FirstEnergy Corp. Executive and Directors Incentive Compensation Plan Restricted Stock Unit Agreement Award No.: RSUP8 Number of Shares Awarded: XXX shares Grantee: Gary R. Leidich (per Employment Agreement dated 2/26/2008)
FirstEnergy
Corp.
Executive
and Directors Incentive Compensation Plan
Award
No.: RSUP8
Number of Shares
Awarded: XXX
shares
Grantee: Xxxx
X. Xxxxxxx (per Employment Agreement dated 2/26/2008)
This Restricted
Stock Unit Agreement (the “Agreement”) is entered into as of the 27th day of
February 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 June 30,
2010;
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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
the Grantee’s employment is terminated by the Company, without Cause,
prior to June 30, 2010.
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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 voluntarily
terminated, (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 two-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 June
30, 2010, 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 Equivalent, 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.
FE’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 two 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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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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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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June 30, 2010
if the delivery is on account of paragraph a) of Section Two
entitled “Period of Restriction”, Grantee’s retirement, voluntary
resignation, or if the Grantee continues to be employed by FE but ceases
to be employed in an executive position during the two-year Performance
Period;
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As soon as
practicable after the Grantee’s death or Disability pursuant to paragraphs
b), c), or d) of Section Two entitled “Period of
Restriction”. If employment is terminated pursuant to
paragraphs b), c) or d), the Grantee will receive a payout equal to the
full number of shares granted in this Agreement and all Dividend
Equivalents earned up to the date of termination. The payout
will not be adjusted for
performance.
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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), occurs at anytime following
a Change of Control, or if the Grantee’s employment is terminated by the
Company, without Cause, prior to June 30,
2010.
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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 voluntarily terminated, 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 two-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 June 30, 2010 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 twenty-four 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 Grantee’s
employment with FE continue after expiration of the Period of Restriction, until
such time as Grantee’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 Grantee’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.
Grantee agrees that
FE may maintain custody of the certificate or certificates evidencing the
Transfer Restricted Securities until the expiration of Grantee’s employment with
FE and its subsidiaries in order to enforce the restrictions provided in this
Agreement. Upon the termination of Grantee’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)
