EXECUTION COPY
PINNACLE WEST CAPITAL CORPORATION
UNDERWRITING AGREEMENT
November 6, 2003
Barclays Capital Inc.
BNY Capital Markets, Inc.
XxXxxxxx Investments Inc.
c/o Barclays Capital Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sir or Madam:
1. Introduction. Pinnacle West Capital Corporation, an Arizona corporation
(the "COMPANY"), proposes to issue and sell to the Underwriters (as defined
herein) $165,000,000 aggregate principal amount of the Company's Floating Rate
Senior Notes due November 1, 2005 (the "NOTES"). The term "UNDERWRITERS", as
used herein, shall be deemed to mean Barclays Capital Inc. ("BARCLAYS") and the
other several persons, firms or corporations named in Schedule A hereto
(including all substituted Underwriters under the provisions of Section 7
hereof). All obligations of the Underwriters hereunder are several and not
joint.
2. Representations and Warranties of the Company. In connection with the
offering of the Notes, the Company represents and warrants to, and agrees with,
the several Underwriters that:
(a) A registration statement on Form S-3 (File No. 333-101457) in
respect of the Notes (and certain other securities) has been filed with the
Securities and Exchange Commission (the "COMMISSION"); such registration
statement and any post-effective amendment thereto, each in the form heretofore
made available to the Underwriters, has been declared effective by the
Commission under the Securities Act of 1933, as amended (the "ACT") and is
effective as of the date hereof; and no stop order suspending the effectiveness
of such registration statement has been issued, no order directed to the
adequacy of any document incorporated by reference in the Prospectus (as defined
below) has been issued and no proceeding for either purpose has been initiated
or threatened by the Commission (any preliminary prospectus relating to the
Notes filed with the Commission pursuant to Rule 424 under the Act, is
hereinafter called a "PRELIMINARY PROSPECTUS"; the various parts of such
registration statement, including all exhibits thereto, each as amended from
time to time, are hereinafter collectively called the "REGISTRATION STATEMENT";
the prospectus relating to the Notes, including the prospectus supplement to be
filed with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 4(a) hereof, is hereinafter called the "PROSPECTUS"; any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to the
applicable form under the Act, as of the date of such Preliminary Prospectus or
Prospectus, as the
case may be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus or Prospectus, as
the case may be, under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any annual report
of the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Registration Statement that is incorporated by
reference in the Registration Statement).
(b) Each part of the Registration Statement relating to the Notes,
when such part became effective (including without limitation pursuant to the
fourth undertaking in Item 17 of the Registration Statement) conformed in all
material respects to the requirements of the Act and the rules and regulations
of the Commission (the "RULES AND REGULATIONS"), and did not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; any
Preliminary Prospectus filed pursuant to Rule 424 under the Act complied when so
filed in all material respects with the Act and the Rules and Regulations; and
on the date of this Agreement, the Registration Statement and the Prospectus
conform in all material respects to the requirements of the Act and the Rules
and Regulations and do not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to (i) any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by any Underwriter through Barclays specifically for use in the
Preliminary Prospectus or the Prospectus or (ii) that part of the Registration
Statement that consists of the Statement of Eligibility and Qualification (Form
T-1) under the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT") of The Bank of New York, as trustee under the Indenture described below.
The documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, conformed in
all material respects with the requirements of the Act or the Exchange Act, as
applicable, and the Rules and Regulations.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Arizona, and is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, and where the failure to be so qualified
would have a material adverse effect on the current or future consolidated
financial position, stockholders' equity or results of operation of the Company
and its consolidated subsidiaries ("MATERIAL ADVERSE EFFECT").
(d) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not been any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the consolidated financial position, stockholders'
equity or results of operations of the Company and its consolidated
subsidiaries, otherwise than as set forth or contemplated in the Prospectus.
(e) The Indenture dated as of December 1, 2000 between the Company
and The Bank of New York, as trustee, as supplemented and amended by various
supplemental
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indentures to the date hereof (the "SENIOR NOTE INDENTURE") has been duly
qualified under the Trust Indenture Act and has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity.
(f) The Second Supplemental Indenture, to be dated as of November 1,
2003, establishing the terms of the Notes (the "SECOND SUPPLEMENTAL INDENTURE"
and together with the Senior Note Indenture, the "INDENTURE") has been duly
authorized by the Company and, when executed and delivered by the Company, will
be a valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity. The Second Supplemental Indenture will be executed by the Company on or
prior to the Closing Date.
(g) The Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered
to and paid for by the Underwriters in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture, will be valid and
binding obligations of the Company, in each case enforceable against the Company
in accordance with their respective terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity and will conform to the description of the Notes contained
in the Prospectus.
(h) The issuance, execution, delivery, and sale of the Notes by the
Company and the compliance by the Company with all of the provisions of this
Agreement, the Indenture and the Notes and the consummation of the transactions
herein contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other material agreement
or instrument to which the Company is a party or by which the Company is bound
or to which any of the property or assets of the Company is subject, nor will
such action result in any violation of the provisions of the Articles of
Incorporation or By-laws of the Company or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the issue and
sale of the Notes or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration of the Notes under the
Act, the qualification of the Indenture under the Trust Indenture Act, and such
consents, approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Notes by the Underwriters.
(i) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries, is a party which, if determined adversely to the Company or any of
its subsidiaries, would have a Material Adverse Effect and, to the Company's
knowledge, no such proceedings are threatened by governmental authorities or
others.
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(j) Except as disclosed in the Prospectus, the operations and
properties of the Company, Arizona Public Service Company ("APS") and Pinnacle
West Energy Corporation ("PWEC") comply in all material respects with all
applicable foreign, federal, state or local laws and regulations and any
decision or order of any governmental agency or body or any court relating to
the environment, the effect of the environment on human health or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"),
except where the necessity of compliance therewith is being contested in good
faith by appropriate proceedings or such noncompliance with Environmental Laws
would not have a Material Adverse Effect.
(k) The Company is not and, after giving effect to the offering and
sale of the Notes, will not be an "investment company", as such term is defined
in the Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY
ACT").
(l) The financial statements included in the Registration Statements
and the Prospectus present fairly in all material respects the financial
position of the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis (except as disclosed therein); the schedules included in the Registration
Statements present fairly in all material respects the information required to
be stated therein; and the Company and its subsidiaries maintain systems of
internal accounting controls and processes sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles; and (iii) assets are safeguarded from loss or
unauthorized use.
(m) This Agreement has been duly authorized, executed and delivered
by the Company.
(n) The Company (i) is a "holding company", as such term is defined
in the Public Utility Holding Company Act of 1935, as amended, and (ii) is
currently exempt from all provisions of the Public Utility Holding Company Act
of 1935, as amended, except Section 9(a)(2) thereof.
3. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, the principal amount of the Notes set forth opposite the names
of the Underwriters in Schedule A hereto at the price specified in Schedule B
hereto. Payment for the Notes shall be made to the Company in Federal or other
funds immediately available at the time (the "Closing Date") and place set forth
in Schedule B hereto, upon delivery to Barclays of the Notes, in fully
registered global form registered in the name of Cede & Co., for the respective
accounts of the several Underwriters of the Notes.
The Company is advised by the Underwriters that they propose to make a
public offering of the Notes as soon after this Agreement has been entered into
as in the judgment of Barclays is advisable. The terms of the public offering of
the Notes are set forth in the Prospectus.
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4. Covenants of the Company. The Company covenants and agrees with each
Underwriter that:
(a) The Company will file the Prospectus with the Commission
pursuant to and in accordance with Rule 424(b) not later than the second
business day following the execution of this Agreement.
(b) The Company will advise Barclays promptly of any proposed
amendment or supplementation of the Registration Statement or the Prospectus
prior to the completion of the offering of the Notes as contemplated herein. The
Company will also advise Barclays of the institution by the Commission of any
stop order proceedings in respect of the Registration Statement or of any part
thereof prior to the completion of the offering of the Notes as contemplated
herein, 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.
(c) If, at any time when a prospectus relating to the Notes 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 Registration Statement or the Prospectus to comply with applicable law, the
Company promptly will prepare and file with the Commission and furnish, at its
own expense, to the Underwriters and to the dealers (whose names and addresses
Barclays will furnish to the Company) to which Notes have been sold by Barclays
on behalf of the Underwriters and to any other dealers upon request, an
amendment or supplement that will correct such statement or omission or an
amendment that will effect such compliance. Neither Barclays' consent to, nor
the Underwriters' delivery of, any such amendment or supplement shall constitute
a waiver of any conditions set forth in Section 5 hereof.
(d) As soon as practicable, but not later than 18 months, after the
date of this Agreement, 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.
(e) The Company will furnish to Barclays such copies of the
Registration Statement (including one copy of the Registration Statement for
Barclays and for the counsel for the Underwriters, which is signed and includes
all exhibits), any related preliminary prospectus supplements and the
Prospectus, and all amendments or supplements to such documents, as may be
reasonably requested.
(f) The Company will arrange or cooperate in arrangements for the
qualification of the Notes for sale under the securities or Blue Sky laws of
such jurisdictions as Barclays designates and will continue such qualifications
in effect so long as required for the distribution of the Notes, 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
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claims arising out of the offering or sale of the Notes, or to meet other
requirements deemed by it to be unduly burdensome.
(g) During the period of two years after the date of this Agreement,
the Company will furnish to Barclays 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 changes in common stock equity of the
Company as at the end of and for such year, all in reasonable detail and
certified by independent public accountants, and (ii) (A) as soon as practicable
after the end of each quarterly fiscal period (except for the last quarterly
fiscal period of each fiscal year), a balance sheet and statement of income of
the Company as at the end of and for such period, all in reasonable detail and
certified by a principal financial or accounting officer of the Company, (B) as
soon as available, a copy of each report of the Company filed with the
Commission, and (C) from time to time, such other information concerning the
Company as may reasonably be requested. So long as the Company has active
subsidiaries, such financial statements will be on a consolidated basis to the
extent the accounts of the Company and its subsidiaries are consolidated.
(h) 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 Notes, and the
determination of their eligibility for investment, under the laws of such
jurisdictions as Barclays shall designate, and the printing of memoranda
relating thereto, and for any fees charged by investment rating agencies for the
rating of the Notes.
(i) For the period beginning on the date of this Agreement and
ending on the Closing Date, the Company will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Commission a registration statement under the Act relating to, any additional
debt securities of the Company (or warrants to purchase debt securities of the
Company) substantially similar to the Notes, without the prior written consent
of Barclays.
5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Notes on the Closing Date
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) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date there shall not have occurred any downgrading or
withdrawal, nor shall any notice have been given of any intended or potential
downgrading or withdrawal or of any review for a possible change that does not
indicate the direction of the possible change, in the rating accorded any of the
Company's securities by Xxxxx'x Investor Service's, Inc. or Standard & Poor's, a
division of The XxXxxx-Xxxx Companies, Inc.; and
(b) At the Closing Date the Notes shall be rated at least BBB- by
S&P and Baa2 by Moody's, and the Company shall have delivered to the
Underwriters a letter, dated the
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Closing Date, from each such rating agency, or other evidence reasonably
satisfactory to the Underwriters, confirming that the Notes have been assigned
such ratings.
(c) On the Closing Date, the Underwriters shall have received a
letter, dated the Closing Date, of Deloitte & Touche confirming that they are
independent public accountants within the meaning of the Act and the applicable
published Rules and Regulations thereunder and stating to the effect that:
(i) in their opinion the financial statements and any
schedules and any summary of earnings examined by them and included in the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published Rules and
Regulations;
(ii) they have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of interim
financial information as described in Statement of Auditing Standards No.
100, Interim Financial Information, on any unaudited financial statements
included in the Registration Statement;
(iii) on the basis of the review referred to in clause (ii)
above, a reading of the latest available interim financial statements of
the Company, inquiries of officials of the Company who have responsibility
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, if any, and any
summary of earnings included in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the related published Rules and
Regulations or any material modifications should be made to such
unaudited financial statements and summary of earnings for them to
be in conformity with generally accepted accounting principles;
(B) if any unaudited "capsule" information is contained
in the Prospectus, the unaudited consolidated operating revenues,
gross income, net income and net income per share amounts or other
amounts constituting such "capsule" information and described in
such letter do not agree with the corresponding amounts set forth in
the unaudited consolidated financial statements or were not
determined on a basis substantially consistent with that of the
corresponding amounts in the audited statements of income;
(C) at the date of the latest available balance sheet
read by such accountants, or at a subsequent specified date not more
than three business days prior to the date of such letter, there was
any change 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
most amounts shown in the most recent financial statements
incorporated by reference in the Registration Statement; or
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(D) for the period from the closing date of the latest
income statement included in the Prospectus to the closing date of
the latest available income statement read by such accountants there
were any decreases, as compared with the corresponding period of the
previous year and with the period of corresponding length ended the
date of the latest income statement included in the Prospectus, 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;
except in all cases set forth in clauses (C) and (D) above for changes,
increases or decreases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Prospectus (in each case to the extent that
such dollar amounts, percentages and other financial information are
derived from the general accounting records of the Company and its
subsidiaries subject to the internal controls of the Company's accounting
system or are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in such letter
and have found such dollar amounts, percentages and other financial
information to be in agreement with such results, except as otherwise
specified in such letter.
All financial statements and schedules included in material incorporated by
reference into the Prospectus shall be deemed included in the Prospectus for
purposes of this subsection.
(d) No stop order suspending the effectiveness of the 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.
(e) Subsequent to the execution of this Agreement, (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 Barclays, materially impairs the
investment quality of the Notes, (ii) there shall not have occurred a suspension
of trading of any securities of the Company by the Commission or the New York
Stock Exchange or 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) there shall not have occurred
any major disruption of settlements of securities or clearance services in the
United States, 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 Barclays, 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 Notes.
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(f) The Underwriters shall have received an opinion of Xxxxx &
Xxxxxx L.L.P., counsel for the Company, dated the 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 with
the corporate power and authority to carry on its business as described in
the Prospectus;
(ii) APS and PWEC have been duly incorporated and are validly
existing as corporations in good standing under the laws of their
jurisdictions of incorporation; APS and PWEC are duly qualified as a
foreign corporations to do business, and are in good standing, in the
States of (a) California, Montana, New Mexico, Oregon, Texas, Washington
and Wyoming and (b) California, Nevada and New Mexico, respectively;
(iii) To the actual knowledge of those persons in the Lawyer
Group (defined below), except as described in the Prospectus, there are no
pending or overtly threatened actions or proceedings before any court or
governmental agency in which the Company or any of its subsidiaries is a
party or in which any property of the Company or any of its subsidiaries
is the subject, which are likely to have a materially adverse effect on
the current or future consolidated financial position, stockholders equity
or results of operations of the Company and its consolidated subsidiaries.
With respect to the matters discussed in the immediately preceding
sentence, the standard of materiality considered is that provided for in
Item 103 (Reg. Section 229.103) of Regulation S-K promulgated under the
Securities Act of 1933, as amended. In giving the foregoing opinion, such
counsel may rely solely upon inquiry among the lawyer group (the "LAWYER
GROUP") consisting of those lawyers in the offices of Xxxxx & Xxxxxx,
L.L.P. who (i) have recorded any time on the transaction to which this
opinion relates or (ii) have billed more than ten hours on any matter
involving the Company in the twelve-month period preceding November 6,
2003, the date as of which the list of such lawyers was compiled for
purposes of inquiry for this opinion. This opinion is limited to matters
which have been given substantive attention by the Lawyer Group in the
form of legal consultation as described in Paragraph 2 of the ABA
Statement of Policy Regarding Lawyers' Responses to Auditors' Requests.
for Information (December 1975);
(iv) This Agreement has been duly authorized, executed and
delivered by the Company;
(v) The execution and delivery by the Company of, and the
issue and sale of the Notes by the Company and the compliance by the
Company with all of the provisions of this Agreement, the Indenture and
the Notes do not contravene or constitute a default under (a) the Articles
or the By-laws of the Company, or (b) any contractual or legal restriction
contained in any document listed in the Certificate (as defined in and
attached to such opinion). In giving the opinion expressed in clause (b)
of the immediately preceding sentence, such counsel may express no opinion
regarding compliance by the Company or any subsidiary with any financial
covenants required to be maintained by the Company or any subsidiary under
any agreement or document;
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(vi) No consent, approval, authorization, order, registration
or qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Notes or the consummation by the
Company of the transactions contemplated by this Agreement, except the
registration under the Act of the Notes, the qualification of the
Indenture under the Trust Indenture Act, and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws (as to which such counsel shall not be
required to express an opinion);
(vii) The statements set forth in the Prospectus under the
captions "Description of Debt Securities" and "Description of the Senior
Notes", insofar as they purport to constitute a summary of the terms of
the Notes, are accurate, complete and fair in material respects;
(viii) The Company is not an "investment company", as such
term is defined in the Investment Company Act;
(ix) The documents incorporated by reference in the Prospectus
as amended or supplemented as of the Closing Date (other than financial
statements and schedules and other financial or statistical data included
or incorporated by reference therein or omitted therefrom, as to which
such counsel expresses no opinion), when they became effective or were
filed with the Commission, as the case may be, complied as to form in all
material respects with the requirements of the Act or the Exchange Act, as
applicable, and the Rules and Regulations of the Commission thereunder;
(x) The Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of the Closing Date (other than
financial statements and schedules and other financial or statistical data
included or incorporated by reference therein or omitted therefrom, as to
which such counsel expresses no opinion) comply as to form in all material
respects with the requirements of the Act and the Rules and Regulations
thereunder. Although such counsel does not assume any responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statements or the Prospectus, except for those referred to in
the opinion in Paragraph (vii) hereof, those persons in the Lawyer Group
have no reason to believe that the Registration Statement, as of its
effective date, or the Prospectus, as of the date of the Prospectus
Supplement, or in either case, as of the Closing Date, or any amendment
thereto, as of the Closing Date, excluding in all cases financial
statements and schedules and other financial or statistical data included
or incorporated by reference therein or omitted therefrom, as to which
such counsel expresses no opinion, contained any untrue statement of
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading. To the
actual knowledge of those persons in the Lawyer Group, 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 Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described and filed as required (it being understood that such
counsel need express no opinion as to the statements of eligibility and
qualification of the trustee under the Indenture);
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(xi) the Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally and general
principles of equity; and
(xii) the Notes have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Underwriters in accordance with the terms
of this Agreement, will be entitled to the benefits of the Indenture, and
will be valid and binding obligations of the Company, in each case
enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity.
In giving such opinion, Xxxxx & Xxxxxx L.L.P. may rely to the extent such
counsel deems appropriate upon certificates of the Company as to any factual
matters upon which any such opinions are based and may rely on the opinion of
Underwriters' counsel as to all matters governed by the law of the State of New
York, and further may rely upon the opinion of Xxxxxx, Xxxxx & Bockius LLP,
delivered to you at the Closing Date, as to all matters under the Public Utility
Holding Company Act of 1935, as amended, and the Federal Power Act, as amended.
(g) The Underwriters 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 Notes, 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 State of Arizona upon the opinion of Xxxxx & Xxxxxx L.L.P.
(h) The Underwriters 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 such Closing
Date, that no stop order suspending the effectiveness of the 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, or any development involving a prospective
material adverse change, in or affecting the consolidated financial position,
stockholders' equity or results of operations of the Company and its
consolidated subsidiaries, otherwise than as set forth or contemplated in the
Prospectus).
(i) The Company will furnish the Underwriters with such conformed
copies of such opinions, certificates, letters, and documents as may be
reasonably requested.
11
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 Statement relating to the Notes, 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, as incurred, by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action; provide 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 through Barclays 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 and not jointly indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, 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 Statement relating to the Notes,
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 any Underwriter through Barclays
specifically for use therein; and will reimburse any legal or other expenses
reasonably incurred, as 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 6 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 failure to notify the indemnifying party shall not relieve it from any
liability that it may have under subsection (a) or (b) above except to the
extent
12
that it has been materially prejudiced (through the forfeiture of substantive
rights or defenses) by such failure; and provided further that the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have to an indemnified party otherwise than under subsection (a) or (b)
above. 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 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. 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 Notes 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; provide however, that in no case shall any Underwriter (except
as may be provided in any agreement among underwriters relating to the offering
of the Notes) be responsible for any amount in excess of the underwriting
discount or
13
commission applicable to the Notes purchased by such Underwriter hereunder. 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 Company and the Underwriters agree that it
would not be just or equitable if contribution pursuant to this Section 6 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 6(d). 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). Notwithstanding the
provisions of this Section 6, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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 Notes pursuant to this Agreement and
the number of Notes that such defaulting Underwriter or Underwriters agreed but
failed to purchase is ten percent (10%) or less of the number of Notes that the
Underwriters are obligated to purchase, the Underwriters may make arrangements
satisfactory to the Company for the purchase of such Notes by other persons,
including any of the Underwriters, but if no such arrangements are made by the
Closing Date the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder to purchase the Notes that
such defaulting Underwriter or Underwriters agreed but failed to purchase. If
any Underwriter or Underwriters so default and the number of Notes 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 Notes by other persons are not made within thirty-six hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Company, except as provided in Section
8. In any such case either Barclays or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and the
Prospectus or in any other documents or arrangements may be effected. 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.
14
If this Agreement shall be terminated by the Underwriters because of any
failure or refusal on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Underwriters for all out of pocket expenses
(including the reasonable fees and disbursements of their counsel) reasonably
incurred by the Underwriters in connection with this Agreement or the offering
contemplated hereunder.
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 Notes. If
this Agreement is terminated pursuant to Section 7, or if for any reason a
purchase pursuant to this 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 Notes
will be in writing, and, if sent to the Underwriters, may be mailed, delivered,
or telecopied and confirmed to Barclays, c/o Barclays Capital Inc., 000 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxx Xxxxxxx (fax: 000-000-0000)
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
00000-0000, or delivered, or telecopied and confirmed to the Company at 000
Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (fax: 000-000-0000).
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
Schedule A hereto 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. Barclays may act for the Underwriters
in connection with the offering contemplated by this Agreement, and any action
under this Agreement taken by Barclays will be binding upon the Underwriters.
12. Execution in Counterpart. 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.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
15
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,
PINNACLE WEST CAPITAL CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Treasurer
Barclays Capital Inc.
BNY Capital Markets, Inc.
McDonald Investments Inc.
By: BARCLAYS CAPITAL INC.
By: /s/ Xxxxxx Xxxxxxx
---------------------
Name: Xxxxxx Xxxxxxx
Title: Director
16
SCHEDULE A
UNDERWRITER PRINCIPAL AMOUNT OF NOTES
----------- -------------------------
Barclays Capital Inc..................................... 115,500,000
BNY Capital Markets, Inc................................. 24,750,000
McDonald Investments Inc................................. 24,750,000
Total.................................................... 165,000,000
SCHEDULE B
Underwriting Agreement dated November 6, 2003
Registration Statement No. 333-101457
Lead Underwriter and Address:
Barclays Capital Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Designation: Floating Rate Senior Notes due November 1, 2005
Principal Amount: $165,000,000
Date of Maturity: November 1, 2005
Interest Rate for
initial Rate Period: LIBOR plus .80%
Interest Payment Dates: February 1, May 1, August 1 and November 1 of each
year, commencing February 1, 2004
Interest Determination
Date: The second London Business Date immediately
preceding the first day of the relevant Interest
Period.
Purchase Price: 99.750% of the principal amount thereof
Public Offering Price: 100% of the principal amount thereof, plus accrued
interest, if any, from the date of original
issuance thereof
Closing Date and Location: November 12, 2003
Pinnacle West Capital Corporation
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
