exv10w4






Exhibit 10.4




RESTRICTED STOCK AGREEMENT

UNDER THE

PINNACLE WEST CAPITAL CORPORATION

2007 LONG-TERM INCENTIVE PLAN





     THIS
AWARD AGREEMENT is made and entered into as of                      (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 have approved, the Pinnacle West Capital Corporation
2007 Long-Term Incentive Plan (the “Plan”), pursuant to which awards of Restricted
Stock may be granted to employees of the Company and its Subsidiaries and certain other
individuals.
	 
	 	B.	 	The Company desires to grant Restricted Stock to Employee under the terms of
the Plan.
	 
	 	C.	 	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 «Number»
shares of Restricted Stock (the “Restricted Shares”) and Dividend Equivalents
based on the dividends declared on the Restricted Shares.
	 
	 	2.	 	Award Subject to Plan. This Restricted Stock 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.
	 
	 	3.	 	Restrictions on Restricted Shares. Employee agrees to
not sell, transfer, pledge, exchange, hypothecate, grant any security interest
in, or otherwise dispose of, any Restricted Shares before the date on which the
restrictions lapse under Section 4, or enter into any agreement or make any
commitment to do so. Any attempted sale, transfer, pledge, exchange,
hypothecation or disposition of the Restricted Shares shall be null and void,
and the Company shall not recognize or give effect to such transaction on its
books and records (including the books and records of the Company’s transfer
agent) or recognize the person or persons to whom such sale, transfer, pledge,
exchange, hypothecation or disposition has been made as the legal or beneficial
owner of the Restricted Shares.
	 
	 	4.	 	Lapse of Restrictions. Subject to the other conditions
in this Agreement, the restrictions on the Restricted Shares described in
Section 3 will lapse and the Restricted Shares will vest and no longer be
subject to forfeiture under this Award Agreement on ___“Vesting Dates” as
follows:





[To be determined]













 









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




	 	5.	 	Acknowledgements and Representation of Employee. By
accepting the Restricted Shares, Employee hereby acknowledges the following:






     (a) Further Limitations on Disposition. Employee understands
and acknowledges that Employee may not make any sale, assignment, transfer or
other disposition (including transfer by gift or operation of law) of all or
any portion of the Restricted Shares except in accordance with this Award
Agreement.




     (b) Section 83(b) Election. Employee understands that
Section 83 of the Code taxes as ordinary income the difference between the
amount paid for the Restricted Shares and the Fair Market Value of the
Restricted Shares as of the date any restrictions on the Restricted Shares
lapse. In this context, “restriction” means the restrictions set forth in
Section 3 hereof. Employee understands that Employee may elect to be taxed
at the time the Restricted Shares are granted rather than when and as the
restrictions on the Restricted Shares lapse and the Restricted Shares vest by
filing an election under Section 83(b) of the Code with the Internal Revenue
Service within 45 days from the Date of Grant. Employee understands that
failure to make this filing timely shall result in the recognition of
ordinary income by Employee on the Fair Market Value of the Restricted Shares
at the time such restrictions lapse and the Restricted Shares vest.




     EMPLOYEE ACKNOWLEDGES THAT IT IS EMPLOYEE’S SOLE RESPONSIBILITY, AND NOT
THE COMPANY’S, TO TIMELY FILE THE ELECTION UNDER SECTION 83(b) OF THE CODE,
EVEN IF EMPLOYEE REQUESTS THAT THE COMPANY OR ITS REPRESENTATIVES MAKE THIS
FILING ON EMPLOYEE’S BEHALF.




	 	6.	 	Transfer and Payment.






	 	(a)	 	Time and Form of Payment. As permitted
by the Plan, the Company will not deliver to Employee any certificates
or other evidence of ownership with respect to the Restricted Shares.
Subject to the provisions of this Award Agreement and the Plan, when the
restrictions on a Restricted Share lapse on the Vesting Date described
in Section 4 above, the Company shall transfer to Employee in exchange
for such Restricted Share one unrestricted, fully transferable share of
Stock. The transfer shall be made within 60 days of the applicable
Vesting Date.
	 
	 	(b)	 	Dividend Equivalents. In satisfaction of
the Dividend Equivalent Award made pursuant to Section 1, at the time of
the Company’s delivery of fully transferable shares of Stock to Employee
pursuant to Section 6(a), the Company also will deliver to Employee a
cash payment equal to the amount of dividends, if any, declared on the
number of shares of Stock equal to the number of fully transferable
shares of Stock delivered to Employee from the Date of Grant to the date
of the payment, plus interest on such amount at the rate of
___ percent
compounded quarterly, as determined pursuant to the Plan.






	 	7.	 	Termination of Award. In the event of the termination of
Employee’s active employment with the Company or any of its Subsidiaries,
whether due to voluntary





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	 	 	 	or involuntary termination, death, disability or otherwise, Employee’s right
to receive and/or vest in any additional Restricted Shares under the Plan, if
any, will terminate. Any unvested Restricted Shares 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.
	 
	 	8.	 	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 the award
of Restricted Shares under this Award Agreement is not subject to
Section 409A. In addition, the Dividend Equivalent Award is exempt from
the requirements of Section 409A pursuant to the short-term deferral
exception.
	 
	 	(b)	 	Short-Term Deferral Exception to
Section 409A. The Company intends that the Dividend Equivalents
payable pursuant to Section 6(b) will comply with the short-term
deferral exception to the requirements of Section 409A of the Code, as
described in Treas. Reg. § 1.409A-1(b)(4). In order to meet the
requirements of the short-term deferral exception, despite any other
provision of this Award Agreement to the contrary, the Dividend
Equivalent payments due pursuant to this Award Agreement shall be paid
at the time stated in Section 6(b). Payment of Dividend Equivalents
under this Award Agreement may be delayed only in accordance with
regulations issued pursuant to Section 409A.
	 
	 	(c)	 	Ban on Acceleration or Deferral. Under
no circumstances may the time or schedule of any Dividend Equivalent
payment provided under Section 6(b) of 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.
	 
	 	(d)	 	No Elections. Employee does not have any
right to make any election regarding the time or form of any Dividend
Equivalent payment due under this Award Agreement.
	 
	 	(e)	 	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 or an exception thereto.






	 	9.	 	Tax Withholding. Any and all transfers of Stock and
payments of Dividend Equivalents made pursuant to this Award Agreement shall be
subject to applicable tax withholding requirements and employment taxes.
Employee’s tax withholding obligation with respect to Dividend Equivalents will
be satisfied through the Company’s withholding from the Dividend Equivalent
payment. 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 attributable to any and all transfers of Stock.
Employee may satisfy any such tax withholding obligation attributable to any and
all transfers of Stock by paying the amount in cash or by check or by directing
the Company to withhold shares of Stock having a Fair Market Value on the date
of withholding sufficient to cover the withholding obligation attributable to
any and all transfers of Stock. Within ___ days after the Date of Grant,
Employee must elect, by providing written notice to the Company, to satisfy any
tax withholding obligation attributable to any and all transfers of Stock by
paying




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	 	 	 	the amount in cash, 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 with respect to transferred
Stock will be satisfied through the Company’s withholding shares of Stock as
set forth above.
	 
	 	10.	 	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 this Award Agreement shall be interpreted to
confer upon Employee the right to continue in the employ or service of the
Company.
	 
	 	11.	 	Voting Rights. Employee is [not] entitled to voting
rights with respect to the Restricted Shares by virtue of this Award.
	 
	 	12.	 	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.
	 
	 	13.	 	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.
	 
	 	14.	 	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.
	 
	 	15.	 	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:	 	 
	 

	 	 	 






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