FirstEnergy Corp.
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Executive and Directors Incentive Compensation Plan
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Non-Qualifying Stock Option (NSO) Agreement
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Option No.: 11A
Number of Options Granted: XXXX NSOs
Option Price: $29.50 per share
Option Closing Date: June 26, 2001
This Option Agreement ("Agreement") is entered into as of the 16th day of May,
2001, between FirstEnergy Corp., and _____________ ("Optionee") and is not in
lieu of salary or any other compensation for services. For the purposes of this
plan, the term "Company" or "FE" means FirstEnergy Corp. or its subsidiaries,
singularly or collectively.
SECTION ONE - AWARD
On February 17, 1998, the Board of Directors ("Board") of FE adopted the FE
Executive and Director Incentive Compensation Plan ("Plan"), which was approved
by the common stock shareholders on April 30, 1998, and become effective May 1,
1998. As of the date of this Agreement, per the terms of the Plan, FE grants to
the Optionee an option ("Option") to purchase the above number of shares of FE
Common Stock ("Shares") at the option price reflected above.
All Grants are considered NSOs, not subject to the provisions of section 422 of
the Code.
SECTION TWO - GENERAL TERMS
This Agreement is subject to the following terms and conditions, many of which
are described in greater detail in the Plan. Please consult the Plan document
for further information.
Vesting Provisions
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These Options will become fully vested on May 16, 2005, which is four (4) years
after the date of grant unless they become exercisable prior to that date due to
termination of employment (as described below).
Expiration
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These Options expire on May 16, 2011 at 2:00 PM, Akron time unless the Options
expire earlier due to termination of employment (or 2:00 PM on the last business
day prior to such date, if the date falls on a Saturday, Sunday, or other day
when the FirstEnergy General Office is closed).
Termination of Employment
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Event of Optionee's
Termination of Employment Vesting When Options Expire Further Information
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Retirement (including Vesting continues Options expire on As defined under
early retirement) per vesting schedule May 16, 2011 6.8 of the Plan
Disability Vesting continues Options expire on As defined under
Per vesting schedule May 16, 2011 6.8 of the Plan
Death (including death 100% vesting on date All options expire Shares exercisable by
after retirement, of death the earlier of one year the beneficiary (as
disability, or Other after date of death or designated under
Terminations other than expiration of the grant Article 12 of the Plan,
for Cause) or by will or by the
laws of descent and
distribution)
For "Cause" Vesting stops upon All vested and Termination for Cause
date you leave unvested options are is defined in section
Company immediately forfeited 2.1.6 of the Plan
back to the Company
Separation from Company in 25% of the unvested All options that have Refer to the Severance
which you qualify for and options will vest for not vested in Benefits Plan
elect benefits under the every whole year you accordance with the
First Energy Severance have worked since the preceding box are
Plan date of the grant, immediately forfeited
effective upon the back to the Company.
date that you leave All vested options
the Company expire on the earlier
of 90 days after you
leave the Company or
expiration of the grant
Termination (including Vesting stops upon All unvested options You may be subject
resignation) date you leave are immediately to the "Forfeiture
Company forfeited back to the and Recovery"
Company. All vested provisions below.
options expire the
earlier of 90 days
after you leave the
Company or expiration
of the grant
Change in Control
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In the event of a Change in Control (as defined in section 2.1.7 of the Plan),
all options under this Agreement become immediately exercisable as of the date
of the Change of Control, and the provisions under the section entitled
"Forfeiture and Recovery" shall not apply.
Forfeiture and Recovery
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If it is determined, in the sole discretion of the Compensation Committee (the
"Committee") of the FirstEnergy Board of Directors or its delegate, that the
Optionee has breached any of the covenants below, and unless such breach has
been waived by the Committee or its delegate in writing, all outstanding Options
shall be immediately forfeited back to FE, and any profits resulting from the
exercise of Options realized in the twelve (12) months preceding the date of
termination through the date of the breach shall be immediately returned to FE.
During the term of his/her employment with the Company and for a period of
twenty-four (24) months following termination of employment for any reason,
including without limitation, termination by mutual agreement, the Optionee
expressly covenants and agrees that he/she will not at any time for
himself/herself or on behalf of any other person, firm, association or other
entity do any of the following:
1. Participate or engage, by virtue of being employed or otherwise, directly
or indirectly, in the business of selling, servicing, and/or manufacturing
products, supplies or services of the kind, nature or description of those
sold by the Company except pursuant to his/her employment with the Company;
2. Directly participate or engage, on the behalf of other parties, in the
purchase of products, supplies or services of the kind, nature or
description of those sold by the Company except pursuant to his/her
employment with the Company;
3. Solicit, divert, take away or attempt to take away any of the Company's
Customers or the business or patronage of any such Customers of the
Company;
4. Solicit, entice, lure, employ or endeavor to employ any of the Company's
employees;
5. Divulge to others or use to his/her own benefit any confidential
information obtained during the course of his/her employment with Company
relative to sales, services, processes, methods, machines, manufacturers,
compositions, ideas, improvements, patents, trademarks, or inventions
belonging to or relating to the affairs of Company; or
6. Divulge to others or use to his/her own benefit any trade secrets belonging
to the Company obtained during the course of his/her employment or of which
he/she became aware during the course of his/her employment with the
Company.
The term "Customer" shall mean any person, firm, association, corporation or
other entity to which the Optionee or the Company has sold the Company's
products or services within the twenty-four (24) month period immediately
preceding the termination of Optionee's employment with the Company or to which
the Optionee or the Company is in the process of selling its products or
services, or to which the Optionee or the Company has submitted a bid, or is in
the process of submitting a bid to sell the Company's products or services.
FE may offset any amount owed against any compensation due to the Optionee or
against any amounts otherwise due and distributable to the Optionee from any
benefit plan of FE in which the Optionee has participated, in accordance with
the terms of such benefit plan. Should it be necessary for FE to initiate legal
action to recover any amounts due, FE shall be entitled to recover from
Optionee, in addition to such amounts due, all costs, including reasonable
attorneys fees, incurred as a result of such legal action.
Effect on the Employment Relationship
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Nothing in this Agreement guarantees employment with the Company, nor does it
confer any special rights or privileges to the Optionee as to the terms of
employment.
Adjustments
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In the event of any merger, reorganization, consolidation, recapitalization,
separation, liquidation, stock dividend, stock split, combination, distribution,
or other change in corporate structure of FE affecting the Common Stock, the
Committee will adjust the number and class of securities in this option in a
manner determined appropriate to prevent dilution or diminution of the Option
under this Agreement.
Administration
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1. This Agreement is governed by the laws of the State of Ohio without giving
effect to the principles of the conflicts of laws.
2. The terms and conditions of this Option may be modified by the Committee:
(a) In any case permitted by the terms of the Plan or this Option,
(b) with the written consent of the Optionee, and/or
(c) without the consent of the Optionee if the amendment is either not
adverse to the interests of the Optionee or is required by law.
3. The administration of this Agreement and the Plan will be performed in
accordance with Article 3 of the Plan. All determinations and decisions
made by the Committee, the Board, or any delegate of the Committee as to
the provisions of the Plan shall be final, conclusive, and binding on all
persons.
4. Except as provided otherwise herein, the terms of this Agreement are
governed at all times by the official text of the Plan and in no way alter
or modify the Plan.
5. If a term is capitalized but not defined in this Agreement, it has the
meaning given to it in the Plan.
6. To the extent a conflict exists between the terms of this Agreement and the
provisions of the Plan, the provisions of the Plan shall govern.
SECTION THREE - METHODS OF EXERCISING THE OPTION
Notification to Exercise
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To exercise an option, the Optionee must submit to the Administrator of the Plan
the information below either on a form provided by FE, a broker form, or a blank
sheet of paper:
1. Number of shares being purchased,
2. The grant price,
3. The form of payment,
4. A statement of intention to exercise,
5. The signature of the Optionee, (or legal representative in the case of
death or disability), and
6. Any representations or disclosures required by any applicable securities
law.
Method of Payment
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Payment for the transaction and associated brokerage fees may be made through
the following methods:
1. Cash Exercise -- Delivering cash equal to the cost of the exercise.
2. Stock Swap Exercise -- Surrendering certificates of FE stock previously
acquired having a Fair Market Value at the time of the exercise equal to
the amount of the exercise, and, if necessary, a small amount of cash, not
to exceed the price of one (1) share of stock.
3. Cashless Exercise-- Using the net proceeds from the immediate sale of stock
to pay for the exercise of the Option, as directed in the written
notification to exercise the option.
A combination of any of the above based upon Plan administrative rules.
Withholding Tax
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FE shall have the right to deduct, withhold, or require the Optionee to
surrender an amount sufficient to satisfy federal (including FICA and Medicare),
state, and/or local taxes required by law to be withheld for any exercise.
SECTION FOUR - TRANSFER OF OPTION
The Option is not transferable during the life of the Optionee. Only the
Optionee shall have the right to exercise an option, unless deceased, at which
time the option may be exercised by the Optionee's beneficiary (as designated
under Article 12 of the Plan or by will or by the laws of descent and
distribution).
FirstEnergy Corp.
By _____________________________
Corporate Secretary
I acknowledge receipt of this NSO Agreement and I accept and agree with
the terms and conditions stated above.
________________________________
(Signature of Optionee)
______________________
(Date)