Board of Director
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Non-Qualifying Stock Option (NSO) Agreement
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for Elected and Bonus Stock Options
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Option No.: 12
Number of Elected Options: 4,193 NSO's
Number of Bonus Options: 839 NSO's
Total Options Granted: 5,032 NSO's
Exercise Price: $35.15 per share
This Option Agreement ("Agreement") is entered into as of January 1, 2002,
between FirstEnergy Corp. ("FE"), and ___________ ("Optionee") and is in lieu of
the Board of Directors retainer fee.
SECTION ONE - AWARD
The Board of Directors ("Directors") of FE adopted the FE Executive and Director
Incentive Compensation Plan ("Plan") on February 17, 1998. The Plan was
subsequently approved by the common stock shareholders on April 30, 1998, and
became effective May 1, 1998. According to the terms of the Plan, the Optionee
shall receive, as of the above date, the number of Options ("Options") to
purchase shares of FE Common Stock ("Shares"), at the above price, based upon
the Optionee's elections indicated on the Election Form signed by the Optionee
on November 16, 2001.
All grants are considered NSO's, 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 as outlined in
the Plan:
Options Accrued
All Options granted are earned in 2002 in proportion to each month served not to
exceed 100%. A full month's credit will be given for time served after the first
of the month.
All Bonus options become fully vested after the director has served four years
from the date of this grant, subject to the same restrictions as the grant.
Exercise of Options
These Options will become exerciseable as of January 1, 2006, which is four
years after the grant unless it becomes exerciseable prior to that date due to
termination from the Board.
Expiration
These Options expire on December 31, 2011, at 2:00 PM, Akron Time, unless the
Options expire earlier due to termination from the Board (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).
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Termination from the Board
Event of Optionee Vesting When Options Expire Further Information
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Retirement Vesting continues per vesting Options expire on December 31, As defined by the Board
schedule 2011 on November 7, 1997
Disability Vesting continues per vesting Options expire on As defined under Internal
schedule December 31, 2011 Revenue Code Section 22
(3) (3)
Death, including death 100% vesting on date of death All options expire the earlier Shares exercisable by the
after disability, of one year after date of beneficiary (per Article
retirement, or resignation death or expiration of the 12 of the Plan, or by
before January 1, 2006 grant will or by the laws of
descent and distribution)
Death after January 1, Vesting stops upon date you All unvested options are
2006 for any reason other leave Board immediately forfeited back to
than disability, the Company. All vested
retirement, or For Cause options expire the earlier of
one year after
you leave the
Board or 90 days
after death, if
such death occurs
prior to one year
after
termination, or
the expiration of
the grant
Termination For Cause Vesting stops upon date you All vested and unvested Termination for Cause is
leave Board options are immediately defined in section 2.1.6
forfeited back to the Company of the Plan
Other Termination, Vesting stops upon date you All unvested options are
including resignation leave Board immediately forfeited back to
before January 1, 2006 the Company. All vested
options expire the earlier of
90 days after you leave the
Board or expiration of the
grant
Other Termination, Vesting stops upon date you All unvested options are
including resignation leave Board immediately forfeited back to
after January 1, 2006 the Company. All vested
options expire the earlier of
one year after you leave the
Board or expiration of the
grant
Change in Control
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 exerciseable as of the date
of the Change in Control.
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Effect on the Board Relationship
Nothing in this Agreement guarantees Board membership with FE, nor does it
confer any special rights or privileges to the Optionee.
Adjustments
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
Compensation Committee ("Committee") of the Board of Directors of FE 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.
Forfeiture
1. All Options not earned in 2002 are immediately forfeited back to the
Company upon termination from the Board.
2. All Bonus Options granted are forfeited back to the Company upon
termination from the Board for any reason other than retirement, death, or
disability prior to January 1, 2006.
Administration
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, 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. 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
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 on 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,
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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
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, along with 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.
4. A combination of any of the above based upon Plan administrative rules.
Withholding Tax
Though taxes are the responsibility of the Optionee, 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 Optionee's beneficiary (as described in
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.
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(Signature of Optionee) (Date)
(This is XXX's YY grant under the Stock Option Program.)
Director's Stock Option Agreement.doc
02/08/02
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