FirstEnergy Corp. Executive and Directors Incentive Compensation Plan Restricted Stock Unit Agreement Award No.: RSUP10 Number of Shares Awarded: XXX shares Grantee: FORM OF GRANT GIVEN TO TOP 5
FirstEnergy
Corp.
Executive
and Directors Incentive Compensation Plan
Award
No.: RSUP10
Number of Shares
Awarded: XXX
shares
Grantee: FORM
OF GRANT GIVEN TO TOP 5
This
Restricted Stock Unit Agreement (the “Agreement”) is entered into as of the 3rd
day of March 2008 between FirstEnergy Corp. and the “Grantee." For
the purposes of this Agreement, the term “Company” or “FE” means FirstEnergy
Corp. and/or its subsidiaries, singularly or collectively.
SECTION
ONE - AWARD
As of the
date of this Agreement, in accordance with the FirstEnergy Corp. 2007 Incentive
Plan (the “Plan”) and the terms and conditions of this Agreement, the
Company grants to the Grantee the right to receive, at the end of the Period of
Restriction (as defined below) a number of shares common stock of the Company
(“Common Stock”) equal to number of restricted stock units set forth above (the
“Restricted Stock Units”), subject to adjustment based on FE’s performance as
described below.
SECTION
TWO - GENERAL TERMS
This
agreement is subject to the Plan and the following terms and
conditions:
Period
of Restriction
For the
purposes of this Agreement, “Period of Restriction” means the period beginning
on the Date of Grant set forth above and ending on the earliest of:
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a)
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5:00
p.m. Akron Time on March 3, 2011;
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b)
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The
date of the Grantee’s death;
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c)
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The
date that the Grantee’s employment is terminated due to Disability (as
defined, except as otherwise provided in "409A" below, under the then
established rules of the Company or any of its subsidiaries, as the case
may be); or
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d)
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The
date that Xxxxxxx’s employment is terminated at any time following a
Change in Control, provided that such termination occurs under the
conditions specified in either Section 5(a) or 5(b) of Grantee’s Special
Severance Agreement dated December 31, 2007, but without regard to the
thirty-six (36) month period specified in Section 5(a) or 5(b) and
provided further that such termination was not at Grantee's discretion
pursuant to Section 5(c) of Grantee's Special Severance Agreement, dated
December 31, 2007.
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In
addition, to the extent described under the caption “Forfeiture” below, the
Period of Restriction will end with respect to a pro rata portion of the
Restricted Stock Units if (a) the Grantee’s employment is terminated as a result
of involuntary termination under conditions in which the Grantee qualifies for,
elects to accept an employer severance benefit, if offered, and executes an
agreement to release the Company in full against any and all claims as required
by the arrangement or plan providing the employer severance benefit; (b) the
Grantee retires, or (c) the Grantee continues to be employed by FE but ceases to
be employed in an executive position during the three-year Performance
Period. Neither the Restricted Stock Units nor the right to receive
the Common Stock issuable under the Restricted Stock Units may be sold,
transferred, pledged or assigned by the Grantee until the end of the Period of
Restriction, except as set forth in Section Three of this
Agreement.
Performance
Adjusted Restricted Stock Units
If the
Delivery Date (as defined below under "Delivery of Common Stock") is March 3,
2011, the actual number of shares issuable under the Restricted Stock Units
awarded pursuant to this Agreement may be adjusted upward or downward by
twenty-five percent (25%) from the base number of shares issuable under the
Restricted Stock Units (as set forth in Section One of this Agreement),
including all Dividend Equivalents, based on FE’s performance against three key
metrics. The Committee has identified the three performance metrics
as Earnings Per Share, Safety Record, and Operational Performance
Index.
XX’s
performance against the three performance metrics will be evaluated, with
respect to each performance metric, by comparing the average of FE’s actual
annual performance over the three years beginning in the year of grant of this
Award to the average of the annual target performance levels established over
the same period to determine whether the Company has exceeded, met or fallen
below the target performance level for that particular performance metric. The
annual target performance level relating to each metric for each year will be
set by the Committee in February of that year. The following guidelines will be
used to adjust the number of shares issuable under the Restricted Stock Units
awarded pursuant to this Agreement:
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If
the Company’s average annual performance meets or exceeds the average of
the target performance levels established by the Committee with respect to
all three of the performance metrics identified above, the base number of
shares issuable under the Restricted Stock Units (as set forth in Section
One of this Agreement) and all Dividend Equivalents will be increased by
twenty-five percent (25%).
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·
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If
the Company’s average annual performance falls below the average of the
target performance levels established by the Committee with respect to all
three of the performance metrics identified above, the base number of
shares issuable under the Restricted Stock Units (as set forth in Section
One of this Agreement) and all Dividend Equivalents will be decreased by
twenty-five percent (25%).
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·
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If
the Company’s average annual performance meets or exceeds the average of
the target performance levels established by the Committee with respect to
one or more of the performance metrics identified above, but falls below
the average of the target performance levels with respect to one or more
of the other performance metrics, the base number of shares issuable under
the Restricted Stock Units (as set forth in Section One of this Agreement)
will not be increased or decreased. All Dividend Equivalents
will be paid.
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Withholding
Tax
The
Company shall sell shares on the open market in an amount sufficient to satisfy
federal (including FICA and Medicare), state, and/or local taxes required by law
to be withheld in connection with the grant of the Restricted Stock Units or the
delivery of shares of Common Stock subject to the Restricted Stock Units granted
under this Agreement, provided however that, pursuant to administrative rules
adopted by the Company, the Grantee may elect to have the Company sell shares on
the open market in an amount in excess of the applicable withholding amounts
required by law up to an amount not to exceed the total federal (including FICA
and Medicare), state and local taxes that could be payable by the
Grantee in connection with the grant of the Restricted Stock Units or the
issuance of shares of Common Stock subject to the Restricted Stock Units granted
under this Agreement.
Delivery
of Common Stock
The date
that Shares of Common Stock shall be delivered to the Grantee (the “Delivery
Date”) shall be as follows for each specified event:
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March
3, 2011 if the delivery is on account of paragraph a)
of Section Two entitled “Period of Restriction”, Xxxxxxx’s
retirement or if the Grantee continues to be employed by FE but ceases to
be employed in an executive position during the three-year Performance
Period;
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As
soon as practicable after the Grantee’s death or Disability pursuant to
paragraph b), c), or d) of Section Two entitled
“Period of Restriction”;
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Upon
payment of tax obligations and as soon as practicable after the
Delivery Date, the Company shall issue to the Grantee shares of FE Common Stock
under the Restricted Stock Units. The Company will issue a number of
shares of Common Stock equal to the number of Restricted Stock Units awarded
under this Agreement, as adjusted, less any shares withheld to cover the tax
obligations in accordance with the preceding paragraph; provided that, no
fractional shares of Common Stock will be issued under the Restricted Stock
Units and any fractional shares to which the Grantee would otherwise be entitled
will be rounded up to the next full share. All shares issued will be registered
in the name of the Grantee and will be held in safekeeping with FE.
Forfeiture
The
Grantee shall forfeit all of the Restricted Stock Units and any right under this
Agreement to receive Common Stock upon the occurrence of any of the following
events before the expiration of the Period of Restriction:
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Termination
of employment with the Company or its subsidiaries for any
reason. Notwithstanding the foregoing, no forfeiture shall
occur if termination of employment with the Company is due to death,
Disability (as defined under the then established rules of the Company or
any of its subsidiaries, as the case may be), or occurs at anytime
following a Change of Control under circumstances where the Grantee is
involuntarily terminated and would qualify for, elect to accept an
employer severance benefit, if offered, and execute an agreement to
release the Company in full against any and all claims as required by the
arrangement or plan providing the employer severance
benefit.
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Any
attempt to sell, transfer, pledge, or assign the Restricted Stock Units or
the right to receive the Common Stock issuable under the Restricted Stock
Units in violation of this
Agreement.
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If the
Grantee’s employment is involuntary terminated under conditions in which the
Grantee qualifies for, elects to accept an employer severance benefit, if
offered, and executes an agreement to release the Company in full against any
and all claims as required by the arrangement or plan providing the employer
severance benefit; or if the Grantee retires (as defined under the then
established rules of the Company or any of its subsidiaries, as the case may
be); or if the Grantee continues to be employed by FE but ceases to be employed
in an executive position during the three-year Performance Period the Restricted
Stock Units in this Agreement will be forfeited and payable as follows, subject
to Section 3.8 of the Plan:
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If
the Grantee’s employment terminates prior to a full month after the Date
of Grant, all Restricted Stock Units and any Restricted Stock Units earned
as Dividend Equivalents will be
forfeited.
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If
the Grantee’s employment terminates a full month or more after the Date of
Grant, the Grantee will be entitled to a prorated number of Restricted
Stock Units. The number of shares to be prorated will be
calculated as of the March 3, 2011 vesting date by multiplying the number
of shares initially awarded and all Dividend Equivalents earned through
the vesting date, by the number of full months served after the date of
grant, divided by thirty-six months. The prorated shares will
then be adjusted upward or downward by the performance factors in
accordance with the provisions under the caption “Performance Adjusted
Restricted Stock Units”, (as determined by the Compensation
Committee). All fractional shares will be rounded up to the
next full shares. The remaining portion of Restricted
Stock Units initially granted and all associated Dividend Equivalents will
be forfeited.
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Upon the
occurrence of any of the above events (for which no exception has been made as
set forth above) before the expiration of the Period of Restriction, the
Restricted Stock Units shall be forfeited by the Grantee to the Company and the
Grantee’s interest in the Restricted Stock Units and the Common Stock issuable
under the Restricted Stock Units, including the right to receive Dividend
Equivalents (as defined below) shall terminate immediately in accordance with
the foregoing, unless such forfeiture is waived in the sole discretion of the
Committee. However, any Restricted Stock Units not forfeited shall
continue to be adjusted for performance in accordance with the provisions under
the caption "Performance Adjusted Restricted Stock Units" above and shall
include the right to receive Dividend Equivalents.
Continuing
Transfer Restrictions
Should
Xxxxxxx’s employment with FE continue after expiration of the Period of
Restriction, until such time as Xxxxxxx’s employment with FE and its
subsidiaries terminates, the Grantee will not be permitted to sell, transfer,
pledge, or assign (collectively, “Transfer”) shares of Common Stock issued under
this Agreement (the “Transfer Restricted Securities”) to the extent prohibited
in this paragraph. If Grantee is subject to the employee share
ownership guidelines established by the Committee, then Grantee may not Transfer
any Transfer Restricted Securities to the extent that Xxxxxxx’s aggregate
ownership of FE stock immediately before and after the Transfer does not meet or
exceed the ownership level that applies to Grantee under those share ownership
guidelines. In addition, if Grantee is subject to the employee share
ownership guidelines established by the Committee, in no case may Grantee
Transfer any Transfer Restricted Securities to the extent that the Transfer,
when aggregated with all of Grantee’s other Transfers, would cause Grantee to
cease to own directly at least one-half of the Transfer Restricted
Securities. Any attempt to Transfer any Transfer Restricted
Securities in violation of the foregoing shall be void, and FE shall not record
such transfer on its books or treat any purported transferee of the Transfer
Restricted Securities as the owner of such shares for any
purpose. The Committee may, however, in its sole discretion waive the
foregoing transfer restrictions in whole or in part. In addition, the
Grantee will be permitted to satisfy tax withholding or income tax obligations
associated with the Restricted Stock Units as provided for under the Withholding
Tax section of this Agreement and any shares sold to satisfy withholding or
income tax obligations will not be considered to be Transfer Restricted
Securities.
Xxxxxxx
agrees that FE may maintain custody of the certificate or certificates
evidencing the Transfer Restricted Securities until the expiration of Xxxxxxx’s
employment with FE and its subsidiaries in order to enforce the restrictions
provided in this Agreement. Upon the termination of Xxxxxxx’s
employment with FE and its subsidiaries for any reason after (or contemporaneous
with) termination of the Period of Restriction, the Grantee’s shares will be
free of all encumbrances, provided that the Grantee has made the necessary
arrangements with FE to satisfy any withholding obligations.
Dividend
Equivalents
With
respect to the Restricted Stock Units granted pursuant to this Agreement, the
Grantee will be credited on the books and records of the Company with an amount
per unit (the “Dividend Equivalent”) equal to the amount per share of any cash
dividends declared by the Board on the outstanding Common Stock of the
Company. Such Dividend Equivalents will be credited in the form of an
additional number of Restricted Stock Units which Restricted Stock Units, from
the time of crediting, will be deemed to be in addition to and part of the base
number of Restricted Stock Units awarded in Section One for all purposes
hereunder, equal to the aggregate amount of Dividend Equivalents credited
on this Award on the respective dividend payment date divided by the average of
the high and low price per share of Common Stock on the respective dividend
payment date. Until the Period of Restriction lapses or any forfeiture of the
Restricted Stock Units occurs pursuant to the terms and conditions described
above, the Company will credit, in additional Restricted Stock Units, to the
Grantee’s Restricted Stock Unit award, an amount equal to the Dividend
Equivalents in the manner set forth above. The Restricted Stock
Units attributable to the Dividend Equivalents will be either delivered or
forfeited, as appropriate, under the same terms and conditions under this
Agreement that apply to the other Restricted Stock Units.
Shareholder
Rights
The
Grantee shall have no rights as a shareholder of the Company, including voting
rights, with respect to the Restricted Stock Units until the issuance of FE
Common Stock upon expiration of the Period of Restriction.
Effect
on the Employment Relationship
The
Restricted Stock Units granted are voluntary and made on a one-time basis and
does not constitute a commitment to make any future awards. Nothing
in this Agreement guarantees employment with the Company or any Subsidiary, nor
does it confer any special rights or privileges to the Grantee as to the terms
of employment.
Adjustments
In the
event of any merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, stock split, combination, distribution,
or other change in corporate structure of the Company affecting the Common
Stock, the Committee will adjust the number and class of securities granted
under this Agreement in a manner determined by the Committee, in its sole
discretion, to be appropriate to prevent dilution or enlargement of the
Restricted Stock Units granted under this Agreement.
Administration
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1.
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This
Agreement is governed by the laws of the State of Ohio without giving
effect to the principles of conflicts of
laws.
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2.
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The
terms and conditions of this Award may be modified by the
Committee
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(a)
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In
any case permitted by the terms of the Plan or this
Agreement,
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(b)
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with
the written consent of the Grantee,
or
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(c)
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without
the consent of the Grantee if the amendment is either not materially
adverse to the interests of the Grantee or is necessary or appropriate in
the view of the Committee to conform with, or to take into account,
applicable law, including either exemption from or compliance with any
applicable tax law.
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3.
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The
administration of this Agreement and the Plan will be performed in
accordance with Article 3 of the Plan. All determinations and
decisions made by the Committee, the Board, or any delegate of the
Committee as to the provisions of the Plan shall be final, conclusive, and
binding on all persons.
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4.
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The
terms of this Agreement are governed at all times by the official text of
the Plan and in no way alter or modify the
Plan.
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5.
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If
a term is capitalized but not defined in this Agreement, it has the
meaning given to it in the Plan.
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6.
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To
the extent a conflict exists between the terms of this Agreement and the
provisions of the Plan, the provisions of the Plan shall
govern.
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409A
It is
intended that this Agreement and the compensation and benefits hereunder either
be exempt from, or comply with, Section 409A of the Internal Revenue Code
(“Section 409A”), and this Agreement shall be so construed and
administered. In the event that the Company reasonably determines
that any compensation or benefits payable under this Agreement may be subject to
taxation under Section 409A, the Company, after consultation with the Grantee,
shall have the authority to adopt, prospectively or retroactively, such
amendments to this Agreement or to take any other actions it determines
necessary or appropriate to (a) exempt the compensation and benefits payable
under this Agreement from Section 409A or (b) comply with the requirements of
Section 409A. In no event, however, shall this section or any other
provisions of this Agreement be construed to require the Company to provide any
gross-up for the tax consequences of any provisions of, or payments under, this
Agreement and the Company shall have no responsibility for tax consequences to
Grantee (or the Grantee’s beneficiary) resulting from the terms or operation of
this Agreement.
Notwithstanding
any other provision in this Agreement to the contrary, (1) a Grantee shall not
be treated as having a termination of employment unless the Grantee would also
be treated as having a separation of service for purposes of Section 409A, (2) a
Grantee shall not be treated as having a disability unless the Grantee would
also be treated as having a disability for purposes of Section
409A.
SECTION
THREE - TRANSFER OF AWARD
Neither
the Restricted Stock Units nor the right to receive the Common Stock issuable
under the Restricted Stock Units are transferable during the life of the
Grantee. Only the Grantee shall have the right to receive the Common
Stock issuable under the Restricted Stock Units, unless the Grantee is deceased,
at which time the Common Stock issuable under the Restricted Stock Units may be
received by the Grantee’s beneficiary (as designated under Article 12 of the
Plan) or by will or by the laws of descent and distribution.
FirstEnergy
Corp.
By
_____________________________
Corporate Secretary
I
acknowledge receipt of this Restricted Stock Unit Agreement and I accept and
agree with the terms and conditions stated above.
________________________________
________________
(Signature of Grantee)
(Date)
