EXHIBIT 10.13
2004 EQUITY COMPENSATION PLAN
1. PURPOSE. The KeyCorp 2004 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, Restricted Stock, Restricted Stock Units, Performance Shares and
Performance Units 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 and Restricted Stock Units shall mean such amount, if any,
required by applicable law or as may be otherwise specified by the Committee in
the Award Instrument with respect to the Restricted Stock or Restricted Stock
Units as the consideration to be paid by the Employee for the Restricted Stock
or Restricted Stock Units.
2.3 AWARD. The term "Award" shall mean an award granted under the Plan of
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Shares, or Performance Units.
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. An Award
Instrument may also be in an electronic medium. Acceptance of the Award
Instrument by an Employee constitutes agreement to the terms of the Award
evidenced thereby.
2.5 BASE PRICE. The term "Base Price" with respect to a Free-Standing SAR
shall mean the price specified in an Award of Free-Standing SARs to be used as
the basis for determining the amount to which a holder of a Free-Standing SAR
is entitled upon the exercise of a Free-Standing SAR.
2.6 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 TO (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 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 TO (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
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.
2.7 COMMITTEE. The term "Committee" shall mean the Compensation Committee
of the Board of Directors of the Corporation or such other committee or
subcommittee as may be designated by the Board of Directors of the Corporation
from time to time.
2.8 COMMON SHARES. The term "Common Shares" shall mean common shares of
the Corporation, with a par value of $1 each.
2.9 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.
2.10 COVERED EMPLOYEE. The term "Covered Employee" shall mean an Employee
who is, or is determined by the Committee to be likely to become, a "covered
employee" within the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended.
2.11 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.
2.12 EFFECTIVE DATE. The term "Effective Date" shall mean March 18, 2004,
the date the Plan is approved and adopted by the Board of Directors of the
Corporation.
2.13 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).
2.14 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.
2.15 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.
2.16 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.
2.17 FREE-STANDING STOCK APPRECIATION RIGHT. The term "Free-Standing
Stock Appreciation Right" or "Free-Standing SAR" shall mean an Award granted to
an Employee that is not granted in tandem with an Option that entitles the
holder thereof to receive from the Corporation, upon exercise of the Free-
Standing SAR or any portion of the Free-Standing SAR, an amount equal to 100%
or such lesser percentage as the Committee may determine at the time of grant
of the Award, of the excess, if any, measured at the time of the exercise of
the Free-Standing SAR, of (a) the Fair Market Value of the Common Shares
underlying the Free-Standing SARs being exercised over (b) the aggregate Base
Price of those Common Shares underlying the Free-Standing SARs being exercised.
2.18 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.
2.19 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
(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.
2.20 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.
2.21 OPTION. The term "Option," 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.
2.22 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 11.4 in the case of the death of the
Employee to whom the option was granted, the Option may not be exercised.
2.23 PERFORMANCE GOAL. The term "Performance Goal" shall mean a
performance goal specified by the Committee in connection with the potential
grant of Performance Shares or Performance Units, or when so determined by the
Committee, Options, SARs, Restricted Stock, and dividend credits pursuant to
this Plan. Performance Goals may be described in terms of objectives 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. The Performance Goals
may be made relative to the performance of other corporations. The Performance
Goals applicable to any award to a Covered Employee will be based on, and
described in terms of specified levels of, growth in, or ratios involving, one
or more of the following criteria:
(a) earnings per share;
(b) total revenue;
(c) net interest income
(d) noninterest income;
(e) net income;
(f) net income before tax;
(g) noninterest expense
(h) efficiency ratio;
(i) return on equity;
(j) return on assets;
(k) economic profit added;
(l) loans;
(m) deposits;
(n) tangible equity;
(o) assets
(p) net charge-offs; and
(q) nonperforming assets
If the Committee determines that a change in the business, operations,
corporate structure or capital structure of the Corporation, or the manner in
which it conducts its business, or other events or circumstances render the
Performance Goals unsuitable, the Committee may in its discretion modify such
Performance Goals or the related minimum acceptable level of achievement, in
whole or in part, as the Committee deems appropriate and equitable, except in
the case of a Covered Employee where such action would result in the loss of
the otherwise available exemption of the Award under Section 162(m) of the
Internal Revenue Code of 1986, as amended. In such case, the Committee will
not make any modification of the Performance Goals or minimum acceptable level
of achievement.
2.24 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 or Performance Units.
2.25 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.
2.26 PERFORMANCE UNITS. The term "Performance Units" shall mean a
bookkeeping entry that records a unit equal to $1.00 awarded pursuant to
Section 10 of this Plan, which are 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.
2.27 PLAN. The term "Plan" shall mean this KeyCorp 2004 Equity
Compensation Plan as from time to time hereafter amended in accordance with
Section 21.1.
2.28 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 the Restriction Period will terminate or terminate early
upon achievement of specified Performance Goals, (c) the requirement that,
subject to the provisions of Section 11, 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 (d) such other restrictions, conditions, and
contingencies, if any, as the Committee may provide in the Award Instrument
with respect to that Restricted Stock.
2.29 RESTRICTED STOCK UNITS. The term "Restricted Stock Units" shall mean
an Award pursuant to Section 9 of this Plan, whereby an Employee receives the
right to receive Common Shares or the cash equivalent thereof at a specified
time in the future in consideration of the performance of services, but subject
to such restrictions, conditions and contingencies as the Committee may provide
in the relevant Award Instrument.
2.30 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.
2.31 STOCK APPRECIATION RIGHT. The term "Stock Appreciation Right" or
"SAR" shall mean a right granted pursuant to Section 7 of this Plan, and will
include Tandem Stock Appreciation Rights, Limited Stock Appreciation Rights and
Free-Standing Stock Appreciation Rights.
2.32 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).
2.33 TANDEM STOCK APPRECIATION RIGHT. The term "Tandem Stock Appreciation
Right "or "Tandem 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 Tandem SAR and surrender of the
related Option, or any portion of the Tandem 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 Tandem SAR, of (a) the Fair Market Value of the
Common Shares subject to the Option with respect to which the Tandem SAR is
exercised over (b) the Exercise Price of those Common Shares under the Option.
2.34 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 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.
5. STOCK SUBJECT TO THE PLAN.
5.1 TYPE OF STOCK. 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.
5.2 NUMBER OF SHARES AVAILABLE. Subject to adjustment as provided in
Section 5.3 and Section 14 of this Plan, the number of Common Shares that may
be issued or transferred (a) upon the exercise of Options or Stock Appreciation
Rights, (b) as Restricted Stock and released from a substantial risk of
forfeiture thereof, (c) in payment of Restricted Stock Units, (d) in payment of
Performance Shares or Performance Units that have been earned, (e) in payment
of dividend equivalents paid with respect to Awards made under the Plan or (f)
in payment of any other award pursuant to this Plan, following the Effective
Date, shall not exceed in the aggregate 70,000,000 Common Shares, plus any
shares described in Section 5.3.
5.3 ADJUSTMENTS. The number of shares available in Section 5.2 above
shall be adjusted to account for shares relating to any awards that expire or
are forfeited or that are transferred, surrendered or relinquished upon the
payment of any exercise price by the transfer to the Corporation of Common
Shares or upon satisfaction of any withholding amount, regardless of whether
such expiration, forfeiture, transfer, surrender or relinquishment relates to
awards that were granted under this Plan or any other plan of the Corporation,
or before or after the Effective Date. Upon payment in cash of the benefit
provided by any award granted under this Plan or under any other plan of the
Corporation, at any time before or after the Effective Date, any shares that
were covered by that award shall again be available for issue or transfer
hereunder.
5.4 LIMITS. Notwithstanding anything in this Section 5, or elsewhere in
this Plan to the contrary and subject to adjustment as provided in Section 14
of this Plan:
(a) the aggregate number of Common Shares actually issued or
transferred by the Corporation upon the exercise of Incentive Stock
Options shall not exceed 15,000,000 Common Shares;
(b) no Employee shall be granted Options or Stock Appreciation Rights,
in the aggregate, for more than 1,000,000 Common Shares during any
one calendar year;
(c) the number of Common Shares that may be issued as Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units,
shall not in the aggregate exceed 14,000,000 Common Shares; and
(d) in no event shall any Employee in any calendar year receive Awards
of Performance Shares, Performance Units and Restricted Stock with
Performance Goals having an aggregate maximum value as of their
respective dates of grant in excess of $7,500,000.
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.
(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.
(d) The Committee reserves the discretion after the date of grant of an
Option to provide for (i) the payment of a cash bonus at the time
of exercise; (ii) the availability of a loan at exercise; or (iii)
the right to tender in satisfaction of the Exercise Price
nonforfeitable, unrestricted Common Shares, which are already owned
by the Employee and have a value at the time of exercise that is
equal to the Exercise Price.
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 Option
shall be not later than ten years from the date on which the Option is granted.
6.4 EXERCISE OF OPTIONS.
(a) Except as otherwise provided in Section 11, 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) The Award Instrument may provide that specified Performance Goals
must be achieved as a condition to the exercise of any Option.
(c) 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.
(d) The exercise of an Option will result in the cancellation on a
share-by-share basis of any Tandem SAR and Limited SAR authorized
under Section 7 of this Plan.
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, to the extent permitted by applicable law, 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 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.
6.7 DIVIDEND EQUIVALENTS. The Committee may, at or after the date on
which an Option is granted, provide for the payment of dividend equivalents to
the holder of the Option on either a current or deferred or contingent basis or
may provide that such equivalents will be credited against the Exercise Price.
7. STOCK APPRECIATION RIGHTS.
7.1 GRANT OF SARS.
(a) The Committee may authorize the granting (i) to any holder of an
Option, of Tandem SARs and Limited SARs in respect of Options
granted hereunder, and (ii) to any Employee, of Free-Standing SARs.
A Tandem SAR may be granted only in connection with an Option. A
Tandem SAR granted in connection with an Incentive Stock Option may
be granted only when the Incentive Stock Option is granted. A
Tandem 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. A Free-Standing SAR
is not granted in tandem with an Option.
7.2 EXERCISE OF SARS.
(a) An Employee electing to exercise an SAR shall deliver written
notice to the Corporation of the election identifying the SAR and,
with respect to Tandem SARs and Limited SARs, the related Option
with respect to which the Tandem 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. Upon exercise
of a Tandem SAR or Limited SAR, the related Option shall be deemed
to be surrendered to the extent that the Tandem SAR or Limited SAR
is exercised.
(b) The Committee may specify in the Award Instrument pursuant to which
SARs are granted that the amount payable on exercise of an SAR may
not exceed a maximum specified by the Committee in the Award
Instrument.
(c) No SAR granted under this Plan may be exercised more than ten years
from the date on which the SAR is granted.
(d) The Committee may provide in the Award Instrument to which SARs are
granted for the payment to the holder of the SAR of dividend
equivalents thereon in cash or Common Shares on a current, deferred
or contingent basis.
(e) SARs may be exercised only (i) on a date when the SAR is "in the
money" (i.e., when there would be positive consideration received
upon exercise of the SAR), (ii) with respect to Tandem SARs and
Limited SARs, at a time and to the same extent as the related
Option is exercisable, (iii) with respect to Tandem SARs and
Limited SARs, unless otherwise provided in the relevant Award
Instrument, by surrender to the Corporation, unexercised, of the
related Option or any applicable portion thereof, and (iv) in
compliance with all restrictions set forth in or specified by the
Committee
(f) 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 this Section 7.
(g) The Committee may specify in the Award Instrument pursuant to which
SARs are granted Performance Goals that must be achieved as a
condition of the exercise of such SARs.
(h) Each Award Instrument pursuant to which Free-Standing SARs are
granted shall specify in respect of each Free-Standing SAR, a Base
Price, which shall be equal to or greater than the Fair Market
Value of the Common Shares subject to each Free-Standing SAR on the
date the Free-Standing SAR is granted.
7.3 PAYMENT FOR SARS. The amount payable upon exercise of an SAR may be
paid by the Corporation in cash or in whole Common Shares (taken at their Fair
Market Value at the time of exercise of the SAR) or in a combination of cash
and whole Common Shares and may either grant to the Employee or retain in the
Committee the right to elect among those alternatives; 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 a Tandem SAR or Limited SAR exceed the
total number of Common Shares subject to the related Option.
7.4 TERMINATION, AMENDMENT, OR SUSPENSION OF SARS. SARs shall terminate
and may no longer by exercised upon the first to occur of (a) with respect to
Tandem SARs and Limited SARs, the exercise or termination of the related
Option, (b) any termination date specified by the Committee at the time of
grant of the SAR, or (c) with respect to Tandem SARs and Limited SARs, 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 theretofore granted under the Plan without
the holder's consent; provided that, in the case of amendment, no provision of
the SAR, as amended, shall be in conflict with any provision of the Plan.
8. RESTRICTED STOCK.
8.1 CONDITIONS ON RESTRICTED STOCK.
(a) 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 achievement of Performance Goals, 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.
(b) The Committee may specify in the Award Instrument pursuant to which
the Restricted Stock is granted, that any or all dividends or other
distributions paid on Restricted Stock during the Restriction
Period be automatically deferred and reinvested in additional
shares of Restricted Stock, which may be subject to the same
restrictions as the underlying Award.
(c) If so directed by the Committee, all certificates representing
Restricted Stock may be held in custody by the Corporation until
all restrictions thereon shall have lapsed, together with a stock
power or powers executed by the Employee in whose name such
certificates are registered, endorsed in blank and covering such
Common Shares.
8.2 PAYMENT FOR RESTRICTED STOCK. Each Employee to whom an Award of
Restricted Stock is made shall pay the Acquisition Price, if any, 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 any Acquisition Price with
respect to an 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. RESTRICTED STOCK UNITS.
9.1 GRANT OF RESTRICTED STOCK UNITS.
(a) Each grant or sale of Restricted Stock Units shall provide that the
Restricted Stock Units shall be subject to deferral and a risk of
forfeiture, as determined by the Committee on the date the
Restricted Stock Units are granted, and may provide for the earlier
lapse or other modification of such period in the event of a Change
in Control.
(b) Each Employee to whom an Award of Restricted Stock Units is made
shall pay the Acquisition Price, if any, with respect to those
Restricted Stock Units to the Corporation not later than 30 days
after delivery to the Employee of the Award Instrument with respect
to the Restricted Stock Units being granted. If any Employee fails
to pay any Acquisition Price with respect to an Award of Restricted
Stock Units within that 30 day period, the Employee's right under
that Award shall be forfeited.
9.2 PAYMENT FOR RESTRICTED STOCK UNITS. The Corporation shall pay each
Employee who is entitled to payment for Restricted Stock Units an amount for
those Restricted Stock Units (a) in cash, (b) in Common Shares, or (c) any
combination of the foregoing, and may either grant to the Employee or retain in
the Committee the right to elect among those alternatives.
9.3 RIGHTS AS A SHAREHOLDER. During any time that the Restricted Stock
Units are outstanding, the Employee shall have no right to transfer any rights
under his or her Award, shall have no rights of ownership in the Common Shares
deliverable upon payment of the Restricted Stock Units and shall have no right
to vote them, but the Committee may, at or after the date on which the
Restricted Stock Units are granted, authorize the payment of dividend
equivalents on such Common Shares underlying the Restricted Stock Units on
either a current or deferred or contingent basis, either in cash or in
additional Common Shares.
10.PERFORMANCE SHARES AND PERFORMANCE UNITS.
10.1 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE SHARES AND
PERFORMANCE UNITS. The Committee shall have full discretion to select the
Employees to whom Awards of Performance Shares and Performance Units are made,
the number of Performance Shares or Performance Units 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 or Performance Units.
10.2 CONDITIONS TO PAYMENT FOR PERFORMANCE SHARES AND PERFORMANCE UNITS.
(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 or Performance Units.
(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 or Performance Units 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 and Performance Units only to the extent that
those Performance Shares or Performance Units, as the case may be,
are treated as earned under one or more such formulas.
10.3 PAYMENT FOR PERFORMANCE SHARES AND PERFORMANCE UNITS. The
Corporation shall pay each Employee who is entitled to payment for Performance
Shares or Performance Units earned with respect to any Performance Period an
amount for those Performance Shares or Performance Units, as the case may be,
(a) in cash, (b) in Common Shares, (c) in Restricted Stock, or (d) any
combination of the foregoing, and may either grant to the Employee or retain in
the Committee the right to elect among those alternatives. Restricted Stock
issued by the
Corporation in payment of Performance Shares or Performance Units shall be
subject to all the provisions of Section 8.
11. TERMINATION OF EMPLOYMENT. After an Employee's Employment
Termination Date, the rules set forth in this Section 11 shall apply.
All factual determinations with respect to the termination of an
Employee's employment that may be relevant under this Section 11 shall be
made by the Committee in its sole discretion.
11.1 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 11.2, disability as
provided on Section 11.3, or death as provided in Section 11.4:
(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
Tandem SARs and Limited SARs that were outstanding on the
Employment Termination Date, if and to the same extent as those
Options, Tandem SARs and Limited SARs were exercisable by the
Employee or Transferee (as the case may be) on the Employment
Termination Date, (ii) during the period ending three months after
the Employment Termination Date, but not later than the Option
Expiration Date, to exercise any Incentive Stock Options and
related Tandem SARs and Limited SARs that were outstanding on the
Employment Termination Date, if and to the same extent as those
Options and Tandem SARs and Limited SARs were exercisable by the
Employee on the Employment Termination Date, and (iii) during the
period ending six months after the Employment Termination Date, but
not later than the date any Free-Standing SAR expires, to exercise
any Free-Standing SARs that were outstanding on the Employment
Termination Date, if and to the same extent as those Free-Standing
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 or the date of expiration of Free-Standing
SARs, as the case may be, 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 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, if any,
to the Corporation each Common Share of Restricted Stock and each
Restricted Stock Unit 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.
11.2 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 after the Employment Termination Date,
but not later than the Option Expiration Date, any Nonqualified
Options and related Tandem SARs and Limited SARs that were
outstanding on the Employment Termination Date, if and to the same
extent as those Options, Tandem SARs and Limited SARs were
exercisable by the Employee or Transferee (as the case may be) on
the Employment Termination Date, (ii) to exercise, from time to
time during the period ending three years after the Employment
Termination Date, but no later than the Option Expiration Date, any
Incentive Stock Options and related Tandem SARs and Limited SARs
that were outstanding on the Employment Termination Date, if and to
the same extent as those Options, Tandem SARs and Limited 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 cause the Option
to fail to qualify for Incentive Stock Option treatment under the
Internal Revenue Code of 1986, as amended) and (iii) to exercise,
from time to time during the period ending three years after the
Employment Termination Date, but not later than the date any Free-
Standing SAR expires, any Free-Standing SARs that were outstanding
on the Employment Termination Date, if and to the same extent as
those Free-Standing SARs were exercisable by the Employee on the
Employment Termination Date;
(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
expiration of the relevant Award, Nonqualified Stock Options,
Incentive Stock Options and SARs to the extent such Options and
SARs become exercisable by their terms prior to the expiration of
the relevant Award (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, if any,
to the Corporation each Common Share of Restricted Stock and each
Restricted Stock Unit 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.
11.3 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 after the Employment Termination Date, but not later
than the Option Expiration Date, any Nonqualified Options and
related Tandem SARs and Limited SARs that were outstanding on the
Employment Termination Date, if and to the same extent those
Options, Tandem SARs and Limited SARs were exercisable by the
Employee or Transferee (as the case may be) on the Employment
Termination Date, (ii) to exercise, from time to time during the
period ending three years after the Employment Termination Date,
but no later than the Option Expiration Date, any Incentive Stock
Options and related Tandem SARs and Limited SARs that were
outstanding on the Employment Termination Date, if and to the same
extent as those Options and Tandem SARs and Limited SARs were
exercisable by the Employee on the Employment Termination Date
(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), and (iii) to exercise,
from time to time during the period ending three years after the
Employment Termination Date, but not later than the date any Free-
Standing SAR expires, any Free-Standing SARs that were outstanding
on the Employment Termination Date, if
and to the same extent as those Free-Standing SARs were exercisable
by the Employee on the Employment Termination Date;
(b) Unless otherwise provided in the relevant Award Instrument, the
Employee shall offer for resale at the Acquisition Price, if any,
to the Corporation each Common Share of Restricted Stock and each
Restricted Stock Unit 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.
11.4 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 11.1, 11.2, or 11.3 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 provided that the Option
Expiration Date shall not be extended beyond the date that is ten
years from the date on which the Option was granted;
(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
after the date of the Employee's death, but not later than the
expiration of the relevant Award, any Options and 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, if any,
to the Corporation each Common Share of Restricted Stock and each
Restricted Stock Unit 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.
12. 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) Tandem
SARs and Limited SARs related to any such Options shall also become immediately
exercisable in full, (c) any outstanding Free-Standing SAR shall become
exercisable in full, (d) the Restriction Period with respect to all outstanding
Awards of Restricted Stock shall immediately terminate, (e) the restrictions,
conditions or contingencies on any Restricted Stock Units shall immediately
terminate, and (f) the restrictions, conditions, or contingencies on any
Performance Shares and Performance Units shall be modified in such manner as
the Committee may specify to give the Employee the benefit of those Performance
Shares or Performance Units through the date of Change of Control.
13.RESTRICTIONS.
13.1 ASSIGNMENT AND TRANSFER. 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, Restricted Stock
during the Restriction Period, Restricted Stock Unit 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 or SAR.
13.2 FURTHER RESTRICTIONS. The Committee may specify at the date of grant
of any Award that part or all of the Common Shares that are (i) to be issued or
transferred by the Corporation upon the exercise of Options or SARs, upon the
termination of any period of deferral applicable to Restrict Stock Units or
upon payment under any grant of Performance Shares or Performance Units or (ii)
no longer subject to the Restriction Period, will be subject to further
restrictions on transfer.
14. 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, the maximum
number of Common Shares that may be issued under the Plan as Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units, and the
maximum number of Common Shares with respect to which any Employee may receive
Awards during any calendar year or calendar years as provided in Section 5, 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. In the event of any such transaction or
event, the Committee, in its discretion, may provide in substitution for any or
all outstanding Awards under this Plan, such alternative consideration as it,
in good faith, may determine to be equitable in the circumstances and may
require in connection therewith the surrender of all Awards so replaced.
15. 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.
16. 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.
17. HARMFUL ACTIVITY. If an Employee shall engage in any "harmful
activity" prior to or within six months after termination of employment with
Key, then (a) any shares of Restricted Stock, Restricted Stock Units,
Performance Shares or Performance Units held by the Employee that have vested,
(b) any Profits realized upon the
exercise of any Covered Option or SAR and (c) any Profits realized upon the sale
of any vested shares of Restricted Stock, Restricted Stock Units, Performance
Shares or Performance Units, 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 vested shares of
Restricted Stock, Restricted Stock Units, Performance Shares or Performance
Units or any Profits realized upon the exercise of any Covered Option or SAR or
upon the sale of any vested shares of Restricted Stock, Restricted Stock Units,
Performance Shares or Performance Units inure to the benefit of the Corporation
in accordance with the first sentence of this paragraph, an Employee shall
provide all such forfeited Awards and pay all such Profits to the Corporation
within 30 days after first engaging in any harmful activity and all Awards that
have not yet vested and all unexercised Covered Options or SARs 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. Unless otherwise provided in
the relevant Award Instrument, the provisions of Section 17 shall apply to all
Awards made under the Plan.
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.
For purposes of this Section 17:
"Covered Option or SAR" means any Option or SAR granted under this
Plan unless the granting resolution expressly excludes the Option or SAR
from the provisions of this Section 17.
"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, (1) with respect to any Covered Option or SAR,
the spread between the Fair Market Value of a Common Share on the date of
exercise and the exercise price or the Base Price, as the case may be,
multiplied by the number of shares exercised under the Covered Option or
SAR; and (2) with respect to any shares of Restricted Stock, Restricted
Stock Units, Performance Shares or Performance Units, any profit realized
upon the sale of any Common Shares that were acquired upon the vesting of
such Awards.
18. AWARDS IN SUBSTITUTION FOR AWARDS GRANTED BY OTHER COMPANIES. Awards,
whether Incentive Stock Options, Nonqualified Options, SARs, Restricted Stock,
Restricted Stock Units, Performance Shares or Performance Units, 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.
19. 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.
20. DURATION AND TERMINATION OF THE PLAN. The Plan shall become effective
and shall be deemed to have been adopted on the Effective Date; provided,
however, that if the Plan is not approved by the affirmative vote of the
holders of the requisite number of outstanding Common Shares on or prior to
December 31, 2004, the Plan shall be void and of no further effect. The Plan
shall remain in effect until the date that is 10 years from the Effective Date.
All grants made on or prior to such date of termination will continue in effect
thereafter subject to the terms thereof and of this Plan.
21. MISCELLANEOUS.
21.1 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 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.
21.2 DEFERRAL. The Committee also may permit Employees to elect to defer
the issuance of Common Shares or the settlement of Awards in cash under the
Plan pursuant to such rules, procedures or programs as it may
establish for purposes of this Plan. The Committee also may provide that
deferred issuances and settlements include the payment or crediting of dividend
equivalents or interest on the deferral amounts.
21.3 CONDITIONS. The Committee may condition the grant of any Award or
combination of Awards authorized under this Plan on the surrender or deferral
by the Employee of his or her right to receive a cash bonus or other
compensation otherwise payable by the Corporation or a Subsidiary to the
Employee.
21.4 ACCELERATION. In case of termination of employment by reason of
death, disability or normal or early retirement, or in the case of hardship or
other special circumstances, of an Employee who holds an Option or SAR not
immediately exercisable in full, or any Restricted Stock as to which the
substantial risk of forfeiture or the prohibition or restriction on transfer
has not lapsed, or any Restricted Stock Units as to which the any period of
deferral has not been completed, or any Performance Shares or Performance Units
which have not been fully earned, or who holds Common Shares subject to any
transfer restriction imposed pursuant to Section 13(b) of this Plan, the
Committee may, in its sole discretion, accelerate the time at which such Option
or SAR may be exercised or the time at which such substantial risk of
forfeiture or prohibition or restriction on transfer will lapse or the time
when such period of deferral will end or the time at which such Performance
Shares or Performance Units will be deemed to have been fully earned or the
time when such transfer restriction will terminate or may waive any other
limitation or requirement under any such Award.
22. 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.
23. 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.
24. FRACTIONAL SHARES. The Corporation will not be required to issue any
fractional Common Shares pursuant to this Plan. The Committee may provide for
the elimination of fractions or for the settlement of fractions in cash.
25. FOREIGN EMPLOYEES. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Employees who are foreign nationals or who are
employed by the Corporation or any Subsidiary outside of the United States of
America as the Committee may consider necessary or appropriate to accommodate
differences in local law, tax policy or custom. Moreover, the Committee may
approve such supplements to or amendments, restatements or alternative versions
of this Plan as it may consider necessary or appropriate for such purposes,
without thereby affecting the terms of this Plan as in effect for any other
purpose, and the Secretary or other appropriate officer of the Corporation may
certify any such document as having been approved and adopted in the same
manner as this Plan. No such special terms, supplements, amendments or
restatements, however, will include any provisions that are inconsistent with
the terms of this Plan as then in effect unless this Plan could have been
amended to eliminate such inconsistency without further approval by the
shareholders of the Corporation.
26. 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.
27. 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.
28.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.
29.GOVERNING LAW. The provisions of the Plan shall be governed and
construed in accordance with the internal substantive laws of the State of Ohio.