Exhibit 10.6



 







Exhibit 10.6




KEYCORP



SECOND DIRECTOR DEFERRED COMPENSATION PLAN




     The KeyCorp Second Director Deferred Compensation Plan (the “Plan”), originally established
December 28, 2004 to be effective January 1, 2005, is hereby amended and restated as of that date.
The Plan, as structured, is designed to provide directors with the opportunity to defer payment of
their directors’ fees and vested equity awards in accordance with the provisions of this Plan. It
is the intention of KeyCorp and it is the understanding of the Directors participating in the Plan,
that the Plan constitutes a nonqualified deferred compensation plan under the provisions of Section
409A of the Code and applicable regulations issued thereunder.



ARTICLE I




DEFINITIONS




     For the purposes hereof, the following words and phrases shall have the meanings indicated.




	 	1.	 	“Account” shall mean the bookkeeping account established in accordance with
Article II hereof.
	 
	 	2.	 	“Beneficiary” shall mean any person designated by a Participant in accordance
with the Plan to receive payment of all or a portion of the remaining balance of the
Participant’s Account in the event of the death of the Participant prior to receipt by
the Participant of the entire amount credited to the Participant’s Account.
	 
	 	3.	 	“Change of Control” shall be deemed to have occurred in accordance with the
requirements of Section 409A of the Code and applicable regulations issued thereunder,
if a change in the ownership or the effective control of the Corporation occurs, or if
there occurs a change in the ownership of a substantial portion of the assets of the
Corporation.
	 
	 	4.	 	“Corporation” shall mean KeyCorp, a bank holding company and its corporate
successors, including the surviving corporation resulting from any merger of KeyCorp
with any other corporation or corporations.
	 
	 	5.	 	“Director” shall mean (i) any member of the Board of Directors of the
Corporation and (ii) any member of the Board of Directors of a Subsidiary.
	 
	 	6.	 	“Election Agreement” shall mean the written election to defer Fees signed in
writing by the Director and in the form provided by the Corporation.
	 
	 	7.	 	“Fees” shall mean the fees earned as a Director.
	 
	 	8.	 	“Participant” shall mean any Director who has at any time elected to defer the
receipt of Fees in accordance with the Plan.
	 
	 	9.	 	“Plan” shall mean this Second Director Deferred Compensation Plan, together
with all amendments hereto.




 









 






	 
	 	10.	 	“Subsidiary” shall mean a corporation organized and existing under the laws of
the United States or of any state or the District of Columbia of which more than 50%
percent of the issued and outstanding stock is owned by the Corporation or by a
Subsidiary of the Corporation, and which has been designated by the Board of Directors
or the Chief Executive Officer of the Corporation as a Subsidiary eligible to
participate in the Plan.
	 
	 	11.	 	“Year” shall mean the calendar year.





ARTICLE II




ELECTION TO DEFER




     1. Eligibility. Any Director may elect to defer receipt of all or a specified portion
of his or her Fees for any Year in accordance with Section 2 of this Article.



     2. Election to Defer. A Director who desires to defer the payment of all or a portion
of his or her Fees for any Year must complete and deliver an Election Agreement to the Corporation
no later than the last day of the Year prior to the Year for which the Fees are earned by the
Director; provided, however, that any Director hereafter elected to the Board of Directors of the
Corporation or a Subsidiary who was not a Director on the preceding December 31 may make an
election to defer payment of Fees for the Year in which he or she is elected to the Board of
Directors by delivering the Election Agreement to the Corporation within 30 days of first becoming
eligible to participate in the Plan. A Director who timely delivers the Election Agreement to the
Corporation shall be a Participant in the Plan upon the Corporation’s acceptance of such Election
Agreement.



     3. Amount Deferred; Date of Deferral. A Participant shall designate on the Election
Agreement (a) the amount of his or her Fees that are to be deferred to the Plan for any Year, (b)
the date on which the Participant’s Fees shall be distributed, (c) whether the distribution of
deferred Fees is to be paid in its entirety or whether such Fees shall be paid in installments, and
(d) if in installments, the number of quarterly installments. Deferrals shall be until the earlier
to occur: (i) the date specified by the Participant which may be not later than the date on which
the Participant would attain age 72, or (ii) the date of death of the Participant, at which time
payment of the amount deferred shall be made in accordance with Section 7 or 10 of this Article. A
Participant may select not more than one date in each Election Agreement upon which distribution
shall be made or when installments shall begin; distribution dates shall be the first business day
of a calendar quarter.



     4. Account. The Corporation shall maintain an Account of the Fees deferred by each
Participant. A Participant shall designate on the Election Agreement whether to have the Account
valued on the basis of KeyCorp Common Shares in accordance with Section 5 of this Article or
receive interest in accordance with Section 6 of this Article. The Corporation may, if necessary
or desirable, establish separate Accounts for a Participant to properly account for amounts
deferred under the different alternatives and Years; all such Accounts are collectively referred to
herein as the Account. The Account based on KeyCorp Common Shares shall be known as the “Common
Shares Account”, and the interest bearing account shall be known as the “Interest Bearing Account”;
a Participant may defer a portion of his or her Fees into each type of Account.



     5. Common Shares Account. If a Participant elects to have all or a portion of his or
her Fees deferred into the Common Shares Account, as of the last business day of any quarter, there
shall be added to such Account the number of Common Shares (whole and fractional, rounded to the
nearest one- 



 









 







hundredth of a share) equal to the dollar amount of such Fees payable for such calendar
quarter plus all dividends payable during such quarter on the Common Shares held in the Account on
the first day of such quarter divided by the market value of the Common Shares at the close of
business on the last business day of such quarter.



     6. Interest Bearing Account. If a Participant elects to have all or a portion of his
or her Fees deferred into the Interest Bearing Account, there shall be added to the Account as of
the last business day of each calendar quarter the dollar amount of such Fees payable for such
calendar quarter plus all interest payable on such Interest Bearing Account for such quarter as
follows: A Participant’s account will receive interest on the average daily balance in the
Interest Bearing Account during each month at a rate equal to 50 basis points higher than the
effective annual yield of the average of the Moody’s Average Corporate Bond Yield Index for the
preceding month, as published by Moody’s Investor Service, Inc. (or any successor publisher
thereto), or, if such index is no longer published, a substantially similar index selected by the
Board.



     7. Payment of Account; Period of Deferral. The amount of a Participant’s Account
shall be paid to the Participant in a single payment and/or in a number of substantially equal
consecutive quarterly installments (not to exceed 40), as elected by the Participant in his or her
Election Agreement. Distributions from the Interest Bearing Account shall be in cash.
Distributions from the Common Shares Account shall be in Common Shares. The amount of the Account
remaining after payment of an installment shall continue to be valued in accordance with Section 5
of this Article or bear interest in accordance with Section 6 of this Article. Full payment or the
first quarterly installment, as the case may be, shall be made as soon as administratively possible
after (i) the date specified in Section 3 of this Article, or (ii) the date of the Participant’s
death.



     Any installment payment shall be made pro rata from the Common Shares Account and the Interest
Bearing Account. The election as to the time for and method of payment of the amount of the
Account relating to Fees deferred for a particular Year shall be made on the Election Agreement(s)
and may not thereafter be altered except as provided in Section 10 of this Article.



     In the event that a Participant elects to receive installment payments under this Section 7,




	 	(a)	 	The amount of the distribution from the Common Shares Account shall be valued
based on the fair market value of the Common Shares on the last business day of the
calendar quarter immediately prior to the distribution date;
	 
	 	(b)	 	The amount of the distribution from the Interest Bearing Account shall be
valued based on the value of such Account on the last business day of the calendar
quarter immediately prior to such distribution date;
	 
	 	(c)	 	The amount of each installment shall be determined by dividing the value of the
Common Shares Account, the Interest Bearing Account, or both, as the case may be, by
the number of installments remaining to be paid to the Participant.





     8. Small Payments. Notwithstanding the foregoing, if the quarterly installment
payment elected under any Election Agreement would result in a quarterly payment of less than $500
in cash or Common Shares, as the case may be, the Participant shall receive an immediate lump sum
payment of the entire amount of the Account to the Participant on the day the installment payments
were to begin.



 









 





     9. Death of Participant. In the event of the death of a Participant, the amount of
the Participant’s Account shall be paid to the Beneficiary or Beneficiaries designated in writing
signed by the Participant in the form provided by the Corporation; in the event there is more than
one Beneficiary, such form shall include the proportion to be paid to each Beneficiary and indicate
the disposition of such share if a Beneficiary does not survive the Participant; in the absence of
any such designation, payment from the Account shall be divided equally among all other
Beneficiaries. A Participant’s Beneficiary designation may be changed at any time prior to the
Participant’s death by execution and delivery of a new Beneficiary designation form. The form on
file with the Corporation at the time of the Participant’s death which bears the latest date shall
govern. In the absence of a Beneficiary designation or the failure of any Beneficiary to survive
the Participant, the amount of the Participant’s Account shall be paid to the Participant’s estate
in its entirety ninety days after the appointment of an executor or administrator. In the event of
the death of any Beneficiary after the death of a Participant, the remaining amount of the Account
payable to such Beneficiary shall be paid in its entirety to the estate of such Beneficiary ninety
days after the appointment of an executor or administrator for such estate.



     10. Acceleration.




	 	(a)	 	Notwithstanding any other provision of the Plan to the contrary, upon the
occurrence of a Change of Control, a Participant shall be entitled to receive from the
Corporation the payment of his or her Account in the manner selected as follows:
within 30 days following the date that a person first becomes eligible to become a
Participant, the Participant shall be entitled to make a Change of Control Election
which will be applicable in the event of a Change of Control (the “Change of Control
Election”). The Change of Control Election will provide the following distribution
options to a Participant in the event of a Change of Control:






	 	(i)	 	upon the occurrence of a Change of Control, the entire
amount of the Participant’s Account will be immediately paid in full to
the Participant regardless of whether the Participant continues as a
Director after the Change of Control;
	 
	 	(ii)	 	upon and after the occurrence of a Change of Control,
the entire amount of the Participant’s Account will be immediately paid
in full to the Participant, but only if either (a) the Participant is
not a Director as of immediately after the Change of Control, or (b)
the Participant ceases to be a Director within two Years after the
Change of Control; or
	 
	 	(iii)	 	upon the occurrence of a Change of Control, the
payment elections specified in the Participant’s Election Agreement
shall govern irrespective of the Change of Control.






	 	(b)	 	The Corporation may accelerate the making of payment of the amount of a
Participant’s Account to a Participant in the event of an “unforeseeable emergency” of
the Participant. For purposes of this Section 10(b), the term “unforeseeable
emergency” shall mean a
severe financial hardship to the Participant resulting from a sudden and unexpected
illness or accident of the Participant, the Participant’s spouse, or the
Participant’s dependent (as defined in Section 152(a) of the Code), the loss of the
Participant’s property due to casualty, or such other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of the
Participant. The determination of an “unforeseeable emergency” and the ability of
the Corporation to 




 









 






	 	 	 	accelerate the Participant’s Supplemental Retirement Benefit
shall be determined in accordance with the requirements of Section 409A of the Code
and applicable regulations issued thereunder.





     11. Change of Control. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change of Control, no amendment or modification of this Plan may be
made at any time on or after such Change of Control (1) to reduce or modify a Participant’s
Pre-Change of Control Account Balance, (2) to reduce or modify the Interest Bearing Account’s rate
of earnings on or method of crediting such earnings to a Participant’s Pre-Change of Control
Account Balance, (3) to reduce or modify the Common Shares Account’s method of calculating all
earnings, gains, and/or losses on a Participant’s Pre-Change of Control Account Balance, or (4) to
reduce or modify the Participant’s deferrals to be credited to a Participant’s Plan Account for the
applicable deferral period. For purposes of this Section 11, the term “Pre-Change of Control
Account Balance” shall mean, with regard to any Plan Participant, the aggregate amount of such
Participant’s prior deferrals with all earnings, gains, and losses thereon which are credited to
the Participant’s Plan Account through the close of the calendar Year in which such Change of
Control occurs.



     12. Interest Bearing Account After Change of Control. In accordance with the
provisions of Section 6 hereof, in the event that Moody’s Average Corporate Bond Yield Index ceases
to be published on or after a Change of Control, the Corporation shall reasonably select a
substantially similar index to be used in crediting earnings on Participants’ Pre-Change of Control
Account Balances held in the Plan’s Interest Bearing Account.



     13 Common Stock Conversion. In the event of a Change of Control in which the Common
Shares of the Corporation are converted into or exchanged for securities, cash and/or other
property as a result of any capital reorganization or reclassification of the capital stock of the
Corporation, or as a result of the consolidation or merger of the Corporation with or into another
corporation or entity, or the sale of all or substantially all of its assets to another corporation
or entity, the Corporation shall cause the Common Shares Account to reflect the securities, cash
and other property to be received in such reorganization, reclassification, consolidation, merger
or sale on the balance in the Common Shares Account and, from and after such reorganization,
reclassification, consolidation, merger or sale, the Common Shares Account shall reflect all
dividends, interest, earnings and losses attributable to such securities, cash, and other property
(with any cash earning interest at the rate applicable to the Interest Bearing Account).



     14. Amendment in the Event of a Change of Control. On or after a Change of Control,
the provisions of Article I and Article II may not be amended or modified as such provisions apply
to Participants’ Pre-Change of Control Account Balances.



     15. Statement. Each Participant shall receive a statement of his or her Account not
less than annually.



     16. Valuation of the Account. Each Account shall be valued as of the last day of each
calendar quarter until payment of a Participant’s Fees in full. If a Participant has elected to
have his or her Fees deferred into the Common Shares Account, the Corporation shall ascertain the
number of shares in the Account (whole and fractional, rounded to the nearest one-hundredth of a
share) after taking into account earnings to the Account under this Article and distributions from
the Account under this Article, based on the fair market value of the Common Shares on the last
business day of such calendar quarter.



 









 







Automatically and without further action by the
Corporation, in the event of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination, exchange of shares, or a similar corporate change,
appropriate adjustments in the number and kind of shares held in a Participant’s Account shall be
made by the Corporation to reflect such change. If a Participant has elected to have his or her
Fees deferred into the Interest Bearing Account, the Corporation shall ascertain the value of such
Interest Bearing Account by adding to the value of the Account at the beginning of such calendar
quarter the dollar amount of the Fees deferred into the Account for such quarter, plus the value of
any interest paid on the Account in accordance with this Article, less any distributions made from
the Account in accordance with this Article.



     17. Plan Transfers.  Participants may elect to transfer vested equity awards (other
than stock option awards) granted under the KeyCorp Directors’ Deferred Share Plan to the Plan,
provided, the Participant’s election to transfer such vested award is made in accordance with the
requirements of the grant agreement under which the award was issued and in accordance with the
subsequent deferral election requirements of Section 409A of the Code. Transferred awards shall be
fully vested under the Plan and shall be subject to the distribution requirements contained within
the Participant’s transfer election form provided, however, that such Plan transfers must be
deferred under the Plan for a minimum of five (5) years from the date of the transfer regardless of
the Participant’s termination, retirement, or the distribution instructions contained in the
Participant’s transfer election form. Transferred awards shall be subject to full investment
diversification if cash based, and transferred awards shall be invested in the in the Plan’s Common
Stock Account if equity based. Awards invested in the Plan’s Common Stock Account will not be
subject to investment direction or diversification. Transferred awards shall be separately
maintained under the Plan.



ARTICLE III




ADMINISTRATION




     The Corporation shall be responsible for the general administration of the Plan and for
carrying out the provisions hereof. The Corporation shall have all such powers as may be necessary
to carry out its duties under the Plan, including the power to determine all questions relating to
eligibility for and the amount in an Account, all questions pertaining to claims for benefits and
procedures for claim review, and the power to resolve all other questions arising under the Plan,
including any questions of construction. The Corporation may take such further action as the
Corporation shall deem advisable in the administration of the Plan. The actions taken and the
decisions made by the Corporation hereunder shall be final and binding upon all interested parties.



 









 





ARTICLE IV




AMENDMENT AND TERMINATION




     The Corporation reserves the right to amend or terminate the Plan at any time by action of its
Board of Directors, the Compensation and Organization Committee or any other duly authorized
Committee of the Board of Directors; provided, however, that no such action shall adversely affect
any Participant or Beneficiary with respect to the amount credited to a Deferred Compensation
Account and further provided that any such action shall be subject to the limitations set forth in
Article II, Sections 10 and 13, hereof. No amendment or termination of the Plan shall result in an
acceleration of Plan benefits in violation of Section 409A of the Code.



ARTICLE V




MISCELLANEOUS




     1. No Present Interest. Subject to any federal statute to the contrary, no right or
benefit under the Plan and no right or interest in each Participant’s Plan Account shall be subject
to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge any right or benefit under the
Plan, or Participant’s Plan Account shall be void. No right, interest, or benefit under the Plan
or Participant’s Plan Account shall be liable for or subject to the debts, contracts, liabilities,
or torts of the Participant or Beneficiary. If the Participant or Beneficiary becomes bankrupt or
attempts to alienate, sell, assign, pledge, encumber, or charge any right under the Plan or
Participant’s Plan Account, such attempt shall be void and unenforceable.



     2. Plan Noncontractual. Nothing herein contained shall be construed as a commitment
to or agreement with any Director of the Corporation or a Subsidiary to continue such person’s
directorship with the Corporation or Subsidiary, and nothing herein contained shall be construed as
a commitment or agreement on the part of the Corporation or any Subsidiary to continue the
directorship or the rate of director compensation of any such person for any period. All Directors
shall remain subject to removal to the same extent as if the Plan had never been put into effect.



     3. Interest of Director. The obligation of the Corporation under the Plan to make
payment of amounts reflected on an Account merely constitutes the unsecured promise of only the
Corporation to make payments from its general assets as provided herein. Further, no Participant
or Beneficiary shall have any claim whatsoever against any Subsidiary for amounts reflected on an
Account. At its discretion, the Corporation may establish one or more trusts, with such trustees
as the Corporation may approve, for the purpose of providing for the payment of benefits owed under
the Plan. Although such a trust may be irrevocable, in the event of insolvency or bankruptcy of
the Corporation, such assets will be subject to the claims of the Corporation’s general creditors.
To the extent any benefits provided under the Plan are paid from any such trust, the Corporation
shall have no further obligation to pay them. If not paid from the trust, such benefits shall
remain the obligation of the Corporation.



     4. Claims of Other Persons. The provisions of the Plan shall in no event be construed
as giving any person, firm, or corporation any legal or equitable rights against the Corporation or
any Subsidiary, or the officers, employees, or directors of the Corporation or any Subsidiary,
except any such rights as are specifically provided for in the Plan or are hereafter created in
accordance with the terms and provisions of the Plan.



 









 





     5. Delegation of Authority. Any action to be taken by the Corporation’s Board of
Directors under this Plan may be taken by such Board’s Compensation and Organization Committee,
Executive Committee or any other duly authorized Committee of the Board of Directors.



     6. Severability. The invalidity and unenforceability of any particular provision of
the Plan shall not affect any other provision hereof, and the Plan shall be construed in all
respects as if such invalid or unenforceable provisions were omitted herefrom.



     7. Governing Law. The provisions of the Plan shall be governed and construed in
accordance with the laws of the State of Ohio.



ARTICLE VI




COMPLIANCE WITH

SECTION 409A CODE




     The Plan is intended to provide for the deferral of compensation in accordance with the
provisions of Section 409A of the Code and regulations and published guidance issued pursuant
thereto. Accordingly, the Plan shall be construed in a manner consistent with those provisions and
may at any time be amended in the manner and to the extent determined necessary or desirable by the
Corporation to reflect or otherwise facilitate compliance with such provisions with respect to
amounts deferred on and after January 1, 2005. Notwithstanding any provision of the Plan to the
contrary, no otherwise permissible election, deferral, accrual, or distribution shall be made or
given effect under the Plan that would result in early taxation or assessment of penalties or
interest of any amount under Section 409A of the Code.



     IN WITNESS WHEREOF, KeyCorp has caused this KeyCorp Second Director Deferred Compensation Plan
to be executed by its duly authorized officer this 21st day of December, to be effective as of
January 1, 2005.



	 	 	 	 	 	 	 
	 	 	KEYCORP
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Thomas E. Helfrich 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	Executive Vice President