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




5.80% Note due June 30, 2014




	 	 	 
	No. 1

	 	$300,000,000 
	

	 	CUSIP No. 040555 CG 7







     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 Three Hundred Million Dollars ($300,000,000) on June 30, 2014,
and to pay interest thereon from June 29, 2004 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for,
semi-annually in arrears on June 30 and December 30 in each year, commencing
December 30, 2004, at the rate of 5.80%, 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 June 15 or December 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




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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. Loftin
	 	 	 	 
	
 
	 	 	 	 
	Nancy C. Loftin
	 	 	 	 
	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 (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 20 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) Credit Suisse First Boston LLC and
J.P. Morgan Securities 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 New York City (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: June 29, 2004

	 	 	 	JPMORGAN CHASE BANK

As Trustee	 	 
	 
 
	 	 	 	 	 	 
	

	 	By	 	Rosa Ciaccia	 	 
	

	 	 	 	
 	 	 
	

	 	 	 	Authorized Officer
	 	 








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