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AMENDMENT TO AGREEMENTS
This Amendment to Agreements (this "Amendment") is
made by and between KeyCorp, a New York corporation ("KeyCorp"), and
_____________ ("Officer") and amends both the Employment Agreement entered into
between KeyCorp and Officer as of ___________, 199_ (the "Employment
Agreement") and the letter agreement regarding the effects of a change of
control that was entered into between KeyCorp and Officer as of ___________,
199_ (the "Severance Agreement"). Except as otherwise defined in this
Amendment, capitalized terms used in this Amendment have the same meanings as
assigned to those terms in the Employment Agreement and in the Severance
Agreement, respectively (which are sometimes referred to collectively in this
Amendment as the "Agreements").
This Amendment is being entered into in anticipation
of, and will become effective upon the consummation of, the Merger (as defined
below). In connection with the execution of this Amendment, KeyCorp and
Officer are entering into a new agreement that will provide certain protection
to Officer if a new change of control occurs after the Merger and at a time
when Officer remains in the employ of KeyCorp (the surviving corporation in the
Merger, hereinafter referred to as "Key"). In consideration of these matters,
KeyCorp and Officer make the following amendments to the Agreements:
1. AMENDMENT TO SECTION 1 OF EMPLOYMENT AGREEMENT.
In connection with the Merger, Officer has agreed to accept the position,
title, and duties with Key contemplated by the action taken by the Compensation
and Organization Committee of the Board of Directors of Key at its January 20,
1994 pre-Merger meeting (the "Post-Merger Position"). Section 1 of the
Employment Agreement is hereby amended so that each reference therein to
Officer's position, title, or duties shall be deemed to be a reference to the
Post-Merger Position.
2. DEFINITION OF "MERGER". The term "Merger" shall
mean the merger of KeyCorp with and into Society Corporation, an Ohio
corporation, after which the name of Society Corporation will be changed to
"KeyCorp."
3. DEFINITIONS OF "CHANGE OF CONTROL" AND "CHANGE IN
CONTROL". The definitions of the terms "Change of Control" (found in Section
3.1C(2) of the Employment Agreement) and "Change in Control" (found in Section
3 of the Severance Agreement) are hereby superseded by the following
definition:
"A 'Change of Control' and 'Change in Control' shall be deemed to have
occurred on the date of the Merger."
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No event other than the Merger shall constitute a Change of Control or Change
in Control for purposes of the Agreements or this Amendment.
4. DEFINITIONS OF "GOOD REASON". The definitions of
the term "Good Reason" (in Section 3.2C(1) of the Employment Agreement and in
Paragraph 4(iv) of the Severance Agreement) are hereby superseded by the
following definitions which shall apply for purposes of the Employment
Agreement, the Severance Agreement, and this Amendment as indicated:
Officer shall be deemed to have "Good Reason" for
terminating Officer's employment with Key if, within six months (for
purposes of the Employment Agreement), within 24 months (for purposes
of the Severance Agreement), or within 36 months (for purposes of
Section 5 of this Amendment) after the effective date of the Merger,
(a) the base salary of Officer is at any time reduced,
(b) the job grade of Officer is reduced from the job
grade of the Post-Merger Position or Officer is not provided
with the same opportunities with respect to incentive
compensation, stock option grants, and other benefits as are
provided to other employees of Key whose job grade is the same
as the job grade of Officer, or
(c) Officer is required to relocate Officer's
principal place of employment for Key, without Officer's
consent, more than 35 miles from 127 Public Square, Cleveland,
Ohio. (This clause (c) will apply only if Key has given
written notice to Officer that such a relocation is required
and Officer, in a written response to that notice, has
declined to consent to the required relocation.)
No other circumstance shall constitute "Good Reason" under the Agreements or
this Amendment and no other circumstance shall give rise to any right on the
part of Officer to voluntarily terminate employment with Key and continue to
receive compensation under either of the Agreements or under this Amendment.
Without limiting the generality of the immediately preceding sentence, Officer
shall not be entitled to voluntarily terminate his employment with Key and
continue to receive compensation under any of the Employment Agreement, the
Severance Agreement, or this Amendment in any of the following circumstances:
(i) any adverse change in Officer's status or position as an officer of Key
that is not described in clause (b), above, (ii) changes in incentive
compensation plans applicable to Officer, (iii) changes in benefit plans or
executive perquisites, (iv) assignment of duties
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inconsistent with Officer's prior duties, (v) any material diminution in
Officer's duties or responsibilities, (vi) the requirement that Officer's
principal place of employment be relocated to 127 Public Square, Cleveland,
Ohio in connection with the Merger, or (vii) retirement by Officer under the
terms of any Key retirement plan. Except insofar as it modifies the definition
of the term "Good Reason," nothing in this Section 4 shall be construed as
amending or otherwise affecting the rights or obligations of Officer under the
Employment Agreement.
5. BENEFITS AVAILABLE UNDER THIS AMENDMENT IF OFFICER
IS TERMINATED IN CERTAIN CIRCUMSTANCES AFTER THE MERGER. Except as provided in
Section 6(a) of this Amendment (which allows Officer to elect to receive
compensation after certain terminations under any one, but only one, of the
Employment Agreement, the Severance Agreement, and this Amendment), if, at any
time before the third anniversary of the Merger, Officer's employment with Key
is terminated by Key (except for Cause) or by Officer at a time when Officer
has Good Reason, then:
(a) Key shall pay to Officer a lump sum payment equal
to 1/12 of the sum of Officer's base salary (as in effect immediately
before the termination) and Officer's average annual incentive
compensation for the years 1991, 1992, and 1993 multiplied by the
greater of:
(i) 18 (i.e., 18 months of compensation), or
(ii) the number of months between the date of
Officer's termination and the third anniversary of the Merger
(with any partial month rounded up to the next highest full
month); and
(b) Key shall provide to Officer medical and life
insurance coverage for up to 18 months after the date of termination
(or, if longer, up to the third anniversary of the Merger) but not
beyond the date Officer becomes employed with any other entity.
(For purposes of (a), above, "Officer's annual incentive compensation
for the years 1991, 1992, and 1993" means the amount determined by
adding together the amounts, if any, awarded to Officer under the
KeyCorp Executive Incentive Compensation Plan for 1991, 1992, and
1993, respectively, and dividing the sum so obtained by three.)
6. ELECTION OF BENEFITS IF BENEFITS COULD BE PAID
UNDER MORE THAN ONE OF THE EMPLOYMENT AGREEMENT, THE SEVERANCE AGREEMENT, AND
THIS AMENDMENT.
(a) ELECTION OF BENEFITS GENERALLY. Section 3.1C(4)
of the Employment Agreement (which provides
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for an election of benefits under the Employment Agreement and the
Severance Agreement in certain circumstances) is superseded by this
Section 6 and that Section 3.1C(4) shall no longer be of any force or
effect. Except as provided in Section 6(b), if, at any time before
the third anniversary of the Merger, Officer's employment with Key is
terminated under circumstances giving rise to a right on the part of
Officer to receive continuing compensation or other benefits under one
or more of the Employment Agreement, the Severance Agreement, and
Section 5 of this Amendment, Officer shall have the right to elect to
receive benefits under any one, but not more than one, of the
Employment Agreement, the Severance Agreement, or Section 5 of this
Amendment. If this Section 6 applies, Key shall not make any payments
under any of the Employment Agreement, the Severance Agreement, or
Section 5 of this Amendment until after Officer has delivered to Key a
signed notice of election to receive payments under the Employment
Agreement, the Severance Agreement, or Section 5 of this Amendment.
(b) ADDITIONAL RELOCATION BENEFITS. If Officer's
employment is terminated before the third anniversary of the Merger
under circumstances entitling Officer to payment after the date of
termination under any one or more of the Employment Agreement, the
Severance Agreement, or Section 5 of this Amendment, then, in addition
to any other payments and benefits otherwise due to Officer (whether
under the Employment Agreement, the Severance Agreement, or Section 5
of this Amendment), Key shall provide to Officer a relocation package
for a further move from Cleveland back to Officer's location
immediately before the Merger (or to a comparable location) with the
same features as in the relocation package received by Officer in
connection with the move to Cleveland.
7. RESOLUTION OF CONFLICTS BETWEEN AMENDMENT AND
SEVERANCE AGREEMENT; TERMINATION OF SEVERANCE AGREEMENT ON SECOND ANNIVERSARY
OF THE MERGER.
(a) If there is any conflict or inconsistency
between the provisions of the Severance Agreement and the provisions
set forth in this Amendment, the provisions of this Amendment shall
control in every case.
(b) If Officer's employment with Key has not been
terminated by the second anniversary of the Merger in such a manner as
to entitle Officer to benefits under the Severance Agreement, then the
Severance Agreement shall terminate on the second anniversary of the
Merger and shall be of no further force or effect.
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8. CONTINUING EFFECT OF EMPLOYMENT AGREEMENT. Except
as otherwise specifically provided in this Amendment, all of the provisions of
the Employment Agreement shall remain in full force and effect throughout the
term of the Employment Agreement. Nothing in this Amendment shall be construed
as having the effect of shortening the term of the Employment Agreement.
9. POTENTIAL DEFERRAL OF CERTAIN COMPENSATION
IN EXCESS OF $1,000,000 IN ANY CALENDAR YEAR.
(a) SECTION 162(m). For purposes of this Section 9,
the term "Section 162(m)" shall mean Section 162(m) of the Internal
Revenue Code (which, as amended by the Revenue Reconciliation Act of
1993, prescribes rules disallowing deductions for certain "applicable
employee remuneration" to any of five specified "covered employees" of
a publicly held corporation in excess of $1,000,000 per year), as from
time to time amended, and the corresponding provisions of any similar
law subsequently enacted, and to all regulations issued under that
section and any such provisions.
(b) DEFERRAL. Except as otherwise provided in
either of Section 9(c) or Section 9(d), below, if Key determines that,
after giving effect to all applicable elective deferrals of
compensation, any amount of compensation (including any base salary
and any incentive compensation payable under any incentive
compensation plan in which Officer is a participant) otherwise payable
to Officer (whether under the Employment Agreement, the Severance
Agreement, this Agreement, or otherwise) at any particular time (the
"Scheduled Time"),
(i) would not be deductible by Key if paid at the
Scheduled Time by reason of the disallowance rules of Section
162(m), and
(ii) would be deductible by Key if deferred until
and paid during a later year,
that amount of compensation shall be deferred until, and paid during,
the year that is determined by Key to be the first year following the
year of deferral during which the compensation can be paid without
disallowance of the deduction for payment of the compensation by
reason of Section 162(m). If Key determines that in any year
following the year of deferral a portion of, but not all of, the
amounts deferred (together with interest thereon as provided in
Section 9(e), below) can be paid without disallowance of the
deduction, that portion that can be so paid shall be paid by Key
during that year and the remainder, except as otherwise provided in
Section 9(c) or
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Section 9(d), below, shall continue to be deferred until a later year.
(c) EARLY PAYOUT OF DEFERRED AMOUNT IF DEFERRAL IS
DETERMINED TO BE INEFFECTIVE. If any amount of compensation is
deferred under Section 9(b) with the expectation that it will be
deductible by Key if paid in a later year and Key later determines
that the compensation will not be deductible by Key even if payment
thereof is deferred until a later year, then, within three months of
the date on which that determination is made, the deferral with
respect to that compensation shall terminate and Key shall pay that
compensation to Officer.
(d) PAYOUT FOLLOWING TERMINATION OF EMPLOYMENT IN ALL
EVENTS. On January 15 of the year immediately following the year in
which Officer ceases to be employed by Key, Key shall pay to Officer,
in a single lump sum, all amounts of compensation that have been
deferred pursuant to this Section 9 and have not previously been paid
out so that, as of the close of business on that date, no amount of
compensation will remain deferred under this Section 9 whether or not
Key is entitled to a deduction with respect to the payment of that
compensation.
(e) INTEREST ON DEFERRED AMOUNTS. Upon payment of
any amounts of compensation deferred for any period of time pursuant
to this Section 9, Key shall pay to Officer an additional amount
equivalent to the interest that would have accrued on that deferred
compensation if interest accrued thereon from the date on which that
compensation would have been paid but for this Section 9 through the
date on which that compensation is paid at a variable rate equal, in
each calendar quarter, to the highest annual rate paid by Society
National Bank on new IRA certificates of deposit issued in Cuyahoga
County, Ohio on the first business day of that calendar quarter,
compounded quarterly.
10. EXCESS PARACHUTE PAYMENT REDUCTION. Anything in
the Employment Agreement, the Severance Agreement, or this Amendment to the
contrary notwithstanding, if it shall be determined that any payment or
distribution by Key to or for the benefit of Officer (whether paid or payable
or distributed or distributable pursuant to the terms of one or more of the
Employment Agreement, the Severance Agreement, this Amendment, or otherwise) (a
"Payment") would be nondeductible by Key for Federal income tax purposes
because of Section 280G of the Internal Revenue Code and applicable regulations
promulgated thereunder, then the aggregate present value of amounts payable or
distributable to or for the benefit of Officer pursuant to one or more of the
Employment Agreement, the Severance Agreement, and this Amendment (such
payments or distributions are
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hereinafter referred to in this Section 10 as "Agreement Payments") shall be
reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall
be an amount expressed in present value which maximizes the aggregate present
value of Agreement Payments without causing any Payment to be nondeductible by
Key because of Section 280G of the Internal Revenue Code and applicable
regulations promulgated thereunder. For purposes of this Section 10, present
value shall be determined in accordance with Section 280G(d)(4) of the Internal
Revenue Code and applicable regulations promulgated thereunder. All
determinations required to be made under this Section 10 shall be made, at the
expense of Key, by the Accounting Firm (as defined in the last sentence of this
Section 10) which shall provide detailed supporting calculations both to Key
and Officer within 30 days after the date of termination of Officer's
employment with Key or such earlier time as is requested by Key. Key and
Officer shall cooperate with each other and the Accounting Firm and will
provide necessary information so that the Accounting Firm may make all such
determinations. All such determinations by the Accounting Firm shall be final
and binding upon Key and Officer. Officer shall determine which of the
Agreement Payments (or, at the election of Officer, other payments) shall be
eliminated or reduced consistent with the requirements of this Section 10,
provided that, if Officer does not make such determination within 20 days of
the receipt of the calculations made by the Accounting Firm, Key shall elect
which of the Agreement Payments shall be eliminated or reduced consistent with
the requirements of this Section 10 and shall notify Officer promptly of such
election. As a result of the uncertainty in the application of Section 280G of
the Internal Revenue Code and applicable regulations promulgated thereunder at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Agreement Payments will be made by Key which should not have been
made ("Overpayment") or that additional Agreement Payments will not be made by
Key which could have been made ("Underpayment"), in each case, consistent with
the calculations required to be made hereunder. If the Accounting Firm or a
court of competent jurisdiction (in a final judgment as to which the time for
appeal has lapsed or no appeal is available) determines at any time that an
Overpayment has been made, any such Overpayment shall be treated for all
purposes as a loan to Officer which Officer shall repay to Key together with
interest at the applicable short-term Federal rate provided for in Section
1274(d)(1) of the Internal Revenue Code, compounded semi-annually; provided,
however, that no amount shall be payable by Officer to Key (or if paid by
Officer to Key, such payment shall be returned to Officer) if and to the extent
such payment would not reduce the amount which is subject to taxation under
Section 4999 of the Internal Revenue Code. If the Accounting Firm or a court
of competent jurisdiction (in a final judgment as to which the time for appeal
has lapsed or no appeal is available) determines at any time that an
Underpayment has occurred,
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any such Underpayment shall be promptly paid by Key to or for the benefit of
Officer together with interest at the applicable short-term Federal rate
provided for in Section 1274(d)(1) of the Internal Revenue Code, compounded
semi-annually. For purposes of this Section 10, the "Accounting Firm" shall
mean Ernst & Young 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 Section 10, Key shall select another national accounting
firm of recognized standing to serve and perform in that capacity under this
Section 10, 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).
IN WITNESS WHEREOF, the parties have executed this Amendment
to Agreement as of February 25, 1994.
KeyCorp
By___________________________
Victor J. Riley, Jr.
Chairman of the Board and
Chief Executive Officer
_____________________________
_____________________________
"Officer"
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