AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 1, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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ARIZONA PUBLIC SERVICE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ARIZONA 86-0011170
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
400 North Fifth Street
Phoenix, Arizona 85004
(602) 250-1000
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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MATTHEW P. FEENEY
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85073
(602) 382-6239
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement, as determined
by market conditions and other factors.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Each Class of to be Price Offering Registration
Securities to be Registered Registered Per Unit Price Fee
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First Mortgage Bonds (1)(3) (2) (1)(2)(3) N/A
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Senior Notes (1)(4) (2) (1)(2)(4) N/A
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Debt Securities (1)(5) (2) (1)(2)(5) N/A
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Total $25,000,000 (2) $25,000,000 $7,576(6)
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(1) In no event will the aggregate initial offering price of all securities
issued from time to time pursuant to this Registration Statement exceed
$25,000,000. If any such securities are issued at an original issue
discount, then the aggregate initial offering price as so discounted shall
not exceed $25,000,000, notwithstanding that the stated principal amount of
such securities may exceed such amount.
(2) The proposed maximum initial offering price per unit will be determined,
from time to time, by the Registrant in connection with the issuance by the
Registrant of the securities registered hereunder.
(3) Subject to Footnote (1), there are being registered hereunder an
indeterminate principal amount of First Mortgage Bonds as may be sold, from
time to time, by the Registrant.
(4) Subject to Footnote (1), there are being registered hereunder an
indeterminate amount of Senior Notes as may be sold, from time to time, by
the Registrant.
(5) Subject to Footnote (1), there are being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold, from time
to time, by the Registrant.
(6) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act of 1933.
Pursuant to Rule 429 of the rules and regulations under the Securities Act
of 1933, this Registration Statement contains a combined prospectus relating to
the $25,000,000 principal amount of securities registered hereby, $25,000,000
principal amount of securities registered on December 22, 1995 pursuant to
Registration No. 33-64455, $25,000,000 principal amount of securities registered
on October 3, 1994 pursuant to Registration No. 33-55473, and $100,000,000
principal amount of First Mortgage Bonds registered on April 26, 1993 pursuant
to Registration No. 33-61228. The previously-paid filing fees associated with
the referenced securities registered under Registration Nos. 33-64455, 33-55473
and 33-61228 totalled $8,621, $8,621 and $34,483, respectively.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 1, 1996
$175,000,000
ARIZONA PUBLIC SERVICE COMPANY
FIRST MORTGAGE BONDS
SENIOR NOTES
DEBT SECURITIES
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Arizona Public Service Company (the "Company") intends from time to time to
issue up to $175,000,000 aggregate principal amount of its first mortgage bonds
(the "New Bonds"), senior notes (the "Senior Notes"), or unsecured debt
securities ("Debt Securities") of the Company (collectively, the "Securities"),
in one or more series at prices and on terms to be determined at the time of
sale.
For each issue of Securities for which this Prospectus is being delivered
(the "Offered Bonds," the "Offered Senior Notes," or the "Offered Debt
Securities" and, collectively, the "Offered Securities"), there will be an
accompanying Prospectus Supplement (the "Prospectus Supplement") that sets
forth, without limitation and to the extent applicable, the specific
designation, aggregate principal amount, denomination, maturity, premium, if
any, rate of interest (which may be fixed or variable) or method of calculation
thereof, time of payment of interest, any terms for redemption, any sinking fund
provisions, any subordination provisions, the initial public offering price, the
names of any underwriters or agents, the principal amounts, if any, to be
purchased by the underwriters, the compensation of such underwriters or agents,
and any other special terms of the Offered Securities. The Prospectus Supplement
relating to any series of Offered Securities will also contain information
concerning certain United States federal income tax considerations, if
applicable to the Offered Securities.
The Company may sell Securities directly to purchasers or through agents
designated from time to time by the Company or to or through underwriters or
a group of underwriters which may be managed by one or more underwriters. If
any agents of the Company or any underwriters are involved in the sale of
Securities in respect of which this Prospectus is being delivered, the names
of such agents or underwriters and any applicable commission or discount will
be set forth in the applicable Prospectus Supplement. The net proceeds to the
Company from the sale of Securities will be the public offering price of such
Securities less such discount, in the case of an offering through an
underwriter, or the purchase price of such Securities less such commission,
in the case of an offering through an agent, and less, in each case, other
expenses of the Company associated with the issuance and distribution of such
Securities.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is , 1996.
<PAGE>
AVAILABLE INFORMATION
Arizona Public Service Company (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and in accordance therewith files reports, proxy statements,
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements, and other information can be
obtained at prescribed rates from the Public Reference Section of the Commission
or may be inspected and copied at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and
at certain of its regional offices located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661; and Seven World Trade Center, Suite 1300, New
York, New York 10048. In addition, such material may be accessed electronically
by means of the Commission's Web Site on the Internet at http://www.sec.gov.
Certain securities of the Company are listed on the New York Stock Exchange.
Reports, proxy materials, and other information concerning the Company can be
inspected at the office of this exchange at 20 Broad Street, 7th Floor, New
York, New York 10005.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the Company
(File No. 1-4473) are incorporated by reference in this Prospectus:
1. The Company's Form 10-K Report for the fiscal year ended December 31, 1995
(the "1995 10-K Report");
2. The Company's Form 10-Q Reports for the fiscal quarters ended March 31 and
June 30, 1996; and
3. The Company's Form 8-K Report dated August 28, 1996 (the "August 8-K
Report").
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14, or
15(d) of the 1934 Act after the filing date of the August 8-K Report and prior
to the termination of the offering of the securities offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which is also incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the oral
or written request of such person, a copy of any or all of the documents
referred to above which have been or may be incorporated in this Prospectus by
reference, other than exhibits to such documents. Request for such copies should
be directed to Arizona Public Service Company, Office of the Secretary, Station
9068, P.O. Box 53999, Phoenix, Arizona 85072-3999, (602) 250-3252.
2
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SELECTED INFORMATION
The following material is qualified in its entirety by reference to the
detailed information and financial statements incorporated by reference in this
Prospectus.
THE OFFERING
Securities Offered ..................... Up to $175,000,000 of any combination
of First Mortgage Bonds, Senior Notes,
and Debt Securities.
Application of Proceeds................ Except as otherwise described in the
Prospectus Supplement, the net
proceeds of the Offered Securities
will be applied primarily to the
redemption, repurchase, repayment, or
retirement of outstanding
indebtedness, and temporary investment
pending such application.
THE COMPANY
Business ............................... Electric utility servicing
approximately 705,000 customers in an
area that includes all or part of 11
of Arizona's 15 counties.
Generating Fuel Mix (estimated for the
twelve months ended September 30,
1996).................................. Coal--43%; Nuclear--33%;
Purchases--22%; Other--2%.
FINANCIAL DATA (THOUSANDS OF DOLLARS):
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
--------------------------------------------------
DECEMBER 31,
------------------------------------
SEPTEMBER 30,
1996(1) 1995 1994 1993
------------ ---------- ---------- ----------
<S> <C> <C> <C> <C>
Electric Operating Revenues ...... $1,687,542 $1,614,952 $1,626,168 $1,602,413
========== ========== ========== ==========
Net Income ....................... $ 264,471 $ 239,570 $ 243,486 $ 250,386
========== ========== ========== ==========
Ratio of Earnings to Fixed Charges 3.01 2.77 2.96 2.99
</TABLE>
CAPITALIZATION DATA (THOUSANDS OF DOLLARS):
AS OF
SEPTEMBER 30, 1996 PERCENTAGE
------------------ ----------
Total Debt (including current $2,212,650 53.1%
maturities)
Redeemable Preferred Stock ... 53,000 1.3
Non-Redeemable Preferred Stock 170,391 4.1
Common Stock Equity .......... 1,726,644 41.5
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Total Capitalization ......... $4,162,685 100.0%
========== =======
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(1) Financial information as of and for the twelve months ended September 30,
1996 is unaudited but, in the judgment of the Company's management, contains
all necessary adjustments for a fair presentation of the financial position
of the Company on such date and the results of operations for such period.
(2) It is assumed that the net proceeds from the issuance of the Offered
Securities will be used for the redemption, repurchase, repayment, or
retirement of a similar amount of outstanding long-term debt.
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<PAGE>
THE COMPANY
The Company was incorporated in 1920 under the laws of Arizona and is
principally engaged in providing electricity in the State of Arizona. The
principal executive offices of the Company are located at 400 North Fifth
Street, Phoenix, Arizona 85004 and its telephone number is (602) 250-1000.
APPLICATION OF PROCEEDS
Except as otherwise described in the Prospectus Supplement, the net proceeds
of the Offered Securities will be applied primarily to the redemption,
repurchase, repayment, or retirement of outstanding indebtedness. Any proceeds
not immediately so applied when received may be invested temporarily, pending
such application, in United States government or agency obligations, commercial
paper, bank certificates of deposit, or repurchase agreements collateralized by
United States government or agency obligations, or will be deposited with banks.
EARNINGS RATIOS
The following table sets forth the Company's historical ratio of earnings to
fixed charges for each of the indicated periods:
TWELVE MONTHS ENDED
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SEPTEMBER 30, DECEMBER 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992 1991
- --------------- ---- ---- ---- ---- ----
3.01 2.77 2.96 2.99 2.73 (1)
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(1) A write-off resulting from a December 1991 Arizona Corporation Commission
("ACC") order settling the Company's then-pending rate case resulted in a
negative coverage ratio and an earnings coverage deficiency of approximately
$317 million for the twelve months ended December 31, 1991. Excluding the
effects of the write-off, the coverage ratio would have been 2.11 for the
same period.
For the purposes of these computations, "earnings" are defined as the sum of
pre-tax income plus fixed charges of the Company and its subsidiaries; "fixed
charges" consist of interest on debt, amortization of debt discount, premium,
and expense and an estimated interest factor in rentals.
SECURITIES
The Securities may be issued in one or more series as (i) first mortgage
bonds ("New Bonds"), (ii) notes secured by New Bonds or, in the circumstances
described under the caption "Description of Senior Notes -- Security; Release
Date," as unsecured notes (such notes are herein referred to as "Senior Notes"),
or (iii) unsecured debt securities ("Debt Securities"). From and after the
"Release Date" (as defined below), any outstanding Senior Notes secured by New
Bonds when issued will cease to be secured and will become unsecured obligations
of the Company. The New Bonds are described below under the caption "Description
of New Bonds," the Senior Notes are described below under the caption
"Description of Senior Notes," and the Debt Securities are described below under
the caption "Description of Debt Securities."
DESCRIPTION OF NEW BONDS
GENERAL
The New Bonds may be issued in one or more new series under the Mortgage and
Deed of Trust dated as of July 1, 1946 between the Company and The Bank of New
York, as successor Trustee ("Bond Trustee"), which as heretofore amended and
supplemented is herein referred to as the "Mortgage," and which is to be further
amended and supplemented by appropriate Supplemental Indentures ("Bond
Supplemental Indentures"). The following summary does not purport to be complete
and is subject in all respects to the provisions of, and is qualified in its
entirety by reference to, the Mortgage, the New Bonds,
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<PAGE>
and the Bond Supplemental Indentures, the forms of which are filed, or will be
filed, as exhibits to the registration statement of which this Prospectus forms
a part. Whenever particular provisions or defined terms in such documents are
referred to herein or in a Prospectus Supplement, such provisions or defined
terms are incorporated by reference herein or therein, as the case may be.
Reference is made to the Prospectus Supplement relating to any particular
issue of Offered Bonds for the following terms: (1) the aggregate principal
amount of the Offered Bonds; (2) the date on which such Offered Bonds mature;
(3) the rate per annum at which such Offered Bonds will bear interest; (4) the
times at which such interest will be payable; (5) the date, if any, after which
such Offered Bonds may be redeemed at the option of the Company and the
redemption price; (6) whether any of such Offered Bonds will be issuable in
whole or in part in the form of one or more Global Securities and, if so, the
Depositaries for such Global Securities, the form of any legend or legends to be
borne by any such Global Security, and any circumstances under which any such
Global Security may be exchanged in whole or in part for Offered Bonds,
registered in the names of persons other than the Depositary for such Global
Security or its nominee; and (7) any other special terms. Interest will be paid
to the person in whose name the Offered Bonds are registered at the close of
business on the record date, as established in the Bond Supplemental Indenture
relating thereto, preceding the interest payment date in respect thereof. The
New Bonds will be issued as fully registered bonds, without coupons, in
denominations of $1,000 and multiples thereof. The New Bonds will be
transferable at any time without any service or other charge, except transfer
taxes and other governmental charges, if any.
Except as otherwise described under the heading "Description of New Bonds --
Issuance of Additional Bonds" or in the Prospectus Supplement, the covenants
contained in the Mortgage and the New Bonds would not afford holders of the New
Bonds protection in the event of a highly-leveraged transaction involving the
Company.
REDEMPTION
The Offered Bonds are redeemable as set forth in the Prospectus Supplement
relating thereto and, subject to any qualifications or variations set forth in
any such Prospectus Supplement, are also subject to redemption, in each case at
the principal amount of the Offered Bonds to be redeemed together with accrued
interest to the date fixed for redemption, (i) in whole or in part with the
proceeds from mortgaged property of the Company taken under eminent domain by,
or otherwise sold to, a governmental body or agency; (ii) in whole or in part
with the Proceeds of Released Property, including proceeds from the sale or
other disposition (including a sale and leaseback) of property released from the
lien of the Mortgage as specified in section (b) of the second to the last
paragraph under the heading "Description of New Bonds -- Security" below; and
(iii) in whole, together with all other first mortgage bonds of the Company then
outstanding, within twelve months of certain mergers or other transactions
involving the transfer of substantially all of the property subject to the lien
of the Mortgage, as then amended. In addition, after the date and at the price
set forth in the Prospectus Supplement, Offered Bonds may be redeemed in whole
or in part with cash deposited in the replacement fund discussed below.
SECURITY
The New Bonds will rank pari passu, except as to any sinking fund or similar
fund provided for a particular series, with all bonds at any time outstanding
under the Mortgage. The Mortgage constitutes a first mortgage lien on
substantially all the fixed property owned by the Company (which does not
include a combined cycle plant or certain interests in Unit 2 of the Palo Verde
Nuclear Generating Station being leased), other than property specifically
excepted by the Mortgage. Such lien and the Company's title to certain of its
properties are subject to Excepted Encumbrances, to minor leases, defects,
irregularities, and deficiencies, and to the considerations discussed below with
respect to the Four Corners and Navajo Plant locations. The lien of the Mortgage
will also extend to all after-acquired property (other than the excepted
classes) located in the jurisdictions in which the necessary recordations or
filings have been accomplished, subject to Excepted Encumbrances and to liens
existing or placed on such property at the time of its acquisition by the
Company.
Both the Four Corners and the Navajo Plants are located on property held by
the plant participants under leases from the Navajo Tribe and easements from the
Secretary of the Interior. The leases extend
5
<PAGE>
from their respective effective dates in 1966 and 1969 for terms of 50 years
with rights of renewal for up to 25 additional years. The easements are for
50-year terms from the same effective dates. While the Company owns the rights
conferred upon it by the leases from the Navajo Tribe, the Company does not make
any representation with respect to the Tribe's interest in the lands leased (but
is not aware of any assertion of a contesting claim to such lands) or with
respect to the enforceability of the leases against the Tribe.
The Mortgage requires the Company to keep the property encumbered thereby as
an operating system or systems in good repair and working order, but permits the
permanent discontinuance or reduction in capacity of any such properties which,
in the judgment of the Board of Directors of the Company, is desirable in the
conduct of its business or which is ordered by a regulatory authority or which
properties are to be sold or disposed of by the Company.
When not in default under the Mortgage, the Company may obtain the release
from the lien thereof of (a) property that has become unserviceable, obsolete,
or unnecessary for use in the Company's operations, provided that it replaces
such property with, or substitutes for the same, an equal value of other
property, and (b) other property that has been sold or otherwise disposed of,
provided that the Company deposits with the Bond Trustee cash in an amount,
waives the right to issue additional bonds on the basis of retired bonds
previously issued in an amount, or utilizes as a credit net Property Additions
acquired by the Company within the preceding five years and having a fair value
(not more than Cost), equal to the fair value of the property to be released.
The Bond Trustee may, and upon request of the Company shall, cancel and
discharge the lien of the Mortgage and all indentures supplemental thereto
whenever all indebtedness secured by the Mortgage has been paid.
ISSUANCE OF ADDITIONAL BONDS
Additional bonds may be issued under the Mortgage in a principal amount equal
to (a) 60% of net Property Additions, (b) the principal amount of certain
redeemed or retired bonds previously issued, and/or (c) deposited cash, provided
that the Company's Adjusted Net Earnings over a twelve-month period are at least
two times the annual interest on all bonds to be outstanding under the Mortgage
after the issuance and on indebtedness secured by prior liens. Exceptions to
this earnings coverage requirement apply to bonds issued on the basis of
redeemed or retired bonds where the redeemed or retired bonds bore a higher rate
of interest and where certain other conditions are satisfied. In addition, the
Company's articles of incorporation allow the Company to issue additional
preferred stock when certain earnings coverage requirements are met. Exceptions
to this earnings coverage requirement apply to preferred stock issued for the
purpose of redeeming or retiring other preferred stock.
As of September 30, 1996, the Company estimates that the Mortgage and the
articles of incorporation would have allowed the Company to issue up to
approximately $1.7 billion and $1.4 billion of additional first mortgage bonds
and preferred stock, respectively.
In addition to the Mortgage restrictions on the Company's issuance of
additional bonds, the Company must obtain ACC approval before issuing equity
securities or incurring long-term debt. Existing ACC orders allow the Company to
have approximately $501 million in aggregate par value of preferred stock and
approximately $2.6 billion in principal amount of long-term debt outstanding at
any one time. The Company does not expect these provisions or authorizations to
limit the Company's ability to meet its capital requirements.
Property Additions, and in many instances redeemed or retired bonds, as well
as deposited cash, may be used for certain alternative purposes under the
Mortgage, including the release of property from the lien thereof or the
satisfaction of sinking or replacement fund requirements. The Mortgage contains
restrictions on the issuance of bonds, withdrawal of cash, or release of
property on the basis of property subject to prior liens. Property located on
leaseholds or easements (as, for example, the Four Corners and Navajo Plants)
will constitute fundable Property Additions if the leasehold or easement has an
unexpired term of, or the term is extendable at the Company's option for, at
least 30 years after the time of funding, or if the property may be removed by
the Company without compensation.
6
<PAGE>
REPLACEMENT FUND
So long as any of the New Bonds are outstanding, the Company is required for
each calendar year to deposit with the Bond Trustee cash in a formularized
amount related to net additions to the Company's mortgaged utility plant;
however, the Company may satisfy all or any part of the requirement by utilizing
redeemed or retired bonds, net Property Additions, or property retirements. For
1995, such requirement amounted to approximately $128 million. Any cash that may
be deposited by the Company pursuant to the requirement may, upon request by the
Company, be applied to the redemption or purchase of bonds and, if not withdrawn
against Property Additions or retired bonds within five years, must be so
applied, subject in each case to any restrictions on any such redemption or
purchase as set forth in the Prospectus Supplement relating to the issue of
bonds to be redeemed or purchased.
EVENTS OF DEFAULT
The following are defaults under the Mortgage: (a) failure to pay the
principal of any bond outstanding under the Mortgage when due and payable; (b)
failure to pay interest on any bond outstanding under the Mortgage within 60
days after the same is due and payable; (c) failure to pay any installment of
any fund required to be applied to the purchase or redemption of bonds
outstanding under the Mortgage within 60 days after the same is due and payable;
(d) certain events in bankruptcy, insolvency, or reorganization; and (e) failure
to perform any other covenant of the Mortgage continuing for 90 days after
notice by the Bond Trustee or holders of 15% in principal amount of Eligible
bonds. The Mortgage allows the Bond Trustee to withhold notice of certain
defaults, not including any default in the payment of principal of, or interest
on, any bond outstanding, or in the payment of any sinking, improvement,
replacement, or purchase fund installment, if it in good faith determines that
the withholding of such notice is in the interests of the bondholders.
The holders of not less than a majority in principal amount of Eligible bonds
may direct the time, method, and place of conducting any proceeding for any
remedy available to the Bond Trustee under the Mortgage; provided, however, that
the Trustee may decline to follow any such direction under certain
circumstances, including a determination made in good faith by the Bond Trustee
that it will not be sufficiently indemnified for any expenditures, including its
own charges, in any action or proceeding so directed. The Company is required to
file with the Bond Trustee, on or before July 1 of each year, a certificate to
the effect that, except as otherwise stated therein, the Company has complied
with all of the provisions of the Mortgage and is not then in default
thereunder.
MODIFICATION OF THE MORTGAGE
The Mortgage and the rights of bondholders may be modified with the consent
of the Company, and of the Bond Trustee if deemed affected, and the vote or
assent of the holders of not less than 70% in principal amount of the Eligible
bonds, and of not less than 70% in principal amount of the Eligible bonds of any
one or more series (less than all) affected by any such modification; except
that the bondholders, without the consent of the holder of each bond affected,
have no power to (a) reduce the principal thereof, or the premium, if any, or
rate of interest thereon or otherwise modify the terms of payment of principal,
premium, or interest, or extend the maturity of any bonds, (b) permit the
creation of any lien ranking prior to or on a parity with the lien of the
Mortgage with respect to any of the mortgaged property, (c) deprive any
nonassenting bondholder of a lien upon the mortgaged property for the security
of his or her bonds, or (d) reduce the percentage of bondholders authorized to
effect any such modification.
GLOBAL SECURITIES
Some or all of the New Bonds of any series may be represented, in whole or in
part, by one or more "Global Securities" which will have an aggregate principal
amount equal to that of the New Bonds represented thereby. Each Global Security
will be registered in the name of a depositary or a nominee thereof identified
in the applicable Prospectus Supplement, will be deposited with such depositary
or nominee or a custodian therefor and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred to below
and any such other matters as may be provided for pursuant to the applicable
Bond Supplemental Indenture.
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<PAGE>
Notwithstanding any provision of the Mortgage or any New Bond described
herein, no Global Security may be exchanged in whole or in part for New Bonds
registered, and no transfer of a Global Security in whole or in part may be
registered, in the name of any person other than the depositary for such Global
Security or any nominee of such depositary unless (i) the depositary has
notified the Company that it is unwilling or unable to continue as depositary
for such Global Security or has ceased to be qualified to act as such as
required by the Mortgage, (ii) there shall have occurred and be continuing a
default with respect to the New Bonds represented by such Global Security or
(iii) there shall exist such circumstances, if any, in addition to or in lieu of
those described above as may be described in the applicable Bond Supplemental
Indenture and Prospectus Supplement. All securities issued in exchange for a
Global Security or any portion thereof will be registered in such names as the
depositary may direct.
As long as the depositary, or its nominee, is the registered holder of a
Global Security, the depositary or such nominee, as the case may be, will be
considered the sole owner and holder of such Global Security and the New Bonds
represented thereby for all purposes under the New Bonds and the Mortgage.
Except in the limited circumstances referred to above, owners of beneficial
interests in a Global Security will not be entitled to have such Global Security
or any New Bonds represented thereby registered in their names, will not receive
or be entitled to receive physical delivery of certificated New Bonds in
exchange therefor and will not be considered to be the owners or holders of such
Global Security or any New Bonds represented thereby for any purpose under the
New Bonds or the Mortgage. All payments of principal of and any premium and
interest on a Global Security will be made to the depositary or its nominee, as
the case may be, as the holder thereof. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. These laws may impair the ability to transfer beneficial
interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of New Bonds represented by the Global Security to
the accounts of its participants. Ownership of beneficial interests in a Global
Security will be shown only on, and the transfer of those ownership interests
will be effected only through, records maintained by the depositary (with
respect to participants' interests) or any such participant (with respect to
interests of persons held by such participants on their behalf). Payments,
transfers, exchanges, and other matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by the
depositary from time to time. None of the Company, the Bond Trustee or any agent
of the Company or the Bond Trustee will have any responsibility or liability for
any aspect of the depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in a Global Security, or for
maintaining, supervising, or reviewing any records relating to such beneficial
interests.
OTHER
The Mortgage restricts the payment of dividends on common stock of the
Company under certain conditions which have not existed in the past and do not
currently exist.
The Bond Trustee, security registrar, and paying agent under the Mortgage is
The Bank of New York. The Company maintains normal banking arrangements with The
Bank of New York, which includes (i) two commitments in the aggregate principal
amount of approximately $35.7 million by The Bank of New York pursuant to
reimbursement agreements related to letters of credit issued on behalf of the
Company in connection with issuances of pollution control bonds, the proceeds of
which were made available to the Company, and (ii) a $25 million commitment by
The Bank of New York pursuant to a revolving credit agreement, $0 and $6 million
of which, respectively, were outstanding at September 30, 1996. The Bank of New
York also serves as (i) trustee for the holders of several issues of pollution
control bonds issued on behalf of the Company, (ii) trustee under the Indenture
relating to the subordinated Debt Securities (see "Description of Debt
Securities" below), (iii) trustee under the Senior Note Indenture (as defined
below), (iv) investment manager for the Company's nonunion post-retirement
medical fund, and (v) custodian of international fixed-income assets for the
Company's pension plan.
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DESCRIPTION OF SENIOR NOTES
GENERAL
The Senior Notes may be issued in one or more new series under an Indenture
(the "Senior Note Indenture") between the Company and The Bank of New York, or
any other trustee to be named, as Trustee (the "Senior Note Trustee"). The
following summary does not purport to be complete and is subject in all respects
to the provisions of, and is qualified in its entirety by reference to, the
Senior Note Indenture pursuant to which the Senior Notes are to be issued and to
the Senior Notes, the forms of which are filed, or will be filed, as exhibits to
the registration statement of which this Prospectus forms a part. Whenever
particular provisions or defined terms in the Senior Note Indenture are referred
to herein or in a Prospectus Supplement, such provisions or terms are
incorporated by reference herein or therein, as the case may be.
Until the Release Date (as defined below), the Senior Notes will be secured
by one or more series of New Bonds ("Senior Note Mortgage Bonds") issued and
delivered by the Company to the Senior Note Trustee. See "Description of Senior
Notes -- Security; Release Date." On the Release Date, the Senior Notes will
cease to be secured by Senior Note Mortgage Bonds, will become unsecured
obligations of the Company, and will rank on a parity with other unsecured
senior indebtedness of the Company, including senior Debt Securities. The Senior
Note Indenture provides that, in addition to the Senior Notes offered hereby,
additional Senior Notes may be issued thereunder, without limitation as to
aggregate principal amount, provided that, prior to the Release Date, the amount
of Senior Notes that may be issued cannot exceed the amount of first mortgage
bonds that the Company is able to issue under its Mortgage. See "Description of
New Bonds -- Issuance of Additional Bonds."
Reference is made to the Prospectus Supplement relating to any particular
issue of Offered Senior Notes for the following terms: (1) the title of such
Senior Notes; (2) any limit on the aggregate principal amount of such Senior
Notes or the series of which they are a part; (3) the date or dates on which the
principal of any of such Senior Notes will be payable; (4) the rate or rates at
which any of such Senior Notes will bear interest, if any, the date or dates
from which any such interest will accrue, the Interest Payment Dates on which
any such interest will be payable and the Regular Record Date for any such
interest payable on any Interest Payment Date; (5) the place or places where the
principal of and any premium and interest on any of such Senior Notes will be
payable; (6) the period or periods within which, the price or prices at which
and the terms and conditions on which any of such Senior Notes may be redeemed,
in whole or in part, at the option of the Company; (7) the obligation, if any,
of the Company to redeem or purchase any of such Senior Notes pursuant to any
sinking fund or analogous provision or at the option of the Holder thereof, and
the period or periods within which, the price or prices at which and the terms
and conditions on which any of such Senior Notes will be redeemed or purchased,
in whole or in part, pursuant to any such obligation; (8) the denominations in
which any of such Senior Notes will be issuable, if other than denominations of
$1,000 and any integral multiple thereof; (9) if the amount of principal of or
any premium or interest on any of such Senior Notes may be determined with
reference to an index or pursuant to a formula, the manner in which such amounts
will be determined; (10) if other than the currency of the United States of
America, the currency, currencies, or currency units in which the principal of
or any premium or interest on any of such Senior Notes will be payable and the
manner of determining the equivalent thereof in the currency of the United
States of America for any purpose, including for purposes of determining the
principal amount deemed to be Outstanding at any time; (11) if the principal of
or any premium or interest on any of such Senior Notes is to be payable, at the
election of the Company or the Holder thereof, in one or more currencies, or
currency units other than those in which such Senior Notes are stated to be
payable, the currency, currencies or currency units in which payment of any such
amount as to which such election is made will be payable, the periods within
which and the terms and conditions upon which such election is to be made and
the amount so payable (or the manner in which such amount is to be determined);
(12) if other than the entire principal amount thereof, the portion of the
principal amount of any of such Senior Notes which will be payable upon
declaration of acceleration of the Maturity thereof; (13) if the principal
amount payable at the Stated Maturity of any of such Senior Notes will not be
determinable as of any one or more dates prior to the
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Stated Maturity, the amount which will be deemed to be such principal amount as
of any such date for any purpose, including the principal amount thereof which
will be due and payable upon any Maturity other than the Stated Maturity or
which will be deemed to be Outstanding as of any such date (or, in any such
case, the manner in which such deemed principal amount is to be determined);
(14) if applicable, that such Senior Notes, in whole or any specified part, are
defeasible pursuant to the provisions of the Senior Note Indenture described
under "Description of Senior Notes -- Defeasance and Covenant Defeasance --
Defeasance and Discharge" or "Description of Senior Notes -- Defeasance and
Covenant Defeasance -- Covenant Defeasance," or under both such captions; (15)
whether any of such Senior Notes will be issuable in whole or in part in the
form of one or more Global Securities and, if so, the respective Depositaries
for such Global Securities, the form of any legend or legends to be borne by any
such Global Security in addition to or in lieu of the legend referred to under
"Description of Senior Notes -- Global Securities" and, if different from those
described under such caption, any circumstances under which any such Global
Security may be exchanged in whole or in part for Senior Notes registered, and
any transfer of such Global Security in whole or in part may be registered, in
the names of Persons other than the Depositary for such Global Security or its
nominee; (16) if any of such Senior Notes are to be issued prior to the Release
Date, the designation of the series of Senior Note Mortgage Bonds to be
delivered to the Senior Note Trustee as security for such Senior Notes; (17) any
addition to or change in the Events of Default applicable to any of such Senior
Notes and any change in the right of the Trustee or the Holders to declare the
principal amount of any of such Senior Notes due and payable; (18) any addition
to or change in the covenants in the Senior Note Indenture; and (19) any other
terms of such Senior Notes not inconsistent with the provisions of the Senior
Note Indenture. (Section 301).
Senior Notes, including Original Issue Discount Notes, may be sold at a
substantial discount below their principal amount. Certain special United States
federal income tax considerations (if any) applicable to Senior Notes sold at an
original issue discount may be described in the applicable Prospectus
Supplement. In addition, certain special United States federal income tax or
other considerations (if any) applicable to any Senior Notes which are
denominated in a currency or currency unit other than United States dollars may
be described in the applicable Prospectus Supplement.
Except as otherwise described in the Prospectus Supplement, the covenants
contained in the Senior Note Indenture would not afford holders of Senior Notes
protection in the event of a highly- leveraged transaction involving the
Company.
FORM, EXCHANGE, AND TRANSFER
The Senior Notes of each series will be issuable only in fully registered
form without coupons and, unless otherwise specified in the applicable
Prospectus Supplement, in denominations of $1,000 and any integral multiple
thereof. (Section 302).
At the option of the Holder, subject to the terms of the Senior Note
Indenture and the limitations applicable to Global Securities, Senior Notes of
any series will be exchangeable for other Senior Notes of the same series, of
any authorized denomination and of like tenor and aggregate principal amount.
(Section 305).
Subject to the terms of the Senior Note Indenture and the limitations
applicable to Global Securities, Senior Notes may be presented for exchange as
provided above or for registration of transfer (duly endorsed or with the form
of transfer endorsed thereon duly executed) at the office of the Note Registrar
or at the office of any transfer agent designated by the Company for such
purpose. No service charge will be made for any registration of transfer or
exchange of Senior Notes, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Note Registrar or
such transfer agent, as the case may be, being satisfied with the documents of
title and identity of the person making the request. The Company has appointed
the Senior Note Trustee as Note Registrar. Any transfer agent (in addition to
the Note Registrar) initially designated by the Company for any Senior Notes
will be named in the applicable Prospectus Supplement. (Section 305). The
Company may at any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the
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office through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for the Senior
Notes of each series. (Section 1102).
If the Senior Notes of any series (or of any series and specified tenor) are
to be redeemed, the Company will not be required to (i) issue, register the
transfer of, or exchange any Senior Note of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption of any such
Senior Note that may be selected for redemption and ending at the close of
business on the day of such mailing or (ii) register the transfer of or exchange
any Senior Note so selected for redemption, in whole or in part, except the
unredeemed portion of any such Senior Note being redeemed in part. (Section
305).
GLOBAL NOTES
Some or all of the Senior Notes of any series may be represented, in whole or
in part, by one or more Global Notes which will have an aggregate principal
amount equal to that of the Senior Notes represented thereby. Each Global Note
will be registered in the name of a Depositary or a nominee thereof identified
in the applicable Prospectus Supplement, will be deposited with such Depositary
or nominee or a custodian therefor and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred to below
and any such other matters as may be provided for pursuant to the Senior Note
Indenture.
Notwithstanding any provision of the Senior Note Indenture or any Senior Note
described herein, no Global Note may be exchanged in whole or in part for Senior
Notes registered, and no transfer of a Global Note in whole or in part may be
registered, in the name of any Person other than the Depositary for such Global
Note or any nominee of such Depositary unless (i) the Depositary has notified
the Company that it is unwilling or unable to continue as Depositary for such
Global Note or has ceased to be qualified to act as such as required by the
Senior Note Indenture, (ii) there shall have occurred and be continuing an Event
of Default with respect to the Senior Notes represented by such Global Note or
(iii) there shall exist such circumstances, if any, in addition to or in lieu of
those described above as may be described in the applicable Prospectus
Supplement. All securities issued in exchange for a Global Note or any portion
thereof will be registered in such names as the Depositary may direct. (Sections
204 and 305).
As long as the Depositary, or its nominee, is the registered Holder of a
Global Note, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Note and the Senior Notes
represented thereby for all purposes under the Senior Notes and the Senior Note
Indenture. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Note will not be entitled to have such Global
Note or any Senior Notes represented thereby registered in their names, will not
receive or be entitled to receive physical delivery of certificated Senior Notes
in exchange therefor and will not be considered to be the owners or Holders of
such Global Note or any Senior Notes represented thereby for any purpose under
the Senior Notes or the Senior Note Indenture. All payments of principal of and
any premium and interest on a Global Note will be made to the Depositary or its
nominee, as the case may be, as the Holder thereof. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a Global Note.
Ownership of beneficial interests in a Global Note will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Note, the Depositary
will credit, on its book-entry registration and transfer system, the respective
principal amounts of Senior Notes represented by the Global Note to the accounts
of its participants. Ownership of beneficial interests in a Global Note will be
shown only on, and the transfer of those ownership interests will be effected
only through, records maintained by the Depositary (with respect to
participants' interests) or any such participant (with respect to interests of
persons held by such participants on their behalf). Payments, transfers,
exchanges, and others matters relating to beneficial interests in a Global Note
may be subject to various policies and procedures adopted by the Depositary from
time to time. None of the Company, the Senior
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Note Trustee or any agent of the Company or the Senior Note Trustee will have
any responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Note, or for maintaining, supervising, or
reviewing any records relating to such beneficial interests.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Senior Note on any Interest Payment Date will be made to the
Person in whose name such Senior Note (or one or more Predecessor Senior Notes)
is registered at the close of business on the Regular Record Date for such
interest. (Section 307).
Unless otherwise indicated in the applicable Prospectus Supplement, principal
of and any premium and interest on the Senior Notes of a particular series will
be payable at the office of such Paying Agent or Paying Agents as the Company
may designate for such purpose from time to time, except that at the option of
the Company payment of any interest may be made by check mailed to the address
of the Person entitled thereto as such address appears in the Note Register.
Unless otherwise indicated in the applicable Prospectus Supplement, the
corporate trust office of the Senior Note Trustee in The City of New York will
be designated as the Company's sole Paying Agent for payments with respect to
Senior Notes of each series. Any other Paying Agents initially designated by the
Company for the Senior Notes of a particular series will be named in the
applicable Prospectus Supplement. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that
the Company will be required to maintain a Paying Agent in each Place of Payment
for the Senior Notes of a particular series.
(Section 1102).
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Senior Notes which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Company, and the Holder of such
Senior Notes thereafter may look only to the Company for payment thereof.
(Section 1103).
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Company may not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets "substantially as an
entirety" to any Person, and may not permit any Person to consolidate with or
merge into the Company or convey, transfer, or lease its properties and assets
substantially as an entirety to the Company, unless (a) the successor Person (if
any) is a corporation, partnership, trust or other entity organized and validly
existing under the laws of any domestic jurisdiction and (i) assumes the
Company's obligations on the Senior Notes and under the Senior Note Indenture,
and (ii) if such consolidation, merger, conveyance, transfer, or lease occurs
prior to the Release Date, assumes the Company's obligations under the Senior
Note Mortgage Bonds and under the Mortgage; (b) immediately after giving effect
to the transaction, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have occurred and
be continuing and (iii) certain other conditions are met. The term
"substantially as an entirety" means 50% or more of the total assets of the
Company as shown on the Company's consolidated balance sheet as of the end of
the calendar year immediately preceding the day of the year in which such
determination is made. (Section 901).
SECURITY; RELEASE DATE
Until the Release Date (as defined below), the Senior Notes will be secured
by one or more series of Senior Note Mortgage Bonds issued and delivered by the
Company to the Senior Note Trustee (see "Description of the New Bonds"). Upon
the issuance of a series of Senior Notes prior to the Release Date, the Company
will simultaneously issue and deliver to the Senior Note Trustee, as security
for such series of Senior Notes, a series of Senior Note Mortgage Bonds that
will have the same stated rate or rates of interest (or interest calculated in
the same manner), Interest Payment Dates, Stated Maturity and
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redemption provisions, and will be in the same aggregate principal amount as the
series of the Senior Notes being issued. (Sections 401-403). Payments by the
Company to the Senior Note Trustee of principal of, premium and interest on, a
series of Senior Note Mortgage Bonds will be applied by the Senior Note Trustee
to satisfy the Company's obligations with respect to principal of, premium and
interest on, the related series of Senior Notes (Section 312). THE RELEASE DATE
WILL BE THE DATE THAT ALL FIRST MORTGAGE BONDS ("FIRST MORTGAGE BONDS") OF THE
COMPANY ISSUED AND OUTSTANDING UNDER THE MORTGAGE, OTHER THAN SENIOR NOTE
MORTGAGE BONDS, HAVE BEEN RETIRED (AT, BEFORE OR AFTER THE MATURITY THEREOF)
THROUGH PAYMENT, REDEMPTION, OR OTHERWISE. ON THE RELEASE DATE, THE SENIOR NOTE
TRUSTEE WILL DELIVER TO THE COMPANY FOR CANCELLATION ALL SENIOR NOTE MORTGAGE
BONDS AND THE COMPANY WILL CAUSE THE SENIOR NOTE TRUSTEE TO PROVIDE NOTICE TO
ALL HOLDERS OF SENIOR NOTES OF THE OCCURRENCE OF THE RELEASE DATE. AS A RESULT,
ON THE RELEASE DATE, THE SENIOR NOTE MORTGAGE BONDS WILL CEASE TO SECURE THE
SENIOR NOTES, AND THE SENIOR NOTES WILL BECOME UNSECURED GENERAL OBLIGATIONS OF
THE COMPANY. (SECTION 407) SEE "DESCRIPTION OF SENIOR NOTES -- DEFEASANCE AND
COVENANT DEFEASANCE -- DEFEASANCE AND DISCHARGE" FOR A DISCUSSION OF ANOTHER
SITUATION IN WHICH OUTSTANDING SENIOR NOTES WOULD NOT BE SECURED BY SENIOR NOTE
MORTGAGE BONDS. Each series of Senior Note Mortgage Bonds will be a series of
New Bonds, all of which are secured by a lien on certain property owned by the
Company. See "Description of New Bonds -- Security." In certain circumstances
prior to the Release Date, the Company is permitted to reduce the aggregate
principal amount of a series of Senior Note Mortgage Bonds held by the Senior
Note Trustee, but in no event to an amount lower than the aggregate outstanding
principal amount of the series of Senior Notes initially issued
contemporaneously with such Senior Note Mortgage Bonds. (Section 409). Following
the Release Date, the Company will cause the Mortgage to be closed and the
Company will not issue any additional First Mortgage Bonds under the Mortgage.
(Section 403) While the Company will be precluded after the Release Date from
issuing additional First Mortgage Bonds, the Company will not be precluded under
the Senior Note Indenture or the Senior Notes from issuing or assuming other
secured debt, or incurring liens on its property, unless otherwise indicated in
the applicable Prospectus Supplement.
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the Senior
Note Indenture with respect to Senior Notes of any series: (a) failure to pay
principal of or any premium on any Senior Note of that series when due,
continued for five days; (b) failure to pay any interest on any Senior Notes of
that series when due, continued for sixty days; (c) failure to deposit any
sinking fund payment, when due, in respect of any Senior Note of that series;
(d) failure to perform any other covenant of the Company in the Senior Note
Indenture (other than a covenant included in the Senior Note Indenture solely
for the benefit of a series other than that series), continued for 90 days after
written notice has been given by the Senior Note Trustee, or the Holders of a
majority in principal amount of the Outstanding Senior Notes of that series, as
provided in the Senior Note Indenture; (e) prior to the Release Date, the
occurrence of a Default under the Mortgage (see "Description of the Bonds --
Events of Default"), of which the Trustee under the Mortgage, the Company or the
Holders of at least 25% in aggregate principal amount of the outstanding Senior
Notes have given written notice thereof to the Senior Note Trustee; and (f)
certain events in bankruptcy, insolvency or reorganization. (Section 601).
If an Event of Default (other than an Event of Default described in clause
(f) above) with respect to the Senior Notes of any series at the time
Outstanding shall occur and be continuing, either the Senior Note Trustee or the
Holders of a majority in principal amount of the Outstanding Senior Notes of
that series by notice as provided in the Senior Note Indenture may declare the
principal amount of the Senior Notes of that series (or, in the case of any
Senior Note that is an Original Issue Discount Note or the principal amount of
which is not then determinable, such portion of the principal amount of such
Senior Note, or such other amount in lieu of such principal amount, as may be
specified in the terms of such Senior Note) to be due and payable immediately.
If an Event of Default described in clause (f) above with respect to the Senior
Notes of any series at the time Outstanding shall occur, the principal amount of
all the Senior Notes of that series (or, in the case of any such Original Issue
Discount Note or other Senior Note, such specified amount) will automatically,
and without any action by the Senior Note Trustee or any
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Holder, become immediately due and payable. After any such acceleration, but
before (i) a judgment or decree based on acceleration or (ii) the Senior Note
Trustee's receipt from the Trustee under the Mortgage of a notice of
acceleration of Senior Note First Mortgage Bonds such acceleration will be
automatically waived and rescinded if all Events of Default, other than the
non-payment of accelerated principal (or other specified amount), have been
cured or waived as provided in the Indenture. (Section 602). For information as
to waiver of defaults, see "Modification and Waiver."
Subject to the provisions of the Senior Note Indenture relating to the duties
of the Senior Note Trustee in case an Event of Default shall occur and be
continuing, the Senior Note Trustee will be under no obligation to exercise any
of its rights or powers under the Senior Note Indenture at the request or
direction of any of the Holders, unless such Holders shall have offered to the
Senior Note Trustee reasonable indemnity. (Section 703). Subject to such
provisions for the indemnification of the Senior Note Trustee, the Holders of a
majority in principal amount of the Outstanding Senior Notes of any series will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Senior Note Trustee, or exercising any trust or
power conferred on the Senior Note Trustee, with respect to the Senior Notes of
that series. (Section 612).
No Holder of a Senior Note of any series will have any right to institute any
proceeding with respect to the Senior Note Indenture, or for the appointment of
a receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Senior Note Trustee written notice of a
continuing Event of Default with respect to the Senior Notes of that series,
(ii) the Holders of at least 25% in aggregate principal amount of the
Outstanding Senior Notes of that series have made written request, and such
Holder or Holders have offered reasonable indemnity, to the Senior Note Trustee
to institute such proceeding as trustee and (iii) the Senior Note Trustee has
failed to institute such proceeding, and has not received from the Holders of a
majority in aggregate principal amount of the Outstanding Senior Notes of that
series a direction inconsistent with such request, within 60 days after such
notice, request and offer. (Section 607). However, such limitations do not apply
to a suit instituted by a Holder of a Senior Note for the enforcement of payment
of the principal of or any premium or interest on such Senior Note on or after
the applicable due date specified in such Senior Note. (Section 608).
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1104).
MODIFICATION AND WAIVER
Modifications and amendments of the Senior Note Indenture may be made by the
Company and the Senior Note Trustee with the consent of the Holders of a
majority in principal amount of the Outstanding Senior Notes of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Senior Note affected thereby, (a) change the Stated Maturity of the
principal of, or any instalment of principal of or interest on, any Senior Note,
(b) reduce the principal amount of, or any premium or interest on, any Senior
Note, (c) reduce the amount of principal of an Original Issue Discount Note or
any other Senior Note payable upon acceleration of the Maturity thereof, (d)
change the place or currency of payment of principal of, or any premium or
interest on, any Senior Note, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Senior Note, (f) prior to
the Release Date, (i) impair the interest of the Senior Note Trustee in the
Senior Note Mortgage Bonds, (ii) reduce the principal amount of any series of
Senior Note Mortgage Bonds to an amount less than the principal amount of the
related Series of Notes, or (iii) alter the payment provisions of the Senior
Note Mortgage Bonds in a manner adverse to the Holders of the Notes, or (g)
reduce the percentage in principal amount of Outstanding Senior Notes of any
series, the consent of whose Holders is required for modification or amendment
of the Senior Note Indenture, reduce the percentage in principal amount of
Outstanding Senior Notes of any series necessary for waiver of compliance with
certain provisions of the Senior Note Indenture or for waiver of certain
defaults or modify such provisions with respect to modification and waiver.
(Section 1002).
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The Holders of a majority in principal amount of the Outstanding Senior Notes
of any series may waive compliance by the Company with certain restrictive
provisions of the Senior Note Indenture. (Section 1108). The Holders of a
majority in principal amount of the Outstanding Senior Notes of any series may
waive any past default under the Senior Note Indenture, except a default in the
payment of principal, premium, or interest and certain covenants and provisions
of the Senior Note Indenture which cannot be amended without the consent of the
Holder of each Outstanding Senior Note of such series affected. (Section 613).
The Senior Note Indenture provides that in determining whether the Holders of
the requisite principal amount of the Outstanding Senior Notes have given or
taken any direction, notice, consent, waiver, or other action under the Senior
Note Indenture as of any date, (i) the principal amount of an Original Issue
Discount Note that will be deemed to be Outstanding will be the amount of the
principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date, (ii) if, as of such date, the
principal amount payable at the Stated Maturity of a Senior Note is not
determinable (for example, because it is based on an index), the principal
amount of such Senior Note deemed to be Outstanding as of such date will be an
amount determined in the manner prescribed for such Senior Note and (iii) the
principal amount of a Senior Note denominated in one or more foreign currencies
or currency units that will be deemed to be Outstanding will be the U.S. dollar
equivalent, determined as of such date in the manner prescribed for such Senior
Note, of the principal amount of such Senior Note (or, in the case of a Senior
Note described in clause (i) or (ii) above, of the amount described in such
clause). Certain Senior Notes, including those for whose payment or redemption
money has been deposited or set aside in trust for the Holders and those that
have been fully defeased pursuant to Section 1402, will not be deemed to be
Outstanding. (Section 101).
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Senior Notes of any series entitled to give or take any direction,
notice, consent, waiver, or other action under the Senior Note Indenture, in the
manner and subject to the limitations provided in the Senior Note Indenture. In
certain limited circumstances, the Senior Note Trustee will be entitled to set a
record date for action by Holders. If a record date is set for any action to be
taken by Holders of a particular series, such action may be taken only by
persons who are Holders of Outstanding Senior Notes of that series on the record
date. To be effective, such action must be taken by Holders of the requisite
principal amount of such Senior Notes within a specified period following the
record date. For any particular record date, this period will be 180 days or
such other shorter period as may be specified by the Company (or the Senior Note
Trustee, if it set the record date), and may be shortened or lengthened (but not
beyond 180 days) from time to time. (Section 104).
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of Section
1402, relating to defeasance and discharge of indebtedness, or Section 1403,
relating to defeasance of certain restrictive covenants in the Senior Note
Indenture, applied to the Senior Notes of any series, or to any specified part
of a series. (Section 1401).
DEFEASANCE AND DISCHARGE. The Senior Note Indenture provides that, upon the
Company's exercise of its option (if any) to have Section 1402 applied to any
Senior Notes, the Company will be discharged from all its obligations with
respect to such Senior Notes (except for certain obligations to exchange or
register the transfer of Senior Notes, to replace stolen, lost or mutilated
Senior Notes, to maintain paying agencies and to hold moneys for payment in
trust) upon the deposit in trust for the benefit of the Holders of such Senior
Notes of money or U.S. Government Obligations, or both, which, through the
payment of principal and interest in respect thereof in accordance with their
terms, will provide money in an amount sufficient to pay the principal of and
any premium and interest on such Senior Notes on the respective Stated
Maturities in accordance with the terms of the Senior Note Indenture and such
Senior Notes. UPON SUCH DEFEASANCE AND DISCHARGE, THE SENIOR NOTE TRUSTEE WILL
DELIVER TO THE COMPANY FOR CANCELLATION ALL SENIOR NOTE MORTGAGE BONDS SECURING
SUCH SENIOR NOTES, AFTER WHICH TIME THE SENIOR NOTES WILL NO LONGER BE SECURED
BY SENIOR NOTE MORTGAGE BONDS. Such defeasance and discharge may occur only if,
among other things, the Company has
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delivered to the Senior Note Trustee an Opinion of Counsel to the effect that
the Company has received from, or there has been published by, the United States
Internal Revenue Service a ruling, or there has been a change in tax law, in
either case to the effect that Holders of such Senior Notes will not recognize
gain or loss for federal income tax purposes as a result of such deposit,
defeasance, and discharge and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
such deposit, defeasance and discharge were not to occur.
(Sections 1402 and 1404).
DEFEASANCE OF CERTAIN COVENANTS. The Senior Note Indenture provides that,
upon the Company's exercise of its option (if any) to have Section 1403 applied
to any Senior Notes, the Company may omit to comply with certain restrictive
covenants that may be described in the applicable Prospectus Supplement, and the
occurrence of certain Events of Default, which are described above in clause (d)
(with respect to such restrictive covenants) under "Description of Senior Notes
- -- Events of Default" and any that may be described in the applicable Prospectus
Supplement, will be deemed not to be or result in an Event of Default will cease
to be effective, in each case with respect to such Senior Notes. The Company, in
order to exercise such option, will be required to deposit, in trust for the
benefit of the Holders of such Senior Notes, money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an amount
sufficient to pay the principal of and any premium and interest on such Senior
Notes on the respective Stated Maturities in accordance with the terms of the
Senior Note Indenture and such Senior Notes. The Company will also be required,
among other things, to deliver to the Trustee an Opinion of Counsel to the
effect that Holders of such Senior Notes will not recognize gain or loss for
federal income tax purposes as a result of such deposit and defeasance of
certain obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
such deposit and defeasance were not to occur. In the event the Company
exercised this option with respect to any Senior Notes and such Senior Notes
were declared due and payable because of the occurrence of any Event of Default,
the amount of money and U.S. Government Obligations so deposited in trust would
be sufficient to pay amounts due on such Senior Notes at the time of their
respective Stated Maturities but may not be sufficient to pay amounts due on
such Senior Notes upon any acceleration resulting from such Event of Default. In
such case, the Company would remain liable for such payments. (Sections 1403 and
1404).
NOTICES
Notices to Holders of Senior Notes will be given by mail to the addresses of
such Holders as they may appear in the Note Register. (Sections 101 and 106).
TITLE
The Company, the Senior Note Trustee, and any agent of the Company or the
Senior Note Trustee may treat the Person in whose name a Senior Note is
registered as the absolute owner thereof (whether or not such Senior Note may be
overdue) for the purpose of making payment and for all other purposes. (Section
308).
GOVERNING LAW
The Senior Note Indenture and the Senior Notes will be governed by, and
construed in accordance with, the law of the State of New York. (Section
112).
REGARDING THE SENIOR NOTE TRUSTEE
The Senior Note Trustee is The Bank of New York. The Company maintains normal
banking arrangements with The Bank of New York, which includes (i) two
commitments in the aggregate principal amount of approximately $35.7 million by
The Bank of New York pursuant to reimbursement agreements related to letters of
credit issued on behalf of the Company in connection with issuances of pollution
control bonds, the proceeds of which were made available to the Company, and
(ii) a $25 million commitment by The Bank of New York pursuant to a revolving
credit agreement, $0 and $6 million of
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which, respectively, was outstanding at September 30, 1996. The Bank of New York
also serves as (i) trustee under the Mortgage, (ii) trustee for the holders of
several issues of pollution control bonds issued on behalf of the Company, (iii)
trustee under the Company's Indenture relating to subordinated Debt Securities
(see below), (iv) investment manager for the Company's nonunion post-retirement
medical fund, and (v) custodian of international fixed-income assets for the
Company's pension plan.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities may be issued in one or more new series under an
Indenture between the Company and (i) The Bank of New York, in the case of
subordinated Debt Securities, and (ii) The Chase Manhattan Bank, in the case of
senior Debt Securities, or any other trustees to be named, as Trustee (each, a
"Trustee"). The following summary does not purport to be complete and is subject
in all respects to the provisions of, and is qualified in its entirety by
reference to, the Indentures pursuant to which the subordinated and senior Debt
Securities are to be issued and to the Debt Securities, the forms of which are
filed, or will be filed, as exhibits to the registration statement of which this
Prospectus forms a part. Whenever particular provisions or defined terms in such
documents are referred to herein or in a Prospectus Supplement, such provisions
or terms are incorporated by reference herein or therein, as the case may be.
The Debt Securities will be unsecured obligations of the Company. Separate
Indentures will be used for senior Debt Securities and subordinated Debt
Securities, respectively, although the description of the Indenture herein,
except as specifically stated otherwise, applies to both Indentures.
Reference is made to the Prospectus Supplement relating to any particular
issue of Offered Debt Securities for the following terms: (1) the title of such
Debt Securities; (2) any limit on the aggregate principal amount of such Debt
Securities or the series of which they are a part; (3) the date or dates on
which the principal of any of such Debt Securities will be payable; (4) the rate
or rates at which any of such Debt Securities will bear interest, if any, the
date or dates from which any such interest will accrue, the Interest Payment
Dates on which any such interest will be payable and the Regular Record Date for
any such interest payable on any Interest Payment Date; (5) the place or places
where the principal of and any premium and interest on any of such Debt
Securities will be payable; (6) the period or periods within which, the price or
prices at which and the terms and conditions on which any of such Debt
Securities may be redeemed, in whole or in part, at the option of the Company;
(7) the obligation, if any, of the Company to redeem or purchase any of such
Debt Securities pursuant to any sinking fund or analogous provision or at the
option of the Holder thereof, and the period or periods within which, the price
or prices at which and the terms and conditions on which any of such Debt
Securities will be redeemed or purchased, in whole or in part, pursuant to any
such obligation; (8) the denominations in which any of such Debt Securities will
be issuable, if other than denominations of $1,000 and any integral multiple
thereof; (9) if the amount of principal of or any premium or interest on any of
such Debt Securities may be determined with reference to an index or pursuant to
a formula, the manner in which such amounts will be determined; (10) if other
than the currency of the United States of America, the currency, currencies, or
currency units in which the principal of or any premium or interest on any of
such Debt Securities will be payable and the manner of determining the
equivalent thereof in the currency of the United States of America for any
purpose, including for purposes of determining the principal amount deemed to be
Outstanding at any time; (11) if the principal of or any premium or interest on
any of such Debt Securities is to be payable, at the election of the Company or
the Holder thereof, in one or more currencies, or currency units other than
those in which such Debt Securities are stated to be payable, the currency,
currencies or currency units in which payment of any such amount as to which
such election is made will be payable, the periods within which and the terms
and conditions upon which such election is to be made and the amount so payable
(or the manner in which such amount is to be determined); (12) if other than the
entire principal amount thereof, the portion of the principal amount of any of
such Debt Securities which will be payable upon declaration of acceleration of
the Maturity thereof; (13) if the principal amount payable at the Stated
Maturity of any of such Debt Securities will not be determinable as of any one
or more dates prior to the Stated Maturity, the amount which will be deemed to
be such
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principal amount as of any such date for any purpose, including the principal
amount thereof which will be due and payable upon any Maturity other than the
Stated Maturity or which will be deemed to be Outstanding as of any such date
(or, in any such case, the manner in which such deemed principal amount is to be
determined); (14) if applicable, that such Debt Securities, in whole or any
specified part, are defeasible pursuant to the provisions of the Indenture
described under "Description of Debt Securities -- Defeasance and Covenant
Defeasance -- Defeasance and Discharge" or "Description of Debt Securities --
Defeasance and Covenant Defeasance -- Covenant Defeasance," or under both such
captions; (15) whether any of such Debt Securities will be issuable in whole or
in part in the form of one or more Global Securities and, if so, the respective
Depositaries for such Global Securities, the form of any legend or legends to be
borne by any such Global Security in addition to or in lieu of the legend
referred to under "Description of Debt Securities -- Global Securities" and, if
different from those described under such caption, any circumstances under which
any such Global Security may be exchanged in whole or in part for Debt
Securities registered, and any transfer of such Global Security in whole or in
part may be registered, in the names of Persons other than the Depositary for
such Global Security or its nominee; (16) any addition to or change in the
Events of Default applicable to any of such Debt Securities and any change in
the right of the Trustee or the Holders to declare the principal amount of any
of such Debt Securities due and payable; (17) any addition to or change in the
covenants in the Indenture; and (18) any other terms of such Debt Securities not
inconsistent with the provisions of the Indenture. (Section 301).
Debt Securities, including Original Issue Discount Securities, may be sold at
a substantial discount below their principal amount. Certain special United
States federal income tax considerations (if any) applicable to Debt Securities
sold at an original issue discount may be described in the applicable Prospectus
Supplement. In addition, certain special United States federal income tax or
other considerations (if any) applicable to any Debt Securities which are
denominated in a currency or currency unit other than United States dollars may
be described in the applicable Prospectus Supplement.
Except as otherwise described in the Prospectus Supplement, the covenants
contained in the Indenture would not afford holders of Debt Securities
protection in the event of a highly-leveraged transaction involving the Company.
SUBORDINATION
The Indenture relating to the subordinated Debt Securities provides that,
unless otherwise provided in a supplemental indenture or a Board Resolution, the
Debt Securities will be subordinate and subject in right of payment to the prior
payment in full of all Senior Debt of the Company, whether outstanding as of the
date of the Indenture or thereafter incurred. (Section 1401). The balance of the
information under this "Subordination" heading assumes that the relevant
supplemental indenture or Board Resolution results in the corresponding series
of Debt Securities being subordinated obligations of the Company.
No payment of principal of (including redemption and sinking fund payments),
premium, if any, or interest on, the subordinated Debt Securities may be made if
any Senior Debt is not paid when due, any applicable grace period with respect
to such default has ended and such default has not been cured or waived, or if
the maturity of any Senior Debt has been accelerated because of a default.
(Section 1402). Upon any distribution of assets of the Company to creditors upon
any dissolution, winding-up, liquidation or reorganization, whether voluntary or
involuntary or in bankruptcy, insolvency, receivership or other proceedings, all
principal of, and premium, if any, and interest due or to become due on, all
Senior Debt must be paid in full before the holders of the subordinated Debt
Securities are entitled to receive or retain any payment. (Section 1403). The
rights of the holders of the subordinated Debt Securities will be subordinated
to the rights of the holders of Senior Debt to receive payments or distributions
applicable to Senior Debt until all amounts owing on the Debt Securities are
paid in full.
(Section 1404).
The term "Senior Debt" shall mean the principal of, premium, if any, interest
on and any other payment due pursuant to any of the following, whether
outstanding at the date of execution of the Indenture or thereafter incurred,
created or assumed:
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(a) all indebtedness of the Company evidenced by notes, debentures, bonds,
or other securities sold by the Company for money, including all first
mortgage bonds of the Company outstanding from time to time;
(b) all indebtedness of others of the kinds described in the preceding
clause (a) assumed by or guaranteed in any manner by the Company; and
(c) all renewals, extensions, or refundings of indebtedness of the kinds
described in any of the preceding clauses (a) and (b);
unless, in the case of any particular indebtedness, renewal, extension or
refunding, the instrument creating or evidencing the same or the assumption or
guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to or is pari passu
with the Debt Securities. (Section 101).
The Indenture does not limit the aggregate amount of Senior Debt that the
Company may issue. As of September 30, 1996, outstanding Senior Debt and
subordinated debt of the Company aggregated approximately $2.1 billion and $75
million, respectively. Any Senior Notes issued by the Company would constitute
Senior Debt, whether before or after the Release Date. See "Description of
Senior Notes -- Security; Release Date."
FORM, EXCHANGE, AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form without coupons and, unless otherwise specified in the applicable
Prospectus Supplement, in denominations of $1,000 and any integral multiple
thereof. (Section 302).
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Securities, Debt Securities of any series will
be exchangeable for other Debt Securities of the same series, of any authorized
denomination and of like tenor and aggregate principal amount. (Section 305).
Subject to the terms of the Indenture and the limitations applicable to
Global Securities, Debt Securities may be presented for exchange as provided
above or for registration of transfer (duly endorsed or with the form of
transfer endorsed thereon duly executed) at the office of the Security Registrar
or at the office of any transfer agent designated by the Company for such
purpose. No service charge will be made for any registration of transfer or
exchange of Debt Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith. Such transfer or exchange will be effected upon the Security
Registrar or such transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in addition
to the Security Registrar) initially designated by the Company for any Debt
Securities will be named in the applicable Prospectus Supplement. (Section 305).
The Company may at any time designate additional transfer agents or rescind the
designation of any transfer agent or approve a change in the office through
which any transfer agent acts, except that the Company will be required to
maintain a transfer agent in each Place of Payment for the Debt Securities of
each series. (Section 1002).
If the Debt Securities of any series (or of any series and specified tenor)
are to be redeemed, the Company will not be required to (i) issue, register the
transfer of, or exchange any Debt Security of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption of any such
Debt Security that may be selected for redemption and ending at the close of
business on the day of such mailing or (ii) register the transfer of or exchange
any Debt Security so selected for redemption, in whole or in part, except the
unredeemed portion of any such Debt Security being redeemed in part. (Section
305).
GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in whole
or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities
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represented thereby. Each Global Security will be registered in the name of a
Depositary or a nominee thereof identified in the applicable Prospectus
Supplement, will be deposited with such Depositary or nominee or a custodian
therefor and will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof referred to below and any such other matters as
may be provided for pursuant to the Indenture.
Notwithstanding any provision of the Indenture or any Debt Security described
herein, no Global Security may be exchanged in whole or in part for Debt
Securities registered, and no transfer of a Global Security in whole or in part
may be registered, in the name of any Person other than the Depositary for such
Global Security or any nominee of such Depositary unless (i) the Depositary has
notified the Company that it is unwilling or unable to continue as Depositary
for such Global Security or has ceased to be qualified to act as such as
required by the Indenture, (ii) there shall have occurred and be continuing an
Event of Default with respect to the Debt Securities represented by such Global
Security or (iii) there shall exist such circumstances, if any, in addition to
or in lieu of those described above as may be described in the applicable
Prospectus Supplement. All securities issued in exchange for a Global Security
or any portion thereof will be registered in such names as the Depositary may
direct. (Sections 204 and 305).
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indenture. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered to
be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the Indenture.
All payments of principal of and any premium and interest on a Global Security
will be made to the Depositary or its nominee, as the case may be, as the Holder
thereof. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. These
laws may impair the ability to transfer beneficial interests in a Global
Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of Debt Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial interests
in a Global Security will be shown only on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) or any such participant (with respect
to interests of persons held by such participants on their behalf). Payments,
transfers, exchanges, and others matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by the
Depositary from time to time. None of the Company, the Trustee or any agent of
the Company or the Trustee will have any responsibility or liability for any
aspect of the Depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in a Global Security, or for
maintaining, supervising, or reviewing any records relating to such beneficial
interests.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Debt Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307).
Unless otherwise indicated in the applicable Prospectus Supplement, principal
of and any premium and interest on the Debt Securities of a particular series
will be payable at the office of such Paying Agent or Paying Agents as the
Company may designate for such purpose from time to time, except that at the
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option of the Company payment of any interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Security
Register. Unless otherwise indicated in the applicable Prospectus Supplement,
the corporate trust office of the Trustee in The City of New York will be
designated as the Company's sole Paying Agent for payments with respect to Debt
Securities of each series. Any other Paying Agents initially designated by the
Company for the Debt Securities of a particular series will be named in the
applicable Prospectus Supplement. The Company may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that
the Company will be required to maintain a Paying Agent in each Place of Payment
for the Debt Securities of a particular series. (Section 1002).
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Company, and the Holder of such
Debt Security thereafter may look only to the Company for payment thereof.
(Section 1003).
CONSOLIDATION, MERGER, AND SALE OF ASSETS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company may not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, and may not permit any Person to consolidate with or merge into the
Company or convey, transfer, or lease its properties and assets substantially as
an entirety to the Company, unless (i) the successor Person (if any) is a
corporation, partnership, trust or other entity organized and validly existing
under the laws of any domestic jurisdiction and assumes the Company's
obligations on the Debt Securities and under the Indenture, (ii) immediately
after giving effect to the transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing and (iii) certain other conditions are met.
(Section 801).
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the Indenture
with respect to Debt Securities of any series: (a) failure to pay principal of
or any premium on any Debt Security of that series when due; (b) failure to pay
any interest on any Debt Securities of that series when due, continued for 30
days; (c) failure to deposit any sinking fund payment, when due, in respect of
any Debt Security of that series; (d) failure to perform any other covenant of
the Company in the Indenture (other than a covenant included in the Indenture
solely for the benefit of a series other than that series), continued for 90
days after written notice has been given by the Trustee, or the Holders of at
least 25% in principal amount of the Outstanding Debt Securities of that series,
as provided in the Indenture; and (e) certain events in bankruptcy, insolvency
or reorganization. (Section 501).
If an Event of Default (other than an Event of Default described in clause
(e) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 25% in aggregate principal amount of the Outstanding Debt Securities of
that series by notice as provided in the Indenture may declare the principal
amount of the Debt Securities of that series (or, in the case of any Debt
Security that is an Original Issue Discount Security or the principal amount of
which is not then determinable, such portion of the principal amount of such
Debt Security, or such other amount in lieu of such principal amount, as may be
specified in the terms of such Debt Security) to be due and payable immediately.
If an Event of Default described in clause (e) above with respect to the Debt
Securities of any series at the time Outstanding shall occur, the principal
amount of all the Debt Securities of that series (or, in the case of any such
Original Issue Discount Security or other Debt Security, such specified amount)
will automatically, and without any action by the Trustee or any Holder, become
immediately due and payable. After any such acceleration, but before a judgment
or decree based on acceleration, the Holders of a majority in aggregate
principal amount of the Outstanding Debt Securities of that series may, under
certain circumstances, rescind and annul such acceleration if
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all Events of Default, other than the non-payment of accelerated principal (or
other specified amount), have been cured or waived as provided in the Indenture.
(Section 502). For information as to waiver of defaults, see "Modification and
Waiver."
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such Holders
shall have offered to the Trustee reasonable indemnity. (Section 603). Subject
to such provisions for the indemnification of the Trustee, the Holders of a
majority in principal amount of the Outstanding Debt Securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the Debt Securities of that
series. (Section 512).
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing Event
of Default with respect to the Debt Securities of that series, (ii) the Holders
of at least 25% in aggregate principal amount of the Outstanding Debt Securities
of that series have made written request, and such Holder or Holders have
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee and (iii) the Trustee has failed to institute such proceeding, and has
not received from the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of that series a direction inconsistent with such
request, within 60 days after such notice, request and offer. (Section 507).
However, such limitations do not apply to a suit instituted by a Holder of a
Debt Security for the enforcement of payment of the principal of or any premium
or interest on such Debt Security on or after the applicable due date specified
in such Debt Security. (Section 508).
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1004).
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than 66 2/3 % in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of
the principal of, or any instalment of principal of or interest on, any Debt
Security, (b) reduce the principal amount of, or any premium or interest on, any
Debt Security, (c) reduce the amount of principal of an Original Issue Discount
Security or any other Debt Security payable upon acceleration of the Maturity
thereof, (d) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security, (e) impair the right to institute
suit for the enforcement of any payment on or with respect to any Debt Security,
(f) reduce the percentage in principal amount of Outstanding Debt Securities of
any series, the consent of whose Holders is required for modification or
amendment of the Indenture, reduce the percentage in principal amount of
Outstanding Debt Securities of any series necessary for waiver of compliance
with certain provisions of the Indenture or for waiver of certain defaults or
modify such provisions with respect to modification and waiver. (Section 902).
The Holders of not less than 66 2/3 % in aggregate principal amount of the
Outstanding Debt Securities of any series may waive compliance by the Company
with certain restrictive provisions of the Indenture. (Section 1008). The
Holders of a majority in principal amount of the Outstanding Debt Securities of
any series may waive any past default under the Indenture, except a default in
the payment of principal, premium, or interest and certain covenants and
provisions of the Indenture which cannot be amended without the consent of the
Holder of each Outstanding Debt Security of such series affected. (Section 513).
22
<PAGE>
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver, or other action under the
Indenture as of any date, (i) the principal amount of an Original Issue Discount
Security that will be deemed to be Outstanding will be the amount of the
principal thereof that would be due and payable as of such date upon
acceleration of the Maturity thereof to such date, (ii) if, as of such date, the
principal amount payable at the Stated Maturity of a Debt Security is not
determinable (for example, because it is based on an index), the principal
amount of such Debt Security deemed to be Outstanding as of such date will be an
amount determined in the manner prescribed for such Debt Security and (iii) the
principal amount of a Debt Security denominated in one or more foreign
currencies or currency units that will be deemed to be Outstanding will be the
U.S. dollar equivalent, determined as of such date in the manner prescribed for
such Debt Security, of the principal amount of such Debt Security (or, in the
case of a Debt Security described in clause (i) or (ii) above, of the amount
described in such clause). Certain Debt Securities, including those for whose
payment or redemption money has been deposited or set aside in trust for the
Holders and those that have been fully defeased pursuant to Section 1302, will
not be deemed to be Outstanding. (Section 101).
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled to give or take any
direction, notice, consent, waiver, or other action under the Indenture, in the
manner and subject to the limitations provided in the Indenture. In certain
limited circumstances, the Trustee will be entitled to set a record date for
action by Holders. If a record date is set for any action to be taken by Holders
of a particular series, such action may be taken only by persons who are Holders
of Outstanding Debt Securities of that series on the record date. To be
effective, such action must be taken by Holders of the requisite principal
amount of such Debt Securities within a specified period following the record
date. For any particular record date, this period will be 180 days or such other
shorter period as may be specified by the Company (or the Trustee, if it set the
record date), and may be shortened or lengthened (but not beyond 180 days) from
time to time. (Section 104).
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of Section
1302, relating to defeasance and discharge of indebtedness, or Section 1303,
relating to defeasance of certain restrictive covenants in the Indenture,
applied to the Debt Securities of any series, or to any specified part of a
series. (Section 1301).
DEFEASANCE AND DISCHARGE. The Indenture provides that, upon the Company's
exercise of its option (if any) to have Section 1302 applied to any Debt
Securities, the Company will be discharged from all its obligations with respect
to such Debt Securities (except for certain obligations to exchange or register
the transfer of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in trust)
upon the deposit in trust for the benefit of the Holders of such Debt Securities
of money or U.S. Government Obligations, or both, which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in an amount sufficient to pay the principal of and any premium
and interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the Indenture and such Debt Securities. Such
defeasance or discharge may occur only if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the Company
has received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that Holders of such Debt Securities will not recognize gain or
loss for federal income tax purposes as a result of such deposit, defeasance,
and discharge and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge were not to occur. (Sections 1302 and 1304).
DEFEASANCE OF CERTAIN COVENANTS. The Indenture provides that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants that may be described in the applicable Prospectus Supplement, and the
occurrence of certain Events of Default, which are described above in clause (d)
(with respect to such
23
<PAGE>
restrictive covenants) under "Events of Default" and any that may be described
in the applicable Prospectus Supplement, will be deemed not to be or result in
an Event of Default and the provisions of Article Fourteen relating to
subordination (included in the Indenture relating to subordinated Debt
Securities) will cease to be effective, in each case with respect to such Debt
Securities. The Company, in order to exercise such option, will be required to
deposit, in trust for the benefit of the Holders of such Debt Securities, money
or U.S. Government Obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms, will provide
money in an amount sufficient to pay the principal of and any premium and
interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the Indenture and such Debt Securities. The Company
will also be required, among other things, to deliver to the Trustee an Opinion
of Counsel to the effect that Holders of such Debt Securities will not recognize
gain or loss for federal income tax purposes as a result of such deposit and
defeasance of certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been the
case if such deposit and defeasance were not to occur. In the event the Company
exercised this option with respect to any Debt Securities and such Debt
Securities were declared due and payable because of the occurrence of any Event
of Default, the amount of money and U.S. Government Obligations so deposited in
trust would be sufficient to pay amounts due on such Debt Securities at the time
of their respective Stated Maturities but may not be sufficient to pay amounts
due on such Debt Securities upon any acceleration resulting from such Event of
Default. In such case, the Company would remain liable for such payments.
(Sections 1303 and 1304).
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106).
TITLE
The Company, the Trustee, and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the purpose
of making payment and for all other purposes. (Section 308).
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 112).
REGARDING THE TRUSTEES
The Trustee under the Indenture relating to the subordinated Debt Securities
is The Bank of New York. The Company maintains normal banking arrangements with
The Bank of New York, which includes (i) two commitments in the aggregate
principal amount of approximately $35.7 million by The Bank of New York pursuant
to reimbursement agreements related to letters of credit issued on behalf of the
Company in connection with issuances of pollution control bonds, the proceeds of
which were made available to the Company, and (ii) a $25 million commitment by
The Bank of New York pursuant to a revolving credit agreement, $0 and $6 million
of which, respectively, were outstanding at September 30, 1996. The Bank of New
York also serves as (i) trustee under the Mortgage (see "Description of New
Bonds"), (ii) trustee for the holders of several issues of pollution control
bonds issued on behalf of the Company, (iii) trustee under the Senior Note
Indenture (see "Description of Senior Notes"), (iv) investment manager for the
Company's nonunion post-retirement medical fund and (v) custodian of
international fixed-income assets for the Company's pension plan. The Trustee
under the Indenture relating to the senior Debt Securities is The Chase
Manhattan Bank. The Company maintains normal banking arrangements with The Chase
Manhattan Bank. The Chase Manhattan Bank also (i) serves as trustee for the
holders of several series of bonds secured by, among other things, the Company's
payments under its Palo Verde Nuclear Generating Station leases (these bonds
were issued by a party unaffiliated with the Company), (ii) serves as an issuing
and paying agent with respect to the Company's commercial
24
<PAGE>
paper program, and (iii) has a commitment to lend the Company up to $55 million
under a revolving credit agreement, $14 million of which was outstanding as of
September 30, 1996. In addition, an affiliate of The Chase Manhattan Bank is the
lessor with respect to a lease with the Company relating to the sale and
leaseback of a portion of Unit 2 of the Palo Verde Nuclear Generating Station.
PLAN OF DISTRIBUTION
The Company intends to sell up to $175 million in aggregate principal amount
of the Offered Securities to or through underwriters or dealers, and may also
sell the Offered Securities directly to other purchasers or through agents, as
described in the Prospectus Supplement relating to an issue of Offered
Securities.
The distribution of the Offered Securities may be effected from time to time
in one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices.
In connection with the sale of the Offered Securities, underwriters may
receive compensation from the Company or from purchasers of Offered Securities
for whom they may act as agents in the form of discounts, concessions, or
commissions. Underwriters may sell Offered Securities to or through dealers, and
such dealers may receive compensation in the form of discounts, concessions, or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. Underwriters, dealers, and agents that participate
in the distribution of Offered Securities may be deemed to be underwriters, and
any discounts or commissions received by them from the Company and any profit on
the resale of Offered Securities by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933 (the "1933 Act"). Any
such person who may be deemed to be an underwriter will be identified, and any
such compensation received from the Company will be described, in the Prospectus
Supplement.
Under agreements which may be entered into by the Company, underwriters,
dealers, and agents who participate in the distribution of the Offered
Securities may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the 1933 Act.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference to the Company's 1995 Annual Report
on Form 10-K have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended March 31 and June 30, 1996 and 1995, which is incorporated herein by
reference, Deloitte & Touche LLP have applied limited procedures in accordance
with professional standards for a review of such information. However, as stated
in their reports included in the Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31 and June 30, 1996, and incorporated by reference
herein, they did not audit and they do not express an opinion on that interim
financial information. Accordingly, the degree of reliance on their reports on
such information should be restricted in light of the limited nature of the
review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because those reports are
not "reports" or a "part" of the registration statement prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the Act.
LEGAL OPINIONS
The validity of the Securities offered hereby will be passed upon for the
Company by Snell & Wilmer L.L.P., One Arizona Center, Phoenix, Arizona 85004,
and, it is currently anticipated, for any underwriters of Securities by Sullivan
& Cromwell, 444 South Flower Street, Los Angeles, California 90071. In giving
25
<PAGE>
their opinions, Sullivan & Cromwell and Snell & Wilmer L.L.P. may rely as to
matters of New Mexico law upon the opinion of Keleher & McLeod, P.A., 1200
Public Service Building, Albuquerque, New Mexico 87102, Sullivan & Cromwell may
rely as to all matters of Arizona law upon the opinion of Snell & Wilmer L.L.P.,
and Snell & Wilmer L.L.P. may rely as to all matters of New York law upon the
opinion of Sullivan & Cromwell.
26
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
----------
TABLE OF CONTENTS
PAGE
----
Available Information ................................................ 2
Incorporation of Certain Documents by
Reference ........................................................... 2
Selected Information ................................................. 3
The Company .......................................................... 4
Application of Proceeds .............................................. 4
Earnings Ratios ...................................................... 4
Securities ........................................................... 4
Description of New Bonds ............................................. 4
Description of Senior Notes .......................................... 9
Description of Debt Securities ....................................... 17
Plan of Distribution ................................................. 25
Experts .............................................................. 25
Legal Opinions ....................................................... 25
================================================================================
================================================================================
$175,000,000
ARIZONA PUBLIC SERVICE
COMPANY
FIRST MORTGAGE BONDS
SENIOR NOTES
DEBT SECURITIES
----------
[APS LOGO]
----------
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Securities and Exchange Commission registration fee ........ $ 7,576
Printing, engraving, and postage expenses .................. 30,000*
Legal fees ................................................. 125,000*
Accounting fees ............................................ 40,000*
Rating Agency fees ......................................... 150,000*
Trustee's fees and expenses ................................ 25,000*
Blue Sky fees and expenses ................................. 15,000*
Miscellaneous .............................................. 2,424*
--------
Total ...................................................... $330,000
========
_______________
*Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The law of Arizona permits extensive indemnification of present and former
directors, officers, employees or agents of an Arizona corporation, whether or
not authority for such indemnification is contained in the indemnifying
corporation's articles of incorporation or bylaws. Specific authority for
indemnification of present and former directors and officers, under certain
circumstances, is contained in Article Fifth of the Company's Articles of
Incorporation. In addition, Section 7.01 of the Company's bylaws provides that
the Company will indemnify present and former directors and officers to the
fullest extent permitted by Arizona law. Under Arizona law, in order for a
corporation to provide indemnification, a disinterested majority of the
corporation's board of directors, independent legal counsel, a court or the
shareholders must find that the director, officer, employee or agent acted, or
failed to act, in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reason to believe his conduct was
unlawful. Statutory indemnification is permissive, except in the event of a
successful defense, when a director, officer, employee or agent must be
indemnified against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection therewith. Indemnification is permitted with
respect to expenses, judgments, fines, and amounts paid in settlement by such
persons.
On January 1, 1996, the new Arizona Business Corporation Act (the "ABCA")
became effective. The ABCA permits extensive indemnification of present and
former directors, officers, employees, or agents of an Arizona corporation,
whether or not authority for such indemnification is contained in the
indemnifying corporation's articles of incorporation or bylaws. Under the ABCA,
in order for a corporation to provide indemnification, a majority of the
corporation's disinterested directors, independent legal counsel, or the
shareholders must find that the conduct of the individual to be indemnified was
in good faith and that the individual reasonably believed that the conduct was
in the corporation's best interests (in the case of conduct in an "official
capacity" with the corporation) or that the conduct was at least not opposed to
the corporation's best interests (in all other cases). In the case of any
criminal proceeding, the finding must be to the effect that the individual had
no reasonable cause to believe the conduct was unlawful. Indemnification is
permitted with respect to expenses, judgements, fines, and amounts paid in
settlement by such individuals.
Indemnification under the ABCA is permissive, except in the event of a
successful defense, in which case a director, officer, employee, or agent must
be indemnified against reasonable expenses, including attorneys' fees, incurred
in connection with the proceeding. In addition, the ABCA requires Arizona
corporations to indemnify any "outside director" (a director who is not an
officer, employee, or holder of five percent or more of any class of the
corporation's stock) against liability unless (i) the corporation's articles of
incorporation limit such indemnification, (ii) the outside director is adjudged
liable in a proceeding by or in the right of the corporation or in any other
proceeding charging improper personal
II-1
<PAGE>
benefit to the director, or (iii) a court determines, before payment to the
outside director, that the director failed to meet the standards of conduct
described in the preceding paragraph. A court may also order that an individual
be indemnified if the court finds that the individual is fairly and reasonably
entitled to indemnification in light of all of the relevant circumstances,
whether or not the individual has met the standards of conduct in this and the
preceding paragraph.
In connection with the offering made by the prospectus which is a part of
this registration statement, as it may be amended or supplemented, the
underwriters of the Offered Securities, pursuant to the relevant underwriting
agreement, will severally agree to indemnify and hold harmless the Company, each
of its directors, each of its officers who have signed this registration
statement, and each person, if any, who controls the Company within the meaning
of the Securities Act of 1933, as amended (the "Act"), against certain losses,
claims, damages or liabilities, including liabilities under the Act, that arise
out of or are based upon written information furnished by such underwriters to
the Company for use in this registration statement or in such prospectus.
Insurance is maintained on a regular basis (and not specifically in
connection with this offering) against liabilities arising on the part of
directors and officers out of their performance in such capacities or arising on
the part of the Company out of its foregoing indemnification provisions, subject
to certain exclusions and to the policy limits.
ITEM 16. LIST OF EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
1.1 Form of Underwriting Agreement for First Mortgage Bonds.
1.2 Form of Underwriting Agreement for Debt Securities.
1.3 Form of Distribution Agreement (to be filed as an Exhibit by means of Form 8-K).
4.1 Form(s) of Supplemental Indenture relating to New Bonds (to be filed as Exhibit(s) by means
of Form 8-K).
4.2 Specimen(s) of New Bonds (to be filed as Exhibit(s) by means of Form 8-K).
4.3 Form(s) of Supplemental Indenture relating to Offered Debt Securities (to be filed as
Exhibit(s) by means of Form 8-K).
4.4 Specimen(s) of Offered Debt Securities (to be filed as Exhibit (s) by means of Form 8-K).
4.5 Form of Indenture relating to Senior Notes.
4.6 Form(s) of Supplemental Indenture relating to Offered Senior Notes (to be filed as
Exhibit(s) by means of Form 8-K).
4.7 Specimen(s) of Offered Senior Notes (to be filed as Exhibit(s) to Form 8-K).
5.1 Opinion of Snell & Wilmer L.L.P.
12.1 Computation of Ratio of Earnings to Fixed Charges.
15.1 Letter In Lieu of Consent of Deloitte & Touche LLP Regarding Unaudited Interim Financial
Information.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Snell & Wilmer L.L.P. (included in Opinion filed as Exhibit No. 5.1).
24.1 Power of Attorney (see II-5).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New
York, as Bond Trustee under the Mortgage.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of The Bank of New York, as Trustee under the Indenture
relating to the subordinated Debt Securities.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Chase Manhattan Bank, as
Trustee under the Indenture relating to the senior Debt Securities.
25.4 Form T-1 Statement of Eligibility under Trust Indenture Act of 1939 of The Bank of New York,
as Trustee under the Indenture relating to the Senior Notes.
</TABLE>
II-2
<PAGE>
In addition to those Exhibits shown above, the Company hereby incorporates
the following Exhibits pursuant to Rule 411 of Regulation C promulgated under
the Securities Act of 1933 by reference to the filings set forth below:
<TABLE>
<CAPTION>
EXHIBIT PREVIOUSLY FILED DATE
NO. DESCRIPTION AS EXHIBIT: FILE NO. EFFECTIVE
- ------- ----------- ---------------- -------- ---------
<S> <C> <C> <C> <C>
4.8 Mortgage and Deed of Trust 4.1 to September 1992 Form 10-Q 1-4473 11-9-92
relating to Company's First Report
Mortgage Bonds, together with
forty-eight indentures
supplemental thereto.
Forty-ninth Supplemental 4.1 to 1992 Form 10-K Report 1-4473 3-30-93
Indenture.
Fiftieth Supplemental Indenture. 4.2 to 1993 Form 10-K Report 1-4473 3-30-94
Fifty-first Supplemental 4.1 to August 1, 1993 Form 8-K 1-4473 9-27-93
Indenture. Report
Fifty-second Supplemental 4.1 to September 30, 1993 Form 1-4473 11-15-93
Indenture. 10-Q Report
Fifty-third Supplemental 4.5 to Registration Statement No. 1-4473 3-1-94
Indenture. 33-61228 by means of February 23,
1994 Form 8-K Report
4.9 Indenture dated as of January 1, 4.6 to January 1, 1995 Form 8-K 1-4473 1-11-95
1995 among the Company and The Report
Bank of New York, as Trustee,
relating to subordinated Debt
Securities.
4.10 First Supplemental Indenture 4.4 to January 1, 1995 Form 8-K 1-4473 1-11-95
dated as of January 1, 1995, Report
relating to the issuance of
$75,000,000 of 10% Junior
Subordinated Deferrable
Interest Debentures,
Series A, Due 2025.
4.11 Form of Indenture relating to 4.3 to Registration Statement No. 1-4473 11-20-95
Senior Debt Securities 33-64455
4.12 Agreement of Resignation, 4.1 to September 29, 1995 Form 1-4473 10-24-95
Appointment, Acceptance, 8-K Report
and Assignment dated as of
August 18, 1995 among the
Company, Bank of America
National Trust and Savings
Association and The Bank of
New York.
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
notwithstanding the foregoing, any increase or decrease in the volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
II-3
<PAGE>
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Act, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Act, each
filing of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and controlling
persons of the registrant pursuant to the provisions referred to in Item 15 of
this Registration Statement, or otherwise, the Company has been advised that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful defense of
any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on the 1st day of
November, 1996.
ARIZONA PUBLIC SERVICE COMPANY
By O. MARK DE MICHELE
------------------------------------
(O. Mark De Michele, President and
Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated. Each person whose signature appears below hereby
authorizes O. Mark De Michele, William J. Post, Jaron B. Norberg, William J.
Hemelt, and Nancy E. Newquist and each of them, as attorneys-in-fact, to sign in
his or her name and behalf, individually and in each capacity designated below,
and to file any amendments, including post-effective amendments, to this
registration statement, and any related Rule 462(b) registration statement or
amendment thereto.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
O. MARK DE MICHELE Principal Executive Officer November 1, 1996
- ---------------------------------- and Director
(O. Mark De Michele, President
and Chief Executive Officer)
WILLIAM J. POST Director November 1, 1996
- ----------------------------------
(William J. Post,
Senior Vice President and
Chief Operating Officer)
JARON B. NORBERG Principal Accounting and November 1, 1996
- ---------------------------------- Financial Officer
(Jaron B. Norberg, and Director
Executive Vice President and
Chief Financial Officer)
MARTHA O. HESSE Director November 1, 1996
- ----------------------------------
(Martha O. Hesse)
MARIANNE M. JENNINGS Director November 1, 1996
- ----------------------------------
(Marianne M. Jennings)
ROBERT G. MATLOCK Director November 1, 1996
- ----------------------------------
(Robert G. Matlock)
</TABLE>
II-5
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
JOHN R. NORTON III Director November 1, 1996
- ----------------------------------
(John R. Norton III)
DONALD M. RILEY Director November 1, 1996
- ----------------------------------
(Donald M. Riley)
HENRY B. SARGENT Director November 1, 1996
- ----------------------------------
(Henry B. Sargent)
WILMA W. SCHWADA Director November 1, 1996
- ----------------------------------
(Wilma W. Schwada)
RICHARD SNELL Director November 1, 1996
- ----------------------------------
(Richard Snell)
DIANNE C. WALKER Director November 1, 1996
- ----------------------------------
(Dianne C. Walker)
BEN F. WILLIAMS, JR. Director November 1, 1996
- ----------------------------------
(Ben F. Williams, Jr.)
THOMAS G. WOODS, JR. Director November 1, 1996
- ----------------------------------
(Thomas G. Woods, Jr.)
II-6
<PAGE>
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
EXHIBITS TO
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
ARIZONA PUBLIC SERVICE COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
================================================================================
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
1.1 Form of Underwriting Agreement for First Mortgage Bonds.
1.2 Form of Underwriting Agreement for Debt Securities.
1.3 Form of Distribution Agreement (to be filed as an Exhibit by means of Form 8-K).
4.1 Form(s) of Supplemental Indenture relating to New Bonds (to be filed as Exhibit(s) by means
of Form 8-K).
4.2 Specimen(s) of New Bonds (to be filed as Exhibit(s) by means of Form 8-K).
4.3 Form(s) of Supplemental Indenture relating to Offered Debt Securities (to be filed as
Exhibit(s) by means of Form 8-K).
4.4 Specimen(s) of Offered Debt Securities (to be filed as Exhibit(s) by means of Form 8-K).
4.5 Form of Indenture Relating to Senior Notes.
4.6 Form of Supplemental Indenture relating to Senior Notes (to be filed as Exhibit(s) by means
of Form 8-K.)
4.7 Specimen(s) of Offered Senior Notes (to be filed as Exhibit(s) to Form 8-K).
5.1 Opinion of Snell & Wilmer L.L.P.
12.1 Computation of Ratio of Earnings to Fixed Charges.
15.1 Letter in Lieu of consent of Deloitte & Touche LLP Regarding Unaudited Interim Financial
Information.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Snell & Wilmer L.L.P. (included in Opinion filed as Exhibit No. 5.1).
24.1 Power of Attorney (see II-5).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New
York, as Bond Trustee under the Mortgage.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act
of 1939 of The Bank of New York, as Trustee under the Indenture
relating to the subordinated Debt Securities.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Chase Manhattan Bank, as
Trustee under the Indenture relating to the senior Debt Securities.
25.4 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York, as
Trustee under the Indenture relating to the Senior Notes.
</TABLE>
For a description of the Exhibits incorporated in this filing by reference
see page II-3.
Exhibit 1.1
ARIZONA PUBLIC SERVICE COMPANY
First Mortgage Bonds
UNDERWRITING AGREEMENT
----------------------
Dear Sir or Madam:
1. Introduction. Arizona Public Service Company, an Arizona corporation
(the "Company"), proposes to issue and sell from time to time up to $175,000,000
in aggregate principal amount of its First Mortgage Bonds (the "Bonds")
registered under the registration statements referred to in Section 2(a). The
Bonds will be issued under its Mortgage and Deed of Trust dated as of July 1,
1946, to The Bank of New York, as successor Trustee, as amended and supplemented
by fifty-three indentures supplemental thereto (the "Mortgage"), and as further
amended and supplemented by one or more additional Supplemental Indentures
relating to the Bonds (the "Supplemental Indentures") (the Mortgage as amended
and supplemented by such Supplemental Indentures being sometimes hereinafter
referred to as the "Indenture"). The Bonds will be issued in one or more series,
which series may vary as to interest rates, maturities, redemption provisions,
selling prices, and other terms, with all such terms for any particular issue of
the Bonds being determined at the time of sale. Particular issues of the Bonds
may be sold from time to time to one or more of the firms to whom this Agreement
is addressed, and to such other purchasers as the Company shall designate and as
shall agree in writing to comply with the terms and conditions of this
Agreement, for resale in accordance with the terms of offering determined at the
time of sale. The Bonds involved in any such offering are hereinafter referred
to as the "Purchased Bonds," the parties that agree to purchase the same are
hereinafter referred to as the "Underwriters" of such Purchased Bonds, and the
representative or representatives of the Underwriters, if any, specified in a
Terms Agreement referred to in Section 3 are hereinafter referred to as the
"Representatives."
2. Representations and Warranties of the Company. In connection with
each offering of the Purchased Bonds, the Company represents and warrants to,
and agrees with, the several Underwriters that:
<PAGE>
(a) A registration statement (No. 33-61228) relating to
$100,000,000 of the Bonds, a registration statement (No. 33-55473)
relating to $25,000,000 of the Bonds or unsecured debentures, notes, or
other evidences of indebtedness (the "Securities"), a registration
statement (No. 33-64455) relating to $25,000,000 of the Bonds or
Securities ,and a registration statement (No. 333-______) relating to
$25,000,000 of the Bonds, Securities or the Company's senior notes (the
"Senior Notes") (including a combined prospectus relating up to
$175,000,000 of the Bonds, Securities or Senior Notes) were filed with
the Securities and Exchange Commission (the "Commission") and have
become effective. Such registration statements, as each is amended at
the time of the Terms Agreement referred to in Section 3 relating to
the Purchased Bonds, are hereinafter referred to as the "First
Registration Statement," the "Second Registration Statement," the
"Third Registration Statement," and the "Fourth Registration
Statement," respectively, and, together with any related Rule 462(b)
registration statement or amendment thereto, are hereinafter referred
to collectively as the "Registration Statements," and such prospectus,
as supplemented as contemplated by Section 3 to reflect the terms of
the Purchased Bonds and terms of offering thereof, including all
material incorporated by reference therein, is hereinafter referred to
as the "Prospectus."
(b) Each part of the Registration Statements relating to the
Bonds, when such part became effective, conformed in all material
respects to the requirements of the Securities Act of 1933 (the "Act"),
the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the
rules and regulations (the "Rules and Regulations") of the Commission
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and on the date of each
Prospectus Supplement referred to in Section 3, the Registration
Statements and the Prospectus will conform in all material respects to
the requirements of the Act, the Trust Indenture Act and the Rules and
Regulations, and at such date none of such documents will include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing does not
apply to (a) statements in or omissions from any such documents based
upon written information furnished to the Company by any Underwriter
specifically for use therein or (b) that part of the Registration
Statements that consists of the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939 of The
Bank of New York, as successor Trustee under the Mortgage.
(c) An order of the Arizona Corporation Commission shall have
been granted authorizing the execution and delivery of the Supplemental
Indenture relating to the Purchased Bonds and the issuance and sale of
the Purchased Bonds on the terms and conditions herein and in the
Prospectus and the Terms Agreement referred to in Section 3 relating to
the Purchased Bonds, and the approval or consent
<PAGE>
of no other public body or authority is necessary to the execution and
delivery of such Supplemental Indenture or the validity of the issuance
and sale of the Purchased Bonds, except as may be required under state
securities or blue sky laws.
(d) Except for property specifically excepted from the lien of
the Indenture or released therefrom in accordance with the terms
thereof, the Company has good and marketable title in fee simple,
except for items described in (A), (B), and (C) below, to all of the
real property purported in the Indenture to be so held, good and valid
leasehold interests in all properties purported in the Indenture to be
held under lease, and good and valid title to all other properties
described in the Indenture as subject to the lien thereof (which
property excludes (i) the combined cycle plant referred to in Note 8 of
Notes to Financial Statements in the Company's Form 10-K Report for the
fiscal year ended December 31, 1995 (the "1995 Form 10-K Report")
incorporated by reference in the Registration Statements but includes
the Company's leasehold and related interests in that plant and (ii)
certain leased interests in Unit 2 of the Palo Verde Nuclear Generating
Station referred to in Note 7 of Notes to Financial Statements in the
1995 Form 10-K Report), except that the transmission and distribution
lines of the Company, other than those located on land owned in fee by
the Company, and the property described in Section 15 of Article IV of
the Forty-first Supplemental Indenture, have been installed in public
streets or alleys and in highways under ordinances and permits granted
by the various governmental bodies having jurisdiction, or have been
constructed on leaseholds, easements or rights-of-way granted, with
minor exceptions, by the apparent owners of record of the land and such
leases, easements, or rights-of-way are subject to any defects in or
encumbrances on the title of the respective lessors of such leases or
grantors of such easements or rights-of-way; title to the aforesaid
properties is subject only to: (A) the lien of the Mortgage, (B)
Excepted Encumbrances as defined in the Mortgage, and (C) other liens,
encumbrances or defects, none of which, individually or in the
aggregate, materially interfere with the business or operations of the
Company (with respect to leasehold interests on the Navajo Reservation,
this representation is intended and shall be understood to mean only
that the Company is the owner of the rights conferred upon it by the
leases from the Navajo Tribe relating to the sites on which the Navajo
Plant and the Four Corners Plant are located, and that while the
Company is not aware of the assertion of any claim contesting the
interest of the Navajo Tribe in the lands leased, the Company does not
give any representation with respect to the interest of the Navajo
Tribe in the lands leased or with respect to the enforceability of such
leases against the Navajo Tribe); the Mortgage, subject only as above
set forth in this clause, now constitutes, and the Mortgage and the
Supplemental Indentures theretofore executed, subject only as above set
forth in this clause, when the latter shall have been duly recorded and
filed, will constitute, together and as a single instrument, a
<PAGE>
direct and valid first mortgage lien upon said properties, which
include all of the properties of the Company (other than the classes or
items of property expressly excepted in the Mortgage); and all
properties (other than the classes or items of property expressly
excepted in the Mortgage or expressly released from the lien thereof)
acquired by the Company after the date of the Supplemental Indenture
relating to the Purchased Bonds in each county in the States of Arizona
and New Mexico in which the Mortgage and the Supplemental Indenture
shall have been duly recorded and filed (and, as to which properties,
with respect to priority only, any necessary recordation and/or filing
has been accomplished, including therein any necessary descriptions of
after-acquired real property and real property upon which
after-acquired fixtures are affixed) will, upon such acquisition,
become subject to the first mortgage lien thereof, subject, however, to
Excepted Encumbrances and to liens, if any, existing or placed thereon
at the time of the acquisition thereof by the Company and, with respect
to priority only, to liens, if any, existing prior to the time of any
necessary recordation and/or filing by the Company.
(e) The Company holds such valid franchises, certificates of
convenience and necessity, licenses, and permits as are necessary with
respect to the maintenance and operation of its property and business
as now conducted, except that (A) the Company from time to time makes
minor extensions of its system prior to the time a related franchise,
certificate, license, or permit is procured, (B) from time to time
communities already being served by the Company become incorporated and
considerable time may elapse before a franchise is procured, (C)
certain franchises may have expired prior to the renegotiation thereof,
(D) the Company may not have obtained certain permits or variances
relating to the environmental requirements described in any of its Form
10-K Report, its Form 10-Q Reports, and/or its Form 8-K Reports
incorporated by reference in the Registration Statements, (E) certain
minor defects and exceptions may exist which, individually and in the
aggregate, are not deemed material, and (F) the Company does not make
any representation regarding the geographical scope of any franchise,
certificate, license, or permit that is not specific as to its
geographical scope.
3. Purchase and Offering. The obligation of the Underwriters to
purchase, and the obligation of the Company to sell, the Purchased Bonds will be
evidenced by an exchange of facsimile transmission or other written
communications (the "Terms Agreement") at the time the Company determines to
sell the Purchased Bonds. The Terms Agreement shall specify (by incorporation by
reference or otherwise) the parties that will be Underwriters, the principal
amount to be purchased by each, the purchase price to be paid by the
Underwriters, any compensation or commissions to be paid to Underwriters, the
offering price, and the terms of the Purchased Bonds not already specified in
the Indenture, including, but not limited to, interest rates, maturity,
<PAGE>
redemption provisions, and sinking fund requirements, if any. The Terms
Agreement shall also specify (by incorporation by reference or otherwise) the
time and date of delivery and payment (the "Closing Date"), the place of
delivery and payment, and any details of the terms of offering that should be
reflected in the prospectus supplement relating to the offering of the Purchased
Bonds (the "Prospectus Supplement"). It is understood that the Underwriters will
offer the Purchased Bonds for sale as set forth in the Prospectus. The
obligations of the Underwriters to purchase the Purchased Bonds shall be several
and not joint. Except as may otherwise be set forth in the Terms Agreement, the
Purchased Bonds will be in definitive form and in such denominations and
registered in such names as the Underwriters may request.
4. Covenants of the Company. In connection with each offering of
Purchased Bonds, the Company covenants and agrees with the several Underwriters
that:
(a) The Company will advise the Underwriters or the
Representatives promptly of any proposed amendment or supplementation
of the First Registration Statement, the Second Registration Statement,
the Third Registration Statement, the Fourth Registration Statement, or
the Prospectus. The Company will also advise the Underwriters or the
Representatives of the institution by the Commission of any stop order
proceedings in respect of the First Registration Statement, the Second
Registration Statement, the Third Registration Statement, the Fourth
Registration Statement, or of any part thereof, and will use its best
efforts to prevent the issuance of any such stop order and to obtain as
soon as possible its lifting, if issued.
(b) If, at any time when a prospectus relating to the
Purchased Bonds is required to be delivered under the Act, any event
occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact, or
omit to 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, the Third Registration Statement, the Fourth Registration
Statement, or the Prospectus to comply with the Act, the Company
promptly will prepare and file with the Commission an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance.
(c) As soon as practicable, but not later than 18 months,
after the date of the Terms Agreement relating to the Purchased Bonds,
the Company will make generally available to its securityholders an
earning statement or statements (which need not be audited) covering a
period of at least 12 months beginning after the effective date of the
Fourth Registration Statement (as defined in Rule 158(c) under the
Act), which will satisfy the provisions of Section ll(a) of the Act and
the rules and regulations thereunder.
<PAGE>
(d) The Company will furnish to the Underwriters or the
Representatives such copies of the Registration Statements (including
one copy of the Fourth Registration Statement for each Representative,
or for each Underwriter if there are no Representatives, and for the
counsel for the Underwriters, which is signed and includes all
exhibits), any related preliminary prospectus supplements and the
Prospectus, including all amendments or supplements to such documents,
as may be reasonably requested.
(e) The Company will arrange or cooperate in arrangements for
the qualification of the Purchased Bonds for sale and the determination
of their eligibility for investment under the laws of such
jurisdictions as the Underwriters or the Representatives designate and
will continue such qualifications in effect so long as required for the
distribution of the Purchased Bonds, provided that the Company shall
not be required to qualify as a foreign corporation in any State, to
consent to service of process in any State other than with respect to
claims arising out of the offering or sale of the Purchased Bonds, or
to meet other requirements deemed by it to be unduly burdensome.
(f) During the period of five years after the date of the
Terms Agreement relating to the Purchased Bonds, the Company will
furnish to the Underwriters or the Representatives thereunder, and,
upon request, each of the other Underwriters, (i) as soon as
practicable after the end of each fiscal year, a balance sheet and
statements of income and retained earnings of the Company as at the end
of and for such year, all in reasonable detail and certified by
independent public accountants, and (ii) (A) as soon as practicable
after the end of each quarterly fiscal period (except for the last
quarterly fiscal period of each fiscal year), a balance sheet and
statement of income of the Company as at the end of and for such
period, all in reasonable detail and certified by a principal financial
or accounting officer of the Company, (B) as soon as available, a copy
of each report of the Company mailed by the Company to stockholders or
filed with the Commission, and (C) from time to time, such other
information concerning the Company as may reasonably be requested. So
long as the Company has active subsidiaries, such financial statements
will be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated.
(g) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, and will reimburse
the Underwriters for any reasonable expenses (including reasonable fees
and disbursements of counsel) incurred by them in connection with the
qualification of the Purchased Bonds with respect to which the Terms
Agreement relating to the Purchased Bonds has been entered for sale,
and the determination of their eligibility for investment, under the
laws of such jurisdictions as the Representatives or, if
<PAGE>
there are no Representatives, the Underwriters designate, and the
printing of memoranda relating thereto, and for any fees charged by
investment rating agencies for the rating of the Purchased Bonds.
(h) The Company will not offer or sell any of its First
Mortgage Bonds for a period beginning at the time of execution of the
Terms Agreement relating to the Purchased Bonds and ending on the
Closing Date relating thereto without prior consent of the Underwriters
or the Representatives.
5. Conditions of the Obligations of the Underwriters. The obligations
of the several Underwriters to purchase and pay for the Purchased Bonds will be
subject to the accuracy of the representations and warranties on the part of the
Company herein, to the accuracy of the statements of Company officers made
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder, and to the following additional conditions precedent:
(a) The Underwriters or the Representatives shall have
received a letter from DELOITTE & TOUCHE LLP, dated the date of the
Terms Agreement, confirming that they are independent certified public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder, and stating in effect that (i) in
their opinion the financial statements and schedules of the Company
examined by them and incorporated by reference in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Securities Exchange Act of
1934 (the "1934 Act") and the published Rules and Regulations
thereunder and (ii) on the basis of a reading of the latest available
interim financial statements of the Company, inquiries of officials of
the Company responsible for financial and accounting matters, and other
specified procedures, nothing came to their attention that caused them
to believe that (A) the unaudited financial statements incorporated by
reference, if any, in the Registration Statements do not comply as to
form in all material respects with the applicable accounting
requirements of the 1934 Act and the published Rules and Regulations
thereunder or are not stated on a basis substantially consistent with
that of the audited financial statements incorporated by reference in
the Registration Statements, (B) at the date of the most recent
available unaudited financial statements and at a specified date not
more than five days prior to the date of this Agreement, there was any
increase in the amounts of common stock, redeemable preferred stock, or
non-redeemable preferred stock of the Company or any increase,
exceeding $10,000,000, in long-term debt of the Company or, at the date
of the most recent available unaudited financial statements there was
any decrease in net assets as compared with amounts shown in the most
recent financial statements incorporated by reference in the
Registration Statements, or (C) for the twelve-month period ended at
the date of the most recent available unaudited financial statements
there were any decreases,
<PAGE>
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, the Third
Registration Statement, the Fourth Registration Statement, or any part
thereof shall have been issued and no proceedings for that purpose
shall have been instituted or, to the knowledge of the Company or the
Underwriters, shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement
relating to the Purchased Bonds, (i) there shall not have occurred any
change, or any development involving a prospective change, in or
affecting particularly the business or properties of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters under such Terms Agreement, including any Representatives,
materially impairs the investment quality of the Purchased Bonds, (ii)
there shall not have occurred a suspension or material limitation in
trading in securities generally on the New York Stock Exchange, (iii)
there shall not have occurred a general moratorium on commercial
banking activities in New York declared by either Federal or New York
State authorities, (iv) no rating of any of the Company's debt
securities shall have been lowered and there shall have been no public
announcement that any such debt securities have been placed on
CreditWatch, Watchlist, or under any similar surveillance or review, in
each case with negative implications, by any recognized rating agency,
and (v) there shall not have occurred any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority
in interest of the Underwriters under such Terms Agreement, including
any Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the sale of and payment for the Purchased
Bonds.
(d) The Underwriters or the Representatives shall have
received an opinion of Snell & Wilmer L.L.P., counsel for the Company,
dated the relevant Closing Date, to the effect that:
(i) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Arizona and has full corporate power and authority to
carry on its business as presently conducted; and the Company
is duly qualified as a
<PAGE>
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 Bonds have been duly authorized,
executed, authenticated, issued, and delivered, constitute
valid and legally binding obligations of the Company entitled
to the benefits and security provided by the Indenture (except
as the same may be limited by (a) general principles of equity
or by bankruptcy, insolvency, reorganization, arrangement,
moratorium, or other laws or equitable principles relating to
or affecting the enforcement of creditors' rights generally or
the enforcement of the security provided by the Indenture, (b)
the necessity for compliance with the statutory procedural
requirements governing the exercise of remedies by a secured
creditor, and (c) the qualification that certain waivers,
procedures, remedies, and other provisions of the Purchased
Bonds and the Indenture may be unenforceable under or limited
by the law of the State of Arizona; however, such law does not
in such counsel's opinion substantially prevent the practical
realization of the benefits intended by such documents) and
conform to the description thereof in the Prospectus;
(iii) The Indenture has been duly authorized,
executed, and delivered, has been duly qualified under the
Trust Indenture Act, and constitutes a valid and binding
instrument enforceable in accordance with its terms except as
the same may be limited by (a) general principles of equity or
by bankruptcy, insolvency, reorganization, arrangement,
moratorium, or other laws or equitable principles relating to
or affecting the enforcement of creditors' rights generally or
the enforcement of the security provided by the Indenture, (b)
the necessity for compliance with the statutory procedural
requirements governing the exercise of remedies by a secured
creditor, and (c) the qualification that certain waivers,
procedures, remedies, and other provisions of the Purchased
Bonds and the Indenture may be unenforceable under or limited
by the law of the State of Arizona; however, such law does not
in such counsel's opinion substantially prevent the practical
realization of the benefits intended by such documents;
(iv) Except for property specifically excepted from
the lien of the Indenture or released therefrom in accordance
with the terms thereof, the Company has good and marketable
title in fee simple, except for items described in (A), (B),
and (C) below, to all of the real property and fixtures
thereon purported in the Indenture to be so held and that are
both located in the State of
<PAGE>
Arizona and described in those title reports covering at least
the Saguaro, Yucca, Cholla, Ocotillo, West Phoenix, and Palo
Verde plant sites that are listed on an exhibit to such
opinion (the "Title Documents") (in giving such opinion, such
counsel may rely solely upon the Title Documents and may
assume the accuracy thereof and of the real property
descriptions contained therein and may state that no other
investigation or inquiry has been made with respect thereto),
and in giving the opinions described below with respect to any
liens, defects, and encumbrances on such title to such
personal property, such counsel may assume that the Company
has good and valid title to all of the personal property
located in the State of Arizona and described in the Indenture
as subject to the lien thereof (which property shall not
include fixtures), and such counsel may rely solely upon, and
assume the accuracy of, a search of the Uniform Commercial
Code Financing Statements filed in the records of the Arizona
Secretary of State and may assume that there are no liens or
other encumbrances on personal property (as used in the
Arizona Uniform Commercial Code) of the Company located in the
State of Arizona other than liens or other encumbrances that
have been perfected by filing with the Arizona Secretary of
State under Arizona Revised Statutes ("A.R.S.") Section
47-9401.A; such title is subject only to: (A) the lien of the
Mortgage, (B) Excepted Encumbrances as defined in the
Mortgage, and (C) other liens, encumbrances, or defects, none
of which, individually or in the aggregate, in the opinion of
such counsel, materially interfere with the business or
operations of the Company (in determining whether any such
other liens, encumbrances, or defects materially interfere
with the business or operations of the Company, such counsel
may rely solely upon a certificate of an officer or engineer
of the Company which shall be attached to such opinion and
such opinion may state that no other investigation or inquiry
with respect thereto has been made); the Mortgage, subject
only as above set forth in this clause, now constitutes, and
the Mortgage and the Supplemental Indentures theretofore
executed, subject only as above set forth in this clause, when
the latter shall have been duly recorded and filed, will
constitute, together and as a single instrument, a direct and
valid first mortgage lien upon said property; and all
properties (other than the classes or items of property
expressly excepted in the Mortgage or expressly released from
the lien thereof) acquired by the Company after the date of
the Supplemental Indenture relating to the Purchased Bonds in
each county in the State of Arizona in which the Mortgage and
the Supplemental Indenture shall have been duly recorded and
filed and, with respect to priority only, any necessary
recordation and/or filing has been accomplished (including
therein any necessary descriptions of after-acquired real
property and real property upon which after-acquired
<PAGE>
fixtures are affixed) will, upon such acquisition, become
subject to the first mortgage lien thereof, subject, however,
to Excepted Encumbrances and to liens, if any, existing or
placed thereon at the time of the acquisition thereof by the
Company and, with respect to priority only, to liens, if any,
existing prior to the time of any necessary recordation and/or
filing by the Company;
(v) The Company is the owner of the rights conferred
upon it by the leases from the Navajo Tribe relating to the
site on which the Navajo Plant is located and while such
counsel is not aware of the assertion of any claim contesting
the title of the Navajo Tribe to the lands leased, such
counsel shall not be required to express any opinion with
respect to the interest of the Navajo Tribe in the lands
leased or with respect to the enforceability of such leases
against the Navajo Tribe;
(vi) With certain exceptions, a public service
corporation is required to obtain certificates of convenience
and necessity from the Arizona Corporation Commission under
A.R.S. Section 40-281.A for construction of its lines, plant,
services, or systems, or any extensions thereof, within the
State of Arizona, and to obtain franchises or similar consents
or permits from counties and incorporated municipalities under
A.R.S. Section 40-283.A for the construction, operation, and
maintenance of transmission lines within the State of Arizona;
to the best of such counsel's knowledge after due inquiry, the
Company holds such valid franchises, certificates of
convenience and necessity, consents, and permits pursuant to
such statutory provisions as are necessary with respect to the
maintenance and operation of its property and business as now
conducted, except that (A) the Company from time to time makes
minor extensions of its system prior to the time a related
franchise, certificate, license, or permit is procured, (B)
from time to time communities already being served by the
Company become incorporated and considerable time may elapse
before a franchise is procured, (C) certain franchises may
have expired prior to the renegotiation thereof, (D) certain
minor defects and exceptions may exist which, individually and
in the aggregate, are not deemed material, and (E) such
counsel need not be required to express any opinion regarding
the geographical scope of any franchise, certificate, license,
or permit that is not specific as to its geographical scope;
(vii) The issuance and sale of the Purchased Bonds on
the terms and conditions set forth or contemplated herein and
in the Prospectus and the Terms Agreement relating to the
Purchased Bonds and the execution and delivery of the
Supplemental Indenture relating to the
<PAGE>
Purchased Bonds have been duly authorized by the Arizona
Corporation Commission, said Commission had jurisdiction in
the premises, and no further approval, authorization, or
consent of any other public board or body is necessary to the
validity of such issuance and sale of such Purchased Bonds or
the execution and delivery of such Supplemental Indenture,
except as may be required under state securities or blue sky
laws, as to which laws such counsel shall not be required to
express an opinion;
(viii) The First Registration Statement, the Second
Registration Statement, the Third Registration Statement, and
the Fourth 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, the Second Registration Statement, the
Third Registration Statement, or the Fourth Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the
Act, and each part of the Registration Statements relating to
the Bonds, when such part became effective, and the
Prospectus, as of the date of the Prospectus Supplement, and
each amendment or supplement thereto, as of their respective
effective or issue dates, complied as to form in all material
respects with the requirements of the Act, the Trust Indenture
Act, and the published Rules and Regulations; such counsel has
no reason to believe that any part of the Registration
Statements, when such part became effective, or the
Prospectus, as of the date of the Prospectus Supplement, or as
of the Closing Date, or any amendment or supplement thereto,
as of their respective effective or issue dates, or as of the
Closing Date, contained any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; the descriptions in the Registration Statements
and Prospectus of statutes, legal and governmental proceedings
and contracts, and other documents are accurate and fairly
present the information required to be shown; and to the
actual knowledge of those persons in 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
<PAGE>
(ix) This Agreement and the Terms Agreement have been
duly authorized, executed, and delivered by the Company.
In giving such opinion, (a) Snell & Wilmer L.L.P. may rely solely upon
certificates of the Company as to any factual matters upon which any such
opinions are based and may rely upon the opinion of Keleher & McLeod, P.A.,
referred to below, as to all matters governed by the laws of the State of New
Mexico, but the opinion of Snell & Wilmer L.L.P. shall state that, though they
are members of the Arizona Bar and do not hold themselves out as experts on the
laws of the State of New Mexico, they have made a study of the laws of such
State insofar as such laws are involved in the conclusions stated in their
opinion, other than such laws as relate to matters of title, and from such study
it is their opinion that such laws support such conclusions and that, in their
opinion, the Underwriters and they are justified to such extent in relying upon
the opinion of Keleher & McLeod, P.A.; and (b) the lawyer group referred to in
such opinion will mean those lawyers in the offices of Snell & Wilmer L.L.P. who
(i) have billed any time on the particular transaction to which such opinion
relates or (ii) have billed more than ten hours to any Company matter in the
twelve-month period preceding the date on which the list of such lawyers was
compiled for purposes of inquiry pursuant to such opinion.
(e) The Underwriters or the Representatives shall have
received an opinion of Keleher & McLeod, P.A., New Mexico counsel for
the Company, dated the Closing Date, to the effect that:
(i) The Company is duly qualified as a foreign
corporation to do business and is in good standing in the
State of New Mexico and has full corporate power and authority
to engage in the State of New Mexico in the business now
conducted by it therein;
(ii) The activities of the Company in the State of
New Mexico to date do not constitute it a "public utility" as
that term is defined in the relevant laws of the State of New
Mexico, and accordingly, no public utility franchises or
certificates of convenience and necessity are necessary under
New Mexico law with respect to the maintenance and operation
of the Company's property and business as now conducted in the
State of New Mexico and no approval, authorization, or consent
of the New Mexico Public 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 Bonds 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 Bonds, except as may be
required under New Mexico state securities or blue sky laws,
as to which
<PAGE>
laws such counsel shall not be required to express an opinion;
(iii) Assuming that the Company has good and valid
title to all of the personal property located in the State of
New Mexico and described in the Indenture as subject to the
lien thereof (which property shall not include fixtures)
("Personal Property"), in giving the opinions described below
with respect to any liens, defects and encumbrances on such
title to such Personal Property, such counsel may rely solely
upon, and assume the accuracy of, a search of the Uniform
Commercial Code Financing Statements filed in the records of
the New Mexico Secretary of State and may assume that there
are no liens or other encumbrances on personal property (as
used in the New Mexico Uniform Commercial Code) of the Company
located in the State of New Mexico other than liens or other
encumbrances that have been perfected by filing with the New
Mexico Secretary of State under Section 55-9-401, New Mexico
Statutes Annotated 1978; such title to such Personal Property
is subject only to: (A) the lien of the Mortgage, (B) Excepted
Encumbrances as defined in the Mortgage, and (C) other liens,
encumbrances, or defects, none of which, individually or in
the aggregate, in the opinion of such counsel, materially
interfere with the business or operations of the Company (in
determining whether any such other liens, encumbrances, or
defects materially interfere with the business or operations
of the Company, such counsel may rely solely upon a
certificate of an officer or engineer of the Company which
shall be attached to such opinion and such opinion may state
that no other investigation or inquiry with respect thereto
has been made); the Mortgage, subject only as above set forth
in this clause, now constitutes, and the Mortgage and the
Supplemental Indentures theretofore executed, subject only as
above set forth in this clause, when the latter shall have
been duly recorded and filed, will constitute, together and as
a single instrument, a direct and valid first mortgage lien
upon such Personal Property; and all properties (other than
the classes or items of property expressly excepted in the
Mortgage or expressly released from the lien thereof) acquired
by the Company after the date of the Supplemental Indenture
relating to the Purchased Bonds in each county in the State of
New Mexico in which the Mortgage and the Supplemental
Indenture shall have been duly recorded and filed and, with
respect to priority only, any necessary recordation and/or
filing has been accomplished (including therein any necessary
descriptions of after-acquired real property and real property
upon which after-acquired fixtures are affixed) will, upon
such acquisition, become subject to the first mortgage lien
thereof, subject, however, to Excepted Encumbrances and to
liens, if any, existing or placed thereon at the time of the
acquisition thereof by the Company and, with
<PAGE>
respect to priority only, to liens, if any, existing prior to
the time of any necessary recordation and/or filing by the
Company;
(iv) The Company is the owner of the rights conferred
upon it by the leases from the Navajo Tribe relating to the
site on which the Four Corners plant is located and while such
counsel is not aware of the assertion of any claim contesting
the interest of the Navajo Tribe in the lands leased, such
counsel shall not be required to express any opinion with
respect to the interest of the Navajo Tribe in the lands
leased or with respect to the enforceability of such leases
against the Navajo Tribe.
In giving such opinion, Keleher & McLeod, P.A. may rely solely upon certificates
of the Company as to any factual matters upon which any such opinions are based.
(f) The Underwriters or the Representatives shall have
received from counsel for the Underwriters such opinion or opinions,
dated the Closing Date, with respect to the incorporation of the
Company, the validity of the Purchased Bonds, the Registration
Statements, the Prospectus, and other related matters as may reasonably
be required, and the Company shall have furnished to such counsel such
documents as they request for the purpose of enabling them to pass upon
such matters. In rendering such opinion, such counsel may rely as to
the incorporation of the Company and all other matters governed by the
laws of the States of Arizona and New Mexico upon the opinions of Snell
& Wilmer L.L.P. and Keleher & McLeod, P.A., referred to above.
(g) The Underwriters or the Representatives shall have
received a certificate of the President or any Vice President and a
principal financial or accounting officer of the Company, dated the
Closing Date, in which such officers, to the best of their knowledge
after reasonable investigation, shall state that the representations
and warranties of the Company in this Agreement are true and correct,
that the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date, that no stop order suspending the effectiveness of the
First Registration Statement, the Second Registration Statement, the
Third Registration Statement, or the Fourth 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
<PAGE>
Date, which meets the requirements of subsection (a) of this Section,
except that the specified date referred to in such subsection will be a
date not more than five days prior to the Closing Date for the purposes
of this subsection.
The Company will furnish the Underwriters or the Representatives with
such conformed copies of such opinions, certificates, letters, and documents as
may be reasonably requested.
6. Indemnification. (a) The Company will indemnify and hold harmless
each Underwriter and each person, if any, who controls such Underwriter within
the meaning of the Act against any losses, claims, damages or liabilities, joint
or several, to which such Underwriter or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any part of the Registration Statements relating to the Bonds, when such part
became effective, any preliminary prospectus or preliminary prospectus
supplement, the Prospectus or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage, or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter specifically for use
therein. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statements, and each person, if any, who controls the Company
within the meaning of the Act, against any losses, claims, damages, or
liabilities to which the Company or any such director, officer, or controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any part of the Registration Statements relating to the Bonds,
when such part became effective, any preliminary prospectus or preliminary
prospectus supplement, the Prospectus or any amendment or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein
<PAGE>
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. An indemnifying party shall not be liable for any
settlement of a claim or action effected without its written consent, which
shall not unreasonably be withheld.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party for any loss, claim,
damage, liability, or action described in subsection (a) or (b) above, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above on the following basis: (l) if such
loss, claim, damage, liability, or action arises under subsection (a) above,
then (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the other from
the offering of the Bonds or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations; and (2) if such loss, claim, damage, liability, or action arises
under subsection (b) above, then in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand
<PAGE>
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities as well as any
other relevant equitable considerations. For the purposes of clause (1) above,
the relative benefits received by the Company on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriters. For the purposes of clauses (1) and (2) above, the relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). No person guilty of
fraudulent misrepresentation (within the meaning of Section ll(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
7. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Purchased Bonds pursuant to this Agreement and
the Terms Agreement and the principal amount of Purchased Bonds that such
defaulting Underwriter or Underwriters agreed but failed to purchase is ten
percent (10%) or less of the principal amount of Purchased Bonds to which such
Terms Agreement relates, the Underwriters or the Representatives may make
arrangements satisfactory to the Company for the purchase of such Purchased
Bonds by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date the nondefaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder
and under such Terms Agreement, to purchase the Purchased Bonds that such
defaulting Underwriter or Underwriters agreed but failed to purchase. If any
Underwriter or Underwriters so default and the aggregate principal amount of
Purchased Bonds with respect to which such default or defaults occur is more
than the above-described amount and arrangements satisfactory to the remaining
Underwriters and the Company for the purchase of such Purchased Bonds by other
persons are not made within thirty-six hours after such default, the Terms
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company, except as provided in Section 8. As used in this
Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
<PAGE>
8. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties, and other statements of
the Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter or the Company or any of its officers or directors or any
controlling person, and will survive delivery of and payment for the Purchased
Bonds. If any Terms Agreement is terminated pursuant to Section 7, or if for any
reason a purchase pursuant to any Terms Agreement is not consummated, the
Company shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 4 and the respective obligations of the Company and the
Underwriters pursuant to Section 6 shall remain in effect.
9. Notices. All communications hereunder relating to any offering of
Purchased Bonds will be in writing, and, if sent to the Underwriters, may be
mailed, delivered, or telecopied and confirmed to the Representative first named
in the Terms Agreement relating to such Purchased Bonds or the Underwriters at
their addresses furnished to the Company in writing for the purpose of
communications; provided, however, that any notice to an Underwriter pursuant to
Section 6 will be mailed, delivered, or telecopied and confirmed to each such
Underwriter at its own address. All communications hereunder to the Company
shall be mailed to the Company, Attention: Treasurer, at P.O. Box 53999,
Phoenix, Arizona 85072-3999, or delivered, or telecopied and confirmed to the
Company at 400 North Fifth Street, Phoenix, Arizona 85004.
10. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and such Underwriters as are named in Terms
Agreements and their respective successors and the officers and directors and
controlling persons referred to in Section 6, and no other person will have any
right or obligation hereunder.
11. Representation of Underwriters. The Representatives, if any, may
act for the several Underwriters in connection with any offering to which a
Terms Agreement may relate, and any action under this Agreement or such Terms
Agreement taken by the Representatives jointly or the Representative first named
in such Terms Agreement in such capacity will be binding upon all the
Underwriters of Purchased Bonds to which such Terms Agreement relates.
12. Execution in Counterpart. This Agreement and any Terms Agreement
may be executed in one or more counterparts, each of which shall be deemed to be
an original, but all such respective counterparts shall together constitute a
single instrument.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms.
<PAGE>
Very truly yours,
ARIZONA PUBLIC SERVICE COMPANY
By ___________________________
Treasurer
<PAGE>
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
____________________________
Exhibit 1.2
ARIZONA PUBLIC SERVICE COMPANY
Securities
UNDERWRITING AGREEMENT
----------------------
Dear Sir or Madam:
1. Introduction. Arizona Public Service Company, an Arizona
corporation (the "Company"), proposes to issue and sell from time to time up to
$175,000,000 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 Chemical Bank, as Trustee, (the "Indenture"), as amended and supplemented by
one or more Supplemental Indentures between the Company and the Trustee (each, a
"Supplemental Indenture") (the Indenture as amended and supplemented by such
Supplemental Indentures being sometimes hereinafter referred to as the
"Indenture"). The Securities will be issued in one or more series, which series
may vary as to interest rates, maturities, redemption provisions, selling
prices, and other terms, with all such terms for any particular issue of the
Securities being determined at the time of sale. Particular issues of the
Securities may be sold from time to time to one or more of the firms to whom
this Agreement is addressed, and to such other purchasers as the Company shall
designate and as shall agree in writing to comply with the terms and conditions
of this Agreement, for resale in accordance with the terms of offering
determined at the time of sale. The Securities involved in any such offering are
hereinafter referred to as the "Purchased Securities," the party or parties that
agree to purchase the same are hereinafter referred to as the "Underwriters" of
such Purchased Securities, and the representative or representatives of the
Underwriters, if any, specified in a Terms Agreement referred to in Section 3
are hereinafter referred to as the "Representatives."
2. Representations and Warranties of the Company. In
connection with each offering of the Purchased Securities, the Company
represents and warrants to, and agrees with, the Underwriters that:
<PAGE>
(a) A registration statement (No. 33-55473) relating to
$25,000,000 of the Securities, a registration statement (No. 33-61228)
relating to $100,000,000 of the Company's first mortgage bonds (the
"Bonds"), a registration statement (No. 33-64455) relating to
$25,000,000 of the Bonds or Securities and a registration statement
(No. 333-_______) relating to $25,000,000 of the Securities, Bonds or
the Company's senior notes (the "Senior Notes") (including a combined
prospectus relating to up to $175,000,000 of the Securities, Bonds or
Senior Notes) were filed with the Securities and Exchange Commission
(the "Commission") and have become effective. Such registration
statements, as each is amended at the time of the Terms Agreement
referred to in Section 3 relating to the Purchased Securities, are
hereinafter referred to as the "First Registration Statement," the
"Second Registration Statement," the "Third Registration Statement" and
the "Fourth Registration Statement," respectively, and, together with
any related Rule 462(b) registration statement or amendment thereto,
are hereinafter referred to collectively as the "Registration
Statements" and such prospectus, as supplemented as contemplated by
Section 3 to reflect the terms of the Purchased Securities and terms of
offering thereof, including all material incorporated by reference
therein, is hereinafter referred to as the "Prospectus."
(b) Each part of the Registration Statements relating to the
Securities, when such part became effective, conformed in all material
respects to the requirements of the Securities Act of 1933 (the "Act"),
the Trust Indenture Act of 1939 (the "Trust Indenture Act") and the
rules and regulations (the "Rules and Regulations") of the Commission
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and on the date of each
Prospectus Supplement referred to in Section 3, the Registration
Statements and the Prospectus will conform in all material respects to
the requirements of the Act, the Trust Indenture Act and the Rules and
Regulations, and at such date none of such documents will include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the foregoing does not
apply to (a) statements in or omissions from any such documents based
upon written information furnished to the Company by any Underwriter
specifically for use therein or (b) that part of the Registration
Statements that consists of the Statement of Eligibility and
Qualification (Form T-1) under the Trust Indenture Act of 1939 of
Chemical Bank, as Trustee under the Indenture.
(c) An order of the Arizona Corporation Commission shall have
been granted authorizing the execution and delivery of the Supplemental
Indenture relating to the Purchased Securities and the issuance and
sale of the Purchased Securities on the terms and conditions herein and
in the
<PAGE>
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 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
<PAGE>
denominations and registered in such names as the Underwriters may request.
4. Covenants of the Company. In connection with each offering
of Purchased Securities, the Company covenants and agrees with the several
Underwriters that:
(a) The Company will advise the Underwriters or the
Representatives promptly of any proposed amendment or supplementation
of the First Registration Statement, the Second Registration Statement,
the Third Registration Statement, the Fourth Registration Statement, or
the Prospectus. The Company will also advise the Underwriters or the
Representatives of the institution by the Commission of any stop order
proceedings in respect of the First Registration Statement, the Second
Registration Statement, the Third Registration Statement, the Fourth
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, the Third Registration Statement, the Fourth 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 Fourth 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 Fourth 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,
<PAGE>
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.
<PAGE>
(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 Underwriters
or the Representatives.
5. Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters to purchase and pay for the Purchased Securities
will be subject to the accuracy of the representations and warranties on the
part of the Company herein, to the accuracy of the statements of Company
officers made pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to the following additional conditions
precedent:
(a) The Underwriters or the Representatives shall have
received a letter from DELOITTE & TOUCHE LLP, dated the date of the
Terms Agreement, confirming that they are independent certified public
accountants within the meaning of the Act and the applicable published
Rules and Regulations thereunder, and stating in effect that (i) in
their opinion the financial statements and schedules of the Company
audited by them and incorporated by reference in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Securities Exchange Act of
1934 (the "1934 Act") and the published Rules and Regulations
thereunder and (ii) on the basis of a reading of the latest available
interim financial statements of the Company, inquiries of officials of
the Company responsible for financial and accounting matters, and other
specified procedures, nothing came to their attention that caused them
to believe that (A) the unaudited financial statements incorporated by
reference, if any, in the Registration Statements do not comply as to
form in all material respects with the applicable accounting
requirements of the 1934 Act and the published Rules and Regulations
thereunder or are not stated on a basis substantially consistent with
that of the audited financial statements incorporated by reference in
the Registration Statements, (B) at the date of the most recent
available unaudited financial statements and at a specified date not
more than five days prior to the date of this Agreement, there was any
increase in the amounts of common stock, redeemable preferred stock, or
non-redeemable preferred stock of the Company or any increase,
exceeding $10,000,000, in long-term debt of the Company or, at the date
of the most recent available unaudited financial statements there was
any decrease in net assets as compared with amounts shown in the most
recent financial statements incorporated by reference in the
Registration Statements, or (C) for the twelve-month period ended at
the date of the most recent available unaudited financial statements
there were any decreases, exceeding 3%, as compared with the
twelve-month period ended at the date of the most recent financial
statements incorporated by reference in the Registration Statements, in
<PAGE>
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, the Third
Registration Statement, the Fourth Registration Statement, or any part
thereof shall have been issued and no proceedings for that purpose
shall have been instituted or, to the knowledge of the Company or the
Underwriters, shall be contemplated by the Commission.
(c) Subsequent to the execution of the Terms Agreement
relating to the Purchased Securities, (i) there shall not have occurred
any change, or any development involving a prospective change, in or
affecting particularly the business or properties of the Company or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters under such Terms Agreement, including any Representatives,
materially impairs the investment quality of the Purchased Securities,
(ii) there shall not have occurred a suspension or material limitation
in trading in securities generally on the New York Stock Exchange,
(iii) there shall not have occurred a general moratorium on commercial
banking activities in New York declared by either Federal or New York
State authorities, (iv) no rating of any of the Company's debt
securities shall have been lowered and there shall have been no public
announcement that any such debt securities have been placed on
CreditWatch, Watchlist, or under any similar surveillance or review, in
each case with negative implications, by any recognized rating agency,
and (v) there shall not have occurred any outbreak or escalation of
major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority
in interest of the Underwriters under such Terms Agreement, including
any Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable
to proceed with completion of the sale of and payment for the Purchased
Securities.
(d) The Underwriters or the Representatives shall have
received an opinion of Snell & Wilmer L.L.P., counsel for the Company,
dated the relevant Closing Date, to the effect that:
(i) The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the
State of Arizona and has full corporate power and authority to
carry on its business as presently conducted; and the Company
is duly qualified as a foreign corporation to do
<PAGE>
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
<PAGE>
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, the Second
Registration Statement, the Third Registration Statement and
the Fourth 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, the Second Registration Statement, the
Third Registration Statement or the Fourth Registration
Statement has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated
<PAGE>
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) Snell & Wilmer L.L.P. may rely
solely upon certificates of the Company as to any factual matters upon
which any such opinions are based and may rely upon the opinion of
Keleher & McLeod, P.A., referred to below, as to all matters governed
by the laws of the State of New Mexico, but the opinion of Snell &
Wilmer L.L.P. shall state that, though they are members of the Arizona
Bar and do not hold themselves out as experts on the laws of the State
of New Mexico, they have made a study of the laws of such State insofar
as such laws are involved in the conclusions stated in their opinion,
and from such study it is their opinion that such laws support such
conclusions and that, in their opinion, the Underwriters and they are
justified to such extent in
<PAGE>
relying upon the opinion of Keleher & McLeod, P.A.; and (b) the lawyer
group referred to in such opinion will mean those lawyers in the
offices of Snell & Wilmer L.L.P. who (i) have billed any time on the
particular transaction to which such opinion relates or (ii) have
billed more than ten hours to any Company matter in the twelve-month
period preceding the date on which the list of such lawyers was
compiled for purposes of inquiry pursuant to such opinion.
(e) The Underwriters or the Representatives shall have
received an opinion of Keleher & McLeod, P.A., New Mexico counsel for
the Company, dated the Closing Date, to the effect that:
(i) The Company is duly qualified as a foreign
corporation to do business and is in good standing in the
State of New Mexico and has full corporate power and authority
to engage in the State of New Mexico in the business now
conducted by it therein; and
(ii) The activities of the Company in the State of New
Mexico to date do not constitute it a "public utility" as that
term is defined in the relevant laws of the State of New
Mexico, and accordingly, no public utility franchises or
certificates of convenience and necessity are necessary under
New Mexico law with respect to the maintenance and operation
of the Company's property and business as now conducted in the
State of New Mexico and no approval, authorization, or consent
of the New Mexico Public Utility Commission or any other
public board or body of the State of New Mexico is required
for the issuance and sale of the Purchased Securities on the
terms and conditions herein and in the Prospectus set forth or
contemplated or for the execution of the Supplemental
Indenture relating to the Purchased Securities, except as may
be required under New Mexico state securities or blue sky
laws, as to which laws such counsel shall not be required to
express an opinion.
In giving such opinion, Keleher & McLeod, P.A. may rely solely upon
certificates of the Company as to any factual matters upon which any
such opinions are based.
(f) The Underwriters or the Representatives shall have
received from counsel for the Underwriters such opinion or opinions,
dated the Closing Date, with respect to the incorporation of the
Company, the validity of the Purchased Securities, the Registration
Statements, the Prospectus, and other related matters as may reasonably
be required, and the Company shall have furnished to such counsel such
documents as
<PAGE>
they request for the purpose of enabling them to pass upon such
matters. In rendering such opinion, such counsel may rely as to the
incorporation of the Company and all other matters governed by the laws
of the States of Arizona and New Mexico upon the opinions of Snell &
Wilmer L.L.P. and Keleher & McLeod, P.A., referred to above.
(g) The Underwriters or the Representatives shall have
received a certificate of the President or any Vice President and a
principal financial or accounting officer of the Company, dated the
Closing Date, in which such officers, to the best of their knowledge
after reasonable investigation, shall state that the representations
and warranties of the Company in this Agreement are true and correct,
that the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date, that no stop order suspending the effectiveness of the
First Registration Statement, the Second Registration Statement, the
Third Registration Statement or the Fourth Registration Statement has
been issued and no proceedings for that purpose have been instituted or
are contemplated by the Commission, and that, subsequent to the date of
the most recent financial statements in the Prospectus, there has been
no material adverse change in the financial position or results of
operations of the Company and its subsidiaries except as set forth or
contemplated in the Prospectus or as described in such certificate.
(h) The Underwriters or the Representatives shall have
received a letter of DELOITTE & TOUCHE LLP, dated the Closing Date,
which meets the requirements of subsection (a) of this Section, except
that the specified date referred to in such subsection will be a date
not more than five days prior to the Closing Date for the purposes of
this subsection.
The Company will furnish the Underwriters or the
Representatives with such conformed copies of such opinions, certificates,
letters, and documents as may be reasonably requested.
6. Indemnification.
(a) The Company will indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter
within the meaning of the Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter or such
controlling person may become subject, under the Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any part of
the Registration Statements relating to the Securities, when such part
became effective, any preliminary prospectus or preliminary prospectus
supplement, the Prospectus, or any amendment or supplement thereto, or
arise
<PAGE>
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
<PAGE>
it may have to any indemnified party otherwise than under this Section.
In case any such action is brought against any indemnified party, and
it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, without the
consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under
this Section for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other
than reasonable costs of investigation. An indemnifying party shall not
be liable for any settlement of a claim or action effected without its
written consent, which shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party for
any loss, claim, damage, liability, or action described in subsection
(a) or (b) above, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or
(b) above on the following basis: (1) if such loss, claim, damage,
liability, or action arises under subsection (a) above, then (i) in
such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Underwriters on the
other from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant
equitable considerations; and (2) if such loss, claim, damage,
liability, or action arises under subsection (b) above, then in such
proportion as is appropriate to reflect the relative fault of the
Company on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages or liabilities as well as any other relevant equitable
considerations. For the purposes of clause (1) above, the relative
benefits received by the Company on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total
net proceeds from the offering (before deducting expenses) received by
the Company bear to the total underwriting discounts and commissions
received by the Underwriters. For the purposes of clauses (1) and (2)
above, the relative fault shall be determined by reference to, among
other things,
<PAGE>
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.
<PAGE>
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties, and other
statements of the Company or its officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of the Underwriters or the Company or any of its officers or
directors or any controlling person, and will survive delivery of and payment
for the Purchased Securities. If any Terms Agreement is terminated pursuant to
Section 7, or if for any reason a purchase pursuant to any Terms Agreement is
not consummated, the Company shall remain responsible for the expenses to be
paid or reimbursed by it pursuant to Section 4 and the respective obligations of
the Company and the Underwriters pursuant to Section 6 shall remain in effect.
9. Notices. All communications hereunder relating to any
offering of Purchased Securities will be in writing, and, if sent to the
Underwriters, may be mailed, delivered, or telecopied and confirmed to the
Representative first named in the Terms Agreement relating to such Purchased
Securities or the Underwriters at their addresses furnished to the Company in
writing for the purpose of communications; provided, however, that any notice to
an Underwriter pursuant to Section 6 will be mailed, delivered, or telecopied
and confirmed to each such Underwriter at its own address. All communications
hereunder to the Company shall be mailed to the Company, Attention: Treasurer,
at P.O. Box 53999, Phoenix, Arizona 85O72-3999, or delivered, or telecopied and
confirmed to the Company at 400 North Fifth Street, Phoenix, Arizona 85004.
10. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and the Underwriter or Underwriters as
are named in any Terms Agreement and their respective successors and the
officers and directors and controlling persons referred to in Section 6, and no
other person will have any right or obligation hereunder.
11. Representation of Underwriters. The Representatives, if
any, may act for the Underwriters in connection with any offering to which a
Terms Agreement may relate, and any action under this Agreement or such Terms
Agreement taken by the Representatives jointly or the Representative first named
in such Terms Agreement in such capacity will be binding upon the Underwriters
of Purchased Securities to which such Terms Agreement relates.
12. Execution in Counterpart. This Agreement and any Terms
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all such respective counterparts shall together
constitute a single instrument.
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between the Company and the
Underwriters in accordance with its terms.
Very truly yours,
ARIZONA PUBLIC SERVICE COMPANY
By_____________________________
Treasurer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written
By__________________________________
Exhibit 4.5
ARIZONA PUBLIC SERVICE COMPANY
TO
THE BANK OF NEW YORK
Trustee
______________
Indenture
Dated as of _____________ ___, 199__
______________
(For Senior Notes)
<PAGE>
..............................................................
Certain Sections of this Indenture relating to Sections 310 through 318,
inclusive, of the Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C> <C>
SECTION 310(a) (1) ........................................................ 709
(a) (2) ........................................................ 709
(a) (3) ........................................................ Not Applicable
(a) (4) ........................................................ Not Applicable
(b) ........................................................ 708
710
SECTION 311(a) ........................................................ 713
(b) ........................................................ 713
SECTION 312(a) ........................................................ 801
802
(b) ........................................................ 802
(c) ........................................................ 802
SECTION 313(a) ........................................................ 803
(b) ........................................................ 803
(c) ........................................................ 803
(d) ........................................................ 803
SECTION 314(a) ........................................................ 804
(a) (4) ........................................................ 101
1104
(b) ........................................................ 1105
(c) (1) ........................................................ 102
(c) (2) ........................................................ 102
(c) (3) ........................................................ Not Applicable
(d) ........................................................ 102
........................................................ 404
(e) ........................................................ 102
SECTION 315(a) ........................................................ 701
(b) ........................................................ 702
(c) ........................................................ 701
(d) ........................................................ 701
(e) ........................................................ 614
SECTION 316(a) ........................................................ 101
(a) (1)(A) ........................................................ 602
612
(a) (1)(B) ........................................................ 613
(a) (2) ........................................................ Not Applicable
(b) ........................................................ 608
(c) ........................................................ 104
SECTION 317(a) (1) ........................................................ 603
(a) (2) ........................................................ 604
(b) ........................................................ 1103
SECTION 318(a) ........................................................ 107
</TABLE>
_________________
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
----------
<TABLE>
<CAPTION>
PAGE
----
PARTIES
RECITALS OF THE COMPANY
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
<S> <C> <C>
SECTION 101. Definitions:
Act.............................................................................. 2
Affiliate........................................................................ 2
Authenticating Agent............................................................. 2
Board of Directors............................................................... 2
Board Resolution................................................................. 2
Business Day..................................................................... 2
Commission....................................................................... 2
Company.......................................................................... 2
Company Request; Company Order................................................... 2
Corporate Trust Office........................................................... 2
Corporation...................................................................... 2
Covenant Defeasance.............................................................. 3
Defaulted Interest............................................................... 3
Defeasance....................................................................... 3
Depositary....................................................................... 3
Event of Default................................................................. 3
Exchange Act..................................................................... 3
Expiration Date.................................................................. 3
Expert........................................................................... 3
First Mortgage................................................................... 3
First Mortgage Bonds............................................................. 3
Global Note...................................................................... 3
Holder........................................................................... 3
Indenture........................................................................ 3
Interest......................................................................... 3
Interest Payment Date............................................................ 3
Investment Company Act........................................................... 4
Maturity......................................................................... 4
Mortgage Trustee................................................................. 4
Notes............................................................................ 4
Note Register; Note Registrar.................................................... 4
Notice of Default................................................................ 4
Officers' Certificate............................................................ 4
Opinion of Counsel............................................................... 4
Original Issue Discount Note..................................................... 4
Outstanding...................................................................... 4
Paying Agent..................................................................... 5
Person........................................................................... 5
Place of Payment................................................................. 5
Predecessor Note................................................................. 5
Redemption Date.................................................................. 5
Redemption Price................................................................. 6
Regular Record Date.............................................................. 6
Release Date..................................................................... 6
Responsible Officer.............................................................. 6
Securities Act................................................................... 6
Senior Note First Mortgage Bonds................................................. 6
Special Record Date.............................................................. 6
Stated Maturity.................................................................. 6
Subsidiary....................................................................... 6
Trust Indenture Act.............................................................. 6
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Trustee.......................................................................... 6
U.S. Government Obligation....................................................... 7
Vice President................................................................... 7
SECTION 102. Compliance Certificates and Opinions.................................................. 7
SECTION 103. Form of Documents Delivered to Trustee................................................ 7
SECTION 104. Acts of Holders; Record Dates......................................................... 8
SECTION 105. Notices, Etc., to Trustee and Company................................................. 10
SECTION 106. Notice to Holders; Waiver............................................................. 10
SECTION 107. Conflict with Trust Indenture Act..................................................... 11
SECTION 108. Effect of Headings and Table of Contents.............................................. 11
SECTION 109. Successors and Assigns................................................................ 11
SECTION 110. Separability Clause................................................................... 11
SECTION 111. Benefits of Indenture................................................................. 11
SECTION 112. Governing Law......................................................................... 11
SECTION 113. Legal Holidays 12
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally....................................................................... 12
SECTION 202. Form of Face of Note.................................................................. 12
SECTION 203. Form of Reverse of Note............................................................... 14
SECTION 204. Form of Legend for Global Notes....................................................... 18
SECTION 205. Form of Trustee's Certificate of Authentication....................................... 19
ARTICLE THREE
THE NOTES
SECTION 301. Amount Unlimited; Issuable in Series.................................................. 19
SECTION 302. Denominations......................................................................... 22
SECTION 303. Execution, Authentication, Delivery and Dating........................................ 22
SECTION 304. Temporary Notes....................................................................... 24
SECTION 305. Registration, Registration of Transfer and Exchange................................... 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes........................................... 26
SECTION 307. Payment of Interest; Interest Rights Preserved........................................ 26
SECTION 308. Persons Deemed Owners................................................................. 27
SECTION 309. Cancellation.......................................................................... 28
SECTION 310. Computation of Interest............................................................... 28
SECTION 311. CUSIP Numbers 28
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 312. Payments on Senior Note First Mortgage Bonds.......................................... 28
ARTICLE FOUR
SENIOR NOTE FIRST MORTGAGE BONDS
SECTION 401. Acceptance of Senior Note First Mortgage Bonds........................................ 29
SECTION 402. Terms of Senior Note First Mortgage Bonds............................................. 29
SECTION 403. Senior Note First Mortgage bonds as Security for Notes................................ 29
SECTION 404. Fair Value Certificate................................................................ 30
SECTION 405. Senior Note First Mortgage Bonds Held by the Trustee.................................. 31
SECTION 406. No Transfer of Senior Note First Mortgage bonds; Exception............................ 31
SECTION 407. Delivery to the Company of all Senior Note First Mortgage bonds....................... 31
SECTION 408. Further Assurances.................................................................... 32
SECTION 409. Exchange and Surrender of Senior Note First Mortgage bonds............................ 32
ARTICLE FIVE
SATISFACTION AND DISCHARGE
SECTION 501. Satisfaction and Discharge of Indenture............................................... 33
SECTION 502. Application of Trust Money............................................................ 34
ARTICLE SIX
REMEDIES
SECTION 601. Events of Default..................................................................... 34
SECTION 602. Acceleration of Maturity; Rescission and Annulment.................................... 36
SECTION 603. Collection of Indebtedness and Suits for
Enforcement by Trustee....................................................... 37
SECTION 604. Trustee May File Proofs of Claim...................................................... 37
SECTION 605. Trustee May Enforce Claims Without Possession
of Notes..................................................................... 38
SECTION 606. Application of Money Collected........................................................ 38
SECTION 607. Limitation on Suits................................................................... 38
SECTION 608. Unconditional Right of Holders to Receive Principal,
Premium and Interest......................................................... 39
SECTION 609. Restoration of Rights and Remedies.................................................... 39
SECTION 610. Rights and Remedies Cumulative........................................................ 40
SECTION 611. Delay or Omission Not Waiver.......................................................... 40
SECTION 612. Control by Holders.................................................................... 40
SECTION 613. Waiver of Past Defaults............................................................... 40
SECTION 614. Undertaking for Costs................................................................. 41
SECTION 615. Waiver of Usury, Stay or Extension Laws............................................... 41
ARTICLE SEVEN
THE TRUSTEE
SECTION 701. Certain Duties and Responsibilities................................................... 41
SECTION 702. Notice of Defaults.................................................................... 42
SECTION 703. Certain Rights of Trustee............................................................. 42
SECTION 704. Not Responsible for Recitals or Issuance of Notes..................................... 43
SECTION 705. May Hold Notes........................................................................ 43
SECTION 706. Money Held in Trust................................................................... 43
SECTION 707. Compensation and Reimbursement........................................................ 44
SECTION 708. Conflicting Interests................................................................. 44
SECTION 709. Corporate Trustee Required; Eligibility............................................... 45
SECTION 710. Resignation and Removal; Appointment of Successor..................................... 45
SECTION 711. Acceptance of Appointment by Successor................................................ 46
SECTION 712. Merger, Conversion, Consolidation or Succession
to Business................................................................. 47
SECTION 713. Preferential Collection of Claims Against Company..................................... 48
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 714. Appointment of Authenticating Agent................................................... 48
ARTICLE EIGHT
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 801. Company to Furnish Trustee Names and Addresses
of Holders................................................................... 50
SECTION 802. Preservation of Information; Communications
to Holders................................................................... 50
SECTION 803. Reports by Trustee.................................................................... 50
SECTION 804. Reports by Company.................................................................... 51
ARTICLE NINE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 901. Company May Consolidate, Etc., Only on
Certain Terms............................................................... 51
SECTION 902. Successor Substituted................................................................. 52
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 1001. Supplemental Indentures Without Consent of Holders................................... 53
SECTION 1002. Supplemental Indentures With Consent of Holders...................................... 54
SECTION 1003. Execution of Supplemental Indentures................................................. 55
SECTION 1004. Effect of Supplemental Indentures.................................................... 55
SECTION 1005. Conformity with Trust Indenture Act.................................................. 55
SECTION 1006. Reference in Securities to Supplemental Indentures................................... 55
ARTICLE ELEVEN
COVENANTS
SECTION 1101. Payment of Principal, Premium and Interest........................................... 56
SECTION 1102. Maintenance of Office or Agency...................................................... 56
SECTION 1103. Money for Notes Payments to Be Held in Trust......................................... 56
SECTION 1104. Statement by Officers as to Default.................................................. 57
SECTION 1105. Recording, Filing, etc.; Opinions of Counsel......................................... 58
SECTION 1106. Existence............................................................................ 58
SECTION 1107. Maintenance of Properties............................................................ 59
SECTION 1108. Payment of Taxes and Other Claims.................................................... 59
SECTION 1109. Waiver of Certain Covenants.......................................................... 59
SECTION 1110. Calculation of Original Issue Discount............................................... 59
ARTICLE TWELVE
REDEMPTION OF NOTES
SECTION 1201. Applicability of Article............................................................. 60
SECTION 1202. Election to Redeem; Notice to Trustee................................................ 60
SECTION 1203. Selection by Trustee of Notes to Be Redeemed......................................... 60
SECTION 1204. Notice of Redemption................................................................. 61
SECTION 1205. Deposit of Redemption Price.......................................................... 62
SECTION 1206. Notes Payable on Redemption Date..................................................... 62
SECTION 1207. Notes Redeemed in Part............................................................... 62
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE THIRTEEN
SINKING FUNDS
<S> <C>
SECTION 1301. Applicability of Article............................................................. 63
SECTION 1302. Satisfaction of Sinking Fund Payments with Notes..................................... 63
SECTION 1303. Redemption of Notes for Sinking Fund................................................. 63
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or
Covenant Defeasance.......................................................... 64
SECTION 1402. Defeasance and Discharge............................................................. 64
SECTION 1403. Covenant Defeasance.................................................................. 65
SECTION 1404. Conditions to Defeasance or Covenant Defeasance...................................... 65
SECTION 1405. Deposited Money and U.S. Government Obligations
to Be Held in Trust; Miscellaneous Provisions................................... 67
SECTION 1406. Reinstatement........................................................................ 67
</TABLE>
TESTIMONIUM
SIGNATURES AND SEALS
ACKNOWLEDGEMENTS
<PAGE>
INDENTURE, dated as of ____________ ____, 199_, between Arizona Public
Service Company, a corporation duly organized and existing under the laws of the
State of Arizona (herein called the"Company"), having its principal office at
400 North Fifth Street, Phoenix, Arizona 85004, and The Bank of New York, a New
York banking corporation, as Trustee (herein called the"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its Senior Notes
(herein called the "Notes"), to be issued in one or more series as in this
Indenture provided.
Subject to the provisions of Section 403 hereof, the Company may issue one
or more series of Senior Note First Mortgage Bonds (as hereinafter defined) and
deliver such Senior Note First Mortgage Bonds to the Trustee to hold in trust
for the benefit of the respective Holders from time to time of the related
series of Notes, or require the Trustee to deliver to the Company for
cancellation any and all Senior Note First Mortgage Bonds held by the Trustee.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually agreed, for the benefit of all Holders of
the Notes or of series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation required or
permitted hereunder shall mean such accounting principles as are generally
accepted in the United States of America;
(4) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Indenture; and
<PAGE>
(5) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 714 to act on behalf of the Trustee to authenticate Notes of one or
more series.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or executive order to close.
"Commission" means the Securities and Exchange Commission, from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor Person shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary, an Assistant Secretary, or an Associate
Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the office of the Trustee in the City of
New York, New York at which at any particular time its corporate trust business
shall be principally administered, which office at the date hereof is located at
101 Barclay Street, New York, New York 10286.
"Corporation" means a corporation, association, company, joint-stock
company or business trust.
"Covenant Defeasance" has the meaning specified in Section 1403.
<PAGE>
"Defaulted Interest" has the meaning specified in Section 307.
"Defeasance" has the meaning specified in Section 1402.
"Depositary" means, with respect to Notes of any series issuable in whole
or in part in the form of one or more Global Notes, a clearing agency registered
under the Exchange Act that is designated to act as Depositary for such Notes as
contemplated by Section 301.
"Event of Default" has the meaning specified in Section 601.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 104.
"Expert" means any officer of the Company familiar with the terms of the
First Mortgage and this Indenture, any law firm, any investment banking firm, or
any other Person, in each case that is appointed by Company Order, is an expert
in the applicable matter, and is satisfactory in the reasonable judgment of the
Trustee.
"First Mortgage" means the Mortgage and Deed of Trust, dated as of July 1,
1946, from the Company to The Bank of New York, as successor trustee to Bank of
America National Trust and Savings Association, as supplemented and amended from
time to time.
"First Mortgage Bonds" means all first mortgage bonds issued by the
Company and outstanding under the First Mortgage, other than Senior Note First
Mortgage Bonds.
"Global Note" means a Note that evidences all or part of the Notes of any
series and bears the legend set forth in Section 204 (or such legend as may be
specified as contemplated by Section 301 for such Notes).
"Holder" means a Person in whose name a Note is registered in the Note
Register.
"Indenture" means this instrument as originally executed and as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively. The term "Indenture" shall also include the terms of particular
series of Notes established as contemplated by Section 301.
"independent," when applied to any accountant, appraiser or other Expert,
shall mean such a Person who is in fact independent, selected by the Company and
approved by the Trustee in the exercise of reasonable care.
"Interest", when used with respect to an Original Issue Discount Note
which by its terms bears interest only after Maturity, means interest payable
after Maturity.
"Interest Payment Date", when used with respect to any Note, means the
Stated Maturity of an instalment of interest on such Note.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
<PAGE>
"Maturity", when used with respect to any Note, means the date on which
the principal of such Note or an instalment of principal becomes due and payable
as therein or herein provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption or otherwise.
"Mortgage Trustee" means the Person serving as trustee at the time under
the First Mortgage.
"Notes" has the meaning stated in the first recital of this Indenture and
more particularly means any Notes authenticated and delivered under this
Indenture.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 305.
"Notice of Default" means a written notice of the kind specified in
Section 601(4).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or a Vice President, and by
the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary,
of the Company, and delivered to the Trustee. One of the officers signing an
Officers' Certificate given pursuant to Section 1104 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, or other counsel who shall be acceptable to the
Trustee.
"Original Issue Discount Note" means any Note which provides for an amount
less than the principal amount thereof to be due and payable upon a declaration
of acceleration of the Maturity thereof pursuant to Section 602.
"Outstanding", when used with respect to Notes, means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(1) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(2) Notes for whose payment or redemption money in the necessary amount
has been theretofore deposited with the Trustee or any Paying Agent (other
than the Company) in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying Agent) for the Holders of
such Notes; provided that, if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(3) Notes as to which Defeasance has been effected pursuant to Section
1402; and
(4) Notes which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Notes have been authenticated and delivered
pursuant to this Indenture, other than any such Notes in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Notes are held by a bona fide purchaser in whose hands such Notes are
valid obligations of the Company;
<PAGE>
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given, made or taken any request,
demand, authorization, direction, notice, consent, waiver or other action
hereunder as of any date, (A) the principal amount of an Original Issue Discount
Note which shall be deemed to be Outstanding shall be the amount of the
principal thereof which would be due and payable as of such date upon
acceleration of the Maturity thereof to such date pursuant to Section 602, (B)
if, as of such date, the principal amount payable at the Stated Maturity of a
Note is not determinable, the principal amount of such Note which shall be
deemed to be Outstanding shall be the amount as specified or determined as
contemplated by Section 301, (C) the principal amount of a Note denominated in
one or more foreign currencies or currency units which shall be deemed to be
Outstanding shall be the U.S. dollar equivalent, determined as of such date in
the manner provided as contemplated by Section 301, of the principal amount of
such Note (or, in the case of a Note described in Clause (A) or (B) above, of
the amount determined as provided in such Clause), and (D) Notes owned by the
Company or any other obligor upon the Notes or any Affiliate of the Company or
of such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent, waiver
or other action, only Notes which the Trustee actually knows to be so owned
shall be so disregarded. Notes so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Notes and that
the pledgee is not the Company or any other obligor upon the Notes or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of or any premium or interest on any Notes on behalf of the Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment", when used with respect to the Notes of any series,
means the place or places where the principal of and any premium and interest on
the Notes of that series are payable as specified as contemplated by Section
301.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same
debt as the mutilated, destroyed, lost or stolen Note.
"Redemption Date", when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Notes of any series means the date specified for that purpose as
contemplated by Section 301.
<PAGE>
"Release Date" means the date as of which all First Mortgage Bonds have
been retired through payment, redemption, or otherwise at, before or after the
maturity thereof.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any senior trust officer, any trust officer or assistant
trust officer, the controller or any assistant controller or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Securities Act" means the Securities Act of 1933 and any statute successor
thereto, in each case as amended from time to time.
"Senior Note First Mortgage Bonds" shall mean any bonds issued by the
Company under the First Mortgage and delivered to the Trustee pursuant to
Section 401 hereof.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Note or any instalment of
principal thereof or interest thereon, means the date specified in such Note as
the fixed date on which the principal of such Note or such instalment of
principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries.
For the purposes of this definition, "voting stock" means stock which ordinarily
has voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Notes of any
series shall mean the Trustee with respect to Notes of that series.
"U.S. Government Obligation" has the meaning specified in Section 1404.
<PAGE>
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include,
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable
<PAGE>
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Indenture to be given, made or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 701) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustee deems sufficient.
The ownership of Notes shall be proved by the Note Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Note shall bind every future Holder of the same
Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Notes of any series entitled to give,
make or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given, made
or taken by Holders of Notes of such series, provided that the Company may not
set a record date for, and the provisions of this paragraph shall not apply with
respect to, the giving or making of any notice, declaration, request or
direction referred to in the next paragraph. If any record date is set pursuant
to this paragraph, the Holders of Outstanding Notes of the relevant series on
such record date, and no other Holders, shall be entitled to take or revoke the
relevant action, whether or not such Holders remain Holders after such record
date; provided that no such action shall be effective
<PAGE>
hereunder unless taken on or prior to the applicable Expiration Date by Holders
of the requisite principal amount of Outstanding Notes of such series on such
record date. Nothing in this paragraph shall be construed to prevent the Company
from setting a new record date for any action for which a record date has
previously been set pursuant to this paragraph (whereupon the record date
previously set shall automatically and with no action by any Person be cancelled
and of no effect), and nothing in this paragraph shall be construed to render
ineffective any action taken by Holders of the requisite principal amount of
Outstanding Notes of the relevant series on the date such action is taken.
Promptly after any record date is set pursuant to this paragraph, the Company,
at its own expense, shall cause notice of such record date, the proposed action
by Holders and the applicable Expiration Date to be given to the Trustee in
writing and to each Holder of Notes of the relevant series in the manner set
forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Notes of any series entitled to join in
the giving or making of (i) any Notice of Default, (ii) any declaration of
acceleration referred to in Section 602, (iii) any request to institute
proceedings referred to in Section 607(2) or (iv) any direction referred to in
Section 612, in each case with respect to Notes of such series. If any record
date is set pursuant to this paragraph, the Holders of Outstanding Notes of such
series on such record date, and no other Holders, shall be entitled to join in
such notice, declaration, request or direction or to revoke the same, whether or
not such Holders remain Holders after such record date; provided that no such
action shall be effective hereunder unless taken on or prior to the applicable
Expiration Date by Holders of the requisite principal amount of Outstanding
Notes of such series on such record date. Nothing in this paragraph shall be
construed to prevent the Trustee from setting a new record date for any action
for which a record date has previously been set pursuant to this paragraph
(whereupon the record date previously set shall automatically and with no action
by any Person be cancelled and of no effect), and nothing in this paragraph
shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of Outstanding Notes of the relevant series on the
date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Trustee, at the Company's expense, shall cause notice of
such record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Company in writing and to each Holder of Notes of the
relevant series in the manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the party
hereto which sets such record dates may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day; provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Notes of the relevant series in the manner set forth in
Section 106, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Note may do so with regard to all
or any part of the principal
<PAGE>
amount of such Note or by one or more duly appointed agents each of which may do
so pursuant to such appointment with regard to all or any part of such principal
amount.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trustee
Administration, or
(2) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to
it at the address of its principal office specified in the first paragraph of
this instrument or at any other address previously furnished in writing to
the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Note Register, not later than
the latest date (if any), and not earlier than the earliest date (if any),
prescribed for the giving of such notice. In any case where notice to Holders is
given by mail, neither the failure to mail such notice, nor any defect in any
notice so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver shall be
the equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, then
such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act which is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
which may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
<PAGE>
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Notes, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder and
the Holders, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
SECTION 112. Governing Law.
This Indenture and the Notes shall be governed by and construed in
accordance with the law of the State of New York, without regard to conflicts of
laws principles thereof.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Note shall not be a Business Day at any Place of Payment, then
(notwithstanding any other provision of this Indenture or of the Notes (other
than a provision of any Note which specifically states that such provision shall
apply in lieu of this Section)) payment of interest or principal (and premium,
if any) need not be made at such Place of Payment on such date, but may be made
on the next succeeding Business Day at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity.
ARTICLE TWO
NOTE FORMS
<PAGE>
SECTION 201. Forms Generally.
The Notes of each series shall be in substantially the form set forth in
this Article, or in such other form as shall be established by or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
or Depositary therefor or as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution thereof. If the
form of Notes of any series is established by action taken pursuant to a Board
Resolution, a copy of an appropriate record of such action shall be certified by
the Secretary or an Assistant Secretary of the Company and delivered to the
Trustee at or prior to the delivery of the Company Order contemplated by Section
303 for the authentication and delivery of such Notes.
The definitive Notes shall be printed, lithographed or engraved on steel
engraved borders or may be produced in any other manner, all as determined by
the officers executing such Notes, as evidenced by their execution of such
Notes.
SECTION 202. Form of Face of Note.
[Insert any legend required by the Internal Revenue Code and the
regulations thereunder.]
ARIZONA PUBLIC SERVICE COMPANY
..............................
No. ......... $ ........
CUSIP No._________
Arizona Public Service Company, a corporation duly organized and existing
under the laws of Arizona (herein called the "Company", which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to ........................................, or
registered assigns, the principal sum of ............................ Dollars on
................................................. [if the Note is to bear
interest prior to Maturity, insert__, and to pay interest thereon from
............. or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on ............ and
............ in each year, commencing ........., at the rate of ....% per annum,
until the principal hereof is paid or made available for payment [if applicable,
insert__, provided that any principal and premium, and any such instalment of
interest, which is overdue shall bear interest at the rate of ...% per annum (to
the extent that the payment of such interest shall be legally enforceable), from
the dates such amounts are due until they are paid or made available for
payment, and such interest shall be payable on demand]. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered at the close of business on the
Regular Record Date for such interest, which shall be the ....... or .......
(whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Any such interest not so punctually paid or duly
<PAGE>
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either be paid to the Person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Notes of this series not
less than 10 days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes of this series may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture].
[If the Note is not to bear interest prior to Maturity, insert__ The principal
of this Note shall not bear interest except in the case of a default in payment
of principal upon acceleration, upon redemption or at Stated Maturity and in
such case the overdue principal and any overdue premium shall bear interest at
the rate of ....% per annum (to the extent that the payment of such interest
shall be legally enforceable), from the dates such amounts are due until they
are paid or made available for payment. Interest on any overdue principal or
premium shall be payable on demand. Any such interest on overdue principal or
premium which is not paid on demand shall bear interest at the rate of ......%
per annum (to the extent that the payment of such interest on interest shall be
legally enforceable), from the date of such demand until the amount so demanded
is paid or made available for payment. Interest on any overdue interest shall be
payable on demand.]
Payment of the principal of (and premium, if any) and [if applicable,
insert__ any such] interest on this Note will be made at the office or agency of
the Company maintained for that purpose in ............, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts [if applicable, insert__ ;
provided, however, that at the option of the Company payment of interest may be
made by check mailed to the address of the Person entitled thereto as such
address shall appear in the Note Register].
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
<PAGE>
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
ARIZONA PUBLIC SERVICE COMPANY
By.......................
Attest:
....................
SECTION 203. Form of Reverse of Note.
This Note is one of a duly authorized issue of securities of the Company
(herein called the "Notes"), issued and to be issued in one or more series under
an Indenture, dated as of ______________ ___, 199__ (herein called the
"Indenture", which term shall have the meaning assigned to it in such
instrument), between the Company and The Bank of New York, as Trustee (herein
called the "Trustee", which term includes any successor trustee under the
Indenture), and reference is hereby made to the Indenture for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Notes and of the terms upon
which the Notes are, and are to be, authenticated and delivered. This Note is
one of the series designated on the face hereof [if applicable, insert__,
limited in aggregate principal amount to $...........].
[If the Note is issued before the Release Date, insert __ Prior to the
Release Date (as hereinafter defined), this Note will be secured by first
mortgage bonds (the "Senior Note First Mortgage Bonds") delivered by the Company
to the Trustee for the benefit of the Holders of the series of Notes of which
this Note is a part, issued under the Mortgage and Deed of Trust, dated as of
July 1, 1946, from the Company to The Bank of New York, as successor trustee
(the "Mortgage Trustee"), as supplemented and amended (the "First Mortgage").
Reference is made to the First Mortgage for a description of property mortgaged
and pledged, the nature and extent of the security, the rights of the holders of
the first mortgage bonds under the First Mortgage and of the Mortgage Trustee in
respect thereof, the duties and immunities of the Mortgage Trustee and the terms
and conditions upon which the Senior Note First Mortgage Bonds are secured and
the circumstances under which additional first mortgage bonds may be issued.
FROM AND AFTER SUCH TIME AS ALL FIRST MORTGAGE BONDS (OTHER THAN SENIOR NOTE
FIRST MORTGAGE BONDS) ISSUED UNDER THE FIRST MORTGAGE HAVE BEEN RETIRED THROUGH
PAYMENT, REDEMPTION OR OTHERWISE AT, BEFORE OR AFTER THE MATURITY THEREOF (THE
"RELEASE DATE"), THE SENIOR NOTE FIRST MORTGAGE BONDS SHALL CEASE TO SECURE THE
NOTES IN ANY MANNER.]
<PAGE>
[If applicable, insert__ The Notes of this series are subject to
redemption upon not less than 30 days' notice by mail, [if applicable, insert__
(1) on ........... in any year commencing with the year ...... and ending with
the year ...... through operation of the sinking fund for this series at a
Redemption Price equal to 100% of the principal amount, and (2)] at any time [if
applicable, insert__ on or after .........., 19..], as a whole or in part, at
the election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [if applicable, insert__ on or
before ..............., ...%, and if redeemed] during the 12-month period
beginning ............. of the years indicated,
Year Year
- ---- Redemption ---- Redemption
Price Price
----- -----
and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption [if applicable, insert__ (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Notes, or
one or more Predecessor Notes, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[If applicable, insert__ The Notes of this series are subject to
redemption upon not less than 30 days' notice by mail, (1) on ............ in
any year commencing with the year .... and ending with the year .... through
operation of the sinking fund for this series at the Redemption Prices for
redemption through operation of the sinking fund (expressed as percentages of
the principal amount) set forth in the table below, and (2) at any time [if
applicable, insert__ on or after ............], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period
beginning ............ of the years indicated,
Year Redemption Price Redemption Price For
- ---- For Redemption Redemption Otherwise
Through Operation Than Through Operation
of the of the Sinking Fund
Sinking Fund -------------------
------------
<PAGE>
and thereafter at a Redemption Price equal to .....% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Notes, or one or more Predecessor
Notes, of record at the close of business on the relevant Record Dates referred
to on the face hereof, all as provided in the Indenture.]
[If applicable, insert__ Notwithstanding the foregoing, the Company may
not, prior to ............., redeem any Notes of this series as contemplated by
[if applicable, insert__ Clause (2) of] the preceding paragraph as a part of, or
in anticipation of, any refunding operation by the application, directly or
indirectly, of moneys borrowed having an interest cost to the Company
(calculated in accordance with generally accepted financial practice) of less
than .....% per annum.]
[If applicable, insert__ The sinking fund for this series provides for the
redemption on ............ in each year beginning with the year ....... and
ending with the year ...... of [if applicable, insert__ not less than
$.......... "mandatory sinking fund") and not more than] $......... aggregate
principal amount of Notes of this series. Notes of this series acquired or
redeemed by the Company otherwise than through [if applicable, insert__
mandatory] sinking fund payments may be credited against subsequent [if
applicable, insert__ mandatory] sinking fund payments otherwise required to be
made [if applicable, insert__ , in the inverse order in which they become due].]
[If the Note is subject to redemption of any kind, insert__ In the event
of redemption of this Note in part only, a new Note or Notes of this series and
of like tenor for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.]
[If applicable, insert__ The Indenture contains provisions for defeasance
at any time of [the entire indebtedness of this Note] [or] [certain restrictive
covenants and Events of Default with respect to this Note] [, in each case] upon
compliance with certain conditions set forth in the Indenture.]
[If the Note is not an Original Issue Discount Note, insert__ If an Event
of Default with respect to Notes of this series shall occur and be continuing,
the principal of the Notes of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.]
[If the Note is an Original Issue Discount Note, insert__ If an Event of
Default with respect to Notes of this series shall occur and be continuing, an
amount of principal of the Notes of this series may be declared due and payable
in the manner and with the effect provided in the Indenture. Such amount shall
be equal to insert formula for determining the amount. Upon payment (i) of the
amount of principal so declared due and payable and (ii) of interest on any
overdue principal, premium and interest (in each case to the extent that the
<PAGE>
payment of such interest shall be legally enforceable), all of the Company's
obligations in respect of the payment of the principal of and premium and
interest, if any, on the Notes of this series shall terminate.]
[If the Note is issued before the Release Date, insert _ If an Event of
Default shall occur and be continuing, the principal of the Notes may be
declared due and payable in the manner and with the effect provided in the
Indenture and, upon such declaration, the Trustee can demand the acceleration of
the payment of principal of the Senior Note First Mortgage Bonds as provided in
the Indenture.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes of each series to be affected
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of a majority in principal amount of the Notes at the time
Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Notes of each series at the time Outstanding, on behalf of the Holders of
all Notes of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange therefor or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note.
As provided in and subject to the provisions of the Indenture, the Holder
of this Note shall not have the right to institute any proceeding with respect
to the Indenture or for the appointment of a receiver or trustee or for any
other remedy thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with respect to the
Notes of this series, the Holders of not less than 25% in principal amount of
the Notes of this series at the time Outstanding shall have made written request
to the Trustee to institute proceedings in respect of such Event of Default as
Trustee and offered the Trustee reasonable indemnity, and the Trustee shall not
have received from the Holders of a majority in principal amount of Notes of
this series at the time Outstanding a direction inconsistent with such request,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The foregoing shall not
apply to any suit instituted by the Holder of this Note for the enforcement of
any payment of principal hereof or any premium or interest hereon on or after
the respective due dates expressed herein.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and any premium and interest
on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Company in any place where the principal of and any premium and interest on
this Note are payable, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the
<PAGE>
Note Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of this series and of
like tenor, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes of this series are issuable only in registered form without
coupons in denominations of $....... and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this series are exchangeable for a like aggregate principal amount of
Notes of this series and of like tenor of a different authorized denomination,
as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
SECTION 204. Form of Legend for Global Notes.
Unless otherwise specified as contemplated by Section 301 for the Notes
evidenced thereby, every Global Note authenticated and delivered hereunder shall
bear a legend in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.
THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO
TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
<PAGE>
SECTION 205. Form of Trustee's Certificate of Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Notes of the series designated therein referred to in
the within-mentioned Indenture.
THE BANK OF NEW YORK,
As Trustee
By........................
Authorized Signatory
ARTICLE THREE
THE NOTES
SECTION 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is unlimited.
The Notes may be issued in one or more series. There shall be established
by or pursuant to a Board Resolution and, subject to Section 303, set forth, or
determined in the manner provided, in an Officers' Certificate, or established
in one or more indentures supplemental hereto, prior to the issuance of Notes of
any series,
(1) the title of the Notes of the series (which shall distinguish the
Notes of the series from Notes of any other series);
(2) any limit upon the aggregate principal amount of the Notes of the
series which may be authenticated and delivered under this Indenture (except for
Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes of the series pursuant to Section 304,
305, 306, 1006 or 1207 and except for any Notes which, pursuant to Section 303,
are deemed never to have been authenticated and delivered hereunder);
(3) the Person to whom any interest on a Note of the series shall be
payable, if other than the Person in whose name that Note (or one or more
Predecessor Notes) is registered at the close of business on the Regular Record
Date for such interest;
(4) the date or dates on which the principal of any Notes of the series is
payable;
(5) the rate or rates at which any Notes of the series shall bear
interest, if any, the date or dates from
<PAGE>
which any such interest shall accrue, the Interest Payment Dates on which any
such interest shall be payable, the manner (if any) of determination of such
Interest Payment Dates and the Regular Record Date for any such interest payable
on any Interest Payment Date;
(6) the right, if any, to extend the interest payment periods and the
duration of such extension;
(7) the place or places where the principal of and any premium and
interest on any Notes of the series shall be payable;
(8) the period or periods within which, the price or prices at which and
the terms and conditions upon which any Notes of the series may be redeemed, in
whole or in part, at the option of the Company and, if other than by a Board
Resolution, the manner in which any election by the Company to redeem the Notes
shall be evidenced;
(9) the obligation, if any, of the Company to redeem or purchase any Notes
of the series pursuant to any sinking fund or analogous provisions or at the
option of the Holder thereof and the period or periods within which, the price
or prices at which and the terms and conditions upon which any Notes of the
series shall be redeemed or purchased, in whole or in part, pursuant to such
obligation;
(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which any Notes of the series shall be issuable;
(11) if the amount of principal of or any premium or interest on any Notes
of the series may be determined with reference to an index or pursuant to a
formula, the manner in which such amounts shall be determined;
(12) if other than the currency of the United States of America, the
currency, currencies or currency units in which the principal of or any premium
or interest on any Notes of the series shall be payable and the manner of
determining the equivalent thereof in the currency of the United States of
America for any purpose, including for purposes of the definition of
"Outstanding" in Section 101;
(13) if the principal of or any premium or interest on any Notes of the
series is to be payable, at the election of the Company or the Holder thereof,
in one or more currencies or currency units other than that or those in which
such Notes are stated to be payable, the currency, currencies or currency units
in which the principal of or any premium or interest on such Notes as to which
such election is made shall be payable, the periods within which and the terms
and conditions upon which such election is to be made and the amount so payable
(or the manner in which such amount shall be determined);
(14) if other than the entire principal amount thereof, the portion of the
principal amount of any Notes of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 602;
(15) if the principal amount payable at the Stated Maturity of any Notes
of the series will not be determinable as of any one or more dates prior to the
Stated Maturity, the amount which shall be deemed to be the principal amount of
such Notes as of any such
<PAGE>
date for any purpose thereunder or hereunder, including the principal amount
thereof which shall be due and payable upon any Maturity other than the Stated
Maturity or which shall be deemed to be Outstanding as of any date prior to the
Stated Maturity (or, in any such case, the manner in which such amount deemed to
be the principal amount shall be determined);
(16) if applicable, that the Notes of the series, in whole or any
specified part, shall be defeasible pursuant to Section 1402 or Section 1403 or
both such Sections and, if other than by a Board Resolution, the manner in which
any election by the Company to defease such Notes shall be evidenced;
(17) if applicable, that any Notes of the series shall be issuable in
whole or in part in the form of one or more Global Notes and, in such case, the
respective Depositaries for such Global Notes, the form of any legend or legends
which shall be borne by any such Global Note in addition to or in lieu of that
set forth in Section 204 and any circumstances in addition to or in lieu of
those set forth in Clause (2) of the last paragraph of Section 305 in which any
such Global Note may be exchanged in whole or in part for Notes registered, and
any transfer of such Global Note in whole or in part may be registered, in the
name or names of Persons other than the Depositary for such Global Note or a
nominee thereof;
(18) if any Notes of the series shall be issued prior to the Release Date,
the designation of the series of Senior Note First Mortgage Bonds to be
delivered to the Trustee in connection with the issuance of such series of
Notes;
(19) any addition to or change in the Events of Default which applies to
any Notes of the series and any change in the right of the Trustee or the
requisite Holders of such Notes to declare the principal amount thereof due and
payable pursuant to Section 602;
(20) any addition to or change in the covenants set forth in Article
Eleven which applies to Notes of the series; and
(21) any other terms of the series (which terms shall not be inconsistent
with the provisions of this Indenture, except as permitted by Section 1001(5)).
All Notes of any one series shall be substantially identical except as to
denomination and except as may otherwise be provided in or pursuant to the Board
Resolution referred to above and (subject to Section 303) set forth, or
determined in the manner provided, in the Officers' Certificate referred to
above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
<PAGE>
SECTION 302. Denominations.
The Notes of each series shall be issuable only in fully registered form
without coupons and only in such denominations as shall be specified as
contemplated by Section 301. In the absence of any such specified denomination
with respect to the Notes of any series, the Notes of such series shall be
issuable in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Notes shall be executed on behalf of the Company by its Chairman of
the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes of any series executed by the Company
to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Notes and, if prior to the Release Date,
Senior Note First Mortgage Bonds of a series of Senior Note First Mortgage Bonds
conforming to the requirements of Sections 401 and 402 hereof, and the Trustee
in accordance with the Company Order shall authenticate and deliver such Notes.
In authenticating such Notes, and accepting the additional responsibilities
under this Indenture in relation to such Notes, the Trustee shall be entitled to
receive, and (subject to Section 701) shall be fully protected in relying upon,
(1) if prior to the Release Date, the certificate of an Expert meeting the
requirements of Section 404(a) hereof and a series of Senior Note First Mortgage
Bonds meeting the requirements of Section 403 hereof, and (2) an Opinion of
Counsel stating,
(A) if the form of such Notes has been established by or pursuant to Board
Resolution or in a supplemental indenture as permitted by Section 201, that
such form has been duly authorized by the Company and established in
conformity with the provisions of this Indenture;
(B) if the terms of such Notes have been duly authorized by the Company
and established by or pursuant to Board Resolution or in a supplemental
indenture as permitted by Section 301, that such terms have been established
in conformity with the provisions of this Indenture;
(C) that such Notes, when authenticated and delivered by the Trustee and
issued by the Company in the manner and subject to any conditions specified
in such Opinion of Counsel, will have been duly issued under the Indenture
and will constitute valid and legally binding obligations of the Company,
entitled to the benefits provided by the Indenture, and enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and
<PAGE>
(D) if prior to the Release Date, that the Senior Note First Mortgage
Bonds of the related series of Senior Note First Mortgage Bonds being
delivered to the Trustee in connection with the issuance of such series of
Notes have been duly authorized, executed, authenticated, issued, and
delivered, constitute valid and legally binding obligations of the Company
entitled to the benefits and security provided by the First Mortgage, except
as the same may be limited by (a) general principles of equity or by
bankruptcy, insolvency, reorganization, arrangement, moratorium, or other
laws or equitable principles relating to or affecting the enforcement of
creditors' rights generally or the enforcement of the security provided by
the First Mortgage, (b) the necessity for compliance with the statutory
procedural requirements governing the exercise of remedies by a secured
creditor, and (c) the qualification that certain waivers, procedures,
remedies, and other provisions of the Senior Note First Mortgage Bonds and
the First Mortgage may be unenforceable under or limited by the law of the
State of Arizona; and that such Senior Note First Mortgage Bonds are entitled
to the benefits provided by the First Mortgage, equally and ratably, with all
First Mortgage Bonds and other Senior Note First Mortgage Bonds (if any)
outstanding thereunder, except as to sinking fund provisions; and
(E) that the Company's execution and delivery of this Indenture, such
Notes, such First Mortgage, and any such Senior Note First Mortgage Bonds
have been duly authorized by the Arizona Corporation Commission (the "ACC"),
the ACC 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 execution and delivery of this Indenture, such Notes,
such First Mortgage, and any such Senior Note First Mortgage Bonds, 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.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Notes if the issue of such Notes pursuant to this
Indenture will affect the Trustee's own rights, duties or immunities under the
Notes and this Indenture or otherwise in a manner which is not reasonably
acceptable to the Trustee.
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Notes of a series are not to be originally issued at one time,
it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the
authentication of each Note of such series if such documents are delivered at or
prior to the authentication upon original issuance of the first Note of such
series to be issued.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for herein executed by the
Trustee by manual signature of an authorized signatory, and such certificate
upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Note shall have been authenticated and delivered hereunder but
never issued and sold by the Company, and the Company shall deliver such Note to
the Trustee for cancellation as provided in Section 309, for all purposes of
this
<PAGE>
Indenture such Note shall be deemed never to have been authenticated and
delivered hereunder and shall never be entitled to the benefits of this
Indenture.
SECTION 304. Temporary Notes.
Pending the preparation of definitive Notes of any series, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as evidenced by their execution of
such Notes.
If temporary Notes of any series are issued, the Company will cause
definitive Notes of that series to be prepared without unreasonable delay. After
the preparation of definitive Notes of such series, the temporary Notes of such
series shall be exchangeable for definitive Notes of such series upon surrender
of the temporary Notes of such series at the office or agency of the Company in
a Place of Payment for that series, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Notes of any series, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor one or more definitive Notes of the same series, of any authorized
denominations and of like tenor and aggregate principal amount. Until so
exchanged, the temporary Notes of any series shall in all respects be entitled
to the same benefits under this Indenture as definitive Notes of such series and
tenor.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office or in any other
office or agency of the Company in a Place of Payment being herein sometimes
referred to as the "Note Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Trustee is hereby appointed "Note
Registrar" for the purpose of registering Notes and transfers of Notes as herein
provided.
Upon surrender for registration of transfer of any Note of a series at the
office or agency of the Company in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Notes of the
same series, of any authorized denominations and of like tenor and aggregate
principal amount.
At the option of the Holder, Notes of any series may be exchanged for
other Notes of the same series, of any authorized denominations and of like
tenor and aggregate principal amount, upon surrender of the Notes to be
exchanged at such office or agency. Whenever any Notes are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Notes which the Holder making the exchange is entitled to receive.
<PAGE>
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Note Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 304, 1006 or 1207 not involving any transfer.
If the Notes of any series (or of any series and specified tenor) are to
be redeemed, the Company shall not be required (A) to issue, register the
transfer of or exchange any Notes of that series (or of that series and
specified tenor, as the case may be) during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Notes selected for redemption and ending at the close of business on the
day of such mailing, or (B) to register the transfer of or exchange any Note so
selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part.
The provisions of Clauses (1), (2), (3) and (4) below shall apply only to
Global Notes:
(1) Each Global Note authenticated under this Indenture shall be
registered in the name of the Depositary designated for such Global Note or a
nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Note shall constitute a single Note
for all purposes of this Indenture.
(2) Notwithstanding any other provision in this Indenture, no Global Note
may be exchanged in whole or in part for Notes registered, and no transfer of
a Global Note in whole or in part may be registered, in the name of any
Person other than the Depositary for such Global Note or a nominee thereof
unless (A) such Depositary (i) has notified the Company that it is unwilling
or unable to continue as Depositary for such Global Note or (ii) has ceased
to be a clearing agency registered under the Exchange Act, (B) there shall
have occurred and be continuing an Event of Default with respect to such
Global Note or (C) there shall exist such circumstances, if any, in addition
to or in lieu of the foregoing as have been specified for this purpose as
contemplated by Section 301.
(3) Subject to Clause (2) above, any exchange of a Global Note for other
Notes may be made in whole or in part, and all Notes issued in exchange for a
Global Note or any portion thereof shall be registered in such names as the
Depositary for such Global Note shall direct.
(4) Every Note authenticated and delivered upon registration of transfer
of, or in exchange for or in lieu of, a Global Note or any portion thereof,
whether pursuant to this Section, Section 304, 306, 1006 or 1207 or
otherwise, shall be authenticated and delivered
<PAGE>
in the form of, and shall be, a Global Note, unless such Note is
registered in the name of a Person other than the Depositary for such Global
Note or a nominee thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Notes.
If any mutilated Note is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
new Note of the same series and of like tenor and principal amount and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Note and (ii) such
security or indemnity as may be required by them to save each of them and any
agent of either of them harmless, then, in the absence of notice to the Company
or the Trustee that such Note has been acquired by a bona fide purchaser, the
Company shall execute and the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Note, a new Note of the same series and of
like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or
is about to become due and payable, the Company in its discretion may, instead
of issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 301 with respect
to any series of Notes, interest on any Note which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Note (or one or more Predecessor Notes) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Note of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of
<PAGE>
having been such Holder, and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes of such series (or their
respective Predecessor Notes) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Note of such series and the date of the proposed payment, and at
the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money
when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause provided. Thereupon the
Trustee shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and,
in the name and at the expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor to be given to each Holder of Notes of such series in the manner
set forth in Section 106, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor having been so mailed, such Defaulted
Interest shall be paid to the Persons in whose names the Notes of such
series (or their respective Predecessor Notes) are registered at the close
of business on such Special Record Date and shall no longer be payable
pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Notes of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Notes may be listed,
and upon such notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment pursuant to
this Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Note.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of and any premium and (subject to
Section 307) any interest on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Company, the
<PAGE>
Trustee nor any agent of the Company or the Trustee shall be affected by notice
to the contrary.
SECTION 309. Cancellation.
All Notes surrendered for payment, redemption, registration of transfer or
exchange or for credit against any sinking fund payment shall, if surrendered to
any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by it. The Company may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and may deliver to the
Trustee (or to any other Person for delivery to the Trustee) for cancellation
any Notes previously authenticated hereunder which the Company has not issued
and sold, and all Notes so delivered shall be promptly cancelled by the Trustee.
No Notes shall be authenticated in lieu of or in exchange for any Notes
cancelled as provided in this Section, except as expressly permitted by this
Indenture. All cancelled Notes held by the Trustee shall be disposed of as
directed by a Company Order; provided, however, that the Trustee shall not be
required to destroy such cancelled Notes.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for Notes of
any series, interest on the Notes of each series shall be computed on the basis
of a 360-day year of twelve 30-day months.
SECTION 311. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 312. Payments on Senior Note First Mortgage Bonds.
Subject to Article Five hereof, all payments made by the Company to the
Trustee on a series of Senior Note First Mortgage Bonds shall be applied by the
Trustee to pay, when due, principal of, premium, if any, and interest on the
related series of Notes and, to the extent so applied, shall satisfy the
Company's obligations on such Notes. The Company shall pay to the Trustee
principal of, premium, if any, and interest on a series of Senior Note First
Mortgage Bonds in a manner and at a time that will enable the Trustee to make
payments when due, of the principal of, premium, if any, and interest on the
related series of Notes.
<PAGE>
ARTICLE FOUR
SENIOR NOTE FIRST MORTGAGE BONDS
SECTION 401. Acceptance of Senior Note First Mortgage Bonds.
At or prior to the time of issuance of a series of Notes hereunder at
any time prior to the Release Date, the Company shall deliver to the Trustee for
the benefit of the Holders of the Notes as described in Section 403 hereof, and
the Trustee shall accept therefor, Senior Note First Mortgage Bonds of a series
of Senior Note First Mortgage Bonds not theretofore delivered to the Trustee,
registered in the name of the Trustee and conforming to the requirements of
Section 402 hereof.
SECTION 402. Terms of Senior Note First Mortgage Bonds.
Each series of Senior Note First Mortgage bonds delivered to the
Trustee pursuant to Section 401 hereof shall have the same stated rate or rates
of interest (or interest calculated in the same manner), Interest Payment Dates,
Stated Maturity and redemption provisions, and shall be in the same aggregate
principal amount, as the related series of Notes being issued.
SECTION 403. Senior Note First Mortgage Bonds as Security for Notes.
Until the Release Date and subject to Article Five and Article Fourteen
hereof, Senior Note First Mortgage Bonds delivered to the Trustee, for the
benefit of the Holders of a related series of Notes, shall serve as security
for any and all obligations of the Company under such related series of Notes,
including, but not limited to (1) the full and prompt payment of the principal
and premium, if any, on such Notes when and as the same shall become due and
payable in accordance with the terms and provisions of this Indenture or the
Notes either at the Stated Maturity thereof, upon acceleration of the maturity
thereof or upon redemption, and (2) the full and prompt payment of any interest
on such Notes when and as the same shall become due and payable in accordance
with the terms and provisions of this Indenture or the Notes.
Notwithstanding anything in this Indenture to the contrary, from and
after the Release Date, the obligation of the Company to make payment with
respect to the principal of and premium, if any, and interest on the Senior Note
First Mortgage Bonds shall be deemed satisfied and discharged as provided in the
supplemental trust indenture or indentures to the First Mortgage creating such
Senior First Mortgage Bonds and the Senior Note First Mortgage Bonds shall cease
to secure in any manner Notes theretofore or subsequently issued. From and after
the Release Date, all Notes, whether theretofore or subsequently issued, shall
be unsecured, and any conditions to the issuance of Notes that refer or relate
to Senior Note First Mortgage Bonds or the First Mortgage shall be inapplicable.
Following the Release Date, the Company shall cause the First Mortgage to be
closed and the Company shall not issue any additional First Mortgage Bonds or
Senior Note First Mortgage Bonds under the First Mortgage. Notice of the
occurrence of the Release Date shall be given by the Trustee to the Holders of
the Notes in the manner provided for in Section 106 hereof not later than 30
days after the Company notifies the Trustee of the occurrence of the Release
Date.
<PAGE>
SECTION 404. Fair Value Certificate.
(a) Upon the delivery by the Company to the Trustee of Senior Note
First Mortgage Bonds pursuant to Section 401 hereof, the Company shall
simultaneously therewith deliver to the Trustee a certificate of an Expert (1)
stating that it is familiar with the provisions of such Senior Note First
Mortgage Bonds and of this Indenture; (2) stating the principal amount of such
Senior Note First Mortgage Bonds delivered, the stated interest rate (or method
of calculation of interest) of such Senior Note First Mortgage and the stated
maturity date of such Senior Note First Mortgage Bonds; (3) identifying the
Notes being issued contemporaneously therewith, and (4) stating the fair value
to the Company of such Senior Note First Mortgage Bonds. If the fair value to
the Company of the Senior Note First Mortgage Bonds so delivered, as described
in the certificate to be delivered pursuant to this Section 404(a), both (l) is
equal to or exceeds (A) $25,000 and (B) 1% of the principal amount of the Notes
outstanding at the date of delivery of such Senior Note First Mortgage Bonds and
(2) together with the fair value to the Company, as described in the
certificates delivered pursuant to this Section 404(a), of all other Senior Note
First Mortgage Bonds delivered to the Trustee since the commencement of the then
current calendar year, is equal to or exceeds 10% of the principal amount of the
Notes outstanding at the date of delivery of such Senior Note First Mortgage
Bonds, then the certificate required by this Section 404(a) shall (1) be
delivered by an independent Expert and (2) shall, in addition to the
certifications described above, state the fair value to the Company of all
Senior Note First Mortgage Bonds delivered to the Trustee pursuant to Section
401 hereof since the commencement of the then current year as to which a
certificate was not delivered by an Expert independent of the Company.
(b) If Senior Note First Mortgage Bonds are delivered or surrendered to
the Company pursuant to Section 407 or 409 hereof, the Company shall
simultaneously therewith deliver to the Trustee a certificate of an Expert (1)
stating that it is familiar with the provisions of such Senior Note First
Mortgage Bonds and of this Indenture, (2) stating the principal amount of such
Senior Note First Mortgage Bonds so delivered or surrendered, the stated
interest rate (the method of calculation of interest) of such Senior Note First
Mortgage Bonds, and the stated maturity date of such Senior Note First Mortgage
Bonds, (3) if applicable, identifying the Notes, the payment of the interest on
and principal of which has been discharged hereunder, (4) stating that such
delivery or surrender will not impair the lien of this Indenture in
contravention of the provisions of this Indenture. If, prior to the Release
Date, the fair value of the Senior Note First Mortgage Bonds so delivered and
surrendered, as described in the certificate to be delivered pursuant to this
Section 404(b), both (l) is equal to or exceeds (A) $25,000 and (B) 1% of the
principal amount of the Notes outstanding at the date of delivery or surrender
of such Senior Note First Mortgage Bonds and (2) together with the fair value,
as described in the certificates delivered pursuant to this Section 404(b), of
all other Senior Note First Mortgage Bonds released from the lien of this
Indenture since the commencement of the then current calendar year, is equal to
or exceeds 10% of the principal amount of the Notes outstanding at the date of
delivery or surrender of such Senior Note First Mortgage Bonds, then the
certificate required by this Section 404(b) shall be delivered by an independent
Expert.
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If, in connection with a delivery or surrender of outstanding Senior
Note First Mortgage Bonds provided for in subsection (a) or (b) of this Section
404, as the case may be, the Company provides to the trustee an Opinion of
Counsel stating that the certificate described by the applicable subsection is
not required by law, such certificate shall not be required to be delivered
hereunder in connection with such delivery or surrender.
SECTION 405. Senior Note First Mortgage Bonds Held by the Trustee.
The Trustee, as a Holder of Senior Note First Mortgage Bonds, shall
attend a meeting of holders of First Mortgage Bonds under the First Mortgage as
to which it receives due notice, or, at its option, shall deliver its proxy in
connection therewith. Either at such meeting, or otherwise where consent of
holders of First Mortgage Bonds issued under the First Mortgage is sought
without a meeting, the Trustee shall vote all of the Senior Note First Mortgage
Bonds held by it, or shall consent or withhold its consent with respect thereto,
as directed by the Holders of not less than a majority in aggregate principal
amount of the Outstanding Notes; provided, however, that the Trustee shall not
vote as such Holder of a particular series of Senior Note First Mortgage Bonds
in favor of, or give its consent to, any action which, in the Trustee's opinion,
would materially adversely affect such series of Senior Note First Mortgage
Bonds in a manner not shared generally by all other Senior Note First Mortgage
Bonds, except upon notification by the Trustee to the Holders of the related
series of Outstanding Notes of such proposal and consent thereto of the holders
of not less than a majority in aggregate principal amount of the Outstanding
Notes of such series.
SECTION 406. No Transfer of Senior Note First Mortgage Bonds; Exception.
Except as required to effect an assignment to a successor trustee under
this Indenture or pursuant to Section 407 or Section 409 hereof, the Trustee
shall not sell, assign or transfer the Senior Note First Mortgage Bonds and the
Company shall issue stop transfer instructions to the Mortgage Trustee and any
transfer agent under the First Mortgage to effect compliance with this Section
406.
SECTION 407. Delivery to the Company of all Senior Note First Mortgage Bonds.
When the obligation of the Company to make payment with respect to the
principal of and premium, if any, and interest on the Senior Note First Mortgage
Bonds shall be satisfied or deemed satisfied pursuant to Section 403, Section
501 or Article Fourteen hereof, the Trustee shall, upon written request of the
Company and receipt of the certificate of the Expert described in Section 404(b)
hereof (if such certificate is then required by Section 404(b) hereof), deliver
to the Company without charge therefor all of the Senior Note First Mortgage
Bonds, together with such appropriate instruments of transfer or release as may
be reasonably requested by the Company. All Senior Note First Mortgage Bonds
delivered to the Company in accordance with this Section 407 shall be delivered
by the Company to the First Mortgage Trustee for cancellation.
SECTION 408. Further Assurances.
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The Company, at its own expense, shall do such further lawful acts and
things, and execute and deliver such additional conveyances, assignments,
assurances, agreements, financing statements and instruments, as may be
necessary in order to further assign, assure, perfect and confirm to the Trustee
its security interest in the Senior Note First Mortgage Bonds and for
maintaining, protecting and preserving such security interest.
SECTION 409. Exchange and Surrender of Senior Note First Mortgage Bonds.
At any time at the written direction of the Company, the Trustee shall
surrender to the Company all or part of the Senior Note First Mortgage Bonds in
exchange for Senior Note First Mortgage bonds equal in aggregate principal
amounts to, in different denominations than but of the same series and with all
other terms identical to, the Senior Note First Mortgage Bonds so surrendered to
the Company. In addition, at any time a Note shall cease to be entitled to any
lien, benefit or security under this Indenture pursuant to Section 501 or
Article Fourteen hereof, the Trustee shall surrender an equal principal amount
of Senior Note First Mortgage Bonds of the related series to the Company for
cancellation. The Trustee shall, together with such Senior Note First Mortgage
Bonds, deliver to the Company such appropriate instruments of transfer or
release as the Company may reasonably request. Prior to the surrender required
by this paragraph, the Trustee shall receive from the Company the following, and
(subject to Section 701 hereof) shall be fully protected in relying upon, (a) an
Officer's Certificate stating (i) the aggregate outstanding principal amount of
the Senior Note First Mortgage bonds of the series surrendered by the Trustee,
after giving effect to such surrender, (ii) the aggregate Outstanding principal
amount of the related series of Notes, (iii) that the surrender of the Senior
Note First Mortgage Bonds will not result in any default under this Indenture,
and (iv) that any Senior Note First Mortgage Bonds to be received in exchange
for the Senior Note First Mortgage Bonds being surrendered comply with the
provisions of this Section.
The Company shall not be permitted to cause the surrender or exchange
of all or any part of a series of Senior Note First Mortgage Bonds contemplated
in this Section, if, after such surrender or exchange, the aggregate outstanding
principal amount of the related series of Notes would exceed the aggregate
outstanding principal amount of such series of Senior Note First Mortgage Bonds
held by the Trustee. Any Senior Note First Mortgage Bonds received by the
Company pursuant to this Section 409 shall be delivered to the Mortgage Trustee
for cancellation.
ARTICLE FIVE
SATISFACTION AND DISCHARGE
SECTION 501. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Notes herein expressly provided for), and the Trustee, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when
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(1) either
(A) all Notes theretofore authenticated and delivered (other than
(i) Notes which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 306 and (ii) Notes for whose
payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1103) have been
delivered to the Trustee for cancellation; or
(B) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the
Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust for the
purpose money in an amount sufficient to pay and discharge the entire
indebtedness on such Notes not theretofore delivered to the Trustee for
cancellation, for principal and any premium and interest to the date of
such deposit (in the case of Notes which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 707, the obligations of
the Company to any Authenticating Agent under Section 714 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 502 and the last
paragraph of Section 1103 shall survive.
If the Notes are deemed paid and discharged pursuant to this Section 501
or defeased pursuant to Article Fourteen, the obligation of the Company to make
payment with respect to the principal of and premium, if any, and interest on
the Senior Note First Mortgage Bonds shall be satisfied and discharged, as
provided in the supplemental trust indenture or indentures to the First Mortgage
creating such Senior Note First Mortgage Bonds and the Senior Note First
Mortgage Bonds shall cease to secure the Notes in any manner.
If the Company shall have paid or caused to be paid the principal of and
premium, if any, and interest on any Note, as and when the same shall have
become due and payable or
<PAGE>
the Company shall have delivered to the Trustee for cancellation any outstanding
Note, such Note shall cease to be entitled to any lien, benefit or security
under this Indenture. Upon a Note of any series ceasing to be entitled to any
lien, benefit or security under this Indenture, the obligation of the Company to
make payment with respect to principal of and premium, if any, and interest on a
principal amount of the related series of Senior Note First Mortgage Bonds equal
to the principal amount of such Note shall be satisfied and discharged and such
portion of the principal amount of such Senior Note First Mortgage Bonds shall
cease to secure the Notes in any manner.
SECTION 502. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1103, all money
deposited with the Trustee pursuant to Section 501 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE SIX
REMEDIES
SECTION 601. Events of Default.
"Event of Default", wherever used herein with respect to Notes of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Note of that series
when it becomes due and payable, and continuance of such default for a period
of 60 days; or
(2) default in the payment of the principal of or any premium on any Note
of that series at its Maturity and continuance of such default for 5 days; or
(3) default in the deposit of any sinking fund payment, when and as due by
the terms of a Note of that series and continuance of such default for 5
days; or
(4) default in the performance, or breach, of any covenant or warranty of
the Company in this Indenture (other than a covenant or warranty a default in
whose performance or whose breach is elsewhere in this Section specifically
dealt with or which has expressly been included in this Indenture solely for
the benefit of series of Notes other than that series), and continuance of
such default or breach for a period of 90 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of a majority in principal amount of the
<PAGE>
Outstanding Notes of that series a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(5) prior to the Release Date, a Default (as defined in the First
Mortgage) has occurred and is continuing, and the Mortgage Trustee, the
Company or Holders of at least 25% in principal amount of the outstanding
Notes shall have given written notice thereof to the Trustee;
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case
or proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law, or
appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator
or other similar official of the Company or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree
or order unstayed and in effect for a period of 90 consecutive days;
(7) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization
or other similar law or to the commencement of any bankruptcy or insolvency
case or proceeding against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under any applicable Federal or
State law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or
of any substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking of
corporate action by the Company in furtherance of any such action; or
(8) any other Event of Default provided with respect to Notes of that
series.
SECTION 602. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section 601(6) or 601(7)) with respect to Notes of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of a majority in principal amount of the Outstanding Notes of that
series may declare the principal amount of all the Notes of that series (or, if
any Notes of that series are Original Issue Discount Notes, such portion of the
principal amount of such Notes as may be specified by the terms thereof) to be
due and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by Holders), and upon any such declaration such principal
amount (or specified amount) shall become immediately due and payable. If an
Event of Default specified in Section 601(6) or 601(7) with respect to Notes of
any series at the time Outstanding occurs, the principal
<PAGE>
amount of all the Notes of that series (or, if any Notes of that series are
Original Issue Discount Notes, such portion of the principal amount of such
Notes as may be specified by the terms thereof) shall automatically, and without
any declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable. Upon such Notes becoming immediately due and
payable, by declaration or otherwise, pursuant to any of the foregoing
provisions of this Section 602, the Trustee can immediately file with the
Mortgage Trustee a written demand for the acceleration of the payment of
principal of all Senior Note First Mortgage Bonds relating to such series of
outstanding Notes pursuant to the applicable provisions of the supplemental
indenture to the First Mortgage relating to such Senior Note First Mortgage
Bonds.
At any time after such a declaration of acceleration with respect to Notes
of any series has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, and prior to the receipt of the Trustee from the Mortgage Trustee of
an irrevocable, valid and unconditional notice to the Trustee of the
acceleration of the payment of principal, by declaration or otherwise, of all of
the Senior Note First Mortgage Bonds relating to such series of Notes, the
related Event of Default and its consequences (including, if given, the written
demand for the acceleration of the payment of principal of all such Senior Note
First Mortgage Bonds) will be automatically waived, resulting in an automatic
rescission and annulment of the acceleration of the Notes if
(1) the Company has paid or deposited with the Trustee a sum sufficient to
pay
(A) all overdue interest on all Notes of that series,
(B) the principal of (and premium, if any, on) any Notes of that
series which have become due otherwise than by such declaration of
acceleration and any interest thereon at the rate or rates prescribed
therefor in such Notes,
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate or rates prescribed therefor in such
Notes, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(2) all Events of Default with respect to Notes of that series, other than
the non-payment of the principal of Notes of that series which have become
due solely by such declaration of acceleration, have been cured (including
any Defaults (as defined in the First Mortgage) under the First Mortgage, as
evidenced by notice thereof received by the Trustee from the Mortgage
Trustee) or waived as provided in Section 613 or under the First Mortgage.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
<PAGE>
SECTION 603. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any Note when such
interest becomes due and payable and such default continues for a period of
60 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Note at the Maturity thereof and such default continues for a
period of 5 days,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Notes, the whole amount then due and payable on such Notes for
principal and any premium and interest and, to the extent that payment of such
interest shall be legally enforceable, interest on any overdue principal and
premium and on any overdue interest, at the rate or rates prescribed therefor in
such Notes, and, in addition thereto, such further amount as shall be sufficient
to cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.
If an Event of Default with respect to Notes of any series occurs and is
continuing, the Trustee may in its discretion proceed to protect and enforce its
rights (including, prior to the Release Date, to exercise any rights that the
Trustee may have as a holder of Senior Note First Mortgage Bonds of the series
relating to the series of such Notes) and the rights of the Holders of Notes of
such series by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 604. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any other
obligor upon the Notes), its property or its creditors, the Trustee shall be
entitled and empowered, by intervention in such proceeding or otherwise, to take
any and all actions authorized under the Trust Indenture Act in order to have
claims of the Holders and the Trustee (including, prior to the Release Date, any
claims of the Trustee as holder of Senior Note First Mortgage Bonds) allowed in
any such proceeding. In particular, the Trustee shall be authorized to collect
and receive any moneys or other property payable or deliverable on any such
claims and to distribute the same; and any custodian, receiver, assignee,
trustee, liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 707.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such
<PAGE>
proceeding; provided, however, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee in bankruptcy or similar official and be a
member of a creditors' or other similar committee.
SECTION 605. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel, be for the ratable benefit of the Holders
of the Notes in respect of which such judgment has been recovered.
SECTION 606. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Notes and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 707;
SECOND: To the payment of the amounts then due and unpaid for principal of
and any premium and interest on the Notes in respect of which or for the benefit
of which such money has been collected, ratably, without preference or priority
of any kind, according to the amounts due and payable on such Notes for
principal and any premium and interest, respectively; and
THIRD: To the payment of the balance, if any, to the Company or any other
Person or Persons legally entitled thereto.
SECTION 607. Limitation on Suits.
No Holder of any Note of any series shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Notes of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its
own name as Trustee hereunder;
<PAGE>
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request and
offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Notes of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 608. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Section 307)
interest on such Note on the respective Stated Maturities expressed in such Note
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
SECTION 609. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and the Holders shall be restored
severally and respectively to their former positions hereunder and thereafter
all rights and remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 610. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 306,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right
<PAGE>
or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 611. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Notes to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 612. Control by Holders.
The Holders of a majority in principal amount of the Outstanding Notes of
any series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, with respect to the Notes of such
series, provided that
(1) such direction shall not be in conflict with any rule of law or with
this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) subject to the provisions of Section 701, the Trustee shall have the
right to decline to follow any such direction if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that
the proceeding so directed would involve the Trustee in personal liability.
SECTION 613. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Notes of any series may on behalf of the Holders of all the Notes of
such series waive any past default hereunder with respect to such series and its
consequences, except a default
(1) in the payment of the principal of or any premium or interest on any
Note of such series, or
(2) in respect of a covenant or provision hereof which under Article Ten
cannot be modified or amended without the consent of the Holder of each
Outstanding Note of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
<PAGE>
SECTION 614. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or the Trustee.
SECTION 615. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SEVEN
THE TRUSTEE
SECTION 701. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by the
Trust Indenture Act, and no implied covenants or obligations shall be read into
this Indenture against the Trustee. The phrase "default (as such term is defined
in such indenture)" as it appears in Section 315 of the Trust Indenture Act
shall mean an Event of Default with respect to a series of Notes which shall
have occured and is continuing. Notwithstanding the foregoing, no provision of
this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section.
SECTION 702. Notice of Defaults.
If a default occurs hereunder with respect to Notes of any series, the
Trustee shall give the Holders of Notes of such series notice of such default
known to the Trustee as and to the extent provided by the Trust Indenture Act;
provided, however, that in the case of any default of the character specified in
Section 601(4) with respect to Notes of such series, no such notice to Holders
shall be given until at least 30 days after the occurrence thereof. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default with respect
to Notes of such series.
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SECTION 703. Certain Rights of Trustee.
Subject to the provisions of Section 701:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order, and any
resolution of the Board of Directors shall be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any
of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(8) except as other provided in Section 601(4), the Trustee shall not be
charged with knowledge of any default or Event of Default unless either (i) a
Responsible Officer of the Trustee assigned to the Corporate Trust Department
of the Trustee (or any successor division or department of the Trustee) shall
have actual knowledge of the default or Event of Default, or (ii) written
notice of such default or Event of Default shall have been given
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to the Trustee by the Company, any other obligor on the Notes or by any
Holder of such Notes or, in the case of an Event of Default described in
Section 601(5) by the Mortgage Trustee or Holders of at least 25% in
principal amount of the Outstanding Notes.
SECTION 704. Not Responsible for Recitals or Issuance of Notes.
The recitals contained herein and in the Notes, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and neither the Trustee nor any Authenticating Agent assumes any responsibility
for their correctness. The Trustee makes no representations as to the validity
or sufficiency of this Indenture or of the Notes or as to the value, title or
validity of any Senior Note First Mortgage Bonds or other securities at any time
pledged or deposited with the Trustee hereunder or as to the security offered
thereby or hereby. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Notes or the proceeds
thereof or of any moneys paid to the Company under any provision hereof. The
Trustee shall not be responsible for recording or filing this Indenture, any
indenture supplemented hereto or any financing or continuation statement in any
public office or elsewhere at any time or times.
SECTION 705. May Hold Notes.
The Trustee, any Authenticating Agent, any Paying Agent, any Note
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and, subject to Sections 608
and 613, may otherwise deal with the Company with the same rights it would have
if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or
such other agent.
SECTION 706. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company.
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SECTION 707. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as shall be
agreed to in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The Trustee shall have a lien prior to the Notes upon all property and
funds held by it hereunder for any amount owing it or any predecessor Trustee
pursuant to this Section 707, except with respect to funds held in trust for the
benefit of the Holders of particular Notes.
Without limiting any rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an Event
of Default specified in Section 601(6) or Section 601(7), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable Federal or State bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 708. Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture. To the extent
permitted by such Act, the Trustee shall not be deemed to have a conflicting
interest by virtue of being a trustee under this Indenture with respect to Notes
of more than one series.
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SECTION 709. Corporate Trustee Required; Eligibility.
There shall at all times be one (and only one) Trustee hereunder with
respect to the Notes of each series, which may be Trustee hereunder for Notes of
one or more other series. Each Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section and to
the extent permitted by the Trust Indenture Act, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee with respect to the Notes of any series shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
SECTION 710. Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee in accordance with the applicable
requirements of Section 711.
The Trustee may resign at any time with respect to the Notes of one or
more series by giving written notice thereof to the Company. If the instrument
of acceptance by a successor Trustee required by Section 711 shall not have been
delivered to the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Notes of such series.
The Trustee may be removed at any time with respect to the Notes of any
series by Act of the Holders of a majority in principal amount of the
Outstanding Notes of such series, delivered to the Trustee and to the Company.
If at any time:
(1) the Trustee shall fail to comply with Section 708 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Note for at least six months, or
(2) the Trustee shall cease to be eligible under Section 709 and shall
fail to resign after written request therefor by the Company or by any such
Holder, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (A) the Company by a Board Resolution may remove the
Trustee with respect to all Notes, or (B) subject to Section 614, any Holder who
has been a bona fide Holder of a Note for at least six months may, on behalf of
himself and all others similarly
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situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Notes and the appointment of a successor Trustee or
Trustees.
If the Trustee shall resign, be removed or become incapable of acting, or
if a vacancy shall occur in the office of Trustee for any cause, with respect to
the Notes of one or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Notes of
that or those series (it being understood that any such successor Trustee may be
appointed with respect to the Notes of one or more or all of such series and
that at any time there shall be only one Trustee with respect to the Notes of
any particular series) and shall comply with the applicable requirements of
Section 711. If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor Trustee with
respect to the Notes of any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Notes of such series delivered
to the Company and the retiring Trustee, the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment in accordance with the
applicable requirements of Section 711, become the successor Trustee with
respect to the Notes of such series and to that extent supersede the successor
Trustee appointed by the Company. If no successor Trustee with respect to the
Notes of any series shall have been so appointed by the Company or the Holders
and accepted appointment in the manner required by Section 711, any Holder who
has been a bona fide Holder of a Note of such series for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the appointment of a successor Trustee with
respect to the Notes of such series.
The Company shall give notice of each resignation and each removal of the
Trustee with respect to the Notes of any series and each appointment of a
successor Trustee with respect to the Notes of any series to all Holders of
Notes of such series in the manner provided in Section 106. Each notice shall
include the name of the successor Trustee with respect to the Notes of such
series and the address of its Corporate Trust Office.
SECTION 711. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee with respect
to all Notes, every such successor Trustee so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee, including rights, title and
interest in the Senior Note First Mortgage Bonds; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to such successor
Trustee all the rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder.
In case of the appointment hereunder of a successor Trustee with respect
to the Notes of one or more (but not all) series, the Company, the retiring
Trustee and each successor Trustee with respect to the Notes of one or more
series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to,
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and to vest in, each successor Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Notes of that or those series to
which the appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Notes, shall contain such provisions
as shall be deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Notes of
that or those series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee, and (3) shall add to or change
any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust and that each such
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Notes of that or those series to
which the appointment of such successor Trustee relates; but, on request of the
Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Notes of that or those
series to which the appointment of such successor Trustee relates.
Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 712. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Notes shall have been authenticated, but
not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Notes so authenticated with the same effect as if
such successor Trustee had itself authenticated such Notes.
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SECTION 713. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Notes), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
SECTION 714. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Notes which shall be authorized to act on behalf of the
Trustee to authenticate Notes of such series issued upon exchange, registration
of transfer or partial redemption thereof or pursuant to Section 306, and Notes
so authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Notes of the
series with respect to which such Authenticating Agent will serve. Any successor
Authenticating Agent upon acceptance of its
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appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant to
this Section, the Notes of such series may have endorsed thereon, in addition to
the Trustee's certificate of authentication, an alternative certificate of
authentication in the following form:
This is one of the Notes of the series designated therein referred to in
the within-mentioned Indenture.
THE BANK OF NEW YORK,
As Trustee
By......................................,
As Authenticating Agent
By.......................................
Authorized Officer
49
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ARTICLE EIGHT
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 801. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(1) fifteen days after each Regular Record Date, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders
of Notes of each series as of such Regular Record Date, and
(2) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such
list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Note Registrar.
SECTION 802. Preservation of Information; Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 801 and the names and
addresses of Holders received by the Trustee in its capacity as Note Registrar.
The Trustee may destroy any list furnished to it as provided in Section 801 upon
receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Notes, and the corresponding
rights and privileges of the Trustee, shall be as provided by the Trust
Indenture Act.
Every Holder of Notes, by receiving and holding the same, agrees with the
Company and the Trustee that neither the Company nor the Trustee nor any agent
of either of them shall be held accountable by reason of any disclosure of
information as to names and addresses of Holders made pursuant to the Trust
Indenture Act.
SECTION 803. Reports by Trustee.
The Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
sixty days after each May 15 following the date of this Indenture deliver to
Holders a brief report, dated as of such May 15, which complies with the
provisions of such Section 313(a).
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A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which any Notes
are listed, with the Commission and with the Company. The Company will promptly
notify the Trustee when any Notes are listed on any stock exchange.
SECTION 804. Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit
to Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.
ARTICLE NINE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 901. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and the Company shall not permit any Person to consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance or
transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership,
unincorporated organization or trust, shall be organized and validly existing
under the laws of the United States of America, any State thereof or the
District of Columbia and (a) shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
and any premium and interest on all the Notes and the performance or
observance of every covenant of this Indenture on the part of the Company to
be performed or observed (b) if such consolidation, merger, conveyance,
transfer, or lease occurs prior to the Release Date, shall expressly assume,
by an indenture supplemental to the First Mortgage, executed and delivered to
the Trustee and the Mortgage Trustee, in form satisfactory to the Trustee and
the Mortgage Trustee, the due and punctual payment of the principal of and
any premium and interest on all of the Senior Note First Mortgage Bonds and
the performance of every covenant of the First Mortgage on the part of the
Company to be performed or observed. For purposes of this Article Nine, the
phrase "assets substantially as an entirety" shall mean 50% or more of the
total assets of the Company as shown on the consolidated balance sheet of the
Company as of the end of the calendar year immediately
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preceding the day of the year in which such determination is made and
nothing in this Indenture shall prevent or hinder the Company from conveying,
transferring or leasing during any calendar year (in one transaction or a
series of transactions) less than 50% of the amount of its total assets as
shown on the consolidated balance sheet of the Company as of the end of the
immediately preceding calendar year;
(2) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of the Company or any Subsidiary as
a result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of
Default, shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or such
conveyance, transfer or lease, properties or assets of the Company would
become subject to a mortgage, pledge, lien, security interest or other
encumbrance which would not be permitted by this Indenture, the Company or
such successor Person, as the case may be, shall take such steps as shall be
necessary effectively to secure the Notes equally and ratably with (or prior
to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with
this Article and that all conditions precedent herein provided for relating
to such transaction have been complied with.
SECTION 902. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company into,
any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with Section
901, the successor Person formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the case of a
lease, the predecessor Person shall be relieved of all obligations and covenants
under this Indenture and the Notes.
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ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 1001. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company herein and
in the Notes; or
(2) to add to the covenants of the Company for the benefit of the Holders
of all or any series of Notes (and if such covenants are to be for the
benefit of less than all series of Notes, stating that such covenants are
expressly being included solely for the benefit of such series) or to
surrender any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default for the benefit of the Holders
of all or any series of Notes (and if such additional Events of Default are
to be for the benefit of less than all series of Notes, stating that such
additional Events of Default are expressly being included solely for the
benefit of such series); or
(4) to add to or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Notes in
bearer form, registrable or not registrable as to principal, and with or
without interest coupons, or to permit or facilitate the issuance of Notes in
uncertificated form; or
(5) to add to, change or eliminate any of the provisions of this Indenture
in respect of one or more series of Notes, provided that any such addition,
change or elimination (A) shall neither (i) apply to any Note of any series
created prior to the execution of such supplemental indenture and entitled to
the benefit of such provision nor (ii) modify the rights of the Holder of any
such Note with respect to such provision or (B) shall become effective only
when there is no such Note Outstanding; or
(6) to secure the Notes; or
(7) to establish the form or terms of Notes of any series as permitted by
Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee with respect to the Notes of one or more series and to
add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
711; or
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(9) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture, provided that such action pursuant to this Clause (9) shall
not adversely affect the interests of the Holders of Notes of any series in
any material respect.
SECTION 1002. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of a majority in principal amount of the
Outstanding Notes of each series affected by such supplemental indenture, by Act
of said Holders delivered to the Company and the Trustee, the Company, when
authorized by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of modifying in any manner the rights of the Holders of Notes of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby,
(1) change the Stated Maturity of the principal of, or any instalment of
principal of or interest on, any Note, or reduce the principal amount thereof
or the rate of interest thereon or any premium payable upon the redemption
thereof, or reduce the amount of the principal of an Original Issue Discount
Note or any other Note which would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 602, or change any
Place of Payment where, or the coin or currency in which, any Note or any
premium or interest thereon is payable, or impair the interest hereunder of
the Trustee in the Senior Note First Mortgage Bonds, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or prior to the Release Date, impair the interest hereunder of the
Trustee in the Senior Note First Mortgage Bonds, reduce the principal amount
of any series of Senior Note First Mortgage Bonds to an amount less than the
principal amount of the related series of Notes or alter the payment
provisions of such Senior Note First Mortgage Bonds in a manner adverse to
the Holders of the Notes, or
(2) reduce the percentage in principal amount of the Outstanding Notes of
any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 613 or Section
1108, except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent
of the Holder of each Outstanding Note affected thereby; provided, however,
that this clause shall not be deemed to require the consent of any Holder
with respect to changes in the references to "the Trustee" and concomitant
changes in this Section and Section 1108, or the deletion of this proviso, in
accordance with the requirements of Sections 711 and 1001(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more
<PAGE>
particular series of Notes, or which modifies the rights of the Holders of Notes
of such series with respect to such covenant or other provision, shall be deemed
not to affect the rights under this Indenture of the Holders of Notes of any
other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 1003. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 701) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 1004. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 1005. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 1006. Reference in Notes to Supplemental Indentures.
Notes of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes of any series so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be prepared and executed
by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Notes of such series.
<PAGE>
ARTICLE ELEVEN
COVENANTS
SECTION 1101. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of Notes
that it will duly and punctually pay the principal of and any premium and
interest on the Notes of that series in accordance with the terms of the Notes
and this Indenture.
SECTION 1102. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of Notes
an office or agency where Notes of that series may be presented or surrendered
for payment, where Notes of that series may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes of that series and this Indenture may be served. The
Company will give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent to receive all
such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Notes of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in each Place of Payment for Notes of any series for such purposes. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
SECTION 1103. Money for Notes Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Notes, it will, on or before each due date of the principal of
or any premium or interest on any of the Notes of that series, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum sufficient
to pay the principal and any premium and interest so becoming due until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any series
of Notes, it will, prior to each due date of the principal of or any premium or
interest on any Notes of that series, deposit with a Paying Agent a sum
sufficient to pay such amount, such sum to be held as provided by the Trust
Indenture Act, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
<PAGE>
The Company will cause each Paying Agent for any series of Notes other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will (1) comply with the provisions of the
Trust Indenture Act applicable to it as a Paying Agent and (2) during the
continuance of any default by the Company (or any other obligor upon the Notes
of that series) in the making of any payment in respect of the Notes of that
series, upon the written request of the Trustee, forthwith pay to the Trustee
all sums held in trust by such Paying Agent for payment in respect of the Notes
of that series.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of or any premium or
interest on any Note of any series and remaining unclaimed for two years after
such principal, premium or interest has become due and payable shall be paid to
the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, New York, notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
30 days from the date of such publication, any unclaimed balance of such money
then remaining will be repaid to the Company.
SECTION 1104. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default, specifying all such defaults and the nature and status thereof of
which they may have knowledge.
SECTION 1105. Recording, Filing, etc.; Opinions of Counsel.
The Company will cause this Indenture, any indentures supplemental to this
Indenture, and any financing or continuation statements to be promptly recorded
and filed and rerecorded and refiled in such a manner and in such places, as may
be required by law in
<PAGE>
order fully to preserve, protect and perfect the security of the Holders and all
rights of the Trustee, and shall deliver to the Trustee:
(a) promptly after the execution and delivery of this Indenture and of any
indenture supplemental to this Indenture but prior to the Release Date, an
Opinion of Counsel either stating that, in the opinion of such counsel, this
Indenture or such supplemental indenture and any financing or continuation
statements have been properly recorded and filed so as to make effective and to
perfect the security interest of the Trustee intended to be created by this
Indenture for the benefit of the Holders from time to time in the Senior Note
First Mortgage Bonds, and reciting the details of such action, or stating that,
in the opinion of such counsel, no such action is necessary to perfect or make
such security interest effective and stating what, if any, action of the
foregoing character may reasonably be expected to become necessary prior to the
next succeeding ______ 1 to maintain, perfect and make such security interest
effective; and
(b) on or before _____ 1 of each year, beginning in 199__, and prior to
the Release Date, an Opinion of Counsel either stating that in the opinion of
such counsel such action has been taken, since the date of the most recent
Opinion of Counsel furnished pursuant to this Section 1105(b) or the first
Opinion of Counsel furnished pursuant to Section 1105(a), with respect to the
recording, filing, rerecording, or refiling of this Indenture, each supplemental
indenture and any financing or continuation statements, as is necessary to
maintain and perfect the security interest of the Trustee intended to be created
by this Indenture for the benefit of the Holders from time to time of the Notes
in the Senior Note First Mortgage Bonds, and reciting the details of such
action, or stating that in the opinion of such counsel no such action is
necessary to maintain and perfect such security interest and stating what, if
any, action of the foregoing character may reasonably be expected to become
necessary prior to the next succeeding _____ 1 to maintain, perfect and make
such security interest effective.
SECTION 1106. Existence.
Subject to Article Nine, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and corporate franchises; provided, however, that
the Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
<PAGE>
SECTION 1107. Maintenance of Properties.
Subject to Article Nine, the Company will cause all properties used or
useful in the conduct of its business or the business of any Subsidiary to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Company may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times;
provided, however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1108. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings.
SECTION 1109. Waiver of Certain Covenants.
Except as otherwise specified as contemplated by Section 301 for Notes of
such series, the Company may, with respect to the Notes of any series, omit in
any particular instance to comply with any term, provision or condition set
forth in any covenant provided pursuant to Section 301(20), 1001(2) or 1001(7)
for the benefit of the Holders of such series or in any of Sections 1107 through
1108 if before the time for such compliance the Holders of a majority in
principal amount of the Outstanding Notes of such series shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall
extend to or affect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect.
SECTION 1110. Calculation of Original Issue Discount.
The Company shall file with the Trustee promptly at the end of each calendar
year a written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on Outstanding Notes as of
the end of such year.
<PAGE>
ARTICLE TWELVE
REDEMPTION OF NOTES
SECTION 1201. Applicability of Article.
Notes of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 301 for such Notes) in accordance with this
Article.
SECTION 1202. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Notes shall be evidenced by a
Board Resolution or in another manner specified as contemplated by Section 301
for such Notes. In case of any redemption at the election of the Company, the
Company shall, at least 60 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee of such Redemption Date, of the principal amount of Notes of such
series to be redeemed and, if applicable, of the tenor of the Notes to be
redeemed. In the case of any redemption of Notes (a) prior to the expiration of
any restriction on such redemption provided in the terms of such Notes or
elsewhere in this Indenture, or (b) pursuant to an election of the Company which
is subject to a condition specified in the terms of such Notes or elsewhere in
this Indenture, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with such restriction or condition.
SECTION 1203. Selection by Trustee of Notes to Be Redeemed.
If less than all the Notes of any series are to be redeemed (unless all
the Notes of such series and of a specified tenor are to be redeemed or unless
such redemption affects only a single Note), the particular Notes to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Notes of such series not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the principal
amount of any Note of such series, provided that the unredeemed portion of the
principal amount of any Note shall be in an authorized denomination (which shall
not be less than the minimum authorized denomination) for such Note. If less
than all the Notes of such series and of a specified tenor are to be redeemed
(unless such redemption affects only a single Note), the particular Notes to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Notes of such series and specified tenor not
previously called for redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption as aforesaid and, in case of any Notes selected for
partial redemption as aforesaid, the principal amount thereof to be redeemed.
<PAGE>
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Note, whether such Note is to
be redeemed in whole or in part. In the case of any such redemption in part, the
unredeemed portion of the principal amount of the Note shall be in an authorized
denomination (which shall not be less than the minimum authorized denomination)
for such Note.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Notes shall relate, in the case of
any Notes redeemed or to be redeemed only in part, to the portion of the
principal amount of such Notes which has been or is to be redeemed.
SECTION 1204. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Notes to be redeemed, at his address appearing in the Note
Register.
All notices of redemption shall identify the Notes to be redeemed
(including CUSIP number) and shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Notes of any series and of a
specified tenor consisting of more than a single Note are to be redeemed, the
identification (and, in the case of partial redemption of any such Notes, the
principal amounts) of the particular Notes to be redeemed and, if less than
all the Outstanding Notes of any series and of a specified tenor consisting
of a single Note are to be redeemed, the principal amount of the particular
Note to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due and
payable upon each such Note to be redeemed and, if applicable, that interest
thereon will cease to accrue on and after said date,
(5) the place or places where each such Note is to be surrendered for
payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
<PAGE>
SECTION 1205. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee
or with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 1103) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Notes which are
to be redeemed on that date.
SECTION 1206. Notes Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such Notes
shall cease to bear interest. Upon surrender of any such Note for redemption in
accordance with said notice, such Note shall be paid by the Company at the
Redemption Price, together with accrued interest to the Redemption Date;
provided, however, that, unless otherwise specified as contemplated by Section
301, installments of interest whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such Notes, or one or more
Predecessor Notes, registered as such at the close of business on the relevant
Record Dates according to their terms and the provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the Note.
SECTION 1207. Notes Redeemed in Part.
Any Note which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes of the same series and of like tenor, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Note so surrendered.
<PAGE>
ARTICLE THIRTEEN
SINKING FUNDS
SECTION 1301. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund for
the retirement of Notes of any series except as otherwise specified as
contemplated by Section 301 for such Notes.
The minimum amount of any sinking fund payment provided for by the terms
of any Notes is herein referred to as a "mandatory sinking fund payment", and
any payment in excess of such minimum amount provided for by the terms of such
Notes is herein referred to as an "optional sinking fund payment". If provided
for by the terms of any Notes, the cash amount of any sinking fund payment may
be subject to reduction as provided in Section 1302. Each sinking fund payment
shall be applied to the redemption of Notes as provided for by the terms of such
Notes.
SECTION 1302. Satisfaction of Sinking Fund Payments with Notes.
The Company (1) may deliver Outstanding Notes of a series (other than any
previously called for redemption) and (2) may apply as a credit Notes of a
series which have been redeemed either at the election of the Company pursuant
to the terms of such Notes or through the application of permitted optional
sinking fund payments pursuant to the terms of such Notes, in each case in
satisfaction of all or any part of any sinking fund payment with respect to any
Notes of such series required to be made pursuant to the terms of such Notes as
and to the extent provided for by the terms of such Notes; provided that the
Notes to be so credited have not been previously so credited. The Notes to be so
credited shall be received and credited for such purpose by the Trustee at the
Redemption Price, as specified in the Notes so to be redeemed, for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
SECTION 1303. Redemption of Notes for Sinking Fund.
Not less than 60 days prior to each sinking fund payment date for any
Notes, the Company will deliver to the Trustee an Officers' Certificate
specifying the amount of the next ensuing sinking fund payment for such Notes
pursuant to the terms of such Notes, the portion thereof, if any, which is to be
satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering and crediting Notes pursuant to Section 1302 and stating
the basis for such credit and that such Notes have not been previously so
credited and will also deliver to the Trustee any Notes to be so delivered. Not
less than 30 days prior to each such sinking fund payment date, the Trustee
shall select the Notes to be redeemed upon such sinking fund payment date in the
manner specified in Section 1203 and cause notice of the redemption thereof to
be given in the name of and at the expense of the Company in the manner provided
in Section 1204. Such notice having been duly given, the redemption of such
Notes shall be made upon the terms and in the manner stated in Sections 1206 and
1207.
<PAGE>
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1401. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may elect, at its option at any time, to have Section 1402 or
Section 1403 applied to any Notes or any series of Notes, as the case may be,
designated pursuant to Section 301 as being defeasible pursuant to such Section
1402 or 1403, in accordance with any applicable requirements provided pursuant
to Section 301 and upon compliance with the conditions set forth below in this
Article. Any such election shall be evidenced by a Board Resolution or in
another manner specified as contemplated by Section 301 for such Notes.
SECTION 1402. Defeasance and Discharge.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Notes or any series of Notes, as the case may be, the Company
shall be deemed to have been discharged from its obligations with respect to
such Notes as provided in this Section on and after the date the conditions set
forth in Section 1404 are satisfied (hereinafter called "Defeasance"). For this
purpose, such Defeasance means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by such Notes and to have
satisfied all its other obligations under such Notes and this Indenture insofar
as such Notes are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), subject to the
following which shall survive until otherwise terminated or discharged
hereunder: (1) the rights of Holders of such Notes to receive, solely from the
trust fund described in Section 1404 and as more fully set forth in such
Section, payments in respect of the principal of and any premium and interest on
such Notes when payments are due, (2) the Company's obligations with respect to
such Notes under Sections 304, 305, 306, 1102 and 1103 and with respect to the
Trustee under Section 707, (3) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and (4) this Article. Subject to compliance with this
Article, the Company may exercise its option (if any) to have this Section
applied to any Notes notwithstanding the prior exercise of its option (if any)
to have Section 1403 applied to such Notes.
<PAGE>
SECTION 1403. Covenant Defeasance.
Upon the Company's exercise of its option (if any) to have this Section
applied to any Notes or any series of Notes, as the case may be, (1) the Company
shall be released from its obligations under Section 901(3), Sections 1107
through 1108, inclusive, and any covenants provided pursuant to Section 301(20),
1001(2), 1001(6) or 1001(7) and 501(8) for the benefit of the Holders of such
Notes and (2) the occurrence of any event specified in Sections 601(4) (with
respect to any of Section 901(3), Sections 1107 through 1108, inclusive, and any
such covenants provided pursuant to Section 301(20), 1001(2), 1001(6) or
1001(7)) and 601(8) shall be deemed not to be or result in an Event of Default
with respect to such Notes as provided in this Section on and after the date the
conditions set forth in Section 1404 are satisfied (hereinafter called "Covenant
Defeasance"). For this purpose, such Covenant Defeasance means that, with
respect to such Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
specified Section (to the extent so specified in the case of Section 601(4)),
whether directly or indirectly by reason of any reference elsewhere herein to
any such Section or by reason of any reference in any such Section to any other
provision herein or in any other document, but the remainder of this Indenture
and such Notes shall be unaffected thereby.
SECTION 1404. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of Section 1402
or Section 1403 to any Notes or any series of Notes, as the case may be:
(1) The Company shall irrevocably have deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Notes, (A) money in an amount,
or (B) U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in
an amount, or (C) a combination thereof, in each case sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
and discharge, and which shall be applied by the Trustee to pay and
discharge, the principal of and any premium and interest on such Notes on the
respective Stated Maturities or on any Redemption Date established pursuant
to clause (9) below, in accordance with the terms of this Indenture and such
Notes. As used herein, "U.S. Government Obligation" means (x) any security
which is (i) a direct obligation of the United States of America for the
payment of which the full faith and credit of the United States of America is
pledged or (ii) an obligation of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case (i) or
(ii), is not callable or redeemable at the option of the issuer thereof, and
(y) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Notes Act) as custodian with respect to any U.S. Government Obligation
which is specified in Clause (x) above and held by such bank for the account
of the holder of such depositary receipt, or with respect to any specific
payment of principal of or interest on any U.S. Government Obligation which
is so specified and held, provided that (except as required by law) such
custodian is not
<PAGE>
authorized to make any deduction from the amount payable to the holder of
such depositary receipt from any amount received by the custodian in respect
of the U.S. Government Obligation or the specific payment of principal or
interest evidenced by such depositary receipt.
(2) In the event of an election to have Section 1402 apply to any Notes or
any series of Notes, as the case may be, the Company shall have delivered to
the Trustee an Opinion of Counsel stating that (A) the Company has received
from, or there has been published by, the Internal Revenue Service a ruling
or (B) since the date of this instrument, there has been a change in the
applicable Federal income tax law, in either case (A) or (B) to the effect
that, and based thereon such opinion shall confirm that, the Holders of such
Notes will not recognize gain or loss for Federal income tax purposes as a
result of the deposit, Defeasance and discharge to be effected with respect
to such Notes and will be subject to Federal income tax on the same amount,
in the same manner and at the same times as would be the case if such
deposit, Defeasance and discharge were not to occur.
(3) In the event of an election to have Section 1403 apply to any Notes or
any series of Notes, as the case may be, the Company shall have delivered to
the Trustee an Opinion of Counsel to the effect that the Holders of such
Notes will not recognize gain or loss for Federal income tax purposes as a
result of the deposit and Covenant Defeasance to be effected with respect to
such Notes and will be subject to Federal income tax on the same amount, in
the same manner and at the same times as would be the case if such deposit
and Covenant Defeasance were not to occur.
(4) The Company shall have delivered to the Trustee an Officers=
Certificate to the effect that neither such Notes nor any other Notes of the
same series, if then listed on any securities exchange, will be delisted as a
result of such deposit.
(5) No event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Notes or any other Notes
shall have occurred and be continuing at the time of such deposit or, with
regard to any such event specified in Sections 601(6) and (7), at any time on
or prior to the 90th day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until after such 90th day).
(6) Such Defeasance or Covenant Defeasance shall not cause the Trustee to
have a conflicting interest within the meaning of the Trust Indenture Act
(assuming all Notes are in default within the meaning of such Act).
(7) Such Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(8) Such Defeasance or Covenant Defeasance shall not result in the trust
arising from such deposit constituting an investment company within the
meaning of the Investment Company Act unless such trust shall be registered
under such Act or exempt from registration thereunder.
<PAGE>
(9) If the Notes are to be redeemed prior to Stated Maturity (other than
from mandatory sinking fund payments or analogous payments), notice of such
redemption shall have been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee shall have been made.
(10) The Company shall have delivered to the Trustee an Officers=
Certificate and an Opinion of Counsel, each stating that all conditions
precedent with respect to such Defeasance or Covenant Defeasance have been
complied with.
SECTION 1405. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1103, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee pursuant to Section 1404 in respect of any Notes shall be held in
trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any such
Paying Agent (including the Company acting as its own Paying Agent) as the
Trustee may determine, to the Holders of such Notes, of all sums due and to
become due thereon in respect of principal and any premium and interest, but
money so held in trust need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 1404 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Notes.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 1404 with
respect to any Notes which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect the Defeasance or Covenant Defeasance, as
the case may be, with respect to such Notes.
SECTION 1406. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money in
accordance with this Article with respect to any Notes by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the obligations under this
Indenture and such Notes from which the Company has been discharged or released
pursuant to Section 1402 or 1403 shall be revived and reinstated as though no
deposit had occurred pursuant to this Article with respect to such Notes, until
such time as the Trustee or Paying Agent is permitted to apply all money held in
trust pursuant to Section 1405 with respect to such Notes in accordance with
this Article; provided, however, that if the Company makes any payment of
principal of or any premium or interest on any such Note following such
reinstatement of its obligations, the Company shall be subrogated
<PAGE>
to the rights (if any) of the Holders of such Notes to receive such payment from
the money so held in trust.
_____________________________
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
ARIZONA PUBLIC SERVICE COMPANY
By..............................
Treasurer
Attest:
.....................
THE BANK OF NEW YORK, as Trustee
By..............................
Vice President
Attest:
.....................
<PAGE>
STATE OF ARIZONA )
) ss.:
COUNTY OF MARICOPA )
On the .... day of before me personally came Nancy E. Newquist,
to me known, who, being by me duly sworn, did depose and say that she is
Treasurer of Arizona Public Service Company, one of the corporations described
in and which executed the foregoing instrument; that she knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that she signed her name thereto by like authority.
...........................
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the .... day of , before me personally came ____________, to
me known, who, being by me duly sworn, did depose and say that he is Vice
President of The Bank of New York, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
...........................
Exhibit 5.1
November 1, 1996
Arizona Public Service Company
400 North Fifth Street
Phoenix, Arizona 85004
Ladies and Gentlemen:
Reference is made to (a) your proposed offering of up to $175,000,000
of your Securities (the "Securities"), as contemplated by the combined
prospectus contained in the Registration Statement (the "Registration
Statement") on Form S-3 to be filed by you on November 1, 1996, with the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Act"), which Securities include (i) $25,000,000 of either New Bonds,
Senior Notes, or Debt Securities (as such terms are defined in the Registration
Statement), or any combination thereof, to be registered pursuant to the
Registration Statement, (ii) $25,000,000 of either New Bonds or Debt Securities
previously registered under Registration No. 33-64455, (iii) $25,000,000 of
either New Bonds or Debt Securities previously registered under Registration No.
33-55473, and (iv) $100,000,000 of First Mortgage Bonds previously registered
under Registration No. 33-61228; and (b) any registration statement registering
additional Securities pursuant to Rule 462(b) of the Act that relates to the
Registration Statement (the "Rule 462(b) Registration Statement").
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such corporate records, agreements, and other
instruments, certificates, orders, opinions, correspondence with public
officials, certificates provided by your officers and representatives, and other
documents as we have deemed necessary or advisable for the purposes of rending
the opinions set forth herein.
Based on the foregoing, it is our opinion that after (i) the
Registration Statement, and the Rule 462(b) Registration Statement, if
applicable, shall have become effective, and (ii) you shall have entered into
one or more underwriting or distribution agreements with respect to the
Securities then to be offered and the initial public offering price for each of
such Securities and the discounts therefrom and commission therefor shall have
been determined in accordance with such underwriting or distribution agreements,
pursuant to the authorization of your Board of Directors and the applicable
order of the Arizona Corporation Commission, then, when (i) the Securities have
been issued, sold, executed, authenticated, and delivered, and (ii) the purchase
price therefor has been paid
<PAGE>
Arizona Public Service Company
November 1, 1996
Page 2
to you as contemplated in the Registration Statement, and the Rule 462(b)
Registration Statement, if applicable, including the Exhibits thereto) and in
any relevant amendment thereto or in any Rule 424 supplement to the prospectus
contained in the Registration Statement, the Securities will be validly issued
and will constitute legal, valid, and binding obligations of you except as the
same may be limited by (a) general principles of equity or by bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other laws or equitable
principles relating to or affecting the enforcement of creditors' rights
generally, or by equitable principles that limit the right to specific
performance or otherwise limit remedial action or the enforcement of the
security provided for the Securities, (b) the necessity for compliance with the
statutory procedural requirements governing the exercise of remedies by a
secured creditor, and (c) the qualification that certain waivers, procedures,
remedies, and other provisions of the Securities may be unenforceable under or
limited by the law of the State of Arizona; however, such law does not in our
opinion substantially prevent the practical realization of the benefits thereof.
In giving the foregoing opinion, we are relying upon the opinion of
Keleher & McLeod, P.A., your New Mexico counsel, to the effect that your
activities to date do not constitute you a "public utility" as that term is
defined in the laws of New Mexico, and that, accordingly, no approval,
authorization, or consent of the New Mexico Public Service Commission or any
other public board or body of the State of New Mexico is required for the
issuance and sale of the Securities.
Consent is hereby given to the use of this opinion as part of the
Registration Statement, and the Rule 462(b) Registration Statement, if
applicable, and to the use of our name wherever it appears in said Registration
Statement, the related prospectus, and the Rule 462(b) Registration Statement,
if applicable.
Very truly yours,
Snell & Wilmer L.L.P.
Snell & Wilmer L.L.P.
Exhibit 12.1
ARIZONA PUBLIC SERVICE COMPANY
COMPUTATION OF EARNINGS TO FIXED CHARGES
(Thousands of Dollars)
<TABLE>
<CAPTION>
Twelve Months Ended
---------------------------------------------------------------------------------------
September 30, December 31,
---------------------------------------------------------------------------------------
1991
1996 1995 1994 1993 1992 1991 (a) Adjusted (a)
---- ---- ---- ---- ---- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Earnings:
Net Income...................... $264,471 $239,570 $243,486 $250,386 $246,805 $(222,649) $184,380
Income taxes (1)................ 152,186 141,267 177,244 188,907 181,355 (94,750) 128,801
Fixed Charges................... 206,724 214,768 213,581 220,590 246,246 281,959 281,959
-------- -------- -------- -------- -------- --------- --------
Total......................... $623,381 $595,605 $634,311 $659,883 $674,406 $ (35,440) $595,140
======== ======== ======== ======== ======== ========= ========
Fixed Charges:
Interest expense................ $160,513 $168,175 $166,045 $171,272 $190,746 $227,624 $227,624
Amortization of debt discount,
premium and expense........... 8,684 8,622 8,854 9,203 8,000 5,995 5,995
Estimated interest portion of
annual rents (2).............. 37,527 37,971 38,682 40,115 47,500 48,340 48,340
-------- -------- -------- -------- -------- --------- --------
Total......................... $206,724 $214,768 $213,581 $220,590 $246,246 $ 281,959 $281,959
======== ======== ======== ======== ======== ========= ========
Ratio of Earnings to Fixed Charges
(rounded down).................. 3.01 2.77 2.96 2.99 2.73 -0.13 2.11
======== ======== ======== ======== ======== ========= ========
(1) Income Taxes:
Charged to operations........... $190,065 $178,865 $168,202 $168,056 $164,620 $ 96,273 $117,408
Charged (credited) to other
accounts...................... (37,879) (37,598) 9,042 20,851 16,735 (191,023) 11,393
-------- -------- --------- -------- -------- ---------- --------
Total......................... $152,186 $141,267 $177,244 $188,907 $181,355 $ (94,750) $128,801
======== ======== ======== ======== ======== =========- ========
(2) Estimated interest portion of
Unit 2 lease payments included
in estimated interest portion of
annual rentals.................. $ 35,166 $ 35,422 $ 35,710 $ 37,407 $ 43,581 $ 43,625 $ 43,625
======== ======== ======== ======== ======== ========= ========
_______________________
(a) The write-off resulting from a December 1991 Arizona Corporation Commission
order settling the Company's then-pending rate case resulted in a negative
coverage ratio and an earnings coverage deficiency of approximately $317
million for the twelve months ended December 31, 1991. Excluding the
effects of the write-off, the coverage ratio would have been 2.11 for the
same period.
</TABLE>
Exhibit 15.1
October 30, 1996
Arizona Public Service Company
Post Office Box 53999
Phoenix, Arizona 85072-3999
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Arizona Public Service Company for the periods ended March 31 and
June 30, 1996 and 1995, as indicated in our reports dated May 2 and August 1,
1996, respectively; because we did not perform an audit, we expressed no opinion
on that information.
We are aware that our reports referred to above, which are included in your
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and June
30, 1996 are incorporated by reference in this Registration Statement.
We are also aware that the aforementioned reports pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of the Act.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Arizona Public Service Company on Form S-3 of our report dated March 1, 1996,
appearing in the Annual Report on Form 10-K of Arizona Public Service Company
for the year ended December 31, 1995 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
October 30, 1996
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM T_1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________
_________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
_________________
ARIZONA PUBLIC SERVICE COMPANY
(Exact name of obligor as specified in its charter)
Arizona 86-0011170
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400 North Fifth Street
Phoenix, Arizona 85004
(Address of principal executive offices) (Zip code)
_________________
First Mortgage Bonds*
(Title of the indenture securities)
___________________
*Specific title(s) to be determined in connection with sale(s) of
First Mortgage Bonds.
<PAGE>
Item 1. General Information.*
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<S> <C>
Superintendent of Banks of the 2 Rector Street, New York, N.Y. 10006
State of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation 550 17th Street, N.W., Washington, D.C. 20429
New York Clearing House Association New York, N.Y.
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 2.)
Item 16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit hereto, pursuant
to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of
the Commission's Rules of Practice.
1. - A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect,
which contains the authority to commence business and a
grant of powers to exercise corporate trust powers.
(Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672
and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. - A copy of the existing By-laws of the Trustee. (Exhibit 4
to Form T-1 filed with Registration Statement No.
33-31019.)
6. - The consent of the Trustee required by Section 321(b) of
the Act. (Exhibit 6 to Form T-1 filed with Registration
Statement No. 33-44051.)
7. - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority. (Exhibit 7 of Exhibit
25(a) filed with Registration Statement Nos. 333-14369
and 333-14369-01).
__________________________
*Pursuant to General Instruction B, the Trustee has responded only to Items
1, 2 and 16 of this form since to the best of the knowledge of the Trustee the
obligor is not in default under any indenture under which the Trustee is a
trustee.
<PAGE>
NOTE
Inasmuch as this Form T-1 is being filed prior to the
ascertainment by the Trustee of all facts on which to base a responsive answer
to Item 2, the answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended
by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank
of New York, a corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 28th day of October, 1996.
THE BANK OF NEW YORK
By: WALTER N. GITLIN
---------------------------
Walter N. Gitlin
Vice President
- 2 -
Exhibit 25.2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________
_________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
_________________
ARIZONA PUBLIC SERVICE COMPANY
(Exact name of obligor as specified in its charter)
Arizona 86-0011170
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400 North Fifth Street
Phoenix, Arizona 85004
(Address of principal executive offices) (Zip code)
_________________
Debt Securities*
(Title of the indenture securities)
__________________
*Specific title(s) to be determined in connection with sale(s)
of Debt Securities.
<PAGE>
Item 1. General Information.*
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
<TABLE>
<S> <C>
Superintendent of Banks of the 2 Rector Street, New York, N.Y. 10006
State of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation 550 17th Street, N.W., Washington, D.C. 20429
New York Clearing House Association New York, N.Y.
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 2.)
Item 16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit hereto, pursuant
to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of
the Commission's Rules of Practice.
1. - A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect,
which contains the authority to commence business and a
grant of powers to exercise corporate trust powers.
(Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672
and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. - A copy of the existing By-laws of the Trustee. (Exhibit 4
to Form T-1 filed with Registration Statement No.
33-31019.)
6. - The consent of the Trustee required by Section 321(b) of
the Act. (Exhibit 6 to Form T-1 filed with Registration
Statement No. 33-44051.)
7. - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority. (Exhibit 7 of Exhibit
25(a) filed with Registration Statement Nos. 333-14369
and 333-14369-01).
___________________
*Pursuant to General Instruction B, the Trustee has responded only to
Items 1, 2 and 16 of this form since to the best of the knowledge of the Trustee
the obligor is not in default under any indenture under which the Trustee is a
trustee.
<PAGE>
NOTE
Inasmuch as this Form T-1 is being filed prior to the
ascertainment by the Trustee of all facts on which to base a responsive answer
to Item 2, the answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended
by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank
of New York, a corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 28th day of October, 1996.
THE BANK OF NEW YORK
By: WALTER N. GITLIN
--------------------------
Walter N. Gitlin
Vice President
- 2 -
-------------------------------------------------------------------
Exhibit 25.3
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------------------------
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
----------------------------------------
THE CHASE MANHATTAN BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
---------------------------------------------------------
Arizona Public Service Company
(Exact name of obligor as specified in its charter)
Arizona 86-0011170
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
400 North Fifth Street
Phoenix, Arizona 85004
(Address of principal executive offices) (Zip Code)
-------------------------------------------
Debt Securities
(Title of the indenture securities)
-----------------------------------------------------
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, State House, Albany, New York
12110.
Board of Governors of the Federal Reserve System, Washington,
D.C., 20551
Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
Item 16. List of Exhibits
List below all exhibits filed as a part of this Statement of
Eligibility.
1. A copy of the Articles of Association of the Trustee as now in
effect, including the Organization Certificate and the Certificates of Amendment
dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1
filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in
connection with the merger of Chemical Bank and The Chase Manhattan Bank
(National Association), Chemical Bank, the surviving corporation, was renamed
The Chase Manhattan Bank.)
3. None, authorization to exercise corporate trust powers being
contained in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-06249, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act
(see Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
33-50010, which is incorporated by reference. On July 14, 1996, in connection
with the merger of Chemical Bank and The Chase Manhattan Bank (National
Association), Chemical Bank, the surviving corporation, was renamed The Chase
Manhattan Bank.)
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
(On July 14, 1996, in connection with the merger of Chemical Bank and The Chase
Manhattan Bank (National Association), Chemical Bank, the surviving corporation,
was renamed The Chase Manhattan Bank.)
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, The Chase Manhattan Bank, a corporation organized and existing under
the laws of the State of New York, has duly caused this statement of eligibility
to be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York, on the 25th day of October, 1996.
THE CHASE MANHATTAN BANK
By T. J. Foley
----------------------------------
T. J. Foley
Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business June 30, 1996, in accordance
with a call made by the Federal Reserve Bank of this District
pursuant to the provisions of the Federal Reserve Act.
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<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ......................................................... $ 4,167
Interest-bearing balances ................................................. 5,094
Securities:.....................................................................
Held to maturity securities .................................................... 3,367
Available for sale securities................................................... 27,786
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold ........................................................ 7,204
Securities purchased under agreements to resell ........................... 136
Loans and lease financing receivables:
Loans and leases, net of unearned income ......................$ 67,215
Less: Allowance for loan and lease losses ..................... 1,768
Less: Allocated transfer risk reserve ......................... 75
--------
Loans and leases, net of unearned income,
allowance, and reserve .................................................... 65,372
Trading Assets.................................................................. 28,610
Premises and fixed assets (including capitalized
leases).................................................................... 1,326
Other real estate owned ........................................................ 26
Investments in unconsolidated subsidiaries and
associated companies ...................................................... 68
Customer's liability to this bank on acceptances
outstanding................................................................ 995
Intangible assets............................................................... 309
Other assets.................................................................... 6,993
--------
TOTAL ASSETS $151,453
========
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits
In domestic offices ....................................................... $ 46,917
Noninterest-bearing ...........................................$ 16,711
Interest-bearing .............................................. 30,206
--------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's ................................................................. 31,577
Noninterest-bearing ................................................$ 2,197
Interest-bearing .............................................. 29,380
--------
Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased ................................................... 12,155
Securities sold under agreements to repurchase ............................ 8,536
Demand notes issued to the U.S. Treasury ....................................... 1,000
Trading liabilities ............................................................ 20,914
Other Borrowed money:
With a remaining maturity of one year or less ............................. 10,018
With a remaining maturity of more than one year ................................ 192
Mortgage indebtedness and obligations under capitalized
leases..................................................................... 12
Bank's liability on acceptances executed and outstanding ....................... 1,001
Subordinated notes and debentures .............................................. 3,411
Other liabilities............................................................... 8,091
TOTAL LIABILITIES .............................................................. 143,824
--------
EQUITY CAPITAL
Common stock ................................................................... 620
Surplus......................................................................... 4,664
Undivided profits and capital reserves ......................................... 2,970
Net unrealized holding gains (Losses)
on available-for-sale securities ............................................... (633)
Cumulative foreign currency translation adjustments ............................ 8
TOTAL EQUITY CAPITAL ........................................................... 7,629
--------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL .................................................. $151,453
========
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and is true
to the best of my knowledge and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
THOMAS G. LABRECQUE )
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Exhibit 25.4
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2) ____________
_________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip code)
_________________
ARIZONA PUBLIC SERVICE COMPANY
(Exact name of obligor as specified in its charter)
Arizona 86-0011170
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
400 North Fifth Street
Phoenix, Arizona 85004
(Address of principal executive offices) (Zip code)
_________________
Senior Notes*
(Title of the indenture securities)
__________________
*Specific title(s) to be determined in connection with sale(s) of Senior Notes
<PAGE>
Item 1. General Information.*
Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
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<S> <C>
Superintendent of Banks of the 2 Rector Street, New York, N.Y. 10006
State of New York and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York, N.Y. 10045
Federal Deposit Insurance Corporation 550 17th Street, N.W., Washington, D.C. 20429
New York Clearing House Association New York, N.Y.
</TABLE>
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None. (See Note on page 2.)
Item 16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an exhibit hereto, pursuant
to Rule 7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of
the Commission's Rules of Practice.
1. - A copy of the Organization Certificate of The Bank of New
York (formerly Irving Trust Company) as now in effect,
which contains the authority to commence business and a
grant of powers to exercise corporate trust powers.
(Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672
and Exhibit 1 to Form T-1 filed with Registration
Statement No. 33-29637.)
4. - A copy of the existing By-laws of the Trustee. (Exhibit 4
to Form T-1 filed with Registration Statement No.
33-31019.)
6. - The consent of the Trustee required by Section 321(b) of
the Act. (Exhibit 6 to Form T-1 filed with Registration
Statement No. 33-44051.)
7. - A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority. (Exhibit 7 of Exhibit
25(a) filed with Registration Statement Nos. 333-14369
and 333-14369-01).
_________________
*Pursuant to General Instruction B, the Trustee has responded only to Items
1, 2 and 16 of this form since to the best of the knowledge of the Trustee the
obligor is not in default under any indenture under which the Trustee is a
trustee.
<PAGE>
NOTE
Inasmuch as this Form T-1 is being filed prior to the
ascertainment by the Trustee of all facts on which to base a responsive answer
to Item 2, the answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended
by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank
of New York, a corporation organized and existing under the laws of the State of
New York, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of New
York, and State of New York, on the 28th day of October, 1996.
THE BANK OF NEW YORK
By: WALTER N. GITLIN
----------------------------
Walter N. Gitlin
Vice President
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