Exhibit 10.5
AGREEMENT
THIS AGREEMENT ("Agreement") is made as of the 17th day of January, 2002,
between KEYCORP, an Ohio corporation ("Key"), and _______________________ (the
"Executive").
Key is entering into this Agreement in recognition of the importance of the
Executive's 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 the Executive's continued attention and dedication to the
Executive's duties in the potentially disruptive circumstances of a possible
Change of Control of Key. (As used in this Agreement, the terms "Subsidiaries"
and "Change of Control" and certain other capitalized terms have the meanings
ascribed to them in Section 8, at the end of this Agreement.)
Key and the Executive agree, effective as of the date first set forth above, as
follows:
1. Basic Severance Benefits. The benefits described in Sections 1.1, 1.2, and
1.3 below are subject to the limitations set forth in Sections 5.1 (which
requires an election among applicable agreements providing severance benefits if
more than one such agreement would apply in the particular circumstances of the
termination of the Executive's employment and stipulates that any payments
received under this Agreement are in lieu of other claims or rights), 5.2
(regarding withholding), and 5.3 (requiring the execution of a waiver and
release by the Executive).
1.1 If Employment is Terminated Without Cause, etc., Within Two Years of a
Change of Control. If, within two years following the occurrence of a
Change of Control, the Executive's employment with Key and its Subsidiaries
is terminated by Key or its Subsidiary for any reason other than Cause,
Disability, or death or by the Executive after a Reduction of Compensation
or a Mandatory Relocation has occurred:
(a) Lump Sum Payment. Key shall pay to the Executive, within 30
business 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 during the one year period ending
on the date of the Change of Control) plus (ii) Average Annual
Incentive Compensation; and
(b) Retirement and Savings Plans. Effective as of the Termination
Date, the Executive's interest in all Relevant Plans shall become
fully vested and nonforfeitable and the Executive's right to and
interest in all subsequent accruals provided for in the remainder of
this Section 1.1(b) under any of the Relevant Plans shall also be
fully vested and nonforfeitable. For the period beginning on the day
after the Termination Date and ending on the third anniversary of the
Termination Date (the "Section 1.1 Benefit Period"), Key shall cause
the Executive to continue to be covered by and to participate in all
of the Relevant Plans in the same manner and to the same extent as if
the Executive continued in the full-time employ of Key throughout the
Section 1.1 Benefit Period, except that, if Key determines that such
coverage or participation in any one or more of the Relevant Plans is
Impermissible, the Executive shall continue to be covered by and
participate as aforesaid in all of the Relevant Plans as to which such
coverage or participation is not Impermissible and, with respect to
each Relevant Plan as to which
such continued coverage or participation is Impermissible, Section
1.4(b) shall apply. With respect to each Discontinued Plan, Section
1.4(c) shall apply.
1.2 If Employment is Terminated by Executive for Good Reason During a
Window Period. Except as provided in the last sentence of this Section 1.2,
if the Executive's employment with Key and its Subsidiaries is terminated
by the Executive for Good Reason during a Window Period:
(a) Lump Sum Payment. Key shall pay to the Executive, within 30
business days after the Termination Date, a lump sum severance benefit
equal to one and one half times the sum of (i) one year's Base Salary
(at the highest rate in effect at any time during the one year period
ending on the date of the Change of Control) plus (ii) Average Annual
Incentive Compensation, and
(b) Retirement and Savings Plans. Effective as of the Termination
Date, the Executive's interest in all Relevant Plans shall become
fully vested and nonforfeitable and the Executive's right to and
interest in all subsequent accruals provided for in the remainder of
this Section 1.2(b) under any of the Relevant Plans shall also be
fully vested and nonforfeitable. For the period beginning on the day
after the Termination Date and ending eighteen months, to the day,
after the Termination Date (the "Section 1.2 Benefit Period"), Key
shall cause the Executive to continue to be covered by and to
participate in all of the Relevant Plans in the same manner and to the
same extent as if the Executive continued in the full-time employ of
Key throughout the Section 1.2 Benefit Period, except that, if Key
determines that such coverage or participation in any one or more of
the Relevant Plans is Impermissible, the Executive shall continue to
be covered by and participate as aforesaid in all of the Relevant
Plans as to which such coverage or participation is not Impermissible
and, with respect to each Relevant Plan as to which such continued
coverage or participation is Impermissible, Section 1.4(b) shall
apply. With respect to each Discontinued Plan, Section 1.4(c) shall
apply.
This Section 1.2 shall not apply if, at the Termination Date, (x) there has
been either any Reduction of Compensation or any Mandatory Relocation (in
which event Section 1.1 would apply to the termination) or (y) Key or any
Subsidiary has Cause to terminate the Executive's employment (in which case
no lump sum severance or retirement benefits would be payable or provided
under either of Sections 1.1 or 1.2).
1.3 Payment of Cost of COBRA Health Benefits. If the Executive becomes
entitled to payment of a lump sum severance benefit under either of
Sections 1.1 or 1.2 of this Agreement and the Executive elects to continue
to receive health benefits pursuant to an election that Key or any
Subsidiary is required to provide to the Executive in order to comply with
Section 4980B(f) of the Internal Revenue Code (commonly referred to as
"COBRA continuation coverage") during the period specified in Section
4980B(f) (the "COBRA continuation period"), Key will pay the cost of
continuing those benefits from the Termination Date through the first to
occur of (a) the end of the COBRA continuation period or (b) the date on
which the Executive becomes employed (other than on a part-time or
temporary basis) by any other person or entity.
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1.4 Provisions Applicable to Continued Retirement and Savings Plan
Participation.
(a) If the Executive becomes entitled to payment of a lump sum
severance benefit under either of Section 1.1 or Section 1.2, the
rules set forth in the remainder of this Section 1.4(a) shall be
applicable for purposes of all Relevant Plans:
(i) the entire Section 1.1 Benefit Period or Section 1.2 Benefit
Period (each, a "Benefit Period"), as the case may be, shall be
included in determining the Executive's years of service,
(ii) amounts received by the Executive under clause (a)(i) of
either of Section 1.1 or Section 1.2, as the case may be, shall
be deemed to be base salary received by the Executive ratably
during the applicable Benefit Period, and
(iii) amounts received by the Executive under clause (a)(ii) of
either of Section 1.1 or Section 1.2, as the case may be, to the
extent allocable to short term incentive compensation that was
taken into account in determining Average Annual Incentive
Compensation, shall be deemed to be short term incentive
compensation received by the Executive ratably during the
applicable Benefit Period.
(b) If either Section 1.1(b) or Section 1.2(b) becomes applicable and
at any time during the applicable Benefit Period, Key determines in
good faith that continuing the Executive's coverage by and
participation in any of the Relevant Plans during the applicable
Benefit Period is Impermissible, the Executive shall not be covered by
and participate in such affected plan or plans during the applicable
Benefit Period, but Key shall provide to the Executive under this
Agreement, as a supplemental retirement benefit, payments and benefits
that put the Executive in the same position that the Executive would
have been in had the Executive continued to be covered by and to
participate in all such affected plans throughout the applicable
Benefit Period (taking into account the rules set forth in Section
1.4(a) above) to the same extent as the Executive was a participant
immediately before the Termination Date, with the supplemental
payments and benefits under this sentence being payable to the
Executive (or, if applicable, to the Executive's spouse, 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.
(c) If either Section 1.1(b) or Section 1.2(b) becomes applicable and
any of the Relevant Plans are Discontinued Plans, as to each such
Discontinued Plan, Key shall provide to the Executive under this
Agreement, as a supplemental retirement benefit, payments and benefits
that put the Executive in the same position that the Executive would
have been in had the Discontinued Plan continued through the end of
the applicable Benefit Period without having become a Discontinued
Plan and had the Executive continued to be covered by and to
participate in that Discontinued Plan throughout the applicable
Benefit Period (taking into account the rules set forth in Section
1.4(a) above) to the same extent as the Executive was a participant
immediately before the date of the Change of Control, with the
supplemental payments and benefits under this sentence being payable
to the Executive (or, if applicable, to the Executive's spouse,
estate, or designated beneficiary)
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at the same time and with the same payment options as would be
applicable under the Discontinued Plan, provided however, that to the
extent the Discontinued Plan has been substituted for by another
Relevant Plan, the amount payable by Key under this Section 1.4(c)
shall be offset by the amounts actually paid under that substitute
plan.
2. Certain Compensation Guaranties During Two Years following a Change of
Control. For so long as the Executive remains in the employ of Key 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 the Executive's employment during such two year period being the
"Guaranteed Compensation Period"), the Executive shall be entitled to the
Incentive Compensation Guaranty set forth in Section 2.1 and to the Option/SAR
Guaranty set forth in Section 2.2.
2.1 Guaranteed Level of Incentive Compensation. Except as otherwise
provided in Section 2.3, Key shall cause the Executive to receive, during
the Guaranteed Compensation Period, as incentive compensation, an amount
that, on an annualized basis, is at least equal to the Executive's 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 the Executive
with respect to the Executive's employment during the Guaranteed
Compensation Period. Except as and to the extent otherwise permitted by any
of the provisions of Section 2.3:
(a) Key shall make payments to the Executive in cash that satisfy the
Incentive Compensation Guaranty quarterly in arrears, within 30 days
after the end of each calendar quarter for each quarter or portion
thereof during the Guaranteed Compensation Period;
(b) If the Executive's employment terminates for any reason other than
Cause, Key shall pay all unpaid guaranteed incentive compensation with
respect to the Guaranteed Compensation Period to the Executive in a
lump sum by not later than 30 business days after the Termination
Date; and
(c) If the Executive's employment is terminated by Key for Cause, Key
shall not be required to pay to the Executive any amount of incentive
compensation on account of the Incentive Compensation Guaranty that
was not required to have been paid before the Termination Date.
2.2 Guaranteed Participation in Stock Option and SAR Plans. During the
Guaranteed Compensation Period, the Executive shall participate fully (and
at a level at least substantially equivalent to that of comparable senior
executives of Key) in each and every stock option and stock appreciation
right plan in which similarly situated executives of Key and its
Subsidiaries generally participate. The guaranty of full participation set
forth in this Section 2.2 is hereinafter sometimes referred to as the
"Option/SAR Guaranty."
2.3 Exceptions to and Alternative Means of Satisfying the Incentive
Compensation Guaranty. For purposes of the exceptions and alternative means
of satisfying the Incentive Compensation Guaranty that are set forth in
this Section 2.3, the Incentive Compensation
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Guaranty shall be deemed to be made up of two parts, the "Short Term Part"
and the "Long Term Part," each of which shall bear the same proportion,
respectively, to the entire Incentive Compensation Guaranty as Average
Short Term Incentive Compensation and Average Long Term Incentive
Compensation bear, respectively, to Average Annual Incentive Compensation.
(a) Bona fide Short Term Incentive Compensation Plan Exception. If (i)
Key maintains a bona fide short term incentive compensation plan that
would satisfy the Short Term Part if the Executive received short term
incentive compensation under that plan at the Executive's target
level; (ii) Key, in administering that plan in good faith and without
discriminating against the Executive, utilizes a performance factor
that is intended to rate for the short term compensation cycle in
question either the corporation's overall performance or the overall
performance of the business unit in which the Executive works; (iii)
that performance factor is uniformly applied (either in establishing
an incentive compensation pool or against each participant's target)
to all participants in the plan or to all participants in the plan
that work in the business unit in which the Executive works, as the
case may be; and (iv) the application of that factor reduces the short
term incentive compensation payable under that plan to a level below
the Executive's target level; then payment of the short term incentive
compensation, if any, due to the Executive at the reduced level under
that plan shall satisfy Key's obligation under the Short Term Part for
that particular short term compensation cycle.
(b) Annual Payment Exception. If Key maintains a bona fide short term
incentive compensation plan that would satisfy the Short Term Part if
the Executive received short term incentive compensation under that
plan at the Executive's target level and that plan provides for
payment of all amounts earned at regularly scheduled times not less
frequently than once a year, Key may satisfy the Short Term Part by
paying incentive compensation to the Executive under that plan (at not
less than the Executive's target level or as reduced if permitted by
2.3(a) above) at those regularly scheduled times, except that if
Executive's employment terminates for any reason other than Cause, Key
shall make payments under that plan, pro rated to include all periods
within the Compensation Guaranty Period as to which the Executive has
not yet received incentive compensation under that plan, within 30
business days after the Termination Date.
(c) Issuance of Restricted Stock Alternative. As an alternative to
paying Executive cash to satisfy the Long Term Part, Key may continue
to make LTIC Restricted Stock Grants to the Executive each year during
the Guaranteed Compensation Period that:
(i) are made during the same calendar quarter of the year as the
calendar quarter during which Key made such grants in the year
immediately preceding the Change Year (but if Key made such
grants during more than one calendar quarter in the year
immediately preceding the Change Year, then the new grant shall
be made during the same calendar quarter of the year as the
calendar quarter during which Key made grants to the highest
number of officers in the year immediately preceding the Change
Year);
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(ii) have a Fair Market Value that on an annual basis is at least
equal to the Executive's Average Long Term Incentive
Compensation;
(iii) provide for time lapsed vesting of the restricted stock
subject to the grant so that the entire grant will be fully
vested not later than the third anniversary of the date of grant
if the Executive continues to be employed through that date; and
(iv) have the further provision that, upon any termination of the
Executive's employment other than a termination for Cause
(including, without limitation, any termination by reason of
death, disability, voluntary or involuntary retirement, or
resignation), if, as of the Termination Date, less than a
proportionate part of the Common Shares subject to the LTIC
Restricted Stock Grant granted to the Executive during the
Guaranteed Compensation Period has vested, then an additional
portion of those Common Shares shall vest immediately on the
Termination Date so that, in the aggregate, a proportionate part
has vested as of the Termination Date. For these purposes, "a
proportionate part" means the full number of Common Shares in the
LTIC Restricted Stock Grant multiplied by a fraction, the
numerator of which is the number of days between (x) January 1 of
the calendar year in which the LTIC Restricted Stock Grant was
made and (y) the last day of the Guaranteed Compensation Period,
inclusive, and the denominator of which is 1095 (i.e., 365 times
three).
If Key makes LTIC Restricted Stock Grants as provided in this 2.3(c)
Key will have satisfied the Long Term Part.
3. Other Benefits.
3.1 Reimbursement of Certain Expenses After a Change of Control.
(a) From and after a Change of Control, Key shall pay, as incurred,
all expenses of the Executive, including the reasonable fees of
counsel engaged by the Executive, of defending any action brought to
have this Agreement declared invalid or unenforceable.
(b) From and after a Change of Control, Key shall pay, as incurred, all
expenses of the Executive, including the reasonable fees of counsel
engaged by the Executive, of prosecuting any action to compel Key to
comply with the terms of this Agreement upon receipt from Executive of
an undertaking to repay Key for such expenses if, and only if, it is
ultimately determined by a court of competent jurisdiction that the
Executive had no reasonable grounds for bringing that action (which
determination need not be made simply because the Executive fails to
succeed in the action).
(c) From and after a Change of Control, expenses (including attorney's
fees) incurred by the Executive in defending any action, suit, or
proceeding commenced or threatened (whether before or after the Change
of Control) against the Executive 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 undertaking by or
on behalf of the Executive in which the Executive agrees to reasonably
cooperate with Key or the Subsidiary, as the case may be,
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concerning the action, suit, or proceeding, and (i) if the action,
suit, or proceeding is commenced or threatened against the Executive
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 the Executive's action or failure to act involved an
act or omission undertaken with deliberate intent to cause injury to
Key or a Subsidiary or undertaken with reckless disregard for the best
interests of Key or a Subsidiary, or (ii) if the action, suit, or
proceeding is commenced or threatened against the Executive for any
action or failure to act as an officer or employee, to repay the
amount if it is ultimately determined that the Executive is not
entitled to be indemnified. The obligation of Key to advance expenses
provided for in this Section 3.1(c) shall not be deemed exclusive of
any other rights to which the Executive may be entitled under the
articles of incorporation or regulations of Key or of any Subsidiary,
any agreement, vote of shareholders or disinterested directors, or
otherwise.
3.2 Indemnification. From and after a Change of Control, Key shall
indemnify the Executive, to the full extent permitted or authorized by the
Ohio General Corporation Law as it may from time to time be amended, if the
Executive is (whether before or after the Change of Control) 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 the Executive 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
3.2 shall not be deemed exclusive of any other rights to which the
Executive 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
the Executive's official capacity and as to action in another capacity
while holding such office, and shall continue as to the Executive after the
Executive has ceased to be a director, trustee, officer, or employee and
shall inure to the benefit of the heirs, executors, and administrators of
the Executive.
3.3 Disability. If, after a Change of Control and prior to the Termination
Date, the Executive is unable to perform services for Key or any Subsidiary
for any period by reason of disability of the Executive, Key will pay and
provide to the Executive all compensation and benefits to which the
Executive would have been entitled had the Executive continued to be
actively employed by Key or any Subsidiary through the earliest of the
following dates: (a) the first date on which the Executive is no longer so
disabled to such an extent that the Executive is unable to perform services
for Key or any Subsidiary (whereupon the Executive shall be restored to his
duties and this Agreement shall apply in accordance with its terms), (b)
the date on which the Executive becomes eligible for payment of long term
disability benefits under a long term disability plan generally applicable
to executives of Key or a Subsidiary, (c) the date on which Key has paid
and provided 24 months of compensation and benefits to the Executive during
the Executive's disability, or (d) the date of the Executive's death.
3.4 Gross-Up of Payments Deemed to be Excess Parachute Payments.
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(a) Key and the Executive acknowledge that, following a Change of
Control, one or more payments or distributions to be made by Key to or
for the benefit of the Executive (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 the Executive 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 the Executive's 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 3.4,
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 the Executive within
30 days after the Termination Date or such earlier time as is
requested by Key. Key and the Executive 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 3.4.
(b) If the Accounting Firm determines that any Payment gives rise,
directly or indirectly, to liability on the part of the Executive 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 the Executive, from time to time and at the same time as
any Payment constituting an excess parachute payment is paid or
provided to the Executive, in such amounts as are necessary to put the
Executive 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 the Executive 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.
(c) If the Internal Revenue Service determines that any Payment gives
rise, directly or indirectly, to liability on the part of the
Executive 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 the Executive 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 the Executive 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 the
Executive 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.
(d) If Key desires to contest any determination by the Internal
Revenue Service with respect to the amount of excise tax under Section
4999, the Executive shall, upon receipt
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from Key of an unconditional written undertaking to indemnify and hold
the Executive 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 clause (d) shall require the Executive to
incur any expense other than expenses with respect to which Key has
paid to the Executive sufficient sums so that after the payment of the
expense by the Executive and taking into account the payment by Key
with respect to that expense and any and all taxes that may be imposed
upon the Executive as a result of the Executive's receipt of that
payment, the net effect is no cost to the Executive. Nothing in this
clause (d) shall require the Executive to extend the statute of
limitations with respect to any item or issue in the Executive's 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, the
Executive receives a refund of a Section 4999 excise tax previously
paid and/or any interest with respect thereto, the Executive shall
promptly pay to Key such amount as will leave the Executive, net of
the repayment and all tax effects, in the same position, after all
taxes and interest, that the Executive would have been in if the
refunded excise tax had never been paid.
4. 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 the Executive. The Executive shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise. Except as provided in Section 1.3, the amount of any
payment provided for under this Agreement shall not be reduced by any
compensation or benefits earned by the Executive as the result of employment by
another employer or otherwise after the termination of the Executive's
employment. Neither the provisions of this Agreement, nor the execution of the
waiver and release referred to in Section 5.3 below, nor the making of any
payment provided for hereunder shall reduce any amounts otherwise payable, or in
any way diminish the Executive's rights, under any incentive compensation plan,
stock option or stock appreciation rights plan, deferred compensation plan,
restricted stock plan or agreement, 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 will
continue to be governed by their respective terms.
5. Certain Limitations on Benefits.
5.1 Election of Benefits Required; Payments in Lieu of Other Claims or
Rights. If (a) the Executive is a party to either or both of an employment
agreement (which includes any letter agreement regarding Executive's
employment with Key or any Subsidiary) or severance agreement with Key or
any Subsidiary (singularly or collectively, the "Prior Agreement"), and (b)
the Executive's employment is terminated under circumstances giving rise to
a right on the part of the Executive to receive continuing compensation,
separation pay, or other severance benefits under the Prior Agreement and
under this Agreement, the Executive shall have the right to elect to have
either the Prior Agreement (if and only to the extent the Prior Agreement
is applicable) or this Agreement (if and only to the extent this Agreement
is
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applicable), but not both, apply to the termination. If this Section 5.1
applies: (x) Key shall not make any payments arising out of the termination
of the Executive's employment, either under the Prior Agreement or under
this Agreement, until after the Executive has delivered to Key a signed
notice of election to receive payments under the Prior Agreement or under
this Agreement, and (y) if the Executive elects to receive payments under
the Prior Agreement, the provisions of Sections 3.1, 3.2, and 3.4 of this
Agreement shall nevertheless continue to be applicable, but without
duplication of payments. If the Executive receives any payments under
Section 1.1(a) or Section 1.2(a), as the case may be, of this Agreement as
a result of the termination of the Executive's employment following a
Change of Control, those payments shall be in lieu of any and all other
claims or rights that the Executive may have for severance, separation,
and/or salary continuation pay upon that termination of the Executive's
employment.
5.2 Taxes; Withholding of Taxes. Without limiting either the right of Key
or its Subsidiary to withhold taxes pursuant to this Section 5.2 or the
obligation of Key to make gross-up payments pursuant to Section 3.4, the
Executive shall be responsible for all income, excise, and other taxes
(federal, state, city, or other) imposed on or incurred by the Executive as
a result of receiving the payments provided in this Agreement, including,
without limitation, the payments provided under Section 1 of this
Agreement. Key or its Subsidiary may withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as Key shall
determine to be required pursuant to any law or government regulation or
ruling. Without limiting the generality of the foregoing, Key or its
Subsidiary may withhold from any amount payable under either of Sections
1.1 or 1.2 of this Agreement amounts sufficient to satisfy any tax
withholding requirements that may arise out of any payment made to the
Executive by Key or any Subsidiary under Section 1.3 of this Agreement.
5.3 Waiver and Release. Key may condition the payment of any amounts
otherwise due under Section 1 of this Agreement upon (a) the execution by
the Executive of a waiver and release in the form attached to this
Agreement as Exhibit A, with blanks appropriately filled and, in the case
of clause (e) contained therein, completed with the number of days that Key
determines is required under applicable law, but in no event more than 45
days, and (b) the observation of such waiting periods, if any, before and
after execution of the waiver and release by the Executive as are required
by law, such as, for example, the waiting periods required for a waiver and
release to be effective with respect to claims under the Age Discrimination
in Employment Act, provided that Key delivers to the Executive such a
waiver and release, appropriately completed, within seven days of the date
on which the Executive's employment is terminated.
6. Term of this Agreement. This Agreement shall be effective upon the date first
above written and shall thereafter apply to any Change of Control occurring on
or before December 31, 2003. Unless this Agreement is terminated earlier
pursuant to Section 6.1, on December 31, 2003 and on December 31 of each
succeeding year thereafter (a "Renewal Date"), the term of this Agreement shall
be automatically extended for an additional year unless either party has given
notice to the other, at least one year in advance of that Renewal Date, that the
Agreement shall not apply to any Change of Control occurring after that Renewal
Date.
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6.1 Termination of Agreement Upon Termination of Employment Before a Change
of Control. This Agreement shall automatically terminate and cease to be of
any further effect on the first date occurring before a Change of Control
on which the Executive is no longer employed by Key or any Subsidiary,
except that, for purposes of this Agreement, any termination of employment
of the Executive that is effected before and in contemplation of a Change
of Control that occurs after the date of the termination shall be deemed to
be a termination of the Executive's employment as of immediately after that
Change of Control and this Agreement shall be deemed to be in effect
immediately after that Change of Control.
6.2 No Termination of Agreement after a Change of Control. If a Change of
Control occurs while this Agreement remains in effect, this Agreement shall
remain effective indefinitely thereafter with respect to any and all
consequences flowing from that Change of Control under the terms of this
Agreement. However, after a Change of Control, Key may terminate this
Agreement with respect to any further Change of Control that might occur
after a future Renewal Date by giving notice, at least one year in advance
of that future Renewal Date, as contemplated above in this Section 6, that
the Agreement shall not apply to any Change of Control occurring after that
future Renewal Date.
7. Miscellaneous.
7.1 Successor to Key. Key shall not consolidate with or merge into any
other corporation, or transfer all or substantially all of its assets to
another corporation or bank, unless such other corporation or bank shall
assume this Agreement in a signed writing and deliver a copy thereof to the
Executive. Upon such assumption the successor corporation or bank 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 or bank.
7.2 Notices. For purposes of this Agreement, 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 or mailed by United States
registered mail, return receipt requested, postage prepaid, and addressed,
in the case of notices to Key or a Subsidiary, as follows:
KeyCorp
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Secretary
and, in the case of notices to the Executive, properly addressed to the
Executive at the Executive's most recent home address as shown on the
records of Key or its Subsidiary, 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.
7.3 Employment Rights. Nothing expressed or implied in this Agreement shall
create any right or duty on the part of Key or the Executive to have the
Executive continue as an officer of Key or a Subsidiary or to remain in the
employment of Key or a Subsidiary.
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7.4 Administration. Key shall be responsible for the general administration
of this Agreement and for making payments under this Agreement. All fees
and expenses billed by the Accounting Firm for services contemplated under
this Agreement shall be the responsibility of Key.
7.5 Source of Payments. Any payment specified in this Agreement to be made
by Key may be made, at the election of Key, directly by Key or through any
Subsidiary of Key. All payments under this Agreement shall be made solely
from the general assets of Key or one of its Subsidiaries (or from a
grantor trust, if any, established by Key for purposes of making payments
under this Agreement and other similar agreements), and the Executive shall
have the rights of an unsecured general creditor of Key with respect
thereto.
7.6 Claims Review Procedure. Whenever Key decides for whatever reason to
deny, whether in whole or in part, a claim for benefits under this
Agreement by the Executive, Key shall transmit a written notice of its
decision to the Executive, which notice shall be written in a manner
calculated to be understood by the Executive and shall contain a statement
of the specific reasons for the denial of the claim and a statement
advising the Executive that, within 60 days of the date on which the
Executive receives such notice, the Executive may obtain review of the
decision of Key in accordance with the procedures hereinafter set forth.
Within such 60-day period, the Executive or the Executive's authorized
representative may request that the claim denial be reviewed by filing with
Key a written request therefor, which request shall contain the following
information:
(a) the date on which the request was filed with Key,
(b) the specific portions of the denial of the Executive's claim that
the Executive requests Key to review, and
(c) any written material that the Executive desires Key to examine.
Within 30 days of the date specified in clause (a) of this Section 7.6, Key
shall conduct a full and fair review of its decision to deny the
Executive's claim for benefits and deliver to the Executive its written
decision on review, written in a manner calculated to be understood by the
Executive, specifying the reasons and the Agreement provisions upon which
its decision is based. Nothing in this Section 7.6 shall be construed as
limiting or restricting the Executive's right to institute legal
proceedings in a court of competent jurisdiction to enforce this Agreement
after complying with the procedures set forth in this Section 7.6 or as
limiting or restricting the scope of the court's review (which review shall
be de novo); provided, further, that the failure of the Executive to comply
with the procedures set forth in this Section 7.6 shall not bar or prohibit
the subsequent compliance by the Executive with those procedures and
thereafter the Executive shall have the right to institute legal
proceedings to enforce this Agreement.
7.7 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.
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7.8 Modification, Waiver, Etc. 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 the Executive 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 that is not set forth expressly in this Agreement. This
Agreement shall inure to the benefit of and be enforceable by the
Executive's personal representatives, executors, administrators,
successors, heirs, and designees. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
7.9 Savings Clause. If any payments otherwise payable to the Executive
under this Agreement are prohibited or limited by any 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 executive change of control payments
that can be made by an FDIC insured institution or its holding company if
the institution is financially troubled (any such limiting statute or
regulation 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)
to the payment by Key to the Executive of the maximum amount that is
permitted (up to the amounts that would be due to the Executive absent
the Limiting Rule); and
(b) the Executive 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 severance, separation pay, and/or salary continuation
plan that may be in effect at the time of the Executive's termination.
Following any such election, the Executive will be entitled to receive
benefits under the agreement or plan elected only if and to the extent the
agreement or plan is applicable and subject to its specific terms.
7.10 Agreement Supersedes Similar Agreement Previously Entered Into. This
Agreement supersedes a similar agreement originally entered into between
Key and the Executive as of ___________________, and that agreement (as
amended, if it has been heretofore amended) is no longer of any force or
effect.
8. Definitions.
8.1 Accounting Firm. The term "Accounting Firm" means the independent
auditors of Key for the fiscal year preceding the year in which the Change
of Control occurred 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
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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")).
8.2 Average Annual Incentive Compensation. The term "Average Annual
Incentive Compensation" means the sum of Average Short Term Incentive
Compensation, as defined in Section 8.4 below, and Average Long Term
Incentive Compensation, as defined in Section 8.3 below. For purposes of
this Agreement:
(a) except as provided in (c) below, incentive compensation means any
cash based incentive compensation, including bonuses and is calculated
before any reduction on account of deferrals;
(b) notwithstanding the fact that they are made in restricted stock
rather than in cash, any LTIC Restricted Stock Grant shall be deemed
to be long term incentive compensation;
(c) special hiring bonuses paid or awarded to a newly hired executive
in connection with that hiring or extraordinary bonuses to an
incumbent executive, outside and beyond Key's regular incentive
compensation program, such as special retention awards to induce an
executive to stay with Key, shall not be treated as incentive
compensation;
(d) short term incentive compensation means incentive compensation for
periods of time of one year or less;
(e) targeted short term incentive compensation means:
(i) if the short term incentive compensation plan, program, or
arrangement in question designates a targeted amount or a
targeted level of achievement for the Executive or the
Executive's job grade, it means that targeted amount or level;
(ii) if the short term incentive compensation plan, program, or
arrangement in question has only one level of payout for the
Executive or the Executive's job grade (other than zero), it
means that level (i.e.: the level other than zero);
(iii) if the short term incentive compensation plan, program, or
arrangement in question does not designate a targeted amount or
level of achievement for the Executive or the Executive's job
grade but does have multiple anticipated levels of possible
payout or achievement for the Executive or the Executive's job
grade, it means (in each case excluding from consideration any
level that results in zero payout) the middle level of payout or
achievement for the Executive or the Executive's job grade (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
(iv) 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.
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For purposes of calculating Average Annual Incentive Compensation under
this Section 8.2, in determining the amount of incentive compensation
(short or long term) payable to or targeted for the Executive for any past
or current incentive compensation period or cycle, if the incentive
compensation was for a partial period or cycle (such as where an executive
becomes a participant in an incentive plan after the incentive compensation
period or cycle has commenced so that the award payable to or targeted for
the executive is prorated), such incentive compensation payable to or
targeted for the Executive shall be determined as if the Executive had
participated throughout the complete incentive compensation period or cycle
in question. For example, if, with respect to a 12-month plan that would
have paid the Executive short term incentive compensation of $12X if the
Executive had been a participant for the full plan year, the Executive
became a participant when only seven months were left in the plan year and
the Executive was therefore paid incentive compensation of only $7X, the
Executive would be treated for purposes of this Section 8.2 as if the
Executive had been a participant for the full plan year and had been paid
incentive compensation of $12X under the plan.
8.3 Average Long Term Incentive Compensation. The term "Average Long Term
Incentive Compensation" means:
(a) if the Change Year is 2002, the dollar value of the 2002 LTIC
Restricted Stock Grant;
(b) if the Change Year is 2003, the higher of:
(i) the dollar value of the 2002 LTIC Restricted Stock Grant, and
(ii) the dollar value of the 2003 LTIC Restricted Stock Grant;
and
(c) if the Change Year is 2004 or any later year, the higher of
(i) the average of the dollar value of the LTIC Restricted Stock
Grants made to the Executive in each of the two years immediately
preceding the Change Year (e.g., the average of the 2003 LTIC
Restricted Stock Grant and the 2004 LTIC Restricted Stock Grant
if the Change Year is 2005), or, if for any reason an LTIC
Restricted Stock Grant was made to Executive in only one of those
two immediately preceding years, the dollar value of the LTIC
Restricted Stock Grant for that single year, and
(ii) the dollar value of the LTIC Restricted Stock Grant for the
Change Year;
except that, if the Executive first became employed by Key or a Subsidiary
during the Change Year or during the year immediately preceding the Change
Year and pursuant to an offer letter or agreement the terms of which were
approved by the Committee, "Average Long Term Incentive Compensation" shall
be not less than the dollar value of the LTIC Restricted Stock Grant target
specified in that offer letter or agreement.
For purposes of this Section 8.3 the dollar value of any LTIC Restricted
Stock Grant means the aggregate Fair Market Value of the restricted Common
Shares subject to that grant as of the date the grant is made, without
regard to changes in Key's stock price after the date of grant or to any
restrictions on those Common Shares.
15
8.4 Average Short Term Incentive Compensation. The term "Average Short Term
Incentive Compensation" means the higher of:
(a) the average of the short term incentive compensation payable to
the Executive for each of the last two years immediately preceding the
Change Year or, if, for any reason, short term incentive compensation
was payable to the Executive for only one of those two years, the
amount of short term incentive compensation payable to the Executive
for that year, and
(b) the Executive's targeted short term incentive compensation for the
Change Year or for the year immediately preceding the Change Year,
whichever is higher,
except that if the Executive first became a participant in Key's short term
incentive compensation program during the Change Year, Average Short Term
Incentive Compensation means the Executive's targeted short term incentive
compensation for the Change Year.
8.5 Base Salary. The term "Base Salary" means the salary payable to the
Executive from time to time before any reduction for voluntary
contributions to the KeyCorp 401(k) Plan or any other deferral. Base Salary
does not include imputed income from payment by Key of country club
membership fees or other noncash benefits.
8.6 Cause. The employment of the Executive by Key or any of its
Subsidiaries shall have been terminated for "Cause" if, after a Change of
Control and prior to the termination of employment, any of the following
has occurred:
(a) the Executive shall have been convicted of a felony,
(b) the Executive commits an act or series of acts of dishonesty in
the course of the Executive's employment which are materially inimical
to the best interests of Key or a Subsidiary and which constitutes the
commission of a felony, all as determined by the vote of three fourths
of all of the members of the Board of Directors of Key (other than the
Executive, if the Executive is a Director of Key) 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) Key or any Subsidiary has been ordered or directed by any federal
or state regulatory agency with jurisdiction to terminate or suspend
the Executive's employment and such order or directive has not been
vacated or reversed upon appeal, or
(d) after being notified in writing by the Board of Directors of Key
to cease any particular Competitive Activity, the Executive shall
intentionally continue to engage in such Competitive Activity while
the Executive remains in the employ of Key or a Subsidiary.
If (x) Key or any Subsidiary terminates the employment of the Executive
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
16
on appeal and the vacation or reversal becomes final and no longer subject
to further appeal, and (z) Key or the Subsidiary fails to offer to
reinstate the Executive to employment within ten days of the date on which
the vacation or reversal becomes final and no longer subject to further
appeal, Key or the Subsidiary will be deemed to have terminated the
Executive without Cause during the two year period beginning on the date of
the Change of Control.
8.7 Change of Control. A "Change of Control" shall be deemed to have
occurred if, at any time while this Agreement is in effect pursuant to
Section 6 hereof, 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 8.7, 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
(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 0000
Xxx) 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 Key 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
17
defined in Rule 14a-1 under the 0000 Xxx) proxies in connection
with a proposal that is not approved or recommended by the Key
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 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
0000 Xxx) 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.
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(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.
8.8 Change Year. The term "Change Year" means the year in which a Change of
Control occurred or, if more than one Change of Control has occurred, the
year in which the earliest Change of Control occurred.
8.9 Common Shares. The term "Common Shares" means common shares of Key.
8.10 Committee. The term "Committee" means the Compensation and
Organization Committee of the Board of Directors of Key or any successor to
that committee.
8.11 Competitive Activity. The Executive shall be deemed to have engaged in
"Competitive Activity" if the Executive:
(a) engages 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
(b) serves as a director, officer, or employee of any bank, bank
holding company, savings and loan association, building and loan
association, savings and loan holding company, insurance company,
investment banking or securities company, mutual fund company, or
other financial services company other than Key or any of its
Subsidiaries (each of the foregoing being hereinafter referred to as a
"Financial Services Company"), or renders services of a consultative
or advisory nature or otherwise to any such Financial Services
Company; provided, however, this clause (b) shall not prohibit or
restrict the Executive from serving in any such capacity with the
consent of Key.
8.12 Disability. For purposes of this Agreement, the Executive's employment
will have been terminated by Key or its Subsidiary by reason of
"Disability" of the Executive only if (a) as a result of bodily injury or
sickness, the Executive has been unable to perform the Executive's normal
duties for Key or its Subsidiary for a period of 180 consecutive days, and
(b) the Executive begins to receive payments under the KeyCorp Long Term
Disability Benefit Plan not later than 30 days after the Termination Date.
8.13 Discontinued Plan. The term "Discontinued Plan" means any Retirement
Plan and/or Savings Plan that:
(a) the Executive was covered by and participating in immediately
before the occurrence of a Change of Control, and
(b) was, between the date of the Change of Control and the Termination
Date, either terminated or altered in such a way as to substantially
reduce the benefits provided to the Executive thereunder without
having been substituted for by a similar plan providing substantially
similar benefits to the Executive.
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8.14 Fair Market Value. The term "Fair Market Value" with respect to Common
Shares means:
(a) if the Common Shares are traded on a national exchange, the mean
between the high and low sales price per Common Share on the national
exchange on the date for which the determination of fair market value
is made or, if there are no sales of Common Shares on that date, then
on the next preceding date on which there were any sales of Common
Shares, or
(b) if the Common Shares are not traded on a national exchange, the
mean between the high and low sales price per Common Share in the
over-the-counter market, National Market System, as report by the
National Quotations Bureau, Inc. and NASDAQ on the date for which the
determination of fair market value is made or, if there are no sales
of Common Shares on that date, then on the next preceding date on
which there were any sales of Common Shares.
8.15 Good Reason. The Executive shall be deemed to have "Good Reason" to
terminate the Executive's employment under this Agreement during a Window
Period if, at any time after the occurrence of a Change of Control and
before the end of the Window Period, either or both of the events listed in
clauses (a) and (b) of this Section 8.15 occurs without the written consent
of the Executive:
(a) following notice by the Executive to Key and an opportunity by Key
to cure, the Executive determines in good faith that the Executive's
position, responsibilities, duties, or status with Key are at any time
materially less than or reduced from those in effect before the Change
of Control or that the Executive's reporting relationships with
superior executive officers have been materially changed from those in
effect before the Change of Control; or
(b) Key's headquarters is relocated outside of the greater Cleveland
metropolitan area (but this clause (b) shall apply only if Key's
headquarters was the Executive's principal place of employment before
the Change of Control).
For purposes of clause (a), Key will be deemed to have had an opportunity
to cure and to have failed to effect a cure if the circumstance otherwise
constituting Good Reason persists (as determined in good faith by the
Executive, whose determination shall be conclusive) for more than seven
calendar days after the Executive has given notice to Key of the existence
of that circumstance.
8.16 Impermissible. The term "Impermissible," when used in the context of
the Executive's 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.
8.17 LTIC Restricted Stock Grant. The term "LTIC Restricted Stock Grant"
means the grant, if any, of restricted stock made by the Committee to the
Executive during any
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particular year as part of Key's ongoing compensation program. For greater
clarity, for purposes of this Agreement:
(a) The grants of restricted stock made by the Committee to certain
officers of Key and its Subsidiaries in 2002, each of which provides
for vesting of one-half of the restricted stock subject to the grant
(the "Time Lapse Restricted Shares") on December 31, 2004 (or earlier
in certain circumstances involving the officer's termination following
a Change of Control) and for vesting of the remaining one-half of the
restricted stock subject to the grant (the "Performance Accelerated
Restricted Shares") on December 31, 2008 (or earlier if a stock price
performance test specified in the resolution is met or if a Change of
Control occurs on or before December 31, 2004) do constitute LTIC
Restricted Stock Grants.
(b) On January 17, 2002, in addition to those grants referred to in
(a) above, the Committee made similar but smaller grants to certain
executives. Each of these smaller grants (i) includes Time Lapse
Restricted Shares that vest on December 31, 2003 (or earlier), rather
than on December 31, 2004 (or earlier), (ii) is not, for purposes of
this Agreement, considered to be an LTIC Restricted Stock Grant, and
(iii) is to be ignored when calculating the Executive's Average Long
Term Incentive Compensation.
(c) The LTIC Restricted Stock Grant, if any, made to the Executive in
2002 is referred to in this Agreement as the "2002 LTIC Restricted
Stock Grant." The terms "2003 LTIC Restricted Stock Grant," "2004 LTIC
Restricted Stock Grant," etc. similarly refer to LTIC Restricted Stock
Grants, if any, made to the Executive by resolution adopted by the
Committee in the specified year.
(d) An extraordinary grant or award of restricted stock made to a
newly hired executive in connection with that hiring (i.e., any
signing or hiring bonus) and a grant or award made to an incumbent
executive outside of Key's regular restricted stock program (e.g., a
special retention grant or award) shall be treated as not being an
LTIC Restricted Stock Grant and shall not be taken into account when
calculating Average Long Term Incentive Compensation.
8.18 Mandatory Relocation. A "Mandatory Relocation" shall have occurred if,
at any time after a Change of Control, the Executive is required to
relocate the Executive's principal place of employment for Key or its
Subsidiary without the Executive's written consent more than 35 miles from
where the Executive was located prior to the Change of Control.
8.19 Reduction of Compensation. A "Reduction of Compensation" shall have
occurred if any one or more of the following occurs:
(a) the Base Salary of the Executive is reduced at any time after a
Change of Control;
(b) following notice by the Executive to Key and an opportunity by Key
to cure, Key fails to satisfy the Short Term Incentive Compensation
Guaranty;
(c) following notice by the Executive to Key and an opportunity by Key
to cure, Key fails to satisfy the Long Term Incentive Compensation
Guaranty; or
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(d) following notice by the Executive to Key and an opportunity by Key
to cure, Key fails to satisfy the Option/SAR Guaranty.
For purposes of clauses (b), (c) and (d), Key will be deemed to have had an
opportunity to cure and to have failed to effect a cure if the failure to
satisfy the Short Term Incentive Compensation Guaranty, the Long Term
Incentive Compensation Guaranty, and/or the Option/SAR Guaranty, as the
case may be, persists (as determined in good faith by the Executive) for
more than seven calendar days after the Executive has given notice to Key
of the existence of that failure.
8.20 Relevant Plans. The term "Relevant Plans" means:
(a) all Retirement Plans and Savings Plans that the Executive was
covered by and participating in immediately before the Termination
Date, and
(b) all Discontinued Plans.
Reference to a "Relevant Plan," in the singular, means any of the Relevant
Plans.
8.21 Retirement Plans. The term "Retirement Plans" means the KeyCorp Cash
Balance Pension Plan and the Supplemental Retirement Plan, each as from
time to time amended, restated, or otherwise modified, and any plan that,
after the date of this Agreement, 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 the Executive was participating prior to
the Termination Date. Reference to a "Retirement Plan," in the singular,
means any of the Retirement Plans.
8.22 Savings Plans. 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 date of this Agreement, 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 the Executive was participating prior to the
Termination Date. Reference to a "Savings Plan," in the singular, shall
mean any of the Savings Plans.
8.23 Supplemental Retirement Plan. The term "Supplemental Retirement Plan"
means the KeyCorp Supplemental Retirement Plan, the KeyCorp Excess Cash
Balance Pension Plan, the KeyCorp Supplemental Retirement Plan for Key
Executives, the KeyCorp Supplemental Retirement Benefit Plan, and the
KeyCorp Executive Supplemental Pension Plan, each as from time to time
amended, restated, or otherwise modified, and any plan that, after the date
of this Agreement, succeeds, replaces, or is substituted for any of such
plans.
8.24 Subsidiary. A "Subsidiary" means any corporation, bank, partnership,
or other entity a majority of the voting control of which is directly or
indirectly owned or controlled at the time in question by Key.
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8.25 Termination Date. The term "Termination Date" means the date on which
the Executive's employment with Key and its Subsidiaries terminates.
8.26 Window Period. The term "Window Period," with respect to any
particular Change of Control, means the three-month period beginning on the
date that falls on the same day of the month as the date of the Change of
Control in the fifteenth month after the month in which the Change of
Control occurs. If at any time there has been more than one Change of
Control, there shall be a separate Window Period with respect to each such
Change of Control.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
KEYCORP
By ____________________________________
Xxxxx X. Xxxxx III
Chairman and Chief Executive Officer
THE "EXECUTIVE"
_______________________________________
______________________
