NOTE 2: MERGER AGREEMENT On February 10, 2010, AE entered into an Agreement and Plan of Merger (as amended on June 4, 2010, the "Merger Agreement") with FirstEnergy Corp. ("FirstEnergy") and Element Merger Sub, Inc. ("Merger Sub"), a wholly owned subsidiary of FirstEnergy. Upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into AE (the "Merger"), with AE becoming a wholly owned subsidiary of FirstEnergy. The Merger is intended to qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended, and be tax-free to AE stockholders. Pursuant to the Merger Agreement, upon completion of the Merger, each issued and outstanding share of AE's common stock, including grants of restricted stock, will automatically be converted into the right to receive 0.667 of a share of the common stock of FirstEnergy. This ratio is fixed, and the Merger Agreement does not provide for any adjustment to reflect stock price changes prior to completion of the Merger. Completion of the Merger is subject to various customary conditions, including, among others, (i) approvals by shareholders of both companies, which were obtained on September 14, 2010; (ii) the SEC's clearance of a registration statement registering the FirstEnergy common stock to be issued in connection with the merger, which registration statement was declared effective by the SEC on July 16, 2010; (iii) expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Anti-Trust improvements Act of 1976; (iv) receipt of all required regulatory approvals, including approvals by FERC and state public service and utility commissions in Virginia, Maryland, Pennsylvania and West Virginia; (v) the absence of any governmental action challenging or seeking to prohibit the Merger and (vi) the absence of any material adverse effect with respect to either Allegheny or FirstEnergy. The proposed Merger was approved by the Virginia SCC on September 9, 2010. AE and FirstEnergy currentl