Exhibit 10
(KEYCORP LOGO) [l32656al3265602.gif]
August 5, 2008
PERSONAL AND CONFIDENTIAL
VIA HAND DELIVERY
Mr. Thomas Bunn
127 Public Square
Cleveland, Ohio 44114
Dear Tom:
Tom, initially, let me apologize for what may appear to be a very “legal” letter
agreement (“Letter Agreement”) addressing the circumstances associated with your
intended retirement from KeyCorp (“KeyCorp”), KeyBank National Association
(“KeyBank”), and affiliates (collectively referred to as “Key”). While there are
numerous issues associated with your intended retirement that need to be
addressed, please know that I have very much valued the commitment and
dedication that you have shown to Key for more than 6 years and I wish you every
success in your retirement. Also please know that Key very much values its
continuing relationship with you, and Key will work very hard to make your
transition from Key to retirement a positive opportunity for both you and Key.
We are also appreciative of the important role that you will continue to perform
until your retirement. You will be an important part of the recruiting process
for your successor and will be extremely helpful in getting your successor
transitioned into a new role. Additionally, your advice and counsel to Henry
Meyer on significant strategic and operating business issues will be valuable as
we work through this challenging business environment.
This Letter Agreement confirms our various discussions and it serves to outline
the terms of your continued employment and retirement from Key as well as the
transitioning arrangements that you have agreed to provide to Key. The salary
and various benefits to be paid to you under the terms of this Letter Agreement
are in lieu of all rights and interests you may have relating to your employment
and the termination thereof.
A. Retention Bonus.
As we have discussed, Key greatly values the expertise that you have shown over
your career with Key, and in particular during the last several years as you led
Key’s institutional and asset management businesses. As a result of our
discussions concerning your intended retirement, and in anticipation of the
selection and development of your eventual successor, Key would like to be
assured that that your expertise will continue to remain available to Key
throughout this transition process. To that end, Key will provide you with a
Retention Bonus in the amount of $1,450,000, which will become due and payable
to you as of December 15, 2008, in exchange for (i) your continued employment
with Key in your present capacity as the Vice Chair of KeyCorp and Senior
Executive Vice President of KeyBank National Association (“KeyBank”),

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 2
and your continued performance of the duties and functions of those positions in
a satisfactory manner through November 30, 2008, (ii) your providing
Transitioning Services to Key from December 1, 2008 through February 28, 2009
(items (i) and (ii) being more fully outlined in Paragraph B, below), (iii) for
your agreement to not engage in any Competitive Activity as more fully set forth
in Paragraph L hereof, and (iv) for your execution and compliance with the terms
of this Letter Agreement.
B. Your Continued Employment and Transitioning Services
From the date hereof through November 30, 2008, you will continue to serve in
your present capacity as the Vice Chair of KeyCorp, and Senior Executive Vice
President of KeyBank. During this continuing employment period you will receive
your current base salary (i.e. $545,000 on an annualized basis) less appropriate
withholdings and deductions and you will continue to be covered under the
various employee benefit coverages that you elected under the KeyCorp flexible
benefits program, as well as your continued participation in the KeyCorp Cash
Balance Pension Plan, Second Excess Cash Balance Plan, 401(k) Savings Plan, and
the Deferred Savings Plan (provided that you have elected to defer under that
Plan for 2008). Effective November 30, 2008, you will resign from your positions
as the Vice Chair of KeyCorp and Senior Executive Vice President of KeyBank,
automatically by the operation of this Letter Agreement without any further
action on your part.
Thereafter, from December 1, 2008 through February 28, 2009 (the “Transition
Period”) you will provide Transitioning Services to Key. During this Transition
Period, you will continue to report to Henry Meyer, KeyCorp’s Chief Executive
Officer, and you will continue to participate in the benefit plans and programs
as outlined above. Your pay during this Period will be at the rate of 50% of
your current base salary (i.e. $272,500 on an annualized basis). Your
Transitioning Services assignments will involve the duties that are set forth in
Exhibit A hereto, but may also include such other matters as Henry may request
from time-to-time. If your employment should terminate or be suspended by reason
of your disability or death prior to the end of the Transition Period: (i) prior
to November 30, 2008, you or your estate will be entitled to 80% of your
Retention Bonus ($1,160,000) and Bonus Award ($613,920) unless either sum has
been previously paid in which case you will keep the same and (ii) on or after
November 30, 2008, you or your estate will be entitled to 100% of your Retention
Bonus ($1,450,000) and Bonus Award ($767,400) unless, of course, either sum has
been previously paid. If your employment should terminate by reason of your
voluntary resignation prior to the end of the Transition Period, you will have
no right to any further payment of base salary and benefits or any other payment
hereunder (including, without limitation the Retention Bonus referred to in
Paragraph A above); however, you will have the rights of a resigning or retiring
employee, as applicable, at the time of your termination or retirement. Your
employment during the term of this Letter Agreement can be terminated by Key for
“Cause”, and is subject, of course, to Key’s employment policies and practices.
The term “Cause” as used herein, has the same definition as contained in your
Change of Control Agreement.

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 3
Effective at the close of business on February 28, 2009, and by operation of
this Letter Agreement without any further act on your part, you voluntarily
resign from your employment with Key and from any officer, director, and other
positions that you hold at Key other than as a director of the Victory funds. As
a former employee you may not continue to participate in Key’s employee benefit
plans and programs other than as required under the provisions of COBRA. You
may, however, elect to participate in the KeyCorp Retiree Medical Plan, provided
that you have met that Plan’s age and service requirements at the time of your
termination/retirement from Key. You acknowledge that as of your
termination/retirement you will have no rights under the KeyCorp Separation Pay
Plan.
C. Bonus Award
Key will provide you with a discretionary bonus award in the amount of $767,400
which shall be paid to you no later than March of 2009; this payment
extinguishes any and all rights that you may have to any other incentive or
bonus payment(s).
D. Restricted Stock and Cash Performance Awards and Option Awards
Your Restricted Stock and Cash Performance Awards (“LTIC Awards”) will vest in
accordance with the terms of each individual Award Instrument under which they
were granted. Accordingly, and by way of example, your 2003 and 2008 grant
Awards will forfeit in conjunction with your termination/retirement date; your
2006 grant Award will either vest or forfeit in February, 2009, based upon the
performance goals outlined in that Award instrument; and your 2007 grant Award
will either vest or forfeit (on a pro-rata basis based upon your
termination/retirement date) in February of 2010 provided the performance goals
as outlined in that Award instrument are met. You agree that you will not
receive any additional LTIC Awards.
You may exercise your vested and exercisable stock options in conformity with
the plans under which they were issued. For purposes of those plans your
termination date is the date upon which your employment with Key terminates, but
in no event later than February 28, 2009. You will have three (3) years from
your February 28, 2009 termination/retirement date to exercise such vested and
exercisable stock options. You will not receive any further stock options,
including the July, 2008 option grant.
E. Distribution of Your Vested Excess Cash Balance, Deferred Savings, and
Automatic Deferral Plans.
You will be eligible to receive a distribution of your vested (i) KeyCorp
Automatic Deferral Plan balance with all earnings, gains and losses thereon and
(ii) KeyCorp Deferred Savings Plan benefits in accordance with your previous
Plan distribution elections, and you will be eligible to commence the
distribution of your KeyCorp Excess Cash Balance Pension Plan and KeyCorp Second
Excess Cash Balance Pension Plan benefit following your February 28, 2009
retirement date, provided, however, that the distribution of those Plans
benefits will not commence their respective payments until the first day of the
seventh month following your termination date from Key (under the mandates of
Section 409A of the Internal Revenue Code). Distributions

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 4
under those Plans shall be made in accordance with the terms of each respective
Plan and your distribution elections, if applicable.
You will continue to vest in those restricted stock units granted to you in
conjunction with your 2007 annual incentive compensation award in accordance
with the vesting schedule under which they were granted, provided, however, that
you will not receive payment of any vested restricted stock units until the
first day of the seventh month following your February 28, 2009
termination/retirement date from Key. All other restricted stock units will be
paid to you as the units vest, with the payment of such vested units being made
no later than 90 days following your vesting date in the same.
F. Change of Control Agreement
As of February 28, 2009, you will forfeit all right, title, and interest you
have in the Agreement, dated December 17, 2007, by and between you and KeyCorp
respecting a Change of Control of KeyCorp (the “COC Agreement”) rendering the
COC Agreement terminated and null and void. You further acknowledge that all
previous agreements between you and KeyCorp respecting your employment
relationship with Key and previous Change of Control of KeyCorp are also
terminated and null and void.
G. Tax Preparation and Financial Planning
For each of the calendar years 2008 and 2009, you will receive tax preparation
and financial planning services in an amount up to $5,000 in accordance with
Key’s tax preparation and financial planning benefit; reimbursement for such
services shall be made by no later than the last day of the year following the
year in which you incur tax preparation and financial planning services.
H. Work Location and Relocation Services
Key will continue to reimburse your business expenses under its business expense
reimbursement policy. Additionally, at the conclusion of your employment, Key
will help you move your household goods etc. in accordance with its relocation
policy. Please note that all fees, business expenses and relocation expenses
must be reimbursed by no later than the last day of the year following the year
in which the fee, business expense or relocation expense is incurred.
Accordingly, you must provide Key with all necessary documents a minimum of
90 days prior to that time in order to receive reimbursement.
I. Compliance with Section 409A; Mandatory 6-Month Hold-Back
Under Section 409A of the Code because you are regarded as a “specified
employee”, Key is required to delay your distribution of deferred compensation
to the first day of the seventh month following your separation from service
from Key. It is intended that this Letter Agreement comply with the provisions
of Section 409A, and this Letter Agreement shall be administered in a manner
consistent with this intent. Notwithstanding any provision of this Letter
Agreement to the contrary, in the event that any payment or benefit hereunder is
determined to constitute a “deferral of compensation” subject to Section 409A,
then to the extent necessary to comply with

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 5
Section 409A, such payment or benefit shall not be made, provided, or commenced
until the first business day of the seventh month following your “separation
from service” (as that term is defined under Section 409A) (or if earlier,
following your date of death).
J. Compliance with the Letter Agreement
Notwithstanding anything to the contrary in this Letter Agreement, Key’s
obligation to pay you all payments and benefits hereunder (including the
Retention Bonus that is outlined in Paragraph A of this Agreement) shall cease
and you shall forfeit all rights thereto and shall repay to Key all sums
previously paid under this Letter Agreement upon the occurrence of any material
breach by you of any of your obligations under this Letter Agreement or that you
otherwise have to Key during or following your employment, including, without
limitation, (i) your obligations to return all Key owned property and to
cooperate with Key in connection with any reasonable review of your previous
assignments and responsibilities, (ii) your obligations regarding
confidentiality hereunder, the preservation of Key’s trade secrets, non-public
information, and intellectual property, (iii) your agreement to not solicit,
entice, and/or hire (except on behalf of Key), as applicable, any of Key’s
employees from the date hereof through June 30, 2010, and (iv) your agreement to
not engage in Competitive Activity as set forth in Paragraph L hereof.
Additionally, in addition to the foregoing, you hereby acknowledge the
enforceability of the restrictions set forth in the Acceptance of Restricted
Stock Award in the KeyCorp Award of Restricted Stock dated January 16, 2003 and
signed by you on April 7, 2003, the Acceptance of Grant Agreement in the KeyCorp
Award of Performance-Based Restricted Stock, Cash Performance Shares and Stock
Performance Shares, dated February 7, 2006 and signed by you on February 27,
2006, and the Acceptance of Grant Agreement in the KeyCorp Award of Cash
Performance Shares and Above-Target Performance Shares dated February 20, 2007,
and signed by you on April 16, 2007 and the Acceptance of Grant Agreement in the
KeyCorp Award of Time-Lapsed Restricted Stock Units, Cash Performance Shares and
Above-Target Performance Shares dated February 21, 2008 and signed by you on
March 27, 2008. Please note that this Letter Agreement shall not be deemed to be
a “Termination Under Limited Circumstances” with respect to any of the aforesaid
awards. As a result, all customer restrictions applicable to such awards shall
remain in full force and effect for their respective terms.
K. Confidentiality/Non-Disparagement
You agree that you shall not at any time, directly or indirectly, without
written authorization from Key, make use of or disclose to any person or entity
any confidential business-related, proprietary, or secret information,
confidential knowledge, trade secrets, or other confidential data not in the
public domain related to the systems, businesses, products, services, employees,
or practices of Key that you have acquired during your employment with Key,
whether prepared by you or another. You further agree that the confidential
character and proprietary nature of any of the foregoing information does not
become any less confidential or proprietary to Key because you may commit some
of the information to your memory or because you may maintain some of this
information outside of Key’s offices. You agree to promptly return to Key all
I.D. Cards, access codes, computers, Blackberrys, files, disks, work papers,
customer, vendor, and

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 6
employee records, and any other property belonging to Key that is in your
possession or control as of your termination date.
You also agree that you will not disparage Key or any of its personnel,
management, products, services, or practices. Key will not authorize anyone to
disparage you.
L. Agreement to not Compete With Key
From the date hereof through August 31, 2009 you agree that you will not,
directly or indirectly, engage in any Competitive Activity, as defined in this
Paragraph, except on behalf of Key, without the written consent of Key, which
consent Key, in its absolute discretion, will not unreasonably withhold. As used
herein, “Competitive Activity” means (i) commencing or engaging in any business
or business activity for a Financial Services Company as defined below;
(ii) serving as a director, advisory director, officer, member, partner, or
employee of a Financial Services Company as defined below; or (iii) serving as a
consultant or advisor, or otherwise rendering services of a consultative or
advisory nature to a Financial Services Company as defined below. As used
herein, “Financial Services Company” means the bank holding companies set forth
on Exhibit B hereto (“Bank Holding Companies”) and all affiliates and
subsidiaries of the Bank Holding Companies; provided, however, that this
restriction on Competitive Activity shall not prevent you from serving as a
director of the Victory funds or of a non-profit corporation that is not
affiliated with a Financial Services Company.
Notwithstanding the foregoing provisions of this Paragraph L, hereof, in the
event that you elect to remain a director or trustee of the Victory funds
following August 31, 2009, you agree that you will not without the written
consent of Key, which consent Key, in its absolute discretion, will not
unreasonably withhold (i) commence or engage in any business or business
activity for an investment management company, or investment advisor company
(hereinafter collectively referred to as “Investment Company”) for your period
of continuing service to the Victory funds, (ii) serve as a director, advisory
director, officer, member, partner, or employee of an Investment Company for
your period of continuing service to the Victory funds, or (iii) serve as a
consultant or advisor, or otherwise rendering services of a consultative or
advisory nature to an Investment Company for your period of continuing service
to the Victory funds.
In the event a court of competent jurisdiction determines that any of the
limitations contained in the above paragraph are excessive because of duration
or scope, the provisions thereof shall not be void but, with respect to such
limitations on duration or scope held to be excessive, they shall be modified to
incorporate the maximum limitations such court will permit, not exceeding the
limitations contained therein.
If you breach the provisions of Paragraphs J, K, or L of this Letter Agreement
you agree that Key shall be entitled to injunctive relief (without the necessity
of posting any bond), in addition to any and all other rights and remedies that
it may be entitled to under law or other contractual provisions.

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 7
M. Release of Key
In consideration of KeyCorp entering into this Letter Agreement and providing
the payments and benefits enumerated above, and except for (i) the arrangements
specified herein, (ii) your vested KeyCorp Cash Balance Pension Plan and 401(k)
Savings Plan benefits, and (iii) any insurance or indemnification rights you
possess, you, for yourself and your heirs, legal representatives, and assigns,
release, acquit, and forever discharge KeyCorp and KeyBank, and all affiliates
and subsidiaries, and their former and current representatives, employees,
officers, directors, predecessors-in-interest, successors, and assigns, jointly
and severally, from any and all liabilities, attorneys’ fees, obligations,
duties, undertakings, agreements, contracts, compensation, incentive
compensation, separation pay, severance, employee benefits, plans, policies,
practices, claims, demands, damages, proceedings, actions, and causes of action
of every kind, nature, and character, which you have had, now have, or may have
in the future for events occurring to the date hereof, whether known or unknown,
suspected or unsuspected, that are by reason of, or in any manner whatsoever
connected with, or growing out of, your employment relationship with KeyCorp and
KeyBank, its affiliates or predecessors-in-interest, or the termination of those
employment relationships, including, without limitation, any alleged tortious,
wrongful, unlawful, or improper act or conduct or any discriminatory events,
acts, patterns, or practices based on age (including the Age Discrimination in
Employment Act, 29 U.S.C. 621, et seq.), religion, creed, sex, sexual
orientation, national origin, ancestry, disability, handicap, veteran status,
marital status, genetic information, race, or color, or the continuing or future
effects thereof, or the KeyCorp Separation Pay Plan, or any alleged violation or
breach of any express, implied, or implied-in-law contract, agreement, promise,
or duty. Notwithstanding anything to the contrary in this paragraph, nothing
herein shall prohibit you from filing a charge or complaint with or from
participation in any investigation or proceeding of the U.S. Equal Employment
Opportunity Commission or the applicable State or Local Fair Employment
Practices Agency; however, you agree that you will not be entitled to any
further monetary compensation from Key in addition to that which is provided for
under this Letter Agreement. The provisions of this Section M. Release of Key
shall not effect your entitlement to coverage under the KeyCorp directors’ and
officers’ insurance program. All coverage under the program shall be controlled
by the terms and conditions of the program.
N. Complete Agreement
This Letter Agreement represents the complete agreement between the parties
hereto and supersedes all prior or contemporaneous oral or written
understandings on the subjects contained herein. No one relies on any
representations, oral or written, on the effect, enforceability, or meaning of
this Letter Agreement, except as is specifically set forth in this Letter
Agreement. This Letter Agreement can only be modified or waived, in whole or in
part, by a writing signed by all of the parties hereto. A facsimile of this
Letter Agreement and a facsimile signature of a party shall be treated in all
respects as an original document and counterparts of this Letter Agreement may
be executed separately and taken together will be treated as one complete
original document. This Letter Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, legal
representatives, affiliates, successors, and assigns.

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 8
Again, Tom, we at Key truly wish you and your family all the best in your
retirement, and thank you again for your contributions, dedication and loyalty
as a Key employee. The best of luck.

            With My Best Regards,

KEYCORP
      By:   /s/ Thomas E. Helfrich       Thomas E. Helfrich, Executive Vice
President        and Chief Human Resources Officer   

ACKNOWLEDGEMENT
I have carefully read and I fully understand the provisions of this Letter
Agreement, including my waiver of claims against Key. In executing this Letter
Agreement I have not relied upon any other representation or statement, written
or oral, and I have had many opportunities to consult with my attorney.

         
AGREED TO this 6th day of August, 2008
       
 
  /s/ Thomas Bunn
 
     Thomas Bunn  

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 9
Statement
Your Rights Under the Older Workers Benefit Protection Act
This Letter Agreement contains a waiver of your rights and claims under the Age
Discrimination in Employment Act of 1967 (“ADEA”). Your waiver must be knowing
and voluntary, which means, as a minimum, that you understand that:

a)   the waiver is part of an agreement between you and your employer which is
written so that you understand it;   b)   the waiver specifically refers to
rights or claims under ADEA;   c)   you do not waive any rights or claims that
may arise after this Letter Agreement is executed by you;   d)   your waiver is
in exchange for consideration that is more valuable than what you are already
entitled to;   e)   you are advised to consult with an attorney prior to
executing this Letter Agreement;   f)   you have at least 21 days after receipt
of this Letter Agreement to decide whether to execute it; and   g)   you have
7 days after you execute this Letter Agreement to revoke it, and this Letter
Agreement will not be effective or enforceable until this 7-day period has
expired.

You acknowledge that you have been given at least 21 days to review and consider
the Letter Agreement and, if you sign it before 21 days has passed, you do so of
your own free choice. You understand that any changes made to this document will
not restart this 21-day period.
You further acknowledge that (1) you understand the above points, and therefore,
your waiver is knowing and voluntary and (2) if you receive any sum under this
Letter Agreement and later revoke it, that you must repay Key for all sums
received by you under this Letter Agreement.

         
Date August 6, 2008
       
 
  /s/ Thomas Bunn
 
     Thomas Bunn    

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 10
EXHIBIT A

  •   Assist with assimilation of new leader of Key National Banking, including
providing advice and counsel on business and personnel matters;     •   Consult
with Chief Executive Officer, as requested, on significant enterprise or Key
National Banking issues;     •   Assist with 2008 incentive compensation process
for Key National Banking;     •   Recommend to Chief Executive Officer, 2008
incentive compensation actions for Board reported Key National Banking
executives; and     •   Perform such other duties as the Chief Executive Officer
may request from time to time.

 

--------------------------------------------------------------------------------

 

Mr. Thomas Bunn
August 5, 2008
Page 11
EXHIBIT B
FIFTH THIRD BANCORP
HUNTINGTON BANCSHARES INCORPORATED
MARSHALL & ILSLEY
M&T BANKCORP
NATIONAL CITY CORPORATION
PNC FINANCIAL SERVICES
ZIONS BANCORPORATION
COMERICA INC.
U.S. BANCORP
WACHOVIA CORPORATION
WELLS FARGO & CO.
BANK OF AMERICA CORPORATION