Exhibit 1.2
ARIZONA PUBLIC SERVICE COMPANY
Securities
UNDERWRITING AGREEMENT
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Dear Sir or Madam:
1. Introduction. Arizona Public Service Company, an Arizona corporation
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(the "Company"), proposes to issue and sell from time to time up to $50,000,000
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 , between the Company and
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, as Trustee, (the "Indenture"), as amended and
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supplemented by one or more Supplemental Indentures between the Company and the
Trustee (each, a "Supplemental Indenture") (the Indenture as amended and
supplemented by such Supplemental Indentures being sometimes hereinafter
referred to as the "Indenture"). The Securities will be issued in one or more
series, which series may vary as to interest rates, maturities, redemption
provisions, selling prices, and other terms, with all such terms for any
particular issue of the Securities being determined at the time of sale.
Particular issues of the Securities may be sold from time to time to one or more
of the firms to whom this Agreement is addressed, and to such other purchasers
as the Company shall designate and as shall agree in writing to comply with the
terms and conditions of this Agreement, for resale in accordance with the terms
of offering determined at the time of sale. The Securities involved in any such
offering are hereinafter referred to as the "Purchased Securities," the party or
parties that agree to purchase the same are hereinafter referred to as the
"Underwriters" of such Purchased Securities, and the representative or
representatives of the Underwriters, if any, specified in a Terms Agreement
referred to in Section 3 are hereinafter referred to as the "Representatives."
2. Representations and Warranties of the Company. In connection with
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each offering of the Purchased Securities, the Company represents and warrants
to, and agrees with, the Underwriters that:
(a) A registration statement (No. 33-55473) relating to $25,000,000 of
the Securities and a registration statement (No. ) relating to
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$25,000,000 of the Securities (including a combined prospectus relating to
up to $150,000,000 of the Company's first mortgage bonds) were filed with
the Securities and Exchange Commission (the "Commission") and have become
effective. Such registration statements, as each is amended at the time of
the Terms Agreement referred to in Section 3 relating to the Purchased
Securities, are hereinafter referred to as the "First Registration
Statement" and the "Second Registration Statement," respectively, and 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 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 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
, as Trustee under the Indenture.
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(c) An order of the Arizona Corporation Commission shall have been
granted authorizing the execution and delivery of the Supplemental Indenture
relating to the Purchased Securities and the issuance and sale of the
Purchased Securities on the terms and conditions herein and in the
Prospectus and the Terms Agreement referred to in Section 3 relating to the
Purchased Securities, and the approval or consent of no other public body or
authority is necessary to the execution and delivery of such Supplemental
Indenture or the validity of the issuance and sale of the Purchased
Securities, except as may be required under state securities or blue sky
laws.
(d) The Company holds such valid franchises, certificates of
convenience and necessity, licenses, and permits as are necessary with
respect to the maintenance and operation of its property and business as now
conducted, except that (A) the Company from 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
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purchase, and the obligation of the Company to sell, the Purchased Securities
will be evidenced by an exchange of facsimile transmission or other written
communications (the "Terms Agreement") at the time the Company determines to
sell the Purchased Securities. The Terms Agreement shall specify (by
Incorporation by reference or otherwise) the party or parties that will be
Underwriters, the principal amount to be purchased by each, the purchase price
to be paid by the Underwriters, any compensation or commissions to be paid to
Underwriters, the offering price, and the terms of the Purchased Securities not
already specified in the Indenture, including, but not limited to, interest
rates, maturity, redemption provisions, and sinking fund requirements, if any.
The Terms Agreement shall also specify (by incorporation by reference or
otherwise) the time and date of delivery and payment (the "Closing Date"), the
place of delivery and payment, and any details of the terms of offering that
should be reflected in the prospectus supplement relating to the offering of the
Purchased Securities (the "Prospectus Supplement"). It is understood that the
Underwriters will offer the Purchased Securities for sale as set forth in the
Prospectus. The obligations of the Underwriters to purchase the Purchased
Securities shall be several and not joint. Except as may otherwise be set forth
in the Terms Agreement, the Purchased Securities will be in definitive form and
in such denominations and registered in such names as the Underwriters may
request.
4. Covenants of the Company. In connection with each offering of
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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
and will not effect such amendment or supplementation without the consent of
the Underwriters or the Representatives. The Company will also advise the
Underwriters or the Representatives of the institution by the Commission of
any stop order proceedings in respect of the First Registration Statement,
the Second Registration Statement, or of any part thereof, and will use its
best efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the Purchased
Securities is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include
an untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend or supplement the First Registration Statement, the Second
Registration Statement, or the Prospectus to comply with the Act, the
Company promptly will prepare and file with the Commission an amendment or
supplement that will correct such statement or omission or an amendment that
will effect such compliance.
(c) As soon as practicable, but not later than 18 months, after the
date of the Terms Agreement relating to the Purchased Securities, the
Company will make generally available to its security holders an earning
statement or statements (which need not be audited) covering a period of at
least 12 months beginning after the effective date of the Second
Registration Statement (as defined in Rule 158(c) under the Act), which will
satisfy the provisions of Section 11(a) of the Act and the rules and
regulations thereunder.
(d) The Company will furnish to the Underwriters or the Representatives
such copies of the Registration Statements (including one copy of the Second
Registration Statement for each Representative, or for each Underwriter if
there are no Representatives, and for the counsel for the Underwriters,
which is signed and includes all exhibits), any related preliminary
prospectus supplements and the Prospectus, including all amendments or
supplements to such documents, as may be reasonably requested.
(e) The Company will arrange or cooperate in arrangements for the
qualification of the Purchased Securities for sale and the determination of
their eligibility for investment under the laws of such jurisdictions as the
Underwriters or the Representatives designate and will continue such
qualifications in effect so long as required for the distribution of the
Purchased Securities, provided that the Company shall not be required to
qualify as a foreign corporation in any State, to consent to service of
process in any State other than with respect to claims arising out of the
offering or sale of the Purchased Securities, or to meet other requirements
deemed by it to be unduly burdensome.
(f) During the period of five years after the date of the Terms
Agreement relating to the Purchased Securities, the Company will furnish to
the Underwriters or the Representatives thereunder, and, upon request, each
of the other Underwriters, (i) as soon as practicable after the end of each
fiscal year, a balance sheet and statements of income and retained earnings
of the Company as at the end of and for such year, all in reasonable detail
and certified by independent public accountants, and (ii) (A) as soon as
practicable after the end of each quarterly fiscal period (except for the
last quarterly fiscal period of each fiscal year), a balance sheet and
statement of income of the Company as at the end of and for such period, all
in reasonable detail and certified by a principal financial or accounting
officer of the Company, (B) as soon as available, a copy of each report of
the Company mailed by the Company to stockholders or filed with the
Commission, and (C) from time to time, such other information concerning the
Company as may reasonably be requested. So long as the Company has active
subsidiaries, such financial statements will be on a consolidated basis to
the extent the accounts of the Company and its subsidiaries are
consolidated.
(g) The Company will pay all expenses incident to the performance of
its obligations under this Agreement, and will reimburse the Underwriters
for any reasonable expenses (including reasonable fees and disbursements of
counsel) incurred by them in connection with the qualification of the
Purchased Securities with respect to which the Terms Agreement relating to
the Purchased Securities has been entered for sale, and the determination of
their eligibility for investment, under the laws of such jurisdictions as
the Representatives or, if there are no Representatives, the Underwriters
designate, and the printing of memoranda relating thereto, and for any fees
charged by investment rating agencies for the rating of the Purchased
Securities.
(h) The Company will not offer or sell any other of its Securities for
a period beginning at the time of execution of the Terms Agreement relating
to the Purchased Securities and ending on the Closing Date relating thereto
without prior consent of the Underwriter or the Representatives.
5. Conditions of the Obligations of the Underwriters. The obligations
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of the Underwriters to purchase and pay for the Purchased Securities will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following additional conditions precedent:
(a) The Underwriters or the Representatives shall have received a
letter from DELOITTE & TOUCHE LLP, dated the date of the Terms Agreement,
confirming that they are independent certified public accountants within the
meaning of the Act and the applicable published Rules and Regulations
thereunder, and stating in effect that (i) in their opinion the financial
statements and schedules of the Company audited by them and incorporated by
reference in the Registration Statements comply as to form in all material
respects with the applicable accounting requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and the published Rules and
Regulations thereunder and (ii) on the basis of a reading of the latest
available interim financial statements of the Company, inquiries of
officials of the Company responsible for financial and accounting matters,
and other specified procedures, nothing came to their attention that caused
them to believe that (A) the unaudited financial statements incorporated by
reference, if any, in the Registration Statements do not comply as to form
in all material respects with the applicable accounting requirements of the
1934 Act and the published Rules and Regulations thereunder or are not
stated on a basis substantially consistent with that of the audited
financial statements incorporated by reference in the Registration
Statements, (B) at the date of the most recent available unaudited financial
statements and at a specified date not more than five days prior to the date
of this Agreement, there was any increase in the amounts of common stock,
redeemable preferred stock, or non-redeemable preferred stock of the Company
or any increase, exceeding $10,000,000, in long-term debt of the Company or,
at the date of the most recent available unaudited financial statements
there was any decrease in net assets as compared with amounts shown in the
most recent financial statements incorporated by reference in the
Registration Statements, or (C) for the twelve-month period ended at the
date of the most recent available unaudited financial statements there were
any decreases, exceeding 3%, as compared with the twelve-month period ended
at the date of the most recent financial statements incorporated by
reference in the Registration Statements, in the amounts of total revenues
or net income, except in all cases for increases or decreases which result
from the declaration or payment of dividends, or which the Registration
Statements (including any material incorporated by reference therein)
disclose have occurred or may occur, or which are described in such letter.
(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 ▇▇▇▇▇ & ▇▇▇▇▇▇ 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 State of New
Mexico, the only other jurisdiction 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 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 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) ▇▇▇▇▇ & ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.,
referred to below, as to all matters governed by the laws of the State of
New Mexico, but the opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. shall state that,
though they are members of the Arizona Bar and do not hold themselves out as
experts on the laws of the State of New Mexico, they have made a study of
the laws of such State insofar as such laws are involved in the conclusions
stated in their opinion, and from such study it is their opinion that such
laws support such conclusions and that, in their opinion, the Underwriters
and they are justified to such extent in relying upon the opinion of ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, P.A.; and (b) the lawyer group referred to in such opinion will
mean those lawyers in the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A., New Mexico counsel for the Company, dated
the Closing Date, to the effect that:
(i) The Company is duly qualified as a foreign corporation to do
business and is in good standing in the State of New Mexico and has
full corporate power and authority to engage in the State of New Mexico
in the business now conducted by it therein; and
(ii) The activities of the Company in the State of New Mexico to
date do not constitute it a "public utility" as that term is defined in
the relevant laws of the State of New Mexico, and accordingly, no
public utility franchises or certificates of convenience and necessity
are necessary under New Mexico law with respect to the maintenance and
operation of the Company's property and business as now conducted in
the State of New Mexico and no approval, authorization, or consent of
the New Mexico Public Utility Commission or any other public board or
body of the State of New Mexico is required for the issuance and sale
of the Purchased Securities on the terms and conditions herein and in
the Prospectus set forth or contemplated or for the execution of the
Supplemental Indenture relating to the Purchased Securities, except as
may be required under New Mexico state securities or blue sky laws, as
to which laws such counsel shall not be required to express an opinion.
In giving such opinion, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.A. may rely solely upon
certificates of the Company as to any factual matters upon which any such
opinions are based.
(f) The Underwriters or the Representatives shall have received
from counsel for the Underwriters such opinion or opinions, dated the
Closing Date, with respect to the incorporation of the Company, the
validity of the Purchased Securities, the Registration Statements, the
Prospectus, and other related matters as may reasonably be required,
and the Company shall have furnished to such counsel such documents as
they request for the purpose of enabling them to pass upon such
matters. In rendering such opinion, such counsel may rely as to the
incorporation of the Company and all other matters governed by the laws
of the States of Arizona and New Mexico upon the opinions of ▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, 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.
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(a) The Company will indemnify and hold harmless each Underwriter
and each person, if any, who controls such Underwriter within the
meaning of the Act against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person
may become subject, under the Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any part of the
Registration Statements relating to the Securities, when such part
became effective, any preliminary prospectus or preliminary prospectus
supplement, the Prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; and will
reimburse each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that
the Company will not be liable in any such case to the extent that any
such loss, claim, damage, or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in any of such documents in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter specifically for use therein. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless
the Company, each of its directors, each of its officers who have
signed the Registration Statements, and each person, if any, who
controls the Company within the meaning of the Act, against any losses,
claims, damages, or liabilities to which the Company or any such
director, officer, or controlling person may become subject, under the
Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any part of the Registration Statements relating to
the Securities, when such part became effective, any preliminary
prospectus or preliminary prospectus supplement, the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter specifically for use therein; and will reimburse any legal
or other expenses reasonably incurred by the Company or any such
director, officer, or controlling person in connection with
investigating or defending any such loss, claim, damage, liability, or
action. This indemnity agreement will be in addition to any liability
which such Underwriter may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section, notify the indemnifying party of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability that it may
have to any indemnified party otherwise than under this Section. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, without the
consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, 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.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party for
any loss, claim, damage, liability, or action described in subsection
(a) or (b) above, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or
(b) above on the following basis: (1) if such loss, claim, damage,
liability, or action arises under subsection (a) above, then (i) in
such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant
equitable considerations; and (2) if such loss, claim, damage,
liability, or action arises under subsection (b) above, then in such
proportion as is appropriate to reflect the relative fault of the
Company on the one hand and the Underwriter on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities as well as any other relevant equitable
considerations. For the purposes of clause (1) above, the relative
benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions
received by the Underwriters. For the purposes of clauses (1) and (2)
above, the relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission.
The amount paid by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of
this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the
subject of this subsection (d). No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their
respective underwriting obligations and not joint.
7. Default of Underwriters. If any Underwriter or Underwriters default
-----------------------
in their obligations to purchase Purchased Securities pursuant to this Agreement
and the Terms Agreement and the principal amount of Purchased Securities that
such defaulting Underwriter or Underwriters agreed but failed to purchase is ten
percent (10%) or less of the principal amount of Purchased Securities to which
such Terms Agreement relates, the Underwriters or the Representatives may make
arrangements satisfactory to the Company for the purchase of such Purchased
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date the nondefaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder
and under such Terms Agreement, to purchase the Purchased Securities that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so default and the aggregate principal amount of
Purchased Securities with respect to which such default or defaults occur is
more than the above-described amount and arrangements satisfactory to the
remaining Underwriters and the Company for the purchase of such Purchased
Securities by other persons are not made within thirty-six hours after such
default, the Terms Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company, except as provided in Section 8. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
8. Survival of Certain Representations and Obligations. The respective
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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
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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 ▇.▇. ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or delivered, or telecopied and confirmed to the
Company at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
10. Successors. This Agreement will inure to the benefit of and be
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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
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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
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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.
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
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Treasurer
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written
By
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