5. Section 1.13 (“Crediting Rate”) of the Plan is amended and restated in its entirety to readas follows:1.13 “Base Rate” for a Plan Year shall mean a rate of interest equalto the yield on ten-year U.S. Treasury Notes as published on thelast business day of the first week of October preceding the PlanYear.All references to “Crediting Rate” in the Plan are changed to refer to “Base Rate.”6. Section 1.25 (“Preferred Rate”) of the Plan is amended and restated in its entirety to readas follows:1.25 “Plan Rate” for a Plan Year shall mean the Base Rate plus the Supplemental Ratefor such Plan Year.All references to “Preferred Rate” in the Plan are changed to refer to “Plan Rate.”7. Section 1.31 (“Termination Benefit”) of the Plan is amended and restated in its entirety toread as follows:1.31 “Termination Benefit” shall mean the Participant’s AccountBalance payable in accordance with the provisions of Article 5.8. Section 1.34 (“Years of Plan Participation”) of the Plan is amended by changing the thirdsentence thereof to read as follows:For purposes of a Participant’s final Plan Year of participationonly, a Participant shall be awarded a Year of Plan Participationif, and only if, he or she has been credited with 1,000 hours ofservice (determined in accordance with the rules set forth inSection 1.35, below) in such Plan Year.9. Section 1.35 (“Years of Service”) is amended by changing the portion of the second sentencethat precedes the first comma to read as follows:“For purposes of this Section 1.35 and Section 1.34 only . . . .”
 
2

 
10. Article 1 (Definitions) of the Plan is amended by the addition of the followingnew Sections 1.36 and 1.37 to read as follows:1.36 “Discretionary Credit Account” shall mean the accountmaintained to record any Discretionary Credits allocated to aParticipant in accordance with Section 3.9 and any interest on theDiscretionary Credits.1.37 “Discretionary Credits” shall mean the amounts, if any,allocated to a Participant pursuant to Section 3.9.11. Article 3 (Deferral Commitments/Interest Crediting) of the Plan is amended by theaddition of the following new Section 3.9 to read as follows:3.9 Discretionary Credits. With the approval of the HumanResources Committee of the Company’s Board of Directors, an Employermay award Discretionary Credits to a Participant at any time duringa Plan Year in such amounts and subject to such terms and conditions(including, but not limited to, vesting provisions, interestcrediting provisions, and distribution provisions) as the Employerdeems appropriate. The Human Resources Committee may delegate itspower to approve the award of Discretionary Credits to the Company’sChief Executive Officer, subject to such restrictions or limitationsas the Human Resources Committee deems to be appropriate or as maybe required by applicable law. The award of the DiscretionaryCredits must be in writing, signed by the Company’s Chief ExecutiveOfficer (unless the Discretionary Credits are awarded to theCompany’s Chief Executive Officer, in which case the award must besigned by the Company’s General Counsel), and delivered to theParticipant.12. Section 5.1(b) (Payment of Termination Benefit — Automatic Distribution ofTermination Benefits) of the Plan is amended and restated in its entirety to read as follows:(b) Automatic Distribution of Termination Benefits.Notwithstanding any provision of this Section 5.1 to the contrary,if, upon a Participant’s Separation from Service, his or her AccountBalance, as determined pursuant to Section 5.1, and theParticipant’s Discretionary Credit Account, if any, when added tohis or her Retirement Account Balance Benefit under the PinnacleWest Capital Corporation Supplemental Excess Benefit Retirement Planof 2005, does not exceed the amount specified in Code Section 402(g)for the calendar year in which such Separation from Service occurs,the Participant’s Termination Benefit shall be distributed in a lumpsum within thirty (30) days following his or her Separation fromService. Notwithstanding the foregoing, payment of the TerminationBenefit shall not be made prior to the date which is six (6) monthsafter the date of a Participant’s Separation from Service in thecase of a Participant who is determined to be a Specified Employee.
 
3

 
13. Article 5 (Payment of Benefits) of the Plan is amended by the addition of thefollowing new Section 5.3 to read as follows:5.3 Payment of Discretionary Credits. Payment of aParticipant’s Discretionary Credit Account shall be at the time andin the manner provided in the written award of the DiscretionaryCredits. If the written award does not specify the time and mannerof payment of the Discretionary Credit Account, the DiscretionaryCredit Account will be paid in a lump sum within thirty (30) daysafter the Participant’s Separation from Service. Payment of theDiscretionary Credit Account shall not be made or commence prior tothe date which is six (6) months after the date of a Participant’sSeparation from Service in the case of a Participant who isdetermined to be a Specified Employee. Unless the written awardprovides otherwise, if a Participant dies prior to his or herSeparation from Service, the Discretionary Credit Account will bepaid in a lump sum at the time specified in Section 5.2(a) of thePlan.14. Section 9.1 (Termination) of the Plan is amended and restated in its entirety toread as follows:9.1 Termination. Subject to the requirements of Section409A of the Code, each Employer reserves the right to terminate thePlan at any time with respect to Participants whose services areretained by that Employer. Upon the termination of the Plan inaccordance with the requirements of Section 409A of the Code, aParticipant’s Account Balance and Discretionary Credit Account, ifany, shall be paid out in accordance with the regulations issuedunder Section 409A of the Code. The termination of the Plan shallnot adversely affect any Participant or Beneficiary who has becomeentitled to the payment of any benefits under the Plan as of thedate of termination.IN WITNESS WHEREOF, Pinnacle West Capital Corporation has caused this First Amendment to beexecuted as of this 22 day of December 2009.      **PINNACLE WEST CAPITAL CORPORATION**