Document:

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Exhibit 4.1

RESTATED
ARTICLES OF INCORPORATION

OF

PINNACLE WEST CAPITAL CORPORATION

(RESTATED AS OF MAY 23, 2007)

     FIRST: The name of the corporation is Pinnacle West Capital Corporation.

     SECOND: The corporation is organized for the purpose of transacting any or all lawful business
for which corporations may be incorporated under Chapter 1 of Title 10, Arizona Revised Statutes,
as at any time in effect. The character of business that the corporation initially intends to
conduct is the acquisition and holding of securities of other corporations for investment purposes.

     THIRD: The aggregate number of shares that the corporation shall have authority to issue is
160,000,000 divided into 150,000,000 shares of Common Stock, no par value, and 10,000,000 shares of
Serial Preferred Stock, no par value. Each issued and outstanding share of Common Stock will
entitle the holder thereof to one vote, except as may otherwise be provided by statute. Issued and
outstanding shares of Serial Preferred Stock will entitle the holders thereof only to those votes,
if any, that may expressly be fixed as hereinafter provided for the respective series thereof or as
may otherwise be provided by statute.

     The Board of Directors is authorized to provide from time to time for the issuance of shares
of Serial Preferred Stock in series and to fix from time to time before issuance the designation,
preferences, privileges and voting powers of the shares of each series of Serial Preferred Stock
and the restrictions or qualifications thereof, including, without limiting the generality of the
foregoing, the following:

	 	(a)	 	The serial designation and authorized number of shares;
	 
	 	(b)	 	The dividend rate, if any, the date or dates on which such
dividends will be payable, and the extent to which such dividends may
be cumulative;
	 
	 	(c)	 	The price or prices at which shares may be redeemed, and any
terms, conditions and limitations upon such redemptions;
	 
	 	(d)	 	The amount or amounts to be received by the holders in the
event of voluntary or involuntary dissolution or liquidation of the
corporation;
	 
	 	(e)	 	Any sinking fund provisions for redemption or purchase of shares of such series;

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	 	(f)	 	The terms and conditions, if any, on which shares may be
converted into shares of other capital stock, or of other series of
Serial Preferred Stock, of the corporation; and
	 
	 	(g)	 	The voting rights, if any, for the shares of such series.

     FOURTH:
The name and address of the current statutory agent of the
corporation is CT Corporation System, 2934 East Camelback Road, Phoenix, Arizona 85016.
The address of the known place of business of the corporation is 400
North 5th Street, Phoenix, Arizona 85004.

     FIFTH: The Board of Directors of the corporation shall consist of not less than 9 nor more
than 21 shareholders of the corporation or of any parent corporation thereof. Each director shall
hold such office until the next annual meeting of the shareholders or until his or her earlier
death, resignation or removal. The foregoing notwithstanding, each director shall serve until his
or her successor is duly elected and qualified.

     Except to fill vacancies resulting from the death or resignation of a director and except for
nominations by the Board of Directors or a committee thereof, nominations for directors must be
made in writing at least 180 days prior to the date of the shareholders’ meeting at which the
election is to occur.

     SIXTH: The corporation shall have the right to purchase, directly or indirectly, its own
shares to the extent of the unreserved and unrestricted earned and capital surplus available
therefor.

     SEVENTH: The Board of Directors may, from time to time, distribute on a pro rata basis to its
shareholders out of capital surplus of the corporation a portion of its assets, in cash or
property, and no shareholder authorization thereof shall be required.

     EIGHTH: The corporation may create and issue rights or options to directors, officers or
employees of the corporation or of any affiliate thereof, entitling the holders thereof to purchase
from the corporation shares of any class or classes, and no shareholder approval or ratification
thereof shall be required.

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     NINTH: The corporation reserves the right to amend, alter, change or repeal any provision
contained in these Articles of Incorporation in the manner now or hereafter prescribed by statute,
and all rights conferred on stockholders herein are granted subject to this reservation.
Notwithstanding the foregoing, the provisions set forth in Articles Third (with respect to Serial
Preferred Stock) and Fifth and in this Article may not be repealed or amended in any respect unless
such repeal or amendment is approved by the affirmative vote of the holders of not less than
two-thirds of the total voting power of all outstanding shares of voting stock of this corporation.

     TENTH: A director of the corporation shall not be personally liable to the corporation or
its shareholders for monetary damages for breach of fiduciary duty as a director, except for
liability for any of the following:

	 	(a)	 	any breach of the director’s duty of loyalty to the corporation
or its shareholders;
	 
	 	(b)	 	acts or omissions which are not in good faith or which involve
intentional misconduct or a knowing violation of law;
	 
	 	(c)	 	any authorization of an unlawful payment of a dividend or other
distribution on the corporation’s capital stock or the unlawful
purchase of its capital stock;
	 
	 	(d)	 	any transaction from which the director derived an improper
personal benefit; or
	 
	 	(e)	 	a violation of Arizona Revised Statutes Section 10-041.

     If the Arizona General Corporation Law is amended after the date of these Articles of
Incorporation to authorize corporate action further eliminating or limiting the personal liability
of directors, the liability of a director of the corporation shall be eliminated or limited to the
full extent permitted by the Arizona General Corporation Law, as amended.

     Any
repeal or modification of this Article TENTH shall not increase the personal liability
of any director of the corporation for any act or occurrence taking place prior to such repeal or
modification or otherwise adversely affect any right or protection of a director of the corporation
existing at the time of such repeal or modification.

     The provisions of this Article TENTH shall not be deemed to limit or preclude
indemnification of a director by the corporation for any liability of a director which has not been
eliminated by the provisions of this Article TENTH.

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Exhibit 4.2

BYLAWS

OF

PINNACLE WEST CAPITAL CORPORATION

(Amended as of May 23, 2007)

I. REFERENCES; SENIORITY

     1.01. References. Any reference herein made to law will be deemed to refer to the law of the
State of Arizona, including any applicable provision or provisions of Chapters 1-17 and Chapter 23
of Title 10, Arizona Revised Statutes (or its successor), as at any given time in effect. Any
reference herein made to the Articles will be deemed to refer to the applicable provision or
provisions of the Articles of Incorporation of the Company, and all amendments thereto, as at any
given time on file with the Arizona Corporation Commission (this reference to that Commission being
intended to include any successor to the incorporating and related functions being performed by
that Commission at the date of the initial adoption of these Bylaws).

     1.02. Seniority. Except as indicated in Part X of these Bylaws, the law and the Articles (in
that order of precedence) will in all respects be considered senior and superior to these Bylaws,
with any inconsistency to be resolved in favor of the law and the Articles (in that order of
precedence), and with these Bylaws to be deemed automatically amended from time to time to
eliminate any such inconsistency which may then exist.

     1.03. Shareholders of Record. Except as otherwise required by law and subject to any
procedure established by the Company pursuant to Arizona Revised Statutes Section 10-723 (or any
comparable successor provision), the word “shareholder” as used herein shall mean one who
is a holder of record of shares of capital stock in the Company.

II. SHAREHOLDERS MEETINGS

     2.01. Annual Meetings. An annual meeting of shareholders shall be held for the election of
directors at such date, time and place, either within or without the State of Arizona, as may be
designated by resolution of the Board of Directors from time to time. Any other proper business
may be transacted at the annual meeting. A special meeting may be called and held in lieu of an
annual meeting pursuant to the provisions of Section 2.02 below, and the same proceedings
(including the election of directors) may be conducted thereat as at a regular meeting. Any
director elected at any annual meeting, or special meeting in lieu of an annual meeting, will
continue in office until the election of his or her successor, subject to his or her (a) earlier
resignation pursuant to Section 6.01 below, (b) removal pursuant to Section 3.13 below, or (c)
death or disqualification.

 

 

     2.02. Special Meetings. Except as otherwise required by law, special meetings of the
shareholders may be held whenever and wherever called by the Chairman of the Board, the President,
or a majority of the Board of Directors, but such special meetings may not be called by any other
person or persons. Business transacted at any special meeting of shareholders shall be limited to
the purposes stated in the notice.

     2.03. Notice. Notice of any meeting of the shareholders will be given as provided by law to
each shareholder entitled to vote at such meeting and, if required by law, to each other
shareholder of the Company. Any such notice may be waived as provided by law.

     2.04. Right to Vote. For each meeting of the shareholders, the Board of Directors will fix in
advance a record date as contemplated by law, and the shares of stock and the shareholders
“entitled to vote” (as that or any similar term is herein used) at any meeting of the
shareholders will be determined as of the applicable record date. The Secretary (or in his or her
absence an Assistant Secretary) will see to the making and production of any record of shareholders
entitled to vote or otherwise entitled to notice of shareholders meetings, in either case which is
required by law. Any voting entitlement may be exercised through proxy, or in such other manner as
specifically provided by law, in accordance with the applicable law. In the event of contest, the
burden of proving the validity of any undated or irrevocable proxy will rest with the person
seeking to exercise the same. A telegram, cablegram, or facsimile appearing to have been
transmitted by a shareholder (or by his or her duly authorized attorney-in-fact) or other means of
voting by telephone or electronic transmission may be accepted as a sufficiently written and
executed proxy if otherwise permitted by law.

     2.05. Notice of Shareholder Business and Nominations.

	 	(a)	 	Annual Meetings of Shareholders. (1) Nominations of persons
for election to the Board of Directors of the Company and the proposal of
business to be considered by the shareholders may be made at an annual meeting
of shareholders only (a) pursuant to the Company’s notice of meeting (or any
supplement thereto), (b) by or at the direction of the Board of Directors or
(c) by any shareholder of the Company who was a shareholder at the time the
notice provided for in this Section 2.05 is delivered to the Secretary of the
Company, who is entitled to vote at the meeting and who complies with the
notice procedures set forth in this Section 2.05.

	 	(1)	 	For nominations or other business to be
properly brought before an annual meeting by a shareholder pursuant to
clause (c) of paragraph (a)(1) of this Section 2.05, the shareholder
must have given timely notice thereof in writing to the Secretary of
the Company and any such proposed business other than the nominations
of persons for election to the Board of Directors must constitute a
proper matter for shareholder action. To be timely, a shareholder
notice shall

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	 	 	 	be delivered to the Secretary at the principal executive offices of
the Company not later than the close of business (a) with respect to
business to be brought before the meeting, on the ninetieth
(90th) day nor earlier than the close of business on the
one hundred twentieth (120th) day prior to the first
anniversary of the preceding year’s annual meeting (provided,
however, that in the event that the date of the annual meeting is
changed by more than thirty (30) days from such anniversary date,
notice by the shareholder must be so delivered not earlier than the
close of business on the one hundred twentieth (120th) day
prior to such annual meeting and not later than the close of business
on the later of the ninetieth (90th) day prior to such
annual meeting or the tenth (10th) day following the day
on which public announcement of the date of such meeting is first
made by the Company), and (b) with respect to nominations of persons
to be elected to the Board of Directors, the one-hundred eightieth
(180th) day prior to the date of the meeting at which the
election is to occur. In no event shall the public announcement of
an adjournment or postponement of an annual meeting commence a new
time period (or extend any time period) for the giving of a
shareholder’s notice as described above.
	 
	 	(2)	 	In addition to meeting the timely notice
requirements of paragraph (a)(2) of this Section 2.05, in order for
nominations or other business to be properly brought before an annual
meeting by a shareholder pursuant to clause (c) of paragraph (a)(1) of
this Section 2.05, such shareholder’s notice shall set forth: (a) as
to each person whom the shareholder proposes to nominate for election
as a director, (i) all information relating to such person that is
required to be disclosed in solicitations of proxies for election of
directors in an election contest, or is otherwise required, in each
case pursuant to and in accordance with Regulation 14A under the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and (ii) and such person’s written consent to being named in
the proxy statement as a nominee and to serving as a director if
elected; (b) as to any other business that the shareholder proposes to
bring before the meeting, a brief description of the business desired
to be brought before the meeting, the text of the proposal or business
(including the text of any resolutions proposed for consideration and,
in the event that such business includes a proposal to amend the Bylaws
of the Company, the language for the proposed amendment), the reasons
for conducting such business at the meeting, and any material

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	 	 	 	interest in such business of such shareholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (c) as to
the shareholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made, (i) the name and
address of such shareholder, as they appear on the Company’s books,
and of such beneficial owner, (ii) the class and number of shares of
capital stock of the Company that are owned beneficially and of
record by such shareholder and such beneficial owner, (iii) a
representation that the shareholder is a holder of record of stock of
the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to propose such business or
nomination, and (iv) a representation whether the shareholder or the
beneficial owner, if any, intends or is part of a group that intends
(A) to deliver a proxy statement and/or form of proxy to holders of
at least the percentage of the Company’s outstanding capital stock
required to approve or adopt the proposal or elect the nominee and/or
(B) otherwise to solicit proxies from shareholders in support of such
proposal or nomination. The foregoing notice requirements of clauses
(b) and (c) of paragraph (a)(3) of this Section 2.05 shall be deemed
satisfied by a shareholder if the shareholder has notified the
Company of his or her intention to present a proposal at an annual
meeting in compliance with Rule 14a-8 (or any successor thereof)
promulgated under the Exchange Act and such shareholder’s proposal
has been included in a proxy statement that has been prepared by the
Company to solicit proxies for such annual meeting. The Company may
require any proposed nominee to furnish such other information as it
may reasonably require to determine the eligibility of such proposed
nominee to serve as a director of the Company.

	 	(b)	 	Special Meetings of Shareholders. Only such business shall be
conducted at a special meeting of shareholders as shall have been brought
before the meeting pursuant to the Company’s notice of meeting.
	 
	 	(c)	 	General. (1) Only such persons who are nominated in accordance
with the procedures set forth in this Section 2.05 shall be eligible to be
elected at an annual or special meeting of shareholders of the Company to serve
as directors and only such business shall be conducted at a meeting of
shareholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Section 2.05. Except as otherwise provided by
law, the Chairman of the meeting shall have the power and duty (a) to determine
whether a nomination or any business proposed to be

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	 	 	 	brought before the meeting was made or proposed, as the case may be, in
accordance with the procedures set forth in this Section 2.05 (including
whether the shareholder or beneficial owner, if any, on whose behalf the
nomination or proposal is made solicited (or is part of a group that
solicited) or did not so solicit, as the case may be, proxies in support of
such shareholder’s nominee or proposal in compliance with such shareholder’s
representation as required by clause (a)(2)(c)(iv) of this Section 2.05) and
(b) if any proposed nomination or business was not made or proposed in
compliance with this Section 2.05, to declare that such nomination shall be
disregarded or that such proposed business shall not be transacted.
Notwithstanding the foregoing provisions of this Section 2.05, if the
shareholder (or a qualified representative of the shareholder) does not
appear at the annual meeting of shareholders of the Company to present a
nomination or business, such nomination shall be disregarded and such
business shall not be transacted, notwithstanding that proxies in respect of
such vote may have been received by the Company. For purposes of this
Section 2.05, to be considered a qualified representative of the
shareholder, a person must be authorized by a writing executed by such
shareholder or an electronic transmission delivered by such shareholder to
act for such shareholder as proxy at the meeting of shareholders and such
person must produce such writing or electronic transmission, or a reliable
reproduction of the writing or electronic transmission, at the meeting of
shareholders.
	 
	 	 	 	(2) For purposes of this Section 2.05, “public announcement” shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document
publicly filed by the Company with the Securities and Exchange Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act.
	 
	 	 	 	(3) Notwithstanding the foregoing provisions of this Section 2.05, a
shareholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 2.05. Nothing in this Section 2.05 shall
be deemed to affect any rights (a) of shareholders to request inclusion of
proposals in the Company’s proxy statement pursuant to Rule 14a-8 of the
Exchange Act or (b) of the holders of any series of Preferred Stock to elect
directors pursuant to any applicable provisions of the Articles.

     2.06. Right to Attend. Except only to the extent of persons designated by the Board of
Directors or the Chairman of the meeting to assist in the conduct of the meeting (as referred to in
Sections 2.08 and 2.09 below) and except as otherwise permitted by the Board or such Chairman, the
persons entitled to attend any meeting of

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shareholders may be confined to (i) shareholders entitled to vote thereat and other
shareholders entitled to notice of the meeting and (ii) the persons upon whom proxies valid for
purposes of the meeting have been conferred or their duly appointed substitutes (if the related
proxies confer a power of substitution); provided, however, that the Board of Directors or the
Chairman of the meeting may establish rules limiting the number of persons referred to in clause
(ii) as being entitled to attend on behalf of any shareholder so as to preclude such an excessively
large representation of such shareholder at the meeting as, in the judgment of the Board or such
Chairman, would be unfair to other shareholders represented at the meeting or be unduly disruptive
of the orderly conduct of business at such meeting (whether such representation would result from
fragmentation of the aggregate number of shares held by such shareholder for the purpose of
conferring proxies, from the naming of an excessively large proxy delegation by such shareholder or
from employment of any other device). A person otherwise entitled to attend any such meeting will
cease to be so entitled if, in the judgment of the Chairman of the meeting, such person engages
thereat in disorderly conduct impeding the proper conduct of the meeting in the interests of all
shareholders as a group.

     2.07. Quorum. Except as otherwise provided by law, the Articles or these Bylaws, at each
meeting of shareholders the presence in person or by proxy of the holders of a majority in voting
power of the outstanding shares of stock entitled to vote at the meeting shall be necessary and
sufficient to constitute a quorum.

     2.08. Election Inspectors. The Board of Directors, in advance of any shareholders meeting may
appoint an election inspector or inspectors to act at such meeting (and any adjournment thereof).
If an election inspector or inspectors are not so appointed, the Chairman of the meeting may or,
upon the request of any person entitled to vote at the meeting will, make such appointment. If any
person appointed as an inspector fails to appear or to act, a substitute may be appointed by the
Chairman of the meeting. If appointed, the election inspector or inspectors (acting through a
majority of them if there be more than one) will determine the number of shares outstanding, the
authenticity, validity and effect of proxies, the credentials of persons purporting to be
shareholders or persons named or referred to in proxies, and the number of shares represented at
the meeting in person and by proxy; they will receive and count votes, ballots and consents and
announce the results thereof; they will hear and determine all challenges and questions pertaining
to proxies and voting; and, in general, they will perform such acts as may be proper to conduct
elections and voting with complete fairness to all shareholders. No such election inspector need
be a shareholder of the Company.

     2.09. Organization and Conduct of Meetings. Each shareholders meeting will be called to order
and thereafter chaired by the Chairman of the Board if there then is one; or, if not, or if the
Chairman of the Board is absent or so requests, then by the President; or if both the Chairman of
the Board and the President are unavailable, then by such other officer of the Company or such
shareholder as may be appointed by the Board of Directors. The Secretary (or in his or her absence
an Assistant Secretary) of the Company will act as secretary of each shareholders meeting; if
neither the Secretary nor an Assistant Secretary is in attendance, the Chairman of the meeting may

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appoint any person (whether a shareholder or not) to act as secretary thereat. After calling
a meeting to order, the Chairman thereof may require the registration of all shareholders intending
to vote in person, and the filing of all proxies, with the election inspector or inspectors, if one
or more have been appointed (or, if not, with the secretary of the meeting). After the announced
time for such filing of proxies has ended, no further proxies or changes, substitutions or
revocations of proxies will be accepted. If directors are to be elected, a tabulation of the
proxies so filed will, if any person entitled to vote in such election so requests, be announced at
the meeting (or adjournment thereof) prior to the closing of the election polls.

     Absent a showing of bad faith on his or her part, the Chairman of a meeting will, among other
things, have absolute authority to determine the order of business to be conducted at such meeting
and to establish rules for, and appoint personnel to assist in, preserving the orderly conduct of
the business of the meeting (including any informal, or question and answer, portions thereof).
Rules, regulations or procedures regarding the conduct of the business of a meeting, whether
adopted by the Board of Directors or prescribed by the Chairman of the meeting, may include,
without limitation, the following: (i) the establishment of an agenda or order of business for the
meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those
present; (iii) limitations on attendance at or participation in the meeting to shareholders of
record of the Company, their duly authorized and constituted proxies (subject to Section 2.06) or
such other persons as the Chairman of the meeting shall determine; (iv) restrictions on entry to
the meeting after the time fixed for the commencement thereof; and (v) limitations on the time
allotted to questions or comments by participants. Unless and to the extent determined by the
Board of Directors or the Chairman of the meeting, meetings of shareholders shall not be required
to be held in accordance with the rules of parliamentary procedure. Any informational or other
informal session of shareholders conducted under the auspices of the Company after the conclusion
of or otherwise in conjunction with any formal business meeting of the shareholders will be chaired
by the same person who chairs the formal meeting, and the foregoing authority on his or her part
will extend to the conduct of such informal session.

     2.10. Voting. The number of shares voted on any matter submitted to the shareholders which is
required to constitute their action thereon or approval thereof will be determined in accordance
with applicable law, the Articles, and these Bylaws, if applicable. No ballot or change of vote
will be accepted after the polls have been declared closed following the ending of the announced
time for voting.

     2.11. Shareholder Approval or Ratification. The Board of Directors may submit any contract or
act for approval or ratification at any duly constituted meeting of the shareholders, the notice of
which either includes mention of the proposed submittal or is waived as provided in Section 2.03
above. Except as otherwise required by law (e.g., Arizona Revised Statutes Section 10-863), if any
contract or act so submitted is approved or ratified by a majority of the votes cast thereon at
such meeting, the same will be valid and as binding upon the Company and all of its shareholders as
it would be if approved and ratified by each and every shareholder of the Company.

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     2.12. Control Share Act. The provisions of Section 10-2721 through and including Section
10-2727 of the Arizona Revised Statutes shall not apply to the Company.

     2.13. Adjournments. Any meeting of shareholders, annual or special, may adjourn from time to
time to reconvene at the same or some other place, and notice need not be given of any such
adjourned meeting if the time and place thereof are announced at the meeting at which the
adjournment is taken. At the adjourned meeting the Company may transact any business that might
have been transacted at the original meeting. If the adjournment is for more than one hundred and
twenty days, or if after the adjournment a new record date is fixed for the adjourned meeting,
notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at
the meeting.

III. BOARD OF DIRECTORS

     3.01. Membership. The Board of Directors of the corporation shall consist of not less than
nine (9) nor more than twenty-one (21) shareholders of the Company or of any parent corporation
thereof. Each director shall be elected annually and hold office in the manner provided by law and
in the Articles (Art. Fifth). The Board will have the exclusive power to increase or decrease its
size within such limits. Any vacancy occurring in the Board, whether by reason of death,
resignation, disqualification or otherwise, may be filled by the directors as contemplated by law
and as provided in the Articles (Art. Fifth). Any such increase in the size of the Board, and the
filling of any vacancy created thereby, will require action by a majority of the whole membership
of the Board as comprised immediately before such increase.

     3.02. Qualifications. In order to qualify as a director, a person must be the owner of one or
more shares of the capital stock of the Company or of any parent corporation thereof at the time of
assuming office (except as may otherwise be provided in these Bylaws or in the Articles) and for so
long thereafter as such person remains in office. A person will cease to qualify as a director if
he or she (i) is in good faith determined by a majority of the other directors then in office to be
physically or mentally incapable of competent performance as a director for a period, starting with
inception of the incapacity, that has extended or is likely to extend for more than six months or
(ii) has failed to attend six successive regular meetings of the Board (as determined in accordance
with Section 3.03 below) unless and to the extent such failure is waived by a majority of the other
directors then in office; however, disqualification pursuant to clause (i) or (ii) of this sentence
will not preclude the subsequent election or appointment of such person as a director by the
shareholders or the Board if a majority of the directors in office immediately prior to the
submission of such person for election or appointment shall determine that his or her prior
incapacity or principal reason for prior non-attendance no longer exists. A person will not qualify
for election or appointment as a director, whether initially or on re-election and whether by the
shareholders at their annual meeting or by the Board of Directors as contemplated in Section 3.01
above, if such person’s 72nd birthday occurs on or has occurred before the date of such election,
appointment or re-election. A person who has been a full-time

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employee of the Company within twelve months prior to the date of any election will not
qualify for election as a director on that date unless he or she then remains a full-time employee
of the Company or unless the Board of Directors specifically authorizes the election of such person
(but it is not intended that any such authorization will extend a person’s service on the Board
beyond the age limitation set out in the preceding sentence). A person who has qualified by age or
employment status for his or her most recent election as a director may serve throughout the term
for which such person was elected, notwithstanding the occurrence of his or her 72nd birthday or
cessation of full-time employment by the Company between the date of such election and the end of
such term, subject, however, to his or her otherwise remaining qualified for such office.

     3.03. Regular Meetings. A regular annual meeting of the directors is to be held as soon as
practicable after the adjournment of each annual shareholders meeting either at the place of the
shareholders meeting or at such other place as the directors elected at the shareholders meeting
may have been informed of at or before the time of their election. Regular meetings, other than
the annual ones, may be held at such intervals at such places and at such times as the Board of
Directors may provide.

     3.04. Special Meetings. Special meetings of the Board of Directors may be held whenever and
wherever called for by the Chairman of the Board, the President or the number of directors which
would be required to constitute a quorum.

     3.05. Notice. No notice need be given of regular meetings of the Board of Directors. Notice
of the time and place (but not necessarily the purpose or all of the purposes) of any special
meeting will be given to each director in person or by telephone, or via mail, telegram, facsimile,
or other electronic transmission addressed in the manner appearing on the Company’s records.
Notice to any director of any such special meeting will be deemed given sufficiently in advance
when (i) if given by mail, the same is deposited in the United States mail at least four days
before the meeting date, with postage thereon prepaid, (ii) if given by telegram, the same is
delivered to the telegraph office for fast transmittal at least 48 hours prior to the convening of
the meeting, (iii) if given by facsimile or other electronic transmission, the same is received by
the director or an adult member of his or her office staff or household, at least 24 hours prior to
the convening of the meeting, or (iv) if personally delivered or given by telephone, the same is
handed, or the substance thereof is communicated over the telephone to the director or to an adult
member of his or her office staff or household, at least 24 hours prior to the convening of the
meeting. Any such notice may be waived as provided by law. No call or notice of a meeting of
directors will be necessary if each of them waives the same in writing or by attendance. Any
meeting, once properly called and noticed (or as to which call and notice have been waived as
aforesaid) and at which a quorum is formed, may be adjourned to another time and place by a
majority of those in attendance.

     3.06. Quorum; Voting. A quorum for the transaction of business at any meeting or adjourned
meeting of the directors will consist of a majority of those then in office. Any matter submitted
to a meeting of the directors will be resolved by a majority of the votes cast thereon, except as
otherwise required by these Bylaws (§§ 3.01 and

- 9 -

 

3.02 above and § 3.07 below), by law or by any applicable Article. Where action by a majority
of the whole membership is required, such requirement will be deemed to relate to a majority of the
directors in office at the time the action is taken. In computing any such majority, whether for
purposes of determining the presence of a quorum or the adequacy of the vote on any proposed
action, any unfilled vacancies at the time existing in the membership of the Board will be excluded
from the computation.

     3.07. Executive Committee. The Board of Directors may, by resolution adopted by a majority of
the whole Board, name three or more of its members as an Executive Committee. Such Executive
Committee will have and may exercise the powers of the Board of Directors in the management of the
business and affairs of the Company while the Board is not in session, except only as precluded by
law or where action other than by a majority of the votes cast is required by these Bylaws, or the
law (all as referred to in Section 3.06 above), and subject to such limitations as may be included
in any applicable resolution passed by a majority of the whole membership of the Board. A majority
of those named to the Executive Committee will constitute a quorum.

     3.08. Other Committees. The Board of Directors may designate one or more additional
committees, each committee to consist of one or more of the directors of the Company. The Board of
Directors may designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Any such committee, to
the extent permitted by law and to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Company, and may authorize the seal of the Company to
be affixed to all papers that may require it.

     3.09. Committee Functioning. Notice requirements and related waiver provisions for meetings
of the Executive Committee and other committees of the Board will be the same as those set forth in
Section 3.05 above for meetings of the Board of Directors. Except as provided in the next two
succeeding sentences, a majority of those named to the Executive Committee or any other committee
of the Board will constitute a quorum at any meeting thereof (with the effect of departure of
committee members from a meeting and the computation of a majority of committee members to be in
accordance with the applicable policies of Section 3.06 above), and any matter submitted to a
meeting of any such committee will be resolved by a majority of the votes cast thereon. No
distinction will be made among ex-officio or other members of any such committee for quorum, voting
or other purposes, except that the membership of any committee (including the Executive Committee),
in performing any function vested in it as herein contemplated, may be deemed to exclude any
officer or employee of the Company, in either case, or other person having a direct or indirect
personal interest in any proposed exercise of such function, whose exclusion for that purpose is
deemed appropriate by a majority of the other members of such committee proposing to perform such
function. All committees are to keep regular minutes of the transactions of their meetings.

- 10 -

 

     3.10. Action by Telephone or Consent. Any meeting of the Board or any committee thereof may
be held by conference telephone or similar communications equipment as permitted by law, in which
case any required notice of such meeting may generally describe the arrangements (rather than the
place) for the holding thereof, and all other provisions herein contained or referred to will apply
to such meeting as though it were physically held at a single place. Action may also be taken by
the Board or any committee thereof without a meeting if the members thereof consent in writing
thereto as contemplated by law.

     3.11. Presumption of Assent. A director of the Company who is present at a meeting of the
Board of Directors, or of any committee when corporate action is taken is deemed to have assented
to the action taken unless either (i) the director objects at the beginning of the meeting or
promptly on the director’s arrival to holding it or transacting business at the meeting; (ii) the
director’s dissent or abstention from the action taken is entered in the minutes of the meeting; or
(iii) the director delivers written notice of the director’s dissent or abstention to the presiding
officer of the meeting before its adjournment or to the Company before 5:00 P.M. on the next
business day after the meeting. The right of dissent or abstention is not available to a director
who votes in favor of the action taken.

     3.12. Compensation. By resolution of the Board, the directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors, or of any committee, and may be paid
a fixed sum for attendance at each such meeting and/or a stated salary as a director or committee
member. No such payment will preclude any director from serving the Company in any other capacity
and receiving compensation therefor.

     3.13. Removal. Any director or the entire Board of Directors may be removed, with or without
cause, only at a special meeting of shareholders called for that purpose, if the votes cast in
favor of such removal exceed the votes cast against such removal, except that if less than the
entire Board of Directors is to be removed, no one of the directors may be removed if the votes
cast against the director’s removal would be sufficient to elect the director if then cumulatively
voted at an election for the class of directors of which the director is a part.

IV. OFFICERS — GENERAL

     4.01. Elections and Appointments. The directors may elect or appoint one or more of the
officers of the Company contemplated in Part V below. Any such election or appointment will
regularly take place at the annual meeting of the directors, but elections of officers may be held
at any other meeting of the Board. A person elected or appointed to any office will continue to
hold that office until the election or appointment of his or her successor, subject to action
earlier taken pursuant to Section 4.04 or 6.01 below. Any person may hold more than one office.

     4.02. Additional Appointments. In addition to the officers contemplated in Part V below, the
Board of Directors may create other corporate positions, and appoint

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persons thereto, with such authority to perform such duties as may be prescribed from time to
time by the Board of Directors, by the President or by the superior officer of any person so
appointed. Notwithstanding such additional appointments, only those persons whose offices are
described in Part V are to be considered an officer of the Company unless the resolution or other
Board action appointing such person expressly states that such person is to be considered an
officer of the Company. Each of such persons (in the order designated by the Board or the superior
officer of such person) will be vested with all of the powers and charged with all of the duties of
his or her superior officer in the event of such superior officer’s absence or disability.

     4.03. Bonds and Other Requirements. The Board of Directors may require any officer or other
appointee to give bond to the Company (with sufficient surety, and conditioned upon the faithful
performance of the duties of his or her office or position) and to comply with such other
conditions as may from time to time be required of him or her by the Board.

     4.04. Removal or Delegation. Provided that a majority of the whole membership thereof concurs
therein, the Board of Directors may remove any officer of the Company as provided by law and
declare his or her office or offices vacant or abolished or, in the case of the absence or
disability of any officer or for any other reason considered sufficient, may temporarily delegate
his or her powers and duties to any other officer or to any director. Similar action may be taken
by the Board of Directors in regard to appointees designated pursuant to Section 4.02 above.

     4.05. Salaries. Officer salaries may from time to time be fixed by the Board of Directors or
(except as to his or her own) be left to the discretion of the Chief Executive Officer or the
President. No officer will be prevented from receiving a salary by reason of the fact that he or
she is also a director of the Company.

V. SPECIFIC OFFICERS, FUNCTIONS AND POWERS

     5.01. Chairman of the Board. The Board of Directors may elect a Chairman to serve as a
general executive officer of the Company and, if specifically designated as such by the Board, as
the Chief Executive Officer of the Company. If elected, the Chairman will preside at all meetings
of the directors and be vested with such other powers and duties as the Board may from time to time
delegate to him or her.

     5.02. Chief Executive Officer. Subject to the control of the Board of Directors exercised as
hereinafter provided, the Chief Executive Officer of the Company will supervise its business and
affairs and the performance of their respective duties by all other officers, by appointees
designated pursuant to Section 4.02 above, and by such additional appointees to such additional
positions (corporate, divisional or otherwise) as the Chief Executive Officer may designate, with
authority on his or her part to delegate the foregoing duty of supervision to such extent and to
such person or persons as may be determined by the Chief Executive Officer. Except as otherwise
indicated from time to time by resolution of the Board of Directors, its management of the business
and

- 12 -

 

affairs of the Company will be implemented through the office of the Chief Executive Officer.

     5.03. President and Vice Presidents. Unless specified to the contrary by resolution of the
Board of Directors, the President will be the Chief Executive Officer of the Company. In addition
to the supervisory functions above set forth on the part of the Chief Executive Officer or in lieu
thereof if a contrary specification is made by the Board relative to the Chief Executive Officer,
the President will be vested with such powers and duties as the Board may from time to time
designate. Vice Presidents may be elected by the Board of Directors to perform such duties as may
be designated by the Board or be assigned or delegated to them by their respective superior
officers. The Board may identify (i) one or more Vice Presidents as “Executive” or “Senior” Vice
Presidents and (ii) the President or any Vice President as “General Manager” of the Company and the
title of any Vice President may include words indicative of his or her particular area of
responsibility and authority. Vice Presidents will succeed to the responsibilities and authority
of the President, in the event of his or her absence or disability, in the order consistent with
their respective titles or regular duties or as specifically designated by the Board of Directors.

     5.04. Treasurer and Secretary. The Treasurer and Secretary each will perform all such duties
normally associated with his or her office (including, in the case of the Secretary, the giving of
notice and the preparation and retention of minutes of corporate proceedings and the custody of
corporate records and the seal of the Company) as are not assigned to a Vice President of the
Company, along with such other duties as may be designated by the Board or be assigned or delegated
to them by their respective superior officers. The Board may appoint one or more Assistant
Treasurers or Assistant Secretaries, each of whom (in the order designated by the Board or their
respective superior officers) will be vested with all of the powers and charged with all of the
duties of the Treasurer or the Secretary (as the case may be) in the event of his or her absence or
disability.

     5.05. Specific Powers. Except as may otherwise be specifically provided in a resolution of
the Board of Directors, any of the officers referred to in this Part V will be a proper officer to
authenticate records of the Company and to sign on behalf of the Company any deed, bill of sale,
assignment, option, mortgage, pledge, note, bond, debenture, evidence of indebtedness, application,
consent (to service of process or otherwise), agreement, indenture or other instrument of
importance to the Company. Any such officer may represent the Company at any meeting of the
shareholders or members of any corporation, association, partnership, joint venture or other entity
in which this Company then has an interest, and may vote such interest in person or by proxy
appointed by him or her, provided that the Board of Directors may from time to time confer the
foregoing authority upon any other person or persons.

VI. RESIGNATIONS AND VACANCIES

     6.01. Resignations. Any director, committee member or officer may resign from his or her
office at any time by written notice as specified in accordance with

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Arizona Revised Statutes Sections 10-807 and 10-843. The acceptance of a resignation will not
be required to make it effective.

     6.02. Vacancies. If the office of any director, committee member or officer becomes vacant by
reason of his or her death, resignation, disqualification, removal or otherwise, the Board of
Directors may choose a successor to hold office for the unexpired term.

VII. INDEMNIFICATION AND RATIFICATION

     7.01. Indemnification. In order to induce qualified persons to serve the Company (and any
other corporation, joint venture, partnership, trust or other enterprise at the request of the
Company) as directors and officers, the Company shall indemnify any and all of its directors and
officers, or former directors and officers to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended.

     7.02. Ratification; Special Committee. Any transaction involving the Company, any of its
subsidiary corporations or any of its directors, officers, employees or agents which at any time is
questioned in any manner or context (including a shareholders derivative suit), on the ground of
lack of authority, conflict of interest, misleading or omitted statement of fact or law,
nondisclosure, miscomputation, improper principles or practices of accounting, inadequate records,
defective or irregular execution or any similar ground, may be investigated and/or ratified (before
or after judgment), or an election may be made not to institute or pursue a claim or legal
proceedings on account thereof or to accept or approve a negotiated settlement with respect thereto
(before or after the institution of legal proceedings), by the Board of Directors or by a special
committee thereof comprised of one or more disinterested directors (that is, a director or
directors who did not participate in the questioned transaction with actual knowledge of the
questioned aspect or aspects thereof). Such a special committee may be validly formed and fully
empowered to act, in accordance with the purposes and duties assigned thereto, by resolution or
resolutions of the Board of Directors, notwithstanding (i) the inclusion of Board members who are
not disinterested as aforesaid among those who form a quorum at the meeting or meetings at which
one or more members of such special committee are elected or appointed to the Board or to such
special committee or at which such committee is formed or empowered, or their inclusion among the
directors who vote upon or otherwise participate in taking any of the foregoing actions, or (ii)
the taking of any of such actions by the disinterested members of the Board (or a majority of such
members) whose number is not sufficient to constitute a quorum or a majority of the membership of
the full Board. Any such special committee so comprised will, to the full extent consistent with
its purposes and duties as expressed in such resolution or resolutions, have all of the authority
and powers of the full Board and its Executive Committee (the same as though it were the full Board
and/or its Executive Committee in carrying out such purposes and duties) and will function in
accordance with Section 3.09 above. No other provisions of these Bylaws which may at any time
appear to conflict with any provisions of this Section 7.02, and no defect or irregularity in the
formation, empowering or functioning of any such special committee, will serve to impede, impair or
bring into

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question any action taken or purported to be taken by such committee or the validity of any
such action. Any ratification of a transaction pursuant to this Section 7.02 will have the same
force and effect as if the transaction has been duly authorized originally. Any such ratification,
and any election made pursuant to this Section 7.02 with respect to claims, legal proceedings or
settlements, will be binding upon the Company and its shareholders and will constitute a bar to any
claim or the execution of any judgment in respect of the transaction involved in such ratification
or election.

VIII. SEAL

     8.01. Form Thereof. The seal of the Company will have inscribed thereon the name of the
Company, the state and year of its incorporation and the words “SEAL”.

IX. STOCK CERTIFICATES

     9.01. Form Thereof. Shares shall be issued in uncertificated form pursuant to the customary
arrangements for issuing shares in such form. This requirement shall not apply to shares
represented by a certificate until the certificate is surrendered to the Company. Notwithstanding
the foregoing, every holder of stock represented by certificates and, upon request any holder of
uncertificated shares, shall be entitled to have a certificate in such form as approved by the
Board of Directors.

     9.02. Ownership. The Company will be entitled to treat the registered owner of any share as
the absolute owner thereof and accordingly, will not be bound to recognize any beneficial,
equitable or other claim to, or interest in, such share on the part of any other person, whether or
not it has notice thereof, except as may expressly be provided by Chapter 8 of Title 47, Arizona
Revised Statutes (or its successor), as at the time in effect, or other applicable law.

     9.03. Transfers. Transfer of stock will be made on the books of the Company as follows: (i)
with respect to certificated shares, only upon surrender of the certificate therefor, duly endorsed
by an appropriate person, with such assurance of the genuineness and effectiveness of the
endorsement as the Company may require, all as contemplated by Chapter 8 of Title 47, Arizona
Revised Statutes (or its successor), as at the time in effect, and/or upon submission of any
affidavit, other document or notice which the Company considers necessary; and (ii) with respect to
uncertificated shares, upon compliance with the customary procedures for transferring shares in
uncertificated form.

     9.04. Lost Certificates. In the event of the loss, theft or destruction of any certificate
representing capital stock of this Company, the Company may issue (or, in the case of any such
stock as to which a transfer agent and/or registrar have been appointed, may direct such transfer
agent and/or registrar to countersign, register and issue) a replacement certificate in lieu of
that alleged to be lost, stolen or destroyed, and cause the same to be delivered to the owner of
the stock represented thereby, provided that the owner shall have submitted such evidence showing
the circumstances of the alleged loss, theft or destruction, and his or her ownership of the
certificate as the

- 15 -

 

Company considers satisfactory, together with any other factors which the Company considers
pertinent, and further provided that an indemnity agreement and/or indemnity bond shall have been
provided in form and amount satisfactory to the Company and to its transfer agent and/or registrar,
if applicable.

X. EMERGENCY BYLAWS

     10.01. Emergency Conditions. The emergency Bylaws provided in this Part X will be as
effective in the event of an emergency as prescribed in Arizona Revised Statutes Section 10-207.D.
To the extent not inconsistent with the provisions of this Part X, these Bylaws will remain in
effect during such emergency and upon its termination, these emergency Bylaws will cease to be
operative.

     10.02. Board Meetings. During any such emergency, a meeting of the Board of Directors or any
of its committees may be called by any officer or director of the Company. Notice of the time and
place of the meeting will be given by the person calling the same to those of the directors whom it
may be feasible to reach by any available means of communication. Such notice will be given so
much in advance of the meeting as circumstances permit in the judgment of the person calling the
same. At any Board or committee meeting held during any such emergency, a quorum will consist of a
majority of those who could reasonably be expected to attend the meeting if they were willing to do
so, but in no event more than a majority of those to whom notice of such meeting is required to
have been given as above provided.

     10.03. Certain Actions. The Board of Directors, either before or during any such emergency,
may provide and from time to time modify lines of succession in the event that during such an
emergency any or all officers, appointees, employees or agents of the Company are for any reason
rendered incapable of discharging their duties. The Board, either before or during any such
emergency, may, effective in the emergency, change the head office or designate several alternative
head offices of the Company, or authorize the officers to do so.

     10.04. Liability. No director, officer, appointee, employee or agent acting in accordance
with these emergency Bylaws will be liable except for willful misconduct.

     10.05. Modifications. These emergency Bylaws will be subject to repeal or change by further
action of the Board of Directors, but no such repeal or change will modify the provisions of
Section 10.04 with respect to action taken prior to the time of such repeal or change. Any
amendment of these emergency Bylaws may make any further or different provisions that may be
practical and necessary for the circumstances of the emergency.

XI. DIVIDENDS

     11.01. Declaration. Subject to such restrictions or requirements as may be imposed by law or
the Company’s Articles or as may otherwise be binding upon the Company, the Board of Directors may
from time to time declare dividends on stock of the Company outstanding on the dates of record
fixed by the Board, to be paid in cash,

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in property or in shares of the Company’s stock on or as of such payment or distribution dates
as the Board may prescribe.

XII. BUSINESS COMBINATIONS

     12.01. Definitions. In these Bylaws, the following definitions shall apply:

	 	1.	 	“Affiliate” means a person that directly or indirectly
controls, is controlled by, or is under common control with a specified person.
	 
	 	2.	 	“Announcement date,” when used in reference to any business
combination, means the date of the first public announcement of the final,
definitive proposal for the business combination.
	 
	 	3.	 	“Associate,” when used to indicate a relationship with any
person, means any of the following:

	 	(a)	 	Any corporation or organization of which the
person is an officer, director, or partnership or is, directly or
indirectly, the beneficial owner of ten percent (10%) or more of any
class or series of shares entitled to vote or other equity interest;
	 
	 	(b)	 	Any trust or estate in which the person has a
substantial beneficial interest or as to which the person serves as
trustee or personal representative or in a similar fiduciary capacity;
or
	 
	 	(c)	 	Any relative or spouse of the person, or any
relative of the spouse, residing in the home of the person.

	 	4.	 	“Beneficial owner,” when used with respect to shares or other
securities, includes any person who, directly or indirectly through any
agreement, arrangement, relationship, understanding, or otherwise, whether or
not in writing, has or shares the power to vote, or direct the voting
of the shares or securities or has or shares the power to dispose of or direct the
disposition of the shares or securities, except that:

	 	(a)	 	A person is not deemed the beneficial owner of shares or securities tendered pursuant to a tender or exchange offer
made by the person or any of the person’s affiliates or associates
until the tendered shares or securities are accepted for purchase or
exchange; and
	 
	 	(b)	 	A person is not deemed the beneficial owner of shares or securities with respect to which the person has the power to
vote or direct the voting arising solely from a revocable proxy given
in response to a proxy solicitation required to be made

- 17 -

 

	 	 	 	and made in accordance with the applicable rules and regulations
under the Securities Exchange Act of 1934, as amended, and is not
then reportable under that act on a Schedule 13D or comparable
report.

	 	5.	 	“Beneficial ownership” includes the right to acquire shares or
securities through the exercise of options, warrants, or rights, the conversion
of convertible securities, or otherwise. The shares or securities subject to
the options, warrants, rights, or conversion privileges held by a person are
deemed to be outstanding for the purpose of computing the percentage of
outstanding shares or securities of the class or series owned by the person but
are not deemed to be outstanding for the purpose of computing the percentage of
the class or series owned by any other person. A person is deemed the
beneficial owner of shares and securities beneficially owned by the spouse of
the person or any relative of the spouse residing in the home of the person,
any trust or estate in which the person owns ten percent (10%) or more of the
total beneficial interest or serves as trustee or personal representative, any
corporation or entity in which the person owns ten percent (10%) or more of the
equity and any affiliate of the person.
	 
	 	6.	 	“Business combination,” when used in reference to the Company
and any interested shareholder of the Company, means any of the following:

	 	(a)	 	Any merger or consolidation of the Company or
any subsidiary of the Company with either:

	 	(i)	 	The interested shareholder; or
	 
	 	(ii)	 	Any other domestic or foreign
corporation, whether or not itself an interested shareholder of
the Company, that is, or after the merger would be, an affiliate
or associate of the interested shareholder, except that the
foregoing does not include the merger of a wholly-owned
subsidiary of the Company into the Company or the merger of two
or more wholly-owned subsidiaries of the Company.

	 	(b)	 	Any exchange, pursuant to a plan of exchange
under the laws of the State of Arizona or a comparable statute of any
other state or jurisdiction, of shares of the Company or any subsidiary
of the Company for shares of either:

	 	(i)	 	The interested shareholder; or

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	 	(ii)	 	Any other domestic or foreign
corporation, whether or not itself an interested shareholder of
the Company, that is, or after the exchange would be, an
affiliate or associate of the interested shareholder.

	 	(c)	 	Any sale, lease, exchange, mortgage, pledge,
transfer, or other disposition, in a single transaction or a series of
transactions, to or with the interested shareholder or any affiliate or
associate of the interested shareholder, of assets of the Company or
any subsidiary of the Company to which any of the following applies:

	 	(i)	 	Has an aggregate market value
equal to ten percent (10%) or more of the aggregate market value
of all the assets, determined on a consolidated basis, of the
Company.
	 
	 	(ii)	 	Has an aggregate market value
equal to ten percent (10%) or more of the aggregate market value
of all the outstanding shares of the Company.
	 
	 	(iii)	 	Represents ten percent (10%) or
more of the earning power or net income, determined on a
consolidated basis, of the Company.

	 	(d)	 	The issuance or transfer by the Company or any
subsidiary of the Company, in a single transaction or a series of
transactions, of any shares of the Company or any subsidiary of the
Company that have an aggregate market value equal to five percent (5%)
or more of the aggregate market value of all the outstanding shares of
the Company to the interested shareholder or any affiliate or associate
of the interested shareholder, except pursuant to the exercise of
warrants or rights to purchase shares offered or a dividend or
distribution paid or made pro rata to all shareholders of the Company.
	 
	 	(e)	 	The adoption of any plan or proposal for the
liquidation or dissolution of the Company, or any reincorporation of
the Company in another state or jurisdiction, proposed by, on behalf
of, or pursuant to any agreement, arrangement, or understanding,
whether or not in writing, with the interested shareholder or any
affiliate or associate of the interested shareholder.
	 
	 	(f)	 	Any reclassification of securities, including
any share dividend or split, reverse share split, or other distribution
of

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	 	 	 	shares in respect of shares, recapitalization of the Company, merger
or consolidation of the Company with any subsidiary of the Company
exchange of shares of the Company with any subsidiary of the Company
or other transaction, whether or not with or into or otherwise
involving the interested shareholder, proposed by, on behalf of, or
pursuant to any agreement, arrangement, or understanding, whether or
not in writing, with the interested shareholder or any affiliate or
associate of the interested shareholder that has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class or series of shares entitled to vote,
or securities that are exchangeable for or convertible into or that
carry a right to acquire shares entitled to vote, of the Company or
any subsidiary of the Company that is, directly or indirectly, owned
by the interested shareholder or any affiliate or associate of the
interested shareholder, except as a result of immaterial changes due
to fractional share adjustments.
	 
	 	(g)	 	Any receipt by the interested shareholder or
any affiliate or associate of the interested shareholder of the
benefit, directly or indirectly, except proportionately as a
shareholder of the Company, of any loans, advances, guarantees,
pledges, or other financial assistance or any tax credits or other tax
advantages provided by or through the Company or any subsidiary of the
Company (other than expense account advances made in the ordinary
course of business).

	 	7.	 	“Consummation date,” with respect to any business combination,
means the date of consummation of the business combination or, in the case of a
business combination as to which a shareholder vote is taken, the later of:

	 	(i)	 	The business day before the vote; or
	 
	 	(ii)	 	Twenty (20) days before the date of
consummation of the business combination.

	 	8.	 	“Control,” “controlling,” “controlled by” or “under common
control with” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract, or otherwise.
A person’s beneficial ownership of ten percent (10%) or more of the voting
power of the Company’s outstanding shares entitled to vote in the election of
directors creates a presumption that the person has control of the Company. A
person is not considered to have control of the Company if the

- 20 -

 

	 	 	 	person holds voting power, in good faith and not for the purpose of
avoiding any provision of law as an agent, bank, broker, nominee, custodian,
or trustee for one or more beneficial owners who do not individually or as a
group have control of the Company.
	 
	 	9.	 	“Interested shareholder,” when used in reference to the Company
means any person, other than the Company or any subsidiary of the Company,
that is either:

	 	(a)	 	The beneficial owner, directly or indirectly,
of ten percent (10%) or more of the voting power of the outstanding shares entitled to vote of the Company; or
	 
	 	(b)	 	An affiliate or associate of the Company who at
any time within the three (3) year period immediately before the date
in question was the beneficial owner of ten percent (10%) or more of
the voting power of the then outstanding shares entitled to vote of the
Company.

	 	10.	 	“Market value,” when used in reference to shares or property of
the Company, means the following:

	 	(a)	 	In the case of shares, the highest closing sale
price during the thirty (30) day period immediately preceding the date
in question of a share on the composite tape for New York Stock
Exchange listed shares or, if the shares are not quoted on the
composite tape or not listed on the New York Stock Exchange, on the
principal United States securities exchange registered under the
Securities Exchange Act of 1934, as amended, on which the share are
listed or, if the shares are not listed on any such exchange, on the
National Association of Securities Dealers, Inc. Automated Quotations
National Market System or, if the shares are not quoted on the National
Association of Securities Dealers, Inc. Automated Quotations National
Market System, the highest closing bid quotation during the thirty (30)
day period preceding the date in question of a share on the National
Association of Securities Dealers, Inc. Automated Quotations System or
any system then in use or, if no such quotation is available, the fair
market value on the date in question of a share as determined in good
faith by the Board of the Company.
	 
	 	(b)	 	In the case of property other than cash or shares, the fair market value of the property on the date in question
as determined in good faith by the Board of the Company.

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	 	11.	 	“Person” means any natural person, partnership, corporation,
group, association, venture, firm, or other entity (other than the Company, any
subsidiary of the Company, or a trustee or fiduciary holding stock for the
benefit of the employees of the Company or its subsidiaries or any one of its
subsidiaries, pursuant to one or more employee benefit plans). If two or more
persons act as a partnership, limited partnership, syndicate, or other group
pursuant to any agreement, arrangement, relationship, understanding, or
otherwise, whether or not in writing, for the purposes of acquiring, owning, or
voting shares of the Company, all members of the partnership, syndicate, or
other group shall be deemed a person. Person does not include a licensed
broker, dealer, or underwriter that purchases shares of the Company solely for
purposes of resale to the public that is not acting in concert with an
interested shareholder.
	 
	 	12.	 	“Share acquisition date,” with respect to any person and the
Company, means the date that the person first becomes an interested
shareholder of the Company.

			
	12.02.	 	Business Combination with Interested Shareholders; Approved by Directors.

	 	1.	 	Except as set forth in these Bylaws, the Company may not engage
in any business combination or vote, consent or otherwise act to authorize a
subsidiary of the Company to engage in any business combination with respect
to, proposed by, or on behalf of, or pursuant to any agreement, arrangement or
understanding, whether or not in writing, with any interested shareholder of
the Company or any affiliate or associate of the interested shareholder for a
period of three (3) years after the interested shareholder’s share acquisition
date, unless the business combination or the acquisition of shares made by the
interested shareholder on the interested shareholder’s share acquisition date
is approved by a committee of the Board of Directors of the Company before the
interested shareholder’s share acquisition date. The committee shall be formed
in accordance with subsection 4 of this Section 12.02.
	 
	 	2.	 	If a good faith definitive proposal regarding a business
combination is made in writing to the Board of Directors of the Company, a
committee of the Board formed in accordance with subsection 4 of this Section
12.02 shall consider and take action on the proposal. Unless the committee
responds affirmatively in writing within forty-five (45) days after receipt of
the proposal by the Company, the committee shall be considered to have
disapproved the business combination.

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	 	3.	 	If a good faith definitive proposal to acquire shares is made
in writing to the Board of Directors of the Company, a committee of the Board
of Directors formed in accordance with subsection 4 of this Section 12.02
shall consider and take action on the proposal. Unless the committee responds
affirmatively in writing within forty-five (45) days after receipt of the
proposal by the Company, the committee shall be considered to have disapproved
the share acquisition.
	 
	 	4.	 	When a business combination or acquisition of shares is
proposed pursuant to this Section 12.02, the Board of Directors shall promptly
form a committee composed of all of the Board’s disinterested Directors. The
committee shall take action on the proposal by the affirmative vote of a simple
majority of the committee members. The committee is not subject to any
direction or control by the Board with respect to the committee’s consideration
of or any action concerning a business combination or acquisition of shares
pursuant to this Section 12.02. A committee formed pursuant to this subsection
shall be composed of one or more members. Only disinterested Directors may be
members of a committee formed pursuant to this subsection. However, if the
Board of Directors has no disinterested Directors, the Board shall select three
or more disinterested persons to be committee members. For purposes of this
subsection, a Director or person is disinterested if the Director or person is
not an interested shareholder or an affiliate thereof or a present or former
officer or employee of the Company or an affiliate or associate of the Company
or of the interested shareholder or of any affiliate or associate of the
interested shareholder.

     12.03. Requirements after Three Years. Except for the provisions of Sections 12.02 and 12.04,
the Company may not engage at any time in any business combination or vote, consent, or otherwise
act to authorize a subsidiary of the Company to engage in any business combination with respect to,
proposed by, on behalf of, or pursuant to any agreement, arrangement, or understanding, whether or
not in writing, with an interested shareholder of the Company or any affiliate or associate of the
interested shareholder other than a business combination meeting all the requirements of this
Article XII, the Articles, and the requirements specified in any of the following:

	 	1.	 	A business combination with respect to which the consummation
date is no less than three years after the share acquisition date, approved by
the Board of Directors of the Company before the interested shareholder’s share
acquisition date, or as to which the acquisition of shares made by the
interested shareholder on the interested shareholder’s acquisition date had
been approved by the Board of Directors before the interested shareholder’s
share acquisition date.

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	 	2.	 	A business combination approved by the affirmative vote of the
holders of a majority of the outstanding shares entitled to vote not
beneficially owned by the interested shareholder proposing the business
combination or any affiliate or associate of the interested shareholder
proposing the business combination at a meeting called for that purpose no
earlier than three years after the interested shareholder’s share acquisition
date.
	 
	 	3.	 	A business combination, with respect to which the consummation
date is no earlier than three years after the interested shareholder’s share
acquisition date, that meets all of the following conditions:

	 	(a)	 	The aggregate amount of the cash and the market
value as of the consummation date of consideration other than cash to
be received per share by holders of outstanding common shares of the
Company in the business combination is at least equal to the higher of
the following:

	 	(i)	 	The highest per share price paid
by the interested shareholder, at a time when the interested
shareholder was the beneficial owner, directly or indirectly, of
five percent (5%) or more of the outstanding shares entitled to
vote of the Company, for any common shares of the same class or
series acquired by it within the three (3) year period
immediately before the announcement date with respect to the
business combination or within the three (3) year period
immediately before, or in, the transaction in which the
interested shareholder became an interested shareholder,
whichever is higher, plus, in either case, interest compounded
annually from the earliest date on which the highest per share
acquisition price was paid through the consummation date at the
rate for one year United States treasury obligations from time
to time in effect less the aggregate amount of any cash
dividends paid, and the market value of any dividends paid other
than in cash, per common share since the earliest date, up to
the amount of the interest.
	 
	 	(ii)	 	The market value per common share
on the announcement date with respect to the business
combination or on the interested shareholder’s share acquisition
date, whichever is higher, plus interest compounded annually
from that date through the consummation date at the rate for one
year United States treasury obligations from time to time in
effect

- 24 -

 

	 	 	 	less the aggregate amount of any cash dividends paid and the
market value of any dividends paid other than in cash, per
common share since that date, up to the amount of the
interest.

	 	(b)	 	The aggregate amount of the cash
and the market value as of the consummation date of
consideration other than cash to be received per share by
holders of outstanding shares of any class or series of shares,
other than common shares, of the Company in the business
combination is at least equal to the highest of the following,
whether or not the interested shareholder has previously
acquired any shares of the class or series:

	 	(i)	 	The highest per share price paid by the interested shareholder, at a
time when the interested shareholder was the beneficial
owner, directly or indirectly, of five percent (5%) or
more of the outstanding shares entitled to vote of the
Company, for any shares of the class or series acquired
by it within the three (3) year period immediately
before the announcement date with respect to the
business combination or within the three (3) year period
immediately before, or in, the transaction in which the
interested shareholder became an interested shareholder,
whichever is higher, plus, in either case, interest
compounded annually from the earliest date on which the
highest per share acquisition price was paid through the
consummation date at the rate for one year United States
treasury obligations from time to time in effect less
the aggregate amount of any cash dividends paid and the
market value of any dividends paid other than in cash,
per share of the class or series since such earliest
date, up to the amount of the interest.
	 
	 	(ii)	 	The highest
preferential amount per share to which the holders of shares of the class or series are entitled in the event
of any voluntary liquidation, dissolution, or winding up
of the Company, plus the aggregate amount of any unpaid
dividends declared or due as to which the holders are
entitled before payment of

- 25 -

 

	 	 	 	dividends on some other class or series of shares,
unless the aggregate amount of the dividends is
included in the preferential amount.
	 	 	 	 
	 	(iii)	 	The market value
per share of the class or series on the announcement
date with respect to the business combination or on the
interested shareholder’s share acquisition date,
whichever is higher, plus interest compounded annually
from that date through the consummation date at the rate
for one year United States treasury obligations from
time to time in effect less the aggregate amount of any
cash dividends paid and the market value of any
dividends paid other than in cash, per share of the
class or series since that date, up to the amount of the
interest.

	 	(c)	 	The consideration to be received
by holders of a particular class or series of outstanding shares, including common shares, of the Company in the business
combination is in cash or in the same form as the interested
shareholder has used to acquire the largest number of shares of
the class or series of shares previously acquired by it and the
consideration is distributed promptly.
	 
	 	(d)	 	The holders of all outstanding shares of the Company not beneficially owned by the interested
shareholder immediately before the consummation date with
respect to the business combination are entitled to receive in
the business combination cash or other consideration for the
 shares in compliance with subdivisions (a), (b) and (c).
	 
	 	(e)	 	After the interested
shareholder’s share acquisition date and before the consummation
date with respect to the business combination, the interested
shareholder has not become the beneficial owner of any
additional shares entitled to vote of the Company except:

	 	(i)	 	As part of the
transaction that resulted in the interested shareholder
becoming an interested shareholder;

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	 	(ii)	 	By virtue of
proportionate share splits, share dividends, or other
distributions of shares in respect of shares not
constituting a business combination;
	 
	 	(iii)	 	Through a
business combination meeting all of the conditions of
Section 12.02 and this paragraph; or
	 
	 	(iv)	 	Through purchase
by the interested shareholder at any price that, if the
price had been paid in an otherwise permissible business
combination the announcement date and consummation date
of which were the date of the purchase, would have
satisfied the requirements of subdivisions (a), (b) and
(c) of this Section.

     12.04. Application. This Article XII does not apply to any business combination of the
Company with an interested shareholder of the Company who became an interested shareholder
inadvertently, if the interested shareholder both:

	 	1.	 	As soon as practicable, divests itself of a sufficient amount
of the shares entitled to vote of the Company so that it no longer is the
beneficial owner, directly or indirectly, of ten percent (10%) or more of the
outstanding shares entitled to vote of the Company.
	 
	 	2.	 	Would not at any time within the three (3) year period
preceding the announcement date with respect to the business combination have
been an interested shareholder except for the inadvertent acquisition.

XIII. LIMITATION ON SHARE REPURCHASES

     13.01. Limitation on Share Repurchases. The Company shall not, directly or indirectly,
purchase or agree to purchase any shares entitled to vote from a person who beneficially owns more
than five per cent (5%) of the voting stock of the Company for more than the “average market price”
of the shares if the shares have been beneficially owned by the person or persons for less than
three (3) years, unless either (i) the purchase or agreement to purchase is approved at a meeting
of shareholders by the affirmative vote of the holders of a majority of the voting stock entitled
to vote excluding shares beneficially owned by such person, by any of such person’s affiliates or
associates, or by any officer or director of the Company or (ii) the Company makes an offer, of at
least equal value per share, to all holders of shares of such class or series and to all holders of
any class or series into which the shares may be converted.

- 27 -

 

     13.02. Definitions. For the purposes of this Article, “average market price” means
the average closing sale price during the thirty trading days immediately preceding the purchase of
the shares in question, or if the person or persons have commenced a tender offer or have announced
an intention to seek control of the Company, during the thirty trading days preceding the earlier
of the commencement of the tender offer or the making of the announcement, of a share on the
composite tape for New York Stock Exchange listed shares or, if the shares are not quoted on the
composite tape or not listed on the New York Stock Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the
shares are listed or, if the shares are not listed on any such exchange, on the National
Association of Securities Dealers, Inc. Automated Quotations National Market System or, if the
shares are not quoted on the National Association of Securities Dealers, Inc. Automated Quotations
National Market System, the average closing bid quotation, during the thirty trading days preceding
the purchase of the shares in questions of a share on the National Association of Securities
Dealers, Inc. Automated Quotations System or any system then in use, or if the person or persons
have commenced a tender offer or have announced an intention to seek control of the issuing public
corporation, during the thirty trading days preceding the earlier of the commencement of the tender
offer or the making of the announcement, except that if no quotation is available the average
market price is the fair market value on the date of purchase of the shares in question of a share
as determined in good faith by the Board of Directors of the Company.

XIV. AMENDMENTS

     14.01. Amendment of Bylaws. These Bylaws may be altered, amended, supplemented, repealed, or
temporarily or permanently suspended, in whole or in part, or replacement Bylaw provisions adopted
by: (i) the affirmative vote of a majority of the directors then in office; or (ii) the
affirmative vote of a majority of the votes cast on such matter(s) at a meeting of shareholders.

- 28 -

 

CERTIFICATE

     I, NANCY C. LOFTIN, Vice President, General Counsel and Secretary of Pinnacle West Capital
Corporation, an Arizona corporation, do HEREBY CERTIFY that the foregoing is a true and correct
copy of the Company’s Bylaws, as amended, and that they are in full force and effect as of the date
hereof.

     IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the corporation this
23rd day
of May, 2007.

	 	 	 
	 

	 	/s/ NANCY C. LOFTIN
	 

	 	 
	 

	 	NANCY C. LOFTIN
	 

	 	Vice President, General Counsel, and Secretary

29

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