exv10w1



 





Exhibit 10.1




RESTRICTED STOCK UNIT AGREEMENT

UNDER THE

PINNACLE WEST CAPITAL CORPORATION 2007

LONG-TERM INCENTIVE PLAN




     THIS AWARD AGREEMENT is made and entered into as of February 20, 2007 (the “Date of Grant”),
by and between Pinnacle West Capital Corporation (the “Company”), and «Name» (“Employee”).



BACKGROUND





	 	A.	 	The Board of Directors of the Company (the “Board of Directors”) has adopted,
and the Company’s shareholders are being asked to approve, the Pinnacle West Capital
Corporation 2007 Long-Term Incentive Plan (the “Plan”), pursuant to which Restricted
Stock Units may be granted to employees of the Company and its Subsidiaries and certain
other individuals.
	 
	 	B.	 	The Company desires to grant to Employee Restricted Stock Units under the terms
of the Plan. The grant of Restricted Stock Units hereunder is contingent upon
shareholder approval of the Plan. The failure of the Company to obtain such
shareholder approval will render any Restricted Stock Units granted hereunder null and
void from the Date of Grant.
	 
	 	C.	 	Pursuant to the Plan, the Company and Employee agree as follows:





AGREEMENT





	 	1.	 	Grant of Award. Pursuant to action of the Committee
(defined herein), which was taken on the Date of Grant, the Company grants to
Employee «Units» Restricted Stock Units.
	 
	 	2.	 	Award Subject to Plan. This Restricted Stock Unit Award
is granted under and is expressly subject to all of the terms and provisions of
the Plan, which terms are incorporated herein by reference, and this Award
Agreement. The Committee described in Section 4 of the Plan (the “Committee”)
has been appointed by the Board of Directors, and designated by it, as the
Committee to make awards.
	 
	 	3.	 	Vesting of Restricted Stock Units. The Restricted Stock
Units granted hereunder will vest and no longer be subject to the restrictions
of and forfeiture under this Award Agreement on four “Vesting Dates” as follows:






	 	(a)	 	25% of the Restricted Stock Units will vest on
February 20, 2008;
	 
	 	(b)	 	An additional 25% of the Restricted Stock Units
will vest on February 20, 2009;
	 
	 	(c)	 	An additional 25% of the Restricted Stock Units
will vest on February 20, 2010; and
	 
	 	(d)	 	The remaining 25% of the Restricted Stock Units
will vest on February 20, 2011.





 









 






     In addition, the Restricted Stock Units will fully vest and no longer be
subject to the restrictions of and forfeiture under this Award Agreement upon
Employee’s Retirement. For purposes of this Award Agreement, “Retirement”
means a termination of employment which constitutes an “Early Retirement” or
a “Normal Retirement” under the Pinnacle West Capital Corporation Retirement
Plan.




     For avoidance of doubt, no acceleration of vesting of the Restricted
Stock Units will occur on a Change of Control of the Company.




	 	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, the Company shall transfer to Employee in
exchange for such Restricted Stock Unit either one unrestricted, fully
transferable share of Stock or a cash payment equal to the Fair Market
Value of one share of Stock determined as of the Vesting Date on which
such Restricted Stock Unit vests. 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.
If no prices are reported for a particular Vesting Date, the Fair Market
Value shall be determined as of the next preceding day for which prices
were reported. The transfer or payment shall be made within 90 days of
the applicable Vesting Date.
	 
	 	(b)	 	Election of Form of Payment. Within 30
days after the Date of Grant, Employee must elect to receive payment for
Employee’s vested Restricted Stock Units in cash or in fully
transferable 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 in fully transferable shares of Stock.
	 
	 	(c)	 	Dividend Equivalents. At the time of the
Company’s delivery of any cash payment or fully transferable shares of
Stock to Employee pursuant to Section 4(a), the Company also will
deliver to Employee a cash payment equal to the amount of dividends that
Employee would have received if Employee had directly owned all of
such shares of Stock from the Date of Grant to the date of the payment, plus
interest on such amount at the rate of 5% compounded quarterly.






	 	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 active employment with the Company or any of its Subsidiaries,
whether due to voluntary or involuntary termination, death, disability or
otherwise, Employee’s right to receive and/or vest in any additional Restricted
Stock Units under the Plan, if any, will terminate. Any unvested Restricted
Stock Units 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.






	 	(a)	 	Purpose of this Provision. Section 409A
of the Code imposes a number of requirements on “non-qualified deferred
compensation” plans and arrangements. Based on regulations issued by
the Internal Revenue Service, the Company has concluded that this Award
of Restricted Stock




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	 	 	 	Units is subject to Section 409A. As a result, unless the Plan and
this Award Agreement are administered to comply with the new rules,
Employee will be required to pay an additional 20% tax (in addition to
regular income taxes) on the compensation provided by this Award
Agreement. In addition, under Section 409A additional interest will
be payable.
	 
	 	(b)	 	Compliance with Section 409A. The
Company intends to comply with Section 409A by assuring that all amounts
to which Employee becomes entitled hereunder are payable at a specified
time or pursuant to a fixed schedule within the meaning of Treas. Reg. §
1-409A-3(a)(4). As a result, no payment or transfer shall be made to
Employee prior to the applicable Vesting Date. The provisions of this
Section 6(b) apply to all amounts due pursuant to this Award Agreement.
	 
	 	(c)	 	Miscellaneous Payment Provisions. If the
Company fails to make a payment (including a transfer of Stock), either
intentionally or unintentionally, within the period required by Section
4, but the payment is made within the same calendar year, it will be
treated as made within the period required by Section 4 pursuant to
Treas. Reg. § 1.409A-3(d). In addition, if a payment is not made due to
a dispute in payments, payments can be delayed in accordance with Treas.

Reg. § 1.409A-3(g).
	 
	 	(d)	 	Ban on Acceleration or Deferral. Under
no circumstances may the time or schedule of any payment made or benefit
provided pursuant to this Award Agreement be accelerated or subject to a
further deferral except as otherwise permitted or required pursuant to
regulations and other guidance issued pursuant to Section 409A of the
Code.
	 
	 	(e)	 	No Elections. 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).
	 
	 	(f)	 	Compliant Operation and Interpretation.
The Plan and this Award Agreement shall be administered in compliance
with Section 409A and each provision of the Award Agreement and the Plan
shall be interpreted, to the extent possible, to comply with Section
409A.






	 	7.	 	Tax Withholding. Any and all payments made pursuant to
this Award Agreement shall be subject to applicable tax withholding requirements
and employment taxes. Employee must pay, or make arrangements acceptable to the
Company for the payment of any and all required federal, state, and local income
and payroll tax withholding. Employee may satisfy any such tax withholding
obligation by paying the amount in cash or by check. In the alternative,
Employee may elect to have the Company withhold shares of Stock having a Fair
Market Value on the date of withholding sufficient to cover the withholding
obligation. Within 30 days after the Date of Grant, Employee must elect, on the
election form described in Section 4(b), to satisfy any tax withholding
obligation by paying the amount in cash or by check or by having the Company
withhold shares of Stock having a Fair Market Value on the date of withholding
sufficient to cover the withholding obligation. In the absence of a timely
election by Employee, Employee’s tax withholding obligation will be satisfied
through the Company’s withholding 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 to terminate Employee’s employment or services at any time. In
addition, nothing in the Plan or




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	 	 	 	this Award Agreement shall be interpreted to confer upon Employee the right
to continue in the employ or service of the Company.
	 
	 	9.	 	Voting Rights. Employee is not entitled to voting rights
with respect to shares of Stock by virtue of this Award. If the Committee, in
its discretion, issues Stock in settlement of Employee’s Restricted Stock Units,
Employee will have voting rights with respect to such shares of Stock.
	 
	 	10.	 	Non-Transferability. Neither this Award nor any rights
under this Award Agreement may be assigned, transferred, or in any manner
encumbered except by will or the laws of descent and distribution, and any
attempted assignment, transfer, mortgage, pledge or encumbrance except as herein
authorized, will be void and of no effect.
	 
	 	11.	 	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. Employee will receive a copy of the Plan and the related Plan Prospectus.
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.
	 
	 	12.	 	Amendment. Except as otherwise provided in the Plan,
this Award Agreement may be amended only by a written agreement executed by the
Company and Employee.
	 
	 	13.	 	Choice of Law. This Award Agreement will be governed by
the laws of the State of Arizona, excluding any conflicts or choice of law rule
or principle that might otherwise refer construction or interpretation of this
Award Agreement to another jurisdiction.





     An authorized representative of the Company has signed this Award Agreement as of the
Date of Grant.



	 	 	 	 	 
	 	 	PINNACLE WEST CAPITAL CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Its: Vice President and Treasurer






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	Pinnacle West Capital Corporation 2007 RESTRICTED STOCK UNIT AWARD ELECTION FORM            INFORMATION
ABOUT YOU Last            First            Middle Initial            Employee ID# 1. PAYMENT ELECTION In accordance
with the terms of the Pinnacle West Capital Corporation 2007 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 that vest on the dates set forth below in the following form (place an “X” in the “Cash”
column or in the “Stock” column for each of the years set forth below):: Vesting Date            Cash
Stock 02/20/2008     02/20/2009     02/20/2010  
  02/20/2011     Note: If you elected to receive payment in the form of
Stock for any vested Restricted Stock Units, complete Section 2. 2. TAX WITHHOLDING ELECTION If
I elected above to receive payment in the form of Stock for any vested Restricted Stock Units, I
hereby elect to satisfy any tax withholding obligation associated with my receipt of Stock in
exchange for my Restricted Stock Units in the following form (place an “X” in the “Cash” column or
in the “Stock” column): Cash            Stock (I will write a check on the vesting date (The Company
should withhold shares of my for my taxes that are due) stock to cover my taxes)  
  ___PARTICIPANT NAME (PLEASE PRINT) ___
___PARTICIPANT SIGNATURE            DATE IMPORTANT NOTE: Please complete and return
this Election Form to Aaron Lynch at Mail Station 9996 by ___, ___.