Exhibit 10.4
AMENDMENT NO. 3
Decommissioning Trust Agreement
(PVNGS Unit 3)
This Amendment No. 3 dated as of March 18, 2002, to the Decommissioning
Trust Agreement (PVNGS Unit 3), dated as of July 1, 1991, as amended by
Amendment No. 1 thereto dated as of December 1, 1994 and Amendment No. 2 thereto
dated as of December 16, 1996 (the "Decommissioning Trust Agreement", terms used
herein as therein defined), is entered into between Arizona Public Service
Company ("APS") and Mellon Bank, N.A., as Decommissioning Trustee
("Decommissioning Trustee").
RECITALS:
WHEREAS, the parties hereto wish to amend the Agreement.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Amendment.
(a) The period at the end of clause (iii) in Section 8, paragraph (a) is
deleted and ";or" is added in its place and the following subparagraph
(iv) shall be added to Section 8, paragraph (a):
"(iv) in any property safekept or settled outside of the United
States".
(b) The third and fifth sentences of clause (ii) of Paragraph (c) of
Section 8 shall be restated as follows;
Upon proper notification from the Investment Manager(s),
Decommissioning Trustee shall execute and deliver instruments in
accordance with the appropriate trading authorizations; provided
that the Trustee shall not follow any direction that would result
in assets of the Second Fund being invested in assets other than
those investments permitted for a qualified nuclear
decommissioning reserve fund under Section 468A of the Code and
the regulations thereunder.
Such notification shall be proper authority for Decommissioning
Trustee to pay for portfolio securities purchased against receipt
thereof, and to deliver portfolio securities sold against payment
therefor, as the case may be.
(c) Clause (ii) of Paragraph (d) of Section 8 shall be restated as
follows:
(ii) Decommissioning Trustee is required to supervise and review the
securities and other assets and investments authorized for
purchase by the Investment Managers(s) within two weeks of the
end of the calendar month during which such purchase was made to
determine that such securities, assets and/or investments are
Permitted Investments and satisfy the further conditions of this
Agreement as set out in Exhibit B. Upon the completion of such
review, the Decommissioning Trustee shall promptly notify APS in
writing if any securities, assets or investments are not
Permitted Investments or fail to satisfy such further conditions.
(d) The following shall be added to Section 11:
Notwithstanding the foregoing, if the Decommissioning Trustee
advances cash or securities for any purpose or in the event that
the Decommissioning Trustee shall incur or be assessed taxes,
interest, charges, expenses, assessments, or other liabilities in
connection with the performance of this Agreement, except such as
may arise from its own negligent action, negligent failure to act
or willful misconduct, any property at any time held for the
Funds or under this Agreement shall be security therefor and the
Decommissioning Trustee shall be entitled to collect from the
Funds sufficient cash for reimbursement, and if such cash is
insufficient, dispose of the assets held under this Agreement to
the extent necessary to obtain reimbursement. To the extent the
Decommissioning Trustee advances funds to the Funds for
disbursements or to effect the settlement of purchase
transactions, the Decommissioning Trustee shall be entitled to
collect from the Funds an amount equal to what would have been
earned on the sums advanced (an amount approximating the "federal
funds" interest rate).
(e) The second sentence of the fourth paragraph of Section 21 shall be
restated as follows:
Decommissioning Trustee shall promptly advise APS if it has
actual knowledge that any of the investments do not constitute
Permitted Investments or otherwise satisfy the further conditions
of this Agreement.
(f) The first sentence of Section 23 shall be restated as follows:
Decommissioning Trustee shall not be liable for any acts,
omissions, or defaults of any agent (other than its officers and
employees), provided such agent was selected with reasonable care
and the performance and status of such agent is monitored with
reasonable care.
(g) Clause (b) of the second paragraph of Section 23 shall be restated as
follows:
(b) any direct damages and any consequential damages permitted
under Section 28 arising from the violation of the restrictions
on the investment of Fund assets under this Agreement 1) where
the decision to invest Fund assets in such investments was made
by the Decommissioning Trustee, or 2) if not made by the
Decommissioning Trustee, such damages could have been prevented
by the Decommissioning Trust through the exercise of reasonable
care in the exercise of its duties hereunder, including but not
limited to its duties of supervision and review under Section 8
hereof, and/or
(h) The following Section 28 shall be added:
Section 28: Notwithstanding anything in this Agreement to the
contrary, the Decommissioning Trustee shall not be responsible or
liable for its failure to perform under this Agreement or for any
losses to the Funds resulting from any event beyond the
reasonable control of the Decommissioning Trustee, its agents or
subcustodians, including but not limited to nationalization,
strikes, expropriation, devaluation, seizure, or similar action
by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental
authority of currency restrictions, exchange controls, levies or
other charges affecting the Funds' property; or the breakdown,
failure or malfunction of any utilities or telecommunications
systems; or any order or regulation of any banking or securities
industry including changes in market rules and market conditions
affecting the execution or settlement of transactions; or acts of
war, terrorism, insurrection or revolution; or acts of God; or
any other similar event. The Decommissioning Trustee shall not be
liable for any indirect, consequential, or special damages with
respect to its role as Decommissioning Trustee to the extent such
damages exceed the Trustee's annual compensation under this
Agreement for the previous calendar year. This Section shall
survive the termination of this Agreement.
(i) EXHIBIT B to the Decommissioning Trust Agreement is hereby deleted and
replaced in its entirety by EXHIBIT B hereto.
SECTION 2. Miscellaneous
(a) Full Force and Effect.
Except as expressly provided herein, the Decommissioning Trust Agreement
shall remain unchanged and in full force and effect. Each reference in the
Decommissioning Trust Agreement and in any exhibit or schedule thereto to "this
Agreement," "hereto," "hereof" and terms of similar import shall be deemed to
refer to the Decommissioning Trust Agreement as amended hereby.
(b) Counterparts/Representations.
The Amendment No. 3 may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Amendment No. 3 by signing any such
counterpart. Each party represents and warrants to the other that it has full
authority to enter into this Amendment upon the terms and conditions hereof and
that the individual executing this Amendment on its behalf has the requisite
authority to bind that Party.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 to
the Decommissioning Trust Agreement to be duly executed as of the day and year
first above written.
ARIZONA PUBLIC SERVICE COMPANY
By Xxxxxxx X. Xxxxx
-------------------------------------
Title Treasurer
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MELLON BANK, N.A. as
Decommissioning Trustee
By Xxxxxx X. Xxxx
-------------------------------------
Title Vice President
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STATE OF ARIZONA )
) ss:
County of Maricopa )
The foregoing instrument was acknowledged before me this 20th day of March,
2002, by Xxxxxxx X. Xxxxx, the Treasurer of ARIZONA PUBLIC SERVICE COMPANY, an
Arizona corporation, on behalf of said corporation.
Xxxxxxx X. Xxxxx
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Notary Public
My commission expires:
June 20, 2003
----------------------
COMMONWEALTH OF PENNSYLVANIA )
) ss:
County of Allegheny )
The foregoing instrument was acknowledged before me this 28th day of March,
2002, by Xxxxxx X. Xxxx, a Vice President of Mellon Bank, N.A. a national
banking association having trust powers, as Decommissioning Trustee, on behalf
of said national banking association.
Xxxxx Xxx Xxxxx
----------------------------------------
Notary Public
My commission expires:
October 13, 2003
----------------------
EXHIBIT B
UNIT 3
PERMITTED INVESTMENTS FOR THE
DECOMMISSIONING TRUST FUND AND THE SECOND FUND
The Second Fund must meet all applicable requirements of the Code, and
applicable rules and regulations promulgated by the Internal Revenue Service
with respect to a Nuclear Decommissioning Reserve Fund.
Subject to the foregoing, the Decommissioning Trust Fund and the Second
Fund may invest in any of the following:
SECURITIES
Except as may be constrained elsewhere in these guidelines, the following
types of taxable or tax-exempt securities are eligible for investment, including
any investment in a common or collective trust fund (including but not limited
to, any such fund maintained by the Decommissioning Trustee or any of its
affiliates, including but not limited to, the Decommissioning Trustee's Nuclear
Decommissioning Trust Equity Index Fund) holding any securities listed in items
1 through 3 below:
1. Debt Obligations of
- The U.S. Government and its agencies or instrumentalities
- States, U.S. possessions, District of Columbia, and any agency or
political subdivision thereof
- Domestic corporations
- Municipalities and municipal agencies
2. Asset-backed and mortgage-backed securities
3. Equities
4. FDIC Certificates of Deposit, including but not limited to, those of
the Decommissioning Trustee or any of its affiliates
5. Shares of regulated investment companies, including but not limited
to, mutual funds, including but not limited to, those for which the
Decommissioning Trustee performs advisory management or other services
for a fee
6. Cash equivalent securities, including but not limited to, the
Decommissioning Trustee's STIF accounts or those of any of its
affiliates
QUALITY
1. Debt obligations other than U.S. Government and agency securities must
have a rating of at least A by both Xxxxx'x Investors Services, Inc.
("Moody's") and Standard & Poor's Ratings Group ("S & P") at time of
purchase. This limitation shall not apply to securities that have been
pre-refunded where a third party trustee holds direct U.S. Government
or agency obligations sufficient to pay debt service and the specified
call price to a specific call or maturity date.
2. Commercial paper must be rated at least A-1 by S&P and P-1 by Moody's.
3. Certificates of Deposit must be at a bank with a minimum of one
billion dollars in assets as of such bank's most recent report of
condition.
DIVERSIFICATION
No investment shall represent more than 10% of the aggregate assets held under
this Decommissioning Trust Agreement, the Xxxx 0 Xxxxx Xxxxxxxxx, and the Xxxx 0
Xxxxx Xxxxxxxxx combined, except for:
1. Positions in securities issued by the U.S. Government or fully
government backed securities or instruments fully pre-refunded where a
third party trustee holds direct U.S. Government or agency obligations
sufficient to pay debt service and the specified call price to a
specific call or maturity date.
2. Units of a common or collective trust fund.
Equity securities are limited to 60% of the aggregate assets held under this
Decommissioning Trust Agreement, the Xxxx 0 Xxxxx Xxxxxxxxx, and the Xxxx 0
Xxxxx Xxxxxxxxx combined.
Notwithstanding the foregoing, the following restrictions are placed on the
investment of the assets of the Funds:
1. Securities of APS, APS' parent corporation, Pinnacle West Capital
Corporation, or its affiliates, are not permitted.
2. Securities issued by Maricopa County, Arizona Pollution Control
Corporation in connection with the financing of certain facilities at
the Palo Verde Nuclear Generation Station are not permitted.
3. Securities issued by or on behalf of any participant in the Palo Verde
Nuclear Generating Station are not permitted.
4. Investments in any bank, savings and loan association, or other
financial institution whose deposits are not insured by the Federal
Deposit Insurance Corporation or other comparable federal agency are
not permitted, except that this restriction does not apply to
investments in the Decommissioning Trustee's STIF.
5. Property that is settled or safekept outside of the United States is
not permitted.
6. The following securities and transactions are explicitly prohibited
unless engaged in in the ordinary course by a common or collective
trust fund described under the heading "Securities" above:
(a) put and call options on securities, securities indices and
foreign currencies;
(b) financial futures contracts including bond, bond index, foreign
currency futures contracts and options thereon;
(c) spot and forward currency transactions both to effect securities
transactions and to manage currency;
(d) private placements;
(e) preferred stock;
(f) warrants;
(g) margin purchases or borrowing money; and
(h) short selling or securities lending.
