-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J6Zo/fgnDFP7X2VkNELGcXi//Zip56gVa0hlChaO7c4qa2v9eR0B05gqrYpTDEXk CmZVvwVZL9sdLZ7Mk57HRg== 0000950147-01-501152.txt : 20010628 0000950147-01-501152.hdr.sgml : 20010628 ACCESSION NUMBER: 0000950147-01-501152 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 9 REFERENCES 429: 333-94277 FILED AS OF DATE: 20010627 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARIZONA PUBLIC SERVICE CO CENTRAL INDEX KEY: 0000007286 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 860011170 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-63994 FILM NUMBER: 1669237 BUSINESS ADDRESS: STREET 1: 400 N FIFTH ST STREET 2: P O BOX 53999 CITY: PHOENIX STATE: AZ ZIP: 85004 BUSINESS PHONE: 6022501000 S-3 1 e-7038.txt FORM S-3 OF ARIZONA PUBLIC SERVICE COMPANY As Filed With the Securities and Exchange Commission On June 27, 2001 Registration No. 333-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ---------- ARIZONA PUBLIC SERVICE COMPANY (Exact name of Registrant as specified in its charter) ARIZONA 86-0011170 (State of Incorporation) (I.R.S. Employer Identification Number) 400 North Fifth Street Phoenix, Arizona 85004 (602) 250-1000 (Address, including zip code and telephone number, including area code, of registrant's principal executive offices) ---------- MATTHEW P. FEENEY Snell & Wilmer L.L.P. One Arizona Center Phoenix, Arizona 85073 (602) 382-6239 (Name, address, including zip code and telephone number, including area code, of agent for service) ---------- Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement, as determined by market conditions and other factors. ---------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act Registration Statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 464(c) under the Securities Act, check the following and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE ================================================================================================================= Proposed Proposed Maximum Maximum Amount Offering Aggregate Amount of Title of Each Class of to be Price Offering Registration Securities to be Registered Registered Per Unit Price Fee - ----------------------------------------------------------------------------------------------------------------- First Mortgage Bonds.................. (1)(3) (2) (1)(2)(3) N/A Debt Securities....................... (1)(4) (2) (1)(2)(4) N/A Total............................ $500,000,000 (2) $500,000,000 $125,000(5) =================================================================================================================
(1) In no event will the aggregate initial offering price of all securities issued from time to time pursuant to this Registration Statement exceed $500,000,000. If any such securities are issued at an original issue discount, then the aggregate initial offering price as so discounted shall not exceed $500,000,000, notwithstanding that the stated principal amount of such securities may exceed such amount. (2) The proposed maximum initial offering price per unit will be determined, from time to time, by the Registrant in connection with the issuance by the Registrant of the securities registered hereunder. (3) Subject to Footnote (1), there are being registered hereunder an indeterminate principal amount of First Mortgage Bonds as may be sold, from time to time, by the Registrant. (4) Subject to Footnote (1), there are being registered hereunder an indeterminate principal amount of Debt Securities as may be sold, from time to time, by the Registrant. (5) Calculated pursuant to Rule 457(o) of the rules and regulations under the Securities Act of 1933. Pursuant to Rule 429 of the rules and regulations under the Securities Act of 1933, this Registration Statement contains a combined prospectus relating to the $500,000,000 principal amount of securities registered hereby and $225,000,000 principal amount of securities registered on January 21, 2000 pursuant to Registration No. 333-94277. The previously-paid filing fees associated with the referenced securities registered under Registration No. 333-94277 totalled $59,400. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE AN OFFER OR SALE IS PROHIBITED. SUBJECT TO COMPLETION, DATED JUNE 27, 2001 Prospectus ARIZONA PUBLIC SERVICE COMPANY $725,000,000 First Mortgage Bonds Debt Securities We may offer and sell first mortgage bonds and debt securities from time to time in one or more offerings. This prospectus provides you with a general description of the first mortgage bonds and debt securities we may offer. Each time we sell first mortgage bonds or debt securities, we will provide a supplement to this prospectus that contains specific information about the offering and the terms of the first mortgage bonds or debt securities. The supplement may also add, update, or change information contained in this prospectus. You should carefully read this prospectus and any supplement before you invest in any of our first mortgage bonds or debt securities. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------- The date of this prospectus is ___, 2001 TABLE OF CONTENTS Page ---- About This Prospectus...................................................... 3 Forward-Looking Statements................................................. 3 Where You Can Find More Information........................................ 4 Business of Arizona Public Service Company................................. 5 Ratio of Earnings to Fixed Charges......................................... 5 Use of Proceeds............................................................ 5 Description of First Mortgage Bonds........................................ 5 Description of Debt Securities............................................. 9 Global Securities.......................................................... 16 Regarding the Trustees..................................................... 18 Plan of Distribution....................................................... 18 Experts.................................................................... 19 Legal Opinions............................................................. 19 2 ABOUT THIS PROSPECTUS This prospectus is part of a shelf registration statement that we filed with the United States Securities and Exchange Commission, or the SEC. You should rely only on the information contained or incorporated by reference in this prospectus and in any supplement. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We will not make an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the supplement to this prospectus is accurate as of the dates on their covers. Our business, financial condition, results of operations, and prospects may have changed since those dates. FORWARD-LOOKING STATEMENTS This prospectus, any accompanying prospectus supplement, and the additional information described under the heading "Where You Can Find More Information" may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties and are based on the beliefs and assumptions of our management, based on information currently available to our management. When we use words such as "believes," "expects," "anticipates," "intends," "plans," "estimates," "should," or similar expressions, we are making forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties, and assumptions. Our future results may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond our ability to control or predict. These factors include, but are not limited to: * the ongoing restructuring of the electric industry; * the outcome of regulatory and legislative proceedings relating to the restructuring; * regional economic and market conditions, including the California energy situation, which could affect customer growth and the cost of power supplies; * the cost of debt and equity capital; * weather variations affecting local and regional customer energy usage; * conservation programs; * our ability to compete successfully outside traditional regulated markets (including the wholesale market); * technological developments in the electric industry; and * other uncertainties, all of which are difficult to predict and many of which are beyond our control. You are cautioned not to put undue reliance on any forward-looking statements. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for any forward-looking statements contained in this prospectus and any prospectus supplement. 3 WHERE YOU CAN FIND MORE INFORMATION AVAILABLE INFORMATION We file annual, quarterly, and special reports, and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC's web site: http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois. You may call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Reports and other information concerning us can also be inspected and copied at the offices of the New York Stock Exchange at 20 Broad Street, New York, New York 10005. INCORPORATION BY REFERENCE The SEC allows us to incorporate by reference the information we file with them, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and later information that we file with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until all securities are sold under this prospectus. * Annual Report on Form 10-K for the fiscal year ended December 31, 2000; * Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2001; and * Current Reports on Form 8-K dated November 27, 2000, and April 5, 2001. You may request a copy of these filings and will receive a copy of these filings, at no cost, by writing or telephoning us at the following address: Arizona Public Service Company Office of the Secretary Station 9046 P.O. Box 53999 Phoenix, Arizona 85072-3999 (602) 250-5608 4 BUSINESS OF ARIZONA PUBLIC SERVICE COMPANY We were incorporated in 1920 under the laws of Arizona and we are Arizona's largest electric utility, with more than 850,000 customers. We provide wholesale or retail electric service to the entire state of Arizona, with the exception of Tucson and about one-half of the Phoenix area. We also generate and, directly or through Pinnacle West Capital Corporation's power marketing division, sell and deliver electricity to wholesale customers in the western United States. We are a wholly-owned subsidiary of Pinnacle West Capital Corporation. Our principal executive offices are located at 400 North Fifth Street, Phoenix, Arizona 85004, 602-250-1000. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the historical ratio of our earnings to fixed charges for each of the indicated periods: Three Months Ended Twelve Months Ended March 31, December 31, --------- ----------------------------------------------- 2001 2000 1999 1998 1997 1996 ---- ---- ---- ---- ---- ---- 3.55 3.88 2.05(a) 3.19 3.07 2.84 For the purposes of these computations, earnings are defined as the sum of our pre-tax income plus our fixed charges and the fixed charges of our subsidiaries. Fixed charges consist of interest on debt, amortization of debt discount, premium, and expense, and an estimated interest factor in rentals. - ---------- (a) The ratio for twelve months ended December 1999 reflects an extraordinary charge of $140 million for a regulatory disallowance. The ratio would be 3.32 without consideration of the extraordinary charge. USE OF PROCEEDS We will add the net proceeds from any sale of first mortgage bonds or debt securities to our general corporate funds. We will use the net proceeds to repay debt and for general corporate purposes. A prospectus supplement may include other uses of the net proceeds. DESCRIPTION OF FIRST MORTGAGE BONDS GENERAL The following description highlights the general terms of the first mortgage bonds. When we offer first mortgage bonds in the future, the prospectus supplement will explain the particular terms of those securities and the extent to which these general provisions will not apply. Our mortgaged property will secure the first mortgage bonds. The first mortgage bonds will be issued under a Mortgage and Deed of Trust, dated as of July 1, 1946, between us and The Bank of New York. The Mortgage allows us to issue first mortgage bonds in one or more series. We have summarized selected provisions of the Mortgage below. The summary is not complete. We have filed the form of the Mortgage as an exhibit to the registration statement and you should read any provisions of the Mortgage that may be important to you. You should refer to the prospectus supplement attached to this prospectus for the following information about a new series of first mortgage bonds: * the aggregate principal amount of the first mortgage bonds; * the date on which the first mortgage bonds mature; * the interest rate; 5 * when the interest on the first mortgage bonds accrues and is payable; * whether and when we can redeem the first mortgage bonds, and at what price; * the record dates for the payment of interest and principal; * whether the first mortgage bonds will be issued in the form of one or more global securities; and * any other terms. We will pay interest to the person in whose name the first mortgage bonds are registered at the close of business on the record date that precedes the interest payment date. The supplemental indenture to the Mortgage that contains the terms of the first mortgage bonds will also contain the record date. We will issue the first mortgage bonds as fully registered bonds, without coupons, in $1,000 denominations and multiples thereof. The holders of the first mortgage bonds may transfer them at any time without any service or other charge, except for transfer taxes and other governmental charges, if any. We, the trustee, and any of our agents may treat the registered holder of a debt security as the absolute owner for the purpose of making payments, giving notices, and for all other purposes. Other than the protections described in this prospectus and in the prospectus supplement, holders of first mortgage bonds would not be protected by the covenants in the Mortgage from a highly-leveraged transaction. REDEMPTION Unless indicated differently in a prospectus supplement, we may redeem the first mortgage bonds at their principal amount plus accrued interest to the redemption date in any of the following ways: * in whole or in part using the proceeds when any of our mortgaged property is taken under eminent domain; * in whole or in part using the proceeds of the sale or other disposition of property that is released from the lien of the Mortgage; * in whole, together with all other first mortgage bonds then outstanding, within twelve months of a transaction involving the transfer of substantially all of the property subject to the lien of the Mortgage; or * in whole or in part with cash deposited in a replacement fund. SECURITY The first mortgage bonds will rank on an equal basis with all first mortgage bonds at any time outstanding under the Mortgage, except for any sinking fund or similar fund that is provided for in a particular series. The Mortgage creates a first mortgage lien on substantially all the property we own. However, the lien does not cover interests in Unit 2 of the Palo Verde Nuclear Generating Station that we lease, or any other property specifically excluded from the Mortgage. The Mortgage lien and the title to some of our properties are subject to excepted encumbrances, minor leases, defects, irregularities, and deficiencies, and are subject to the considerations discussed below regarding the Four Corners Plant and Navajo Plant locations. The Mortgage lien also extends to all property acquired after the effective date of the Mortgage, other than specifically excluded property, for which proper filings and recordings have been made. In the case of property acquired after the effective date of the Mortgage lien, however, the Mortgage lien is subject to encumbrances and to liens existing or placed on the property at the time we acquire it. 6 Both the Four Corners Plant and the Navajo Plant are located on property held under leases from the Navajo Tribe and easements from the Secretary of the Interior. The leases extend from their effective dates in 1966 and 1969 for terms of 50 years with rights of renewal for up to 25 additional years. The easements are for 50-year terms from the same effective dates. Although we own the rights granted to us by the leases from the Navajo Tribe, we do not make any representation about the Navajo Tribe's interest in the lands leased, but we are not aware of any assertion of a contesting claim to the lands. We also do not make any representations about the enforceability of the leases against the Navajo Tribe. The Mortgage requires us to keep our encumbered property in good repair and working order as an operating system. However, we are permitted to permanently discontinue or reduce the capacity of any property if: * in the judgment of our Board of Directors, it is desirable in the conduct of our business; * a regulatory authority orders us to do so; or * we are going to sell or dispose of the property. If we are not in default under the Mortgage, we may obtain a release from the Mortgage lien of: * unserviceable, obsolete, or unnecessary property, but only if we replace the property with property of equal value; or * other property that we have sold or otherwise disposed of, but only if we: * deposit with the trustee cash in an amount equal to the released property's fair value; * use redeemed or retired first mortgage bonds in an amount equal to the released property's fair value; or * use as a credit additional property we acquired within the preceding five years that has fair value equal to the released property's fair value. The trustee may, and upon our request must, cancel and discharge the Mortgage lien and all supplemental indentures to the Mortgage when we have repaid all of the debt secured by the Mortgage. ISSUANCE OF ADDITIONAL FIRST MORTGAGE BONDS We may issue additional first mortgage bonds under the Mortgage in a principal amount equal to: * 60% of net property additions; * the principal amount of redeemed or retired first mortgage bonds; and/or * deposited cash, but only if our adjusted net earnings over the twelve-month period within fifteen months preceding the month in which we issue the bonds are at least two times the annual interest on all outstanding first mortgage bonds after the issuance and on debt secured by prior liens. There are exceptions to this earnings coverage requirement for first mortgage bonds issued on the basis of redeemed or retired first mortgage bonds when the redeemed or retired first mortgage bonds had a higher rate of interest and when other conditions are satisfied. 7 We can support the issuance of new first mortgage bonds by using property located on leaseholds or easements, such as the Four Corners and Navajo Plants, if the leasehold or easement has an unexpired term of, or the term is extendable at our option for, at least 30 years after the date of issuance, or if we may remove the property without compensation. As of March 31, 2001, we estimate that the Mortgage would have allowed us to issue up to approximately $2.77 billion of additional first mortgage bonds. In addition to complying with the Mortgage restrictions placed on the issuance of additional first mortgage bonds, we must obtain the approval of the Arizona Corporation Commission, which we refer to as the ACC, before incurring long-term debt. Existing ACC orders allow us to have approximately $2.6 billion in principal amount of long-term debt outstanding at any one time. We do not expect these orders to limit our ability to meet our capital requirements. REPLACEMENT FUND So long as any of our first mortgage bonds are outstanding, the Mortgage requires us to deposit cash with the trustee each calendar year in an amount related to net additions to our mortgaged utility plant. However, we may satisfy all or any part of this requirement by using redeemed or retired first mortgage bonds, property additions, or property retirements. For 2000, our replacement fund requirement was about $149 million. Any cash that we deposit may, upon our request, be applied to the redemption or repurchase of first mortgage bonds. We may withdraw the cash from the trustee by using additional property we acquire or redeemed or retired first mortgage bonds. If we do not withdraw the cash from the trustee within five years of deposit, the trustee must use the cash to redeem outstanding first mortgage bonds. The prospectus supplement relating to a particular series of first mortgage bonds may describe restrictions on our ability to redeem the first mortgage bonds with cash we deposit with the trustee to meet our replacement fund requirements. EVENTS OF DEFAULT The following are events of default under the Mortgage: * our failure to pay the principal of any first mortgage bond when due and payable; * our failure to pay interest on any first mortgage bond within 60 days after it is due and payable; * our failure to pay any installment of any fund required to be applied to the purchase or redemption of first mortgage bonds within 60 days after it is due and payable; * bankruptcy, insolvency, and reorganization events involving us; and * our failure to perform any other covenant of the Mortgage which continues for 90 days after notice by the trustee or holders of 15% in principal amount of eligible bonds. The Mortgage allows the trustee to withhold notice of defaults if the trustee determines in good faith that withholding the notice is in the interests of the bondholders. The trustee may not withhold notice of any default in the payment of principal or interest or any sinking, improvement, replacement, or purchase fund installment. Those holding at least a majority in principal amount of the first mortgage bonds may direct the time, method, and place of conducting any proceeding for any remedy available to the trustee. However, the trustee may decline to follow any direction under some circumstances, including the trustee's good faith determination that it will not be sufficiently indemnified for any expenditures. We are required to file with the trustee, on or before July 1 of each year, a certificate stating we have complied with all of the provisions of the Mortgage and that we are not in default and, if we have not complied, stating all known defaults. 8 MODIFICATION OF THE MORTGAGE The Mortgage and the rights of bondholders may be modified if the following parties consent to the modification: * us; * the trustee, if the trustee is affected by the modification; * holders of at least 70% in principal amount of the first mortgage bonds, if all series are affected by the modification; or * holders of at least 70% in principal amount of any series of first mortgage bonds affected by the modification, if all series are not affected. However, the holder of each first mortgage bond affected must consent to any modification that would: * affect the rights of the holder to receive payment of the principal, premium, or interest on any first mortgage bonds on the dates due or to institute suit to enforce such right; * permit the creation of an additional lien ranking prior or equal to the lien of the Mortgage to any of the mortgaged property; * deprive any nonassenting bondholder of a lien upon the mortgaged property for the security of the holder's first mortgage bonds; or * reduce the percentage of bondholders required to consent to a modification. RESTRICTIONS ON DIVIDENDS The Mortgage restricts the payment of dividends on our common stock under conditions that have not existed in the past and do not currently exist. DESCRIPTION OF DEBT SECURITIES GENERAL The following description highlights the general terms of the debt securities. When we offer debt securities in the future, the prospectus supplement will explain the particular terms of those securities and the extent to which any of these general provisions will not apply. The debt securities will be our unsecured obligations. The debt securities may be issued in one or more new series under: * an Indenture, dated as of January 1, 1995, between The Bank of New York and us, in the case of subordinated debt securities; or * an Indenture, dated as of January 15, 1998, between The Chase Manhattan Bank and us, in the case of senior debt securities. We have summarized selected provisions of the Indentures below. The summary is not complete. We have filed the forms of the Indentures as exhibits to the registration statement. You should read the Indentures in their entirety, including the definitions of certain terms, together with this 9 prospectus and the prospectus supplement before you make any investment decision. Although separate Indentures are used for subordinated debt securities and senior debt securities, the description of the Indenture in this section applies to both Indentures, unless otherwise noted. You should refer to the prospectus supplement attached to this prospectus for the following information about a new series of debt securities: * title of the debt securities; * the aggregate principal amount of the debt securities or the series of which they are a part; * the date on which the debt securities mature; * the interest rate; * when the interest on the debt securities accrues and is payable; * the record dates; * places where principal, premium, or interest will be payable; * periods within which, and prices at which we can redeem debt securities at our option; * any obligation on our part to redeem or purchase debt securities pursuant to a sinking fund or at the option of the holder; * denominations and multiples at which debt securities will be issued if other than $1,000; * any index or formula from which the amount of principal or any premium or interest may be determined; * any allowance for alternative currencies and determination of value; * whether the debt securities are defeasible under the terms of the Indenture; * whether we are issuing the debt securities as global securities; * any additional or different events of default and any change in the right of the trustee or the holders to declare the principal amount due and payable if there is any default; * any addition to or change in the covenants in the Indenture; and * any other terms. We may sell the debt securities at a substantial discount below their principal amount. The prospectus supplement may describe special federal income tax considerations that apply to debt securities sold at an original issue discount or to debt securities that are denominated in a currency other than United States dollars. Other than the protections described in this prospectus and in the prospectus supplement, holders of debt securities would not be protected by the covenants in the Indenture from a highly-leveraged transaction. 10 SUBORDINATION The Indenture relating to the subordinated debt securities states that, unless otherwise provided in a supplemental indenture or a board resolution, the debt securities will be subordinate to all senior debt. This is true whether the senior debt is outstanding as of the date of the Indenture or is incurred afterwards. The balance of the information under this heading assumes that a supplemental indenture or a board resolution results in a series of debt securities being subordinated obligations. The Indenture states that we cannot make payments of principal, premium, or interest on the subordinated debt if: * the principal, premium or interest on senior debt is not paid when due and the applicable grace period for the default has ended and the default has not been cured or waived; or * the maturity of any senior debt has been accelerated because of a default. The Indenture provides that we must pay all senior debt in full before the holders of the subordinated debt securities may receive or retain any payment if our assets are distributed to our creditors upon any of the following: * dissolution; * winding-up; * liquidation; * reorganization, whether voluntary or involuntary; * bankruptcy; * insolvency; * receivership; or * any other proceedings. The Indenture provides that when all amounts owing on the senior debt are paid in full, the holders of the subordinated debt securities will be subrogated to the rights of the holders of senior debt to receive payments or distributions applicable to senior debt. The Indenture defines senior debt as the principal, premium, interest and any other payment due under any of the following, whether outstanding at the date of the Indenture or thereafter incurred, created or assumed: * all of our debt evidenced by notes, debentures, bonds, or other securities we sell for money, including all of our first mortgage bonds; * all debt of others of the kinds described in the preceding bullet point that we assume or guarantee in any manner; and * all renewals, extensions, or refundings of debt of the kinds described in either of the two preceding bullet points. 11 However, the preceding will not be considered senior debt if the document creating the debt or the assumption or guarantee of the debt states that it is not superior to or that it is on equal footing with the subordinated debt securities. The Indenture does not limit the aggregate amount of senior debt that we may issue. As of March 31, 2001, there was approximately $1.57 billion of senior debt outstanding and there was no subordinated debt outstanding. FORM, EXCHANGE, AND TRANSFER Each series of debt securities will be issuable only in fully registered form and without coupons. In addition, unless otherwise specified in a prospectus supplement, the debt securities will be issued in denominations of $1,000 and multiples of $1,000. We, the trustee, and any of our agents may treat the registered holder of a debt security as the absolute owner for the purpose of making payments, giving notices, and for all other purposes. The holders of debt securities may exchange them for any other debt securities of the same series, in authorized denominations, and equal principal amount. However, this type of exchange will be subject to the terms of the Indenture and any limitations that apply to global securities. A holder may transfer debt securities by presenting the endorsed security at the office of a security registrar or at the office of any transfer agent we designate. The holder will not be charged for any exchange or registration of transfer, but we may require payment to cover any tax or other governmental charge in connection with the transaction. We have appointed the trustee under each Indenture as security registrar. A prospectus supplement will name any transfer agent we designate for any debt securities if different from the security registrar. We may designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts at any time, except that we will maintain a transfer agent in each place of payment for debt securities. If the debt securities of any series are to be redeemed in part, we will not be required to do any of the following: * issue, register the transfer of, or exchange any debt securities of that series and/or tenor beginning 15 days before the day of mailing of a notice of redemption of any debt security that may be selected for redemption and ending at the close of business on the day of the mailing; or * register the transfer of or exchange any debt security selected for redemption, except for an unredeemed portion of a debt security that is being redeemed in part. PAYMENT AND PAYING AGENTS Unless otherwise indicated in the applicable prospectus supplement, we will pay interest on a debt security on any interest payment date to the person in whose name the debt security is registered. Unless otherwise indicated in the applicable prospectus supplement, the principal, premium, and interest on the debt securities of a particular series will be payable at the office of the paying agents that we may designate. However, we may pay any interest by check mailed to the address, as it appears in the security register, of the person entitled to that interest. Also, unless otherwise indicated in the applicable prospectus supplement, the corporate trust office of the trustee in The City of New York will be our sole paying agent for payments with respect to debt securities of each series. Any other paying agent that we initially designate for the debt securities of a particular series will be named in the applicable prospectus supplement. We may at any time designate additional paying agents or rescind the designation of any paying agent or approve a change in the office through which any paying agent acts, except that we will maintain a paying agent in each place of payment for the debt securities of a particular series. 12 All money that we pay to a paying agent for the payment of the principal, premium, or interest on any debt security that remains unclaimed at the end of two years after the principal, premium, or interest has become due and payable will be repaid to us, and the holder of the debt security may look only to us for payment. CONSOLIDATION, MERGER, AND SALE OF ASSETS Unless otherwise indicated in the applicable prospectus supplement, we may not: * consolidate with or merge into any other entity; * convey, transfer, or lease our properties and assets substantially as an entirety to any entity; or * permit any entity to consolidate with or merge into us or convey, transfer, or lease its properties and assets substantially as an entirety to us, unless the following conditions are met: * the successor entity is a corporation, partnership, trust, or other entity organized and validly existing under the laws of any domestic jurisdiction and assumes our obligations on the debt securities and under the Indenture; * immediately after giving effect to the transaction, no event of default, and no event which, after notice or lapse of time or both, would become an event of default, shall have occurred and be continuing; and * other conditions are met. Upon any merger, consolidation, or transfer or lease of properties, the successor person will be substituted for us under the Indenture, and, thereafter, except in the case of a lease, we will be relieved of all obligations and covenants under the Indenture and the debt securities. EVENTS OF DEFAULT Each of the following will be an event of default under the Indenture with respect to debt securities of any series: * our failure to pay principal of or any premium on any debt security of that series when due; * our failure to pay any interest on any debt securities of that series when due, and the continuance of that failure for 30 days; * our failure to deposit any sinking fund payment, when due, in respect of any debt securities of that series; * our failure to perform any of our other covenants in the Indenture relating to that series and the continuance of that failure for 90 days after written notice has been given by the trustee or the holders of at least 25% in principal amount of the outstanding debt securities of that series; * bankruptcy, insolvency, or reorganization events involving us; and 13 * any other event of default for that series described in the applicable prospectus supplement. If an event of default occurs and is continuing other than an event of default relating to bankruptcy, insolvency, or reorganization, either the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of the affected series may declare the principal amount of the debt securities of that series to be due and payable immediately. In the case of any debt security that is an original issue discount security or the principal amount of which is not then determinable, the trustee or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series may declare the portion of the principal amount of the debt security specified in the terms of such debt security to be immediately due and payable upon an event of default. If an event of default involving bankruptcy, insolvency, or reorganization occurs, the principal amount of all the debt securities of the affected series will automatically, and without any action by the trustee or any holder, become immediately due and payable. After any acceleration, but before a judgment or decree based on acceleration, the holders of a majority in aggregate principal amount of the outstanding debt securities of that series may rescind and annul the acceleration if all events of default, other than the non-payment of accelerated principal, have been cured or waived as provided in the Indenture. The trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the holders, unless the holders have offered the trustee reasonable indemnity. Subject to provisions for the indemnification of the trustee, the holders of a majority in principal amount of the outstanding debt securities of any series will have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the trustee, or exercising any trust or power conferred on the trustee, with respect to the debt securities of that series. No holder of a debt security of any series will have any right to institute any proceeding under the Indenture, or for the appointment of a receiver or a trustee, or for any other remedy under the Indenture, unless: * the holder has previously given the trustee written notice of a continuing event of default with respect to the debt securities of that series; * the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series have made written request, and the holder or holders have offered reasonable indemnity, to the trustee to institute the proceeding as trustee; and * the trustee has failed to institute the proceeding, and has not received from the holders of a majority in aggregate principal amount of the outstanding debt securities of that series a direction inconsistent with the request within 60 days after the notice, request, and offer. The limitations provided above do not apply to a suit instituted by a holder of a debt security for the enforcement of payment of the principal, premium, or interest on the debt security on or after the applicable due date. We are required to furnish to the trustee annually a certificate of various officers stating whether or not we are in default in the performance or observance of any of the terms, provisions, and conditions of the Indenture and, if so, specifying all known defaults. MODIFICATION AND WAIVER In limited cases the trustee, as well as us, may make modifications and amendments to the Indenture without the consent of the holders of any series of debt securities. The trustee may make modifications and amendments to the Indenture with the consent of the holders of not less than 66-2/3% in aggregate principal amount of the outstanding debt securities of each series affected by the 14 modification or amendment. However, without the consent of the holder of each outstanding debt security affected, no modification or amendment may: * change the stated maturity of the principal of, or any installment of principal of or interest on, any debt security; * reduce the principal amount of, or any premium or interest on, any debt security; * reduce the amount of principal of an original issue discount security or any other debt security payable upon acceleration of the maturity of the security; * change the place or currency of payment of principal of, or any premium or interest on, any debt security; * impair the right to institute suit for the enforcement of any payment on or with respect to any debt security; or * reduce the percentage in principal amount of outstanding debt securities of any series, the consent of whose holders is required for modification or amendment of the Indenture necessary for waiver of compliance with certain provisions of the Indenture or of certain defaults, or modify the provisions of the Indenture relating to modification and waiver. Compliance with certain restrictive provisions of the Indenture may be waived by the holders of not less than 66-2/3% in aggregate principal amount of the outstanding debt securities of any series. The holders of a majority in principal amount of the outstanding debt securities of any series may waive any past default under the Indenture, except: * a default in the payment of principal, premium, or interest; and * a default under covenants and provisions of the Indenture which cannot be amended without the consent of the holder of each outstanding debt security of the affected series. In determining whether the holders of the requisite principal amount of the outstanding debt securities have given or taken any direction, notice, consent, waiver, or other action under the Indenture as of any date: * the principal amount of an outstanding original issue discount security will be the amount of the principal that would be due and payable upon acceleration of the maturity on that date, * if the principal amount payable at the stated maturity of a debt security is not determinable, the principal amount of the outstanding debt security will be an amount determined in the manner prescribed for the debt security; and * the principal amount of an outstanding debt security denominated in one or more foreign currencies will be the U.S. dollar equivalent of the principal amount of the debt security or, in the case of a debt security described in the previous clause above, the amount described in that clause. If debt securities have been fully defeased or if we have deposited money with the trustee to redeem debt securities, they will not be considered outstanding. Except in limited circumstances, we will be entitled to set any day as a record date for the purpose of determining the holders of outstanding debt securities of any series entitled to give or take any direction, notice, consent, waiver, or other action under the Indenture. In limited circumstances, the 15 trustee will be entitled to set a record date for action by holders. If a record date is set for any action to be taken by holders of a particular series, the action may be taken only by persons who are holders of outstanding debt securities of that series on the record date. To be effective, the action must be taken by holders of the requisite principal amount of the debt securities within a specified period following the record date. For any particular record date, this period will be 180 days or any other shorter period as we may specify. The period may be shortened or lengthened, but not beyond 180 days. DEFEASANCE AND COVENANT DEFEASANCE We may elect to have the provisions of the Indenture relating to defeasance and discharge of indebtedness, or defeasance of restrictive covenants in the Indenture, applied to the debt securities of any series, or to any specified part of a series. The prospectus supplement describing a series of debt securities will state whether we can make these elections for that series. DEFEASANCE AND DISCHARGE We will be discharged from all of our obligations with respect to the debt securities of a series if we deposit with the trustee money in an amount sufficient to pay the principal, premium, and interest on the debt securities of that series when due in accordance with the terms of the Indenture and the debt securities. We can also deposit securities that will provide the necessary monies. However, we will not be discharged from the obligations to exchange or register the transfer of debt securities, to replace stolen, lost, or mutilated debt securities, to maintain paying agencies, and to hold moneys for payment in trust. The defeasance or discharge may occur only if we deliver to the trustee an opinion of counsel stating that we have received from, or there has been published by, the United States Internal Revenue Service a ruling, or there has been a change in tax law, in either case to the effect that holders of such debt securities: * will not recognize gain or loss for federal income tax purposes as a result of the deposit, defeasance, and discharge; and * will be subject to federal income tax on the same amount, in the same manner, and at the same times as would have been the case if the deposit, defeasance, and discharge were not to occur. DEFEASANCE OF COVENANTS We may elect to omit compliance with restrictive covenants in the Indenture and any additional covenants that may be described in the applicable prospectus supplement for a series of debt securities. This election will preclude some actions from being considered defaults under the Indenture for the applicable series. In order to exercise this option, we will be required to deposit, in trust for the benefit of the holders of debt securities, funds in an amount sufficient to pay the principal, premium and interest on the debt securities of the applicable series. We may also deposit securities that will provide the necessary monies. We will also be required to deliver to the trustee an opinion of counsel to the effect that holders of the debt securities will not recognize gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if the deposit and defeasance were not to occur. If we exercise this option with respect to any debt securities and the debt securities are declared due and payable because of the occurrence of any event of default, the amount of funds deposited in trust would be sufficient to pay amounts due on the debt securities at the time of their respective stated maturities but may not be sufficient to pay amounts due on the debt securities on any acceleration resulting from an event of default. In that case, we would remain liable for the additional payments. GOVERNING LAW The law of the State of New York will govern the Indenture and the debt securities. 16 GLOBAL SECURITIES Some or all of the first mortgage bonds or debt securities of any series may be represented, in whole or in part, by one or more global securities, which will have an aggregate principal amount equal to that of the first mortgage bonds or debt securities they represent. We will register each global security in the name of a depositary or nominee identified in a prospectus supplement and deposit the global security with the depositary or nominee. Each global security will bear a legend regarding the restrictions on exchanges and registration of transfer referred to below and other matters specified in a supplemental indenture to the Mortgage or the Indenture. No global security may be exchanged for first mortgage bonds or debt securities registered, and no transfer of a global security may be registered, in the name of any person other than the depositary for the global security or any nominee of the depositary, unless: * the depositary has notified us that it is unwilling or unable to continue as depositary for the global security or has ceased to be qualified to act as depositary; * a default has occurred and is continuing with respect to the first mortgage bonds or debt securities represented by the global security; or * any other circumstances exist that may be described in the applicable supplemental indenture and prospectus supplement. We will register all securities issued in exchange for a global security or any portion of a global security in the names specified by the depositary. As long as the depositary or its nominee is the registered holder of a global security, the depositary or nominee will be considered the sole owner and holder of the global security and the first mortgage bonds or debt securities that it represents. Except in the limited circumstances referred to above, owners of beneficial interests in a global security will not: * be entitled to have the global security or first mortgage bonds or debt securities registered in their names; * receive or be entitled to receive physical delivery of certificated first mortgage bonds or debt securities in exchange for a global security; and * be considered to be the owners or holders of the global security or any first mortgage bonds or debt securities for any purpose under the Mortgage or the Indenture. We will make all payments of principal, premium, and interest on a global security to the depositary or its nominee. The laws of some jurisdictions require that purchasers of securities take physical delivery of securities in definitive form. These laws make it difficult to transfer beneficial interests in a global security. Ownership of beneficial interests in a global security will be limited to institutions that have accounts with the depositary or its nominee, referred to as Participants, and to persons that may hold beneficial interests through Participants. In connection with the issuance of any global security, the depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of first mortgage bonds or debt securities represented by the global security to the accounts of its Participants. Ownership of beneficial interests in a global security will only be shown on records maintained by the depositary or the Participant. Likewise, the transfer of ownership interests will be effected only through the same records. Payments, transfers, exchanges, and other matters relating to beneficial interests in a global security may be subject to various policies and procedures adopted by the 17 depositary from time to time. Neither we, the trustee, nor any of our agents will have responsibility or liability for any aspect of the depositary's or any Participant's records relating to, or for payments made on account of, beneficial interests in a global security, or for maintaining, supervising, or reviewing any records relating to the beneficial interests. REGARDING THE TRUSTEES The Bank of New York is the trustee under the Mortgage and trustee under the Indenture relating to the subordinated debt securities. We maintain normal banking arrangements with The Bank of New York, which include: * a commitment in the aggregate principal amount of approximately $15.8 million by The Bank of New York pursuant to a reimbursement agreement related to a letter of credit issued on our behalf in connection with an issuance of pollution control bonds, the proceeds of which were made available to us; and * a $15.6 million commitment by The Bank of New York pursuant to a revolving credit agreement, none of which was outstanding at March 31, 2001. The Bank of New York also serves as: * trustee for the holders of several issues of pollution control bonds issued on our behalf; * trustee under our senior note indenture; * investment manager for our nonunion post-retirement medical fund; and * custodian of international fixed-income assets for our pension plan. An affiliate of The Bank of New York is the remarketing agent for a series of our pollution control bonds. The Chase Manhattan Bank is the trustee under the Indenture relating to the senior debt securities. We maintain normal banking arrangements with The Chase Manhattan Bank. The Chase Manhattan Bank also: * serves as trustee for the holders of several series of bonds issued by a party unaffiliated with us, secured by, among other things, our payments under our Palo Verde Nuclear Generating Station leases; * serves as an issuing and paying agent with respect to our commercial paper program; and * has a commitment to lend us up to $34.4 million under a revolving credit agreement, none of which was outstanding as of March 31, 2001. In addition, an affiliate of The Chase Manhattan Bank is the owner participant under a trust to which we sold and leased back a portion of Unit 2 of the Palo Verde Nuclear Generating Station. PLAN OF DISTRIBUTION We intend to sell up to $725,000,000 in aggregate principal amount of the offered securities to or through underwriters or dealers, and may also sell the offered securities directly to other purchasers or through agents, as described in the prospectus supplement relating to an issue of first mortgage bonds or debt securities. 18 We may distribute the offered securities from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices. In connection with the sale of the offered securities, underwriters may receive compensation from us or from purchasers of offered securities for whom they act as agents in the form of discounts, concessions, or commissions. Underwriters may sell offered securities to or through dealers, and the dealers may receive compensation in the form of discounts, concessions, or commissions from the underwriters and/or commissions from the purchasers for whom they act as agents. Underwriters, dealers, and agents, who participate in the distribution of offered securities, may be considered to be underwriters, and any discounts or commissions received by them from us and any profit on the resale of offered securities by them may be considered to be underwriting discounts and commissions under the Securities Act of 1933. We will identify any person considered to be an underwriter, and we will describe any compensation received from us in the prospectus supplement. We may agree to indemnify underwriters, dealers, and agents who participate in the distribution of the offered securities against liabilities, including liabilities under the Securities Act of 1933. EXPERTS The financial statements incorporated in this prospectus by reference from APS' 2000 Annual Report on Form 10-K have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. LEGAL OPINIONS Snell & Wilmer L.L.P., One Arizona Center, Phoenix, Arizona 85004 will opine on the validity of the offered securities. We currently anticipate that Sullivan and Cromwell, 1888 Century Park East, Los Angeles, California 90067 will opine on the validity of the offered securities for any underwriters of securities. In giving their opinions, Sullivan & Cromwell and Snell & Wilmer L.L.P. may rely as to matters of New Mexico law upon the opinion of Keleher & McLeod, P.A., Albuquerque Plaza, 201 Third NW, 12th Floor, Albuquerque, New Mexico 87102. Snell & Wilmer L.L.P. may rely as to all matters of New York law upon the opinion of Sullivan & Cromwell. Sullivan & Cromwell may rely as to all matters of Arizona law upon the opinion of Snell & Wilmer L.L.P. 19 $725,000,000 ARIZONA PUBLIC SERVICE COMPANY FIRST MORTGAGE BONDS DEBT SECURITIES ---------- APS ---------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Securities and Exchange Commission registration fee.............. $125,000 Printing, engraving, and postage expenses........................ 40,000 * Legal fees....................................................... 300,000 * Accounting fees.................................................. 30,000 * Rating Agency fees............................................... 215,000 * Trustee's fees and expenses...................................... 10,000 * Blue Sky fees and expenses....................................... 30,000 * Miscellaneous.................................................... 10,000 * -------- Total................................................... $760,000 * ======== - ---------- * Estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The law of Arizona permits extensive indemnification of present and former directors, officers, employees or agents of an Arizona corporation, whether or not authority for such indemnification is contained in the indemnifying corporation's articles of incorporation or bylaws. Specific authority for indemnification of present and former directors and officers, under certain circumstances, is contained in Article Fifth of the Company's Articles of Incorporation. In addition, Section 7.01 of the Company's bylaws provides that the Company will indemnify present and former directors and officers to the fullest extent permitted by Arizona law. Under the Arizona Business Corporation Act (the "ABCA"), in order for a corporation to indemnify a director or officer, a majority of the corporation's disinterested directors, independent legal counsel, or the shareholders must find that the conduct of the individual to be indemnified was in good faith and that the individual reasonably believed that the conduct was in the corporation's best interests (in the case of conduct in an "official capacity" with the corporation) or that the conduct was at least not opposed to the corporation's best interests (in all other cases). In the case of any criminal proceeding, the finding must be to the effect that the individual had no reasonable cause to believe the conduct was unlawful. Indemnification is permitted with respect to expenses, judgments, fines, and amounts paid in settlement by such individuals. Indemnification under the ABCA is permissive, except in the event of a successful defense, in which case a director or officer must be indemnified against reasonable expenses, including attorneys' fees, incurred in connection with the proceeding. In addition, the ABCA requires Arizona corporations to indemnify any "outside director" (a director who is not an officer, employee, or holder of five percent or more of any class of the corporation's stock) against liability unless (i) the corporation's articles of incorporation limit such indemnification, (ii) the outside director is adjudged liable in a proceeding by or in the right of the corporation or in any other proceeding charging improper personal benefit to the director, or (iii) a court determines, before payment to the outside director, that the director failed to meet the standards of conduct described in the preceding paragraph. A court may also order that an individual be indemnified if the court finds that the individual is fairly and reasonably entitled to indemnification in light of all of the relevant circumstances, whether or not the individual has met the standards of conduct in this and the preceding paragraph. In connection with the offering made by the prospectus which is a part of this registration statement, as it may be amended or supplemented, the underwriters of the securities, pursuant to the relevant underwriting agreement, will severally agree to indemnify and hold harmless the Company, each of its directors, each of its officers who have signed this registration statement, and each person, if any, who controls the Company within the meaning of the Securities Act of 1933, as amended (the "Act"), II-1 against certain losses, claims, damages, or liabilities, including liabilities under the Act, that arise out of or are based upon written information furnished by such underwriters to the Company for use in this registration statement or in such prospectus. Insurance is maintained on a regular basis (and not specifically in connection with this offering) against liabilities arising on the part of directors and officers out of their performance in such capacities or arising on the part of the Company out of its foregoing indemnification provisions, subject to certain exclusions and to the policy limits. ITEM 16. LIST OF EXHIBITS. EXHIBIT NO. DESCRIPTION - ----------- ----------- 1.1 Form of Underwriting Agreement for First Mortgage Bonds. 1.2 Form of Underwriting Agreement for Debt Securities. 4.1 Form(s) of Supplemental Indenture relating to First Mortgage Bonds (to be filed as Exhibit(s) by means of Form 8-K). 4.2 Specimen(s) of First Mortgage Bonds (to be filed as Exhibit(s) by means of Form 8-K). 4.3 Form(s) of Supplemental Indenture relating to Debt Securities (to be filed as Exhibit(s) by means of Form 8-K). 4.4 Specimen(s) of Debt Securities (to be filed as Exhibit (s) by means of Form 8-K). 5.1 Opinion of Snell & Wilmer L.L.P. 12.1 Computation of Ratio of Earnings to Fixed Charges. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consent of Snell & Wilmer L.L.P. (included in Opinion filed as Exhibit No. 5.1). 24.1 Power of Attorney (see II-6). 25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Bond Trustee under the Mortgage. 25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee under the Indenture relating to the subordinated Debt Securities. 25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Chase Manhattan Bank, as Trustee under the Indenture relating to the senior Debt Securities. In addition to those Exhibits shown above, the Company hereby incorporates the following Exhibits pursuant to Rule 411 of Regulation C promulgated under the Securities Act of 1933 by reference to the filings set forth below:
Exhibit Previously Filed Date No. Description as Exhibit: File No. Effective - -------- ----------- ----------------- -------- --------- 4.5 Mortgage and Deed of Trust 4.1 to September 1992 Form 1-4473 11-9-92 relating to Company's First 10-Q Report Mortgage Bonds, together with forty-eight indentures supplemental thereto. Forty-ninth Supplemental 4.1 to 1992 Form 10-K Report 1-4473 3-30-93 Indenture Fiftieth Supplemental Indenture 4.2 to 1993 Form 10-K Report 1-4473 3-30-94 Fifty-first Supplemental 4.1 to August 1, 1993 Form 8-K Indenture Report 1-4473 9-27-93
II-2
Exhibit Previously Filed Date No. Description as Exhibit: File No. Effective - -------- ----------- ----------------- -------- --------- Fifty-second Supplemental 4.1 to September 30, 1993 Form 1-4473 11-15-93 Indenture 10-Q Report Fifty-third Supplemental 4.5 to Registration Statement No. 1-4473 3-1-94 Indenture 33-61228 by means of Febru- ary 23, 1994 Form 8-K Report Fifty-fourth Supplemental 4.1 to Registration Statements 1-4473 11-22-96 Indenture Nos. 33-61228, 33-55473, 33-64455 and 333-15379 by means of November 19, 1996 Form 8-K Report Fifty-fifth Supplemental 4.8 to Registration Statements 1-4473 4-9-97 Indenture Nos. 33-55473, 33-64455 and 333-15379 by means of April 7, 1997 Form 8-K Report 4.6 Agreement of Resignation, 4.1 to September 29, 1995 Form 1-4473 10-24-95 Appointment, Acceptance, 8-K Report and Assignment dated as of August 18, 1995 among the Company, Bank of America National Trust and Savings Association and The Bank of New York 4.7 Indenture dated as of January 1, 4.6 to Registration Statement Nos. 1-4473 1-11-95 1995 among the Company and 33-61228 and 33-55473 by means of The Bank of New York, as January 1, 1995 Form 8-K Report Trustee, relating to subordi- nated Debt Securities 4.8 First Supplemental Indenture 4.4 to Registration Statement Nos. 1-4473 1-11-95 dated as of January 1, 1995, 33-61228 and 33-55473 by means of relating to the issuance of January 1, 1995 Form 8-K Report $75,000,000 of 10% Junior Subordinated Deferrable Interest Debentures, Series A, Due 2025 4.9 Indenture dated as of January 4.10 to Registration Statement 1-4473 1-16-98 15, 1998 among the Company Nos. 333-15379 and 333- and The Chase Manhattan 27551 by means of January Bank, as Trustee, relating to 13, 1998 Form 8-K Report Senior Debt Securities 4.10 First Supplemental Indenture 4.3 to Registration Statement 1-4473 1-16-98 dated as of January 15, 1998, Nos. 333-15479 and 333- relating to the issuance of 27551 by means of January $100,000,000 of 6-1/4% Notes 13, 1998 Form 8-K Report Due 2005
II-3
Exhibit Previously Filed Date No. Description as Exhibit: File No. Effective - -------- ----------- ----------------- -------- --------- 4.11 Second Supplemental 4.3 to Registration Statement 1-4473 2-22-99 Indenture dated as of Nos. 333-27551 and 333- February 15, 1999 58445 by means of February 18, 1999 Form 8-K Report 4.12 Third Supplemental Indenture 4.5 to Registration Statement 1-4473 11-5-99 dated as of November 1, 1999 No. 333-58445 by means of November 2, 1999 Form 8-K Report 4.13 Fourth Supplemental Indenture dated 4.1 to Registration Statement Nos. 1-4473 8-4-00 as of August 1, 2000 333-58445 and 333-94277 by means of August 2, 2000 Form 8-K Report
ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (4) That, for purposes of determining any liability under the Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 (5) That, insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the provisions referred to in Item 15 of this Registration Statement, or otherwise, the Company has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (6) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (7) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Phoenix, State of Arizona on the 27th day of June, 2001. ARIZONA PUBLIC SERVICE COMPANY By William J. Post ----------------------------------------- (William J. Post, Chairman of the Board of Directors and Chief Executive Officer) Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated. Each person whose signature appears below hereby authorizes Chris N. Froggatt, Barbara M. Gomez, and Michael V. Palmeri and each of them, as attorneys-in-fact, to sign in his or her name and behalf, individually and in each capacity designated below, and to file any amendments, including post-effective amendments, to this registration statement, and any related Rule 464(b) registration statement or amendment thereto. Signature Title Date --------- ----- ---- William J. Post Principal Executive Officer June 27, 2001 - ----------------------------- and Director (William J. Post, Chairman of the Board of Directors and Chief Executive Officer) Jack E. Davis Principal Accounting Officer, June 27, 2001 - ----------------------------- President and Director (Jack E. Davis, President) Michael V. Palmeri Principal Financial Officer June 27, 2001 - ----------------------------- (Michael V. Palmeri, Vice President, Finance) Edward N. Basha, Jr. Director June 27, 2001 - ----------------------------- (Edward N. Basha, Jr.) Michael L. Gallagher Director June 27, 2001 - ----------------------------- (Michael L. Gallagher) Pamela Grant Director June 27, 2001 - ----------------------------- (Pamela Grant) Roy A. Herberger, Jr. Director June 27, 2001 - ----------------------------- (Roy A. Herberger, Jr.) II-6 Martha O. Hesse Director June 27, 2001 - ----------------------------- (Martha O. Hesse) William S. Jamieson, Jr. Director June 27, 2001 - ----------------------------- (William S. Jamieson, Jr.) Humberto S. Lopez Director June 27, 2001 - ----------------------------- (Humberto S. Lopez) Robert G. Matlock Director June 27, 2001 - ----------------------------- (Robert G. Matlock) Kathryn L. Munro Director June 27, 2001 - ----------------------------- (Kathryn L. Munro) Bruce J. Nordstrom Director June 27, 2001 - ----------------------------- (Bruce J. Nordstrom) Director - ----------------------------- (William L. Stewart) II-7 Registration No. 333-_____ ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- EXHIBITS TO FORM S-3 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ---------- ARIZONA PUBLIC SERVICE COMPANY (Exact name of registrant as specified in its charter) ================================================================================ INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION - ----------- ----------- 1.1 Form of Underwriting Agreement for First Mortgage Bonds. 1.2 Form of Underwriting Agreement for Debt Securities. 4.1 Form(s) of Supplemental Indenture relating to First Mortgage Bonds (to be filed as Exhibit(s) by means of Form 8-K). 4.2 Specimen(s) of First Mortgage Bonds (to be filed as Exhibit(s) by means of Form 8-K). 4.3 Form(s) of Supplemental Indenture relating to Debt Securities (to be filed as Exhibit(s) by means of Form 8-K). 4.4 Specimen(s) of Debt Securities (to be filed as Exhibit(s) by means of Form 8-K). 5.1 Opinion of Snell & Wilmer L.L.P. 12.1 Computation of Ratio of Earnings to Fixed Charges. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consent of Snell & Wilmer L.L.P. (included in Opinion filed as Exhibit No. 5.1). 24.1 Power of Attorney (see II-6). 25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Bond Trustee under the Mortgage. 25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as Trustee under the Indenture relating to the subordinated Debt Securities. 25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Chase Manhattan Bank, as Trustee under the Indenture relating to the senior Debt Securities. - ---------- For a description of the Exhibits incorporated in this filing by reference, see Item 16. EX-1.1 2 ex1-1.txt FORM OF UNDERWRITING AGRMT. - 1ST MRTG. BONDS Exhibit 1.1 ARIZONA PUBLIC SERVICE COMPANY FIRST MORTGAGE BONDS UNDERWRITING AGREEMENT Dear Sir or Madam: 1. INTRODUCTION. Arizona Public Service Company, an Arizona corporation (the "Company"), proposes to issue and sell from time to time up to $725,000,000 in aggregate principal amount of its First Mortgage Bonds (the "Bonds") registered under the registration statements referred to in Section 2(a). The Bonds will be issued under its Mortgage and Deed of Trust dated as of July 1, 1946, to The Bank of New York, as successor Trustee, as amended and supplemented by fifty-five indentures supplemental thereto (the "Mortgage"), and as further amended and supplemented by one or more additional Supplemental Indentures relating to the Bonds (the "Supplemental Indentures") (the Mortgage as amended and supplemented by such Supplemental Indentures being sometimes hereinafter referred to as the "Indenture"). The Bonds will be issued in one or more series, which series may vary as to interest rates, maturities, redemption provisions, selling prices, and other terms, with all such terms for any particular issue of the Bonds being determined at the time of sale. Particular issues of the Bonds may be sold from time to time to one or more of the firms to whom this Agreement is addressed, and to such other purchasers as the Company shall designate and as shall agree in writing to comply with the terms and conditions of this Agreement, for resale in accordance with the terms of offering determined at the time of sale. The Bonds involved in any such offering are hereinafter referred to as the "Purchased Bonds," the parties that agree to purchase the same are hereinafter referred to as the "Underwriters" of such Purchased Bonds, and the representative or representatives of the Underwriters, if any, specified in a Terms Agreement referred to in Section 3 are hereinafter referred to as the "Representatives." 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In connection with each offering of the Purchased Bonds, the Company represents and warrants to, and agrees with, the several Underwriters that: (a) A registration statement (No. 333-94277) relating to $225,000,000 of the Bonds, unsecured debentures, notes, or other evidences of indebtedness (the "Securities"), and a registration statement (No. 333-____) relating to $500,000,000 of the Bonds or Securities (including a combined prospectus relating to up to $725,000,000 of the Bonds or Securities) were filed with the Securities and Exchange Commission (the "Commission") and have become effective. Such registration statements, as each is amended at the time of the Terms Agreement referred to in Section 3 relating to the Purchased Bonds, are hereinafter referred to as the "First Registration Statement" and the "Second Registration Statement," respectively, and, together with any related Rule 462(b) registration statement or amendment thereto, are hereinafter referred to collectively as the "Registration Statements," and such prospectus, as supplemented as contemplated by Section 3 to reflect the terms of the Purchased Bonds and terms of offering thereof, including all material incorporated by reference therein, is hereinafter referred to as the "Prospectus." (b) Each part of the Registration Statements relating to the Bonds, when such part became effective, conformed in all material respects to the requirements of the Securities Act of 1933 (the "Act"), the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the rules and regulations (the "Rules and Regulations") of the Commission and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and on the date of each Prospectus Supplement referred to in Section 3, the Registration Statements and the Prospectus will conform in all material respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, and at such date none of such documents will include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the foregoing does not apply to (a) statements in or omissions from any such documents based upon written information furnished to the Company by any Underwriter specifically for use therein or (b) that part of the Registration Statements that consists of the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of The Bank of New York, as successor Trustee under the Mortgage. (c) An order of the Arizona Corporation Commission shall have been granted authorizing the execution and delivery of the Supplemental Indenture relating to the Purchased Bonds and the issuance and sale of the Purchased Bonds on the terms and conditions herein and in the Prospectus and the Terms Agreement referred to in Section 3 relating to the Purchased Bonds, and the approval or consent of no other public body or authority is necessary to the execution and delivery of such Supplemental Indenture or the validity of the issuance and sale of the Purchased Bonds, except as may be required under state securities or blue sky laws. (d) Except for property specifically excepted from the lien of the Indenture or released therefrom in accordance with the terms thereof, the Company has good and marketable title in fee simple, except for items described in (A), (B), and (C) below, to all 2 of the real property purported in the Indenture to be so held, good and valid leasehold interests in all properties purported in the Indenture to be held under lease, and good and valid title to all other properties described in the Indenture as subject to the lien thereof (which property excludes certain leased interests in Unit 2 of the Palo Verde Nuclear Generating Station referred to in Note 9 of Notes to Financial Statements in the Company's Form 10-K Report for the fiscal year ended December 31, 2000 (the "2000 Form 10-K Report") incorporated by reference in the Registration Statements, except that the transmission and distribution lines of the Company, other than those located on land owned in fee by the Company, and the property described in Section 15 of Article IV of the Forty-first Supplemental Indenture, have been installed in public streets or alleys and in highways under ordinances and permits granted by the various governmental bodies having jurisdiction, or have been constructed on leaseholds, easements or rights-of-way granted, with minor exceptions, by the apparent owners of record of the land and such leases, easements, or rights-of-way are subject to any defects in or encumbrances on the title of the respective lessors of such leases or grantors of such easements or rights-of-way; title to the aforesaid properties is subject only to: (A) the lien of the Mortgage, (B) Excepted Encumbrances as defined in the Mortgage, and (C) other liens, encumbrances or defects, none of which, individually or in the aggregate, materially interfere with the business or operations of the Company (with respect to leasehold interests on the Navajo Reservation, this representation is intended and shall be understood to mean only that the Company is the owner of the rights conferred upon it by the leases from the Navajo Tribe relating to the sites on which the Navajo Plant and the Four Corners Plant are located, and that while the Company is not aware of the assertion of any claim contesting the interest of the Navajo Tribe in the lands leased, the Company does not give any representation with respect to the interest of the Navajo Tribe in the lands leased or with respect to the enforceability of such leases against the Navajo Tribe); the Mortgage, subject only as above set forth in this clause, now constitutes, and the Mortgage and the Supplemental Indentures theretofore executed, subject only as above set forth in this clause, when the latter shall have been duly recorded and filed, will constitute, together and as a single instrument, a direct and valid first mortgage lien upon said properties, which include all of the properties of the Company (other than the classes or items of property expressly excepted in the Mortgage); and all properties (other than the classes or items of property expressly excepted in the Mortgage or expressly released from the lien thereof) acquired by the Company after the date of the Supplemental Indenture relating to the Purchased Bonds in each county in the States of Arizona and New Mexico in which the Mortgage and the Supplemental Indenture shall have been duly recorded and filed (and, as to which properties, with respect to priority only, any necessary recordation and/or filing has been accomplished, including therein any necessary descriptions of after-acquired real property and real property upon which after-acquired fixtures are affixed) will, upon such acquisition, become subject to the first mortgage lien thereof, subject, however, to Excepted Encumbrances and to liens, if any, existing or placed thereon at the time of the acquisition thereof by the Company and, with respect to priority only, to liens, if any, existing prior to the time of any necessary recordation and/or filing by the Company. (e) The Company holds such valid franchises, certificates of convenience and necessity, licenses, and permits as are necessary with respect to the maintenance and 3 operation of its property and business as now conducted, except that (A) the Company from time to time makes minor extensions of its system prior to the time a related franchise, certificate, license, or permit is procured, (B) from time to time communities already being served by the Company become incorporated and considerable time may elapse before a franchise is procured, (C) certain franchises may have expired prior to the renegotiation thereof, (D) the Company may not have obtained certain permits or variances relating to the environmental requirements described in any of its Form 10-K Report, its Form 10-Q Reports, and/or its Form 8-K Reports incorporated by reference in the Registration Statements, (E) certain minor defects and exceptions may exist which, individually and in the aggregate, are not deemed material, and (F) the Company does not make any representation regarding the geographical scope of any franchise, certificate, license, or permit that is not specific as to its geographical scope. 3. PURCHASE AND OFFERING. The obligation of the Underwriters to purchase, and the obligation of the Company to sell, the Purchased Bonds will be evidenced by an exchange of facsimile transmission or other written communications (the "Terms Agreement") at the time the Company determines to sell the Purchased Bonds. The Terms Agreement shall specify (by incorporation by reference or otherwise) the parties that will be Underwriters, the principal amount to be purchased by each, the purchase price to be paid by the Underwriters, any compensation or commissions to be paid to Underwriters, the offering price, and the terms of the Purchased Bonds not already specified in the Indenture, including, but not limited to, interest rates, maturity, redemption provisions, and sinking fund requirements, if any. The Terms Agreement shall also specify (by incorporation by reference or otherwise) the time and date of delivery and payment (the "Closing Date"), the place of delivery and payment, and any details of the terms of offering that should be reflected in the prospectus supplement relating to the offering of the Purchased Bonds (the "Prospectus Supplement"). It is understood that the Underwriters will offer the Purchased Bonds for sale as set forth in the Prospectus. The obligations of the Underwriters to purchase the Purchased Bonds shall be several and not joint. Except as may otherwise be set forth in the Terms Agreement, the Purchased Bonds will be in definitive form and in such denominations and registered in such names as the Underwriters may request. 4. COVENANTS OF THE COMPANY. In connection with each offering of Purchased Bonds, the Company covenants and agrees with the several Underwriters that: (a) The Company will advise the Underwriters or the Representatives promptly of any proposed amendment or supplementation of the First Registration Statement, the Second Registration Statement, or the Prospectus. The Company will also advise the Underwriters or the Representatives of the institution by the Commission of any stop order proceedings in respect of the First Registration Statement, the Second Registration Statement, or of any part thereof, and will use its best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. (b) If, at any time when a prospectus relating to the Purchased Bonds is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact, or omit to 4 state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the First Registration Statement, the Second Registration Statement, or the Prospectus to comply with the Act, the Company promptly will prepare and file with the Commission an amendment or supplement that will correct such statement or omission or an amendment that will effect such compliance. (c) As soon as practicable, but not later than 18 months, after the date of the Terms Agreement relating to the Purchased Bonds, the Company will make generally available to its securityholders an earning statement or statements (which need not be audited) covering a period of at least 12 months beginning after the effective date of the Second Registration Statement (as defined in Rule 158(c) under the Act), which will satisfy the provisions of Section 11(a) of the Act and the rules and regulations thereunder. (d) The Company will furnish to the Underwriters or the Representatives such copies of the Registration Statements (including one copy of the Second Registration Statement for each Representative, or for each Underwriter if there are no Representatives, and for the counsel for the Underwriters, which is signed and includes all exhibits), any related preliminary prospectus supplements and the Prospectus, including all amendments or supplements to such documents, as may be reasonably requested. (e) The Company will arrange or cooperate in arrangements for the qualification of the Purchased Bonds for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Underwriters or the Representatives designate and will continue such qualifications in effect so long as required for the distribution of the Purchased Bonds, provided that the Company shall not be required to qualify as a foreign corporation in any State, to consent to service of process in any State other than with respect to claims arising out of the offering or sale of the Purchased Bonds, or to meet other requirements deemed by it to be unduly burdensome. (f) During the period of five years after the date of the Terms Agreement relating to the Purchased Bonds, the Company will furnish to the Underwriters or the Representatives thereunder, and, upon request, each of the other Underwriters, (i) as soon as practicable after the end of each fiscal year, a balance sheet and statements of income and retained earnings of the Company as at the end of and for such year, all in reasonable detail and certified by independent public accountants, and (ii) (A) as soon as practicable after the end of each quarterly fiscal period (except for the last quarterly fiscal period of each fiscal year), a balance sheet and statement of income of the Company as at the end of and for such period, all in reasonable detail and certified by a principal financial or accounting officer of the Company, (B) as soon as available, a copy of each report of the Company mailed by the Company to stockholders or filed with the Commission, and (C) from time to time, such other information concerning the Company as may reasonably be requested. So long as the Company has active subsidiaries, such financial statements will be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated. 5 (g) The Company will pay all expenses incident to the performance of its obligations under this Agreement, and will reimburse the Underwriters for any reasonable expenses (including reasonable fees and disbursements of counsel) incurred by them in connection with the qualification of the Purchased Bonds with respect to which the Terms Agreement relating to the Purchased Bonds has been entered for sale, and the determination of their eligibility for investment, under the laws of such jurisdictions as the Representatives or, if there are no Representatives, the Underwriters designate, and the printing of memoranda relating thereto, and for any fees charged by investment rating agencies for the rating of the Purchased Bonds. (h) The Company will not offer or sell any of its First Mortgage Bonds for a period beginning at the time of execution of the Terms Agreement relating to the Purchased Bonds and ending on the Closing Date relating thereto without prior consent of the Underwriters or the Representatives. 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the several Underwriters to purchase and pay for the Purchased Bonds will be subject to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of Company officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder, and to the following additional conditions precedent: (a) The Underwriters or the Representatives shall have received a letter from DELOITTE & TOUCHE LLP, dated the date of the Terms Agreement, confirming that they are independent certified public accountants within the meaning of the Act and the applicable published Rules and Regulations thereunder, and stating in effect that (i) in their opinion the financial statements and schedules of the Company examined by them and incorporated by reference in the Registration Statements comply as to form in all material respects with the applicable accounting requirements of the Securities Exchange Act of 1934 (the "1934 Act") and the published Rules and Regulations thereunder and (ii) on the basis of a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company responsible for financial and accounting matters, and other specified procedures, nothing came to their attention that caused them to believe that (A) the unaudited financial statements incorporated by reference, if any, in the Registration Statements do not comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the published Rules and Regulations thereunder or are not stated on a basis substantially consistent with that of the audited financial statements incorporated by reference in the Registration Statements, (B) at the date of the most recent available unaudited financial statements and at a specified date not more than five days prior to the date of this Agreement, there was any increase in the amounts of common stock, redeemable preferred stock, or non-redeemable preferred stock of the Company or any increase, exceeding $10,000,000, in long-term debt of the Company or, at the date of the most recent available unaudited financial statements there was any decrease in net assets as compared with amounts shown in the most recent financial statements incorporated by reference in the Registration Statements, or (C) for the twelve-month period ended at the date of the most recent available unaudited financial statements there were any decreases, 6 exceeding 3%, as compared with the twelve-month period ended at the date of the most recent financial statements incorporated by reference in the Registration Statements, in the amounts of total revenues or net income, except in all cases for increases or decreases which result from the declaration or payment of dividends, or which the Registration Statements (including any material incorporated by reference therein) disclose have occurred or may occur, or which are described in such letter. (b) No stop order suspending the effectiveness of the First Registration Statement, the Second Registration Statement, or any part thereof shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Company or the Underwriters, shall be contemplated by the Commission. (c) Subsequent to the execution of the Terms Agreement relating to the Purchased Bonds, (i) there shall not have occurred any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Company or its subsidiaries which, in the judgment of a majority in interest of the Underwriters under such Terms Agreement, including any Representatives, materially impairs the investment quality of the Purchased Bonds, (ii) there shall not have occurred a suspension or material limitation in trading in securities generally on the New York Stock Exchange, (iii) there shall not have occurred a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities, (iv) no rating of any of the Company's debt securities shall have been lowered and there shall have been no public announcement that any such debt securities have been placed on CreditWatch, Watchlist, or under any similar surveillance or review, in each case with negative implications, by any recognized rating agency, and (v) there shall not have occurred any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of a majority in interest of the Underwriters under such Terms Agreement, including any Representatives, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Purchased Bonds. (d) The Underwriters or the Representatives shall have received an opinion of Snell & Wilmer L.L.P., counsel for the Company, dated the relevant Closing Date, to the effect that: (i) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Arizona and has full corporate power and authority to carry on its business as presently conducted; and the Company is duly qualified as a foreign corporation to do business and is in good standing in the States of New Mexico, California, Oregon, Washington, Montana, Wyoming, and Texas, the only other jurisdictions in which it owns or leases substantial properties or in which the conduct of its business requires such qualification; 7 (ii) The Purchased Bonds have been duly authorized, executed, authenticated, issued, and delivered, constitute valid and legally binding obligations of the Company entitled to the benefits and security provided by the Indenture (except as the same may be limited by (a) general principles of equity or by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other laws or equitable principles relating to or affecting the enforcement of creditors' rights generally or the enforcement of the security provided by the Indenture, (b) the necessity for compliance with the statutory procedural requirements governing the exercise of remedies by a secured creditor, and (c) the qualification that certain waivers, procedures, remedies, and other provisions of the Purchased Bonds and the Indenture may be unenforceable under or limited by the law of the State of Arizona; however, such law does not in such counsel's opinion substantially prevent the practical realization of the benefits intended by such documents) and conform to the description thereof in the Prospectus; (iii) The Indenture has been duly authorized, executed, and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a valid and binding instrument enforceable in accordance with its terms except as the same may be limited by (a) general principles of equity or by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other laws or equitable principles relating to or affecting the enforcement of creditors' rights generally or the enforcement of the security provided by the Indenture, (b) the necessity for compliance with the statutory procedural requirements governing the exercise of remedies by a secured creditor, and (c) the qualification that certain waivers, procedures, remedies, and other provisions of the Purchased Bonds and the Indenture may be unenforceable under or limited by the law of the State of Arizona; however, such law does not in such counsel's opinion substantially prevent the practical realization of the benefits intended by such documents; (iv) Except for property specifically excepted from the lien of the Indenture or released therefrom in accordance with the terms thereof, the Company has good and marketable title in fee simple, except for items described in (A), (B), and (C) below, to all of the real property and fixtures thereon purported in the Indenture to be so held and that are both located in the State of Arizona and described in those title reports covering at least the Saguaro, Yucca, Cholla, Ocotillo, West Phoenix, and Palo Verde plant sites that are listed on an exhibit to such opinion (the "Title Documents") (in giving such opinion, such counsel may rely solely upon the Title Documents and may assume the accuracy thereof and of the real property descriptions contained therein and may state that no other investigation or inquiry has been made with respect thereto), and in giving the opinions described below with respect to any liens, defects, and encumbrances on such title to such personal property, such counsel may assume that the Company has good and valid title to all of the personal property located in the State of Arizona and described in the Indenture as subject to the lien thereof (which property shall not include fixtures), and such counsel may rely solely upon, and assume the accuracy of, a search of the 8 Uniform Commercial Code Financing Statements filed in the records of the Arizona Secretary of State and may assume that there are no liens or other encumbrances on personal property (as used in the Arizona Uniform Commercial Code) of the Company located in the State of Arizona other than liens or other encumbrances that have been perfected by filing with the Arizona Secretary of State under Arizona Revised Statutes ("A.R.S.") Section 47-9401.A; such title is subject only to: (A) the lien of the Mortgage, (B) Excepted Encumbrances as defined in the Mortgage, and (C) other liens, encumbrances, or defects, none of which, individually or in the aggregate, in the opinion of such counsel, materially interfere with the business or operations of the Company (in determining whether any such other liens, encumbrances, or defects materially interfere with the business or operations of the Company, such counsel may rely solely upon a certificate of an officer or engineer of the Company which shall be attached to such opinion and such opinion may state that no other investigation or inquiry with respect thereto has been made); the Mortgage, subject only as above set forth in this clause, now constitutes, and the Mortgage and the Supplemental Indentures theretofore executed, subject only as above set forth in this clause, when the latter shall have been duly recorded and filed, will constitute, together and as a single instrument, a direct and valid first mortgage lien upon said property; and all properties (other than the classes or items of property expressly excepted in the Mortgage or expressly released from the lien thereof) acquired by the Company after the date of the Supplemental Indenture relating to the Purchased Bonds in each county in the State of Arizona in which the Mortgage and the Supplemental Indenture shall have been duly recorded and filed and, with respect to priority only, any necessary recordation and/or filing has been accomplished (including therein any necessary descriptions of after-acquired real property and real property upon which after-acquired fixtures are affixed) will, upon such acquisition, become subject to the first mortgage lien thereof, subject, however, to Excepted Encumbrances and to liens, if any, existing or placed thereon at the time of the acquisition thereof by the Company and, with respect to priority only, to liens, if any, existing prior to the time of any necessary recordation and/or filing by the Company; (v) The Company is the owner of the rights conferred upon it by the leases from the Navajo Tribe relating to the site on which the Navajo Plant is located and while such counsel is not aware of the assertion of any claim contesting the title of the Navajo Tribe to the lands leased, such counsel shall not be required to express any opinion with respect to the interest of the Navajo Tribe in the lands leased or with respect to the enforceability of such leases against the Navajo Tribe; (vi) With certain exceptions, a public service corporation is required to obtain certificates of convenience and necessity from the Arizona Corporation Commission under A.R.S. Section 40-281.A for construction of its lines, plant, services, or systems, or any extensions thereof, within the State of Arizona, and to obtain franchises or similar consents or permits from counties and incorporated municipalities under A.R.S. Section 40-283.A for the construction, operation, and 9 maintenance of transmission lines within the State of Arizona; to the best of such counsel's knowledge after due inquiry, the Company holds such valid franchises, certificates of convenience and necessity, consents, and permits pursuant to such statutory provisions as are necessary with respect to the maintenance and operation of its property and business as now conducted, except that (A) the Company from time to time makes minor extensions of its system prior to the time a related franchise, certificate, license, or permit is procured, (B) from time to time communities already being served by the Company become incorporated and considerable time may elapse before a franchise is procured, (C) certain franchises may have expired prior to the renegotiation thereof, (D) certain minor defects and exceptions may exist which, individually and in the aggregate, are not deemed material, and (E) such counsel need not be required to express any opinion regarding the geographical scope of any franchise, certificate, license, or permit that is not specific as to its geographical scope; (vii) The issuance and sale of the Purchased Bonds on the terms and conditions set forth or contemplated herein and in the Prospectus and the Terms Agreement relating to the Purchased Bonds and the execution and delivery of the Supplemental Indenture relating to the Purchased Bonds have been duly authorized by the Arizona Corporation Commission, said Commission had jurisdiction in the premises, and no further approval, authorization, or consent of any other public board or body is necessary to the validity of such issuance and sale of such Purchased Bonds or the execution and delivery of such Supplemental Indenture, except as may be required under state securities or blue sky laws, as to which laws such counsel shall not be required to express an opinion; (viii) The First Registration Statement and the Second Registration Statement have become effective under the Act, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the First Registration Statement or the Second Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, and each part of the Registration Statements relating to the Bonds, when such part became effective, and the Prospectus, as of the date of the Prospectus Supplement, and each amendment or supplement thereto, as of their respective effective or issue dates, complied as to form in all material respects with the requirements of the Act, the Trust Indenture Act, and the published Rules and Regulations; such counsel has no reason to believe that any part of the Registration Statements, when such part became effective, or the Prospectus, as of the date of the Prospectus Supplement, or as of the Closing Date, or any amendment or supplement thereto, as of their respective effective or issue dates, or as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the descriptions in the Registration Statements and Prospectus of statutes, legal and governmental proceedings and contracts, and other documents are accurate and fairly present the information required to be shown; and to the actual knowledge of those persons in 10 the lawyer group described in such opinion, there are no legal or governmental proceedings required to be described in the Prospectus that are not described as required, nor any contracts or documents of a character required to be described in the Registration Statements or Prospectus or to be filed as exhibits to the Registration Statements that are not described and filed as required (it being understood that such counsel need express no opinion as to the financial statements or other financial data contained in the Registration Statements or the Prospectus); and (ix) This Agreement and the Terms Agreement have been duly authorized, executed, and delivered by the Company. In giving such opinion, (a) Snell & Wilmer L.L.P. may rely solely upon certificates of the Company as to any factual matters upon which any such opinions are based and may rely upon the opinion of Keleher & McLeod, P.A., referred to below, as to all matters governed by the laws of the State of New Mexico, but the opinion of Snell & Wilmer L.L.P. shall state that, though they are members of the Arizona Bar and do not hold themselves out as experts on the laws of the State of New Mexico, they have made a study of the laws of such State insofar as such laws are involved in the conclusions stated in their opinion, other than such laws as relate to matters of title, and from such study it is their opinion that such laws support such conclusions and that, in their opinion, the Underwriters and they are justified to such extent in relying upon the opinion of Keleher & McLeod, P.A.; and (b) the lawyer group referred to in such opinion will mean those lawyers in the offices of Snell & Wilmer L.L.P. who (i) have billed any time on the particular transaction to which such opinion relates or (ii) have billed more than ten hours to any Company matter in the twelve-month period preceding the date on which the list of such lawyers was compiled for purposes of inquiry pursuant to such opinion. (e) The Underwriters or the Representatives shall have received an opinion of Keleher & McLeod, P.A., New Mexico counsel for the Company, dated the Closing Date, to the effect that: (i) The Company is duly qualified as a foreign corporation to do business and is in good standing in the State of New Mexico and has full corporate power and authority to engage in the State of New Mexico in the business now conducted by it therein; (ii) The activities of the Company in the State of New Mexico to date do not constitute it a "public utility" as that term is defined in the relevant laws of the State of New Mexico, and accordingly, no public utility franchises or certificates of convenience and necessity are necessary under New Mexico law with respect to the maintenance and operation of the Company's property and business as now conducted in the State of New Mexico and no approval, authorization, or consent of the New Mexico Public Regulation Commission or any other public board or body of the State of New Mexico is required for the issuance and sale of the Purchased Bonds on the terms and conditions herein and in the Prospectus set forth or 11 contemplated or for the execution of the Supplemental Indenture relating to the Purchased Bonds, except as may be required under New Mexico state securities or blue sky laws, as to which laws such counsel shall not be required to express an opinion; (iii) Assuming that the Company has good and valid title to all of the personal property located in the State of New Mexico and described in the Indenture as subject to the lien thereof (which property shall not include fixtures) ("Personal Property"), in giving the opinions described below with respect to any liens, defects and encumbrances on such title to such Personal Property, such counsel may rely solely upon, and assume the accuracy of, a search of the Uniform Commercial Code Financing Statements filed in the records of the New Mexico Secretary of State and may assume that there are no liens or other encumbrances on personal property (as used in the New Mexico Uniform Commercial Code) of the Company located in the State of New Mexico other than liens or other encumbrances that have been perfected by filing with the New Mexico Secretary of State under Section 55-9-401, New Mexico Statutes Annotated 1978; such title to such Personal Property is subject only to: (A) the lien of the Mortgage, (B) Excepted Encumbrances as defined in the Mortgage, and (C) other liens, encumbrances, or defects, none of which, individually or in the aggregate, in the opinion of such counsel, materially interfere with the business or operations of the Company (in determining whether any such other liens, encumbrances, or defects materially interfere with the business or operations of the Company, such counsel may rely solely upon a certificate of an officer or engineer of the Company which shall be attached to such opinion and such opinion may state that no other investigation or inquiry with respect thereto has been made); the Mortgage, subject only as above set forth in this clause, now constitutes, and the Mortgage and the Supplemental Indentures theretofore executed, subject only as above set forth in this clause, when the latter shall have been duly recorded and filed, will constitute, together and as a single instrument, a direct and valid first mortgage lien upon such Personal Property; and all properties (other than the classes or items of property expressly excepted in the Mortgage or expressly released from the lien thereof) acquired by the Company after the date of the Supplemental Indenture relating to the Purchased Bonds in each county in the State of New Mexico in which the Mortgage and the Supplemental Indenture shall have been duly recorded and filed and, with respect to priority only, any necessary recordation and/or filing has been accomplished (including therein any necessary descriptions of after-acquired real property and real property upon which after-acquired fixtures are affixed) will, upon such acquisition, become subject to the first mortgage lien thereof, subject, however, to Excepted Encumbrances and to liens, if any, existing or placed thereon at the time of the acquisition thereof by the Company and, with respect to priority only, to liens, if any, existing prior to the time of any necessary recordation and/or filing by the Company; and (iv) The Company is the owner of the rights conferred upon it by the leases from the Navajo Tribe relating to the site on which the Four Corners plant is located and 12 while such counsel is not aware of the assertion of any claim contesting the interest of the Navajo Tribe in the lands leased, such counsel shall not be required to express any opinion with respect to the interest of the Navajo Tribe in the lands leased or with respect to the enforceability of such leases against the Navajo Tribe. In giving such opinion, Keleher & McLeod, P.A. may rely solely upon certificates of the Company as to any factual matters upon which any such opinions are based. (f) The Underwriters or the Representatives shall have received from counsel for the Underwriters such opinion or opinions, dated the Closing Date, with respect to the incorporation of the Company, the validity of the Purchased Bonds, the Registration Statements, the Prospectus, and other related matters as may reasonably be required, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. In rendering such opinion, such counsel may rely as to the incorporation of the Company and all other matters governed by the laws of the States of Arizona and New Mexico upon the opinions of Snell & Wilmer L.L.P. and Keleher & McLeod, P.A., referred to above. (g) The Underwriters or the Representatives shall have received a certificate of the President or any Vice President and a principal financial or accounting officer of the Company, dated the Closing Date, in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement are true and correct, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Date, that no stop order suspending the effectiveness of the First Registration Statement or the Second Registration Statement has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission, and that, subsequent to the date of the most recent financial statements in the Prospectus, there has been no material adverse change in the financial position or results of operations of the Company and its subsidiaries except as set forth or contemplated in the Prospectus or as described in such certificate. (h) The Underwriters or the Representatives shall have received a letter of DELOITTE & TOUCHE LLP, dated the Closing Date, which meets the requirements of subsection (a) of this Section, except that the specified date referred to in such subsection will be a date not more than five days prior to the Closing Date for the purposes of this subsection. The Company will furnish the Underwriters or the Representatives with such conformed copies of such opinions, certificates, letters, and documents as may be reasonably requested. 6. INDEMNIFICATION. (a) The Company will indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of the Act against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or such controlling person may become subject, under the Act or otherwise, insofar as such losses, 13 claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statements relating to the Bonds, when such part became effective, any preliminary prospectus or preliminary prospectus supplement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Underwriter will severally indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statements, and each person, if any, who controls the Company within the meaning of the Act, against any losses, claims, damages, or liabilities to which the Company or any such director, officer, or controlling person may become subject, under the Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statements relating to the Bonds, when such part became effective, any preliminary prospectus or preliminary prospectus supplement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter specifically for use therein; and will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, or action. This indemnity agreement will be in addition to any liability which such Underwriter may otherwise have. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party otherwise than under this Section. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, without the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or 14 other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. An indemnifying party shall not be liable for any settlement of a claim or action effected without its written consent, which shall not be unreasonably withheld. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party for any loss, claim, damage, liability, or action described in subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above on the following basis: (l) if such loss, claim, damage, liability, or action arises under subsection (a) above, then (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Bonds or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations; and (2) if such loss, claim, damage, liability, or action arises under subsection (b) above, then in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. For the purposes of clause (1) above, the relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. For the purposes of clauses (1) and (2) above, the relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. 7. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default in their obligations to purchase Purchased Bonds pursuant to this Agreement and the Terms Agreement and the principal amount of Purchased Bonds that such defaulting Underwriter or Underwriters agreed but failed to purchase is ten percent (10%) or less of the principal amount of Purchased Bonds to which such Terms Agreement relates, the Underwriters or the Representatives may make arrangements satisfactory to the Company for the purchase of such Purchased Bonds by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing 15 Date the nondefaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder and under such Terms Agreement, to purchase the Purchased Bonds that such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of Purchased Bonds with respect to which such default or defaults occur is more than the above-described amount and arrangements satisfactory to the remaining Underwriters and the Company for the purchase of such Purchased Bonds by other persons are not made within thirty-six hours after such default, the Terms Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 8. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default. 8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective indemnities, agreements, representations, warranties, and other statements of the Company or its officers and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter or the Company or any of its officers or directors or any controlling person, and will survive delivery of and payment for the Purchased Bonds. If any Terms Agreement is terminated pursuant to Section 7, or if for any reason a purchase pursuant to any Terms Agreement is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 4 and the respective obligations of the Company and the Underwriters pursuant to Section 6 shall remain in effect. 9. NOTICES. All communications hereunder relating to any offering of Purchased Bonds will be in writing, and, if sent to the Underwriters, may be mailed, delivered, or telecopied and confirmed to the Representative first named in the Terms Agreement relating to such Purchased Bonds or the Underwriters at their addresses furnished to the Company in writing for the purpose of communications; provided, however, that any notice to an Underwriter pursuant to Section 6 will be mailed, delivered, or telecopied and confirmed to each such Underwriter at its own address. All communications hereunder to the Company shall be mailed to the Company, Attention: Treasurer, at P.O. Box 53999, Phoenix, Arizona 85072-3999, or delivered, or telecopied and confirmed to the Company at 400 North Fifth Street, Phoenix, Arizona 85004. 10. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto and such Underwriters as are named in Terms Agreements and their respective successors and the officers and directors and controlling persons referred to in Section 6, and no other person will have any right or obligation hereunder. 11. REPRESENTATION OF UNDERWRITERS. The Representatives, if any, may act for the several Underwriters in connection with any offering to which a Terms Agreement may relate, and any action under this Agreement or such Terms Agreement taken by the Representatives jointly or the Representative first named in such Terms Agreement in such capacity will be binding upon all the Underwriters of Purchased Bonds to which such Terms Agreement relates. 16 12. EXECUTION IN COUNTERPART. This Agreement and any Terms Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute a single instrument. 17 If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms. Very truly yours, ARIZONA PUBLIC SERVICE COMPANY By ------------------------------------- Treasurer The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. By ------------------------------------- 18 EX-1.2 3 ex1-2.txt FORM OF UNDERWRITING AGRMT. - DEBT SECURITIES Exhibit 1.2 ARIZONA PUBLIC SERVICE COMPANY SECURITIES UNDERWRITING AGREEMENT Dear Sir or Madam: 1. INTRODUCTION. Arizona Public Service Company, an Arizona corporation (the "Company"), proposes to issue and sell from time to time up to $725,000,000 in aggregate principal amount of its unsecured debentures, notes or other evidences of indebtedness (the "Securities") registered under the registration statements referred to in Section 2(a). The Securities will be issued under the Indenture, dated as of January 15, 1998, between the Company and The Chase Manhattan Bank, as Trustee, (the "Indenture"), as amended and supplemented by one or more Supplemental Indentures between the Company and the Trustee (each, a "Supplemental Indenture") (the Indenture as amended and supplemented by such Supplemental Indentures being sometimes hereinafter referred to as the "Indenture"). The Securities will be issued in one or more series, which series may vary as to interest rates, maturities, redemption provisions, selling prices, and other terms, with all such terms for any particular issue of the Securities being determined at the time of sale. Particular issues of the Securities may be sold from time to time to one or more of the firms to whom this Agreement is addressed, and to such other purchasers as the Company shall designate and as shall agree in writing to comply with the terms and conditions of this Agreement, for resale in accordance with the terms of offering determined at the time of sale. The Securities involved in any such offering are hereinafter referred to as the "Purchased Securities," the party or parties that agree to purchase the same are hereinafter referred to as the "Underwriters" of such Purchased Securities, and the representative or representatives of the Underwriters, if any, specified in a Terms Agreement referred to in Section 3 are hereinafter referred to as the "Representatives." 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In connection with each offering of the Purchased Securities, the Company represents and warrants to, and agrees with, the Underwriters that: (a) A registration statement (No. 333-94277) relating to $225,000,000 of the Securities or the Company's first mortgage bonds (the "Bonds") and a registration statement (No. 333-_____) relating to $500,000,000 of the Securities or the Bonds (including a combined prospectus relating to up to $725,000,000 of the Securities or Bonds) were filed with the Securities and Exchange Commission (the "Commission") and have become effective. Such registration statements, as each is amended at the time of the Terms Agreement referred to in Section 3 relating to the Purchased Securities, are hereinafter referred to as the "First Registration Statement" and the "Second Registration Statement," respectively, and, together with any related 462(b) registration statement or amendment thereto, are hereinafter referred to collectively as the "Registration Statements" and such prospectus, as supplemented as contemplated by Section 3 to reflect the terms of the Purchased Securities and terms of offering thereof, including all material incorporated by reference therein, is hereinafter referred to as the "Prospectus." (b) Each part of the Registration Statements relating to the Securities, when such part became effective, conformed in all material respects to the requirements of the Securities Act of 1933 (the "Act"), the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the rules and regulations (the "Rules and Regulations") of the Commission and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and on the date of each Prospectus Supplement referred to in Section 3, the Registration Statements and the Prospectus will conform in all material respects to the requirements of the Act, the Trust Indenture Act and the Rules and Regulations, and at such date none of such documents will include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the foregoing does not apply to (a) statements in or omissions from any such documents based upon written information furnished to the Company by any Underwriter specifically for use therein or (b) that part of the Registration Statements that consists of the Statement of Eligibility and Qualification (Form T-1) under the Trust Indenture Act of 1939 of The Chase Manhattan Bank, as Trustee under the Indenture. (c) An order of the Arizona Corporation Commission shall have been granted authorizing the execution and delivery of the Supplemental Indenture relating to the Purchased Securities and the issuance and sale of the Purchased Securities on the terms and conditions herein and in the Prospectus and the Terms Agreement referred to in Section 3 relating to the Purchased Securities, and the approval or consent of no other public body or authority is necessary to the execution and delivery of such Supplemental Indenture or the validity of the issuance and sale of the Purchased Securities, except as may be required under state securities or blue sky laws. (d) The Company holds such valid franchises, certificates of convenience and necessity, licenses, and permits as are necessary with respect to the maintenance and operation of its property and business as now conducted, except that (A) the Company from 2 time to time makes minor extensions of its system prior to the time a related franchise, certificate, license, or permit is procured, (B) from time to time communities already being served by the Company become incorporated and considerable time may elapse before a franchise is procured, (C) certain franchises may have expired prior to the renegotiation thereof, (D) the Company may not have obtained certain permits or variances relating to the environmental requirements described in any of its Form 10-K Report, its Form 10-Q Reports, and/or its Form 8-K Reports incorporated by reference in the Registration Statements, (E) certain minor defects and exceptions may exist which, individually and in the aggregate, are not deemed material, and (F) the Company does not make any representation regarding the geographical scope of any franchise, certificate, license, or permit that is not specific as to its geographical scope. 3. PURCHASE AND OFFERING. The obligation of the Underwriters to purchase, and the obligation of the Company to sell, the Purchased Securities will be evidenced by an exchange of facsimile transmission or other written communications (the "Terms Agreement") at the time the Company determines to sell the Purchased Securities. The Terms Agreement shall specify (by incorporation by reference or otherwise) the party or parties that will be Underwriters, the principal amount to be purchased by each, the purchase price to be paid by the Underwriters, any compensation or commissions to be paid to Underwriters, the offering price, and the terms of the Purchased Securities not already specified in the Indenture, including, but not limited to, interest rates, maturity, redemption provisions, and sinking fund requirements, if any. The Terms Agreement shall also specify (by incorporation by reference or otherwise) the time and date of delivery and payment (the "Closing Date"), the place of delivery and payment, and any details of the terms of offering that should be reflected in the prospectus supplement relating to the offering of the Purchased Securities (the "Prospectus Supplement"). It is understood that the Underwriters will offer the Purchased Securities for sale as set forth in the Prospectus. The obligations of the Underwriters to purchase the Purchased Securities shall be several and not joint. Except as may otherwise be set forth in the Terms Agreement, the Purchased Securities will be in definitive form and in such denominations and registered in such names as the Underwriters may request. 4. COVENANTS OF THE COMPANY. In connection with each offering of Purchased Securities, the Company covenants and agrees with the several Underwriters that: (a) The Company will advise the Underwriters or the Representatives promptly of any proposed amendment or supplementation of the First Registration Statement, the Second Registration Statement, or the Prospectus. The Company will also advise the Underwriters or the Representatives of the institution by the Commission of any stop order proceedings in respect of the First Registration Statement, the Second Registration Statement, or of any part thereof, and will use its best efforts to prevent the issuance of any such stop order and to obtain as soon as possible its lifting, if issued. (b) If, at any time when a prospectus relating to the Purchased Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact, or omit to state any material fact necessary to make the statements therein, in the light of the 3 circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the First Registration Statement, the Second Registration Statement, or the Prospectus to comply with the Act, the Company promptly will prepare and file with the Commission an amendment or supplement that will correct such statement or omission or an amendment that will effect such compliance. (c) As soon as practicable, but not later than 18 months, after the date of the Terms Agreement relating to the Purchased Securities, the Company will make generally available to its security holders an earning statement or statements (which need not be audited) covering a period of at least 12 months beginning after the effective date of the Second Registration Statement (as defined in Rule 158(c) under the Act), which will satisfy the provisions of Section 11(a) of the Act and the rules and regulations thereunder. (d) The Company will furnish to the Underwriters or the Representatives such copies of the Registration Statements (including one copy of the Second Registration Statement for each Representative, or for each Underwriter if there are no Representatives, and for the counsel for the Underwriters, which is signed and includes all exhibits), any related preliminary prospectus supplements and the Prospectus, including all amendments or supplements to such documents, as may be reasonably requested. (e) The Company will arrange or cooperate in arrangements for the qualification of the Purchased Securities for sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Underwriters or the Representatives designate and will continue such qualifications in effect so long as required for the distribution of the Purchased Securities, provided that the Company shall not be required to qualify as a foreign corporation in any State, to consent to service of process in any State other than with respect to claims arising out of the offering or sale of the Purchased Securities, or to meet other requirements deemed by it to be unduly burdensome. (f) During the period of five years after the date of the Terms Agreement relating to the Purchased Securities, the Company will furnish to the Underwriters or the Representatives thereunder, and, upon request, each of the other Underwriters, (i) as soon as practicable after the end of each fiscal year, a balance sheet and statements of income and retained earnings of the Company as at the end of and for such year, all in reasonable detail and certified by independent public accountants, and (ii) (A) as soon as practicable after the end of each quarterly fiscal period (except for the last quarterly fiscal period of each fiscal year), a balance sheet and statement of income of the Company as at the end of and for such period, all in reasonable detail and certified by a principal financial or accounting officer of the Company, (B) as soon as available, a copy of each report of the Company filed with the Commission, and (C) from time to time, such other information concerning the Company as may reasonably be requested. So long as the Company has active subsidiaries, such financial statements will be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated. 4 (g) The Company will pay all expenses incident to the performance of its obligations under this Agreement, and will reimburse the Underwriters for any reasonable expenses (including reasonable fees and disbursements of counsel) incurred by them in connection with the qualification of the Purchased Securities with respect to which the Terms Agreement relating to the Purchased Securities has been entered for sale, and the determination of their eligibility for investment, under the laws of such jurisdictions as the Representatives or, if there are no Representatives, the Underwriters designate, and the printing of memoranda relating thereto, and for any fees charged by investment rating agencies for the rating of the Purchased Securities. (h) The Company will not offer or sell any other of its Securities for a period beginning at the time of execution of the Terms Agreement relating to the Purchased Securities and ending on the Closing Date relating thereto without prior consent of the Underwriter or the Representatives. 5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the Underwriters to purchase and pay for the Purchased Securities will be subject to the accuracy of the representations and warranties on the part of the Company herein, to the accuracy of the statements of Company officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder, and to the following additional conditions precedent: (a) The Underwriters or the Representatives shall have received a letter from DELOITTE & TOUCHE LLP, dated the date of the Terms Agreement, confirming that they are independent certified public accountants within the meaning of the Act and the applicable published Rules and Regulations thereunder, and stating in effect that (i) in their opinion the financial statements and schedules of the Company audited by them and incorporated by reference in the Registration Statements comply as to form in all material respects with the applicable accounting requirements of the Securities Exchange Act of 1934 (the "1934 Act") and the published Rules and Regulations thereunder and (ii) on the basis of a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company responsible for financial and accounting matters, and other specified procedures, nothing came to their attention that caused them to believe that (A) the unaudited financial statements incorporated by reference, if any, in the Registration Statements do not comply as to form in all material respects with the applicable accounting requirements of the 1934 Act and the published Rules and Regulations thereunder or are not stated on a basis substantially consistent with that of the audited financial statements incorporated by reference in the Registration Statements, (B) at the date of the most recent available unaudited financial statements and at a specified date not more than five days prior to the date of this Agreement, there was any increase in the amounts of common stock, redeemable preferred stock, or non-redeemable preferred stock of the Company or any increase, exceeding $10,000,000, in long-term debt of the Company or, at the date of the most recent available unaudited financial statements there was any decrease in net assets as compared with amounts shown in the most recent financial statements incorporated by reference in the Registration Statements, or (C) for the twelve-month period ended at the date of the most recent available unaudited financial statements there were any decreases, 5 exceeding 3%, as compared with the twelve-month period ended at the date of the most recent financial statements incorporated by reference in the Registration Statements, in the amounts of total revenues or net income, except in all cases for increases or decreases which result from the declaration or payment of dividends, or which the Registration Statements (including any material incorporated by reference therein) disclose have occurred or may occur, or which are described in such letter. (b) No stop order suspending the effectiveness of the First Registration Statement, the Second Registration Statement, or any part thereof shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Company or the Underwriters, shall be contemplated by the Commission. (c) Subsequent to the execution of the Terms Agreement relating to the Purchased Securities, (i) there shall not have occurred any change, or any development involving a prospective change, in or affecting particularly the business or properties of the Company or its subsidiaries which, in the judgment of a majority in interest of the Underwriters under such Terms Agreement, including any Representatives, materially impairs the investment quality of the Purchased Securities, (ii) there shall not have occurred a suspension or material limitation in trading in securities generally on the New York Stock Exchange, (iii) there shall not have occurred a general moratorium on commercial banking activities in New York declared by either Federal or New York State authorities, (iv) no rating of any of the Company's debt securities shall have been lowered and there shall have been no public announcement that any such debt securities have been placed on CreditWatch, Watchlist, or under any similar surveillance or review, in each case with negative implications, by any recognized rating agency, and (v) there shall not have occurred any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of a majority in interest of the Underwriters under such Terms Agreement, including any Representatives, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Purchased Securities. (d) The Underwriters or the Representatives shall have received an opinion of Snell & Wilmer L.L.P., counsel for the Company, dated the relevant Closing Date, to the effect that: (i) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Arizona and has full corporate power and authority to carry on its business as presently conducted; and the Company is duly qualified as a foreign corporation to do business and is in good standing in the States of New Mexico, California, Oregon, Washington, Montana, Wyoming, and Texas, the only other jurisdictions in which it owns or leases substantial properties or in which the conduct of its business requires such qualification; 6 (ii) The Purchased Securities have been duly authorized, executed, authenticated, issued, and delivered, constitute valid and legally binding obligations of the Company entitled to the benefits provided by the Indenture (except as the same may be limited by (a) general principles of equity or by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other laws or equitable principles relating to or affecting the enforcement of creditors' rights generally and (b) the qualification that certain waivers, procedures, remedies, and other provisions of the Purchased Securities and the Indenture may be unenforceable under or limited by the law of the State of Arizona; however, such law does not in such counsel's opinion substantially prevent the practical realization of the benefits intended by such documents) and conform to the description thereof in the Prospectus; (iii) The Indenture has been duly authorized, executed, and delivered, has been duly qualified under the Trust Indenture Act, and constitutes a valid and binding instrument enforceable in accordance with its terms except as the same may be limited by (a) general principles of equity or by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other laws or equitable principles relating to or affecting the enforcement of creditors' rights generally and (b) the qualification that certain waivers, procedures, remedies, and other provisions of the Purchased Securities and the Indenture may be unenforceable under or limited by the law of the State of Arizona; however, such law does not in such counsel's opinion substantially prevent the practical realization of the benefits intended by such documents; (iv) With certain exceptions, a public service corporation is required to obtain certificates of convenience and necessity from the Arizona Corporation Commission under A.R.S. Section 40-281.A for construction of its lines, plant, services, or systems, or any extensions thereof, within the State of Arizona, and to obtain franchises or similar consents or permits from counties and incorporated municipalities under A.R.S. Section 40-283.A for the construction, operation, and maintenance of transmission lines within the State of Arizona; to the best of such counsel's knowledge after due inquiry, the Company holds such valid franchises, certificates of convenience and necessity, consents, and permits pursuant to such statutory provisions as are necessary with respect to the maintenance and operation of its property and business as now conducted, except that (A) the Company from time to time makes minor extensions of its system prior to the time a related franchise, certificate, license, or permit is procured, (B) from time to time communities already being served by the Company become incorporated and considerable time may elapse before a franchise is procured, (C) certain franchises may have expired prior to the renegotiation 7 thereof, (D) certain minor defects and exceptions may exist which, individually and in the aggregate, are not deemed material, and (E) such counsel need not be required to express any opinion regarding the geographical scope of any franchise, certificate, license, or permit that is not specific as to its geographical scope; (v) The issuance and sale of the Purchased Securities on the terms and conditions set forth or contemplated herein and in the Prospectus and the Terms Agreement relating to the Purchased Securities and the execution and delivery of the Supplemental Indenture relating to the Purchased Securities have been duly authorized by the Arizona Corporation Commission, said Commission had jurisdiction in the premises, and no further approval, authorization, or consent of any other public board or body is necessary to the validity of such issuance and sale of such Purchased Securities or the execution and delivery of such Supplemental Indenture, except as may be required under state securities or blue sky laws, as to which laws such counsel shall not be required to express an opinion; (vi) The First Registration Statement and the Second Registration Statement have become effective under the Act, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the First Registration Statement or the Second Registration Statement has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Act, and each part of the Registration Statements relating to the Securities, when such part became effective, and the Prospectus, as of the date of the Prospectus Supplement, and each amendment or supplement thereto, as of their respective effective or issue dates, complied as to form in all material respects with the requirements of the Act, the Trust Indenture Act, and the published Rules and Regulations; such counsel has no reason to believe that any part of the Registration Statements, when such part became effective, or the Prospectus, as of the date of the Prospectus Supplement, or as of the Closing Date, or any amendment or supplement thereto, as of their respective effective or issue dates, or as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the descriptions in the Registration Statements and Prospectus of statutes, legal and governmental proceedings and contracts, and other documents are accurate and fairly present the information required to be shown; and to the actual knowledge of those persons in the lawyer group described in such opinion, there are no legal or governmental proceedings required to be described in the Prospectus that are not described as required, nor any contracts or documents of a character required to be described in the Registration Statements or Prospectus or to be filed as exhibits to the Registration Statements that are not described and filed as required (it being understood 8 that such counsel need express no opinion as to the financial statements or other financial data contained in the Registration Statements or the Prospectus); and (vii) This Agreement and the Terms Agreement have been duly authorized, executed, and delivered by the Company. In giving such opinion, (a) Snell & Wilmer L.L.P. may rely solely upon certificates of the Company as to any factual matters upon which any such opinions are based and may rely upon the opinion of Keleher & McLeod, P.A., referred to below, as to all matters governed by the laws of the State of New Mexico, but the opinion of Snell & Wilmer L.L.P. shall state that, though they are members of the Arizona Bar and do not hold themselves out as experts on the laws of the State of New Mexico, they have made a study of the laws of such State insofar as such laws are involved in the conclusions stated in their opinion, and from such study it is their opinion that such laws support such conclusions and that, in their opinion, the Underwriters and they are justified to such extent in relying upon the opinion of Keleher & McLeod, P.A.; and (b) the lawyer group referred to in such opinion will mean those lawyers in the offices of Snell & Wilmer L.L.P. who (i) have billed any time on the particular transaction to which such opinion relates or (ii) have billed more than ten hours to any Company matter in the twelve-month period preceding the date on which the list of such lawyers was compiled for purposes of inquiry pursuant to such opinion. (e) The Underwriters or the Representatives shall have received an opinion of Keleher & McLeod, P.A., New Mexico counsel for the Company, dated the Closing Date, to the effect that: (i) The Company is duly qualified as a foreign corporation to do business and is in good standing in the State of New Mexico and has full corporate power and authority to engage in the State of New Mexico in the business now conducted by it therein; and (ii) The activities of the Company in the State of New Mexico to date do not constitute it a "public utility" as that term is defined in the relevant laws of the State of New Mexico, and accordingly, no public utility franchises or certificates of convenience and necessity are necessary under New Mexico law with respect to the maintenance and operation of the Company's property and business as now conducted in the State of New Mexico and no approval, authorization, or consent of the New Mexico Public Regulation Commission or any other public board or body of the State of New Mexico is required for the issuance and sale of the Purchased Securities on the terms and conditions herein and in the Prospectus set forth or contemplated or for the execution of the Supplemental Indenture relating to the Purchased Securities, except as may be required under New Mexico state securities or blue sky laws, as to which laws such counsel shall not be required to express an opinion. 9 In giving such opinion, Keleher & McLeod, P.A. may rely solely upon certificates of the Company as to any factual matters upon which any such opinions are based. (f) The Underwriters or the Representatives shall have received from counsel for the Underwriters such opinion or opinions, dated the Closing Date, with respect to the incorporation of the Company, the validity of the Purchased Securities, the Registration Statements, the Prospectus, and other related matters as may reasonably be required, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. In rendering such opinion, such counsel may rely as to the incorporation of the Company and all other matters governed by the laws of the States of Arizona and New Mexico upon the opinions of Snell & Wilmer L.L.P. and Keleher & McLeod, P.A., referred to above. (g) The Underwriters or the Representatives shall have received a certificate of the President or any Vice President and a principal financial or accounting officer of the Company, dated the Closing Date, in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company in this Agreement are true and correct, that the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Date, that no stop order suspending the effectiveness of the First Registration Statement or the Second Registration Statement has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission, and that, subsequent to the date of the most recent financial statements in the Prospectus, there has been no material adverse change in the financial position or results of operations of the Company and its subsidiaries except as set forth or contemplated in the Prospectus or as described in such certificate. (h) The Underwriters or the Representatives shall have received a letter of DELOITTE & TOUCHE LLP, dated the Closing Date, which meets the requirements of subsection (a) of this Section, except that the specified date referred to in such subsection will be a date not more than five days prior to the Closing Date for the purposes of this subsection. The Company will furnish the Underwriters or the Representatives with such conformed copies of such opinions, certificates, letters, and documents as may be reasonably requested. 6. INDEMNIFICATION. (a) The Company will indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of the Act against any losses, claims, damages or liabilities, joint or several, to which such Underwriter or such controlling person may become subject, under the Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon 10 any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statements relating to the Securities, when such part became effective, any preliminary prospectus or preliminary prospectus supplement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse each Underwriter and each such controlling person for any legal or other expenses reasonably incurred by such Underwriter or such controlling person in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the Company by any Underwriter specifically for use therein. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Underwriter will severally indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statements, and each person, if any, who controls the Company within the meaning of the Act, against any losses, claims, damages, or liabilities to which the Company or any such director, officer, or controlling person may become subject, under the Act or otherwise, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of the Registration Statements relating to the Securities, when such part became effective, any preliminary prospectus or preliminary prospectus supplement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter specifically for use therein; and will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, or action. This indemnity agreement will be in addition to any liability which such Underwriter may otherwise have. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party otherwise than under this Section. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, without the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, 11 the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. An indemnifying party shall not be liable for any settlement of a claim or action effected without its written consent, which shall not be unreasonably withheld. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party for any loss, claim, damage, liability, or action described in subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above on the following basis: (1) if such loss, claim, damage, liability, or action arises under subsection (a) above, then (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations; and (2) if such loss, claim, damage, liability, or action arises under subsection (b) above, then in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Underwriter on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. For the purposes of clause (1) above, the relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. For the purposes of clauses (1) and (2) above, the relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. 12 7. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default in their obligations to purchase Purchased Securities pursuant to this Agreement and the Terms Agreement and the principal amount of Purchased Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase is ten percent (10%) or less of the principal amount of Purchased Securities to which such Terms Agreement relates, the Underwriters or the Representatives may make arrangements satisfactory to the Company for the purchase of such Purchased Securities by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date the nondefaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder and under such Terms Agreement, to purchase the Purchased Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of Purchased Securities with respect to which such default or defaults occur is more than the above-described amount and arrangements satisfactory to the remaining Underwriters and the Company for the purchase of such Purchased Securities by other persons are not made within thirty-six hours after such default, the Terms Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 8. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default. 8. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The respective indemnities, agreements, representations, warranties, and other statements of the Company or its officers and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect regardless of any investigation, or statement as to the results thereof, made by or on behalf of the Underwriters or the Company or any of its officers or directors or any controlling person, and will survive delivery of and payment for the Purchased Securities. If any Terms Agreement is terminated pursuant to Section 7, or if for any reason a purchase pursuant to any Terms Agreement is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 4 and the respective obligations of the Company and the Underwriters pursuant to Section 6 shall remain in effect. 9. NOTICES. All communications hereunder relating to any offering of Purchased Securities will be in writing, and, if sent to the Underwriters, may be mailed, delivered, or telecopied and confirmed to the Representative first named in the Terms Agreement relating to such Purchased Securities or the Underwriters at their addresses furnished to the Company in writing for the purpose of communications; provided, however, that any notice to an Underwriter pursuant to Section 6 will be mailed, delivered, or telecopied and confirmed to each such Underwriter at its own address. All communications hereunder to the Company shall be mailed to the Company, Attention: Treasurer, at P.O. Box 53999, Phoenix, Arizona 85072-3999, or delivered, or telecopied and confirmed to the Company at 400 North Fifth Street, Phoenix, Arizona 85004. 10. SUCCESSORS. This Agreement will inure to the benefit of and be binding upon the parties hereto and the Underwriter or Underwriters as are named in any Terms Agreement and their respective successors and the officers and directors and controlling persons referred to in Section 6, and no other person will have any right or obligation hereunder. 13 11. REPRESENTATION OF UNDERWRITERS. The Representatives, if any, may act for the Underwriters in connection with any offering to which a Terms Agreement may relate, and any action under this Agreement or such Terms Agreement taken by the Representatives jointly or the Representative first named in such Terms Agreement in such capacity will be binding upon the Underwriters of Purchased Securities to which such Terms Agreement relates. 12. EXECUTION IN COUNTERPART. This Agreement and any Terms Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute a single instrument. 14 If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon it will become a binding agreement between the Company and the Underwriters in accordance with its terms. Very truly yours, ARIZONA PUBLIC SERVICE COMPANY By -------------------------------------- Treasurer The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. By ------------------------------------- 15 EX-5.1 4 ex5-1.txt CONSENT OF SNELL & WILMER L.L.P. Exhibit 5.1 June 27, 2001 Arizona Public Service Company 400 North 5th Street Phoenix, Arizona 85004 Ladies and Gentlemen: Reference is made to (a) your proposed offering of up to $725,000,000 of your securities (the "Securities"), as contemplated by the combined prospectus contained in the Registration Statement (the "Registration Statement") on Form S-3 to be filed by you on June 27, 2001, with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), which Securities include (i) $500,000,000 of first mortgage bonds, debt securities, or any combination thereof, to be registered pursuant to the Registration Statement; and (ii) $225,000,000 of first mortgage bonds, debt securities, or any combination thereof, previously registered under Registration No. 333-94277; and (b) any registration statement registering additional Securities pursuant to Rule 462(b) of the Act that relates to the Registration Statement (the "Rule 462(b) Registration Statement"). We have examined originals or copies, certified or otherwise identified to our satisfaction, of such corporate records, agreements, and other instruments, certificates, orders, opinions, correspondence with public officials, certificates provided by your officers and representatives, and other documents as we have deemed necessary or advisable for the purposes of rendering the opinions set forth herein. Based on the foregoing, it is our opinion that after (i) the Registration Statement, and the Rule 462(b) Registration Statement, if applicable, shall have become effective, (ii) all required regulatory approvals have been obtained, and (iii) you shall have entered into one or more underwriting or distribution agreements with respect to the Securities then to be offered and the initial public offering price for each of such Securities and the discounts therefrom and commission therefor shall have been determined in accordance with such underwriting or distribution agreements, pursuant to the authorization of your Board of Directors and the applicable order of the Arizona Corporation Commission, then, when (i) the Securities have been issued, sold, executed, authenticated, and delivered, and (ii) the purchase price therefor has been paid to you as contemplated in the Registration Statement and the Rule 462(b) Registration Statement, if applicable (including the Exhibits thereto), and in any relevant amendment thereto or in any Rule 424 supplement to the prospectus contained in the Registration Statement; the Securities will be validly issued and will constitute legal, valid, and binding obligations of you Arizona Public Service Company June 27, 2001 Page 2 except as the same may be limited by (a) general principles of equity or by bankruptcy, insolvency, reorganization, arrangement, moratorium, or other laws or equitable principles relating to or affecting the enforcement of creditors' rights generally, or by equitable principles that limit the right to specific performance or otherwise limit remedial action or the enforcement of any security provided for the Securities, (b) the necessity for compliance with the statutory procedural requirements governing the exercise of remedies by a secured creditor, and (c) the qualification that certain waivers, procedures, remedies, and other provisions of the Securities may be unenforceable under or limited by the law of the State of Arizona; however, such law does not in our opinion substantially prevent the practical realization of the benefits thereof. In giving the above opinion, we have assumed that the law of the jurisdiction or jurisdictions that govern the Securities is substantially the same as the law of the State of Arizona. Consent is hereby given to the use of this opinion as part of the Registration Statement and the Rule 462(b) Registration Statement, if applicable, and to the use of our name wherever it appears in said Registration Statement, the related prospectus, and the Rule 462(b) Registration Statement, if applicable. Very truly yours, Snell & Wilmer EX-12.1 5 ex12-1.txt COMPUTATION OF RATIO OF EARNINGS Exhibit 12.1 ARIZONA PUBLIC SERVICE COMPANY COMPUTATION OF EARNINGS TO FIXED CHARGES (THOUSANDS OF DOLLARS)
Three Months Ended Twelve Months Ended March 31 December 31, --------- -------------------------------------------------------------------------- 2001 2000 1999(a) 1999(b) 1998 1997 1996 --------- --------- --------- --------- --------- --------- --------- Earnings: Net Income $ 61,851 $ 306,594 $ 128,437 $ 268,322 $ 255,247 $ 251,493 $ 243,471 Income taxes 49,790 225,317 65,373 159,488 159,456 153,324 132,961 Fixed Charges 43,749 184,173 184,327 184,327 188,568 195,055 203,855 --------- --------- --------- --------- --------- --------- --------- Total $ 155,390 $ 716,084 $ 378,137 $ 612,137 $ 603,271 $ 599,872 $ 580,287 ========= ========= ========= ========= ========= ========= ========= Fixed Charges: Interest expense $ 33,542 $ 141,886 $ 140,948 $ 140,948 $ 144,695 $ 150,335 $ 158,287 Amortization of debt discount, premium and expense 1,384 6,897 7,323 7,323 7,580 7,791 8,176 Estimated interest portion of annual rents 8,823 35,390 36,056 36,056 36,293 36,929 37,392 --------- --------- --------- --------- --------- --------- --------- Total $ 43,749 $ 184,173 $ 184,327 $ 184,327 $ 188,568 $ 195,055 $ 203,855 ========= ========= ========= ========= ========= ========= ========= Ratio of Earnings to Fixed Charges (rounded down) 3.55 3.88 2.05 3.32 3.19 3.07 2.84 ========= ========= ========= ========= ========= ========= ========= (1) Income Taxes: Charged to operations $ 51,010 $ 229,542 $ 192,015 $ 192,015 $ 192,207 $ 184,737 $ 178,513 Income Tax Benefit - Disallowance (c) N/A N/A (94,115) N/A N/A N/A N/A Charged (credited) to other accounts (1,220) (4,225) (32,527) (32,527) (32,751) (31,413) (45,552) --------- --------- --------- --------- --------- --------- --------- Total $ 49,790 $ 225,317 $ 65,373 $ 159,488 $ 159,456 $ 153,324 $ 132,961 ========= ========= ========= ========= ========= ========= ========= (2) Estimated interest portion of Unit 2 lease payments included in estimated interest portion of annual rentals $ 8,093 $ 33,411 $ 33,878 $ 33,878 $ 34,315 $ 34,720 $ 35,083 ========= ========= ========= ========= ========= ========= =========
- ---------- (a) Net Income for twelve months ended December 1999 reflects an after-tax extraordinary charge of $140 million for a regulatory disallowance. (b) Net Income is shown excluding the effects of the regulatory disallowance. (c) Income taxes reported on the Company's income statement are shown excluding the effects of the regulatory disallowance. EX-23.1 6 ex23-1.txt CONSENT OF DELOITTE & TOUCHE LLP Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Arizona Public Service Company on Form S-3 of our report dated February 9, 2001, appearing in the Annual Report on Form 10-K of Arizona Public Service Company for the year ended December 31, 2000 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP DELOITTE & TOUCHE LLP Phoenix, Arizona June 26, 2001 EX-25.1 7 ex25-1.txt FORM T-1 STATEMENT - BANK OF NY AS BOND TRUSTEE Exhibit 25.1 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [ ] ---------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------- ARIZONA PUBLIC SERVICE COMPANY (Exact name of obligor as specified in its charter) Arizona 86-0011170 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 400 North Fifth Street Phoenix, Arizona 85004 (Address of principal executive offices) (Zip code) ---------- First Mortgage Bonds (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. Name Address ---- ------- Superintendent of Banks of the 2 Rector Street, New York, State of New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 19th day of June, 2001. THE BANK OF NEW YORK By: THOMAS E. TABOR ------------------------------------ Name: THOMAS E. TABOR Title: ASSISTANT VICE PRESIDENT -3- Exhibit 7 Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 2000, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS In Thousands -------------- Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ......... $ 3,083,720 Interest-bearing balances .................................. 4,949,333 Securities: Held-to-maturity securities ................................ 740,315 Available-for-sale securities .............................. 5,328,981 Federal funds sold and Securities purchased under agreements to resell ....................................... 5,695,708 Loans and lease financing receivables: Loans and leases, net of unearned income..........................................36,590,456 LESS: Allowance for loan and lease losses.......................................598,536 LESS: Allocated transfer risk reserve.............................................12,575 Loans and leases, net of unearned income, allowance, and reserve ................................... 35,979,345 Trading Assets ............................................... 11,912,448 Premises and fixed assets (including capitalized leases) .................................................... 763,241 Other real estate owned ...................................... 2,925 Investments in unconsolidated subsidiaries and associated companies ....................................... 183,836 Customers' liability to this bank on acceptances outstanding ................................................ 424,303 Intangible assets ............................................ 1,378,477 Other assets ................................................. 3,823,797 ------------ Total assets ................................................. $ 74,266,429 ============ -4- LIABILITIES Deposits: In domestic offices ........................................ $ 28,328,548 Noninterest-bearing...............................12,637,384 Interest-bearing..................................15,691,164 In foreign offices, Edge and Agreement subsidiaries, and IBFs ................................... 27,920,690 Noninterest-bearing..................................470,130 Interest-bearing..................................27,450,560 Federal funds purchased and Securities sold under agreements to repurchase ................................... 1,437,916 Demand notes issued to the U.S.Treasury ...................... 100,000 Trading liabilities .......................................... 2,049,818 Other borrowed money: With remaining maturity of one year or less ................ 1,279,125 With remaining maturity of more than one year through three years ...................................... 0 With remaining maturity of more than three years ........... 31,080 Bank's liability on acceptances executed and outstanding ................................................ 427,110 Subordinated notes and debentures ............................ 1,646,000 Other liabilities ............................................ 4,604,478 ------------ Total liabilities ............................................ $ 67,824,765 ============ EQUITY CAPITAL Common stock ................................................. 1,135,285 Surplus ...................................................... 1,008,775 Undivided profits and capital reserves ....................... 4,308,492 Net unrealized holding gains (losses) on available-for-sale securities .............................. 27,768 Accumulated net gains (losses) on cash flow hedges ........... 0 Cumulative foreign currency translation adjustments .......... (38,656) ------- Total equity capital ......................................... 6,441,664 ------------ Total liabilities and equity capital ......................... $ 74,266,429 ============ -5- I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi ) Alan R. Griffith ) Directors Gerald L. Hassell ) EX-25.2 8 ex25-2.txt FORM T-1 ST. - BANK OF NY AS TRUSTEE DEBT SEC. Exhibit 25.2 ================================================================================ FORM T-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [ ] ---------- THE BANK OF NEW YORK (Exact name of trustee as specified in its charter) New York 13-5160382 (State of incorporation (I.R.S. employer if not a U.S. national bank) identification no.) One Wall Street, New York, N.Y. 10286 (Address of principal executive offices) (Zip code) ---------- ARIZONA PUBLIC SERVICE COMPANY (Exact name of obligor as specified in its charter) Arizona 86-0011170 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 400 North Fifth Street Phoenix, Arizona 85004 (Address of principal executive offices) (Zip code) ------------- Subordinated Debt Securities (Title of the indenture securities) ================================================================================ 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT. - -------------------------------------------------------------------------------- Name Address - -------------------------------------------------------------------------------- Name Address ---- ------- Superintendent of Banks of the 2 Rector Street, New York, State of New York N.Y. 10006, and Albany, N.Y. 12203 Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045 Federal Deposit Insurance Corporation Washington, D.C. 20429 New York Clearing House Association New York, New York 10005 (b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Yes. 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. None. 16. LIST OF EXHIBITS. EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R. 229.10(D). 1. A copy of the Organization Certificate of The Bank of New York (formerly Irving Trust Company) as now in effect, which contains the authority to commence business and a grant of powers to exercise corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with Registration Statement No. 33-29637.) 4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1 filed with Registration Statement No. 33-31019.) 6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.) 7. A copy of the latest report of condition of the Trustee published pursuant to law or to the requirements of its supervising or examining authority. -2- SIGNATURE Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in The City of New York, and State of New York, on the 19th day of June, 2001. THE BANK OF NEW YORK By: THOMAS E. TABOR ------------------------------------ Name: THOMAS E. TABOR Title: ASSISTANT VICE PRESIDENT -3- Exhibit 7 Consolidated Report of Condition of THE BANK OF NEW YORK of One Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 2000, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. Dollar Amounts ASSETS In Thousands -------------- Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ......... $ 3,083,720 Interest-bearing balances .................................. 4,949,333 Securities: Held-to-maturity securities ................................ 740,315 Available-for-sale securities .............................. 5,328,981 Federal funds sold and Securities purchased under agreements to resell ....................................... 5,695,708 Loans and lease financing receivables: Loans and leases, net of unearned income..........................................36,590,456 LESS: Allowance for loan and lease losses.......................................598,536 LESS: Allocated transfer risk reserve.............................................12,575 Loans and leases, net of unearned income, allowance, and reserve ................................... 35,979,345 Trading Assets ............................................... 11,912,448 Premises and fixed assets (including capitalized leases) .................................................... 763,241 Other real estate owned ...................................... 2,925 Investments in unconsolidated subsidiaries and associated companies ....................................... 183,836 Customers' liability to this bank on acceptances outstanding ................................................ 424,303 Intangible assets ............................................ 1,378,477 Other assets ................................................. 3,823,797 ------------ Total assets ................................................. $ 74,266,429 ============ -4- LIABILITIES Deposits: In domestic offices ........................................ $ 28,328,548 Noninterest-bearing...............................12,637,384 Interest-bearing..................................15,691,164 In foreign offices, Edge and Agreement subsidiaries, and IBFs ................................... 27,920,690 Noninterest-bearing..................................470,130 Interest-bearing..................................27,450,560 Federal funds purchased and Securities sold under agreements to repurchase ................................... 1,437,916 Demand notes issued to the U.S.Treasury ...................... 100,000 Trading liabilities .......................................... 2,049,818 Other borrowed money: With remaining maturity of one year or less ................ 1,279,125 With remaining maturity of more than one year through three years ...................................... 0 With remaining maturity of more than three years ........... 31,080 Bank's liability on acceptances executed and outstanding ................................................ 427,110 Subordinated notes and debentures ............................ 1,646,000 Other liabilities ............................................ 4,604,478 ------------ Total liabilities ............................................ $ 67,824,765 ============ EQUITY CAPITAL Common stock ................................................. 1,135,285 Surplus ...................................................... 1,008,775 Undivided profits and capital reserves ....................... 4,308,492 Net unrealized holding gains (losses) on available-for-sale securities .............................. 27,768 Accumulated net gains (losses) on cash flow hedges ........... 0 Cumulative foreign currency translation adjustments .......... (38,656) ------- Total equity capital ......................................... 6,441,664 ------------ Total liabilities and equity capital ......................... $ 74,266,429 ============ -5- I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Thomas J. Mastro We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. Thomas A. Renyi ) Alan R. Griffith ) Directors Gerald L. Hassell ) EX-25.3 9 ex25-3.txt FORM T-1 STATEMENT - THE CHASE MANHATTAN BANK Exhibit 25.3 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 ---------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE ---------- CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) [ ] ---------- THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) NEW YORK 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 PARK AVENUE NEW YORK, NEW YORK 10017 (Address of principal executive offices) (Zip Code) William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) ---------- ARIZONA PUBLIC SERVICE COMPANY (Exact name of obligor as specified in its charter) ARIZONA 86-0011170 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 400 NORTH FIFTH STREET PHOENIX, ARIZONA 85004 (Address of principal executive offices) (Zip Code) ---------- DEBT SECURITIES (TITLE OF THE INDENTURE SECURITIES) ---------- GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. - 2 - Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-76439, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 20th day of June, 2001. THE CHASE MANHATTAN BANK By T.J. Foley ------------------------------------- T.J. Foley Vice President -3- Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business March 31, 2001, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act. DOLLAR AMOUNTS ASSETS IN MILLIONS ----------- Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ............................................... $ 19,899 Interest-bearing balances ....................................... 23,359 Securities: Held to maturity securities........................................ 531 Available for sale securities...................................... 60,361 Federal funds sold and securities purchased under agreements to resell ............................................ 50,929 Loans and lease financing receivables: Loans and leases held for sale................................... 3,311 Loans and leases, net of unearned income $153,867 Less: Allowance for loan and lease losses 2,369 Loans and leases, net of unearned income and allowance ....................................................... 151,498 Trading Assets .................................................... 61,673 Premises and fixed assets (including capitalized leases).......................................................... 4,387 Other real estate owned............................................ 39 Investments in unconsolidated subsidiaries and associated companies............................................. 429 Customers' liability to this bank on acceptances outstanding ..................................................... 291 Intangible assets Goodwill......................................................... 1,839 Other Intangible assets.......................................... 3,479 Other assets ...................................................... 18,598 --------- TOTAL ASSETS ...................................................... $ 400,623 ========= - 4 - LIABILITIES Deposits In domestic offices ............................................. $ 131,214 Noninterest-bearing ................................... $ 52,683 Interest-bearing ...................................... 78,531 In foreign offices, Edge and Agreement subsidiaries and IBF's .......................................... 112,394 Noninterest-bearing ................................ $ 5,045 Interest-bearing ...................................... 107,349 Federal funds purchased and securities sold under agree- ments to repurchase ............................................... 61,321 Trading liabilities ............................................... 43,847 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases) ....................... 10,309 Bank's liability on acceptances executed and outstanding .......... 291 Subordinated notes and debentures ................................. 6,030 Other liabilities ................................................. 12,004 TOTAL LIABILITIES ................................................. 377,410 Minority Interest in consolidated subsidiaries .................... 126 EQUITY CAPITAL Perpetual preferred stock and related surplus ..................... 0 Common stock ...................................................... 1,211 Surplus (exclude all surplus related to preferred stock) ......... 12,714 Retained earnings ............................................... 9,446 Accumulated other comprehensive income .......................... (284) Other equity capital components ................................... 0 TOTAL EQUITY CAPITAL .............................................. 23,087 --------- TOTAL LIABILITIES, MINORITY INTEREST, AND EQUITY CAPITAL .......... $ 400,623 ========= I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the in- structions issued by the appropriate Federal regulatory authority and is true and correct. WILLIAM B. HARRISON JR. ) DOUGLAS A. WARNER III ) DIRECTORS LAWRENCE A. BOSSIDY ) -5- -----END PRIVACY-ENHANCED MESSAGE-----