AMENDED
FIRSTENERGY CORP.
DEFERRED COMPENSATION PLAN
FOR DIRECTORS
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ARTICLE I
Director Election
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Any member of the Board of Directors ("Director") of FirstEnergy
Corp. (the "Company") may elect from time to time, by written notice to the
Company given on or before December 31 of any year, to defer receipt of all or
any specified part of his or her fees (cash or equity instruments) for services
as a Director during succeeding calendar years, including retainer fees, fees
for attending meetings of the Board of Directors and its Committees and fees for
serving as Chairman or other official of the Board or a Committee (collectively
"Director's fees"). Any person elected to the Board who was not a Director on
the preceding December 31 may elect, by written notice to the Company given
within thirty (30) days after becoming a Director, to defer receipt of all or
any specified part of his or her Director's fees during the balance of the
calendar year following his or her becoming a Director and succeeding calendar
years.
With respect to the calendar year in which this Plan is adopted by
the Board of Directors of the Company, any Director may elect, by written notice
to the Company given within thirty (30) days after the date on which this Plan
is adopted or, if later, within thirty (30) days after first becoming a
Director, to defer receipt of all or any specified part of his or her Director's
fees during the balance of that calendar year and succeeding calendar years. An
election to defer Director's fees shall be irrevocable and shall continue from
year to year unless the Director terminates it by written notice to the Company
on or before December 31 of the year preceding the year to which the termination
applies.
Effective as of January 1, 2000, the Centerior Energy Corporation
Deferred Compensation Plan for Directors (the "Centerior Plan") shall be merged
into this Plan. Any election to defer director's fees made under the Centerior
Plan prior to such date shall, to the extent such deferred fees and any earnings
credited to such deferred fees have not been paid to the director or to his or
her beneficiary prior to such date, be treated as having been made under this
Plan and shall be subject to all of the rights and limitations imposed on
elections made under this Plan. The individuals who made such elections shall be
considered "Directors" for purposes of this Plan even if they have not served on
the Board of Directors of the Company.
ARTICLE II
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Deferred Fee Account--Balances
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Any deferred Director's fees shall be credited by the Company to the
Director's deferred fee account to be maintained by the Company as of the date
the fees would otherwise be payable. Adjustments to the balance in the account
for deemed interest or deemed investment gains and losses shall be made from
time to time, as determined by the Compensation Committee of the Board of
Directors of FirstEnergy Corp. (the "Committee"), but at least annually. The
Committee, in its sole discretion shall determine whether adjustments to the
account shall be made based upon deemed interest or deemed investment earnings.
If deemed interest is selected by the Committee, the deemed interest rate shall
be the "prime rate" then in effect at The Chase Manhattan Bank, N.A., of New
York City, New York, or at another bank as the Committee may from time to time
designate. If the Committee elects to make adjustments to the accounts in
accordance with deemed investment gains and losses, the Committee, in its sole
discretion, shall determine the investment vehicles to be used. In its the sole
discretion, the Committee may permit the Director to designate that the balance
of his or her account be invested in one or more investment vehicles selected by
the Committee, and adjusted accordingly. The Company shall provide an annual
statement to each Director who has elected to defer fees.
One of the investment options for equity instruments and cash
retainer fees, meeting fees, and/or chairperson fees, shall be an account whose
value will be adjusted as if the deferred fees were invested in FirstEnergy
Common Stock. This account shall be called the Deferred Stock Account (DSA). At
the time cash retainer, meeting fees, and/or chairperson fees are designated for
investment into this account, the initial account value shall be increased by 20
percent. If a Director separates from the Board for any reason other than death,
retirement, or disability as defined by Section 22(e)(3) of the Internal Revenue
Code and such retainer fees are not kept in this account for a minimum of three
years from January 1 of the year of deferral, the Director shall forfeit the 20
percent bonus on such retainer fees and any earnings associated with it. A
Director shall be immediately entitled to the 20 percent bonus and all
associated earnings if a Change in Control occurs as defined in Article IX.
Initial unit valuation for cash deferrals into this account shall be based on
the Fair Market Value which is the average of the high and low price of
FirstEnergy Common Stock on the day when payment would otherwise be received.
Stock deferred into this account shall be valued at the actual purchase price,
including any commissions.
With respect to any Director who had a balance in his or her
deferred fee account under the Centerior Plan immediately prior to January 1,
2000, the balance of such account shall be transferred to a deferred fee account
under this Plan as of January 1, 2000. Such Directors shall be permitted to
designate how such transferred account balances shall be deemed invested to the
same extent that other Directors are permitted such designations under this Plan
with respect to their deferred fee accounts.
ARTICLE III
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Payment to Director
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Amounts credited to a Director's deferred fee account, including
deemed interest and earnings shall be paid to the Director in cash, either in a
lump sum or in annual installments over a period not to exceed 10 years. For
this purpose, a designation by a Director of the form of payment will be
effective only if it is made at the time of his or her election to defer
Director's fees; provided, however, that if a Director makes a designation, he
or she may change that designation by filing a new superseding designation with
the Company during the period beginning 120 days prior and ending on the day
prior to the day on which the Director ceases to be a Director. Payment(s) shall
be made on or commencing with the January 1 next following the day the Director
ceases to be a Director unless during the foregoing 120 day election period, the
Director designates a later payment or commencement date (not later than the
January 1 next following the day he or she attains age 72).
Payment of the balance of the DSA to the Director will be in
the form of FirstEnergy Common Stock and will be paid out when a Director ceases
to be a Director unless a separate election for the DSA is made. The election
options are the same as described in the paragraph above. If a Director requests
any change in the date of the pay-out of his DSA, the request must be approved
by the Compensation Committee of the Board of Directors of the Company.
A Director may at any time request an accelerated distribution of
his or her account balances, subject to a 10 percent penalty and, if applicable,
forfeiture of the 20 percent bonus and associated earnings described above if
the three-year criterion is not met. Such a request must be made in writing, in
a form and manner specified by the Committee. The Company will distribute to the
Director the balance of his or her account minus any forfeitures and the 10
percent penalty as a lump sum within 90 days after the end of the month in which
the Committee receives the request. Such distribution shall completely discharge
the Company from all liability with respect to the Director's account. If the
Director is an active Director, the Director may not resume any further
deferrals into the Plan until January 1 of the second calendar year following
the calendar year in which the Director receives such distribution. If a
Director requests an accelerated distribution of his DSA, the request must be
approved by the Compensation Committee of the Board of Directors of the Company.
A Director who is an active Director and who has been a Plan
Participant for at least five calendar years may request to withdraw a portion
of his or her deferred fees and associated earnings. For this purpose,
participation in the Centerior Plan shall be considered as participation in this
Plan. All deferred cash fees must be disbursed prior to the disbursement of any
deferred stock fees. Such request must be made in writing in a form and manner
specified by the Committee and must specify the amount to be withdrawn and the
future date or dates to be paid. The date(s) must be the first of a month in the
second calendar year following the calendar year in which the request was made.
The request will be irrevocable after December 31 of the calendar in which it is
made unless, prior to payment, the Director separates from the Board or a Change
in Control occurs as defined in Article IX. In these instances, the request will
become null and void and the account balances will be paid as elected by the
Director or as in the paragraph below.
In the instance of a Change in Control as defined in Article IX, all
cash account balances will be paid out immediately as a lump sum and the DSA in
stock as soon as practicable.
ARTICLE IV
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Payment to Beneficiary
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Upon the death of a Director or a former Director prior to the
distribution of the entire balance in the Director's or former Director's
deferred fee account and deferred stock account, the balance including interest,
shall be paid to the beneficiary or beneficiaries designated by the Director or
former Director in writing filed with the Company, or in the absence of a
designation, paid to his or her estate, at the time and in the manner specified
in the Director or former Director's beneficiary designation, which may be
either (i) in a lump sum as soon as practicable after the date of death, (ii) in
a lump sum on January 1 of the year following the year in which the death
occurred or (iii) in one or more annual payments the last of which may occur no
later than January 1 of the fifth year following the year in which the death
occurred.
ARTICLE V
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Assignment
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Except to the extent that a Director or former Director may
designate a beneficiary to receive any payment to be made following his or her
death and except by will or the laws of descent and distribution, no rights
under this Plan shall be assignable or transferable, or subject to encumbrance
or charge of any nature.
ARTICLE VI
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Administration
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This Plan shall be administered by the Committee as defined in
Article II. Except as otherwise provided by action of the Board of Directors of
the Company or the terms of the Plan: (a) a majority of the members of the
Committee shall constitute a quorum for the transaction of business, and (b) all
resolutions or other actions taken by the Committee at a meeting shall be by the
vote of the majority of the committee members present, or, without a meeting, by
an instrument in writing signed by all members of the Committee.
The powers of the Committee shall include the power to construe,
interpret, and apply this Plan, and to render nondiscriminatory rulings or
determinations. Constructions, interpretations, and decisions of the committee
shall be conclusive and binding on all persons.
ARTICLE VII
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Amendment and Termination
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The Board of Directors of the Company may from time to time amend,
suspend, terminate or reinstate any or all of the provisions of this Plan,
except that no amendment, suspension, termination or reinstatement shall
adversely affect the deferred fee account of any Director, former Director or
beneficiary (collectively, "Eligible Persons") as it existed immediately before
the amendment, suspension, termination or reinstatement or the manner of
payments, unless the Eligible Person shall have consented in writing.
The Board of Directors of the Company may at any time terminate its
participation in this Plan and/or transfer its liabilities under this Plan to a
similar plan established by the Committee. Upon the termination of its
participation in this Plan, amounts credited to deferred fee accounts of
Eligible Persons shall continue to be payable to those Eligible Persons in
accordance with the terms of this Plan. Upon termination of the participation of
the Company in this Plan, if the Board of Directors of the Company should
transfer its liabilities to another plan, such transfer of liabilities shall not
adversely affect the deferred fee account of any Eligible Person as it existed
immediately prior to that transfer or the manner of payments, unless the
Eligible Person shall have consented in writing.
All liabilities of the Ohio Edison Company Deferred Compensation
Plan for Directors shall be transferred to this Plan; and this Plan shall be an
amendment, restatement and continuation of that Plan. If any deferred fee
account is in pay status or is otherwise payable to an Eligible Person, it shall
continue to be payable to that person under the same terms and conditions as
were provided under the Plan. The balance in any deferred fee account under that
Plan maintained with respect to an individual who is a Director of FirstEnergy
Corp. at the time of the amendment or restatement of this Plan shall become
payable under the terms and conditions of this Plan; provided, however, that the
Director's deferral elections, commencement date elections, and beneficiary
elections made under the Prior Plan shall continue to be effective under this
Plan unless amended or changed under the terms of this Plan.
All liabilities of the Centerior Plan shall be transferred to this
Plan as of January 1, 2000. If any deferred fee account under the Centerior Plan
is in pay status or is otherwise payable to an Eligible Person as of such date,
it shall continue to be payable to that person under the same terms and
conditions as were provided under the Centerior Plan. The balance of any
deferred fee account under the Centerior Plan shall become payable under the
terms and conditions of this Plan; provided, however, that the Director's
deferral elections, commencement date elections, and beneficiary elections made
under the Centerior Plan shall continue to be effective under this Plan unless
amended or changed under the terms of this Plan.
Notwithstanding any other provisions of the Plan, if the Plan is
terminated and the liabilities of this Plan are not transferred to another plan,
no subsequent Director's fees may be deferred under this Plan, the balance in a
Director's deferred account shall continue to be credited with deemed interest
or earnings in a manner similar to that described in Article II, and the entire
balance in the account (including interest) shall become payable to the Director
(or his or her beneficiary) in accordance with the provisions of this Plan in
effect at the date of termination.
ARTICLE VIII
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Unfunded Plan
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Deferred fee accounts maintained for purposes of this Plan shall
constitute bookkeeping records of the Company and shall not constitute any
allocation of any assets of the Company or be deemed to create any trust or
special deposit with respect to any of the assets of the Company. The Company
shall not be under any obligation to any Director, former Director or
beneficiary to acquire, segregate or reserve any funds or other assets for
purposes relating to this Plan. No Eligible Person shall have any rights
whatsoever in or with respect to any funds or other assets owned or held by the
Company; the rights of an Eligible Person under this Plan are solely those of a
general creditor of the Company to the extent of the amount credited to his or
her deferred fee account with the Company.
The Company may, at its discretion, establish one or more trusts,
purchase one or more insurance contracts or otherwise invest or segregate funds
for purposes relating to this Plan, but the assets of such trusts, rights and
assets of such insurance contracts or otherwise invested or segregated funds
shall at all times remain subject to the claims of the general creditors of the
Company except to the extent and at the time any payment is made to an Eligible
Person under this Plan; and no Eligible Person shall have any rights whatsoever
in or with respect to any trust, insurance contract or other investment or fund,
or their assets.
ARTICLE IX
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Change In Control
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For purposes of the Plan, a "Change in Control" means any of the following:
1. An acquisition by any person or entity of at least 50% (25% if the
acquiring person or entity proposes any individual for election to the
Board of Directors or is represented by any member of the Board) of either
the Company's outstanding common stock ("Outstanding Common Stock") or the
combined voting power of the Company's outstanding voting securities
("Outstanding Voting Securities"). The following acquisitions will not
constitute a Change in Control:
a) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege);
b) any acquisition by the Company;
c) any acquisition by an employee benefit plan sponsored by the
Company or one of its affiliates (e.g., the FirstEnergy Corp.
Savings Plan);
d) any acquisition pursuant to a merger or other form of reorganization
or consolidation where the requirements of paragraph 3 below are
satisfied.
2. The current members of the Company's Board of Directors (the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board. For this purpose, any individual whose election or nomination
to the Board was approved by at least a majority of the Directors then
comprising the Incumbent Board shall be considered as though he or she
were a member of the Incumbent board, unless the individual first
assumed office as a result of an actual or threatened proxy or election
contest.
3. Approval by the Company's shareholders of a reorganization, merger or
consolidation, or of a sale or other disposition of all or substantially
all of the assets of the Company, unless after the transaction each of the
following requirements are satisfied:
a) all or substantially all of the holders of the Company's
Outstanding Common Stock and Outstanding Voting Securities
immediately prior the transaction, continue to hold at least 75%
of the outstanding common stock and the combined voting power of
outstanding voting securities of the corporation resulting from
the reorganization, merger or consolidation (or of the
corporation that purchased the assets of the Company, as the case
may be) in the same proportions as they held the Company's
Outstanding Common Stock and Outstanding Voting Securities
immediately before the transaction.
b) no person or entity owns 25% or more of the outstanding common
stock or the combined voting power of outstanding voting
securities of the corporation resulting from the reorganization,
merger or consolidation (or of the corporation that purchased the
assets of the Company, as the case may be). This 25% limitation
does not apply to the Company, any employee benefit plan
sponsored by the Company or such other corporation, or any person
or entity who owned at least 25% of the Company's Outstanding
Common Stock or Outstanding Voting Securities immediately prior
to the transaction; and
c) at least a majority of the members of the Board of Directors of
the corporation resulting from the reorganization, merger or
consolidation (or of the corporation that purchased the assets of
the Company, as the case may be), were members of the Incumbent
Board of the Company at the time of the initial agreement
providing for the reorganization, merger, consolidation or sale
or other disposition of all or substantially all of the assets of
the Company.
4. Approval by the Company's shareholders of the complete liquidation or
dissolution of the Company.
However in no event will a Change in Control be deemed to have occurred, with
respect to a Director, if the Director is part of a purchasing group which
consummates the Change in Control transaction. The Director will be deemed "part
of a purchasing group" for purposes of the preceding sentence if the Director is
an equity participant or has agreed to become an equity participant in the
purchasing company or group (excluding passive ownership of less than 5% of the
voting securities of the purchasing company or ownership of equity participation
in the purchasing company or group which is otherwise not deemed to be
significant, as determined prior to the Change in Control by a majority of the
nonemployee, continuing members of the Board of Directors).
ARTICLE X
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Miscellaneous
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The invalidity or unenforceability of any particular provision of this Plan
shall not affect any other provision, and the Plan shall be construed in all
respects as if invalid or unenforceable provisions were omitted.
This Plan shall be construed and governed in accordance with the
laws of the State of Ohio without giving effect to principles of conflicts of
laws.
Scope of Changes
Rev. 4 approved by the Compensation Committee on September 18, 2000
1. Clarify that a 20% bonus is not added to the equity instrument retainer.
2. Allow changes to the beneficiary form and how a beneficiary can receive
payment.
Rev. 3 approved by the Compensation Committee on September 19, 1999 and
November 15, 1999
1. Article III, 2nd paragraph revised to allow directors to defer meeting fees
and chairperson fees into the deferred stock account.
2. Changes made to Articles I, II, III, VII to allow the merging of the
Centerior Plan into the FirstEnergy Plan.
Rev. 2 approved by the Compensation Committee on February 15, 1999
1. Article III, added sentences to the end of paragraph 2 and 3 requiring that
approval of the Compensation Committee when changing the date of a pay-out or
when requesting an accelerated distribution. Unless these changes are
specifically approved in accordance with Rule 16b-3 of Section 16, the
Director may inadvertently incur liability under Section 16(b) for repayment
to the Company of related profits involving the Company's equity securities.
Rev. 1 approved by the Compensation Committee on November 16, 1998
1. Added the ability to defer stock and to receive a bonus for doing so.
2. Added the ability to withdrawal all funds from the Plan as long as there
was a 10% penalty and forfeiture of any bonus that is not yet vested.
3. Added the ability to withdrawal funds from the Plan as long as the
Director is an active Director and has been a Plan Participant for 5 years,
and written notice is give 2 years in advance.
4. Added the ability to receive disbursement of funds in cash for the cash
portion of the Plan and in stock for the stock portion of the Plan.
5. Revised the Administration portion of the Plan to bring it in line with
the current Code.
6. Added Change in Control language to the Plan.