Exhibit
10(k)
AMERICAN
ELECTRIC POWER SERVICE CORPORATION
CHANGE
IN CONTROL AGREEMENT
Effective
January 1, 2008
Whereas, American Electric
Power Service Corporation, a New York corporation, including
any of its subsidiary companies, divisions, organizations, or
affiliated entities (collectively referred to as
“AEPSC”) considers it essential to its best
interests and the best interests of the shareholders of the
American Electric Power Company, Inc., a New York
corporation, (hereinafter referred to as
“Corporation”) to foster the continued employment
of key management personnel; and
Whereas, the uncertainty
attendant to a Change In Control of the Corporation may
result in the departure or distraction of management
personnel to the detriment of AEPSC and the shareholders of
the Corporation; and
Whereas, the Board of the
Corporation has determined that steps should be taken to
reinforce and encourage the continued attention and
dedication of members of AEPSC’s management to their
assigned duties in the event of a Change In Control of the
Corporation; and
Now Therefore, AEPSC hereby
establishes the American Electric Power Service Corporation
Change In Control Agreement (the
“Agreement”).
ARTICLE
I
DEFINITIONS
As used herein the
following words and phrases shall have the following
respective meanings unless the context clearly indicates
otherwise.
(a) “Anniversary Date” means January 1
of each Calendar Year.
(b) “Annual Compensation” means the
sum of the Executive’s Annual Salary and the
Executive’s Target Annual Incentive.
(c) “Annual Salary” means the
Executive’s regular annual base salary immediately
prior to the Executive’s termination of employment,
including compensation converted to other benefits under a
flexible pay arrangement maintained by AEPSC or deferred
pursuant to a written plan or agreement with AEPSC, but
excluding sign-on bonuses, allowances and compensation paid
or payable under any of AEPSC’s long-term or short-term
incentive plans or any similar payments, and any salary lump
sum amount paid in lieu of or in addition to a base wage or
salary increase.
(d) “Board”
means the Board of Directors of American Electric Power
Company, Inc.
(e) “Calendar
Year” means the twelve (12) month period commencing each
January 1 and ending each December 31.
(f) “Cause” shall mean
(i)
the willful and continued failure of the Executive to perform
substantially the Executive’s duties with AEPSC (other
than any such failure as reasonably and consistently
determined by the Board to have resulted from incapacity due
to physical or mental illness), after a written demand for
substantial performance is delivered to the Executive by the
Board or an elected officer of AEPSC which specifically
identifies the manner in which the Board or the elected
officer believes that the Executive has not substantially
performed the Executive’s duties, or
(ii)
the willful conduct or omission by the Executive, which the
Board determines to be illegal or gross misconduct that is
demonstrably injurious to AEPSC or the Corporation; or a
breach of the Executive’s fiduciary duty to AEPSC or the
Corporation, as determined by the Board.
For purposes of this
provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless
it is done, or omitted to be done, by the Executive in bad
faith or without reasonable belief that the Executive’s
action or omission was in the best interests of AEPSC or the
Corporation. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by
the Board or upon the advice of counsel for AEPSC or the
Corporation, shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the
best interests of AEPSC or the Corporation
(g) “Change In Control” of the
Corporation shall be deemed to have occurred if and as of
such date that (i) any “person” or
“group” (as such terms are used in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934
(“Exchange Act”)), other than AEPSC, any company
owned, directly or indirectly, by the shareholders of the
Corporation in substantially the same proportions as their
ownership of stock of the Corporation or a trustee or other
fiduciary holding securities under an employee benefit plan
of the Corporation, becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of more than one third of the
then outstanding voting stock of the Corporation; or (ii) the
consummation of a merger or consolidation of the Corporation
with any other entity, other than a merger or consolidation
which would result in the voting securities of the
Corporation outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at
least two-thirds of the total voting power represented by the
voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation;
or (iii) the consummation of the complete liquidation of the
Corporation or the sale or disposition by the Corporation (in
one transaction or a series of transactions) of all or
substantially all of the Corporation’s
assets.
(h) “CIC
Multiple” means a factor of (i) two and ninety-nine
one-hundredths (2.99) with respect to the Chief Executive
Officer of American Electric Power Service Corporation and
such other Executives who are nominated for such factor by the
Chief Executive Officer of American Electric Power Service
Corporation and approved by the Human Resources Committee of
the Board of the Corporation; or (ii) two (2.00) with respect
to all other Executives.
(i) “Code” means the Internal Revenue
Code of 1986, as amended from time to time.
(j) “Commencement Date” means January
1, 2008, which shall be the beginning date of the term of
this Agreement.
(k) “Disability” means the
Executive’s total and permanent disability as defined
in AEPSC’s long-term disability plan covering the
Executive immediately prior to the Change In
Control.
(l) “Executive” means an employee of
AEPSC or the Corporation who is designated by AEPSC and
approved by the Human Resources Committee of the Board of the
Corporation as an employee entitled to benefits, if any,
under the terms of this Agreement.
(m) “Good
Reason” means
(1)
an adverse change in the Executive’s status, duties or
responsibilities as an executive of AEPSC as in effect
immediately prior to the Change In Control;
(2)
failure of AEPSC to pay or provide the Executive in a timely
fashion the salary or benefits to which the Executive is
entitled under any employment agreement between AEPSC and the
Executive in effect on the date of the Change In Control, or
under any benefit plans or policies in which the Executive was
participating at the time of the Change In
Control;
(3)
the reduction of the Executive’s base salary as in
effect on the date of the Change In Control;
(4)
the taking of any action by AEPSC (including the elimination
of a plan without providing substitutes therefor, the
reduction of the Executive’s awards thereunder or
failure to continue the Executive’s participation
therein) that would substantially diminish the aggregate
projected value of the Executive’s awards or benefits
under AEPSC’s benefit plans or policies in which the
Executive was participating at the time of the Change In
Control; provided, however, that the diminishment of such
awards or benefits that apply to other groups of employees of
AEPSC in addition to Executives covered by this or a similar
agreement shall be disregarded;
(5)
a failure by AEPSC or the Corporation to obtain from any
successor the assent to this Agreement contemplated by Article
IV hereof; or
(6)
the relocation, without the Executive’s prior approval,
of the office at which the Executive is to perform services on
behalf of AEPSC to a location more than fifty (50) miles from
its location immediately prior to the Change In
Control.
Any circumstance described
in this Article I(m) shall constitute Good Reason even if
such circumstance would not constitute a breach by AEPSC of
the terms of an employment agreement between AEPSC and the
Executive in effect on the date of the Change In
Control. However, such circumstance shall not
constitute Good Reason unless (i) within ninety (90) days of
the initial existence of such circumstance, the Executive
shall have given AEPSC written notice of such circumstance,
and (ii) AEPSC shall have failed to remedy such circumstance
within thirty (30) days after its receipt of such
notice. Such written notice to be provided by the
Executive to AEPSC shall specify (A) the effective date for
the Executive’s proposed termination of employment
(provided that such effective date may not precede the
expiration of the period for AEPSC’s opportunity to
remedy), (B) reasonable detail of the facts and circumstances
claimed to provide the basis for termination, and (C) the
Executive’s belief that such facts and circumstance
would constitute Good Reason for purposes of this
Agreement. The Executive’s continued
employment shall not constitute consent to, or a waiver of
rights with respect to, any circumstances constituting Good
Reason hereunder.
(n) “Qualifying Termination” shall
mean following a Change In Control and during the term of
this Agreement the Executive’s employment is terminated
for any reason excluding (i) the Executive’s death,
(ii) the Executive’s Disability, (iii) the exhaustion
of the Executive’s benefits under the terms of an
applicable AEPSC sick pay plan or long-term disability plan
(other than by reason of the amendment or termination of such
a plan), (iv) the Executive’s Retirement, (v) by AEPSC
for Cause or (vi) by the Executive without Good
Reason. In addition, a Qualifying Termination
shall be deemed to have occurred if, prior to a Change In
Control, the Executive’s employment was terminated
during the term of this Agreement (A) by AEPSC without Cause,
or (B) by the Executive based on events or circumstances that
would constitute Good Reason if a Change in Control had
occurred, in either case, (x) at the request of a person who
has entered into an agreement with AEPSC or the Corporation,
the consummation of which would constitute a Change In
Control or (y) otherwise in connection with, as a result of
or in anticipation of a Change In Control. The
mere act of approving a Change In Control agreement shall not
in and of itself be deemed to constitute an event or
circumstance in anticipation of a Change In Control for
purposes of this Article I(n).
(o) “Retirement” shall mean an
Executive’s voluntary termination of employment after
attainment of age 55 with five or more years of service with
AEPSC without Good Reason.
(p) “Target Annual Incentive” shall
mean the award that the Executive would have received under
the Senior Officer Annual Incentive Compensation Plan or such
other annual incentive compensation plan applicable to such
Executive for the year in which the Executive’s
termination occurs, if one hundred percent (100%) of the
annual target award has been earned. Executives
not participating in an annual incentive compensation plan
that has predefined target levels will be treated as though
they were participants in an annual incentive plan with such
targets and will be assigned the same annual target percent
as their participating peers in a comparable salary
grade.
ARTICLE
II
TERM
OF AGREEMENT
2.1 The
initial term of this Agreement shall be for the period
beginning on the Commencement Date and ending on the December
31 immediately following the Commencement
Date. The term of this Agreement shall
automatically be extended for an additional Calendar Year on
the first Anniversary Date immediately following the initial
term of this Agreement without further action by AEPSC, and
shall be automatically extended for an additional Calendar
Year on each succeeding Anniversary Date, unless AEPSC shall
have served notice upon the Executive at least thirty (30)
days prior to such Anniversary Date of AEPSC’s
intention that this Agreement shall not be extended,
provided, however, that if a Change In Control of the
Corporation shall occur during the term of this Agreement,
this Agreement shall terminate two years after the date the
Change In Control is completed.
2.2 If
an employee is designated as an Executive after the
Commencement Date or after an Anniversary Date, the initial
term of this Agreement shall be for the period beginning on
the date the employee is designated as an Executive and
ending on the December 31 immediately following.
2.3 Notwithstanding
Section 2.1, the term of this Agreement shall end upon any
termination of the Executive’s employment that is other
than a Qualifying Termination in connection with a Change In
Control of the Cor
