1
KEY BANKS INC.
STOCK OPTION PLAN
1. PURPOSES OF THE PLAN
The Key Banks Inc. Stock Plan is intended to provide a method whereby
employees of Key Banks Inc. and its Subsidiaries who are largely
responsible for the management, growth and protection of the business and
who are making and can continue to make substantial contributions to the
success of the business may be encouraged to acquire a larger stock
ownership in the Corporation, thus increasing their proprietary interest
in the business, providing them with greater incentive for their
continued employment and promoting the interests of the Corporation and
all its stockholders. Accordingly, the Corporation will from time to
time during the term of the Plan grant, to such employees as may be
selected in the manner hereinafter provided options to purchase shares of
Common Stock of the Corporation, subject to the conditions hereinafter
provided.
2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms have
the meanings set forth below.
"Board of Directors" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1954, as amended.
"Committee" means the Compensation Committee of the Board of
Directors, which Committee shall be composed of not less than three
directors who have not been eligible to receive an award under the
Plan at any time within a period of one year immediately preceding
the date of their appointment to such Committee.
"Common Stock" means the Common Stock of the Corporation, $5 par
value, or such other class of shares or others securities as to
which the provision of the Plan may be applicable.
"Corporation" means Key Banks Inc. and its subsidiaries.
"Grant Date" as used with respect to a particular Option, means the
date as of which such option is granted by the Committee pursuant to
the Plan.
"Grantee" means the individuals to whom an incentive Stock Option or
Nonqualified Stock Option is granted by the Committee pursuant to
the Plan.
"Option" means an option, granted by the Committee pursuant to
Section 5 to purchase shares of Common Stock and which shall be
designated as either an "Incentive Stock Option" or a "Nonqualified
Stock Option."
"Incentive Stock Option" means an option that qualifies as an
Incentive Stock Option as described in Section 422A of the Code of
1954, as amended.
"Nonqualified Stock Option" means any option granted under this
Plan, other than an Incentive Stock Option.
"Option Period" means the period beginning on the Grant Date and
ending the day prior to the tenth anniversary of the Grant Date.
"Plan" means the Key Banks Inc. Stock Option Plan as set forth
herein and as may be amended from time to time.
"Retirement" as applied to a Grantee, means the Grantee's
termination of employment at a time when the Grantee receives an
immediately payable retirement benefit under the Key Banks Inc.
Pension Plan or under any other retirement plan that is maintained
by a subsidiary and that is determined by the Committee to be the
functional equivalent of the Corporation's Retirement Plan.
AAA0725C 03/23/94 A-1
2
"Subsidiary" means any stock corporation of which a majority of the
voting common or capital stock is owned directly or indirectly by
the Corporation, and any other company designated as such by the
Committee, but only during the period of such ownership or
designation.
"Total and Permanent Disability" as applied to a Grantee, means that
the Grantee: (i) has established to the satisfaction of the
Corporation that the Grantee is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death of which
has lasted or can be expected to last for a continuous period of not
less than 12 months (all within the meaning of Section 105(d)(4) of
the Code), and (ii) has satisfied any requirement imposed by the
Committee.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Committee (the "Committee") composed
of three or more members who are appointed by the Board of Directors of
the Corporation (the "Board") and selected from those directors who are
not employees of the Corporation or of a Subsidiary. The Board may from
time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, howsoever caused, shall be filled by the
Board. The Board shall select one of its members as Chairman and shall
hold meetings at such times and places as it may determine, subject to
such rules as to procedures not inconsistent with the provisions of the
Plan as are prescribed by the Board, set forth in the By-Laws of the
Corporation as applicable to the Executive Committee, and as prescribed
by the Committee itself. A majority of the authorized number of members
of the Committee shall constitute a quorum for the transaction of
business. Acts reduced to or approved in writing by a majority of the
members of the Committee then serving shall be the valid acts of the
Committee. No member of the Committee shall be eligible to be granted
options under the Plan while he or she is a member of the Committee.
The Committee shall be vested with full authority to make such rules and
regulations as it deems necessary or desirable to administer the Plan and
to interpret the provisions of the Plan. Any determination, decision or
action of the Committee in connection with the construction,
interpretation, administration or application of the Plan shall be final,
conclusive and binding upon all optionees and any person claiming under
or through an optionee, unless otherwise determined by the Board.
Any determination, decision or action of the Committee provided for in
the Plan may be made or taken by action of the Board if it so determines,
with the same force and effect as if such determination, decision or
action had been made or taken by the Committee. No member of the
Committee or of the Board shall be liable for any determination, decision
or action made in good faith with respect to the Plan or any option
granted under the Plan. The fact that a member of the Board shall at the
time be, or shall theretofore have been or thereafter may be, a person
who has received or is eligible to receive an option shall not disqualify
him or her from taking part in and voting at any time as a member of the
Board in favor of or against any amendment or repeal of the Plan provided
that such vote shall be in accordance with the recommendations of the
Committee.
4. STOCK SUBJECT TO THE PLAN
(a) The stock to be issued upon exercise of options granted under the
Plan shall be the Corporation's Common Stock, $5 par value, (the
"Common Stock") which shall be made available at the discretion of
the Board, either from authorized but unissued Common Stock or from
Common Stock reacquired by the Corporation, including shares
purchased in the open market. The aggregate number of shares of
Common Stock which may be issued under options shall not exceed
500,000 shares. The limitation established by the preceding
sentence shall be subject to adjustment as provided in Section 15 of
the Plan.
(b) In the event that any outstanding option under the Plan for any
reason expires or is terminated, the shares of Common Stock
allocable to the unexercised portion of such option may again be
made subject to option under the Plan.
(c) The aggregate fair market value (determined as of the date an option
is granted) of the stock for which any optionee may be granted
incentive Stock Options in any calendar year under the Plan and all
other plans maintained by the Corporation, its parent or any
Subsidiary shall not exceed the sum of (i) $100,000 plus (ii) any
unused limit carryover(s) to such year.
AAA072C5 03/29/94 A-2
3
(d) For purposes of Subsection (c) above, an "unused limit carryover"
shall arise only in a calendar year commencing after December 31,
1983, and shall be equal to one half of the excess of (i) $100,000
over (ii) the aggregate fair market value (determined as of the date
an option is granted) of the stock for which the optionee is granted
incentive Stock Options in such year under the Plan and all other
plans maintained by the Corporation, or any Subsidiary. The unused
limit carryover arising in any calendar year may be carried over to
any of the three consecutive calendar years next following such
year, but only to the extent not used in an earlier calendar year.
The value of the Common Stock for which incentive Stock Options are
granted under the Plan in any calendar year shall be applied first
against the basic $100,000 limit for such year and then against any
unused limit carryovers which may be carried over to such year in
the order of the calendar years in which such carryovers arose.
5. GRANT OF OPTIONS
The Committee may from time to time, subject to the provisions of the
Plan, grant Options to key employees to purchase shares of Common Stock
allotted in accordance with Section 4. The Committee may designate any
option granted as either an Incentive Stock Option or a Nonqualified or
the Committee may designate a portion of the Option as an "Incentive
Stock Option" and the remaining portion as a "Nonqualified Stock Option."
Any portion of an Option that is not designated as an "Incentive Stock
Option" shall be a "Nonqualified Stock Option."
6. OPTION PRICE
The purchase price per share shall be 100 percent of the fair market
value of one share of Common Stock on the date the option is granted,
except that the purchase price per share shall be 110 percent of such
fair market value in the case of an Incentive Stock Option granted to an
individual described in Section 7(c) of the Plan. During such time as
Common Stock is not listed on an established stock exchange, fair market
value per share shall be the mean between the closing dealer "bid" and
"ask" prices for Common Stock as quoted by NASDAQ for the day of the
grant and if no "bid" and "ask" prices are quoted for the day of the
grant, the fair market value shall be determined by reference to such
prices on the next preceding day on which such prices were quoted. If
Common Stock is listed on an established stock exchange or exchanges, the
fair market value shall be deemed to be the highest closing price of
Common Stock on such stock exchange or exchanges on the day the option is
granted or, if no sale of Common Stock has been made on any stock
exchange on that day, the fair market value shall be determined by
reference to such price for the next preceding day on which a sale
occurred. In the event that Common Stock is not traded on an established
stock exchange, and no closing dealer "bid" and "ask" prices are
available, then the purchase price shall be 100 percent of the fair
market value of one share of Common Stock on the day the option is
granted, as determined by the Committee in good faith. The purchase
price shall be subject to adjustment only as provided in Section 15 of
the Plan.
7. ELIGIBILITY OF OPTIONEES
(a) Options shall be granted only to person who are key employees of the
Corporation or of a Subsidiary, as determined by the Committee. The
term "key employees" shall include officers as well as other
employees of the Corporation or of any Subsidiary.
(b) Neither the members of the Committee nor any member of the Board of
Key Banks Inc. who is an employee of the Corporation or of a
Subsidiary shall be eligible to receive an option under the Plan.
(c) Any other provision of the Plan notwithstanding an individual who
owns more than 10 percent of the total combined voting power of all
classes of outstanding stock of the Corporation, its parent or any
Subsidiary shall not be eligible for the grant of an Incentive Stock
Option unless the special requirements set forth in Sections 6 and
9(a) of the Plan are satisfied. For purposes of this Subsection (c)
in determining stock ownership, an individual shall be considered as
owning the stock owned, directly or indirectly, by or for his or her
brothers and sisters, spouse, ancestors and lineal descendants.
Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned
proportionately by or for its shareholders, partners or
beneficiaries. Stock with respect to which such individual holds an
option shall not be counted. "Outstanding stock" shall include all
stock actually issued and outstanding immediately after the grant of
the option. "Outstanding stock" shall not include shares authorized
for issue under outstanding options held by the optionee or by any
other person.
(d) Subject to the terms, provisions and conditions of the Plan and
subject to review by the Board, the Committee shall have exclusive
jurisdiction (i) to select the employees to be granted options (it
being
AAA072C5 03/29/94 A-3
4
understood that more than one option may be granted to the same
person), (ii) to determine the number of shares subject to each
option, (iii) to determine the date or dates when the options will
be granted, (iv) to determine the purchase price of the shares
subject to each option in accordance with Section 4 of the Plan, (v)
to determine the date or dates when each option may be exercised
within the term of the option specified pursuant to Section 9 of the
Plan, (vi) to determine whether or not an option constitutes an
Incentive Stock Option and (vii) to prescribe the form, which shall
be consistent with the Plan, of the instruments evidencing any
options granted under the Plan.
(e) Neither anything contained in the Plan or in any instrument under
the Plan nor the grant of any option hereunder shall confer upon any
optionee any right to continue in the employ of the Corporation or
of any Subsidiary or limit in any respect the right of the
Corporation or of any Subsidiary to terminate the optionee's
employment at any time and for any reason.
8. NON-TRANSFERABILITY OF OPTIONS
No option granted under the Plan shall be assignable or transferable by
the optionee other than by _____________ or the laws of descent and
distribution, and during the lifetime of an optionee the option shall be
exercisable only by such optionee.
9. TERMS AND EXERCISE OF OPTIONS
(a) Each option granted under the Plan shall terminate on the date
determined by the Committee and specified in the option agreement
provided that each Incentive Stock Option granted to an individual
described in Section 7(c) of the Plan shall terminate not later than
five years after the date of grant and each other option shall
terminate not later than 10 years after the date of grant. The
Committee at its discretion may provide further limitations or the
exercisability of options granted under the Plan. An option may be
exercised only during the continuance of the optionee's employment,
except as provided in Sections 10 and 11 of the Plan.
(b) A person electing to exercise an option shall give written notice to
the Corporation of such election and of the number of shares he or
she has elected to purchase, in such forms as the Committee shall
have prescribed or approved, and shall at the time of exercise
tender the full purchase price of the shares he or she has elected
to purchase. The purchase price shall be paid in full in cash upon
the exercise of the option, provided, however, that in lieu of cash
with the approval of the Committee at or prior to exercise, an
optionee may exercise his or her option by tendering to the
Corporation shares of Common Stock owned by him or her and having a
fair market value equal to the cash exercise price applicable to his
or her option with the fair market value of such stock to be
determined in the manner provided in section 6 of the plan (with
respect to the determination of the fair market value of Common
Stock on the date an option is granted).
(c) An option or a transferee of an option shall have no rights as a
stockholder with respect to any shares covered by his or her option
until the date the stock certificate is issued evidencing ownership
of the shares. No adjustments shall be made for dividends (ordinary
or extraordinary) whether in cash, securities or other property, or
distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as provided in
Section 15 hereof.
(d) In the case of options, other than Incentive Stock Options, a person
may, in accordance with the other provisions of the Plan, elect to
exercise such options in any order notwithstanding the fact that
options granted to him or her prior to the grant of the options
selected for exercise are unexpired. However, an Incentive Stock
Option shall not be exercisable with respect to all or any part of
the shares of Common Stock subject thereto while there is
outstanding any other Incentive Stock Option granted to the optionee
(under the Plan or otherwise) prior to the grant of the New Option
to purchase any stock in the Corporation in a parent or Subsidiary
of the Corporation or in a predecessor corporation. For purposes of
the preceding sentence, an Incentive Stock Option shall be treated
as "outstanding" until such Incentive Stock Option is exercised in
full or expires by reason of the lapse of time.
10. TERMINATION OF EMPLOYMENT
If an optionee severs from all employment with the Corporation and its
Subsidiaries for any reason other than death, any option granted to him
or her under the Plan shall terminate, and all rights under the option
shall cease, in accordance with rules adopted by the Committee in any
event.
AAA072C5 03/29/94 A-4
5
(a) In the case of an Incentive Stock Option held by an optionee who is
not permanently and totally disabled (within the meaning of Section
105(d)(4) of the Code) such Incentive Stock Option shall terminate
no more than three months after the termination of employment.
(b) In the case of an Incentive Stock Option held by an optionee who is
permanently and totally disabled (within the meaning of Section
105(d)(4) of the Code) such Incentive Stock Option shall terminate
12 months after the termination of employment.
(c) The foregoing notwithstanding, no option shall be exercisable after
its expiration date . Whether an authorized leave of absence or an
absence for military or governmental service shall constitute
termination of employment for the purposes of the Plan shall be
determined by the Committee, which determination shall be final,
conclusive and binding upon the affected optionee and any person
claiming under or through such optionee.
11. DEATH OF OPTIONEE
If an optionee dies while in the employ of the Corporation or of any
Subsidiary or after cessation of such employment but within the period
during which he or she could have exercised the option under Section 10
of the Plan, then the option may be exercised by the executors or
administrators of the optionee's estate or by any person or persons who
have acquired the option directly from the optionee by bequest or
inheritance, within 12 months after the termination of the optionee's
employment for Incentive Stock Options and within a period prescribed by
the Committee for Nonqualified Options provided, however, that no option
shall be exercisable after its expiration date.
12. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding options
granted under the Plan or accept the surrender of outstanding options (to
the extent not theretofore exercised) and authorized the granting of new
options in substitution therefor. Without limiting the generality of the
foregoing the Committee may grant to an optionholder, if he or she is
otherwise eligible and consents thereto, a new or modified option in lieu
of an outstanding option for a number of shares, at an exercise price and
for a term which are greater or lesser than under the earlier option, or
may do so by cancellation and regrant, amendment, substitution or
otherwise subject only to the general limitations and conditions of the
Plan. The foregoing notwithstanding, no modification of an option shall
without the consent of the optionee, alter or impair any rights or
obligations under any option theretofore granted under the Plan.
13. PERIOD IN WHICH OPTIONS MAY BE GRANTED
Options may be granted pursuant to the Plan at any time on or before (to
read ten years from Plan adoption).
14. AMENDMENT OR TERMINATION OF THE PLAN
The Board may at any time terminate, amend, modify or suspend the Plan,
provided that, without the approval of the stockholders of the
Corporation, no amendment or modification shall be made by the Board
which:
(a) Increases the maximum number of shares as to which options may be
granted under the Plan;
(b) Alters the method by which the option price is determined;
(c) Extends any option for a period longer than 10 years after the date
of grant;
(d) Materially modifies the requirements as to eligibility for
participation in the Plan; or
(e) Alters this Section 14 so as to defeat its purpose.
Further, no amendment, modification, suspension or termination of the
Plan shall in any manner affect any option theretofore granted under the
Plan without the consent of the optionee or any person validly claiming
under or through the optionee.
15. CHANGES IN CAPITALIZATION
(a) In the event that the shares of the Corporation, as presently
constituted, shall be changed into or exchanged for a different
number or kind of shares of stock or other securities of the
Corporation or of
AAA072C5 03/29/94 A-5
6
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or
otherwise) or if the number of such shares of stock shall be increased
through the payment of a stock dividend, then, subject to the provisions
of Subsection (c) below, there shall be substituted for or added to each
share of stock of the Corporation which was theretofore appropriated, or
which hereafter may become subject to an option under the Plan, the
number and kind of shares of stock or other securities into which each
outstanding share of the stock of the Corporation shall be so changed or
for which each such share shall be exchanged or to which each such share
shall be entitled, as the case may be. Outstanding options shall also be
appropriately amended as to price and other terms, as may be necessary to
reflect the foregoing events.
(b) If there shall be any other change in the number or kind of the
outstanding shares of the stock of the Corporation, or of any stock
or other securities into which such stock shall have been changed,
or for which it shall have been exchanged, and if the Board or the
Committee (as the case may be), shall in its sole discretion,
determine that such change equitably requires an adjustment in any
option which was theretofore granted or which may thereafter be
granted under the Plan, then such adjustment shall be made in
accordance with such determination.
(c) A dissolution or liquidation of the Corporation, or a merger or
consolidation in which the Corporation is not the surviving
corporation, shall cause each outstanding option to terminate,
except to the extent that another corporation may and does in the
transaction assume and continue the option or substitute its own
options. In either event, the Board or the Committee (as the case
may be) shall have the right to accelerate the time within which the
option may be exercised.
(d) Fractional shares resulting from any adjustment in options pursuant
to this Section 15 may be settled as the Board or the Committee (as
the case may be) shall determine.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee whose determination in that respect shall be final,
binding and conclusive. Notice of any adjustment shall be given by
the Corporation to each holder of an option which shall have been so
adjusted.
(f) The grant of an option pursuant to the Plan shall not affect in any
way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure to merge, to consolidate, to dissolve, to
liquidate or to sell or transfer all or any part of its business or
assets.
16. LISTING AND REGISTRATION OF SHARES
(a) No option granted pursuant to the Plan shall be exercisable in whole
or in part if at any time the Board of the Committee (as the case
may be) shall determine in its discretion that the listing,
registration or qualification of the shares of Common Stock subject
to such option on any securities exchange or under any applicable
law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with,
the granting of such option or the issue of shares thereunder,
unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions
not acceptable to the Board.
(b) If a registration statement under the Securities Act of 1933 with
respect to the shares issuable upon exercise of any option granted
under the Plan is not in effect at the time of exercise, as a
condition of the issuance of the time of exercise, as a condition of
the issuance of the shares the person exercising such option shall
give the Committee a written statement, satisfactory in form and
substance to the Committee, that he or she is acquiring the shares
for his or her own account for investment and not with a view to
their distribution. The Corporation may place upon any stock
certificate for shares issuable upon exercise of such option the
following legend or such other legend as the Committee may prescribe
to prevent disposition of the shares in violation of the Securities
Act of 1933 or other applicable law:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 ("ACT") AND MAY
NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT
AAA072C5 03/29/94 A-6
7
WITH RESPECT TO THEM UNDER THE ACT OR A WRITTEN OPINION OF COUNSEL FOR
KEY BANKS INC. THAT REGISTRATION IS NOT REQUIRED."
17. PLAN EFFECTIVE DATE
The Plan will be submitted to the Corporation shareholders for their
approval at the shareholders meeting to be held on April 18, 1984 and, if
approved by a majority vote of the shareholders, will become effective
upon such approval. Unless sooner terminated by the Board, the Plan will
terminate ten years from its effective date and no options may be granted
under the Plan after such termination date.
AAA072C5 03/29/94 A-7