EXHIBIT 10.14
AMENDED AND RESTATED
1991 EQUITY COMPENSATION PLAN
(AMENDED AS OF NOVEMBER 14, 2001)
1. PURPOSE. The KeyCorp Amended and Restated 1991 Equity Compensation
Plan is intended to promote the interests of the Corporation and its
shareholders by providing equity-based incentives for effective service and high
levels of performance to Employees selected by the Committee. To achieve these
purposes, the Corporation may grant Awards of Options, Stock Appreciation
Rights, Limited Stock Appreciation Rights, Restricted Stock, and Performance
Shares to selected Employees, all in accordance with the terms and conditions
hereinafter set forth.
2. DEFINITIONS.
2.1 1934 ACT. The term "1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.
2.2 ACQUISITION PRICE. The term "Acquisition Price" with respect to
Restricted Stock shall mean such amount, if any, required by applicable law and
as may be specified by the Committee in the Award Instrument with respect to
that Restricted Stock as the consideration to be paid by the Employee for that
Restricted Stock.
2.3 AWARD. The term "Award" shall mean an award granted under the Plan
of an Option, of Stock Appreciation Rights, of Limited Stock Appreciation
Rights, of Restricted Stock, or of Performance Shares.
2.4 AWARD INSTRUMENT. The term "Award Instrument" shall mean a written
instrument evidencing an Award in such form and with such provisions as the
Committee may prescribe, including, without limitation, an agreement to be
executed by the Employee and the Corporation, a certificate issued by the
Corporation, or a letter executed by the Committee or its designee. Acceptance
of the Award Instrument by an Employee constitutes agreement to the terms of the
Award evidenced thereby.
2.5 CHANGE OF CONTROL. A "Change of Control" shall be deemed to have
occurred if, at any time after the date of the grant of the relevant Award,
there is a Change of Control under any of clauses (a), (b), (c), or (d) below.
For these purposes, the Corporation will be deemed to have become a subsidiary
of another corporation if any other corporation (which term shall include, in
addition to a corporation, a limited liability company, partnership, trust, or
other organization) owns, directly or indirectly, 50 percent or more of the
total combined outstanding voting power of all classes of stock of the
Corporation or any successor to the Corporation.
(a) A Change of Control will have occurred under this clause (a)
if the Corporation is a party to a transaction pursuant to
which the Corporation is merged with or into, or is
consolidated with, or becomes the subsidiary of another
corporation and either
(i) immediately after giving effect to that transaction,
less than 65% of the then outstanding voting
securities of the surviving or resulting corporation
or (if the Corporation becomes a subsidiary in the
transaction) of the ultimate parent of the
Corporation represent or were issued in exchange for
voting securities of the Corporation outstanding
immediately prior to the transaction, or
(ii) immediately after giving effect to that transaction,
individuals who were directors of the Corporation on
the day before the first public announcement of (A)
the pendency of the transaction or (B) the intention
of any person or entity to cause the transaction to
occur, cease for any reason to constitute at least
51% of the directors of the surviving or resulting
corporation or (if the Corporation becomes a
subsidiary in the transaction) of the ultimate parent
of the Corporation.
(b) A Change of Control will have occurred under this clause (b)
if a tender or exchange offer shall be made and consummated
for 35% or more of the outstanding voting stock of the
Corporation or any person (as the term "person" is used in
Section 13(d) and Section 14(d)(2) of the 1934 Act) is or
becomes the beneficial owner of 35% or more of the outstanding
voting stock of the Corporation or there is a report filed on
Schedule 13D or Schedule 14D-1 (or any successor schedule,
form or report), each as adopted under the 1934 Act,
disclosing the acquisition of 35% or more of the outstanding
voting stock of the Corporation in a transaction or series of
transactions by any person (as defined earlier in this clause
(b)).
(c) A Change of Control will have occurred under this clause (c)
if either
(i) without the prior approval, solicitation, invitation,
or recommendation of the Corporation's Board of
Directors any person or entity makes a public
announcement of a bona fide intention (A) to engage
in a transaction with the Corporation that, if
consummated, would result in a Change Event (as
defined below in this clause (c)), or (B) to
"solicit" (as defined in Rule 14a-1 under the 1934
Act) proxies in connection with a proposal that is
not approved
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or recommended by the Corporation's Board of
Directors, or
(ii) any person or entity publicly announces a bona fide
intention to engage in an election contest relating
to the election of directors of the Corporation
(pursuant to Regulation 14A, including Rule 14a-11,
under the 1934 Act),
and, at any time within the 24 month period immediately following the
date of the announcement of that intention, individuals who, on the day
before that announcement, constituted the directors of the Corporation
(the "Incumbent Directors") cease for any reason to constitute at least
a majority thereof unless both (A) the election, or the nomination for
election by the Corporation's shareholders, of each new director was
approved by a vote of at least two-thirds of the Incumbent Directors in
office at the time of the election or nomination for election of such
new director, and (B) prior to the time that the Incumbent Directors no
longer constitute a majority of the Board of Directors, the Incumbent
Directors then in office, by a vote of at least 75% of their number,
reasonably determine in good faith that the change in Board membership
that has occurred before the date of that determination and that is
anticipated to thereafter occur within the balance of the 24 month
period to cause the Incumbent Directors to no longer be a majority of
the Board of Directors was not caused by or attributable to, in whole
or in any significant part, directly or indirectly, proximately or
remotely, any event under subclause (i) or (ii) of this clause (c).
For purposes of this clause (c), the term "Change Event" shall mean any
of the events described in the following subclauses (x), (y), or (z) of
this clause (c):
(x) A tender or exchange offer shall be made for 25% or
more of the outstanding voting stock of the
Corporation or any person (as the term "person" is
used in Section 13(d) and Section 14(d)(2) of the
1934 Act) is or becomes the beneficial owner of 25%
or more of the outstanding voting stock of the
Corporation or there is a report filed on Schedule
13D or Schedule 14D-1 (or any successor schedule,
form, or report), each as adopted under the 1934 Act,
disclosing the acquisition of 25% or more of the
outstanding voting stock of the Corporation in a
transaction or series of transactions by any person
(as defined earlier in this subclause (x)).
(y) The Corporation is a party to a transaction pursuant
to which the Corporation is merged with or into, or
is
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consolidated with, or becomes the subsidiary of
another corporation and, after giving effect to such
transaction, less than 50% of the then outstanding
voting securities of the surviving or resulting
corporation or (if the Corporation becomes a
subsidiary in the transaction) of the ultimate parent
of the Corporation represent or were issued in
exchange for voting securities of the Corporation
outstanding immediately prior to such transaction or
less than 51% of the directors of the surviving or
resulting corporation or (if the Corporation becomes
a subsidiary in the transaction) of the ultimate
parent of the Corporation were directors of the
Corporation immediately prior to such transaction.
(z) There is a sale, lease, exchange, or other transfer
(in one transaction or a series of related
transactions) of all or substantially all the assets
of the Corporation.
(d) A Change of Control will have occurred under this clause (d)
if there is a sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Corporation.
2.6 COMMITTEE. The term "Committee" shall mean a committee appointed by
the Board of Directors of the Corporation to administer the Plan. The Committee
shall be composed of not less than three directors of the Corporation. The Board
of Directors may also appoint one or more directors as alternate members of the
Committee. No officer or Employee of the Corporation or of any Subsidiary shall
be a member or alternate member of the Committee. The Committee shall at all
times be so comprised (a) as to satisfy the disinterested administration
standard contained in Rule 16b-3, if required to qualify for the Rule 16b-3
Exemption and (b) as to satisfy the outside director standard under Section
162(m) of the Internal Revenue Code of 1986, as amended, if required to qualify
compensation paid under one or more of the provisions of the Plan as
performance-based compensation within the meaning of that section.
2.7 COMMON SHARES. The term "Common Shares" shall mean common shares of
the Corporation, with a par value of $1 each.
2.8 CORPORATION. The term "Corporation" shall mean KeyCorp and its
successors, including the surviving or resulting corporation of any merger of
KeyCorp with or into, or any consolidation of KeyCorp with, any other
corporation or corporations.
2.9 DISABILITY. The term "Disability" with respect to an Employee shall
mean physical or mental impairment which entitles the Employee to receive
disability payments under any long-term disability plan maintained by the
Corporation.
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2.10 EMPLOYEE. The term "Employee" shall mean any individual employed
by the Corporation or by any Subsidiary and shall include officers as well as
all other employees of the Corporation or of any Subsidiary (including employees
who are members of the Board of Directors of the Corporation or any Subsidiary).
2.11 EMPLOYMENT TERMINATION DATE. The term "Employment Termination
Date" with respect to an Employee shall mean the first date on which the
Employee is no longer employed by the Corporation or any Subsidiary.
2.12 EXERCISE PRICE. The term "Exercise Price" with respect to an
Option shall mean the price specified in the Option at which the Common Shares
subject to the Option may be purchased by the holder of the Option.
2.13 FAIR MARKET VALUE. Except as otherwise determined by the Committee
at the time of the grant of an Award, the term "Fair Market Value" with respect
to Common Shares shall mean: (a) if the Common Shares are traded on a national
exchange, the mean between the high and low sales price per Common Share on that
national exchange on the date for which the determination of fair market value
is made or, if there are no sales of Common Shares on that date, then on the
next preceding date on which there were any sales of Common Shares, or (b) if
the Common Shares are not traded on a national exchange, the mean between the
high and low sales price per Common Share in the over-the-counter market,
National Market System, as reported by the National Quotations Bureau, Inc. and
NASDAQ on the date for which the determination of fair market value is made or,
if there are no sales of Common Shares on that date, then on the next preceding
date on which there were any sales of Common Shares.
2.14 INCENTIVE STOCK OPTION. The term "Incentive Stock Option" shall
mean an Option intended by the Committee to qualify as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended.
2.15 LIMITED STOCK APPRECIATION RIGHT. The term "Limited Stock
Appreciation Right" or "Limited SAR" shall mean an Award granted to an Employee
with respect to all or any part of any Option, that entitles the holder thereof
to receive from the Corporation, upon exercise of the Limited SAR and surrender
of the related Option, or any portion of the Limited SAR and the related Option,
an amount equal to (unless the Committee specifies a lesser amount at the time
of the grant of the Award):
(a) in the case of a Limited SAR granted with respect to an
Incentive Stock Option, 100% of the excess, if any, measured
at the time of the exercise of the Limited SAR, of (i) the
Fair Market Value of the Common Shares subject to the
Incentive Stock Option with respect to which the Limited SAR
is exercised over (ii) the Exercise Price of those Common
Shares under the Incentive Stock Option, or
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(b) in the case of a Limited SAR granted with respect to a
Nonqualified Option, 100% of the highest of:
(i) the excess, measured at the time of the exercise of
the Limited SAR, of (A) the Fair Market Value of the
Common Shares subject to the Nonqualified Option with
respect to which the Limited SAR is exercised over
(B) the Exercise Price of those Common Shares under
the Nonqualified Option,
(ii) the excess of (A) the highest gross price (before
brokerage commissions and soliciting dealers' fees)
paid or to be paid for a Common Share (whether in
cash or in property and whether by way of exchange,
conversion, distribution upon liquidation, or
otherwise) in connection with any Change of Control
multiplied by the number of Common Shares subject to
the Nonqualified Option with respect to which the
Limited SAR is exercised over (B) the Exercise Price
of those Common Shares under the Nonqualified Option,
or
(iii) the excess of (A) the highest Fair Market Value of
the Common Shares subject to the Nonqualified Option
with respect to which the Limited SAR is exercised on
any one day during the period beginning on the
sixtieth day prior to the date on which the Limited
SAR is exercised multiplied by the number of Common
Shares subject to the Nonqualified Option with
respect to which the Limited SAR is exercised over
(B) the Exercise Price of those Common Shares under
the Nonqualified Option.
2.16 NONQUALIFIED OPTION. The term "Nonqualified Option" shall mean an
Option intended by the Committee not to qualify as an "incentive stock option"
under Section 422 of the Internal Revenue Code of 1986, as amended.
2.17 OPTION. The term "Option," (a) when used otherwise than in
connection with the term Stock Appreciation Right or Limited Stock Appreciation
Right, shall mean an Award entitling the holder thereof to purchase a specified
number of Common Shares at a specified price during a specified period of time,
and (b) when used in connection with the term Stock Appreciation Right or
Limited Stock Appreciation Right, shall mean (i) any such Award or (ii) any
award under any other plan maintained or assumed by the Corporation entitling
the holder thereof to purchase a specified number of Common Shares at a
specified price during a specified period of time.
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2.18 OPTION EXPIRATION DATE. The term "Option Expiration Date" with
respect to any Option shall mean the date selected by the Committee after which,
except as provided in Section 10.4 in the case of the death of the Employee to
whom the option was granted, the Option may not be exercised.
2.19 PERFORMANCE GOAL. The term "Performance Goal" shall mean a
performance goal specified by the Committee in connection with the potential
grant of Performance Shares and may include, without limitation, goals based
upon cumulative earnings per Common Share, return on investment, return on
shareholders' equity, or achievement of any other goals, whether or not readily
expressed in financial terms, that are related to the performance by the
Corporation, by any Subsidiary, or by any Employee or group of Employees in
connection with services performed by that Employee or those Employees for the
Corporation, a Subsidiary, or any one or more subunits of the Corporation or of
any Subsidiary.
2.20 PERFORMANCE PERIOD. The term "Performance Period" shall mean such
one or more periods of time, which may be of varying and overlapping durations,
as the Committee may select, over which the attainment of one or more
Performance Goals will be relevant in connection with one or more Awards of
Performance Shares.
2.21 PERFORMANCE SHARES. The term "Performance Shares" shall mean an
Award denominated in Common Shares and contingent upon attainment of one or more
Performance Goals by the Corporation or a Subsidiary or any subunit of the
Corporation or of any Subsidiary over a Performance Period.
2.22 PLAN. The term "Plan" shall mean this KeyCorp Amended and Restated
1991 Equity Compensation Plan as from time to time hereafter amended in
accordance with Section 20.
2.23 RESTRICTED STOCK. The term "Restricted Stock" shall mean Common
Shares of the Corporation delivered to an Employee pursuant to an Award subject
to such restrictions, conditions and contingencies as the Committee may provide
in the relevant Award Instrument, including (a) the restriction that the
Employee not sell, transfer, otherwise dispose of, or pledge or otherwise
hypothecate the Restricted Stock during the applicable Restriction Period, (b)
the requirement that, subject to the provisions of Section 10, if the Employee's
employment terminates so that the Employee is no longer employed by the
Corporation or any Subsidiary before the end of the applicable Restriction
Period, the Employee will offer to sell to the Corporation at the Acquisition
Price each Common Share of Restricted Stock held by the Employee at the
Employment Termination Date with respect to which, as of that date, any
restrictions, conditions, or contingencies have not lapsed, and (c) such other
restrictions, conditions, and contingencies, if any, as the Committee may
provide in the Award Instrument with respect to that Restricted Stock.
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2.24 RESTRICTION PERIOD. The term "Restriction Period" with respect to
an Award of Restricted Stock shall mean the period selected by the Committee and
specified in the Award Instrument with respect to that Restricted Stock during
which the Employee may not sell, transfer, otherwise dispose of, or pledge or
otherwise hypothecate that Restricted Stock.
2.25 RULE 16b-3. Term "Rule 16b-3" shall mean Rule 16b-3 or any rule
promulgated in replacement thereof or in substitution therefor under the 1934
Act.
2.26 RULE 16b-3 EXEMPTION. The term "Rule 16b-3 Exemption" shall mean
the exemption from Section 16(b) of the 1934 Act that is available under Rule
16b-3.
2.27 SECTION 16(b) EMPLOYEE. The term "Section 16(b) Employee" shall
mean an individual who is, or at any time within the preceding six months was, a
director, officer, or 10% shareholder of the Corporation within the meaning of
Section 16(b) of the 1934 Act.
2.28 STOCK APPRECIATION RIGHT. The term "Stock Appreciation Right "or
"SAR" shall mean an Award granted to an Employee with respect to all or any part
of any Option that entitles the holder thereof to receive from the Corporation,
upon exercise of the SAR and surrender of the related Option, or any portion of
the SAR and the related Option, an amount equal to 100%, or such lesser
percentage as the Committee may determine at the time of the grant of the Award,
of the excess, if any, measured at the time of the exercise of the SAR, of (a)
the Fair Market Value of the Common Shares subject to the Option with respect to
which the SAR is exercised over (b) the Exercise Price of those Common Shares
under the Option.
2.29 SUBSIDIARY. The term "Subsidiary" shall mean any corporation,
partnership, joint venture, or other business entity in which the Corporation
owns, directly or indirectly, 50 percent or more of the total combined voting
power of all classes of stock (in the case of a corporation) or other ownership
interest (in the case of any entity other than a corporation).
2.30 TANDEM AWARD. The term "Tandem Award" shall mean any two or more
Awards that are linked by the terms of any such Awards so that the exercise of
one such Award, in whole or in part, requires or will automatically result in
the surrender or cancellation, in whole or in proportionate part, of the other
such Awards.
2.31 TRANSFEREE. The term "Transferee" shall mean, with respect to
Nonqualified Options only, any person or entity to which an Employee is
permitted by the Committee to transfer or assign all or part of his or her
Options.
3. ADMINISTRATION. The Plan shall be administered by the Committee. No
Award may be made under the Plan to any member or alternate member of the
Committee. The Committee shall have authority, subject to the terms of the Plan,
(a) to determine the Employees who are eligible to participate in the Plan, the
type, size, and terms of Awards to be granted to any Employee, the time or times
at which Awards shall be exercisable or at which restrictions, conditions, and
contingencies shall lapse, and the terms and provisions of the instruments by
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which Awards shall be evidenced, (b) to establish any other restrictions,
conditions, and contingencies on Awards in addition to those prescribed by the
Plan, (c) to interpret the Plan, and (d) to make all determinations necessary
for the administration of the Plan.
The construction and interpretation by the Committee of any provision
of the Plan or any Award Instrument delivered pursuant to the Plan and any
determination by the Committee pursuant to any provision of the Plan or any
Award Instrument shall be final and conclusive. No member or alternate member of
the Committee shall be liable for any such action or determination made in good
faith.
The Committee may act only by a majority of its members. Any
determination of the Committee may be made, without a meeting, by a writing or
writings signed by all of the members of the Committee. In addition, the
Committee may authorize any one or more of their number or any officer of the
Corporation to execute and deliver documents on behalf of the Committee and the
Committee may delegate to one or more employees, agents, or officers of the
Corporation, or to one or more third party consultants, accountants, lawyers, or
other advisors, such ministerial duties related to the operation of the Plan as
it may deem appropriate.
4. ELIGIBILITY. Awards may be granted to Employees of the Corporation
or any Subsidiary selected by the Committee in its sole discretion. The granting
of any Award to an Employee shall not entitle that Employee to, nor disqualify
the Employee from, participation in any other grant of an Award. The maximum
number of Common Shares with respect to which any Employee may receive Awards
during any calendar year shall be the lesser of 400,000 Common Shares or .2% of
the outstanding Common Shares of the Corporation on the date such award was
made, which maximum number shall be subject to adjustment as provided in Section
13 of the Plan.
5. STOCK SUBJECT TO THE PLAN. The stock that may be issued and
distributed to Employees in connection with Awards granted under the Plan shall
be Common Shares and may be authorized and unissued Common Shares, treasury
Common Shares, or Common Shares acquired on the open market specifically for
distribution under the Plan, as the Board of Directors may from time to time
determine.
Subject to adjustment as provided in Section 13, the number of Common
Shares available for grant of Awards under the Plan shall be determined from
time to time as follows: (a) on the date of the 1994 Annual Meeting of
Shareholders of the Corporation (at which meeting an amendment and restatement
of the Plan was submitted for approval of the shareholders of the Corporation),
the number of Common Shares available for grant of Awards under the Plan shall
equal two percent of the total number of Common Shares outstanding on March 31,
1994, and (b) on January 2, 1995 and on each January 2 occurring thereafter
during the life of the Plan, the number of Common Shares available for grant of
Awards under the Plan shall be increased by adding to the number of Common
Shares then available for grant of Awards under the Plan, the number of Common
Shares of the Corporation that, when added to the number of Common Shares that
otherwise remain available for grant of additional Awards under the Plan on that
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January 2, equals two percent of the total number of Common Shares of the
Corporation outstanding on December 31st of the next proceeding year.
The number of Common Shares remaining available for grants of
additional Awards under the Plan at any particular time during a calendar year
shall be reduced, upon the granting thereafter of any Award under the Plan, by
the full number of Common Shares subject to that Award except that, in the case
of any particular Tandem Award, the number of Common Shares counted as being
subject to such Tandem Award shall be the maximum number of Common Shares with
respect to which the Employee may receive value under such Tandem Award. If any
Award for any reason expires or is terminated, in whole or in part, without the
receipt by an Employee of Common Shares (or the equivalent thereof in cash or
other property), the Common Shares subject to that part of the Award that has so
expired or terminated shall again be available for the future grant of Awards
under the Plan.
Notwithstanding any other provision of the Plan, but subject to
adjustment under Section 13, (a) the maximum number of Common Shares that may be
issued under the Plan pursuant to Incentive Stock Options shall be 9,600,000
Common Shares, and (b) the maximum number of Common Shares that may be issued
under the Plan as Restricted Stock during any calendar year shall be that number
of Common Shares that is equal to five percent of the total number of Common
Shares available for grant of Awards under the Plan as of January 2 of that
calendar year.
6. STOCK OPTIONS.
6.1 TYPE AND DATE OF GRANT OF OPTIONS.
(a) The Award Instrument pursuant to which any Incentive Stock Option
is granted shall specify that the Option granted thereby shall be
treated as an Incentive Stock Option. The Award Instrument pursuant
to which any Nonqualified Option is granted shall specify that the
Option granted thereby shall not be treated as an Incentive Stock
Option.
(b) The day on which the Committee authorizes the grant of an Incentive
Stock Option shall be the date on which that Option is granted. No
Incentive Stock Option may be granted on any date after the tenth
anniversary of the date of adoption, on March 17, 1994, by the
Board of Directors of the Corporation, of the Plan as amended and
restated.
(c) The day on which the Committee authorizes the grant of a
Nonqualified Option shall be considered the date on which that
Option is granted, unless the Committee specifies a later date.
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6.2 EXERCISE PRICE. The Exercise Price under any Option shall be not
less than the Fair Market Value of the Common Shares subject to the Option on
the date the Option is granted.
6.3 OPTION EXPIRATION DATE. The Option Expiration Date under any
Incentive Stock Option shall be not later than ten years from the date on which
the Option is granted. The Option Expiration Date under any Nonqualified Option
shall not be later than ten years and one month from the date on which the
Option is granted.
6.4 EXERCISE OF OPTIONS.
(a) Except as otherwise provided in Section 10, an Option may be
exercised only while the Employee to whom the Option was granted is
in the employ of the Corporation or of a Subsidiary. Subject to
this requirement, each Option shall become exercisable in one or
more installments at the time or times provided in the Award
Instrument evidencing the Option. Once any portion of an Option
becomes exercisable, that portion shall remain exercisable until
expiration or termination of the Option. An Employee to whom an
Option is granted or, with respect to Nonqualified Options, the
Employee's Transferee may exercise the Option from time to time, in
whole or in part, up to the total number of Common Shares with
respect to which the Option is then exercisable, except that no
fraction of a Common Share may be purchased upon the exercise of
any Option.
(b) An Employee or, with respect to Nonqualified Options, any
Transferee electing to exercise an Option shall deliver to the
Corporation (i) the Exercise Price payable in accordance with
Section 6.5 and (ii) written notice of the election that states the
number of whole Common Shares with respect to which the Employee is
exercising the Option.
6.5 PAYMENT FOR COMMON SHARES. Upon exercise of an Option by an
Employee or, with respect to Nonqualified Options, any Transferee, the Exercise
Price shall be payable by the Employee or Transferee in cash or in such other
form of consideration as the Committee determines may be accepted, including
without limitation, securities or other property, or any combination of cash,
securities or other property, or by delivery by the Employee or Transferee (with
the written notice of election to exercise) of irrevocable instructions to a
broker registered under the 1934 Act promptly to deliver to the Corporation the
amount of sale or loan proceeds to pay the Exercise Price. The Committee, in its
sole discretion, may grant to an Employee or, with respect to Nonqualified
Options, any Transferee the right to transfer Common Shares acquired upon the
exercise of a part of an Option in payment of the Exercise Price payable upon
immediate exercise of a further part of the Option.
6.6 CONVERSION OF INCENTIVE STOCK OPTIONS. The Committee may at any
time in its sole discretion take such actions as may be necessary to convert any
outstanding Incentive Stock Option (or any installments or portions of
installments thereof) into a Nonqualified Option with
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or without the consent of the Employee to whom that Incentive Stock Option was
granted and whether or not that Employee is an Employee at the time of the
conversion.
7. STOCK APPRECIATION RIGHTS AND LIMITED STOCK APPRECIATION RIGHTS.
7.1 GRANT OF SARS AND LIMITED SARS. An SAR may be granted only in
connection with an Option. An SAR granted in connection with an Incentive Stock
Option may be granted only when the Incentive Stock Option is granted. An SAR
granted in connection with a Nonqualified Option may be granted either when the
related Nonqualified Option is granted or at any time thereafter including, in
the case of any Nonqualified Option resulting from the conversion of an
Incentive Stock Option, simultaneously with or after the conversion. Similarly,
a Limited SAR may be granted only in connection with an Option. A Limited SAR
granted in connection with an Incentive Stock Option may be granted only when
the Incentive Stock Option is granted. A Limited SAR granted in connection with
a Nonqualified Option may be granted either when the related Nonqualified Option
is granted or at any time thereafter including, in the case of any Nonqualified
Option resulting from the conversion of an Incentive Stock Option,
simultaneously with or after the conversion.
7.2 EXERCISE OF SARS AND LIMITED SARS.
(a) An Employee electing to exercise an SAR or a Limited SAR shall
deliver written notice to the Corporation of the election
identifying the SAR or Limited SAR and the related Option with
respect to which the SAR or Limited SAR was granted to the Employee
and specifying the number of whole Common Shares with respect to
which the Employee is exercising the SAR or Limited SAR. Upon
exercise of the SAR or Limited SAR, the related Option shall be
deemed to be surrendered to the extent that the SAR or Limited SAR
is exercised.
(b) SARs and Limited SARs may be exercised only (i) after the
expiration of six months from the date of grant of the SAR or
Limited SAR, (ii) on a date when the SAR or Limited SAR is "in the
money" (i.e., when there would be positive consideration received
upon exercise of the SAR or Limited SAR), (iii) at a time and to
the same extent as the related Option is exercisable, (iv) unless
otherwise provided in the relevant Award Instrument, by surrender
to the Corporation, unexercised, of the related Option or any
applicable portion thereof, and (v) in compliance with all
restrictions set forth in or specified by the Committee pursuant to
Section 7.2(c) (in the case of SARs) or Section 7.2(d) (in the case
of Limited SARs).
(c) The Committee may specify in the Award Instrument pursuant to which
any SAR is granted waiting periods and restrictions on permissible
exercise periods in addition to the restrictions on exercise set
forth in
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Section 7.2(b), including, without limitation, any restriction
necessary to make applicable the Rule 16b-3 Exemption.
7.3 PAYMENT FOR SARS AND LIMITED SARS. The amount payable upon exercise
of an SAR or Limited SAR may be paid by the Corporation in cash, or, if the
Committee shall determine in its sole discretion, in whole Common Shares (taken
at their Fair Market Value at the time of exercise of the SAR or Limited SAR) or
in a combination of cash and whole Common Shares; provided, however, that in no
event shall the total number of Common Shares that may be paid to an Employee
pursuant to the exercise of an SAR or Limited SAR exceed the total number of
Common Shares subject to the related Option.
7.4 TERMINATION, AMENDMENT, OR SUSPENSION OF SARS AND LIMITED SARS.
SARs and Limited SARs shall terminate and may no longer by exercised upon the
first to occur of (a) exercise or termination of the related Option, (b) any
termination date specified by the Committee at the time of grant of the SAR or
Limited SAR, or (c) the transfer by the Employee of the related Option. In
addition, the Committee may in its sole discretion at any time before the
occurrence of a Change of Control amend, suspend, or terminate any SAR or
Limited SAR theretofore granted under the Plan without the holder's consent;
provided that, in the case of amendment, no provision of the SAR or Limited SAR,
as amended, shall be in conflict with any provision of the Plan.
8. RESTRICTED STOCK.
8.1 ADDITIONAL CONDITIONS ON RESTRICTED STOCK. In addition to the
restrictions on disposition of Restricted Stock during the Restriction Period
and the requirement to offer Restricted Stock to the Corporation if the
Employee's employment terminates during the Restriction Period, the Committee
may provide in the Award Instrument with respect to any Award of Restricted
Stock other restrictions, conditions, and contingencies, which other
restrictions, conditions, and contingencies, if any, may relate to, in addition
to such other matters as the Committee may deem appropriate, the Employee's
personal performance, corporate performance, or the performance of any subunit
of the Corporation or any Subsidiary, in each case measured in such manner as
may be specified by the Committee. The Committee may impose different
restrictions, conditions, and contingencies on separate Awards of Restricted
Stock granted to different Employees, whether at the same or different times,
and on separate Awards of Restricted Stock granted to the same Employee, whether
at the same or different times. The Committee may specify a single Restriction
Period for all of the Restricted Stock subject to any particular Award
Instrument or may specify multiple Restriction Periods so that the restrictions
with respect to the Restricted Stock subject to the Award will expire in stages
according to a schedule specified by the Committee and set forth in the Award
Instrument; provided, however, that no Restriction Period with respect to any
Restricted Stock shall end earlier than one year after the date on which that
Restricted Stock is granted.
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8.2 PAYMENT FOR RESTRICTED STOCK. Each Employee to whom an Award of
Restricted Stock is made shall pay the Acquisition Price with respect to that
Restricted Stock to the Corporation not later than 30 days after the delivery to
the Employee of the Award Instrument with respect to that Restricted Stock. If
any Employee fails to pay the Acquisition Price with respect to any Award of
Restricted Stock within that 30 day period, the Employee's right under that
Award shall be forfeited.
8.3 RIGHTS AS A SHAREHOLDER. Upon payment by an Employee in full of the
Acquisition Price for Restricted Stock under an Award, the Employee shall have
all of the rights of a shareholder with respect to the Restricted Stock,
including voting and dividend rights, subject only to such restrictions and
requirements referred to in Section 8.1 as may be incorporated in the Award
Instrument with respect to that Restricted Stock.
9. PERFORMANCE SHARES.
9.1 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE SHARES. The
Committee shall have full discretion to select the Employees to whom Awards of
Performance Shares are made, the number of Performance Shares to be granted to
any Employee so selected, the kind and level of the Performance Goals and
whether those Performance Goals are to apply to the Corporation, a Subsidiary,
or any one or more subunits of the Corporation or of any Subsidiary, and the
dates on which each Performance Period shall begin and end, and to determine the
form and provisions of the Award Instrument to be used in connection with any
Award of Performance Shares.
9.2 CONDITIONS TO PAYMENT FOR PERFORMANCE SHARES.
(a) Unless otherwise provided in the relevant Award Instrument, an
Employee must be employed by the Corporation or a Subsidiary on the
last day of a Performance Period to be entitled to payment for any
Performance Shares.
(b) The Committee may establish, from time to time, one or more
formulas to be applied against the Performance Goals to determine
whether all, some portion but less than all, or none of the
Performance Shares granted with respect to a Performance Period are
treated as earned pursuant to any Award. An Employee will be
entitled to receive payments with respect to any Performance Shares
only to the extent that those Performance Shares are treated as
earned under one or more such formulas.
9.3 PAYMENT FOR PERFORMANCE SHARES. The Corporation shall pay each
Employee who is entitled to payment for Performance Shares earned with respect
to any Performance Period an amount for those Performance Shares (a) in cash
(based upon the per share Fair Market Value of Common Shares on the last day of
the Performance Period), (b) in Common Shares (one Common Share for each
Performance Share earned), (c) in Restricted Stock (one Common Share of
Restricted Stock for each Performance Share earned), or (d) any combination of
the
14
foregoing, in such proportions as the Committee may determine. Restricted
Stock issued by the Corporation in payment of Performance Shares shall be
subject to all the provisions of Section 8.
10. TERMINATION OF EMPLOYMENT. After an Employee's Employment
Termination Date, the rules set forth in this Section 10 shall apply. All
factual determinations with respect to the termination of an Employee's
employment that may be relevant under this Section 10 shall be made by the
Committee in its sole discretion.
10.1 TERMINATION OTHER THAN UPON DEATH, DISABILITY, OR CERTAIN
RETIREMENTS. Upon any termination of an Employee's employment for any reason
other than the Employee's retirement (under any retirement plan of the
Corporation or of a Subsidiary) as provided in Section 10.2, disability as
provided on Section 10.3, or death as provided in Section 10.4:
(a) Unless otherwise provided in the relevant Award Instrument, the
Employee or, with respect to Nonqualified Options, any Transferee
shall have the right (i) during the period ending six months after
the Employment Termination Date, but not later than the Option
Expiration Date, to exercise any Nonqualified Options and related
SARs that were outstanding on the Employment Termination Date, if
and to the same extent as those Options and SARs were exercisable
by the Employee or Transferee (as the case may be) on the
Employment Termination Date, and (ii) during the period ending
three months after the Employment Termination Date, but not later
that the Option Expiration Date, to exercise any Incentive Stock
Options and related SARs that were outstanding on the Employment
Termination Date, if and to the same extent as those Options and
SARs were exercisable by the Employee on the Employment
Termination Date. Notwithstanding the preceding sentence, if
within two years after a Change of Control an Employee's
Employment Termination Date occurs other than as a result of a
Voluntary Resignation, unless otherwise provided in the relevant
Award Instrument, the Employee or, with respect to Nonqualified
Options, any Transferee shall have the right, during the Extended
Period, but not later than the Option Expiration Date, to exercise
any Options and related SARs that were outstanding on the
Employment Termination Date, if and to the same extent as those
Options and SARs were exercisable by the Employee or Transferee
(as the case may be) on the Employment Termination Date (even
though, in the case of Incentive Stock Options, exercise of those
Options more than three months after the Employment Termination
Date may cause the Option to fail to qualify for Incentive Stock
Option treatment under the Internal Revenue Code of 1986, as
amended). As used in the immediately preceding sentence, the term
"Extended Period" means the longer of the period that the Option
or SAR would otherwise be exercisable in the absence of the
immediately preceding sentence or the period ending with the
second anniversary date of the Change of Control
15
last occurring before the Employment Termination Date and the term
"Voluntary Resignation" means that the Employee shall have
terminated his or her employment with the Corporation and its
Subsidiaries by voluntarily resigning at his or her own instance
without having been requested to so resign by the Corporation or
its Subsidiaries except that any resignation by the Employee will
not be deemed to be a Voluntary Resignation if, after the Change
of Control, the Employee's base salary was reduced or the Employee
was required to relocate his or her principal place of employment
more than 35 miles,
(b) Unless otherwise provided in the relevant Award Instrument,
the Employee shall offer for resale at the Acquisition Price to
the Corporation each Common Share of Restricted Stock held by the
Employee at the Employment Termination Date with respect to which,
as of that date, any restrictions, conditions, or contingencies
have not lapsed, and
(c) Unless otherwise provided in the relevant Award Instrument, the
Employee shall forfeit each Performance Share with respect to
which, as of that date, any restrictions, conditions, or
contingencies have not lapsed.
10.2 TERMINATION DUE TO CERTAIN RETIREMENTS. Upon any termination of an
Employee's employment with the Corporation or any Subsidiary under circumstances
entitling the Employee to immediate payment of normal retirement or early
retirement benefits under any retirement plan of the Corporation or of a
Subsidiary (whether the Employee elects to commence or defer receipt of such
payment):
(a) Unless otherwise provided in the relevant Award Instrument, the
Employee or, with respect to Nonqualified Options, any Transferee
shall have the right (i) to exercise, from time to time during the
period ending three years (two years if the Option was granted
prior to January 1, 2002) after the Employment Termination Date,
but not later than the Option Expiration Date, any Nonqualified
Options and related SARs that were outstanding on the Employment
Termination Date, if and to the same extent as those Options and
SARs were exercisable by the Employee or Transferee (as the case
may be) on the Employment Termination Date, and (ii) to exercise,
from time to time during the period ending three years (two years
if the Option was granted prior to January 1, 2002) after the
Employment Termination Date, but no later than the Option
Expiration Date, any Incentive Stock Options and related SARs that
were outstanding on the Employment Termination Date, if and to the
same extent as those Options and SARs were exercisable by the
Employee on the Employment Termination Date (even though exercise
of the Incentive Stock Option more than three months after the
Employment Termination Date may
16
cause the Option to fail to qualify for Incentive Stock Option
treatment under the Internal Revenue Code of 1986, as amended),
(b) The relevant Award Instrument may provide that the Employee or,
with respect to Nonqualified Options, any Transferee will have the
right to exercise, from time to time until not later than the
Option Expiration Date, Nonqualified Stock Options and SARs and
Incentive Stock Options and SARs to the extent such Options and
SARs become exercisable by their terms prior to the Option
Expiration Date (or such earlier date as specified in the relevant
Award Instrument), notwithstanding the fact that such Options and
SARs were not exercisable in whole or in part (whether because a
condition to exercise had not yet occurred or a specified time
period had not yet elapsed or otherwise) on the Employment
Termination Date,
(c) Unless otherwise provided in the relevant Award Instrument, the
Employee shall offer for resale at the Acquisition Price to the
Corporation each Common Share of Restricted Stock held by the
Employee at the Employment Termination Date with respect to which,
as of that date, any restrictions, conditions, or contingencies
have not lapsed, and
(d) Unless otherwise provided in the relevant Award Instrument, the
Employee shall forfeit each Performance Share with respect to
which, as of that date, any restrictions, conditions, or
contingencies have not lapsed.
10.3 TERMINATION DUE TO DISABILITY. Upon any termination of an
Employee's employment due to disability:
(a) Unless otherwise provided in the relevant Award Instrument, the
Employee, the Employee's attorney in fact or legal guardian or,
with respect to Nonqualified Options, any Transferee shall have
the right (i) to exercise, from time to time during the period
ending three years (two years if the Option was granted prior to
January 1, 2002) after the Employment Termination Date, but not
later than the Option Expiration Date, any Nonqualified Options
and related SARs that were outstanding on the Employment
Termination Date, if and to the same extent those Options and SARs
were exercisable by the Employee or Transferee (as the case may
be) on the Employment Termination Date, and (ii) to exercise, from
time to time during the period ending three years (two years if
the Option was granted prior to January 1, 2002) after the
Employment Termination Date, but no later than the Option
Expiration Date, any Incentive Stock Options and related SARs that
were outstanding on the employment Termination Date, if and to the
same extent as those Options and SARs were exercisable by the
Employee on the Employment Termination Date
17
(even though exercise of the Incentive Stock Option more than one
year after the Employment Termination Date may cause the Option to
fail to qualify for Incentive Stock Option treatment under the
Internal Revenue Code of 1986, as amended),
(b) Unless otherwise provided in the relevant Award Instrument, the
Employee shall offer for resale at the Acquisition Price to the
Corporation each Common Share of Restricted Stock held by the
Employee at the Employment Termination Date with respect to
which, as of that date, any restrictions, conditions, or
contingencies have not lapsed, and
(c) Unless otherwise provided in the relevant Award Instrument, the
Employee shall forfeit each Performance Share with respect to
which, as of that date, any restrictions, conditions, or
contingencies have not lapsed.
10.4. DEATH OF AN EMPLOYEE. Upon the death of an Employee while
employed by the Corporation or any Subsidiary or within any of the periods
referred to in any Section 10.1, 10.2, or 10.3 during which any particular
Option or SAR remains potentially exercisable:
(a) Unless otherwise provided in the relevant Award Instrument, if the
Option Expiration Date of any Nonqualified Option that had not
expired before the Employee's death would otherwise expire before
the first anniversary of the Employee's death, that Option
Expiration Date shall automatically be extended to the first
anniversary of the Employee's death or such other date as provided
in the relevant Award Instrument,
(b) Unless otherwise provided in the relevant Award Instrument, the
Employee's executor or administrator, the person or persons to
whom the Employee's rights under any Option or SAR are transferred
by will or the laws of descent and distribution or, with respect
to Nonqualified Options, any Transferee shall have the right to
exercise, from time to time during the period ending three years
(two years if the Option was granted prior to January 1, 2002)
after the date of the Employee's death, but not later than the
Option Expiration Date, any Options and related SARs that were
outstanding on the date of the Employee's death, if and to the
same extent as those Options and SARs were exercisable by the
Employee or Transferee (as the case may be) on the date of the
Employee's death,
(c) Unless otherwise provided in the relevant Award Instrument, the
Employee shall offer for resale at the Acquisition Price to the
Corporation each Common Share of Restricted Stock held by the
Employee at the Employment Termination Date with respect to which,
as of that date, any restrictions, conditions, or contingencies
have not lapsed, and
18
(d) Unless otherwise provided in the relevant Award Instrument, the
Employee shall forfeit each Performance Share with respect to
which, as of that date, any restrictions, conditions, or
contingencies have not lapsed.
11. ACCELERATION UPON CHANGE OF CONTROL. Unless otherwise specified in
the relevant Award Instrument, upon the occurrence of a Change of Control of the
Corporation, each Award theretofore granted to any Employee that then remains
outstanding shall be automatically treated as follows: (a) any outstanding
Option shall become immediately exercisable in full, (b) SARs and Limited SARs
related to any such Options shall also become immediately exercisable in full,
(c) the Restriction Period with respect to all outstanding Awards of Restricted
Stock shall immediately terminate, and (d) the restrictions, conditions, or
contingencies on any Performance Shares shall be modified in such manner as the
Committee may specify to give the Employee the benefit of those Performance
Shares through the date of Change of Control.
12. ASSIGNABILITY. Nonqualified Options may not be assigned or
transferred (other than by will or by the laws of descent and distribution)
unless the Committee, in its sole discretion, determines to allow such
assignment or transfer and, if the Committee determines to allow any such
assignment or transfer, the Transferee shall have the power to exercise such
Nonqualified Option in accordance with the terms of the Award and the provisions
of this Plan. No Incentive Stock Option, SAR, Limited SAR, Restricted Stock
during the Restriction Period, or Performance Share may be transferred other
than by will or by the laws of descent and distribution. During an Employee's
lifetime, only the Employee (or in the case of incapacity of an Employee, the
Employee's attorney in fact or legal guardian) may exercise any Incentive Stock
Option, SAR, Limited SAR, Restricted Stock during the Restriction Period, or
Performance Share requiring or permitting exercise.
13. ADJUSTMENT UPON CHANGES IN COMMON SHARES. Automatically and without
Committee action, in the event of any stock dividend, stock split, or share
combination of the Common Shares, or by appropriate Committee action in the
event of any reclassification, recapitalization, merger, consolidation, other
form of business combination, liquidation, or dissolution involving the
Corporation or any spin-off or other distribution to shareholders of the
Corporation (other than normal cash dividends), appropriate adjustments to (a)
the maximum number of Common Shares that may be issued under the Plan pursuant
to Section 5, the maximum number of Common Shares that may be issued under the
Plan pursuant to Incentive Stock Options as provided in Section 5, and the
maximum number of Common Shares with respect to which any Employee may receive
Awards during any calendar year as provided in Section 4, and (b) the number and
kind of shares subject to, the price per share under, and the terms and
conditions of each then outstanding Award shall be made to the extent necessary
and in such manner that the benefits of Employees under all then outstanding
Awards shall be maintained substantially as before the occurrence of such event.
Any such adjustment shall be conclusive and binding for all purposes of the Plan
and shall be effective, in the event of any stock dividend, stock split, or
share combination, as of the date of such stock dividend, stock split, or share
combination, and in all other cases, as of such date as the Committee may
determine.
19
14. PURCHASE FOR INVESTMENT. Each person acquiring Common Shares
pursuant to any Award may be required by the Corporation to furnish a
representation that he or she is acquiring the Common Shares so acquired as an
investment and not with a view to distribution thereof if the Corporation, in
its sole discretion, determines that such representation is required to insure
that a resale or other disposition of the Common Shares would not involve a
violation of the Securities Act of 1933, as amended, or of applicable blue sky
laws. Any investment representation so furnished shall no longer be applicable
at any time such representation is no longer necessary for such purposes.
15. WITHHOLDING OF TAXES. The Corporation will withhold from any
payments of cash made pursuant to the Plan such amount as is necessary to
satisfy all applicable federal, state, and local withholding tax obligations.
The Committee may, in its discretion and subject to such rules as the Committee
may adopt from time to time, permit or require an Employee (or other person
exercising an Option with respect to withholding taxes upon exercise of such
Option) to satisfy, in whole or in part, any withholding tax obligation that may
arise in connection with the grant of an Award, the lapse of any restrictions
with respect to an Award, the acquisition of Common Shares pursuant to any
Award, or the disposition of any Common Shares received pursuant to any Award by
having the Corporation hold back some portion of the Common Shares that would
otherwise be delivered pursuant to the Award or by delivering to the Corporation
an amount equal to the withholding tax obligation arising with respect to such
grant, lapse, acquisition, or disposition in (a) cash, (b) Common Shares, or (c)
such combination of cash and Common Shares as the Committee may determine. The
Fair Market Value of the Common Shares to be so held back by the Company or
delivered by the Employee shall be determined as of the date on which the
obligation to withhold first arose.
16. HARMFUL ACTIVITY. If an Employee shall engage in any "harmful
activity" prior to or within six months after termination of employment with
Key, then any Profits realized upon the exercise of any Covered Option on or
after one year prior to the termination of employment with Key shall inure to
the Corporation. The aforementioned restriction shall not apply in the event
that employment with Key terminates within two years after a Change of Control
of the Corporation if any of the following have occurred: a relocation of an
Employee's principal place of employment more than 35 miles from an Employee's
principal place of employment immediately prior to the Change of Control, a
reduction in an Employee's base salary after a Change of Control, or termination
of employment under circumstances in which an Employee is entitled to severance
benefits or salary continuation or similar benefits under a change of control
agreement, employment agreement, or severance or separation pay plan. If any
Profits realized upon the exercise of any Covered Option inure to the benefit of
the Corporation in accordance with the first sentence of this paragraph, an
Employee shall pay all such Profits to the Corporation within 30 days after
first engaging in any harmful activity and all unexercised Covered Options shall
immediately be forfeited and canceled. Consistent with the provisions of Section
3 of the Plan, the determination by the Committee as to whether an Employee
engaged in "harmful activity" prior to or within six months after termination of
employment with Key shall be final and conclusive.
20
A "harmful activity" shall have occurred if an Employee shall do any one or more
of the following:
a. Use, publish, sell, trade or otherwise disclose Non-Public
Information of Key unless such prohibited activity was inadvertent,
done in good faith and did not cause significant harm to Key.
b. After notice from the Corporation, fail to return to Key
any document, data, or thing in an Employee's possession or to which an
Employee has access that may involve Non-Public Information of Key.
c. After notice from the Corporation, fail to assign to Key
all right, title, and interest in and to any confidential or
non-confidential Intellectual Property which an Employee created, in
whole or in part, during employment with Key, including, without
limitation, copyrights, trademarks, service marks, and patents in or to
(or associated with) such Intellectual Property.
d. After notice from the Corporation, fail to agree to do any
acts and sign any document reasonably requested by Key to assign and
convey all right, title, and interest in and to any confidential or
non-confidential Intellectual Property which an Employee created, in
whole or in part, during employment with Key, including, without
limitation, the signing of patent applications and assignments thereof.
e. Upon an Employee's own behalf or upon behalf of any other
person or entity that competes or plans to compete with Key, solicit or
entice for employment or hire any Employee of Key.
f. Upon an Employee's own behalf or upon behalf of any other
person or entity that competes or plans to compete with Key, call upon,
solicit, or do business with (other than business which does not
compete with any business conducted by Key) any customer of Key an
Employee called upon, solicited, interacted with, or became acquainted
with, or learned of through access to information (whether or not such
information is or was non-public) while employed at Key unless such
prohibited activity was inadvertent, done in good faith, and did not
involve a customer whom an Employee should have reasonably known was a
customer of Key.
g. Upon an Employee's own behalf or upon behalf of any other
person or entity that competes or plans to compete with Key, engage in
any business activity in competition with Key in the same or a closely
related activity that an Employee was engaged in for Key during the one
year period prior to the termination of employment.
21
For purposes of this Section 16:
"Covered Option" means any Option granted on or after January
1, 2001 unless the granting resolution expressly excludes the
Option from the provisions of this Section 16.
"Intellectual Property" shall mean any invention, idea,
product, method of doing business, market or business plan,
process, program, software, formula, method, work of
authorship, or other information, or thing.
"Key" shall mean the Corporation and its Subsidiaries
collectively.
"Non-Public Information" shall mean, but is not limited to,
trade secrets, confidential processes, programs, software,
formulas, methods, business information or plans, financial
information, and listings of names (e.g., employees,
customers, and suppliers) that are developed, owned, utilized,
or maintained by an employer such as Key, and that of its
customers or suppliers, and that are not generally known by
the public.
"Profit" shall mean, with respect to any Covered Option, the
spread between the Fair Market Value of a Common Share on the
date of exercise and the exercise price multiplied by the
number of shares exercised under the Covered Option.
17. AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER COMPANIES.
Awards, whether Incentive Stock Options, Nonqualified Options, SARs, Limited
SARs Restricted Stock, or Performance Shares, may be granted under the Plan in
substitution for awards held by employees of a company who become Employees of
the Corporation or a Subsidiary as a result of the merger or consolidation of
the employer company with the Corporation or a Subsidiary, or the acquisition by
the Corporation or a Subsidiary of the assets of the employer company, or the
acquisition by the Corporation or a Subsidiary of stock of the employer company
as a result of which it becomes a Subsidiary. The terms, provisions, and
benefits of the substitute Awards so granted may vary from the terms, provisions
and benefits set forth in or authorized by the Plan to such extent as the
Committee at the time of the grant may deem appropriate to conform, in whole or
in part, to the terms, provisions, and benefits of the awards in substitution
for which they are granted.
18. LEGAL REQUIREMENTS. No Awards shall be granted and the Corporation
shall have no obligation to make any payment under the Plan, whether in Common
Shares, cash, or any combination thereof, unless such payment is, without
further action by the Committee, in compliance with all applicable Federal and
state laws and regulations, including, without limitation, the United States
Internal Revenue Code and Federal and state securities laws.
22
19. DURATION AND TERMINATION OF THE PLAN. The Plan shall become
effective and shall be deemed to have been adopted on the date on which it is
approved by the shareholders of the Corporation and shall remain in effect
thereafter until terminated by action of the Board of Directors. No termination
of the Plan shall adversely affect the rights of any Employee with respect to
any Award granted before the effective date of the termination.
20. AMENDMENTS. The Board of Directors, or a duly authorized committee
thereof, may alter or amend the Plan from time to time prior to its termination
in any manner the Board of Directors, or such duly authorized committee, may
deem to be in the best interests of the Corporation and its shareholders, except
that no amendment may be made without shareholder approval if shareholder
approval is required under Rule 16b-3 to qualify for the Rule 16b-3 Exemption,
is required by any applicable securities law or tax law, or is required by the
rules of any exchange on which the Common Shares of the Corporation are traded
or, if the Common Shares are not listed on an exchange, by the rules of the
registered national securities association through whose inter-dealer quotation
system the Common Shares are quoted. The Committee shall have the authority to
amend these terms and conditions applicable to outstanding Awards (a) in any
case where expressly permitted by the terms of the Plan or of the relevant Award
Instrument or (b) in any other case with the consent of the Employee to whom the
Award was granted. Except as expressly provided in the Plan or in the Award
Instrument evidencing the Award, the Committee may not, without the consent of
the holder of an Award granted under the Plan, amend the terms and conditions
applicable to that Award in a manner adverse to the interests of the Employee.
21. PLAN NONCONTRACTUAL. Nothing herein contained shall be construed as
a commitment to or agreement with any person employed by the Corporation or a
Subsidiary to continue such person's employment with the Corporation or the
Subsidiary, and nothing herein contained shall be construed as a commitment or
agreement on the part of the Corporation or any Subsidiary to continue the
employment or the annual rate of compensation of any such person for any period.
All Employees shall remain subject to discharge to the same extent as if the
Plan had never been put into effect.
22. INTEREST OF EMPLOYEES. Any obligation of the Corporation under the
Plan to make any payment at any future date merely constitutes the unsecured
promise of the Corporation to make such payment from its general assets in
accordance with the Plan, and no Employee shall have any interest in, or lien or
prior claim upon, any property of the Corporation or any Subsidiary by reason of
that obligation.
23. CLAIMS OF OTHER PERSONS. The provisions of the Plan shall in no
event be construed as giving any person, firm, or corporation any legal or
equitable right against the Corporation or any Subsidiary, their officers,
employees, agents, or directors, except any such rights as are specifically
provided for in the Plan or are hereafter created in accordance with the terms
and provisions of the Plan.
23
24. ABSENCE OF LIABILITY. No member of the Board of Directors of the
Corporation or a Subsidiary, of the Committee, of any other committee of the
Board of Directors, or any officer or Employee of the Corporation or a
Subsidiary shall be liable for any act or action under the Plan, whether of
commission or omission, taken by any other member, or by any officer, agent, or
Employee, or except in circumstances involving his bad faith or willful
misconduct, for anything done or omitted to be done by himself.
25. SEVERABILITY. The invalidity or unenforceability of any particular
provision of the Plan shall not affect any other provision hereof, and the Plan
shall be construed in all respects as if such invalid or unenforceable provision
were omitted herefrom.
26. GOVERNING LAW. The provisions of the Plan shall be governed and
construed in accordance with the laws of the State of Ohio.
27. PLAN EFFECTIVE DATE. The Plan, originally named the Society
Corporation 1991 Equity Compensation Plan, was approved by the Corporation's
shareholders at the Annual Meeting of Shareholders held on April 16, 1991 and
became effective on that date. On March 17, 1994, the Corporation's Board of
Directors adopted, subject to shareholder approval, certain amendments to the
Plan, then renamed the KeyCorp Amended and Restated 1991 Equity Compensation
Plan. The shareholders approved these amendments at the Corporation's Annual
Meeting of Shareholders held on May 19, 1994. The Plan was further amended by
action of the Committee on July 17, 1996 to amend the definition of Change of
Control as set forth in Section 2.5 of the Plan, which amendment was effective
as of January 1, 1996. If the Corporation hereafter enters into a transaction
intended to be accounted for as a pooling of interests and the Committee
determines, based on the written advice of the Corporation's independent
accountants, that the July 17, 1996 amendment or the operation thereof would
conflict with or jeopardize the pooling of interests accounting treatment for
such transaction, then the July 17, 1996 amendment shall be inoperative and
shall be treated as if it had never been effected so that the definition of
Change of Control would be as in effect prior to such amendment. The Plan was
further amended and restated as of September 19, 1996, to provide for the
transferability of Options granted hereunder. The Plan was further amended by
action of the Equity Based Compensation Subcommittee of the Compensation and
Organization Committee on May 6, 1998 to amend Section 10.1(a) of the Plan to
extend the option exercise period for terminated employees upon a change of
control in certain circumstances. The amendment to Section 10.1(a) only applies
to Awards and Award Instruments granted or entered into on or after January 1,
1999. If the Corporation enters into a transaction intended to qualify as a
pooling of interests for accounting purposes prior to January 1, 1999, the
amendment to Section 10.1(a) shall become null and void. The Subcommittee also
amended the Plan to delete Section 17 of the Plan and all cross-references
thereto. References in the Plan to specific numbers of Common Shares have been
adjusted pursuant to Section 13 to reflect the two-for-one split in the Common
Shares effective March 6, 1998. With respect to clause (a) of the last paragraph
of Section 5, as of May 6, 1998, Incentive Stock Options covering 451,823 Common
Shares had been theretofore granted and not expired or terminated unexercised,
leaving 9,148,177 Common Shares then available for future grant of Incentive
Stock Options (subject to
24
increase in the event that outstanding Incentive Stock Options expire or
terminate unexercised). The Plan was further amended by action of the
Compensation and Organization Committee on March 15, 2000 to amend Section 1 of
the Plan to clarify that Awards under the Plan may be made to any Employee of
the Corporation. The Plan was amended on January 17, 2001 to amend Section
6.4(a) to remove the requirement that an Option will not become exercisable
unless an Optionee has been continuously employed by the Corporation for at
least six months from the date of grant. The Plan was also amended to add a new
Section 16 entitled "Harmful Activity" which states that, if an Optionee engages
in a "harmful activity" prior to or within six months of termination of
employment, profits from the exercise of a Covered Option will inure to the
benefit of the Corporation in certain circumstances. Section 16 does not apply
to Options granted prior to January 1, 2001. The Plan was amended on March 14,
2001 to amend Sections 10.2, 10.3, and 10.4 to extend the period during which
Options are exercisable pursuant to these sections to three years after
retirement, disability, or death. The amendment only applies to Options granted
on or after January 1, 2002. The Plan was amended on November 14, 2001 to amend
Section 2.2 to change the consideration required for Restricted Stock.
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