Exhibit
10-3
 
 
 
 
 
 
 **F** **IRST** **E** **NERGY
CORP.**
 
 **EXECUTIVE
AND DIRECTOR INCENTIVE COMPENSATION PLAN**
 
 
 
 
 
 
 
 FE Plan
      effective May 1, 1998
      Revised
      November 16, 1998
      Revised
      November 16, 1999
      Amendment to
      Plan approved by
      Shareholders
      on May 15, 2001
      Amendment to
      Plan approved by
      Shareholders
      on May 21, 2002
      Revised on
      January 18, 2005
 
 
 
 
 
   
   **Table of
Contents**
 Page**Article
      1**
    **Establishment,
      Purpose, and Duration**1.1
    Establishment
      of the Plan
    11.2
    Purpose of
      the Plan
    11.3
    Duration of
      the Plan
    1**Article
      2**
    **Definitions
      and Construction**2.1
    Definitions2.1.1
    Award
    12.1.2
    Beneficial
      Owner
    12.1.3
    Black-Scholes
      Value
    12.1.4
    Board or
      Board of Directors
    12.1.5
    Cash
      Award
    12.1.6
    Cause
    12.1.7
    Change in
      Control
    22.1.8
    Code
    32.1.9
    Committee
    32.1.10
    Company
    32.1.11
    Covered
      Employee
    32.1.12
    Directors’
      Award
    42.1.13
    Disability
    42.1.14
    Exchange
      Act
    42.1.15
    Fair Market
      Value
    42.1.16
    Incentive
      Stock Option or ISO
    42.1.17
    Key
      Employee
    42.1.18
    Nonqualified
      Stock Option or NSO
    42.1.19
    Option
    42.1.20
    Outside
      Director
    42.1.21
    Participant
    42.1.22
    Performance
      Share
    42.1.23
    Period of
      Restriction
    42.1.24
    Person
    42.1.25
    Plan
    42.1.26
    Restricted
      Stock
    42.1.27
    Restricted
      Stock Unit
    42.1.28
    Subsidiary
    52.1.29
    Standard
      Rate
    52.1.30
    Stockor
      Shares
    52.1.31
    Stock
      Appreciation Right or SAR
    52.1.32
    Voting
      Stock
    52.2
    Gender and
      Number
    52.3
    Severability
    5
   FirstEnergy
Corp.
 Executive and
Director Incentive Compensation Plan
   **Table
      of Contents****Article
      3**
    **Administration**3.1
    The
      Committee
    53.2
    Authority of
      the Committee
    **5**3.3
    Selection of
      Participants
    **6**3.4
    Decisions
      Binding
    **6**3.5
    Delegation of
      Certain Responsibilities
    **6**3.6
    Procedures of
      the Committee
    **6**3.7
    Award
      Agreements
    **6**3.8
    Conditions on
      Awards
    63.9
    Saturdays,
      Sundays, and Holidays
    **7****Article
      4**
    **Stock
      Subject to the Plan**4.1
    Number of
      Shares
    74.2
    Lapsed
      Awards
    **7**4.3
    Adjustments
      in Authorized Shares
    **7****Article
      5**
    **Eligibility
      and Participation**5.1
    Eligibility
    85.2
    Actual
      Participation
    8**Article
      6**
    **Stock
      Options**6.1
    Grant of
      Options
    86.2
    Option
      Agreement
    86.3
    Option
      Price
    86.4
    Duration of
      Options
    96.5
    Exercise of
      Options
    96.6
    Payment
    96.7
    Restrictions
      on Stock Transferability
    96.8
    Termination
      of Employment Due to Death, Disability, or Retirement
    96.9
    Termination
      of Employment for Other Reasons
    106.10
    Nontransferability
      of Options
    10
   FirstEnergy
Corp.
 Executive and
Director Incentive Compensation Plan
   **Table
      of Contents****Article
      7**
    **Stock
      Appreciation Rights**7.1
    Grant of
      Stock Appreciation Rights
    107.2
    Exercise of
      SARS in Lieu of Options
    107.3
    Exercise of
      SARS in Addition to Options
    117.4
    Exercise of
      SARS Independent of Options
    117.5
    Payment of
      SAR Amount
    117.6
    Form and
      Timing of Payment
    117.7
    Term of
      SAR
    117.8
    Termination
      of Employment
    117.9
    Nontransferability
      of SARs
    11**Article
      8**
    **Restricted
      Stock****and
      Restricted Stock Units**8.1
    Grant of
      Restricted Stockand
      Restricted Stock Units
    128.2
    AwardAgreement
    128.3
    Transferability
    128.4
    Other
      Restrictions
    128.5
    Certificate
      Legend
    128.6
    Removal of
      Restrictions
    138.7
    Voting
      Rights
    138.8
    Dividends and
      Other Distributions
    138.9
    Termination
      of Employment Due to Retirement
    138.10
    Termination
      of Employment Due to Death or Disability
    138.11
    Termination
      of Employment for Other Reasons
    13**Article
      9**
    **Performance
      Shares**9.1
    Grant of
      Performance Shares
    149.2
    Value of
      Performance Shares
    149.3
    Payment of
      Performance Shares
    149.4
    Committee
      Discretion to Adjust Awards
    159.5
    Form and
      Timing of Payment
    159.6
    Termination
      of Employment Due to Death, Disability, or Retirement
    159.7
    Termination
      of Employment for Other Reasons
    159.8
    Nontransferability
    15**Article
      10**
    **Cash
      Awards**10.1
    Grant of Cash
      Award
    1510.2
    Cash Award
      Performance Criteria
    1510.3
    Payout of
      Cash awards
    1610.4
    Conversion of
      Cash Award Payout to Restricted Stock
    16
   FirstEnergy
Corp.
 Executive and
Director Incentive Compensation Plan
   **Table
      of Contents****Article
      11**
    **Directors’
      Awards**11.1
    Grant of
      Director’s Awards
    1611.2
    Conversion of
      Retainer to Stock
    1611.3
    Conversion of
      Retainer to Restricted Stock
    1611.4
    Conversion of
      Retainer to Stock Options
    17**Article
      12**
    **Beneficiary
      Designation**
    17**Article
      13**
    **Rights
      of Employees**13.1
    Employment
    1713.2
    Participation
    1713.3
    No Implied
      Rights; Rights on Termination of Service
    1713.4
    No Right to
      Company Assets
    17**Article
      14**
    **Change
      in Control**14.1
    Stock Based
      Awards
    1814.2
    All Awards
      Other than Stock Based Awards
    18**Article
      15**
    **Amendment,
      Modification, and Termination**15.1
    Amendment,
      Modification, and Termination
    1815.2
    Awards
      Previously Granted
    1815.3
    Deferral of
      Payments and Distributions
    18**Article
      16**
    **Withholding
      and Deferral**16.1
    Tax
      Withholding
    1816.2
    Stock
      Delivery or Withholding
    19**Article
      17**
    **Successors**
    19**Article
      18**
    **Requirements
      of Law**18.1
    Requirements
      of Law
    1918.2
    Governing
      Law
    19
 
 
 
    
   **ARTICLE 1** **ESTABLISHMENT,
PURPOSE, AND DURATION**
 
 1.1
    ESTABLISHMENT
      OF THE PLAN. FirstEnergy Corp. (hereinafter referred to as "FirstEnergy"),
      established, effective May 1, 1998, an incentive compensation plan known
      as the "Executive and Director Incentive Compensation Plan" (hereinafter
      referred to as the "Plan"), which permits the grant of Incentive Stock
      Options, Non-qualified Stock Options, Stock Appreciation Rights,
      RestrictedStock, Restricted
      Stock Units,
      PerformanceShares, Cash
      Awards and Directors’ Awards.
 
 1.2
    PURPOSE OF
      THE PLAN. The purpose of the Plan is to promote the success of the Company
      and its Subsidiaries by providing incentives to Key Employees and
      Directors that will link their personal interests to the long-term
      financial success of the Company and its Subsidiaries, and to growth in
      shareholder value. The Plan is designed to provide flexibility to the
      Company and its Subsidiaries in their ability to motivate, attract, and
      retain the services of Key Employees upon whose judgment, interest, and
      special effort the successful conduct of their operations is largely
      dependent. The Plan is intended to preserve maximum deductibility of all
      awards made under the plan within the structure of Section 162(m) of the
      Internal Revenue Code of 1986 as amended “the
Code”.
 
 1.3
    DURATION OF
      THE PLAN. The Plan will commence on May 1, 1998, as described in Section
      1.1 herein. The Plan shall remain in effect, subject to the right of the
      Board of Directors to terminate the Plan at any time, until all Shares
      subject to it shall have been purchased or acquired according to the
      provisions herein.
 
 
 **ARTICLE 2** **DEFINITIONS
AND CONSTRUCTION**
 
 2.1.
    DEFINITIONS.
      Whenever used in the Plan, the following terms shall have the meanings set
      forth below and, when the meaning is intended, the initial letter of the
      word is capitalized:
 
 2.1.1
    "Award"
      means, individually or collectively, a grant under this Plan of Incentive
      Stock Options, Nonqualified Stock Options, Stock Appreciation Rights,
      Restricted Stock,Restricted
      Stock Units,PerformanceShares, Cash
      Awards or Directors’ Awards.
 2.1.2
    "Beneficial
      Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the
      General Rules and Regulations under the Exchange
Act.
 2.1.3
    “Black-Scholes
      Value” means the value of one stock option as calculated by the
      Black-Scholes Valuation Model as prescribed under Financial Accounting
      Standard 123.
 2.1.4
    "Board" or
      "Board of Directors" means the Board of Directors of the
      Company.
 2.1.5
    “Cash Award”
      means an award in the form of cash that is a bonus made pursuant to the
      terms of Article 10.
 2.1.6
    "Cause" shall
      mean the occurrence of any one of the following:
 (i)  the willful and
continued failure by a Participant to substantially perform his/her duties
(other than any such failure resulting from the Participant's Disability ), after a written
demand for substantial performance is delivered to the Participant that
specifically identifies the manner in which the Company or any of its
Subsidiaries, as the case may be, believes that the Participant has not
substantially performed his/her duties, and the Participant has failed to remedy
the situation within ten (10) business days of receiving such notice;
or
 (ii)  the Participant's
conviction for committing a felony or a crime involving an act of moral
turpitude, dishonesty or misfeasance; or
 (iii)  the willful
engaging by the Participant in gross misconduct materially and demonstrably
injurious to the Company or any of its Subsidiaries. However, no act, or failure
to act, on the Participant's part shall be considered "willful" unless done, or
omitted to be done, by the Participant not in good faith and without reasonable
belief that his/her action or omission was in the best interest of the Company
or any of its Subsidiaries.
  
   2.1.7
    "Change in
      Control" shall mean:
 (i)  The acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange
Act )
(a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% (25% if such Person proposes any
individual for election to the Board or any member of the Board is the
representative of such Person) or more of either
 (a)  the then
outstanding shares of common stock of the Company (the “Outstanding Company
Common Stock”) or
 (b)  the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that the following acquisitions shall not
constitute a Change in Control:
 (1)  any acquisition
directly from the Company (excluding an acquisition by virtue of the exercise of
a conversion privilege),
 (2)
    any
      acquisition by the Company,
 (3)
    any
      acquisition by any employee benefit plan (or related trust) sponsored or
      maintained by the Company or any corporation controlled by the Company,
      or
 (4)
    any
      acquisition by any corporation pursuant to a reorganization, merger or
      consolidation, if, following such reorganization,
      merger
      or consolidation, the conditions described in clauses (a), (b) and (c) of
      subsection (iii) of this subsection 2.1.7 are satisfied; or
 (ii)  Individuals who, as
of the date hereof, constitute the Board (the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent to the date hereof whose election,
or nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened election contest
( within the meaning
of solicitations subject to Rule
14a- 12(c) of  Regulation 14A
promulgated under the Exchange Act or any such
successor rule ) or other actual
or threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
 (iii)  Consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company, in each case, unless, following
such reorganization, merger, consolidation or sale or other disposition of
assets,
 (a)  more than 75% of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or acquiring such
assets and the combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger, consolidation or sale or other
disposition of assets in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger , consolidation or
sale or other disposition of assets , of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as the case may
be,
  
   (b)  no Person
(excluding the Company, any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
reorganization, merger, consolidation or acquiring
such assets and any Person beneficially owning, immediately prior to such
reorganization, merger, consolidation or sale or other disposition of
assets , directly or
indirectly, 25% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such
reorganization, merger or consolidation or acquiring such assets or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and
 (c)  at least a majority
of the members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation or acquiring such assets were members of
the Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger, consolidation or sale or other
disposition of assets; or
 (iv)  Approval by the
shareholders of the Company of a complete liquidation or dissolution of the
Company.
 
 However, in no
event shall a Change in Control be deemed to have occurred, with respect to a
Participant, if the Participant is part of a purchasing group, which consummates
the Change in Control transaction. The Participant shall be deemed "part of a
purchasing group. . . " for purposes of the preceding sentence if the
Participant is an equity participant or has agreed to become an equity
participant in the purchasing company or group (except for (i) passive ownership
of less than 5% of the voting securities of the purchasing company or (ii)
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 non-employee continuing members of the Board).
 2.1.8
    "Code" means
      the Internal Revenue Code of 1986, as amended from time to
      time.
 2.1.9
    "Committee"
      means the Compensation Committee of the
Board.
 2.1.10
    "Company"
      means FirstEnergy Corp., an Ohio corporation, or any successor thereto as
      provided in Article 17 herein.
 2.1.11
    "Covered
      Employee" means any Participant designated prior to the grant of StockOptions,
      Stock Appreciation Rights, Restricted Stock,Restricted
      Stock Units,Performance
      Shares or Cash Award by the Committee who is or may be a "covered
      employee" within the meaning of Section 162(m)(3) of the Code in the year
      in which such Stock Options, Stock Appreciation Rights, Restricted
      Stock, Restricted
      Stock Units, Performance
      Shares or Cash Award are taxable to such
Participant.
  
   2.1.12
    “Directors’
      Award” means an Award made pursuant to Article 11 of this
      Plan.
 2.1.13
    “Disability”
      means permanent and total disability as defined in Section 22(e)(3) of the
      Code.
 2.1.14
    "Exchange
      Act" means the Securities Exchange Act of 1934, as amended from time to
      time.
 2.1.15
    "Fair Market
      Value" means the average of the high and low sale prices of the common
      stock as reported on the composite tape of the New York Stock Exchange for
      the date in which the determination of the fair market value is made, or,
      if there are no sales of common stock on that date, then on the next
      preceding date on which there were sales of common
  stock.
 2.1.16
    "Incentive
      Stock Option" or "ISO" means an option to purchase Stock, granted under
      Article 6 herein, which is designated as an incentive stock option and is
      intended to meet the requirements of Section 422 of the
    Code.
 2.1.17
    "Key
      Employee" means an employee of the Company or any of its Subsidiaries,
      including an employee who is an officer or a director of the Company or
      any of its Subsidiaries, who, in the opinion of the Committee, can
      contribute significantly to the growth and profitability of the Company
      and its Subsidiaries. "Key Employee" also may include any other employee,
      identified by the Committee, in special situations involving extraordinary
      performance, promotion, retention, or recruitment. The granting of an
      Award under this Plan shall be deemed a determination by the Committee
      that such employee is a Key Employee, but shall not create a right to
      remain a Key Employee.
 2.1.18
    "Nonqualified
      Stock Option" or "NSO" means an option to purchase Stock, granted under
      Article 6 herein, which is not intended to be an Incentive Stock
      Option.
 2.1.19
    "Option"
      means an Incentive Stock Option or a Nonqualified Stock
      Option.
 2.1.20
    "Outside
      Director" means any director who qualifies as an "outside director" as
      that term is defined in Code Section 162(m) and the regulations issued
      thereunder.
 2.1.21
    "Participant"
      means a Key Employee or Director who has been granted an Award
      underthe
      Plan.
 2.1.22
    "Performance
      Share" means an Award, designated as a Performance Share, granted to a
      Participant pursuant to Article 9 herein.
 2.1.23
    "Period of
      Restriction" means the period during which the transfer or sale of Shares
      of Restricted Stock by theParticipant
      or the issuance of Shares subject to Restricted Stock Units to the
      Participantis
      restricted.
 2.1.24
    "Person"
      shall have the meaning ascribed to such term in Section 3(a)(9) of the
      Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
      "group" as defined in Section 13(d) thereof.
 2.1.25
    "Plan" means
      this Executive and Director Incentive Compensation Plan of FirstEnergy
      Corp., as herein described and as hereafter from time to time
      amended.
 2.1.26
    "Restricted
      Stock" means an Award of Stock granted to a Participant pursuant to
      Article 8 herein.
 2.1.27
    "Restricted
      Stock Unit" means an Award, designated as a Restricted Stock Unit, granted
      to a Participant pursuant to Article 8 herein under which Stock will be
      issued to a Participant if specified conditions are
    satisfied.
  
   2.1.28
    "Subsidiary"
      shall mean any corporation of which more than 50% (by number of votes) of
      the Voting Stock at the time outstanding is owned, directly or indirectly,
      by theCompany.
 2.1.29
    “Standard
      Rate” means the electric utility median base salary level for a given
      position as determined in the judgment of the
Committee.
 2.1.30
    "Stock" or
      "Shares" means the common stock with a 10 cent par value of the
      Company.
 2.1.31
    "Stock
      Appreciation Right" or "SAR" means an Award, designated as a Stock
      Appreciation Right, granted to a Participant pursuant to Article 7
      herein.
 2.1.32
    "Voting
      Stock" shall mean securities of any class or classes of stock of a
      corporation, the holdersof which are
      ordinarily, in the absence of contingencies, entitled to elect a majority
      of the corporate directors.
 
 2.2
    GENDER AND
      NUMBER. Except where otherwise indicated by the context, any masculine
      term used herein also shall include the feminine, the plural shall include
      the singular, and the singular shall include the plural.
 
 2.3.
    SEVERABILITY.
      In the event any provision of the Plan shall be held illegal or invalid
      for any reason, the illegality or invalidity shall not affect the
      remaining parts of the Plan, and the Plan shall be construed and enforced
      as if the illegal or invalid provision had not been
    included.
 
 
 **ARTICLE 3** **ADMINISTRATION**
 
 3.1
    THE
      COMMITTEE. The Plan shall be administered by the Committee, which consists
      of not less than three Directors who shall be appointed from time to time
      by, and shall serve at the discretion of, the Board of Directors. To the
      extent required to comply with Rule 16b-3 under the Exchange Act, each
      member of the Committee shall qualify as a "Non-Employee Director” as
      defined in Rule 16b-3 or any successor definition adopted by the
      Securities and Exchange Commission. Te extent required to comply with Code
      Section 162(m), each member of the Committee shall also be an Outside
      Director.
 
 3.2
    AUTHORITY OF
      THE COMMITTEE. Subject to the provisions of the Plan, the Committee shall
      have full power to construe and interpret the Plan; to establish, amend or
      waive rules and regulations for its administration; to accelerate the
      exercisability of any Award or the end of a performance period or the
      termination of any Period of Restriction or any award agreement, or any
      other instrument relating to an Award under the Plan; and (subject to the
      provisions of Article 15 herein) to amend the terms and conditions of any
      outstanding Option, Stock Appreciation Right or other Award to the extent
      such terms and conditions are within the discretion of the Committee as
      provided in the Plan. Notwithstanding the foregoing, the Committee shall
      have no authority to adjust upwards the amount payable to a Covered
      Employee with respect to a particular Award, to take any of the foregoing
      actions, or to take any other action to the extent that such action or the
      Committee's ability to take such action would cause any Award under the
      Plan to any Covered Employee to fail to qualify as "performance-based
      compensation" within the meaning of Code Section 162(m)(4) and the
      regulations issued thereunder. Subject to section 4.3, in no event shall
      the Committee have the right to i) cancel outstanding Options or SARs for
      the purpose of replacing or regranting such Options or SARs with an
      exercise price that is less than the original exercise price of the Option
      or SAR, or ii) change the Option Price of an Option or SAR to an exercise
      price that is less than the original Option or SAR exercise price, without
      first obtaining the approval of shareholders. Also notwithstanding the
      foregoing, no action of the Committee (other than pursuant to Section 4.3
      hereof or Section 9.4 hereof) may, without the consent of the person or
      persons entitled to exercise any outstanding Option or Stock Appreciation
      Right or to receive payment of any other outstanding Award, adversely
      affect the rights of such person or
persons.
  
   
 3.3
    SELECTION OF
      PARTICIPANTS. The Committee shall have the authority to grant Awards under
      the Plan, from time to time, to such Key Employees and Directors as may be
      selected by it. The Committee shall select Participants from among those
      who they have identified as being Key Employees or
    Directors.
 
 3.4
    DECISIONS
      BINDING. All determinations and decisions made by the Committee pursuant
      to the provisions of the Plan and all related orders or resolutions of the
      Board of Directors shall be final, conclusive and binding on all persons,
      including the Company and its Subsidiaries, its stockholders, employees,
      and Participants and their estates and beneficiaries, and such
      determinations and decisions shall not be
reviewable.
 
 3.5
    DELEGATION OF
      CERTAIN RESPONSIBILITIES. The Committee may, in its sole discretion,
      delegate to an officer or officers of the Company the administration of
      the Plan under this Article 3; provided, however, that no such delegation
      by the Committee shall be made with respect to the administration of the
      Plan as it affects Directors of the Company or Covered Employees and
      provided further that the Committee may not delegate its authority to
      correct errors, omissions or inconsistencies in the Plan. The Committee
      may delegate to the Chief Executive Officer of the Company its authority
      under this Article 3 to grant Awards to Key Employees who are not Covered
      Employees. All authority delegated by the Committee under this Section 3.5
      shall be exercised in accordance with the provisions of the Plan and any
      guidelines for the exercise of such authority that may from time to time
      be established by the Committee.
 
 3.6
    PROCEDURES OF
      THE COMMITTEE. All determinations of the Committee shall be made by not
      less than a majority of its members present at the meeting (in person or
      otherwise) at which a quorum is present. A majority of the entire
      Committee shall constitute a quorum for the transaction of business. Any
      action required or permitted to be taken at a meeting of the Committee may
      be taken without a meeting if a unanimous written consent, which sets
      forth the action, is signed by each member of the Committee and filed with
      the minutes for proceedings of the Committee. Service on the Committee
      shall constitute service as a director of the Company so that members of
      the Committee shall be entitled to indemnification, limitation of
      liability and reimbursement of expenses with respect to their services as
      members of the Committee to the same extent that they are entitled under
      the Company's Articles of Incorporation and Ohio law for their services as
      directors of the Company.
  
   
 3.7
    AWARD
      AGREEMENTS. Stock-based Awards under the Plan shall be evidenced by an
      award agreement, which shall be signed by an authorized officer of the
      Company or delegate and by the Participant, and shall contain such terms
      and conditions as may be approved by the Committee. Such terms and
      conditions need not be the same in all cases.
 
 3.8
    CONDITIONS ON
      AWARDS. Notwithstanding any other provision of the Plan, the Board or the
      Committee may impose such conditions on any Award (including, without
      limitation, the right of the Board or the Committee to limit the time of
      exercise to specified periods).
 
 Notwithstanding
      any other provisions of the Plan, all Awards under this Plan shall be
      subject to the following conditions:
 
 (i)  Except in the case
of death, no SAR, ISO, NSO or other option granted pursuant to Article 6 shall
be exercisable for at least six months after its grant; and
 (ii)  Except in the case
of death, no Restricted Stock , Restricted Stock
Unit or Performance Share (or a Share issued in payment thereof) shall be sold for at
least six months after its grant.
 
 3.9
    SATURDAYS,
      SUNDAYS AND HOLIDAYS. When a date referenced in an award Agreement falls
      on a Saturday, Sunday or other day when the FirstEnergy General Office is
      closed, the date reference will revert back to the day prior to such
      date.
 
 
 **ARTICLE 4** **STOCK
SUBJECT TO THE PLAN**
 
 4.1
    NUMBER OF
      SHARES. Subject to adjustment as provided in Section 4.3 herein, the
      aggregate number of Shares that may be delivered under the Plan at any
      time shall not exceed 22,500,000 Shares of common stock of the Company. No
      more than three-quarters of such aggregate number of such Shares shall be
      issued as Restricted Stockor Restricted
      Stock Unitsunder Article
      8 of the Plan or as Performance Shares under Article 9. Stock delivered
      under the Plan may consist, in whole or in part, of authorized and
      unissued shares, treasury shares or shares purchased on the open market.
      The exercise of a Stock Appreciation Right, whether paid in cash or Stock,
      shall be deemed to be an issuance of Stock under the
  Plan.
 
 4.2
    LAPSED
      AWARDS. If any Award granted under this Plan terminates, expires, or
      lapses for any reason, any Stock subject to such Award again shall be
      available for the grant of an Award under the Plan, subject to Section 7.2
      herein. If the value of any Performance Shares issued under Article 9 are
      paid in cash after a Performance Period has ended, such stock subject to
      such award shall again be available for the grant of an award under the
      Plan.
  
   
 4.3
    ADJUSTMENTS
      IN AUTHORIZED SHARES. In the event of any merger, reorganization,
      consolidation, recapitalization, separation, liquidation, stock dividend,
      split-up, share combination, or other change in the corporate structure of
      the Company affecting the Stock, such adjustment shall be made in the
      number and class of shares which may be delivered under the Plan, and in
      the number and class of and/or price of shares subject to outstanding
      Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted
      Stock UnitsandPerformance
      Shares, granted under the Plan, as may be determined to be appropriate and
      equitable by the Committee, in its sole discretion, to prevent dilution or
      enlargement of rights; and provided that the number of shares subject to
      any Award shall always be a whole number. Any adjustment of an Incentive
      Stock Option under this paragraph shall be made in such a manner so as not
      to constitute a modification within the meaning of Section 425(h)(3) of
      the Code.
 
 
 **ARTICLE 5** **ELIGIBILITY
AND PARTICIPATION**
 
 5.1
    ELIGIBILITY.
      Persons eligible to receive Awards under all Articles of this Plan except
      Article 11 include all employees of the Company and its Subsidiaries who,
      in the opinion of the Committee, are Key Employees. Key Employees may
      include employees who are members of the Board, but may not include
      Directors who are not employees. Directors who are not employees may
      receive Awards under this Plan exclusively under Articles 6 and 8, subject
      to Article 11.
 
 5.2
    ACTUAL
      PARTICIPATION. Subject to the provisions of the Plan, the Committee may
      from time to time select those Key Employees to whom Awards shall be
      granted and determine the nature and amount of each Award. No employee
      shall have any right to be granted an Award under this Plan even if
      previously granted an Award.
 
 
 **ARTICLE 6** **STOCK
OPTIONS**
 
 6.1
    GRANT OF
      OPTIONS. Subject to the terms and provisions of the Plan, Options may be
      granted to Participants at any time and from time to time as shall be
      determined by the Committee. The maximum number of Shares subject to
      Options granted to any individual Participant in any calendar year shall
      be five hundred thousand (500,000) Shares. The Committee shall have the
      sole discretion, subject to the requirements of the Plan, to determine the
      actual number of Shares subject to Options granted to any Participant. The
      Committee may grant any type of Option to purchase Stock that is permitted
      by law at the time of grant, including, but not limited to, ISO’s and
      NSO’s. However, no employee may receive an Award of Incentive Stock
      Options that are first exercisable during any calendar year to the extent
      that the aggregate Fair Market Value of the Stock (determined at the time
      the options are granted) exceeds $100,000. Nothing in this Article 6 shall
      be deemed to prevent the grant of NSO’s in excess of the maximum
      established by Section 422 of the Code. Unless otherwise expressly
      provided at the time of grant, Options granted under the Plan will be
      NSO’s. Notwithstanding any other provision of the Plan, no ISO shall be
      granted after May 1, 2008.
 
 6.2
    OPTION
      AGREEMENT. Each Option grant shall be evidenced by an Option agreement
      that shall specify the type of Option granted, the Option price, the
      duration of the Option, the number of Shares to which the Option pertains,
      and such other provisions as the Committee shall determine. The Option
      agreement shall specify whether the Option is intended to be an Incentive
      Stock Option within the meaning of Section 422 of the Code, or a
      Nonqualified Stock Option whose grant is not intended to be subject to the
      provisions of Code Section 422.
  
   
 6.3
    OPTION PRICE.
      The purchase price per share of Stock covered by an Option shall be
      determined by the Committee but shall not be less than 100% of the Fair
      Market Value of such Stock on the date the Option is granted.
 
 An Incentive
      Stock Option granted to an Employee who, at the time of grant, owns
      (within the meaning of Section 425(d) of the Code) Stock possessing more
      than 10% of the total combined voting power of all classes of stock of the
      Company, shall have an exercise price which is at least 110% of the Fair
      Market Value of the Stock subject to the
Option.
 
 6.4
    DURATION OF
      OPTIONS. Each Option shall expire at such time as the Committee shall
      determine at the time of grant; provided, however, that no Option shall be
      exercisable later than the tenth (10th) anniversary date of its grant.
 
 6.5
    EXERCISE OF
      OPTIONS. Subject to Section 3.8 herein, Options granted under the Plan
      shall be exercisable at such times and be subject to such restrictions and
      conditions as the Committee shall in each instance approve, which need not
      be the same for all Participants. All options within a single grant need
      not be exercised at one time.
 
 6.6
    PAYMENT.
      Options shall be exercised by the delivery of a written notice to the
      Company setting forth the number of Shares with respect to which the
      Option is to be exercised, accompanied by full payment for the Shares. The
      Option price upon exercise of any Option shall be payable to the Company
      in full either:
 (a)  in cash or its
equivalent;
 (b)  by tendering Shares
of previously acquired Stock having a Fair Market Value at the time of exercise
equal to the
 total Option
price,
 (c)  by foregoing
compensation under rules established by the Committee,
 (d)
    by
      delivery by the Participant of irrevocable instructions to an approved
      broker to promptly deliver to the Company the
      amount
      of the saleor loan
      proceeds to pay the exercise price, or
 (e)  such other
consideration as the Committee may deem appropriate.
 
 The proceeds
      from such a payment shall be added to the general funds of the Company and
      shall be used for general corporate purposes. As soon as practicable,
      after the Company’s receipt of written notification and payment, the
      Participant shall receive either:
 (i)  stock certificates
in an appropriate amount based upon the number of Options exercised, issued in
the Participant's name:
 (ii)  cash in an amount
equal to the difference between the sale price of such Shares and the Option
price less taxes and administrative expenses; or
 (iii)  a combination of
the foregoing.
 
 6.7
    RESTRICTIONS
      ON STOCK TRANSFERABILITY. The Committee shall impose such restrictions on
      any Shares acquired pursuant to the exercise of an Option under the Plan
      as it may deem advisable, including, without limitation, restrictions
      under applicable Federal securities law, under the requirements of any
      stock exchange upon which such Shares are then listed and under any blue
      sky or state securities laws applicable to such
Shares.
  
   
 6.8
    TERMINATION
      OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT. In the event the
      employment of a Participant is terminated by reason of death, any of such
      Participant's outstanding Options shall become immediately exercisable at
      any time prior to the expiration date of the Options or within one year
      after such date of termination of employment, whichever period is shorter,
      by such person or persons as shall have acquired the Participant's rights
      under the Option pursuant to Article 12 hereof or by will or by the laws
      of descent and distribution.
 
 In
the event the employment of a Participant is terminated by reason of D isability or retirement,
including early retirement, (as defined under the then established rules of the
Company or any of its Subsidiaries, as the case may be), any of such
Participant's outstanding Options shall continue to vest per the vesting
schedule of the Participant’s Option Agreement; provided, however, that if the
Participant subsequently dies with unexercised options, the vesting and exerciseability will be governed
by the first sentence of 6.8.
 
 Notwithstanding the
foregoing to the contrary, the Committee may, in its sole discretion, lengthen
the exercise period up to the expiration date for an individual participant if
it deems this is in the best interest of the Company. In the case of Incentive
Stock Options, the favorable tax treatment prescribed under Section 422 of the
Internal Revenue Code of l986, as amended, may not be available if the Options
are not exercised within the Code Section 422 prescribed time period after
termination of employment for death, disability, or retirement.
 
 6.9
    TERMINATION
      OF EMPLOYMENT FOR OTHER REASONS. If the employment of a Participant shall
      terminate for any reason other than death,Disability,
      retirement(including
      early retirement) or for Cause, the Participant shall have the right to
      exercise such Participant's outstanding Options within 90 days after the
      date of his termination, but in no event beyond the expiration of the term
      of the Options and only to the extent that the Participant was entitled to
      exercise the Options at the date of his termination of employment. In its
      sole discretion, the Committee may extend the 90 days to up to one year
      but, however, in no event beyond the expiration date of the
      Option.
 
 If the
      employment of the Participant shall terminate for Cause, all of the
      Participant's outstanding Options shall be immediately forfeited back to
      the Company.
 
 6.10
    NONTRANSFERABILITY
      OF OPTIONS. No Option granted under the Plan may be sold, transferred,
      pledged, assigned, or otherwise alienated or hypothecated, otherwise than
      by will or by the laws of descent and distribution. Further, all Options
      granted to a Participant under the Plan shall be exercisable during his
      lifetime only by such Participant.
 
 
 
 ****
 **ARTICLE 7** **STOCK
APPRECIATION RIGHTS**
  
 7.1
    GRANT OF
      STOCK APPRECIATION RIGHTS. Subject to the terms and conditions of the
      Plan, Stock Appreciation Rights may be granted to Participants, at the
      discretion of the Committee, in any of the following forms:
 (a)
    in lieu of
      Options;
 (b)
    in addition
      to Options;
 (c)
    independent
      of Options; or
 (d)
    in any
      combination of (a), (b), or (c).
 
 The maximum
      numbers of Shares subject to SARs granted to any individual Participant in
      any calendar year shall be five hundred thousand (500,000) Shares. Subject
      to the immediately preceding sentence, the Committee shall have the sole
      discretion, subject to the requirements of the Plan, to determine the
      actual number of Shares subject to SARs granted to any Participant.
 
 7.2
    EXERCISE OF
      SARS IN LIEU OF OPTIONS. SARs granted in lieu of Options may be exercised
      for all or part of the Shares subject to the related Option upon the
      surrender of the related Options representing the right to purchase an
      equivalent number of Shares. The SAR may be exercised only with respect to
      the Shares of Stock for which its related Option is then exercisable.
      Option Stock with respect to which the SAR shall have been exercised may
      not be subject again to an Award under the
Plan.
 
 Notwithstanding
      any other provision of the Plan to the contrary, with respect to a SAR
      granted in lieu of an Incentive Stock
Option:
 (i)
    the SAR will
      expire no later than the expiration of the underlying Incentive Stock
      Option;
 (ii)
    the SAR
      amount may be for no more than one hundred percent (100%) of the
      difference between the exercise price of the underlying Incentive Stock
      Option and the Fair Market Value of the Stock subject to the underlying
      Incentive Stock Option at the time the SAR is exercised; and
 (iii)
    the SAR may
      be exercised only when the Fair Market Value of the Stock subject to the
      Incentive Stock Option exceeds the exercise price of the Incentive Stock
      Option.
 
 7.3
    EXERCISE OF
      SARS IN ADDITION TO OPTIONS. SARs granted in addition to Options shall be
      deemed to be exercised upon the exercise of the related Options. The
      deemed exercise of SARs granted in addition to Options shall not
      necessitate a reduction in the number of related
  Options.
 
 7.4
    EXERCISE OF
      SARS INDEPENDENT OF OPTIONS. Subject to Section 3.8 herein and Section 7.5
      herein, SARs granted independently of Options may be exercised upon
      whatever terms and conditions the Committee, in its sole discretion,
      imposes upon the SARs, including, but not limited to, a corresponding
      proportional reduction in previously granted Options.
 
 7.5
    PAYMENT OF
      SAR AMOUNT. Upon exercise of the SAR, the holder shall be entitled to
      receive payment of an amount determined by multiplying:
 (a)
    The
      difference between the market price of a Share on the date of exercise
      over the price fixed by the Committee at the date of grant (which price
      shall not be less than 100% of the market price of a Share on the date of
      grant) (the Exercise Price); by
 (b)
    The number of
      Shares with respect to which the SAR is exercised.
 
 7.6
    FORM AND
      TIMING OF PAYMENT. Payment to a Participant, upon SAR exercise, will be
      made in cash or stock, at the discretion of the Committee, as soon as
      administratively possible after
exercise.
  
   
 7.7
    TERM OF SAR.
      The term of an SAR granted under the Plan shall not exceed ten
      years.
 
 7.8
    TERMINATION
      OF EMPLOYMENT. In the event the employment of a Participant is terminated
      by reason ofdeath,Disability,
      retirement(including
      early retirement), or any other reason, the exercisability of any
      outstanding SAR granted in lieu of or in addition to an Option shall
      terminate in the same manner as its related Option as specified under
      Sections 6.8 and 6.9 herein. The exercisability of any outstanding SARs
      granted independent of Options also shall terminate in the manner provided
      under Sections 6.8 and 6.9 hereof.
 
 7.9
    NONTRANSFERABILITY
      OF SARS. No SAR granted under the Plan may be sold, transferred, pledged,
      assigned, or otherwise alienated or hypothecated, other than by will or by
      the laws of descent and distribution. Further, all SARs granted to a
      Participant under the Plan shall be exercisable during his lifetime only
      by such Participant.
 
 
 **ARTICLE 8** **RESTRICTED** **STOCK** **AND
RESTRICTED STOCK UNITS**
 
 8.1
    GRANT OF
      RESTRICTED STOCKAND
      RESTRICTED STOCK UNITS. Subject to
      the terms and provisions of the Plan, the Committee, at any time and from
      time to time, may grant Shares of Restricted Stockor
      Restricted Stock Unitsunder the
      Plan to such Participants and in such amounts, as it shall determine. The
      Committee may condition the vesting or lapse of the Period of Restriction
      established pursuant to Section 8.3 upon the attainment of one or more of
      the performance goals utilized for purposes of Performance Shares pursuant
      to Article 9 hereof. As required for valuation of grants under the Plan,
      Restricted Stockand Stock
      subject to Restricted Stock Unitswill be
      valued at its Fair Market Value. The maximum number of Shares subject to
      issuance as Restricted Stockor pursuant
      to Restricted Stock Unitsgranted, in the
      aggregate,to any
      individual Participant in any calendar year is two hundred fifty thousand
      (250,000) Shares.
 
 8.2
    AWARDAGREEMENT.
      Each Restricted Stockand
      Restricted Stock Unitgrant shall
      be evidenced by a Restricted Stock agreementor Restricted
      Stock Unit agreement, as the case may be,that shall
      specify the Period of Restriction, or periods,performance
      goals, as applicable,the number of
      Shares of Restricted Stock grantedor subject
      to the Restricted Stock Units granted, as applicable, and such
      other provisions as the Committee shall
determine.
 
 8.3
    TRANSFERABILITY.
      Except as provided in this Article 8 or in Section 3.8 herein, the Shares
      of Restricted Stock granted hereunder may not be sold, transferred,
      pledged, assigned, or otherwise alienated or hypothecated, and Stock
      subject to a Restricted Stock Unit agreement will not be
      issued,until the
      termination of the applicable Period of Restriction or for such period of
      time as shall be established by the Committee and as shall be specified in
      the Restricted Stock agreementor
      Restricted Stock Unit agreement, as the case may be, or uponsatisfaction
      of other conditions (including any performance goals) as specified by the
      Committee in its sole discretion and set forth insuchRestricted
      Stock agreementor
      Restricted Stock Unit agreement. No Restricted Stock Unit granted under
      the Plan may be sold, transferred, pledged, assigned or otherwise
      alienated or hypothecated, other than by will or by the laws of descent
      and distribution. All rights
      with respect to the Restricted Stockor
      Restricted Stock Unitsgranted to a
      Participant under the Plan shall be exercisable during his lifetime only
      by such Participant.
  
  8.4
    OTHER
      RESTRICTIONS. The Committee shall impose such other restrictions on any
      Shares of Restricted Stock granted pursuant to the Plan as it may deem
      advisable including, without limitation, vesting or forfeiture
      restrictions under applicable Federal or state securities laws, and the
      Committee may legend certificates representing Restricted Stock to give
      appropriate notice of such restrictions.
 
 8.5
    CERTIFICATE
      LEGEND. In addition to any legends placed on certificates pursuant to
      Section 8.4 herein, each certificate representing Shares of Restricted
      Stock granted pursuant to the Plan shall bear the following
      legend:
 
 “The sale or other
transfer of the shares of stock represented by this certificate, whether
voluntary, involuntary, or by operation of law, is subject to certain
restrictions on transfer set forth in the Executive and Director Incentive
Compensation Plan of FirstEnergy Corp., in the rules and administrative
procedures adopted pursuant to such Plan, and in a Restricted Stock Agreement
dated __________. A copy of the Plan, such rules and procedures, and such
Restricted Stock agreement may be obtained from the Secretary of FirstEnergy
Corp."
 
 8.6
    REMOVAL OF
      RESTRICTIONS. Except as otherwise provided in this Article, Shares of
      Restricted Stock covered by each Restricted Stock grant made under the
      Plan shall become freely transferable by the Participant, and Shares
      subject to each Restricted Stock Unit grant made under the Plan shall be
      issued to the Participant,after the
      last day of the Period of Restriction, subject to
      satisfying applicable tax withholding requirements. In the case of a
      Restricted Stock grant, oncethe Shares
      are released from the restrictions, the Participant shall be entitled to
      have the legend required by Section 8.5 removed from his Stock
      certificate.
 
 8.7
    VOTING
      RIGHTS. During the Period of Restriction, Participants holding Shares of
      Restricted Stock granted hereunder may exercise full voting rights with
      respect to those Shares, but no
      Participant shall have any voting rights with respect to Shares subject to
      Restricted Stock Units before the issuance of those Shares to the
      Participant.
 
 8.8
    DIVIDENDS AND
      OTHER DISTRIBUTIONS. During the Period of Restriction, Participants
      holding Shares of Restricted Stock granted hereunder shall be entitled to
      receive all dividends and other distributions paid with respect to those
      Shares while they are so held. If any such dividends or distributions are
      paid in Shares, the Shares shall be subject to the same restrictions on
      transferability as the Shares of Restricted Stock with respect to which
      they were paid.The
      Committee may provide for the crediting of dividend equivalents on
      Restricted Stock Units during the Period of Restriction on such terms as
      the Committee may specify.
 
 8.9
    TERMINATION
      OF EMPLOYMENT DUE TO RETIREMENT (including early retirement). In the event
      that a Participant terminates his employment with the Company or any of
      its Subsidiaries because of retirement (as defined under the then
      established rules of the Company or any of its Subsidiaries, as the case
      may be), the Committee in its sole discretion (subject to Section 3.8herein) may
      waive or modify the restrictions remaining on any or all Shares of
      Restricted Stockor remaining
      on Shares subject to Restricted Stock Unitsas it deems
      appropriate.
 
 8.10
    TERMINATION
      OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In the event a Participant's
      employment is terminated because of death orDisabilityduring the
      Period of Restriction, any remaining Period of Restriction applicable to
      the Restricted Stockor
      Restricted Stock Unitsshall
      automatically terminate and, except as otherwise provided in Section8.4herein, the
      Shares of Restricted Stock shall thereby be free of restrictions and be
      fully transferableand Shares
      subject to Restricted Stock Units shall become issuable free of
      restrictions, subject to satisfying applicable tax withholding
      requirements.
  
   
 8.11
    TERMINATION
      OF EMPLOYMENT FOR OTHER REASONS. In the event that a Participant
      terminates his employment with the Company or any of its Subsidiaries for
      any reason other than for death,Disability, or
      retirement (including early retirement), as set forth in Sections 8.9 and
      8.10 herein, during the Period of Restriction, then any Shares of
      Restricted Stockor Restricted
      Stock Unitsstill subject
      to restrictions as of the date of such termination shall automatically be
      forfeited and returned to the Company; provided, however, that in the
      event of a termination of the employment of a Participant by the Company
      or any of its Subsidiaries other than for Cause, the Committee, in its
      sole discretion (subject to Section 3.8 herein), may waive or modify the
      automatic forfeiture of any or all such Sharesor
      unitsas it deems
      appropriate.
 
 **ARTICLE 9** **PERFORMANCE
SHARES**
 
 9.1
    GRANT OF
      PERFORMANCE SHARES. Subject to the terms and provisions of the Plan,
      Performance Shares may be granted to Participants at any time and from
      time to time as shall be determined by the Committee. The maximum number
      of Shares that may be issued to any Participant in a calendar year shall
      not exceed two hundred fifty thousand (250,000), subject to adjustment as
      provided in Section 4.3.
 
 9.2
    VALUE OF
      PERFORMANCE SHARES. The Committee shall set performance goals over certain
      periods to be determined in advance by the Committee ("Performance
      Periods"). Prior to each grant of Performance Shares, the Committee shall
      establish an initial number of Shares for each Performance Share granted
      to each Participant for that Performance Period. Prior to each grant of
      Performance Shares, the Committee also shall set the performance goals
      that will be used to determine the extent to which the Participant
      receives a payment of the number of Shares for the Performance Shares
      awarded for such Performance Period. These goals will be based on the
      attainment by the Company or its Subsidiaries of certain objective
      performance measures, which may include, but are not limited to one or
      more of the following: total shareholder return, return on equity, return
      on capital, earnings per share, market share, stock price, sales, costs,
      net income, cash flow, retained earnings, results of customer satisfaction
      surveys, aggregate product price and other product price measures, safety
      record, service reliability, demand-side management (including
      conservation and load management), operating and maintenance cost
      management, and energy production availability performance measures. Such
      performance goals also may be based upon the attainment of specified
      levels of performance of the Company or one or more Subsidiaries under one
      or more of the measures described above, relative to the performance of
      other corporations. The Committee may provide for the crediting of
      dividend equivalents during the performance period. With respect to each
      such performance measure utilized during a Performance Period, the
      Committee shall assign percentages to various levels of performance which
      shall be applied to determine the extent to which the Participant shall
      receive a payout of the number of Performance Shares awarded. With respect
      to Covered Employees, all performance goals shall be objective performance
      goals satisfying the requirements for "performance-based compensation"
      within the meaning of Section 162(m)(4) of the Code, and shall be set by
      the Committee within the time period prescribed by Section 162(m) of the
      Code and related regulations.
  
  
 9.3
    PAYMENT OF
      PERFORMANCE SHARES. After a Performance Period has ended, the holder of a
      Performance Share shall be entitled to receive the value thereof as
      determined by the Committee. The Committee shall make this determination
      by first determining the extent to which the performance goals set
      pursuant to Section 9.2 have been met. It will then determine the
      applicable percentage (which may exceed 100%) to be applied to, and will
      apply such percentage to, the number of Performance Shares to determine
      the payout to be received by the Participant. In addition, with respect to
      Performance Shares granted to any Covered Employee, no payout shall be
      made hereunder except upon written certification by the Committee that the
      applicable performance goal or goals have been satisfied to a particular
      extent. The amount payable in cash in a calendar year to any Participant
      with respect to any Performance Period pursuant to any Performance Share
      award shall not exceed $2,000,000.
 
 9.4
    COMMITTEE
      DISCRETION TO ADJUST AWARDS. Subject to Section 3.2 regarding Awards to
      Covered Employees, the Committee shall have the authority to modify, amend
      or adjust the terms and conditions of any Performance Share award, at any
      time or from time to time, including but not limited to the performance
      goals.
 
 9.5
    FORM AND
      TIMING OF PAYMENT. The payment described in Section 9.3 herein shall be
      made in cash, Stock, or a combination thereof as determined by the
      Committee. Payment may be made in a lump sum or installments as prescribed
      by the Committee. If any payment is to be made on a deferred basis, the
      Committee may provide for the payment of dividend equivalents or interest
      during the deferral period. Any stock issued in payment of a Performance
      Share shall be subject to the restrictions on transfer in Section 3.8
      herein.
 
 9.6
    TERMINATION
      OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT (including early
      retirement). In the case ofdeath,Disability, or
      retirement (as defined
      under the established rules of the Company or any of its Subsidiaries, as
      the case may be), the holder of a Performance Share shall receive a
      prorated payment based on the Participant's number of full months of
      service during the Performance Period, further adjusted based on the
      achievement of the performance goals, as computed by the Committee. The
      Committee may require that a Participant have a minimum number of full
      months of service during the Performance Period to qualify for an Award
      payout.
 
 9.7
    TERMINATION
      OF EMPLOYMENT FOR OTHER REASONS. In the event that a Participant
      terminates employment with the Company or any of its Subsidiaries for any
      reason other than death,Disability, or
      retirement (including early retirement), all Performance Shares shall
      beforfeited;
      provided, however, that in the event of a termination of the employment of
      the Participant by the Company or any of its Subsidiaries other than for
      Cause, the Committee in its sole discretion may waive the automatic
      forfeiture provisions.
 
 9.8
    NONTRANSFERABILITY.
      No Performance Shares granted under the Plan may be sold, transferred,
      pledged, assigned, or otherwise alienated or hypothecated, other than by
      will or by the laws of descent and distribution until the termination of
      the applicable Performance Period. All rights with respect to Performance
      Shares granted to a Participant under the Plan shall be exercisable during
      his/her lifetime only by such Participant.
 
 
  
 ****
 **ARTICLE 10** **CASH
AWARDS**
  
 10.1
    GRANT OF CASH
      AWARD. Subject to the terms of this Plan, Cash Awards may be made to
      Participants at any time and from time to time as shall be determined by
      the Committee. The Committee shall have complete discretion in the
      determining the form of the Cash Awards granted to
      Participants
 
 10.2
    CASH AWARD
      PERFORMANCE CRITERIA. All Cash Awards made under this Plan shall be
      subject to pre-established, objective, business-related Performance
      Measures. The performance measures shall be approved for use by the
      Committee and the Committee shall certify their attainment and the
      resulting payout of Cash Awards. Performance Measures for Cash Awards may
      be measurable for periods of one year to five years (allowing for prorated
      periods for new Participants). The Performance Measures may include, but
      shall not be limited to: operational measures (e.g. attaining merger
      milestones, customer satisfaction, service reliability, safety and
      tactical objectives), financial measures (e.g. expense control, revenue,
      margins and shareholder value added levels “SVA”) and individual measures.
      Performance Measures can be made on overlapping cycles, (i.e. one-year
      cycles could emphasize operational measures and three-year cycles could
      emphasize SVA Performance Measures.) Each cycle of Performance Measures
      could have a distinct Cash Award associated with
it.
 
 10.3
    PAYOUT OF
      CASH AWARDS. Payouts of Cash Awards are made in relationship to a target
      payout level determined prior to each cycle on a per Participant basis.
      Target levels under multiple cycles will be calibrated to provide, in
      total, an annualized level of incentives consistent with the Company’s
      compensation philosophy as set by the Committee. Actual payouts of Cash
      Awards will vary with performance results as follows: actual payouts based
      upon operational or individual Performance Measures will vary from 50% (if
      threshold performance is attained) to 150% of the target level; actual
      payouts based upon Company SVA and other corporate financial measures will
      vary from 50% (if threshold performance is attained) up to 200% of the
      target level. The maximum Cash Award payable in a calendar year to any
      Participant with respect to any Performance Period shall not exceed
      $2,000,000.
 
 10.4
    CONVERSION OF
      CASH AWARD PAYOUT TO RESTRICTED STOCK. At the request of the Participant,
      but subject to the discretion of the Committee, any Cash Award payout may
      be converted to Restricted Stock at a discount. The conversion to
      Restricted Stock will occur by multiplying the Cash Award by a premium,
      but in no event more than 120% and dividing the product by the Fair Market
      Value of the Restricted Stock on the date of conversion, which shall be
      chosen by the Committee at least 10 days in advance, to determine the
      number of shares of Restricted Stock that will be provided as full
      settlement of the Cash Award. The shares of Restricted Stock provided to
      Participants in settlement of Cash Awards shall be Restricted Stock
      subject to Article 8.
 
 
 **ARTICLE 11** **DIRECTORS’
AWARDS**
 
 11.1
    GRANT OF
      DIRECTORS’ AWARDS. In lieu of a portion of their retainer, Directors’
      Awards can be made in the form of Stock Options or Restricted Stock under
      Articles 6 and 8 respectively. No other Awards may be made to Directors
      under the Plan.
 
 11.2
    CONVERSION OF
      RETAINER TO STOCK. At the request of a Director but subject to the
      election of the Committee, a Director may convert any retainer otherwise
      due to be paid by the Company in cash to an aggregate equivalent value of
      either Stock Options, Restricted Stock or
both.
  
   
 11.3
    CONVERSION OF
      RETAINER TO RESTRICTED STOCK. Retainer, otherwise payable in cash may be
      converted to Restricted Stock under Article 8. The conversion to
      Restricted Stock will occur by multiplying the retainer by a premium, but
      in no event more than 120% and dividing the product by the Fair Market
      Value of the Restricted Stock on the date of conversion, which shall be
      chosen by the Committee at least 10 days in advance, into the amount of
      the retainer to determine the number of shares of Restricted Stock that
      will be provided as full settlement of the
retainer.
 
 11.4
    CONVERSION OF
      RETAINER TO STOCK OPTIONS. Retainer otherwise due to be paid in cash may
      be converted to Stock Options under Article 6 at the request of the
      Participant but subject to the election of the Committee. Retainer shall
      be converted by multiplying the retainer by a premium, but in no event
      more than 120% and dividing the product by the amount equal to the
      Black-Scholes Value of the Stock Option on the date of conversion. The
      quotient of which is the number of Stock Options that shall be awarded.
 
 
 **ARTICLE 12** **BENEFICIARY
DESIGNATION**
 
 Each Participant
under the Plan may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively and who may include a trustee
under a will or living trust) to whom any benefit under the Plan is to be paid
in case of his/her death before he receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Committee, and will be effective only when filed by
the Participant in writing with the Committee during his lifetime. In the
absence of any such designation or if all designated beneficiaries predecease
the Participant, benefits remaining unpaid at the Participant's death shall be
paid to the Participant's estate.
 
 
 **ARTICLE 13** **RIGHTS
OF EMPLOYEES**
 
 13.1
    EMPLOYMENT.
      Nothing in the Plan shall interfere with or limit in any way the right of
      the Company or any of its Subsidiaries to terminate any Participant's
      employment at any time, nor confer upon any Participant any right to
      continue in the employ of the Company or any of its Subsidiaries.
 
 13.2
    PARTICIPATION.
      No employee shall have a right to be selected as a Participant, or, having
      been so selected, to be selected again as a Participant.
 
 13.3
    NO IMPLIED
      RIGHTS; RIGHTS ON TERMINATION OF SERVICE. Neither the establishment of the
      Plan nor any amendment thereof shall be construed as giving any
      Participant, beneficiary, or any other person any legal or equitable right
      unless such right shall be specifically provided for in the Plan or
      conferred by specific action of the Committee in accordance with the terms
      and provisions of the Plan. Except as expressly provided in this Plan,
      neither the Company nor any of its Subsidiaries shall be required or be
      liable to make any payment under the Plan.
 
 13.4
    NO RIGHT TO
      COMPANY ASSETS. Neither the Participant nor any other person shall
      acquire, by reason of the Plan, any right in or title to any assets, funds
      or property of the Company or any of its Subsidiaries whatsoever
      including, without limiting the generality of the foregoing, any specific
      funds, assets, or other property which the Company or any of its
      Subsidiaries, in its sole discretion, may set aside in anticipation of a
      liability hereunder. Any benefits which become payable hereunder shall be
      paid from the general assets of the Company or the applicable subsidiary.
      The Participant shall have only a contractual right to the amounts, if
      any, payable hereunder unsecured by any asset of the Company or any of its
      Subsidiaries. Nothing contained in the Plan constitutes a guarantee by the
      Company or any of its Subsidiaries that the assets of the Company or the
      applicable subsidiary shall be sufficient to pay any benefit to any
      person.
  
   
 
 **ARTICLE 14** **CHANGE
IN CONTROL**
 
 14.1
    STOCK BASED
      AWARDS. Notwithstanding any other provisions of the Plan, in the event of
      a Change in Control, all Stock based awards granted under this Plan shall
      immediately vest 100% in each Participant (subject to Section 3.8 herein),
      including Incentive Stock Options, Nonqualified Stock Options, Stock
      Appreciation Rights,Restricted
      Stockand
      Restricted StockUnits.
 
 14.2
    ALL AWARDS
      OTHER THAN STOCK BASED AWARDS. Notwithstanding any other provisions of the
      Plan, in the event of a Change in Control, all Awards other than Stock
      Based Awards granted under this Plan shall be immediately paid out in
      cash, including Performance Shares. The amount of the payout shall be
      based on the higher of: (i) the extent, as determined by the Committee, to
      which performance goals, established for the Performance Period then in
      progress have been met up through and including the effective date of the
      Change in Control or (ii) 100% of the value on the date of grant of the
      number of Performance Shares.
 
 
 **ARTICLE 15** **AMENDMENT,
MODIFICATION, AND TERMINATION**
 
 15.1
    AMENDMENT,
      MODIFICATION, AND TERMINATION. At any time and from time to time, the
      Board or Committee may terminate, amend, or modify the Plan. However,
      without the approval of the stockholders of the Company if required by the
      Code, by the insider trading rules of Section 16 of the Exchange Act, by
      any national securities exchange or system on which the Stock is then
      listed or reported, or by any regulatory body having jurisdiction with
      respect hereto, no such termination, amendment, or modification
      may:
 
 (a)
    Increase the
      total amount of Stock which may be issued under this Plan, except as
      provided in Section 4.3 herein; or
 (b)
    Change the
      class of Employees eligible to participate in the
Plan;
 (c)
    Materially
      increase the cost of the Plan or materially increase the benefits to
      Participants; or
 (d)
    Extend the
      maximum period after the date of grant during which Options or Stock
      Appreciation Rights may be exercised.
 
 15.2
    AWARDS
      PREVIOUSLY GRANTED. No termination, amendment or modification of the Plan
      other than pursuant to Section 4.3 hereof shall in any manner adversely
      affect any Award theretofore granted under the Plan, without the written
      consent of the Participant.
 
 15.3
    DEFERRAL OF
      PAYMENTS AND DISTRIBUTIONS. Cash Awards pursuant to Article 10 may be
      eligible for deferral by any plan(s) offered by the company, subject to
      the approval of the Committee and any administrative requirements imposed
      by the Committee.
  
   
 
 **ARTICLE 16** **WITHHOLDING
AND DEFERRAL**
 
 16.1
    TAX
      WITHHOLDING. The Company and any of its Subsidiaries shall have the power
      and the right to deduct or withhold, or require a Participant to remit to
      the Company or any of its Subsidiaries, an amount sufficient to satisfy
      Federal, state and local taxes (including the Participant's FICA
      obligation) required by law to be withheld with respect to any grant,
      exercise, or payment made under or as a result of this
    Plan.
 
 16.2
    STOCK
      DELIVERY OR WITHHOLDING. With respect to withholding required upon the
      exercise of Stock Options, or upon the lapse of restrictions on RestrictedStockor
      Restricted Stock Units,
      participants may elect, subject to the approval of the Committee, to
      satisfy the withholdingrequirement,
      in whole or in part, by tendering to the Company Shares of previously
      acquired Stock or by having the Company withhold Shares of Stock, in each
      such case in an amount having a Fair Market Value equal to the amount
      required to be withheld to satisfy the tax withholding obligations
      described in Section 16.1. The value of the Shares to be tendered or
      withheld is to be based on the Fair Market Value of the Stock on the date
      that the amount of tax to be withheld is to be determined.
 
 All Stock
withholding elections shall be irrevocable and made in writing, signed by the
Participant on forms approved by the Committee in advance of the day that the
transaction becomes taxable.
 
 Stock
      withholding elections made by Participants who are subject to the
      short-swing profit restrictions of Section 16 of the Exchange Act must
      comply with the additional restrictions of Section 16 and Rule 16b-3 in
      making their elections.
 
 
 **ARTICLE 17** **SUCCESSORS**
 
 All obligations of
the Company under the Plan, with respect to Awards granted hereunder, shall be
binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation or
otherwise, of all or substantially all of the business and/or assets of the
Company.
 
 
 **ARTICLE 18** **REQUIREMENTS
OF LAW**
 
 18.1
    REQUIREMENTS
      OF LAW. The granting of Awards and the issuance of Shares of Stock under
      this Plan shall be subject to all applicable laws, rules, and regulations,
      and to such approvals by any governmental agencies or national securities
      exchanges as may be required.
 
 18.2
    GOVERNING
      LAW. The Plan, and all agreements hereunder, shall be construed in
      accordance with and governed by the laws of the State of Ohio without
      giving effect to the principles of the conflicts of laws.