Document:

<PAGE>

                                                                    EXHIBIT 10.4

October 3, 1996

Mr. Pat Kellick
Sullivan Graphics, Inc.
100 Winners Circle
Brentwood, TN 37027

Dear Pat:

This will confirm that if Sullivan Graphics, Inc. ("SGI") (i) terminates your
employment without cause, or (ii) in connection with a transaction whereby all
of the stock or substantially all of the assets of SGI are sold, requires you
relocate more than 50 miles from Brentwood, Tennessee and you voluntarily
terminate your employment, then SGI shall continue to pay your then current base
salary and maintain all your then current benefits (to the extent allowed under
the applicable benefit plans) for a period of two years following your
termination. In such event, SGI shall also pay you a pro rata portion of the
bonus to which you would have been entitled for the year of termination had you
been employed for the entire year, which bonus shall be payable at the time
bonuses under the applicable bonus plan are paid to SGI's executives generally.
Such base salary payments and benefits will be reduced to the extent you receive
compensation and benefits from another employer with respect to such period. The
term "Cause" shall mean the termination of your employment hereunder in the
event of your (i) conviction of any crime or offense involving money or other
property of SGI or any felony, (ii) willful and unreasonable refusal to
substantially perform your duties hereunder, (iii) competition with SGI, or (iv)
gross negligence in the conduct of your duties; provided, however, no
termination shall be deemed for "Cause" under clauses (ii) or (iv) unless you
shall have first received written notice from SGI advising you of the acts or
omissions that constitute the refusal or gross negligence and you fail to
correct the acts or omissions complained of within 20 business days following
receipt of such notice.

For so long as you are employed by SGI, and continuing for two years thereafter,
you shall not, without the prior written consent of SGI, directly or indirectly,
as a sole proprietor, member of a partnership, stockholder or investor, officer
or director of a corporation, or as an employee, associate, consultant or agent
of any person, partnership, corporation or other business organization or entity
other than SGI: (i) render any service to or in any way be affiliated with a
competitor (or any person or entity that is reasonable anticipated (to the
general knowledge of you or the public) to become a competitor) of SGI; (ii)
solicit or endeavor to entice away from SGI any person or entity who is, or,
during the then most recent two-year 12-month period, was employed by, or had
served as an agent or key consultant of, SGI; or (iii) solicit or endeavor to
entice away from SGI any person or entity who is, or was within the then most
recent 12-month period, a customer or client (or reasonably anticipated (to the
general knowledge of you or the public) to become a customer or client) of SGI.

You covenant and agree with SGI that you will not at any time, except in
performance of your obligations to SGI hereunder or with the prior written
consent of SGI, directly or indirectly, disclose any secret or confidential
information that you may learn or have learned by reason of your association
with SGI. The term "confidential information" includes information not
previously disclosed to the public or to the trade by SGI's management, or
otherwise in the public domain, with respect to SGI's products, facilities,
applications and methods, trade secrets and other intellectual property,
systems, procedures manuals, confidential reports, product price lists, customer
lists, technical information, financial information

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(including the revenues, costs or profits associated with any of SGI's
products), business plans, prospects or opportunities, but shall exclude any
information which (i) is or becomes available to the public or is generally
known in the industry or industries in which SGI operates other than as a result
of disclosure by you in violation of your agreements under this paragraph or
(ii) you are required to disclose under any applicable laws, regulations or
directives of any government agency, tribunal or authority having jurisdiction
in the matter or under subpoena or other process of law.

All references to "SGI" include its divisions, subsidiaries and affiliates.

If the foregoing meets with your approval, please sign and return the enclosed
copy of this letter to the undersigned. This agreement constitutes our entire
agreement, supersedes all prior agreements between us, and its provisions may
not be changed or waived, except by a writing signed by the party to be charged
with such change.

                                                 Sincerely,

                                                 SULLIVAN GRAPHICS, INC.

                                                 By:  /s/ Stephen M. Dyott
                                                      -------------------------
                                                      Stephen M. Dyott
                                                      Chairman, President
                                                      & Chief Executive Officer

ACCEPTED AND AGREED TO:

/s/ Patrick Kellick
-----------------------
 Patrick Kellickexv4w1

 

Exhibit 4.1

ARIZONA PUBLIC SERVICE COMPANY

TO

JPMORGAN CHASE BANK

Trustee

Eighth Supplemental Indenture

Dated as of June 15, 2004

To

Indenture

Dated as of January 15, 1998

5.80% Notes due June 30, 2014

 

 

     EIGHTH SUPPLEMENTAL INDENTURE, dated as of June 15, 2004, between Arizona
Public Service Company, a corporation duly organized and existing under the
laws of the State of Arizona (herein called the “Company”), having its
principal office at 400 North Fifth Street, Phoenix, Arizona 85004, and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), a New York
banking corporation, as Trustee (herein called the “Trustee”) under the
Indenture dated as of January 15, 1998 between the Company and the Trustee (the
“Indenture”).

RECITALS OF THE COMPANY

     The Company has executed and delivered the Indenture to the Trustee to
provide for the issuance from time to time of its unsecured debentures, notes
or other evidences of indebtedness (the “Securities”), said Securities to be
issued in one or more series as provided in the Indenture.

     Pursuant to the terms of the Indenture, the Company desires to provide for
the establishment of a new series of its Securities to be known as its 5.80%
Notes due June 30, 2014 (herein called the “Notes Due 2014”), the form and
substance of the Notes Due 2014 and the terms, provisions, and conditions
thereof to be set forth as provided in the Indenture and this Eighth
Supplemental Indenture.

     All things necessary to make this Eighth Supplemental Indenture a valid
agreement of the Company, and to make the Notes Due 2014, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations
of the Company, have been done.

     NOW, THEREFORE, THIS EIGHTH SUPPLEMENTAL INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Notes Due
2014 by the Holders thereof, and for the purpose of setting forth, as provided
in the Indenture, the form and substance of the Notes Due 2014 and the terms,
provisions, and conditions thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Notes Due 2014, as follows:

ARTICLE ONE

GENERAL TERMS AND CONDITIONS OF

THE NOTES DUE 2014

     SECTION 101. There shall be and is hereby authorized a series of
Securities designated the “5.80% Notes due June 30, 2014” initially limited in
aggregate principal amount to $300,000,000, which amount shall be as set forth
in any Company Order for the authentication and delivery of Notes Due 2014.
The Notes Due 2014 shall mature and the principal shall be due and payable
together with all accrued and unpaid interest thereon on June 30, 2014, and
shall be issued in the form of registered Notes without coupons.

     The foregoing principal amount of the Notes Due 2014 may be increased from
time to time as permitted by Section 301 of the Indenture. All Notes Due 2014
need not be issued at the same time and such series may be reopened at any
time, without notice to, or the consent of, the

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then existing Holders, for issuances of additional Notes Due 2014. Any
such additional Notes Due 2014 will be equal in rank and have the same
respective maturity, payment terms, redemption features, and other terms,
except for the payment of interest accruing prior to the issue date of the
further Notes Due 2014 and for the first payment of interest following the
issue date of the further Notes Due 2014, as those initially issued.

     SECTION 102. The Notes Due 2014 shall be issued in certificated form,
except that the Notes Due 2014 shall be issued initially as a Global Security
to and registered in the name of Cede & Co., as nominee of The Depository Trust
Company, as Depositary therefor. Any Notes Due 2014 to be issued or
transferred to, or to be held by, Cede & Co. (or any successor thereof) for
such purpose shall bear the depositary legend in substantially the form set
forth at the top of the form of Note Due 2014 in Article Two hereof (in lieu of
that set forth in Section 204 of the Indenture), unless otherwise agreed by the
Company, such agreement to be confirmed in writing to the Trustee. Such Global
Security may be exchanged in whole or in part for Notes Due 2014, registered,
and any transfer of such Global Security in whole or in part may be registered,
in the name(s) of Persons other than such Depositary or a nominee thereof only
under the circumstances set forth in Clause (2) of the last paragraph of
Section 305 of the Indenture, or such other circumstances in addition to or in
lieu of those set forth in Clause (2) of the last paragraph of Section 305 of
the Indenture as to which the Company shall agree, such agreement to be
confirmed in writing to the Trustee. Principal of, and premium, if any, and
interest on the Notes Due 2014 will be payable, the transfer of Notes Due 2014
will be registrable and Notes Due 2014 will be exchangeable for Notes Due 2014,
bearing identical terms and provisions, at the office or agency of the Company
in the Borough of Manhattan, The City and State of New York; provided, however,
that payment of interest may be made at the option of the Company by check
mailed to the Holder at such address as shall appear in the Security Register.

     SECTION 103. Each Note Due 2014 will bear interest at the rate of 5.80%,
from June 29, 2004 or from the most recent Interest Payment Date (as
hereinafter defined) to which interest has been paid or duly provided for until
the principal thereof is paid or made available for payment, payable on June 30
and December 30 of each year (each, an “Interest Payment Date”), commencing on
December 30, 2004, to the person in whose name such Note Due 2014 or any
Predecessor Security is registered, at the close of business on June 15 and
December 15, as the case may be, whether or not a Business Day, immediately
preceding the Interest Payment Date. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
Holders on such regular record date, and may be paid to the Person in whose
name the Note Due 2014 (or one or more Predecessor Securities) is registered at
the close of business on a special record date to be fixed by the Trustee for
the payment of such defaulted interest, notice whereof shall be given to the
Holders of the Notes Due 2014, not less than 10 days prior to such special
record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Notes Due 2014 may be listed, and upon such notice as may be required by such
exchange, all as more fully described in the Indenture.

     The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Interest will accrue from June
29, 2004 to, but not including, the relevant payment date. In the event that
any date on which interest is payable on the Notes Due

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2014 is not a Business Day, then payment of interest payable on such date
will be made on the next succeeding day which is a Business Day (and without
any interest or other payment in respect of any such delay), in each case with
the same force and effect as if made on such date. A “Business Day” shall mean
any day, except a Saturday, a Sunday or a legal holiday in the City of New York
on which banking institutions are authorized or required by law, regulation or
executive order to close.

     SECTION 104. The Company may redeem all or any portion of the Notes Due
2014, at its option, at any time or from time to time, upon notice as provided
in the Indenture. The Redemption Price for any Notes Due 2014 to be redeemed
on any Redemption Date will be equal to the greater of the following amounts:

          (a) 100% of the principal amount of the Notes Due 2014 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 Notes Due 2014 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.
The Redemption Price will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.

     For purposes of this Section 104, the following terms shall have the
following meanings:

     “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 Notes Due 2014 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 Notes Due 2014.

     “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”),

3

 

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 Company shall give the Trustee written notice of the Redemption Price,
promptly after the calculation thereof.

     The Trustee shall be under no duty to inquire into, may conclusively
presume the correctness of, and shall be fully protected in acting upon the
Company’s calculation of any Redemption Price.

     Notwithstanding Section 1104 of the Indenture, any notice of redemption
given pursuant to said Section with respect to the foregoing redemption need
not set forth the Redemption Price but only the manner of calculation thereof.

     SECTION 105. The Notes Due 2014 shall be defeasible pursuant to Section
1302 or 1303 of the Indenture.

ARTICLE TWO

FORM OF NOTES DUE 2014

     SECTION 201. The Notes Due 2014 and the Trustee’s certificate of
authentication to be endorsed thereon are to be substantially in the following
forms:

Form of Face of Security

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.

4

 

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 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.

5

 

     IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

	 	 	 	 	 
	 
 
	 	 	 	 
	 	 	ARIZONA PUBLIC SERVICE COMPANY
	 
 
	 	 	 	 
	

	 	By	 	 
	

	 	 	 	
 
	 
 
	 	 	 	 
	Attest:
	 	 	 	 
	 
 
	 	 	 	 
	
 
	 	 	 	 

6

 

Form of Reverse of Security

     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.

7

 

     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.

8

 

     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.

9

 

     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.

     Form of Trustee’s Certificate of Authentication.

CERTIFICATE OF AUTHENTICATION

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

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Dated:

	 	 	 	JPMORGAN CHASE BANK	 	 
	

	 	 	 	As Trustee	 	 
	 
 
	 	 	 	 	 	 
	

	 	By	 	 	 	 
	

	 	 	 	
 	 	 
	

	 	 	 	Authorized Officer
	 	 

10

 

ARTICLE THREE

ORIGINAL ISSUE OF NOTES DUE 2014

     SECTION 301. Subject to Section 101, the Notes Due 2014 in the aggregate
principal amount of $300,000,000 may, upon execution of this Eighth
Supplemental Indenture, or from time to time thereafter, be executed by the
Company and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Notes Due 2014 in accordance with a
Company Order delivered to the Trustee by the Company, without any further
action by the Company.

ARTICLE FOUR

PAYING AGENT AND REGISTRAR

     SECTION 401. JPMorgan Chase Bank will be the Paying Agent and Security
Registrar for the Notes Due 2014.

ARTICLE FIVE

SUNDRY PROVISIONS

     SECTION 501. Except as otherwise expressly provided in this Eighth
Supplemental Indenture or in the form of Notes Due 2014 or otherwise clearly
required by the context hereof or thereof, all terms used herein or in said
form of Notes Due 2014 that are defined in the Indenture shall have the several
meanings respectively assigned to them thereby.

     SECTION 502. The Indenture, as heretofore supplemented and amended, and as
supplemented by this Eighth Supplemental Indenture, is in all respects ratified
and confirmed, and this Eighth Supplemental Indenture shall be deemed part of
the Indenture in the manner and to the extent herein and therein provided.

     SECTION 503. The Trustee hereby accepts the trusts herein declared,
provided, created, supplemented, or amended and agrees to perform the same upon
the terms and conditions herein and in the Indenture, as heretofore
supplemented and amended, set forth and upon the following terms and
conditions:

     The Trustee shall not be responsible in any manner whatsoever for or in
respect of the validity or sufficiency of this Eighth Supplemental Indenture or
for or in respect of the recitals contained herein, all of which recitals are
made by the Company solely. In general, each and every term and condition
contained in Article Six of the Indenture shall apply to and form a part of
this Eighth Supplemental Indenture with the same force and effect as if the
same were herein set forth in full with such omissions, variations, and
insertions, if any, as may be appropriate to make the same conform to the
provisions of this Eighth Supplemental Indenture.

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     This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.

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     IN WITNESS WHEREOF, the parties hereto have caused this Eighth
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.

	 	 	 	 	 
	 	 	ARIZONA PUBLIC SERVICE COMPANY
	 
 
	 	 	 	 
	

	 	By:	 	/s/ Chris N. Froggatt
	

	 	 	 	
 
	

	 	 	 	Chris N. Froggatt
	Attest:

	 	 	 	Vice President and Controller
	
/s/ Betsy A. Pregulman
	 	 	 	 
	
 
	 	 	 	 
	Betsy A. Pregulman
	 	 	 	 
	Associate Secretary
	 	 	 	 
	 
 
	 	 	 	 
	 	 	JPMORGAN CHASE BANK, as Trustee
	 
 
	 	 	 	 
	

	 	By:	 	/s/ Rosa Ciaccia
	

	 	 	 	
 
	

	 	 	 	Name: Rosa Ciaccia
	

	 	 	 	Title: Trust Officer
	 
 
	 	 	 	 
	Attest:
	 	 	 	 
	 
/s/ Nicholas
Sberlati
	 	 	 	 
	

	 	 	 	 
	Name: Nicholas
Sberlati
	 	 	 	 
	Title: Trust
Officer
	 	 	 	 

[Signature Page to Eighth Supplemental Indenture)

13

 

	 	 	 	 	 
	STATE OF ARIZONA

	 	) 	 	 
	

	 	) ss.:
	 	 
	COUNTY OF MARICOPA

	 	) 	 	 

     On
the 25th day of June, 2004, before me personally came Chris N. Froggatt,
to me known, who, being by me duly sworn, did depose and say that he is the
Vice President and Controller of Arizona Public Service Company, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that he signed his name thereto by like
authority.

	 	 	 	 	 
	 
 
	 	/s/ Joy L. Heinrich	 	 
	

	 	
 	 	 
	My Commission Expires

	 	Notary Public
	 	 
	 
October 1, 2005
	 	 	 	 
	
 
	 	 	 	 

	 	 	 	 	 
	STATE OF NEW YORK

	 	 )	 	 
	

	 	 ) ss.:
	 	 
	COUNTY OF NEW YORK

	 	 )	 	 

     On
the 29th day of June, 2004, before me personally came Rosa
Ciaccia,
to me known, who, being by me duly sworn, did depose and say that he/she is
a Trust Officer of JPMorgan Chase Bank (formerly known as The Chase Manhattan
Bank), one of the corporations described in and which executed the foregoing
instrument; that he/she knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he/she signed
his/her name thereto by like authority.

	 	 	 	 	 
	 
 
	 	/s/ Emily Fayan	 	 
	

	 	
 	 	 
	My Commission Expires

	 	Notary Public
	 	 
	 
December 31,
2005
	 	 	 	 
	
 
	 	 	 	 

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