Exhibit 10.2

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

THIS AWARD AGREEMENT is made and entered into as of                          ,
201     (the “Date of Grant”), by and between Pinnacle West Capital Corporation
(the “Company”), and                                          (“Employee”).

 

BACKGROUND

 

A.                                   The Board of Directors of the Company (the
“Board of Directors”) has adopted, and the shareholders of the Company have
approved, the Pinnacle West Capital Corporation 2007 Long-Term Incentive Plan
(the “2007 Plan”), pursuant to which Restricted Stock Units and Dividend
Equivalents may be granted to employees of the Company and its Subsidiaries.

 

B.                                     The Board of Directors also has adopted
the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan (the “2012
Plan”), which also authorizes the award of Restricted Stock Units and Dividend
Equivalents.  The Company intends to submit the 2012 Plan to its shareholders
for their approval at the Company’s 2012 Annual Meeting.

 

C.                                     Subject to the approval of the Company’s
shareholders, the Company hereby grants to Employee Restricted Stock Units and
Dividend Equivalents under the terms of the 2012 Plan.  If, but only if, the
shareholders do not approve the 2012 Plan, the Company hereby grants to Employee
Restricted Stock Units and Dividend Equivalents under the terms of the 2007
Plan.  For purposes of the remaining provisions of this Agreement, the plan
pursuant to which the Award evidenced by this Agreement is made, as determined
in accordance with the preceding provisions of this paragraph, shall be referred
to as the “Plan.”

 

D.                                    Pursuant to the Plan, the Company and
Employee agree as follows:

 

AGREEMENT

 

1.                                       Grant of Award.  Pursuant to action of
the Committee which was taken on the Date of Grant, the Company grants to
Employee                        (x,xxx) Restricted Stock Units and Dividend
Equivalents based on the dividends declared on the shares of Stock to which such
Restricted Stock Units relate.

 

2.                                       Award Subject to Plan.  This Restricted
Stock Unit Award and the related Dividend Equivalent Award are granted under and
are expressly subject to all of the terms and provisions of the Plan, which
terms are incorporated herein by reference, and this Award Agreement.  In the
event of any conflict between the terms and conditions of this Award Agreement
and the Plan, the provisions of the Plan shall control.  If this Award is made
pursuant to the 2007 Plan, as determined in accordance with paragraph C of the
Background Section, above, this Agreement shall be subject to the terms of the
Master Amendment to Restricted Stock Unit Agreements to be entered into between
Employee and the Company.

 

3.                                       Vesting of Restricted Stock Units.  The
Restricted Stock Units granted pursuant to Section 1 will vest and no longer be
subject to the restrictions of and forfeiture under this Award Agreement on
four  (4) “Vesting Dates” as follows:

 

(a)                                  x,xxx Restricted Stock Units will vest on
                     ,         ;

 

(b)                                 x,xxx Restricted Stock Units will vest on
                     ,         ;

 

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(c)                                  x,xxx Restricted Stock Units will vest on
                     ,         ; and

 

(d)                                 The remaining x,xxx Restricted Stock Units
will vest on                      ,         .

 

In addition, the Restricted Stock Units will fully vest and (subject to
Section 4(a)) no longer be subject to the restrictions of and forfeiture under
this Award Agreement upon Employee’s Retirement; provided, however, all
Restricted Stock Units and the related Dividend Equivalents not vested prior to
the date of Employee’s Retirement (and that will vest solely as a result of this
provision) will be forfeited and Employee shall not be entitled to receive any
payment in connection therewith if Employee’s employment is terminated for Cause
regardless of Employee’s Retirement or eligibility for Retirement.  For purposes
of this Award Agreement, (i) “Retirement” means a termination of employment
which constitutes an “Early Retirement” or a “Normal Retirement” under the
Pinnacle West Capital Corporation Retirement Plan, and (ii) “Cause” means
(A) embezzlement, theft, fraud, deceit and/or dishonesty by the Employee
involving the property, business or affairs of the Company or any of its
Subsidiaries, or (B) an act of moral turpitude which in the sole judgment of the
Chief Executive Officer of the Company reflects adversely on the business or
reputation of the Company or any of its Subsidiaries or negatively affects any
of the Company’s or any of its Subsidiaries’ employees or customers.

 

4.                                       Payment.

 

(a)                                  Time and Form of Payment.  Subject to the
provisions of this Award Agreement and the Plan, when a Restricted Stock Unit
vests on one of the Vesting Dates set forth in clauses (a), (b), (c) or (d) of
Section 3 above, Employee shall receive in exchange for each Restricted Stock
Unit one unrestricted fully transferrable share of Stock.  Employee may elect,
pursuant to Section 4(b), to receive payment for the Restricted Stock Units
payable on any Vesting Date in the form of fully transferrable shares of Stock
or 50% cash and 50% in unrestricted fully transferrable shares of Stock.  If a
Restricted Stock Unit vests prior to the applicable Vesting Date due to
Employee’s Retirement, the transfer or payment will be deferred until the
applicable Vesting Date.  Any cash payment will be based on the Fair Market
Value of one share of Stock determined as of the Vesting Date on which the
Restricted Stock Unit vests.  The transfer or payment shall be made within 30
days of the applicable Vesting Date.

 

(b)                                 Election of Form of Payment.  Within 45 days
after the Date of Grant, Employee must elect to receive payment for Employee’s
vested Restricted Stock Units and Dividend Equivalents in fully transferable
shares of Stock or 50% in cash and 50% in fully transferrable shares of Stock by
completing and returning to the Company the election form attached to this
Agreement.  In the absence of a timely election by Employee, Employee will
receive payment for the vested Restricted Stock Units and Dividend Equivalents
in fully transferable shares of Stock.

 

(c)                                  Dividend Equivalents.  In satisfaction of
the Dividend Equivalents Award made pursuant to Section 1, at the time of the
Company’s delivery of payment pursuant to Section 4(a), the Company also will
deliver to Employee a payment equal to the amount of dividends, if any, that
Employee would have received if Employee had directly owned the Stock to which
the Restricted Stock Units relate from the Date of Grant to the applicable
Vesting Date, plus interest on such amount at the rate of      percent
compounded quarterly.  Pursuant to the election filed by the Employee pursuant
to Section 4(b), payment for the Dividend Equivalents and interest will be made
in fully transferrable shares of Stock, or 50% in cash and 50% in fully
transferrable shares of Stock.  The number of shares of Stock

 

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distributed to Employee will be determined by dividing the amount of the
Dividend Equivalents and interest by the Fair Market Value of one share of Stock
as of the applicable Vesting Date. No fractional Stock shall be issued.  If the
Stock payout results in a fractional share of one-half or greater, such fraction
will be increased to provide for the issuance of a full share of Stock.

 

(d)                                 Impact on Pension Plans. The value of the
shares of Stock distributed upon payment for the Restricted Stock Units and
Dividend Equivalents will be disregarded for purposes of calculating the amount
of Employee’s benefit under any Company retirement plans.

 

5.                                       Termination of Award.  Except as
otherwise provided in Section 3 with respect to Employee’s Retirement, in the
event of the termination of Employee’s employment with the Company or any of its
Subsidiaries, whether due to voluntary or involuntary termination, death,
disability or otherwise, Employee’s right to vest in any additional Restricted
Stock Units or Dividend Equivalents under the Plan or this Award Agreement, if
any, will terminate. Any unvested Restricted Stock Units and the related
Dividend Equivalents will be forfeited effective as of the date that Employee
terminates active employment with the Company or any of its Subsidiaries.

 

6.                                       Section 409A Compliance.  If the
Company concludes, in the exercise of its discretion, that this Award is subject
to Section 409A of the Code, the Plan and this Award Agreement shall be
administered in compliance with Section 409A and each provision of this Award
Agreement and the Plan shall be interpreted to comply with Section 409A.  If the
Company concludes, in the exercise of its discretion, that this Award is not
subject to Section 409A, but, instead, is eligible for the short-term deferral
exception to the requirements of Section 409A, the Plan and this Award Agreement
shall be administered to comply with the requirements of the short-term deferral
exception to the requirements of Section 409A and each provision of this Award
Agreement and the Plan shall be interpreted to comply with the requirements of
such exception.  In either event, Employee does not have any right to make any
election regarding the time or form of any payment due under this Award
Agreement other than the election described in Section 4(b).

 

7.                                       Tax Withholding.  Employee is
responsible for any and all federal, state, and local income, payroll or other
tax obligations or withholdings (collectively, the “Taxes”) arising out of this
Award.  Employee shall pay any and all Taxes due prior to the payout of Stock or
cash hereunder by check or other arrangement acceptable to the Company. 
Employee shall pay any and all Taxes due in connection with a payout of Stock or
cash hereunder by check or by having the Company withhold cash or shares of
Stock from such payout.  Within 45 days after the Date of Grant, Employee must
elect, on the election form described in Section 4(b), how Employee will satisfy
the tax obligations upon a payout.  In the absence of a timely election by
Employee, Employee’s tax withholding obligation upon a payout will be satisfied
through the Company’s withholding of cash or shares of Stock as set forth above.

 

8.                                       Continued Employment.  Nothing in the
Plan or this Award Agreement shall be interpreted to interfere with or limit in
any way the right of the Company or its Subsidiaries to terminate Employee’s
employment or services at any time.  In addition, nothing in the Plan or this
Award Agreement shall be interpreted to confer upon Employee the right to
continue in the employ or service of the Company or its Subsidiaries.

 

9.                                       Confidentiality.  During and after
Employee’s Termination of Employment, for any reason, Employee agrees that
Employee will not, directly or indirectly, in one or a series of transactions,
disclose to any person, or use or otherwise exploit for Employee’s own benefit
or for the benefit of anyone other than the Company or any of its Affiliates any
Confidential Information (as hereinafter defined), whether prepared by Employee
or not;

 

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provided, however, that during the term of Employee’s employment, any
Confidential Information may be disclosed (i) to officers, representatives,
employees and agents of the Company and its Affiliates who need to know such
Confidential Information in order to perform the services or conduct the
operations required or expected of them in the business, and (ii) in good faith
by Employee in connection with the performance of Employee’s job duties to
persons who are authorized to receive such information by the Company or its
Affiliates.  Employee shall have no obligation to keep confidential any
Confidential Information, if and to the extent disclosure of any such
information is specifically required by law; provided, however, that in the
event disclosure is required by applicable law, Employee shall provide the
Company with prompt notice of such requirement, prior to making any disclosure,
so that it may seek an appropriate protective order.

 

Employee agrees that all Confidential Information of the Company and its
Affiliates (whether now or hereafter existing) conceived, discovered or made by
him during employment exclusively belongs to the Company or its Affiliates (and
not to Employee). Employee will promptly disclose such Confidential Information
to the Company and perform all actions reasonably requested by the Company to
establish and confirm such exclusive ownership.  For purposes of this Section 9,
the term “Confidential Information” shall mean and include any information
disclosed to Employee any time during Employee’s employment with the Company or
its Affiliates or thereafter which is not generally known to the public,
including, but not limited to, information concerning the Company’s or its
Affiliates’ assets and valuations, business plans, methods of operation,
management, information systems, procedures, processes, practices, policies,
plans, programs, personnel and/or reports or other information prepared by
appraisers, consultants, advisors, bankers or attorneys.

 

10.                                 Restrictive Covenants.

 

(a)                                  Non-Competition.  Employee agrees that for
a period of 12 months following any Termination of Employment voluntarily by
Employee (other than due to Disability), Employee shall not, without the prior
written consent of the Company’s General Counsel, participate, whether as a
consultant, employee, contractor, partner, owner (ownership of less than 5% of
the outstanding stock of a publicly traded company will not be considered
ownership under this provision), co-owner, or otherwise, with any business,
corporation, group, entity or individual that is engaged in the business
activity of supplying electric service in any area of Arizona for which the
Company or its Affiliates is authorized to supply the same or similar service

 

(b)                                 Employee Non-Solicitation.  Employee agrees
that for a period of 12 months following Employee’s termination of employment
for any reason, Employee will not encourage, induce, or otherwise solicit, or
actively assist any other person or organization to encourage, induce or
otherwise solicit, directly or indirectly, any employee of the Company or any of
its Affiliates to terminate his or her employment with the Company or its
Affiliates , or otherwise interfere with the advantageous business relationship
of the Company and its Affiliates with their employees.

 

(c)                                  Remedies.  If Employee fails to comply with
Sections 9, 10(a) or 10(b) in a material respect, the Company may (i) cause any
of Employee’s unvested Restricted Stock Units and related Dividend Equivalents
to be cancelled and forfeited, (ii) refuse to deliver shares of Stock or cash in
exchange for vested Restricted Stock Units or Dividend Equivalents, and/or
(iii) pursue any other rights and remedies the Company may have pursuant to this
Award Agreement or the Plan at law or in equity including, specifically,
injunctive relief.

 

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11.                                 Non-Transferability.  Neither this Award nor
any rights under this Award Agreement may be assigned, transferred, or in any
manner encumbered except as provided in the Plan.

 

12.                                 Definitions: Copy of Plan and Plan
Prospectus.  To the extent not specifically defined in this Award Agreement, all
capitalized terms used in this Award Agreement will have the same meanings
ascribed to them in the Plan.  By signing this Award Agreement, Employee
acknowledges receipt of a copy of the Plan and the related Plan Prospectus.

 

13.                                 Amendment.  Except as provided below, any
amendments to this Award Agreement must be made by a written agreement executed
by the Company and Employee.  The Company may amend this Award Agreement
unilaterally, without the consent of Employee, if the change (i) is required by
law or regulation, (ii) does not adversely affect in any material way the rights
of Employee, or (iii) is required to cause the benefits under the Plan to
qualify as performance-based compensation within the meaning of
Section 162(m) of the Code or to comply with the provisions of Section 409A of
the Code and applicable regulations or other interpretive authority.  Additional
rules relating to amendments to the Plan or any Award Agreement to assure
compliance with Section 409A of the Code are set forth in Section 17.15 of the
Plan.

 

IN WITNESS WHEREOF, the Company has caused this Award Agreement to be executed,
as of the Date of Grant, by an authorized representative of the Company and this
Award Agreement has been executed by Employee.

 

 

PINNACLE WEST CAPITAL CORPORATION

 

 

 

 

 

By:

 

 

Its:

 

 

Date:

 

 

 

 

 

 

EMPLOYEE

 

 

 

 

 

By:

 

 

Date:

 

 

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Pinnacle West Capital Corporation

 

RESTRICTED STOCK UNIT AWARD
ELECTION FORM

(applies to Award Agreement dated     /    /    )

 

INFORMATION ABOUT YOU

 

 

 

 

Last

First

Middle Initial

Employee ID#

 

 

 

 

 

 

 

 

1.  PAYMENT ELECTION

 

In accordance with the terms of the Pinnacle West Capital Corporation 2012
Long-Term Incentive Plan and pursuant to Section 4(b) of the Award Agreement, I
hereby elect to receive payment for the Restricted Stock Units and Dividend
Equivalents that vest on the dates set forth below in the following form (place
an “X” in the “Stock” column or in the “50% Cash/50% Stock” column for each of
the years and types of Awards set forth below):

 

 

Restricted Stock Units and Dividend Equivalents

Vesting Date

Stock

50% Cash/
50% Stock

    /    /    

o

o

 

 

 

    /    /    

o

o

 

 

 

    /    /    

o

o

 

 

 

    /    /    

o

o

 

2.  TAX WITHHOLDING ELECTION

 

 

I hereby elect to satisfy any tax withholding obligation associated with my
receipt of Stock or Stock and cash in exchange for my Restricted Stock Units and
Dividend Equivalents in the following form (place an “X” in the “Check” column
or in the “Stock/Cash” column):

 

Check
(I will write a check for my taxes that are due and deliver it to the Company
within one (1) day of the release date of my Stock or cash payment)
o

Withholding
(The Company should withhold
shares of my Stock or cash payment
to cover my taxes)
o

 

To the extent permitted by law, I hereby elect Federal tax withholding of
           percent (minimum may not be less than 25% and maximum may not exceed
35%)

 

 

 

 

 

 

PARTICIPANT NAME (PLEASE PRINT)

 

 

 

 

 

PARTICIPANT SIGNATURE

 

DATE

 

IMPORTANT NOTE:

Please complete and return this Election Form to Jennifer Mellegers at Mail
Station 9996 by

                       ,           .

 

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