AMENDED EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS AMENDED EMPLOYMENT AGREEMENT (this “Agreement”) is made at Cleveland, Ohio, as of
September 1, 2009, between KEYCORP, an Ohio corporation (“Key”), and XXXXX X. XXXXX III (“Xxxxx”).
The original version of this Agreement was entered into by Key and Xxxxx as of May 15, 1997, and
was amended as of each of November 20, 1997, July 21, 1999, February 1, 2001, July 18, 2002,
February 15, 2005 January 1, 2007, and January 1, 2008. Further amendments are incorporated below
in this Agreement which replaces and supersedes both the original version and those prior
amendments.
Xxxxx has been elected as Chairman of the Board of Directors, President, and Chief Executive
Officer of Key. Key is entering into this Agreement in recognition of the importance of Xxxxx’x
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 Xxxxx’x 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
24, at the end of this Agreement.)
Key and Xxxxx agree, effective as of the date first set forth above (the “Effective Date”), as
follows:
1. Employment, Term. Key engages and employs Xxxxx 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 Chairman of the Board of Directors, President, and Chief
Executive Officer, 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) Xxxxx’x employment under this Agreement is earlier terminated in accordance with the
provisions of one of Sections 6.2 through 6.7 of this Agreement. Thus, for example, on September
2, 2009 the term of employment under this Agreement will be for three years until September 2,
2012; automatically, without any action by either party, the term will renew and extend itself on
September 3, 2009 so as to be a three year term of employment until September 3, 2012; 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 Xxxxx’x 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. Xxxxx 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 corporations
or organizations that are not in competition with Key or any Subsidiary, except that, Xxxxx shall
obtain the prior approval of the Chairman of the Committee of Key’s Board of
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Directors before accepting a position as director or trustee of any for profit entity, other than
Continental Airlines, Inc. (whether the entity is in corporate or other form).
3. Executive Officer. Except as provided in the last sentence of this Section 3, Xxxxx shall hold
the offices of Chairman of the Board of Directors, President, and Chief Executive Officer of Key
throughout the period of his employment under this Agreement. Key, by action of the Board of
Directors, may, at some point in time after the Effective Date, elect or appoint a different
executive officer with the title of President and such executive officer shall report to Xxxxx
while Xxxxx remains as Chairman of the Board of Directors and Chief Executive Officer of Key.
4. Compensation. For all services to be rendered by Xxxxx 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 Xxxxx, in equal monthly or more frequent installments, Base Salary at a rate of not less than
$1,000,000 per annum. The rate of Xxxxx’x Base Salary shall be subject to increase from time to
time at the discretion of the Committee 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, Xxxxx shall participate
fully in all incentive compensation (long and short term), retirement, savings, stock option,
restricted stock, disability, and other employee benefit and welfare plans or arrangements allowed
or provided by Key in which he would otherwise be eligible for participation as an executive
officer and employee of Key.
5. Certain Compensation Guaranties During Two Years following a Change of Control. For so long as
Xxxxx 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 Xxxxx’x employment during that two year period being the “Guaranteed
Compensation Period”), unless otherwise limited by applicable law, Xxxxx shall be entitled to:
(a) A cash incentive compensation opportunity, which on an annualized basis, is at
least equal to the cash incentive compensation opportunity that Xxxxx was provided
by Key in the last calendar year that ended before the Change of Control, and which
is in no event less than the greatest cash incentive compensation opportunity
provided to any other senior executive of Key during the Guaranteed Compensation
Period
(b) Participation in a supplemental retirement plan or program, or the accrual of a
supplemental retirement benefit which, at minimum, provides Xxxxx with retirement
benefits that are at least equal, on a vested annualized basis to the benefit that
Xxxxx would have accrued under the Supplemental Retirement Plan for the applicable
period as if the Supplemental Retirement Plan had continued after the Change of
Control on the same basis as it was in effect prior to the Change of Control.
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(c) Equity awards, including stock options, restricted stock, phantom shares,
performance shares and restricted units which, at a minimum, provide Xxxxx in the
aggregate with an annual benefit opportunity that is at least equal to the
opportunity that Xxxxx was provided by Key in the last calendar year that ended
before the Change of Control and which is in no event less than the greatest equity
awards provided to any other senior executive of Key during the Guaranteed
Compensation Period.
(d) Participation in a deferred compensation plan(s) or program(s), or the
allocation of a deferred compensation benefit, which, at minimum, equals the benefit
provided to other executives of Key during the Guaranteed Compensation Period.
(e) Participation in Key-sponsored health and welfare plans and qualified retirement
plans including any top hat plans which, at minimum equal the coverage levels
provided to other executives of Key during the Guaranteed Compensation Period.
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 Xxxxx’x employment hereunder (a “Non-Renewal Notice”), Xxxxx’x employment under this
Agreement will terminate at 12:00 Midnight 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 Xxxxx 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 Xxxxx 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 Xxxxx) 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 Xxxxx’x employment continues
through that third anniversary, Xxxxx’x employment under this Agreement shall terminate at
12:00 Midnight on that third anniversary.
6.2 Death or Disability. Xxxxx’x employment hereunder will terminate immediately upon
Xxxxx’x death. Upon Xxxxx’x disability, by reason of his physical or mental impairment to
such an extent that he is unable to substantially perform his duties under this Agreement,
the Board of Directors may terminate Xxxxx’x employment after providing Xxxxx’x with notice
of the same provided that Xxxxx’x disability has continued for a period of 180 consecutive
days or such longer period as the Board of Directors or the Committee shall determine.
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6.3 For “Cause”. Key may terminate Xxxxx’x employment hereunder for “Cause” if:
(a) Xxxxx is convicted of a felony (other than felonious operation of a motor
vehicle);
(b) Xxxxx 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 in good faith by the vote of three quarters of the entire number of
members of the Board of Directors and, if the act or acts are capable of being
cured, Xxxxx fails to cure or take all reasonable steps to cure within 30 days of
notice from the Board of Directors to Xxxxx;
(c) Key or any Subsidiary has been ordered or directed by any federal or state
regulatory agency with jurisdiction to terminate or suspend Xxxxx’x employment, and
notwithstanding, the best efforts of Key to oppose the order or directive, the order
or directive has become final;
(d) Xxxxx 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, Xxxxx 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 By Key Without Cause. Key may terminate Xxxxx’x employment hereunder without Cause at
any time by Majority Action of the Board of Directors.
6.5 By Xxxxx Following Constructive Termination. Xxxxx may terminate his employment
hereunder “on grounds of Constructive Termination” (and, if Xxxxx elects to terminate his
employment in such circumstances, he will be deemed to have been “Constructively Terminated”
and not to have terminated his employment as a result of an “Approved
Retirement/Resignation” and/or “Non-approved Retirement/Resignation”) if:
(a) Xxxxx’x 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) Xxxxx is excluded from full participation in any incentive, equity, option,
restricted stock, annual performance, deferral, bonus, or other compensatory plan
made available to other executive officers of Key generally, and such exclusion from
full participation any incentive, equity, option, restricted stock, annual
performance, deferral, bonus, or other compensatory plan has not been cured within
thirty days after Xxxxx gives notice to the Board of Directors;
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(c) Xxxxx is subject to Demotion or Removal;
(d) Key (by action of the Committee or the Board of Directors) requests Xxxxx’x
resignation or retirement at a time when Key does not have grounds to terminate
Xxxxx’x employment for Cause;
(e) Xxxxx’x principal place of employment for Key is relocated outside of the
Cleveland metropolitan area or Xxxxx is otherwise required by Key to relocate
outside the Cleveland metropolitan area or the headquarters of Key is located
outside of the Cleveland metropolitan area;
(f) 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,
(i) Xxxxx determines in good faith that his responsibilities, duties, or authorities
with Key are materially reduced from those in effect before the Change of Control
and the reduction has not been cured within thirty days after Xxxxx gives notice to
the Board of Directors or (ii) Xxxxx 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 of Key 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 fails to fully address those issues (as determined by
Xxxxx in good faith) within thirty days after Xxxxx gives notice to the Board of
Directors of his determination under this clause (f)(i) or (f)(ii), and the basis of
such determination; or
(g) Any other action or inaction that constitutes a material breach by Key of this
Agreement and such material breach that has not been cured within thirty days after
Xxxxx gives notice to the Board of Directors.
6.6 Xxxxx’x Non-Approved Retirement/Resignation. If, without the approval of the Board of
Directors or the Committee, Xxxxx retires or resigns at any time before February 1, 2011 at
a time when he is not otherwise entitled to terminate his employment on grounds of
Constructive Termination, then in such event, Xxxxx’x retirement or resignation will be
deemed to be a “Non-approved Retirement/Resignation.”
6.7 Xxxxx’x Approved Retirement/Resignation. Xxxxx may terminate his employment hereunder
before the expiration of his term of employment pursuant to Section 6.1 hereof, if Xxxxx
retires or resigns by his own instance without having been requested to so retire or resign
by Key: (i) at any time before February 1, 2011 upon timely notice and approval of the
Board of Directors or the Committee, or (ii) at any time on or after February 1, 2011.
Xxxxx’x retirement or resignation in accordance with the provisions of this Section 6.7 will
be deemed to be an “Approved Retirement/Resignation.” Unless the Board of Directors or the
Committee approves of a shortened notice, Xxxxx will advise (orally or in writing) the
Committee of his intention to retire or resign not less than one year prior to the effective
date of his Approved Retirement/Resignation. Notwithstanding the foregoing provisions of
this Section 6.7,
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however, if Xxxxx retires or resigns at a time when he is otherwise entitled to terminate
his employment on grounds of Constructive Termination (including, if Xxxxx retires or
resigns at the request of Key at a time when Key does not have grounds to terminate Xxxxx’x
employment for Cause), then in such event, Xxxxx will be deemed to have been Constructively
Terminated pursuant to Section 6.5.
7. Severance Payments and Benefits upon Termination.
7.1 If Xxxxx is Constructively Terminated or terminated by Key for any reason other than (i)
pursuant to Section 6.1 on the third anniversary following the giving of a Non-Renewal
Notice, (ii) Cause, or (iii) Xxxxx’x disability or death, unless otherwise limited by
applicable law, Key shall pay Xxxxx,:
(a) Base Salary through Termination Date. Key shall pay to Xxxxx, at the same time
or times as would have been the case absent the termination, any unpaid Base Salary
due or to become due to Xxxxx with respect to any period ending on or before the
Termination Date.
(b) Short Term Incentive Compensation through Termination Date. Key shall pay to
Xxxxx, at the time specified in Section 7.1(h), as short term incentive compensation
with respect to each short term incentive compensation plan in which Xxxxx is a
participant, an amount equal to a pro rata portion of Xxxxx’x targeted short term
incentive compensation under that plan for the calendar year in which the
Termination Date falls. For these purposes, a “pro rata portion” means the
percentage figure determined by dividing the number of days between January 1 of the
calendar year in question through the Termination Date, inclusive, by 365. Any
amount paid by Key to Xxxxx pursuant to this Section 7.1(b) with respect to a
particular short term incentive compensation plan in which Xxxxx is a participant
shall reduce, but not below zero, the amount that Key is required to pay to Xxxxx
under that plan as short term incentive compensation for the calendar year in which
the Termination Date falls; except as provided herein, the short term incentive
compensation plan shall in all other respects be governed by its terms.
(c) Lump Sum Payment. Key shall pay to Xxxxx, at the time specified in Section
7.1(h), 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 Short Term Incentive Compensation..
(d) Additional Retirement Benefit. Key shall pay to Xxxxx, at the time specified in
Section 7.1(h), an additional retirement benefit that shall equal the benefits that
Xxxxx otherwise would have been entitled to receive under the Retirement Plan, the
Supplemental Retirement Plan and the Savings Plan had Xxxxx remained an active full
time employee of Key during the period beginning on the Termination Date and ending
on the third anniversary of the Termination Date (the “Continuing Benefit Period”).
In calculating Xxxxx’x additional retirement benefit under the respective Plans (i)
the entire Continuing Benefit
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Period shall be included for purposes of determining Xxxxx’x years of service for
both vesting and benefit accrual purposes, (ii) the amounts to be provided to Xxxxx
under clause 7.1(c)(i) will be deemed to be Xxxxx’x Base Salary paid ratably during
the Continuing Benefit Period, (iii) the amounts to be provided to Xxxxx under
clause 7(c)(ii) will be deemed to be Xxxxx’x incentive compensation paid ratably
during the Continuing Benefit Period, and (iv) the rate of employer matching
contributions allocated under the Savings Plan shall reflect Xxxxx’x rate of
employer matching contributions under such Plans immediately prior to the
Termination Date. The payment of Xxxxx’x additional retirement benefit, as if
accrued under the Retirement Plan and the Supplemental Retirement Plan, shall be
paid to Xxxxx as an annuity payment in a form elected by Xxxxx under the annuity
benefit payment options otherwise provided under the Retirement Plan and
Supplemental Retirement Plan, and the additional retirement benefit payment as if
accrued under the Savings Plan shall be paid to Xxxxx in a single lump sum cash
payment. Notwithstanding the foregoing provisions of this Section 7.1(d), however,
in the event that Key, during the ordinary course of its business and prior to a
Change of Control, amends or modifies the Retirement Plan, Supplemental Retirement
Plan, and/or the Savings Plan with such amendment or modification resulting in the
termination of Xxxxx’x future accruals or contributions under such Plan(s), then in
such event shall the provisions of this Section 7.1(d) be modified to reflect the
amendment or modification of such Plan(s).
(e) Deferred Savings Plan Benefit. Key shall pay to Xxxxx, at the time specified in
Section 7.1(h), a lump sum cash payment, which shall equal the amount of corporate
contributions that Xxxxx otherwise would be eligible to receive under the KeyCorp
Deferred Savings Plan if Xxxxx actively deferred 6% or more of his Base Salary and
6% or more of his incentive compensation award to the KeyCorp Deferred Savings Plan
during the Continuing Benefit Period (as referenced in Section 7.1(d) hereof). For
purposes of this Section 7.1(e), the amounts provided to Xxxxx under clause
7.1(c)(i) will be deemed to be Xxxxx’x Base Salary paid ratably during the
Continuing Benefit Period, (iii) the amounts to be provided to Xxxxx under clause
7(c)(ii) will be deemed to be Xxxxx’x incentive compensation paid ratably during the
Continuing Benefit Period.
(f) Continued Life, Accidental Death and Dismemberment, and Disability Insurance
Coverage. Through the third anniversary of the Termination Date, Key shall continue
to maintain and shall assume the cost of providing (i) conversion group term life
insurance coverage for the benefit of Xxxxx and his dependants at one times Xxxxx’x
Base Salary coverage level in effect at the time of Xxxxx’x Termination Date
(subject to the conversion coverage requirements of the group term life plan as then
in effect as of Xxxxx’x Termination Date), (ii) conversion accidental death and
dismemberment coverage for the benefit of Xxxxx and his dependants at the coverage
level in effect immediately prior to Xxxxx’x Termination Date (subject to the
conversion coverage requirements of the accidental death and dismemberment plan as
in effect as of Xxxxx’x Termination Date), and (iii) continued coverage under
Xxxxx’x individual policy of disability
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insurance as in effect as of Xxxxx’x Termination Date. After the third anniversary
of the Termination Date, Xxxxx and his dependants may continue to be covered under
the foregoing coverages, provided, however, that Xxxxx and his dependants assume the
cost for such continued insurance coverages.
(g) Retiree Medical Plan Coverage. Key shall provide Retiree Medical Plan coverage
(i) for the benefit of Xxxxx and his wife for their respective lifetimes, and (ii)
for the benefit of each of Xxxxx’x children through the earlier of the date on which
he attains age 23 or has ceased for more than 120 consecutive days to be a full time
student. On each of the first, second and third anniversary of Xxxxx’x Termination
Date, Key shall pay to Xxxxx a lump sum cash payment that shall equal the premium
costs that Xxxxx paid on an after-tax basis over the then preceding 12 months for
coverage under the KeyCorp Retiree Medical Plan for himself and his dependents, as
adjusted to reflect Key’s subsidized cost-sharing arrangement that is otherwise
provided to all similarly situated employees based on their years of service with
Key. After the third anniversary of Xxxxx’x Termination Date, Xxxxx shall not be
entitled to further reimbursement for premium costs for coverage under the KeyCorp
Retiree Medical plan for himself and his dependents, but he shall continue to be
entitled to receive Key’s subsidized cost-sharing arrangement that is otherwise
provided to all similarly situated employees based on their years of service with
Key. Xxxxx may also elect dental coverage for himself and his dependents under the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, provided that Xxxxx and his dependents assume the cost for such dental
coverage.
(h) Timing of Payments. If Xxxxx is a “specified employee” (as such phrase is
defined in Treas. Reg. § 1.409A-1(i) (“Specified Employee”) on the Termination Date,
(i) Xxxxx shall receive payment of any lump sum amounts described in Section 7.1(b),
Section 7.1(c), Section 7.1(d), and Section 7.1(e) on the first day of the seventh
month following the Termination Date (or, if earlier, on Xxxxx’x death), and (ii),
to the extent an annuity is payable to Xxxxx under Section 7.1(d) or a benefit is
scheduled to commence or be paid pursuant to Section 7.1(f)(i), the commencement
date for such benefit shall be deferred until the first day of the seventh month
following the Termination Date (or, if earlier, on Xxxxx’x death). To the extent an
amount is deferred under this Section 7.1(h) until the first business day of the
seventh month following the Termination Date, the payments to which Xxxxx would
otherwise be entitled during the first six months following the Termination Date
shall be accumulated and paid to Xxxxx on the first business day of such seventh
month and such amount shall be credited with interest or earnings as provided for
under the relevant underlying plan. If there is no underlying plan or if the
underlying plan does not provide for interest or earnings on deferred amounts, then
the amount deferred under the Section 7.1(h) shall be credited with interest at the
applicable federal rate determined under Section 1274 of the Code. If Xxxxx is not
a Specified Employee on the Termination Date, (i) Xxxxx shall receive payment of the
lump sum amounts described in Section 7.1(b), Section 7.1(c), Section 7.1(d), and
Section 7.1(e) on the 60th day following the Termination Date and (ii)
the annuity
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payments provided to Xxxxx under Section 7.1(d) shall commence on the 60th day
following the Termination Date.
(i) Funding Obligation. In the event a payment otherwise due under this Agreement
is deferred under Section 7.1(h) and a Change of Control occurs or has occurred
within two years, the performance of Key’s obligations to make such payment will be
secured by amounts deposited or to be deposited in trust pursuant to the KeyCorp
Rabbi Trust Agreement, or any successor trust (“Trust”), provided that any funds
deposited in the Trust shall remain subject to the general creditors of Key, and
Xxxxx will have the status of a general unsecured creditor of Key, and will have no
right to, or security interest in, any assets of Key or any subsidiary of Key.
Prior to the date of a Change of Control, Key shall provide Xxxxx and the trustee
with a schedule showing the nature and amounts of the benefits that Xxxxx would be
entitled to under Section 7.1 of this Agreement if on the date of the Change of
Control Xxxxx’x employment was terminated under circumstances that Section 7.1 would
be applicable. At the time set forth in Section 7.1(h) when the trust is required
to make payment to Xxxxx, the trustee shall make such payment and perform any
necessary calculation of benefits in the same manner as outlined in the schedule
provided by Key to the trustee prior to the date of the Change of Control.
(j) Payment Structure. Each payment to be made to Xxxxx under the provisions of
Section 7.1(b), (c), (d), (e), (f) and (g) shall be considered a separate payment
and not one of a series of payments for purposes of Section 409A. Further, the
coverages provided during one taxable year shall not affect the degree to which
coverages will be provided in any other taxable year.
7.2 Effect of Death While in Employ of Key. If Xxxxx dies while employed by Key:
(a) Key shall pay to Xxxxx’x estate any unpaid Base Salary due or to become due to
Xxxxx with respect to any period ending before his death and Key shall have no
further obligations to Xxxxx for Base Salary for any period after Xxxxx’x death.
(b) Key shall provide retiree medical plan coverage (i) for the benefit of Xxxxx’x
wife, for her lifetime, and (ii) for the benefit of each of Xxxxx’x children,
through the earlier of the date on which he attains age 23 or has ceased for more
than 120 consecutive days to be a full time student. Within 30 days of Xxxxx’x
death, and thereafter, on January 2 of each following Plan year, Key shall provide
Xxxxx’x wife (or Xxxxx’x dependent children in the event of Xxxxx’x wife’s death)
with a lump sum cash payment that shall equal the annual premium costs that Xxxxx’x
wife (or Xxxxx’x dependent children in the event of Xxxxx’x wife’s death) is
required to pay, on an after-tax basis, for coverage under the KeyCorp Retiree
Medical Plan for herself and her dependants, as adjusted to reflect Key’s subsidized
cost-sharing arrangement that is otherwise provided to all similarly situated
employees based on Xxxxx’x years of service with Key at the time of his death.
Xxxxx’x wife may also elect dental coverage for herself and her dependents
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under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, provided that Xxxxx’x wife and dependents assume the cost, on an
after-tax basis, for such dental coverage.
(c) Upon his death, Xxxxx’x rights under any other plan or benefit of Key shall be
governed by the respective terms thereof.
7.3 Effect of Disability While Employed by Key. If Xxxxx becomes disabled during the course
of his employment with Key, by reason of a physical or mental impairment to such an extent
that he is unable to substantially perform his duties under this Agreement, then in such
event:
| (a) | Key may relieve Xxxxx of his duties under this Agreement for as long as Xxxxx is so disabled. | ||
| (b) | Key shall continue to provide Xxxxx with all Base Salary, incentive compensation and continuing employee benefit plan coverage to the same extent as he otherwise would be entitled under this Agreement and under the applicable incentive compensation and employee benefit plans had Xxxxx continued to be actively employed by Key up to the earliest of (i) his date of death, or (ii) the date on which the Board of Directors terminates Xxxxx’x employment pursuant to the second sentence of Section 6.2. If, prior to the termination of Xxxxx’x employment pursuant to the second sentence of Section 6.2, Xxxxx recovers from his disability to such an extent that the Board or the Committee determines that Xxxxx is again able to substantially perform his duties under this Agreement, then in such event, Xxxxx shall be restored to his duties under this Agreement, and shall be entitled to the benefits of and subject to this Agreement as if no period of disability had occurred. | ||
| (c) | If at any time prior to Xxxxx’x death or termination of employment Xxxxx qualifies for disability payments under the Long Term Disability Plan, then in such event, Xxxxx shall, upon Key’s written request, endeavor to apply for payments under the Long Term Disability Plan and the amounts otherwise payable to Xxxxx for any month under the provisions of Section 7.3(b) shall be reduced, but not below zero, by the monthly distribution amount paid to Xxxxx under the terms of the Long Term Disability Plan. | ||
| (d) | Upon Xxxxx’x death while disabled, or upon the Board of Director’s termination of Xxxxx’x employment pursuant to the second sentence of Section 6.2, Xxxxx shall be automatically deemed to have elected to retire. In conjunction with Xxxxx’x deemed retirement, Xxxxx (or in the event of Xxxxx’x death, then Xxxxx’x beneficiary) will begin to receive a distribution of Xxxxx’x Retirement Plan and Supplemental Retirement Plan benefits. Such distribution shall be made in such form and at such times as otherwise provided under the distribution requirements of each respective Plan. |
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| (e) | In conjunction with Xxxxx’x deemed retirement under the provisions of Section 7.3(d), Key shall also provide Xxxxx with Retiree Medical Plan coverage for the benefit of Xxxxx and his wife for their respective lifetimes and for the benefit of Xxxxx’x children through the earlier of (i) the date on which Xxxxx’x child attains age 23, or (ii) has ceased for more than 120 consecutive days to be a full time student. In providing Xxxxx and his wife with this Retiree Medical Plan coverage, Key shall pay to Xxxxx as of each anniversary of his termination of employment date, or in the event of Xxxxx’x death, then to Xxxxx’x wife, (or to Xxxxx’x dependent children in the event of Xxxxx’x wife death) a lump sum cash payment that shall equal the premium costs that Xxxxx (or Xxxxx’x wife or dependent children) paid on an after-tax basis over the then preceding twelve months for their coverage under the Retiree Medical Plan, as adjusted to reflect Key’s subsidized cost-sharing arrangement that is otherwise provided to all similarly situated employees based on their years of service with Key. Xxxxx may also receive dental coverage for himself, his wife, and his dependent children under the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, provided that Xxxxx and his dependents assume the cost on an after-tax basis for such dental coverage. | ||
| (f) | Except as provided in this Section 7.3, Key shall have no further obligations to Xxxxx for any period during which Xxxxx is so disabled to such an extent that he is unable to substantially perform his duties under this Agreement. | ||
| (g) | Except as expressly otherwise provided in this Section 7.3, Xxxxx’x rights under any plan or benefit of Key shall be governed by the respective terms thereof. |
7.4 Effect of Termination for Cause or Non-approved Retirement/Resignation. If Xxxxx’x
employment is terminated for Cause or as the result of a Non-approved
Retirement/Resignation, Key may, by giving written notice to Xxxxx, terminate all its
obligations remaining to be performed or observed by it under this Agreement (other than the
obligation to pay Base Salary to Xxxxx through the Termination Date and the obligations of
Key under Sections 11 and 12.3), except no termination of Key’s obligations under this
Agreement shall affect Xxxxx’x rights under any plan or benefit of Key, all of which shall
be governed by their respective terms.
7.5 Effect of Termination Upon Xxxxx’x Approved Retirement/Resignation and Non-Renewal of
Xxxxx’x Employment. If Xxxxx’x employment is terminated by an Approved
Retirement/Resignation or pursuant to Section 6.1 on the third anniversary following the
giving of a Non-Renewal Notice, Key may, by giving written notice to Xxxxx, terminate all
its obligations remaining to be performed or observed by it under this Agreement (other than
the obligation to pay Base Salary to Xxxxx through the Termination Date, the obligations of
Key under Sections 11 and 12 and, to the extent then applicable by their respective terms,
the obligations of Key under Sections 14 and 15), except no
Page 11
termination of Key’s obligations under this Agreement shall affect Xxxxx’x 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
Xxxxx, except that the prohibition on set-off, counterclaim, recoupment, defense, or other claim
contained in this sentence shall not apply if Xxxxx’x 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. Xxxxx 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 Xxxxx as the result of employment by another employer or
otherwise after the termination of Xxxxx’x 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 Xxxxx’x
rights, under any incentive compensation plan, stock option or stock appreciation rights plan,
restricted stock plan or agreement, 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 Xxxxx 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 Xxxxx 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. Xxxxx shall not engage in any Competitive Activity during the
period of his employment with Key.
10.2 Two Years in Certain Circumstances. If Xxxxx’x employment is terminated within two
years after the occurrence of a Change of Control either by Key without Cause or by Xxxxx
after he has been Constructively Terminated, Xxxxx 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 Xxxxx’x employment is terminated
(whether by him, by Key, or otherwise) in any circumstances other than those expressly
covered by Section 10.2 above, Xxxxx shall not engage in any Competitive Activity at any
time during the three year period ending on the third anniversary of the Termination Date.
10.4 No Further Obligation to Make Payments or Provide Benefits Following Continuing Breach.
If Xxxxx continues to violate the restriction set forth in Section 10.2
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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
Xxxxx under any of the provisions contained in Section 7.1. Any obligation that Key is
relieved of pursuant to the preceding sentence shall not reduce any money damages that may
be payable to Key as a result of the breach. Xxxxx 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 Xxxxx 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 Xxxxx
restraining him from any further breach of any such prohibition.
11. Indemnification. Key shall indemnify Xxxxx, to the fullest extent permitted or authorized by
the Ohio General Corporation Law as it may from time to time be amended, if Xxxxx 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 Xxxxx is or
was a director, officer, employee, or agent of Key or any Subsidiary, or is or was serving at the
request of Key or any Subsidiary as a director, trustee, officer, employee, member, manager, or
agent of a bank, corporation, domestic or foreign, nonprofit or for profit, limited liability
company, partnership, joint venture, trust, or other enterprise, including serving as a committee
member or other fiduciary of any employee benefit plan maintained by Key or any Subsidiary
(“Plan”), including serving as a member of either the Key Cash Balance Pension Plan Trust Oversight
Committee or the Key 401(k) Savings Plan Trust Oversight Committee, or any successor of either of
the Committees. The indemnification provided by this Section 11 shall not be deemed exclusive of
any other rights to which Xxxxx 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, insurance policy or similar protection, or otherwise, both as to action in Xxxxx’x
official capacity and as to action in another capacity while holding such office, and shall
continue as to Xxxxx after Xxxxx has ceased to be a director, trustee, officer, employee, member,
manager, agent, committee member, or other fiduciary and shall inure to the benefit of the heirs,
executors, and administrators of Xxxxx. Notwithstanding the foregoing provisions of this Section
11, Xxxxx shall not be indemnified if it is judicially determined in a final non-appealable
judgment that Xxxxx’x action or failure to act constituted gross negligence or willful misconduct
in carrying out his duties as a fiduciary of any employee benefit plan maintained by Key or any
Subsidiary plan.
12. Reimbursement of Certain Expenses.
12.1 Key shall pay, as incurred, all expenses, including the reasonable fees of counsel
engaged by Xxxxx, 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 Xxxxx, of prosecuting any action to compel Key to comply with the terms of this
Agreement upon receipt from Xxxxx of an undertaking to repay Key for such
Page 13
expenses if, and only if, it is ultimately determined by a court of competent jurisdiction
that Xxxxx had no reasonable grounds for bringing that action (which determination need not
be made simply because Xxxxx fails to succeed in the action).
12.3 Expenses (including attorney’s fees) incurred by Xxxxx in defending any action, suit,
or proceeding commenced or threatened against Xxxxx (i) for any action or failure to act as
an employee, officer, director, or agent of Key or any Subsidiary or (ii) if Xxxxx is or was
serving at the request of Key or any Subsidiary, for any action or failure to act as a
director, trustee, officer, employee, member, manager, or agent of a bank, corporation,
domestic or foreign, nonprofit or for profit, limited liability company, partnership, joint
venture, trust, or other enterprise, including serving as a committee member or other
fiduciary of any Plan, 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 Xxxxx 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 Xxxxx 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 Xxxxx for any action or failure to act as an
officer, employee, trustee, member, manager, or agent (including as a Plan fiduciary), 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 Xxxxx 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, insurance policy or similar protection or
otherwise. Without limiting the preceding provisions of this Section 12.3, Key shall
advance Xxxxx’x expenses provided for herein as incurred in connection with service as a
member of either the Key Cash Balance Pension Plan Trust Oversight Committee or the Key
401(k) Savings Plan Trust Oversight Committee or any successor of either of the Committees.
12.4 All reimbursements under this Section 12 shall be for expenses incurred by Xxxxx during
his lifetime, or by his estate during the duration of such estate. Reimbursement shall be
made within 90 days following Xxxxx (or his estate) submitting evidence of such incurrence
of such expenses. All requests for reimbursements shall be submitted no later than 90 days
prior to the last day of the calendar year following the calendar year in which the expense
was incurred. In no event will the amount of expenses so reimbursed by Key in one year
affect the amount of expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year.
13. Parachute Payments. In the event that the payments or distributions to be made by Key to or
for the benefit of Xxxxx (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”) (i) constitute “parachute payments” within the meaning of Section 280G of the Internal
Revenue Code and (ii) but for this Section 13 would be subject to the excise tax imposed
Page 14
by Section 4999 of the Internal Revenue Code (the “Excise Tax”), then the Payment to Xxxxx shall be
either:
(a) delivered in full, or
(b) delivered after reducing the Payment $1 below the safe harbor limit (as
described in Section 280G(b)(2)(A)(ii) of the Internal Revenue Code) which would
result in no portion of the Payment being subject to the Excise Tax,
whichever of the foregoing amounts, taking into account the applicable federal, state, and local
income taxes and the Excise Tax, results in the receipt by Xxxxx on an after-tax basis, of the
greater amount, notwithstanding that all or some portion of the Payment may be taxable under
Section 4999 of the Internal Revenue Code. In the event that the Payment is required to be reduced
by this Section 13, any amount payable pursuant to Section 7.1(c) shall be reduced first. The
Accounting Firm shall make all determinations required by this Section 13. Key and Xxxxx 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.
14. Vesting of Awards.
14.1 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 Xxxxx by Key after February 1, 2001 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 Date unless Xxxxx’x employment is terminated by Key for Cause, by a
Non-approved Retirement/Resignation, or as a result of death or disability. Each stock
option (other than any performance option) granted to Xxxxx by Key after February 1, 2001
that remains outstanding and is 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 Xxxxx had continued in Key’s employment
indefinitely) unless Xxxxx’x employment is terminated by Key for Cause or by a Non-approved
Retirement/Resignation. In the case of incentive stock options granted to Xxxxx by Key
after February 1, 2001, this Section 14.1 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 14.1, an option would vest earlier than is
provided in this Section 14.1 or would be exercisable for a longer period than is provided
in this Section 14.1, 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 Xxxxx by Key after February 1, 2001 shall be deemed to
contain the provisions of this Section 14.1 as a part of the award instrument evidencing
such option.
Page 15
14.2 Vesting of LTIC Stock Grants. All LTIC Stock Grants made to Xxxxxx after January 1,
2008 shall be treated as if Xxxxx had continued in Key’s employment on and after the
Termination Date unless Xxxxx’x employment is terminated by Key for Cause, by a Non-approved
Retirement/Resignation, or as a result of death or disability. In the event that Xxxxx is
treated as if he had continued in Key’s employment, Xxxxx shall be entitled to payment in
cash or to freely transferable Common Shares (“Common Shares” means common shares of Key),
as the case may be, pursuant to the LTIC Stock Grant in question following the determination
of the attainment of the performance goals upon conclusion of the performance period. If
Xxxxx’x employment is terminated as a result of death or disability, any provision for a pro
rated award set forth in the applicable LTIC Stock Grant award agreement shall apply.
15. Post-Termination Benefits. Following termination of his employment with Key for any reason
other than Cause, by a Non-approved Retirement/Resignation or death, Key shall continue to provide
to Xxxxx the following benefits:
(a) Payment of an amount equal to the meeting fee and payment of reasonable expenses
for a meeting of the Board of Directors if Xxxxx attends Key’s annual meeting of
shareholders at the invitation or request of Key’s Chief Executive Officer.
(b) Use of office space and secretarial support in Key facilities in the Greater
Cleveland metropolitan area for a period of five years following the Termination
Date.
(c) 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; provided, however, that at any time after the fifth anniversary
of the Termination Date, Key may, by giving written notice to Xxxxx signed by the
Chair of the Committee, cease paying dues under this Section 15(c) if Xxxxx no
longer utilizes the club or clubs in question in connection with clients or business
activities that are a benefit to Key.
(d) 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; provided, however, that
at any time after the fifth anniversary of the Termination Date, Key may, by giving
written notice to Xxxxx signed by the Chair of the Committee, cease paying the cost
of tax preparation assistance under this Section 15(d) in respect of any tax year
which begins after the date Key gives such written notice to Xxxxx.
(e) With respect to the benefits provided under Section 15(b), 15(c) and 15(d)
during the period from the Termination Date until the first day of the seventh month
following the Termination Date, Xxxxx shall be responsible for paying for such
benefits on a current basis. On the first day of the seventh month following the
Termination Date, Key shall reimburse Xxxxx for his costs incurred pursuant to the
preceding sentence in a lump sum payment and shall pay to Xxxxx any sums that may be
owed under 15(a). Thereafter, Key shall be responsible for
Page 16
paying, or reimbursing Xxxxx for the benefits provided under this Section 15, on a
current basis, provided that all reimbursements under this Section 15 shall be for
expenses incurred by Xxxxx during his lifetime and such reimbursement shall in no
case be made later than December 31 of the year following the year in which Xxxxx
incurs the expense. In no event will the amount of expenses so reimbursed by Key in
one year affect the amount of expenses eligible for reimbursement, or in-kind
benefits to be provided, in any other taxable year.
16. Statutory Limitations including those Limitations Mandated under the Emergency Economic
Stabilization Act of 2008. If any payments otherwise payable to Xxxxx under this Agreement are
prohibited by any statute or regulation in effect at the time the payments would otherwise be
payable, including, without limitation, the compensation prohibitions specifically mandated under
Section 111(b) and/or Section 111(c) of the Emergency Economic Stabilization Act of 2008, as
amended, (“EESA”) as may be applicable to Key as of the time of payment or as of the time of
Xxxxx’x Termination Date, or by 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 being a “Limiting Rule”):
(a) Unless such payment is specifically limited under the provisions of EESA, Key
will use its best efforts to obtain the consent of the appropriate governmental
agency, whether the FDIC or any other agency (including its best efforts to appeal
any refusal by any such agency to grant its consent), to the payment by Key to Xxxxx
of the maximum amount that is permitted (up to the amounts that would be due to
Xxxxx absent the Limiting Rule); and
(b) Unless such payment is specifically limited under the provisions of EESA, Xxxxx
will be entitled to receive a lump sum payment equal to the greater of either (i)
the aggregate amount payable under this Agreement (as limited by the Limiting Rule)
or (ii) the aggregate payments that would be due under applicable Key severance,
separation pay, and/or salary continuation plans that may be in effect at the time
of Xxxxx’x termination (as if Xxxxx were not a party to this Agreement) up to the
amounts that would be due to Xxxxx under this Agreement or otherwise absent the
Limiting Rule; provided that the timing of any payments shall be made in the manner
set forth in Section 7.1(h) (i.e., the first day of the seventh month following the
Termination Date) and provided further, that the payment may not exceed the amount
specified in Section 7.1(c), and the payment will otherwise comply with all
requirements under Section 409A.
17. Compliance with Section 409A of the Internal Revenue Code. It is intended that this Agreement
comply with the provisions of Section 409A of the Internal Revenue Code (hereinafter referred to as
“Section 409A”). This Agreement shall be administered in a manner consistent with this intent.
Notwithstanding any provision of this Agreement to the contrary, in the event any payment or
benefit hereunder is determined to constitute a “deferral of compensation” subject to Section 409A,
then to the extent necessary to comply with Section 409A, such payment or benefit shall not be
made, provided or commenced until the first business
Page 17
day of the seventh month after Xxxxx’x “separation from service” as such phrase is defined for
purposes of Section 409A (or, if earlier, on Xxxxx’x death).
18. Survival of Obligations. Except as is otherwise expressly provided in this Agreement, the
respective obligations of Key and Xxxxx hereunder shall survive any termination of Xxxxx’x
employment under this Agreement.
19. Merger or Transfer of Assets of Key. Key will not consolidate with or merge with or into any
other corporation, or transfer, directly or indirectly, 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 Xxxxx. 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. From and after a Change of
Control involving Key, the entity surviving or resulting from the Change of Control transaction
(including, if Key becomes a subsidiary in the transaction, the ultimate parent of Key) 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 surviving or resulting entity.
20. 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 Xxxxx in the case of notices to Xxxxx) or mailed by United
States registered mail, return receipt requested, postage prepaid, as follows:
| If to Key: | KeyCorp 000 Xxxxxx Xxxxxx Xxxxxxxxx, Xxxx 00000-0000 Attention: Secretary |
| If to Xxxxx: | Xx. Xxxxx X. Xxxxx 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.
21. 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.
22. 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 Xxxxx 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
Page 18
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.
23. Prior Agreements. This Agreement supersedes all prior agreements entered into between Xxxxx
and Key that provided Xxxxx certain protection in the event of a Change of Control of Key.
24. Definitions.
24.1 Accounting Firm. The term “Accounting Firm” means the independent auditors of Key for
the fiscal year preceding the earlier of (i) the year in which the Termination Date
occurred, 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”)).
24.2 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 earned by Xxxxx for each of
the last two years immediately preceding the Relevant Year or, if for any reason
short term incentive compensation was payable to Xxxxx for only one of those two
years, the amount of short term incentive compensation payable to Xxxxx for that
year, and
(b) Xxxxx’x 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, short term incentive compensation means (i) incentive
compensation (including bonuses) for periods of one year or less, and (ii) is calculated
before any reduction on account of deferrals.
24.3 Base Salary. The term “Base Salary” means the cash salary payable to Xxxxx 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.
24.4 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.
24.5 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 Xxxxx remains in the employ of
Page 19
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 24.5, 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
(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 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 0000 Xxx)
proxies in connection with a proposal that is not approved or recommended by
the Board of Directors, or
Page 20
(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.
Page 21
(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.
Notwithstanding the provisions of this Section 24.5 hereof, in the event that there is a
transaction or a series of transactions that are entered into under the authority of the
Emergency Economic Stabilization Act of 2008, as amended, which involve the United States
Treasury Department’s acquisition of Key preferred stock, common stock, warrants to purchase
common stock or to purchase other types of Key equity, then in such event, such
transaction(s) shall not be treated as resulting in a Change of Control for purposes of this
Agreement.
24.6 Committee. The term “Committee” means the Compensation and Organization Committee of
the Board of Directors of Key or any successor to that committee.
24.7 Competitive Activity. Xxxxx 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, Xxxxx will not be deemed
to have engaged in Competitive Activity solely because of any one or more investments he may
make in any one 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.
24.8 Day. A “day” as used in this Agreement means a calendar day unless business day is
specifically referred to.
24.9 Deferred Savings Plan. The term Deferred Savings Plan means the KeyCorp Deferred
Savings Plan, which is the successor in interest by reason of merger with the KeyCorp
Deferred Compensation Plan, the KeyCorp Second Deferred Compensation Plan, the KeyCorp
Excess 401(k) Savings Plan and the KeyCorp Second Excess 401(k) Savings Plan, as the same
may be from time to time amended, or restated, or otherwise modified, including any plan
that, after the Effective Date, succeeds, replaces, or is substituted for such Deferred
Savings Plan.
24.10 Demotion or Removal. Xxxxx shall be deemed to have been subjected to “Demotion or
Removal:”
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(a) if Xxxxx ceases to be Chairman of the Board of Key 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 by his Approved or
Non-approved Retirement/Resignation, death, or disability;
(b) if Xxxxx ceases to be or have the responsibilities, duties, or authorities of
Chief Executive Officer of Key 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 Approved or Non-approved
Retirement/Resignation, death, or disability; or
(c) if, after a Change of Control involving Key, Xxxxx fails to become Chairman of
the Board and Chief Executive Officer of the entity surviving or resulting from the
Change of Control transaction (including, if Key becomes a subsidiary in the
transaction, the ultimate parent of Key).
24.11 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.
24.12 Long Term Disability Plan. The term “Long Term Disability Plan” means the KeyCorp
Long Term Disability Plan as the same from time to time may be 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 or rights provided pursuant to or under insurance contracts maintained
by Key applicable to executive officers of Key.
24.13 LTIC Stock Grant. The term “LTIC Stock Grant” means the grant, if any, of restricted
stock, of phantom restricted stock, of Performance Shares, or a combination of restricted
stock, phantom restricted stock and/or Performance Shares made by the Committee to Xxxxx
during any particular year as part of Key’s ongoing compensation program. The terms “2006
LTIC Stock Grant,” “2007 LTIC Stock Grant,” etc. refer to LTIC Stock Grants, if any, made to
Xxxxx by resolution adopted by the Committee in the specified year.
24.14 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.
24.15 Performance Shares. The term “Performance Shares” means an award denominated in
Common Shares or phantom Common Shares (regardless of whether payable in stock or cash) the
vesting of which is contingent or accelerated upon attainment of one or more performance
goals (absent death, disability, or a Change of Control); provided, however, if the award is
granted pursuant to or under a long term incentive compensation plan or program that has a
target amount or a targeted level of performance, the terms Performance Shares and LTIC
Stock Grant shall not include the
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portion of the award beyond the target amount or the portion of the award the vesting of
which is contingent or accelerated upon exceeding the targeted level of performance.
24.16 Relevant Year. 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.
24.17 Retiree Medical Plan. The term “Retiree Medical Plan” means and includes the KeyCorp
Retiree Medical Plan as may be 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. In the event that the Plan is terminated without a successor plan being
substituted for the Retiree Medical Plan, then in such event, for purposes of this Agreement
only, Xxxxx (and his eligible dependents) shall be provided with individual medical coverage
which, at a minimum, will be comparable to the medical coverage provided, or which would
have been provided to Xxxxx under the terms of the Retiree Medical Plan, and which shall
satisfy Key’s obligations with regard to Section 7.1, Section 7.2 and Section 7.3 hereof.
24.18 Retirement Plan. The term “Retirement Plan” means and includes the KeyCorp Cash
Balance Pension Plan (which succeeded by merger the Retirement Plan for Employees of Society
Corporation and Subsidiaries), as the same may be from time to time amended, restated, or
otherwise modified, including any plan that, after the Effective Date, succeeds, replaces,
or is substituted for such Plan, and all retirement plans of any nature maintained by Key or
any of its Subsidiaries in which Xxxxx was participating prior to the Termination Date.
24.19 Savings Plan. The term “Savings Plan” means the KeyCorp 401(k) Savings Plan, as may
be from time to time amended, restated, or otherwise modified, including any plan that,
after the Effective Date, succeeds, replaces, or is substituted for such plan, and any other
benefit or compensation plan or program maintained by Key, which provides as part of its
benefit or compensation structure an employer matching contribution, and under which Xxxxx
participated prior to the Termination Date, whether or not such plan or program constituted
a qualified cash or deferred arrangement under Section 401(k) of the Internal Revenue Code.
Reference to the “Savings Plan” in the singular shall include all plans and programs
referenced herein.
24.20 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.
24.21 Supplemental Retirement Plan. The term “Supplemental Retirement Plan” means the
KeyCorp Second Supplemental Retirement Plan, which succeeds by reason of merger the KeyCorp
Supplemental Retirement Plan and the Amended and Restated Society Corporation Supplemental
Retirement Plan, in all cases, as the same may be from time to time amended, restated, or
otherwise modified, including any plan that, after the Effective
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Date, succeeds, replaces, or is substituted for the KeyCorp Second Supplemental Retirement
Plan.
24.22 Termination Date. The term “Termination Date” means the date on which Xxxxx incurs a
“separation from service” from Key within the meaning of Section 409A(c)(2)(A)(i) of the
Code.
IN WITNESS WHEREOF, Key and Xxxxx have executed this Agreement, Key by its duly authorized
Vice Chairman of the Board, as of the date first written above.
| KEYCORP |
||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||
| Xxxxxx X. Xxxxxxx | ||||
| Vice Chairman of the Board | ||||
| /s/ Xxxxx X. Xxxxx III | ||||
| XXXXX X. XXXXX III | ||||
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