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KEYCORP
1988 STOCK OPTION PLAN
(As Amended by the Shareholders on April 26, 1990,
and on April 23, 1992)
1. PURPOSES OF THE PLAN
The purpose of the KeyCorp 1988 Stock Option Plan is to provide a method
by which those employees of KeyCorp 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 KeyCorp, thus increasing their proprietary interest in the
business, providing them with greater incentive for their continued
employment, and promoting the interests of KeyCorp and all of its
shareholders. Accordingly, KeyCorp will, from time to time during the
term of the Plan, grant to such key employees as may be selected, in the
manner provided in the Plan, options to purchase shares of Common Stock
of KeyCorp and stock appreciation rights for use in connection with the
stock options, subject to the conditions provided in the Plan.
2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms have
the meanings set forth below.
(a) "BOARD OF DIRECTORS" or "BOARD" means the Board of Directors of
KeyCorp.
(b) "CODE" means the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" means the Compensation Committee of the Board of
Directors of KeyCorp as described in Section 3 of the Plan.
(d) "COMMON STOCK" means the Common Stock of KeyCorp, $5.00 par
value.
(e) "GRANT DATE," as used with respect to a particular Option, means
the date as of which such Option is granted by the Board or
Committee pursuant to the Plan.
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(f) "INCENTIVE STOCK OPTION" means an Option that qualifies as an
Incentive Stock Option as described in Section 422 of the Code.
(g) "NON-QUALIFIED STOCK OPTION" means any Option granted under the
Plan other than Incentive Stock Option.
(h) "OPTION" means an option granted pursuant to Section 5 of the
Plan to purchase shares of Common Stock and which shall be
designated as either an Incentive Stock Option or a
Non-Qualified Stock Option.
(i) "OPTIONEE" means an individual to whom an Incentive Stock Option
or Non-Qualified Stock Option or Right is granted pursuant to
the Plan.
(j) "PLAN" means the KeyCorp 1988 Stock Option Plan as set forth
herein and as may be amended from time to time.
(k) "RIGHT" means a stock appreciation right granted under Section 7
of the Plan.
(l) "SUBSIDIARY" means any stock corporation of which a majority of
the voting common or capital stock is owned, directly or
indirectly, by KeyCorp and any other company designated as such
by the Committee, but only during the period of such ownership
or designation.
(m) "TOTAL AND PERMANENT DISABILITY," as applied to an Optionee,
means that the Optionee has (1) established to the satisfaction
of KeyCorp that the Optionee 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 or which has lasted or can be expected to
last for a continuous period of not less than twelve months, all
within the meaning of Section 22(e)(3) of the Code, and (2)
satisfied any requirement imposed by the Committee.
3. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee, which shall be
comprised of three or more Directors who are appointed by the
Board of Directors and selected from those Directors who are not
employees of KeyCorp or a Subsidiary. The
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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 the Committee's
members as Chairman. The Committee 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 KeyCorp's By-Laws 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 or Rights under the Plan while a member
of the Committee.
(b) 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.
(c) 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 or Right granted
under the Plan. The fact that a member of the Board who is not
then a member of the Committee 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 or Right 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,
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provided that such vote shall be in accordance with the recommendations
of the Committee.
4. STOCK SUBJECT TO THE PLAN
(a) The Common Stock to be issued or transferred under the Plan will
be KeyCorp 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 KeyCorp,
including shares purchased in the open market. The maximum
number of shares of Common Stock upon which Options may be
granted in each year under this Plan shall not exceed 2 percent
of the total issued and outstanding shares of Common Stock as of
December 31 of the next preceding year, as adjusted pursuant to
Section 15 of the Plan, provided, however, that for each year in
which the Plan is in effect, no more than 750,000 of the total
issued and outstanding shares of Stock shall be available for
the grant of Incentive Stock Options under this Plan. Unused
grant capacity shall not cumulate from one year to the next.
(b) In the event that any outstanding Option or Right under the Plan
for any reason expires or is terminated, the shares of Common
Stock allocable to the unexercised portion of such Option or
Right may again be made subject to Option or Right under the
Plan.
5. GRANT OF OPTIONS
The Committee may from time to time, subject to the provisions of the
Plan, grant Options to key employees of KeyCorp or of a Subsidiary to
purchase shares of Common Stock allotted in accordance with Section 4 of
the Plan. The Committee may designate any Option granted as either an
incentive Stock Option or a Non-Qualified Stock Option, or the Committee
may designate a portion of the Option as an Incentive Stock Option and
the remaining portion as a Non-Qualified Stock Option. If an Optionee
exercises an Option, then at the discretion of the Committee or pursuant
to the terms of the original Option, the Optionee may receive a
replacement Option to purchase a number of shares of Common Stock
determined by the Committee or the terms of the original Option, with an
option price determined under Section 6 of the Plan as of the date of
exercise of the original Option and with a term extending to the
expiration date of the original Option.
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6. OPTION PRICE
The purchase price per share of any Option granted under the Plan 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 the fair market value in the case of an
Incentive Stock Option granted to an individual described in subsection
8(b) of the Plan. For purposes of the Plan, the fair market value of a
share of Common Stock shall be equal to the highest closing price of one
share of Common Stock as reported for consolidated trading on the New
York Stock Exchange (or such other national securities exchange on which
the Common Stock may be principally traded) on the date the Option is
granted, or if no sale of Common Stock has been made on any securities
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. During such time as Common Stock is not listed on a national
securities exchange, fair market value per share shall be the mean
between the closing dealer "bid" and "ask" prices for Common Stock as
quoted by National Association of Securities Dealers Automated Quotation
System for the day of the grant, and if no "bid" and "ask" prices are
quoted for the day of grant, the fair market value shall be determined
by reference to such prices on the next preceding day on which such
prices were quoted. In the event that Common Stock is not traded on a
national securities exchange, and no closing dealer "bid" and "ask"
prices are available, then the fair market value of one share of Common
Stock on the day the Option is granted shall be determined by the
Committee or by the Board. The purchase price shall be subject to
adjustment only as provided in Section 15 of the Plan.
7. GRANT OF RIGHTS
The Committee may, at any time and in its discretion, grant to any
employee of KeyCorp or any of its subsidiaries who is awarded or who
holds an outstanding Option or any other outstanding stock option
granted by KeyCorp, the right to surrender such Option (to the extent
any Option or such other stock option is otherwise exercisable) and to
receive from KeyCorp an amount equal to the excess, if any, of the fair
market value of the Common Stock with respect to which such Option is
surrendered on the date of such surrender over the option price of the
Option or other stock option surrendered. Payment of KeyCorp of the
amount receivable upon any exercise of a Right may be made by
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delivery of Common Stock, or cash, or any combination of Common Stock
and cash, as determined in the sole discretion of the Committee from
time to time. No fractional shares shall be issued. The Committee may
provide for the elimination of fractional shares of Common Stock
delivered to the Optionee without adjustment or for the payment of the
value of such fractional shares in cash. Shares of KeyCorp Common Stock
delivered to the Optionee upon the exercise of a Right, and the
surrender of the Option or stock option, shall be valued at the fair
market value (determined pursuant to Section 6) of a share of Common
Stock on the date the right is exercised and the Option or stock option
is surrendered. The Committee may limit the period or periods during
which the Rights may be exercised and may provide such other terms and
conditions (which need not be the same with respect to each Optionee)
under which a Right may be granted and/or exercised. A Right may be
exercised only as long as the related Option or stock option is
exercisable. In no event may a Right be exercised more than ten years
after the date of the grant of the related Option or stock option. A
right may not be granted with respect to an Incentive Stock Option at
any time other than at the same time the Incentive Stock Option is
granted. Rights granted with respect to Incentive Stock Options (a)
shall expire no later than the expiration of the underlying Option, (b)
shall be for no more than the difference between the exercise price of
the underlying option and the market price of the stock subject to the
underlying option at the time the right is exercised, (c) shall be
transferrable only when the underlying Option is transferrable and under
the same conditions, (d) shall be exercisable only when the underlying
Option is exercisable, and (e) shall be exercisable only when the market
price of the stock subject to the underlying Option exceeds the exercise
price of the Option.
8. ELIGIBILITY OF OPTIONEES
(a) Options and Rights shall be granted only to persons who are key
employees of KeyCorp or of a Subsidiary as determined by the
Committee at the time of grant. The term "employees" shall
include persons who are Directors or Officers who are also
employees of KeyCorp or of any Subsidiary.
(b) Any other provision of the Plan notwithstanding, an individual
who owns more than ten percent of the total combined voting
power of all classes of outstanding Common Stock of KeyCorp or
any
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Subsidiary shall not be eligible for the grant of an Incentive
Stock Option unless the special requirements set forth in
Sections 6 and 10(a) of the Plan are satisfied. For purposes of
this subsection (b), 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 another person.
(c) Subject to the terms, provisions, and conditions of the Plan and
subject to review by the Board, the Committee shall have
exclusive jurisdiction to (1) select the key employees to be
granted Options or Rights (it being understood that more than
one Option or Right may be granted to the same person), (2)
determine the number of shares subject to each Option or Right,
(3) determine the date or dates when the Options or Rights will
be granted, (4) determine the purchase price of the shares
subject to each Option in accordance with Section 6 of the Plan,
(5) determine the date or dates when each Option or Right may be
exercised within the term of the Option specified pursuant to
Section 10 of the Plan, (6) determine whether or not an Option
constitutes an Incentive Stock Option, and (7) prescribe the
form, which shall be consistent with the Plan, of the documents
evidencing any Options or Rights granted under the Plan.
(d) Neither anything contained in the Plan or in any document under
the Plan nor the grant of any Option or Right under the Plan
shall confer upon any Optionee any right to continue in the
employ of KeyCorp or of any Subsidiary or limit in any respect
the right of Key Corp or of any Subsidiary to terminate the
Optionee's employment at any time and for any reason.
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9. NON-TRANSFERABILITY
No Option or Right granted under the Plan shall be assignable or
transferable by the Optionee other than by will or the laws of descent
and distribution; and during the lifetime of an Optionee, the Option
shall be exercisable only by such Optionee.
10. TERM AND EXERCISE OF OPTIONS AND RIGHTS
(a) Each Option or Right granted under the Plan shall terminate on
the date determined by the Committee and specified in the Option
Agreement, provided that each Option shall terminate not later
than ten years after the date of grant. However, any Option
designated as an Incentive Stock Option granted to a more than
ten percent shareholder shall terminate not later than five
years after the date of grant. The Committee, at its
discretion, may provide further limitations on the
exercisability of Options or rights granted under the Plan. An
Option or Right may be exercised only during the continuance of
the Optionee's employment, except as provided in Section 11 of
the Plan.
(b) A person electing to exercise an Option or Right shall give
written notice to KeyCorp, in such form as the Committee shall
have prescribed or approved, of such election and of the number
of shares he or she has elected to purchase and shall at the
time of exercise tender the full purchase price of any shares he
or she has elected to purchase. The purchase price upon the
exercise of an Option shall be paid in full in cash, 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 KeyCorp 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
then 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). However, if an Optionee pays the
Option exercise price of a Non-Qualified Stock Option in whole
or in part in the form of unrestricted Common Stock already
owned by the Optionee, KeyCorp may require that the Optionee
have owned the stock for a period of time that would not cause
the exercise to create a
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charge to KeyCorp's earnings. Such provision may be used by
KeyCorp to prevent a pyramid exercise. As conditions to
exercising an Option or a Right, the holder must (1) arrange to
pay to KeyCorp any amount required to be withheld under any tax
law on the account of the exercise, and (2) in the case of an
Incentive Stock Option, agree to notify KeyCorp of any
disqualifying disposition (as defined in Section 421 of the
Code) of the Common Stock acquired upon the exercise and agree
to pay to KeyCorp any amount required to be withheld under any
tax law on account of the disposition. Any payment on account
of withholding taxes shall be made in a form acceptable to
the Committee.
(c) An Optionee or a transferee of an Option shall have no rights as
a shareholder with respect to any shares covered by his or her
Option or Right 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 of the
Plan.
(d) A person may, in accordance with the other provisions of the
Plan, elect to exercise Options or Rights in any order,
notwithstanding the fact that Options or Rights granted to him
or her prior to the grant of the Options or Rights selected for
exercise are unexpired.
11. TERMINATION OF EMPLOYMENT
If an Optionee severs from all employment with KeyCorp and/or its
Subsidiaries, any Option or Right granted to him or her under the Plan
shall terminate as follows:
(a) An Option or Right held by an Optionee who is permanently and
totally disabled within the meaning of Section 22(e)(3) of the
Code shall terminate upon its expiration date;
(b) An Option or Right held by an Optionee shall be exercisable
within a period of one year from the date of Optionee's death by
the executor or
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administrator of the Optionee's estate or by the person to whom
the Optionee shall have transferred such right by last Will and
Testament or by the laws of descent or distribution;
(c) An Option or Right held by an Optionee who terminates for cause,
as determined by the Committee, shall expire immediately upon
the date of termination unless some other expiration date is
fixed by the Committee; and
(d) An Option or Right held by an Optionee who terminates for any
reason other than those specified in subsections (a), (b), or
(c) above shall expire three months after the date of
termination unless a later expiration date is fixed by the
Committee.
The foregoing notwithstanding, no Option or Right 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
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.
Termination or employment with any subsidiary of KeyCorp in order to
accept employment with another subsidiary of KeyCorp or while remaining
an employee of KeyCorp or of any of its subsidiaries shall not be a
termination of employment for the purposes of this Section 11.
12. MODIFICATION, EXTENSION, AND RENEWAL
Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend, or renew outstanding Options or
Rights (to the extent not theretofore exercised) and authorize the
granting of new Options or Rights in substitution therefor. Without in
any way limiting the generality of the foregoing, the Committee may
grant to an Optionee, if he or she is otherwise eligible and consents
thereto, a new or modified Option or Right in lieu of an outstanding
Option or Right for a number of shares at an exercise price and for a
term which are greater or less than under the earlier Option or Right or
may do so by cancellation and re-grant, amendment, substitution, or
otherwise subject only to the general limitations and conditions of the
Plan. The foregoing notwithstanding, no modification of an Option or
Right
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shall, without the consent of the Optionee, alter or impair any rights
or obligations under any Option or Right theretofore granted under the
Plan.
13. PERIOD IN WHICH GRANTS MAY BE MADE
Options and Rights may be granted pursuant to the Plan at any time on or
before April 26, 2000.
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 shareholders of KeyCorp, no
amendment or modification shall be made by the Board which (a) increases
the maximum number of shares as to which Options or Rights may be
granted under the Plan; (b) alters the method by which the Option price
is determined; (c) extends any Option or Right for a period longer than
ten years after the date of the 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 or Right 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 KeyCorp, as presently
constituted, shall be changed into or exchanged for a different
number or kind of shares of stock or other securities of KeyCorp
or of 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 KeyCorp which was theretofore appropriated or which
thereafter may become subject to an Option or Right under the
Plan the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock of KeyCorp
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 and Rights shall also be
appropriately amended as to price and
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other terms as may be necessary to reflect the foregoing events.
The maximum number of shares of Common Stock upon which Options
and Incentive Stock Options may be granted, as provided in
Section 4(a) of the Plan, shall be proportionately adjusted to
reflect any of the foregoing events.
(b) If there shall be any other change in the number or kind of
outstanding shares of stock of KeyCorp, 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 or Right 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 KeyCorp or a merger or
consolidation in which KeyCorp is not the surviving corporation
shall cause each outstanding Option and Right 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 or Right may be exercised.
(d) Fractional shares resulting from any adjustment in Options or
Rights 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 KeyCorp, 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 KeyCorp to each holder of an Option or Right which
shall have been so adjusted.
(f) The grant of an Option or Right pursuant to the Plan shall not
affect in any way the right or power of KeyCorp to make
adjustments, reclassifications, reorganizations, or changes of
its capital or business structure or to merge, consolidate,
dissolve, liquidate, sell, or transfer all or any part of its
business or asset.
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16. LISTING AND REGISTRATION OF SHARES
(a) No Option or Right granted pursuant to the Plan shall be
exercisable in whole or in part if at any time the Board or 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 or Right 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 Right 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 shares issuable upon exercise of any Option or
Right granted under the Plan is not in effect at the time of
exercise, the person exercising such Option or Right 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 disposition. KeyCorp may place upon any Stock
Certificate for shares issuable upon exercise of such Option or
Right such legend as the Committee may prescribe to prevent
disposition of the shares in violation of the Securities Act of
1933 or any other applicable law.
17. EFFECTIVE DATE OF PLAN
The Plan was approved by KeyCorp's shareholders at the Annual Meeting of
Shareholders held on April 23, 1992, and became effective on that date.
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