EXHIBIT 10
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of the
16th day of September, 2002, by and among McDonald Investments Inc., an Ohio
corporation (the "Company"), KeyCorp, an Ohio corporation ("KeyCorp"), and
Xxxxxx X. Xxxxxxxxxxx (the "Executive").
WHEREAS, the Executive, the Company and KeyCorp are parties to
that certain Employment Agreement, dated as of October 4, 2000 (the "Prior
Agreement") and the related letter agreement, dated as of October 4, 2000 (the
"Letter Agreement"), concerning certain matters relating to the Executive's
employment under the Prior Agreement, including the potential transition of
employment arrangements;
WHEREAS, the Executive and KeyCorp are parties to that certain
Agreement, dated as of January 17, 2002, providing for certain payments and
benefits to the Executive if his employment is terminated under certain
circumstances in connection with a change of control of KeyCorp (the "Change of
Control Agreement");
WHEREAS, the Executive, the Company and KeyCorp desire to
terminate and supersede the Prior Agreement, the Letter Agreement and the Change
of Control Agreement; and
WHEREAS, the Executive desires to continue to be employed by
the Company, and the Company desires to continue to employ the Executive, on the
terms set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
respective covenants and agreements of the parties herein contained, the parties
hereto agree as follows:
1. EMPLOYMENT PERIOD. The Company hereby agrees to continue to employ
the Executive, and the Executive hereby agrees to be employed by the Company,
subject to the terms and conditions of this Agreement, for the period commencing
on the date of this Agreement (the "Commencement Date") and ending on January
31, 2004 (the "Employment Period"), unless the Employment Period is renewed or
terminated earlier in accordance with the terms hereof.
2. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, the Executive shall (A) serve as
the Chairman of the major business group of KeyCorp known as Key
Capital Partners ("Key Capital Partners") as long as Key Capital Partners
continues to exist as a major business group of KeyCorp, (B) serve as the Vice
Chairman of the Company, and (C) serve in such other position or positions as
may be reasonably requested from time to time by the Chief Executive Officer of
KeyCorp and be reasonably acceptable to the Executive. During the Employment
Period, the Executive shall report directly to the Chief Executive Officer of
KeyCorp (or its successor). Notwithstanding any other provision of this
Agreement, KeyCorp shall have the right to dissolve Key Capital Partners, to
change the business lines that make up Key Capital Partners or the Company from
time to time, and otherwise to reorganize the business, operations and
organizational structure of the Company or any other KeyCorp affiliates, and
none of such actions shall be a breach of this Agreement or require the consent
of the Executive.
(ii) During the Employment Period, the Executive shall continue
to make available to the Company, KeyCorp and its affiliates his experience,
knowledge, understanding and relationships relating to the brokerage and
investment banking business by assisting, at a senior executive level and at his
and KeyCorp's mutual discretion, in the following activities:
A. Maintaining relationships with, and the development of,
key customers for the Company and other KeyCorp affiliates;
B. Advising KeyCorp's Chief Executive Officer and/or Chief
Administrative Officer on organizational issues related to the
integration of the business lines of the Company and other KeyCorp
affiliates;
C. Transitioning the business lines, customer
relationships, staff, internal organizational structure and other
matters related to such integration;
D. Overseeing the relationship of the Company and other
KeyCorp affiliates with securities regulatory agencies, self-regulatory
organizations and stock exchanges, including the Securities and
Exchange Commission, the New York Stock Exchange and the National
Association of Securities Dealers;
E. Offering to KeyCorp's Chief Executive Officer and Chief
Administrative Officer input into, and perspective on, strategic issues
facing the business of the Company and other KeyCorp affiliates; and
F. Recruiting, at the request of KeyCorp's Chief Executive
Officer or Chief Administrative Officer, key executives for the
business of the Company and other KeyCorp affiliates.
As used in this Agreement, the terms "affiliates" and "affiliated companies"
shall include any corporation, limited liability company, trust, joint venture,
association, company, partnership or other entity controlled by, controlling or
under common control with the Company or KeyCorp, as the case may be.
(iii) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the Executive
agrees to fulfill the foregoing duties and responsibilities in accordance with a
flexible schedule dictated by his own judgment of how best to fulfill his duties
and responsibilities hereunder. The Executive shall be present at the Company's
offices only in accordance with a schedule he determines.
(iv) It shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at educational
institutions and (C) manage personal investments; provided, however, that the
Executive's service on boards or committees shall be subject to the following
conditions: (x) any such service shall not be provided to a for-profit entity in
the
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financial services industry (except for a KeyCorp affiliate); (y) KeyCorp and
its affiliates shall not be responsible for indemnification or directors and
officers liability insurance relating to such service; and (z) the Chief
Executive Officer or the Chief Administrative Officer of KeyCorp (or its
successor) shall have been advised in advance of such service and not objected
to such service on the basis that it would cause a conflict of interest or
public embarrassment or discomfort to KeyCorp.
(v) During the Employment Period, the Executive also may assume
additional responsibilities with the Company in the area of providing brokerage
and asset management services directly to customers of the Company; provided,
however, that the Executive's assumption of such additional responsibilities
shall be subject to the following conditions: (A) such additional
responsibilities may not be inconsistent with, or detract from, the Executive's
other duties and responsibilities set forth above; (B) the Chief Executive
Officer or the Chief Administrative Officer of KeyCorp (or its successor) shall
have been advised in advance of such additional responsibilities and not
objected to such additional responsibilities; and (C) the Executive shall not
receive any compensation in addition to the compensation provided for under this
Agreement, whether in the form of commissions or otherwise, from the Company,
any other KeyCorp affiliate, or any of their customers, related to such
additional responsibilities unless the Chief Executive Officer or the Chief
Administrative Officer of KeyCorp (or its successor) shall have consented in
advance in writing to the form and amount of such additional compensation.
(vi) After the Commencement Date, the Executive no longer shall
serve on the senior officer committees of KeyCorp on which major business group
heads serve (currently the KeyCorp Senior Staff and KeyCorp Executive Council),
or any successor committee, nor shall the Executive serve on the Key Capital
Partners Management Committee, or any successor committee. Effective as of the
Commencement Date, the Executive hereby resigns as Chief Executive Officer of
the Company and Key Capital Partners, as a Senior Executive Vice President of
KeyCorp and from all other officer positions and directorships previously held
by the Executive with KeyCorp or its affiliated companies.
(b) COMPENSATION DURING EMPLOYMENT PERIOD.
(i) CASH COMPENSATION THROUGH DECEMBER 31, 2002.
A. 2002 BASE SALARY. During the period from the
Commencement Date through and ending on December 31, 2002, the
Executive shall continue to receive base salary payments ("2002 Base
Salary") at an annualized rate of $250,000 in accordance with the
compensation policies and practices established by the Compensation and
Organization Committee of KeyCorp's Board of Directors, or its
successor (the "Committee").
B. 2002 INCENTIVE COMPENSATION. In addition to 2002
Base Salary, the Executive shall be awarded annual cash incentive
compensation for the year 2002 in the amount of $1,294,444 ("2002
Incentive Compensation"). The 2002 Incentive Compensation shall be
payable and/or awarded no later than March 15, 2003.
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C. DEFERRAL OF 2002 COMPENSATION. Any deferral
election previously submitted by the Executive with respect to deferral
of a portion of his base salary and/or incentive compensation for the
year 2002 shall continue to apply in accordance with its terms and
without any alteration as a result of this Agreement or otherwise.
(ii) CASH COMPENSATION COMMENCING JANUARY 1, 2003. During the
portion of the Employment Period commencing on January 1, 2003 and ending on
January 31, 2004, the Executive shall receive annual compensation at the rate of
$1,544,444 per year ("Periodic Annual Compensation"), for a total amount of up
to $1,673,148 of Periodic Annual Compensation payable during such 13-month
period. The Periodic Annual Compensation shall be payable to the Executive in
substantially equal periodic installments throughout such 13-month period (no
less frequently than monthly) and shall be prorated if the Executive is employed
by the Company hereunder for less than the entire such 13-month period. The
parties acknowledge and agree that each of the Periodic Annual Compensation and
the 2004 Lump-Sum Payment (as defined in Section 2(b)(iii)) represents a
combined base and incentive compensation amount and, accordingly, that the
Executive shall not be eligible to receive additional bonus or other incentive
compensation for periods after December 31, 2002, unless otherwise determined by
the Committee, in its sole discretion.
(iii) 2004 LUMP-SUM PAYMENT. If the Executive remains employed
by the Company under this Agreement throughout the Employment Period until
January 31, 2004, then the Company shall pay to the Executive in a lump sum in
cash by no later than February 10, 2004 the amount of $1,415,740 (the "2004
Lump-Sum Payment").
(iv) RETENTION AWARDS. The parties acknowledge and agree that
the Executive was granted a cash retention award, effective October 23, 1998, in
the amount of $2.2 million (the "Cash Retention Award") and was granted
non-qualified stock options, effective October 23, 1998 and January 13, 1999, to
acquire a total of 241,055 KeyCorp Common Shares (the "Retention Options"). The
parties agree that the terms of the Cash Retention Award and the Retention
Options shall not be affected or modified hereby, except as follows or as
otherwise expressly set forth herein:
A. Section 2 of each Non-Qualified Grant Agreement
evidencing the Retention Options shall be, and it hereby is, deleted
and replaced in its entirety by the following:
"2. Upon (i) the termination of your employment by KeyCorp and
its subsidiaries other than for Cause, as defined in the Employment
Agreement, dated as of September 16, 2002, among KeyCorp, McDonald
Investments Inc. and you (the "Employment Agreement"), including by
reason of your Disability, as defined in the Employment Agreement, (ii)
your termination of your employment with KeyCorp and its subsidiaries
for Good Reason, as defined in the Employment Agreement, or (iii) your
death, all outstanding Options granted hereunder shall become
immediately vested and exercisable in full."
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B. Section 2 of the Agreement evidencing the Cash
Retention Award shall be, and it hereby is, deleted and replaced in its
entirety by the following:
"2. Upon (i) the termination of your employment by KeyCorp and
its subsidiaries other than for Cause, as defined in the Employment
Agreement, dated as of September 16, 2002, among KeyCorp, McDonald
Investments Inc. and you (the "Employment Agreement"), including by
reason of your Disability, as defined in the Employment Agreement, (ii)
your termination of your employment with KeyCorp and its subsidiaries
for Good Reason, as defined in the Employment Agreement, or (iii) your
death, all unpaid portions of the Award shall become immediately
payable in full."
(v) EMPLOYEE BENEFIT PLANS. During the Employment Period, the
Executive shall continue to be eligible to participate in welfare and retirement
benefit plans, programs, policies and arrangements to the same extent as
immediately prior to the Commencement Date; provided, however, that KeyCorp or
the Company may amend, modify or terminate any such plan, program, policy or
arrangement at any time so long as the amendment, modification or termination
applies to a significant portion or number of participants in such plan,
program, policy or arrangement. Notwithstanding the foregoing, after the
Commencement Date, unless otherwise determined by the Committee in its sole
discretion, the Executive shall not be eligible to receive new awards under, or
otherwise participate in (other than by exercise or payment of awards
outstanding on the Commencement Date in accordance with their terms), any stock
option, stock appreciation right, restricted stock or other equity incentive
plans of KeyCorp or its affiliates.
(vi) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable business
expenses incurred by the Executive, in accordance with the policies of the
Company and KeyCorp.
(vii) INDEMNIFICATION/D&O INSURANCE. The Executive shall be
indemnified by KeyCorp against claims arising in connection with the Executive's
status as an employee, officer or agent of KeyCorp in accordance with KeyCorp's
indemnity policies for its senior executives, subject to applicable law.
(viii) DEFERRAL OF COMPENSATION. During the Employment Period,
the Executive shall not be subject to any policy or plan of KeyCorp or any
affiliated company requiring the automatic deferral of incentive compensation,
including, without limitation, the KeyCorp Automatic Deferral Plan as in effect
from time to time. During the Employment Period, the Executive shall have the
right to defer voluntarily up to 75% of his Periodic Annual Compensation and up
to 75% of his 2004 Lump-Sum Payment pursuant to the terms of KeyCorp's Deferred
Compensation Plan as in effect from time to time (and such plan is hereby
amended to the extent necessary to permit the deferral of such amounts under
such plan), provided that the Executive elects such deferral and gives notice of
such election to KeyCorp in advance of the year in which the compensation to be
deferred is to be earned and otherwise complies with the terms of KeyCorp's
Deferred Compensation Plan as in effect from time to time. In addition, with
respect to deferral of compensation:
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A. The Executive acknowledges that he may have
previously voluntarily elected to defer a portion of his 2002 Base
Salary and/or 2002 Incentive Compensation under a deferral election
made by the Executive in accordance with the terms of KeyCorp's
Deferred Compensation Plan. Any such deferral election shall continue
to apply in accordance with its terms and without any alteration as a
result of this Agreement or otherwise;
B. The Executive may not defer any of his Periodic
Annual Compensation payable for calendar year 2003 unless he elects
such deferral under the conditions specified above and gives notice of
such election to KeyCorp not later than November 15, 2002; and
C. The Executive may not defer any of his Periodic
Annual Compensation payable for January 2004 or the 2004 Lump-Sum
Payment unless he elects such deferral under the conditions specified
above and gives notice of such election to KeyCorp not later than
September 15, 2003.
(c) EMPLOYMENT LOCATION. During the Employment Period, the
Executive's principal place of employment (i) shall be located at (A) the
XxXxxxxx Investment Center, provided that such building continues to be the
principal office of the Company, or (B) such other appropriate office of the
Company agreed upon with the Chief Executive Officer or the Chief Administrative
Officer of KeyCorp, and (ii) shall, in any case, be located no more than 20
miles from the Executive's principal place of employment at the date hereof.
3. TERMINATION OF EMPLOYMENT.
(a) EXPIRATION OF EMPLOYMENT PERIOD, DEATH OR DISABILITY.
(i) EXPIRATION OF EMPLOYMENT PERIOD. The Executive's
employment shall terminate automatically upon the expiration of the Employment
Period, unless (A) the Employment Period is extended by a writing signed by all
the parties to this Agreement prior to January 31, 2004, or (B) the Executive
continues to be actually employed after January 31, 2004 by the Company or
another affiliated company of KeyCorp on a basis where he is receiving salary,
commission and/or incentive-based compensation independent of any compensation
payments required by this Agreement.
(1) As a condition to the continuation of the
Executive's employment under Section 3(a)(i)(B), the Executive agrees
that each stock option and restricted stock award granted or awarded to
the Executive by KeyCorp or any of its affiliated companies before the
Commencement Date (each, a "Preexisting Award") that has not vested in
full before January 31, 2004 shall be cancelled, terminated and
forfeited effective January 31, 2004 to the extent that such
Preexisting Award has not vested before that date (unless KeyCorp and
the Executive otherwise agree in a writing signed by KeyCorp and the
Executive prior to January 31, 2004) and on and after January 31, 2004
any such Preexisting Award may be exercised or disposed of in
accordance with its terms only to the extent not cancelled, terminated
and forfeited hereunder. If, during the Employment Period, the Company
shall terminate the Executive's employment other
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than for Cause (an "Applicable Discharge"), all then outstanding
Preexisting Awards (other than the Retention Options, which are
governed by Section 4) not fully vested immediately prior to such
Applicable Discharge shall become immediately vested to the same extent
that such Preexisting Awards would have vested in the normal course had
the Executive remained employed until January 31, 2004, and the balance
of such Preexisting Awards shall be immediately cancelled, terminated
and forfeited upon such Applicable Discharge. As used in this
paragraph, the term "vested" means, with reference to a stock option,
the extent to which such stock option has become exercisable, and
means, with reference to restricted stock, the extent to which such
restricted stock has ceased to be subject to forfeiture and transfer
restrictions. To the extent that this paragraph is inconsistent with
the terms of any Preexisting Award, the parties agree that such
Preexisting Award is hereby amended to be consistent with this
paragraph, but the terms of such award shall remain unchanged to the
extent not inconsistent with this paragraph.
(2) A continuation of the Executive's employment
under the conditions specified in Section 3(a)(i)(B) shall not be an
extension of the Employment Period hereunder and the Employment Period
shall expire on January 31, 2004 notwithstanding such continuing
employment. In addition, Section 8 shall not apply to payments or
distributions received or receivable by the Executive during such
continuation of employment that are not required by the terms of this
Agreement.
(ii) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the Employment Period.
If the Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 10(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive days as a result of
incapacity due to mental or physical illness or injury.
(b) CAUSE. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the engaging by the Executive in illegal conduct
constituting a felony, or
(ii) gross intentional misconduct which is materially and
demonstrably injurious to the Company or KeyCorp, or
(iii) any material breach by the Executive of Section 7 hereof,
provided that, to the extent any such breach is curable, the Company has given
the Executive notice thereof and the Executive has failed to cure such breach
within 10 days after such notice is effective, or
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(iv) conduct that results in the permanent loss of the
Executive's professional license to conduct business or in the Executive's being
disqualified or barred by banking or securities law regulators from serving in
the capacity contemplated by this Agreement for six months or more.
The employment of the Executive shall not be deemed to be terminated for Cause
unless and until there shall have been delivered to the Executive a copy of a
written determination executed by the Chief Executive Officer of KeyCorp (the
"CEO") on behalf of KeyCorp (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with counsel, to
be heard before the CEO), finding that, in the good faith opinion of the CEO,
the Executive is guilty of the conduct described in any of subparagraphs (i)
through (iv) above, and specifying the particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be terminated during
the Employment Period by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean a material breach by the Company of an
obligation of the Company under this Agreement, without the consent or
concurrence of the Executive, that the Company has failed to cure within 10 days
after the effective time at which the Executive has given the Company and
KeyCorp written notice of such breach. A breach described in this clause
includes any of the following events (subject to such opportunity of the Company
to cure) (i) the relocation of the Executive's principal place of employment to
any location more than 20 miles from the Executive's principal place of
employment on the Commencement Date, (ii) the failure of the Company to obtain
an agreement reasonably satisfactory to the Executive from any successor to
assume and agree to perform this Agreement, as contemplated in Section 9 hereof,
or (iii) any termination of the Executive's employment which is not effected
pursuant to the terms of this Agreement. Notwithstanding the foregoing, the
Executive's failure to give notice to the Company and KeyCorp of his objection
to an event alleged to constitute "Good Reason" within 45 days after the date of
occurrence of such event shall be deemed a waiver of such event by the Executive
and the Executive thereafter may not terminate his employment hereunder for Good
Reason based on such event.
(d) FOLLOWING A CHANGE OF CONTROL OF KEYCORP. The Executive's
employment may be terminated during the Employment Period by the Executive, in
his sole discretion, at any time within two years after a Change of Control,
upon 30 days' advance Notice of Termination to the Company and KeyCorp. For
purposes of this Agreement, "Change of Control" shall be defined as set forth in
Schedule A, attached hereto.
(e) NOTICE OF TERMINATION. Any termination by the Company for Cause,
or by the Executive for Good Reason or under Section 3(d) within two years after
a Change of Control, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 10(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) specifies the Date of Termination. The failure
by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company, respectively,
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hereunder or preclude the Executive or the Company, respectively, from asserting
such fact or circumstance in enforcing the Executive's or the Company's rights
hereunder, except as otherwise set forth in Section 3(c).
(f) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of termination of employment that is set
forth in the Notice of Termination (which shall not be earlier than the date on
which such notice is given and which shall be subject to any applicable cure
period), (ii) if the Executive's employment is terminated by the Company other
than for Cause or Disability, or the Executive resigns without Good Reason
(other than under Section 3(d) within two years after a Change of Control), the
date on which the Company or the Executive notifies the Executive or the
Company, respectively, of such termination, (iii) if the Executive's employment
is terminated by reason of expiration of the Employment Period, death or
Disability, the date of expiration of the Employment Period, death of the
Executive or the Disability Effective Date, as the case may be, and (iv) if the
Executive's employment is terminated by the Executive under Section 3(d) within
two years after a Change of Control, the date of termination of employment set
forth in the Notice of Termination (which, in either case, shall not be earlier
than the 30th day after the date on which such notice is given).
4. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON; OTHER THAN FOR CAUSE, DEATH OR DISABILITY. If,
during the Employment Period, the Company shall terminate the Executive's
employment other than for Cause or Disability or the Executive shall terminate
employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of each of the
amounts listed below, but only to the extent not previously paid:
A. the 2002 Base Salary payable for the period
from the Commencement Date through December 31, 2002;
B. the 2002 Incentive Compensation;
C. the Periodic Annual Compensation payable for
the period from January 1, 2003 through January 31, 2004; and
D. the 2004 Lump-Sum Payment.
For purposes of this Section 4: (x) each of the amounts listed in Sections
4(a)(i)(A), (B), (C) or (D) above or any other amount specified herein shall be
deemed to have been "previously paid" if and to the extent paid to or for the
benefit of the Executive, his estate or beneficiaries, under any provision of
this Agreement or otherwise, on or before the date on which payment is made
under this Section 4, and to the extent an amount has been "previously paid"
there shall be no further obligation to pay such amount under this Agreement or
otherwise; and (y) any amounts of compensation deferred by the Executive into a
deferral plan of KeyCorp or any affiliate, whether voluntarily, automatically or
otherwise, shall be deemed to have been paid on the date of
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deferral, and all such deferred amounts shall be payable as governed by the
terms of the applicable deferral plan, subject to Section 4(a)(vi);
(ii) any portion of the Cash Retention Award not previously
paid shall become fully vested and immediately payable;
(iii) the Retention Options shall become fully vested and
immediately exercisable;
(iv) to the extent not previously paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is entitled to receive
under any plan, program, policy or practice or contract or agreement (but
excluding the KeyCorp Separation Pay Plan) of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter referred to as
the "Other Benefits");
(v) until December 31, 2004, the Executive and the Executive's
dependents shall continue to be eligible to participate in the medical, dental,
health and group-term life benefit plans and arrangements applicable to the
Executive immediately prior to the Date of Termination on the same terms and
conditions as in effect for the Executive and the Executive's dependents
immediately prior to the Date of Termination;
(vi) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon), including the
Executive's employer match and employee share under all automatic and voluntary
deferral programs in which the Executive participated while employed by the
Company, shall become fully vested and nonforfeitable and all such deferred
compensation shall be payable as governed by, and subject to, the terms of the
applicable deferral plan; and
(vii) the Executive shall be entitled to participate, at his
cost, in KeyCorp's Retiree Medical Plan (the "Retiree Medical Plan") through age
65, or through such later age through which participants in the Retiree Medical
Plan may continue to participate therein under the terms thereof as amended with
general application to all participants therein from time to time. Consistent
with the requirements of the Retiree Medical Plan, in the event this Agreement
terminates, this clause providing for retiree medical benefits shall be deemed
to be part of a termination agreement. The Executive acknowledges and agrees
that, consistent with the requirements of the Retiree Medical Plan, he must
inform KeyCorp at the time of termination of his employment whether he wishes to
participate in the Retiree Medical Plan and if he does not then elect
participation in the Retiree Medical Plan or ever ceases participation, he shall
not later be eligible to elect or resume participation. Such requirement to
elect participation in the Retiree Medical Plan at the time of termination of
employment (or forego participation therein) shall apply to the Executive
notwithstanding any potentially duplicate benefits (if any) that may be
available to the Executive under Section 4(a)(v) pursuant to the terms of this
Agreement.
(b) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further
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obligations to the Executive's legal representatives under this Agreement, other
than for payment of the aggregate amount determined under Section 4(a)(i) to the
extent not previously paid, the payments referred to in Section 4(a)(ii) to the
extent not previously paid, and the timely payment or provision of Other
Benefits. Such payments referred to in Sections 4(a)(i) and 4(a)(ii) shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination. In addition, the Retention
Options shall become fully vested and immediately exercisable and Section
4(a)(vi) shall be applicable. With respect to the provision of Other Benefits,
the term Other Benefits as utilized in this Section 4(b) shall include death
benefits as in effect on the date of the Executive's death.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive, other
than for payment of the aggregate amount determined under Section 4(a)(i) to the
extent not previously paid, the payments referred to in Section 4(a)(ii) to the
extent not previously paid, and the timely payment or provision of Other
Benefits. Such payments referred to in Sections 4(a)(i) and 4(a)(ii) shall be
paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination. In addition, the Retention Options shall become fully vested and
immediately exercisable and Sections 4(a)(v), 4(a)(vi) and 4(a)(vii) shall be
applicable. With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 4(c) shall include, and the Executive shall
be entitled after the Disability Effective Date to receive, disability and other
benefits as in effect on the Disability Effective Date; provided, however, that
the Executive hereby assigns to KeyCorp any amounts that are paid or payable to
the Executive under the KeyCorp Long Term Disability Plan (or any successor
plan) through December 31, 2004 and the Executive further agrees, should the
Executive receive any such amount, to pay such amount promptly to KeyCorp.
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause or the Executive terminates employment
without Good Reason (other than within two years after a Change of Control)
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
(x) any unpaid amounts that were due and payable to the Executive before the
Date of Termination (which shall not include the 2002 Incentive Compensation if
the Date of Termination occurs before December 31, 2002), and (y) Other
Benefits, in each case to the extent not previously paid.
(e) BY THE EXECUTIVE FOLLOWING A CHANGE OF CONTROL. If the
Executive terminates employment under Section 3(d) during the Employment Period
within two years after a Change of Control, the Executive shall be entitled to
receive the same payments and benefits upon such termination of employment to
which the Executive would have been entitled under the terms of Section 4(a) had
he terminated his employment for Good Reason at that time. In addition, for
purposes of the Cash Retention Award and the Retention Options, the Executive's
employment shall be deemed to have been terminated under the terms of this
Agreement by the Executive for Good Reason on such Date of Termination.
(f) EXPIRATION OF THE EMPLOYMENT PERIOD. Upon the expiration of the
Employment Period, this Agreement shall terminate without further obligations to
the Executive, other than the right of the Executive to receive:
11
(i) the 2004 Lump-Sum Payment under the terms of Section
2(b)(iii);
(ii) the benefits provided for under Section 4(a)(vi) in
accordance with the terms stated in such Section; and
(iii) the benefits provided for under Sections 4(a)(iv),
4(a)(v) and 4(a)(vii) in accordance with, and to the extent applicable under,
the terms stated in such Sections; provided, however, that if the Executive
continues to be employed after January 31, 2004 by the Company or another
affiliated company of KeyCorp, then the Executive shall not be entitled to the
benefits specified in this Section 4(f)(iii) until he ceases to be so employed,
and then only to the extent such benefits are then applicable.
5. NON-EXCLUSIVITY OF RIGHTS. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies (other than the KeyCorp Separation Pay Plan) at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement. The Executive shall not be entitled to any benefits
under the KeyCorp Separation Pay Plan.
6. FULL SETTLEMENT. The Company'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, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not the Executive obtains other employment.
Except for actions or legal proceedings by the Company or KeyCorp to enforce the
provisions of Section 7 that are not determined by a court of competent
jurisdiction in favor of the Executive, the Company agrees to pay as incurred,
to the full extent permitted by law, all reasonable legal fees and expenses
which the Executive may reasonably incur as a result of any contest brought in
good faith (regardless of the outcome thereof) by the Company, the Executive or
others contesting the validity or enforceability of, or liability under, any
provision of this Agreement (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as
amended (the "Code").
7. CONFIDENTIAL INFORMATION/NONCOMPETITION/NONSOLICITATION.
(a) The Executive shall hold in a fiduciary capacity for the benefit
of KeyCorp and its affiliates all secret or confidential information, knowledge
or data relating to KeyCorp or any of its affiliates, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by KeyCorp or any of its affiliates and which shall not
be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After
termination of the Executive's employment with KeyCorp and its affiliates, the
Executive shall not, without the prior written consent of KeyCorp or as may
otherwise be required by law or legal process, communicate or
12
divulge any such information, knowledge or data to anyone other than KeyCorp and
those designated by it or to an attorney retained by the Executive.
(b) As used in this Section 7, the following terms shall have the
meanings set forth below:
(i) "Covered Period" shall mean the period (A) while the
Executive is employed by KeyCorp or any of its affiliates and (B) continuing
thereafter until two years after the Executive ceases to be so employed.
(ii) "Established Clients" mean customers or clients of
the Executive who become customers or clients of the Company's retail brokerage
business after the date hereof through the Executive's direct efforts during the
Executive's employment with the Company, and who had no previous brokerage,
asset management or private banking relationship with KeyCorp or any of its
affiliates before becoming the Executive's customer or client in the Company's
retail brokerage business. The Executive agrees that Established Clients do not
include House Customers.
(iii) "House Customers" means any customers or clients (A)
who have been referred to the Executive by KeyCorp or its affiliates or who
become the Executive's customers or clients after the Executive's having
received information about such customers or clients from KeyCorp or its
affiliates and (B) who had a significant and established investment, money
management or commercial relationship with KeyCorp or its affiliates before the
Executive received such referral or information. The Executive acknowledges that
from time-to-time in the course of the Executive's employment with KeyCorp or
any of its affiliates the Executive may receive referrals of House Customers, or
information about House Customers, from KeyCorp or its affiliates. The Executive
agrees that House Customers are not to be considered Established Clients.
(iv) The term "Person" includes any natural person,
corporation, limited liability company, trust, joint venture, association,
company, partnership or other entity.
(c) During the Covered Period, the Executive shall not, directly
or indirectly, on behalf of the Executive or any other Person, solicit or entice
for employment or hire, by other than KeyCorp or its affiliates, any person
employed by KeyCorp or its affiliates.
(d) The Executive shall have the right to engage in the following
permissible activities and nothing in Section 7(e) shall prohibit or restrict
the Executive from engaging in such permissible activities: If the Executive
ceases to be employed by KeyCorp and its affiliates, then the Executive may
contact, at any time on or after January 1, 2005, any Established Client solely
for the purpose of soliciting such Established Client to move its retail
brokerage account from KeyCorp or any of its affiliates to the securities firm
with which the Executive is then affiliated. The Executive's rights under this
Section 7(d) are limited to activity conducted by the Executive as a retail
broker or other investment professional with a securities firm unaffiliated with
KeyCorp and, accordingly, do not include any right of the Executive to contact
or solicit clients or customers as an officer, director, owner, partner or in
any other management capacity at any such securities firm.
13
(e) Subject to the Executive's rights under Section 7(d), while the
Executive is employed by KeyCorp or any of its affiliates and until one year
after he ceases to be so employed, the Executive shall not, directly or
indirectly, on behalf of the Executive or any other Person, solicit any customer
or client who was a customer or client of KeyCorp or any of its affiliates
during the 12-month period immediately preceding the date of the Executive's
termination of employment with KeyCorp and its affiliates, for the purpose of
providing such customer or client with services that are directly competitive
with the services provided by KeyCorp or any of its affiliates.
(f) While the Executive is employed by KeyCorp or any of its
affiliates and until the later of January 31, 2004 or the date on which he
ceases to be so employed, the Executive shall not, without the written consent
of KeyCorp, directly or indirectly, serve, act or be connected as an officer,
employee, partner, director or otherwise with any business which engages, within
a 50-mile radius of any area in which KeyCorp or any of its affiliates conducted
business during the 12-month period immediately preceding the date of the
Executive's termination of employment with KeyCorp and its affiliates, in any
business that competes with any business activity conducted by KeyCorp or any of
its affiliates. If the Executive ceases to be employed by KeyCorp and its
affiliates, then during the period from February 1, 2004 until December 31, 2004
the Executive shall not, without the written consent of KeyCorp, directly or
indirectly, serve, act or be connected, in or within a 00-xxxx xxxxxx xx
Xxxxxxxxx, Xxxx, as an officer, director, owner, partner or in any other
management capacity with any financial services company other than a privately
held money management or brokerage firm with total annual revenues of less than
$25 million, unless the Executive ceases to be so employed as a result of his
discharge by KeyCorp without Cause or his termination for Good Reason.
Ownership, for personal investment purposes only, of less than 5% of the voting
stock of any publicly held corporation shall not constitute a violation hereof.
(g) The Executive's rights under Section 7(d) shall cease and such
Section shall be of no further force or effect if the Executive has materially
breached this Agreement, or if the Company terminates the Executive's employment
for Cause.
(h) In the event of a breach or threatened breach of this Section
7, the Executive agrees that the Company and KeyCorp shall be entitled to
injunctive relief (in addition to any other remedy available) in a court of
competent jurisdiction to remedy any such breach or threatened breach, and the
Executive acknowledges that damages would be inadequate and insufficient.
(i) The provisions of this Section 7 shall remain in full force and
effect until the expiration of the period specified herein notwithstanding the
earlier termination of the Executive's employment hereunder.
8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Except as set forth below, in the event it shall be determined
that any payment or distribution by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 8) (a
14
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Code or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 8(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the "Reduced Amount") that could be paid to the Executive such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate, shall
be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Ernst & Young
LLP or such other certified public accounting firm reasonably acceptable to the
Company as may be designated by the Executive (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by the
Company. All fees and expenses of the Accounting Firm shall be borne solely by
the Company. Any Gross-Up Payment, as determined pursuant to this Section 8,
shall be paid by the Company to the Executive within five days of the later of
(i) the due date for the payment of any Excise Tax, and (ii) the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 8(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
15
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 8(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 8(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 8(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 8(c), a determination
is made that the Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven
16
and shall not be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid.
9. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and KeyCorp and their respective successors and assigns. The
Company and KeyCorp may assign this Agreement without the consent of the
Executive, including to any affiliated company, subject to Section 9(c).
(c) The Company and KeyCorp will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company or KeyCorp, or
any business of the Company or KeyCorp for which the Executive's services are
principally performed, to assume expressly and agree to perform this Agreement
in the same manner and to the same extent that the Company or KeyCorp would be
required to perform it if no such succession had taken place. As used in this
Agreement, "Company" and "KeyCorp" shall mean the Company and KeyCorp as
hereinbefore defined and any successors to their business and/or assets as
aforesaid which assume and agree to perform this Agreement by operation of law,
or otherwise.
10. GENERAL PROVISIONS.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended, modified
or waived otherwise than by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
IF TO THE EXECUTIVE: Xxxxxx X. Xxxxxxxxxxx
00 Xxxxxxxxxx Xxxx
Xxxxx Xxxxx, Xxxx 00000
17
IF TO THE COMPANY: McDonald Investments Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Att: Chief Executive Officer
COPY TO: KeyCorp
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Att: Chief Administrative Officer
IF TO KEYCORP: KeyCorp
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Att: Chief Administrative Officer
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) 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. In the event
that any provision of Section 7 is found by a court of competent jurisdiction to
be invalid or unenforceable, such court shall exercise its discretion in
reforming such provision to the end that the Executive shall be subject to such
restrictions and obligations as are reasonable under the circumstances and
enforceable by the Company and KeyCorp.
(d) The parties agree to treat all amounts paid to the Executive
hereunder as compensation for services. Accordingly, the Company may withhold
from any amounts payable under this Agreement such Federal, state, local or
foreign taxes as shall be required to be withheld pursuant to any applicable law
or regulation.
(e) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes any other agreement,
written or oral (including the Prior Agreement, any earlier employment
agreement, the Letter Agreement, the Change of Control Agreement and any earlier
change of control agreement), pertaining to the Executive's employment by the
Company, KeyCorp or any affiliate. The parties hereto agree that the Prior
Agreement, any such earlier employment agreement, the Letter Agreement, the
Change of Control Agreement and any such earlier change of control agreement are
each hereby terminated and that none of such agreements shall be of any further
force or effect. This Agreement does not, however, supersede KeyCorp's Code of
Ethics, and the Executive shall at all times comply with KeyCorp's Code of
Ethics, as in effect from time to time, as it applies to employees of KeyCorp
and its affiliates generally. The Executive hereby irrevocably waives and
consents to any event or action by the Company, KeyCorp or any affiliate that
may have been a breach of the Prior Agreement or the Letter Agreement, so long
as such event or action is not a material breach of this Agreement, and the
Executive agrees that any such event or action (so long as such event or action
is not a material breach of this Agreement) shall have no effect under the Prior
Agreement, this Agreement, or any other agreement or instrument.
18
(f) This Agreement may be executed in counterparts, which together
shall constitute one and the same original.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and the Company and KeyCorp have caused these presents to be executed in their
names on their behalf, all as of the day and year first above written.
----------------------------------------------
Xxxxxx X. Xxxxxxxxxxx
MCDONALD INVESTMENTS INC.
----------------------------------------------
By: Xxxxxx X. Xxxxx
Title: President and Chief Executive Officer
KEYCORP
----------------------------------------------
By: Xxxxxx X. Xxxxxxx
Title: Vice Chairman and Chief
Administrative Officer
19
SCHEDULE A
DEFINITION OF CHANGE OF CONTROL
For purposes of this Agreement, a "Change of Control" shall be deemed to have
occurred if, at any time during the Employment Period, there is a Change of
Control under any of clauses (a), (b), (c), or (d) below. For these purposes,
KeyCorp shall be deemed to have become a subsidiary of another corporation if
any other corporation (which term shall, for all purposes of this Schedule A,
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
KeyCorp or any successor to KeyCorp.
(a) A Change of Control will have occurred under this clause (a)
if KeyCorp is a party to a transaction pursuant to which
KeyCorp 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 KeyCorp becomes a subsidiary in the
transaction) of the ultimate parent of KeyCorp
represent or were issued in exchange for voting
securities of KeyCorp outstanding immediately prior
to the transaction, or
(ii) immediately after giving effect to that transaction,
individuals who were directors of KeyCorp 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 KeyCorp becomes a subsidiary in
the transaction) of the ultimate parent of KeyCorp.
(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 KeyCorp or
any person (as the term "person" is used in Section 13(d) and
Section 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) is or becomes the beneficial owner
of 35% or more of the outstanding voting stock of KeyCorp 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 KeyCorp 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 KeyCorp Board of Directors
any person or entity makes a public announcement of a
bona fide intention (A) to engage in a transaction
with
A-1
KeyCorp 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 KeyCorp
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 KeyCorp (pursuant to
Regulation 14A 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 KeyCorp (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 KeyCorp'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 KeyCorp 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 KeyCorp 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 KeyCorp in a transaction or series of
transactions by any person (as defined earlier in
this subclause (x)).
(y) KeyCorp is a party to a transaction pursuant to which
KeyCorp 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 KeyCorp becomes a subsidiary in
the transaction) of the ultimate parent of KeyCorp
represent or were issued in exchange for voting
securities of KeyCorp outstanding immediately prior
to such transaction or less than 51% of the directors
of the surviving or resulting
A-2
corporation or (if KeyCorp becomes a subsidiary in
the transaction) of the ultimate parent of KeyCorp
were directors of KeyCorp 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 KeyCorp.
(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 KeyCorp.
A-3
