EX-10.42



 





EXHIBIT 10.42




FirstEnergy Corp.

Executive and Directors Incentive Compensation Plan

Non-Qualifying Stock Option (NSO) Agreement




	 	 	 
	

	 	Option No.: 21A
	 
	 	 
	

	 	Number of Options Granted: 54,759.00 NSOs
	 
	 	 
	

	 	Option Price: $39.46 per share
	 
	 	 
	

	 	Option Closing Date: September 17, 2004






This Option Agreement (“Agreement”) is entered into as of the 20th day of
August, 2004, between FirstEnergy Corp., and Richard R. Grigg (“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
and amended by the common stock shareholders. 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 Internal Revenue 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



These Options will vest in 25% increments starting one year from the date of
grant, as reflected in the schedule below.




	 	 	 	 	 
	Vesting Date
	 	Vesting Schedule

	August 20, 2005
	 	 	25	%
	August 20, 2006
	 	 	50	%
	August 20, 2007
	 	 	75	%
	August 20, 2008
	 	 	100	%







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Expiration



These Options expire on August 20, 2014 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




	 	 	 	 	 	 	 
	Event of Optionee’s	 	 	 	 	 	 
	Termination of	 	 	 	 	 	 
	Employment
	 	Vesting
	 	When Options Expire
	 	Further Information

	Retirement (including early retirement)

	 	Vesting continues per vesting schedule
	 	Options expire on
August 20, 2014
	 	As defined under
6.8 of the Plan
	 
	 	 	 	 	 	 
	Disability

	 	Vesting continues per vesting schedule
	 	Options expire on
August 20, 2014
	 	As defined under
6.8 of the Plan
	 
	 	 	 	 	 	 
	Death (including death after
retirement,
disability, or
Other Terminations
other than for
Cause)

	 	100% vesting upon
date of death
	 	All options expire
the earlier of one
year after date of
death or expiration
of the grant
	 	Shares exercisable
by the beneficiary
(as designated
under Article 12 of
the Plan, or by
will or by the laws
of descent and
distribution)
	 
	 	 	 	 	 	 
	For “Cause”

	 	Vesting stops upon
date of termination
	 	All vested and
unvested options
are immediately
forfeited back to
the Company
	 	Termination for
Cause is defined in
section 2.1.6 of
the Plan
	 
	 	 	 	 	 	 
	Other Separation (including
resignation)

	 	Vesting stops upon
date of termination
	 	All unvested
options are
immediately
forfeited back to
the Company.
All
vested options
expire the earlier
of 90 days after
you leave the
Company or
expiration of the
grant
	 	You may be subject
to the “Forfeiture
and Recovery”
provisions below.







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.




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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 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



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.




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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.






	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



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.




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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, 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



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)




(This is RRG’s 1st grant under the FE Stock Option Program.)





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