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Exhibit 99(f)
EMPLOYMENT AGREEMENT
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AGREEMENT by and between XxXxxxxx & Company Securities, Inc.,
an Ohio corporation (the "Company"), KeyCorp, an Ohio corporation ("KeyCorp")
and __________ __________ (the "Executive"), dated as of the 14th day of June,
1998.
1. EMPLOYMENT PERIOD. Subject to the consummation of the
transactions contemplated by the Agreement and Plan of Merger dated as of June
14, 1998 by and among XxXxxxxx & Company Investments, Inc. and KeyCorp (the
"Merger Agreement"), 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 closing date of the transactions contemplated by the Merger Agreement
(the "Commencement Date") and ending on the third anniversary thereof (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 serve in the capacity and with the
duties, responsibilities and reporting relationship set forth on Exhibit A
hereto. The term "New McDonald" shall include the following lines of business
and the business relationships and management rights associated with such lines
of business: (A) retail and institutional brokerage, (B) equity and fixed income
trading and underwriting, (C) investment banking, (D) capital markets products,
(E) loan syndication, (F) public finance, (G) venture capital, (H) mezzanine
finance and (I) clearing operations, in each case, as in existence at the
Company and KeyCorp and its affiliates as of the date hereof and, to the extent
integrated with such lines of business, as may be acquired by KeyCorp or its
affiliates after the date hereof. Unless otherwise determined after the
Commencement Date, New McDonald shall not include Key Global Finance. As used
herein, the terms "affiliates" and "affiliated companies" shall include any
company controlled by, controlling or under common control with the KeyCorp.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled, the
Executive agrees to devote full attention and time during normal business hours
to the business and affairs of the Company and to use the Executive's reasonable
best efforts to perform such responsibilities in a professional manner. 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, so long as such activities do not significantly interfere
with the performance of
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the Executive's responsibilities as an employee of the Company in accordance
with this Agreement. For purposes hereof, service on corporate boards pursuant
to appointments after the date hereof shall be subject to the prior approval of
KeyCorp, which shall not be unreasonably denied, and to KeyCorp's Code of
Ethics. It is expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the Commencement Date,
the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Commencement Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
(b) COMPENSATION. (i) BASE SALARY. During the Employment
Period, the Executive shall receive an annual base salary ("Annual Base Salary")
determined by the Compensation Committee of New McDonald (the "Compensation
Committee") in accordance with the compensation policies and practices
established by the Compensation Committee, which shall be consistent with the
historical compensation practices and policies of the Company and KeyCorp and in
conformity with industry practice, provided that in no event shall the Annual
Base Salary be less than the annual base salary paid to the Executive
immediately prior to the Commencement Date. The Annual Base Salary shall be
payable in cash no less frequently than in equal monthly installments.
(ii) ANNUAL BONUS. In addition to the Annual Base
Salary, the Executive shall be awarded an annual cash bonus (the "Annual
Bonus"), determined by the Compensation Committee in accordance with the
compensation policies and practices established by the Compensation Committee,
which shall be consistent with the historical compensation practices and
policies of the Company and KeyCorp and in conformity with industry practice.
For calendar years 1999 and 2000, the sum of the Annual Base Salary and Annual
Bonus shall not be less than the amount set forth on Exhibit A hereto (the
"Guaranteed Compensation"). The Annual Bonus shall be payable no later than
March 1 of each calendar year ending during the Employment Period.
(iii) RETENTION PAYMENTS. (A) In addition to the
Annual Base Salary and Annual Bonus, the Executive shall be entitled to receive
payments and awards from a $68,000,000 retention pool (the "Retention Pool") in
the aggregate amount set forth on Exhibit A hereto (the "Aggregate Retention
Amount"). The Retention Pool and the Aggregate Retention Amount shall be payable
as to 44% of such amounts in cash and as to 56% of such amounts in non-qualified
stock options to acquire shares of KeyCorp common stock (the "Retention
Options"). The aggregate number of Retention Options to be granted as a
percentage of the Retention Pool shall be determined as of the date hereof based
on the Black-Scholes option pricing model at a .315 valuation (the "Valuation
Method"). Retention Options with a value (based on the Valuation Method) equal
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to the non-cash portion of the Aggregate Retention Amount shall be granted to
the Executive in two portions with at least one-half of such Retention Options
granted on the Commencement Date and the remaining portion granted before
January 31, 1999. The Retention Options (i) shall have an exercise price equal
to the fair market value of KeyCorp common stock on the date of grant, (ii)
shall have an option expiration date of ten years from the date of grant (the
"Option Term"), (iii) shall vest as provided in paragraph (B) below and (iv)
shall be exercisable after becoming vested during the periods provided in the
KeyCorp Amended and Restated 1991 Equity Compensation Plan as in effect as of
the date hereof, provided, however, that KeyCorp shall use its best efforts to
obtain approval from KeyCorp's Compensation and Organization Committee to
provide the Executive with a two-year post termination of employment exercise
period, except upon a termination for Cause (as defined herein) or without Good
Reason (as defined herein). In no event shall the Retention Options be
exercisable beyond the Option Term.
(B) The Retention Pool and the Aggregate Retention
Amount, including the Retention Options granted in satisfaction thereof (whether
granted on the Commencement Date or otherwise), shall vest in the percentages,
and be payable or exercisable, as the case may be, on the dates set forth below
or if earlier as provided in the next following sentence:
Vesting & Payment Date Retention %
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2nd Anniversary of Commencement Date 33-1/3
3rd Anniversary of Commencement Date 66-2/3
If the Company shall terminate the Executive's employment other than for Cause,
including by reason of the Executive's Disability (as defined herein), or the
Executive shall terminate employment for Good Reason or due to his death, or
upon the occurrence of circumstances constituting a breach by the Company of
Section 2(a)(i) and Exhibit A in a manner that would result in Good Reason
pursuant to Section 3(c)(A) but in which the Executive does not terminate his
employment, the cash portion of the Aggregate Retention Amount and the Retention
Options shall become fully vested and immediately payable or exercisable, as the
case may be. If after the Commencement Date and prior to the January 1999 grant
of the balance of the Retention Options, the Executive's employment terminates
under any of the circumstances described in the preceding sentence (other than
death), KeyCorp shall either make a cash payment or grant Retention Options
equal to the balance of the Aggregate Retention Amount. In the event of the
Executive's death after the Commencement Date and prior to the January 1999
grant of the balance of the Retention Options, the Executive's estate shall
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be entitled to receive a cash payment equal to the balance of the Aggregate
Retention Amount in lieu of the Retention Options.
(iv) EMPLOYEE BENEFIT PLANS. During the Employment
Period, the benefit plans, programs, policies and arrangements provided to the
Executive shall be no less favorable, in the aggregate, than the benefit plans,
programs, policies and arrangements in which the Executive was entitled to
participate immediately prior to the Commencement Date.
(v) 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
New McDonald.
(vi) INDEMNIFICATION/D&O INSURANCE. The Executive
shall be indemnified by the Company against claims arising in connection with
the Executive's status as an employee, officer, director or agent of the Company
in accordance with the Company's indemnity policies for its senior executives,
subject to applicable law.
(c) EMPLOYMENT LOCATION. During the Employment Period, the
Executive's principal place of employment shall be located no more than 20 miles
from the Executive's principal place of employment at the date hereof.
(d) MANAGEMENT AND OPERATIONS OF NEW MCDONALD AFTER THE
MERGER. During the Employment Period, the Compensation Committee of New McDonald
will be comprised of at least a majority of people who were among the executive
officers of the Company who entered into employment agreements in connection
with the transactions contemplated by the Merger Agreement (the "McDonald
Executives"). In the event of a vacancy on the Compensation Committee, which
would result in the loss of the majority representation of the McDonald
Executives, the appointment of the succeeding McDonald Executive to the
Compensation Committee shall be subject to the approval of the Chief Executive
Officer or Chief Operating Officer of KeyCorp, which approval will not be
unreasonably denied.
3. TERMINATION OF EMPLOYMENT. (a) 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
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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 New McDonald 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 continued failure of the Executive to perform
substantially the Executive's duties with New McDonald (other than any such
failure resulting from incapacity due to mental or physical illness or injury),
after a written demand for substantial performance is delivered to the Executive
by the Chief Executive Officer of New McDonald, which specifically identifies
the manner in which the Chief Executive Officer of New McDonald believes that
the Executive has not substantially performed the Executive's duties, or
(ii) the engaging by the Executive in illegal conduct
constituting a felony, or
(iii) gross misconduct which is materially and
demonstrably injurious to New McDonald, or
(iv) any material breach of Section 7 hereof,
provided that to the extent any such breach is curable, New McDonald shall give
the Executive notice thereof and a reasonable opportunity to cure, or
(v) conduct that results in the permanent loss of the
Executive's professional license to conduct business or in the Executive being
disqualified or barred by banking or security law regulators from serving in the
capacity contemplated by this Agreement for six months or more.
Any act, or failure to act, based upon instructions of the Chief Executive
Officer of New McDonald or based upon the advice of counsel for the New McDonald
shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of New McDonald.
(c) GOOD REASON. The Executive's employment may be terminated
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 after the Executive has given the Company notice of the
breach and a reasonable opportunity to cure such breach. A breach described in
this clause to include, without limitation, (A) a detrimental alteration or
failure to comply with the terms of the Executive's employment as they relate to
the Executive's position, reporting,
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responsibilities and duties, or the compensation and benefit arrangements and
opportunities applicable to the Executive, each as described in Section 2 and
Exhibit A hereof, (B) 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, (C) 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, if the business for which the Executive's services are principally
performed is sold or transferred, the failure of the Company to obtain such an
agreement from the purchaser or transferee of such business or (D) any
termination of the Executive's employment which is not effected pursuant to the
terms of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive for Good Reason, 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 termination
date (which date, in the case of a termination for Good Reason, shall be not
more than 30 days after the giving of such notice). 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, 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.
(e) 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 that is one day after the last day of the
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, the Date of Termination shall be the date on which the Company or the
Executive notifies the Executive or the Company, respectively, of such
termination and (iii) if the Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Executive or the Disability Effective Date, as the case may be.
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:
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(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 the
amounts set forth in clauses A and B below:
A. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid, (2) the product of (x) the average of the Annual Bonuses
paid or payable to the Executive in the three calendar years
ending prior to the Date of Termination including any bonus or
portion thereof which has been earned but deferred (and
annualized for any calendar year consisting of less than
twelve full months or during which the Executive was employed
for less than twelve full months) (such amount being referred
to as the "Average Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current
calendar year through the Date of Termination, and the
denominator of which is 365, and (3) any unpaid Annual Bonus
for a prior year and any compensation previously deferred by
the Executive (together with any accrued interest or earnings
thereon) to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2) and (3) shall be
hereinafter referred to as the "Accrued Obligations"); and
B. the amount equal to the product of (1) the number
of years (including fractions thereof) remaining from the Date
of Termination until the end of the Employment Period (the
"Continuation Period") and (2) the sum of (x) the Executive's
Annual Base Salary and (y) the Average Annual Bonus;
(ii) any unpaid cash portion of the Aggregate
Retention Amount shall become fully vested and immediately payable;
(iii) the Retention Options shall become fully vested
and immediately exercisable;
(iv) to the extent not theretofore 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 of
the Company and its affiliated companies (such other amounts and benefits shall
be hereinafter referred to as the "Other Benefits"); and
(v) for the duration of the Continuation Period, the
Executive and the Executive's dependents shall continue to be eligible to
participate in the medical, dental, health, group-term life 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.
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(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 obligations to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations, the timely payment or provision of Other Benefits and the payments
referred to in Section 4(a)(ii). Accrued Obligations and the payments referred
to in Section 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 all restrictions shall lapse. 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, which
shall be no less favorable than those in effect immediately prior to the
Commencement Date.
(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 Accrued Obligations, the timely payment or provision of
Other Benefits and the payments referred to in Section 4(a)(ii). Accrued
Obligations and the payments referred to in Section 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 all restrictions shall lapse. 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, which shall be no less favorable than those in effect
immediately prior to the Commencement Date.
(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 during the Employment Period, this Agreement shall terminate
without further obligations to the Executive other than the obligation to pay to
the Executive (x) Accrued Obligations less the amount determined under Section
4(a)(i)A(2) hereof, and (y) Other Benefits, in each case to the extent
theretofore unpaid.
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 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.
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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. The
Company agrees to pay as incurred, to the full extent permitted by law, all
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 of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (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 the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the Executive's
employment by the Company or any of its affiliated companies 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 the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by it or
to an attorney retained by the Executive.
(b) While employed by the Company or any of its affiliates and
for one year after the Executive's termination of employment by the Company for
Cause or by the Executive without Good Reason (but in no event for more than one
year following the expiration of the Employment Period), the Executive will not,
without the written consent of the Company, directly or indirectly, be connected
as an officer, employee,
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partner, director or otherwise with any business which engages within a 50-mile
radius of any area in which the Company conducted business during the 12-month
period immediately preceding the Executive's Date of Termination, in any
business that competes, at the time such engagement is commenced, with any
business actively conducted by the Company in such area and that is of the type
of business activity in which the Executive was directly engaged on behalf of
the Company during the 12-month period immediately preceding the Date of
Termination or any other business with respect to which the Executive has
confidential information. 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.
(c) While employed by the Company or any of its affiliates and
for one year after the earlier of the Date of Termination and the expiration of
the Employment Period, the Executive will not, directly or indirectly, on behalf
of the Executive or any other person, solicit for employment by other than the
Company any person employed by the Company or its affiliates.
(d) While employed by the Company or any of its affiliates and
for one year after the earlier of (i) the Executive's termination of employment
by the Company for Cause or by the Executive without Good Reason and (ii) the
expiration of the Employment Period, the Executive will 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 the Company during the 12-month period
immediately preceding the Date of Termination, for the purpose of providing such
customer or client with services that are directly competitive with the services
provided by the Company, provided that under no circumstances may the Executive
solicit any customer or client for the purpose of providing services relating to
business that was under discussion prior to the Date of Termination.
(e) In the event of a breach or threatened breach of this
Section 7, the Executive agrees that the Company shall be entitled to injunctive
relief 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.
(f) The provisions of Section 7(b), (c) and (d) 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.
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8. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in
this Agreement to the contrary notwithstanding and 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 "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. The Executive shall not be entitled to a
Gross-Up Payment under this Section 8 upon a termination of employment due to
the failure to perform satisfactorily his job duties, which failure to perform
is certified by the Chief Executive Officer or Chief Operating Officer of New
McDonald.
(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 (i) the later
of the due date for the
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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 it 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:
(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
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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 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
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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.
(a) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(b) 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 assumes and agrees 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 or modified 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:
--------------------
If to the Company: New McDonald
------------------ 000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Att: Chief Executive Officer
Copy to: KeyCorp
-------- 000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Att: General Counsel
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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.
(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) On and after the Commencement Date, this Agreement shall
supersede any other agreement, written or oral, pertaining to the subject matter
of this Agreement. This Agreement shall automatically terminate and be of no
force and effect if the Executive dies prior to the Commencement Date.
(f) This Agreement may be executed in counterparts, which
together shall constitute one and the same original.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from their respective Boards of
Directors, 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.
-------------------------------------------
[Executive]
XxXXXXXX & COMPANY
SECURITIES, INC.
-------------------------------------------
By:
Title:
KEYCORP
-------------------------------------------
By:
Title:
