Exhibit 10.3
AMENDMENT NO. 6
Decommissioning Trust Agreement
(PVNGS Unit 2)
This Amendment No. 6 dated as of March 18, 2002, to the Amended and
Restated Decommissioning Trust Agreement (PVNGS Unit 2), dated as of January 31,
1992, as amended by Amendment No. 1 thereto dated as of November 1, 1992,
Amendment No. 2 thereto dated as of November 1, 1994, Amendment No. 3 thereto
dated as of June 20, 1996, Amendment No. 4 thereto dated as of December 16,
1996, and Amendment No. 5 thereto dated as of June 30, 2000 (the
"Decommissioning Trust Agreement", terms used herein as therein defined), is
entered into between Arizona Public Service Company ("APS"), State Street Bank
and Trust Company, as successor to The First National Bank of Boston, as Owner
Trustee and as Lessor, 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 third and fifth sentences of clause (ii) of Paragraph (c) of
Section 9 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.
(b) Clause (ii) of Paragraph (d) of Section 9 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 and
the Secured Parties and Equity Participants in writing if any
securities, assets or investments are not Permitted Investments
or fail to satisfy such further conditions.
(c) The second sentence of the fourth paragraph of Section 24 shall be
restated as follows:
Within two weeks of the end of each calendar quarter, the
Decommissioning Trustee shall send a written statement to APS and
the Secured Parties and Equity Participants indicating whether
during that previous quarter such securities, assets and/or
investments held in the Funds during that quarter were Permitted
Investments and satisfied the further conditions of this
Agreement; provided however, the Decommissioning Trustee shall
promptly advise APS and the Secured Parties and Equity
Participants if it has actual knowledge that any of the
investments do not constitute Permitted Investments or otherwise
satisfy the further conditions of this Agreement.
(d) The words "any such consequences" shall be added after the words "as
provided in this Agreement or" and before the words "could have been
prevented" in clause (b) of the first sentence of the second paragraph
of Section 26.
(e) The following Section 33 shall be added:
Section 33: 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.
(f) 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. 6 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. 6 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. 6 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
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Title Treasurer
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MELLON BANK, N.A. as
Decommissioning Trustee
By Xxxxxx X. Xxxx
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Title Vice President
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STATE STREET BANK AND TRUST COMPANY, as
Owner Trustee under a Trust Agreement
with Security Pacific Capital Leasing
Corporation and as Lessor under a
Facility Lease with Arizona Public
Service Company
By Xxxxxxx X. Ring
-------------------------------------
Title Assistant Vice President
----------------------------------
STATE STREET BANK AND TRUST COMPANY, as
Owner Trustee under a Trust Agreement
with Xxxxxxx Finance Co. and as Lessor
under a Facility Lease with Arizona
Public Service Company
By Xxxxxxx X. Ring
-------------------------------------
Title Assistant Vice President
----------------------------------
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
----------------------
COMMONWEALTH OF MASSACHUSETTS )
) ss:
County of Suffolk )
The foregoing instrument was acknowledged before me this 18th day of March,
2002, by Xxxxxxx X. Ring, an Assistant Vice President of State Street Bank and
Trust Company, a Massachusetts trust company, in its capacity as Owner Trustee
under a Trust Agreement with Security Pacific Capital Leasing Corporation and as
Lessor under a Facility Lease with Arizona Public Service Company, on behalf of
said association in such capacities.
Xxxxx X. Xxxxxxxx
----------------------------------------
Notary Public
My commission expires:
June 19, 2003
----------------------
COMMONWEALTH OF MASSACHUSETTS )
) ss:
County of Suffolk )
The foregoing instrument was acknowledged before me this 18th day of March,
2002, by Xxxxxxx X. Ring, an Assistant Vice President of State Street Bank and
Trust Company, a Massachusetts trust company, in its capacity as Owner Trustee
under a Trust Agreement with Xxxxxxx Finance Company and as Lessor under a
Facility Lease with Arizona Public Service Company, on behalf of said
association in such capacities.
Xxxxx X. Xxxxxxxx
----------------------------------------
Notary Public
My commission expires:
June 19, 2003
----------------------
EXHIBIT B
UNIT 2
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 obligations or securities maturing at
such time or times as to enable payments or transfers to be made from the Funds
or which shall be readily marketable prior to the final maturity thereof:
(a) bills, notes, bonds and savings bonds of the Treasury of the United
States of America;
(b) obligations of the United States of America not included in clause (a)
taken into consideration for purposes of determining the public debt limit of
the United States of America;
(c) time or demand deposits in a bank (as defined in Section 581 of the
Code) or an insured credit union (within the meaning of Section 101(6) of the
Federal Credit Union Act, 12 U.S.C. 1752(7) (1982)) (for the purposes of this
paragraph, "time or demand deposits" shall include checking accounts, savings
accounts, certificates of deposit, and other time or demand deposits but shall
not include common or collective trust funds);
(d) obligations of the Federal National Mortgage Association and Government
National Mortgage Association;
(e) AAA rated collateralized mortgage obligations; interest only, principal
only, and inverse floaters are specifically prohibited;
(f) commercial paper maturing within 60 days and rated the highest grade by
Xxxxx'x Investor's Services, Inc. ("Xxxxx'x") or Standard & Poor's Corporation
("S & P") or if one of such agencies does not rate such paper, rated the highest
grade by the other;
(g) deposit accounts (which may be represented by certificates of deposit)
payable on demand or maturing within 180 days, in Federally insured national or
state banks; provided, however, if the aggregate amount of such deposit accounts
in a bank is $100,000 or more, such bank shall have combined capital and surplus
as of its last report of condition exceeding $250,000,000 and a senior unsecured
debt rating of Investment Grade;
(h) The Decommissioning Trustee's Short Term Investment Fund ("STIF")
account; provided, however, that no more than fifteen percent (15%) of the
aggregate assets of the Funds may be invested in the Decommissioning Trustee's
STIF account at any one time, except that the full amount of APS' quarterly
contribution to the Funds or any portion thereof may be invested in the
Decommissioning Trustee's STIF account for a period of up to seven (7) business
days after such contribution is made and, during such period, the amount of such
contribution or portion thereof that shall have been so invested shall not count
against the fifteen percent (15%) limitation in this paragraph (h):
(i) repurchase agreements fully secured (and perfected) by any of the
foregoing obligations or securities maturing within 30 days with any Federally
insured national or state bank (including Decommissioning Trustee) or any other
financial institution that is a nationally recognized dealer that reports to the
Market Reports Division of the Federal Reserve Bank of New York; provided,
however, if the aggregate face amount of such repurchase agreements with an
issuer is $1,000,000 or more, the issuer shall have combined capital and surplus
as of its last report of condition exceeding $250,000,000 and a senior unsecured
debt rating of Investment Grade;
(j) obligations rated Investment Grade of a State, a possession of the
United States of America, the District of Columbia or any political subdivision
of the foregoing, the interest on which is exempt from tax under Section 103(a)
of the Code;
(k) corporate debt obligations rated Investment Grade; and
(l) (x) corporate equity securities, including, but not limited to,
investment in units of common or collective trust funds investing in corporate
equity securities; including, but not limited to, the Decommissioning Trustee's
Nuclear Decommissioning Trust Equity Index Fund (the "NDT Equity Index Fund")
and (y) obligations not included in clauses (a) through (k) issued or guaranteed
by a person controlled or supervised by and acting as an instrumentality of the
United States of America pursuant to authority granted by the Congress of the
United States of America, including Federal Intermediate Credit Bank, Banks for
Cooperatives, Federal Land Banks, Federal Home Loan Banks, Federal Home Loan
Mortgage Corporation; provided, that no more than fifty percent (50%) of the
aggregate assets of the Funds may be invested in securities described in (x) and
(y) of this subparagraph (1) during the period from June 27, 1996 through
December 31, 2003, no more than thirty percent (30%) during the period from
January 1, 2004 through December 31, 2006, and no more than fifteen percent
(15%) during the period from January 1, 2007 through January 31, 2010; and
provided further that after January 31, 2010, no investments shall be made in
such securities.
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 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. There shall be no short-selling, securities lending, options trading,
financial futures, over-the-counter derivative transactions, or other
specialized investment activity, except as specifically allowed in paragraphs
(a) through (1) hereof, or except as may be effected in the ordinary course of
operation of the Decommissioning Trustee's STIF account or its NDT Equity Index
Fund.
6. No investment shall be made which would cause the holding of any one
issue (excluding obligations of the United States Government and agencies of or
guaranteed by the United States Government and excluding units of a common or
collective trust fund), to exceed ten percent (10%) of the aggregate assets held
under this Decommissioning Trust Agreement, the Xxxx 0 Xxxxx Xxxxxxxxx, and the
Xxxx 0 Xxxxx Xxxxxxxxx, valued at cost.
7. Bank certificates of deposit must be at banks with a minimum of one
billion ($1,000,000,000) in assets as of such banks' most recent report of
condition.
8. Short-term taxable and non-taxable debt securities are not permitted
unless such securities have a rating of at least P-1 by Xxxxx'x or at least A-1
by S&P.
9. Long-term taxable and non-taxable debt securities are not permitted
unless such securities have a rating of at least "A" by Xxxxx'x or S&P.
10. No investment shall be made which would cause sixty percent (60%) or
more of the aggregate assets held under this Decommissioning Trust Agreement and
the Xxxx 0 Xxxxx Xxxxxxxxx and the Xxxx 0 Xxxxx Xxxxxxxxx to be invested in
equity securities.
