Contract

EXHIBIT 10.13 2004 EQUITY COMPENSATION PLAN 1. PURPOSE. The KeyCorp 2004 Equity Compensation Plan is intendedto promote the interests of the Corporation and its shareholders byproviding equity-based incentives for effective service and high levelsof performance to Employees selected by the Committee. To achieve thesepurposes, the Corporation may grant Awards of Options, Stock AppreciationRights, Restricted Stock, Restricted Stock Units, Performance Shares andPerformance Units to selected Employees, all in accordance with the termsand conditions hereinafter set forth. 2. DEFINITIONS. 2.1 1934 ACT. The term “1934 Act” shall mean the Securities Exchange Actof 1934, as amended. 2.2 ACQUISITION PRICE. The term “Acquisition Price” with respect toRestricted Stock and Restricted Stock Units shall mean such amount, if any,required by applicable law or as may be otherwise specified by the Committee inthe Award Instrument with respect to the Restricted Stock or Restricted StockUnits as the consideration to be paid by the Employee for the Restricted Stockor Restricted Stock Units. 2.3 AWARD. The term “Award” shall mean an award granted under the Plan ofOptions, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units,Performance Shares, or Performance Units. 2.4 AWARD INSTRUMENT. The term “Award Instrument” shall mean a writteninstrument evidencing an Award in such form and with such provisions as theCommittee may prescribe, including, without limitation, an agreement to beexecuted by the Employee and the Corporation, a certificate issued by theCorporation, or a letter executed by the Committee or its designee. An AwardInstrument may also be in an electronic medium. Acceptance of the AwardInstrument by an Employee constitutes agreement to the terms of the Awardevidenced thereby. 2.5 BASE PRICE. The term “Base Price” with respect to a Free-Standing SARshall mean the price specified in an Award of Free-Standing SARs to be used asthe basis for determining the amount to which a holder of a Free-Standing SARis entitled upon the exercise of a Free-Standing SAR. 2.6 CHANGE OF CONTROL. A “Change of Control” shall be deemed to haveoccurred 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 subsidiaryof another corporation if any other corporation (which term shall include, inaddition to a corporation, a limited liability company, partnership, trust, orother organization) owns, directly or indirectly, 50 percent or more of thetotal combined outstanding voting power of all classes of stock of theCorporation 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 Committeeof the Board of Directors of the Corporation or such other committee orsubcommittee as may be designated by the Board of Directors of the Corporationfrom time to time. 2.8 COMMON SHARES. The term “Common Shares” shall mean common shares ofthe Corporation, with a par value of $1 each. 2.9 CORPORATION. The term “Corporation” shall mean KeyCorp and itssuccessors, including the surviving or resulting corporation of any merger ofKeyCorp with or into, or any consolidation of KeyCorp with, any othercorporation or corporations. 2.10 COVERED EMPLOYEE. The term “Covered Employee” shall mean an Employeewho is, or is determined by the Committee to be likely to become, a “coveredemployee” within the meaning of Section 162(m) of the Internal Revenue Code of1986, as amended. 2.11 DISABILITY. The term “Disability” with respect to an Employee shallmean physical or mental impairment which entitles the Employee to receivedisability payments under any long-term disability plan maintained by theCorporation. 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 theCorporation. 2.13 EMPLOYEE. The term “Employee” shall mean any individual employed bythe Corporation or by any Subsidiary and shall include officers as well as allother employees of the Corporation or of any Subsidiary (including employeeswho are members of the Board of Directors of the Corporation or anySubsidiary). 2.14 EMPLOYMENT TERMINATION DATE. The term “Employment Termination Date”with respect to an Employee shall mean the first date on which the Employee isno longer employed by the Corporation or any Subsidiary. 2.15 EXERCISE PRICE. The term “Exercise Price” with respect to an Optionshall mean the price specified in the Option at which the Common Shares subjectto the Option may be purchased by the holder of the Option. 2.16 FAIR MARKET VALUE. Except as otherwise determined by the Committeeat the time of the grant of an Award, the term “Fair Market Value” with respectto Common Shares shall mean: (a) if the Common Shares are traded on a nationalexchange, the mean between the high and low sales price per Common Share onthat national exchange on the date for which the determination of fair marketvalue is made or, if there are no sales of Common Shares on that date, then onthe 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 betweenthe 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. andNASDAQ 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 precedingdate on which there were any sales of Common Shares. 2.17 FREE-STANDING STOCK APPRECIATION RIGHT. The term “Free-StandingStock Appreciation Right” or “Free-Standing SAR” shall mean an Award granted toan Employee that is not granted in tandem with an Option that entitles theholder 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 grantof the Award, of the excess, if any, measured at the time of the exercise ofthe Free-Standing SAR, of (a) the Fair Market Value of the Common Sharesunderlying the Free-Standing SARs being exercised over (b) the aggregate BasePrice of those Common Shares underlying the Free-Standing SARs being exercised. 2.18 INCENTIVE STOCK OPTION. The term “Incentive Stock Option” shall meanan 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, asamended. 2.19 LIMITED STOCK APPRECIATION RIGHT. The term “Limited StockAppreciation Right” or “Limited SAR” shall mean an Award granted to an Employeewith respect to all or any part of any Option, that entitles the holder thereofto receive from the Corporation, upon exercise of the Limited SAR and surrenderof the related Option, or any portion of the Limited SAR and the relatedOption, an amount equal to (unless the Committee specifies a lesser amount atthe 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 anOption 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 holderthereof to purchase a specified number of Common Shares at a specified priceduring a specified period of time. 2.22 OPTION EXPIRATION DATE. The term “Option Expiration Date” withrespect to any Option shall mean the date selected by the Committee afterwhich, except as provided in Section 11.4 in the case of the death of theEmployee to whom the option was granted, the Option may not be exercised. 2.23 PERFORMANCE GOAL. The term “Performance Goal” shall mean aperformance goal specified by the Committee in connection with the potentialgrant of Performance Shares or Performance Units, or when so determined by theCommittee, Options, SARs, Restricted Stock, and dividend credits pursuant tothis Plan. Performance Goals may be described in terms of objectives that arerelated to the performance by the Corporation, by any Subsidiary, or by anyEmployee or group of Employees in connection with services performed by thatEmployee or those Employees for the Corporation, a Subsidiary, or any one ormore subunits of the Corporation or of any Subsidiary. The Performance Goalsmay be made relative to the performance of other corporations. The PerformanceGoals applicable to any award to a Covered Employee will be based on, anddescribed in terms of specified levels of, growth in, or ratios involving, oneor 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 inwhich it conducts its business, or other events or circumstances render thePerformance Goals unsuitable, the Committee may in its discretion modify suchPerformance Goals or the related minimum acceptable level of achievement, inwhole or in part, as the Committee deems appropriate and equitable, except inthe case of a Covered Employee where such action would result in the loss ofthe otherwise available exemption of the Award under Section 162(m) of theInternal Revenue Code of 1986, as amended. In such case, the Committee willnot make any modification of the Performance Goals or minimum acceptable levelof achievement. 2.24 PERFORMANCE PERIOD. The term “Performance Period” shall mean suchone 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 morePerformance Goals will be relevant in connection with one or more Awards ofPerformance Shares or Performance Units. 2.25 PERFORMANCE SHARES. The term “Performance Shares” shall mean anAward denominated in Common Shares and contingent upon attainment of one ormore Performance Goals by the Corporation or a Subsidiary or any subunit of theCorporation or of any Subsidiary over a Performance Period. 2.26 PERFORMANCE UNITS. The term “Performance Units” shall mean abookkeeping entry that records a unit equal to $1.00 awarded pursuant toSection 10 of this Plan, which are contingent upon attainment of one or morePerformance Goals by the Corporation or a Subsidiary or any subunit of theCorporation or of any Subsidiary over a Performance Period. 2.27 PLAN. The term “Plan” shall mean this KeyCorp 2004 EquityCompensation Plan as from time to time hereafter amended in accordance withSection 21.1. 2.28 RESTRICTED STOCK. The term “Restricted Stock” shall mean CommonShares of the Corporation delivered to an Employee pursuant to an Award subjectto such restrictions, conditions and contingencies as the Committee may providein the relevant Award Instrument, including (a) the restriction that theEmployee not sell, transfer, otherwise dispose of, or pledge or otherwisehypothecate the Restricted Stock during the applicable Restriction Period, (b)the requirement that the Restriction Period will terminate or terminate earlyupon achievement of specified Performance Goals, (c) the requirement that,subject to the provisions of Section 11, if the Employee’s employmentterminates so that the Employee is no longer employed by the Corporation or anySubsidiary before the end of the applicable Restriction Period, the Employeewill offer to sell to the Corporation at the Acquisition Price each CommonShare of Restricted Stock held by the Employee at the Employment TerminationDate with respect to which, as of that date, any restrictions, conditions, orcontingencies have not lapsed, and (d) such other restrictions, conditions, andcontingencies, if any, as the Committee may provide in the Award Instrumentwith respect to that Restricted Stock. 2.29 RESTRICTED STOCK UNITS. The term “Restricted Stock Units” shall meanan Award pursuant to Section 9 of this Plan, whereby an Employee receives theright to receive Common Shares or the cash equivalent thereof at a specifiedtime in the future in consideration of the performance of services, but subjectto such restrictions, conditions and contingencies as the Committee may providein the relevant Award Instrument. 2.30 RESTRICTION PERIOD. The term “Restriction Period” with respect to anAward of Restricted Stock shall mean the period selected by the Committee andspecified in the Award Instrument with respect to that Restricted Stock duringwhich the Employee may not sell, transfer, otherwise dispose of, or pledge orotherwise 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 willinclude Tandem Stock Appreciation Rights, Limited Stock Appreciation Rights andFree-Standing Stock Appreciation Rights. 2.32 SUBSIDIARY. The term “Subsidiary” shall mean any corporation,partnership, joint venture, or other business entity in which the Corporationowns, directly or indirectly, 50 percent or more of the total combined votingpower of all classes of stock (in the case of a corporation) or other ownershipinterest (in the case of any entity other than a corporation). 2.33 TANDEM STOCK APPRECIATION RIGHT. The term “Tandem Stock AppreciationRight “or “Tandem SAR” shall mean an Award granted to an Employee with respectto all or any part of any Option that entitles the holder thereof to receivefrom the Corporation, upon exercise of the Tandem SAR and surrender of therelated Option, or any portion of the Tandem SAR and the related Option, anamount equal to 100%, or such lesser percentage as the Committee may determineat the time of the grant of the Award, of the excess, if any, measured at thetime of the exercise of the Tandem SAR, of (a) the Fair Market Value of theCommon Shares subject to the Option with respect to which the Tandem SAR isexercised over (b) the Exercise Price of those Common Shares under the Option. 2.34 TRANSFEREE. The term “Transferee” shall mean, with respect toNonqualified Options only, any person or entity to which an Employee ispermitted by the Committee to transfer or assign all or part of his or herOptions. 3. ADMINISTRATION. The Plan shall be administered by theCommittee. No Award may be made under the Plan to any member oralternate member of the Committee. The Committee shall have authority,subject to the terms of the Plan, (a) to determine the Employees who areeligible to participate in the Plan, the type, size, and terms of Awardsto be granted to any Employee, the time or times at which Awards shall beexercisable or at which restrictions, conditions, and contingencies shalllapse, and the terms and provisions of the instruments by which Awardsshall 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 necessaryfor the administration of the Plan. The construction and interpretation by the Committee of any provision ofthe Plan or any Award Instrument delivered pursuant to the Plan and anydetermination by the Committee pursuant to any provision of the Plan or anyAward Instrument shall be final and conclusive. No member or alternate memberof the Committee shall be liable for any such action or determination made ingood faith. The Committee may act only by a majority of its members. Anydetermination of the Committee may be made, without a meeting, by a writing orwritings signed by all of the members of the Committee. In addition, theCommittee may authorize any one or more of their number or any officer of theCorporation to execute and deliver documents on behalf of the Committee and theCommittee may delegate to one or more employees, agents, or officers of theCorporation, or to one or more third party consultants, accountants, lawyers,or other advisors, such ministerial duties related to the operation of the Planas it may deem appropriate. 4. ELIGIBILITY. Awards may be granted to Employees of theCorporation or any Subsidiary selected by the Committee in its solediscretion. The granting of any Award to an Employee shall not entitlethat Employee to, nor disqualify the Employee from, participation in anyother grant of an Award. 5. STOCK SUBJECT TO THE PLAN. 5.1 TYPE OF STOCK. The stock that may be issued and distributed toEmployees in connection with Awards granted under the Plan shall be CommonShares and may be authorized and unissued Common Shares, treasury CommonShares, or Common Shares acquired on the open market specifically fordistribution under the Plan, as the Board of Directors may from time to timedetermine. 5.2 NUMBER OF SHARES AVAILABLE. Subject to adjustment as provided inSection 5.3 and Section 14 of this Plan, the number of Common Shares that maybe issued or transferred (a) upon the exercise of Options or Stock AppreciationRights, (b) as Restricted Stock and released from a substantial risk offorfeiture thereof, (c) in payment of Restricted Stock Units, (d) in payment ofPerformance Shares or Performance Units that have been earned, (e) in paymentof 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 EffectiveDate, shall not exceed in the aggregate 70,000,000 Common Shares, plus anyshares described in Section 5.3. 5.3 ADJUSTMENTS. The number of shares available in Section 5.2 aboveshall be adjusted to account for shares relating to any awards that expire orare forfeited or that are transferred, surrendered or relinquished upon thepayment of any exercise price by the transfer to the Corporation of CommonShares or upon satisfaction of any withholding amount, regardless of whethersuch expiration, forfeiture, transfer, surrender or relinquishment relates toawards 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 benefitprovided by any award granted under this Plan or under any other plan of theCorporation, at any time before or after the Effective Date, any shares thatwere covered by that award shall again be available for issue or transferhereunder. 5.4 LIMITS. Notwithstanding anything in this Section 5, or elsewhere inthis Plan to the contrary and subject to adjustment as provided in Section 14of 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 lessthan the Fair Market Value of the Common Shares subject to the Option on thedate the Option is granted. 6.3 OPTION EXPIRATION DATE. The Option Expiration Date under any Optionshall 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 Employeeor, with respect to Nonqualified Options, any Transferee, the Exercise Priceshall be payable by the Employee or Transferee in cash or in such other form ofconsideration as the Committee determines may be accepted, including withoutlimitation, securities or other property, or any combination of cash,securities or other property or, to the extent permitted by applicable law, bydelivery by the Employee or Transferee (with the written notice of election toexercise) of irrevocable instructions to a broker registered under the 1934 Actpromptly to deliver to the Corporation the amount of sale or loan proceeds topay the Exercise Price. The Committee, in its sole discretion, may grant to anEmployee or, with respect to Nonqualified Options, any Transferee the right totransfer Common Shares acquired upon the exercise of a part of an Option inpayment of the Exercise Price payable upon immediate exercise of a further partof the Option. 6.6 CONVERSION OF INCENTIVE STOCK OPTIONS. The Committee may at any timein its sole discretion take such actions as may be necessary to convert anyoutstanding Incentive Stock Option (or any installments or portions ofinstallments thereof) into a Nonqualified Option with or without the consent ofthe Employee to whom that Incentive Stock Option was granted and whether or notthat Employee is an Employee at the time of the conversion. 6.7 DIVIDEND EQUIVALENTS. The Committee may, at or after the date onwhich an Option is granted, provide for the payment of dividend equivalents tothe holder of the Option on either a current or deferred or contingent basis ormay 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 bepaid by the Corporation in cash or in whole Common Shares (taken at their FairMarket Value at the time of exercise of the SAR) or in a combination of cashand whole Common Shares and may either grant to the Employee or retain in theCommittee the right to elect among those alternatives; provided, however, thatin no event shall the total number of Common Shares that may be paid to anEmployee pursuant to the exercise of a Tandem SAR or Limited SAR exceed thetotal number of Common Shares subject to the related Option. 7.4 TERMINATION, AMENDMENT, OR SUSPENSION OF SARS. SARs shall terminateand may no longer by exercised upon the first to occur of (a) with respect toTandem SARs and Limited SARs, the exercise or termination of the relatedOption, (b) any termination date specified by the Committee at the time ofgrant of the SAR, or (c) with respect to Tandem SARs and Limited SARs, thetransfer by the Employee of the related Option. In addition, the Committee mayin its sole discretion at any time before the occurrence of a Change of Controlamend, suspend, or terminate any SAR theretofore granted under the Plan withoutthe holder’s consent; provided that, in the case of amendment, no provision ofthe 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 ofRestricted Stock is made shall pay the Acquisition Price, if any, with respectto that Restricted Stock to the Corporation not later than 30 days after thedelivery to the Employee of the Award Instrument with respect to thatRestricted Stock. If any Employee fails to pay any Acquisition Price withrespect to an Award of Restricted Stock within that 30 day period, theEmployee’s right under that Award shall be forfeited. 8.3 RIGHTS AS A SHAREHOLDER. Upon payment by an Employee in full of theAcquisition Price for Restricted Stock under an Award, the Employee shall haveall of the rights of a shareholder with respect to theRestricted Stock, including voting and dividend rights, subject only to suchrestrictions and requirements referred to in Section 8.1 as may be incorporatedin 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 eachEmployee who is entitled to payment for Restricted Stock Units an amount forthose Restricted Stock Units (a) in cash, (b) in Common Shares, or (c) anycombination of the foregoing, and may either grant to the Employee or retain inthe Committee the right to elect among those alternatives. 9.3 RIGHTS AS A SHAREHOLDER. During any time that the Restricted StockUnits are outstanding, the Employee shall have no right to transfer any rightsunder his or her Award, shall have no rights of ownership in the Common Sharesdeliverable upon payment of the Restricted Stock Units and shall have no rightto vote them, but the Committee may, at or after the date on which theRestricted Stock Units are granted, authorize the payment of dividendequivalents on such Common Shares underlying the Restricted Stock Units oneither a current or deferred or contingent basis, either in cash or inadditional Common Shares. 10.PERFORMANCE SHARES AND PERFORMANCE UNITS. 10.1 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE SHARES ANDPERFORMANCE UNITS. The Committee shall have full discretion to select theEmployees to whom Awards of Performance Shares and Performance Units are made,the number of Performance Shares or Performance Units to be granted to anyEmployee so selected, the kind and level of the Performance Goals and whetherthose Performance Goals are to apply to the Corporation, a Subsidiary, or anyone or more subunits of the Corporation or of any Subsidiary, and the dates onwhich each Performance Period shall begin and end, and to determine the formand provisions of the Award Instrument to be used in connection with any Awardof 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. TheCorporation shall pay each Employee who is entitled to payment for PerformanceShares or Performance Units earned with respect to any Performance Period anamount 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) anycombination of the foregoing, and may either grant to the Employee or retain inthe Committee the right to elect among those alternatives. Restricted Stockissued by theCorporation in payment of Performance Shares or Performance Units shall besubject to all the provisions of Section 8. 11. TERMINATION OF EMPLOYMENT. After an Employee’s EmploymentTermination Date, the rules set forth in this Section 11 shall apply.All factual determinations with respect to the termination of anEmployee’s employment that may be relevant under this Section 11 shall bemade by the Committee in its sole discretion. 11.1 TERMINATION OTHER THAN UPON DEATH, DISABILITY, OR CERTAINRETIREMENTS. Upon any termination of an Employee’s employment for any reasonother than the Employee’s retirement (under any retirement plan of theCorporation or of a Subsidiary) as provided in Section 11.2, disability asprovided 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 anEmployee’s employment with the Corporation or any Subsidiary undercircumstances entitling the Employee to immediate payment of normalretirement or early retirement benefits under any retirement plan of theCorporation or of a Subsidiary (whether the Employee elects to commence or deferreceipt 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’semployment 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 employedby the Corporation or any Subsidiary or within any of the periods referred toin any Section 11.1, 11.2, or 11.3 during which any particular Option or SARremains 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 inthe relevant Award Instrument, upon the occurrence of a Change of Control ofthe Corporation, each Award theretofore granted to any Employee that thenremains outstanding shall be automatically treated as follows: (a) anyoutstanding Option shall become immediately exercisable in full, (b) TandemSARs and Limited SARs related to any such Options shall also become immediatelyexercisable in full, (c) any outstanding Free-Standing SAR shall becomeexercisable in full, (d) the Restriction Period with respect to all outstandingAwards of Restricted Stock shall immediately terminate, (e) the restrictions,conditions or contingencies on any Restricted Stock Units shall immediatelyterminate, and (f) the restrictions, conditions, or contingencies on anyPerformance Shares and Performance Units shall be modified in such manner asthe Committee may specify to give the Employee the benefit of those PerformanceShares or Performance Units through the date of Change of Control. 13.RESTRICTIONS. 13.1 ASSIGNMENT AND TRANSFER. Nonqualified Options may not be assigned ortransferred (other than by will or by the laws of descent and distribution)unless the Committee, in its sole discretion, determines to allow suchassignment or transfer and, if the Committee determines to allow any suchassignment or transfer, the Transferee shall have the power to exercise suchNonqualified Option in accordance with the terms of the Award and theprovisions of this Plan. No Incentive Stock Option, SAR, Restricted Stockduring the Restriction Period, Restricted Stock Unit or Performance Share maybe 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 incapacityof an Employee, the Employee’s attorney in fact or legal guardian) may exerciseany Incentive Stock Option or SAR. 13.2 FURTHER RESTRICTIONS. The Committee may specify at the date of grantof any Award that part or all of the Common Shares that are (i) to be issued ortransferred by the Corporation upon the exercise of Options or SARs, upon thetermination of any period of deferral applicable to Restrict Stock Units orupon payment under any grant of Performance Shares or Performance Units or (ii)no longer subject to the Restriction Period, will be subject to furtherrestrictions on transfer. 14. ADJUSTMENT UPON CHANGES IN COMMON SHARES. Automatically and withoutCommittee action, in the event of any stock dividend, stock split, or sharecombination of the Common Shares, or by appropriate Committee action in theevent of any reclassification, recapitalization, merger, consolidation, otherform of business combination, liquidation, or dissolution involving theCorporation or any spin-off or other distribution to shareholders of theCorporation (other than normal cash dividends), appropriate adjustments to (a)the maximum number of Common Shares that may be issued under the Plan pursuantto Section 5, the maximum number of Common Shares that may be issued under thePlan pursuant to Incentive Stock Options as provided in Section 5, the maximumnumber of Common Shares that may be issued under the Plan as Restricted Stock,Restricted Stock Units, Performance Shares and Performance Units, and themaximum number of Common Shares with respect to which any Employee may receiveAwards 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, andthe terms and conditions of each then outstanding Award shall be made to theextent necessary and in such manner that the benefits of Employees under allthen outstanding Awards shall be maintained substantially as before theoccurrence of such event. Any such adjustment shall be conclusive and bindingfor all purposes of the Plan and shall be effective, in the event of any stockdividend, stock split, or share combination, as of the date of such stockdividend, stock split, or share combination, and in all other cases, as of suchdate as the Committee may determine. In the event of any such transaction orevent, the Committee, in its discretion, may provide in substitution for any orall outstanding Awards under this Plan, such alternative consideration as it,in good faith, may determine to be equitable in the circumstances and mayrequire in connection therewith the surrender of all Awards so replaced. 15. PURCHASE FOR INVESTMENT. Each person acquiring Common Shares pursuantto any Award may be required by the Corporation to furnish a representationthat he or she is acquiring the Common Shares so acquired as an investment andnot with a view to distribution thereof if the Corporation, in its solediscretion, determines that such representation is required to insure that aresale or other disposition of the Common Shares would not involve a violationof the Securities Act of 1933, as amended, or of applicable blue sky laws. Anyinvestment representation so furnished shall no longer be applicable at anytime such representation is no longer necessary for such purposes. 16. WITHHOLDING OF TAXES. The Corporation will withhold from any paymentsof cash made pursuant to the Plan such amount as is necessary to satisfy allapplicable Federal, state, and local withholding tax obligations. TheCommittee may, in its discretion and subject to such rules as the Committee mayadopt from time to time, permit or require an Employee (or other personexercising an Option with respect to withholding taxes upon exercise of suchOption) to satisfy, in whole or in part, any withholding tax obligation thatmay arise in connection with the grant of an Award, the lapse of anyrestrictions with respect to an Award, the acquisition of Common Sharespursuant to any Award, or the disposition of any Common Shares receivedpursuant to any Award by having the Corporation hold back some portion of theCommon Shares that would otherwise be delivered pursuant to the Award or bydelivering to the Corporation an amount equal to the withholding tax obligationarising with respect to such grant, lapse, acquisition, or disposition in (a)cash, (b) Common Shares, or (c) such combination of cash and Common Shares asthe Committee may determine. The Fair Market Value of the Common Shares to beso held back by the Company or delivered by the Employee shall be determined asof the date on which the obligation to withhold first arose. 17. HARMFUL ACTIVITY. If an Employee shall engage in any “harmfulactivity” prior to or within six months after termination of employment withKey, 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 theexercise of any Covered Option or SAR and (c) any Profits realized upon the saleof any vested shares of Restricted Stock, Restricted Stock Units, PerformanceShares or Performance Units, on or after one year prior to the termination ofemployment with Key shall inure to the Corporation. The aforementionedrestriction shall not apply in the event that employment with Key terminateswithin two years after a Change of Control of the Corporation if any of thefollowing have occurred: a relocation of an Employee’s principal place ofemployment more than 35 miles from an Employee’s principal place of employmentimmediately prior to the Change of Control, a reduction in an Employee’s basesalary after a Change of Control, or termination of employment undercircumstances in which an Employee is entitled to severance benefits or salarycontinuation or similar benefits under a change of control agreement, employmentagreement, or severance or separation pay plan. If any vested shares ofRestricted Stock, Restricted Stock Units, Performance Shares or PerformanceUnits or any Profits realized upon the exercise of any Covered Option or SAR orupon the sale of any vested shares of Restricted Stock, Restricted Stock Units,Performance Shares or Performance Units inure to the benefit of the Corporationin accordance with the first sentence of this paragraph, an Employee shallprovide all such forfeited Awards and pay all such Profits to the Corporationwithin 30 days after first engaging in any harmful activity and all Awards thathave not yet vested and all unexercised Covered Options or SARs shallimmediately be forfeited and canceled. Consistent with the provisions of Section3 of the Plan, the determination by the Committee as to whether an Employeeengaged in “harmful activity” prior to or within six months after termination ofemployment with Key shall be final and conclusive. Unless otherwise provided inthe relevant Award Instrument, the provisions of Section 17 shall apply to allAwards made under the Plan. A “harmful activity” shall have occurred if an Employee shall do any oneor 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 grantedunder the Plan in substitution for awards held by employees of a company whobecome Employees of the Corporation or a Subsidiary as a result of the mergeror consolidation of the employer company with the Corporation or a Subsidiary,or the acquisition by the Corporation or a Subsidiary of the assets of theemployer company, or the acquisition by the Corporation or a Subsidiary ofstock of the employer company as a result of which it becomes a Subsidiary.The terms, provisions, and benefits of the substitute Awards so granted mayvary from the terms, provisions and benefits set forth in or authorized by thePlan to such extent as the Committee at the time of the grant may deemappropriate to conform, in whole or in part, to the terms, provisions, andbenefits of the awards in substitution for which they are granted. 19. LEGAL REQUIREMENTS. No Awards shall be granted and the Corporationshall have no obligation to make any payment under the Plan, whether in CommonShares, cash, or any combination thereof, unless such payment is, withoutfurther action by the Committee, in compliance with all applicable Federal andstate laws and regulations, including, without limitation, the United StatesInternal Revenue Code and Federal and state securities laws. 20. DURATION AND TERMINATION OF THE PLAN. The Plan shall become effectiveand 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 theholders of the requisite number of outstanding Common Shares on or prior toDecember 31, 2004, the Plan shall be void and of no further effect. The Planshall 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 effectthereafter subject to the terms thereof and of this Plan. 21. MISCELLANEOUS. 21.1 AMENDMENTS. The Board of Directors, or a duly authorized committeethereof, may alter or amend the Plan from time to time prior to its terminationin any manner the Board of Directors, or such duly authorized committee, maydeem to be in the best interests of the Corporation and its shareholders,except that no amendment may be made without shareholder approval ifshareholder 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 theCorporation are traded or, if the Common Shares are not listed on an exchange,by the rules of the registered national securities association through whoseinter-dealer quotation system the Common Shares are quoted. The Committeeshall have the authority to amend these terms and conditions applicable tooutstanding Awards (a) in any case where expressly permitted by the terms ofthe Plan or of the relevant Award Instrument or (b) in any other case with theconsent of the Employee to whom the Award was granted. Except as expresslyprovided in the Plan or in the Award Instrument evidencing the Award, theCommittee may not, without the consent of the holder of an Award granted underthe Plan, amend the terms and conditions applicable to that Award in a manneradverse to the interests of the Employee. 21.2 DEFERRAL. The Committee also may permit Employees to elect to deferthe issuance of Common Shares or the settlement of Awards in cash under thePlan pursuant to such rules, procedures or programs as it mayestablish for purposes of this Plan. The Committee also may provide thatdeferred issuances and settlements include the payment or crediting of dividendequivalents or interest on the deferral amounts. 21.3 CONDITIONS. The Committee may condition the grant of any Award orcombination of Awards authorized under this Plan on the surrender or deferralby the Employee of his or her right to receive a cash bonus or othercompensation otherwise payable by the Corporation or a Subsidiary to theEmployee. 21.4 ACCELERATION. In case of termination of employment by reason ofdeath, disability or normal or early retirement, or in the case of hardship orother special circumstances, of an Employee who holds an Option or SAR notimmediately exercisable in full, or any Restricted Stock as to which thesubstantial risk of forfeiture or the prohibition or restriction on transferhas not lapsed, or any Restricted Stock Units as to which the any period ofdeferral has not been completed, or any Performance Shares or Performance Unitswhich have not been fully earned, or who holds Common Shares subject to anytransfer restriction imposed pursuant to Section 13(b) of this Plan, theCommittee may, in its sole discretion, accelerate the time at which such Optionor SAR may be exercised or the time at which such substantial risk offorfeiture or prohibition or restriction on transfer will lapse or the timewhen such period of deferral will end or the time at which such PerformanceShares or Performance Units will be deemed to have been fully earned or thetime when such transfer restriction will terminate or may waive any otherlimitation or requirement under any such Award. 22. PLAN NONCONTRACTUAL. Nothing herein contained shall be construed as acommitment to or agreement with any person employed by the Corporation or aSubsidiary to continue such person’s employment with the Corporation or theSubsidiary, and nothing herein contained shall be construed as a commitment oragreement on the part of the Corporation or any Subsidiary to continue theemployment or the annual rate of compensation of any such person for anyperiod. All Employees shall remain subject to discharge to the same extent asif the Plan had never been put into effect. 23. INTEREST OF EMPLOYEES. Any obligation of the Corporation under thePlan to make any payment at any future date merely constitutes the unsecuredpromise of the Corporation to make such payment from its general assets inaccordance with the Plan, and no Employee shall have any interest in, or lienor prior claim upon, any property of the Corporation or any Subsidiary byreason of that obligation. 24. FRACTIONAL SHARES. The Corporation will not be required to issue anyfractional Common Shares pursuant to this Plan. The Committee may provide forthe elimination of fractions or for the settlement of fractions in cash. 25. FOREIGN EMPLOYEES. In order to facilitate the making of any grant orcombination of grants under this Plan, the Committee may provide for suchspecial terms for awards to Employees who are foreign nationals or who areemployed by the Corporation or any Subsidiary outside of the United States ofAmerica as the Committee may consider necessary or appropriate to accommodatedifferences in local law, tax policy or custom. Moreover, the Committee mayapprove such supplements to or amendments, restatements or alternative versionsof 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 otherpurpose, and the Secretary or other appropriate officer of the Corporation maycertify any such document as having been approved and adopted in the samemanner as this Plan. No such special terms, supplements, amendments orrestatements, however, will include any provisions that are inconsistent withthe terms of this Plan as then in effect unless this Plan could have beenamended to eliminate such inconsistency without further approval by theshareholders of the Corporation. 26. CLAIMS OF OTHER PERSONS. The provisions of the Plan shall in no eventbe construed as giving any person, firm, or corporation any legal or equitableright against the Corporation or any Subsidiary, their officers, employees,agents, or directors, except any such rights as are specifically provided forin the Plan or are hereafter created in accordance with the terms andprovisions of the Plan. 27. ABSENCE OF LIABILITY. No member of the Board of Directors of theCorporation or a Subsidiary, of the Committee, of any other committee of theBoard of Directors, or any officer or Employee of the Corporation or aSubsidiary shall be liable for any act or action under the Plan, whether ofcommission or omission, taken by any other member, or by any officer, agent, orEmployee, or except in circumstances involving his bad faith or willfulmisconduct, for anything done or omitted to be done by himself. 28.SEVERABILITY. The invalidity or unenforceability of any particularprovision of the Plan shall not affect any other provision hereof, and the Planshall be construed in all respects as if such invalid or unenforceableprovision were omitted herefrom. 29.GOVERNING LAW. The provisions of the Plan shall be governed andconstrued in accordance with the internal substantive laws of the State of Ohio.