exv4w4



 



Exhibit 10.6





SECOND AMENDED AND RESTATED PINNACLE WEST CAPITAL CORPORATION

INVESTORS ADVANTAGE PLAN




          Pinnacle West Capital Corporation, an Arizona corporation (the “Company”),
hereby amends and restates, as of June 23, 2004, the Pinnacle West Capital
Corporation Investors Advantage Plan (the “Plan”):



ARTICLE 1




DEFINITIONS




          The terms defined in this Article I shall, for all purposes of this Plan,
have the following respective meanings:



          Account



          The term “Account” shall mean, as to any Participant, the account
maintained by the Administrator evidencing (i) the shares (and/or fraction of a
share) of Common Stock (a) purchased through the Plan and/or (b) deposited by
such Participant into the Plan pursuant to Section 4.1 hereof and credited to
such Participant; (ii) any dividends in the form of shares of Common Stock and
any shares resulting from a Common Stock split on such shares, and (iii) cash
held in the Plan pending investment in Common Stock for such Participant.



          Account Shares



          The term “Account Shares” shall mean all shares (and/or fraction of a
share) of Common Stock credited to the Account of a Participant by the
Administrator, which shall include shares deposited into the Plan pursuant to
Section 4.1 hereof.



          Administrator



          The term “Administrator” shall mean the individual (who may be an employee
of the Company), bank, trust company, or other entity (including the Company)
appointed from time to time by the Company to act as Administrator hereunder.



          Automatic Investment Form



          The term “Automatic Investment Form” shall mean documentation that the
Administrator shall require to be completed and received if Participant elects
to make an initial cash investment, or authorize automatic monthly investments,
to be deducted directly from a U.S. checking, savings, or credit union account
which is a member of the Automated Clearing House (“ACH”) network.



 









 





          Cash Investment Form



          The term “Cash Investment Form” shall mean documentation prepared by the
Administrator that may be utilized by a Participant when making an optional
cash investment pursuant to Section 2.4 hereof.



          Cash Investment Only option



          As defined in Subsection 2.2.3 hereof.



          Common Stock



          The Company’s Common Stock, no par value.



          Company



          As defined in the Preamble.



          Company Share Purchase Price



          The term “Company Share Purchase Price,” when used with respect to newly
issued shares of Common Stock, or shares of Common Stock held in the Company’s
treasury, shall mean the average of the high and low sales prices of Common
Stock on a given trading day as reported on the New York Stock Exchange
Composite Tape and published in The Wall Street Journal, or, for any day on
which there is no such publication, as published in another generally accepted
publication for the first business day of the relevant Investment Period (as
defined below), provided that the New York Stock Exchange is open for trading
on such day. In the absence of knowledge of inaccuracy, the Company may rely
upon such prices as published in The Wall Street Journal or such other
publication. In the event no trading is so reported for a trading day, the
Company Share Purchase Price for such shares may be determined by the Company
on the basis of such market quotations as it deems appropriate.



          Direct Deposit Authorization Form



          The term “Direct Deposit Authorization Form” shall mean documentation that
the Administrator shall require to be completed and received if Participant
elects to have Dividends deposited directly to a financial institution which is
a member of the ACH network.



          Dividend



          The term “Dividend” shall mean cash dividends paid on Reinvestment
Eligible Securities.



- 2 -









 





          Dividend Payment Date



          The term “Dividend Payment Date” shall mean a date on which a cash
dividend on shares of Common Stock is paid.



          Dividend Processing Period



          The term “Dividend Processing Period” shall mean a 13-15 business day
period which begins on the Ex-Dividend Date.



          Dividend Record Date



          The term “Dividend Record Date” shall mean the date fixed for the
determination of shareholders of record who will be entitled to receive a
Dividend payable on a Dividend Payment Date.



          Eligible Securities



          The term “Eligible Securities” shall mean those securities of the Company
and its subsidiaries, whether issued prior to, on, or after the date hereof,
set forth in Section 6.1 hereof, and such other securities of the Company and
its subsidiaries as the Company may designate, in its sole discretion, pursuant
to Section 6.2 hereof.



          Enrollment Forms



          The term “Enrollment Forms” shall mean the documentation that the
Administrator shall require to be completed and received (subject to Section
2.1 hereof with respect to automatic enrollment of Plan Participants) prior to
an investor’s enrollment in the Plan pursuant to Section 2.1 hereof, a
Participant’s changing his/her options under the Plan pursuant to Section 7.1
hereof, or, at the option of a Participant as described in Section 4.1 hereof,
a Participant’s depositing shares of Common Stock into the Plan pursuant to
Section 4.1 hereof. An Enrollment Form may also be used by the Administrator
for other purposes as described herein or as determined by the Administrator
from time to time.



          Exchange Act



          The term “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.



          Ex-Dividend Date



          The term “Ex-Dividend Date” shall mean a date prior to the Dividend Record
Date, based on industry regulations, necessary to allow for the settlement of
traded securities by the Dividend Record Date.



- 3 -









 





          Foreign Person



          The term “Foreign Person” shall mean a Person that is a citizen or
resident of, or is organized or incorporated under, or has its principal place
of business in, a country other than the United States, its territories, and
possessions.



          Full Dividend Reinvestment option



          As defined in Subsection 2.2.1 hereof.



          Independent Agent



          The term “Independent Agent” shall mean an agent independent of the
Company who satisfies applicable legal requirements (including without
limitation the requirements of Regulation M and Rule 10b-18 promulgated under
the Exchange Act) and who has been selected by the Company, pursuant to Section
10.6 hereof, to serve as an Independent Agent for purposes of making purchases
and sales of Common Stock under the Plan.



          Initial Enrollment Form



          The term “Initial Enrollment Form” shall mean the specific type of
Enrollment Form (defined above) required for all new investors in the Plan who
are not existing shareholders.



          Investment Date



          The term “Investment Date” shall mean the date on which the purchase price
for all shares of Common Stock to be purchased during an Investment Period has
been determined. If shares are purchased from the Company pursuant to Section
3.3 hereof, the Investment Date will be the first day of the relevant
Investment Period. If the Investment Date would otherwise fall on a day on
which the New York Stock Exchange is not open, the first day immediately
succeeding such day on which the New York Stock Exchange is open will be the
Investment Date.



          Investment Period



          The term “Investment Period” shall mean the period during which Common
Stock is purchased. An Investment Period will occur approximately every 5
business days, except that an Investment Period, which would normally begin on
a Dividend Record Date, will be postponed until the second business day
following the Dividend Record Date.



          Investment Statement



          The term “Investment Statement” shall mean a written statement prepared by
the Administrator and sent to a Participant after an Investment Period in which
the Participant’s Account had investment activity, or otherwise as the
Administrator shall



- 4 -









 







determine to be appropriate or as provided in this Plan, which statement
reflects (i) the purchase price and number of Account Shares purchased for or
credited to the Participant’s Account for such Investment Period, (ii) the
total number of Account Shares credited to the Participant’s Account at the
date of such statement, and (iii) such additional information regarding the
Participant’s Account as the Administrator may determine to be pertinent to the
Participant.



          Market Share Purchase Price



          The term “Market Share Purchase Price,” when used with respect to shares
of Common Stock purchased in the open market, shall mean the weighted average
purchase price per share (including brokerage commissions, any related service
charges, and applicable taxes) of the aggregate number of shares purchased in
the open market for an Investment Date.



          Market Share Sales Price



          The term “Market Share Sales Price,” when used with respect to shares of
Common Stock sold under the Plan, shall mean the weighted average sales price
per share (less brokerage commissions, any related service charges, and
applicable taxes) of the aggregate number of shares sold in the open market for
the relevant period.



          Maximum Amount



          As defined in Section 2.4 hereof.



          Partial Dividend Reinvestment option



          As defined in Subsection 2.2.2 hereof.



          Participant



          As defined in Section 2.1 hereof.



          Person



          The term “Person” shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, estate, or unincorporated organization.



          Plan



          As defined in the Preamble.



          Plan History Statement



          The term “Plan History Statement” shall mean a written statement prepared
by the Administrator and sent to each Participant upon withdrawal of any or all
Account Shares upon the issuance of a certificate therefor or upon the sale of
any or all



- 5 -









 







Account Shares from the Participant’s Account, or otherwise as the
Administrator shall determine to be appropriate or as provided in this Plan,
which statement reflects (i) the number of Account Shares so withdrawn and
certificated, (ii) the number of Account Shares so sold, (iii) the number of
Account Shares, if any, remaining in the Participant’s Account at the date of
such statement, and (iv) such additional information regarding the
Participant’s Account as the Administrator may determine to be pertinent to the
Participant.



          Reinvestment Eligible Securities



          The term “Reinvestment Eligible Securities” shall mean (i) those Eligible
Securities of which a Participant is the record or registered holder and on
which such Participant has elected to have all or a portion of the Dividends
paid reinvested in Common Stock and (ii) a Participant’s Account Shares except
for Account Shares as to which the Participant has elected not to have
Dividends reinvested in Common Stock and has notified the Administrator by
delivery of a completed Enrollment Form of such election.



          Sales/Transfer Request Form



          The term “Sales/Transfer Request Form” shall mean the documentation that
the Administrator may require to be completed and received prior to a
Participant’s (i) sale of Account Shares pursuant to Section 5.1 hereof, (ii)
gift or transfer of Account Shares pursuant to Section 5.2 hereof, and (iii)
termination of participation in the Plan pursuant to Section 7.2 hereof.



          A pronoun or adjective in the masculine gender includes the feminine
gender, and the singular includes the plural, unless the context clearly
indicates otherwise.



ARTICLE II




PARTICIPATION




          Section 2.1 Participation. Any Person, whether or not a record holder of
Common Stock, may elect to participate in the Plan; provided, however, that if
such Person is a Foreign Person, he must provide evidence satisfactory to the
Administrator that his/her participation in the Plan would not violate local
laws applicable to the Company, the Plan, or such Foreign Person.



          An election by a Person to participate in the Plan shall be made by
completing and returning to the Administrator an Enrollment Form, or an Initial
Enrollment Form, and, subject to the last two paragraphs of this Section 2.1
below, (i) electing to have Dividends on Eligible Securities of which such
Person is the record holder invested in Common Stock pursuant to Section 2.2
hereof, (ii) depositing certificates representing Common Stock of which such
person is the record holder into the Plan pursuant to Section 4.1 hereof, or
(iii) making an initial cash investment pursuant to Section 2.3 hereof.



- 6 -









 





          Any Person who has met such requirements and has made and not revoked such
election is herein referred to as a “Participant.” Notwithstanding the
foregoing, each participant in the Plan on the date of effectiveness hereof is
automatically a Participant without submitting a new Enrollment Form; provided,
however, that any such Participant who wishes to change his/her current
participation in any way must submit a new Enrollment Form to the
Administrator. A Participant may elect to participate in any or all of the
forms of investment provided in Sections 2.2 through 2.4 hereof and to utilize
the Plan’s safekeeping services provided in Section 4.1 hereof by submitting an
Enrollment Form designating such election to the Administrator; provided,
however, that, alternatively, a Participant may elect to make optional cash
investments pursuant to Section 2.4 hereof by submitting to the Administrator a
completed optional Cash Investment Form in lieu of an Enrollment Form.



          The Company reserves the right to restrict participation in this Plan if
it believes that such participation may be contrary to the general intent of
this Plan or in violation of applicable law.



          Section 2.2 Dividend Reinvestment. A Participant may elect any of the
Full Dividend Reinvestment, Partial Dividend Reinvestment, and Cash Investment
Only options described in Subsections 2.2.1, 2.2.2, and 2.2.3 hereof.



          Subsection 2.2.1 Full Dividend Reinvestment. Participants enrolling in
the “Full Dividend Reinvestment” option will have Dividends earned on all
Common Stock, both in their Plan Accounts and held of record by such
Participants, reinvested in shares (and/or a fraction of a share) of Common
Stock to be credited to their Accounts in lieu of receiving such Dividends
directly.



          Subsection 2.2.2 Partial Dividend Reinvestment. Participants enrolling in
the “Partial Dividend Reinvestment” option will have Dividends on a designated
number of shares of Reinvestment Eligible Securities held of record or in their
Plan Accounts paid directly to the Participant in the manner otherwise
associated with payment of Dividends, with the balance being reinvested in
shares (and/or a fraction of a share) of Common Stock to be credited to their
Accounts in lieu of receiving such Dividends directly.



          Subsection 2.2.3 Cash Investment Only. Participants enrolling in the
“Cash Investment Only” option may make cash investments pursuant to Sections
2.3 and 2.4 hereof. Dividends on Eligible Securities held by such Participants
of record or in their Plan Accounts will not be reinvested. Such Dividends
will be paid directly to Participant either by check or direct deposit, at the
election of the Participant.



          Subsection 2.2.4 No Option Chosen. If Participants do not indicate a
participation option as described in Subsections 2.2.1, 2.2.2, and 2.2.3 hereof
on their Enrollment Forms, except as otherwise provided for Plan participants
in Section 2.1 hereof, such Participants will be deemed to have elected the
Full Dividend Reinvestment option described in Subsection 2.2.1 hereof.



- 7 -









 





          Section 2.3 Initial Cash Investment. A Person who is not already a
Common Stock shareholder of record may become a Participant by returning to the
Administrator a completed Initial Enrollment Form, accompanied by an initial
cash payment of at least $50, by check, money order, or electronic funds
transfer, payable through a U.S. bank or other U.S. financial institution, in
U.S. dollars, to Pinnacle West Capital Corporation, to be invested in Common
Stock pursuant to Subsections 3.3.2 or 3.4.2 hereof. Initial cash investments
may be made by electronic funds transfer by completing and forwarding an
Automatic Investment Form to the Administrator authorizing the deduction of a
set amount.



          Section 2.4 Optional Cash Investments. A Participant may elect to make
cash payments at any time or from time to time to the Plan, in any amount, by
check, money order, or electronic funds transfer, payable through a U.S. bank
or other U.S. financial institution, in U.S. dollars, to Pinnacle West Capital
Corporation, for investment in Common Stock pursuant to Subsections 3.3.2 or
3.4.2 hereof; provided, however, that a Participant may not invest more than
$150,000 in aggregate amount in any calendar year (the “Maximum Amount”) and
provided further that any such payment must be accompanied by a new Enrollment
Form or a Cash Investment Form. For purposes of determining whether the
Maximum Amount has been reached, initial cash investments made pursuant to
Section 2.3 hereof shall be counted as optional cash investment, and Dividends
reinvested pursuant to Section 2.2.1 or 2.2.2 shall not be counted as optional
cash investments. Automatic cash investments may be made monthly by completing
and forwarding an Automatic Investment Form to the Administrator, authorizing
the deduction of a set amount.



ARTICLE III




DIVIDEND REINVESTMENT AND STOCK PURCHASE




          Section 3.1 Dividend Reinvestment. Dividends as to which reinvestment
has been elected by a Participant shall be paid to the Administrator or its
nominee on behalf of such Participant. Dividends shall be reinvested, at the
Company’s election, subject to Section 10.7 hereof, in either (i) newly issued
shares of Common Stock or shares of Common Stock held in the Company’s treasury
purchased from the Company or (ii) shares of Common Stock purchased in the open
market.



          Section 3.2 Investment of Optional Cash Payments and Initial Cash
Payments. Any optional cash investments and initial cash investments may be
made by either (a) check or money order received by the Administrator from a
Participant and as to which no request for return has been received at least
two business days prior to the next scheduled Investment Period, or (b)
electronic funds deduction, which deduction, regardless of when the Participant
completes and forwards his/her Automatic Investment Form to the Company, will
occur only once a month, on or about the 10th day of each month, unless and
until the Company implements more frequent electronic funds deductions dates.
Such optional cash investments and initial cash investments will be invested
during the next Investment Period following the receipt or event specified in
(a) or (b) above, in either (i) newly issued shares of Common Stock or



- 8 -









 







shares of Common Stock held in the Company’s treasury purchased from the
Company or (ii) shares of Common Stock purchased in the open market.



          Section 3.3 Investment and Reinvestment in Newly Issued or Treasury
Shares. Dividend reinvestment in newly issued shares of Common Stock or shares
of Common Stock held in the Company’s treasury shall be governed by Subsection
3.3.1 hereof. Any optional cash investments and/or initial cash investments to
be invested in either newly issued shares of Common Stock or shares of Common
Stock held in the Company’s treasury will be governed by Subsection 3.3.2
hereof.



          Subsection 3.3.1 Dividend Reinvestment. As soon as practicable following
an Investment Date with respect to which the Company elects to issue new shares
of Common Stock or sell shares of Common Stock held in the Company’s treasury
to the Plan in order to effect the reinvestment of Dividends, the Company shall
issue to the Administrator upon the Company’s receipt of the funds described in
Subsection 3.3.3(a) below, for crediting by the Administrator to the Account of
a Participant as of such Investment Date, shares (and/or fraction of a share
rounded to three decimal places or other fraction determined from time to time
by the Administrator) of Common Stock as provided in Subsection 3.3.3 below.
Such shares shall be issued or sold to, and registered in the name of, the
Administrator or its nominee as custodian for such Participant. No interest
shall be paid on Dividends held pending reinvestment pursuant to this
Subsection 3.3.1.



          Subsection 3.3.2 Cash Investments. As soon as practicable following an
Investment Date with respect to which the Company elects to issue new shares of
Common Stock or sell shares of Common Stock held in the Company’s treasury to
the Plan in order to effect the investment of optional cash investments and/or
initial cash investments, the Company shall issue to the Administrator upon the
Company’s receipt of the funds described in Subsection 3.3.3(b) below, for
crediting by the Administrator to the Account of a Participant as of such
Investment Date, shares (and/or fraction of a share rounded to three decimal
places or other fraction determined from time to time by the Administrator) of
Common Stock as provided in Subsection 3.3.3 below. Such shares shall be
issued or sold to, and registered in the name of, the Administrator or its
nominee as custodian for such Participant. No interest shall be paid on cash
investments held pending investment pursuant to this Subsection 3.3.2.



          Subsection 3.3.3 Number of Shares to be Issued. If shares are to be
issued or sold pursuant to Subsections 3.3.1 or 3.3.2 above, the number of
shares (and/or fraction of a share rounded to three decimal places or other
fraction determined from time to time by the Administrator) of Common Stock
that will be credited to the account of a Participant as of an Investment Date
will be equal to (a) the amount of any Dividends paid to the Administrator on
behalf of such Participant since the preceding Investment Date plus (b) the
amount of any optional cash investments and/or initial cash investment received
by the Administrator from such Participant at least two business days prior to
the next scheduled Investment Period and not previously invested, subject to
the provisions of Section 3.6 hereof, divided by (c) the Company Share Purchase
Price on such Investment Date.



- 9 -









 





          Section 3.4 Investment and Reinvestment in Shares Purchased in the Open
Market. Dividend reinvestment in shares of Common Stock purchased in the open
market shall be governed by Subsection 3.4.1 hereof. Any optional cash
investments and/or initial cash investments to be invested in shares of Common
Stock purchased in the open market shall be governed by Subsection 3.4.2
hereof.



          Subsection 3.4.1 Dividend Reinvestment. During an Investment Period with
respect to which the Company elects to effect reinvestment of Dividends in
shares of Common Stock purchased in the open market, the Administrator shall
(if it is an Independent Agent), or shall cause an Independent Agent to, apply
the amount of any Dividends paid to the Administrator on behalf of a
Participant since the preceding Investment Date to the purchase of shares
(and/or fraction of a share rounded to three decimal places or other fraction
determined from time to time by the Administrator) of Common Stock in the open
market as provided in Subsection 3.4.3 below. Such shares shall be registered
in the name of the Administrator or its nominee as custodian for such
Participant. No interest shall be paid on Dividends held pending reinvestment
pursuant to this Subsection 3.4.1.



          Subsection 3.4.2 Cash Investments. During an Investment Period with
respect to which the Company elects to effect the investment of optional cash
investments and/or initial cash investments in shares of Common Stock purchased
in the open market, the Administrator shall cause an Independent Agent to
purchase for crediting by the Administrator to the Account of a Participant a
number of shares (and/or fraction of a share rounded to three decimal places or
other fraction determined from time to time by the Administrator) of Common
Stock in the open market as provided in Subsection 3.4.3 below. Such shares
shall be registered in the name of the Administrator or its nominee as
custodian for such Participant. No interest shall be paid on cash investments
held pending investment pursuant to this Subsection 3.4.2.



          Subsection 3.4.3 Number of Shares to be Purchased and Other Matters.
Purchases in the open market pursuant to Subsection 3.4.1 and Subsection 3.4.2
hereof may begin on the first day of the applicable Investment Period and shall
be completed no later than 30 days from such date, unless completion at a later
date is necessary or advisable under applicable law, including without
limitation any federal securities laws. Open market purchases pursuant to
Subsection 3.4.1 and Subsection 3.4.2 hereof may be made on any securities
exchange on which the Common Stock is traded, in the over-the-counter market or
by negotiated transactions, and may be upon such terms and subject to such
conditions with respect to price and delivery to which the Independent Agent
may agree. With regard to open market purchases of shares of Common Stock
pursuant to Subsection 3.4.1 and Subsection 3.4.2 hereof, none of the Company,
the Administrator, or any Participant shall have any authority or power to
direct the time or price at which shares of Common Stock may be purchased, the
markets on which such shares are to be purchased (including on any securities
exchange, in the over the counter market, or in negotiated transactions), or
the selection of the broker or dealer (other than the Independent Agent)
through or from whom purchases may be made, except that the timing of such
purchases must be made in accordance with the terms and conditions of the Plan.
For the purpose of making, or



- 10 -









 







causing to be made, purchases of shares of Common Stock pursuant to
Subsection 3.4.1 and Subsection 3.4.2 hereof, and sales of Account Shares
pursuant to Section 5.1 hereof, the Administrator may authorize the Independent
Agent to commingle each Participant’s funds with those of all other
Participants and to offset purchases of shares of Common Stock against sales of
shares of Common Stock to be made for Participants, resulting in a net purchase
or a net sale of shares. The number of shares (and/or fraction of a share
rounded to three decimal places or other fraction determined from time to time
by the Administrator) of Common Stock that shall be credited to a Participant’s
Account with respect to and as of an Investment Date pursuant to Subsection
3.4.1 and Subsection 3.4.2 shall be equal to (a) the amount of any Dividends
paid to the Administrator on behalf of such Participant since the preceding
Investment Date plus (b) the amount of any optional cash investments and/or
initial cash investment received by the Administrator from such Participant at
least two business days prior to the next scheduled Investment Period and not
previously invested, subject to the provisions of Section 3.6 hereof, divided
by (c) the Market Share Purchase Price with respect to such Investment Date.



          Section 3.5 Request to Stop Investment. If a written request to stop
investment of optional cash investments and/or an initial cash investment is
received by the Administrator from a Participant at least two business days
prior to the next scheduled Investment Period during which investment of such
cash investments would be effected pursuant to the provisions of this Plan,
such optional cash investments and/or initial cash investment shall not be
invested in Common Stock and shall be returned to such Participant. If such a
request is not received by the Administrator by such time, such optional cash
investments or initial cash investment shall be invested in shares of Common
Stock for such Participant’s Account.



          Section 3.6 Return of Uninvested Monies. Any Dividends to be reinvested
in shares of Common Stock pursuant to Subsection 3.3.1 or Subsection 3.4.1
hereof and not reinvested in shares of Common Stock within 30 days of the
applicable Dividend Payment Date shall be promptly returned to the Participant
at his/her address of record by First Class Mail. Any optional cash
investments and initial cash investments to be invested in shares of Common
Stock pursuant to Subsection 3.3.2 or Subsection 3.4.2 hereof and not invested
in shares of Common Stock within 35 days of receipt by the Administrator or the
Company shall be promptly returned to the Participant at his/her address of
record by First Class Mail.



          Section 3.7 Uncollectible Funds. If the Administrator does not receive
credit for a cash payment because of insufficient funds or incorrect ACH draft
information, the requested purchase will be deemed void. Any shares credited
will be immediately removed from the Participant’s Account. The Administrator
will be entitled to sell those shares to satisfy any uncollected amounts, and
if the net proceeds of the sale of such shares are not sufficient to satisfy
the balance of such uncollected amounts, the Administrator may sell additional
shares from the Participant’s Account to satisfy the uncollected balance. In
addition, an “insufficient funds” fee of $20.00 will be charged to the
Participant. The Administrator may place a hold on the Account until this fee
is paid, or may sell shares from the Account to pay this fee.



- 11 -









 





ARTICLE IV




SAFEKEEPING SERVICES FOR DEPOSITED COMMON STOCK




          Section 4.1 Deposited Common Stock. A Participant may elect to have
certificates representing shares of Common Stock of which the Participant is
the record holder deposited into the Plan by delivering such certificates to
the Administrator, along with either (i) an Enrollment Form with the
certificate safekeeping option checked thereon or (ii) a letter with respect to
such certificates directing the Administrator to deposit the shares represented
by such certificates into the Plan Account of the Participant. Shares of
Common Stock so deposited shall be transferred into the name of the
Administrator or its nominee and credited to the depositing Participant’s
Account. Shares of Common Stock deposited into the Plan pursuant to this
Section 4.1 shall be treated as shares purchased pursuant to the Plan.



          Section 4.2 Withdrawal of Common Stock Deposited Pursuant to Section 4.1.
Shares of Common Stock deposited pursuant to Section 4.1 hereof may be
withdrawn from the Plan pursuant to Section 8.1 hereof.



ARTICLE V




SALE OF ACCOUNT SHARES; GIFT OR TRANSFER OF ACCOUNT SHARES




          Section 5.1 Sale of Account Shares. A Participant may request, at any
time, that all or a portion of his/her whole Account Shares be sold by
delivering to the Administrator a completed Sale/Transfer Request Form or other
written instructions to that effect. The Administrator shall forward such sale
instructions to the Independent Agent as soon as practicable after receipt
thereof. The Independent Agent shall make such sales as soon as practicable
(in accordance with any applicable stock transfer requirements and federal and
state securities laws) after processing such sale instructions. As soon as
practicable following the receipt of proceeds from such sale, the Administrator
shall mail by First Class Mail to such Participant at his/her address of record
a check in an amount equal to (a) the Market Share Sales Price multiplied by
(b) the number of his/her Account Shares sold, minus a $5.00 service fee.



          With regard to open market sales of Account Shares pursuant to this
Section 5.1, none of the Company, the Administrator or any Participant shall
have any authority or power to direct the time or price at which shares of
Common Stock may be sold, the markets on which such shares are to be sold
(including on any securities exchange, in the over-the-counter market, or in
negotiated transactions), or the selection of the broker or dealer (other than
the Independent Agent) through or from whom sales may be made, except that the
timing of such sales must be made in accordance with the terms and conditions
of the Plan.



          Section 5.2 Gift or Transfer of Account Shares. A Participant may elect
to transfer (whether by gift, private sale, or otherwise) ownership of all or a
portion of his/her Account Shares to the Account of another Participant or
establish an Account for a Person not already a Participant by delivering to
the Administrator a completed



- 12 -









 







Sale/Transfer Request Form to that effect and a stock assignment (stock
power) acceptable to the Administrator along with such other documentation as
may be required by the Administrator. If the transferee is not already a
Participant, the Administrator will require the completion and delivery of an
Enrollment Form for the transferee prior to the transfer. No fraction of a
share of Common Stock credited to the transferor’s Account shall be transferred
unless the transferor’s entire Account is transferred.



          Account Shares transferred in accordance with the preceding paragraph
shall continue to be registered in the name of the Administrator as custodian
and shall be credited to the transferee’s Account. Unless otherwise requested
by a transferee who is already a Participant on a completed Enrollment Form,
the reinvestment of Dividends on such transferred Account Shares in shares of
Common Stock under the Plan shall be made in proportion to the reinvestment
level (i.e., full, partial or none) of the transferee’s other Account Shares.
Unless otherwise requested by the transferor, the Administrator shall deliver
an Investment Statement to such transferee showing the transfer of such Account
Shares into his/her Account. The transferor may request that the Administrator
deliver such Investment Statement to the transferor for personal delivery to
the transferee and/or the transferor may request that the Administrator deliver
to such transferee a gift certificate. The transferor may request that the
Administrator send the gift certificate directly to such transferee with the
first Investment Statement following such transfer, or request that the
Administrator deliver such gift certificate to the transferor for personal
delivery to the transferee. The Administrator shall comply with any such
request of a transferor relating to Investment Statements and/or gift
certificates as soon as practicable following receipt of such request.



          Section 5.3 Reinvestment of Dividends on Remaining Account Shares. If
only a portion of a Participant’s Account Shares are Reinvestment Eligible
Securities and the Participant elects to (i) sell a portion of his/her Account
Shares pursuant to Section 5.1 hereof, (ii) transfer a portion of his/her
Account Shares pursuant to Section 5.2 hereof, or (iii) withdraw a portion of
his/her Account Shares pursuant to Section 8.1 hereof, all of the Account
Shares which are Reinvestment Eligible Securities shall be sold, transferred,
or withdrawn, as the case may be, before any Account Shares which are not
Reinvestment Eligible Securities are sold, transferred, or withdrawn unless the
Participant gives specific instructions to the contrary in connection with such
sale, transfer, or withdrawal of Account Shares.



ARTICLE VI




ELIGIBLE SECURITIES




          Section 6.1 Eligible Securities. The Common Stock of the Company and its
subsidiaries shall be Eligible Securities.



          Section 6.2 Additional Eligible Securities. The Company may from time to
time or at any time designate other securities of the Company and its
subsidiaries as



- 13 -









 







Eligible Securities by notifying the Administrator in writing of the
designation of such securities as Eligible Securities.



ARTICLE VII




TREATMENT OF ACCOUNTS




          Section 7.1 Changing Plan Options. A Participant may elect to change
his/her Plan options, including changing the reinvestment levels (i.e., Full
Dividend Reinvestment, Partial Dividend Reinvestment, or Cash Investment Only)
of Dividends on Reinvestment Eligible Securities by delivering to the
Administrator a new Enrollment Form to that effect. To be effective with
respect to any Dividend Payment Date, the Enrollment Form with respect to such
Reinvestment Eligible Securities must be received by the Administrator prior to
the Dividend Record Date relating to such Dividend Payment Date. If the
Enrollment Form is not received by the Administrator by such time, such
instructions shall not become effective until after such Dividend Payment Date.
The shares of Common Stock purchased from the reinvestment of such Dividend
shall be credited to the Participant’s Account. After the Administrator’s
receipt of effective option changing instructions, Dividends on Reinvestment
Eligible Securities as to which the reinvestment election has been revoked will
be paid directly to the Participant in the manner otherwise associated with the
payment of Dividends.



          Section 7.2 Right of Termination of Participation. If a Participant’s
Sale/Transfer Request Form or other written instructions acceptable to the
Administrator indicates the Participant’s desire to terminate his/her
participation in the Plan, within 30 days of the receipt of such request, the
Administrator shall either mail certificates representing all whole Account
Shares, if any, by First Class Mail to the Participant at his/her address of
record, pursuant to Section 8.1 hereof, along with a check for the cash value
of any fraction of a share of Common Stock credited to his/her Account, or
shall cause the Account Shares to be sold, or gifted or transferred pursuant to
Sections 5.1 or 5.2, respectively, in any such case, as shall have been
directed by the Participant.



          Section 7.3 Stock Splits, Stock Dividends and Rights Offerings. Any
shares or other securities representing stock splits or other noncash
distributions on Account Shares shall be credited to such Participant’s
Account. Stock splits, combinations, recapitalizations and similar events
affecting the Common Stock shall, as to shares credited to Accounts of
Participants, be credited to such Accounts on a pro rata basis.



          In the event of a rights offering, a Participant shall receive rights
based upon the total number of whole shares of Common Stock credited to his/her
Account.



          Section 7.4 Shareholder Materials; Voting Rights. The Administrator
shall send or forward to each Participant all applicable proxy solicitation
materials and other shareholder materials or consent solicitation materials.
Participants shall have the exclusive right to exercise all voting rights
respecting Account Shares credited to their



- 14 -









 







respective Accounts. A Participant may vote all of his/her Account Shares
in person or by proxy. A Participant’s proxy card shall include all his/her
Account Shares and shares of Common Stock of which he is the record holder.
Account Shares shall not be voted unless a Participant or his/her proxy votes
them. Fractions of shares of Common Stock shall be voted.



          Solicitation of the exercise of Participants’ voting rights by the
management of the Company and others under a proxy or consent provision
applicable to all holders of Common Stock shall be permitted. Solicitation of
the exercise of Participants’ tender or exchange offer rights by management of
the Company and others shall also be permitted. The Administrator shall notify
the Participants of each occasion for the exercise of their voting rights or
rights with respect to a tender offer or exchange offer within a reasonable
time before such rights are to be exercised. Such notification shall include
all information distributed to the shareholders of the Company by the Company
regarding the exercise of such rights.



          Section 7.5 Investment and Plan History. As soon as practicable after
each Investment Period, the Administrator shall send an Investment Statement to
each Participant for whom Dividends were reinvested or shares of Common Stock
were purchased or who deposited Common Stock into the Plan pursuant to Section
4.1 hereof during such Investment Period. Additionally, the Administrator
shall send a Plan History Statement to each Participant following a sale,
transfer, or withdrawal of Account Shares by a Participant.



ARTICLE VIII




CERTIFICATES AND FRACTIONS OF SHARES




          Section 8.1 Certificates. A Participant, at any time or from time to
time, may request in writing to receive a certificate for all or a portion of
his/her whole Account Shares and the Administrator shall, as soon as
practicable after receipt of such written request, mail such certificate by
First Class Mail to such Participant at his/her address of record; provided,
however, that upon the mailing of such certificate the shares of Common Stock
represented by such certificate shall no longer be Account Shares but shall
remain Reinvestment Eligible Securities (except to the extent such Participant
has elected not to have Dividends on such Account Shares reinvested in Common
Stock).



          Section 8.2 Fractional Share. Fractions of shares of Common Stock shall
be credited to Accounts as provided in Article III hereof; provided, however,
that no certificate for a fraction of a share shall be distributed to any
Participant at any time; and provided, further, that the Company shall issue
and sell only whole shares of Common Stock to the Administrator in respect of
Dividends reinvested in, and purchases made by the Administrator hereunder of,
newly issued shares or shares of Common Stock held in the Company’s treasury.



- 15 -









 





ARTICLE IX




CONCERNING THE PLAN




          Section 9.1 Suspension, Modification, and Termination. The Company may
at any time and from time to time, at its sole option, suspend, modify, amend,
or terminate the Plan, in whole, in part or in respect of Participants in one
or more jurisdictions; provided, however, no such amendment shall decrease the
Account of any Participant or result in a distribution to the Company of any
amount credited to the Account of any Participant. Upon complete termination
of the Plan, the Accounts of all Participants (or in the case of partial
termination of the Plan, the Accounts of all affected Participants) shall be
treated as if each such Participant had elected to terminate his/her
participation in the Plan pursuant to Section 7.2 hereof. The Administrator
shall promptly send each affected Participant notice of such suspension,
modification or termination.



          Section 9.2 Rules and Regulations. The Company may from time to time
adopt such administrative rules and regulations concerning the Plan as it deems
necessary or desirable for the administration of the Plan. The Company shall
have the power and authority to interpret the terms and the provisions of the
Plan and shall interpret and construe the Plan and reconcile any inconsistency
or supply any omitted detail in a manner consistent with the general terms of
the Plan and applicable law.



          Section 9.3 Costs. All costs of administration of the Plan shall be paid
by the Company; provided, however, that any brokerage commissions, service
charges, or applicable taxes incurred in connection with open market purchases
and sales of shares of Common Stock made under the Plan shall be borne by the
Participants. In addition, Participants will be responsible for a $5.00
service fee on all sales transactions, as set forth in Section 5.1, and will be
subject to an insufficient funds fee as described in Section 3.7.



          Section 9.4 Termination of a Participant. If a Participant does not have
at least one whole Account Share or own or hold any other Common Stock of
record for which Dividends are designated for reinvestment pursuant to this
Plan, the Participant’s participation in the Plan may be terminated by the
Company, in its sole discretion, after written notice is mailed to such
Participant at his/her address of record. Additionally, the Company, in its
sole discretion, may terminate any Participant’s participation in the Plan
after written notice mailed in advance to such Participant at his/her address
of record, if the Company believes that such Participant’s participation may be
contrary to the general intent of the Plan or in violation of applicable law.
Upon such termination, the Account of such Participant shall be treated as if
he had elected to terminate his/her participation in the Plan pursuant to
Section 7.2 hereof.



- 16 -









 





ARTICLE X




ADMINISTRATION OF THE PLAN




          Section 10.1 Selection of an Administrator. The Administrator shall be
appointed by the Company. The Administrator’s appointment to serve as such may
be revoked by the Company at any time. The Administrator may resign at any
time upon reasonable notice to the Company. In the event that no Administrator
is appointed, the Company shall be deemed to be the Administrator for purposes
of the Plan. The Company shall be the initial Administrator.



          Section 10.2 Compensation. The officers of the Company shall make such
arrangements regarding compensation, reimbursement of expenses and
indemnification of the Administrator and any Independent Agent as they from
time to time deem reasonable and appropriate.



          Section 10.3 Authority and Duties of Administrator. The Administrator
shall have the authority to undertake any act necessary to fulfill its duties
as set forth in the various provisions of the Plan. Upon receipt, the
Administrator shall deposit all Dividends, optional cash investments and
initial cash investments in the Trust Account. The Administrator shall
maintain appropriate records of the Accounts of Participants.



          Section 10.4 Liability of the Company, the Administrator and Any
Independent Agent. The Company, the Administrator, and any Independent Agent
shall not be liable for any act done in good faith, or for the good faith
omission to act in administering or performing their duties with respect to the
Plan, including, without limitation, any claim of liability arising out of
failure to terminate a Participant’s Account upon such Participant’s death
prior to receipt of notice in writing of such death, or with respect to the
prices at which shares are purchased or sold for a Participant’s Account and
the times when such purchases and sales are made, or with respect to any loss
or fluctuation in the market value after the purchase or sale of such shares.



          Section 10.5 Records and Reports. The Administrator shall keep
appropriate records concerning the Plan, Accounts of Participants, purchases
and sales of Common Stock made under the Plan, and Participants’ addresses of
record and shall send shareholder materials and statements to each Participant
in accordance with the provisions of Sections 7.4 and 7.5 hereof.



          Section 10.6 Selection of Independent Agent. Any Independent Agent
serving in such capacity pursuant to the Plan shall be selected by the Company,
and the Administrator and the Company, or either of them, shall, subject to the
provisions hereof, make such arrangements and enter into such agreements with
the Independent Agent in connection with the activities contemplated by the
Plan as the Administrator and the Company, or either of them, deem reasonable
and appropriate.



          Section 10.7 Source of Shares of Common Stock. The Company shall not
change the source of shares of Common Stock purchased by Participants in the
Plan (i.e., either (a) newly issued shares of Common Stock or shares of Common
Stock



- 17 -









 







held in the Company’s treasury purchased from the Company or (b) shares of
Common Stock purchased in the open market) more than once in any three-month
period. The Company may exercise its right to change the source of shares upon
approval by any one of the following:



          (i) the Company’s Board of Directors,



          (ii) the Finance Committee of the Company’s Board of Directors,



          (iii) the Company’s Chief Financial Officer, or



          (iv) the Company’s Treasurer



     provided, however, that, if necessary and requested by the Independent
Agent at any time, the Company may settle fractional shares with treasury stock
even if otherwise shares are being purchased on the open market.



ARTICLE XI




MISCELLANEOUS PROVISIONS




          Section 11.1 Controlling Law. This Plan shall be construed, regulated
and administered under the laws of the State of Arizona.



          Section 11.2 Acceptance of Terms and Conditions of Plan by Participants.
Each Participant, by completing an Enrollment Form and as a condition of
participation herein, for himself, his/her heirs, executors, administrators,
legal representatives and assigns, approves and agrees to be bound by the
provisions of this Plan and any subsequent amendments hereto, and all actions
of the Company and the Administrator hereunder.



          Section 11.3 Receipt by Administrator. Monies, Enrollment Forms, and
other forms and communications will be considered to be received when
delivered, either by postal service or electronic delivery or in person, during
business hours of the Company or the Administrator, as the case may be, to the
Company’s or Administrator’s corporate headquarters.



- 18 -









 





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, correct and complete copy of the Second Amended
and Restated Pinnacle West Capital Corporation Investors Advantage Plan and
that it is in full force and effect as of the date hereof.



     IN WITNESS WHEREOF, I have signed this Certificate as of this 23rd day of
June 2004.


	 	 	 	 	 
	 	 	 
	 	                                    /s/ Nancy C. Loftin
 	 
	 	NANCY C. LOFTIN 	 
	 	Vice President, General Counsel and
Secretary 	 
	 





- 19 -