ARIZONA PUBLIC SERVICE COMPANY
SECURITIES
UNDERWRITING AGREEMENT
February 18, 1999
Credit Suisse First Boston Corporation
PaineWebber Incorporated
Xxxxxxx Xxxxx Xxxxxx Inc.
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 "Original Indenture"), as amended
and supplemented by one or more Supplemental Indentures between the Company and
the Trustee (each, a "Supplemental Indenture") (the Original 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. 333-58445) 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
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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 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
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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 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.
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(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 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
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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, 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
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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 Xxxxx & Xxxxxx 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,
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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;
(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
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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 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
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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 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) Xxxxx & Xxxxxx 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
Xxxxxxx & XxXxxx, P.A., referred to below, as to all matters governed
by the laws of the State of New Mexico, but the opinion of Xxxxx &
Xxxxxx 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
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justified to such extent in relying upon the opinion of Xxxxxxx &
XxXxxx, P.A.; and (b) the lawyer group referred to in such opinion will
mean those lawyers in the offices of Xxxxx & Xxxxxx 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 Xxxxxxx & XxXxxx, 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.
In giving such opinion, Xxxxxxx & XxXxxx, 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
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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 Xxxxx
& Xxxxxx L.L.P. and Xxxxxxx & XxXxxx, 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 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
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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
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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 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
14
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 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.
15
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 X.X. Xxx 00000, Xxxxxxx, Xxxxxxx 00X00-0000, or delivered, or telecopied and
confirmed to the Company at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000.
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.
16
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 Xxxxxxx X. Xxxxxxx
-----------------------------
Treasurer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
By Xxxx Xxxxxxxxxx
------------------------
Managing Director
PAINEWEBBER INCORPORATED
By Xxxxx Xxxxx
------------------------
Managing Director
XXXXXXX XXXXX XXXXXX INC.
By Xxxxxx Xxxx
------------------------
Vice President
TERMS AGREEMENT
February 18, 1999
Arizona Public Service Company
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Treasurer
Dear Sir:
Arizona Public Service Company (the "Company") hereby agrees to
sell to the several Underwriters (the "Underwriters") listed in the Company's
Prospectus Supplement (the "Prospectus Supplement") of even date herewith
relating to $125,000,000 in aggregate principal amount of its 5-7/8% Notes Due
2004 (the "Purchased Securities"), and the Underwriters hereby agree to
purchase, severally and not jointly, at a purchase price of 99.351% of the
principal amount thereof plus any accrued interest from the date of original
issuance, the respective principal amounts of Purchased Securities set forth
opposite the names of the Underwriters in the Prospectus Supplement. The sale of
the Purchased Securities by the Company and the purchase thereof by the
Underwriters shall be made on the basis of the representations, warranties, and
agreements contained in the Underwriting Agreement (the "Underwriting
Agreement"), dated February 18, 1999, relating to the issuance and sale of up to
$400,000,000 of the Company's Securities under the Company's Indenture, and
shall be subject to the terms and conditions set forth in such Underwriting
Agreement. The provisions of the Underwriting Agreement are incorporated herein
by reference. As contemplated by Section 3 of the Underwriting Agreement,
certain terms of the Purchased Securities are described in the Prospectus
Supplement.
The Underwriters propose to offer the Purchased Securities to
the public in the manner and upon the terms set out in the Prospectus
Supplement.
On February 23, 1999 the Company will deliver the Purchased
Securities to the Underwriters in book-entry form through the facilities of the
Depository Trust Company at the office of the Company, 000 Xxxxx Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000, against payment of the purchase price by transfer of
funds by Fed Wire from the Underwriters to the Company's account at a bank in
Phoenix, Arizona designated by the Company. Such purchase price will be deemed
to have been received by the Company upon the Company's receipt of the Fed Wire
reference number relating to such transfer of funds. Closing shall occur at the
office of the Company, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Arizona, at 8:00 a.m.
Phoenix time, on February 23, 1999, or at such other time and date as the
Underwriters and the Company may agree upon in writing, such time and date being
referred to as the "Closing Date." All of the Purchased Securities referred to
in this paragraph shall be in global form and registered in the name of Cede &
Co. and deposited with the Depository Trust Company, as depositary.
TERMS AGREEMENT
Page 2
If the foregoing is acceptable to you, please sign below and
transmit evidence of such signing to Credit Suisse First Boston Corporation at
your earliest convenience. At that point, the agreement signified hereby will
constitute the Terms Agreement, as described in the Underwriting Agreement, with
respect to the $125,000,000 of Purchased Securities referred to herein.
All capitalized terms herein, not otherwise defined herein, are
used as defined in the Underwriting Agreement. This 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.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
PAINEWEBBER INCORPORATED
XXXXXXX XXXXX XXXXXX INC.
By: CREDIT SUISSE FIRST BOSTON
CORPORATION
(As Representative of the
Several Underwriters)
By Xxxx Xxxxxxxxxx
---------------------------
Managing Director
Confirmed and accepted as
of the date first above written.
ARIZONA PUBLIC SERVICE COMPANY
By Xxxxxxx X. Xxxxxxx
----------------------------
Treasurer
