PUBLIC SERVICE COMPANY OF NEW MEXICO
MASTER DECOMMISSIONING TRUST AGREEMENT
FOR
PALO VERDE NUCLEAR GENERATING STATION
Dated: March ___, 1996
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TABLE OF CONTENTS
ARTICLE TITLE PAGE
I DEFINITIONS AND PURPOSE............................................ 4
1.01 Definitions............................................... 4
1.02 Authorization............................................. 11
1.03 Purposes.................................................. 11
1.04 Establishment of the Fund................................. 11
1.05 Acceptance of Appointment................................. 12
1.06 Name of Master Trust...................................... 12
1.07 Segregation of Master Trust............................... 12
II DISPOSITIVE PROVISIONS............................................. 13
2.01 Payment of Nuclear Decommissioning Costs.................. 13
2.02 Additions to the Funds.................................... 15
2.03 Adjustments for Excess Contributions...................... 15
2.04 Transfers Between Funds................................... 16
2.05 Designation of Funds...................................... 16
2.06 Distribution of Income.................................... 16
2.07 No Transferability of Interest in Trust................... 17
2.08 Revocation and Termination of Agreement................... 18
2.09 Termination of Qualified Funds............................ 19
2.10 Distribution of Assets Upon Termination................... 19
2.11 Alterations and Amendments................................ 20
2.12 No Authority to Conduct Business.......................... 20
III TRUSTEES........................................................... 21
3.01 Designation and Qualification of Successor
Trustee(s)................................................ 21
3.02 Resignation............................................... 22
3.03 Compensation.............................................. 22
3.04 Accounts.................................................. 22
3.05 Tax Returns and Other Reports............................. 23
3.06 Liability................................................. 24
3.07 Indemnity of Trustee...................................... 26
IV INVESTMENTS........................................................ 26
4.01 Appointment of Investment Manager(s)...................... 26
4.02 Direction by Investment Managers.......................... 27
V TRUSTEE'S GENERAL POWERS........................................... 29
5.01 Payment of Expenses of Administration..................... 29
5.02 Extension of Obligations and Negotiation of
Claims.................................................... 30
5.03 Registration of Securities................................ 30
5.04 Location of Assets........................................ 30
5.05 Retention of Professional Services........................ 30
5.06 Delegation of Ministerial Powers.......................... 30
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5.07 Powers of Trustee to Continue Until Final
Distribution.............................................. 31
5.08 Voting.................................................... 31
5.09 Power to Join in or Dissent From Certain Events........... 31
5.10 Prohibition Against Real Estate Investment................ 32
5.11 Discretion in Exercise of Powers.......................... 32
VI TRUSTEE'S INVESTMENT POWERS........................................ 33
6.01 Investment Standards...................................... 33
6.02 Investment of Funds....................................... 34
6.03 Management of Master Trust................................ 34
6.04 Disposition of Investments................................ 35
6.05 Power to Hold Uninvested Cash............................. 35
6.06 Cash Sweep Provision...................................... 35
VII MISCELLANEOUS...................................................... 36
7.01 Headings.................................................. 36
7.02 Particular Words.......................................... 36
7.03 Parties Interested Herein................................. 36
7.04 Severability of Provisions................................ 36
7.05 Form and Content of Communications........................ 37
7.06 Delivery of Notices Under Agreement....................... 37
7.07 Successors and Assigns.................................... 38
7.08 Governing Jurisdiction.................................... 38
7.09 Accounting Year........................................... 38
7.10 Counterparts.............................................. 39
7.11 Disbursement Withdrawal Certificate....................... 39
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PUBLIC SERVICE COMPANY OF NEW MEXICO
MASTER DECOMMISSIONING TRUST AGREEMENT
FOR
PALO VERDE NUCLEAR GENERATING STATION
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PUBLIC SERVICE COMPANY OF NEW MEXICO
MASTER DECOMMISSIONING TRUST AGREEMENT
FOR
PALO VERDE NUCLEAR GENERATING STATION
AGREEMENT made the 15th day of March, 1996, by and between Public
Service Company of New Mexico, a New Mexico corporation ("Company"), and Mellon
Bank, N.A., a national banking association,
having trust powers ("Trustee").
WHEREAS, the Company is the: (1) lessee of a 10.2 percent undivided
interest in Unit One of the Palo Verde Nuclear Generating Station; (2) lessee of
a 10.2 percent undivided interest in Unit Two of the Palo Verde Nuclear
Generating Station; and (3) owner of a 10.2 percent undivided interest in Unit
Three of the Palo Verde Nuclear Generating Station; and
WHEREAS, an affiliate of the Trustee is an owner participant with
respect to: (1) the Company's leasehold interest in 1.36 percent of Unit One of
the Palo Verde Nuclear Generating Station; and (2) the Company's leasehold
interest in approximately 2.49 percent of Unit Two of the Palo Verde Nuclear
Generating Station;
WHEREAS, the Company is subject to regulation by the New Mexico Public
Utility Commission ("NMPUC"), an agency of the State of New Mexico, the Nuclear
Regulatory Commission ("NRC"), an agency of the United States government created
and existing pursuant to 42 U.S.C. ss. 5841, and the Federal Energy Regulatory
Commission ("FERC"), an agency of the United States government created and
existing pursuant to 42 U.S.C. ss.ss.7134 and 7171; and
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WHEREAS, the Company has elected to satisfy certain regulations of the
NRC found at 10 C.F.R. ss.50.75(e) by the establishment of an external sinking
fund, consisting of the Funds described herein, to provide financial assurance
for the decommissioning of Palo Verde Unit 1, Palo Verde Unit 2 and Palo Verde
Unit 3; and
WHEREAS, the NMPUC has permitted the Company to include in its cost of
service for ratemaking purposes certain amounts in order to provide monies for
the Company's share of decommissioning costs with respect to the Palo Verde
Nuclear Generating Station ("Station"); and
WHEREAS, the Funds established herein are intended to satisfy the
Company's obligation to accumulate funds for the payment of its share of
Termination Costs for Palo Verde Unit 1, Palo Verde Unit 2 and Palo Verde Unit
3, in accordance with the requirements of Section 8A.7.2 of the ANPP
Participation Agreement; and
WHEREAS, pursuant to Section 468A of the Internal Revenue Code of 1986,
26 U.S.C. ss. 1 et seq., certain Federal income tax benefits are available to
the Company by creating and contributing monies to qualified nuclear
decommissioning reserve funds associated with the Station; and
WHEREAS, the Company wishes to establish both qualified nuclear
decommissioning reserve funds and nonqualified nuclear decommissioning reserve
funds to hold monies for decommissioning the Station; and
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WHEREAS, the Company wishes to establish a Master Trust for the
collective investment of the assets of the qualified and nonqualified nuclear
decommissioning reserve funds for the Station, wherein each Fund shall
constitute a separate trust under the Master Trust; and
WHEREAS, the assets of each of the qualified and nonqualified nuclear
decommissioning reserve funds shall be deemed to have been transferred to a
Master Trust to be held hereunder for the benefit of such Funds; and
WHEREAS, pursuant to the ANPP Participation Agreement, any trustee
hereunder shall be: (1) a corporation organized and existing under and by virtue
of the laws of the United States or of any State; (2) authorized under such laws
to exercise corporate trust powers; and (3) subject to supervision or
examination by federal or state banking or trust authorities and shall not be
owned by or subject to the control, except as provided therein, of the Company
or any other direct or indirect participant in the Station or any parent or any
other subsidiary of any parent of the Company or any other participant in the
Station.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company hereby agrees to deliver to the Trustee and the Trustee
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hereby agrees to receive the initial contribution of assets pursuant to this
Agreement on or before March 15, 1996; and
TO HAVE AND HOLD, such assets and such assets as may from time to time
be added thereto as provided herein, together with the proceeds and
reinvestments thereof unto the Trustee;
IN TRUST NEVERTHELESS, for the uses and purposes and upon the terms and
conditions hereinafter set forth:
I
DEFINITIONS AND PURPOSE
1.01 Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(1) "Agreement" shall mean and include this Master Decommissioning
Trust Agreement, as the same may from time to time be amended,
modified, or supplemented.
(2) "ANPP Participation Agreement" shall mean the Arizona Nuclear
Power Project Participation Agreement, dated as of August 23,
1973, among the Company, Arizona Public Service Company, Salt
River Project, Southern California Edison Company, El Paso
Electric Company, the Los Angeles Department of Water and Power
and the Southern California Public Power Authority, as
heretofore and hereafter amended pursuant to the terms thereof.
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(3) "Authorized Representative" shall mean the Chief Executive
Officer, President, Treasurer, or any Vice President of the
Company, or any other person designated as an Authorized
Representative of the Company.
(4) "Board of Directors" shall mean the Board of Directors of the
Company, or the Executive Committee thereof, as duly elected
from time to time.
(5) "Certificate" or "Certification" shall mean a written
certificate signed by two Authorized Representatives of the
Company for a certificate of the Company.
(6) "Code" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
(7) "Company" shall have the meaning set forth in the first
paragraph of this Agreement.
(8) "Decommissioning Costs" shall mean the costs incurred in
decommissioning the Plants and shall include Termination Costs
as defined in the ANPP Participation Agreement.
(9) "Disbursement Certificate" shall mean a document properly
completed and executed by two Authorized Representatives of the
Company and substantially in the form of Exhibit A hereto.
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(10) "Excess Contribution" shall have the meaning set forth in
Section 2.03 hereof.
(11) "Fund" shall mean any one of the Qualified or Nonqualified
Funds.
(12) "Funds" shall mean the Qualified Funds and the Nonqualified
Funds, collectively.
(13) "Investment Manager(s)" shall mean the fiduciary specified in
the Investment Manager Agreement(s):
(a) Which has been retained by the Company to manage, acquire,
or dispose of any asset belonging to any Fund; and
(b) Which is:
(i) registered as an investment adviser under the
Investment Advisers Act of 1940, or
(ii) a bank, as defined in that Act, or
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(iii) an insurance company qualified to perform, as
described in subsection (a) above, under the laws of
more than one state, and
(c) Which has acknowledged, in writing, that it is a fiduciary
with respect to the Funds, that it is qualified to act
under subsection (b) above, and has agreed to be bound by
all of the terms, provisions, and covenants of this
Agreement.
(14) "Investment Manager Agreement(s)" shall mean the agreement(s)
between the Company and an investment manager(s) selected by the
Company which agreement governs the management of the assets of
the Funds.
(15) "Master Trust" shall be used merely to refer to the Funds in the
aggregate and is not intended nor should it be construed to
constitute a separate entity.
(16) "Nonqualified Funds" shall mean the Palo Verde Unit 1
Nonqualified Fund, Palo Verde Unit 2 Nonqualified Fund and Palo
Verde Unit 3 Nonqualified Fund, collectively.
(17) "NMPUC" shall mean the New Mexico Public Utility Commission, as
defined and set forth in the New Mexico Public Utility Act,
Sections 62-3-1 et seq., New Mexico Statutes Annotated (1978).
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(18) "Palo Verde Unit 1" shall mean Unit One of the Palo Verde
Nuclear Generating Station.
(19) "Palo Verde Unit 1 Qualified Fund" shall mean the Fund
established and maintained under this Agreement for
decommissioning Palo Verde Unit 1 to which monies are
contributed subject to the conditions and limitations of Section
468A of the Code, plus earnings and appreciation thereon.
(20) "Palo Verde Unit 1 Nonqualified Fund" shall consist of
contributions by the Company for decommissioning Palo Verde Unit
1 (but only to the extent such Contributions are not deposited
and maintained in the Palo Verde Unit 1 Qualified Fund) plus
earnings and appreciation thereon.
(21) "Palo Verde Unit 2" shall mean Unit Two of the Palo Verde
Nuclear Generating Station.
(22) "Palo Verde Unit 2 Qualified Fund" shall mean the Fund
established and maintained under this Agreement for
decommissioning Palo Verde Unit 2 to which monies are
contributed subject to the conditions and limitations of Section
468A of the Code, plus earnings and appreciation thereon.
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(23) "Palo Verde Unit 2 Nonqualified Fund" shall consist of
contributions by the Company for decommissioning Palo Verde Unit
2 (but only to the extent such Contributions are not deposited
and maintained in the Palo Verde Unit 2 Qualified Fund) plus
earnings and appreciation thereon.
(24) "Palo Verde Unit 3" shall mean Unit Three of the Palo Verde
Nuclear Generating Station.
(25) "Palo Verde Unit 3 Qualified Fund" shall mean the Fund
established and maintained under this Agreement for
decommissioning Palo Verde Unit 3 to which monies are
contributed subject to the conditions and limitations of Section
468A of the Code, plus earnings and appreciation thereon.
(26) "Palo Verde Unit 3 Nonqualified Fund" shall consist of
contributions by the Company for decommissioning Palo Verde Unit
3 (but only to the extent such contributions are not deposited
and maintained in the Palo Verde Unit 3 Qualified Fund) plus
earnings and appreciation thereon.
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(27) "Qualified Fund" shall mean a nuclear decommissioning reserve
fund as defined in section 468A(e) of the Code.
(28) "Service" shall mean the Internal Revenue Service.
(29) "Station" shall mean the Palo Verde Nuclear Generating Station
Units 1, 2 and 3, collectively.
(30) "Termination Costs" shall have the meaning set forth in the ANPP
Participation Agreement.
(31) "Trustee" shall have the meaning set forth in the first
paragraph of this Agreement.
(32) "Withdrawal Certificate" shall mean a document properly
completed and executed by two Authorized Representatives of the
Company and substantially in the form of Exhibit B hereto.
1.02 Authorization. The Trustee and the Company hereby represent and
warrant that each has full legal authority and is duly empowered to enter into
this Agreement, and has taken all action necessary to authorize the execution of
this Agreement by the officers and persons signing it.
1.03 Purposes. The exclusive purposes of this Agreement are to provide
assets for the decommissioning of the Station that are sufficient in the
aggregate: (1) to pay the Company's share (determined pursuant to Sections
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8A.7.2 and 23.5.1 of the ANPP Participation Agreement) of Termination Costs of
Palo Verde Unit 1, Palo Verde Unit 2 and Palo Verde Unit 3; (2) to pay the costs
of managing, investing and administering the Funds, including, without
limitation, legal, accounting, actuarial and trustee expenses, and taxes, if
any, levied on the Funds or on any investment income derived therefrom; and (3)
to constitute qualified and nonqualified nuclear decommissioning funds for the
Units (the Qualified Funds being established pursuant to Section 468A of the
Code and any applicable successor provisions and the regulations thereunder).
The assets of the Qualified Funds may be used only in a manner authorized by
Code section 468A and the regulations thereunder.
1.04 Establishment of the Funds. By execution of this Agreement,
the Company:
(a) establishes the Funds, each of which shall
constitute a trust consisting of such
contributions as may be delivered to the
Trustee by the Company designated for such
Fund. Each Fund also shall include additional
contributions (or other contributions as
described in Section 2.02) designated for such
Fund, together with investments and
reinvestments thereon; and
(b) appoints Mellon Bank as Trustee of each of the
Funds.
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1.05 Acceptance of Appointment. Upon the terms and conditions herein
set forth, Mellon Bank, N.A. accepts the appointment as Trustee of the Funds.
The Trustee shall receive any contributions deposited with it by the Company and
shall hold, manage, invest and administer such contributions, together with
earnings and appreciation thereon, in accordance with this Agreement.
1.06 Name of Master Trust. The contributions received by the Trustee
from the Company together with the proceeds, reinvestments and appreciation
thereof shall constitute the "Public Service Company of New Mexico Master
Decommissioning Trust."
1.07 Segregation of Master Trust. The Master Trust shall be divided by
the Trustee into the Funds as follows:
(a) Palo Verde Unit 1 Qualified Fund;
(b) Palo Verde Unit 1 Nonqualified Fund;
(c) Palo Verde Unit 2 Qualified Fund;
(d) Palo Verde Unit 2 Nonqualified Fund;
(e) Palo Verde Unit 3 Qualified Fund;
(f) Palo Verde Unit 3 Nonqualified Fund.
The Trustee shall maintain such records as are necessary to reflect
each Fund separately on its books from each other Fund and shall create and
maintain such subaccounts (including any subaccounts required to satisfy Federal
Energy Regulatory Commission requirements) within each Fund as the Company shall
direct.
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II
DISPOSITIVE PROVISIONS
After payment of the expenses described in Section 5.01 hereof, the
Trustee shall distribute the assets of the Funds as follows:
2.01 Payment of Nuclear Decommissioning Costs. The Trustee shall make
payments of the Decommissioning Costs in accordance with the following
procedures:
(1) Authorized Representative. The Company shall promptly
notify the Trustee of the selection and appointment of any
Authorized Representative of the Company. The Trustee shall
have no duty to inquire into or investigate the continued
authority of such person to act as the Authorized
Representative. The Company shall provide the Trustee with
written notice of the termination of any Authorized
Representative's authority.
(2) Disbursements to Third Parties. Requests for payments of
Decommissioning Costs to any person (other than the
Company) for goods provided or labor or other services
rendered to the Company in connection with the
decommissioning of the Plants shall be submitted by the
Company to the Trustee on a Disbursement Certificate.
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(3) Reimbursement to the Company. Requests for payments to the
Company in reimbursement of Decommissioning Costs actually
incurred by the Company and paid by the Company to any
other person shall be submitted by the Company to the
Trustee on a Withdrawal Certificate.
(4) Payment of Decommissioning Costs. The Trustee shall pay
Decommissioning Costs when a Disbursement Certificate or
Withdrawal Certificate is filed with the Trustee, showing
with respect to each withdrawal of money:
(a) the name and address of the person or entity to whom
payment is due (which may be the Company);
(b) the amount of money to be paid; and
(c) the purpose for which the obligation to be paid was
incurred.
Each Disbursement Certificate or Withdrawal Certificate
must certify that the expenses paid constitute
Decommissioning Costs and shall provide satisfactory
evidence to the Trustee that such expenses have been
incurred.
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2.02 Additions to the Funds. From time to time after the initial
contribution and prior to the termination of this Agreement, the Company may
make, and the Trustee shall accept, additional contributions of assets to
satisfy the purposes of this Agreement as set forth in Section 1.03, which
contributions shall be made to the applicable Fund(s).
2.03 Adjustments for Excess Contributions. The Trustee and the Company
understand and agree that the contributions made by the Company to any of the
Qualified Funds from time to time may exceed the amount permitted to be paid
into such fund(s) pursuant to Section 468A of the Code and any regulations
thereunder based upon changes in estimates, subsequent developments, or any
other event or occurrence which could not reasonably have been foreseen by the
Company at the time such contribution was made (Excess Contribution). Upon
Certification of the Company, setting forth the amount of the Excess
Contribution, the amount of any Excess Contribution (together with any income
accrued thereon) shall be paid to the person or persons specified by the Company
in a Certification to the Trustee.
2.04 Transfers Between Funds. The Trustee shall transfer assets between
Funds only upon written instructions from the Company.
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2.05 Designation of Funds. Upon: (a) the initial contribution; (b) any
withdrawal from any Fund for Decommissioning Costs pursuant to Section 2.01 or
for administrative expense pursuant to Section 5.01; (c) any addition to any
Fund pursuant to Section 2.02; or (d) any adjustment to any Fund pursuant to
section 2.03, the Company shall designate, by Certificate, the appropriate Funds
which are to be credited or debited by such contribution, withdrawal, addition,
or adjustment, and the Trustee shall credit or debit the appropriate Funds in
accordance with such designation.
2.06 Distribution of Income. Upon written consent of the Company,
assets of a Qualified Fund established pursuant to this Agreement may be pooled,
but only with the assets of another Qualified Fund established pursuant to this
Agreement, and assets of a Nonqualified Fund established pursuant to this
Agreement may be pooled, but only with the assets of another Nonqualified Fund
established pursuant to this Agreement, provided that the following conditions
are satisfied: (i) the Trustee must separately account for the contributions,
earnings, expenses, and distributions of such Fund; (ii) the earnings and
expenses must be reasonably apportioned among such Funds; (iii) the books and
records of such Funds must enable the Service to verify that the requirements of
Code section 468A and the regulations thereunder are satisfied. Any pooling
arrangement undertaken as permitted in this Section 2.06 can be terminated at
any time by any Fund. No Fund in such a pooling arrangement may substitute for
itself in such arrangement any person that is not a member of the pooling
arrangement. Notwithstanding the foregoing, the provisions of this Section 2.06
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shall not limit the Trustee's authority to invest in permissible common or
collective trust funds.
2.07 No Transferability of Interest in Trust. The interest of the
Company in the Funds is not transferable by the Company, whether voluntarily or
involuntarily, nor subject to the claims of creditors of the Company, provided,
however, that any creditor of the Company as to which a Disbursement Certificate
has been properly completed and submitted to the Trustee may claim directly
against the appropriate Fund in an amount not to exceed the amount specified on
such Disbursement Certificate. Nothing herein shall be construed to prohibit a
transfer of the Company's interest in a Fund upon sale of all or part of the
Company's ownership or leasehold interest in any plant or plants.
2.08 Revocation and Termination of Agreement. The Company reserves the
power to revoke this Agreement, in whole or in part, by instrument or
instruments in writing delivered to the Trustee ninety (90) days in advance of
the proposed revocation; provided, however, that the assets of the Funds are
transferred to another decommissioning trust or otherwise dedicated to payment
of Decommissioning Costs and other expenses permitted hereunder; provided
further, however, that absent revocation by the Company, this Agreement will
terminate (in whole or in part) upon the earlier of:
(1) Receipt by the Trustee of a Certificate from the Company
stating that substantial completion of the nuclear
decommissioning of the Plants has occurred (as defined in
Treasury Regulations promulgated under Code Section 468A
and consistent with the requirements of the ANPP
Participation Agreement);
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(2) The twentieth anniversary of the date of the death of the
survivor from among a class consisting of all of the
descendants of John D. Rockefeller, late of New York, New
York, born on or prior to January 1, 1996; or
(3) At such earlier time as the Company may terminate all or a
portion of the Funds.
2.09 Termination of Qualified Funds. One or more of the Qualified
Funds shall terminate upon the earlier of:
(1) Its disqualification from the application of Section 468A
of the Code, whether pursuant to an administrative action
on the part of the Service or the decision of any court of
competent jurisdiction, but in no event earlier than the
date on which all available appeals have been either
prosecuted or abandoned and the period of time for taking
any further appeals has elapsed; or
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(2) The disposition by the Company of any interest in the
Plants, to the extent provided in regulations by the
Service promulgated under Code Section 468A.
2.10 Distribution of Assets Upon Termination. Upon termination of any
one or more of the Fund(s), the Trustee shall assist the Investment Manager in
liquidating the assets of the Fund(s), and thereupon distributing the
then-existing assets of the Fund(s) (including accrued, accumulated, and
undistributed net income) less final administrative expense (including accrued
taxes) to the Company.
2.11 Alterations and Amendments. The Trustee and the Company understand
and agree that modifications or amendments may be required to this Agreement
from time to time consistent with the purposes of this Agreement.
Notwithstanding anything herein to the contrary, no amendment which affects the
specific rights, duties, responsibilities, or liabilities of the Trustee, shall
be made without its consent and no amendment shall be effective prior to the
Trustee receiving reasonable notice thereof. No amendment or modification to the
Agreement is permitted that would cause the assets of the Qualified Funds to be
used in a manner contrary to that authorized by Code section 468A and the
regulations thereunder.
2.12 No Authority to Conduct Business. The purpose of this Agreement is
limited to the matters set forth in Section 1.03 above, specifically, and there
is no objective to carry on any business unrelated to the purposes set forth in
Section 1.03 hereof, or to divide the gains therefrom.
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III
TRUSTEES
3.01 Designation and Qualification of Successor Trustee(s). The Company
by this Agreement has appointed the Trustee named herein having all requisite
corporate power and authority to act as the sole Trustee. The Trustee shall act
in accordance with the directions provided to it by the Company under the terms
of this Agreement. At any time during the term of this Trust, the Company shall
have the right to remove the Trustee acting hereunder and appoint another
qualified corporation, pursuant to the requirements of the ANPP Participation
Agreement, as a Successor Trustee upon sixty (60) days' notice in writing to the
Trustee, or upon such shorter notice as may be acceptable to the Trustee. In the
event that the Trustee or any Successor Trustee shall: (a) become insolvent or
admit in writing its insolvency; (b) be unable or admit in writing its inability
to pay its debts as such debts mature; (c) make a general assignment for the
benefit of creditors; (d) have an involuntary petition in bankruptcy filed
against it; (e) commence or otherwise seek to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation
law, statute, or proceeding; or (f) resign, the Trustees or Successor Trustee
shall cease to act as a fiduciary of the Funds established pursuant to this
Agreement and the Company shall appoint a Successor Trustee. In the event of any
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such removal or resignation, the Trustee or Successor Trustee shall have the
right to have its accounts settled as provided in Section 3.04 hereof. Any
successor to the Company, as provided herein, shall have the same right to
remove and to appoint any Trustee or Successor Trustee.
Any Successor Trustee shall qualify by a duly acknowledged acceptance
of this Master Trust, delivered to the Company. Upon acceptance of such
appointment by the Successor Trustee, the Trustee shall assign, transfer and pay
over to such Successor Trustee the monies and properties then constituting the
Funds. Any Successor Trustee shall have all the rights, powers, duties and
obligation herein granted to the original Trustee.
3.02 Resignation. The Trustee or any Successor Trustee hereof may
resign and be relieved as Trustee at any time without prior application to or
approval by or order of any court by a duly acknowledged instrument, which shall
be delivered to the Company by the Trustee not less than sixty (60) days prior
to the effective date of the Trustee's resignation or upon such shorter notice
as may be acceptable to the Company.
3.03 Compensation. The Trustee shall be entitled to compensation as may
be agreed from time to time by the Company and the Trustee. Such compensation
shall be payable by the Company, shall constitute administrative costs and shall
be reimbursable by the Master Trust.
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3.04 Accounts. The Trustee shall present financial statements to the
Company on a quarterly basis (within forty-five (45) days following the close of
each quarter), or at such other frequency as the Company shall from time to time
require. The financial statements shall show the financial condition of each of
the Funds, including, without limitation, income and expenses of each of the
Funds for the period. The Trustee shall assume responsibility for employing
independent public accountants to audit the financial statements not less
frequently than annually, subject to the provisions contained in Section 5.05.
The Company shall have the right to object to any of the Trustee's audited
financial statements. If the Company desires to object to the Trustee's audited
financial statements it shall deliver notice of its objection to the Trustee in
writing within one hundred and eighty (180) days from the day the Trustee shall
mail or deliver such audited financial statements to the Company. If no written
objection is made within that time, the presentation of the audited financial
statements to the Company shall release and discharge the Trustee with respect
to all acts or omissions; provided, however, that nothing contained herein shall
be deemed to relieve the Trustee of any liability which may be imposed pursuant
to Section 3.06 hereof.
3.05 Tax Returns and Other Reports. The Trustee and the Company shall
cooperate in the preparation of income or franchise tax returns or other reports
as may be required from time to time, including reports required pursuant to the
ANPP Participation Agreement, and, subject to the limitations contained in
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Section 5.05, may employ independent certified public accountants or other tax
counsel to prepare or review such returns and reports. The Trustee shall present
to the Company on a monthly basis a report setting forth all investments
purchased by the Investment Manager(s) during the previous month.
3.06 Liability. The Trustee shall be liable for the acts, omissions or
defaults of its own officers and employees. The Trustee shall not be liable for
the acts, omissions or defaults of its agents, provided any such agents were
selected with reasonable care and the performance and status of the agent is
monitored with reasonable care throughout the duration of the agency
relationship. The Trustee shall not be liable for the failure or default of any
bank or depositary, provided any such bank or depositary was selected with
reasonable care and its performance and status is monitored with reasonable
care. Except where the Trustee exercises its investment discretion as provided
in this Agreement, the Trustee shall not be liable for the acts or omissions of
any Investment Manager(s) acting hereunder. Except as provided in Section 3.04,
the Trustee shall not be liable in regard to the exercise or nonexercise of any
powers and discretion properly delegated pursuant to the provisions of this
Agreement.
Notwithstanding the foregoing, the Trustee (and not the Funds), to the
extent of its investment discretion provided under Article VI, shall be liable
for any consequences resulting from investing assets of the Qualified Funds in
other than permissible assets or from self-dealing as defined in Code section
468A(e)(5) and Treasury Regulations section 1.468A-5(b).
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The Trustee is prohibited from doing any act or knowingly engaging in
any transaction that would violate the terms and conditions of any instructions
provided by written Certificate of the Company that are consistent with this
Agreement, or contravening any provision of this Agreement. Upon receipt of a
Certificate of the Company giving the Trustee notice of either (a) instructions
of the Company to the Trustee, or (b) acts or transactions the Company believes
constitute a violation by the Trustee of the provisions of this Agreement, the
Trustee shall follow the instructions of the Company, and/or cease and desist
from the acts identified in the Certificate as violating the provisions of this
Agreement. To the extent the Trustee fails to follow the instructions of the
Company, or continues with any act identified in the Certificate as violating
the provisions of this Agreement, from the date of receipt of the Certificate
providing the instructions and/or notice of violation of the provisions of this
Agreement, the Trustee (and not any Fund) shall be liable for all consequences
flowing from any failure to follow the Company's instructions, and/or flowing
from any violation by the Trustee of the provisions of this Agreement.
Notwithstanding the foregoing, the Trustee (and not any Fund) shall be liable
for all consequences flowing from any violation by the Trustee of the provisions
of this Agreement, regardless of whether notice thereof was provided by the
Company.
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3.07 Indemnity of Trustee. The Company hereby agrees to indemnify the
Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without gross negligence, willful recklessness or bad faith on the part
of the Trustee, arising out of or in connection with its entering into this
Agreement and carrying out its duties hereunder, including the costs and
expenses of defending itself against any claim of liability, provided such loss,
liability or expense does not result from self-dealing under Section 3.06
hereof, and provided further that no such costs or expenses shall be paid if the
payment of such costs or expenses is prohibited by section 468A of the Code or
regulations thereunder.
IV
INVESTMENTS
4.01 Appointment of Investment Manager(s). The Company may appoint one
or more Investment Managers to direct the investment of all or part of the
assets of the Funds. The Company shall also have the right to remove any such
Investment Manager. The appointment of the Investment Manager(s) shall be made
in accordance with any procedure specified by the Company. The Company shall
provide notice of any such appointment by Certification to the Trustee which
shall specify the portion of the Funds with respect to which the Investment
Manager(s) has been designated. The Investment Manager(s) shall certify in
writing to the Trustee that it is qualified to act in the capacity provided
under the Investment Manager Agreement, shall accept its appointment as such
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Investment Manager(s), shall certify the identity of the person or persons
authorized to give instructions or directions to the Trustee on its behalf,
including specimen signatures, and shall undertake to perform the duties imposed
on it under the Investment Manager Agreement. The Trustee may continue to rely
upon all such certifications unless otherwise notified in writing by the Company
or the Investment Manager(s), as the case may be.
4.02 Direction by Investment Managers. Notwithstanding Article VI, the
Investment Manager(s) designated by the Company to manage any portion of the
assets of the Funds shall have authority to manage, acquire, and dispose of the
assets of the Funds, or a portion thereof as the case may be. The Investment
Manager(s) is authorized to invest in securities specified in Section 6.02. The
Investment Manager(s) shall have the power and authority, exercisable in its
sole discretion at any time, and from time to time, to issue and place orders
for the purchase or sale of portfolio securities directly with qualified brokers
or dealers. The Trustee, upon proper notification from an Investment Manager,
shall execute and deliver in accordance with the appropriate trading
authorizations. Written notification of the issuance of each such authorization
shall be given promptly to the Trustee by the Investment Manager(s), and the
Investment Manager(s) shall cause the execution of such order to be confirmed in
writing to the Trustee by the broker or dealer. Such notification shall be
proper authority for the Trustee to pay for portfolio securities purchased
against receipt thereof and to deliver portfolio securities sold against payment
therefor, as the case may be.
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The authority of the Investment Manager(s) and the terms and conditions
of the appointment and retention of the Investment Manager(s) shall be the
responsibility solely of the Company, and the Trustee shall not be deemed to be
a party to or to have any obligations under any agreement with the Investment
Manager(s). Any duty of supervision or review of the acts, omissions or overall
performance of the Investment Manager(s), shall be the exclusive responsibility
of the Company, and, except as provided in Section 3.06, the Trustee shall have
no duty to review any securities or other assets purchased by the Investment
Manager(s) or to the Company with respect to the exercise or nonexercise of any
power by the Investment Manager(s).
Unless the Trustee participates knowingly in, or knowingly undertakes
to conceal an act or omission of an Investment Manager(s) knowing such act or
omission to be a breach of the fiduciary responsibility of the Investment
Manager(s), the Trustee shall be under no liability of any kind which may result
by reason of any action taken by it in accordance with any direction of the
Investment Manager(s). In any event, the Trustee shall be under no liability for
any loss of any kind by reason of changes in value of the investments purchased,
sold, or retained by the Investment Manager(s), nor for the risk or
diversification of the portfolio, nor for the turnover of the investments, nor
for any other aspect of a portfolio for which an Investment Manager(s) has been
appointed.
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V
TRUSTEE'S GENERAL POWERS
The Trustee Shall have, with respect to the Funds, the following
powers, all of which powers are fiduciary powers to be exercised in a fiduciary
capacity and in the best interests of the Funds and the beneficiaries thereof,
and which are to be exercised as the Trustee, acting in Such fiduciary capacity,
in its discretion, shall determine and, which, except as otherwise provided, are
intended in no way to limit the powers of the office, namely:
5.01 Payment of Expenses of Administration. To pay all ordinary and
necessary expense and other incidental costs including, but not limited to,
Investment Manager(s) fees and the fees and/or compensation of any professional
advisors, legal counsel or administrative support hired by the Company, expenses
and insurance policy premiums incurred in connection with this Agreement or the
Funds in the discharge of the Trustee's fiduciary obligations under this
Agreement, but only to the extent that such amount(s): (1) may be incurred and
paid from the Funds without causing the Funds to become disqualified from the
application of Section 468A of the Code or any applicable successor provisions;
and (2) are permissible under the ANPP Participation Agreement.
5.02 Extension of Obligations and Negotiation of Claims. To renew or
extend the time of payment of any obligation, secured or unsecured, payable to
or by this Trust, for as long a period or periods of time and on such terms as
the Trustee shall determine, and to adjust, settle, compromise, and arbitrate
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claims or demands in favor of or against this Trust, including claims for taxes,
upon such terms as the Trustee may deem advisable, subject to the limitations
contained in Section 6.03 (regarding self-dealing), and the procedures contained
in Section 2.01.
5.03 Registration of Securities. To hold any stocks, bonds, securities,
and/or other property in the name of a nominee, in a street name, or by other
title-holding device, without indication of trust.
5.04 Location of Assets. To keep any property belonging to any Fund at
any place in the United States.
5.05 Retention of Professional Services. To execute any of the powers
hereof and perform the duties required of it hereunder by or through its
employees, agents, attorneys, contractors or receivers.
5.06 Delegation of Ministerial Powers. To delegate to other persons
such ministerial powers and duties as the Trustee may deem to be advisable.
5.07 Powers of Trustee to Continue Until Final Distribution. To
exercise any of such powers after the date on which the principal and income of
the Funds shall have become distributable and until such time as the entire
principal of, and income from, the Funds shall have been actually distributed by
the Trustee. It is intended that distribution of the assets of the Funds will
occur as soon as possible upon termination of the Agreement, subject, however,
to the limitations contained in Sections 2.08, 2.09 and 2.10 hereof.
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5.08 Voting. To vote in person or by proxy (at the direction of an
Investment Manager to the extent an asset is being managed by an Investment
Manager) any stocks, bonds or other securities held by the Funds.
5.09 Power to Join in or Dissent From Certain Events. To join in,
dissent or oppose the reorganization, recapitalization, consolidation, sale or
merger of corporations or properties in which the Funds may hold stocks, bonds
or other securities or in which the Funds may be interested, upon such terms and
conditions as deemed wise; to pay any assessments or subscriptions in connection
therewith, and to accept any securities or property, whether or not the Trustee
would be authorized to invest in such securities or property, which may be
issued upon any such reorganization, recapitalization, consolidation, sale or
merger and thereafter to hold the same, without any duty to sell.
5.10 Prohibition Against Real Estate Investment. Notwithstanding
anything else in this Agreement to the contrary, including, without limitation,
any specific or general power granted to the Trustee and the Investment
Manager(s), no portion of the Funds shall be invested in real estate. For
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purposes of this section 5.10, "real estate" includes, but is not limited to,
real property, leaseholds or mineral interests.
5.11 Discretion in Exercise of Powers. To do any and all other acts
which the Trustee shall deem proper to effectuate the powers specifically
conferred upon it by this Agreement, provided, however, that the Trustee may
not, in its discretionary exercise of powers, do any act or knowingly engage in
any transaction which would:
(1) Disqualify the Qualified Funds from the application of
Section 468A (or any applicable successor provision) of the
Code; or
(2) Contravene any provision of this Agreement; or
(3) Violate any terms or conditions of applicable law.
VI
TRUSTEE'S INVESTMENT POWERS
The Trustee recognizes the authority of the Investment Manager(s) to
manage, invest, and reinvest the assets of the Funds pursuant to the Investment
Manager Agreement and as provided in Section 4.02 of this Agreement, and the
Trustee agrees to cooperate with the Investment Manager(s) as deemed necessary
to accomplish these tasks; provided, however, that to the extent an Investment
Manager is not otherwise appointed by the Company, or to the extent that an
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Investment Manager has not invested Fund monies, the Trustee shall act in the
capacity of the Investment Manager as provided in Article IV. Upon the written
authorization of the Company from time to time, the Trustee shall have the
following investment powers, all of which are fiduciary powers to be executed in
a fiduciary capacity and in the best interest of the Funds and the beneficiaries
thereof, and which are to be exercised by the Trustee, acting in such fiduciary
capacity, in its discretion, shall determine and, except as otherwise provided,
which are intended in no way to limit the powers of the office, namely:
6.01 Investment Standards. The Trustee in its exercise of investment
discretion as authorized by the Company and consistent with any investment
standards of the NMPUC, any other relevant regulatory agency and the ANPP
Participation Agreement, shall hold, manage, and invest the assets of the Funds,
except as provided in Section 6.02;
6.02 Investment of Funds. To invest and reinvest all or part of the
Funds, including any undistributed income therefrom; provided, however, that no
such investment or reinvestment of the Funds may be made by the Trustee which
would contravene any instructions issued by the Company or any applicable
investment standards. In all cases, however, the total investments by the
Trustee must be sufficiently liquid to enable the Master Trust to fulfill the
purposes of the Master Trust and to satisfy obligations of the Master Trust as
such obligations become due. Nothing in this Section 6.02 shall be construed as
authorizing the Trustee to carry on any business or to divide the gains
therefrom.
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6.03 Management of Master Trust. To sell, exchange, partition, or
otherwise dispose of all or any part of the Master Trust at public or private
sale, without prior application to, or approval by, or order of any court, upon
such terms and in such manner and at such prices as the Trustee shall determine;
to modify, renew or extend bonds, notes or other obligations or any installment
of principal thereof or any interest due thereon and to waive any defaults in
the performance of the terms and conditions thereof; and to execute and deliver
any and all bills of sale, assignments, bonds or other instruments in connection
with these powers, all at such times, in such manner and upon such terms and
conditions as the Trustee may deem expedient to accomplish the purposes of this
Master Trust as set forth in Section 1.03.
Notwithstanding anything contained in this Agreement to the contrary,
the Trustee may not authorize or carry out any sale, exchange or other
transaction which would constitute an act of "self-dealing" within the meaning
of Section 4951 of the Code, as such section is made applicable to the Qualified
Funds by Section 468A(e)(5) of the Code, any regulations thereunder, and any
applicable successor provision.
6.04 Disposition of Investments. When required to make any payments
under Section 2.01 or 5.01 hereof, from monies over which the Trustee has
discretion, the Trustee shall sell investments at the best price reasonably
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obtainable, or present investments for prepayment, but only upon written
direction from the Company. The Trustee shall have no liability, except for its
own negligence or willful misconduct, with respect to any sale or prepayment of
an investment directed by the Company or an Investment Manager or made by an
Investment Manager through a broker-dealer.
6.05 Power to Hold Uninvested Cash. To hold uninvested cash in a
commercial bank of the Trustee or that of an affiliate, as it shall deem
necessary.
6.06 Cash Sweep Provision. To invest in any collective, common or
pooled trust fund operated or maintained exclusively for the commingling of and
collective investment of monies or other assets including any such funds
operated or maintained by the Trustee or an affiliate.
VII
MISCELLANEOUS
7.01 Headings. The section headings set forth in this Agreement and the
Table of Contents are inserted for convenience of reference only and shall be
disregarded in the construction or interpretation of any of the provisions of
this Agreement.
7.02 Particular Words. Any word contained in the text of this Agreement
shall be read as the singular or plural and as the masculine, feminine, or
neuter as may be applicable or permissible in the particular context. Unless
otherwise specifically stated, the word "person" shall be taken to mean and
include an individual, partnership, association, trust, company, or corporation.
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7.03 Parties Interested Herein. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon, or to give to, any
person or corporation, other than the Company and the Trustee any right, remedy
or claim under or by reason of this Agreement, or any covenant, condition or
stipulation contained herein. The Company shall be entitled to receive payments
for Decommissioning Costs and administrative expenses of the Funds which the
Company may incur in carrying out the purposes set forth in Section 1.03 of this
Agreement.
7.04 Severability of Provisions. If any provision of this Agreement or
its application to any person or entity or in any circumstances shall be invalid
and unenforceable, the application of such provision to persons and in
circumstances other than those as to which it is invalid or unenforceable and
the other provisions of this Agreement, shall not be affected by such invalidity
or unenforceability.
7.05 Form and Content of Communications. The names of any person
authorized to act on behalf of the Company shall be certified, with the specimen
signature of such person, to the Trustee by the Company. Until it receives
appropriate written evidence to the contrary, the Trustee shall be fully
protected in relying upon or acting in accordance with any written notice,
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instruction, direction, certificate, resolution, or other communication believed
by it to be genuine and to be signed and/or certified by any proper person, and
the Trustee shall be under no duty to make any investigation or inquiry as to
the truth or accuracy of any statement contained therein. Until notified in
writing to the contrary, the Trustee shall have the right to assume that there
has been no change in the identity or authority of any person previously
certified to it hereunder.
7.06 Delivery of Notices Under Agreement. Any notice required by this
Agreement to be given to the Company or the Trustee shall be deemed to have been
properly given when mailed, postage prepaid, by registered or certified mail, to
the person to be notified as set forth below:
If to the Company:
PUBLIC SERVICE COMPANY OF NEW MEXICO Alvarado Square Albuquerque, New Mexico
87158
Attention: Robert G. McMahon
If to the Trustee:
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Attention: Denise A. Fuhrer
The Company or the Trustee may change that address by delivering notice thereof
in writing to the other party.
7.07 Successors and Assigns. Subject to the provisions of Sections 2.07
and 3.01, this Agreement shall be binding upon and inure to the benefit of the
Company, the Trustee and their respective successors, assigns, personal
representatives, executors and heirs.
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7.08 Governing Jurisdiction. Each Fund is a Pennsylvania trust and all
questions pertaining to its validity, construction, and administration shall be
determined in accordance with the laws of the Commonwealth of Pennsylvania to
the extent not preempted by Federal law.
7.09 Accounting Year. Each Fund shall operate on an accounting year
which coincides with the calendar year, January 1 through December 31.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
7.11 Disbursement Withdrawal Certificate. No provision of this
Agreement shall be construed or applied so as to require the preparation of a
Disbursement Certificate or a Withdrawal Certificate to authorize the payment of
compensation to the Trustee under Section 3.03 or of the expenses of
administration under Section 5.01.
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IN WITNESS WHEREOF, the Company and the Trustee have set their hands
and seals to this Agreement as of the day and year first above written.
PUBLIC SERVICE COMPANY OF NEW MEXICO
By: ________________________________
Title
Attest: ____________________________
Title
MELLON BANK, N.A.
By: ________________________________
Title
Attest: ____________________________
Title
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Exhibit A
DISBURSEMENT CERTIFICATE
The undersigned, being Authorized Representatives of Public
Service Company of New Mexico ("Company"), a New Mexico corporation, and, in
such capacity, being authorized and empowered to execute and deliver this
certificate, hereby certify to the Trustee pursuant to Section 2.01 of the
Public Service Company of New Mexico Master Decommissioning Trust Agreement for
Palo Verde Nuclear Generating Station ("Palo Verde"), dated March ___, 1995:
(1) there is due and owing to each payee ("Payee") [all/a
portion] of the invoiced cost to the Company for goods or
services provided in connection with the decommissioning of
Unit [One/Two/Three] of Palo Verde as evidenced by the
Invoice Schedule (with supporting exhibits) attached as
Exhibit 1 hereto;
(2) all such amounts due and owing to the Payees constitute
Decommissioning Costs; and
(3) all conditions precedent to the making of this withdrawal
and disbursement set forth in any agreement between such
Payee and the Company have been fulfilled.
Accordingly, you are hereby authorized to withdraw $__________
from the [Palo Verde Unit 1/Palo Verde Unit 2/Palo Verde Unit 3]
[Qualified/Nonqualified] Fund in order to permit payment of such sum to be made
to Payees for such purpose. You are further authorized to disburse such sum,
once withdrawn, directly to such Payees in the following manner: [DESCRIBE:
JOINT PAYEE CHECK, WIRE TRANSFER, ETC.] on or before , 19__.
Executed this day of , 19__.
By:
--------------------------------
Authorized Representative
--------------------------------
Authorized Representative
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Exhibit B
WITHDRAWAL CERTIFICATE
The undersigned, being Authorized Representatives of Public
Service Company of New Mexico ("Company"), a New Mexico corporation, and in such
capacity, being duly authorized and empowered to execute and deliver this
certificate, hereby certify to the Trustee pursuant to Section 2.01 of the
Public Service Company of New Mexico Master Decommissioning Trust Agreement for
Palo Verde Nuclear Generating Station dated March __, 1995:
(1) there is due and owing to the Company [all/a portion] of
the invoiced cost to the Company for goods or services
provided in connection with the decommissioning of Palo
Verde as evidenced by the Invoice Schedule with supporting
exhibits attached as Exhibit 1 hereto;
(2) all such amounts have been paid by the Company and
constitute Decommissioning Costs; and
(3) all conditions precedent to the making of this withdrawal
and disbursement and the payment by the Company of the
Decommissioning Costs set forth in any agreement between
such payee of the Companies and the Company have been
fulfilled.
Accordingly, you are hereby authorized to withdraw $__________
from the [Palo Verde Unit 1/Palo Verde Unit 2/Palo Verde Unit 3]
[Qualified/Nonqualified] Fund in order to permit payment of such sum to be made
to the Company for such purpose. You are further authorized to disburse such
sum, once withdrawn, directly to such Payees in the following manner: [DESCRIBE:
JOINT PAYEE CHECK, WIRE TRANSFER, ETC.] on or before , 19__.
Executed this day of , 19__.
By:
--------------------------------
Authorized Representative
---------------------------------
Authorized Representative
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