Document:

Exhibit

Exhibit 10.2.5

DEFERRED COMPENSATION PLAN OF 2005
FOR EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION
AND AFFILIATES
(as amended and restated effective January 1, 2016)

Table of Contents

		
	ARTICLE 1
	Definitions....................................................................................................1

		
	ARTICLE 2
	Selection, Enrollment, Eligibility.................................................................5

		
	2.1
	Eligibility......................................................................................................5

		
	2.2
	Enrollment Requirements............................................................................5

		
	2.3
	Eligibility: Commencement of Participation...............................................6

		
	2.4
	Loss of Eligibility to Participate..................................................................6

		
	ARTICLE 3
	Deferral Commitments/Interest Crediting...................................................6

		
	3.1
	Deferral........................................................................................................6

		
	3.2
	Maximum Deferral.......................................................................................6

		
	3.3
	Election to Defer; Effect of Election Form..................................................6

		
	3.4
	Withholding of Deferral Amounts...............................................................7

		
	3.5
	Interest Crediting Prior to Distribution........................................................7

		
	3.6
	Change in Time and Form of Payment........................................................7

		
	3.7
	Installment Distribution...............................................................................8

		
	3.8
	FICA Taxes..................................................................................................8

		
	3.9
	Discretionary Credits...................................................................................8

		
	ARTICLE 4
	Short-Term Payout and Unforeseeable Financial Emergencies...................9

		
	4.1
	Short-Term Payout.......................................................................................9

		
	4.2
	Withdrawal Payout; Suspensions for Unforeseeable Financial Emergencies.9

		
	ARTICLE 5
	Payment of Benefits...................................................................................10

		
	5.1
	Payment of Termination Benefit................................................................10

		
	5.2
	Death Prior to Pay Out...............................................................................10

		
	5.3
	Payment of Discretionary Credits..............................................................11

		
	ARTICLE 6
	Disability Credit.........................................................................................11

		
	6.1
	Disability Credit.........................................................................................11

		
	ARTICLE 7
	Beneficiary Designation.............................................................................11

		
	7.1
	Beneficiary.................................................................................................11

		
	7.2
	Beneficiary Designation and Change; Spousal Consent............................11

		
	7.3
	Acknowledgment.......................................................................................12

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Table of Contents
(Continued)

		
	7.4
	No Beneficiary Designation.......................................................................12

		
	7.5
	Doubt as to Beneficiary..............................................................................12

		
	7.6
	Discharge of Obligations...........................................................................12

		
	ARTICLE 8
	Leave of Absence.......................................................................................12

		
	8.1
	Paid Leave of Absence...............................................................................12

		
	8.2
	Unpaid Leave of Absence..........................................................................12

		
	8.3
	Definition of Leave of Absence.................................................................13

		
	ARTICLE 9
	Termination, Amendment or Modification................................................13

		
	9.1
	Termination................................................................................................13

		
	9.2
	Amendment................................................................................................13

		
	ARTICLE 10
	Administration...........................................................................................13

		
	10.1
	Committee Duties......................................................................................13

		
	10.2
	Agents........................................................................................................13

		
	10.3
	Binding Effect of Decisions......................................................................13

		
	10.4
	Indemnity of Committee............................................................................13

		
	10.5
	Employer Information................................................................................14

		
	ARTICLE 11
	Other Benefits and Agreements.................................................................14

		
	11.1
	Coordination with Other Benefits..............................................................14

		
	ARTICLE 12
	Claims Procedures.....................................................................................14

		
	12.1
	Claims........................................................................................................14

		
	ARTICLE 13
	Miscellaneous............................................................................................14

		
	13.1
	Unsecured General Creditor; Top Hat Plan...............................................14

		
	13.2
	Employer’s Liability..................................................................................14

		
	13.3
	Nonassignability.........................................................................................15

		
	13.4
	Not a Contract of Employment..................................................................15

		
	13.5
	Furnishing Information..............................................................................15

		
	13.6
	Terms..........................................................................................................15

		
	13.7
	Captions.....................................................................................................15

		
	13.8
	Governing Law...........................................................................................15

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Table of Contents
(Continued)

		
	13.9
	Validity.......................................................................................................15

		
	13.10
	Notice.........................................................................................................15

		
	13.11
	Successors..................................................................................................16

		
	13.12
	Spouse’s Interest........................................................................................16

		
	13.13
	Incompetent................................................................................................16

		
	13.14
	Underpayment or Overpayment of Benefits..............................................16

		
	13.15
	Section 409A..............................................................................................16 

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DEFERRED COMPENSATION PLAN OF 2005 FOR
EMPLOYEES OF PINNACLE WEST CAPITAL CORPORATION AND AFFILIATES

Effective  January  1, 1992, Pinnacle  West Capital  Corporation,  an Arizona corporation (the “Company”),  established  the Pinnacle  West Capital Corporation,  Arizona Public Service Company, SunCor Development  Company  and El Dorado Investment Company  Deferred Compensation  Plan (the “Prior  Plan”).    Effective  December  31,  2004,  the Company  restated  the  Prior  Plan  in its entirety  to incorporate all prior amendments  to the Prior Plan as in effect on October 3, 2004, and to cease future deferrals  thereunder  after  December 31,  2004.     Effective  January  1,  2005,  the Company established  a new deferred compensation  plan that was substantially  similar to the Prior Plan, except to the extent required  by Section 409A of the Internal Revenue Code of 1986, as amended, and  was known  as  the  Deferred  Compensation  Plan  of  2005  for  Employees  of  Pinnacle  West Capital Corporation and Affiliates (“2005 Plan”)  for the purpose of providing specified benefits to a select group of management,  highly compensated  employees  and Directors  who contribute  materially  to the continued growth,  development  and  future  business success of  the Company,  Arizona  Public  Service  Company, Suncor Development  Company,  El  Dorado  Investment  Company,  and  their  subsidiaries.    The  2005 Plan applied to deferred  compensation  which  was either  earned  or first  became  vested  after  December 31, 2004, applying the rules set forth in Treasury Regulation Section 1.409A-6.  As a result, the 2005 Plan applied to any interest credits above the Base Rate (as defined in the 2005 Plan) with respect to the December 31, 2004 Account Balance of any Participant who had less than five years of Plan Participation as of December 31, 2004.  Otherwise, the 2005 Plan did not apply to an individual’s December 31, 2004 Account Balance and any interest credited to such Account Balance.

By this instrument the Company intends to amend and restate the 2005 Plan in its entirety to make certain modifications the Company deems appropriate (the “Plan”). This amended and restated Plan is effective on January 1, 2016 (the “Effective Date”) and only applies to Participants who incur a Separation form Service on or after the Effective Date.  The plan document as in effect on the date of the Participant’s Separation from Service will apply to Participants who terminate employment prior to the Effective Date.
ARTICLE 1
Definitions
Unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings for purposes of the Plan:
1.1    “Account Balance” shall mean the sum of (i) the Deferral Amount and  (ii) interest  credited  in  accordance  with  all  the applicable interest crediting provisions of the Plan, reduced by all Short-Term  Payouts  and other  distributions,  if  any.   The term “Account Balance” does not include any Discretionary Credits allocated to the Participant in accordance with Section 3.9.   

This account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to the Participant pursuant to this Plan.
1.2    “Annual Deferral” shall mean that portion of a Participant’s Base Annual Salary, Restricted Stock Units (but only if deferral of Restricted Stock Units is permitted by the Company), Year-End Bonus and/or Directors Fees that a Participant elects to have and is deferred, in accordance with Article 3, for any one Plan Year.  In the event of Disability, death or a Separation from Service prior to the end of a Plan Year and prior to 2008, such year’s Annual Deferral shall be the actual amount withheld prior to such event. In the event of death or a Separation from Service prior to the end of a Plan Year, the Annual Deferral shall include amounts that are earned, but not yet paid, immediately prior to a Participant’s death or Separation from Service (for example, a Year-End Bonus that might have been earned but not yet paid as of the date of a Participant’s death or Separation from Service).  
1.3    “Base Annual Salary” shall mean the annual compensation, excluding bonuses, commissions, overtime, incentive payments, non-monetary awards, Directors Fees and other fees paid to a Participant for employment services rendered to any Employer, before reduction for compensation deferred pursuant to all qualified, non-qualified and Code Section 125 compensation plans of any Employer.
1.4    “Beneficiary” shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 7, that are entitled to receive benefits under this Plan upon the death of a Participant.
1.5    “Beneficiary Designation Form” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Company to designate one or more Beneficiaries.
1.6    “Board” shall mean the Board of Directors of the Company.
1.7    “Claimant” shall have the meaning set forth in Section 12.1
1.8    “Code” shall mean the Internal Revenue Code of 1986, as amended.
1.9    “Committee” shall mean the administrative committee appointed to manage and administer the Plan in accordance with its provisions pursuant to Article 10.
1.10    “Company” shall mean Pinnacle West Capital Corporation, an Arizona corporation.
1.11     “Deferral” shall mean the sum of all of a Participant’s Annual Deferrals.
1.12    “Director” shall mean any member of the board of directors of an Employer.

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1.13    “Directors Fees” shall mean the annual fees paid by an Employer, including retainer fees and meetings fees, as compensation for serving on a board of directors of an Employer.
1.14    “Disability” shall mean (i) in the case of a Participant who is an employee of an Employer, a period of disability during which a Participant qualifies for benefits under the Participant’s Employer’s long-term disability plan, or (ii) in the case of a Participant who is a Director, a period of disability during which the Participant would have qualified for benefits under such a plan, as determined in the sole discretion of the Committee, had the Participant been an employee of an Employer.
1.15    “Disability Benefit” shall mean the benefit set forth in Article 6.
1.16    “Discretionary Credit Account” shall mean the account maintained to record any Discretionary Credits allocated to a Participant in accordance with Section 3.9 and any interest on the Discretionary Credits.
1.17    “Discretionary Credits” shall mean the amounts, if any, allocated to a Participant pursuant to Section 3.9.
1.18    “Effective Date” shall mean January 1, 2016 except as otherwise provided in this document.
1.19    “Election Form” shall mean the form established from time to time by the Committee that a Participant completes, signs and returns to the Company to make an election under the Plan.
1.20    “Employer” shall mean the Company, Arizona Public Service Company, an Arizona corporation, El Dorado Investment Company, an Arizona corporation, Bright Canyon Energy Corporation, a Delaware corporation and/or any subsidiaries of such corporations that have been selected by the Board to participate in the Plan.
1.21    “Participant” shall mean any employee or Director of an Employer (i) who is selected to participate in the Plan, (ii) who elects to participate in the Plan, and (iii) who signs an Election Form and a Beneficiary Designation Form.
1.22    “Plan” shall mean this Deferred Compensation Plan of 2005 for Employees of Pinnacle West Capital Corporation and Affiliates, which shall be evidenced by this amended and restated instrument, as it may be further amended from time to time.
1.23    “Plan Year” shall begin on January 1 of each year and continue through December 31.

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1.24    “Plan Rate” shall mean an interest rate determined for each Plan Year by the Committee, in its sole discretion, which rate shall be determined on or before the first business day of the month that precedes the beginning of the Plan Year for which the rate applies but which rate shall in no event be less than a rate of interest equal to the ten year U.S. Treasury Note rate as published on the last business day of the first week of October preceding a Plan Year.
1.25    “Restricted Stock Units” shall have the meaning assigned to that term under the Pinnacle West Capital Corporation 2007 Long-Term Incentive Plan, as amended, the Pinnacle West Capital Corporation 2012 Long-Term Incentive Plan, as amended, or any similar plan adopted by the Company in the future.
1.26    “Retirement” and “Retires” shall mean, with respect to an employee, Separation from Service for any reason other than a leave of absence, death or Disability on or after the earlier of the attainment of (i) age sixty-five (65) with five (5) Years of Service or (ii) age fifty‐five (55) with ten (10) Years of Service; and shall mean, with respect to a Director who is not an employee, Separation from Service with all Employers on or after the earlier of the attainment of (x) age sixty-five (65) with five (5) Years of Service as a Director or (y) age fifty‐five (55) with ten (10) Years of Service as a Director.  If a Participant is both an employee and a Director, Retirement shall occur when he or she Retires as an employee.
1.27    “Section 409A” shall mean Section 409A of the Code or the regulations or other guidance issued thereunder from time to time.
1.28    “Separation from Service” or “Separates from Service” shall mean the ceasing of employment by an employee with all Employers or ceasing service as a Director of all Employers, voluntarily or involuntarily for any reason other than death.  If a Participant is both an employee and a Director, a Separation from Service shall occur when he or she terminates employment as an employee, and the Participant shall become an inactive Participant (as defined in the last sentence of Section 2.4) at such point in time.  Except as provided in the preceding sentence and the resolution of the Board defining such term, “Separation from Service” and “Separates from Service” shall be determined in accordance with the default rules set forth in the regulations issued under Section 409A.
1.29    “Short-Term Payout” shall mean the payout set forth in Section 4.1.
1.30    “Specified Employee” shall have the meaning set forth in Section 409A, the regulations issued thereunder, and the resolution issued by the Board defining such term.
1.31    “Termination Benefit” shall mean the Participant’s Account Balance payable in accordance with the provisions of Article 5.

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1.32    “Unforeseeable Financial Emergency” shall mean a severe financial hardship to the Participant resulting from (i) an illness or accident of the Participant, the Participant’s Beneficiary, or the Participant’s spouse or dependent (as defined in Code Section 152(a)), (ii) loss of the Participant’s property due to casualty, including the need to rebuild a home following damage to the home that is not otherwise covered by insurance, or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in accordance with Treasury Regulation Section 1.409A-3(i)(3) in the sole discretion of the Committee.
1.33    “Year-End Bonus” shall mean compensation paid to a Participant who is an employee as an annual bonus under any Employer’s regular annual bonus and incentive plans.  
1.34    “Years of Plan Participation” shall mean the total number of full Plan Years a Participant has been a Participant in the Plan and has either (i) made deferral elections or (ii) had an Account Balance.  For purposes of a Participant’s first Plan Year of participation only, any partial Plan Year of participation shall be treated as a full Plan Year.  For purposes of a Participant’s final Plan Year of participation only, a Participant shall be awarded a Year of Plan Participation if, and only if, he or she has been credited with 1,000 hours of service (determined in accordance with the rules set forth in Section 1.35, below) in such Plan Year.
1.35    “Years of Service” shall mean the total number of years of employment during which a Participant has been credited with at least 1,000 hours of service in each of those years.  For purposes of this Section 1.35 and 1.34 only, (i) Participants who are employees shall be credited with ten (10) hours of service for each working day during which they are employed by the Employer and Participants who are Directors shall be credited with ten (10) hours of service for each day (other than weekend days) during which they serve as a Director, provided that no Participant shall be credited with more than 1,000 hours of service in any one year of employment, and (ii) a year of employment shall be a 365 day period (or 366 day period in the case of a leap year) that, for the first year of employment, commences on the employee’s date of hiring or the date the Director begins his or her service as a Director and that, for any subsequent year, commences on an anniversary of that date.
ARTICLE 2 
 
Selection, Enrollment, Eligibility
2.1    Eligibility.  Participation in the Plan shall be limited to a select group of management, highly compensated employees, and Directors of the Employers.  Subject  to Section 3.2 below, a Participant  may defer eligible  compensation  for each Plan  Year  starting  with  his  or  her  commencement   of  participation   in  the  Plan  and  ending immediately prior to his or her death or Separation from Service, provided, however, that in the event of death or a Separation from 

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Service prior to the end of a Plan Year, such deferral shall include amounts that are earned, but not yet paid, immediately prior to a Participant’s death or Separation from Service (for example, a Year-End Bonus that might have been earned but not yet paid as of the date of a Participant’s death or Separation from Service).  
2.2    Enrollment Requirements.  As a condition to participation, each selected employee or Director shall complete, execute and return to the Company an Election Form and a Beneficiary Designation Form.  To the extent permitted by the Committee, a selected employee or Director may enroll in the Plan and make elections by electronic means.  In addition, the Committee, in its sole discretion, may establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.
2.3    Eligibility: Commencement of Participation.  When an employee or Director first becomes eligible to participate in the Plan, that employee or Director may commence participation in the Plan at any time within thirty (30) days after his or her initial qualification for eligibility.  When a Participant has ceased being eligible to participate in the Plan (other than by the accrual of earnings), and subsequently becomes eligible to participate in the Plan again more than twenty-four (24) months after first not being eligible to participate in the Plan, the Participant will be treated as a new Participant and will be allowed to recommence participation in the Plan at any time within thirty (30) days after his or her requalification for eligibility.  If an employee or Director fails to submit an Election Form to the Company within thirty (30) days after his or her initial qualification or requalification for eligibility, that employee or Director shall not be eligible to submit an Election Form until the election period effective the following January 1.
2.4    Loss of Eligibility to Participate.  If the status of a Participant changes, without a Separation from Service, so that he or she is no longer an employee eligible to participate pursuant to Section 2.1, he or she shall become an inactive Participant as of the last day of the Plan Year in which such change of status occurred.  Inactive Participants shall continue to participate in the Plan for all purposes other than for purposes of making deferrals under Section 3.1 and 3.2.
ARTICLE 3 
 
Deferral Commitments/Interest Crediting
3.1    Deferral.  Subject to Section 3.2 below, a Participant may defer eligible compensation for each Plan Year starting with his or her commencement of participation in the Plan and ending immediately prior to his or her death or Separation from Service. For the avoidance of doubt, such deferral shall include amounts that are earned, but not yet paid, immediately prior to a Participant’s death or Separation from Service (for example, a Year-End Bonus that might have been earned but not yet paid as of the date of a Participant’s death or Separation from Service).    

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3.2    Maximum Deferral.  Subject to Section 3.3, for each Plan Year, a Participant may defer up to fifty percent (50%) of his or her Base Annual Salary, up to one hundred percent (100%) of his or her Year-End Bonus, up to 100% of his or her Restricted Stock Units (if the Company allows deferrals of Restricted Stock Units), and/or up to one hundred percent (100%) of his or her Directors Fees.
3.3    Election to Defer; Effect of Election Form.  In  connection   with   a  Participant’s initial commencement  (or  in certain cases described  in Section 2.3, recommencement) of participation in the Plan, the Participant  may file an Election Form within thirty (30) days after becoming eligible to participate.  If this initial Election Form is filed after the beginning of the calendar year to which the Election Form relates, the Participant may elect only to defer his or her Base Annual Salary for pay periods commencing after the filing of his or her Election Form.   For each succeeding Plan Year, a Participant  may elect to defer from his or her Base Annual Salary, Year-End Bonus and/or  Directors  Fees (and Restricted  Stock Units to the extent  permitted  by the Company) an Annual Deferral  by delivering  to the Company a completed  Election Form before the January 1 of the calendar year in which the Participant earns the compensation he or she is deferring, which election and form shall  be irrevocable  during the Plan Year except as  provided in Section 4.2. Solely with respect to a deferral of Base Annual Salary, and as permitted by Treasury Regulation Section 1.409A-2(A)(13)(i), compensation payable after any particular December 31 solely for services performed during the final payroll period containing such December 31, shall be treated as compensation for services performed in the subsequent taxable year in which the payment is made. Notwithstanding  the foregoing, with respect to Restricted Stock Units, the Committee may permit a Participant to file an Election Form on or before the thirtieth (30th) day after the Participant obtains the right to the Restricted  Stock  Units, provided that the Election  Form  is filed at least twelve (12) months  in advance  of  the  earliest  date  at  which  the forfeiture  condition  with  respect  to the Restricted  Stock  Units  could  lapse.   If no Election  Form  is delivered  and  accepted  for a Plan Year, no Annual  Deferral  will  be withheld  for that Plan  Year.   Any such Election Form shall designate the time and form of payment of the compensation deferred.  With respect to the “excess interest credits” on the December 31, 2004 Account Balance of any Participant who had less than five (5) years of Plan Participation as of December 31, 2004, the election of the form and time of payment made by such Participant with respect to the calendar year in which the Participant first earns five (5) years of Plan Participation shall govern the form and time of payment of such excess interest credits. For this purpose, the “excess interest credits” are the interest credits in excess of the yield on ten year U.S. Treasury Notes (as published on the last business day of the first week of October preceding the Plan Year).
3.4    Withholding of Deferral Amounts.  For each Plan Year, the Base Annual Salary portion of the Annual Deferral shall be withheld periodically from the Participant’s Base Annual Salary.  The Year-End Bonus, Restricted Stock Unit, and/or Directors Fees portion of the Annual 

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Deferral shall be withheld at the time the Year-End Bonus and/or Director Fees and/or compensation attributable to Restricted Stock Units are or would otherwise be paid to the Participant.
3.5    Interest Crediting Prior to Distribution. Prior to any distribution of benefits under Article 5, interest shall be credited in accordance with rules established by the Company. The rate of interest for crediting shall be the Plan Rate. If a Short-Term Payout is made, for purposes of crediting interest, the Account Balance shall be reduced as of the first day of the Plan Year in which the Short-Term Payout is made.
3.6    Change in Time and Form of Payment.  A Participant may change an election as to time and form of payment with respect to Short-Term Payouts or Termination Benefits if such an Election Form is filed in accordance with rules established by the Committee no later than December 31, 2008.  Any such election must not defer benefits which would otherwise be payable in the calendar year of election to a later calendar year or accelerate benefits which would be payable in a later calendar year into the calendar year of election.  On and after January 1, 2009, a Participant may change an election as to time and form of payment with respect to Termination Benefits under the Plan if an Election Form is filed in accordance with rules established by the Committee, provided (a) such election must not take effect until at least twelve (12) months after the date on which the Election Form is properly filed, (b) the first payment with respect to which such election is made must be deferred for a period of not less than five (5) years from the date such payment would otherwise have been made, and (c) any election related to a payment that was otherwise to be made at a specified time may not be made less than twelve (12) months prior to the date of the first scheduled payment.  For purposes of the preceding sentence, a series of installment payments shall be considered a single payment.  Subject to the foregoing, the Election Form most recently filed with the Company for each calendar year shall govern the payout of all Termination Benefits for such calendar year.
3.7    Installment Distribution.  In the event a benefit is paid in installments, installment payment amounts shall be determined in the following manner:
(a)    Interest Rate.  The interest rate to be used to calculate installment payment amounts shall be a fixed interest rate that is determined by averaging the Plan Rates for the Plan Year in which a Participant becomes eligible to receive a benefit and the four (4) preceding Plan Years. If a Participant has completed fewer than five (5) Years of Plan Participation, the interest rate to be used to calculate installment payment amounts shall be a fixed interest rate that is determined by averaging the Plan Rates for the relevant Plan Years in which the Participant participated in the Plan.
(b)    Installment Payments.  For purposes of calculating installment payment amounts, each annual installment payment, starting with the first payment, which for this purpose is deemed to be paid as of the date that the Participant becomes eligible to receive a benefit under 

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this Plan without respect to any six-month delay in benefit commencement for a Specified Employee (the “Eligibility Date”), and continuing thereafter for each additional year that starts on the anniversary of the Eligibility Date until the Participant’s Account Balance is paid in full, shall be deemed to have been paid prior to the crediting of interest for that year.  (The result of this is that interest crediting shall be made after taking into account the annual installment payment for that year.)
(c)    Amortization.  Based on the interest rate determined in accordance with Section 3.7(b) above, the Participant’s Account Balance shall be amortized in equal installment payments over the term of the specified payment period.  The resulting number shall be the installment payment that is to be paid each year.
(d)    Timing of Payments.  The initial installment payment shall be made at the time set forth in Section 5.1(a).  Installment payments for subsequent years shall be made in January of such year, subject to the requirement that payment of any installment amount following Separation from Service shall not be made prior to the date which is six (6) months after the date of the Participant’s Separation from Service in the case of a Participant who is determined to be a Specified Employee.
3.8    FICA Taxes.  For each Plan Year in which an Annual Deferral is being withheld, the Participant’s Employer(s) shall withhold from the Participant’s compensation that is not being deferred the Participant’s share of FICA taxes.
3.9    Discretionary Credits. With the approval of the Human Resources Committee of the Company’s Board of Directors, an Employer may award Discretionary Credits to a Participant at any time during a Plan Year in such amounts and subject to such terms and conditions (including, but not limited to, vesting provisions, interest crediting provisions, and distribution provisions) as the Employer deems appropriate. The Human Resources Committee may delegate its power to approve the award of Discretionary Credits to the Company’s Chief Executive Officer, subject to such restrictions or limitations as the Human Resources Committee deems to be appropriate or as may be required by applicable law. The award of the Discretionary Credits must be in writing, signed by the Company’s Chief Executive Officer (unless the Discretionary Credits are awarded to the Company’s Chief Executive Officer, in which case the award must be signed by the Company’s General Counsel), and delivered to the Participant.
ARTICLE 4 
 
Short-Term Payout and Unforeseeable Financial Emergencies
4.1    Short-Term Payout.  At the same time as each election to defer an Annual Deferral, a Participant may elect to receive a future Short-Term Payout from the Plan with respect to that 

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Annual Deferral.  The Short-Term Payout shall be a lump sum payment in an amount that is equal to the Annual Deferral plus interest credited at the Plan Rate, and it shall be paid in January of the Plan Year that is five (5) years after the first day of the Plan Year in which the Annual Deferral is actually deferred, provided, however, that if the Participant Separates from Service or dies before the Plan Year in which a Short-Term Payout is to be made, distribution will be made in accordance with Article 5 instead of this Section 4.1.  Except as provided in Section 3.6, such election shall be irrevocable.
4.2    Withdrawal Payout; Suspensions for Unforeseeable Financial Emergencies.  If the Participant experiences an Unforeseeable Financial Emergency, the Participant may petition the Committee to receive a partial or full payout from the Plan.  The payout shall not exceed the lesser of (i) the Participant’s Account Balance, calculated as if such Participant were receiving a Termination Benefit, or (ii) the amount reasonably needed to satisfy the Unforeseeable Financial Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship) or by cessation of deferrals under this Plan, all as determined in accordance with Treasury Regulation Section 1.409A-3(i)(3)(ii).  The petition must: (i) describe the Unforeseeable Emergency for which the withdrawal is being requested; (ii) describe the amount needed to satisfy the Unforeseeable Emergency, which amount may include any federal, state, or local income taxes or penalties reasonably anticipated to result from the distribution; (iii) include a representation that the Unforeseeable Emergency cannot reasonably be relieved through reimbursement or compensation by insurance or otherwise, by liquidation of the Participant’s assets to the extent the liquidation of such assets would not itself cause a severe financial hardship, or by cessation of deferrals pursuant to this Plan; (iv) identify the date on which the withdrawal is being requested; and (v) provide any other information the Committee deems necessary. If the petition for a payout is approved, the payout shall be made within sixty (60) days after the date of approval.  In the event that the Participant takes an Unforeseeable Financial Emergency withdrawal under this Plan, the Participant’s deferral election for the Plan Year shall immediately terminate for the remainder of such Plan Year.
ARTICLE 5
Payment of Benefits
5.1    Payment of Termination Benefit.
(a)    Lump Sum or Installments.  A Participant may elect to receive his or her Termination Benefit in a lump sum or in equal annual payments over a period of five (5), ten (10) or fifteen (15) years (the latter determined in accordance with Section 3.7 above) by so electing in an Election Form. In the Election Form, the Participant also shall specify whether the lump sum 

10    

payment will be paid or the installment payments will begin within thirty (30) days following either (i) his or her Separation from Service or (ii) the later of his or her attainment of age fifty-five (55) or his or her Separation from Service. The Participant may change his or her election to an allowable alternative payout date or period by submitting a new Election Form to the Company in accordance with Section 3.6. Failure to make an election will result in the benefits being paid in a lump sum within thirty (30) days after the Participant’s Separation from Service. Any election under this Section 5.1 shall be irrevocable, except to the extent provided in Section 3.6.  Notwithstanding the foregoing, payment of the Termination Benefit shall not be made or commence prior to the date which is six (6) months after the date of a Participant’s Separation from Service in the case of a Participant who is determined to be a Specified Employee.
(b)    Automatic Distribution of Termination Benefits for Small Amounts.  Notwithstanding any provision of this Section 5.1 to the contrary, if, upon a Participant’s Separation from Service, his or her Account Balance, as determined pursuant to Section 5.1, and the Participant’s Discretionary Credit Account, if any, when added to his or her Retirement Account Balance Benefit under the Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan of 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 lump sum within thirty (30) days following his or her Separation from Service. Notwithstanding the foregoing, payment of the Termination Benefit shall not be made prior to the date which is six (6) months after the date of a Participant’s Separation from Service in the case of a Participant who is determined to be a Specified Employee.
5.2    Death Prior to Pay Out.
(a)    Death Prior to Commencement of Payments.  If a Participant dies prior to the payout date that he or she elected for his or her Termination Benefit, his or her Termination Benefit shall be paid to the Participant’s Beneficiary in the survivor form elected by the Participant (lump sum or installments over five (5), ten (10), or fifteen (15) years) commencing in the January immediately after the Participant’s death.  Notwithstanding anything to the contrary herein, the Participant may change his or her elections regarding his or her payment of Termination Benefit upon his or her death by submitting a new Election Form to the Company in accordance with rules established by the Committee, provided, however, that if such election results in potentially later payment date, the election must comply with the requirements of Section 3.6 except that, as permitted by Treasury Regulation Section 1.409A-2(b)(1)(ii), the five (5) year delay described in clause (b) of Section 3.6 shall not apply.
(b)    Death After Commencement.  If a Participant dies after the commencement of the payment of his or her Termination Benefit, but before the Termination Benefit is paid in full, the Participant’s unpaid Termination Benefit payments shall continue and shall be paid to the 

11    

Participant’s Beneficiary over the remaining number of years and in the same amounts as that benefit would have been paid to the Participant had the Participant survived.  
5.3    Payment of Discretionary Credits. Payment of a Participant’s Discretionary Credit Account shall be at the time and in the manner provided in the written award of the Discretionary Credits. If the written award does not specify the time and manner of payment of the Discretionary Credit Account, the Discretionary Credit Account will be paid in a lump sum within thirty (30) days after the Participant’s Separation from Service. Payment of the Discretionary Credit Account shall not be made or commence prior to the date which is six (6) months after the date of a Participant’s Separation from Service in the case of a Participant who is determined to be a Specified Employee.  Unless the written award provides otherwise, if a Participant dies prior to his or her Separation from Service, the Discretionary Credit Account will be paid in a lump sum at the time specified in Section 5.2(a) of the Plan.
ARTICLE 6 
 
Disability Credit
6.1    Disability Credit.
(a)    Eligibility.  By participating in the Plan, all Participants are eligible for this credit.
(b)    Credit for Plan Year of Disability.  A Participant who is determined to be suffering from a Disability, and who is not receiving Base Annual Salary, Year-End Bonus and/or Directors Fees, shall be credited with an amount equal to that portion of the Annual Deferral commitment that would otherwise have been withheld from the Participant’s Base Annual Salary, Year-End Bonus and/or Directors Fees for the Plan Year during which the Participant first suffers Disability, unless the Disability ceases in the Plan Year that it commences, in which case the crediting shall apply only for the period of Disability.
ARTICLE 7 
 
Beneficiary Designation 
7.1    Beneficiary.  Each Participant shall have the right, at any time, to designate his or her Beneficiary (both primary as well as contingent) to receive any benefits payable under the Plan to a Beneficiary upon the death of a Participant.
7.2    Beneficiary Designation and Change; Spousal Consent.  A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Company or its designated agent.  A Participant shall have the right to change a 

12    

Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time to time.  If the Participant names, with respect to more than fifty percent (50%) of his or her benefit under this Plan, someone other than his or her spouse as a Beneficiary, a spousal consent, in the form designated by the Committee, must be signed by that Participant’s spouse and returned to the Company.  Upon submission to the Company of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be cancelled.  The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant prior to his or her death.
7.3    Acknowledgment.  No designation or change in designation of a Beneficiary shall be effective until received by the Company or its designated agent.
7.4    No Beneficiary Designation.  If a Participant fails to designate a Beneficiary as provided in Sections 7.1, 7.2 and 7.3 above, or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Participant’s designated Beneficiary shall be deemed to be his or her surviving spouse with respect to any undistributed benefits.  If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the executor or personal representative of the Participant’s estate.
7.5    Doubt as to Beneficiary.  If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Participant’s Employer to withhold such payments until this matter is resolved to the Committee’s satisfaction.
7.6    Discharge of Obligations.  The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant.
ARTICLE 8 
 
Leave of Absence
8.1    Paid Leave of Absence.  If a Participant is authorized by the Participant’s Employer for any reason to take a paid leave of absence from the employment of the Employer, the Participant shall continue to be considered employed by the Employer and the Annual Deferral shall continue to be withheld during such paid leave of absence in accordance with Section 3.3.
8.2    Unpaid Leave of Absence.  If a Participant is authorized by the Participant’s Employer for any reason to take an unpaid leave of absence from the employment of the Employer, the Participant shall continue to be considered employed by the Employer and the Participant shall be excused from making deferrals until the earlier of the date the leave of absence expires or the 

13    

Participant returns to a paid employment status.  Upon such expiration or return, deferrals shall resume for the remaining portion of the Plan Year in which the expiration or return occurs, based on the deferral election, if any, made for that Plan Year prior to the leave of absence.
8.3    Definition of Leave of Absence.  Whether a Participant is on a leave of absence shall be determined in accordance with the default rules under the regulations issued pursuant to Section 409A.
ARTICLE 9 
 
Termination, Amendment or Modification
9.1    Termination.  Subject to the requirements of Section 409A, each Employer reserves the right to terminate the Plan at any time with respect to Participants whose services are retained by that Employer. Upon the termination of the Plan in accordance with the requirements of Section 409A, a Participant’s Account Balance and Discretionary Credit Account, if any, shall be paid out in accordance with the regulations issued under Section 409A. The termination of the Plan shall not adversely affect any Participant or Beneficiary who has become entitled to the payment of any benefits under the Plan as of the date of termination.
9.2    Amendment.  The Company may, at any time, amend or modify the Plan in whole or in part with respect to any Employer or all Employers, provided, however, that no amendment or modification shall be effective to the extent it would cause an amount to become taxable or be subject to additional taxes on account of such amendment under Section  409A.
ARTICLE 10 
 
Administration
10.1    Committee Duties.  This Plan shall be administered by a Committee, which shall consist of persons approved by the Human Resources Committee of the Company’s Board of Directors.  Members of the Committee may be Participants under this Plan.  The Committee shall also have the discretion and authority to make, amend, interpret, and enforce all appropriate rules and regulations for the administration of this Plan and decide or resolve any and all questions including interpretations of this Plan, as may arise in connection with the Plan.
10.2    Agents.  In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit and may from time to time consult with counsel who may be counsel to any Employer.
10.3    Binding Effect of Decisions.  The decision or action of the Committee with respect to any question arising out of or in connection with the administration, interpretation and application 

14    

of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.
10.4    Indemnity of Committee.  All Employers shall indemnify and hold harmless the members of the Committee against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee or any of its members.
10.5    Employer Information.  To enable the Committee to perform its functions, each Employer shall supply full and timely information to the Committee on all matters relating to the compensation of its Participants, the date and circumstances of the Retirement, Disability, death or Separation from Service of its Participants, and such other pertinent information as the Committee may reasonably require.
ARTICLE 11 
 
Other Benefits and Agreements
11.1    Coordination with Other Benefits.  Except as provided in this Section, the benefits provided for a Participant and Participant’s Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program for employees or directors of the Participant’s Employer.  The Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.
ARTICLE 12 
 
Claims Procedures
12.1    Claims.  Any Participant, Beneficiary or any authorized representative acting on behalf of the Participant or Beneficiary (“Claimant”) claiming benefits, eligibility, participation or any other right or interest under this Plan may file a written claim setting forth the basis of the claim under the procedures set forth in the Pinnacle West Capital Corporation Savings Plan, as amended.
ARTICLE 13 
 
Miscellaneous
13.1    Unsecured General Creditor; Top Hat Plan.  Amounts payable to a Participant or his or her Beneficiary under this Plan shall be paid from the general assets of an Employer.  Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of an Employer.  Any and all of an Employer’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Employer.  An 

15    

Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to pay money in the future and Participants and their Beneficiaries shall be unsecured creditors of the Participant’s Employer. This Plan is intended to provide an unfunded deferred compensation benefit to a select group of management, highly compensated employees and Directors of the Employers and, as a result, should fit within the “Top Hat” exception to many of the requirements of ERISA.  
13.2    Employer’s Liability.  An Employer’s liability for the payment of benefits shall be defined only by the Plan.  An Employer shall have no obligation to a Participant under the Plan except as expressly provided in the Plan.
13.3    Nonassignability.  Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, and all rights to such amounts are expressly declared to be unassignable and non-transferable, except that the foregoing shall not apply to any family support obligations set forth in a court order which is determined by the Committee to be a qualified domestic relations order as defined in Code Section 414(p).  No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.
13.4    Not a Contract of Employment.  The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between any Employer and the Participant.  Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, with or without cause, unless expressly provided in a written employment agreement.  Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of any Employer or to be retained as a Director, or to interfere with the right of any Employer to discipline or discharge the Participant at any time.
13.5    Furnishing Information.  A Participant will cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee may deem necessary.
13.6    Terms.  Whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.

16    

13.7    Captions.  The captions of the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.
13.8    Governing Law.  The provisions of this Plan shall be construed and interpreted according to the laws of the State of Arizona to the extent not preempted by Federal law.
13.9    Validity.  In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provision had never been inserted herein.
13.10    Notice.  Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the addresses indicated below:
If a Participant’s Employer is Pinnacle West Capital Corporation or one of its subsidiaries, then to:
Pinnacle West Capital Corporation 
400 North 5th Street
P.O. Box 53999 
Phoenix, Arizona 85072-3999 
Attn: Manager of Benefit Services 
Station 8460 

Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.
Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by mail, to the last known address of the Participant.
13.11    Successors.  The provisions of this Plan shall bind and inure to the benefit of the Participant’s Employer and its successors and assigns and the Participant, the Participant’s Beneficiaries, and their permitted successors and assigns.
13.12    Spouse’s Interest.  The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor shall such interest pass under the laws of intestate succession.
13.13    Incompetent.  If the Committee, in its discretion, determines that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling 

17    

the disposition of that person’s property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person.  The Committee may require proof of minority, incompetency, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit.  Any payment of a benefit shall be a payment for the account of the Participant and the Participant’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Plan for such payment amount.
13.14    Underpayment or Overpayment of Benefits.  In the event that, through mistake or computational error, benefits are underpaid or overpaid, there shall be no liability for any more than the correct amount of benefits under the Plan.  To the extent permitted by Section 409A, overpayments may be deducted from future payments under the Plan, and underpayments may be added to future payments under the Plan.
13.15    Section 409A.  
(a)    General. This Plan shall be administered in compliance with Section 409A and each provision of the Plan shall be interpreted, to the extent possible, to comply with Section 409A.  Notwithstanding any other provision of this Plan to the contrary, neither the time nor the schedule of any payment under the Plan may be accelerated or subject to a further deferral except as permitted pursuant to Section 409A.  Each Participant remains solely responsible for any adverse tax consequences imposed upon him or her by Section 409A.
(b)    Six Month Delay. For the avoidance of doubt, if a Participant is a Specified Employee at the time of the Participant’s Separation from Service, no payment due upon the Participant’s Separation from Service shall be made prior to the date that is six (6) months following the date of a Participant’s Separation from Service. 
(c)    Distributions Treated as Made Upon a Designated Event. If the Company fails to make any payment in accordance with Article 5, either intentionally or unintentionally, but the payment is made within the time period specified in Treasury Regulation Section 1.409A‐3(d), such payment will be treated as made within the time period specified in the Plan (for example, in situations where the calculation of the amount payable is not administratively practicable, the payment will be treated as made upon the date specified under the Plan if the payment is made during the first taxable year in which the calculation of the amount is practicable).  In addition, if a distribution is not made due to a dispute with respect to such distribution, the distribution may be delayed in accordance with Treasury Regulation Section 1.409A‐3(g).
(d)    Permitted Accelerations.  The Company may accelerate the distributions described in Article 5 upon the occurrence of the events described in Treasury Regulation Section 

18    

1.409A‐3(j)(4), which include, without limitation, an accelerated distribution in the event the Plan fails to meet the requirements of Section 409A.
IN WITNESS WHEREOF the Company has caused this Plan to be executed by its duly authorized officers this 29th day of December 2015.
PINNACLE WEST CAPITAL CORPORATION

		
	By:
	/s/ Donald E. Brandt                

Name: Donald E. Brandt
Its:  Chairman of the Board, President and Chief Executive Officer

19Exhibit

Exhibit 10.3.2

PINNACLE WEST CAPITAL CORPORATION  

SUPPLEMENTAL EXCESS BENEFIT  

RETIREMENT PLAN OF 2005

(as amended and restated effective January 1, 2016)

Table of Contents

		
	ARTICLE 1
	PREAMBLE...........................................................................................................1

		
	ARTICLE 2
	CONSTRUCTION..................................................................................................2

		
	ARTICLE 3
	ELIGIBILITY AND PARTICIPATION..................................................................2

		
	(a)
	Officers...................................................................................................................2

		
	(b)
	Other Approved Participants...................................................................................2

		
	(c)
	Commencement of Participation............................................................................2

		
	(d)
	Status Change.........................................................................................................3

		
	(e)
	Rehires....................................................................................................................3

		
	ARTICLE 4
	BENEFITS..............................................................................................................3

		
	(a)
	Officer Benefits.......................................................................................................3

		
	(b)
	Other Approved Participants...................................................................................6

		
	(c)
	Average Monthly Compensation............................................................................7

		
	(d)
	Disability Accrual...................................................................................................7

		
	(e)
	Recognition of Benefits under Separate Agreements.............................................7

		
	ARTICLE 5
	PAYMENT OF BENEFITS ON AND AFTER JANUARY 1, 2009......................7

		
	(a)
	Officer Traditional Benefits Described in Sections 4(a)(1) and 4(a)(2)(i).............7

		
	(b)
	Spouse’s Benefit with Respect to Officer Traditional Benefits Described in Sections 4(a)(1) and 4(a)(2)(i)................................................................................9

		
	(c)
	Officer Retirement Account Balance Benefits Described in Sections 4(a)(2)(ii) and 4(a)(3).............................................................................................................10

		
	(d)
	Other Approved Participants’ Traditional and Retirement Account Balance Benefits Described in Section 4(b).......................................................................11

		
	(e)
	Change in Time and Form of Payment.................................................................13

		
	(f)
	Cash-Out Provisions.............................................................................................13

		
	(g)
	Reemployment......................................................................................................14

		
	ARTICLE 6
	PAYMENT OF BENEFITS BEFORE JANUARY 1, 2009.................................14

		
	ARTICLE 7
	SECTION 409A COMPLIANCE.........................................................................14

		
	ARTICLE 8
	FUNDING............................................................................................................15

		
	ARTICLE 9
	ADMINISTRATION............................................................................................15

		
	ARTICLE 10
	AMENDMENT AND TERMINATION OF THE PLAN.....................................15

		
	ARTICLE 11
	ASSIGNMENT.....................................................................................................15

		
	ARTICLE 12
	WITHHOLDING..................................................................................................16

		
	ARTICLE 13
	OTHER BENEFIT PLANS OF THE COMPANY...............................................16

		
	ARTICLE 14
	SPOUSAL CONSENT AND BENEFICIARY DESIGNATIONS.......................16

		
	ARTICLE 15
	MISCELLANEOUS.............................................................................................17

	
			
	 
	i
	 

PINNACLE WEST CAPITAL CORPORATION 
SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN OF 2005
ARTICLE 1 
PREAMBLE
Effective January 1, 1987, PINNACLE WEST CAPITAL CORPORATION (the “Company”) adopted the PINNACLE WEST CAPITAL CORPORATION SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN (the “Prior Plan”) for the purpose of paying retirement benefits to certain employees in excess of the benefits permitted to be paid under the Pinnacle West Capital Corporation Retirement Plan (the “Retirement Plan”) by reason of Section 415 of the Internal Revenue Code (the “Code”).  The Prior Plan was thereafter amended several times to provide additional benefits, thereby changing the Prior Plan from an “excess benefit plan” under the Employee Retirement Income Security Act of 1974, as amended (the “Act”), to a “top hat” plan under the Act.
Effective January 1, 1982, ARIZONA PUBLIC SERVICE COMPANY (“APS”) adopted the ARIZONA PUBLIC SERVICE COMPANY SUPPLEMENTAL EXCESS BENEFIT RETIREMENT PLAN (the “APS Plan”) for the purpose of paying retirement benefits to certain employees in excess of the benefits permitted to be paid under the Arizona Public Service Company Employees’ Retirement Plan (the “APS Retirement Plan”) by reason of Section 415 of the Code.  The APS Plan was thereafter amended several times to provide additional benefits, thereby changing the APS Plan from an “excess benefit plan” under the Act to a “top hat” plan under the Act.
Effective January 1, 2000, the Company and APS amended and restated the Prior Plan and the APS Plan to merge the APS Plan into the Prior Plan and to make other technical changes. The Prior Plan was amended several times thereafter.
Effective January 1, 2003, the Company amended the Prior Plan to add a new benefit structure.
Effective December 31, 2004, the Company amended the Prior Plan to “grandfather” from the application of Code Section 409A benefits with respect to only those participants who neither earned nor became vested in a supplemental excess benefit after December 31, 2004.  Only the benefits of such participants are provided under the terms of the Prior Plan.
On December 19, 2008, the Company adopted the Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan of 2005 (the “Plan”) which applies to the entire benefit of any participant who either earned or became vested in all or any portion of his or her benefits on or after January 1, 2005.
By this instrument the Company intends to amend and restate the Plan in its entirety to make certain modifications the Company deems appropriate.  This amended and restated Plan is effective on January 1, 2016 (the “Effective Date”) and only applies to participants who incur a Separation from Service on or after the Effective Date.  The plan document as in effect on the date of the 

1

participant’s Separation from Service will apply to participants who terminate employment prior to the Effective Date.
ARTICLE 2 
 
CONSTRUCTION
Terms capitalized in this Plan shall have the meaning given in Article 2 of the Retirement Plan, governing definitions and construction, except where such terms are otherwise defined in this Plan.  If any provision of this Plan is determined to be invalid or unenforceable for any reason, the remaining provisions shall continue in full force and effect.  All of the provisions of this Plan shall be construed and enforced according to the laws of the State of Arizona, and shall be administered according to the laws of such state, except as otherwise required by the Act, the Code or other applicable federal law.  It is the intention of the Company that the Plan, as adopted by the Company, shall constitute an “unfunded plan of deferred compensation for a select group of management and highly compensated employees” within the meaning of Sections 201(2) and 301(3) of the Act.  Benefits under this Plan shall be paid from the Company’s general assets, and not from any trust fund or other segregated fund, unless paid out of a rabbi trust established by the Company.  The assets of any such rabbi trust shall be subject to the claims of the general creditors of the Company.  This Plan shall be construed in a manner consistent with the Company’s intention.
ARTICLE 3 
 
ELIGIBILITY AND PARTICIPATION
Employees of the Company or its Affiliates who are individually designated as Plan participants by the Human Resources Committee of the Board of Directors of the Company (“Committee”), in its discretion, shall be eligible to participate in the Plan, and such designated individuals shall be considered “Eligible Employees.”
(a)    Officers.  Except as provided by the Committee, Eligible Employees who are officers of the Company or an Affiliate which is a participating employer under the Retirement Plan shall be entitled to the benefits described in Section 4(a).
(b)    Other Approved Participants.  Except as provided by the Committee, Eligible Employees of the Company or an Affiliate which is a participating employer under the Retirement Plan who are not officers shall be entitled to the benefits described in Section 4(b). Such Eligible Employees shall consist of Director level employees unless approved by the Committee.
(c)    Commencement of Participation.  An Eligible Employee shall commence participation in this Plan as of the first day of the Plan Year following (1) the date the Eligible Employee becomes an officer of the Company or an Affiliate or (2) the date the Committee designates him or her as a participant, as applicable.  Such participation shall continue until the date on which the participant is no longer an officer or designated as an Eligible Employee by the Committee.

2

(d)    Status Change.  Notwithstanding the foregoing, if the status of a participant changes for reasons other than separation from service with the Company or an Affiliate which is a participating employer under the Retirement Plan, so that he or she no longer is eligible to participate in the Plan, his or her participation in the Plan shall cease but his or her benefit under this Plan as of the date of his or her change of status shall not be canceled or distributed, but shall be determined upon his or her separation from service with the Company or an Affiliate and distributed at the time or times and in the form set forth below.
(e)    Rehires.  In the event that a Participant terminates employment and is later rehired, he or she shall not be eligible to participate in the Plan again unless such individual is again individually designated as a Plan participant by the Committee following his or her rehire.
ARTICLE 4 
 
BENEFITS
A participant whose entire benefit was both earned and vested on December 31, 2004 (as determined under regulations issued under Code Section 409A) shall receive such benefit under the Prior Plan.  All other participants shall receive their entire benefit under the terms outlined below.  A participant shall only receive a benefit under this Plan if the participant is eligible to receive a vested benefit under the Retirement Plan.
(a)    Officer Benefits.
(1)    Group A Participants.  Subject to Article 7, a participant who is eligible under Section 3(a) and who is a Group A Participant under the Retirement Plan shall be entitled to a monthly benefit for life commencing at age 65 equal to the lesser of (i) or (ii), reduced by (iii), where 
(i)    Equals three percent (3%) of the participant’s Average Monthly Compensation multiplied by the participant’s Years of Service, not to exceed ten (10) Years of Service, plus two percent (2%) of the participant’s Average Monthly Compensation multiplied by the participant’s Years of Service in excess of ten (10) Years of Service,
(ii)    Equals sixty percent (60%) of the participant’s Average Monthly Compensation, and
(iii)    Equals the amount of such participant’s monthly benefit for life at age 65 determined under the terms of the Retirement Plan.
(2)    Group B Participants.  Subject to Article 7 a participant who is eligible under Section 3(a) and who is a Group B Participant under the Retirement Plan shall be entitled to a monthly benefit for life commencing at age 65 equal to the sum of (i) and (ii), where
(i)    Equals the benefit determined under the formula set forth above in this Section 4(a)(1) for a Group A Participant in the Retirement Plan based 

3

on the participant’s Years of Service as of March 31, 2003 and his or her Average Monthly Compensation as of the date of determination.  Years of Service as of March 31, 2003 shall equal his or her full Years of Service as of such date plus a partial Year of Service equal to the lesser of one (1) or a fraction, the numerator of which is the participant’s Hours of Service earned during the period beginning on the day after the last day of his or her Computation Period ending prior to March 31, 2003 and ending on March 31, 2003, and the denominator of which is 1,000, and
(ii)    Equals the monthly benefit for life payable at age 65 which is the Actuarial Equivalent of a lump sum benefit equal to the participant’s Supplemental Retirement Account Balance minus the participant’s Retirement Account Balance under the Retirement Plan. For the avoidance of doubt, if the amount under this Section 4(a)(2)(ii) is a negative number, it will serve as an offset against the amount payable under Section 4(a)(2)(i).
(3)    Group C Participants – General Rule.  Subject to Article 7, a participant who is eligible under Section 3(a) and who is a Group C Participant under the Retirement Plan shall be entitled to a monthly benefit for life commencing at age 65 equal to the Actuarial Equivalent of a lump sum benefit equal to (i) reduced by (ii), where
(i)    Equals the participant’s Supplemental Retirement Account Balance, and
(ii)    Equals the participant’s Retirement Account Balance under the Retirement Plan.
A participant’s Supplemental Retirement Account Balance shall be a notional account credited with Monthly Retirement Account Balance Credits and Interest Credits.  For purposes of this Plan, Monthly Retirement Account Balance Credits shall be determined under the general methodology set forth in the Retirement Plan based on the participant’s Monthly Compensation for the month but using the following chart; provided that, except for a Group C Participant, a participant shall not receive a Monthly Retirement Account Balance Credit after the last day of the calendar year in which he or she is credited with twenty-five (25) Years of Service, with twenty-five years (25) Years of Service defined as twenty-five (25) full twelve (12) month periods in duration.

4

	
		
	

Age at End of Plan 
Year
	Percent of Monthly
Compensation
Contribution Rate

	

Less than 35
	

12%

	35-39
	14%

	40-44
	16%

	45-49
	20%

	50-54
	24%

	55 and over
	28%

	 
	 

(3A)    Group C Participants -- Individuals Becoming Participants on or after January 1, 2011.  The provisions of this Section 4(a)(3A), rather than  Section 4(a)(3), shall apply to an individual who becomes an Officer on or after January 1, 2011.  Subject to Article 7, such an individual who is a participant who is eligible under Section 3(a) and who is a Group C Participant under the Retirement Plan shall be entitled to a monthly benefit for life commencing at age 65 equal to the Actuarial Equivalent of a lump sum benefit equal to (i) reduced by (ii), where
(i)    Equals the participant's Supplemental Retirement Account Balance, and
(ii)    Equals the participant's Retirement Account Balance under the Retirement Plan. 
A Participant’s Supplemental Retirement Account Balance shall be a notional account credited with Monthly Retirement Account Balance Credits and Interest Credits.  For purposes of this Plan, Monthly Retirement Account Balance Credits shall be determined under the general methodology set forth in the Retirement Plan based on the participant’s Monthly Compensation for the month but using the following chart:
	
		
	

Age at End of Plan
Year 
	Percent of Monthly
Compensation
Contribution Rate

	

Less than 35
	

8%

	35-39
	9%

	40-44
	10%

	45-49
	12%

	50-54
	15%

	55 and over
	18%

	 
	 

(4)    Compensation.  For purposes of this Section 4(a), Compensation and Monthly Compensation shall be determined without regard to the limitation set forth in Section 401(a)(17) of the Code and shall be increased by any cash payments made to the participant pursuant to “year-end” bonus or incentive plans maintained by the Company or an Affiliate which 

5

is a participating employer under the Retirement Plan for employees generally and by any amounts deferred by the participant under any of the Company’s or such an Affiliate’s deferred compensation plans for employees.  Bonus or incentive payments made in a form other than cash, bonus or incentive payments which are not “year-end” bonus or incentive payments, bonus or incentive payments under individual agreements between the Company or such an Affiliate and a participant, and large asset bonus plan payments shall not be taken into account as Compensation and Monthly Compensation for purposes of this Plan unless the Company’s President or Chief Executive Officer determines, in his or her discretion, that such bonus or incentive payment shall be taken into account as Compensation and Monthly Compensation under this Plan.  Subject to the foregoing, (a) eligible bonuses and incentive payments (including eligible bonuses and incentive payments paid after termination) shall be taken into account as Compensation and Monthly Compensation in the year in which such amounts are paid rather than in the year in which they are earned, provided that the Company’s President or Chief Executive Officer shall have the authority to determine, in his or her discretion, that such bonus or incentive payment shall be taken into account in the year in which such amounts are earned rather than in the year in which they are paid, (b) Retention Unit Awards granted in a calendar month which become vested shall be counted as Compensation paid and earned in such calendar month; provided, however, that if Retention Unit Awards are taken into account in determining a participant’s Average Monthly Compensation with respect to benefits described in Sections 4(a)(1) or 4(a)(2)(i), no more than two other year-end bonus or incentive payments will be taken into account in determining such Average Monthly Compensation.  The Company’s President or Chief Executive Officer shall have the sole and absolute discretion to determine whether a bonus or incentive payment made to a participant constitutes Compensation or Monthly Compensation for purposes of this Section 4(a) and may differentiate among individuals in establishing the bonus or incentive payments that may be taken into account under the Plan.
(5)    Promotion to Officer Status.  In the event that an Eligible Employee is promoted to officer status, his or her Traditional Benefit and Retirement Account Balance Benefit shall be retroactively calculated as if he or she had served as an officer during the entire period of his or her employment with the Company or any of its Affiliates.  The provisions of this Section 4(a)(5) shall not apply to any individual who is promoted into Officer status on or after January 1, 2011.
(6)    Promotion or Re-Hire into Officer Status On or After January 1, 2011.  For individuals who are promoted into Officer status on or after January 1, 2011 or were an Officer and whose employment terminated and are re-hired as an Officer on or after January 1, 2011, his or her Retirement Account Balance Benefit shall be prospectively calculated as of the date he or she is promoted or re-hired to Officer status and then reduced by the Retirement Plan for service after the date of promotion or re‐hire.
(b)    Other Approved Participants.
Subject to Article 6 and Article 7 any participant who is designated for participation pursuant to Section 3(b) and who receives a benefit under the Retirement Plan, or such participant’s surviving 

6

spouse or beneficiary in the event of the participant’s death, shall be entitled to a benefit payable in accordance with this Article 4 and with Article 5 equal to (i) reduced by (ii), where
(i)    Equals the amount of such participant’s or surviving spouse’s or beneficiary’s benefit under the Retirement Plan computed under the provisions of the Retirement Plan but without regard to the cap on Compensation in Section 2.1(o) and the limitations in Section 5.12 of the Retirement Plan and the provisions of Sections 401(a)(17) and 415 of the Code; and
(ii)    Equals the amount of such participant’s or surviving spouse’s or beneficiary’s benefit which would be payable under the terms of the Retirement Plan if the participant or his or her surviving spouse or beneficiary were to receive payment under the Retirement Plan at the same time and in the same form as benefits are payable under this Plan.
For purposes of this Section 4(b), Compensation shall include any amount of the participant’s regular salary that the participant elects to defer under any deferred compensation plans for employees of the Company or an Affiliate which is a participating employer under the Retirement Plan (including amounts deferred before participation in the Plan commences) and shall exclude all bonus or incentive payments paid to the participant.
(c)    Average Monthly Compensation.
For purposes of computing a participant’s Average Monthly Compensation, such term shall have the same meaning as under the Retirement Plan except that the highest 36 consecutive months of Compensation will be determined based on the participant’s entire period of employment (instead of only the most recent 120 consecutive months of employment as provided in the Retirement Plan).
(d)    Disability Accrual.
A participant who is earning a disability accrual under Section 4.5 of the Retirement Plan shall continue to accrue benefits under this Plan until the earlier of the date disability accrual ceases under the Retirement Plan or the date his or her benefits commence under this Plan.
(e)    Recognition of Benefits under Separate Agreements.
In the event that the Company or an Affiliate enters into a separate agreement with an Eligible Employee which provides that the payment of benefits under the Plan shall be modified as provided in such agreement, the Plan shall be deemed to have been amended to reflect the terms of any such agreement.
ARTICLE 5 
 
PAYMENT OF BENEFITS ON AND AFTER JANUARY 1, 2009
(a)    Officer Traditional Benefits Described in Sections 4(a)(1) and 4(a)(2)(i).

7

(1)    Time for Commencement.  A participant may elect the time for commencement of payment of benefits described in Sections 4(a)(1) and 4(a)(2)(i) on or before the later of December 31, 2008 or the day before the Committee designates the individual as a participant in this Plan.  Any such election shall be irrevocable except as provided in Section 5(e). A participant desiring to make the election described in the preceding sentence may elect to receive his or her benefits described in Sections 4(a)(1) or 4(a)(2)(i) upon the later of separation from service or a specified age after age 55 (age 54 for an individual who has severed from employment before 2009 and, as a result of such severance, has received an additional year of age and service under the Retirement Plan and has therefore become entitled to receive Traditional Benefits under the Retirement Plan at age 54) and on or before age 65.  Such election of a commencement age before age 65 will be effective only if the participant has ten Years of Service upon his or her separation from service.  In the absence of such an election, the participant’s benefits described in Section 4(a)(1) or 4(a)(2)(i) will commence as follows: (i) upon separation from service if at the time of such separation from service he or she has either attained age sixty-five (65) or has both attained age fifty-five (55) and completed ten (10) Years of Service; or (ii) age sixty-five (65) if at the time of such separation from service he or she has neither attained age sixty-five (65) nor both attained age fifty-five (55) and completed ten (10) Years of Service.  Such benefits shall be unreduced if they commence on or after the date on which the participant attains the age of sixty-five (65) years or attains the age of sixty (60) years and is credited with at least twenty (20) Years of Service.  If benefits commence earlier than as provided in the preceding sentence, the portion of his or her benefit calculated in accordance with Section 4(a)(1) or 4(a)(2)(i) shall be reduced by three percent (3%) for each year (or part thereof) by which the participant’s retirement age precedes the date on which he or she would have attained the age of sixty (60) years if he or she is credited with at least twenty (20) Years of Service or the date on which he or she would have attained the age of sixty-five (65) years if credited with less than twenty (20) Years of Service.
(2)    Form of Payment.  This section governs the election of the form of payment of benefits described in Sections 4(a)(1) and 4(a)(2)(i).  A participant may elect to receive such benefits in the form of a life annuity or any joint and survivor annuity form (with the participant’s spouse as joint annuitant) permitted under the Retirement Plan.  In addition, a participant who commences benefits after 2007 shall have a five-year installment option with respect to any benefits payable after 2008 under Sections 4(a)(1) or 4(a)(2)(i).  However, a participant must elect the five-year installment form of benefit on or before the later of December 31, 2008 or the day before the Committee designates the individual as a participant in this Plan.  If a participant has not elected the five-year installment form of benefit as provided in the preceding sentence, then the participant may elect an annuity form of payment at any time up until the date payments are scheduled to commence.  Except as provided in the preceding sentence or in Section 5(e), any such election of the form of payment shall be irrevocable.  In the absence of an election regarding the form of payment, benefits payable to a single participant under Section 4(a)(1) or Section 4(a)(2)(i) shall be payable as a life annuity and to a married participant as a monthly payment to the participant for his or her life equal to the amount determined under Section 4(a)(1) or Section 4(a)(2)(i) and upon his or her death, shall provide monthly payments to the participant’s spouse for life equal to one hundred percent (100%) of the monthly payment being received by the participant at the time of his or her death.  A participant may not elect to receive 

8

such benefits in any form not described in this Section, such as a ten-year certain form described in Section 6.6 of the Retirement Plan or the over-and-under payment method described in Section 6.7 of the Retirement Plan (the “Over-and-Under Payment Method”).
(3)    Actuarial Adjustments – General Rule.  The joint and 50% survivor annuity form shall be fully subsidized (i.e., the amount of the benefit payable for the participant’s life under the joint and 50% survivor annuity shall be equal to the amount of the benefit payable for the participant’s life under the life only benefit).  Alternate joint and survivor payment forms shall be actuarially equivalent to the joint and 50% survivor form, using the same actuarial adjustments as provided under the Retirement Plan.  Prior to January 1, 2016, the five-year installment form shall be actuarially equivalent to the single life annuity (increased for this purpose by the subsidy for the joint and 50% survivor form), but using a discount rate assumption of 6.25% and the mortality table used by the Company for year-end financial reporting purposes for the calendar year preceding the year in which the five-year installment benefit commences.  On or after January 1, 2016, the five‐year installment form shall be actuarially equivalent to the single life annuity (increased for this purpose by the subsidy for the joint and 50% survivor form), but using a discount rate assumption of 6.25% and the “applicable mortality table,” as defined in Section 5.19 of the Retirement Plan used by the Company for the calendar year in which the five‐year installment benefit commences.
(4)    Actuarial Adjustments -- Individuals Becoming Participants on or after January 1, 2011. The provisions of this Section 5(a)(4) rather than Section 5(a)(3), shall apply to an individual who becomes an Officer on or after January 1, 2011.  For such an individual, the joint and 50% survivor annuity form shall not be fully subsidized. In addition, all alternate payment forms shall be actuarially equivalent to a life annuity for the life of the participant alone, with the actuarial equivalency to be determined using the same actuarial adjustments as provided under the Retirement Plan. Prior to January 1, 2016, the five‐year installment form shall be actuarially equivalent to the life annuity, but using a discount rate assumption of 6.25% and the mortality table used by the Company for year-end financial reporting purposes for the calendar year preceding the year in which the five-year installment benefit commences.  On or after January 1, 2016, the five-year installment form shall be actuarially equivalent to the life annuity, but using a discount rate assumption of 6.25% and the “applicable mortality table,” as defined in Section 5.19 of the Retirement Plan used by the Company for the calendar year in which the five-year installment benefit commences.
(b)    Spouse’s Benefit with Respect to Officer Traditional Benefits Described in Sections 4(a)(1) and 4(a)(2)(i).
If a participant entitled to benefits under Section 4(a)(l) or Section 4(a)(2)(i) dies while still employed by the Company or an Affiliate, the participant's spouse shall be entitled to a one hundred percent (100%) survivor annuity.  The one hundred percent (100%) survivor annuity shall provide a benefit to the participant’s surviving spouse, for the spouse’s life, equal to one hundred percent (100%) of the monthly benefit for life that the participant would have received under Section 4(a)(l) or Section 4(a)(2)(i) had he or she (i) terminated employment on the day before he or she died, (ii) survived to the day on which he or she would first be eligible to commence benefits under 

9

Section 5(a), (iii) elected to retire and commence benefits under the Plan and the Retirement Plan in the form of a joint and 100% survivor annuity, and (iv) then died. Benefits payable to the surviving spouse shall commence on the first day of the month following the participant’s date of death.
Benefits payable to any other participant who is entitled to benefits under Section 4(a)(l) or Section 4(a)(2)(i) who has terminated employment with the Company and all Affiliates (a “terminated participant”) and dies prior to commencing benefits also shall be paid in the form of a one hundred percent (100%) survivor annuity.  The one hundred percent (100%) survivor annuity payable to the surviving spouse of a terminated participant shall provide a benefit to the terminated participant’s surviving spouse, for the spouse’s life, equal to one hundred percent (100%) of the monthly benefit for life that the participant would have received under Section 4(a)(l) or Section 4(a)(2)(i) had he or she (i) survived to the day on which he or she would first be eligible to commence benefits under Section 5(a) and (ii) elected to retire and commence benefits under the Plan and the Retirement Plan in the form of a joint and one hundred percent (100%) survivor annuity commencing on the day determined in accordance with the next sentence. The one hundred percent (100%) survivor annuity benefits payable to the surviving spouse of a terminated participant shall commence as follows: (i) upon death if at the time of such death the participant has either attained age sixty-five (65) or has both attained age fifty‐five (55) and completed ten (10) Years of Service; or (ii) age sixty‐five (65) if at the time of such death the participant has neither attained age sixty-five (65) nor both attained age fifty‐five (55) and completed ten (10) Years of Service.
(c)    Officer Retirement Account Balance Benefits Described in Sections 4(a)(2)(ii) and 4(a)(3).
(1)    Time and Form of Payment.  The participant may elect the form and time of payment of benefits described in Section 4(a)(2)(ii) or Section 4(a)(3) on or before the later of December 31, 2008 or the day before the Committee designates the individual as a participant in this Plan.  Any such election shall be irrevocable except as provided in the next sentence or Section 5(e).  Any election of an annuity form of benefit may be changed to any other actuarially equivalent annuity form of benefit on or before the date annuity payments are to begin.  A participant may elect to receive benefits described in Section 4(a)(2)(ii) or Section 4(a)(3) at any time permitted under the Retirement Plan.  A participant may elect to receive benefits described in Section 4(a)(2)(ii) or Section 4(a)(3) in the form of a lump sum, a life annuity, or in any joint and survivor annuity form (with the participant’s spouse as joint annuitant) permitted under the Retirement Plan.  In addition, a participant who commences benefits after 2007 shall have a five-year installment option with respect to any benefits payable after 2008.  A participant may not elect to receive such benefits in any other form, such as the ten-year certain form or the Over-and-Under Payment Method.  In the absence of an election regarding the form of benefits, payments shall be made in a lump sum upon separation from service.
(2)    Actuarial Adjustments – General Rule.  The life annuity form of benefit shall be actuarially equivalent to the participant’s Retirement Account Balance, using the actuarial factors set forth in the Retirement Plan.  The joint and 50% survivor annuity form shall be fully subsidized (i.e., the amount of the benefit payable for the participant’s life under the joint and 50% survivor annuity shall be equal to the amount of the benefit payable for the participant’s life 

10

under the life only annuity benefit).  The other joint and survivor annuity forms of benefit shall be actuarially equivalent to the joint and 50% survivor annuity form of benefit, using the actuarial assumptions in the Retirement Plan.  Prior to January 1, 2016, the five-year installment form shall be actuarially equivalent to the lump sum benefit (increased for this purpose by the subsidy for the joint and 50% survivor form), but using a discount rate assumption of 6.25% and the mortality table used by the Company for year-end financial reporting purposes for the calendar year preceding the year in which the five-year installment benefit commences. On or after January 1, 2016, the five-year installment form shall be actuarially equivalent to the lump sum benefit (increased for this purpose by the subsidy for the joint and 50% survivor form), but using a discount rate assumption of 6.25% and the “applicable mortality table,” as defined in Section 5.19 of the Retirement Plan used by the Company for the calendar year in which the five-year installment benefit commences.
(2A)    Actuarial Adjustments -- Individuals Becoming Participants on or after January 1, 2011.  The provisions of this Section 5(c)(2A), rather than Section 5(c)(2), shall apply to an individual who becomes an Officer on or after January 1, 2011.  For such an individual, the joint and 50% survivor annuity form shall not be fully subsidized. In addition, the life annuity form of benefit shall be actuarially equivalent to the participant’s Retirement Account Balance, using the actuarial factors set forth in the Retirement Plan.  Any joint and survivor annuity forms shall be actuarially equivalent to the life annuity form, using the actuarial factors set forth in the Retirement Plan. Prior to January 1, 2016, the five‐year installment form shall be actuarially equivalent to the lump sum benefit, but using a discount rate assumption of 6.25% and the mortality table used by the Company for year‐end financial reporting purposes for the calendar year preceding the year in which the five-year installment benefit commences.  On or after January 1, 2016, the five-year installment form shall be actuarially equivalent to the lump sum benefit, but using a discount rate assumption of 6.25% and the “applicable mortality table,” as defined in Section 5.19 of the Retirement Plan used by the Company for the calendar year in which the five-year installment benefit commences.
(3)    Payment Upon Death.  If a participant dies before commencement of benefits described in Sections 4(a)(2)(ii) or 4(a)(3), such benefits shall be paid to the participant’s spouse or beneficiary in a lump sum upon the participant’s death.
(d)    Other Approved Participants’ Traditional and Retirement Account Balance Benefits Described in Section 4(b).
(1)    Form of Payment – Traditional Benefits.  This section governs the election of the form of payment of Other Approved Participants' benefits which supplement benefits described in Sections 5.1(a) and 5.1(b) of the Retirement Plan (“Traditional Benefits”).  A participant may elect to receive Traditional Benefits in any form permitted under the Retirement Plan except for the Over-and-Under Payment Method.  In addition, a participant who commences benefits after 2007 shall have a five-year installment option with respect to any Traditional Benefits payable after 2008.  However, a participant must elect the five-year installment form of benefit on or before the later of December 31, 2008 or the day before the Committee designates the individual as a participant in this Plan.  If a participant has not elected the five-year installment 

11

form of benefit as provided in the preceding sentence, then the participant may elect the annuity form of payment of Traditional Benefits at any time up until the date payments are scheduled to commence.  Except as provided in the preceding sentence or in Section 5(e), any such election of the form of payment shall be irrevocable.  In the absence of an election with respect to Traditional Benefits, Traditional Benefits payable to a single participant shall be payable as a life annuity and to a married participant in the form of a joint and 50% survivor annuity with the participant’s spouse as beneficiary.
(2)    Time of Payment – Traditional Benefits.  The participant may elect the time for payment of Traditional Benefits on or before the later of December 31, 2008 or the day before the Committee designates the individual as a participant in this Plan.  Any such election shall be irrevocable except as provided in Section 5(e).  A participant desiring to make the election described in the preceding sentence may elect to receive his or her Traditional Benefits upon the later of separation from service or a specified age after age 55 and on or before age 65.  Such election of a commencement age before age 65 will be effective only if the participant has ten Years of Service upon his or her separation from service.  In the absence of such an election, the participant’s Traditional Benefits will commence as follows: (i) upon separation from service if at the time of such separation from service he or she has either attained age sixty-five (65) or has both attained age fifty-five (55) and completed ten (10) Years of Service; or (ii) age sixty-five (65) if at the time of such separation from service he or she has neither attained age sixty-five (65) nor both attained age fifty-five (55) and completed ten (10) Years of Service.
(3)    Form and Time of Payment – Retirement Account Balance Benefit.  A participant may elect the time and form of payment of his or her benefit which supplements his or her Retirement Account Balance under the Retirement Plan (“Retirement Account Balance Benefit”) on or before the later of December 31, 2008 or the day before the Committee designates the individual as a participant in this Plan.  A participant may elect to receive his or her Retirement Account Balance Benefit at any time and in any form permitted under the Retirement Plan, except for the Over-and-Under Payment Method.  In addition, a participant who commences benefits after 2007 shall have a five-year installment option with respect to any benefits payable after 2008.  However, a participant must elect the five-year installment form of benefit on or before the later of December 31, 2008 or the day before the Committee designates the individual as a participant in this Plan.  Any election of a form or time of payment for his or her Retirement Account Balance Benefit shall be irrevocable except as provided in the next sentence or Section 5(e).  If a participant elects an annuity form of payment for his or her Retirement Account Balance Benefit, such election may be changed to another actuarially equivalent annuity form available under the Retirement Plan at any time on or before annuity payments are scheduled to commence.  In the absence of an election, his or her Retirement Account Balance Benefit shall be paid in a lump sum upon separation from service.
(4)    Actuarial Adjustments.  Alternate payment forms described in this Section 5(d) (other than the five-year installment form) shall be actuarially equivalent using the assumptions provided under the Retirement Plan.  Prior to January 1, 2016, the five-year installment form shall be actuarially equivalent to the single life annuity for the Traditional Benefit or the lump sum for the Retirement Account Balance Benefit, but using a discount rate assumption 

12

of 6.25% and the mortality assumption used by the Company for year-end financial reporting purposes for the calendar year preceding the year in which the five-year installment benefit commences.  On or after January 1, 2016, the five-year installment form shall be actuarially equivalent to the single life annuity for the Traditional Benefit or the lump sum for the Retirement Account Balance Benefit, but using a discount rate assumption of 6.25% and the “applicable mortality table,” as defined in Section 5.19 of the Retirement Plan used by the Company for the calendar year in which the five-year installment benefit commences.
(5)    Time and Form of Benefits Payable Upon Death.  In the event a participant dies before Traditional Benefits described in Section 4(b) commence, benefits shall be paid to the surviving spouse for his or her life commencing as follows: (i) upon death if at the time of such death the participant has either attained age sixty-five (65) or has both attained age fifty-five (55) and completed ten (10) Years of Service; or (ii) age sixty-five (65) if at the time of such death the participant has neither attained age sixty-five (65) nor both attained age fifty-five (55) and completed ten (10) Years of Service.  In the event that the participant dies before Retirement Account Balance Benefits described in Section 4(b) commence to the participant, then such benefits shall be paid to the participant’s spouse or beneficiary in a lump sum upon the participant’s death.
(e)    Change in Time and Form of Payment.
A participant may change an election as to the time and form of payment of his or her benefits if an election is filed in accordance with rules established by the Committee, provided (i) such election must not take effect until at least twelve months after the date on which the election is properly filed, (ii) the first payment with respect to which such election is made must be deferred for a period of not less than five years from the date such payment would otherwise have been made, and (iii) any election related to a payment that was otherwise to be made at a specified time may not be made less than twelve months prior to the date of the first scheduled payment.  Any such change in election must provide for payment at a time permitted under the Retirement Plan and a form permitted under this Plan.
(f)    Cash-Out Provisions.
(1)    If the present value of a participant’s or Spouse’s or Vested Survivor’s vested Traditional Benefit under the Plan is less than the limit described in Code Section 402(g) upon the participant’s death, retirement, or other separation from service which occurs after 2008, the participant’s or Spouse’s or Vested Survivor’s vested Traditional Benefit shall immediately be distributed in a single lump sum.  If the value of a participant’s or Spouse’s or Vested Survivor’s vested Retirement Account Balance Benefit plus the participant’s vested benefit under the Pinnacle West Capital Corporation Deferred Compensation Plan of 2005 for Employees of Pinnacle West Capital Corporation and Affiliates is less than the limit described in Code Section 402(g) upon the participant’s retirement, death, or other separation from service which occurs after 2008, such vested Retirement Account Balance Benefit shall immediately be distributed in a single lump sum.  The benefits of a non-vested participant shall automatically be deemed to be cashed out pursuant to this Section 5(f) upon such participant’s separation from service.

13

(2)    For purposes of calculating the present value of a participant’s vested benefits, the Spouse’s Benefit or the Vested Survivor’s Benefit, the actuarial assumptions incorporated by reference in Section 2.1(c) of the Retirement Plan shall be used, but in no event shall such present value be less than the present value calculated using the “applicable interest rate” and “applicable mortality table,” as defined in Section 5.19 of the Retirement Plan.
(g)    Reemployment.
For the avoidance of doubt, once benefits under this Plan have commenced, such benefits shall not be suspended as a result of the participant’s reemployment by the Company or an Affiliate.
ARTICLE 6 
 
PAYMENT OF BENEFITS BEFORE JANUARY 1, 2009
A participant who separates from service before January 1, 2009 and who begins receiving payment of his or her benefits under the Retirement Plan before January 1, 2009 shall receive benefits under this Plan in the same manner and at the same time as the participant’s benefits under the Retirement Plan are paid.  Notwithstanding the foregoing, a participant who terminated employment after December 31, 2007 will be entitled to change the form of payments of his or her unpaid benefits as of December 31, 2008 under this Plan to the five-year installment option by filing a special election on or before December 31, 2008.  Such special election shall only apply to benefits payable after December 31, 2008.
ARTICLE 7 
 
SECTION 409A COMPLIANCE
If a benefit becomes payable under this Plan to a specified employee, payments due within six months following separation from service shall be delayed and distributed as a single payment on the first day of the seventh month immediately following the participant’s separation from service, with simple interest added to such payments from the date they otherwise would have been paid at the crediting rate in effect under the Retirement Plan.  The terms “separation from service” and “specified employee” shall have the meaning set forth in Section 409A of the Code, the regulations thereunder, and the resolution issued by the Board of Directors of the Company defining such terms, except that a separation from service shall not include separation by reason of death.
This Plan shall be administered in compliance with Section 409A and each provision of the Plan shall be interpreted, to the extent possible, to comply with Section 409A.  Notwithstanding any other provision of this Plan to the contrary, neither the time nor the schedule of any payment under the Plan may be accelerated or subject to a further deferral except as permitted pursuant to Section 409A.  Each participant remains solely responsible for any adverse tax consequences imposed upon him or her by Section 409A.
If the Company fails to make any payment in accordance with Article 5, either intentionally or unintentionally, but the payment is made within the time period specified in Treasury Regulation 

14

Section 1.409A‐3(d), such payment will be treated as made within the time period specified in the Plan (for example, in situations where the calculation of the amount payable is not administratively practicable, the payment will be treated as made upon the date specified under the Plan if the payment is made during the first taxable year in which the calculation of the amount is practicable).  In addition, if a distribution is not made due to a dispute with respect to such distribution, the distribution may be delayed in accordance with Treasury Regulation Section 1.409A‐3(g).
The Company may accelerate the distributions described in Article 5 upon the occurrence of the events described in Treasury Regulation Section 1.409A‐3(j)(4), which include, without limitation, an accelerated distribution in the event the Plan fails to meet the requirements of Section 409A.
ARTICLE 8 
 
FUNDING
Benefits under this Plan shall be payable from the general assets of the Company and shall not be segregated in a trust fund or otherwise funded in any manner prior to the time of payment.  No Plan participant shall have any vested rights hereunder nor any right hereunder to any specific assets of the Company.
ARTICLE 9 
 
ADMINISTRATION
The Plan will be administered by the Administrative Committee that administers the Retirement Plan.  Except as otherwise expressly provided in this Plan, the Administrative Committee shall have the same powers and responsibilities as it has under Sections 10.3 and 10.4 of the Retirement Plan.  Claims for benefits under the Plan shall be determined in the manner set forth in Article 11 of the Retirement Plan.
ARTICLE 10 
 
AMENDMENT AND TERMINATION OF THE PLAN
The Plan may be amended in whole or in part, prospectively or retroactively, by action of the Company’s Board of Directors, and may be terminated at any time by action of the Board of Directors in accordance with the requirements of Code Section 409A and the regulations issued thereunder; provided, however, that no such amendment or termination shall reduce any amount payable hereunder to the extent such amount accrued prior to the date of amendment or termination.  All amendments shall be in writing, approved by the Company’s Board of Directors and executed by a duly authorized officer of the Company.
ARTICLE 11 
 
ASSIGNMENT

15

No Plan participant or beneficiary of a Plan participant shall have any right to assign, pledge, hypothecate, anticipate or any way create a lien on any amounts payable hereunder.  No amounts payable hereunder shall be subject to assignment or transfer or otherwise be alienable, either by voluntary or involuntary act, or by operation of law, or be subject to attachment, execution, garnishment, sequestration or other seizure under any legal, equitable or other process, or be liable in any way for the debts or defaults of Plan participants and their beneficiaries.  Notwithstanding the foregoing, assignments of the benefits provided under this Plan shall be permitted for purposes of satisfying family support obligations if such assignments are pursuant to a court order which satisfies the requirements for a “qualified domestic relations order” as defined in Section 206(d)(3) of the Act.
ARTICLE 12 
 
WITHHOLDING
Any taxes required to be withheld from payments to the Plan participants hereunder and any FICA taxes that may become due prior to the commencement of payments hereunder shall be deducted and withheld by the Company from the payments due under this Plan or any other payments that may become due (i.e., regular salary) to the participant.
ARTICLE 13 
 
OTHER BENEFIT PLANS OF THE COMPANY
Nothing contained in this Plan shall prevent a Plan participant prior to his or her death, or his or her spouse or other beneficiary after his or her death, from receiving, in addition to any payments provided for under this Plan, any payments provided for under the Retirement Plan or under The Pinnacle West Capital Corporation Savings Plan, or which would otherwise be payable or distributable to him or her, his or her surviving spouse or beneficiary under any plan or policy of the Company or otherwise.  Nothing in this Plan shall be construed as preventing the Company or any of its subsidiaries from establishing any other or different plans providing for current or deferred compensation for employees.
ARTICLE 14 
 
SPOUSAL CONSENT AND BENEFICIARY DESIGNATIONS
To the extent required by the Company, a participant must obtain the consent of his or her spouse to a form of benefit under which the spouse does not receive a survivor annuity or to a beneficiary designation under which the spouse is not designated as the beneficiary.  A participant may designate his or her beneficiary to receive Retirement Account Benefits which have not yet commenced upon his or her death.  In the absence of any such beneficiary designation, the participant’s beneficiary designation under the Retirement Plan shall control or, in the absence of any such designation under the Retirement Plan, the participant’s Retirement Account Benefits shall be paid to the same person or entity as under the Retirement Plan.  A participant may also designate a beneficiary to receive any remaining installment payments due upon his or her death under the 

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five-year installment option.  In the absence of any such designation, the remaining installment payments shall be paid to his or her spouse if he or she is living on the date of the participant’s death or, in the absence of any such spouse, to his or her estate.
ARTICLE 15 
 
MISCELLANEOUS
Nothing contained in this Plan shall be construed as a contract of employment between the Company and an employee, or as a right of any employee to be continued in the employment of the Company, or as a limitation of the right of the Company to discharge any of its employees, with or without cause.
All of the provisions of this Plan shall be binding upon all persons who shall be entitled to any benefit hereunder, their heirs and personal representatives.
IN WITNESS WHEREOF, the Company has caused this Pinnacle West Capital Corporation Supplemental Excess Benefit Retirement Plan, as amended and restated herein, to be executed by its duly authorized officer this 29th day of December 2015.
PINNACLE WEST CAPITAL CORPORATION

		
	By:
	/s/ Donald    E. Brandt                

Name:  Donald E. Brandt                
Its:    Chairman of the Board, President and Chief Executive Officer                    

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