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Exhibit 10.10
AMENDED EMPLOYMENT AGREEMENT
THIS AMENDED EMPLOYMENT AGREEMENT (this "Agreement") is made at
Cleveland, Ohio, as of February 1, 2001, between KEYCORP, an Ohio corporation
("Key"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇ III ("▇▇▇▇▇"). The original version of this
Agreement was entered into by Key and ▇▇▇▇▇ as of May 15, 1997, and was amended
as of November 20, 1997 and as of July 21, 1999. Further amendments are
incorporated below in this Agreement which replaces and supersedes both the
original version and those prior amendments.
▇▇▇▇▇ has been elected as President and Chief Executive Officer of Key
and it is contemplated that the Board of Directors of Key will elect ▇▇▇▇▇ as
Chairman of the Board of Directors of Key immediately following Key's Annual
Shareholders Meeting scheduled to be held in May of 2001. Key is entering into
this Agreement in recognition of the importance of ▇▇▇▇▇'▇ services to the
continuity of management of Key and based upon its determination that it will be
in the best interests of Key and its Subsidiaries to encourage ▇▇▇▇▇'▇ continued
attention and dedication to his duties on behalf of Key on into the future. (As
used in this Agreement, the term "Subsidiaries" and certain other capitalized
terms have the meanings ascribed to them in Section 25, at the end of this
Agreement.)
Key and ▇▇▇▇▇ agree, effective as of the date first set forth above
(the "Effective Date"), as follows:
1. Employment, Term. Key engages and employs ▇▇▇▇▇ to render such
services in the administration and operation of its affairs as, from time to
time, may be specified by its Board of Directors in a manner consistent with his
status as President, Chief Executive Officer, and (after Key's 2001 Annual
Meeting of Shareholders) Chairman of the Board of Directors, all in accordance
with the terms and conditions of this Agreement, for a constantly renewing three
year term, commencing on the Effective Date, so that the remaining term of
employment under this Agreement shall always be three years, unless: (a) either
party gives written notice to the other that the term shall no longer constantly
renew (in which case, the term of employment under this Agreement will expire on
the third anniversary of the giving of such notice) or (b) ▇▇▇▇▇'▇ employment
under this Agreement is earlier terminated in accordance with the provisions of
one of Sections 6.2 though 6.7 of this Agreement. Thus, for example, on February
2, 2001, the term of employment under this Agreement will be for three years
until February 2, 2004; automatically, without any action by either party, the
term will renew and extend itself on February 3, 2001 so as to be a three year
term of employment until February 3, 2004; and so on with the term automatically
extending on a daily basis so as always to be a three year term until either
notice is given under clause (a) above or ▇▇▇▇▇'▇ employment is earlier
terminated in accordance with the provisions of one of Sections 6.2 through 6.7
of this Agreement.
2. Full-Time Services. ▇▇▇▇▇ will devote all his time and efforts to
the service of Key, except for (a) usual vacation periods and reasonable periods
of illness, (b) services as an officer and director of any Subsidiary of Key,
and (c) services as a director or trustee of other
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corporations or organizations that are not in competition with Key or any
Subsidiary, except that, ▇▇▇▇▇ shall obtain the prior approval of the Chairman
of the Compensation and Organization Committee of Key's Board of Directors
before accepting a position as director or trustee of any for profit entity,
other than Lincoln Electric Holdings, Inc. (whether the entity is in corporate
or other form).
3. Executive Officer. Except as provided in the last sentence of this
Section 3, ▇▇▇▇▇ shall hold the offices of President and Chief Executive Officer
of Key throughout the period of his employment under this Agreement and ▇▇▇▇▇
shall hold the position of Chairman of the Board of Directors of Key from
immediately after Key's 2001 Annual Meeting of Shareholders through the date on
which ▇▇▇▇▇'▇ employment under this Agreement is terminated. Notwithstanding the
immediately preceding sentence, ▇▇▇▇▇ and Key may, at some point in time after
the Effective Date, mutually agree that a different executive officer of Key
should hold the title of President and report to ▇▇▇▇▇ while ▇▇▇▇▇ remains as
Chief Executive Officer and Chairman of the Board of Directors of Key.
4. Compensation. For all services to be rendered by ▇▇▇▇▇ to Key under
this Agreement, including services as an officer, director, Chairman of the
Board of Directors, or member of any committee of Key or of any Subsidiary, or
any other services specified by the Board of Directors, Key shall pay to ▇▇▇▇▇,
in equal monthly or more frequent installments, Base Salary, initially at the
rate of $825,000 per annum. The rate of ▇▇▇▇▇'▇ Base Salary shall be subject to
increase from time to time at the discretion of the Compensation and
Organization Committee of the Board of Directors and shall not be subject to
decrease except and then only to the extent that there is an across-the-board
salary reduction applicable to the executive officers of Key generally. In
addition to being paid such Base Salary, ▇▇▇▇▇ shall participate fully in any
incentive compensation, retirement, savings, stock option, disability, and other
employee benefit and welfare plan or arrangement allowed or provided by Key in
which he would otherwise be eligible for participation as an executive officer
and employee of Key, and, to the extent not provided, Key shall pay or provide
for the payment of benefits commensurate with ▇▇▇▇▇'▇ annual compensation.
5. Certain Compensation Guaranties During Two Years following a Change
of Control. For so long as ▇▇▇▇▇ remains in the employ of the Surviving Entity
or one of its Subsidiaries during the period beginning on the day after any
Change of Control and continuing through the second anniversary of that Change
of Control (the period of ▇▇▇▇▇'▇ employment during that two year period being
the "Guaranteed Compensation Period"), ▇▇▇▇▇ shall be entitled to the incentive
compensation guaranty set forth in Section 5.1 and to the equity compensation
guaranty set forth in Section 5.2.
5.1 Guaranteed Level of Incentive Compensation. Except as
provided in (c) below (which provides for a forfeiture of unpaid
amounts if ▇▇▇▇▇'▇ employment is terminated for Cause) and the last
sentence of (a) below (which provides for a potential reduction in
amount if based on overall corporate performance), the Surviving Entity
shall cause ▇▇▇▇▇ to receive, during the Guaranteed Compensation
Period, as incentive
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compensation, an amount that, on an annualized basis, is at least equal
to ▇▇▇▇▇'▇ Average Annual Incentive Compensation. The guaranty set
forth in the immediately preceding sentence (the "Incentive
Compensation Guaranty") establishes a minimum amount of incentive
compensation that must be paid to ▇▇▇▇▇ with respect to ▇▇▇▇▇'▇
employment during the Guaranteed Compensation Period. Except as
otherwise provided in (a), (b), or (c) of this Section 5.1 below, the
guaranteed incentive compensation for the Guaranteed Compensation
Period shall be paid to ▇▇▇▇▇ quarterly, within 30 days after the end
of each calendar quarter, for each quarter (or portion thereof) during
the Guaranteed Compensation Period.
(a) If and to the extent ▇▇▇▇▇, together with other executive
officers of the Surviving Entity, is a participant in one or
more bona fide incentive compensation plans during the
Guaranteed Compensation Period, the Surviving Entity may defer
payment of guaranteed incentive compensation payable under
this Section 5.1 up to the amount of the target award for
▇▇▇▇▇ under that incentive compensation plan (provided,
however, if the compensation cycle under the incentive
compensation plan includes time periods outside the Guaranteed
Compensation Period, the deferral shall be up to a
proportionate amount of the target award) until such time as
payments are regularly scheduled to be made under that
incentive compensation plan, at which time the Surviving
Entity shall pay the deferred amount plus any other amount, if
any, to which ▇▇▇▇▇ is then entitled under the plan that has
not been earlier paid. (This could result in a guaranteed
payment being made after the end of the Guaranteed
Compensation Period, for example, where the compensation cycle
under the incentive compensation plan ends after the end of
the Guaranteed Compensation Period.) Notwithstanding the
foregoing, if the Surviving Entity, in administering a bona
fide incentive compensation plan in which ▇▇▇▇▇ participates,
in good faith and without discriminating against ▇▇▇▇▇,
establishes or utilizes a factor which is intended to reflect
or rate for the compensation cycle in question the
corporation's overall performance and that performance factor
is uniformly applied (either in establishing an incentive
compensation pool or against each participant's target) to not
less than three quarters of all of the executive officers
participating in the plan, the Surviving Entity may elect to
apply that performance factor against the target award for
▇▇▇▇▇ under the incentive compensation plan in question and,
if applying that factor reduces ▇▇▇▇▇'▇ target award, the
amount of guaranteed incentive compensation payable under this
Section 5.1 that has been deferred under this paragraph (a) on
account of the incentive compensation plan in question may be
reduced by the same amount (or, if the compensation cycle
includes time periods outside the Guaranteed Compensation
Period, the reduction shall be by a proportionate amount).
(b) If ▇▇▇▇▇'▇ employment is terminated for any reason other
than Cause, all unpaid guaranteed incentive compensation with
respect to the Guaranteed
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Compensation Period shall be paid in a lump sum within 30
business days following the Termination Date.
(c) If ▇▇▇▇▇'▇ employment is terminated by the Surviving
Entity for Cause, the Surviving Entity shall not be required
to pay to ▇▇▇▇▇ any amount of incentive compensation otherwise
payable at any time on or after the Termination Date.
5.2 Guaranteed Participation in Equity Based Compensation
Plans. During the Guaranteed Compensation Period, ▇▇▇▇▇ shall
participate fully (at a level that is at least comparable to the level
at which he participated in the last calendar year that ended before
the date of the Change of Control and is at least equal to the highest
targeted level at which other executive officers of the Surviving
Entity participate) in each and every stock option, stock appreciation,
or similar equity based plan in which executive officers of the
Surviving Entity generally participate. The guaranty of full
participation set forth in this Section 5.2 is hereinafter sometimes
referred to as the "Equity Compensation Guaranty."
6. Termination.
6.1 Three Years following Notice of Non-Renewal. If either party gives
written notice to the other of his or its intention to discontinue the otherwise
automatic renewal of the term of ▇▇▇▇▇'▇ employment hereunder (a "Non-Renewal
Notice"), that term will terminate on the third anniversary of the giving of the
Non-Renewal Notice, except that if a Change of Control occurs before that third
anniversary date and while ▇▇▇▇▇ remains employed by Key pursuant to this
Agreement, the Non-Renewal Notice shall be automatically abrogated and
thereafter treated as though it had never been given unless ▇▇▇▇▇ gives written
notice, not later than 30 days after the occurrence of the Change of Control,
that he desires to have the Non-Renewal Notice (whether it was given by Key or
by ▇▇▇▇▇) continue in effect. If either party gives the other a Non-Renewal
Notice as provided in the immediately preceding sentence, that Non-Renewal
Notice remains in effect through the third anniversary of the giving of that
notice, and ▇▇▇▇▇'▇ employment continues through that third anniversary, ▇▇▇▇▇'▇
employment under this Agreement shall terminate at 12:00 Midnight on that third
anniversary.
6.2 Death or Disability. ▇▇▇▇▇'▇ employment hereunder will terminate
immediately upon ▇▇▇▇▇'▇ death. Key may terminate ▇▇▇▇▇'▇ employment hereunder
immediately upon giving notice of termination if ▇▇▇▇▇ is disabled, by reason of
physical or mental impairment, to such an extent that he is unable to
substantially perform his duties under this Agreement for 180 consecutive days.
6.3 For "Cause" Absent a Change of Control. At any time that is either
before the occurrence of any Change of Control or after the second anniversary
of the then most recent Change of Control, Key may terminate ▇▇▇▇▇'▇ employment
hereunder for "Cause" if :
(a) ▇▇▇▇▇ commits a felony (other than felonious operation of a motor
vehicle);
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(b) ▇▇▇▇▇ commits an act or series of acts of dishonesty in the course
of his employment that are materially inimical to the best interests of
Key or a Subsidiary as determined by Majority Action of the Board of
Directors and, if the act or acts are capable of being cured, ▇▇▇▇▇
fails to cure or take all reasonable steps to cure within 30 days of
notice from the Board of Directors to ▇▇▇▇▇;
(c) Key or any Subsidiary has been ordered or directed by any federal
or state regulatory agency with jurisdiction to terminate or suspend
▇▇▇▇▇'▇ employment and such order or directive has not been vacated or
reversed upon appeal;
(d) ▇▇▇▇▇ continues to violate his obligation under Section 10.1 not to
engage in Competitive Activities for more than ten days after the Board
of Directors has by Majority Action advised him in writing to cease
those activities; or
(e) Other than for disability, ▇▇▇▇▇ abandons and consistently fails to
attempt to perform his duties and responsibilities as specified from
time to time by the Board of Directors for 90 consecutive days after
the Board of Directors has by Majority Action advised him in writing of
that failure.
6.4 For "Cause" Within Two Years After a Change of Control. From the
date on which occurs any Change of Control and thereafter through the second
anniversary of that Change of Control, the Surviving Entity and its Subsidiaries
may terminate ▇▇▇▇▇'▇ employment under this Agreement for "Cause" only if :
(a) ▇▇▇▇▇ is convicted of a felony (other than felonious operation of a
motor vehicle);
(b) ▇▇▇▇▇ commits an act or series of acts of dishonesty in the course
of his employment that are materially inimical to the best interests of
the Surviving Entity or any of its Subsidiaries and that constitutes
the commission of a felony (other than felonious operation of a motor
vehicle), all as determined in good faith by the vote of three quarters
of the entire number of members of the Board of Directors, which
determination is confirmed by a panel of three arbitrators appointed
and acting in accordance with the rules of the American Arbitration
Association for the purpose of reviewing that determination;
(c) The Surviving Entity or any of its Subsidiaries has been ordered or
directed by any federal or state regulatory agency with jurisdiction to
terminate or suspend ▇▇▇▇▇'▇ employment and, notwithstanding the best
efforts of the Surviving Entity and/or its relevant Subsidiary or
Subsidiaries to oppose, initially, and to appeal, thereafter, the order
or directive, that order or directive has not been vacated or reversed
upon appeal; or
(d) ▇▇▇▇▇ continues to violate his obligation under Section 10.1 not to
engage in Competitive Activities for more than ten days after the Board
of Directors has by Majority Action advised him in writing to cease
those activities, that violation is material,
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and the fact that the violation both was material and so continued
beyond that ten day period is confirmed by a panel of three arbitrators
appointed and acting in accordance with the rules of the American
Arbitration Association for the purpose of determining whether the
violation both was material and so continued beyond that ten day
period.
If (x) the Surviving Entity or any of its Subsidiaries terminates the employment
of ▇▇▇▇▇ during the two year period beginning on the date of a Change of Control
and at a time when it has "Cause" therefor under clause (c) above, (y) the order
or directive is subsequently vacated or reversed on appeal and the vacation or
reversal becomes final and no longer subject to further appeal, and (z) the
Surviving Entity or any of its Subsidiaries fails to offer to reinstate ▇▇▇▇▇ to
employment under this Agreement within ten days of the date on which the
vacation or reversal becomes final and no longer subject to further appeal, the
Surviving Entity and its Subsidiaries will be deemed to have terminated ▇▇▇▇▇
without Cause during the two year period beginning on the date of the Change of
Control.
6.5 By Key Without Cause. Key may terminate ▇▇▇▇▇'▇ employment
hereunder without Cause at any time by Majority Action of the Board of
Directors.
6.6 By ▇▇▇▇▇ Following Constructive Termination at Any Time. ▇▇▇▇▇ may
terminate his employment hereunder "on grounds of Constructive Termination"
(and, if ▇▇▇▇▇ elects to terminate his employment in such circumstances, he will
be deemed to have been "Constructively Terminated" and not to have "Voluntarily
Resigned" or "Voluntarily Retired") if, at any time:
(a) ▇▇▇▇▇'▇ Base Salary is reduced other than in connection with, and
then only to the extent of, a general across-the-board salary reduction
applicable to the executive officers of Key generally;
(b) ▇▇▇▇▇ is excluded from full participation in any incentive, option,
or other compensatory plan applicable to executive officers of Key
generally;
(c) ▇▇▇▇▇ is subject to Demotion or Removal;
(d) Key requests ▇▇▇▇▇'▇ resignation or retirement at a time when Key
does not have grounds to terminate ▇▇▇▇▇'▇ employment for Cause; or
(e) ▇▇▇▇▇'▇ principal place of employment for Key is relocated outside
of the Cleveland metropolitan area or ▇▇▇▇▇ is otherwise required by
Key to relocate outside the Cleveland metropolitan area.
6.7 By ▇▇▇▇▇ Following Constructive Termination Within Two Years After
a Change of Control. At any time during the period beginning on the date on
which occurs any Change of Control and thereafter through the second anniversary
of that Change of Control, ▇▇▇▇▇ may terminate his employment hereunder "on
grounds of Constructive Termination" (and, if ▇▇▇▇▇
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elects to terminate his employment in such circumstances, he will be deemed to
have been "Constructively Terminated" and not to have "Voluntarily Resigned" or
"Voluntarily Retired") if he could then terminate his employment on any of the
grounds of Constructive Termination listed under Section 6.6 or if:
(a) ▇▇▇▇▇'▇ Base Salary is reduced from the highest level in effect at
any time during the one year period ending on the date of the Change of
Control;
(b) ▇▇▇▇▇ is excluded from full participation in any incentive, option,
or other compensatory plan that was available to him and in effect at
any time during the one year period ending on the date of the Change of
Control (the "Pre-Change of Control Compensatory Plans") unless ▇▇▇▇▇
is provided with substitute incentive, option, and other compensatory
plans that provide to ▇▇▇▇▇, in the aggregate, at least substantially
equivalent compensatory opportunities as would have been provided had
the Pre-Change of Control Compensatory Plans remained in effect with
▇▇▇▇▇ as a full participant therein;
(c) Following notice by ▇▇▇▇▇ to the Surviving Entity and an
opportunity by the Surviving Entity to cure, the Surviving Entity fails
to satisfy the Incentive Compensation Guaranty or the Equity
Compensation Guaranty or ▇▇▇▇▇ is otherwise excluded from full
participation in any incentive, option, or other compensation plan that
is generally applicable to executive officers of the Surviving Entity
after the Change of Control;
(d) The headquarters of the Surviving Entity is located outside of the
Cleveland metropolitan area;
(e) ▇▇▇▇▇ determines in good faith that his responsibilities, duties,
or authorities with the Surviving Entity are materially reduced from
those in effect before the Change of Control and the reduction has not
been cured within thirty days after ▇▇▇▇▇ gives notice to the Board of
Directors of the Surviving Entity of his election to terminate his
employment based upon that reduction; or
(f) ▇▇▇▇▇ determines in good faith that as a result of the Change of
Control he is unable to carry out the authorities, powers, functions,
responsibilities, or duties as Chairman of the Board of Directors and
Chief Executive Officer as those authorities, powers, functions,
responsibilities, or duties attached to those positions were in effect
before the Change of Control and the Board of Directors of the
Surviving Entity fails to fully address those issues (as determined by
▇▇▇▇▇ in good faith) within thirty days after ▇▇▇▇▇ gives notice to the
Board of Directors of his determination under this clause (f) and the
basis of such determination.
For purposes of clause (c), the Surviving Entity will be deemed to have
had an opportunity to cure and to have failed to effect a cure if the
failure to satisfy the Incentive Compensation Guaranty or the Equity
Compensation Guaranty, as the case may be,
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persists (as determined in good faith by ▇▇▇▇▇) for more than thirty
calendar days after ▇▇▇▇▇ has given notice to the Surviving Entity of
the existence of that failure.
7. Severance Payments and Benefits upon Termination.
7.1 Termination by Key Without Cause, etc., or by ▇▇▇▇▇ Following
Constructive Termination. If ▇▇▇▇▇'▇ employment is terminated by Key (or, if
applicable, the Surviving Entity) for any reason other than Cause, disability,
or death, or if ▇▇▇▇▇ is Constructively Terminated:
(a) Lump Sum Payment. Key shall pay to ▇▇▇▇▇, within 30 days after the
Termination Date, a lump sum severance benefit equal to three times the
sum of (i) one year's Base Salary (at the highest rate in effect at any
time before the Termination Date) plus (ii) his Average Annual
Incentive Compensation;
(b) Retirement and Savings Plan Participation. For the period beginning
on the day after the Termination Date and ending on the third
anniversary of the Termination Date (the "Continuing Benefit Period"),
Key shall cause ▇▇▇▇▇ to continue to be covered by and to participate
in all Retirement Plans and Savings Plans that he was entitled to be
covered by and participating in as an officer of Key immediately before
the Termination Date in the same manner and to the same extent as if
▇▇▇▇▇ continued in the full-time employ of Key throughout the
Continuing Benefit Period, except where such coverage or participation
is Impermissible. For these purposes: (i) the entire Continuing Benefit
Period shall be included in determining ▇▇▇▇▇'▇ years of service, (ii)
amounts received by ▇▇▇▇▇ under clause (a)(i) above shall be deemed to
be base salary received by ▇▇▇▇▇ ratably during the Continuing Benefit
Period, and (iii) amounts received by ▇▇▇▇▇ under clause (a)(ii) above
shall be deemed to be incentive compensation received by ▇▇▇▇▇ ratably
during the Continuing Benefit Period and shall, if relevant, be
allocated between short term incentive compensation and long term
incentive compensation based on the degree to which awards of each type
of incentive compensation were taken into account in determining
Average Annual Incentive Compensation. If, at any time during the
Continuing Benefit Period, Key determines in good faith that continuing
▇▇▇▇▇'▇ coverage by and participation in any of the Retirement Plans or
any of the Savings Plans during the Continuing Benefit Period is
Impermissible, ▇▇▇▇▇ shall not be covered by and participate in such
affected plan or plans during the Continuing Benefit Period, but Key
shall provide to ▇▇▇▇▇ under this Agreement, as a supplemental
retirement benefit, payments and benefits that put ▇▇▇▇▇ in the same
position that he would have been in had he continued to be covered by
and participated in all such affected plan or plans throughout the
Continuing Benefit Period to the same extent as he was a participant
immediately before the Termination Date, with the supplemental payments
and benefits under this sentence being payable to ▇▇▇▇▇ (or, if
applicable, to his wife, estate, or designated beneficiary) at the same
time and with the same payment options as would be applicable under the
affected plan or plans in question.
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(c) Medical, Disability, and Group Term Life Coverage. Through the
third anniversary of the Termination Date, Key shall continue to
maintain in effect medical (including dental) coverage, disability
coverage, and group term life insurance for the benefit of ▇▇▇▇▇ and
his dependents at the same levels and subject to the same (by dollar
amount) employee contribution requirement, if any, as had been in
effect for the benefit of ▇▇▇▇▇ and his dependents before the
Termination Date. After the third anniversary of the Termination Date,
▇▇▇▇▇ and his dependents shall be provided retiree medical benefits
that are at least equal to those that ▇▇▇▇▇ and his dependents would
have been entitled to under the Retiree Medical Benefits Plan if ▇▇▇▇▇
had retired from Key on the Termination Date after satisfying all
eligibility requirements for retiree medical benefits under that plan.
The retiree medical benefits shall be provided under the Retiree
Medical Benefit Plan, with the cost thereof borne as between Key and
▇▇▇▇▇ and his dependents as provided in that plan, if and so long as
that plan remains in effect and ▇▇▇▇▇ and his dependents are in fact
eligible for the intended benefits thereunder. In all other
circumstances, the retiree medical benefits shall be provided directly
by Key, with the cost thereof borne as between Key and ▇▇▇▇▇ and his
dependents in the same manner as would have been the case if the
benefits had been provided under the Retiree Medical Benefits Plan
rather than directly by Key.
7.2 Effect of Death While in Employ of Key. If ▇▇▇▇▇ dies while
employed by Key:
(a) Key shall pay to ▇▇▇▇▇'▇ estate any unpaid Base Salary due or to
become due to ▇▇▇▇▇ with respect to any period ending before his death
and Key shall have no further obligations to ▇▇▇▇▇ for Base Salary for
any period after ▇▇▇▇▇'▇ death.
(b) Key shall continue to maintain medical (including dental) coverage
in effect (i) for the benefit of ▇▇▇▇▇'▇ wife, for her lifetime, and
(ii) for the benefit of each of ▇▇▇▇▇'▇ children, through the earlier
of the date on which he or she attains age 23 or has ceased for more
than 120 consecutive days to be a full time student, in each case at
Key's sole cost and at the highest levels as had been in effect for the
benefit of ▇▇▇▇▇'▇ wife and each of his children, as the case may be,
at any time before the Termination Date.
(c) Upon his death, ▇▇▇▇▇'▇ rights under any other plan or benefit of
Key shall be governed by the respective terms thereof.
7.3 Effect of Disability While in Employ of Key. If, while ▇▇▇▇▇ is
employed by Key, he becomes disabled, by reason of physical or mental
impairment, to such an extent that he is unable to perform his duties under this
Agreement:
(a) Key may relieve ▇▇▇▇▇ of his duties under this Agreement for as
long as ▇▇▇▇▇ is so disabled.
(b) Key shall pay to ▇▇▇▇▇ all Base Salary and incentive
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compensation to which he would have been entitled under this Agreement
and under applicable incentive compensation plans had he continued to
be actively employed by Key to the earliest of (i) the date on which he
becomes eligible for payment of long term disability benefits under the
Long Term Disability Benefit Plan, (ii) the date of his death, or (iii)
the third anniversary of the first date on which his employment
hereunder could have been terminated by Key pursuant to the second
sentence of Section 6.2, except that if, after ▇▇▇▇▇ has become so
disabled and before he is terminated by Key pursuant to the second
sentence of Section 6.2, ▇▇▇▇▇ recovers so that he is no longer so
disabled to such an extent that he is unable to perform his duties
under this Agreement, ▇▇▇▇▇ shall be restored to his duties under this
Agreement and entitled to the benefits of and subject to this Agreement
as if no period of disability had occurred.
(c) The amounts payable to ▇▇▇▇▇ for any month under this Section 7.3
shall be reduced, but not below zero, by the full amount of the
payments, if any, received by ▇▇▇▇▇ for that month (i) from all
Retirement Plans, (ii) from the Long Term Disability Plan, and (iii)
from any other disability plan the entire cost of which is borne by
Key.
(d) For purposes of all retirement, savings, stock option, disability,
and other employee benefit and welfare plans or arrangements allowed or
provided by Key to executive officers, ▇▇▇▇▇ shall be treated in the
same manner that Key treats other executive officers who become
disabled.
(e) Except as provided in this Section 7.3, Key shall have no further
obligations to ▇▇▇▇▇ for Base Salary or incentive compensation for any
period during which ▇▇▇▇▇ is so disabled to such an extent that he is
unable to perform his duties under this Agreement.
(f) The payments provided for under this Section 7.3 shall be made as
provided for in this Section notwithstanding any termination of ▇▇▇▇▇'▇
employment under the second sentence of Section 6.2.
7.4 Effect of Termination for Cause. If ▇▇▇▇▇'▇ employment is
terminated for Cause, Key may, by giving written notice to ▇▇▇▇▇, terminate all
its obligations remaining to be performed or observed by it under this Agreement
(other than the obligation to pay Base Salary to ▇▇▇▇▇ through the Termination
Date and the obligations of Key under Sections 11, 12.3, and 14 and, to the
extent then applicable by its terms, Section 15), except no termination of Key's
obligations under this Agreement shall affect ▇▇▇▇▇'▇ rights under any plan or
benefit of Key, all of which shall be governed by their respective terms.
7.5 Effect of Termination Upon ▇▇▇▇▇'▇ Voluntary Resignation or
Voluntary Retirement. If ▇▇▇▇▇'▇ employment is terminated by ▇▇▇▇▇'▇ Voluntary
Resignation or Voluntary Retirement, Key may, by giving written notice to ▇▇▇▇▇,
terminate all its obligations remaining to be performed or observed by it under
this Agreement (other than the obligation to pay Base Salary to ▇▇▇▇▇ through
the Termination Date, the obligations of Key under Sections 11, 12, and 14 and,
to the extent then applicable by their respective terms, the obligations of Key
under Sections 15, 16, and 17), except no termination of Key's obligations
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under this Agreement shall affect ▇▇▇▇▇'▇ rights under any plan or benefit of
Key, all of which shall be governed by their respective terms.
8. No Set-Off; No Obligation to Seek Other Employment or to Otherwise
Mitigate Damages; No Effect Upon Other Plans. Key's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense, or other claim whatsoever that Key or any of its Subsidiaries may have
against ▇▇▇▇▇, except that the prohibition on set-off, counterclaim, recoupment,
defense, or other claim contained in this sentence shall not apply if ▇▇▇▇▇'▇
employment is terminated by Key for Cause at any time that is either before the
occurrence of any Change of Control or after the second anniversary of the then
most recent Change of Control. ▇▇▇▇▇ shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise. The amount of any payment provided for under this
Agreement shall not be reduced by any compensation or benefits earned by ▇▇▇▇▇
as the result of employment by another employer or otherwise after the
termination of ▇▇▇▇▇'▇ employment. Neither the provisions of this Agreement nor
the making of any payment provided for hereunder, nor the termination of Key's
obligations under this Agreement, shall reduce any amounts otherwise payable, or
in any way diminish ▇▇▇▇▇'▇ rights, under any incentive compensation plan, stock
option or stock appreciation rights plan, deferred compensation, retirement, or
supplemental retirement plan, stock purchase and savings plan, disability or
insurance plan, or other similar contract, plan, or arrangement of Key or any
Subsidiary, all of which shall be governed by their respective terms.
9. Payments Are in Lieu of Severance Payments. If ▇▇▇▇▇ becomes
entitled to receive payments under this Agreement as a result of termination of
his employment, those payments shall be in lieu of any and all other claims or
rights that ▇▇▇▇▇ may have against Key for severance, separation, and/or salary
continuation pay upon that termination of his employment.
10. Limitations on Competition.
10.1 During Employment. ▇▇▇▇▇ shall not engage in any Competitive
Activity during the period of his employment with Key.
10.2 Two Years in Certain Circumstances. If ▇▇▇▇▇'▇ employment is
terminated within two years after the occurrence of a Change of Control either
by Key without Cause or by ▇▇▇▇▇ after he has been Constructively Terminated,
▇▇▇▇▇ shall not engage in any Competitive Activity during the two year period
ending on the second anniversary of the Termination Date.
10.3 Three Years Following Any Other Termination. If ▇▇▇▇▇'▇ employment
is terminated (whether by him, by Key, or otherwise) in any circumstances other
than those expressly covered by Section 10.2 above, ▇▇▇▇▇ shall not engage in
any Competitive Activity at any time during the three year period ending on the
third anniversary of the Termination Date.
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10.4 No Further Obligation to Make Payments or Provide Benefits
Following Continuing Breach. If ▇▇▇▇▇ continues to violate the restriction set
forth in Section 10.2 or 10.3, as may be applicable, after the Board of
Directors has advised him by Majority Action in writing to cease those
activities and that violation is material, Key shall thereupon be relieved of
all further obligations to make payments and provide benefits to ▇▇▇▇▇ under any
of the provisions contained in Section 7.1. ▇▇▇▇▇ shall not be required to repay
to Key any payment received by him before he began to engage in any such
Competitive Activity.
10.5 Other Remedies. In addition to other remedies provided by law or
equity, upon a breach by ▇▇▇▇▇ of any prohibition on Competitive Activity
contained in this Section 10, Key shall be entitled to have a court of competent
jurisdiction enter an injunction against ▇▇▇▇▇ restraining him from any further
breach of any such prohibition.
11. Indemnification. Key shall indemnify ▇▇▇▇▇, to the full extent
permitted or authorized by the Ohio General Corporation Law as it may from time
to time be amended, if ▇▇▇▇▇ is made or threatened to be made a party to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative, by reason of the fact that ▇▇▇▇▇ is
or was a director, officer, or employee of Key or any Subsidiary, or is or was
serving at the request of Key or any Subsidiary as a director, trustee, officer,
or employee of a bank, corporation, partnership, joint venture, trust, or other
enterprise. The indemnification provided by this Section 11 shall not be deemed
exclusive of any other rights to which ▇▇▇▇▇ may be entitled under the articles
of incorporation or the regulations of Key or of any Subsidiary, or any
agreement, vote of shareholders or disinterested directors, or otherwise, both
as to action in ▇▇▇▇▇'▇ official capacity and as to action in another capacity
while holding such office, and shall continue as to ▇▇▇▇▇ after ▇▇▇▇▇ has ceased
to be a director, trustee, officer, or employee and shall inure to the benefit
of the heirs, executors, and administrators of ▇▇▇▇▇.
12. Reimbursement of Certain Expenses.
12.1 Key shall pay, as incurred, all expenses, including the reasonable
fees of counsel engaged by ▇▇▇▇▇, of defending any action brought to have this
Agreement declared invalid or unenforceable.
12.2 Key shall pay, as incurred, all expenses, including the reasonable
fees of counsel engaged by ▇▇▇▇▇, of prosecuting any action to compel Key to
comply with the terms of this Agreement upon receipt from ▇▇▇▇▇ of an
undertaking to repay Key for such expenses if, and only if, it is ultimately
determined by a court of competent jurisdiction that ▇▇▇▇▇ had no reasonable
grounds for bringing that action (which determination need not be made simply
because ▇▇▇▇▇ fails to succeed in the action).
12.3 Expenses (including attorney's fees) incurred by ▇▇▇▇▇ in
defending any action, suit, or proceeding commenced or threatened against ▇▇▇▇▇
for any action or failure to act as an employee, officer, or director of Key or
any Subsidiary shall be paid by Key, as they are incurred, in advance of final
disposition of the action, suit, or proceeding upon receipt of an
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undertaking by or on behalf of ▇▇▇▇▇ in which he agrees to reasonably cooperate
with Key or the Subsidiary, as the case may be, concerning the action, suit, or
proceeding, and (a) if the action, suit, or proceeding is commenced or
threatened against ▇▇▇▇▇ for any action or failure to act as a director, to
repay the amount if it is proved by clear and convincing evidence in a court of
competent jurisdiction that his action or failure to act involved an act or
omission undertaken with deliberate intent to cause injury to Key or a
Subsidiary or with reckless disregard for the best interests of Key or a
Subsidiary or (b) if the action, suit, or proceeding is commenced or threatened
against ▇▇▇▇▇ for any action or failure to act as an officer or employee, to
repay the amount if it is ultimately determined that he is not entitled to be
indemnified. The obligation of Key to advance expenses provided for in this
Section 12.3 shall not be deemed exclusive of any other rights to which ▇▇▇▇▇
may be entitled under the articles of incorporation or the regulations of Key or
of any Subsidiary, or any agreement, vote of shareholders or disinterested
directors, or otherwise.
13. Gross-Up of Payments Deemed to be Excess Parachute Payments.
13.1 Key and ▇▇▇▇▇ acknowledge that, following a Change of Control, one
or more payments or distributions to be made by Key to or for the benefit of
▇▇▇▇▇ (whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement, under some other plan, agreement, or arrangement, or
otherwise) (a "Payment") may be determined to be an "excess parachute payment"
that is not deductible by Key for Federal income tax purposes and with respect
to which ▇▇▇▇▇ will be subject to an excise tax because of Sections 280G and
4999, respectively, of the Internal Revenue Code (hereinafter referred to
respectively as "Section 280G" and "Section 4999"). If ▇▇▇▇▇'▇ employment is
terminated after a Change of Control occurs, the Accounting Firm, which, subject
to any inconsistent position asserted by the Internal Revenue Service, shall
make all determinations required to be made under this Section 13, shall
determine whether any Payment would be an excess parachute payment and shall
communicate its determination, together with detailed supporting calculations,
to Key and to ▇▇▇▇▇ within 30 days after the Termination Date or such earlier
time as is requested by Key. Key and ▇▇▇▇▇ shall cooperate with each other and
the Accounting Firm and shall provide necessary information so that the
Accounting Firm may make all such determinations. Key shall pay all of the fees
of the Accounting Firm for services performed by the Accounting Firm as
contemplated in this Section 13.
13.2 If the Accounting Firm determines that any Payment gives rise,
directly or indirectly, to liability on the part of ▇▇▇▇▇ for excise tax under
Section 4999 (and/or any penalties and/or interest with respect to any such
excise tax), Key shall make additional cash payments to ▇▇▇▇▇, from time to time
and at the same time as any Payment constituting an excess parachute payment is
paid or provided to ▇▇▇▇▇, in such amounts as are necessary to put ▇▇▇▇▇ in the
same position, after payment of all federal, state, and local taxes (whether
income taxes, excise taxes under Section 4999 or otherwise, or other taxes) and
any and all penalties and interest with respect to any such excise tax, as ▇▇▇▇▇
would have been in after payment of all federal, state, and local income taxes
if the Payments had not given rise to an excise tax under Section 4999 and no
such penalties or interest had been imposed.
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13.3 If the Internal Revenue Service determines that any Payment gives
rise, directly or indirectly, to liability on the part of ▇▇▇▇▇ for excise tax
under Section 4999 (and/or any penalties and/or interest with respect to any
such excise tax) in excess of the amount, if any, previously determined by the
Accounting Firm, Key shall make further additional cash payments to ▇▇▇▇▇ not
later than the due date of any payment indicated by the Internal Revenue Service
with respect to these matters, in such amounts as are necessary to put ▇▇▇▇▇ in
the same position, after payment of all federal, state, and local taxes (whether
income taxes, excise taxes under Section 4999 or otherwise, or other taxes) and
any and all penalties and interest with respect to any such excise tax, as ▇▇▇▇▇
would have been in after payment of all federal, state, and local income taxes
if the Payments had not given rise to an excise tax under Section 4999 and no
such penalties or interest had been imposed.
13.4 If Key desires to contest any determination by the Internal
Revenue Service with respect to the amount of excise tax under Section 4999,
▇▇▇▇▇ shall, upon receipt from Key of an unconditional written undertaking to
indemnify and hold ▇▇▇▇▇ harmless (on an after tax basis) from any and all
adverse consequences that might arise from the contesting of that determination,
cooperate with Key in that contest at Key's sole expense. Nothing in this
Section 13.4 shall require ▇▇▇▇▇ to incur any expense other than expenses with
respect to which Key has paid to ▇▇▇▇▇ sufficient sums so that after the payment
of the expense by ▇▇▇▇▇ and taking into account the payment by Key with respect
to that expense and any and all taxes that may be imposed upon ▇▇▇▇▇ as a result
of his receipt of that payment, the net effect is no cost to ▇▇▇▇▇. Nothing in
this Section 13.4 shall require ▇▇▇▇▇ to extend the statute of limitations with
respect to any item or issue in his tax returns other than, exclusively, the
excise tax under Section 4999. If, as the result of the contest of any assertion
by the Internal Revenue Service with respect to excise tax under Section 4999,
▇▇▇▇▇ receives a refund of a Section 4999 excise tax previously paid and/or any
interest with respect thereto, ▇▇▇▇▇ shall promptly pay to Key such amount as
will leave ▇▇▇▇▇, net of the repayment and all tax effects, in the same
position, after all taxes and interest, that he would have been in if the
refunded excise tax had never been paid.
14. Deferral of Payment of Compensation under Certain Circumstances.
14.1 Section 162(m). For purposes of this Section 14, the term "Section
162(m)" shall mean Section 162(m) of the Internal Revenue Code (which, as
amended by the Revenue Reconciliation Act of 1993, prescribes rules disallowing
deductions for certain "applicable employee remuneration" to any of five
specified "covered employees" of a publicly held corporation in excess of
$1,000,000 per year), as from time to time amended, and the corresponding
provisions of any similar law subsequently enacted, and to all regulations
issued under that section and any such provisions.
14.2 Deferral. Except as otherwise provided in either of Section 14.3
or Section 14.4, below, if Key determines that, after giving effect to all
applicable elective deferrals of compensation, any amount of compensation
(including any Base Salary and any incentive compensation payable under any
incentive compensation plan in which ▇▇▇▇▇ is a participant) otherwise payable
to ▇▇▇▇▇ under this Agreement at any particular time (the "Scheduled Time"),
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(a) would not be deductible by Key if paid at the Scheduled Time by
reason of the disallowance rules of Section 162(m), and
(b) would be deductible by Key if deferred until and paid during a
later year,
that amount of compensation shall be deferred until, and paid during, the year
that is determined by Key to be the first year following the year of deferral
during which the compensation can be paid without disallowance of the deduction
for payment of the compensation by reason of Section 162(m). If Key determines
that in any year following the year of deferral a portion of, but not all of,
the amounts deferred (together with interest thereon as provided in Section
14.5, below) can be paid without disallowance of the deduction, that portion
that can be so paid shall be paid by Key during that year and the remainder,
except as otherwise provided in Section 14.3 or Section 14.4, below, shall
continue to be deferred until a later year.
14.3 Early Payout of Deferred Amount if Deferral is Determined to be
Ineffective. If any amount of compensation is deferred under Section 14.2 with
the expectation that it will be deductible by Key if paid in a later year and
Key later determines that the compensation will not be deductible by Key even if
payment thereof is deferred until a later year, then, within 30 days of the date
on which that determination is made, the deferral with respect to that
compensation shall terminate and Key shall pay that compensation to ▇▇▇▇▇.
14.4 Payout Following Termination of Employment in All Events. On April
15 of the year immediately following the year in which ▇▇▇▇▇ ceases to be
employed by Key, Key shall pay to ▇▇▇▇▇, in a single lump sum, all amounts of
compensation that have been deferred pursuant to this Section 14 and have not
previously been paid so that, as of the close of business on that date, no
amount of compensation will remain deferred under this Section 14 whether or not
Key is entitled to a deduction with respect to the payment of that compensation.
14.5 Interest on Deferred Amounts. Upon payment of any amounts of
compensation deferred for any period of time pursuant to this Section 14, Key
shall pay to ▇▇▇▇▇ an additional amount equivalent to the interest that would
have accrued on such deferred compensation if interest accrued thereon on a
daily basis from the date on which that compensation would have been paid but
for this Section 14 through the date on which that compensation is paid at a
rate varying from month to month and equal to 50 basis points higher than the
effective annual yield of the average of the Moody's Average Corporate Bond
Yield Index for the previous month, as published by ▇▇▇▇▇'▇ Investor Services,
Inc. (or any successor published thereto), or, if such index is no longer
published, a substantially similar index selected by the Accounting Firm, with
interest compounded as of the end of each month.
14.6 Miscellaneous. ▇▇▇▇▇'▇ rights with respect to payment during his
lifetime of any compensation deferred under this Section 14 shall not be subject
to assignment. If ▇▇▇▇▇ dies before all compensation deferred under this Section
14 has been paid to him, any such unpaid compensation shall be paid, at the same
time it would have been paid if ▇▇▇▇▇ had not died but had merely ceased to be
an employee of Key on the date of his death (or, if earlier, on the last
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date he actually was an employee of Key), to his estate or, if ▇▇▇▇▇ shall so
direct to Key in writing, to his wife or to a trust created by ▇▇▇▇▇. The
obligation of Key to make payments of compensation deferred pursuant to this
Section 14 constitutes the unsecured promise of Key to make payments from its
general assets as and when due and neither ▇▇▇▇▇ nor any person claiming through
him shall have, as a result of this Section 14, any lien or claim on any assets
of Key that is superior to the claims of the general creditors of Key.
15. Vesting of Supplemental Retirement Benefit. Upon any termination of
▇▇▇▇▇'▇ employment with Key other than (a) a termination by Key for Cause before
▇▇▇▇▇ attains age 55 or (b) by ▇▇▇▇▇'▇ Voluntary Resignation before he attains
age 55, ▇▇▇▇▇ will be treated as having satisfied all of the requirements for
eligibility for and as being fully vested in a supplemental retirement benefit
under the Supplemental Retirement Plan. Nothing in this Section 15 shall be
deemed to create an inference that ▇▇▇▇▇ is not otherwise eligible for or fully
vested in a supplemental retirement benefit under the Supplemental Retirement
Plan and whether or not he is so otherwise eligible for or fully vested in such
a benefit will be determined pursuant to the terms of the Supplemental
Retirement Plan without reference to this Section 15
16. Vesting of, and Extension of Exercise Period for, Stock Options.
All stock options (other than so-called "performance options," which are options
that vest or become exercisable only if certain stock price and/or financial
performance tests are achieved) granted to ▇▇▇▇▇ by Key after the Effective Date
that remain outstanding on the Termination Date shall be deemed to have vested
(to the extent not already vested) as of immediately prior to the termination of
his employment unless ▇▇▇▇▇'▇ employment is terminated by Key for Cause, by
▇▇▇▇▇'▇ Voluntary Resignation before the fifth anniversary of the date of grant
of the particular stock option, or as a result of death or disability. Each
stock option (other than any performance option) that is granted to ▇▇▇▇▇ by Key
after the Effective Date and remain outstanding and are vested on the
Termination Date (whether pursuant to the immediately preceding sentence or
otherwise) shall be exercisable after the Termination Date until that particular
option's expiration date (which is the last date that the option would be
exercisable in accordance with its terms if ▇▇▇▇▇ had continued in Key's
employment indefinitely) unless ▇▇▇▇▇'▇ employment is terminated by Key for
Cause or by ▇▇▇▇▇'▇ Voluntary Resignation before the fifth anniversary of the
date of grant of the particular stock option. In the case of incentive stock
options granted to ▇▇▇▇▇ by Key after the Effective Date, this Section 16 shall
apply, recognizing however that failure to exercise the incentive stock option
within the time periods after the Termination Date prescribed by the Internal
Revenue Code may cause the option to fail to qualify for incentive stock option
treatment under the Internal Revenue Code. If, in accordance with its terms and
without regard to this Section 16, an option would vest earlier than is provided
in this Section 16 or would be exercisable for a longer period than is provided
in this Section 16, the terms of the option providing for earlier vesting and/or
a longer period of exercisability, as the case may be, shall govern. Each stock
option (other than performance options) granted to ▇▇▇▇▇ by Key after the
Effective Date shall be deemed to contain the provisions of this Section 16 as a
part of the award instrument evidencing such option.
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17. Post-Termination Benefits. Following termination of his employment
with Key for any reason other than Cause, Voluntary Resignation, or death, Key
shall continue to provide to ▇▇▇▇▇ the following benefits:
(a) Payment of monthly membership dues at one country club, one
luncheon club, and one professional or cultural group or association
located in the Greater Cleveland metropolitan area.
(b) Payment of the cost of tax preparation assistance but only to the
extent and as long as Key provides this benefit to its executive
officers.
(c) Payment of the cost of an executive physical examination but only
to the extent and as long as Key provides this benefit to its executive
officers.
(d) Payment of an amount equal to the meeting fee and payment of
reasonable expenses for a meeting of the Board of Directors if ▇▇▇▇▇
attends Key's annual meeting of shareholders.
(e) Use of office space and secretarial support in Key facilities in
Cleveland for a period of two years following the Termination Date.
18. Savings Clause. If any payments otherwise payable to ▇▇▇▇▇ under
this Agreement are prohibited by any applicable statute or regulation in effect
at the time the payments would otherwise be payable, including, without
limitation, any regulation issued by the Federal Deposit Insurance Corporation
(the "FDIC") that limits so called "golden parachute payments" that can be made
by an FDIC insured institution or its holding company if the institution is
financially troubled and certain so-called "indemnification payments" (any such
statute or regulation being a "Limiting Rule"):
(a) Key will use its best efforts to obtain the consent of the
appropriate governmental agency (whether the FDIC or any other agency,
and including using its best efforts to appeal any refusal by any such
agency to grant its consent) to the payment by Key to ▇▇▇▇▇ of the
maximum amount that is permitted (up to the amounts that would be due
to ▇▇▇▇▇ under this Agreement or otherwise absent the Limiting Rule);
and
(b) ▇▇▇▇▇ will be entitled to elect to have apply, and therefore to
receive benefits directly under, either (i) this Agreement (as limited
by the Limiting Rule) or (ii) any generally applicable Key plan or
policy (including any severance, separation pay, and/or salary
continuation plan that may be in effect at the time of ▇▇▇▇▇'▇
termination), up to the amounts that would be due to ▇▇▇▇▇ under this
Agreement or otherwise absent the Limiting Rule.
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19. Survival of Obligations. Except as is otherwise expressly provided
in this Agreement, the respective obligations of Key and ▇▇▇▇▇ hereunder shall
survive any termination of ▇▇▇▇▇'▇ employment under this Agreement.
20. Merger or Transfer of Assets of Key. Key will not consolidate with
or merge into any other corporation, or transfer all or substantially all of its
assets to another corporation, unless such other corporation shall assume this
Agreement in a signed writing and deliver a copy thereof to ▇▇▇▇▇. Upon such
assumption the successor corporation shall become obligated to perform the
obligations of Key under this Agreement, and the term "Key" as used in this
Agreement shall be deemed to refer to such successor corporation.
21. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered in person (to the Secretary of Key in the case of notices to Key and
to ▇▇▇▇▇ in the case of notices to ▇▇▇▇▇) or mailed by United States registered
mail, return receipt requested, postage prepaid, as follows:
If to Key:
KeyCorp
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Secretary
If to ▇▇▇▇▇:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇ III
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
22. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement which shall remain in full force and effect.
23. Miscellaneous. No provision of this Agreement may be modified,
waived, or discharged unless such waiver, modification, or discharge is agreed
to in a writing signed by ▇▇▇▇▇ and Key. No waiver by either party hereto at any
time of any breach by the other party of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same time or
at any prior or subsequent time. No agreement or representation, oral or
otherwise, express or implied, with respect to the subject matter hereof has
been made by either party which is not set forth expressly in this Agreement.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Ohio.
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24. Prior Agreement. This Agreement supersedes the agreement entered
into between ▇▇▇▇▇ and Key as of October 15, 1996 that provided ▇▇▇▇▇ certain
protection in the event of a Change of Control of Key.
25. Definitions.
25.1 Accounting Firm. The term "Accounting Firm" means the independent
auditors of Key for the fiscal year preceding the year in which the earlier of
(i) the Termination Date, or (ii) the year, if any, in which occurred the first
Change of Control occurring after the Effective Date, and such firm's successor
or successors; provided, however, if such firm is unable or unwilling to serve
and perform in the capacity contemplated by this Agreement, Key shall select
another national accounting firm of recognized standing to serve and perform in
that capacity under this Agreement, except that such other accounting firm shall
not be the then independent auditors for Key or any of its affiliates (as
defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as
amended (the "1934 Act")).
25.2 Average Annual Incentive Compensation. The term "Average Annual
Incentive Compensation" means the sum of Average Short Term Incentive
Compensation, as defined in clause (a) below, and Average Long Term Incentive
Compensation, as defined in clause (b) below.
(a) The term "Average Short Term Incentive Compensation" means the
higher of:
(i) the average of the short term incentive compensation
payable to ▇▇▇▇▇ for each of the last two years immediately
preceding the Relevant Year (as defined below in this clause
(a)) or, if for any reason short term incentive compensation
was payable to ▇▇▇▇▇ for only one of those two years, the
amount of short term incentive compensation payable to ▇▇▇▇▇
for that year, and
(ii) ▇▇▇▇▇'▇ targeted short term incentive compensation for
the Relevant Year or for the year immediately preceding the
Relevant Year, whichever is higher.
For purposes of this Section 25.2, the term "Relevant Year" means the
year in which the Termination Date occurs unless, during the two year
period ending on the Termination Date, there has occurred one or more
Changes of Control, in which case the term "Relevant Year" means the
year in which occurred the first Change of Control that occurred during
that two year period.
(b) The term "Average Long Term Incentive Compensation" means the
higher of:
(i) the average of the "Applicable Amounts" (as defined in
clauses (x) and (y) below) of the long term incentive
compensation awards payable to ▇▇▇▇▇ for each of the last two
multi-year cycles that ended before the Relevant Year or, if,
for any reason, long term incentive compensation was payable
to ▇▇▇▇▇ for only one of
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those two multi-year cycles, the Applicable Amount of the long
term incentive compensation award payable to ▇▇▇▇▇ for that
multi-year cycle, and
(ii) the Applicable Amount of ▇▇▇▇▇'▇ targeted long term
incentive compensation award for the multi-year cycle that
began with the Relevant Year or, if higher or if no multi-year
cycle began with the Relevant Year, the Applicable Amount of
▇▇▇▇▇'▇ targeted long term incentive compensation award for
the most recently commenced multi-year cycle that began before
the Relevant Year,
For these purposes:
(x) if the plan in question provides for a series of
successive multi-year periods, the last year of each of which
follows the last year of the immediately preceding multi-year
period under the plan by a single year (i.e., a plan that
provides for possible payment of long term incentive
compensation each and every year for as long as the plan
continues), the Applicable Amount of the award for each
multi-year cycle under that plan shall be the full amount
(i.e.: 100%) of the award for that multi-year period; and
(y) if the plan in question provides for a series of
successive multi-year periods, the last year of each of which
follows the last year of the immediately preceding period
under the plan by two years (i.e., a plan that provides for
possible payment of long term incentive compensation every
other year for as long as the plan continues), the Applicable
Amount of the award for each multi-year cycle under that plan
shall be one half of the full amount (i.e.: 50%) of the award
for that multi-year period.
The effect of clauses (x) and (y) is shown in the following
table which assumes that the multi-year long term incentive
compensation plan in question was one described in clause (x)
(contemplating payments every year for successive three-year
cycles) through the three-year cycle ending with the year 1999
and one described in clause (y) (contemplating payments every
other year for successive four-year cycles) starting with a
four-year cycle ending with the year 2001:
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Multi-Year Cycle Last Year "Applicable Amount" of Full Award
for the Multi-Year Cycle
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1996-1998 1998 100%
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1997-1999 1999 100%
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1998-2001 2001 50%
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2000-2003 2003 50%
----------------------------------------------------------------------------------------
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----------------------------------------------------------------------------------------
2002-2005 2005 50%
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As used in this Section 25.2, incentive compensation means any cash based
incentive compensation, including bonuses, and is calculated before any
reduction on account of deferrals; short term incentive compensation means
incentive compensation under all plans for periods of time of one year or less
and long term incentive compensation means incentive compensation under all
plans for periods of time of more than one year; targeted long term or short
term incentive compensation, as the case may be, means: (w) if the incentive
compensation plan, program, or arrangement in question designates a targeted
amount or a targeted level of achievement applicable to ▇▇▇▇▇, it means that
targeted amount or level, (x) if the incentive compensation plan, program, or
arrangement in question has only one level of payout applicable to ▇▇▇▇▇ (other
than zero), it means that level (i.e. the level other than zero), (y) if the
incentive compensation plan, program, or arrangement in question does not
designate a targeted amount or level of achievement applicable to ▇▇▇▇▇ but does
have multiple anticipated levels of possible payout or achievement applicable to
▇▇▇▇▇, it means (in each case excluding from consideration any level that
results in zero payout) the middle level of payout or achievement applicable to
▇▇▇▇▇ (or if there are an even number of levels, the average of the two levels
if there are only two levels or the average of the middle two levels if there
are four or more levels), and (z) in all other cases, the amount anticipated or
projected to be paid under the plan, program, or arrangement in question at the
time the performance period in question commenced.
25.3 Base Salary. The term "Base Salary" means the salary payable to
▇▇▇▇▇ from time to time before any reduction for voluntary contributions to the
KeyCorp 401(k) Plan or any other deferral under any other plan. Base Salary does
not include imputed income from payment by Key of country club membership fees
or other noncash benefits.
25.4 Board of Directors. The term "Board of Directors," when used other
than with specific reference to another entity, means the Board of Directors of
Key.
25.5 Change of Control. A "Change of Control" shall be deemed to have
occurred if, at any time after the date of this Agreement and while ▇▇▇▇▇
remains in the employ of Key, there is a Change of Control under any of clauses
(a), (b), (c), or (d) below. For these purposes, Key will be deemed to have
become a subsidiary of another corporation if any other corporation (which term
shall, for all purposes of this Section 25.5, include, in addition to a
corporation, a limited liability company, partnership, trust, or other
organization) owns, directly or indirectly, 50 percent or more of the total
combined outstanding voting power of all classes of stock of Key or any
successor to Key.
(a) A Change of Control will have occurred under this clause (a) if Key
is a party to a transaction pursuant to which Key is merged with or
into, or is consolidated with, or becomes the subsidiary of another
corporation and either
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(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 Key becomes a
subsidiary in the transaction) of the ultimate parent of Key
represent or were issued in exchange for voting securities of
Key outstanding immediately prior to the transaction, or
(ii) immediately after giving effect to that transaction,
individuals who were directors of Key on the day before the
first public announcement of (x) the pendency of the
transaction or (y) 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 Key becomes a subsidiary in the
transaction) of the ultimate parent of Key.
(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 Key or any person (as the term
"person" is used in Section 13(d) and Section 14(d)(2) of the ▇▇▇▇ ▇▇▇)
is or becomes the beneficial owner of 35% or more of the outstanding
voting stock of Key or there is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report), each as
adopted under the 1934 Act, disclosing the acquisition of 35% or more
of the outstanding voting stock of Key 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 Board of Directors any person or entity
makes a public announcement of a bona fide intention (A) to
engage in a transaction with Key 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
▇▇▇▇ ▇▇▇) proxies in connection with a proposal that is not
approved or recommended by the 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 Key (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 Key (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 Key'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
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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 Key or any person (as the
term "person" is used in Section 13(d) and Section 14(d)(2) of
the ▇▇▇▇ ▇▇▇) is or becomes the beneficial owner of 25% or
more of the outstanding voting stock of Key or there is a
report filed on Schedule 13D or Schedule 14D-1 (or any
successor schedule, form, or report), each as adopted under
the 1934 Act, disclosing the acquisition of 25% or more of the
outstanding voting stock of Key in a transaction or series of
transactions by any person (as defined earlier in this
subclause (x)).
(y) Key is a party to a transaction pursuant to which Key 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
Key becomes a subsidiary in the transaction) of the ultimate
parent of Key represent or were issued in exchange for voting
securities of Key outstanding immediately prior to such
transaction or less than 51% of the directors of the surviving
or resulting corporation or (if Key becomes a subsidiary in
the transaction) of the ultimate parent of Key were directors
of Key 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 Key.
(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 Key.
25.6 Competitive Activity. ▇▇▇▇▇ shall be deemed to have engaged in
"Competitive Activity" if he engages, without Key's prior written consent, in
any business or business activity in which Key or any of its Subsidiaries
engages, including, without limitation, engaging in any business activity in the
banking or financial services industry (other than as a director, officer, or
employee of Key or any of its Subsidiaries) or has an ownership interest in, or
serves as a director, officer, agent, or employee of, or in any other capacity
with, any Financial Services Company or renders services of a consultative,
advisory, or other nature to any Financial Services Company. Notwithstanding the
foregoing, ▇▇▇▇▇ will not be deemed to have engaged in Competitive Activity
solely because of any one or more investments he may make in any one
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or more for profit entity or entities, none of which is a Financial Services
Company, or solely because he owns stock in a publicly held Financial Services
Company that constitutes not more than 1% of the outstanding stock of that
Financial Services Company.
25.7 Day. A "day" as used in this Agreement means a calendar day unless
business day is specifically referred to.
25.8 Demotion or Removal. ▇▇▇▇▇ shall be deemed to have been subjected
to "Demotion or Removal:"
(a) if ▇▇▇▇▇ is not elected Chairman of the Board of Key immediately
after Key's Annual Meeting of Shareholders in May 2001, or if, having
been so elected, he ceases to be Chairman of the Board of Key (or,
after a Change of Control, of the Surviving Entity) at any time before
the expiration of the term of his employment pursuant to Section 6.1,
other than as a result of the termination of his employment by Key for
Cause or of his Voluntary Resignation or Voluntary Retirement, death,
or disability,
(b) if ▇▇▇▇▇ ceases to be or have the responsibilities, duties, or
authorities of Chief Executive Officer of Key (or, after a Change of
Control, of the Surviving Entity) at any time before the expiration of
the term of his employment pursuant to Section 6.1, other than as a
result of the termination of his employment by Key for Cause or of his
Voluntary Resignation or Voluntary Retirement, death, or disability, or
(c) if ▇▇▇▇▇ ceases to be a director of Key (or, after a Change of
Control, of the Surviving Entity) at any time before the expiration of
the term of his employment pursuant to Section 6.1, other than as a
result of the termination of his employment by Key for Cause or of his
Voluntary Resignation or Voluntary Retirement, death, or disability.
25.9 Financial Services Company. The term "Financial Services Company"
means a bank, bank holding company, savings and loan association, building and
loan association, savings and loan holding company, insurance company,
investment banking, or securities company, or other financial services company,
other than Key or any of its Subsidiaries.
25.10 Impermissible. The term "Impermissible," when used in the context
of ▇▇▇▇▇'▇ continued coverage by and participation in any of the Retirement
Plans or Savings Plans shall mean that such a continuation would violate the
provisions of any such plan, would cause any such plan that is or is intended to
be qualified under Section 401(a) of the Internal Revenue Code to fail to be so
qualified, would require shareholder approval, or would be unlawful.
25.11 Long Term Disability Plan. The term "Long Term Disability Plan"
means and includes the KeyCorp Long Term Disability Plan as from time to time
amended, restated, or otherwise modified, including any long term disability
plan or program that, after the Effective Date, succeeds, replaces, or is
substituted for that plan and includes long term disability benefits
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or rights provided pursuant to or under insurance contracts maintained by Key
applicable to executive officers of Key.
25.12 Majority Action. The term "Majority Action," when used in
reference to the Board of Directors, means an action taken by the affirmative
vote of a majority of the entire number of members of the Board of Directors.
25.13 Retiree Medical Benefits Plan. The term "Retiree Medical Benefits
Plan" means and includes the KeyCorp Medical Benefits Plan For Retirees as from
time to time amended, restated, or otherwise modified, including any plan that,
after the Effective Date, succeeds, replaces, or is substituted for that plan.
25.14 Retirement Plans. The term "Retirement Plans" means and includes
the KeyCorp Cash Balance Pension Plan, which succeeded by merger the Retirement
Plan for Employees of Society Corporation and Subsidiaries, and the Supplemental
Retirement Plan, in all cases, as from time to time amended, restated, or
otherwise modified, including any plan that, after the Effective Date, succeeds,
replaces, or is substituted for any such plan, and all retirement plans of any
nature maintained by Key or any of its Subsidiaries in which ▇▇▇▇▇ was
participating prior to the Termination Date. Reference to a "Retirement Plan,"
in the singular, means any of the Retirement Plans.
25.15 Savings Plan. The term "Savings Plans" means and includes the
KeyCorp 401(k) Savings Plan and the KeyCorp Excess 401(k) Savings Plan, in both
cases, as from time to time amended, restated, or otherwise modified, including
any plan that, after the Effective Date, succeeds, replaces, or is substituted
for either such plan, and all salary reduction, savings, profit-sharing, or
stock bonus plans (including, without limitation, all plans involving employer
matching contributions, whether or not constituting a qualified cash or deferred
arrangement under Section 401(k) of the Internal Revenue Code), maintained by
Key or any of its Subsidiaries in which ▇▇▇▇▇ was participating prior to the
Termination Date. Reference to a "Savings Plan," in the singular, shall mean any
of the Savings Plans.
25.16 Subsidiary. The term "Subsidiary," as of any time, means any
corporation, bank, partnership, or other entity a majority of the voting control
of which is directly or indirectly owned or controlled at that time by Key or,
after a Change of Control, by the Surviving Entity.
25.17 Surviving Entity. The term "Surviving Entity" means the entity
surviving or resulting from any Change of Control involving Key or (if Key
becomes a subsidiary in the transaction) the ultimate parent of Key.
25.18 Supplemental Retirement Plan. The term "Supplemental Retirement
Plan" means the KeyCorp Supplemental Retirement Plan, which succeeded by merger
the Amended and Restated Society Corporation Supplemental Retirement Plan, in
all cases, as from time to time amended, restated, or otherwise modified,
including any plan that, after the Effective Date, succeeds, replaces, or is
substituted for the KeyCorp Supplemental Retirement Plan.
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25.19 Termination Date. The term "Termination Date" means the date on
which ▇▇▇▇▇'▇ employment with Key and its Subsidiaries terminates.
25.20 Voluntary Resignation. The term "Voluntary Resignation" means a
termination by ▇▇▇▇▇ of his employment with Key and its Subsidiaries before the
expiration of the term of his employment pursuant to Section 6.1 by voluntarily
resigning at his own instance without having been requested to so resign by Key,
except that any resignation by ▇▇▇▇▇ will not be deemed to be a Voluntary
Resignation if it occurs at a time when ▇▇▇▇▇ is entitled to terminate his
employment on grounds of Constructive Termination. The term "Voluntary
Resignation" includes a Voluntary Retirement if the Voluntary Retirement occurs
before the expiration of the term of ▇▇▇▇▇'▇ employment pursuant to Section 6.1;
provided, however, ▇▇▇▇▇ will not be considered to have Voluntarily Resigned if
▇▇▇▇▇ retires after February 1, 2011 (the tenth anniversary of the Effective
Date) or, if he retires earlier, he does so with the approval of the Board of
Directors or the committee thereof that serves as the compensation committee.
25.21 Voluntary Retirement. The term "Voluntary Retirement" means a
termination by ▇▇▇▇▇ of his employment with Key and its Subsidiaries by
voluntarily retiring at his own instance without having been requested to so
retire by Key, except that any retirement by ▇▇▇▇▇ will not be deemed to be a
Voluntary Retirement if it occurs at a time when ▇▇▇▇▇ is entitled to terminate
his employment on grounds of Constructive Termination.
IN WITNESS WHEREOF, Key and ▇▇▇▇▇ have executed this Agreement, Key by
its duly authorized Chairman of the Board, as of the date first written above.
KEYCORP
By
--------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Chairman of the Board
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ III
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