Document:

Unassociated Document

    Exhibit
      10.3

     

     

    EXECUTION
      COPY

    

    

    

     

    GUARANTY,
      dated as
      of March 2, 2007, made by FIRSTENERGY CORP., an Ohio corporation (the
“Guarantor”),
      in favor of the
      Lender
      (as defined in the Credit Agreement referred to below). 

     

    PRELIMINARY
      STATEMENT

    

    FirstEnergy
      Solutions Corp., an Ohio corporation (the “Borrower”),
      is party to a
      Credit Agreement, dated as of the date hereof (as amended, amended and restated,
      supplemented or otherwise modified from time to time, the “Credit
      Agreement”;
      the capitalized
      terms defined therein and not otherwise defined herein being used herein as
      therein defined), with
      the
      Lender.
      The Guarantor shall receive, directly or indirectly, all of the proceeds of
      the
      Loan under the Credit Agreement and will derive substantial direct and indirect
      benefits from the transactions contemplated by the Credit Agreement. After
      the
      date hereof, the Borrower shall be required to meet the debt to capitalization
      ratio financial covenant described in Section 5.02 of the Credit Agreement
      only
      at such time as this Guaranty shall no longer be in effect in accordance with
      the terms hereof.

    

    NOW,
      THEREFORE, in
      consideration of the premises and in order to induce the Lender to make the
      Loan
      for the account of the Borrower, the Guarantor hereby agrees as
      follows:

     

    SECTION
      1. Guaranty;
      Limitation of Liability. 

     

    The
      Guarantor hereby
      absolutely, unconditionally and irrevocably guarantees the punctual payment
      when
      due, whether at scheduled maturity or on any date of a required prepayment
      or by
      acceleration, demand or otherwise, of the Applicable Percentage (as defined
      below) of all payment, performance and other obligations of the Borrower now
      or
      hereafter existing under or in respect of the Loan Documents (including, without
      limitation, any extensions, modifications, substitutions, amendments or renewals
      of any or all of the foregoing obligations), whether direct or indirect,
      absolute or contingent, and whether for principal, interest, reimbursement
      obligations, premiums, fees, indemnities, contract causes of action, costs,
      expenses or otherwise, including, without limitation, (i) the obligation of
      the
      Borrower to pay principal, interest, charges, expenses, fees, attorneys’ fees
      and disbursements, indemnities and other amounts payable by the Borrower under
      any Loan Document and (ii) any liability of the Borrower on any claim, whether
      or not the right of any creditor to payment in respect of such claim is reduced
      to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed,
      undisputed, legal, equitable, secured or unsecured, and whether or not such
      claim is discharged, stayed or otherwise affected by any proceeding (such
      obligations being the “Guaranteed
      Obligations”),
      and agrees to
      pay any and all expenses (including, without limitation, fees and expenses
      of
      counsel) incurred by the Lender in enforcing any rights under this Guaranty
      or
      any other Loan Document. As used herein, “Applicable
      Percentage”
shall
      mean (i)
      100%, at any time that the Borrower has a Borrower’s Rating of less than BBB- by
      S&P and Baa3 by Moody’s and (ii) 0%, at any time that the Borrower has a
      Borrower’s Rating of at least BBB- by S&P and Baa3 by Moody’s.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        C-2

      

    

    The
      Guarantor, and
      by its acceptance of this Guaranty, the Lender hereby confirms that it is the
      intention of all such Persons that this Guaranty and the Guaranteed Obligations
      of the Guarantor hereunder not constitute a fraudulent transfer or conveyance
      for purposes of Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent
      Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
      federal or state law to the extent applicable to this Guaranty and the
      Guaranteed Obligations. To effectuate the foregoing intention, the Lender and
      the Guarantor hereby irrevocably agree that the Guaranteed Obligations at any
      time shall be limited to the maximum amount as will result in the Guaranteed
      Obligations not constituting a fraudulent transfer or conveyance. For purposes
      hereof, “Bankruptcy
      Law”
means
      any
      proceeding of the type referred to in Section 6.01(f) of the Credit Agreement
      or
      Title 11, U.S. Code, or any similar foreign, federal or state law for the relief
      of debtors.

     

    SECTION
      2. Guaranty
      Absolute. 

     

    The
      Guarantor
      guarantees that the Guaranteed Obligations will be paid strictly in accordance
      with the terms of the Loan Documents, regardless of any law, regulation or
      order
      now or hereafter in effect in any jurisdiction affecting any of such terms
      or
      the rights of the Lender with respect thereto. The obligations of the Guarantor
      under or in respect of this Guaranty are independent of the Guaranteed
      Obligations or any other obligations the Borrower under or in respect of the
      Loan Documents, and a separate action or actions may be brought and prosecuted
      against the Guarantor to enforce this Guaranty, irrespective of whether any
      action is brought against the Borrower or whether the Borrower is joined in
      any
      such action or actions. The liability of the Guarantor under this Guaranty
      shall
      be irrevocable, absolute and unconditional irrespective of, and the Guarantor
      hereby irrevocably waives any defenses it may now have or hereafter acquire
      in
      any way relating to, any or all of the following:

     

    (a) any
      lack of validity
      or enforceability of any Loan Document or any agreement or instrument relating
      thereto;

     

    (b) any
      change in the
      time, manner or place of payment of, or in any other term of, all or any of
      the
      Guaranteed Obligations, or any other amendment or waiver of or any consent
      to
      departure from any Loan Document, including, without limitation, any increase
      in
      the Guaranteed Obligations resulting from the extension of additional credit
      to
      the Borrower;

     

    (c) any
      taking,
      exchange, release or non-perfection of any collateral, or any taking, release
      or
      amendment or waiver of, or consent to departure from, any other guaranty, for
      all or any of the Guaranteed Obligations;

     

    (d) any
      manner of
      application of any collateral, or proceeds thereof, to all or any of the
      Guaranteed Obligations, or any manner of sale or other disposition of any
      collateral for all or any of the Guaranteed Obligations or any other assets
      of
      the Borrower or any of its Subsidiaries;

     

    (e) any
      change,
      restructuring or termination of the corporate structure or existence of the
      Borrower or any of its Subsidiaries;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        C-3

      

    

    (f) any
      failure of the
      Lender to disclose to the Guarantor any information relating to the business,
      condition (financial or otherwise), operations, performance, properties or
      prospects of the Borrower now or hereafter known to the Lender (the Guarantor
      waiving any duty on the part of the Lender to disclose such
      information);

     

    (g) the
      failure of any
      other Person to execute or deliver this Guaranty or any other guaranty or
      agreement or the release or reduction of liability of the Guarantor or other
      guarantor or surety with respect to the Guaranteed Obligations; or

     

    (h) any
      other
      circumstance (including, without limitation, any statute of limitations) or
      any
      existence of or reliance on any representation by the Lender that might
      otherwise constitute a defense available to, or a discharge of, the Guarantor
      or
      any other guarantor or surety.

     

    This
      Guaranty shall
      continue to be effective or be reinstated, as the case may be, if at any time
      any payment of any of the Guaranteed Obligations is rescinded or must otherwise
      be returned by the Lender or any other Person upon the insolvency, bankruptcy
      or
      reorganization of the Guarantor, the Borrower or otherwise, all as though such
      payment had not been made.

     

    SECTION
      3. Waivers
      and
      Acknowledgments. 

     

    (a) The
      Guarantor hereby
      unconditionally and irrevocably waives promptness, diligence, notice of
      acceptance, presentment, demand for performance, notice of nonperformance,
      default, acceleration, protest or dishonor and any other notice with respect
      to
      any of the Guaranteed Obligations and this Guaranty and any requirement that
      the
      Lender protect, secure, perfect or insure any Lien or any property subject
      thereto or exhaust any right or take any action against the Borrower or any
      other Person or any collateral.

     

    (b) The
      Guarantor hereby
      unconditionally and irrevocably waives any right to revoke this Guaranty and
      acknowledges that this Guaranty is continuing in nature and applies to all
      Guaranteed Obligations, whether existing now or in the future.

     

    (c) The
      Guarantor hereby
      unconditionally and irrevocably waives (i) any defense arising by reason of
      any
      claim or defense based upon an election of remedies by the Lender that in any
      manner impairs, reduces, releases or otherwise adversely affects the
      subrogation, reimbursement, exoneration, contribution or indemnification rights
      of the Guarantor or other rights of the Guarantor to proceed against the
      Borrower, any other guarantor or any other Person or any collateral and (ii)
      any
      defense based on any right of set-off or counterclaim against or in respect
      of
      the Guaranteed Obligations.

     

    (d) The
      Guarantor hereby
      unconditionally and irrevocably waives any duty on the part of the Lender to
      disclose to the Guarantor any matter, fact or thing relating to the business,
      condition (financial or otherwise), operations, performance, properties or
      prospects of the Borrower or any of its Subsidiaries now or hereafter known
      by
      the Lender.

     

    (e) The
      Guarantor
      acknowledges that it will receive substantial direct and indirect benefits
      from
      the Loan and that the waivers set forth in Section 2 and this Section 3 are
      knowingly made in contemplation of such benefits.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        C-4

      

    

    SECTION
      4. Subrogation.
      

     

    The
      Guarantor hereby
      unconditionally and irrevocably agrees not to exercise any rights that it may
      now have or hereafter acquire against the Borrower that arise from the
      existence, payment, performance or enforcement of the Guaranteed Obligations
      under or in respect of this Guaranty, including, without limitation, any right
      of subrogation, reimbursement, exoneration, contribution or indemnification
      and
      any right to participate in any claim or remedy of the Lender against the
      Borrower, whether or not such claim, remedy or right arises in equity or under
      contract, statute or common law, including, without limitation, the right to
      take or receive from the Borrower, directly or indirectly, in cash or other
      property or by set-off or in any other manner, payment or security on account
      of
      such claim, remedy or right, unless and until all of the Guaranteed Obligations
      and all other amounts payable under this Guaranty shall have been paid in full
      in cash. If any amount shall be paid to the Guarantor in violation of the
      immediately preceding sentence at any time prior to the payment in full in
      cash
      of the Guaranteed Obligations and all other amounts payable under this Guaranty,
      such amount shall be received and held in trust for the benefit of the Lender,
      shall be segregated from other property and funds of the Guarantor and shall
      forthwith be paid or delivered to the Lender in the same form as so received
      (with any necessary endorsement or assignment) to be credited and applied to
      the
      Guaranteed Obligations and all other amounts payable under this Guaranty,
      whether matured or unmatured, in accordance with the terms of the Loan
      Documents, or to be held as collateral for any Guaranteed Obligations or other
      amounts payable under this Guaranty thereafter arising. If (i) the Guarantor
      shall make payment to the Lender of all or any part of the Guaranteed
      Obligations and (ii) all of the Guaranteed Obligations and all other amounts
      payable under this Guaranty shall have been paid in full in cash, the Lender
      will, at the Guarantor’s request and expense, execute and deliver to the
      Guarantor appropriate documents, without recourse and without representation
      or
      warranty, necessary to evidence the transfer by subrogation to the Guarantor
      of
      an interest in the Guaranteed Obligations resulting from such payment made
      by
      the Guarantor pursuant to this Guaranty.

     

    SECTION
      5. Payments
      Free and Clear of Taxes, Etc. 

     

    (a) Any
      and all payments
      made by the Guarantor under or in respect of this Guaranty or any other Loan
      Document shall be made, in accordance with Section 2.10 of the Credit Agreement,
      free and clear of and without deduction for any and all present or future Taxes.
      If the Guarantor shall be required by law to deduct any Taxes from or in respect
      of any sum payable under or in respect of this Guaranty or any other Loan
      Document to the Lender, (i) the sum payable by the Guarantor shall be increased
      as may be necessary so that after the Guarantor has made all required deductions
      (including deductions applicable to additional sums payable under this Section
      5), the Lender receives an amount equal to the sum it would have received had
      no
      such deductions been made, (ii) the Guarantor shall make all such deductions
      and
      (iii) the Guarantor shall pay the full amount deducted to the relevant taxation
      authority or other authority in accordance with applicable law.

     

    (b) In
      addition, the
      Guarantor agrees to pay any present or future Other Taxes that arise from any
      payment made by or on behalf of the Guarantor under or in respect of this
      Guaranty or any other Loan Document or from the execution, delivery or
      registration of, performance under, or otherwise with respect to, this Guaranty
      and the other Loan Documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        C-5

      

    

    The
      Guarantor agrees
      to indemnify the Lender for and hold it harmless against the full amount of
      Taxes and Other Taxes, (including, without limitation, any Taxes or Other Taxes
      of any kind imposed by any jurisdiction on amounts payable under this Section
      5)
      imposed on or paid by the Lender and any liability (including penalties,
      additions to tax, interest and expenses) arising therefrom or with respect
      thereto. This indemnification shall be made within 30 days from the date the
      Lender makes written demand therefor.

     

    From
      time to time
      thereafter if requested by the Guarantor or the Administrative Agent, any other
      lender under the Credit Agreement following an assignment of all or any portion
      of the Loan to an Eligible Assignee, pursuant to Section 7.07 of the Credit
      Agreement, which other lender is organized under the laws of a jurisdiction
      outside the United States shall provide the Lender and the Guarantor with the
      forms prescribed by the Internal Revenue Service of the United States certifying
      that such Person is exempt from United States withholding taxes with respect
      to
      all payments to be made to such Person hereunder. If for any reason during
      the
      term of this Guaranty, any Person becomes unable to submit the forms referred
      to
      above or the information or representations contained therein are no longer
      accurate in any material respect, such Person shall promptly notify the
      Guarantor in writing to that effect. Unless the Guarantor has received forms
      or
      other documents satisfactory to it indicating that payments hereunder are not
      subject to United States withholding tax, the Guarantor shall withhold taxes
      from such payments at the applicable statutory rate in the case of payments
      to
      or for any Person organized under the laws of a jurisdiction outside the United
      States.

     

    Any
      Person claiming
      any additional amounts payable pursuant to this Section 5 shall use its
      best efforts (consistent with its internal policy and legal and regulatory
      restrictions) to change the jurisdiction of its Lending Office if the making
      of
      such a change would avoid the need for, or reduce the amount of, any such
      additional amounts that may thereafter accrue and would not, in the reasonable
      judgment of such Person, be otherwise disadvantageous to such Person.

     

    Without
      prejudice to
      the survival of any other agreement of the Guarantor hereunder, the agreements
      and obligations of the Guarantor contained in this Section 5 shall survive
      the
      payment in full or termination of the Guaranteed Obligations.

     

    SECTION
      6. Representations
      and Warranties. 

     

    The
      Guarantor hereby
      makes each representation and warranty made in the Loan Documents by the
      Borrower with respect to the Guarantor and the Guarantor hereby further
      represents and warrants as follows:

     

    (a) There
      are no
      conditions precedent to the effectiveness of this Guaranty that have not been
      satisfied or waived.

     

    (b) The
      Guarantor has,
      independently and without reliance upon the Lender and based on such documents
      and information as it has deemed appropriate, made its own credit analysis
      and
      decision to enter into this Guaranty and each other Loan Document to which
      it is
      or is to be a party, and the Guarantor has established adequate means of
      obtaining from the Borrower on a continuing basis information pertaining to,
      and
      is now and on a continuing basis will be completely familiar with, the business,
      condition (financial or otherwise), operations, performance, properties and
      prospects of the Borrower.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        C-6

      

    

    SECTION
      7. Covenants.
      

     

    The
      Guarantor
      covenants and agrees that, so long as any part of the Guaranteed Obligations
      shall remain unpaid, the Guarantor will perform and observe, and cause each
      of
      its Subsidiaries to perform and observe, all of the terms, covenants and
      agreements set forth in the Loan Documents on its or their part to be performed
      or observed or that the Guarantor has agreed to cause the Borrower or such
      Subsidiaries to perform or observe.

     

    SECTION
      8. Amendments,
      Guaranty Supplements, Etc. 

     

    No
      amendment or
      waiver of any provision of this Guaranty and no consent to any departure by
      the
      Guarantor therefrom shall in any event be effective unless the same shall be
      in
      writing and signed by the Lender, and then such waiver or consent shall be
      effective only in the specific instance and for the specific purpose for which
      given. 

     

    SECTION
      9. Notices,
      Etc. 

     

    All
      notices and
      other communications provided for hereunder shall be in writing (including
      telegraphic, telecopy or cable communication) and mailed, telegraphed,
      telecopied, cabled or delivered to it, if to the Guarantor, addressed to it
      at
      the Borrower’s address specified in Section 7.02 of the Credit Agreement, and if
      to the Lender at its address specified in Section 7.02 of the Credit Agreement,
      or, as to each party, at such other address as shall be designated by such
      party
      in a written notice to each other party. All such notices and other
      communications shall, when mailed, telegraphed, telecopied or cabled, be
      effective when deposited in the mails, delivered to the telegraph company,
      telecopied or delivered to the cable company, respectively. Delivery by
      telecopier of an executed counterpart of a signature page to any amendment
      or
      waiver of any provision of this Guaranty shall be effective as delivery of
      an
      original executed counterpart thereof.

     

    SECTION
      10. No
      Waiver,
      Remedies. 

     

    No
      failure on the
      part of the Lender to exercise, and no delay in exercising, any right hereunder
      shall operate as a waiver thereof; nor shall any single or partial exercise
      of
      any right hereunder preclude any other or further exercise thereof or the
      exercise of any other right. The remedies herein provided are cumulative and
      not
      exclusive of any remedies provided by law.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        C-7

      

    

    SECTION
      11. Right
      of
      Set-off. 

     

    Upon
      the occurrence
      and during the continuance of any Event of Default, the Lender is hereby
      authorized at any time and from time to time, to the fullest extent permitted
      by
      law, to set off and apply any and all deposits (general or special, time or
      demand, provisional or final, excluding,
however,
      any payroll
      accounts maintained by the Guarantor with the Lender if and to the extent that
      the Lender shall have expressly waived its set-off rights in writing in respect
      of such payroll account) at any time held and other indebtedness at any time
      owing by the Lender to or for the credit or the account of the Guarantor against
      any and all of the obligations of the Guarantor now or hereafter existing under
      this Guaranty, irrespective of whether the Lender shall have made any demand
      under this Guaranty or any other Loan Document and although such obligations
      may
      be unmatured. The Lender agrees promptly to notify the Guarantor after any
      such
      set-off and application; provided,
      however,
      that the failure
      to give such notice shall not affect the validity of such set-off and
      application. The rights of the Lender under this Section are in addition to
      other rights and remedies (including, without limitation, other rights of
      set-off) that the Lender may have.

     

    SECTION
      12. Indemnification.
      

     

    (a)
 Without
      limitation
      on any other Guaranteed Obligations of the Guarantor or remedies of the Lender
      under this Guaranty, the Guarantor shall, to the fullest extent permitted by
      law, indemnify, defend and save and hold harmless the Lender and each of its
      Affiliates and their respective officers, directors, employees, agents and
      advisors (each, an “Indemnified
      Party”)
      from and against,
      and shall pay on demand, any and all claims, damages, losses, liabilities and
      expenses (including, without limitation, reasonable fees and expenses of
      counsel) that may be incurred by or asserted or awarded against any Indemnified
      Party in connection with or as a result of any failure of any Guaranteed
      Obligations to be the legal, valid and binding obligations of the Borrower
      enforceable against the Borrower in accordance with their terms.

     

    (b) The
      Guarantor hereby
      also agrees that none of the Indemnified Parties shall have any liability
      (whether direct or indirect, in contract, tort or otherwise) to the Guarantor
      or
      any of its respective Affiliates or any of their respective officers, directors,
      employees, agents and advisors, and the Guarantor hereby agrees not to assert
      any claim against any Indemnified Party on any theory of liability, for special,
      indirect, consequential or punitive damages in connection with, arising out
      of,
      or otherwise relating to this Guaranty, any of the transactions contemplated
      herein or the actual or proposed use of the proceeds of the Loan.

     

    (c) Without
      prejudice to
      the survival of any of the other agreements of the Guarantor under this Guaranty
      or any of the other Loan Documents, the agreements and obligations of the
      Guarantor contained in Section 1(a) (with respect to enforcement expenses),
      the
      last sentence of Section 2, Section 5 and this Section 12 shall survive the
      payment in full of the Guaranteed Obligations and all of the other amounts
      payable under this Guaranty.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        C-8

      

    

    SECTION
      13. Subordination.
      

     

    If
      either (i) any
      Unmatured Default shall have occurred and be continuing or (ii) an Event of
      Default shall have occurred and be continuing, the Guarantor agrees to
      subordinate any and all debts, liabilities and other obligations owed to the
      Guarantor by the Borrower (the “Subordinated
      Obligations”)
      to the Guaranteed
      Obligations to the extent and in the manner hereinafter set forth in this
      Section 13:

     

    (a) Prohibited
      Payments, Etc.
      Except during the
      continuance of an Unmatured Default or an Event of Default (including the
      commencement and continuation of any proceeding under any Bankruptcy Law
      relating to the Borrower), the Guarantor may receive regularly scheduled
      payments from the Borrower on account of the Subordinated Obligations. After
      the
      occurrence and during the continuance of any Unmatured Default (including the
      commencement and continuation of any proceeding under any Bankruptcy Law
      relating to the Borrower), however, unless the Lender otherwise agrees, the
      Guarantor shall not demand, accept or take any action to collect any payment
      on
      account of the Subordinated Obligations.

    

    (b) Prior
      Payment of Guaranteed Obligations.
      In any proceeding
      under any Bankruptcy Law relating to the Borrower, the Guarantor agrees that
      the
      Lender shall be entitled to receive payment in full in cash of all Guaranteed
      Obligations (including all interest and expenses accruing after the commencement
      of a proceeding under any Bankruptcy Law, whether or not constituting an allowed
      claim in such proceeding (“Post
      Petition Interest”))
      before the
      Guarantor receives payment of any Subordinated Obligations.

    

    (c) Turn-Over.
      After the
      occurrence and during the continuance of any Unmatured Default or any Event
      of
      Default (including the commencement and continuation of any proceeding under
      any
      Bankruptcy Law relating to the Borrower), the Guarantor shall, if the Lender
      so
      requests, collect, enforce and receive payments on account of the Subordinated
      Obligations as trustee for the Lender and deliver such payments to the Lender
      on
      account of the Guaranteed Obligations (including all Post Petition Interest),
      together with any necessary endorsements or other instruments of transfer,
      but
      without reducing or affecting in any manner the liability of the Guarantor
      under
      the other provisions of this Guaranty.

     

    (d) Lender
      Authorization.
      After the
      occurrence and during the continuance of any Unmatured Default or any Event
      of
      Default, the Lender is authorized and empowered (but without any obligation
      to
      so do), in its discretion, (i) in the name of the Guarantor, to collect and
      enforce, and to submit claims in respect of, Subordinated Obligations and to
      apply any amounts received thereon to the Guaranteed Obligations (including
      any
      and all Post Petition Interest), and (ii) to require the Guarantor (A) to
      collect and enforce, and to submit claims in respect of, Subordinated
      Obligations and (B) to pay any amounts received on such obligations to the
      Lender for application to the Guaranteed Obligations (including any and all
      Post
      Petition Interest).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        C-9

      

    

    SECTION
      14. Continuing
      Guaranty; Assignments under the Credit Agreement.

     

    This
      Guaranty is a
      continuing guaranty and shall (a) remain in full force and effect until the
      payment in full in cash of the Guaranteed Obligations and all other amounts
      payable under this Guaranty, (b) be binding upon the Guarantor, its successors
      and assigns and (c) inure to the benefit of and be enforceable by the Lender
      and
      its successors, transferees and permitted assigns. Without limiting the
      generality of clause (c) of the immediately preceding sentence, the Lender
      may
      assign or otherwise transfer all or any portion of its rights and obligations
      under the Credit Agreement (including, without limitation, all or any portion
      of
      the Loan owing to it and the Note or Notes held by it) to any other Person,
      and
      such other Person shall thereupon become vested with all the benefits in respect
      thereof granted to the Lender herein or otherwise, in each case as and to the
      extent provided in Section 7.07 of the Credit Agreement. The Guarantor shall
      not
      have the right to assign its rights hereunder or any interest herein without
      the
      prior written consent of the Lender.

     

    SECTION
      15. Execution
      in
      Counterparts. 

     

    This
      Guaranty and
      each amendment, waiver and consent with respect hereto may be executed in any
      number of counterparts and by different parties thereto in separate
      counterparts, each of which when so executed shall be deemed to be an original
      and all of which taken together shall constitute one and the same agreement.
      Delivery of an executed counterpart of a signature page to this Guaranty by
      telecopier shall be effective as delivery of an original executed counterpart
      of
      this Guaranty.

     

    SECTION
      16. Governing
      Law; Jurisdiction; Waiver of Jury Trial, Etc. 

     

    (a) THIS
      GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
      THE
      STATE OF NEW YORK.

     

    (b) To
      the fullest
      extent permitted by law, the Guarantor hereby irrevocably and unconditionally
      (i) submits, for itself and its property, to the nonexclusive jurisdiction
      of
      any New York State court or Federal court of the United States of America
      sitting in New York City, and any appellate court from any thereof, in any
      action or proceeding arising out of or relating to this Guaranty or any of
      the
      other Loan Documents to which it is or is to be a party, and (ii) agrees that
      all claims in respect of any such action or proceeding may be heard and
      determined in such New York State court or, in such Federal court. The Guarantor
      agrees, to the fullest extent permitted by law, that a final judgment in any
      such action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by law.
      

     

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          C-10

        

      

    (c) The
      Guarantor hereby
      irrevocably and unconditionally waives, to the fullest extent permitted by
      law,
      any objection that it may now or hereafter have to the laying of venue of any
      suit, action or proceeding arising out of or relating to this Guaranty or any
      of
      the other Loan Documents to which it is or is to be a party in any New York
      State or federal court. The Guarantor hereby irrevocably waives, to the fullest
      extent permitted by law, the defense of an inconvenient forum to the maintenance
      of such suit, action or proceeding in any such court. The Guarantor also,
      irrevocably consents, to the fullest extent permitted by law, to the service
      of
      any and all process in any such action or proceeding by the mailing of certified
      mail of copies of such process to the Guarantor at its address specified in
      Section 9.

     

    (d) THE
      GUARANTOR AND
      THE LENDER HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
      OR
      COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY, ANY OTHER LOAN
      DOCUMENT, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED HEREUNDER OR
      THEREUNDER.

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the Guarantor has caused this Guaranty to be duly executed and delivered by
      its
      officer thereunto duly authorized as of the date first above
      written.

     

     

    
      	 	 	 
	 	FIRSTENERGY
              CORP.
	 
 	 
 	 
 
	 	By:  	_____________________________
	 	Name:
	 	Title:Exhibit 10.1

     

    Exhibit
      10.1

    Frontier
      Oil Corporation

    Omnibus
      Incentive Compensation Plan

     

    2007
      Stock Unit/Restricted Stock Agreement

     

    
      	
              Grantee:

            	
              ______________

               

            
	
              Date
                of Grant:

            	
               

               

            
	
              Number
                of Stock Units Granted

              Tranche
                A Stock Units:

              Tranche
                B Stock Units:

              Tranche
                C Stock Units:

            	
               

              
                ______________

                
                  ______________

                  
                    ______________

                     

                  

                

              

            

    

    1.  Stock
      Unit Grants.
      I am
      pleased to inform you that you have been granted Stock Units with respect to
      shares of common stock of Frontier Oil Corporation (the “Company”) under the
      Frontier Oil Corporation Omnibus Incentive Compensation
      Plan
      (the
“Plan”). A Stock Unit is a notional (phantom) share of Company stock. The terms
      of the grants are subject to the terms of the Plan and this Agreement, which
      includes Attachment A hereto.

     

    2.  Performance
      Goals/Restricted Stock Grants.
      If, and
      to the extent, the Performance Goal applicable to a Tranche of Stock Units
      is
      achieved (as set forth on Attachment A), at the end of the Performance Period
      you will receive, in cancellation of and in exchange for your Stock Units
      subject to that Tranche, a number of shares of Restricted Stock (except with
      respect to the Tranche C Stock Units for which you will receive fully vested
      shares of Company Stock (“Vested Shares”) instead of Restricted Stock) equal to
      the product of the applicable Stock Units earned percentage set forth in Item
      I
      on Attachment A and the number of Stock Units granted to you with respect to
      that Tranche. If the Threshold for a particular Tranche is not achieved for
      the
      Performance Period, all Stock Units that are subject to that Tranche will
      automatically be cancelled without payment at the end of the Performance
      Period.

     

    3.  Vesting.
      To the
      extent Stock Units are earned with respect to Tranche A or Tranche B and shares
      of Restricted Stock are granted to you at the end of the Performance Period,
      then, subject to the further provisions of this Agreement, those
      shares of Restricted Stock will vest as follows: one-third on June 30, 2008;
      one-third on June 30, 2009; and the final one-third on June 30, 2010. Shares
      issued with respect to Stock Units that are subject to Tranche C will be Vested
      Shares.

     

    Notwithstanding
      the above vesting schedule, upon the occurrence of any of the following events
      during the Vesting Period (the period beginning January 1, 2008 and ending
      June
      30, 2010), all shares of Restricted Stock then outstanding, if any, shall become
      vested or forfeitable, as the case may be, as provided below:

     

    
      	 	
              (a)

            	
              Death,
                Retirement or Disability.
                If you cease to be an employee of the Company and its Affiliates
                during
                the Vesting Period as a result of your death, Retirement or a disability
                that entitles you to disability benefits under the Company’s long-term
                disability plan, any shares of Restricted Stock then outstanding
                automatically shall become 100% vested upon your termination of
                employment. As used herein, “Retirement” means your termination of
                employment with the Company and its Affiliates for reasons other
                than
                Cause on or after reaching age 63 or, if after age 55 and prior to
                age 63,
                with the consent of the Committee.

            

    

     

    
      	 	
              (b)

            	
              Other
                Terminations.
                If you cease to be an employee of the Company and its Affiliates
                (i)
                during the Performance Period for any reason, all Stock Units awarded
                to
                you automatically shall be forfeited without payment upon your termination
                and (ii) during the Vesting Period for any reason other than due
                to death,
                Retirement or disability as provided in paragraph 3(a) above, all
                shares
                of Restricted Stock then outstanding, if any, (or earned but not
                yet
                granted to you after the Performance Period, if any) automatically
                shall
                be forfeited without payment upon your termination of
                employment.

            

    

     

    
      	 	
              (c)

            	
              Change
                of Control.
                Upon the occurrence of a Change of Control (A) during the Performance
                Period, your Stock Units shall be cancelled in full on such date
                and you
                will be paid (i) a number of Shares equal to 125% of the number of
                Stock
                Units then credited to you plus (ii) an amount of cash equal to the
                amount
                of cash and stock dividend equivalents that would have been then
                credited
                to you if the Stock Units instead had been shares of Restricted Stock
                and
                (B) during the Vesting Period, (i) all shares of Restricted Stock,
                if any,
                then outstanding (or earned but not yet granted to you after the
                Performance Period, if any) automatically shall become 100% vested
                on such
                date and (ii) you will be paid all dividend equivalents (in cash
                or stock,
                as applicable) then credited to you pursuant to Section
                4.

            

    

     

    For
      purposes of this Agreement, “employment with the Company” shall include being an
      employee or a Director of, or a Consultant to, the Company or an
      Affiliate.

     

    4.  Dividend
      Equivalents.
      If you
      receive a grant of Restricted Stock or are paid Vested Shares pursuant to
      Section 2, then, on or as soon as practicable following the vesting of a share
      of Restricted Stock (but not later than 21⁄2 months after such vesting date), or
      the receipt of the Vested Shares, as the case may be, the Company shall pay
      you
      (i) an amount of cash equal to the value of all cash dividends the Company
      has
      paid with respect to a share of Company stock during the period beginning on
      the
      Date of Grant and ending on the date the share of Restricted Stock became vested
      or the Vested Share was issued (the “Dividend Period”) and (ii) a number of
      Shares equal to the number of stock dividends paid during the Dividend Period
      with respect to a Share. Dividend equivalents (cash or stock) shall not be
      payable with respect to any Stock Unit that is not earned or any share of
      Restricted Stock that is forfeited.

     

    5.  Nontransferability
      of Award.
      The
      Stock Units and any shares of Restricted Stock granted to you may not be
      transferred in any manner otherwise than by will or by the laws of descent
      or
      distribution. The terms of the Plan and this Agreement shall be binding upon
      your executors, administrators, heirs, successors and assigns.

     

    6.  Entire
      Agreement; Governing Law.
      The
      Plan is incorporated herein by reference. The Plan and this Agreement constitute
      the entire agreement of the parties with respect to the subject matter hereof
      and, except as expressly provided in this Agreement, supersede in their entirety
      all prior undertakings and agreements between you and the Company with respect
      to the same. This Agreement is governed by the internal substantive laws, but
      not the choice of law rules, of the State of Texas.

     

    7.  Withholding
      of Tax.
      To the
      extent that the vesting or payment of Stock Units, Restricted Stock, Vested
      Shares or payment of a dividend equivalent results in the receipt of
      compensation by you with respect to which the Company or an Affiliate has a
      tax
      withholding obligation pursuant to applicable law, unless other arrangements
      have been made by you that are acceptable to the Company or such Affiliate,
      you
      shall deliver to the Company or an Affiliate such amount of money as the Company
      or an Affiliate may require to meet its withholding obligations under such
      applicable law; provided, however, you may direct the Company to withhold such
      number of Shares that would otherwise be delivered to you hereunder upon vesting
      that have an aggregate fair market value that does not exceed the amount of
      taxes required to be withheld by the Company or an Affiliate. No delivery of
      Shares shall be made pursuant to this Agreement until you have paid or made
      arrangements approved by the Company or an Affiliate to satisfy in full the
      applicable tax withholding requirements of the Company or an
      Affiliate.

     

    8.  Amendment.
      This
      Agreement may be modified only by a written agreement signed by you and an
      officer of the Company who is expressly authorized by the Company to execute
      such document; provided, however, notwithstanding the foregoing, the Company
      may
      make any change to this agreement without your consent if such change is not
      materially adverse to your rights under this Agreement.

     

    9.  General.
      By
      accepting this grant, you agree that the Stock Units, shares of Restricted
      Stock, if granted, and vested Stock are granted or issued under and governed
      by
      the terms and conditions of the Plan and this Agreement. In the event of any
      conflict, the terms of the Plan shall control. Unless otherwise defined herein,
      the terms defined in the Plan shall have the same defined meanings in this
      Agreement. 

     

    10.  Change
      of Control and/or Severance Agreement.
      Notwithstanding anything in this Agreement to the contrary, the terms of any
      Change of Control and/or Severance Agreement between you and the Company in
      effect on the Date of Grant are incorporated herein by reference and to the
      extent such agreement continues to be in effect on any relevant date hereunder,
      shall control over any provisions in this Agreement in conflict with the terms
      of such Change of Control and/or Severance Agreement.

     

    

     

    FRONTIER
      OIL CORPORATION

    

    

    By:___________________________   

    Name:
      James R. Gibbs

    Title: Chairman
      of the Board, President & 

    Chief
      Executive Officer

    

    

    

    EMPLOYEE:

    

    

    _______________________________  

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ATTACHMENT
      A

    I. Performance
      Goals

     

    The
      Performance Period shall be (i) the 2007 calendar year for Tranche A and Tranche
      B Stock Units and (ii) the 2007, 2008 and 2009 three-year calendar period for
      the Tranche C Stock Units.

     

    A.     Tranche
      A
      Stock Units: Net Income

     

    
      	
               

              Net
                Income for

              Performance
                Period 1

               

            	
               

              Award
                Level

            	
               

              Stock
                Units Earned

              as
                a % of Target 2

               

            
	
              <$124.5
                MM

               

            	
              <
                Threshold

               

            	
              -0-

               

            
	
              $124.5
                MM

               

            	
              Threshold

               

            	
              75%

               

            
	
              $155.6
                MM

               

            	
              Target

               

            	
              100%

               

            
	
              $186.7
                MM

               

            	
              Maximum

               

            	
              125%

               

            
	
              1
                Net income as reported in the Company’s Annual Report to Stockholders for
                2007, subject to adjustment as provided in Item II below.

               

              2
                If
                Net Income falls between two Award Levels, the percentage of Stock
                Units
                earned will be interpolated on a straight line basis between the
                two
                closest points in the table above.

               

            

    

    

    B.     Tranche
      B
      Stock Units: Return on Capital Employed1
      (“ROCE”)
      vs Peers

     

    
      	
               

              ROCE
                vs Peers 2

               

            	
               

              Award
                Level

               

            	
               

              Stock
                Units Earned

              as
                a % of Target 3

               

            
	
              <0.80

               

            	
              <Threshold

               

            	
              -0-

               

            
	
              0.80

               

            	
              Threshold

               

            	
              75%

               

            
	
              1.05

               

            	
              Target

               

            	
              100%

               

            
	
              1.30

               

            	
              Maximum

               

            	
              125%

               

            
	
              1
                ROCE
                is calculated as EBITDA divided by (average of the beginning of year
                and
                end of year Shareholders Equity plus the average of the beginning
                of year
                and end of year net debt).

               

            
	
              2
                ROCE
                vs Peers is calculated by dividing the Company’s 2007 ROCE by the simple
                average 2007 ROCE achieved by the following independent refiners:
                Holly
                Corporation, Valero Corporation, Tesoro Corporation, Western Refining,
                Sunoco Corporation and Alon USA Energy.

               

            
	
              3 If
                ROCE vs Peers falls between two Award Levels, the percentage of Stock
                Units earned will be interpolated on a straight-line basis between
                the two
                closest points in the table above.

               

            

    

    

     

    C.     Tranche
      C
      Stock Units: 3-year Total Shareholder Return (“TSR”) vs Peers

     

    
      	
               

              TSR
                vs Peers 1

               

            	
               

              Award
                Level

               

            	
               

              Stock
                Units Earned

              as
                a % of Target 2

               

            
	
              <0.80

               

            	
              <Threshold

               

            	
              -0-

               

            
	
              0.80

               

            	
              Threshold

               

            	
              75%

               

            
	
              1.05

               

            	
              Target

               

            	
              100%

               

            
	
              1.30

               

            	
              Maximum

               

            	
              125%

               

            
	
              1
                3-year
                TSR vs Peers is calculated by dividing the Company’s three-year TSR (from
                January 2007 to December 2009) by the average TSR for the same period
                for
                the following companies: Holly Corporation, Valero Corporation, Tesoro
                Corporation, Western Refining, Sunoco Corporation and Alon USA Energy.
                TSR
                equals the percentage change in share price plus the total yield
                attributable to cash and stock dividends for the three-year period.
                The
                January 2007 stock price will be calculated using the average closing
                prices on the stock for the first twenty trading days of January
                2007; the
                December 2009 stock price will be calculated using the average closing
                prices on the stock for the final twenty trading days in December
                2009.

               

            
	
              2
                If
                TSR vs Peers falls between two Award Levels, the percentage of Stock
                Units
                earned will be interpolated on a straight-line basis between the
                two
                closest points in the table above.

               

            

    

    

    II.   
 Adjustments
      to Performance Goals for Certain Events

     

    If,
      during the Performance Period, there is change in accounting standards required
      by the Financial Accounting Standards Board, the performance goals in the above
      tables A & B shall be adjusted as appropriate to disregard the effect of
      such change. 

     

    In
      the
      event of an acquisition or disposition of a business operation by the Company
      or
      an Affiliate during the Performance Year, or any other Extraordinary Item(s)
      (as
      determined for GAAP purposes and reflected in the Company’s Annual Report to
      Stockholders) during the Performance Period, for purposes of comparing results
      with the performance goals for the Performance Period, the actual results and
      the dollar amount of the performance goals shall exclude the effect of such
      acquisition, disposition or other Extraordinary Item(s) (applies to tables
      A and
      B only).

     

    If
      a Peer
      company ceases to be publicly traded during the three-year Performance Period,
      such company shall be excluded from the calculation.

     

    Notwithstanding
      the foregoing, however, an adjustment pursuant to this Section II may be made
      only to the extent the adjustment does not cause the award to cease to qualify
      as a “performance-based” award under IRC Section 162(m) and applicable Treasury
      regulations thereunder.

     

    III.     Committee
      Certification

     

    As
      soon
      as reasonably practical following the end of the Performance Period, the
      Committee shall review the Performance Goal results for the Performance Period
      (as adjusted by the Company, if applicable) and certify those results in
      writing. No cash payments, shares of Restricted Stock or Vested Shares shall
      become paid or issuable to you prior to the Committee’s certification. However,
      Committee certification shall not apply in the event of a Change of
      Control.

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