exv4w2



 






Exhibit 4.2



UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO ARIZONA PUBLIC SERVICE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.




ARIZONA PUBLIC SERVICE COMPANY




5.50% Note due 2035




	 	 	 
	No. 1

	 	$250,000,000
	 

	 	CUSIP No. 040555 CH5






     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 Cede & Co., or registered
assigns, the principal sum of Two Hundred and Fifty Million Dollars ($250,000,000) on September 1,
2035, and to pay interest thereon from August 22, 2005 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, semi-annually in arrears on March 1 and
September 1 in each year, commencing March 1, 2006, at the rate of 5.50%, until the principal
hereof is paid or made available for payment.



     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 Security (or one
or more Predecessor Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be February 15 or August 15, as the case may be, immediately
preceding the Interest Payment Date (whether or not a Business Day). Any such interest not so
punctually paid or duly 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 Security (or one or
more Predecessor Securities) 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 Securities 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 Securities 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.



 









 





     Payment of the principal of (and premium, if any) and any interest on this Security will be
made at the office or agency of the Company maintained for that purpose in the City of New York, 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; 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 Security Register.



     Reference is hereby made to the further provisions of this Security set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.



     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Security 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 	 	/s/ Donald E. Brandt
	 

	 	 	 
	 

	 	 	 	Donald E. Brandt

Executive Vice President

and Chief Financial Officer





	 	 	 
	Attest:
	 	 
	 
	 	 
	/s/ Nancy C. Lofin
	 	 
	 


	 	 
	Nancy
C. Lofin

Vice President,

General Counsel and Secretary
	 	 






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     This Security is one of a duly authorized issue of securities of the Company (herein called
the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of
January 15, 1998 (herein called the “Indenture”, which term shall have the meaning assigned to it
in such instrument), between the Company and JPMorgan Chase Bank, N.A. (formerly known as The Chase
Manhattan Bank), 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 Securities and of the terms upon which the Securities are, and are
to be, authenticated and delivered. This Security is one of the series designated on the face
hereof, which is unlimited in aggregate principal amount.



     The Company may redeem all or any portion of the Securities of this series, at its option, at
any time or from time to time, at a Redemption Price equal to the greater of (a) 100% of the
principal amount of the Securities of this series being redeemed on the Redemption Date or (b) the
sum of the present values of the remaining scheduled payments of principal and interest on the
Securities of this series being redeemed on that Redemption Date (not including any portion of any
payments of interest accrued to the Redemption Date) discounted to the Redemption Date on a
semiannual basis at the Adjusted Treasury Rate plus 15 basis points, as determined by a Reference
Treasury Dealer appointed by the Company for such purpose; plus, in each case, accrued and unpaid
interest thereon to the Redemption Date. Notwithstanding the foregoing, installments of interest
on Securities of this series that are due and payable on Interest Payment Dates falling on or prior
to a Redemption Date will be payable on the Interest Payment Date to the Holders as of the close of
business on the relevant Record Date according to the Securities of this series and the Indenture.
The Redemption Price will be calculated on the basis of a 360-day year consisting of twelve 30-day
months.



     If notice has been given as provided in the Indenture and funds for the redemption of any
Securities of this series (or any portion thereof) called for redemption shall have been made
available on the Redemption Date referred to in such notice, such Securities (or any portion
thereof) will cease to bear interest on the date fixed for such redemption specified in such notice
and the only right of the Holders of such Securities will be to receive payment of the Redemption
Price.



     Notice of any optional redemption of Securities of this series (or any portion thereof) will
be given to Holders at their addresses, as shown in the Security Register for such Securities, not
more than 60 nor less than 30 days prior to the date fixed for redemption. The notice of redemption
will specify, among other items, the manner of calculation of the Redemption Price and the
principal amount of the Securities of this series held by such Holder to be redeemed. If less than
all of the Securities of this series are to be redeemed at the option of the Company, the Trustee
shall select, in such manner as it shall deem fair and appropriate, the portion of such Securities
to be redeemed in whole or in part.



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     As used herein:



     “Adjusted Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal
to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price
for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date.



     “Comparable Treasury Issue” means the U.S. Treasury security selected by a Reference Treasury
Dealer appointed by the Company for such purpose as having a maturity comparable to the remaining
term of the Securities of this series to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of such Securities.



     “Comparable Treasury Price” means, with respect to any Redemption Date, (A) the average of the
Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and
lowest of such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three
such Reference Treasury Dealer Quotations, the average of all such quotations, or (C) if only one
Reference Treasury Dealer Quotation is received, such quotation.



     “Reference Treasury Dealer” means (A) UBS Securities LLC and BNY Capital Markets, Inc. (or
their respective affiliates which are Primary Treasury Dealers), and their respective successors;
provided, however, that if any of the foregoing shall cease to be a primary U.S. Government
securities dealer in the United States (a “Primary Treasury Dealer”), the Company will substitute
therefor another Primary Treasury Dealer; and (B) any other Primary Treasury Dealer(s) selected by
the Trustee after consultation with the Company.



     “Reference Treasury Dealer Quotations” means, with respect to each Reference Treasury Dealer
and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New York City
time) on the third Business Day preceding such Redemption Date.



     The Securities of this series will not be subject to any sinking fund.



     In the event of redemption of this Security in part only, a new Security or Securities 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.



     The Indenture contains provisions for defeasance at any time of the entire indebtedness of
this Security and certain restrictive covenants and Events of Default with respect to this
Security, in each case upon compliance with certain conditions set forth in the Indenture.



     If an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.



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     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
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee without the consent of such Holders in certain limited circumstances or with the consent of
the Holders of 66-2/3% in principal amount of the Securities 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 Securities of each series at the time Outstanding, on behalf
of the Holders of all Securities 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 Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.



     As provided in and subject to the provisions of the Indenture, the Holder of this Security
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 Securities of this series, the Holders of not less than 25% in principal amount of the
Securities 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 Securities 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 Security 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 Security 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 Security 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 Security is registrable in the Security Register, upon surrender of this Security
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 Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities 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 Securities of this series are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject
to certain limitations therein set forth, Securities of this series are exchangeable for a like
aggregate principal amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.



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     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 Security 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
Security is registered as the owner hereof for all purposes, whether or not this Security 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 Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.



CERTIFICATE OF AUTHENTICATION




     This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.



	 	 	 	 	 	 
	Dated: August 22, 2005	 	JPMORGAN CHASE BANK, N.A.	 
	 

	 	 	 	As Trustee
	 
	 
	 	 	 	 	 
	 

	 	By	 	/s/ Larry O’Brien	 
	 

	 	 	 	 
	 

	 	 	 	Authorized
Officer	 






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