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.: 7
Number of Options Granted: XXXX NSOs
Option Price: $19.31 per share
This Option Agreement ("Agreement") is entered into as of the 1st day of
March, 2000, 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 became
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 as
outlined in the Plan:
Vesting Provisions
These Options will become fully vested on March 1, 2004, which is four (4)
years after the date of grant unless it becomes exercisable prior to that
date due to termination of employment (as described below).
Expiration
These Options expire on March 1, 2010 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).
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Termination of Employment
Event of Optionee Vesting When Options Expire Further Information
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Retirement Vesting continues per Options expire on As defined under 6.8
vesting schedule March 1, 2010 of the Plan
Disability Vesting continues per Options expire on As defined under 6.8
vesting schedule March 1, 2010 of the Plan
Death 100% vesting on date All options expire Shares exercisable
of death the earlier of one year by the beneficiary
after date of death or (per Article 12 of the
expiration of the grant Plan, or by will or by
the laws of descent and
distribution)
Death after Retirement, 100% vesting on date All options will expire As defined under
Disability, or Other of death, if applicable the earlier of 90 days 6.9 of the Plan
Terminations other than after death or the
for Cause expiration of the grant
Termination For Cause Vesting stops upon date All vested and unvested Termination for Cause
you leave Company options are immediately is defined in section
forfeited back to the 2.1.6 of the Plan
Company
Other Termination, Vesting stops upon All unvested options You may be subject
including resignation date you leave Company are immediately to the "Forfeiture
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
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 in Control and the provisions under the section
entitled "Forfeiture and Recovery" shall not apply.
Forfeiture and Recovery
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 returned to FE. During the term of his/her employment with the
Company and for a period of twenty-four (24) months following the
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:
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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 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 for 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;
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 that he/she became aware of as a consequence of
his/her employment.
The term "Customer" shall mean any person, firm, association, corporation
or other entity to which 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 Company or to
which Optionee or the Company is in the process of selling its products or
services, or to which 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 was a participant, 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
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
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
1. This Agreement is governed by the laws of the State of Ohio without
giving effect to the principles of the conflicts of laws.
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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 xxxxx xxxxx,
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
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
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.
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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
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)
(This is XXX's Yth grant under the FE Stock Option Program.)
Executive Grant 7 NSO.doc
02/07/00
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