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Exhibit 10.96
EXECUTION VERSION
PINNACLE WEST CAPITAL CORPORATION
$200,000,000
SENIOR NOTES
UNCOMMITTED MASTER SHELF AGREEMENT
Dated as of February 28, 2006
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TABLE OF CONTENTS
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<C>
1. AUTHORIZATION OF
ISSUE OF NOTES........................................ 1
2. PURCHASE AND SALE
OF NOTES............................................. 1
2A.
Facility..........................................................
1
2B.
Issuance
Period...................................................
2
2C.
Periodic Spread
Information....................................... 2
2D.
Request for
Purchase.............................................. 2
2E.
Rate
Quotes.......................................................
3
2F.
Acceptance........................................................
3
2G.
Market
Disruption.................................................
3
2H.
Closing...........................................................
4
2I.
Fees..............................................................
5
3. CONDITIONS OF
CLOSING..................................................
6
3A.
Certain
Documents.................................................
6
3B.
Opinion of Purchaser's
Special Counsel............................ 7
3C.
Representations and
Warranties; No Default........................ 7
3D.
Purchase Permitted by
Applicable Laws............................. 7
3E.
Legal
Matters.....................................................
8
3F.
Payment of
Fees...................................................
8
3G.
Proceedings.......................................................
8
3H.
Private Placement
Numbers......................................... 8
4.
PREPAYMENTS............................................................
8
4A.
Required
Prepayments..............................................
8
4B.
Optional Prepayment
With Yield-Maintenance Amount................. 8
4C.
Notice of Optional
Prepayment..................................... 8
4D.
Application of
Prepayments........................................ 9
4E.
Retirement of
Notes............................................... 9
5. AFFIRMATIVE
COVENANTS..................................................
9
5A.
Financial Statements;
Notice of Defaults.......................... 9
5B.
Information Required
by Rule 144A................................. 11
5C.
Inspection of
Property............................................ 11
5D.
Maintenance of
Property; Insurance................................ 12
5E.
Conduct of Business
and Maintenance of Existence.................. 12
5F.
Compliance with
Laws.............................................. 13
5G.
Covenant to Secure
Notes Equally.................................. 13
5H.
Ownership of
APS.................................................. 13
5I.
Additional Covenants
and Additional Defaults...................... 13
6. NEGATIVE
COVENANTS.....................................................
13
6A.
Debt..............................................................
13
6B.
Consolidations;
Mergers and Sales of Assets....................... 13
6C.
Terrorism Sanction
Regulations.................................... 14
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7. EVENTS OF
DEFAULT......................................................
14
7A.
Acceleration......................................................
14
7B.
Rescission of
Acceleration........................................ 16
7C.
Notice of Acceleration
or Rescission.............................. 17
7D.
Other
Remedies....................................................
17
8. REPRESENTATIONS,
COVENANTS AND WARRANTIES.............................. 17
8A.
Organization......................................................
17
8B.
Financial
Statements..............................................
17
8C.
Actions
Pending...................................................
18
8D.
Outstanding
Indebtedness.......................................... 18
8E.
Title to
Properties...............................................
18
8F.
Taxes.............................................................
19
8G.
Conflicting Agreements
and Other Matters.......................... 19
8H.
Offering of
Notes................................................. 19
8I.
Use of
Proceeds...................................................
19
8J.
ERISA.............................................................
20
8K.
Governmental
Consent.............................................. 20
8L.
Compliance with
Environmental and Other Laws...................... 20
8M.
Foreign Assets Control
Regulations, Etc........................... 21
8N.
Permits and Other
Operating Rights................................ 21
8O.
Utility Company
Status............................................ 21
8P.
Investment Company
Status......................................... 21
8Q.
Disclosure........................................................
22
8R.
Rule
144A.........................................................
22
8S.
Hostile Tender
Offers............................................. 22
9. REPRESENTATIONS OF
THE PURCHASERS...................................... 22
9A.
Nature of
Purchase................................................
22
9B.
Source of
Funds...................................................
22
9C.
Accredited
Investor...............................................
24
10. DEFINITIONS; ACCOUNTING
MATTERS........................................ 24
10A.
Yield-Maintenance Terms...........................................
24
10B. Other
Terms.......................................................
25
10C.
Accounting Principles, Terms and Determinations...................
33
11.
MISCELLANEOUS..........................................................
33
11A. Note
Payments.....................................................
33
11B.
Expenses..........................................................
34
11C.
Consent to Amendments.............................................
34
11D. Form,
Registration, Transfer and Exchange of Notes; Lost Notes....
35
11E.
Persons Deemed Owners; Participations.............................
36
11F.
Survival of Representations and Warranties; Entire Agreement......
36
11G.
Successors and Assigns............................................
36
11H.
Independence of Covenants.........................................
36
11I.
Notices...........................................................
37
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11J.
Payments Due on Non-Business Days.................................
37
11K.
Severability......................................................
37
11L.
Descriptive Headings..............................................
37
11M.
Satisfaction Requirement..........................................
38
11N.
Governing Law.....................................................
38
11O.
Severalty of Obligations..........................................
38
11P.
Counterparts......................................................
38
11Q.
Binding Agreement.................................................
38
11R.
Waiver of Jury Trial; Consent to Jurisdiction.....................
38
11S.
Confidential Information..........................................
39
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PURCHASER SCHEDULE
SCHEDULE 8G - LIST OF AGREEMENTS RESTRICTING DEBT
EXHIBIT A-1 - FORM OF NOTE
EXHIBIT A-2 - FORM OF SERIES A NOTE
EXHIBIT B - FORM
OF REQUEST FOR PURCHASE
EXHIBIT C - FORM
OF CONFIRMATION OF ACCEPTANCE
EXHIBIT D - FORM
OF FUNDS DELIVERY INSTRUCTION LETTER
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PINNACLE WEST CAPITAL CORPORATION
400 NORTH 5TH STREET, 19TH FLOOR
PHOENIX, ARIZONA 85004
As of February 28, 2006
To: Prudential Investment Management, Inc.
(herein called "PRUDENTIAL")
Each
Prudential Affiliate (as hereinafter defined)
which becomes bound by certain provisions of this
Agreement as hereinafter provided (the "PURCHASERS")
c/o
Prudential Capital Group
2200 Ross
Avenue, Suite 4200E
Dallas, TX
75201
Ladies and Gentlemen:
The undersigned, Pinnacle West Capital Corporation (the
"COMPANY"),
hereby agrees with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Company will authorize
the
issue of its senior promissory notes (the "NOTES") from time to
time in
accordance with the provisions of this Agreement in the aggregate
principal
amount of up to $200,000,000, to be dated the date of issue
thereof; to mature,
in the case of each Note so issued, no more than 5 years after the
date of
original issuance thereof; to bear interest on the unpaid balance
thereof from
the date thereof at the rate per annum, and to have such other
particular terms,
as shall be set forth, in the case of each Note so issued, in the
Confirmation
of Acceptance with respect to such Note delivered pursuant to
paragraph 2F; and
to be substantially in the form of Exhibit A-1 attached hereto. The
term "NOTES"
as used herein shall include each Note delivered pursuant to any
provision of
this Agreement and each Note delivered in substitution or exchange
for any such
Note pursuant to any such provision. Notes which have (i) the same
final
maturity, (ii) the same principal prepayment dates, (iii) the same
principal
prepayment amounts (as a percentage of the original principal
amount of each
Note), (iv) the same interest rate, and (v) the same original date
of issuance
are herein called a "SERIES" of Notes. Capitalized terms used
herein have the
meanings specified in paragraph 10.
2. PURCHASE AND SALE OF NOTES.
2A. FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase
by Prudential
Affiliates from time to time, the purchase of Notes pursuant to
this Agreement.
The willingness of Prudential to consider such purchase of Notes is
herein
called the "FACILITY". At any time, the aggregate principal amount
of Notes
stated in paragraph 1, minus the aggregate principal amount of
Notes purchased
and sold pursuant to this Agreement prior to such time, minus the
aggregate
principal amount of Accepted Notes (as hereinafter defined) which
have not yet
been purchased and sold hereunder prior to such time is herein
called the
"AVAILABLE FACILITY AMOUNT" at such time. NOTWITHSTANDING THE
WILLINGNESS OF
PRUDENTIAL TO CONSIDER
<PAGE>
PURCHASES OF NOTES BY PRUDENTIAL AFFILIATES, THIS AGREEMENT IS
ENTERED INTO ON
THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE
SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE NOTES, OR
TO QUOTE
RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF
NOTES, AND
THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY
PRUDENTIAL OR ANY
PRUDENTIAL AFFILIATE.
2B. ISSUANCE PERIOD. Notes may be issued and sold pursuant to
this
Agreement until the earlier of (i) December 31, 2007 and (ii) the
fifteenth day
after Prudential shall have given to the Company, or the Company
shall have
given to Prudential, written notice stating that it elects to
terminate the
issuance and sale of Notes pursuant to this Agreement (or if such
fifteenth day
is not a Business Day, the Business Day next preceding such
fifteenth day). The
period during which Notes may be issued and sold pursuant to this
Agreement is
herein called the "ISSUANCE PERIOD".
2C. PERIODIC SPREAD INFORMATION. Provided no Default or Event
of
Default exists, not later than 9:30 A.M. (New York City local time)
on a
Business Day during the Issuance Period if there is an Available
Facility Amount
on such Business Day, the Company may request by telecopier or
telephone, and
Prudential will, to the extent reasonably practicable, provide to
the Company on
such Business Day (or, if such request is received after 9:30 A.M.
(New York
City local time) on such Business Day, on the following Business
Day),
information (by telecopier or telephone) with respect to various
spreads at
which Prudential Affiliates might be interested in purchasing Notes
of different
average lives; provided, however, that the Company may not make
such requests
more frequently than once in every five Business Days or such other
period as
shall be mutually agreed to by the Company and Prudential. The
amount and
content of information so provided shall be in the sole discretion
of Prudential
but it is the intent of Prudential to provide information which
will be of use
to the Company in determining whether to initiate procedures for
use of the
Facility. Information so provided shall not constitute an offer to
purchase
Notes, and neither Prudential nor any Prudential Affiliate shall be
obligated to
purchase Notes at the spreads specified. Information so provided
shall be
representative of potential interest only for the period commencing
on the day
such information is provided and ending on the earlier of the fifth
Business Day
after such day and the first day after such day on which further
spread
information is provided. Prudential may suspend or terminate
providing
information pursuant to this paragraph 2C for any reason, including
its
determination that the credit quality of the Company has declined
since the date
of this Agreement.
2D. REQUEST FOR PURCHASE. The Company may from time to time during
the
Issuance Period make requests for purchases of Notes (each such
request being a
"REQUEST FOR PURCHASE"). Each Request for Purchase shall be made to
Prudential
by telecopier or overnight delivery service, and shall (i) specify
the aggregate
principal amount of Notes covered thereby, which shall not be less
than
$5,000,000 and not be greater than the Available Facility Amount at
the time
such Request for Purchase is made, (ii) specify the principal
amounts, final
maturities, principal prepayment dates and amounts of the Notes
covered thereby,
(iii) specify the use of proceeds of such Notes, (iv) specify the
proposed day
for the closing of the purchase and sale of such Notes, which,
unless otherwise
agreed by Prudential, shall be a Business Day during the
2
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Issuance Period not less than 10 days and not more than 25 days
after the making
of such Request for Purchase, (v) specify the number of the account
and the name
and address of the depository institution to which the purchase
prices of such
Notes are to be transferred on the Closing Day for such purchase
and sale, (vi)
certify that, except as specified in such Request for Purchase,
the
representations and warranties contained in paragraph 8 are true on
and as of
the date of such Request for Purchase and that there exists on the
date of such
Request for Purchase no Event of Default or Default, (vii) specify
the
Designated Spread for such Notes and (viii) be substantially in the
form of
Exhibit B attached hereto. Each Request for Purchase shall be in
writing and
shall be deemed made when received by Prudential.
2E. RATE QUOTES. Not later than five Business Days after the
Company
shall have given Prudential a Request for Purchase pursuant to
paragraph 2D,
Prudential may, but shall be under no obligation to, provide to the
Company by
telephone or telecopier, in each case between 9:30 A.M. and 1:30
P.M. New York
City local time (or such later time as Prudential may elect)
interest rate
quotes for the several principal amounts, maturities and principal
prepayment
schedules of Notes specified in such Request for Purchase. Each
quote shall
represent the interest rate per annum payable on the outstanding
principal
balance of such Notes, at which a Prudential Affiliate would be
willing to
purchase such Notes at 100% of the principal amount thereof.
2F. ACCEPTANCE. Within 30 minutes after Prudential shall have
provided
any interest rate quotes pursuant to paragraph 2E or such shorter
period as
Prudential may specify to the Company (such period being the
"ACCEPTANCE
WINDOW"), the Company may, subject to paragraph 2G, elect to accept
such
interest rate quotes as to any portion not less than $5,000,000
aggregate
principal amount of the Notes specified in the related Request for
Purchase.
Such election shall be made by an Authorized Officer of the Company
notifying
Prudential by telephone or telecopier within the Acceptance Window
that the
Company elects to accept such interest rate quotes, specifying the
Notes (each
such Note being an "ACCEPTED NOTE") as to which such acceptance
(an
"ACCEPTANCE") relates. The day the Company notifies an Acceptance
with respect
to any Accepted Notes is herein called the "ACCEPTANCE DAY" for
such Accepted
Notes. Any interest rate quotes as to which Prudential does not
receive an
Acceptance within the Acceptance Window shall expire, and no
purchase or sale of
Notes hereunder shall be made based on such expired interest rate
quotes.
Subject to paragraph 2G and the other terms and conditions hereof,
the Company
agrees to sell to a Prudential Affiliate, and Prudential agrees to
cause the
purchase by a Prudential Affiliate of, the Accepted Notes at 100%
of the
principal amount of such Notes. As soon as practicable following
the Acceptance
Day, the Company, Prudential and each Prudential Affiliate which is
to purchase
any such Accepted Notes will execute a confirmation of such
Acceptance
substantially in the form of Exhibit C attached hereto (a
"CONFIRMATION OF
ACCEPTANCE"). If the Company should fail to execute and return to
Prudential
within two Business Days following receipt thereof a Confirmation
of Acceptance
with respect to any Accepted Notes, Prudential may at its election
at any time
prior to its receipt thereof cancel the closing with respect to
such Accepted
Notes by so notifying the Company in writing.
2G. MARKET DISRUPTION. Notwithstanding the provisions of paragraph
2F,
if Prudential shall have provided interest rate quotes pursuant to
paragraph 2E
and thereafter prior to the time an Acceptance with respect to such
quotes shall
have been notified to Prudential in
3
<PAGE>
accordance with paragraph 2F the domestic market for U.S. Treasury
securities or
derivatives shall have closed or there shall have occurred a
general suspension,
material limitation, or significant disruption of trading in
securities
generally on the New York Stock Exchange or in the domestic market
for U.S.
Treasury securities or derivatives, then such interest rate quotes
shall expire,
and no purchase or sale of Notes hereunder shall be made based on
such expired
interest rate quotes. If the Company thereafter notifies Prudential
of the
Acceptance of any such interest rate quotes, such Acceptance shall
be
ineffective for all purposes of this Agreement, and Prudential
shall promptly
notify the Company that the provisions of this paragraph 2G are
applicable with
respect to such Acceptance.
2H. CLOSING.
2H(1). SERIES A CLOSING. The Company hereby agrees to sell to
the
Purchasers and, subject to the terms and conditions set forth
herein, each
Purchaser agrees to purchase from the Company under the Facility
5.91% Senior
Notes due February 28, 2011 (the "SERIES A NOTES") in the aggregate
principal
amount set forth opposite its name on the Purchaser Schedule
attached hereto at
100% of such aggregate principal amount. The Series A Notes shall
be
substantially in the form of Exhibit A-2 attached hereto. The
Company will
deliver to Prudential, at the offices of Prudential Capital Group
at 2200 Ross
Avenue, Suite 4200E, Dallas, Texas, 75201 or, at the request of
Prudential, at
the offices of Baker Botts L.L.P. at 2001 Ross Avenue, Suite 600,
Dallas, Texas
75201, one or more Notes registered in the name of the Purchasers,
evidencing
the aggregate principal amount of Series A Notes to be purchased by
the
Purchasers and in the denomination or denominations specified in
the Purchaser
Schedule attached hereto against payment of the purchase price
thereof by
transfer of immediately available funds to the credit of the
Company's account
at JPMorgan Chase AZ, Phoenix, Arizona, Account Number 22703938
(ABA No.
122100024) on the date of closing, which shall be February 28,
2006, or any
other date upon which the Company and Prudential may mutually agree
in writing
(the "SERIES A CLOSING").
2H(2). SUBSEQUENT CLOSINGS. Not later than 11:30 A.M. (New York
City
local time) on the Closing Day for any Accepted Notes, the Company
will deliver
to each Purchaser listed in the Confirmation of Acceptance relating
thereto at
the offices of Prudential Capital Group at 2200 Ross Avenue, Suite
4200E,
Dallas, Texas 75201 the Accepted Notes to be purchased by such
Purchaser in the
form of one or more Notes in authorized denominations as such
Purchaser may
request for each Series of Accepted Notes to be purchased on the
Closing Day,
dated the Closing Day and registered in such Purchaser's name (or
in the name of
its nominee), against payment of the purchase price thereof by
transfer of
immediately available funds for credit to the Company's account
specified in the
Request for Purchase of such Notes.
2H(3). RESCHEDULED CLOSINGS. If the Company fails to tender to
any
Purchaser the Accepted Notes to be purchased by such Purchaser on
the scheduled
Closing Day for such Accepted Notes as provided above in this
paragraph 2H, or
any of the conditions specified in paragraph 3 shall not have been
fulfilled by
the time required on such scheduled Closing Day, the Company shall,
prior to
1:00 P.M., New York City local time, on such scheduled Closing Day
notify
Prudential (which notification shall be deemed received by each
Purchaser) in
writing whether (x) such closing is to be rescheduled (such
rescheduled date to
be a Business Day during the Issuance Period not less than one
Business Day and
not more than 30 Business Days after
4
<PAGE>
such scheduled Closing Day (the "RESCHEDULED CLOSING DAY") and
certify to
Prudential (which certification shall be for the benefit of each
Purchaser) that
the Company reasonably believes that it will be able to comply with
the
conditions set forth in paragraph 3 on such Rescheduled Closing Day
and that the
Company will pay the Delayed Delivery Fee in accordance with
paragraph 2I(2) or
(y) such closing is to be canceled as provided in paragraph 2I(3).
In the event
that the Company shall fail to give such notice referred to in the
preceding
sentence, Prudential (on behalf of each Purchaser) may at its
election, at any
time after 1:00 P.M., New York City local time, on such scheduled
Closing Day,
notify the Company in writing that such closing is to be canceled
as provided in
paragraph 2I(3). Notwithstanding anything to the contrary appearing
in this
Agreement, the Company may elect to reschedule a closing with
respect to any
given Accepted Notes on not more than one occasion, unless
Prudential shall have
otherwise consented in writing.
2I. FEES.
2I(1). ISSUANCE FEE. The Company will pay to Prudential in
immediately
available funds a fee (the "ISSUANCE FEE") on each Closing Day
(other than the
Series A Closing) in an amount equal to 0.125% of the aggregate
principal amount
of Notes sold on such Closing Day.
2I(2). DELAYED DELIVERY FEE. If the closing of the purchase and
sale
of any Accepted Note is delayed for any reason beyond the original
Closing Day
for such Accepted Note, the Company will pay to the Purchaser of
such Accepted
Note on the Cancellation Date or actual closing date of such
purchase and sale a
fee (the "DELAYED DELIVERY FEE") calculated as follows:
(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, i.e., the bond equivalent
yield per
annum of such Accepted Note, "MMY" means Money Market Yield, i.e.,
the yield per
annum on a commercial paper investment of the highest quality
selected by
Prudential on the date Prudential receives notice of the delay in
the closing
for such Accepted Note having a maturity date or dates the same as,
or closest
to, the Rescheduled Closing Day or Rescheduled Closing Days (a new
alternative
investment being selected by Prudential each time such closing is
delayed);
"DTS" means Days to Settlement, i.e., the number of actual days
elapsed from and
including the original Closing Day with respect to such Accepted
Note to but
excluding the date of such payment; and "PA" means Principal
Amount, i.e., the
principal amount of the Accepted Note for which such calculation is
being made.
In no case shall the Delayed Delivery Fee be less than zero.
Nothing contained
herein shall obligate any Purchaser to purchase any Accepted Note
on any day
other than the Closing Day for such Accepted Note, as the same may
be
rescheduled from time to time in compliance with paragraph 2H.
2I(3). CANCELLATION FEE. If the Company at any time notifies
Prudential in writing that the Company is canceling the closing of
the purchase
and sale of any Accepted Note, or if Prudential notifies the
Company in writing
under the circumstances set forth in the penultimate sentence of
paragraph 2H(3)
that the closing of the purchase and sale of such Accepted Note
5
<PAGE>
is to be canceled, or if the closing of the purchase and sale of
such Accepted
Note is not consummated on or prior to the last day of the Issuance
Period (the
date of any such notification, or the last day of the Issuance
Period, as the
case may be, being the "CANCELLATION DATE"), the Company will pay
the Purchasers
in immediately available funds an amount (the "CANCELLATION FEE")
calculated as
follows:
PI X PA
where "PI" means Price Increase, i.e., the quotient (expressed in
decimals)
obtained by dividing (a) the excess of the ask price (as determined
by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date
over the bid
price (as determined by Prudential) of the Hedge Treasury Notes(s)
on the
Acceptance Day for such Accepted Note by (b) such bid price; and
"PA" has the
meaning specified in paragraph 2I(2). The foregoing bid and ask
prices shall be
as reported by TradeWeb LLC (or, if such data for any reason ceases
to be
available through TradeWeb LLC, any publicly available source of
similar market
data). Each price shall be rounded to the second decimal place. In
no case shall
the Cancellation Fee be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to
purchase
and pay for any Notes is subject to the satisfaction, on or before
the Closing
Day for such Notes, of the following conditions:
3A. CERTAIN DOCUMENTS. Such Purchaser shall have received the
following, each dated the date of the applicable Closing Day:
(i) The Note(s) to be purchased by such Purchaser.
(ii) Certified copies of the resolutions of the Board of Directors
of
the
Company authorizing the execution and delivery of this Agreement
and
the
issuance of the Notes, and of all documents evidencing other
necessary
corporate action and governmental approvals, if any, with respect
to this
Agreement and the Accepted Notes (provided, that for any Closing
Day
occurring after the Series A Closing, the Company may certify that
there
has
been no change to any applicable authorization or approval since
the
date
on which it was most recently delivered to such Purchaser under
this
paragraph 3A(ii), as an alternative to the further delivery
thereof).
(iii) A certificate of the Secretary, an Assistant Secretary or
an
Associate Secretary of the Company certifying the names and true
signatures
of
the officers of the Company authorized to sign this Agreement and
the
Notes and the other documents to be delivered hereunder (provided,
that for
any
Closing Day occurring after the Series A Closing, the Secretary,
an
Assistant Secretary or an Associate Secretary of the Company may
certify
that
there has been no change to the officers of the Company authorized
to
sign
Accepted Notes and other documents to be delivered therewith since
the
date
on which a certificate setting forth the names and true signatures
of
such
officers, as described above, was most recently delivered to
such
Purchaser under this paragraph 3A(iii), as an alternative to the
further
delivery thereof).
(iv) Certified copies of the Certificate of Incorporation and
By-laws
of
the Company (provided, that for any Closing Day occurring after
the
Series A Closing, the Company may certify that there has been no
change to
any
applicable constitutive
6
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document since the date on which it was most recently delivered to
such
Purchaser under this paragraph 3A(iv), as an alternative to the
further
delivery thereof).
(v) Favorable opinions of (a) Snell & Wilmer, L.L.P. and (b)
Morgan,
Lewis & Bockius LLP, special counsel to the Company (or such
other counsel
designated by the Company and acceptable to the Purchaser(s))
satisfactory
to
such Purchaser and substantially in the forms provided on the
Closing
Day
with respect to the Series A Notes and as to such other matters as
such
Purchaser may reasonably
request. The Company hereby directs each such
counsel to deliver such opinion, agrees that the issuance and sale
of any
Accepted Notes will constitute a reconfirmation of such direction,
and
understands and agrees that each Purchaser receiving such an
opinion will
and
is hereby authorized to rely on such opinion.
(vi) A good standing certificate for the Company from the
Arizona
Corporation Commission dated a recent date and such other evidence
of the
status of the Company as such Purchaser may reasonably request.
(vii) Solely in connection with the Series A Closing, certified
copies
of
Requests for Information or Copies (Form UCC-11) or equivalent
reports
listing all effective financing statements which name the Company
(under
its
present name and previous names) as debtor and which are filed in
the
office of the Secretary of State of Arizona, together with copies
of such
financing statements.
(viii) Additional documents or certificates with respect to
legal
matters or corporate or other proceedings related to the
transactions
contemplated hereby as may be reasonably requested by such
Purchaser at
least five days in advance of the Closing Day.
(ix) Written instructions of the Company in the form of Exhibit
D
attached hereto.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser shall
have
received from Baker Botts, L.L.P., who is acting as special counsel
for it in
connection with this transaction, a favorable opinion satisfactory
to such
Purchaser as to such matters incident to the matters herein
contemplated as it
may reasonably request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. Except as disclosed
in
the Officer's Certificate referenced herein, the representations
and warranties
contained in paragraph 8 shall be true on and as of such Closing
Day, except to
the extent of changes caused by the transactions herein
contemplated; there
shall exist on such Closing Day no Event of Default or Default; and
the Company
shall have delivered to such Purchaser an Officer's Certificate,
dated such
Closing Day, to both such effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment
for the Notes to be purchased by such Purchaser on the terms and
conditions
herein provided (including the use of the proceeds of such Notes by
the Company)
shall not violate any applicable law or governmental regulation
(including,
without limitation, Section 5 of the Securities Act or Regulation
T, U or X of
the Board of Governors of the Federal Reserve System) and shall not
subject such
Purchaser to any tax, penalty, liability or other onerous
7
<PAGE>
condition under or pursuant to any applicable law or governmental
regulation,
and such Purchaser shall have received such certificates or other
evidence as it
may reasonably request to establish compliance with this
condition.
3E. LEGAL MATTERS. Counsel for such Purchaser, including any
special
counsel for the Purchasers retained in connection with the purchase
and sale of
such Accepted Notes, shall be satisfied as to all legal matters
relating to such
purchase and sale, and such Purchaser shall have received from such
counsel
favorable opinions as to such legal matters as it may reasonably
request.
3F. PAYMENT OF FEES. The Company shall have paid to the Purchasers
and
Prudential any fees due them pursuant to or in connection with this
Agreement,
including any Issuance Fee due pursuant to paragraph 2I(1) and any
Delayed
Delivery Fee due pursuant to paragraph 2I(2). In addition, and
without limiting
the provisions of paragraph 11B, special counsel to the Purchasers
shall have
received its reasonable fees, charges and disbursements to the
extent reflected
in a statement of such special counsel rendered to the Company at
least one
Business Day prior to such Closing Day.
3G. PROCEEDINGS. All corporate and other proceedings taken or to
be
taken in connection with the transactions contemplated hereby and
all documents
incident thereto shall be satisfactory in substance and form to
such Purchaser,
and it shall have received all such counterpart originals or
certified or other
copies of such documents as it may reasonably request.
3H. PRIVATE PLACEMENT NUMBERS. Private Placement numbers issued
by
Standard & Poor's CUSIP Service Bureau (in cooperation with the
Securities
Valuation Office of the National Association of Insurance
Commissioners) shall
have been obtained by Prudential for the Notes.
4. PREPAYMENTS. The Notes shall be subject to prepayment with
respect
to any required prepayments set forth in such Notes as provided in
paragraph 4A
and with respect to the optional prepayments permitted by paragraph
4B.
4A. REQUIRED PREPAYMENTS. The Notes of each Series shall be subject
to
required prepayments, if any, set forth in the Notes of such
Series.
4B. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The Notes
of
each Series shall be subject to prepayment, in whole at any time or
from time to
time in part (in integral multiples of $1,000,000 and in a minimum
amount of
$1,000,000), at the option of the Company, at 100% of the principal
amount so
prepaid plus interest thereon to the prepayment date and the
Yield-Maintenance
Amount, if any, with respect to each such Note. Any partial
prepayment of a
Series of Notes pursuant to this paragraph 4B shall be applied in
satisfaction
of required payments of principal of the Notes in such Series in
inverse order
of their scheduled due dates.
4C. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the
holder
of each Note to be prepaid pursuant to paragraph 4B irrevocable
written notice
of such prepayment not less than 10 Business Days prior to the
prepayment date,
specifying such prepayment date, specifying the aggregate principal
amount of
the Notes to be prepaid on such date, identifying
8
<PAGE>
each Note held by such holder, and the principal amount of each
such Note, to be
prepaid on such date and stating that such prepayment is to be made
pursuant to
paragraph 4B. Notice of prepayment having been given as aforesaid,
the principal
amount of the Notes specified in such notice, together with
interest thereon to
the prepayment date and together with the Yield-Maintenance Amount,
if any,
herein provided, shall become due and payable on such prepayment
date. The
Company shall, on or before the day on which it gives written
notice of any
prepayment pursuant to paragraph 4B, give telephonic notice of the
principal
amount of the Notes to be prepaid and the prepayment date to each
Significant
Holder which shall have designated a recipient for such notices in
the Purchaser
Schedule attached hereto or by notice in writing to the
Company.
4D. APPLICATION OF PREPAYMENTS. Upon any partial prepayment of
the
Notes of any Series pursuant to paragraph 4A or 4B, the amount so
prepaid shall
be allocated to all outstanding Notes of such Series (including,
for the purpose
of this paragraph 4D only, all Notes prepaid or otherwise retired
or purchased
or otherwise acquired by the Company or any of its Subsidiaries or
Affiliates
other than by prepayment pursuant to paragraph 4A or 4B) in
proportion to the
respective outstanding principal amounts thereof.
4E. RETIREMENT OF NOTES. The Company shall not, and shall not
permit
any of its Subsidiaries or Affiliates to, prepay or otherwise
retire in whole or
in part prior to their stated final maturity (other than by
prepayment pursuant
to paragraph 4A or 4B or upon acceleration of such final maturity
pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes
of any Series held by any holder unless the Company or such
Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or
purchase or
otherwise acquire, as the case may be, the same proportion of the
aggregate
principal amount of Notes of such Series held by each other holder
of Notes of
such Series at the time outstanding upon the same terms and
conditions. Any
Notes so prepaid or otherwise retired or purchased or otherwise
acquired by the
Company or any of its Subsidiaries or Affiliates shall not be
deemed to be
outstanding for any purpose under this Agreement, except as
provided in
paragraph 4D.
5. AFFIRMATIVE COVENANTS. During the Issuance Period, from and
after
the Business Day immediately preceding the Series A Closing, and so
long
thereafter as any Note is outstanding and unpaid, the Company
covenants as
follows:
5A. FINANCIAL STATEMENTS; NOTICE OF DEFAULTS. The Company will
deliver
to each Significant Holder in duplicate:
(i) as soon as practicable and in any event within 60 days after
the
end
of each quarterly period (other than the last quarterly period) in
each
fiscal year, statements of income and cash flows of the Company and
its
Consolidated Subsidiaries for the period from the beginning of the
current
fiscal year to the end of such quarterly period, and a balance
sheet of the
Company and its Consolidated Subsidiaries as at the end of such
quarterly
period, setting forth in the case of statements of income and cash
flows in
comparative form figures for the corresponding period in the
preceding
fiscal year, and accompanied by a certificate of an authorized
financial
officer of the Company, which certificate shall state that said
financial
statements fairly present in all material respects the financial
position
and
results of operation of the Company and its Consolidated
9
<PAGE>
Subsidiaries in accordance with GAAP, except as disclosed therein
and
subject to changes resulting from year-end audit adjustments;
provided,
however, that delivery pursuant to clause (iii) below of copies of
the
Quarterly Report on Form l0-Q of the Company for such quarterly
period
filed with the SEC shall be deemed to satisfy the requirements of
this
clause (i) with respect to consolidated financial statements so
long as
such
Report on Form 10-Q includes the financial statements required by
Form
10-Q;
(ii) as soon as practicable and in any event within 120 days after
the
end
of each fiscal year, statements of income and cash flows of the
Company
and
its Consolidated Subsidiaries for such year, and a balance sheet of
the
Company and its Consolidated Subsidiaries as at the end of such
year,
setting forth in each case in comparative form corresponding
figures from
the
preceding fiscal year, and accompanied by a report thereon of
independent public accountants of recognized national standing
selected by
the
Company, whose report shall state that said financial statements
fairly
present in all material respects the financial position and results
of
operations of the Company and its Consolidated Subsidiaries as at
the end
of,
and for, such fiscal year in accordance with GAAP (except as
disclosed
therein); provided, however, that delivery pursuant to clause (iii)
below
of
copies of the Annual Report on Form 10-K of the Company for such
fiscal
year
filed with the SEC shall be deemed to satisfy the requirements of
this
clause (ii) with respect to consolidated financial statements and
the
auditor's report so long as such Annual Report on Form 10-K
includes the
financial statements required by Form 10-K;
(iii) promptly after transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it
shall
send
to its public stockholders and copies of all registration
statements
(other than the exhibits thereto and any registration statements on
Form
S-8
or its equivalent) and all reports on Form 10-K, 10-Q and 8-K (or
their
equivalents) which it files with the SEC;
(iv) if and when any ERISA Affiliate (a) gives or is required to
give
notice to the PBGC of any "reportable event" (as defined in Section
4043 of
ERISA) with respect to any Plan which might constitute grounds for
a
termination of such Plan under Title IV of ERISA, or knows that the
plan
administrator of any Plan has given or is required to give notice
of any
such
reportable event, a copy of the notice of such reportable event
given
or
required to be given to the PBGC; (b) receives notice of complete
or
partial withdrawal liability under Title IV of ERISA or notice that
any
Multiemployer Plan is in reorganization, is insolvent or has
been
terminated, a copy of such notice; (c) receives notice from the
PBGC under
Title IV of ERISA of an intent to terminate, impose liability
(other than
for
premiums under Section 4007 of ERISA) in respect of, or appoint
a
trustee to administer any Plan, a copy of such notice; (d) applies
for a
waiver of the minimum funding standard under Section 412 of the
Code, a
copy
of such application; (e) gives notice of intent to terminate any
Plan
under Section 4041(c) of ERISA, a copy of such notice and other
information
filed with the PBGC; (f) gives notice of withdrawal from any Plan
pursuant
to
Section 4063 of ERISA, a copy of such notice; or (g) fails to make
any
payment or contribution to any Plan or Multiemployer Plan or in
respect of
any
Benefit Arrangement or makes any amendment to any Plan or
Benefit
Arrangement which has resulted or is reasonably likely to result in
the
imposition of a Lien or the
10
<PAGE>
posting of a bond or other security under ERISA or the Code, a
certificate
of
an Responsible Officer setting forth details as to such occurrence
and
action, if any, which the Company or applicable member of the
ERISA
Affiliate is required or proposes to take; and
(v) with reasonable promptness, such other information respecting
the
condition or operations, financial or otherwise, of the Company or
any of
its
Subsidiaries as such Significant Holder may reasonably request.
Together with each delivery of financial statements required by
clauses (i) and
(ii) above, the Company will deliver to each Significant Holder an
Officer's
Certificate demonstrating (with computations in reasonable detail)
compliance by
the Company with the provisions of paragraph 6A and stating that
there exists no
Event of Default or Default, or, if any Event of Default or Default
exists,
specifying the nature thereof and what action the Company proposes
to take with
respect thereto. Information required to be delivered pursuant to
clauses (i),
(ii) and (iii) above shall be deemed to have been delivered on the
date on which
the Company provides notice to each Significant Holder that such
information has
been posted on the Company's website at www.pinnaclewest.com,
at
sec.gov/edaux/searches.htm or at another website identified in such
notice and
accessible by the Significant Holders without charge; provided that
(a) such
notice may be included in any Officer's Certificate described in
the foregoing
sentence and (b) the Company shall deliver paper copies of the
information
referred to in clauses (i), (ii) or (iii) above to any Significant
Holder which
requests such delivery.
The Company also covenants that as soon as possible and in any
event
within five Business Days after any Responsible Officer obtains
knowledge of an
Event of Default or Default then continuing, it will deliver to
each holder of
any Notes an Officer's Certificate specifying the nature thereof
and what action
the Company proposes to take with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company will, upon
the
request of the holder of any Note, provide such holder, and any
qualified
institutional buyer designated by such holder, such financial and
other
information as such holder may reasonably determine to be necessary
in order to
permit compliance with the information requirements of Rule 144A
under the
Securities Act in connection with the resale of Notes, except at
such times as
the Company is subject to and in compliance with the reporting
requirements of
section 13 or 15(d) of the Exchange Act. For the purpose of this
paragraph 5B,
the term "QUALIFIED INSTITUTIONAL BUYER" shall have the meaning
specified in
Rule 144A under the Securities Act.
5C. INSPECTION OF PROPERTY. The Company will permit any Person
designated by any Significant Holder in writing, at such
Significant Holder's
expense if no Default or Event of Default exists and at the
Company's expense if
a Default or Event of Default does exist, to visit and inspect any
of the
properties of the Company and its Subsidiaries, to examine the
corporate books
and financial records of the Company and its Subsidiaries and make
copies
thereof or extracts therefrom and to discuss the affairs, finances
and accounts
of any of such corporations with the principal officers of the
Company and its
independent public accountants, all at such reasonable times and as
often as
such Significant Holder may reasonably request; provided, however,
that the
Company and its Subsidiaries reserve the right to restrict access
to any of
their properties in accordance with reasonably adopted policies
relating to
safety; and,
11
<PAGE>
provided further, that such Significant Holder complies with
reasonably adopted
security policies.
5D. MAINTENANCE OF PROPERTY; INSURANCE.
(i) The Company will keep, and will cause each Significant
Subsidiary
to
keep, all property useful and necessary in its business in good
working
order and condition, ordinary wear and tear excepted, if the
failure to do
so
is reasonably likely to have a material adverse effect on the
financial
condition or financial prospects of the Company and its
Consolidated
Subsidiaries, considered as a whole, it being understood that this
covenant
relates only to the working order and condition of such properties
and
shall not be construed as a covenant not to dispose of
properties.
(ii) The Company will maintain, and cause each Significant
Subsidiary
to
maintain, insurance with responsible and reputable insurance
companies
or
associations in such amounts and covering such risks as is
usually
carried by companies engaged in similar businesses and owning
similar
properties in the same general areas in which the Company or
such
Significant Subsidiary operates; provided, however, that the
Company and
APS
may self-insure to the same extent as other companies engaged
in
similar businesses and owning similar properties in the same
general areas
in
which the Company or such Significant Subsidiary operates.
5E. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE.
(i) Subject to paragraph 6B hereof, the Company will preserve
and
maintain, and will cause APS to preserve and maintain, its
corporate
existence and all rights and privileges (other than, in the case of
APS,
"franchises" as
described in Arizona Revised Statutes, Section 40-283 or
any
successor provision) reasonably necessary in the normal conduct of
its
business, if the failure to maintain such rights or privileges
is
reasonably likely to have a material adverse effect on the
financial
condition or financial prospects of the Company and its
Consolidated
Subsidiaries, considered as a whole, and will cause APS to use
its
commercially reasonable efforts to preserve and maintain such
franchises
reasonably necessary in the normal conduct of its business, except
that (a)
APS
from time to time may make minor extensions of its lines,
plants,
services or systems prior to the time a related franchise,
certificate of
convenience and necessity, license or permit is procured, (b) from
time to
time
communities served by APS may become incorporated and
considerable
time
may elapse before such a franchise is procured, (c) certain
such
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 material and (e) certain franchises,
certificates,
licenses and permits may not be specific as to their geographical
scope.
(ii) The Company will continue to conduct, directly or through
its
Subsidiaries, the same general type of business conducted by the
Company
and
APS on the date hereof.
12
<PAGE>
5F. COMPLIANCE WITH LAWS. The Company will comply, and cause each
of
its Significant Subsidiaries to comply, in all material respects
with all
applicable laws, ordinances, rules, regulations, and requirements
of
governmental authorities (including, without limitation,
environmental laws and
ERISA and the rules and regulations thereunder) except where (i)
the necessity
of compliance therewith is contested in good faith by appropriate
proceedings or
(ii) the noncompliance with which is not reasonably likely to have
a material
adverse effect on the financial condition or financial prospects of
the Company
and its Consolidated Subsidiaries, considered as a whole.
5G. COVENANT TO SECURE NOTES EQUALLY. The Company will not
create,
assume or suffer to exist any Lien on the capital stock of any
Significant
Subsidiary owned by the Company unless the holders of Notes are
also granted a
Lien thereon on a pari passu basis securing all of the Company's
obligations
under the Notes.
5H. OWNERSHIP OF APS. The Company will at all times continue to
own
directly at least 80% of the outstanding capital stock of APS.
5I. ADDITIONAL COVENANTS AND ADDITIONAL DEFAULTS. If, after the
date
hereof, the Company enters into, assumes or otherwise becomes bound
or obligated
under any agreement (including amendments of the Bank Agreement)
evidencing,
securing, guaranteeing or otherwise relating to the Bank
Obligations that
contains one or more Additional Covenants or Additional Defaults,
the terms of
this Agreement shall, without any further action on the part of the
Company or
any of the holders of the Notes, be deemed to be amended
automatically to
include each Additional Covenant and each Additional Default
contained in such
agreement. The Company further covenants to promptly execute and
deliver at its
expense (including the reasonable fees and expenses of counsel for
the holders
of the Notes) an amendment to this Agreement in form and substance
satisfactory
to the Required Holder(s) evidencing the amendment of this
Agreement to include
such Additional Covenants and Additional Defaults, provided that
the execution
and delivery of such amendment shall not be a precondition to the
effectiveness
of such amendment as provided for in this paragraph 5I, but shall
merely be for
the convenience of the parties hereto.
6. NEGATIVE COVENANTS. During the Issuance Period, from and after
the
Business Day immediately preceding the Series A Closing, and so
long thereafter
as any Note or other amount due hereunder is outstanding and
unpaid, the Company
covenants as follows:
6A. DEBT. Consolidated Debt will not exceed at any time an
amount
equal to 65% of Consolidated Capitalization.
6B. CONSOLIDATIONS; MERGERS AND SALES OF ASSETS. The Company will
not,
nor will it permit any Significant Subsidiary to, merge or
consolidate with or
into any other Person, except (i) any Significant Subsidiary may
merge or
consolidate with the Company if the Company is the corporation
surviving such
merger, (ii) any Significant Subsidiary may merge or consolidate
with any other
Subsidiary, provided that the Company's aggregate direct and
indirect ownership
interest in the survivor thereof shall not be less than the greater
of the
Company's direct and indirect ownership interest in such
Subsidiaries prior to
such merger, and (iii) the
13
<PAGE>
Company or any Significant Subsidiary may merge or consolidate with
any other
Person if (a) such Person was organized under the laws of the
United States of
America or one of its States and (b) the Company or such
Significant Subsidiary
is the corporation surviving such merger; provided that, in each
case, after
giving effect thereto, no Default or Event of Default will be in
existence. The
Company will not sell, lease, transfer, assign or otherwise dispose
of all or
substantially all of its assets, or permit any of its Significant
Subsidiaries
to sell, lease, transfer, assign or otherwise dispose of all or
substantially
all of its assets, except for sales, leases, transfers,
assignments, and other
dispositions of all or substantially all of the Company's or any
such
Significant Subsidiary's assets to the Company or any other
Subsidiary of the
Company, provided in each case that no Default or Event of Default
shall have
occurred and be continuing after giving effect thereto and provided
further that
(i) in no case will the merger of PWEC into the Company with the
Company
surviving be governed or prohibited by this paragraph 6B, and (ii)
this
paragraph 6B will not govern or prohibit pledges or the grant of
security
interests, mortgages or other Liens on any assets.
6C. TERRORISM SANCTION REGULATIONS. The Company will not and will
not
permit any Subsidiary to (i) become a Person described or
designated in the
Specially Designated Nationals and Blocked Persons List of the
Office of Foreign
Assets Control or in Section 1 of the Anti-Terrorism Order, unless
such
description or designation is then being contested in good faith by
appropriate
proceedings, or (ii) knowingly engage in any dealings or
transactions, except to
provide electricity to any APS customer, with any such Person.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If on or after the Series A Closing and so
long
thereafter as any Note is outstanding and unpaid, any of the
following events
shall occur and be continuing for any reason whatsoever (and
whether such
occurrence shall be voluntary or involuntary or come about or be
effected by
operation of law or otherwise):
(i) the Company defaults in the payment of any principal of, or
Yield-Maintenance Amount payable with respect to, any Note when the
same
shall become due, either by the terms thereof or otherwise as
herein
provided; or
(ii) the Company defaults in the payment of any interest on any
Note
for
more than three Business Days after the date due; or
(iii) the Company or APS defaults in any payment of principal of
or
interest on any other Debt or any Derivative Obligation (in either
case
which is outstanding in a principal amount exceeding $25,000,000)
and such
default shall continue beyond any period of grace provided with
respect
thereto, or the Company or APS fails to perform or observe any
other
agreement, term or condition contained in any agreement under which
any
such
Debt or Derivative Obligation is created and such failure shall
continue after the applicable grace period, if any, specified in
such
agreement or instrument and the effect of such failure is to cause,
or to
permit the holder or holders of such Debt or Derivative Obligation
(or a
trustee on behalf of such holder or holders) to accelerate, or
permit the
acceleration of the maturity of, such Debt or Derivative
Obligation; or
14
<PAGE>
(iv) any representation or warranty made by the Company herein or
by
the
Company or any of its officers in any certificate furnished in
connection with or pursuant to this Agreement shall be false in
any
material respect on the date as of which made; or
(v) the Company fails to perform or observe any term, covenant
or
agreement contained in paragraph 5G, 5H or 6; or
(vi) the Company fails to perform or observe any other term,
covenant,
agreement or condition contained herein (other than those covered
by
clauses (i) or (ii) above) and such failure shall not be remedied
within 30
days
after notice thereof has been given to the Company by the
Required
Holders; or
(vii) the Company or any Significant Subsidiary shall commence
a
voluntary case or other proceeding seeking liquidation,
reorganization or
other relief with respect to itself or its debts under any
bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the
appointment of a trustee, receiver, liquidator, custodian or other
similar
official of it or any substantial part of its property, or shall
consent to
any
such relief or to the appointment of or taking possession by any
such
official in an involuntary case or other proceeding commenced
against it,
or
shall make a general assignment for the benefit of creditors, or
shall
fail
generally to pay its debts as they become due, or shall take
any
corporate action to authorize any of the foregoing; or
(viii) an involuntary case or other proceeding shall be
commenced
against the Company or any Significant Subsidiary seeking
liquidation,
reorganization or other relief with respect to it or its debts
under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or
other similar official of it or any substantial part of its
property, and
such
involuntary case or other proceeding shall remain undismissed
or
unstayed for a period of 60 days; or an order for relief shall be
entered
against the Company or any Significant Subsidiary under the
federal
bankruptcy laws as now or hereafter in effect; or
(ix) a final judgment in an amount in excess of $25,000,000
(excluding
any
such judgments to the extent a solvent insurer has acknowledged
liability therefor in writing) is rendered against the Company or
APS and,
within 45 days after entry thereof, such judgment is not discharged
or
execution thereof stayed pending appeal, or within 45 days after
the
expiration of any such stay, such judgment is not discharged;
or
(x) any ERISA Affiliate shall fail to pay when due an amount or
amounts aggregating in excess of $25,000,000 which it shall have
become
liable to pay under Title IV of ERISA; or notice of intent to
terminate a
Material Plan shall be filed under Title IV of ERISA by any
ERISA
Affiliate, any plan administrator or any combination of the
foregoing which
could cause one or more ERISA Affiliates to incur a liability in
excess of
$25,000,000; or the PBGC shall institute proceedings under Title IV
of
ERISA to terminate, to impose liability (other than for premiums
under
Section 4007 of ERISA) in respect of, or to cause a trustee to be
appointed
to
administer any Material Plan which could cause one or more
ERISA
Affiliates to incur a liability in excess of $25,000,000 or a
condition
shall exist by reason of which the PBGC would be entitled to obtain
a
decree
15
<PAGE>
adjudicating that any Material Plan must be terminated which could
cause
one
or more ERISA Affiliates to incur a liability in excess of
$25,000,000;
or
there shall occur a complete or partial withdrawal from, or a
default,
within the meaning of Section 4219(c) (5) of ERISA, with respect
to, one or
more
Multiemployer Plans which could cause one or more ERISA Affiliates
to
incur a current payment obligation in excess of $25,000,000; or
(xi) any Change in Control shall occur;
then (a) if such event is an Event of Default specified in clause
(i) or (ii) of
this paragraph 7A, any holder of any Note (other than the Company
or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing
to the
Company, declare all of the Notes held by such holder to be, and
all of the
Notes held by such holder shall thereupon be and become,
immediately due and
payable at par together with interest accrued thereon, without
presentment,
demand, protest or notice of any kind, all of which are hereby
waived by the
Company, (b) if such event is an Event of Default specified in
clause (vii) or
(viii) of this paragraph 7A with respect to the Company, all of the
Notes at the
time outstanding shall automatically become immediately due and
payable at par
together with interest accrued thereon and together with the
Yield-Maintenance
Amount, if any, with respect to each Note, without presentment,
demand, protest
or notice of any kind, all of which are hereby waived by the
Company, and (c) if
such event is any Event of Default other than as specified in
preceding clause
(b), the Required Holder(s) of the Notes may at its or their option
by notice in
writing to the Company, declare all of the Notes to be, and all of
the Notes
shall thereupon be and become, immediately due and payable together
with
interest accrued thereon and together with the Yield-Maintenance
Amount, if any,
with respect to each Note, without presentment, demand, protest or
notice of any
kind, all of which are hereby waived by the Company.
The Company acknowledges, and the parties hereto agree, that
each
holder of a Note has the right to maintain its investment in the
Notes free from
repayment by the Company (except as herein specifically provided
for) and that
the provision for payment of the Yield-Maintenance Amount by the
Company in the
event that the Notes are prepaid or are accelerated as a result of
an Event of
Default, is intended to provide compensation for the deprivation of
such right
under such circumstances.
7B. RESCISSION OF ACCELERATION. At any time after any or all of
the
Notes shall have been declared immediately due and payable pursuant
to paragraph
7A, the Required Holder(s) may, by notice in writing to the
Company, rescind and
annul such declaration and its consequences if (i) the Company
shall have paid
all overdue interest on the Notes, the principal of and
Yield-Maintenance
Amount, if any, payable with respect to any Notes which have become
due
otherwise than by reason of such declaration, and interest on such
overdue
interest and overdue principal and Yield Maintenance Amount at the
rate
specified in the Notes, (ii) the Company shall not have paid any
amounts which
have become due solely by reason of such declaration, (iii) all
Events of
Default and Defaults, other than non-payment of amounts which have
become due
solely by reason of such declaration, shall have been cured or
waived pursuant
to paragraph 11C, and (iv) no judgment or decree shall have been
entered for the
payment of any amounts due pursuant to the Notes or this Agreement.
No such
rescission or annulment shall
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extend to or affect any subsequent Event of Default or Default or
impair any
right arising therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall
be
declared immediately due and payable pursuant to paragraph 7A or
any such
declaration shall be rescinded and annulled pursuant to paragraph
7B, the
Company shall forthwith give written notice thereof to the holder
of each Note
at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall occur
and
be continuing, the holder of any Note may proceed to protect and
enforce its
rights under this Agreement and such Note by exercising such
remedies as are
available to such holder in respect thereof under applicable law,
either by suit
in equity or by action at law, or both, whether for specific
performance of any
covenant or other agreement contained in this Agreement or in aid
of the
exercise of any power granted in this Agreement. No remedy
conferred in this
Agreement upon the holder of any Note is intended to be exclusive
of any other
remedy, and each and every such remedy shall be cumulative and
shall be in
addition to every other remedy conferred herein or now or hereafter
existing at
law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. Except as disclosed
in
the Officer's Certificate referred to in paragraph 3C, as of each
Closing Day
hereunder, the Company represents, covenants and warrants as
follows (all
references to "SUBSIDIARY" and "SUBSIDIARIES" in this paragraph 8
shall be
deemed omitted if the Company has no Subsidiaries at the time
the
representations herein are made or repeated):
8A. ORGANIZATION. The Company is a corporation duly organized
and
validly existing in good standing under the laws of the State of
Arizona and APS
is a corporation duly organized and existing in good standing under
the laws of
the State of Arizona. Each of the Company and APS has the corporate
power to own
its respective property and to carry on its respective business as
now being
conducted. The execution, delivery and performance by the Company
of this
Agreement and the Notes are within the Company's corporate powers
and have been
duly authorized by all necessary corporate action.
8B. FINANCIAL STATEMENTS. The Company has furnished Prudential
and
each Purchaser with the following financial statements, identified
by a
principal financial officer of the Company or posted on the
Company's website on
the Internet at www.pinnaclewest.com or on
sec.gov/edaux/searches.htm: (i) a
balance sheet of the Company and its Consolidated Subsidiaries as
at December
31, 2004 and the related statements of income and cash flows of the
Company and
its Consolidated Subsidiaries for the fiscal year then ended, all
reported on by
Deloitte & Touche LLP; and (ii) a balance sheet of the Company
and its
Consolidated Subsidiaries as at September 30, 2005 and the related
statements of
income and cash flows of the Company and its Consolidated
Subsidiaries for the
nine months then ended. Such financial statements (including any
related
schedules and/or notes) or the financial statements most recently
provided
pursuant to Section 5A(i) and (ii) of this Agreement as of the date
this
representation is made or repeated, fairly present in all material
respects the
financial position and results of operations of the Company and its
Consolidated
Subsidiaries as at the end of, and for, the applicable fiscal year
or fiscal
quarter, as the case may be, in accordance with GAAP, except as
disclosed
therein and subject, as to interim statements, to changes resulting
from audits
17
<PAGE>
and year-end adjustments. Except as disclosed in the SEC Reports or
by means of
a letter delivered to Prudential and each Purchaser prior to any
Closing Day,
there has been no material adverse change in the financial
condition or
financial prospects of the Company and its Consolidated
Subsidiaries taken as a
whole since the end of the most recent fiscal quarter for which
financial
statements have been furnished at the time of an Acceptance
relating to the
Notes to be purchased.
8C. ACTIONS PENDING. Except as disclosed in the SEC Reports or
by
means of a letter delivered to the Purchasers prior to any Closing
Day, there is
no action, suit or proceeding pending or, to the knowledge of the
Company,
threatened against or affecting the Company or any of its
Subsidiaries, by or
before any court, arbitrator or administrative or governmental body
in which
there is a reasonable possibility of an adverse decision which is
reasonably
likely to have a material adverse effect on the financial condition
or financial
prospects of the Company and its Consolidated Subsidiaries taken as
a whole.
There is no action, suit or proceeding pending or, to the knowledge
of the
Company, threatened against the Company or any of its Subsidiaries
which
purports to affect the validity or enforceability of this Agreement
or any Note.
8D. OUTSTANDING INDEBTEDNESS. Neither the Company nor any of
its
Subsidiaries has outstanding any Indebtedness except as permitted
by paragraph
6A. There exists no default under the provisions of any instrument
evidencing
such Debt which is outstanding in a principal amount exceeding
$25,000,000 or of
any agreement relating thereto.
8E. TITLE TO PROPERTIES. The Company and APS have good and
marketable
title in fee simple to their respective properties and assets,
including the
properties and assets reflected in the most recent audited balance
sheet
refer
