Exhibit 1.2
ARIZONA PUBLIC SERVICE COMPANY
Securities
UNDERWRITING AGREEMENT
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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 $400,000,000
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. 333-27551) relating to
$50,000,000 of the Securities, the Company's first mortgage bonds (the
"Bonds"), or the Company's senior notes (the "Senior Notes") and a
registration statement (No. 333-____) relating to $350,000,000 of the
Securities, the Bonds or the Senior Notes (including a combined
prospectus relating to up to $400,000,000 of the Securities, Bonds or
Senior Notes) 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
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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 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.
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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 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
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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 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.
(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.
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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, 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.
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(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 and Wyoming, the only other
jurisdictions in which it owns or leases substantial
properties or in which the conduct of its business requires
such qualification;
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(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
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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;
(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
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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 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.
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(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 Utility 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.
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
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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 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
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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
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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 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
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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 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.
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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 85O72-3999, 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.
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.
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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__________________________________
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