RESTRICTED STOCK UNIT AGREEMENT UNDER THE PINNACLE WEST CAPITAL CORPORATION 2007 LONG-TERM INCENTIVE PLAN (SUPPLEMENTAL 2010 AWARD)
Exhibit
10.6
RESTRICTED STOCK UNIT AGREEMENT
UNDER THE
PINNACLE WEST CAPITAL CORPORATION
2007 LONG-TERM INCENTIVE PLAN
(SUPPLEMENTAL 2010 AWARD)
UNDER THE
PINNACLE WEST CAPITAL CORPORATION
2007 LONG-TERM INCENTIVE PLAN
(SUPPLEMENTAL 2010 AWARD)
THIS AWARD AGREEMENT is made and entered into as of February 15, 2011 (the “Date of Grant”),
by and between Pinnacle West Capital Corporation (the “Company”), and
(“Employee”).
BACKGROUND
| A. | The Board of Directors of the Company (the “Board of Directors”) has adopted,
and the Company’s shareholders have approved, the Pinnacle West Capital Corporation
2007 Long-Term Incentive Plan (the “Plan”), pursuant to which Restricted Stock Units
and Dividend Equivalents may be granted to employees of the Company and its
Subsidiaries and certain other individuals. |
| B. | The Company desires to grant to Employee Restricted Stock Units and Dividend
Equivalents under the terms of the Plan. |
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| C. | Pursuant to the Plan, the Company and Employee agree as follows: |
AGREEMENT
| 1. | Grant of Award. Pursuant to action of the Committee which was taken on
the Date of Grant, the Company grants to Employee
_____
(x,xxx) Restricted Stock
Units and Dividend Equivalents based on the dividends declared on the shares of Stock
to which such Restricted Stock Units relate. |
| 2. | Award Subject to Plan. This Restricted Stock Unit Award and the
related Dividend Equivalent Award are granted under and are expressly subject to all of
the terms and provisions of the Plan, which terms are incorporated herein by reference,
and this Award Agreement. |
| 3. | Vesting of Restricted Stock Units. The Restricted Stock Units granted
pursuant to Section 1 and Section 4(b) will vest and no longer be
subject to the restrictions of and forfeiture under this Award Agreement on three (3)
“Vesting Dates” as follows: |
| (a) | x,xxx (fifty percent) of the Restricted Stock Units will vest
on February 15, 2013; |
| (b) | x,xxx (twenty-five percent) of the Restricted Stock Units will
vest on February 15, 2014; and |
| (c) | x,xxx (the remaining twenty-five percent) of the Restricted
Stock Units will vest on February 15, 2015. |
| 4. | Payment. |
| (a) | Time and Form of Payment. Subject to the provisions of
this Award Agreement and the Plan, Employee (or in the case of Employee’s
death, Employee’s beneficiary) shall receive in exchange for each vested
Restricted Stock Unit one unrestricted fully transferrable share of Stock. The
Stock will be delivered to Employee within ninety (90) days following the
earliest to occur of Employee’s
Retirement, death, Disability or other Separation from Service. If the
distribution is due to Employee’s Separation from Service or Retirement, and
if Employee is considered to be a “Specified Employee” on the date of
Employee’s Separation from Service or Retirement, the payment to Employee
may not commence prior to the first business day following the date which is
six (6) months after the date of Employee’s Separation from Service. The
six (6) month delay does not apply if the Stock is being delivered to
Employee (or Employee’s beneficiary) due to Employee’s death or Disability.
If the ninety (90) day period described above spans two (2) calendar years,
payment will be made to Employee in the second (2nd) calendar
year. |
For purposes of this Award Agreement, the term “Retirement” means a
termination of employment which constitutes an “Early Retirement” or a
“Normal Retirement” under the Pinnacle West Capital Corporation Retirement
Plan (as in effect on the date of Retirement) (the “Retirement Plan”). The
terms “Separation from Service” and “Specified Employee” shall be given the
meanings ascribed to them in the Deferred Compensation Plan of 2005 for
Employees of Pinnacle West Capital Corporation and Affiliates (as in effect
on the date of this Award Agreement). The term “Disability” means Employee
is, by reason of any medically determinable physical or mental impairment
that can be expected to (i) result in death or (ii) last for a continuous
period of not less than twelve (12) months, receiving income replacement
benefits for a period of not less than three (3) months under an accident
and health plan covering employees of the Company.
For avoidance of doubt, no acceleration of vesting of the Restricted Stock
Units will occur on a Change of Control of the Company.
The value of the shares of Stock distributed upon payment for the Restricted
Stock Units will be disregarded for purposes of calculating the amount of
Employee’s benefit under any Company retirement plans.
| (b) | Dividend Equivalents. On each day on which a dividend
is paid on shares of Stock from the Date of Grant until Employee’s Separation
from Service or Retirement, Employee will be credited with additional
Restricted Stock Units in satisfaction of the Dividend Equivalent Award made
pursuant to Section 1. The number of additional Restricted Stock Units
credited to Employee shall be determined by dividing (i) the aggregate dollar
amount of the dividends paid on the number of shares of Stock equal to the
Restricted Stock Units previously credited to Employee pursuant to Section
1 or this Section 4(b) by (ii) the Fair Market Value of one share
of Stock on the day on which the dividend is paid. No fractional Restricted
Stock Units shall be issued. If, but for the preceding sentence, a crediting
would have resulted in the issuance of a fractional Restricted Stock Unit of
one-half or greater, such fraction will be increased to provide for the
issuance of an additional Restricted Stock Unit. The additional Restricted
Stock Units issued pursuant to this Section 4(b) will vest pursuant to the same
vesting schedule as the underlying Restricted Stock Units that were the basis
for the Dividend Equivalents giving rise to such additional Restricted Stock
Units. Vested Restricted Stock Units credited in satisfaction of the Dividend
Equivalent Award will be delivered to Employee at the same time and in the same
manner as all other Restricted Stock Units credited to Employee. |
| 5. | Termination of Award. In the event of Employee’s death, Disability, or
other Separation from Service, whether due to Retirement, voluntary or involuntary
termination or otherwise, Employee’s right to vest in any additional Restricted Stock
Units or Dividend Equivalents under the Plan or this Award Agreement, if any, will
terminate. Any unvested
Restricted Stock Units and Dividend Equivalents will be forfeited effective as of
the date of Employee’s death, Disability or Separation from Service, as the case may
be. |
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| 6. | Confidentiality. During and after the termination of Employee’s
employment, for any reason, Employee agrees that Employee will not, directly or
indirectly, in one or a series of transactions, disclose to any person, or use or
otherwise exploit for Employee’s own benefit or for the benefit of anyone other than
the Company or any of its Subsidiaries any Confidential Information (as hereinafter
defined), whether prepared by Employee or not; provided, however, that during the term
of Employee’s employment, any Confidential Information may be disclosed (i) to
officers, representatives, employees and agents of the Company and its Subsidiaries who
need to know such Confidential Information in order to perform the services or conduct
the operations required or expected of them in the business, and (ii) in good faith by
Employee in connection with the performance of Employee’s job duties to persons who are
authorized to receive such information by the Company or its Subsidiaries. Employee
shall have no obligation to keep confidential any Confidential Information, if and to
the extent disclosure of any such information is specifically required by law;
provided, however, that in the event disclosure is required by applicable law, Employee
shall provide the Company with prompt notice of such requirement, prior to making any
disclosure, so that it may seek an appropriate protective order. |
Employee agrees that all Confidential Information of the Company and its
Subsidiaries (whether now or hereafter existing) conceived, discovered or made by
him during employment exclusively belongs to the Company or its Subsidiaries (and
not to Employee). Employee will promptly disclose such Confidential Information to
the Company and perform all actions reasonably requested by the Company to establish
and confirm such exclusive ownership. For purposes of this Section 6, the
term “Confidential Information” shall mean and include any information disclosed to
Employee any time during Employee’s employment with the Company or its Subsidiaries
or thereafter which is not generally known to the public, including, but not limited
to, information concerning the Company’s or its Subsidiaries’ assets and valuations,
business plans, methods of operation, management, information systems, procedures,
processes, practices, policies, plans, programs, personnel and/or reports or other
information prepared by appraisers, consultants, advisors, bankers or attorneys.
| 7. | Restrictive Covenants. |
| (a) | Non-Competition. Employee agrees that for a period of
twelve (12) months following any termination of employment voluntarily by
Employee (other than due to Disability), Employee shall not, without the prior
written consent of the Company’s General Counsel, participate, whether as a
consultant, employee, contractor, partner, owner, co-owner, or otherwise, with
any business, corporation, group, entity or individual that is engaged in the
business activity of generating, transmitting or distributing electricity in
Arizona. |
| (b) | Employee Non-Solicitation. Employee agrees that for a
period of twelve (12) months following Employee’s termination of employment for
any reason, Employee will not encourage, induce, or otherwise solicit, or
actively assist any other person or organization to encourage, induce or
otherwise solicit, directly or indirectly, any employee of the Company or any
of its Subsidiaries to terminate his or her employment with the Company or its
Subsidiaries, or otherwise interfere with the advantageous business
relationship of Pinnacle West and its Subsidiaries with their employees. |
| (c) | Remedies. If Employee fails to comply with
Sections 6, 7(a) or 7(b) in a material respect, the Company may (i)
cause any of Employee’s unvested Restricted
Stock Units and related Dividend Equivalents to be cancelled and forfeited,
(ii) refuse to deliver shares of stock in exchange for vested Restricted
Stock Units, and/or (iii) pursue any other rights and remedies the Company
may have pursuant to this Award Agreement or the Plan at law or in equity
including, specifically, injunctive relief. |
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| 8. | Section 409A Compliance. |
| (a) | Purpose of this Provision. Section 409A of the Code
imposes a number of requirements on “non-qualified deferred compensation” plans
and arrangements. Based on regulations issued by the Internal Revenue Service,
the Company has concluded that this Award of Restricted Stock Units is subject
to Section 409A. As a result, unless the Plan and this Award Agreement are
administered in compliance with Section 409A and the regulations, Employee will
be required to pay an additional twenty percent (20%) tax (in addition to
regular income taxes) on the compensation provided by this Award Agreement. In
addition, under Section 409A additional interest will be payable. |
| (b) | Compliance with Section 409A. In order to assure
compliance with Section 409A, no payment will be made prior to the earliest of
Employee’s death, Disability or other Separation from Service. |
| (c) | Miscellaneous Payment Provisions. If the Company fails
to make a payment (including a transfer of Stock), either intentionally or
unintentionally, within the period required by Section 4, but the
payment is made within the same calendar year, it will be treated as made
within the period required by Section 4 pursuant to Treas. Reg. §
1.409A-3(d). In addition, if a payment is not made due to a dispute in
payments, payments can be delayed in accordance with Treas. Reg. § 1.409A-3(g). |
| (d) | Restriction on Acceleration or Further Deferral. Under
no circumstances may the time or schedule of any payment made or benefit
provided pursuant to this Award Agreement be accelerated or subject to a
further deferral except as otherwise permitted or required pursuant to
regulations and other guidance issued pursuant to Section 409A of the Code. |
| (e) | No Elections. Employee does not have any right to make
any election regarding the time or form of any payment due under this Award
Agreement. |
| (f) | Compliant Operation and Interpretation. The Plan and
this Award Agreement shall be administered in compliance with Section 409A and
each provision of the Award Agreement and the Plan shall be interpreted, to the
extent possible, to comply with Section 409A. |
| 9. | Tax Withholding. Employee is responsible for any and all federal,
state, and local income, payroll or other tax obligations or withholdings
(collectively, the “Taxes”) arising out of this Award. Employee shall pay any and all
Taxes due in connection with the vesting of any Restricted Stock Units by check or by
having the Company withhold a sufficient number of shares of Stock to cover the tax and
withholdings obligation. Employee shall pay any and all Taxes dues in connection with
a payout of Stock by the Company withholding a sufficient number of shares of Stock
from any payout to cover the tax and withholdings obligation. Concurrently with the
return to the Company of an executed copy of this Agreement, Employee must return the
attached form regarding tax withholding for the Restricted Stock Unit Award and the
related Dividend Equivalent Award. |
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| 10. | Continued Employment. Nothing in the Plan or this Award Agreement
shall be interpreted to interfere with or limit in any way the right of the Company or
its Subsidiaries to terminate Employee’s employment or services at any time. In
addition, nothing in the Plan or this Award Agreement shall be interpreted to confer
upon Employee the right to continue in the employ or service of the Company or its
Subsidiaries. |
| 11. | Non-Transferability. Neither this Award nor any rights under this
Award Agreement may be assigned, transferred, or in any manner encumbered except by
will or the laws of descent and distribution, and any attempted assignment, transfer,
mortgage, pledge or encumbrance except as herein authorized, will be void and of no
effect. |
| 12. | Definitions: Copy of Plan and Plan Prospectus. To the extent not
specifically defined in this Award Agreement, all capitalized terms used in this Award
Agreement will have the same meanings ascribed to them in the Plan. Employee will
receive a copy of the Plan and the related Plan Prospectus. In the event of any
conflict between the terms and conditions of this Award Agreement and the Plan, the
provisions of the Plan shall control. |
| 13. | Amendment. Except as otherwise provided in the Plan, this Award
Agreement may be amended only by a written agreement executed by the Company and
Employee. |
| 14. | Severability. If a court of competent jurisdiction determines that any
provision of this Award Agreement is invalid, then that invalidity shall not affect
other provisions or applications that can be given effect without the invalid provision
or application. |
| 15. | Choice of Law. This Award Agreement will be governed by the laws of
the State of Arizona, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this Award Agreement to another
jurisdiction. |
An authorized representative of the Company has signed this Award Agreement as of the Date of
Grant.
| PINNACLE WEST CAPITAL CORPORATION | ||||||||
| By: | ||||||||
| Its: | ||||||||
| EMPLOYEE | ||||||||
| Name: | ||||||||
| Signature: | ||||||||
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Pinnacle West Capital Corporation
SUPPLEMENTAL RESTRICTED STOCK UNIT AWARD
FEDERAL TAX WITHHOLDING ELECTION FORM
(applies to Award Agreement dated 02/15/2011)
FEDERAL TAX WITHHOLDING ELECTION FORM
(applies to Award Agreement dated 02/15/2011)
INFORMATION ABOUT YOU
| Last | First | Middle Initial | Employee ID# |
FEDERAL TAX WITHHOLDING ELECTION
| To the extent permitted by law, I hereby elect Federal tax withholding of _____ percent (minimum may not be less than 25% and maximum may not exceed 35%) | ||||||||||
| IMPORTANT NOTE: | Please complete and return this Election Form to Xxxxxxxx Xxxxxxxxx at Mail Station 9996 by April 30, 2011. |
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