Document:

ex10s.htm

Exhibit 10(s)

 

AMERICAN ELECTRIC POWER SERVICE CORPORATION

CHANGE IN CONTROL AGREEMENT

As Revised Effective January 1, 2013

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

Whereas, AEPSC therefore previously established the American Electric Power Service Corporation Change In Control Agreement (the “Agreement”), the most recent version of which was set forth in a document dated effective January 1, 2012; and

Whereas, the Human Resources Committee of the Board of the Corporation has a long-standing policy directing that tax gross-up provisions be phased out of employee agreements and benefit plans and, pursuant to this policy, has directed that, as a condition of any promotion on or after January 1, 2012, Grandfathered Executives entitled to the tax-gross-up described in Section 3.4 shall lose such status;

Now, Therefore, AEPSC hereby amends the Agreement in its entirety.

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 

 

  

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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, 2012, 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.  References in this agreement to the Executive shall be construed to include a Grandfathered Executive.

(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;

  

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(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.

  

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(n)  “Grandfathered Executive” means an individual who became an Executive [as defined in Article I(l), taking into account this Agreement and  any agreement considered by the Human Resources Committee of the Board of the Corporation to be a predecessor to this Agreement] prior to October 1, 2009, and who continuously has remained such an Executive until becoming entitled to benefits set forth in this Agreement, unless such Executive either (i) is promoted to a higher salary grade effective on or after January 1, 2012 (without regard to whether the Executive's job title or duties changes) or (ii) otherwise has agreed to waive “Grandfathered Executive” status.

(o)  “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.  For purposes of this Article I(o), (1) 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, and (2) if an Executive’s level of services decreases to 50% or less of the average level of service performed during the previous 36-month period but does not completely end, such decrease shall not, of itself, be considered a Qualifying Termination, but may, under appropriate circumstance be taken into account in determining whether the Executive has Good Reason for Terminating employment, provided that if the Executive fails to establish that such decrease constitutes Good Reason for purposes of this Agreement, any subsequent termination of the Executive’s employment shall not be considered a Qualifying Termination.

(p)  “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.

(q)  “Target Annual Incentive” shall mean the award that the Executive would have received under the 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 

 

  

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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.

(r)  “Taxable Year” shall mean the taxable year of the Executive for federal income tax purposes, unless the context clearly indicates that the taxable year of a different taxpayer was intended.

(s)  “Termination” means those circumstances considered to be a separation from service, determined in a manner consistent with the written policies adopted by the HR Committee of the Corporation from time to time to the extent such policies are consistent with the requirements imposed under Code Section 409A(a)(2)(A)(i).

(t)  “Triggering Event” shall mean the event that triggered the Qualifying Termination (i.e., the Termination of the Executive’s employment or, if the Qualifying Termination is specified in Article I(o)(A) or (B), the Change in Control).

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 Corporation.  For example, this Agreement shall terminate if the Executive’s position is eliminated and the Executive’s employment is Terminated, other than in connection with a Change In Control of the Corporation, (i) due to a downsizing, consolidation or restructuring of AEPSC or of any other subsidiary of the Corporation or (ii) due to the sale, disposition or divestiture of all or a portion of AEPSC or of any other subsidiary of the Corporation.

  

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ARTICLE III

COMPENSATION UPON A QUALIFYING TERMINATION IN CONNECTION WITH A CHANGE IN CONTROL

3.1           Except as otherwise provided in Section 3.3, 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)

	
As soon as practicable following 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 current plan year’s 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, except that annual incentive plans which do not have predetermined annual target awards for participants shall have their pro-rated incentive compensation award for the current plan year paid as soon as practicable, and (3) any accrued vacation pay that otherwise would be available upon the Executive’s Termination of employment with AEPSC, in each case to the extent not theretofore paid and in full satisfaction of the rights of the Executive thereto; provided, however, in the case of a Qualifying Termination in the circumstances specified in Article I(o)(B), payment of the amount described in subsection (2) of this Section 3.1(a) shall not be made until immediately after the Change in Control event or circumstance; and

	
  

	
(b)

	
If the Executive timely satisfies the conditions set forth in Section 3.3, AEPSC shall make a lump sum cash payment to the Executive in an amount equal to the CIC Multiple times the Executive’s Annual Compensation. If the Qualifying Termination is specified in Article I(o) (A) or (B), no such lump sum payment shall be made unless and until the Change in Control related to the Qualifying Termination shall have occurred.  If any of the periods specified for timely satisfaction of the conditions set forth in Section 3.3 shall end in a Taxable Year that is different from the Taxable Year of the Triggering Event, the lump sum payment specified in this paragraph (b) shall not be made until the Taxable Year in which such period ends, provided that such payment shall be made no later than the 15th day of the third month of that later Taxable Year.

3.2           The Executive shall be entitled to such outplacement services and other non-cash severance or separation benefits as may then be available under the terms of a plan or agreement to groups of employees of AEPSC in addition to Executives who are covered under the terms of this or a similar agreement.  See also section 3.3(b).  To the 

 

  

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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 to the Executive.

 

3.3           Notwithstanding the foregoing,

	
  

	
(a)

	
The severance payments and benefits provided under Sections 3.1(a)(2), 3.1(b), 3.2 and, if applicable, 3.4 hereof shall be conditioned upon the Executive executing a release within the period specified therein, but in no event later than sixty (60) days after the Triggering Event, in the form established by the Corporation or by AEPSC, releasing the Corporation, AEPSC and their shareholders, partners, officers, directors, employees and agents from any and all claims and from any and all causes of action of kind or character, including but not limited to all claims or causes of action arising out of Executive’s employment with the Corporation or AEPSC or the termination of such employment.

	
  

	
(b)

	
The severance payments and benefits provided under Sections 3.1(a)(2), 3.1(b), 3.2 and, if applicable, 3.4 hereof shall be subject to, and conditioned upon, the timely waiver of any other cash severance payment or other benefits provided by AEPSC pursuant to any other severance agreement between AEPSC and the Executive.  Such waiver shall not be considered timely unless received by AEPSC within sixty (60) days after the Triggering Event. 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.

	
  

	
(c)

	
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(c) 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 

 

 

 

  

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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, propriety and or trade secret information, including, but not limited to, concepts, ideas, information and materials relating to AEPSC or the Corporation, client records, client lists, economic and financial analysis, financial data, customer contracts, marketing plans, 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, but subject to the requirements of Section 3.3, in the event that any payment or distribution by AEPSC to or for the benefit of any Grandfathered 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 Internal Revenue Code of 1986, as amended (the “Code”) (or any successor provision thereto) by reason of being “contingent on a change in ownership or control” of the Corporation, within the meaning of Section 280G of the Code (or any successor provision thereto) or any interest or penalties with respect to such excise tax other than any such amount as may become payable by the Grandfathered Executive by reason of Code Section 409A (such excise tax, together with any such interest or penalties, are hereinafter collectively referred to as the "Excise Tax"), and the aggregate total of such Payments (the “Total Payments”) is determined to be an “excess parachute payment” pursuant to Code Section 280G with the effect that the Grandfathered Executive is liable for the payment of the Excise Tax.

	
  

	
(a)

	
If the Total Payments do not exceed 105% of the amount as would trigger the Grandfathered Executive having any “parachute payment” as described in Code Section 280G(b)(2), then, after taking into account any reduction in the Total Payments provided by reason of Code Section 280G in such other plans, arrangements or agreements, the cash payments provided in Section 3.2 of this Agreement shall first be reduced, and the noncash payments and benefits shall thereafter be reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax; provided, however, that the Grandfathered Executive may elect (at any time prior to the payment of any Total Payment under this Agreement) to have the noncash payments and benefits reduced (or eliminated) prior to any reduction of the cash payments under this Agreement.

  

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(b)

	
If the Total Payments exceed 105% of the amount as would trigger the Grandfathered Executive having any “parachute payment” as described in Code Section 280G(b)(2), then, AEPSC shall pay to the Grandfathered Executive an additional payment (a "Gross-up Payment") in an amount such that after payment by the Grandfathered Executive of all taxes (including any interest or penalties imposed with respect to such taxes, but excluding any such taxes, interest or penalties as may be imposed on the Grandfathered Executive pursuant to Code Section 409A), including any Excise Tax imposed on any Gross-up Payment, the Grandfathered Executive retains an amount of the Gross-up Payment equal to the Excise Tax imposed upon the Payments.

	
  

	
(c)

	
All determinations required to be made under this Section 3.4, including the assumptions to be utilized in arriving at such determinations and whether an Excise Tax is payable by the Grandfathered Executive and the amount of such Excise Tax, shall be made by a nationally recognized tax preparation, financial counseling or public accounting firm (the “Tax Firm”) that is experienced in 280G calculations and that is selected by AEPSC prior to the Change in Control.  The Tax Firm shall be directed by AEPSC to submit its preliminary determination and detailed supporting calculations to both AEPSC and the Grandfathered Executive within 15 calendar days after the date of the Grandfathered Executive’s Termination of employment, if applicable, and any other such time or times as may be requested by AEPSC or the Grandfathered Executive.  If the Tax Firm determines that Excise Tax would be payable by the Grandfathered Executive if not for the applicability of Section 3.4(a), AEPSC shall reduce the payments as described in said Section 3.4(a) in a manner consistent with determinations made by the Tax Firm.  If the Tax Firm determines that a Gross-up Payment to the Grandfathered Executive is triggered pursuant to Section 3.4(b), AEPSC shall make the Gross-Up Payment attributable thereto.  If the Tax Firm determines that no Excise Tax is payable by the Grandfathered Executive, it shall, at the same time as it makes such determination, furnish the Grandfathered Executive with an opinion that she has substantial authority not to report any Excise Tax on her federal, state, local income or other tax return.  All fees and expenses of the Tax Firm shall be paid by AEPSC in connection with the calculations required by this section.

	
  

	
(d)

	
The federal, state and local income or other tax returns filed by the Grandfathered Executive (or any filing made by a consolidated tax group, which includes AEPSC) shall be prepared and filed on a consistent basis with the determination of the Tax Firm with respect to the Excise Tax payable by the Grandfathered Executive.  The Grandfathered Executive shall make proper payment of the amount of any Excise Tax, and at the request of AEPSC, provide to AEPSC true and correct copies (with any amendments) of her federal income tax return as filed with the Internal

 

 

 

  

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Revenue and such other documents reasonably requested by AEPSC, evidencing such payment.

 

	
  

	
(e)

	
The Grandfathered Executive shall notify AEPSC immediately in writing of any claim by the Internal Revenue Service that, if successful, would require AEPSC to make a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially determined under Section 3.4(b)) within five days of the receipt of such claim.  AEPSC shall notify the Grandfathered 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 Grandfathered 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 Grandfathered 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 the Grandfathered Executive receives a refund of any amount paid by AEPSC with respect to such claim, the Grandfathered Executive shall promptly pay to AEPSC (i) such refund and (ii) the amount of any Gross-up Payment associated with such refund that is not included in the amount of such refund (such as taxes other than federal taxes included in the Gross-up Payment).  If AEPSC fails to timely notify the Grandfathered Executive whether it will contest such claim or AEPSC determines not to contest such claim, then AEPSC shall immediately pay to the Grandfathered Executive the portion of such claim, if any, which it has not previously paid to the Grandfathered Executive as well as the amount of any Gross-up Payment (calculated pursuant to Section 3.4) associated with such payment but that has not otherwise been paid to the Grandfathered Executive.

	
  

	
(f)

	
Unless otherwise required by this Agreement to be paid earlier, any Gross-up Payment required under this Section 3.4 shall be paid no later than the end of the Grandfathered Executive’s Taxable Year next following the Grandfathered Executive’s Taxable Year in which the related taxes are remitted to the applicable taxing authority.

3.5           The obligations of AEPSC to pay the benefits described in Sections 3.1, 3.2, and if applicable, 3.4, shall, subject to Section 3.3, 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; provided, however, AEPSC shall comply with and enforce obligations of AEPSC or the Executive under law determined by AEPSC to be applicable, including any withholding in order to comply with a court order.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the 

 

  

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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.

3.6           Executive alone shall be liable for the payment of any and all tax cost, incremental or otherwise, incurred by the Executive in connection with the provision of any benefits described in this Agreement.  No provision of this Agreement shall be interpreted to provide for the gross-up or other mitigation of any amount payable or benefit provided to the Executive under the terms of this Agreement as a result of such taxes, except to the extent specifically set forth in Section 3.4.

3.7           Notwithstanding any provision of this Agreement to the contrary, if the Executive is a “specified employee” (as determined with respect AEPSC for purposes of Code Section 409A), the Executive shall not be entitled to any payments of amounts determined to be nonqualified deferred compensation within the meaning of Code Section 409A upon separation of service prior to the earliest of (1) the date that is six months after the date of separation from service for any reason other than death,  (2) the date of the Executive’s death, or (3) such earlier time that would not cause the Executive to incur any excise tax under Code Section 409A.

ARTICLE IV

SUCCESSOR TO CORPORATION

4.1           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.

4.2           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 its business or assets which by reason hereof becomes bound by this Agreement.

  

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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 AEPSC at its principal office and to the Executive at the Executive’s residence or at such other addresses as AEPSC or the Executive shall designate in writing.

5.2           Except to the extent otherwise provided in Article II (Term of Agreement), no provision of this Agreement may be modified, waived or discharged except in writing specifically referring to such provision and signed by either AEPSC or the Executive against whom enforcement of such modification, waiver or discharge is sought.  No waiver by either AEPSC or the Executive 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 Agreement, 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 Executive’s Termination of employment (or, if the Qualifying Termination is specified in Article I(o)(A) or (B), within 30 days after the Change in Control).  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 

 

  

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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 additional 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 therefor 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.

5.8           AEPSC intends that the design and administration of this Agreement are intended to comply with the requirements of Code Section 409A to the extent such section is effective and applicable to amounts that may become available hereunder. However, no Executive, beneficiary or any other person shall have any recourse against AEPSC, the Corporation, or any of their affiliates, employees, agents, successors, assigns or other representatives if this condition is determined not to be satisfied.

AEPSC has caused this Change In Control Agreement to be signed on behalf of all participating employers as of the 29th day of November, 2012.

 

	  	
 

American Electric Power Service Corporation

	  	 
	  	
By  /s/ Nicholas K. Akins

	  	
Nicholas K. Akins

	  	
President & CEO

  

14ex10t2a.htm

Exhibit 10(t)(2)(A)

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

AMENDED AND RESTATED

AMERICAN ELECTRIC POWER SYSTEM

LONG-TERM INCENTIVE PLAN

This award agreement is being furnished to you as a participant in the Amended and Restated American Electric Power System Long-Term Incentive Plan (LTIP) under which the restricted stock units described herein are awarded.

[Name] is hereby granted the number of restricted stock units listed below:

Number of Restricted Stock Units Granted:                           <<# Shares Granted>>

Grant Date:                                                                                  December 11, 2012

Effective Date:                                                                                    January 1, 2013

 

	
Vesting Schedule

	
Vesting Date

May 1, 2014 (“First Vesting Date”)

May 1, 2015

May 1, 2016

	
Percentage of Granted Units

33 1/3%

33 1/3%

33 1/3%

 

Restricted Stock Units (“RSUs”)

This award agreement entitles you to the aggregate number of RSUs specified above ("Granted RSUs") each of which, if and when it vests, will convert to a single share of AEP's Common Stock, $6.50 par value (except to the extent otherwise specified under certain circumstances for Section 16 Officers).  Upon vesting, RSUs are converted to AEP Common Stock (except to the extent otherwise specified under certain circumstances for Section 16 Officers) and delivered to you in accordance with the other terms and provisions of this Agreement.  RSUs have no voting rights and are not entitled to receive any dividend declared on AEP Common Stock.  However, RSUs are entitled to additional RSUs (“Dividend Equivalent RSUs”) of an equal value to dividends paid on AEP Common Stock, as described below.

Dividend Equivalent RSUs

Additional Dividend Equivalent RSUs with a value equal to the value of dividends paid on AEP Common Stock are credited on outstanding RSUs.  The number of additional RSUs awarded due to dividends is calculated as the value of the dividend for a number of shares of AEP common stock equal to the number of outstanding RSUs divided by the closing price of AEP Common Stock on the dividend payment date.

No additional RSUs will be awarded as Dividend Equivalent RSUs after conversion of the related RSUs into Common Stock or after payment of cash for the related RSUs for Section 

 

  

  

  

16 Officers, as applicable.  See Conversion of Vested Stock Units and Delivery of Shares, below.

Vesting of Granted Restricted Stock Units

Your Granted RSUs shall vest, subject to your continuous AEP employment through the vesting date, in accordance with the above vesting schedule, except as otherwise provided for in this Agreement.  See also the sections of this award agreement entitled Vesting of Dividend Equivalent RSUs and Accelerated Vesting of Restricted Stock Units below.

Vesting of Dividend Equivalent RSUs

Dividend Equivalent RSUs vest at the same time as the Granted RSUs to which they relate become vested.  Also see the sections of this award agreement entitled Vesting of Granted Restricted Stock Units above and Accelerated Vesting of Restricted Stock Units below.

Accelerated Vesting of Restricted Stock Units

RSUs may vest earlier than the dates shown in the Vesting Schedule, above, as follows:

Prorated Vesting for Severance:  As of your Severance Date, a fractional portion of your Granted RSUs (and related Dividend Equivalent RSUs) shall vest. The portion of your Granted RSUs (and related Dividend Equivalent RSUs) that vest under this provision is determined as follows: 
 

The number of whole months from the Effective Date through the date your employment with AEP Terminates as the direct result of the Triggering Event divided by the number of whole months from the Effective Date until the final Vesting Date specified in the Vesting Schedule, above;

 

Reduced by

 

The cumulative Percentage of Granted Units for which the Vesting Date specified in the Vesting Schedule has passed as of the date your employment with AEP Terminates as the direct result of the Triggering Event.

For example, if you would incur a Severance Date on July 10, 2015 in connection with the Termination of your employment on June 30, 2015 as the direct result of a Triggering Event, the fractional percentage of your Granted RSUs would be determined as follows: there are 30 whole months from the Effective Date divided by 40 whole months in the vesting period (30/40 or 75%), reduced by the 66-2/3% of your Granted RSUs that had become vested through June 30, 2015, such that 8-1/3% (75% - 66-2/3%) of your Granted RSUs (along with any additional Dividend Equivalent RSUs related to that portion) would become vested as of your July 10, 2015 Severance Date.

 

RSUs that vest as a result of your severance shall be converted to AEP Common Stock and delivered to you as of your Severance Date in accordance with the section of this award agreement entitled Delivery of Shares of Common Stock, below.

Prorated Vesting for Officers who Terminate Due to Mandatory Retirement at Age 65:  As of your Mandatory Retirement Date, a fractional portion of your Granted RSUs 

 

  

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(and related Dividend Equivalent RSUs) shall vest. The portion of your Granted RSUs (and related Dividend Equivalent RSUs) that vest under this provision is determined as follows:

 

The number of whole months from the Effective Date through your Mandatory Retirement Date divided by the number of whole months from the Effective Date until the final Vesting Date specified in the Vesting Schedule, above;

 

Reduced by

 

The cumulative Percentage of Granted Units for which the Vesting Date specified in the Vesting Schedule has passed as of your Mandatory Retirement Date.

For example, if you would incur a Mandatory Retirement Date on September 15, 2014, the fractional percentage of your Granted RSUs would be determined as follows: there are 20 whole months from the Effective Date divided by 40 whole months in the vesting period (20/40 or 50%), reduced by the 33-1/3% of your Granted RSUs that had become vested through September 15, 2014, such that 16-2/3% (50% - 33-1/3%) of your Granted RSUs (along with any additional Dividend Equivalent RSUs related to that portion) would become vested as of your September 15, 2014 Mandatory Retirement Date.

RSUs that vest as a result of your Mandatory Retirement Date shall be converted to AEP Common Stock and delivered to you as of your Mandatory Retirement Date in accordance with the section of this award agreement entitled Delivery of Shares of Common Stock, below.  If you hold a salary grade 44 or higher position with AEP, the Shares of Common Stock delivered to you by reason of this section shall be subject to transfer restrictions such that you will be required to retain ownership of such Shares until the second anniversary of your Mandatory Retirement Date, except that you will be permitted to cause the sale of so many of such Shares as would allow you to cover your liability for the applicable taxes directly associated with your receipt of those Shares.

Death:  Upon your death prior to the Termination of your employment with AEP, the RSUs, to the extent outstanding but not vested, shall vest, be converted into AEP Common Stock and delivered to your designated beneficiaries under the LTIP (or if you have not effectively designated any beneficiary under the LTIP, to your estate) as soon as administratively practicable following your death.

Change In Control:  Upon a Qualifying Termination of your employment with AEP, the RSUs, to the extent outstanding but  not vested, shall vest, be converted into AEP Common Stock and delivered as of the date of the Qualifying Termination in accordance with the section of this award agreement entitled Delivery of Shares of Common Stock, below.

Other Terminations

Except as provided above under the Accelerated Vesting section with respect to a Change in Control and as provided in the following sentence involving circumstances that may give rise to a Severance Date for you, upon the Termination of your employment with AEP for any reason prior to your Mandatory Retirement Date or your death, any unvested Granted RSUs and unvested Dividend Equivalent RSUs shall be forfeited, and you shall have no 

 

  

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rights or interests in or with respect to such unvested RSUs.  If your employment with AEP is Terminated under circumstances that may give rise to a Severance Date for you, to the extent your unvested Granted RSUs and unvested Dividend Equivalent RSUs do not vest by reason of a Severance Date for you, they shall be forfeited as of the date it becomes certain that such Severance Date shall not occur.

Definitions

In addition to the terms defined elsewhere in this Agreement, the following shall be defined terms when used in this Agreement:

“AEP” means American Electric Power Company, Inc.; a New York corporation; and its subsidiaries and affiliates.

“Cause” means any one or more of the following grounds: (i) failure or refusal to perform your assigned duties and responsibilities in a competent or satisfactory manner as determined by your AEP employer; (ii) commission of an act of dishonesty, including, but not limited to, misappropriation of funds or any property of AEP; (iii) engagement in activities or conduct injurious to the best interest or reputation of AEP as determined by your AEP employer; (iv) insubordination; (v) a violation of any of the materials terms and conditions of any written agreement or agreements you may from time to time have with AEP; (vi)  violation of any of AEP’s rules of conduct of behavior, such as may be provided in any employee handbook or as AEP may promulgate from time to time; (vii) commission of a crime which is a felony, a misdemeanor involving an act or moral turpitude, or a misdemeanor committed in connection with your employment with AEP which is injurious to the best interest or reputation of AEP as determined by your AEP employer; or (viii) disclosure, dissemination, or misappropriation of confidential, proprietary, and/or trade secret information.

“Disability” or “Disabled” means you that you have an illness or injury for which you have been determined to be entitled to benefits under the terms of the LTD Plan. You shall not be considered Disabled for purposes of this Award Agreement effective at any time you are not entitled to benefits under the LTD Plan, under such circumstances that include (but are not limited to) the termination of the LTD Plan or your not being in a classification eligible to participate in the LTD Plan.

“Good Reason” means

 

	
  

	
(i)

	
an adverse change in your status, duties or responsibilities as an employee of AEP as in effect immediately prior to the Change In Control;

 

	
  

	
(ii)

	
failure of AEP to pay or provide you in a timely fashion the salary or benefits to which you are entitled under any employment agreement between AEP and you in effect on the date of the Change In Control, or under any benefit plans or policies in which you were participating at the time of the Change In Control;

 

	
  

	
(iii)

	
the reduction of your base salary as in effect on the date of the Change In Control;

 

  

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(iv)

	
the taking of any action by AEP (including the elimination of a plan without providing substitutes therefor, the reduction of your awards thereunder or failure to continue your participation therein) that would substantially diminish the aggregate projected value of your awards or benefits under AEP’s benefit plans or policies in which you were participating at the time of the Change In Control; provided, however, that the diminishment of such awards or benefits that apply to other employees of AEP holding positions in your salary grade or lower in addition to you shall be disregarded; or

 

	
  

	
(v)

	
the relocation, without your prior approval, of the office at which you are to perform services on behalf of AEP to a location more than fifty (50) miles from its location immediately prior to the Change In Control.

Any circumstance described in this definition shall constitute Good Reason even if such circumstance would not constitute a breach by AEP of the terms of an employment agreement between AEP and you in effect on the date of the Change In Control.  However, such circumstance shall not constitute Good Reason unless (1) within ninety (90) days of the initial existence of such circumstance, you shall have given AEP written notice of such circumstance, and (2) AEP shall have failed to remedy such circumstance within thirty (30) days after its receipt of such notice.  Such written notice to be provided by you to AEP shall specify (A) the effective date for your proposed termination of employment (provided that such effective date may not precede the expiration of the period for AEP’s opportunity to remedy), (B) reasonable detail of the facts and circumstances claimed to provide the basis for termination, and (3) your belief that such facts and circumstance would constitute Good Reason for purposes of this Agreement.  Your continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstances constituting Good Reason hereunder.

 

 

“Key Employee” means each employees who is classified as a “specified employee” at the time of Termination in accordance with policies adopted by AEP from in order to comply with the requirements of Section 409A(a)(2)(B)(i) of the Internal

Revenue Code.  As of the grant date of this award, such policies specify that Key Employees for the period February 1 through the next following January 31 are those employees who, as of the December 31 immediately preceding the February 1 beginning date either (a) held the office of Vice President or higher with an AEP System company; or (b) were employed by an AEP System company at exempt salary grade 34 or higher.

“LTD Plan” means the American Electric Power System Long Term Disability Plan, as amended from time to time, or any plan providing continuation of cash payments due to your illness or injury that may reasonably be expected to prevent you from performing the duties of your occupation for a period longer than at least 6 months that is designated as a successor to that plan or as a replacement for that plan with respect to you.

“Mandatory Retirement Date” means the date of your Termination, if all of the following conditions are satisfied: (i) you are an officer of AEP subject to mandatory retirement at age 65, and (ii) your employment with AEP Terminates on the date you attain 

 

  

5

  

age 65 or such later date specified by resolution of the Board of Directors of AEP (or such person or committee to whom the Board delegates the authority to make such determinations) adopted prior to the date you attain age 65.

“Qualifying Termination” means, coincident with or within one (1) year after the date of a Change In Control, your Termination for any reason excluding (i) your death, (ii) your Disability, (iii) the exhaustion of your benefits under the terms of an applicable AEP sick pay plan or long-term disability plan (other than by reason of the amendment or termination of such a plan), (iv) your attaining your Mandatory Retirement Date, (v) by AEP for Cause or (vi) by you without Good Reason.  If your employment is Terminated during the term of this Agreement, but prior to a Change In Control, it shall not be considered a Qualifying Termination even if such Termination was (A) by AEP without Cause, or (B) by you based on events or circumstances that would constitute Good Reason if a Change in Control had occurred.

“Section 16 Officer” means any person who is determined by AEP to be subject to the disclosure requirements set forth in Section 16 of the Securities Exchange Act of 1934, as amended from time to time, or any successor statute.

“Severance Date” means the date that all of the following conditions are satisfied at least 4 business days before March 15 of the calendar year immediately following the calendar year in which your employment with AEP Terminates: (i) your Termination is not a Qualifying Termination, (ii) your employment with AEP is Terminated prior to your Mandatory Retirement Date in a manner that is the direct result of a Triggering Event and that is either (I) an involuntary Termination by the unilateral authority of AEP without cause, and not due to your implicit or explicit request, where you are willing and able to continue performing services, or (II) a voluntary Termination by you pursuant to a window program that has been designed and implemented by AEP in a manner that is not inconsistent with the requirements imposed by regulatory or other authoritative guidance issued under Code Section 409A with respect to separation pay plans, (iii) you are presented with and then timely sign and return an effective Severance and Release of All Claims Agreement; (iv) on or before the date your Severance and Release of All Claims Agreement becomes irrevocable by you, you neither receive an offer of employment with a purchaser or successor employer nor an offer of employment with AEP that is at the same or higher base pay (determined without regard to overtime pay, bonuses, premium payments, incentive compensation or any other form of additional compensation) and that does not require relocation of your primary residence.  For purposes of clause (ii), your employment will not be considered Terminated as the direct result of a Triggering Event if (A) your employment Terminates following the expiration of a specific term of employment previously identified between you and AEP, regardless of the reason for not extending or renewing your employment, or (B) you fail to continue to provide services to AEP up to and including the date established by AEP for the Termination of your employment pursuant to the Triggering Event, or (C) AEP does not present you with a Severance and Release of All Claims Agreement in connection with the Termination of your employment with AEP.  AEP retains sole discretion over any determination of whether and when it will present you with a Severance and Release of All Claims Agreement and the terms of any such agreement.

  

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“Severance and Release of All Claims Agreement” means a Severance and Release of All Claims Agreement in a form acceptable to AEP or its Subsidiary, whereby you agree to waive and release AEP, all AEP System companies and all of their respective officers, directors, employees, agents and representatives of and from any and all claims.

“Termination” means termination of employment with AEP for any reason; provided that determinations as to the circumstances that will be considered a Termination (including a leave of absence other than a leave of absence due to your Disability) shall be made in a manner consistent with the written policies adopted by the HRC from time to time to the extent such policies are consistent with the requirements imposed under Code 409A(a)(2)(A)(i).  Your employment with AEP will not be considered Terminated so long as you remain continuously Disabled.

“Triggering Event” means the restructuring, consolidation, downsizing, closing, sale and/or divestiture of AEP or part thereof under circumstances that are not a Change in Control.

“Vesting Date” means each date set forth above in the Vesting Schedule.

Restricted Stock Units Are Nontransferable

No RSUs shall be sold, exchanged, pledged, transferred, assigned, or otherwise encumbered, hypothecated or disposed of by you (or any beneficiary).

Recoupment of Incentive Compensation

By accepting this Award, you agree to reimburse AEP for compensation awarded, earned, received or paid to you under this Award agreement with respect to the relevant time period if the Board, in its discretion, determines that:

 

	
·  

	
This restricted stock unit award or any compensation resulting from it was predicated upon the achievement of financial or other results that were subsequently materially restated or corrected, and

 

	
·  

	
You engaged in misconduct that caused or partially caused the need for the restatement or correction, and

 

	
·  

	
A lower payment would have been made to you based upon the restated or corrected financial results.

Therefore, if and to the extent that, in the Board’s view, the above conditions have been met and such reimbursement is warranted by the facts and circumstances of the particular case or if the applicable legal requirements impose more stringent requirements on AEP to obtain reimbursement of such compensation, then you will be required to reimburse AEP for the value of such compensation paid to you.  AEP also may retain any deferred compensation previously credited to you and not paid, provided that AEP will retain such deferred compensation only if, when and to the extent that it otherwise becomes payable to you.  This right to reimbursement is in addition to, and not in substitution for, any and all other rights AEP might have to pursue reimbursement or such other remedies against an employee for 

 

  

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misconduct in the course of employment by AEP or otherwise based on applicable legal considerations, all of which are expressly retained by AEP.

Conversion of Vested Stock Units and Delivery of Shares

Conversion to Common Stock or Cash Payment:  Upon vesting, each vested RSU (including each vested Granted RSU and each vested Dividend Equivalent RSU) shall be converted into a single share of AEP Common Stock for delivery in accordance with the section of this award agreement entitled Delivery of Shares of Common Stock/Payment of Cash, below; provided that if you are a Section 16 Officer at the time of vesting under circumstances other than those described in the section of this award agreement entitled Accelerated Vesting of Restricted Stock Units, you will be paid an amount equal to your then vesting RSUs (including any fractional RSUs) multiplied by the average of the Fair Market Value of AEP Common Stock for the last 20 trading days prior to the Vesting Date.  Fractional RSUs that constitute less than a single share may be converted to cash at AEP’s option.

Delivery of Shares of Common Stock/Payment of Cash:  The shares of Common Stock resulting from the conversion of your vested RSUs shall be delivered (or, if you are a Section 16 Officer whose RSUs have vested under appropriate circumstances, cash payment for your vested RSUs will be made) to you or to an account set up for your benefit with a broker/dealer designated by the Company (the “Broker/Dealer Account”) within a reasonable time (generally 3 days) after such shares are converted (or such RSUs are valued) as described in the section of this award agreement entitled Conversion to Common Stock or Cash Payment, above.  Such shares shall be delivered (or, if you are a Section 16 Officer, cash payment for your vested RSUs will be made) on or before March 15 of the calendar year following the calendar year during which the RSUs became vested.

AEP Common Stock and all LTIP participants remain subject to all applicable legal and regulatory restrictions such as insider trading restrictions and black-out periods and as otherwise specified by this award agreement (see, for example, the section of this award agreement entitled Prorated Vesting for Officers who Terminate Due to Mandatory Retirement at Age 65).

Tax Withholding

AEP retains discretion to withhold any and all applicable income, employment and other taxes required to be withheld in connection with these RSUs.  AEP may reduce the number of vested RSUs credited to you or the number of shares of Common Stock delivered to you to satisfy such tax withholding obligation.  The amount of such reduction shall be based upon the Fair Market Value of AEP Common Stock at that time; provided, however, that any reduction to your vested RSUs for applicable tax withholding shall not exceed such limits as may be applicable to comply with the requirements of Code Section 409A.

LTIP Incorporated By Reference

This Agreement is subject in all respects to the terms and provisions of the LTIP, all the terms and provisions of which are made a part of and incorporated in this Agreement (as if they were expressly set forth herein).  In the event of any conflict between the terms of this 

 

  

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Agreement and the terms of the LTIP, the terms of the LTIP shall control.  Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto under the LTIP.

No Special Employment Rights

Nothing contained in the LTIP or this Agreement shall be construed or deemed by any person under any circumstances to bind the Company to continue your employment for the Vesting Period or for any other period.

Cancellation

The RSUs subject to this award agreement shall be canceled and be of no force or effect upon forfeiture in accordance with the terms and provisions of the relevant sections of this award agreement, including the section entitled Other Terminations, above.

Notice

Any Notice that may be required or permitted under this Agreement shall be in writing, and shall be delivered in person or via fax transmission, overnight courier service or certified mail, postage prepaid, properly addressed as follows:

Notice to AEP:  If such notice is to AEP, to the attention of the Executive Compensation Department, American Electric Power, 1 Riverside Plaza, Columbus, OH 43215, or at such other address as AEP, by notice to you, may designate in writing from time to time.

Notice to You:  If such notice is to you, at the address as shown on the records of AEP or at such other address as you, by notice to AEP, may designate in writing from time to time.

IN WITNESS WHEREOF, AEP has caused this Agreement to be executed by its duly authorized officer as of the Grant Date specified above. This Agreement will not become effective until you accept it.  If you have not properly accepted this Agreement by the day immediately preceding the First Vesting Date, (A) any Granted RSUs (and related Dividend Equivalent RSUs) to the extent not then vested shall be forfeited and (B) you shall be deemed to have accepted this Agreement only with respect to any RSUs and Dividend Equivalent RSUs that vested before the First Vesting Date.

AMERICAN ELECTRIC POWER COMPANY, INC.

 

                      

                                                            By:/s/ Nicholas K. Akins 

            Nicholas K. Akins

            President and Chief Executive Officer

  

9

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