PINNACLE WEST CAPITAL CORPORATION
AND ARIZONA PUBLIC SERVICE COMPANY
DIRECTORS' RETIREMENT PLAN
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TABLE OF CONTENTS
ARTICLE ONE - DEFINITIONS AND CONSTRUCTION.....................................1
1.1 Definitions..........................................................1
1.2 Construction.........................................................2
ARTICLE TWO - PARTICIPATION AND SERVICE........................................3
2.1 Participation........................................................3
2.2 Limitation on Years of Service.......................................3
ARTICLE THREE - REQUIREMENTS FOR BENEFITS......................................3
3.1 Pension Entitlement..................................................3
3.2 Death of a Participant...............................................4
3.3 Pension Forfeiture...................................................4
3.4 Non-Duplication of Benefits..........................................4
ARTICLE FOUR - DETERMINATION OF BENEFITS.......................................4
4.1 Amount and Form of Benefit Payment...................................4
4.2 Commencement and Form of Benefits....................................4
4.3 Payment of Benefits..................................................4
ARTICLE FIVE - INALIENABILITY OF BENEFITS......................................5
5.1 No Assignment Permitted..............................................5
ARTICLE SIX - PLAN ADMINISTRATION..............................................6
6.1 Appointment..........................................................6
6.2 Powers...............................................................6
6.3 Indemnification......................................................6
6.4 Claims Procedure.....................................................6
ARTICLE SEVEN - AMENDMENT AND TERMINATION......................................7
7.1 Amendment............................................................7
7.2 Right to Terminate...................................................7
ARTICLE EIGHT - MISCELLANEOUS..................................................7
8.1 Funding..............................................................7
8.2 Duration.............................................................8
8.3 Limitation on Participant's Rights...................................8
8.4 Heirs and Successors.................................................8
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PINNACLE WEST CAPITAL CORPORATION
AND ARIZONA PUBLIC SERVICE COMPANY
DIRECTORS' RETIREMENT PLAN
PREAMBLE
Effective January 1, 1995, PINNACLE WEST CAPITAL CORPORATION (the
"Company") adopted the PINNACLE WEST CAPITAL CORPORATION AND ARIZONA PUBLIC
SERVICE COMPANY DIRECTORS' RETIREMENT PLAN (the "Plan") to provide retirement
benefits to those members of the Boards of Directors of the Company and Arizona
Public Service Company ("APS") who are not employees of the Company, APS or
their subsidiaries. By this amendment and restatement of this Plan in its
entirety, the Company intends to amend the Plan to cease future benefit
accruals, increase the benefits of all directors, authorize the Company to pay
the benefits accrued by active directors in a lump sum in Company stock, and
grant the Company the discretion to pay the benefits accrued by former directors
in a lump sum, in cash or stock at any time in the future.
ARTICLE ONE
DEFINITIONS AND CONSTRUCTION
1.1 DEFINITIONS. When a word or phrase shall appear in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be a term defined in this Section 1.1. The
following words and phrases with the initial letter capitalized shall have the
meanings set forth in this Section 1.1, unless a clearly different meaning is
required by the context in which the word or phrase is used:
(a) "Actuarially Equivalent" - Of equal value when computed on the
basis of the actuarial assumptions and tables used for purposes of
determining actuarial equivalency at the time the benefit is computed.
Actuarial Equivalence shall be determined on the basis of the factors and
assumptions set forth below:
(i) an interest rate of six percent (6%) per annum;
(ii) the 1983 Group Annuity Mortality Table (50/50 Blend); and
(iii) a retirement age of sixty-five (65) unless the Participant
had attained age sixty-five (65) prior to January 1, 1995, in which
case the retirement age shall be age seventy (70).
(b) "APS" - Arizona Public Service Company and each corporation that
succeeds to substantially all of its assets and elects to continue its
participation in this Plan.
(c) "Board" - The Boards of Directors of the Company or APS.
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(d) "Code" - The Internal Revenue Code of 1986, as the same may
hereafter be amended from time to time.
(e) "Company" - PINNACLE WEST CAPITAL CORPORATION and each corporation
that succeeds to substantially all of its assets and elects to continue its
participation in this Plan.
(f) "Director" - An individual serving on the Boards of Directors of
the Company or APS.
(g) "Effective Date" - June 21, 2000.
(h) "Participant" - A Director who has satisfied the eligibility
requirements set forth in Section 2.1 prior to the Effective Date.
(i) "Plan" - The PINNACLE WEST CAPITAL CORPORATION AND ARIZONA PUBLIC
SERVICE COMPANY DIRECTORS' RETIREMENT PLAN, as set forth in this
instrument, and as it may hereafter be amended from time to time.
(j) "Plan Administrator" - The person or committee appointed by the
Board of Directors of the Company to administer the Plan. Unless otherwise
determined by the Company's Board of Directors, on and after the Effective
Date, the Plan Administrator shall be the Vice President and Secretary of
the Company.
(k) "Retirement Plan" - The Pinnacle West Capital Corporation
Retirement Plan or any other defined benefit pension plan within the
meaning of Section 414(j) of the Code maintained by the Company, APS or
their subsidiaries.
(l) "Year of Service" - Each twelve (12) consecutive month period
during which the Director served as a member of the Board, commencing on
the date on which the Director is or was first elected to the Board of
either the Company or APS. If a Director ceases to serve on the Board and
is later reelected as a member of the Board, for purposes of measuring
Years of Service following reelection, the twelve (12) consecutive month
period shall be measured from the date of the Director's re-election to the
Board and from each anniversary thereof, and shall be aggregated with such
Director's prior Years of Service. In the event that a Director's term on
the Board ends, or the Director reaches age sixty-five (65), other than on
the date of the Director's anniversary, Years of Service shall include the
entirety of such partial year, through the next anniversary date, only if
more than six (6) months have elapsed since the last anniversary of the
Director's election or reelection to the Board.
1.2 CONSTRUCTION. The masculine gender, where appearing in this Plan, shall
include the feminine gender, and vice-versa, and the singular may include the
plural, unless the context clearly indicates to the contrary. Headings and
subheadings are for the purpose of reference only and are not to be considered
in the construction of this
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Plan. The term "delivered to the Plan Administrator," as used in this Plan,
shall include delivery to a person or persons designated by the Plan
Administrator for the disbursement and receipt of administrative forms. Delivery
shall be deemed to have occurred only when the form or other communication is
actually received. If any provision of this Plan is determined to be for any
reason invalid or unenforceable, 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 law.
ARTICLE TWO
PARTICIPATION AND SERVICE
2.1 PARTICIPATION. Each Director who is serving on the Board of Directors
of the Company or APS who is not at the same time an employee of the Company,
APS or their subsidiaries on the Effective Date, shall be a Participant as of
the Effective Date. Each Director who is not a Participant as of the Effective
Date shall become a Participant as of the date he or she first becomes a member
of the Board of Directors of the Company or APS; provided, however, that if such
person is an employee of the Company, APS or their subsidiaries, such person
shall become a Participant on the day that such employee status ceases.
Notwithstanding the foregoing, (a) a Director who is receiving or entitled to
receive a pension from the Retirement Plan shall not be eligible to participate
in this Plan, and (b) a Director who becomes a member of the Board on or after
the Effective Date shall not be eligible to participate in the Plan.
2.2 LIMITATION ON YEARS OF SERVICE. The following Years of Service shall be
disregarded for purposes of this Plan: (a) Years of Service completed by a
Participant while he or she was an employee of the Company, APS or their
subsidiaries, (b) subject to Section 1.1(l), Years of Service completed by a
Participant after attaining age sixty-five (65), provided that Years of Service
for a Participant who was a Director as of January 1, 1995, and who first became
a Director after attaining age sixty-five (65), shall include such Participant's
actual Years of Service, and (c) Years of Service completed on or after the
Effective Date.
ARTICLE THREE
REQUIREMENTS FOR BENEFITS
3.1 PENSION ENTITLEMENT. Subject to Sections 3.2 and 3.3, a Participant
shall have a non-forfeitable right to a pension benefit under this Plan upon the
completion of one Year of Service or if he or she is serving as a Director on
the Effective Date.
3.2 DEATH OF A PARTICIPANT. Except as otherwise provided in Section 4.2(e),
no death benefits shall be paid from this Plan on account of a Participant who
dies prior to the commencement of benefits or prior to receiving all of the
benefits to which he or she would otherwise be entitled under this Plan.
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3.3 PENSION FORFEITURE. Notwithstanding any provision to the contrary in
the Plan, a Participant shall not receive any pension under this Plan if he or
she is receiving, or is entitled to receive, a pension from the Retirement Plan,
or if the Participant has been found by a unanimous vote of the Company's Board
of Directors (but excluding that Participant) to have acted in bad faith in the
performance of his or her duties as a Director.
3.4 NON-DUPLICATION OF BENEFITS. A Participant who serves on the Board of
Directors of both the Company and APS shall be entitled to only one pension
under the Plan, with such pension to be attributable to, and paid by, whichever
company with respect to which the Participant had accumulated the greatest
number of Years of Service as a Director.
ARTICLE FOUR
DETERMINATION OF BENEFITS
4.1 AMOUNT OF BENEFIT PAYMENT. (a) The benefits accrued by each Participant
who is serving as a Director as of the Effective Date shall be equal to the
amount reflected on Exhibit A to this Plan.
(b) Except as otherwise provided in Section 4.2, the benefits payable to
each Participant who is not serving as a Director as of the Effective Date shall
be equal to the benefit accrued by such Participant under the terms of the Plan
as in effect prior to the Effective Date.
4.2 COMMENCEMENT AND FORM OF BENEFITS. (a) For a Participant who is serving
as a Director as of the Effective Date, the benefits accrued by that Participant
under Section 4.1(a) shall be paid to the Participant in a lump-sum in Common
Stock of the Company. Such lump sum payment shall be paid as soon as practicable
following the Effective Date.
(b) For a Participant who is not serving as a Director as of the Effective
Date, the benefit accrued by that Participant, as determined under Section
4.1(b), shall be paid to the Participant in the form of a monthly annuity on the
first business day of each month, commencing on the first business day of the
month following the later of (a) the month in which the Participant is no longer
serving as a member of the Board, or (b) the month in which the Participant
attains age sixty-five (65). Upon retirement from the Board, a Participant's
benefits shall be determined as of the last day of the month in which he or she
attains age sixty-five (65).
(c) Notwithstanding the foregoing, the President and Chief Executive
Officer of the Company may, in his discretion, direct the Company, at any time
following the Effective Date, to pay a Participant entitled to benefits under
Section 4.2(b) a lump sum in lieu of the monthly annuity otherwise payable to
that Participant. Each Participant's lump sum payment shall be equal to the sum
of (i) an amount which is Actuarially Equivalent to his or her monthly annuity
(adjusted to take into account amounts previ-
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ously paid to the Participant under this Plan), and (ii) an amount equal to
twenty percent (20%) of the amount determined under Section 4.2(c)(i). The
President and Chief Executive Officer of the Company may, in his discretion,
direct the Company to pay such lump sum payment in cash or Common Stock of the
Company.
(d) For purposes of this Section 4.2, the value of the Company Common Stock
distributed to a Participant under this ARTICLE FOUR shall be equal to (i) for
Participants who are described in Section 4.2(a), the lesser of (A) the closing
price of such stock on the New York Stock Exchange on the Effective Date, or (B)
the average closing price of such stock on the New York Stock Exchange for the
five (5) trading days immediately preceding the Effective Date, and (ii) for
Participants described in Section 4.2(b), the lesser of (A) the date specified
by the President and Chief Executive Officer of the Company as the date on which
the lump sum payable to such Participant shall be determined (the "conversion
date"), or (B) the average closing price of such stock on the New York Stock
Exchange for the five (5) trading days immediately preceding the conversion
date. If the number of shares to be paid to a Participant, determined by
dividing the share price (as determined above) by the Participant's lump sum
amount, would result in the Participant being entitled to a number of shares
which is not divisible by ten (10), that number shall be rounded up to the next
whole number which is divisible by ten (10), and the Participant shall receive
that number of shares.
(e) If a Participant entitled to a lump sum payment under Section 4.2(a) or
(c) dies prior to receipt of that payment, the amount payable shall be paid to
the Participant's estate.
ARTICLE FIVE
INALIENABILITY OF BENEFITS
5.1 No Assignment Permitted. No Participant and no creditor of a
Participant shall have any right to assign, pledge, hypothecate, anticipate or
in any way create a lien upon the benefits payable under this Plan. Except as
provided in Section 4.2(e), all payments to be made to Participants, excepting
persons under legal disability, shall be made only upon their personal receipts
or endorsements, and no interest in the Plan shall be subject to assignment or
transfer or otherwise be alienable, either by voluntary or involuntary act or by
operation of law or equity, or subject to attachment, execution, garnishment,
sequestration, levy or other seizure under any legal, equitable or other
process, or be liable in any way for the debts or defaults of Participants. This
Section 5.1 shall, however, not preclude assignments or alterations pursuant to
a court order for purposes of satisfying the Participant's family support
obligations.
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ARTICLE SIX
PLAN ADMINISTRATION
6.1 APPOINTMENT. The Board of Directors of the Company shall appoint the
Plan Administrator. Members of the Board and officers and employees of the
Company and its subsidiaries may serve as the Plan Administrator.
6.2 POWERS. The Plan Administrator shall have the discretionary power and
authority to perform the administrative duties of the Plan Administrator as
described in the Plan or required for proper administration of the Plan, and
shall have all powers necessary to enable it to properly carry out such duties.
Without limiting the generality of the foregoing, the Plan Administrator shall
have the power and discretion to construe and interpret the Plan, to determine
all questions of meaning or interpretation that shall arise under the Plan, to
hear and determine claims relating to the Plan as provided in Section 6.4 of the
Plan, and to decide all questions relating to the eligibility to participate in
the Plan, to decide all questions relative to the determination of Years of
Service, status, and rights of a Participant, and to determine the manner and
time of payment of benefits under the Plan. All benefit disbursements shall be
made upon the written instructions of the Plan Administrator. The decisions of
the Plan Administrator shall be binding and conclusive upon all persons. The
Plan Administrator shall file all reports and forms lawfully required to be
filed and shall distribute any forms, reports, statements or plan descriptions
lawfully required to be distributed to Participants and others.
6.3 INDEMNIFICATION. To the extent permitted by law, the Company may, but
shall not be required to, indemnify and agree to hold harmless its employees,
agents and the Plan Administrator from all loss, damage, or liability, joint or
several, including payment of expenses in connection with defense against any
such claim, for their acts, omissions and conduct, and for the acts, omissions
and conduct of their duly appointed agents, which acts, omissions, or conduct
constitutes or is alleged to constitute a breach of such individual's fiduciary
or other responsibilities under any law, except for those acts, omissions, or
conduct resulting from his or her own willful misconduct, willful failure to
act, or gross negligence; provided, however, that if any party would otherwise
be entitled to indemnification hereunder with respect to any liability and such
party shall be insured against loss as a result of such liability by any
insurance contract or contracts, such party shall be entitled to indemnification
hereunder only to the extent by which the amount of such liability shall exceed
the amount thereof payable under such insurance contract or contracts. The
Company may obtain insurance covering itself and others for breaches of
fiduciary obligations under the Plan to the extent permitted by law, and nothing
in this Plan shall restrict the right of any person to obtain such insurance for
himself in connection with the performance of his or her duties under the Plan.
6.4 CLAIMS PROCEDURE. If a Participant disagrees with the Plan
Administrator's determination regarding his or her eligibility for a pension or
the amount of such pension, the affected Participant may, within thirty (30)
days after receiving the Plan Administrator's written notice of that decision,
request in writing a review of his or her claim by the Plan Administrator. The
written statement requesting that review should set forth
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the Participant's reasons supporting the claim. If the claimant does not request
a review meeting within thirty (30) days after receiving written notice of the
Plan Administrator's decision, the Participant shall be deemed to have accepted
the Plan Administrator's decision. A decision on review shall be rendered in
writing by the Plan Administrator not later than sixty (60) days after review,
and a written copy of such decision shall be delivered to the Participant. To
the extent permitted by law, a decision on review by the Plan Administrator
shall be binding and conclusive upon all persons whomsoever. To the extent
permitted by law, the claims procedures described in this Section 6.4 shall be a
mandatory precondition that must be complied with prior to commencement of a
legal or equitable action in connection with the Plan by a Participant or a
person claiming rights through a Participant. The Plan Administrator may, in his
or her sole discretion, waive these procedures as a mandatory precondition to
such an action.
ARTICLE SEVEN
AMENDMENT AND TERMINATION
7.1 AMENDMENT. The Company shall have the right at any time to modify,
alter or amend this Plan. An amendment shall be in writing, approved by the
Board of Directors of the Company, and executed by a duly authorized officer of
the Company. Any such modification, alteration or amendment may be in whole or
in part and may be prospective or retroactive; provided that no amendment shall
reduce any Participant's vested benefit determined as of the date the amendment
is adopted.
7.2 RIGHT TO TERMINATE. The Company shall have the right to terminate the
Plan, completely or partially, at any time. The termination of the Plan shall
not reduce the pension benefit of any Participant determined as of the Plan's
termination date. The Plan shall be terminated as of the effective Date,
provided that it shall continue in existence until all benefits accrued under
the Plan as of the Effective Date have been paid.
ARTICLE EIGHT
MISCELLANEOUS
8.1 FUNDING. Benefits payable under the Plan shall be paid from the general
assets of the Company or APS as to each company's own directors. Participants
shall be unsecured creditors of the Company or APS and shall have no legal or
equitable rights, interest or claims in any property or assets of the Company,
APS or their subsidiaries.
8.2 DURATION. The Plan shall continue in full force and effect for the
maximum period permitted under applicable law, subject to the Company's right to
amend the Plan and to terminate the Plan as provided in ARTICLE SEVEN of the
Plan.
8.3 LIMITATION ON PARTICIPANT'S RIGHTS. Nothing contained in the Plan shall
be deemed to give any individual the right to be retained as a Director.
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8.4 HEIRS AND SUCCESSORS. All of the provisions of the Plan shall be
binding upon all persons who shall be entitled to any benefits under the Plan,
their heirs and legal successors.
IN WITNESS WHEREOF, PINNACLE WEST CAPITAL CORPORATION has caused this Plan
to be executed by its duly authorized officers, this ____ day of June, 2000.
PINNACLE WEST CAPITAL CORPORATION
By
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Its
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EXHIBIT A
Director Lump Sum Amount
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Edward N. Basha $ 19,297
Michael L. Gallagher $ 21,711
Pamela Grant $116,757
Roy A. Herberger, Jr. $ 55,210
Martha O. Hesse $ 59,974
William S. Jamieson, Jr. $ 56,289
Humberto S. Lopez $ 31,713
Robert G. Matlock $ 47,516
Kathryn L. Munro $ 6,050
Bruce J. Nordstrom $ 15,928
