Document:

Exhibit 4.30

 

CONFIDENTIAL TREATMENT REQUESTED

[*] indicates confidential portions omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission

 

SECOND AMENDMENT TO LICENSE, DISTRIBUTION, MANUFACTURING

AND SUPPLY AGREEMENT

 

This Second Amendment to License, Distribution, Manufacturing and Supply Agreement (this “Second Amendment”) is made and entered into on September 30, 2011, with an effective date of November 1, 2010, except where otherwise stated, by and between LUITPOLD PHARMACEUTICALS, INC., a corporation duly organized and existing under the applicable laws of the State of New York, and having a principal place of business in Shirley, New York (hereinafter referred to as “Luitpold”), AMERICAN REGENT, INC., a corporation duly organized and existing under the applicable laws of the State of New York, and having a principal place of business in Shirley, New York (hereinafter referred to as “AR”, and Luitpold and AR collectively referred to as “Luitpold/AR”), and FRESENIUS USA MANUFACTURING, INC., a corporation duly organized and existing under the applicable laws of the State of Delaware, and having a principal place of business in Waltham, Massachusetts (hereinafter referred to as “FUSA”), each a “Party” and collectively “the Parties”.

 

WHEREAS, the Parties hereto are parties to a LICENSE, DISTRIBUTION, MANUFACTURING AND SUPPLY AGREEMENT, dated May 30, 2008, as amended by a First Amendment entered into on September 13, 2008 (the “License Agreement”); and

 

WHEREAS, the Parties hereto desire to amend the License Agreement to revise certain provisions thereof to the intent of the Parties;

 

NOW THEREFORE, the Parties hereto, intending to be legally bound, agree as follows:

 

1.               Section 1.01 of the License Agreement is amended as follows:

 

The definition of “Annual Royalty for Product” shall be replaced in its entirety by the following:

 

“Annual Royalty for Product” means, for any Calendar Year, the amount set forth for such Calendar Year in the tables in Exhibit 1.01-A; provided that,  should Luitpold/AR market its ferric carboxymaltose injection product in the Field in the Territory, the Parties agree that there will be a [*] in the Elemental Iron Commitment and Annual Royalty for Product in Exhibit 1.01-A for each Calendar Year of the Agreement in which such product is sold in the Field in the Territory. Any said [*] shall be triggered if Luitpold/AR’s sales of the ferric carboxymaltose injection product in the Field in the Territory [*] of elemental iron [*] of the Elemental Iron Commitment of FUSA in a Calendar Year. The [*] will be calculated as [*] in the Elemental Iron Commitment of FUSA, with a [*] in the payment due calculated as the amount [*] of elemental iron [*] of elemental iron payment due for that Calendar Year.”

 

The definition of “New Product Formulation” shall be replaced in its entirety by the following:

 

 

““New Product Formulation” means any modified or improved iron products, including but not limited to modifications or improvements related to method of or design for delivery, in development as of the date of execution of this Agreement or during the term hereof including those that require the making of a new regulatory filing or Product Approval, or any other product which is indicated or may be indicated for the prevention and/or treatment of iron deficiency anemia for the Field within the Territory (including drugs, devices and combination drug/device products), but excluding ferric carboxymaltose injection (and any successor designation).”

 

2.               Section 6.11(a) of the License Agreement is amended and replaced as follows:

 

6.11                           Replacement Manufacturer.

 

(a)                                  At any time (i) after the [*] of the Effective Date for the Product and [*] after commercial launch of the New Product Formulation, or (ii) Luitpold/AR shall become unable to supply FUSA’s requirements either one or both of the Iron Products for a period of [*], FUSA shall have the right to qualify and contract with one or more Third Party manufacturers (each a “Replacement Manufacturer”) to manufacture either one or both of the Iron Products, provided that FUSA provides at least thirty (30) days notice to Luitpold/AR prior to contracting with a Replacement Manufacturer for such supply.  Unless otherwise agreed by the Parties, FUSA shall not engage a Replacement Manufacturers to manufacture [*] of FUSA’s requirements for either one or both of the Iron Products for the Field in the Territory.  For so long as Luitpold/AR holds the NDA for any of the Iron Products to be manufactured by a Replacement Manufacturer, FUSA shall also perform the covenants set forth in subsections Sections 6.11(b)-(f).

 

3.               Exhibit 1.01-A to the License Agreement, as amended, is replaced and restated in its entirety as of the Effective Date of November 1, 2010 by new Exhibit 1.01-A-1 and Exhibit 1.01-A-2 attached to this Second Amendment, which shall be labeled prominently with the legend “Execution Copy,” made and entered into as of the date of FTC approval of this Second Amendment, or thirty (30) days after submission, whichever occurs first, and initialed by the Parties to this Amendment. Luitpold/AR and FUSA agree that Exhibit 1.01-A-1 and Exhibit 1.01-A-2 attached to this Second Amendment is the final agreement between the Parties.

 

4.               Exhibit 1.01-B (Intellectual Property) to the License Agreement is amended to add the following:

 

“4.                     U.S. Application Serial No.: 11/914,955 (U.S. Publication No.: 2008/0200886): Filing date: Dec. 11, 2007”

 

2

 

5.               The Parties further recognize and agree that certain new customers with facilities both inside and outside the Field may prefer the efficiencies of meeting all of their Product requirements from a single Party. Therefore, the Parties agree to negotiate in good faith to include all of each such customer’s facilities and patients either inside or outside the Field; any such discussions should include a discussion of any and all other relevant terms, including any appropriate [*] in the royalty payable to Luitpold/AR on a [*] elemental iron basis if a customer outside the Field is added to the list of FUSA’s customers or, if a customer inside the Field is added to Luitpold/AR’s customer list, a [*] in the royalties payable by FUSA.  If the Parties cannot agree, then the EOC shall resolve the issue at its next scheduled quarterly meeting in accordance with Sections 12.16 and 12.18 of the License Agreement.

 

6.               Except as expressly amended by this Second Amendment, the License Agreement shall remain in full force and effect. The representations, warranties and covenants of the signatories contained in the Amendment are true and correct in all material respects as of and on the date hereof as if made again on the date hereof or as of the Effective Date (as applicable).

 

7.               This Second Amendment may be executed in facsimile counterparts, each of which shall have the legal binding effect of an original signature, but all of which together shall constitute one and the same instrument.

 

[Signatures are on the following page.]

 

3

 

IN WITNESS WHEREOF, the Parties hereto have duly executed this Second Amendment to License, Distribution, Manufacturing and Supply Agreement as of the date first set forth above.

 

	
 
    	
LUITPOLD PHARMACEUTICALS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mary Jane Helenek
    
	
 
    	
Name:
    	
 Mary Jane Helenk
    
	
 
    	
Title:
    	
 President & CEO
    
	
 
    	
 
    	
 
    
	
 
    	
AMERICAN REGENT, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mary Jane Helenek
    
	
 
    	
Name:
    	
 Mary Jane Helenek
    
	
 
    	
Title:
    	
 President & CEO
    
	
 
    	
 
    	
 
    
	
 
    	
FRESENIUS USA MANUFACTURING, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Rice Powell
    
	
 
    	
Name:
    	
 Rice Powell
    
	
 
    	
Title:
    	
 CEO, FMCNA
    

 

4

 

EXHIBIT TO SECOND AMENDMENT TO LICENSE AGREEMENT

 

EXHIBIT 1.01-A-1

 

(Confidential to FUSA and Luitpold/AR)

 

EXECUTION COPY NOVEMBER 1, 2010

 

ANNUAL ROYALTY  FOR PRODUCT

 

Table I — Royalties — [*]

 

	
Calendar Year*
    	
 
    	
Minimum [*] Elemental Iron
   Purchases [*]
    	
 
    	
Minimum [*] Royalty for
   Product  ($)
    
	
Calendar Year 2011
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2012
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2013
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2014
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2015
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2016
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2017
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2018
    	
 
    	
[*]
    	
 
    	
[*]
    

 

**          Volumes and Royalties are based on elemental iron purchases of Product [*].

 

Table II — Royalties — [*]

 

	
Calendar Year
    	
 
    	
Minimum Elemental Iron
   Purchases [*]
    	
 
    	
Minimum Annual Royalty
   for Product [*]
    
	
Calendar Year 2011
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2012
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2013
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2014
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2015
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2016
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2017
    	
 
    	
[*]
    	
 
    	
[*]
    
	
Calendar Year 2018
    	
 
    	
[*]
    	
 
    	
[*]
    

 

5

 

Table III — Royalties — [*]

 

	
 
    	
 
    	
Minimum Elemental Iron
   Purchases [*]
    	
 
    	
Royalty for Product [*]
    
	
[*]
    	
 
    	
[*]
    	
 
    	
[*]
    

 

*The Parties agree that certain Products purchased [*] and therefore that a credit [*] is to be applied to royalty due for Calendar Year 2011. This credit is reflected in the royalty [*] as shown in Table III.

 

[*] between Calendar Year 2011 and Calendar Year 2012 is [*] will be applied to Calendar Year 2012 and [*]  Calendar Year [*].

 

Product Sales in Excess of Total Minimum Elemental Iron Purchases [*].  To the extent that purchase volume [*] the minimum totals in Table II, the Parties will agree to negotiate in good faith a royalty [*]. The parties acknowledge and agree that [*].

 

New Product Formulation; Annual Royalty.  If a New Product Formulation is developed, the Parties agree to meet within [*] the expected approval date of the New Product Formulation to discuss how, if at all, the Annual Royalty for the Product should be adjusted upon marketing of the New Product Formulation by FUSA.

 

For purposes of determining the Annual Royalty Payment for any Calendar Year, the terms “Products” and “New Product Formulation” shall be mutually exclusive.

 

Payment.  FUSA will pay the Annual Royalty for Product [*] during each Calendar Year, due on [*], beginning on [*].

 

Payments due and unpaid under this Agreement shall bear interest until payment is received by Luitpold/AR at a rate of [*].

 

If sales for Luitpold/AR’s ferric carboxymaltose injection product [*] the elemental iron commitment of a FUSA Calendar Year then, the total Elemental Iron Commitment [*] elemental iron in units of Luitpold/AR’s ferric carboxymaltose injection product sold into the Field by Luitpold/AR or its designee. The Annual Royalty will be [*] elemental iron of Luitpold/AR’s ferric carboxymaltose injection product sold into the Field [*] elemental iron paid by FUSA during that Calendar Year.  [*] Annual Royalties will be calculated on a

 

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Calendar Year basis [*].  Luitpold/AR will provide FUSA a listing of all sales of Luitpold/AR’s ferric carboxymaltose injection product [*].

 

[*].

 

7

 

Exhibit 1.01-A-2

 

(Confidential to FUSA and Luitpold/AR)

 

EXECUTION COPY NOVEMBER 1, 2010

 

ADDITIONAL PAYMENTS

 

During Calendar Year 2011, and Calendar Year 2012, FUSA shall make payments of [*] for the rights outlined in Sections 2.01 and 2.02 of the Agreement.  The last of such payments will be due by [*].

 

COST OF MANUFACTURE (“COM”)

 

FUSA will pay Luitpold/AR the following [*] of elemental iron for Products supplied by Luitpold/AR to FUSA under this Agreement:

 

[*] vial in [*] vial shelf pack

 

	
Calendar   Year 2011:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2012 - 15:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2016 - 18:
    	
 
    	
[*]   of elemental iron
    

 

[*] vial in [*] vial shelf pack

 

	
Calendar   Year 2011:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2012 - 15:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2016 - 18:
    	
 
    	
[*]   of elemental iron
    

 

[*] in [*] pack

 

	
Calendar   Year 2011:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2012 - 15:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2016 - 18:
    	
 
    	
[*]   of elemental iron
    

 

[*] vial in [*] vial shelf pack

 

	
Calendar   Year 2011:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2012 - 15:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2016 - 18:
    	
 
    	
[*]   of elemental iron
    

 

[*] vial in [*] vial shelf pack

 

	
Calendar   Year 2011
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2012 - 15:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2016 - 18:
    	
 
    	
[*]   of elemental iron
    

 

8

 

[*] in [*] pack

 

	
Calendar   Year 2011:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2012 - 15:
    	
 
    	
[*]   of elemental iron
    
	
Calendar   Years 2016 - 18:
    	
 
    	
[*]   of elemental iron
    

 

The foregoing amounts are based upon [*]:

 

[*]

 

[*] shall have the right [*] to a [*] in the COMs based on [*] to the COMs as listed above.  [*] in COMs.

 

NON-DELIVERY CHARGE

 

In the event that FUSA [*] of elemental iron [*] set forth in Tables I and II of Exhibit 1.01-A-1 for any Calendar Year from 2012 through 2015, FUSA agrees to [*] of elemental iron [*] set forth in Tables I and II for such Calendar Year and the [*] of elemental iron [*] in such year.  For any Calendar Year in which a [*] the end of such Calendar Year.

 

COST OF FREIGHT

 

[*] during Calendar Year 2011 until October 31, 2011 based on monthly shipments.  Thereafter, [*].

 

[*].

 

DEVELOPMENT OF NEW PRODUCT FORMULATION

 

If Luitpold/AR files a separate NDA or a supplement to the existing NDA covering indications only for Stage V renal disease, then [*] such separate NDA or supplement.  If Luitpold/AR files a separate NDA or a supplement to the existing NDA covering indications only for Stage III and/or Stage IV renal disease, then [*] such separate NDA or supplement. If Luitpold/AR files a separate NDA or a supplement to the existing NDA covering indications for both Stage V and either Stage III or Stage IV

 

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renal disease, [*] such separate NDA or supplement.

 

FUSA and Luitpold shall [*] further clinical development of the New Product Formulation necessary to obtain approval of Product Registrations of the New Product Formulation for chronic kidney disease indications in the Territory.

 

As a condition of Luitpold/AR’s obligation to supply the New Product Formulation to FUSA for commercial distribution, FUSA [*] with Luitpold/AR [*] of (i) [*] and (ii) [*] required by Luitpold/AR to manufacture and fill the [*].

 

Any [*] for subsequent approvals in chronic kidney disease indications, such as for new dosages, new indications, new formulations, new delivery systems and the like which the Parties agree to pursue, or any [*] related to post-marketing Phase IV commitments in chronic kidney disease indications [*].

 

TERMINATION PAYMENT

 

If FUSA terminates the Agreement pursuant to Section 5.01(a)(iv), FUSA shall pay Luitpold/AR a termination payment in the amount of (i) [*] if the termination occurs in Calendar Year 2011 or Calendar Year 2012, or (ii) [*] if the termination occurs in Calendar Year 2013, 2014, or 2015 (iii) [*], if the termination occurs in Calendar Year 2016, 2017, or 2018, which amount shall be due upon delivery of the notice of termination.

 

If FUSA terminates the Agreement pursuant to Section 5.01(a)(v), FUSA shall pay Luitpold/AR a termination payment of (i) [*] if the termination occurs in Calendar Year 2012, 2013, 2014, or 2015 or (ii) [*] if the termination occurs in Calendar Year 2016, 2017 or 2018, which amount shall be due upon delivery of the notice of termination.

 

10Exhibit 10.1

 

SUPPLEMENTAL AGREEMENT BETWEEN

ARIZONA PUBLIC SERVICE COMPANY AND RANDALL K. EDINGTON

 

This Supplemental Agreement (the “Agreement”) is entered into by and between Arizona Public Service Company (the “Company”) and Randall K. Edington (“Executive”).

 

1.             Background.  The Company previously entered into a Supplemental Agreement dated December 26, 2008 (the “2008 Agreement”) with Executive.  By letter dated March 12, 2012 (the “Letter Agreement”), the Company and Executive agreed to certain additions to the terms and conditions of Executive’s employment to those set forth in the 2008 Agreement, subject to the receipt of appropriate corporate approval which was obtained on June 20, 2012.

 

2.             Effective Date.  Except as otherwise noted below, this Agreement shall be effective as of the date on which it is executed.  This Agreement supersedes and replaces the Letter Agreement as to all matters addressed herein and therein.

 

3.             Salary Increases.  Effective as of January 1, 2012, Executive’s base salary shall be increased to $900,000.  Effective as of January 1, 2013, Executive’s base salary shall be increased to $925,000, and effective as of January 1, 2014, Executive’s base salary shall be increased to $950,000.

 

4.             2014 Supplemental Pension Benefit.  In addition to the pension benefit set forth in the 2008 Agreement, if Executive is actively employed by the Company on December 31, 2013, the supplemental pension benefit amount calculated in accordance with the first paragraph of Section 5(b) of the 2008 Agreement shall be increased by an amount equal to 5% of the benefit that would have otherwise been payable. If Executive is actively employed by the Company on December 31, 2014, the supplemental pension benefit amount calculated in accordance with the first paragraph of Section 5(b) (prior to the increase called for by the preceding sentence) shall be increased by an amount equal to 10% of the benefit that would have otherwise been payable.

 

5.             Supplemental Deferred Compensation Arrangement.  The Company shall provide Executive with a deferred compensation benefit that will be credited in three equal installments to accounts established for the benefit of Executive and will vest in accordance with the terms and conditions described in the attached Exhibit A.

 

6.             Potential Repurchase of Arizona Home.  If Executive incurs a termination of employment after December 31, 2014, and within six months of such termination of employment, Executive decides to relocate from Arizona but is unable to sell his Arizona home for a net price equal to Executive’s original purchase price (after making reasonable efforts to do so), the Company will purchase Executive’s primary Arizona residence for the original purchase price.  If Executive terminates employment due to death or disability prior to December 31, 2014, and within six months of Executive’s termination of employment, Executive (or Executive’s executor or representative) decides to relocate from Arizona but is unable to sell Executive’s Arizona home for a net price equal to the original purchase price (after making reasonable efforts to do so), the Company will purchase Executive’s primary Arizona residence for the original purchase price.  For purposes of this Agreement, the term “disability” shall have

 

 

the meaning ascribed to it in the Deferred Compensation Plan of 2005 for Employees of Pinnacle West Capital Corporation and Affiliates, and the term “original purchase price” shall mean the agreed price contracted between Executive and the original seller and shall not include any real estate commissions or settlement charges which may have been paid by Executive as part of the purchase transaction.

 

7.             Amendment of 2011 and 2012 Restricted Stock Unit Agreements.  The definition of “Retirement” in clause (i) of the second paragraph of Section 3 of each of the February 15, 2011 and February 21, 2012 Restricted Stock Unit Agreements under the Pinnacle West Capital Corporation 2007 and 2012 Long-Term Incentive Plans issued to Executive is hereby amended as follows:

 

(i) “Retirement” means Employee’s Separation from Service (as defined in the Deferred Compensation Plan of 2005 for Employees of Pinnacle West Capital Corporation and Affiliates (as in effect on the date of this Amendment)) for any reason on or after December 31, 2014,

 

8.             Amendments of Supplemental 2010 Award.  The February 15, 2011 Restricted Stock Unit Agreement under the Pinnacle West Capital Corporation 2007 Long-Term Incentive Plan issued to Executive (Supplemental 2010 Award) (the “Supplemental 2010 Award Agreement”) is hereby amended by the addition of the following new sentence to the end of Section 3 thereof:

 

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 Agreement, “Retirement” means Employee’s Separation from Service for any reason on or after December 31, 2014.

 

Section 4(a) of the Supplemental 2010 Award Agreement is also amended by deleting the first sentence thereof.

 

9.             Impact on 2008 Agreement.  This Agreement supplements the 2008 Agreement which otherwise remains in full force and effect.

 

10.          Status of Exhibit.  Exhibit A is deemed to be a part of this Agreement as if fully set forth herein.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF, the Company and Executive have caused this Agreement to be executed as of the date set forth below.

 

	
 
    	
ARIZONA PUBLIC SERVICE COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Donald E. Brandt
    
	
 
    	
 
    	
Its:   Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
6/19/2012
    
	
 
    	
Date
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Randall K. Edington
    
	
 
    	
Randall K. Edington
    
	
 
    	
 
    
	
 
    	
6/19/2012
    
	
 
    	
Date
    

 

3

 

Exhibit A

 

SUPPLEMENTAL DEFERRED COMPENSATION PROGRAM

FOR RANDALL K. EDINGTON

 

1.             Purpose.  By an Agreement approved on June 20, 2012 between Arizona Public Service Company (the “Company”) and Randall K. Edington (“Executive”), the Company agreed to establish a supplemental deferred compensation arrangement for the benefit of Executive (the “Supplemental Deferred Compensation Benefit”).  The purpose of this document is to establish this arrangement through Discretionary Credits to accounts established for the benefit of Executive pursuant to the Deferred Compensation Plan of 2005 for Employees of Pinnacle West Capital Corporation and Affiliates (the “Deferred Compensation Plan”).

 

2.             Definitions.  Defined terms used herein shall have the respective meanings ascribed to them in the Deferred Compensation Plan.

 

3.             Discretionary Credits.  Three Discretionary Credits in the aggregate amount of $1,050,000 will be allocated to three Discretionary Credit Accounts (“Discretionary Credit Account A,” “Discretionary Credit Account B” and “Discretionary Credit Account C”) established for the benefit of Executive pursuant to Section 3.9 of the Deferred Compensation Plan.  Discretionary Credit Account A shall be credited with $350,000 as of January 1, 2012.  Discretionary Credit Account B shall be credited with $350,000 on January 1, 2013 and Discretionary Credit Account C shall be credited with $350,000 on January 1, 2014.

 

4.             Interest.  The Discretionary Credit Accounts shall be credited with interest in accordance with Sections 3.5 and 3.7(a) of the Deferred Compensation Plan.  Discretionary Credit Account A shall be credited with interest from January 1, 2012.  Discretionary Credit Account B shall be credited with interest from January 1, 2013 and Discretionary Credit Account C shall be credited with interest from January 1, 2014.

 

5.             Vesting.  The Discretionary Credit Accounts vest on December 31, 2014.  If Executive Separates from Service prior to December 31, 2014, the amounts allocated to the Discretionary Credit Accounts will be forfeited; provided, however, that if Executive Separates from Service due to death or Disability prior to December 31, 2014, all amounts previously credited to the Discretionary Credit Accounts prior to the date of such Separation from Service will be fully vested.

 

6.             Payment of Discretionary Credits.  Executive’s vested interest in his Discretionary Credit Accounts will be paid to Executive (or to the Beneficiary designated by Executive pursuant to the Deferred Compensation Plan in the event of Executive’s death) in installments over a period of 10 years following Executive’s Separation from Service in accordance with Sections 3.7 and 5.1 of the Deferred Compensation Plan.  As provided in the Deferred Compensation Plan, the first installment payment shall be made within 30 days following Executive’s Separation from Service, unless Executive is a Specified Employee on the date of his Separation from Service.  If Executive is a Specified Employee on the date of his Separation from Service, the payment of Executive’s vested interest in his Discretionary  Credit  Accounts may not commence prior to the first day of the seventh month following Executive’s

 

A-1

 

Separation from Service.  The Discretionary Credit Accounts may not be distributed as a Short-Term Payout or due to an Unforeseeable Financial Emergency.

 

7.             Executive’s Plan Status.  This document shall be deemed to be Executive’s Election Form with respect to the Discretionary Credits for purposes of Section 2.2 of the Deferred Compensation Plan.

 

8.             Relationship to Other Benefits.  The Discretionary Credits allocated to Executive shall not be taken into account as compensation or for purposes of determining any benefits due to Executive pursuant to the terms of any pension, retirement, savings, profit sharing, incentive, group insurance or other tax qualified or nonqualified benefit plan sponsored by the Company, Pinnacle West Capital Corporation or any affiliate of either.  In addition, any amounts payable to Executive pursuant to this document shall be disregarded for purposes of the benefit plans referred to in the preceding sentence.

 

9.             Plan Document.  This Program is established pursuant to the provisions of Section 3.9 of the Deferred Compensation Plan.  Accordingly, except as otherwise set forth in this document, the provisions of the Deferred Compensation Plan shall apply in determining the rights of Executive as well as the administration of Executive’s Discretionary Credit Accounts.  In cases of conflict, this document controls over any conflicting provisions of the Deferred Compensation Plan, except as may be required by Section 409A of the Internal Revenue Code or the provisions of any other applicable law or regulation.

 

10.          Amendments.  This document may not be modified, altered or changed, except by a written agreement signed by the Company and Executive.

 

11.          Entire Agreement.  This document and the Deferred Compensation Plan constitute the entire agreement between the Company and Executive regarding the Supplemental Deferred Compensation Arrangement.

 

12.          Severability.  If any provision of this document is held to be invalid, the remaining provisions shall remain in full force and effect.

 

A-2

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