Capability of 770 mw, and all facilities and
structures
used therewith or related thereto, all as described in Exhibit
A
hereto.
5.24 NAVAJO PLANT SITE: A parcel of land in Coconino County,
Arizona,
consisting of approximately
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<PAGE>
1,020
acres, described in Exhibit 2 to the Indenture of Lease.
5.25 NAVAJO PROJECT: The Navajo Generating Station and the
Transmission System.
5.26 NAVAJO TRIBE: The Navajo Tribe of Indians.
5.27 NET EFFECTIVE GENERATING CAPABILITY: The maximum
continuous
ability of
each unit of the Navajo Generating Station to produce Power
which is
available to the Participants at the Navajo 500 kv Switchyard
500
kv
bus.
5.28 OPERATING AGENT: A Co-Tenant responsible for the operation
and
maintenance of the Navajo Generating Station or a Component of
the
Transmission System in accordance with the Project Agreements.
5.29 PARTICIPANTS: Any one or more of the parties hereto,
including
the United
States.
5.30 PARTICIPATION AGREEMENT: The Navajo Project Participation
Agreement,
dated as of September 30, 1969 (Contract No. 14-06-300-2131),
and the
Amendment and Supplement #1 thereto dated as of January 16,
1970,
which
provide the basic principles for the Participants' participation
in
the Navajo
Project.
5.31 POWER: Kilowatts (kw) or megawatts (mw).
5.32 PROJECT AGREEMENTS: This Co-Tenancy Agreement, the
Participation Agreement, the grants from the United States for
rights-of-way across Indian lands pursuant
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<PAGE>
to 2S U.S.C. Section
323, the Navajo Project Power Coordination Agreement,
the
Southern Transmission System, Western Transmission System and
Navajo
Generating
Station Construction Agreements, the Southern Transmission
System,
Western Transmission System and Navajo Generating Station
Operating
Agreements, other grants of rights-of-way and easements for
Navajo
Project facilities, the Indenture of Lease, the Arizona Water
Permit,
the Water Service Contract, the Water Service Contract
Assignment,
the Coal
Supply Agreement, the Conditional Partial Assignment, the
Multi-Party Agreement, the Memorandum Transmission Agreement, and
such
other
agreements as the Participants find necessary or desirable and
designate
as Project Agreements, as such Project Agreements are
originally
executed
or as they may thereafter be supplemented, amended or
superseded;
5.33 PROJECT SERIES CAPACITORS: Series capacitors described in
the
Memorandum
Transmission Agreement and in any subsequent Project
Agreement(s) superseding the Memorandum Transmission Agreement,
which will
serve the
purposes described therein for "project series capacitors".
5.34 PROJECT MANAGER: A Co-Tenant responsible for the
construction
and
completion of the Navajo Generating Station or a Component of
the
Transmission System in accordance with the Project Agreements.
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<PAGE>
5.35 PUMPING PLANT SITE: The site for facilities to divert and
pump
water from
Lake Powell, including water intake works, pumping station,
water
lines and related facilities, as described on Exhibit 2 to the
Indenture
of Lease.
5.36 RAIL LOADING SITE: The site for the conveyor termination
and
rail
loading facilities, related facilities and equipment and coal
storage
as
described on Exhibit 3 to the Indenture of Lease.
5.37 RAILROAD: The railroad described in Exhibit A hereto.
5.38 SECRETARY: The Secretary of the Interior.
5.39 Section 323 GRANTS: Grants of easements and rights-of-way
by
the United
States to the Co-Tenants, covering the Navajo Plant Site, the
Ash
Disposal Area, the Pumping Plant Site, the Railroad right-of-way,
the
Rail
Loading Site and related rights.
5.40 SOUTHERN TRANSMISSION SYSTEM: The Southern Transmission
System
as
described in Exhibit B hereto.
5.41 STATION ENGINEERING AND OPERATING COMMITTEE: A committee
established pursuant to and which will exercise the functions
described
in the
Project Agreements.
5.42 STATION WORK: Engineering, design, contract preparation,
purchasing, construction, supervision, expediting, inspection,
accounting, testing, start-up, protection, operation, repair,
maintenance, replacement, or
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<PAGE>
reconstruction, of or for the Navajo Generating Station.
5.43 TRANSMISSION SYSTEM: The Transmission System as generally
described
in Exhibit B hereto.
5.44 TRANSMISSION ENGINEERING AND OPERATING COMMITTEE: A
committee
established pursuant to and which will exercise the functions
described in
the
Project Agreements.
5.45 TRANSMISSION WORK: Engineering, design, contract
preparation,
purchasing, construction, supervision, expediting, inspection,
accounting, testing, protection, operation, repair,
maintenance,
replacement, or reconstruction, of or for the Transmission
System.
5.46 UNITS OF PROPERTY: Units of property as described in the
Federal
Power Commission's "List of Units of Property for Use in
Connection
with Uniform System of Accounts Prescribed for Public Utilities
and
Licensees," in effect on January 1, 1961, and as such list may
be
amended
from time to time.
5.47 WATER SERVICE CONTRACT: The Water Service Contract dated
the
17th day
of January, 1969, between the United States and the Salt River
Project
(Contract No. 14-06-400-5033).
5.48 WATER SERVICE CONTRACT ASSIGNMENT: The Water Service
Contract
Assignment
dated as of the 22nd day of December, 1969, between the Salt
River
Project and the other Co-Tenants whereby Salt River Project
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<PAGE>
assigned
undivided interests in the Water Service Contract and the
Arizona
Water
Permit to the Co-Tenants.
5.49 WESTERN TRANSMISSION SYSTEM: The Western Transmission System
as
described
in Exhibit B hereto.
6.
OWNERSHIPS AND TITLES:
6.1 The Co-Tenants shall acquire and own undivided interests as
tenants in
common in the Navajo Generating Station, the Water Service
Contract,
the Arizona Water Permit, the Coal Supply Agreement, the
Conditional Partial Assignment, and those Project Agreements
relating to
land and
land rights for the Navajo Generating Station to which the
United
States is
not a party in its capacity as a Participant, as follows:
6.1.1
Arizona
= 14.0%
6.1.2 Los
Angeles = 21.2%
6.1.3
Nevada
= 11.3%
6.1.4 Salt
River
Project =
21.7% for its own use and benefit
and 24.3% for the use
and benefit of the
United States in accordance with
Project Agreements
6.1.5
Tucson
= 7.5%
6.2 The Co-Tenants shall acquire and own undivided interests as
tenants in
common in the Components of the Transmission System as follows:
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<PAGE>
6.2.1 Navajo 500 kv Switchyard
Navajo-Moenkopi 500 kv line
(i) Arizona
= 14.0%
(ii) Los Angeles
=
21.2%
(iii) Nevada
= 11.3%
(iv) Salt River
Project =
21.7% for its own use and benefit and
24.3% for the use and benefit of the
United States in accordance with
Project Agreements.
(v) Tucson
= 7.5%
6.2.2 Navajo-Westwing 500 kv line
Moenkopi-Westwing 500 kv line
Westwing 500 kv Switchyard
(i) Arizona
= 24.7%
(ii) Salt River
Project =
38.3% for its own use and benefit and
23.7% for the use and benefit of the
United States in accordance with
Project Agreements.
(iii) Tucson
= 13.3%
6.2.3 Westwing Substation 2-1332 MVA 500/230 kv transformer
banks
and transformer leads and spare 444 MVA 500/230 kv transformer
and transformer leads
(i) Arizona
= 28.5%
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<PAGE>
(ii) Salt River
Project =
44.2% for its own use
and benefit and
27.3% for the use and benefit of the
United States in accordance with
Project Agreements.
6.2.4 Westwing Substation 600 MVA 500/345 kv transformer bank
and
transformer leads and spare 200 MVA 500/345 kv transformer and
transformer leads
(i) Arizona
= 19.5%
(ii) Tucson
= 80.5%
6.2.5 Westwing 230 kv Switchyard
(i) Arizona
= 39.9%
(ii) Salt River
Project =
44.9% for its own use and benefit and
15.2% for the use and benefit of the
United States in accordance with
Project Agreements.
Upon completion of the United States' two 230 kv lines to the
reserved bay positions in the Westwing 230 kv Switchyard, (i)
and (ii) of this Section 6.2.5 shall be as follows:
(i) Arizona
= 32.1%
(ii) Salt River
Project =
36.1% for its own use and benefit and
31.8% for the use and
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<PAGE>
benefit of the United States in
accordance with Project
Agreements.
6.2.6 Other Associated Components of the Southern Transmission
System, as
described in paragraph F of Exhibit B hereto, shall be solely
owned by
Arizona.
6.2.7
Navajo-McCullough 500 KV line and McCullough Line Compensation
(i) Los Angeles
=
48.9%
(ii) Nevada
= 26.1%
(iii) Salt River
Project =
25.0% for the use and benefit of the
United States in accordance with
Project Agreements.
6.2.8 McCullough 500 kv Switchyard
(i) Los Angeles
=
74.8%
(ii) Nevada
= 19.0%
(iii) Salt River
Project =
6.2% for the use and
benefit of the
United States in accordance with
Project Agreements.
6.2.9 McCullough Substation Common Facilities, as described in
Exhibit B hereto.
(i) Los Angeles
=
67.9%
(ii) Nevada
= 23.9%
(iii) Salt River
Project =
8.2% for the use
and
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<PAGE>
benefit of the United States in
accordance with Project
Agreements.
6.3 The ownerships and titles described in this Co-Tenancy
Agreement
shall be
determined to have vested simultaneously in the Co-Tenants so
that the
estate of each shall be determined to be concurrent as to right
and
priority.
6.4 Within eighteen (18) months following the Date of Firm
Operation
of the
final unit of the Navajo Generating Station placed in
operation,
the
Participants shall jointly make, execute and deliver a supplement
to
this
Co-Tenancy Agreement in recordable form which shall describe
with
particularity and detail the facilities and other property then
constituting the Navajo Project not specifically described in the
exhibits
hereto,
and such supplement, when recorded, shall be and become a part
of
this
Co-Tenancy Agreement.
6.5 In the event any Participant transfers or assigns any of
its
rights,
title or interest in and to the Navajo Project in accordance
with
the terms
and conditions of this Co-Tenancy Agreement, the Participants
and any
successor shall jointly make, execute and deliver a supplement
to
this
Co-Tenancy Agreement in recordable form which shall describe
with
particularity and detail the rights, titles and interests of
each
Participant and
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any
successor following such transfer or assignment.
7.
ENTITLEMENT TO NAVAJO GENERATING STATION CAPACITY AND ENERGY:
7.1 The Capacity entitlement of each Participant in each unit of
the
Navajo
Generating Station shall be the product of its Generation
Entitlement Share and the Net Effective Generating Capability of
such
unit.
7.2 Each Participant shall be entitled to schedule for its
account
Power and
Energy from any generating unit up to the amount of its
available
Capacity entitlement in such unit.
8. USE OF
THE TRANSMISSION SYSTEM:
8.1 Each Participant shall have the right to use the
Transmission
System to
transmit to its designated delivery points under normal
operating
conditions Power in an amount equivalent to the sum of its
Capacity
entitlements in the Navajo Generating Station as provided in
Section 7
hereof or to reserve the Transmission System for such
transmission without regard to the origin, source, ownership or
type of
generation
used to produce such Power.
8.2 Any Participant may acquire firm entitlement in the
Transmission
System in
addition to that provided for in Section 8.1 hereof upon the
written
agreement of all Participants having cost responsibility under
the
Project
Agreements for the facilities over which such
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firm
entitlement is sought, provided that said firm entitlement does
not
materially
interfere with the right of any other Participant to utilize
its
entitlement as provided in Section 8.1 hereof. Such written
agreement
shall
specify the amount of monetary compensation to be paid to and
the
allocation
among the Participants for such firm entitlement.
8.3 Any Participant may make non-firm use of transmission
Capacity
in
addition to its use under Section 8.1 hereof to the extent that
transmission Capacity is determined to be available by the
Operating Agent
for that
segment of the Transmission System over which the Capacity is
desired in
accordance with criteria to be developed by the Transmission
Engineering and Operating Committee.
8.4 If two or more Participants concurrently desire to make
non-firm
use of
transmission Capacity in the same segment of the Transmission
System
pursuant to Section 8.3 hereof and the available transmission
Capacity
in such segment is not adequate to satisfy all such requests,
then, unless
otherwise agreed, the available Capacity will be shared by
those
Participants concurrently requesting such Capacity in proportion
to
their cost
responsibility in such segment as provided in the Project
Agreements.
8.5 The Participants' designated points of
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<PAGE>
delivery
shall be as follows:
8.5.1 Arizona =
Navajo 500 kv
Switchyard and Westwing
Substation.
8.5.2 Los Angeles =
Navajo 500 kv
Switchyard and McCullough
500 kv Switchyard.
8.5.3 Nevada =
Navajo 500 kv
Switchyard and McCullough
500 kv Switchyard.
8.5.4 Salt River
= Navajo 500 kv
Switchyard and Westwing
Project
Substation.
8.5.5 Tucson =
Navajo 500 kv
Switchyard and Westwing
Substation.
8.5.6 United =
Navajo 500 kv
Switchyard, McCullough
States 500 kv
Switchyard, Westwing Substation,
and the Moenkopi Switchyard during the
period in which the United States is
selling Power to Southern California
Edison Company pursuant to the Contract
With Southern California Edison Company
for Interim Sale of United States'
Entitlement of Navajo Project for
delivery at Moenkopi Switchyard.
8.6 Each Participant shall be entitled to interconnect its
transmission system with the Transmission System at its designated
points
of
delivery, and the costs of such interconnection shall be paid by
such
Participant.
8.7 Upon agreement with all the other Partici-
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<PAGE>
pants, a
Participant may at its expense make interconnections to the
Transmission System at points other than its designated points
of
delivery.
Such agreement shall specify the terms and conditions under
which such
interconnections may be made, the charges, if any, to the
interconnecting Participant, and the distribution of the
proceeds
therefrom
to the other Participants.
8.8 Unless otherwise agreed by the Transmission Engineering and
Operating
Committee, when the Capacity available to the Participants in
any
segment of the Transmission System is insufficient to accommodate
all
of the
firm use of the Transmission System pursuant to Section 8.1
hereof,
then the
use of the available Capacity of that segment of the
Transmission
System
will be allocated in proportion to the Participants' cost
responsibility in such segment. It is not the intention of the
Participants to dedicate any Capacity in the Transmission System
for use
by other
parties.
8.9 The Transmission System will be interconnected with the
Four
Corners-Eldorado 500 kv line at the Moenkopi Switchyard in
accordance with
the
Memorandum Transmission Agreement, and as such agreement may
hereafter
be
supplemented, amended or superseded.
8.10 For the purpose of this Section 8, any use of any section
of
line by
the United States which is in excess of the greater of (i) the
United
States' percentage
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<PAGE>
cost
responsibility in such line times the capability of such line,
or
(ii) the
capability required to supply the Power requirements of the
Central
Arizona Project, shall be deemed to be non-firm use unless the
right to
such use shall have been acquired pursuant to Section 8.2
hereof.
8.11 Notwithstanding the provisions of this Section 8, Los
Angeles
shall have
the right to use the McCullough Substation or to interconnect
its
transmission system therewith for purposes other than those of
the
Navajo
Project established pursuant to the Project Agreements;
provided,
that such
use or interconnection shall not unreasonably interfere with
the
rights,
titles or interests of the other Participants in the
Transmission
System as
established pursuant to Project Agreements.
9.
ADMINISTRATION:
9.1 As a means of securing effective cooperation and interchange
of
information and of providing consultation on a prompt and orderly
basis
among the
Participants in connection with various administrative and
technical
problems which may arise from time to time in connection with
the terms
and conditions of the Project Agreements, the Coordinating
Committee,
Auditing Committee, Transmission Engineering and Operating
Committee
and Station Engineering and Operating Committee, established
under the
provisions of Section 8 of the Participation Agreement, shall
continue
in existence and shall have the
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<PAGE>
responsibilities set forth in Sections 9.2 through 9.5 hereof.
9.2 The Coordinating Committee shall be composed of one (1)
representative of each Participant, who shall be the Contracting
Officer
or an
officer or general manager of a Participant or the designee of
any
of the
foregoing and shall:
9.2.1 Provide liaison among the Participants at the management
level.
9.2.2 Exercise general supervision over the Station Engineering
and
Operating Committee, the Transmission Engineering and
Operating Committee, the Auditing Committee and other
permanent or ad hoc committees established pursuant to Section
9.11 hereof.
9.2.3 Consider matters referred to it by another committee.
9.2.4 Perform such other functions and duties as may be assigned
to
it in the Project Agreements.
9.2.5 Review, discuss and act upon disputes among the
Participants
arising under the Project Agreements.
9.3 The Station Engineering and Operating Committee shall consist
of
two (2)
representatives desig-
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<PAGE>
nated by
each Participant, and each such representative shall be
authorized
by the Participant by which he is designated to act on its
behalf
with respect to those matters herein provided to be the
responsibilities of the Station Engineering and Operating
Committee. The
Station
Engineering and Operating Committee shall:
9.3.1 Provide liaison among the Participants and between them
and
the Project Manager and the Operating Agent for the Navajo
Generating Station with respect to the engineering,
construction, operation, maintenance, replacement and
reconstruction of the Navajo Generating Station.
9.3.2 Perform such other functions and duties as may be assigned
to
it in the Project Agreements or by the Coordinating Committee.
9.4 The Transmission Engineering and Operating Committee shall
consist of
two (2) representatives designated by each Participant, and
each such
representative shall be authorized by the Participant by which
he is
designated to act on its behalf with respect to those matters
herein
provided
to be the responsibilities of the Transmission Engineering and
Operating
Committee. The Transmission Engineering and Operating Committee
shall:
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<PAGE>
9.4.1 Provide liaison among the Participants and between them
and
the Project Managers and the Operating Agents for the
Components of the Transmission System with respect to the
engineering, construction, operation, maintenance, re-
placement and reconstruction of the Transmission System.
9.4.2 Perform such other functions and duties as may be assigned
to
it in the Project Agreements or by the Coordinating Committee.
9.5 The Auditing Committee shall consist of two (2)
representatives
designated
by each Participant, and each such representative shall be
authorized
by the Participant by which he is designated to act on its
behalf
with respect to those matters herein provided to be the
responsibilities of the Auditing Committee. The Auditing Committee
shall:
9.5.1 Develop procedures for proper accounting and financial
liaison
among the Participants in connection with the engineering,
construction, operation, replacement, reconstruction and
maintenance of the Navajo Project.
9.5.2 Review accounting and financial
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<PAGE>
aspects of the engineering, construction, operation,
maintenance, replacement and reconstruction of the Navajo
Project.
9.5.3 Advise and make recommendations to the Coordinating
Committee,
the Project Managers and the Operating Agents on matters
involving
auditing and financial transactions.
9.5.4 Perform such other functions and duties as may be
assigned to it in the Project Agreements or by the
Coordinating Committee.
9.6 Any action or determination of a committee must be
unanimous.
9.7 All actions, agreements or determinations made by the
committees
shall be
reduced to writing and any such action, agreement or
determination shall become effective when signed by a
representative of
each
Participant on the committee or an authorized alternate. The
Station
Engineering and Operating Committee, the Transmission Engineering
and
Operating
Committee and the Auditing Committee shall keep written minutes
and
records of all meetings
9.8 The committees shall have no authority to modify any of the
terms,
covenants
or conditions of the
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<PAGE>
Project
Agreements.
9.9 If the Station Engineering and Operating Committee,
Transmission
Engineering and Operating Committee or the Auditing Committee fail
to
reach
agreement while performing the respective functions and duties
assigned
to them in this Co-Tenancy Agreement or in the other Project
Agreements, then such disagreement shall be referred to the
Coordinating
Committee.
9.10 Each Participant shall notify the other Participants
promptly
of any
change in the designation of its representatives on the
committees.
A
Participant may designate an alternate to act as its representative
on
any
committee in the absence of the regular member or to act on
specified
occasions
with respect to specified matters. Any alternate representative
appearing
at a committee meeting shall be deemed to have authority to act
on behalf
of the Participant he represents unless he furnishes written
notice to
the committee chairman to the contrary.
9.11 The Participants, acting through the Coordinating
Committee,
shall have
the right to establish permanent or ad hoc committees. The
authority
and duties of any such committee shall be set forth in writing
and shall
be subject to the provisions of the Project Agreements.
10.
NONPARTITIONMENT: The Co-Tenants and each of them accept title to
the
Navajo
Project and their rights, titles and
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<PAGE>
interests
in the Project Agreements as tenants in common. Each Co-Tenant
agrees to
waive any rights which it may have to partition the Navajo
Project,
or the Project Agreements, whether by partitionment in kind or
by
sale and
division of the proceeds, and further agrees that it will not
resort to any
action in law or in equity to partition the Navajo Project,
or the
Project Agreements, and it waives the benefits of all laws that
may
now or
hereafter authorize such partition for a term (i) which shall
be
co-terminus with this Co-Tenancy Agreement, or (ii) which shall be
for
such
lesser period as may be required under applicable law.
11. MORTGAGE AND
TRANSFER OF INTERESTS:
11.1 Except as provided in Section 11.6 hereof, each Co-Tenant
shall
have the
right at any time and from time to time to mortgage, create or
provide
for a security interest in or convey in trust all or a part of
its
ownership
share in the Navajo Project, together with an equal interest in
the
Project Agreements, to a trustee or trustees under a deed of
trust,
mortgage
or indenture, or to a secured party or parties under a security
agreement,
as security for its present or future bonds or other
obligations or securities, and to any successors or assigns
thereof,
without
need for the prior written consent of any other Participant and
without
such mortgagee, trustee or secured party assuming or becoming
in
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<PAGE>
any
respect obligated to perform any of the obligations of the
Participants.
11.2 Except as provided in Section 11.6 hereof, any mortgagee,
trustee or
secured party under present or future deeds of trust,
mortgages,
indentures or security agreements of any of the Co-Tenants and
any
successor or assign thereof, and any receiver, referee or trustee
in
bankruptcy
or reorganization of any of the Co-Tenants, and any successor
by action
of law or otherwise, and any purchaser, transferee or assignee
of any
thereof may, without need for the prior written consent of any
other
Participant, succeed to and acquire all the rights, titles and
interests
of such Co-Tenant in the Navajo Project and the Project
Agreements
and may take over possession of or foreclose upon said rights,
titles and
interests of such Co-Tenant.
11.3 Except as provided in Section 11.6 hereof, each Co-Tenant
shall
have the
right to transfer or assign all or part of its ownership share
in
the Navajo
Project, together with an equal interest in the Project
Agreements, to any of the following without the need for prior
written
consent of
any other Participant:
11.3.1 To any entity acquiring all or substantially all of the
property of such Co-Tenant ; or
11.3.2 To any entity merged or consolidated
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<PAGE>
with such Co-Tenant;
or
11.3.3 To any entity which is wholly-owned by a Co-Tenant; or
11.3.4 To the Salt River Valley Water Users' Association, an
Arizona
corporation, in the case of a transfer by Salt River Project.
11.4 Except as otherwise provided in Sections 11.1, 11.2 and
11.6
hereof,
any successor to the rights, titles and interests of a
Co-Tenant
in the
Navajo Project, together with an equal interest in the Project
Agreements, shall assume and agree to fully perform and discharge
all of
the
obligations hereunder of such Co-Tenant, and such successor
shall
notify
each of the other Participants in writing of such transfer,
assignment
or merger, and shall furnish to each Participant evidence of
such
transfer, assignment or merger.
11.5 No Participant shall be relieved of any of its obligations
under the
Project Agreements by an assignment under this Section 11
without
the express prior written consent of all of the remaining
Participants.
11.6 The rights set forth in Sections 11.1, 11.2 and 11.3
hereof
shall not
apply to such interests of Salt River Project in the Navajo
Project or
in the Project Agreements as are held for the use and benefit
of the
United States, and Salt River Project shall transfer,
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<PAGE>
convey,
mortgage, encumber or hypothecate any such interest only upon
the
prior
written instruction of the United States.
12. RIGHT OF
FIRST REFUSAL:
12.1 Except as provided in Section 11 hereof, should any
Co-Tenant
desire to
transfer its ownership in the Navajo Project or any part
thereof
to any
person, entity or another Co-Tenant, each remaining Co-Tenant
shall
have the right
of first refusal to purchase such interest on the basis of
the
greater of the following amounts:
12.1.1 The amount of the bona fide written offer from the
prospective buyer, or
12.1.2 The fair market value.
12.2 If more than one of the Co-Tenants desire to purchase such
interest,
unless otherwise agreed, it shall be transferred in the ratio
that the
Generation Entitlement Share of each Co-Tenant desiring to
purchase
bears to the total Generation Entitlement Shares of such Co-
Tenants.
12.3 At least three (3) years prior to the date on which the
intended
transfer is to be consummated, the Co-Tenant desiring to
transfer
shall
serve written notice of its intention to do so upon all of the
Participants. Such notice shall contain the proposed date of
transfer and
the terms
and conditions of the transfer.
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<PAGE>
12.4 Each Co-Tenant shall have the option to purchase all or
any
part of
the interest to be transferred and shall exercise said option
by
serving
written notice of its intention upon the Co-Tenant desiring to
transfer
and on the remaining Participants within one hundred eighty
(180)
days after
service of the written notice of intention to transfer given
pursuant
to Section 12.3 hereof. Failure by a Co-Tenant to exercise said
option as
provided herein within the time period specified shall be
conclusively deemed to be an election not to exercise said
option.
12.5 If the Co-Tenants fail to exercise their option to purchase
the
entire
ownership interest to be transferred, then the Co-Tenant
desiring
to
transfer shall serve written notice of this fact upon the
remaining
Participants within ten (10) days after its receipt of the last of
the
written
notices given pursuant to Section 12.4 hereof, or after the
expiration
of the one hundred eighty (180) day period referred to in
Section
12.4 hereof, whichever is earlier.
12.6 The Co-Tenants who exercised their option to purchase less
than
the entire
ownership interest to be transferred shall have the option to
purchase
the remaining ownership interest to be transferred, which such
option
shall be exercised by serving written notice of such election
upon
the
Co-Tenant desiring to transfer
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<PAGE>
within
thirty (30) days after the receipt of the notice given pursuant
to
Section
12.5 hereof.
12.7 When the options to purchase all or any portion of said
ownership
interest have been exercised, the Co-Tenants shall thereby
incur
the
following obligations:
12.7.1 The Co-Tenant desiring to transfer the ownership interest
and
the Co-Tenants having exercised the option to purchase all or
any portion of such ownership interest shall be obligated to
proceed in good faith and with due diligence to obtain all
required authorizations and approvals for such purchase.
12.7.2 The Co-Tenant desiring to transfer such ownership
interest
shall be obligated to obtain the release of any lien en-
cumbering the ownership interest which is the subject of the
transfer at the earliest practicable date.
12.7.3 The Co-Tenants having exercised the option to purchase
such
ownership interest shall be obligated to perform all of the
terms and conditions required of them to complete the purchase
of said ownership interest.
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<PAGE>
`
12.8 The purchase of the ownership interest by the Co-Tenants
having
elected to
purchase the same shall be fully consummated within thirty (30)
months
following, the date upon which all notices required to be given
under this
Section 12 have been duly served, unless the Co-Tenants are
then
diligently pursuing applications for required authorizations or
approvals
to effect such transfer or are then diligently pursuing or
defending
appeals from orders entered or authorizations issued in
connection
with such applications, in which event the transfer shall be
consummated within twelve (12) months following the date upon which
the
final
order is entered or authorization issued in connection with
such
applications.
12.9 If the Co-Tenants fail to exercise their option to purchase
all
of the
ownership interest to be transferred, the Co-Tenant desiring to
transfer
such interest shall be free to transfer all, but not less than
all, of
such interest to the party that made the offer to purchase
referred
to in Section 12.1 hereof upon the terms and conditions set
forth
in said
bona fide written offer. If such transfer is not consummated by
the
proposed date of transfer referred to in Section 12.3 hereof,
the
Co-Tenant
desiring to transfer said ownership interest must give another
complete
new right of first refusal to the remaining Co-Tenants pursuant
to the
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<PAGE>
provisions
of this Section 12 before such Co-Tenant shall be free to
transfer
said ownership interest to another party.
12.10 The Co-Tenants who purchase the ownership interest pursuant
to
this
Section 12 shall receive title to and shall own the interest as
tenants in
common, subject to the same rights, duties and obligations as
are
applied by the Project Agreements to the interest being transferred
in
the hands
of the transferring Co-Tenant.
12.11 Any Co-Tenant transferring an ownership interest pursuant
to
the
provisions of this Section 12 shall remain liable and obligated
for
the
performance of all of the terms and conditions of the Project
Agreements, unless otherwise agreed to by all of the remaining
Participants.
12.12 Any party who may succeed to an ownership interest pursuant
to
this
Section 12 shall specifically agree in writing with the
remaining
Participants at the time of such transfer that it will not transfer
or
assign all
or any portion of such ownership interest without complying
with the
terms and conditions of this Section 12.
12.13 The provisions of this Section 12 shall not apply to any
interest
held by the Salt River Project for the use and benefit of the
United
States.
13. DESTRUCTION
:
13.1 If a generating unit of the Navajo Generat-
36
<PAGE>
ing
Station should be destroyed to the extent that the cost of repairs
or
reconstruction is less than 60% of the original cost thereof,
the
Participants shall, unless otherwise agreed, repair or reconstruct
such
generating
unit to substantially the same general character or use as the
original.
The Participants shall share the costs of such repair or
reconstruction in proportion to their Generation Entitlement Shares
in the
generating
unit so destroyed.
13.2 If a generating unit of the Navajo Generating Station should
be
destroyed
to the extent that the cost of repairs or reconstruction is 60%
or more of
the original costs thereof, the Participants shall, upon
agreement,
restore or reconstruct, such unit to substantially the same
general
character or use as the original; provided, however, that
should
all of the
Participants not agree to restore or reconstruct such unit, but
some of
the Participants nevertheless desire so to do, then the
Participants who do not agree to restore or reconstruct shall sell
their
interests
in such unit to the remaining Participants at a price equal to
the
salvage value of such interests. The Participants agreeing to
restore
or
reconstruct such unit shall share the costs of restoration or
reconstruction in the proportion that the Generation Entitlement
Share of
each bears
to the total of Generation Entitlement Shares of such
Participants.
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<PAGE>
13.3 If any facilities of the Transmission System, the Railroad
or
the
pumping plant should be destroyed, the Participants shall,
unless
otherwise
agreed, repair or reconstruct such facilities. The Participants
shall
share the costs of such repair or reconstruction in proportion
to
their cost
responsibility for the facilities so destroyed.
14. SEVERANCE OF
IMPROVEMENTS: Except as provided in Section 12 of the
Indenture
of Lease, the Co-Tenants agree that all facilities, structures,
improvements, equipment and property of whatever kind and
nature
constructed, placed or affixed on the rights-of-way, easements,
patented
and leased
lands as part of or as a Capital Improvement to the Navajo
Project,
as against all parties and persons whomsoever (including
without
limitation
any party acquiring any interest in the rights-of-way,
easements,
patented or leased lands or any interest in or lien, claim or
encumbrance against any of such facilities, structures,
improvements,
equipment
and property of whatever kind and nature), shall be deemed to
be
and remain
personal property of the Co-Tenant(s), not affixed to the
realty.
15. CAPITAL
IMPROVEMENTS:
15.1 The Participants recognize that from time to time it may
be
necessary
or desirable to make Capital Improvements or that Capital
Improvements may be required
38
<PAGE>
by laws
and regulations applicable to the Navajo Project.
15.2 If requested by a Participant, any such Capital
Improvement
shall be
described in a supplement to this Co-Tenancy Agreement executed
in
recordable form.
15.3 The rights, titles and interests, including undivided
percentage
ownership interests, of any Participant in and to any Capital
Improvements to the Navajo Generating Station shall be held as
provided in
Section
6.1 hereof.
15.4 Except as specifically provided in Section 6.2.5 hereof,
Capital
Improvements made to the Transmission System shall be owned by
the
Participant(s) in percentage ownership interest(s) in proportions
equal to
their
construction cost responsibility (ies) for such Capital
Improvements; provided, that title to the interest of the United
States in
any such
Capital Improvements shall be held by the Salt River Project
for
the use
and benefit of the United States.
16. INTERESTS
HELD FOR THE USE AND BENEFIT OF THE UNITED STATES :
16.1 Salt River Project shall acquire and hold the interests
acquired
for the use and benefit of the United States so that the United
States
will realize the full use and benefit of its entitlement as
provided
for in the Project Agreements.
16.2 Salt River Project shall not execute any
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<PAGE>
Project
Agreement or any other agreement which purports to apply to the
rights,
titles or interests held for the use and benefit of the United
States to
which the United States is not a contracting party in its
capacity
as a Participant without the prior written consent of the
United
States.
Except as otherwise provided in the Project Agreements, Salt
River
Project
shall not exercise any rights, privileges or options in any
such
agreement
for or on behalf of the United States without the prior written
consent of
the United States. With respect to any Project Agreement to
which the
United States is not a contracting party, except as otherwise
provided
in the Project Agreements, the United States shall have a
right,
co-equal
with the rights of the Participants who are contracting parties
to such
Project Agreement, to participate in any decision or action
taken
under such
Project Agreement which in any manner applies to or affects a
right,
title or interest held by Salt River Project for the use and
benefit of
the United States, to the same extent and to the same effect as
though the
United States were a contracting party to such Project
Agreement.
16.3 Although it is the intention of the Participants that no
Co-Tenant
should incur any additional liability or burden by reason of
the
generating
and transmission Capacity dedicated for the use and benefit of
the United
States, should any such liability or burden
40
<PAGE>
be imposed
upon Salt River Project solely by reason of its holding legal
title to
any portion of the Navajo Project or holding an interest in the
Project
Agreements for the use and benefit of the United States, such
liability
or burden shall be shared by the Co-Tenants and allocated among
them in
the ratio that each Co-Tenant's Generation Entitlement Share
bears
to the
total of the Generation Entitlement Shares of the Co-Tenants.
To
the extent
any such liability or burden is remedied by money payment,
performance or otherwise subsequent to its allocation to the
Co-Tenants,
Salt River
Project shall reimburse or recompense the Co-Tenants in the
same ratio
as such liability or burden was shared among them.
16.4 All moneys paid to Salt River Project pursuant to the
Project
Agreements
which are for the use and benefit of the United States shall be
segregated
from Salt River Project's general funds and, upon written
request of
the Contracting Officer, such funds will be invested by Salt
River
Project in the manner specified in such request. All interest
earned
and
appreciation in value on such investments shall inure to the
benefit
of the
United States and all losses on such investments shall be at
the
risk of
the United States. If the proceeds exceed the amount of the
obligation
for which they are designated or held, then, upon written
request of
the Contracting Officer, Salt River Project shall pay such
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<PAGE>
excess to
the United States or its designee.
17.
REIMBURSEMENT FOR COSTS AND EXPENSES: The United States shall
reimburse
Salt River
Project for all costs and expenses not otherwise specifically
provided
for which are imposed upon, measured by or associated with the
interests
held by Salt River Project for the use and benefit of the
United
States in
accordance with the Project Agreements.
18. DEFAULTS AND
COVENANTS REGARDING OTHER AGREEMENTS:
18.1 Each Participant hereby agrees that it shall pay all monies
and
carry out
all other duties and obligations agreed to be paid and/or
performed
by it pursuant to all of the terms and conditions set forth and
contained
in the Project Agreements, and a default by any Participant in
the
covenants and obligations to be kept and performed pursuant to
the
terms and
conditions set forth and contained in any of the Project
Agreements
shall be an act of default under this Co-Tenancy Agreement.
18.2 In the event of a default by any Participant in any of the
terms and
conditions of the Project Agreements, then, within ten (10)
days
after
written notice has been given by any non-defaulting Participant
to
all other
Participants of the existence and nature of the default, the
non-defaulting Participants shall remedy such default either by
advancing
the
necessary funds
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<PAGE>
and/or
commencing to render the necessary performance, with each
non-defaulting Participant contributing to such remedy in the ratio
of its
Generation
Entitlement Share to the total of the Generation Entitlement
Shares of
all non-defaulting Participants.
18.3 In the event of a default by any Participant in any of the
terms and
conditions of the Project Agreements and the giving of notice
as
provided
in Section 18.2 hereof, the defaulting Participant shall take
all
steps
necessary to cure such default as promptly and completely as
possible
and shall pay promptly upon demand to each non-defaulting
Participant the total amount of money and/or the reasonable
equivalent in
money of
non-monetary performance, if any, paid and/or made by such
non-defaulting Participant in order to cure any default by the
defaulting
Participant, together with interest on such money and/or the costs
of
non-monetary performance at the rate of ten per cent (10%) per
annum, or
the
maximum rate of interest legally chargeable, whichever is the
lesser,
from the
date of the expenditure of such money and/or the date of
completion
of such non-monetary performance by each such non-defaulting
Participant to the date of such reimbursement by the defaulting
Participant, or such greater amount as may be otherwise provided in
the
Project
Agreements.
18.4 In the event that any Participant shall
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<PAGE>
dispute an
asserted default by it, then such Participant shall pay the
disputed
payment or perform the disputed obligation, but may do so under
protest.
The protest shall be in writing, shall accompany the disputed
payment or
precede the performance of the disputed obligation, and shall
specify
the reasons upon which the protest is based. Copies of such
protest
shall be mailed by such Participant to all other Participants.
Payments
not made under protest shall be deemed to be correct, except to
the extent
that periodic or annual audits may reveal over or under
payments
by Participants, necessitating adjustments. In the event it is
determined
by arbitration, pursuant to the provisions of this Co-Tenancy
Agreement
or otherwise, that a protesting Participant is entitled to a
refund of
all or any portion of a disputed payment or payments or is
entitled
to the reasonable equivalent in money of non-monetary
performance
of a
disputed obligation theretofore made, then, upon such
determination,
the
non-protesting Participants shall pay such amount to the
protesting
Participant, together with interest thereon at the rate of six per
cent
(6%) per
annum from the date of payment or from the date of completion
of
performance of a disputed obligation to the date of
reimbursement.
Reimbursement of the amount so paid shall be made by the
non-protesting
Participants in the ratio of their respective Generation
Entitlement
Shares
to
44
<PAGE>
the total
of the Generation Entitlement Shares of all non-protesting
Participants.
18.5 Unless otherwise determined by a board of arbitrators, in
the
event a
default by any Co-Tenant in the payment or performance of any
obligation
under the Project Agreements shall continue for a period of six
(6) months
or more without having been cured by the defaulting Co-Tenant
or without
such Co-Tenant having commenced or continued action in good
faith to
cure such default, or in the event the question of whether an
act
of default
exists is the subject of arbitration and such default continues
for a
period of six (6) months following a final determination by a
board
of
arbitrators or otherwise that an act of default exists and the
defaulting
Co-Tenant has failed to cure such default or to commence such
action
during said six (6) month period, then, at any time thereafter
and
while said
default is continuing, all of the non-defaulting Co-Tenants
may, by
written notice to all Participants, suspend the right of the
defaulting
Co-Tenant to receive all or any part of its proportionate share
of the Net
Effective Generating Capability, in which event:
18.5.1 During the period that such suspension is in effect, the
non-defaulting Participants shall bear all of the operation
and maintenance costs, insurance costs and other expenses
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<PAGE>
otherwise payable by the defaulting Co-Tenant under the
Project Agreements in the ratio of their respective Generation
Entitlement Shares to the total of the Generation Entitlement
Shares of all non-defaulting Participants.
18.5.2 A defaulting Co-Tenant shall be liable to the
non-defaulting
Participants (in the proportion that the Generation
Entitlement Share of each non-defaulting Participant bears to
the total of the Generation Entitlement Shares of all
non-defaulting Participants) for all costs incurred by such
non-defaulting Participants pursuant to Section 18.5.1 hereof.
The proceeds paid by any defaulting Co-Tenant to remedy any
such default shall be distributed to the non-defaulting
Participants in the ratio of their respective Generation
Entitlement Shares to the total of the Generation Entitlement
Shares of all non-defaulting Participants.
18.6 In addition to the remedies provided for in Section 18.5
of
this
Co-Tenancy Agreement, the non-defaulting Participants may, in
submitting
a dispute to arbitration in accordance with the provisions of
Section 19 hereof,
request that the board of arbitrators determine what
additional
remedies may be reasonably necessary or
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<PAGE>
required
under the circumstances which give rise to the dispute. The
board
of
arbitrators may determine what remedies are necessary or required
in
the
premises, including but not limited to the conditions under which
the
Navajo
Generating Station may be operated economically and efficiently
during
periods when the defaulting Co-Tenant's right to receive its
proportionate share of the Net Effective Generating Capability
is
suspended.
18.7 The rights and remedies of the Participants set forth in
this
Co-Tenancy
Agreement shall be in addition to the rights and remedies of
the
Participants set forth in any other of the Project Agreements.
18.8 Notwithstanding the provisions of Sections 18.3 and 18.4
hereof,
the United States shall not pay or be held liable for any
interest
charges,
except as otherwise provided in Section 18.9 hereof.
18.9 In the event a default by the United States in any of its
obligations to advance funds in accordance with the provisions of
the
Project
Agreements is remedied by the non-defaulting Participants as
provided
in Section 18.2 hereof, the United States will reimburse each
contributing Participant for its costs of money thereby incurred if
there
is in
effect at the time of such reimbursement an Act of Congress
expressly
authorizing such reimbursement to be made by the United States.
For the
purposes of this Section 18.9, "costs of money" shall
47
<PAGE>
mean the
contributing Participant's average cost of borrowed capital
during the
period in which its funds are advanced to remedy a default by
the United
States.
19.
ARBITRATION:
19.1 If a dispute between any of the Participants should arise
under
the
Project Agreements which does not involve the legal rights of or
which
will not
create a legal obligation upon the United States under the
Project
Agreements, or will not affect the interests or rights held for
the use
and benefit of the United States under the Project Agreements,
any
Participant(s) may call for submission of the dispute to
arbitration,
which call
shall be binding upon all of the other Participants.
19.2 The Participant(s) calling for arbitration shall give
written
notice to
all other Participants, setting forth in such notice in
adequate
detail the
nature of the dispute, the amount or amounts, if any, involved
in such
dispute, and the remedy sought by such arbitration proceedings,
and,
within twenty (20) days from receipt of such notice, any other
Participant(s) involved may, by written notice to the first
Participant(s)
and all
other Participants, prepare its or their own statement of the
matter at
issue and set forth in adequate detail additional related
matters or
issues to be arbitrated. Thereafter, the Participant(s) first
submitting
its or their statement of the matter at issue shall have ten
(10)
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<PAGE>
days in
which to submit a rebuttal statement, copies of which shall be
given to
all other Participants.
19.3 Within ten (10) days following the submission of the
rebuttal
statement,
the Participants, acting through their representatives on the
Coordinating Committee, shall meet for the purpose of selecting
arbitrators. Each Participant or group of Participants representing
one
side of
the dispute shall designate an arbitrator. The arbitrators so
selected
shall meet within twenty (20) days following their selection
and
shall
select additional arbitrators, the number of which shall be one
(1)
less than
the number of arbitrators selected by the Participants. If the
arbitrators selected by the Participants, as herein provided, shall
fail
to select
such additional arbitrator(s) within said twenty (20) day
period,
then the arbitrators shall request from the American
Arbitration
Association (or a similar organization if the American
Arbitration
Association should not at that time exist) a list of arbitrators
who are
qualified
and eligible to serve as hereinafter provided. The arbitrators
selected
by the Participants shall take turns striking names from the
list
of
arbitrators furnished by the American Arbitration Association, and
the
last
name(s) remaining on said list shall be the additional
arbitrator(s).
All
arbitrators shall be persons skilled and experienced in the
field
which
gives
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<PAGE>
rise to
the dispute, and no person shall be eligible for appointment as
an
arbitrator
who is an officer or employee of any of the parties to the
dispute or
is otherwise interested in the matter to be arbitrated.
19.4 Except as otherwise provided in this Section 19, the
arbitration shall be governed by the rules and practice of the
American
Arbitration Association (or the rules and practice of a similar
organization if the American Arbitration Association should not at
that
time
exist) from time to time in force, except that if such rules
and
practice,
as modified herein, shall conflict with the Arizona Revised
Statutes or any other
provisions of Arizona law or Federal law, as the
case may
be, then in force which are specifically applicable to
arbitration proceedings, such law shall govern.
19.5 Included in the issues which may be submitted to
arbitration
pursuant
to this Section 19 is the issue of whether the right to
arbitrate
a
particular dispute is permitted under the Project Agreements.
19.6 The arbitrators shall hear evidence submitted by the
respective
Participants and
may call for additional information, which additional
information shall be furnished by the Participant(s) having
such
information. The decision of a majority of the arbitrators shall
be
binding
upon all the Participants.
19.7 The award of the arbitrators shall contain
50
<PAGE>
findings
relative to the materiality of the default, the period of time
within
which the defaulting party must remedy the default or commence
remedial
action, and the remedies which may be exercised by the
non-defaulting Participants in the event the default is not
remedied
within
such period of time.
19.8 This agreement to arbitrate shall be specifically
enforceable,
and the
award and findings of the arbitrators shall be final and
binding
upon the
Participants to the extent permitted by applicable law. Any
award
may be
filed with the clerk of any court having jurisdiction over the
Participants, or
any of them, against whom the award is rendered, and,
upon such
filing, such award, to the extent permitted by the laws of the
jurisdiction in which said award is filed, shall be
specifically
enforceable or shall form the basis of a declaratory judgment or
other
similar
relief.
19.9 The fees and expenses of the arbitrators shall be shared by
the
Participants equally, unless the decision of the arbitrators shall
specify
some other
apportionment of such fees and expenses. All other expenses and
costs of
the arbitration shall be borne by the Participant incurring the
same.
19.10 In the event that any Participant shall attempt to carry
out
the
provisions herein set forth in regard to arbitration, and such
Participant shall not be
51
<PAGE>
able to
obtain a valid and enforceable arbitration decree, such
Participant shall be entitled to seek legal remedies in the courts
having
jurisdiction in the premises, and the provisions of the Project
Agreements
referring
to decision of a board of arbitration shall be then deemed
applicable
to final decisions of such courts.
19.11 If a dispute arises between any of the Participants which
does
or may
involve the legal rights of or which will or may create a legal
obligation
upon the United States under the Project Agreements, or which
affects or
may affect the interests or rights held for the use and benefit
of the
United States under the Project Agreements, then any
Participant
may call
for submission to arbitration of any part of the dispute, which
the United
States may lawfully submit to arbitration. If the Contracting
Officer
agrees to such arbitration, or if the Contracting Officer
refuses
or fails
to arbitrate and a court of competent jurisdiction thereafter
finally
decides that the United States may lawfully submit the matter
in
dispute to
arbitration, it shall be conducted in the manner set forth in
this
Section 19 or in such other manner as may be provided for by
Federal
law.
20. ACTIONS
PENDING RESOLUTION OF DISPUTES: If a dispute should arise which
is
not
resolved by the Coordinating Committee, then, pending the
resolution
of the
dispute by arbitration or judicial proceedings, the Project
Managers
52
<PAGE>
or
Operating Agents shall proceed with Station Work and Transmission
Work
in a
manner consistent with the Project Agreements and generally
accepted
practice
in the electric utility industry, and the Participants shall
advance
the funds required to perform such Station Work and
Transmission
Work in
accordance with the applicable provisions of the Project
Agreements. The resolution of any dispute involving the failure of
one of
the
committees to reach agreement upon matters involving future
expenditures shall have prospective application from the date of
final
determination, and amounts advanced by the Participants pursuant to
this
Section 20
during the pendency of such dispute shall not be subject to
refund
except upon a final determination that the expenditures were
not
made in a
manner consistent with the Project Agreements and generally
accepted
practice in the electric utility industry.
21. TERM AND
RIGHTS OF CO-TENANTS UPON TERMINATION:
21.1 This Co-Tenancy Agreement shall continue in force and
effect
for the
term of the Indenture of Lease and any extension thereof,
unless
otherwise
agreed.
21.2 Upon termination of this Co-Tenancy Agreement the
facilities
comprising
the Navajo Project shall be disposed of in a manner to be
mutually
agreed upon by the Participants.
22. COVENANTS
RUNNING WITH THE LAND:
53
<PAGE>
22.1 All of the respective covenants and obligations of each of
the
Co-Tenants
set forth and contained in the Project Agreements shall bind
and shall
be and become the respective covenants and obligations of:
22.1.1 Each such Co-Tenant;
22.1.2 All mortgagees, trustees and secured parties under all
present and future mortgages, indentures and deeds of
trust, and security agreements which are or may become
a lien upon any of the properties of such Co-Tenant;
22.1.3 All receivers, assignees for the benefit of creditors,
bankruptcy trustees and referees of such Co-Tenant;
22.1.4 All other persons, firms, partnerships or corporations
claiming through or under any of the foregoing; and
22.1.5 Any successors or assigns of any of those mentioned in
Sections 22.1.1 through 22.1.4 hereof
and shall
be covenants and obligations running with such Co-Tenant's
respective
rights, titles and interests in the Navajo Project and in, to
and under
the Project Agreements, and shall be for the benefit of the
respective
rights, titles and interests of the Participants and their
54
<PAGE>
respective
successors and assigns, in and to the Navajo Project. It is the
specific
intention of this provision that all such covenants and
obligations shall be binding upon any party which acquires any of
the
rights,
titles and interests of any such Co-Tenant in the Navajo
Project
or in, to
and under the Project Agreements and that all of the
above-described persons and groups shall be obligated to use
such
Co-Tenant's rights, titles and interests in the Navajo Project
and/or in,
to or
under the Project Agreements for the purpose of discharging its
covenants
and obligations under the Project Agreements; except that in
the
case of a
partial assignment the assignee shall only be required to share
in the
cost of fulfilling the covenants and obligations of the
assigning
Co-Tenant
in, to and under the Project Agreements to an extent
proportionate to such assignment.
23. RELATIONSHIP
OF PARTICIPANTS:
23.1 The covenants, obligations and liabilities of the
Participants
are
intended to be several and not joint or collective and, except
as
expressly
provided in the Project Agreements, nothing herein contained
shall ever
be construed to create an association, joint venture, trust or
partnership, or to impose a trust or partnership covenant,
obligation or
liability
on or with regard to any one or more of the Participants. Each
Participant shall be individually responsible for its own
covenants,
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<PAGE>
obligations and liabilities as herein provided. No Participant or
group of
Participants shall be under the control of or shall be deemed to
control
any other
Participant or the Participants as a group. No Participant
shall
be the
agent of or have a right or power to bind any other Participant
without
its express written consent, except as provided in the Project
Agreements.
23.2 The Co-Tenants hereby elect to be excluded from the
application
of
Subchapter "K" of Chapter 1 of Subtitle "A" of the Internal
Revenue
Code of
1954, or such portion or portions thereof as may be permitted
or
authorized
by the Secretary of the Treasury or his delegate, insofar as
such
Subchapter, or any portion or portions thereof, may be applicable
to
the
Co-Tenants under the Project Agreements.
24. FEES: No
Project Manager or Operating Agent shall receive any fee or
profit
under the Project Agreements.
25.
UNCONTROLLABLE FORCES: No Participant shall be considered to be in
default
in the
performance of any of its obligations under the Project
Agreements
(other
than obligations of said Participant to pay costs and expenses)
when a
failure of performance shall be due to an uncontrollable force.
The
term
"uncontrollable force" shall be any cause beyond the control of
the
Participant affected, including but not restricted to failure of or
threat
of failure
of facilities, flood, earthquake, storm, fire,
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<PAGE>
lightning,
epidemic, war, riot, civil disturbance or disobedience, labor
dispute,
labor or material shortage, sabotage, restraint by court order
or
public
authority, and action or non-action by or failure to obtain the
necessary
authorizations or approvals from any governmental agency or
authority,
which by exercise of due diligence such Participant could not
reasonably
have been expected to avoid and which by exercise of due
diligence
it shall be unable to overcome. Nothing contained herein shall
be
construed so as to require a Participant to settle any strike or
labor
dispute in
which it may be involved. Any Participant rendered unable to
fulfill
any of its obligations under the Project Agreements by reason
of
an
uncontrollable force shall give prompt written notice of such fact
to
the other Participants
and shall exercise due diligence to remove such
inability
with all reasonable dispatch. The term "Participant" as used in
this
Section 25 shall include any Project Manager or Operating Agent,
in
its
capacity as such.
26. GOVERNING
LAW: This Co-Tenancy Agreement shall be governed by the laws of
the State
of Arizona, except insofar as the rights or obligations of the
United
States are concerned.
27. BINDING
OBLIGATIONS: All of the obligations set forth in the Project
Agreements
shall bind the Participants and their successors and assigns,
and such
obligations shall
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<PAGE>
run with
the Participants' rights, titles and interests in the Navajo
Project
and with all of the interests of each Participant in the
Project
Agreements; provided that any mortgagee, trustee or secured party
shall
not be
obligated for obligations arising prior to taking of possession
or
the
initiation of remedial proceedings.
28.
NONDEDICATION OF FACILITIES:
28.1 The Project Agreements shall not be construed to grant to
any
Co-Tenant
any rights of ownership in, possession of or control over the
electric
system of the United States.
28.2 The Project Agreements shall not be construed to grant to
the
United
States any rights of ownership in, possession of, or control
over
the
electric system of any Co-Tenant.
28.3 The Co-Tenants do not intend to dedicate, and nothing in
the
Project
Agreements shall be construed as constituting a dedication by
any
Co-Tenant
of its properties or facilities, or any part thereof, to the
United
States or to any other Co-Tenant or to the customers of the
United
States or
to the customers of any other Co-Tenant.
29.
ENVIRONMENTAL PROTECTION:
29.1 The Participants will design, construct, operate and
maintain
the Navajo
Project in a manner consistent with the Participants' objective
of
attaining the greatest
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feasible
degree of environmental protection. In addition to fulfilling
all
obligations which have been assumed under provisions relating
to
protection of
the environment which are contained in existing Project
Agreements, the Participants affirm their continuing obligation to
comply
fully with
applicable Federal, state and local laws, orders, regulations,
rules and
standards relating to environmental protection. The
Participants
shall to
the extent practicable anticipate and make provision for the
future
installation of any systems required to comply with changes in
said
laws,
orders, regulations, rules and standards.
29.2 The Participants shall install and diligently operate in
the
Navajo
Generating Station the most effective commercially proven air
quality
control equipment available at the time of design of each unit
of
the Navajo
Generating Station. Stack design, the designs of other plant
systems
related to air quality control, and plans for and design of
systems
for control and disposal of waste materials and residue from
burned
fuel shall be subject to such approval by the Secretary as
required
by Project
Agreements and to review and comment by the Secretary in all
other
instances in advance of construction, installation, making a
Capital
Improvement thereto or the retirement of Units of Property thereof.
The
Secretary
shall act or comment within 60 days after submission of a plan
or design.
From time to time, at the call of either the Secretary or the
Coordinating
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Committee, but
at least every five (5) years beginning in 1980,
representatives of the Participants and the designated
representative of
the
Secretary shall meet to review technological advances in air
quality
control
equipment and shall formulate a recommendation to the
Coordinating
Committee
as to the need for and feasibility of installing additional
equipment
or modifying existing equipment to improve air quality control.
In the
event agreement cannot be reached by the Coordinating Committee
on
any
question regarding modification or supplementation of existing
equipment,
the matter shall be subject to arbitration as provided in
Section 19
hereof.
29.2.1 In the operation of the Navajo Generating Station the
Participants will make such tests and measurements and keep
such
records as will enable them to make reports to the Secretary
relating to the operation and efficiency of the air quality
control
equipment at such intervals as may be mutually agreed upon, but
not
less than once annually. The tests and measurements will be made
in
conformance with the latest American Society of Mechanical
Engineers
(ASME) test procedures for determining dust concentration in a
gas
stream and in conformance with other accepted procedures agreed
upon
by the Secretary and the Participants.
29.2.2 The Participants during normal working
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<PAGE>
hours will permit representatives of the Secretary to have access
to,
and to inspect and copy, all records relating to air quality and
will
permit such representatives to inspect the air quality control
systems.
29.3 The Participants shall install and diligently operate as
part
of the
Navajo Generating Station such waste water, waste material,
sewage
control
and disposal systems necessary to comply with and fulfill the
objectives
and obligations set forth in Section 29.1 hereof. Designs and
plans for
the water quality control systems, systems for the disposal of
waste
water, waste materials, and sewage, and any other plant systems
related to
control of water quality shall be subject to such approval by
the
Secretary as required by the Project Agreements and to review
and
comment by
the Secretary in all other instances in advance of
construction, installation, making a Capital Improvement or the
retirement
of Units
of Property thereof. The Secretary shall act or comment within
60
days after
submission of a plan or design.
29.3.1 The Participants during normal working hours will permit
representatives of the Secretary to have access to, and to inspect
and
copy, all records relating to water quality control and will
permit
such representatives to inspect the water quality control
systems.
29.4 The
Participants shall take appropriate
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<PAGE>
measures
to harmonize the Navajo Project with the environment. The
Participants shall exercise care to prevent any unnecessary
destruction,
scarring, or
defacing of the natural surroundings in the vicinity of the
Navajo
Project work.
30. ASSIGNMENT
OF INTERESTS: Any Participant who acquires in its name an
interest
in any real or personal property or contract which is part of
the
Navajo
Project shall transfer and assign an undivided interest therein
to
the other
Participants so that the ownership and rights of the
Participants in such property or contract shall be as provided for
in
this
Co-Tenancy Agreement.
31. USE OF
FACILITIES OF LOS ANGELES:
31.1 The United States may use, for such period or periods of
time
as it
desires, the 500 kv transmission line of Los Angeles between
McCullough
Substation and Eldorado Substation and associated terminal
facilities
to the extent of the right of Los Angeles to use such terminal
facilities. Unless otherwise agreed, the United States' right to
use the
facilities
of Los Angeles shall not exceed 250 megawatts. Payment shall be
made
annually by the United States to Los Angeles as provided in the
Project
Agreements.
31.2 The land presently held by Los Angeles under Bureau of
Land
Management
Grant No. N-2763, dated January 23, 1969, which land comprises
the site
of McCullough
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<PAGE>
Substation, may be utilized by Nevada, by the United States, and by
the
Salt River
Project for the use and benefit of the United States, pursuant
to the
Project Agreements without charge other than as provided in the
Project
Agreements. If and when Los Angeles acquires fee title to such
land,
Nevada, the United States and the Salt River Project for the use
and
benefit of
the United States shall each continue to have the right to use
such lands
pursuant to the Project Agreements, and for any period of such
use Nevada
and the United States shall pay Los Angeles as provided in the
Project
Agreements.
32. NOTICES
32.1
Except as set forth in Section 32.2 hereof, any notice, demand
or request
provided for in the Project Agreements shall be in writing and
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:
32.1.1 Arizona Public
Service Company
c/o Secretary
P.O. Box 21666
Phoenix, Arizona 85036
32.1.2 Department of
Water and Power of the
City of Los Angeles
c/o General Manager
P.O. Box 111
Los Angeles, California 90051
32.1.3 Nevada Power
Company
c/o Secretary
P.O. Box 230
Las Vegas, Nevada 89109
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<PAGE>
32.1.4 Salt River
Project Agricultural
Improvement and Power District
c/o Secretary
P.O.Box 1980
Phoenix, Arizona 85001
32.1.5 Tucson Gas
& Electric Company
c/o Secretary
P.O. Box 711
Tucson, Arizona 85702
32.1.6 United
States
c/o Regional
Director
Bureau of Reclamation
Boulder City, Nevada 89005
32.2 Informal communications of a routine nature, including
requests
for funds
and related matters, shall be given in such manner as the
committees
shall arrange.
32.3 Any Participant may, at any time, by written notice to all
other
Participants, designate different or additional persons or
different
addresses
for the giving of notices hereunder.
33.
MISCELLANEOUS PROVISIONS CONCERNING THE PROJECT AGREEMENTS:
33.1 Each Participant agrees to negotiate in good faith and to
proceed
with diligence upon request by any other Participants, to
negotiate,
make, execute and deliver any and all documents between such
Participant and any other Participant or other parties reasonably
required
to
implement the Project Agreements.
33.2 The captions and headings appearing in the Project
Agreements
are
inserted merely to facilitate reference and shall have no bearing
upon
the
interpretation thereof.
-64-
<PAGE>
33.3 Each term, covenant and condition of the Project Agreements
is
deemed to
be an independent term, covenant and condition, and the
obligation
of any Participant to perform any or all of the terms,
covenants
and conditions to be kept and performed by it is not dependent
on the
performance by the other Participants of any or all of the
terms,
covenants
and conditions to be kept and performed by them.
33.4 In the event that any of the terms, covenants or conditions
of
any of the
Project Agreements, or the application of any such term,
covenant
or condition, as to any person or circumstance shall be held
invalid by
any court of competent jurisdiction, such Project Agreement and
the
application of the remainder of its terms, covenants or conditions
to
such
persons or circumstances shall not be affected thereby.
33.5 The Project Agreements shall be subject to filing with, and
to
such
changes or modifications as may from time to time be directed
by
competent
regulatory authority, if any, in the exercise of its
jurisdiction.
33.6 Any waiver at any time by any Participant of its rights
with
respect to
a default or any other matter arising in connection with any
Project
Agreement shall not be deemed a waiver with respect to any
subsequent
default or matter.
33.7 It is acknowledged by the Participants that
-65-
<PAGE>
certain
provisions of this Co-Tenancy Agreement conflict with certain
provisions
of the Participation Agreement or cover certain matters also
covered in
the Participation Agreement. The provisions of this Co-Tenancy
Agreement
shall, to the extent of such conflicts or coverage, be deemed
to
supersede
such provisions of the Participation Agreement.
33.8 Certain provisions of this Co-Tenancy Agreement pertaining
to
the
Project Agreements may be reiterated in one or more subsequent
Project
Agreements
solely as a convenient reference for those who will be using
such
Project Agreements. Any variations between such provisions as
contained
in this Co-Tenancy Agreement and as contained in such
subsequent
Project
Agreements shall be resolved in favor of the provisions of this
Co-Tenancy
Agreement.
33.9 Costs to be borne by the United States under the Project
Agreements
for Station Work and Transmission Work shall not include any
part of
any other Participant's costs of interest and interest during
construction, financing charges or franchise fees, nor any part of
any
other
Participant's attorneys' fees other than fees incurred as a
result
of
employing the services of an attorney in private practice in
connection
with the
performance of Station Work or Transmission Work; provided,
that
nothing
contained in this Section 33.9 shall be construed
-66-
<PAGE>
to relieve
the United States from any obligation which may arise under the
provisions
of Section 18.9 hereof.
33.10 The Co-Tenants acknowledge that the United States has
entered
into the
Project Agreements for the purpose of providing a Power supply
in
accordance
with and for the purposes of the Colorado River Basin Project
Act and
that the United States has entered into Contracts for the
Interim
Sale of
United States' Entitlement in reliance upon the performance of
the
obligations and duties of the Participants specified in the
Project
Agreements.
33.11 Except as otherwise specifically provided in the Project
Agreements, the Participants do not intend to create rights in or
to grant
remedies
to any third party as a beneficiary of the Project Agreements
or
of any
duty, covenant, obligation or undertaking established therein.
34. NAVAJO
PROJECT GENERAL CONTRACT PROVISIONS; the Navajo Project General
Contract
Provisions attached hereto as Exhibit C are hereby made a part
of
this Co-Tenancy
Agreement.
35. COMPLIANCE
WITH COMPACTS:
35.1 The Department of the Interior is the Federal department
responsible for administering the terms of the Water Service
Contract
dated
January 17, 1969, Contract No. 14-06-400-5033. The Department of
the
Interior
also has been directed by P.L. 90-537 to comply with the terms
-67-
<PAGE>
of the
Colorado River Compact dated November 24, 1922 and the Upper
Colorado
River Basin Compact dated October 11, 1948. In compliance with
that
responsibility and those directives, the Secretary of the
Interior
hereby
agrees to take any and all actions within the power and
authority
of the
Department of the Interior which are necessary and required to
prevent
total depletions chargeable to the State of Arizona under the
Upper
Colorado River Basin Compact resulting from consumptive use of
water
from the
Upper Colorado River System in the State of Arizona as measured
at Lee
Ferry in the manner provided for in Article VI of the Upper
Colorado
River Basin Compact from exceeding the 50,000 acre feet
apportioned to the State of Arizona by the Upper Colorado River
Basin
Compact.
35.2 The Secretary of the Interior further agrees to make the
reports
required by Section 601 (b)(l) of P.L. 90-537 as they pertain
to
Arizona's
Upper Basin uses annually rather than every five years. Within
fifteen
days following the completion of said reports, the Secretary of
the
Interior shall furnish copies of such reports to the Co-Tenants,
the
Navajo
Tribe, each of the Upper Basin States, and the Upper Colorado
River
Commission
.
35.3 It is the intention of the parties to this contract that
each
of the
Upper Basin States shall be a third party beneficiary of the
terms
and
conditions of
-68-
<PAGE>
third
party beneficiary of the terms and conditions of this Section
35.
IN WITNESS WHEREOF, the Participants have caused this
Co-Tenancy
Agreement
to be executed as of this 23rd, day of March, 1976.
UNITED STATES OF AMERICA
By /s/ Authorized Signatory
----------------------------------------------
Assistant Secretary of the Interior
ARIZONA PUBLIC SERVICE COMPANY
By /s/ M.C. Titus
----------------------------------------------
Executive Vice President
ATTEST:
/s/ Gerald Griffin
-------------------------------
Assistant Secretary
DEPARTMENT OF WATER AND POWER
OF THE CITY OF LOS ANGELES
by
BOARD OF WATER AND POWER COMMISSIONERS
OF THE CITY OF LOS ANGELES
By: /s/ Ralph Guy Wesson By
/s/ Louis H. Winnard
------------------------
----------------------------------------------
Ralph Guy Wesson
General Manager and Chief Engineer
Assistant
City Attorney
and
By /s/ Mary J. Born
----------------------------------------------
Secretary
-69-
<PAGE>
NEVADA POWER COMPANY
By /s/ Harry Allen
----------------------------------------------
President
ATTEST:
/s/ W.E. Littler
-------------------------------
ASSISTANT
Secretary
SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND
POWER DISTRICT
By /s/ Floyd N. Smith
----------------------------------------------
President
ATTEST:
/s/ Francis E. Smith
-------------------------------
Secretary
TUCSON GAS & ELECTRIC COMPANY
By /s/ Hamilton R. Catlin
----------------------------------------------
ATTEST:
/s/ R.N. Foster
-------------------------------
Secretary
District of
)
) ss
Columbia
)
On this
the 25th day of March, 1972, before me, the undersigned
officer,
the Assistant Secretary of the Interior of the United States of
America, known
to me to be
-70-
<PAGE>
the person described in the foregoing instrument, personally
appeared and
acknowledged that he executed the same in the capacity therein
stated and for
the purposes therein contained.
In witness
whereof I hereunto set my hand and official seal.
/s/ Theodore M. Kilby
-------------------------------------------------
Notary Public
My commission expires:
Sept, 30, 1973
State of Arizona )
) ss
County of Maricopa )
On this
the 2nd day of March, 1972, before me, the undersigned
officer, personally appeared M. C. TITUS, who acknowledged himself
to be the
Executive Vice President of ARIZONA PUBLIC SERVICE COMPANY, an
Arizona
corporation, and that he, as such Executive Vice President, being
authorized so
to do, executed the foregoing instrument for the purposes therein
contained, by
signing the name of the corporation by himself as Executive Vice
President.
In witness
whereof I hereunto set my hand and official seal.
/s/ Melba J. Andrews
-------------------------------------------------
Notary Public
My commission expires:
March 30, 1973
-71-
<PAGE>
State of California )
)
ss
County of Los Angeles )
On this
the 23rd day of March, 1976, before me, the undersigned
officer,
personally appeared LOUIS H. WINNARD and MARY J. BQRN, who were on
March 23,
1976, the General Manager and Chief Engineer and Board Secretary,
respectively,
of the DEPARTMENT OF WATER AND POWER OF THE CITY OF LOS ANGELES, a
department
organized and existing under the Charter of the City of Los
Angeles, a municipal
corporation of the State of California, known to me to be the
persons described
in the foregoing instrument, and acknowledged that they executed
the same in the
capacity therein stated and for the purposes therein contained.
In witness
whereof I hereunto set my hand and official seal.
/s/ Linda L. Newman
-------------------------------------------------
Notary Public
My commission expires:
OFFICIAL SEAL
May 27, 1997
LINDA L. NEWMAN
[SEAL] NOTARY PUBLIC
CALIFORNIA
PRINCIPAL OFFICE IN
LOS ANGELES COUNTY
My Commission Expires May 27, 1977
State of Nevada )
) ss
County of Clark )
On this
the 7th day of March, 1972, before me, the undersigned officer,
personally appeared
-72-
<PAGE>
Harry Allen, known to me to be the President of NEVADA POWER
COMPANY, a
Nevada corporation, and that he, as such, being authorized so to
do, executed
the foregoing instrument for the purposes therein contained, by
signing
the name of the corporation by himself as _____________.
In witness
whereof, I hereunto set my hand and official seal.
/s/ Authorized Signatory
------------------------------------------------
Notary Public
My commission expires:
______________________
State of Arizona
)
) ss
County of Maricopa )
On this
the 6th day of March, 1972, before me, the undersigned officer,
personally appeared FLOYD N. SMITH and FRANCIS E. SMITH, of SALT
RIVER PROJECT
AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, an Arizona
agricultural improvement
district, known to me to be the persons described in the foregoing
instrument,
and acknowledged that they executed the same in the capacity
therein stated and
for the
-73-
<PAGE>
purposes therein contained.
In witness
whereof I hereunto set my hand and official seal.
/s/ Authorized Signatory
-------------------------------------------------
Notary Public
My commission expires:
My Commission Expires July 11, 1972
State of Arizona
)
) ss
County of Pima )
On this
the 3rd day of March, 1972, before me, the undersigned officer,
personally appeared Hamilton R. Catlin, who acknowledged himself to
be
the___________________________ of TUCSON GAS ELECTRIC COMPANY,
an
Arizona corporation, and that he, as such _____________________,
being
authorized so to do, executed the foregoing instrument for the
purposes therein
contained, by signing the name of the corporation by himself as
such
____________________.
In witness
whereof, I hereunto set my hand and official seal.
/s/ Diane Howland
-------------------------------------------------
Notary Public
My commission expires:
December 8, 1972
----------------------
-74-
<PAGE>
EXHIBIT A
NAVAJO GENERATING STATION
The Navajo
Generating Station shall consist of the following:
I. Three
steam electric generating units (Unit 1, Unit 2 and Unit 3),
each
of which shall have a nameplate rating of 750,000 kw and shall be
a
tandem-compound, four flow, single reheat, turbine-generator unit
with initial
steam conditions of 3500 psig and 1000 degrees F and reheat to 1000
degrees F,
including three pulverized coal-fired, supercritical steam
generator units.
II. All
auxiliary equipment associated with said units.
III. An
administration building, machine shop and warehouse to be
located
adjacent to the powerplant.
IV. A
pumping station and all associated equipment to be located on
the
Colorado River.
V. 500 kv
step-up transformers and all equipment associated therewith up
to the point where the leads from the said transformers terminate
at the
generator isolating 500 kv disconnect switch structures in the
Navajo 500 kv
Switchyard.
VI.
Standby auxiliary Power transformation equipment and related
facilities.
VII. Plant
control and communication facilities and associated buildings
or equipment.
<PAGE>
VIII.
Railroad approximately 80 miles in length extending from within
the
Rail Loading Site into the Navajo Plant Site, rolling stock,
related facilities
and equipment.
IX. All
improvements owned by the Co-Tenants within the Ash Disposal
Area,
Pumping Plant Site and Rail Loading Site.
X. All
land and land rights acquired under the Indenture of Lease, the
Section 323 Grants and the Contract and Grant of Easement from the
United States
for Water Intake and Discharge Facilities.
A-2
<PAGE>
Exhibit B
TRANSMISSION SYSTEM*
I. The
SOUTHERN TRANSMISSION SYSTEM shall consist of the following
Components
of the
Transmission System:
A. NAVAJO
500 KV SWITCHYARD
The Navajo 500 kv Switchyard, a basic breaker-and-a-half
scheme, comprising the termination facilities for the
transmission lines and generator step-up transformer 500 kv
leads including, but not limited to, the 500 kv busses, power
circuit breakers, disconnect switches, control building and
structures.
B.
McCULLOUGH LINE COMPENSATION
The Project Series Capacitors, Incremental Series Capacitors
and shunt reactors on the Navajo 500 kv Switchyard end of the
Navajo-McCullough 500 kv line including, but not limited to,
the capacitors, control equipment, reactors, lightning
arrestors, hazard fencing, disconnects, structures and bus
work from the switchyard side of the first 500 kv line
dead-end tower located
----------
*
For details of ownership, see Exhibit B-B which is made a part
hereof.
B-1
<PAGE>
outside the switchyard to the attachment on the main
switchyard structure.
C.
NAVAJO-MOENKOPI 500 KV LINE
1. The
Navajo-Moenkopi 500 kv line, from and including the first
500 kv line dead-end tower outside the Navajo 500 kv
Switchyard to a similar tower location outside the Moenkopi
Switchyard and the Navajo-Moenkopi 500 kv line right-of-way.
2. The
Project Series Capacitors on the Navajo 500 kv Switchyard
end of the Navajo-Moenkopi 500 kv line including, but not
limited to, the capacitors, control equipment, lightning
arrestors, hazard fencing, disconnects, structures and bus
work from the switchyard side of the first 500 kv line
dead-end tower located outside the switchyard to the
attachment on the main switchyard structure.
D.
NAVAJO-WESTWING 500 KV LINE
1. The
Navajo-Westwing 500 kv line, from and including the first
500 kv line dead-end tower outside the Navajo 500 kv
Switchyard to a similar tower location outside the Westwing
Substation and the Navajo-Westwing 500 kv line right-of-way.
2.
The
Project Series Capacitors and shunt
B-2
<PAGE>
reactors on the Navajo 500 kv Switchyard end of the
Navajo-Westwing 500 kv line including, but not limited to, the
capacitors, control equipment, reactors, lightning arrestors,
hazard fencing, disconnects, structures and bus work from the
switchyard side of the first 500 kv line dead-end tower
located outside the switchyard to the attachment on the main
switchyard structure.
3. The
Project Series Capacitors and shunt reactors on the
Westwing 500 kv Substation end of the Navajo-Westwing 500 kv
line including, but not limited to, the capacitors, control
equipment, reactors, lightning arrestors, hazard fencing,
disconnects, structures and bus work from the substation side
of the first 500 kv line dead-end tower located outside the
substation to the attachment on the main substation structure.
E.
MOENKOPI-WESTWING 500 KV LINE
1. The
Moenkopi-Westwing 500 kv line, from and including the
first 500 kv line dead-end tower outside the Moenkopi
Switchyard to a similar tower location outside the Westwing
Substation and the Moenkopi-Westwing 500 kv line right-of-way.
B-3
<PAGE>
2. The
Project Series Capacitors and shunt reactors on the
Westwing 500 kv Substation end of the Moenkopi-Westwing 500 kv
line including, but not limited to, the capacitors, control
equipment, reactors, lightning arrestors, hazard fencing,
disconnects, structures and bus work from the substation side
of the first 500 kv line dead-end tower located outside the
substations to the attachment on the main substation
structure.
F. OTHER
ASSOCIATED COMPONENTS
1. The
additions to the Moenkopi Switchyard comprising the
terminal facilities for the Navajo-Moenkopi and the
Moenkopi-Westwing 500 kv lines and the additions to the
terminal facilities for the Four Corners-Moenkopi and
Moenkopi-Eldorado 500 kv lines including, but not limited to,
the additional 500 kv busses, power circuit breakers,
disconnect switches, and structures.
2. The
Project Series Capacitors on the Moenkopi Switchyard end
of the Navajo-Moenkopi 500 kv line including, but not limited
to, the capacitors, control equipment, hazard fencing,
disconnects, structures and bus work from the switchyard side
of the first 500 kv line
B-4
<PAGE>
dead-end tower located outside the switchyard to the
attachment on the main switchyard structure.
3. The
Project Series Capacitors and shunt reactors on the
Moenkopi Switchyard end of the Moenkopi-Westwing 500 kv line
including, but not limited to, the capacitors, control
equipment, reactors, lightning arrestors, hazard fencing,
disconnects, structures, and bus work from the switchyard side
of the first 500 kv line dead-end tower located outside the
switchyard to the attachment on the main switchyard structure.
4. The
Project Series Capacitors and Incremental Series
Capacitors on the Moenkopi Switchyard end of the
Moenkopi-Eldorado 500 kv line including, but not limited to,
the capacitors, control equipment and structures.
5. The
Project Series Capacitors on the Moenkopi Switchyard end
of the Four Corners-Moenkopi 500 kv line including, but not
limited to, the capacitors, control equipment and structures.
6. The
Project Series Capacitors on the Four Corners Switchyard
end of the Four Corners-Moenkopi 500 kv line including, but
not limited to, the capacitors, control equipment
B-5
<PAGE>
and structures.
7. The
four new series capacitor installations on both ends of
both of Arizona's Cholla-Pinnacle Peak 345 kv lines
including, but not limited to, the capacitors, control
equipment, hazard fencing, disconnects, structures and bus
work.
8. All the
communications facilities necessary to control the
Southern Transmission System including such facilities located
at Navajo 500 kv Switchyard, Moenkopi Switchyard or Westwing
Substation.
G.
WESTWING SUBSTATION
1. The
Westwing 500 kv Switchyard, a basic breaker-and-a-half
scheme, comprising termination facilities for the
Moenkopi-Westwing 500 kv line, Navajo-Westwing 500 kv line,
500/230 kv transformer banks, and 500/345 kv transformer bank
including, but not limited to, the 500 kv busses, power
circuit breakers, metering transformers, disconnect switches,
control building, structures, and related land and land
rights.
2. The
Westwing Substation 2-1332 MVA 500/230 kv transformer
banks and spare 444 MVA 500/230 kv transformer to be located
within the
B-6
<PAGE>
boundaries of the Westwing 500 kv Switchyard and the equipment
associated therewith including, but not limited to,
foundations, structures, insulators and hardware, transformer
leads from 500 kv bushings to points of termination on the
attachments to the 500 kv switchyard structure, and 230 kv
leads up to the point of attachment where the 230 kv lines
from adjacent facilities attach to the transformer dead-end
tower.
3. The
Westwing Substation 600 MVA 500/345 kv transformer bank
and spare 200 MVA 500/345 kv transformer to be located within
the boundaries of the Westwing 500 kv Switchyard and the
equipment associated therewith including, but not limited to,
foundations, structures, insulators and hardware, transformer
leads from the 500 kv bus
