EXHIBIT 10.7a
PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
SUNCOR DEVELOPMENT COMPANY
AND
EL DORADO INVESTMENT COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PLAN
Amended and Restated Effective as of January 1, 1992
TABLE OF CONTENTS
Page
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 Selection, Enrollment and Eligibility . . . . . . . . . . . . 5
2.1 Selection by Committee . . . . . . . . . . . . . . . . . . 5
2.2 Enrollment Requirements . . . . . . . . . . . . . . . . . . 6
2.3 Eligibility; Commencement of Participation . . . . . . . . 6
ARTICLE 3 Vesting; Account Balance Allocation . . . . . . . . . . . . . 6
3.1 Vesting in Change in Control Benefit . . . . . . . . . . . 6
3.2 Account Balance Allocations . . . . . . . . . . . . . . . . 7
ARTICLE 4 Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Change in Control Benefit . . . . . . . . . . . . . . . . . 7
4.2 Employer Benefit . . . . . . . . . . . . . . . . . . . . . 7
4.3 Withholding and Payroll Taxes . . . . . . . . . . . . . . . 8
ARTICLE 5 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Beneficiary Designation; Change; Spousal Consent . . . . . 8
5.3 Acknowledgment . . . . . . . . . . . . . . . . . . . . . . 8
5.4 No Beneficiary Designation . . . . . . . . . . . . . . . . 8
5.5 Doubt as to Beneficiary . . . . . . . . . . . . . . . . . . 8
5.6 Discharge of Obligations . . . . . . . . . . . . . . . . . 9
ARTICLE 6 Termination, Amendment or Modification of the Plan . . . . . 9
6.1 Termination, Amendment or Modification Prior to One Year
Before Change in Control . . . . . . . . . . . . . . . . . 9
6.2 Termination, Amendment or Modification Within One Year
Before Change of Control or Following Change in Control . . 9
6.3 Termination of Plan Agreement . . . . . . . . . . . . . . . 10
ARTICLE 7 Other Benefits and Agreements . . . . . . . . . . . . . . . . 10
7.1 Coordination with Other Benefits . . . . . . . . . . . . . 10
ARTICLE 8 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8.1 Establishment of the Trust . . . . . . . . . . . . . . . . 11
8.2 Interrelationship of the Plan and the Trust . . . . . . . . 11
8.3 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 9 Insurance Policies . . . . . . . . . . . . . . . . . . . . . 12
9.1 Policies . . . . . . . . . . . . . . . . . . . . . . . . . 12
9.2 Documents Required By Insurer . . . . . . . . . . . . . . . 12
ARTICLE 10 Administration . . . . . . . . . . . . . . . . . . . . . . . 12
10.1 Committee Duties . . . . . . . . . . . . . . . . . . . . . 12
10.2 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . 12
10.3 Binding Effect of Decisions . . . . . . . . . . . . . . . . 12
10.4 Indemnity of Committee . . . . . . . . . . . . . . . . . . 13
10.5 Employer Information . . . . . . . . . . . . . . . . . . . 13
ARTICLE 11 Claims Procedures . . . . . . . . . . . . . . . . . . . . . 13
11.1 Presentation of Claim . . . . . . . . . . . . . . . . . . . 13
11.2 Notification of Decision . . . . . . . . . . . . . . . . . 13
11.3 Review of a Denied Claim . . . . . . . . . . . . . . . . . 14
11.4 Decision on Review . . . . . . . . . . . . . . . . . . . . 14
11.5 Legal Action . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 12 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 14
12.1 Unsecured General Creditor . . . . . . . . . . . . . . . . 14
12.2 Employer's Liability . . . . . . . . . . . . . . . . . . . 15
12.3 Nonassignability . . . . . . . . . . . . . . . . . . . . . 15
12.4 Not a Contract of Employment . . . . . . . . . . . . . . . 15
12.5 Furnishing Information . . . . . . . . . . . . . . . . . . 15
12.6 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . 15
12.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 15
12.9 Validity . . . . . . . . . . . . . . . . . . . . . . . . . 16
12.10 Notice . . . . . . . . . . . . . . . . . . . . . . . . 16
12.11 Successors . . . . . . . . . . . . . . . . . . . . . . 16
12.12 Spouse's Interest . . . . . . . . . . . . . . . . . . 16
12.13 Incompetent . . . . . . . . . . . . . . . . . . . . . 16
12.14 Distribution in the Event of Taxation . . . . . . . . 17
PINNACLE WEST CAPITAL CORPORATION
ARIZONA PUBLIC SERVICE COMPANY
SUNCOR DEVELOPMENT COMPANY
AND
EL DORADO INVESTMENT COMPANY
SUPPLEMENTAL EXECUTIVE BENEFIT PLAN
Amended and Restated Effective as of January 1, 1992
The purpose of this Plan is to provide 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 Pinnacle West Capital Corporation, an Arizona
corporation, Arizona Public Service Company, an Arizona corporation, SunCor
Development Company, an Arizona corporation, El Dorado Investment Company,
an Arizona corporation, and their subsidiaries. This Plan is amended and
restated effective as of January 1, 1992.
ARTICLE 1
Definitions
For purposes hereof, unless otherwise clearly apparent from the
context, the following phrases or terms shall have the following indicated
meaning:
1.1 "Beneficiary" shall mean one or more persons, trusts, estates or
other entities, designated in accordance with Article 5 below, that
are entitled to receive benefits under this Plan upon the death of a
Participant.
1.2 "Beneficiary Designation Form" shall mean the form established from
time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more beneficiaries.
1.3 "Board" shall mean the Board of Directors of the Company.
1.4 "Change in Control" shall mean the date upon which the first of the
following events occurs:
(a) A change in control of the Company of a nature that would be
required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the
Securities and Exchange Act of 1934 (the "Act"), or any
successor regulation of similar import, regardless of whether
the Company is subject to such reporting requirement;
(b) A change in control of ownership of the Company through a
transaction or series of transactions, such that any person
(as that term is used in Sections 13 and 14(d)(2) of the Act)
is or becomes the beneficial owner (as that term is used in
Section 13(d) of the Act), directly or indirectly, of
securities of the Company representing twenty percent (20%) or
more of the combined voting power of the Company's then
outstanding securities;
(c) Any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or
pursuant to which shares of the common stock of the Company
would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the
common stock of the Company immediately prior to the merger
have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(d) The shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company;
(e) During any period of two (2) consecutive years, individuals
who, at the beginning of such period, constituted the Board
cease, for any reason, to constitute at least a majority
thereof, unless the election or nomination for election of
each new director was approved by the vote of at least two-
thirds (2/3) of the directors then still in office who were
directors at the beginning of the period;
(f) Substantially all of the assets of the Company and its
subsidiaries, in the aggregate, are sold or otherwise
transferred to parties that are not within a "controlled group
of corporations" (as defined in Section 1563 of the Code) in
which the Company is a member;
(g) More than eighty percent (80%) of the stock, or substantially
all of the assets of, any Employer, other than the Company,
are sold or otherwise transferred to a party or parties that
are not within a "controlled group of corporations" (as
defined in Section 1563 of the Code) in which that Employer is
a member, provided, that (i) with respect to any Employer that
is not a Significant Subsidiary (as defined in Regulation S-X
promulgated by the Securities and Exchange Commission, as in
effect on the date hereof) of the Company, any such event
shall constitute a Change in Control with respect to such
Employer only if the Board determines, within forty-five (45)
days of such event, that such event constitutes a Change in
Control, and (ii) any such event shall constitute a Change in
Control only with respect to that Employer and its employees
or Directors who are Participants;
(h) The Company voluntarily files a petition for bankruptcy under
federal bankruptcy law, or an involuntary bankruptcy petition
is filed against the Company under federal bankruptcy law,
which involuntary petition is not dismissed within 120 days of
the filing or such later date as agreed to by the Company and
the parties filing the involuntary petition or as may be
approved by a court;
(i) The Company makes a general assignment for the benefit of
creditors; or
(j) The Company seeks or consents to the appointment of a trustee,
receiver, liquidator or similar person.
1.5 "Change in Control Benefit" shall mean the benefit set forth in
Section 4.1 below.
1.6 "Claimant" shall have the meaning set forth in Section 11.1 below.
1.7 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.8 "Committee" shall mean the administrative committee appointed to
manage and administer the Plan in accordance with the provisions of
Article 10 below.
1.9 "Company" shall mean Pinnacle West Capital Corporation, an Arizona
corporation.
1.10 "Director" shall mean any member of the board of directors of an
Employer.
1.11 "Disability" shall mean a period of disability during which a
Participant qualifies for benefits under the Participant's Employer's
long-term disability plan or, if a Participant does not participate
in such a plan, 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 a
participant in such a plan.
1.12 "Employer" shall mean the Company, Arizona Public Service Company, an
Arizona corporation, SunCor Development Company, an Arizona
corporation, El Dorado Investment Company, an Arizona corporation,
and/or any subsidiaries of such corporations that have been selected
by the Board to participate in the Plan.
1.13 "Employer Benefit" shall mean the benefit set forth in Section 4.2
below.
1.14 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time.
1.15 "Insurer" shall mean the insurance company or companies that issue
one or more Policies.
1.16 "Participant" shall mean any employee or Director of an Employer
(a) who is selected to participate in the Plan, (b) who elects to
participate in the Plan, (c) who signs a Plan Agreement and a
Beneficiary Designation Form, (d) whose signed Plan Agreement and
Beneficiary Designation Form are accepted by the Committee, (e) who
commences participation in the Plan on his or her Plan Entry Date,
and (f) whose Plan Agreement has not terminated.
1.17 "Participant's Account" shall mean an account established in
accordance with Section 8.3 below.
1.18 "Plan" shall mean the Pinnacle West Capital Corporation, Arizona
Public Service Company, SunCor Development Company and El Dorado
Investment Company Supplemental Executive Benefit Plan, which is
defined by this instrument and by each Plan Agreement, all as amended
from time to time.
1.19 "Plan Agreement" shall mean a written agreement, as may be amended
from time to time, which is entered into by and between an Employer
and a Participant. Each Plan Agreement executed by a Participant
shall provide for the entire benefit to which such Participant is
entitled to under the Plan, and the Plan Agreement bearing the latest
date of acceptance by the Committee shall govern such entitlement.
1.20 "Plan Entry Date" shall mean one of two dates in any Plan Year on
which an employee or Director selected by the Committee to
participate in the Plan is eligible to commence participation in the
Plan in accordance with Article 2. The two entry dates are January 1
and July 1.
1.21 "Plan Year" shall, for the first Plan Year, begin on January 1, 1992,
and end on December 31, 1992. For each Plan Year thereafter, the
Plan Year shall begin on January 1 of each year and continue through
December 31 of that year.
1.22 "Policy" or "Policies" shall mean the policy or policies issued in
the name of the Trustee in accordance with the terms and conditions
of this Plan and each respective Plan Agreement.
1.23 "Retirement" and "Retires" shall mean, with respect to an employee,
severance from employment with all Employers for any reason other
than a leave of absence, death or Disability on or after the earlier
of the attainment of: (a) age sixty-five (65), (b) age sixty (60)
with ten (10) Years of Service, or (c) age fifty-five (55) with
twenty (20) Years of Service; and shall mean, with respect to a
Director who is not an employee, severance of his or her
directorship(s) with all Employers on or after the earlier of the
attainment of: (x) age sixty-five (65), (y) age sixty (60) with ten
(10) years of board service, or (z) age fifty-five (55) with twenty
(20) years of board service. If a Participant is both an employee
and a Director, Retirement shall not occur until he or she Retires as
both an employee and a Director; provided, however, that such a
Participant may elect, in accordance with the policies and procedures
established by the Committee, to Retire for purposes of this Plan at
the time he or she Retires as an employee of all Employers.
1.24 "Termination of Employment" shall mean the ceasing of employment with
or service as a Director of all Employers, voluntarily or involun-
tarily, for any reason other than Retirement, Disability, leave of
absence or death. If a Participant is both an employee and a
Director, a Termination of Employment shall occur only upon the
termination of the last position held; provided, however, that such a
Participant may elect, in accordance with the policies and procedures
established by the Committee, to be treated for purposes of this Plan
as having experienced a Termination of Employment at the time he or
she ceases employment with all Employers as an employee.
1.25 "Trust" shall mean the trust established pursuant to that certain
Trust Agreement dated as of January 1, 1992, between all Employers
and the Trustee, as the same may be amended or restated from time to
time.
1.26 "Trustee" shall mean the trustee named in the Trust and any successor
trustee.
1.27 "Vesting Date" shall mean the date upon which a Participant becomes
100% vested in his or her Change in Control Benefit in accordance
with Section 3.1 below.
1.28 "Years of Service" shall mean the total number of years in which a
Participant has been employed by one or more Employers and has
completed in each of those years 1,000 hours of service. For
purposes of this definition only, 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 and that, for any subsequent year, commences on an anniversary
of that hiring date.
ARTICLE 2
Selection, Enrollment and Eligibility
2.1 Selection by Committee. Participation in the Plan shall be limited
to a select group of management, highly compensated employees and
Directors of the Employers. From that group, the Committee shall
select, in its sole discretion, employees and Directors of the
Employers to participate in the Plan.
2.2 Enrollment Requirements. As a condition to participation, each
selected employee or Director shall complete, execute and return to
the Committee a Plan Agreement and a Beneficiary Designation Form.
In addition, the Committee, in its sole discretion, shall establish
from time to time such other enrollment requirements as it determines
in its sole discretion are necessary.
2.3 Eligibility; Commencement of Participation. Provided an employee or
Director selected to participate in the Plan has met all enrollment
requirements set forth in this Plan and required by the Committee,
that employee or Director shall commence participation in the Plan on
the Plan Entry Date that immediately follows his or her selection to
participate in the Plan. If a selected employee or Director fails to
meet all such requirements prior to that Plan Entry Date, that
employee or Director shall not be eligible to participate in the Plan
until the Plan Entry Date that follows his or her completion of those
requirements.
ARTICLE 3
Vesting; Account Balance Allocation
3.1 Vesting in Change in Control Benefit.
(a) General Rule. If a Participant has not Retired, died,
suffered a Disability or experienced a Termination of
Employment prior to 90 days prior to a Change in Control, the
Participant shall become 100% vested in his or her Change in
Control Benefit on January 1 of the Plan Year following the
Change in Control (the "Vesting Date"); provided, however,
that if a Participant voluntarily terminates his or her
employment with all Employers at any time on or after the date
of the Change in Control and prior to the Vesting Date, that
Participant shall forfeit his or her rights to benefits under
this Plan.
(b) Early Vesting. If at any time on or after 90 days prior to a
Change in Control and prior to the Vesting Date a Participant
Retires, dies, suffers a Disability or experiences an
involuntarily termination of employment with all Employers,
the Participant (or the Participant's Beneficiary in the event
of the Participant's death) shall become 100% vested in his or
her Change in Control Benefit on the later of (i) the date of
the Change in Control or (ii) the date of such Retirement,
death, Disability or involuntary termination of employment,
and such date (rather than January 1 of the following Plan
Year) shall be considered the "Vesting Date" for purposes of
this Plan.
3.2 Account Balance Allocations. Within 60 days of the end of each Plan
Year, each Participant with a balance in his or her Participant's
Account shall receive a statement of the dollar amount of his or her
balance.
ARTICLE 4
Benefits
4.1 Change in Control Benefit.
(a) Eligibility. On the Vesting Date, the Participant or the
Participant's Beneficiary shall become entitled to the Change
in Control Benefit described in this Section 4.1.
(b) Benefit and Payment. The "Change in Control Benefit" shall be
a dollar amount that is equal to the fair market value of the
assets allocated to and held in the Participant's Account as
of the Vesting Date, plus any earnings allocated to that
account from that date to the date of payment of the Change in
Control Benefit. This benefit shall be paid to the
Participant, or his or her Beneficiary, within 90 days of the
Vesting Date.
4.2 Employer Benefit.
(a) Eligibility. The Participant's Employer shall be entitled to
the Employer Benefit if:
(i) A Participant Retires, suffers a Disability or
experiences a Termination of Employment prior to
90 days prior to a Change in Control;
(ii) A Participant voluntarily terminates his or her
employment (other than by Retirement or
Disability) with all of his or her Employers at
any time on or after the date of a Change in
Control and prior to January 1 of the Plan Year
following a Change in Control; or
(iii) A Participant dies at any time.
(b) Benefit and Payment. The "Employer Benefit" shall be a
distribution of the assets allocated to and held in the
Participant's Account as of the date of the event described in
Section 4.2(a) above after taking in account any distributions
made or to be made in accordance with Section 4.1 above, plus
any earnings allocated to that account from that date to the
date of payment of the Employer Benefit. This benefit shall
be paid to the Participant's Employer within 120 days of
January 1 of the Plan Year following that event.
4.3 Withholding and Payroll Taxes. The Trustee shall withhold from any
and all benefit payments made under this Article 4, all federal,
state and local income, employment and other taxes required to be
withheld in connection with the payment of benefits hereunder, in
amounts to be determined in sole discretion of the Participant's
Employer.
ARTICLE 5
Beneficiary
5.1 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.
5.2 Beneficiary Designation; Change; Spousal Consent. A Participant
shall designate his or her Beneficiary by completing and signing the
Beneficiary Designation Form, and returning it to the Committee or
its designated agent. A Participant shall have the right to change a
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 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 Committee.
Upon the acceptance by the Committee 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 and accepted by
the Committee before his or her death.
5.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received, accepted and
acknowledged in writing by the Committee or its designated agent.
5.4 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 5.1, 5.2 and 5.3 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. 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.
5.5 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, before
a Change in Control, to cause the Trustee to withhold such payments
until this matter is resolved to the Committee's satisfaction.
5.6 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, and that Participant's Plan Agreement
shall terminate upon such full payment of benefits.
ARTICLE 6
Termination, Amendment or
Modification of the Plan
6.1 Termination, Amendment or Modification Prior to One Year Before
Change in Control. Prior to one year before a Change in Control,
each Employer reserves the right to terminate the Plan or any related
Plan Agreement, in whole or in part, with respect to Participants
whose services are retained by that Employer, and the Company
reserves the right to amended or modify the Plan or any related Plan
Agreement, in whole or in part, with respect to all Participants.
Notwithstanding the foregoing, no termination, amendment or
modification shall be effective to decrease or reduce a Participant's
potential benefits under this Plan below the fair market value of the
assets in his or her Participant's Account as reflected on the last
statement provided under Section 3.2 above prior to the effective
date of the termination, amendment or modification.
6.2 Termination, Amendment or Modification Within One Year Before Change
of Control or Following Change in Control.
(a) General. Within one year before a Change in Control and
thereafter, neither the Company, any subsidiary of the Company
nor any corporation, trust or other person that succeeds to
all or any substantial portion of the assets of the Company
shall have the right to terminate, amend or modify the Plan
and/or any Plan Agreement in effect prior to such Change in
Control, and all benefits under the Plan and any such Plan
Agreement shall thereafter be paid in accordance with the
terms of the Plan and such Plan Agreement, as in effect
immediately prior to such Change in Control. If the Plan is
terminated, amended, or modified within one year before the
Change in Control, such termination, amendment or modification
shall be considered void as of the date of the termination,
amendment or modification. Subject to Section 6.2(b) below,
any provision of this Plan or any Plan Agreement to the
contrary shall be construed in accordance with this
Section 6.2(a).
(b) Compliance with ERISA and Code. Notwithstanding any other
provision of this Plan, if, at any time within one year before
a Change in Control or any time thereafter, counsel to the
Company advises the Company in writing that it is counsel's
opinion that the provisions of this Plan and/or any related
Plan Agreement are not in compliance with ERISA or the Code,
or any final or proposed regulation or ruling under ERISA or
the Code promulgated by the Internal Revenue Service or the
Department of Labor, the Company shall have the right, in its
sole discretion, to amend, modify or terminate this Plan
and/or any related Plan Agreement in order to comply with such
applicable law, to minimize the Plan's noncompliance with such
applicable law and/or to avoid the Plan from failing to comply
with such applicable law.
(c) Limitation. If the Company elects to amend, modify or
terminate the Plan and/or any Plan Agreement under
Section 6.2(b), the Company may do so only to the extent that
such amendment, modification or termination does not decrease
or reduce a Participant's potential benefit under this Plan
below the fair market value of the assets in his or her
Participant's Account as reflected on the last statement
provided under Section 3.2 above prior to the effective date
of the termination, amendment or modification.
6.3 Termination of Plan Agreement. Absent the earlier termination,
modification or amendment of the Plan, the Plan Agreement of any
Participant shall terminate upon the full payment of the applicable
benefit provided under Article 4.
ARTICLE 7
Other Benefits and Agreements
7.1 Coordination with Other Benefits. 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.
The benefit, if any, to be received under this Plan shall be offset,
but not below zero, by the benefits that a Participant has received
in the past as a "Short-Term Payout" or as a result of an
"Unforeseeable Financial Emergency" under the Pinnacle West Capital
Corporation, Arizona Public Service Company, Suncor Development
Company and El Dorado Investment Company 1992 Deferred Compensation
Plan, which was effective January 1, 1992.
ARTICLE 8
Trust
8.1 Establishment of the Trust; Premiums. The Employers shall establish
the Trust and shall at least annually transfer over to the Trust such
assets as the Committee determines, prior to a Change in Control, or
the Trustee determines, after a Change in Control, are necessary to
provide for the Employers' future liabilities created with respect to
the benefits provided under the Plan and the Plan Agreements,
including, without limitation, the payment of insurance premiums in
amounts sufficient to acquire and maintain all Policies held by the
Trustee. At the direction of the Committee, prior to a Change in
Control, or the Trustee, after a Change in Control, the Employers
shall pay any and all Policy premiums and other costs directly to the
Insurer. In addition, if the Trust incurs any tax liability, the
Employers, to the extent the administrative account is insufficient
to pay such taxes, shall contribute to the Trust sufficient funds to
allow the Trustee to pay any such tax liability.
8.2 Interrelationship of the Plan and the Trust. The provisions of the
Plan and the Plan Agreement shall govern the rights of a Participant
and the Employers to receive distributions pursuant to the Plan. The
provisions of the Trust shall govern the rights of the Trustee,
Employers, Participant and a Participant's Beneficiary as to the
assets of the Trust. The Employers shall at all times remain liable
to carry out their obligations under the Plan. The Employers and the
Trustee shall cooperate with each other as is necessary to minimize
the Trust's tax liability.
8.3 Accounts.
(a) The Trustee shall establish and maintain the following
separate accounts in the Trust:
(i) A "Participant's Account" for each Participant to which
the Employers' contributions, or a portion thereof, and
earnings thereon shall be allocated to, held, and
invested, the assets of which are to be used to pay the
Change in Control Benefit and/or Employer Benefit in
accordance with this Plan and the Trust; and
(ii) An "Administrative Account" for the administrative
expenses of the Trust to which a portion of the
Employers' contributions and earnings thereon may be
allocated to, held and invested, the assets of which
are to be used to pay the administrative expenses,
including all taxes, of the Trust in accordance with
the terms and provisions of this Plan and the Trust.
(b) Prior to a Change in Control, the Committee shall direct the
Trustee in writing as to (i) the allocation of the Employers'
contributions to the accounts described in Section 8.3(a)
above, and (ii) the allocations of the earnings on the
Employer's contributions held and invested in the accounts
described in Section 8.3(a) above. Thereafter, the Trustee
shall make such allocations in accordance with the terms and
provisions of this Plan and the Trust.
(c) Each of the accounts described in Section 8.3(a) above shall
qualify for and be treated as separate shares under Code
Section 663(c).
ARTICLE 9
Insurance Policies
9.1 Policies. The Committee may direct the Trustee in writing to acquire
one or more Policies in the Trustee's name. The Trustee shall be the
sole and absolute owner and beneficiary of each Policy, with all
rights of an owner and beneficiary, including without limitation, the
right to surrender Policies for their cash surrender values and to
take one or more loans against one or more Policies. Notwithstanding
the foregoing, the Trustee shall exercise its ownership rights in
each Policy only in accordance with the terms of this Plan, the
respective Plan Agreements and the Trust.
9.2 Documents Required By Insurer. The Trustee, the Participant's
Employer and the Participant shall sign such documents and provided
such information as may be required from time to time by the Insurer.
ARTICLE 10
Administration
10.1 Committee Duties. This Plan shall be administered by a Committee
which shall consist of persons approved by the Board of the Company.
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 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 Termination of Employment of its Participants,
and such other pertinent information as the Committee may reasonably
require.
ARTICLE 11
Claims Procedures
11.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below
as a "Claimant") may deliver to the Committee a written claim for a
determination with respect to the amounts distributable to such
Claimant from the Plan. If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within
60 days after such notice was received by the Claimant. All other
claims must be made within 180 days of the date on which the event
that caused the claim to arise occurred. The claim must state with
particularity the determination desired by the Claimant.
11.2 Notification of Decision. The Committee shall consider a Claimant's
claim within a reasonable time, and shall notify the Claimant in
writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and
such notice must set forth in a manner calculated to be
understood by the Claimant:
(i) the specific reason(s) for the denial of the
claim, or any part of it;
(ii) the specific reference(s) to pertinent
provisions of the Plan upon which such denial
was based;
(iii) a description of any additional material or
information necessary for the Claimant to
perfect the claim, and an explanation of why
such material or information is necessary; and
(iv) an explanation of the claim review procedure set
forth in Section 11.3 below.
11.3 Review of a Denied Claim. Within 60 days after receiving a notice
from the Committee that a claim has been denied, in whole or in part,
a Claimant (or the Claimant's duly authorized representative) may
file with the Committee a written request for a review of the denial
of the claim. Thereafter, but not later than 30 days after the
review procedure began, the Claimant (or the Claimant's duly
authorized representative):
(a) may review pertinent documents;
(b) may submit written comments or other documents; and/or
(c) may request a hearing, which the Committee, in its sole
discretion, may grant.
11.4 Decision on Review. The Committee shall render its decision on
review promptly, and not later than 60 days after the filing of a
written request for review of the denial, unless a hearing is held or
other special circumstances require additional time, in which case
the Committee's decision must be rendered within 120 days after such
date. Such decision must be written in a manner calculated to be
understood by the Claimant, and it must contain:
(a) specific reasons for the decision;
(b) specific reference(s) to the pertinent Plan provisions upon
which the decision was based; and
(c) such other matters as the Committee deems relevant.
11.5 Legal Action. A Claimant's compliance with the foregoing provisions
of this Article 11 is a mandatory prerequisite to a Claimant's right
to commence any legal action with respect to any claim for benefits
under this Plan.
ARTICLE 12
Miscellaneous
12.1 Unsecured General Creditor. 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
Employer's obligation under the Plan shall be merely that of an
unfunded and unsecured promise to pay money in the future. Amounts
payable to a Participant or his or her Beneficiary shall be paid from
the general assets of an Employer exclusively.
12.2 Employer's Liability. An Employer's liability for the payment of
benefits shall be defined only by the Plan and the Plan Agreement, as
entered into between the Employer and a Participant. An Employer
shall have no obligation to a Participant under the Plan except as
expressly provided in the Plan.
12.3 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, which are, and all rights to which
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. 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.
12.4 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.
12.5 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.
12.6 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.
12.7 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.
12.8 Governing Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the State of Arizona.
12.9 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.
12.10 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
address indicated below:
If a Participant's Employer is Pinnacle West Capital Corporation or
any other Employer other than Arizona Public Service Company, then to
Pinnacle West Capital Corporation
400 East Van Buren Street
Post Office Box 52132
Phoenix, Arizona 85072-2132
Attn: Human Resources
If a Participant's Employer is Arizona Public Service Company, then
to:
Arizona Public Service Company
400 North 5th Street
P.O. Box 53999
Phoenix, Arizona 85072-3999
Attn: Manager, Compensation and Benefit
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.
12.11 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.
12.12 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.
12.13 Incompetent. If the Committee determines in its discretion that a
benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling 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.
12.14 Distribution in the Event of Taxation. If, for any reason, all or
any portion of a Participant's benefit under this Plan becomes
taxable to the Participant prior to the Vesting Date, a Participant
may petition the Committee, if prior to a Change in Control, or the
Trustee, after a Change in Control, for a distribution of assets
sufficient to meet the Participant's tax liability (including
additions to tax, penalties and interest). Upon the grant of such a
petition, which grant shall not be unreasonably withheld, the Trustee
shall distribute to the Participant from the Trust, immediately
available funds in an amount equal to that Participant's federal,
state and local tax liability associated with such taxation, which
liability shall be measured by using that Participant's then current
highest federal, state and local marginal tax rate, plus the rates or
amounts for the applicable additions to tax, penalties and interest.
If the petition is granted, the tax liability distribution shall be
made within 90 days of the date when the Participant's petition is
granted.
IN WITNESS WHEREOF the Company and Arizona Public Service
Company have signed this amended and restated Supplemental Executive Benefit
Plan document on December 31, 1992.
Pinnacle West Capital Corporation,
an Arizona corporation
By: Faye Widenmann
________________________________________
Its: Vice President
_______________________________________
Arizona Public Service Company,
an Arizona corporation
By: John Heenan
________________________________________
Its: Manager, Compensation and Benefits
_______________________________________