Document:

exv10w4a

 

Exhibit 10.4

STOCK OWNERSHIP INCENTIVE AGREEMENT

UNDER

PINNACLE WEST CAPITAL CORPORATION

2002 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 2002 Long-Term
Incentive Plan (the “Plan”), pursuant to which stock ownership
incentive awards may be granted to employees of the Company and its
subsidiaries and to certain other individuals.
	 
	 	B.	 	The Company desires to grant to Employee a stock ownership
incentive award under the terms of the Plan.
	 
	 	C.	 	Pursuant to the Plan, the Company and Employee agree as follows:

AGREEMENT

	 	1.	 	Definitions. For purposes of this Award Agreement,
the following terms have the meanings specified in this Section
1:

	 	(a)	 	“Award Period” means the period beginning
                       
 and ending             
           .
	 
	 	(b)	 	“Average Number of Shares Owned” means
(i) the sum of the number of shares of Common Stock owned
by Employee at the end of each month during the Award
Period divided by (ii) twelve (12), rounded down to the
next whole share.
	 
	 	(c)	 	“Average Share Price” means the average
daily closing price of the Common Stock on the New York
Stock Exchange during the Award Period.
	 
	 	(d)	 	“Base Salary” means the base salary
earned by Employee during the Award Period.
	 
	 	(e)	 	“Common Stock” means the common stock of
the Company.
	 
	 	(f)	 	“Ownership Level” means the Stock
Ownership Value divided by Employee’s Base Salary,
expressed as a ratio, carried out to two decimal places
and rounded down.
	 
	 	(g)	 	“Stock Ownership Value” means the Average
Number of Shares Owned multiplied by the Average Share
Price.

	 	2.	 	Grant of Award. Pursuant to action of the
Committee, which was taken on the Date of Grant, the Company
grants to Employee the stock ownership incentive award
described in this Award Agreement.
	 
	 	3.	 	Award Subject to Plan. This award is granted under
and is expressly subject to, all the terms and provisions of
the Plan, which terms are incorporated herein by reference, and

 

 

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Performance Share Agreement

	 	 	 	this Award Agreement. The Committee referred to in Section 4
of the Plan (“Committee”) has been appointed by the Board of
Directors, and designated by it, as the Committee to make
awards.
	 
	 	4.	 	Stock Ownership Incentive Award.

	 	(a)	 	General. Upon satisfaction of the
“Threshold Performance Goal” described in Section 4(b)
below and the Ownership Level described in Section 4(c)
below, the Company will deliver to Employee, as soon as
practicable after the end of the Award Period, a number of
shares of Common Stock equal to four percent (4%) of
Employee’s Average Number of Shares Owned. Partial shares
will be rounded down to the nearest whole share, when
applicable. Attachment A provides a generic example of
the operation of a Stock Ownership Incentive Award.
	 
	 	(b)	 	Threshold Performance Goal. For purposes
of this Award Agreement, the threshold performance goal
for the Award Period will have been met if, during the Award Period, the Company’s
earnings from continuing operations plus SunCor Development
Company’s earnings from discontinued operations are at least $       million.
	 
	 	(c)	 	Ownership Level. For purposes of this
Agreement, the Common Stock ownership requirement will
have been met if Employee’s Ownership Level is at least
«Shares» times.
	 
	 	(d)	 	Maximum Award. If Employee’s Ownership
Level exceeds five (5), the number of shares of Common
Stock awarded to Employee will be four percent (4%) of the
number of shares represented by an Ownership Level of five
(5) or 15,000 shares maximum.

	 	5.	 	Evidence of Ownership.

	 	(a)	 	Shares Held In Company Plans. Employee
is not required to provide ownership evidence of shares of
Common Stock owned by Employee and held in any
Company-sponsored stock-based plan, such as the Pinnacle
West Capital Corporation Investors Advantage Plan or the
Pinnacle West Capital Corporation Savings Plan.
	 
	 	(b)	 	Shares Held Outside Company Plans.
Shares of Common Stock owned by Employee outside of
Company-sponsored stock-based plans (for example, shares
held in a brokerage account) will be included in
Employee’s Average Number of Shares Owned only if Employee
provides the Company with written evidence of such
ownership (for example, a copy of a brokerage account
statement). Employee must provide the Company with
evidence of such ownership no later than thirty (30) days
following the end of the Award Period.

	 	6.	 	Termination of Award. This Award Agreement will
terminate and be of no further force or effect as of the date
during the Award Period that Employee is no longer employed by
the Company or any of its subsidiaries, unless the termination
of active employment is due to Employee’s death or Disability.
In the case of Employee’s death or Disability, Employee will be
deemed to have been employed by the Company through the end of
the Award Period. No adjustment will be made to Employee’s
“Base Salary” calculation as a result of Employee’s death or
Disability (e.g., the base salary earned by Employee to the
date of Employee’s death or Disability will not be annualized
over the Award Period).

 

 

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Performance Share Agreement

	 	 	 	“Disability” shall mean a period of disability during which
Employee qualifies for benefits under Employee’s employer’s
long-term disability plan, or, if Employee does not participate
in such a plan, a period of disability during which Employee
would have qualified for benefits under such a plan, as
determined by the Committee, had Employee been a participant in
such a plan. The Committee may require such medical or other
evidence, as it deems necessary to judge the nature of
Employee’s condition.
	 
	 	7.	 	Tax Withholding. Employee must pay, or
make arrangements acceptable to the Company for the payment of,
any and all federal, state, and local tax withholding that in
the opinion of the Company is required by law. Unless Employee
satisfies any such tax withholding obligation by paying the
amount in cash or by check , the Company will withhold shares
of Common Stock having a Fair Market Value on the date of
withholding equal to the tax withholding obligation.
	 
	 	8.	 	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.
	 
	 	9.	 	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.
	 
	 	10.	 	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
Agreement to another jurisdiction.

     An authorized representative of the Company has signed this Award
Agreement, and Employee has signed this Award Agreement to evidence Employee’s
acceptance of the award on the terms specified in this Award Agreement, all as
of the Date of Grant.

	 	 	 	 	 
	 	PINNACLE WEST CAPITAL CORPORATION

 	 
	 	By:  	 	 
	 	
Its: Treasurer 	 
	 	 
	 	
Employee	 

 

 

	 	 	 	 	 

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Performance Share Agreement

Attachment A

Generic Example

	 	 	 	Assumptions:
	 
	 	•	 	Earnings threshold is met.
	 
	 	•	 	Employee’s Base Salary is $100,000.
	 
	 	•	 	Employee’s Ownership Level must be at least two (2) (Employee’s
Ownership Level is based on Employee’s title).
	 
	 	•	 	Employee owns 5,800 shares of Common Stock at the end of each month
during 2004, resulting in the Average Number of Shares Owned equaling
5,800.
	 
	 	•	 	The Average Share Price for 2004 is $35.00 per share.
	 
	 	•	 	Employee’s Stock Ownership Value is $203,000 (5,800 shares X $35.00 per share)
	 
	 	•	 	Employee’s Ownership Level is $203,000 / $100,000, or 2.03.
	 
	 	•	 	Employee meets the required Ownership Level of at least 2.

Delivery of Common Stock to Employee:

	 	•	 	Employee would receive 232 shares of Common Stock (4% of 5,800 shares, rounded down, which represents Employee’s Average Number of
Shares Owned)

     Application of the maximum:

	 	•	 	Same assumptions, except Average Number of Shares Owned equals 15,000.
	 
	 	•	 	Employee’s Stock Ownership Value is $525,000 (15,000 shares X $35.00 per share)
	 
	 	•	 	Employee’s Ownership Level is 525,000 / 100,000, or 5.25.
	 
	 	•	 	Shares are not awarded for Ownership Levels above 5, so five times
Base Salary is $500,000 Stock Ownership Value, resulting in 14,285
shares ($500,000 / $35 per share). The 4% award would be based on
14,285 shares; as a result, Employee would receive 571 shares.exv10w5a

 

Exhibit 10.5

PINNACLE WEST CAPITAL CORPORATION

RESTRICTED STOCK AWARD AGREEMENT

     This Award Agreement is made and entered into by and between PINNACLE WEST
CAPITAL CORPORATION, an Arizona corporation (the “Company”) and    
(“Employee”), as of the    day of    ,   (the “Date of Grant”).

W I T N E S S E T H:

     The Board of Directors of the Company has adopted the Pinnacle West
Capital Corporation 1994 Long-Term Incentive Plan (the “Plan”) to encourage
ownership in the Company by key employees of the Company and its subsidiaries,
to enhance the ability of the Company and its subsidiaries to attract and
retain employees whose services are considered unusually valuable, and to
provide those individuals with a further incentive to work for the best
interests of the Company and its shareholders. Pursuant to the Plan, the
Company and the Employee agree as follows.

	 	1.	 	Restricted Stock

               (a) Grant of Shares. Subject to the terms and provisions of this Award
Agreement and the Plan, the Company hereby grants    (   ) shares
of the Stock to the Employee. The Employee shall be the beneficial owner of
said Stock as of the Date of Grant and the Stock shall be transferred of record
to the Employee and a certificate or certificates representing said Stock shall
be issued in the name of the Employee immediately upon the execution of this
Award Agreement. The Employee shall not be entitled to delivery of a stock
certificate for any of such shares; however, until the restrictions noted in
paragraph 1(c) have lapsed with respect to said shares.

               (b) Rights of Employee. Upon the execution of this Award Agreement, the
Employee shall become a shareholder with respect to all of the shares awarded
pursuant to paragraph 1(a) and shall have the rights of a shareholder with
respect to all such shares, including the right to vote such shares and to
receive all dividends and other distributions paid with respect to such shares,
provided, however, that such shares shall be subject to the restrictions
hereinafter described.

     Notwithstanding the preceding paragraph, the Company will withhold any
cash or stock dividends paid on such shares, with such cash or stock dividends
to be distributed to the Employee upon the expiration of the restrictions noted
herein. Interest will be paid on the amount of cash dividends withheld,
including cash dividends on stock dividends, at a rate and subject to such
terms and conditions as shall be determined by the Committee.

 

 

               (c) Restrictions. The restrictions set forth in this Award Agreement
shall exist for the period (“Restriction Period”) beginning on the Date of
Grant and ending on the last to occur of:

	 	(i)	 	immediately exercisable as of the Date of Grant,
	 
	 	(ii)	 	with no matching restrictions.

     If by virtue of paragraph 1(c)(ii) (the requirements of paragraph 1(c)(i)
having then been satisfied), the Restriction Period would end.

               (d) Price. Pricing will be determined by averaging the high and low
price of the Stock on the New York Stock Exchange on the date of vesting. If
the exchange is closed, it will occur on the first business day thereafter.

               (e) Tax Withholding. The Plan permits the Company to withhold, or require
the Employee to remit to the Company, an amount sufficient to satisfy United
States Federal, state and local taxes required by law to be withheld with
respect to any taxable event arising in connection with the Restricted Stock
Award. The Employee may satisfy any such tax withholding obligation by (i)
paying the amount in cash or by check or (ii) providing written notice to the
Company to withhold shares of Stock having a Fair Market Value on the date of
withholding equal to the tax withholding obligation.

     2. Incorporation of Plan. The Plan is incorporated into this Agreement as
if set forth fully herein and this Agreement is, at all times, subject to the
terms and conditions of the Plan, as amended from time to time.

     3. Definitions; Copy of Plan. To the extent not specifically provided
herein, all capitalized terms used in this Award Agreement will have the same
meanings ascribed to them in the Plan. By the execution of this Award
Agreement, the Employee acknowledges receipt of a copy of the Plan.

     4. Continuation of Employment. This Award Agreement shall not be
construed to confer upon the Employee any right to continue in the employ of
the Company or its subsidiaries and shall not limit the right of the Company or
its subsidiaries, in its sole discretion, to terminate the employment of the
Employee at any time.

     5. Governing Law. This Award Agreement shall be interpreted and
administered under the laws of the State of Arizona.

     6. Amendments. This Award Agreement may be amended only by a written
agreement executed by the Company and the Employee, provided that the Company
may amend this Award Agreement without the consent of the

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Employee to the
extent that such amendment is required by applicable federal or state
securities laws.

     IN WITNESS WHEREOF, the Company and the Employee have executed this Award
Agreement effective as of the day and year first above written.

	 	 	 	 	 	 
	 	PINNACLE WEST CAPITAL CORPORATION

 	 
	 	 	By 	
 	 
	 	 	
Its Vice President and Treasurer 	 
	 	 	
 	 
	 	 	
Employee 	 
	 

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