EXHIBIT 10(p)
AMERICAN ELECTRIC POWER SERVICE CORPORATION
CHANGE IN CONTROL AGREEMENT
This Change In Control Agreement ("Agreement"), made as of this ____day of
___________, 2000, by and between 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") and
______________, ________________, _______________ (the "Executive").
Whereas, AEPSC considers it essential to its best interests and the best
interests of the shareholders of the Corporation to xxxxxx 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, including the Executive, to their assigned duties
in the event of a Change In Control of the Corporation.
Now Therefore, it is hereby agreed as follows:
ARTICLE I
DEFINITIONS
As used herein the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.
(a) "Annual Compensation" means the sum of the Executive's Annual Salary
and the Executive's Target Annual Incentive.
(b) "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 overtime pay, allowances, premium pay, compensation paid or
payable under any of AEPSC's long-term or short-term incentive plans or any
similar payments.
(c) "Board" means the Board of Directors of American Electric Power
Company, Inc.
(d) "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 resulting 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 engaging by the Executive in illegal conduct or
gross misconduct which is materially and demonstrably injurious 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
(e) "Change In Control" of the Corporation shall be deemed to have
occurred if (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 25 percent of the then outstanding voting stock of the Corporation; (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board, together with any new directors (other than a
director nominated by a person (x) who has entered into an agreement with the
Corporation to effect a transaction described in Article 1(e)(i), (iii) or (iv)
hereof or (y) who publicly announces an intention to take or to consider taking
action (including, but not limited to, an actual or threatened proxy contest)
which if consummated would constitute a Change In Control) whose election or
nomination for election was approved by a vote of at least two-thirds of the
directors then still in office who were either directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason, except for death or disability, to constitute at least a
majority of the Board; or (iii) 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 50 percent 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 (iv) the shareholders of the Corporation
approve a plan of complete liquidation of the Corporation, or an agreement for
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.
Notwithstanding the foregoing, a Change In Control shall not be deemed to
occur as a result of the consummation of the transactions contemplated in the
Agreement and Plan of Merger by and among the American Electric Power Company,
Inc., Augusta Acquisition Corporation and Central and South West Corporation
dated as of December 21, 1997, nor thereafter as a result of any event in (i) or
(iii) above, if directors who were members of the Board prior to such event and
continue to constitute a majority of the Board after such event.
(f) "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
(g) "Commencement Date" means the date of this Agreement, which shall be
the beginning date of the term of this Agreement.
(h) "Corporation" means American Electric Power Company, Inc., a New York
corporation.
(i) "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.
(j) "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, provided that the Executive shall have given
AEPSC written notice of the alleged adverse change and AEPSC shall have
failed to cure such change within thirty (30) days after its receipt of
such notice;
(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, provided that such failure was other than an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Corporation within eight days following notice from the
Executive;
(3) the reduction of the Executive's 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 therefore, 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;
(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 or a change, without the Executive's prior
approval, in the Executive's business travel obligation subsequent to the
Change In Control that requires the Executive to travel on a regular and
continuous basis in an amount that represents a significant increase, from
immediately prior to the Change In Control, in the portion of the
Executive's working time routinely devoted to business travel.
Any circumstance described in this Article I (j) 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. The Executive shall be deemed to have
terminated employment for Good Reason effective upon the effective date stated
in a written notice of such termination given by the Executive to AEPSC (which
notice shall not be given, in circumstances described in Article I (j)(1),
before the end of the thirty (30) day period described therein, or in
circumstances described in Article I(j)(2), before the end of the eight day
period described therein), setting forth in reasonable detail the facts and
circumstances claimed to provide the basis for termination, provided that the
effective date may not precede, nor be more than sixty (60) days from, the date
such notice is given. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.
(k) "Retirement" shall mean a termination of employment due to the
Executive's voluntary late, normal or early retirement under a pension plan
sponsored by AEPSC as defined in such plan.
(l) "Target Annual Incentive" shall mean the award that the Executive
would have received under the Senior Officer Annual Incentive Compensation Plan,
the AEP Energy Services, Inc. Incentive Compensation Plan or the Management
Incentive Compensation Plan for the year in which the Executive's termination
occurs, if one hundred percent (100%) of the annual target award has been
earned.
(m) "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 Executive's Retirement, (iv) by AEPSC for Cause or (v) 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 by AEPSC without
Cause, or by the Executive for Good Reason based on events or circumstances that
occurred, (i) 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 (ii) 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(m).
ARTICLE II
TERM OF AGREEMENT
2.1 The term of this Agreement shall initially be for the period beginning
on the Commencement Date and ending on the day before the first anniversary of
the Commencement Date. The term of this Agreement shall automatically be
extended on the first anniversary of the Commencement Date until the day before
the second anniversary of the Commencement Date without further action by the
parties, and shall be automatically extended by an additional year on each
succeeding anniversary of the Commencement Date, unless either AEPSC or the
Executive shall have served notice upon the other party at least sixty (60) days
prior to such anniversary of its or the Executive'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 Notwithstanding Section 2.1, the term of this Agreement shall end upon
any termination of the Executive's employment prior to a Change In Control of
the Corporation.
ARTICLE III
COMPENSATION UPON A CHANGE IN CONTROL FOLLOWED BY A TERMINATION
3.1 Upon a Qualifying Termination, the Executive shall be under no further
obligation to perform services for AEPSC and shall be entitled to receive the
following payments and benefits:
(a) Within ten (10) days of the Executive's date of termination, AEPSC
shall make a lump sum cash payment to the Executive in an amount
equal to the sum of (1) the Executive's Annual Salary through the
date of termination to the extent not theretofore paid, (2) the
product of (x) the Target Annual Incentive and (y) a fraction, the
numerator of which is the number of days in such calendar year
through the date of termination, and the denominator of which is
365, and (3) any accrued vacation pay, in each case the extent not
theretofore paid and in full satisfaction of the rights of the
Executive thereto;
(b) Within ten (10) days of the Executive's date of termination, AEPSC
shall make a lump sum cash payment to the Executive in an amount
equal to three times the Executive's Annual Compensation; and
(c) For purposes of the American Electric Power System Excess Benefit
Plan, or any successor thereto, provided that the Executive is a
participant thereunder, the Executive shall be credited with three
(3) additional years of service; provided that if the Executive is
older than age 62 as of the Executive's date of termination the
additional years of service shall be limited to the difference
between the Executive's age as of the date of termination and the
date the Executive would attain age 65, and assuming that the
Executive's compensation for the additional period of service would
have been equal to the Executive's compensation in effect as of the
Executive's date of termination.
3.2 The Executive shall be entitled to the continuing benefits as follows:
(a) For the three (3) year period following the Executive's date of
termination, the Executive and the Executive's family shall be
provided with medical and dental insurance benefits as if the
Executive's employment had not been terminated; provided, however,
that if the Executive becomes reemployed with another employer and
is eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility. For
purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree medical and
dental insurance benefits under AEPSC's plans, practices, programs
and policies, the Executive shall be considered to have remained
employed during the three (3) year period and to have retired on the
last day of the three (3) year period;
(b) AEPSC shall, at its sole expense as incurred, provide the Executive
with outplacement services the scope and provider of which shall be
selected by the Executive in the Executive's sole discretion (but at
a cost to AEPSC of not more that $30,000) or, at the Executive's
option, the use of comparable and accessible office space, office
supplies and equipment and secretarial services for a period not to
exceed one year, which in the aggregate are of comparable cost to
the Corporation as the outplacement services; and
(c) AEPSC shall transfer to the Executive, at no cost to the Executive,
the title to AEPSC's car being used by the Executive as of the date
of termination.
(d) To the extent any benefits described in this Article III, Section
3.2 cannot be provided pursuant to the appropriate plan or program
maintained by AEPSC, AEPSC shall provide such benefits outside such
plan or program at no additional cost (including without limitation
tax cost) to the Executive.
3.3 Notwithstanding the foregoing;
(a) The severance payments and benefits provided under Sections 3.1 and
3.2 hereof shall be subject to, and conditioned upon, the waiver of
any other cash severance payment or other benefits provided by AEPSC
pursuant to any other severance agreement between AEPSC and the
Executive. No amount shall be payable under this Agreement to, or
on behalf of the Executive, if the Executive elects benefits under
any other cash severance plan or program, or any other special pay
arrangement with respect to the termination of the Executive's
employment.
(b) The Executive agrees that at all times following termination, the
Executive will not, without the prior written consent of AEPSC or
the Corporation, disclose to any person, firm or corporation any
"confidential information," of AEPSC or the Corporation which is now
known to the Executive or which hereafter may become known to the
Executive as a result of the Executive's employment or association
with AEPSC or the Corporation, unless such disclosure is required
under the terms of a valid and effective subpoena or order issued by
a court or governmental body; provided, however, that the foregoing
shall not apply to confidential information which becomes publicly
disseminated by means other than a breach of this provision. It is
recognized that damages in the event of breach of this Section
3.3(ii) by the Executive would be difficult, if not impossible, to
ascertain, and it is therefore agreed that AEPSC and the
Corporation, in addition to and without limiting any other remedy or
right that AEPSC or the Corporation may have, shall have the right
to an injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such breach, and the Executive hereby
waives any and all defenses the Executive may have on the ground of
lack of jurisdiction or competence of the court to grant such an
injunction or other equitable relief. The existence of this
right shall not preclude AEPSC or the Corporation from pursuing any
other rights or remedies at law or in equity which AEPSC or the
Corporation may have.
"Confidential information" shall mean any confidential concepts,
ideas, information and materials relating to AEPSC or the
Corporation, including, but not limited to, client records, client
lists, economic and financial analysis, financial data, customer
contracts, notes, memoranda, lists, books, correspondence, manuals,
reports or research, whether developed by AEPSC or the Corporation
or developed by the Executive acting alone or jointly with AEPSC or
the Corporation while the Executive was employed by AEPSC.
3.4 Notwithstanding anything to the contrary in this Agreement, in the
event that any payment or distribution by AEPSC to or for the benefit of the
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (a "Payment"), would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest or
penalties, are hereinafter collectively referred to as the "Excise Tax"), AEPSC
shall pay to the Executive an additional payment (a "Gross-up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed on any Gross-up Payment, the Executive retains an amount of the
Gross-up Payment equal to the Excise Tax imposed upon the Payments. AEPSC and
the Executive shall make an initial determination as to whether a Gross-up
Payment is required and the amount of any such Gross-up Payment. Executive shall
notify AEPSC immediately in writing of any claim by the Internal Revenue Service
which, if successful, would require AEPSC to make a Gross-up Payment (or a
Gross-up Payment in excess of that, if any, initially determined by AEPSC and
the Executive) within five days of the receipt of such claim. AEPSC shall notify
the Executive in writing at least five days prior to the due date of any
response required with respect to such claim, or such shorter time period
following AEPSC's receipt of the notice, if it plans to contest the claim. If
AEPSC decides to contest such claim, the Executive shall cooperate fully with
AEPSC in such action; provided, however, AEPSC shall bear and pay directly or
indirectly all costs and expenses (including additional interest and penalties)
incurred in connection with such action and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of
AEPSC's action. If, as a result of AEPSC's action with respect to a claim, the
Executive receives a refund of any amount paid by AEPSC with respect to such
claim, the Executive shall promptly pay such refund to AEPSC. If AEPSC fails to
timely notify the Executive whether it will contest such claim or AEPSC
determines not to contest such claim, then AEPSC shall immediately pay to the
Executive the portion of such claim, if any, which it has not previously paid to
the Executive.
3.5 The obligations of AEPSC to pay the benefits described in Sections 3.1
and 3.2 shall be absolute and unconditional and shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which AEPSC may have against the Executive.
In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement, nor shall the amount of any
payment hereunder be reduced by any compensation earned by the Executive as a
result of employment by another employer, except as specifically provided in
Section 3.2.
ARTICLE IV
SUCCESSOR TO CORPORATION
This Agreement shall bind any successor of AEPSC or the Corporation, its
assets or its businesses (whether direct or indirect, by purchase, merger,
consolidation or otherwise) in the same manner and to the same extent that AEPSC
or the Corporation would be obligated under this Agreement if no succession had
taken place.
In the case of any transaction in which a successor would not by the
foregoing provision or by operation of law be bound by this Agreement, AEPSC and
the Corporation shall require such successor expressly and unconditionally to
assume and agree to perform AEPSC's and the Corporation's obligations under this
Agreement, in the same manner and to the same extent that AEPSC and the
Corporation would be required to perform if no such succession had taken place.
The term "Corporation," as used in this Agreement, shall mean the Corporation as
hereinbefore defined and any successor or assignee to the business assets which
by reason hereof becomes bound by this Agreement.
ARTICLE V
MISCELLANEOUS
5.1 Any notices and all other communications provided for herein shall be
in writing and shall be deemed to have been duly given when delivered or mailed,
by certified or registered mail, return receipt requested, postage prepaid
addressed to the respective addresses as follows:
To AEPSC:
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To the Executive
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5.2 No provision of this Agreement may be modified, waived or
discharged except in a writing specifically referring to such provision and
signed by the party against which enforcement of such modification, waiver or
discharge is sought. No waiver by either party hereto of the breach of any
condition or provision of this Agreement shall be deemed a waiver of any other
condition or provision at the same or any other time.
5.3 The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Ohio.
5.4 The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
5.5 This Agreement does not constitute a contract of employment or impose
on the Executive, AEPSC or the Corporation any obligation to retain the
Executive as an employee, to change the status of the Executive's employment, or
to change AEPSC's policies regarding the termination of employment.
5.6 If the Executive institutes any legal action in seeking to obtain or
enforce or is required to defend in any legal action the validity or
enforceability of, any right or benefit provided by this Plan, AEPSC will pay
for all actual and reasonable legal fees and expenses incurred (as incurred) by
the Executive, regardless of the outcome of such action; provided, however, that
if such action instituted by the Executive is found by a court of competent
jurisdiction to be frivolous, the Executive shall not be entitled to legal fees
and expenses and shall be liable to AEPSC for amounts already paid for this
purpose.
5.7 If the Executive makes a written request alleging a right to receive
benefits under this Agreement or alleging a right to receive an adjustment in
benefits being paid under the Agreement, AEPSC shall treat it as a claim for
benefit. All claims for benefit under the Agreement shall be sent to the Human
Resources Department of AEPSC and must be received within 30 days after the Date
of Termination. If AEPSC determines that the Executive who has claimed a right
to receive benefits, or different benefits, under the Agreement is not entitled
to receive all or any part of the benefits claimed, it will inform the Executive
in writing of its determination and the reasons therefor in terms calculated to
be understood by the Executive. The notice will be sent within 90 days of the
claim unless AEPSC determines additional time, not exceeding 90 days, is needed.
The notice shall make specific reference to the pertinent Agreement provisions
on which the denial is based, and describe any additional material or
information, if any, necessary for the Executive to perfect the claim and the
reason any such addition material or information is necessary. Such notice
shall, in addition, inform the Executive what procedure the Executive should
follow to take advantage of the review procedures set forth below in the event
the Executive desires to contest the denial of the claim. The Executive may
within 90 days thereafter submit in writing to AEPSC a notice that the Executive
contests the denial of the claim by AEPSC and desires a further review. AEPSC
shall within 60 days thereafter review the claim and authorize the Executive to
appear personally and review pertinent documents and submit issues and comments
relating to the claim to the persons responsible for making the determination on
behalf of AEPSC. AEPSC will render its final decision with specific reasons
therefore in writing and will transmit it to the Executive within 60 days of the
written request for review, unless AEPSC determines additional time, not
exceeding 60 days, is needed, and so notifies the Executive. If AEPSC fails to
respond to a claim filed in accordance with the foregoing within 60 days or any
such extended period, AEPSC shall be deemed to have denied the claim.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
American Electric Power Service Corporation
By__________________________________
(Title)
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Executive
