Document:

Exhibit 10.5

 

Exhibit 10.5

McDONALD FINANCIAL GROUP

DEFERRAL PLAN

ARTICLE I

     The McDonald Financial Group Deferral Plan (“Plan”) as originally established effective
January 1, 2003, is hereby amended in its entirety to be effective January 1, 2005. The Plan as
amended and restated, is structured to maintain on a bookkeeping basis, those not vested
discretionary bonus awards that have been granted to Plan Participants under the various
KeyCorp-sponsored Incentive Compensation Plan(s) which mandate that such discretionary bonus awards
be subject to a three year vesting period prior to distribution to the Plan Participant. The Plan,
provides a bookkeeping structure for such discretionary bonus awards until such awards become
vested and distributed to Plan Participants. As structured, the Plan also provides Plan
Participants with a tax-favorable savings vehicle, while permitting KeyCorp to retain such
Participants’ continued employment. It is the intention of KeyCorp, and it is the understanding of
those Participants covered under the Plan, that the Plan is unfunded for tax purposes. It is also
the understanding of Participants covered under the Plan that the Plan will be administered in
accordance with the requirements of Section 409A of the Code.

ARTICLE II

DEFINITIONS

     2.1 Meaning of Definitions. For the purposes of this Plan, the following
words and phrases shall have the meanings hereinafter set forth, unless a different meaning is
clearly required by the context:

	 	(a)	 	“Beneficiary” shall mean the person, persons or entity entitled under
Article VIII to receive any Plan benefits that may become payable after a Participant’s
death.
	 
	 	(b)	 	“Board” shall mean the Board of Directors of KeyCorp, the Board’s
Compensation and Organization Committee, or any other committee designated by the Board
or a subcommittee designated by the Board’s Compensation and Organization Committee.
	 
	 	(c)	 	“Change of Control” shall be deemed to have occurred if under a rabbi
trust arrangement established by KeyCorp (“Trust”), as such Trust may from time to time
be amended or substituted, the Corporation is required to fund the Trust because of a
“Change of Control” as that term is defined in the Trust.
	 
	 	(d)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time, together with all regulations promulgated thereunder. Reference to a
section of the Code shall include such section and any comparable section or sections
of any future legislation that amends, supplements, or supersedes such section.
	 
	 	(e)	 	“Common Stock Account” shall mean the investment account established
under the Plan for bookkeeping purposes, in which a Participant may elect to have his
or her Discretionary Bonus Awards credited. Discretionary Bonus Awards invested in the
Common Stock Account shall be credited based on a bookkeeping allocation of KeyCorp
Common Shares (both whole and fractional rounded to the nearest one-hundredth of a
share) that shall be equal to the amount of Discretionary Bonus Awards and Corporate

 

 

	 	 	 	Contributions invested by the Participant and by the Corporation in the Common Stock
Account. The Common Stock Account shall also reflect on a bookkeeping basis all
dividends, gains, and losses attributable to such Common Shares. All Corporate
Contributions and all Discretionary Bonus Awards credited to the Common Stock
Account, shall be based on the ten-day average of the New York Stock Exchange’s
closing price for such Common Shares immediately preceding, up to, and including the
day such Discretionary Bonus Awards and Corporate Contributions are credited to the
Participants’ Plan Account.
	 
	 	(f)	 	“Corporate Contributions” shall mean the dollar amount that an Employer
has agreed to contribute on a bookkeeping basis to the Participant’s Plan Account in
accordance with the provisions of Article V of the Plan.
	 
	 	(g)	 	“Corporation” shall mean KeyCorp, an Ohio corporation, its corporate
successors, and any corporation or corporations into or with which it may be merged or
consolidated.
	 
	 	(h)	 	“Deferral Period” shall mean each applicable calendar year.
	 
	 	(i)	 	“Determination Date” shall mean the last business day of each calendar
quarter.
	 
	 	(j)	 	“Disability” shall mean (1) the physical or mental disability of a
permanent nature which prevents a Participant from performing the duties such
Participant was employed to perform for his or her Employer when such disability
commenced, (2) qualifies for disability benefits under the federal Social Security Act
within 30 months following the Participant’s disability, and (3) qualifies the
Participant for disability coverage under the KeyCorp Long Term Disability Plan.
	 
	 	(k)	 	“Discharge for Cause” shall mean the termination (whether by the
Participant or the Employer) of a Participant’s employment from his or her Employer and
any other Employer that is the result of (1) serious misconduct as an Employee,
including, but not limited to, a continued failure after notice to perform a
substantial portion of his or her duties and responsibilities unrelated to illness or
incapacity, unethical behavior such as acts of self-dealing or self-interest,
harassment, violence in the workplace, or theft; (2) the commission of a crime
involving a controlled substance, moral turpitude, dishonesty, or breach of trust; or
(3) the Employer being directed by a regulatory agency or self-regulatory agency to
terminate or suspend the Participant or to prohibit the Participant from performing
services for the Employer. The Corporation in its sole and absolute discretion shall
determine whether a Participant has been Discharged for Cause, as provided for in this
Section 2.1(k), provided, however, that for a period of two years following a Change of
Control, any determination by the Corporation that an Employee has been Discharged for
Cause shall be set forth in writing with the factual basis for such Discharge for Cause
clearly specified and documented by the Corporation.
	 
	 	(l)	 	“Discretionary Bonus Awards” shall mean those not-vested
discretionary bonus award(s) granted to an Employee under the terms of an
Incentive Compensation Plan during the applicable Deferral Period, which shall
be subject to the automatic deferral and vesting provisions of Article III and
Article VI of
the Plan. For purposes of this Section 2.1(l), the term “Discretionary
Bonus Awards” shall not include any compensation paid to the Employee during
the applicable Deferral Period which constitutes any form of a hiring bonus,
sales

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	 	 	 	commissions, referral awards, recognition awards, and /or corporate
long-term incentive compensation plan awards.
	 
	 	(m)	 	“Employee” shall mean a common law employee who is employed by an
Employer.
	 
	 	(n)	 	“Employer” shall mean the Corporation and any of its subsidiaries or
affiliates, unless specifically excluded as an Employer for Plan purposes by written
action by an officer of the Corporation. An Employer’s Plan participation shall be
subject to all conditions and requirements made by the Corporation, and each Employer
shall be deemed to have appointed the Plan Administrator as its exclusive agent under
the Plan as long as it continues as an Employer.
	 
	 	(o)	 	“Harmful Activity” shall have occurred if the Participant shall do any
one or more of the following. This provision shall survive the Participant’s
termination of employment from KeyCorp.

	 	(i)	 	Use, publish, sell, trade or otherwise disclose Non-Public
Information of KeyCorp unless such prohibited activity was inadvertent, done in
good faith and did not cause significant harm to KeyCorp.
	 
	 	(ii)	 	After notice from KeyCorp, fail to return to KeyCorp any
document, data, or thing in his or her possession or to which the Participant
has access that may involve Non-Public Information of KeyCorp.
	 
	 	(iii)	 	After notice from KeyCorp, fail to assign to KeyCorp all
right, title, and interest in and to any confidential or non-confidential
Intellectual Property which the Participant created, in whole or in part,
during employment with KeyCorp, including, without limitation, copyrights,
trademarks, service marks, and patents in or to (or associated with) such
Intellectual Property.
	 
	 	(iv)	 	After notice from KeyCorp, fail to agree to do any acts and
sign any document reasonably requested by KeyCorp to assign and convey all
right, title, and interest in and to any confidential or non-confidential
Intellectual Property which the Participant created, in whole or in part,
during employment with KeyCorp, including, without limitation, the signing of
patent applications and assignments thereof.
	 
	 	(v)	 	Upon the Participant’s own behalf or upon behalf of any other
person or entity that competes or plans to compete with KeyCorp, solicit or
entice for employment or hire any KeyCorp employee.
	 
	 	(vi)	 	Upon the Participant’s own behalf or upon behalf of any other
person or entity that competes or plans to compete with KeyCorp, call upon,
solicit, or do business with (other than business which does not compete with
any business conducted by KeyCorp) any KeyCorp customer the Participant called
upon, solicited, interacted with, or became acquainted with, or learned of
through access to information
(whether or not such information is or was non-public) while the Participant
was employed at KeyCorp unless such prohibited activity was inadvertent, done
in good faith, and did not involve a customer whom the Participant should have
reasonably known was a customer of KeyCorp.

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	 	(vii)	 	Upon the Participant’s own behalf or upon behalf of any other
person or entity that competes or plans to compete with KeyCorp, after notice
from KeyCorp, continue to engage in any business activity in competition with
KeyCorp in the same or a closely related activity that the Participant was
engaged in for KeyCorp during the one year period prior to the termination of
the Participant’s employment.
	 
	 	 	 	For purposes of this Section 2.1(o) the term:
	 
	 	 	 	“Intellectual Property” shall mean any invention, idea, product,
method of doing business, market or business plan, process, program,
software, formula, method, work of authorship, or other information,
or thing relating to KeyCorp or any of its businesses.
	 
	 	 	 	“Non-Public Information” shall mean, but is not limited to, trade
secrets, confidential processes, programs, software, formulas,
methods, business information or plans, financial information, and
listings of names (e.g., employees, customers, and suppliers) that are
developed, owned, utilized, or maintained by an employer such as
KeyCorp, and that of its customers or suppliers, and that are not
generally known by the public.
	 
	 	 	 	“KeyCorp” shall include KeyCorp, its subsidiaries, and its affiliates.

	 	(p)	 	“Incentive Compensation Plan” shall mean a line of business or
management incentive compensation plan that is sponsored by KeyCorp or an affiliate of
KeyCorp that mandates the deferral of unvested Discretionary Bonus Awards granted under
the applicable Incentive Compensation Plan and which the Corporation in its sole
discretion has determined constitutes an Incentive Compensation Plan for purposes of
the Plan.
	 
	 	(q)	 	“Interest Bearing Account” shall mean the investment account
established under the Plan for bookkeeping purposes in which a Participant may elect to
have his or her Discretionary Bonus Awards credited. Discretionary Bonus Awards
invested for bookkeeping purposes in the Interest Bearing Account shall be credited
with earnings as of each Determination Date which shall be based on the effective
annual yield of the average of Moody’s Average Corporate Bond Yield Index for the
previous calendar month increased by 50 basis points. In the event that Moody’s
Investor Services, Inc. ceases to publish such Index (or any successor publisher
thereto) the Board, in its sole and absolute discretion, shall select a substantially
similar index to be used in crediting earnings under the Interest Bearing Account.
	 
	 	(r)	 	“Investment Accounts” shall collectively mean those investment accounts
established under the Plan for bookkeeping purposes in which a Participant may elect to
have his or her Discretionary Bonus Awards credited. Investment Accounts shall include
the Plan’s (1) Interest Bearing Account, (2) Common Stock Account, and (3) Investment
Funds.
	 
	 	(s)	 	“Investment Funds” shall mean those investment accounts established
under the Plan for bookkeeping purposes in which a Participant may elect to have his or
her Discretionary Bonus awards credited and which mirror the investment funds
established under Article VIII of the KeyCorp 401(k) Savings Plan (“Savings Plan”) as
may be amended from time to time, provided, however, that the Savings Plan’s
Corporation

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	 	 	 	Stock Fund, for Plan purposes, shall be excluded from the definition of
Investment Funds. Discretionary Bonus Awards invested for bookkeeping purposes in the
Investment Funds shall be credited on a bookkeeping basis with those earnings, gains,
and losses experienced by the Savings Plan’s investment funds.
	 
	 	(t)	 	“Involuntary Termination” shall mean the termination (by the Employer)
of a Participant’s employment from his or her Employer and from any other Employer,
other than a Discharge for Cause or a Termination Under Limited Circumstances.
	 
	 	(u)	 	“Participant” shall mean an Employee who meets the eligibility and
participation requirements set forth in Section 3.1 of the Plan.
	 
	 	(v)	 	“Plan” shall mean the McDonald Financial Group Deferral Plan with all
amendments, modifications and revisions as hereafter made.
	 
	 	(w)	 	“Plan Account” shall mean those bookkeeping accounts established by the
Corporation for each Plan Participant, which shall reflect all Discretionary Bonus
Awards and Corporate Contributions invested for bookkeeping purposes in the Plan’s
Investment Accounts, with all earnings, dividends, gains, and losses thereon. Plan
Accounts shall not constitute separate Plan funds or separate Plan assets. Neither the
maintenance of, nor the crediting of amounts to such Plan Accounts shall be treated (i)
as the allocation of any Corporation assets to, or a segregation of any Corporation
assets in any such Plan Accounts, or (ii) as otherwise creating a right in any person
or Participant to receive specific assets of the Corporation.
	 
	 	(x)	 	“Plan Year” shall mean the calendar year.
	 
	 	(y)	 	“Retirement” shall mean the termination of a Participant’s employment
any time after the Participant’s attainment of age 55 and completion of 5 years of
Vesting Service but shall not include the Participant’s (i) Discharge for Cause, (ii)
Involuntary Termination, (iii) Termination Under Limited Circumstances, (iv)
Disability, or (v) death.
	 
	 	(z)	 	“Termination Under Limited Circumstances” shall mean the termination
(whether by the Participant or the Employer) of a Participant’s employment from his or
her Employer, and from any other Employer (i) under circumstances in which the
Participant is entitled to receive severance benefits or salary continuation benefits
under the KeyCorp Separation Pay Plan, (ii) under circumstances in which the
Participant is entitled to severance benefits or salary continuation or similar
benefits under a change of control agreement or employment agreement within two years
after a change of control (as defined by such agreement) has occurred, or (iii) as
otherwise expressly approved by an officer of the Corporation.
	 
	 	(aa)	 	“Vesting Service” for purposes of Section 2.1(y) shall be calculated by
measuring the period of service commencing on the Employee’s employment commencement
date and
ending on the Employee’s termination date and shall be computed based on each full
calendar month that the Employee is employed by an Employer.
	 
	 	(bb)	 	“Voluntary Termination” shall mean a voluntary termination of the
Participant’s employment from his or her Employer and from any other Employer, whether
by resignation or otherwise, but shall not include the Participant’s Discharge for
Cause,

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	 	 	 	Involuntary Termination, Retirement, Termination Under Limited Circumstances, or
termination as a result of Disability or death.
	 
	 	(cc)	 	"Termination” shall mean the voluntary or involuntary and permanent
termination of a Participant’s employment from his or her Employer and any other
Employer, whether by resignation or otherwise, but shall not include the Participant’s
Retirement

     2.2 Pronouns. The masculine pronoun wherever used herein includes the feminine in any
case so requiring, and the singular may include the plural.

ARTICLE III

ELIGIBILITY AND PARTICIPATION

     3.1 Eligibility and Participation. An Employee shall automatically become a Plan
Participant upon (i) the Employee’s meeting the applicable Incentive Compensation Plan’s annual
production criteria established by the Corporation for the applicable Deferral Period, and (ii) the
Employee being awarded a not vested, Discretionary Bonus Award under his or her applicable
Incentive Compensation Plan.

     3.2 Automatic Deferral Requirements. An Employee meeting the eligibility and
automatic participation requirements of Section 3.1 hereof, shall automatically have his or her not
vested Discretionary Bonus Awards deferred to the Plan. Such Discretionary Bonus Awards shall be
maintained in the Plan until vested or forfeited.

     3.3 Deferral Limited by Termination Under Limited Circumstances, Involuntary Termination,
Retirement, Disability, or Death. As of a Participant’s Termination Under Limited
Circumstances, Involuntary Termination, Retirement, Disability or death, the Participant shall be
relieved from and, further, shall not be permitted to have any further bonus awards deferred to the
Plan, and any Discretionary Bonus Awards that thereafter would have been subject to the Automatic
Deferral Requirements of Section 3.2 hereof, if and to the extent payable, shall be paid directly
to the Participant in accordance with the terms of the applicable Incentive Compensation Plan.

     3.4 Effect of a Participant’s Discharge for Cause or Voluntary Termination on
Participant’s Discretionary Bonus Award. In the event of a Participant’s Discharge for Cause
or Voluntary Termination, the Participant shall forfeit his or her Discretionary Bonus Award to the
extent that it would otherwise become subject to the Automatic Deferral Requirements of Section 3.2
of the Plan when paid but for the termination of the Participant’s employment.

     3.5 Change in Participation Status. During those Deferral Periods in which the
Participant does not automatically defer Discretionary Bonus Awards to the Plan, Discretionary
Bonus Awards and Corporate Contributions previously credited to the Participant’s Plan Account
shall remain in the Plan
and shall continue to vest under the terms of Section 6.1 hereof; such Discretionary Bonus
Awards and Corporate Contributions with all earnings, gains, or losses thereon when vested shall be
distributed to the Participant in accordance with the provisions of Article VII of the Plan.

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ARTICLE IV

DISCRETIONARY BONUS AWARDS

     4.1 Plan Account/Investment of Discretionary Bonus Awards. Discretionary Bonus Awards
and Corporate Contributions shall be credited on a bookkeeping basis to a Plan Account established
in the Participant’s name. Each Participant shall direct the manner in which his or her
Discretionary Bonus Awards are to be invested for bookkeeping purposes under the Plan. All
Discretionary Bonus Awards may be invested for bookkeeping purposes in any one or more of the
Plan’s Investment Accounts, in such amounts as the Participant shall select, provided that such
election amounts are expressed in five percent increments. Participants may modify their
investment elections at such times and in such manner as permitted by the Corporation.

     4.2 Crediting of Discretionary Bonus Awards. Discretionary Bonus Awards shall be
credited to the Participant’s Plan Account as of the date that the Participant’s Discretionary
Bonus Awards would have been payable to the Participant under an Incentive Compensation Plan but
for the Incentive Compensation Plan’s mandatory deferral requirements.

     4.3 Default Investment Election. In the event that a Participant fails to direct the
manner in which his or her Discretionary Bonus Award(s) shall be invested for bookkeeping purposes
under the Plan, then such Discretionary Bonus Award(s) when credited to the Participant’s Plan
Account shall be automatically invested on a bookkeeping basis in the Plan’s Interest Bearing
Account.

ARTICLE V

CORPORATE CONTRIBUTIONS

     5.1 Crediting of Corporation Contributions. Corporate Contributions equal to 15% of
the Participant’s Discretionary Bonus Awards for the applicable Deferral Period shall be credited
on a bookkeeping basis to the Participant’s Plan Account as of the payroll date on which the
Participant’s Discretionary Bonus Awards are automatically deferred and credited to the Plan.

     5.2 Investment of Corporate Contributions. All Corporate Contributions credited to
the Participant’s Plan Account shall be invested for bookkeeping purposes in the Plan’s Common
Stock Account. Corporate Contributions are not subject to Participant investment direction.

     5.3 Determination of Amount. The Plan Administrator shall verify the amount of
Discretionary Bonus Awards, Corporate Contributions, dividends, and earnings, if any, to be
credited to each Participant’s Plan Account in accordance with the provisions of the Plan. The
reasonable and equitable decision of the Plan Administrator as to the value of each Plan Account
shall be conclusive and binding upon all Participants and the Beneficiary of each deceased
Participant having any interest, direct or indirect in the Participant’s Plan Account. As soon as
reasonably practicable after the close of the
Plan Year, the Corporation shall send to each Participant an itemized accounting statement that
shall reflect the Participant’s Plan Account balance.

     5.4 Corporate Assets. All Discretionary Bonus Awards, Corporate Contributions,
dividends, earnings and any other gains and losses credited to a Participant’s Plan Account on a
bookkeeping basis, remain the assets and property of the Corporation, which shall be subject to
distribution to the Participant only in accordance with Article VII of the Plan. Participants and
Beneficiaries shall have the status of general unsecured creditors of the Corporation. Nothing
contained in the Plan shall create, or be construed as creating a trust of any kind or any other
fiduciary relationship

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between the Participant, the Corporation, or any other person. It is the
intention of the Corporation and it is the understanding of the Participant that the Plan be
unfunded.

     5.5 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.

ARTICLE VI

VESTING

     6.1 Vesting in Discretionary Bonus Awards and Corporate Contributions. Subject to the
provisions of Section 7.9 of the Plan, the calculation of a Participant’s vested interest in those
Discretionary Bonus Awards and Corporate Contributions credited on a bookkeeping basis to the
Participant’s Plan Account shall be measured from the last day of the applicable calendar quarter
in which the Discretionary Bonus Awards and Corporate Contributions are credited to the
Participant’s Plan Account (“Quarterly Deferral Date”). A Participant shall become vested in his
or her Discretionary Bonus Awards and Corporate Contributions with all earnings, gains, and losses
thereon under the following three-year graded vesting schedule:

	 	(a)	 	From the date the Participant’s Discretionary Bonus Awards and Corporate
Contributions are credited to the Participant’s Plan Account until one full
calendar year from the Quarterly Deferral Date 0%.
	 
	 	(b)	 	One full calendar year from the Quarterly Deferral Date of the Participant’s
Discretionary Bonus Awards and Corporate Contributions to the Plan but less than two
full calendar years from such Quarterly Deferral
Date 33%.
	 
	 	(c)	 	Two full calendar years from the Quarterly Deferral Date of the Participant’s
Discretionary Bonus Awards and Corporate Contributions to the
Plan but less than three full calendar years from such Quarterly
Deferral Date 66%.
	 
	 	(d)	 	Three full calendar years from the date of the Quarterly Deferral Date
of the Participant’s Discretionary Bonus Awards and Corporate
Contributions to the Plan 100%.

Notwithstanding the foregoing provisions of this Section 6.1, a Participant shall become fully
vested in all Discretionary Bonus Awards and Corporate Contributions credited on a bookkeeping
basis to the Participant’s Plan Account upon the Participant’s Termination Under Limited
Circumstances, Disability or death.
 

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     6.2 Continued Vesting Upon Retirement. Subject to the provisions of Section 7.9 of
the Plan, upon the Participant’s Retirement, the Participant’s unvested Discretionary Bonus Awards
and Corporate Contributions credited to the Participant’s Plan Account with all earnings and gains
thereon, shall remain in the Plan and shall continue to vest under the vesting provisions of
Section 6.1 of the Plan.

     6.3 Forfeiture of Corporate Contributions. In the event of the Participant’s
Involuntary Termination, as that term is defined in accordance with Section 2.1(t) of the Plan, the
Participant shall become immediately vested in those Discretionary Bonus Awards allocated on a
bookkeeping basis to the Participant’s Plan Account with all related earnings and gains thereon.
All not vested Corporate Contributions and related earnings credited on a bookkeeping basis to the
Participant’s Plan Account shall be forfeited as of the Participant’s last day of employment.

     6.4 Forfeiture of Discretionary Bonus Awards and Corporate Contributions.
Notwithstanding any provision of the Plan to the contrary, upon the Participant’s Discharge for
Cause or the Participant’s Voluntary Termination, the Participant shall automatically forfeit all
Discretionary Bonus Awards and Corporate Contributions allocated on a bookkeeping basis to the
Participant’s Plan Account with all earnings and gains thereon that are not vested in accordance
with the vesting provisions of Section 6.1 of the Plan as of the Participant’s last day of
employment.

ARTICLE VII

DISTRIBUTION OF PLAN BENEFITS

     7.1 Distribution of Interest Bearing Account and/or Investment Funds. Subject to the
provisions of Section 7.8 and Section 7.9 hereof, a Participant shall receive a distribution of his
or her vested Plan Account balance from the Plan’s Interest Bearing Account and /or Investment
Funds as a single lump sum cash distribution.

     7.2 Distribution for Common Stock Account. Subject to the provisions of Section 7.8
and Section 7.9 hereof, a Participant shall receive a distribution of his or her vested Plan
Account balance from the Plan’s Common Stock Account as a single lump sum distribution of KeyCorp
Common Shares.

     7.3 Distribution of Account Balance. The Participant’s vested Plan Account shall be
valued as of the Determination Date immediately following his or her Termination, Retirement or
Disability (the “valuation date”), and such lump sum distribution shall be made as soon as
reasonably practicable following such valuation date.

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     7.4 Distributions Following Retirement. Subject to the Harmful Activity provisions of
Section 7.9 of the Plan, upon the Participant’s Retirement, the Participant’s Plan Account balance
shall continue to be maintained within the Plan and all Discretionary Bonus Awards and Corporate
Contributions credited to the Participant’s Plan Account with all earnings, gains, and losses
thereon, shall continue to vest under the vesting provisions of Section 6.1 of the Plan, and when
vested, shall be distributed to the Participant in accordance with the provisions of Section 7.1
and 7.2 hereof. .

     7.5 Distributions Following Termination Under Limited Circumstances, Disability or
Death. Upon the Participant’s Termination Under Limited Circumstances, Disability or death,
all Discretionary Bonus Awards and Corporate Contributions credited to the Participant’s Plan
Account with all earnings, gains, and losses thereon shall become immediately vested and shall be
distributed to the Participant.

     7.6 Distributions Following Involuntary Termination. In accordance with the
provisions of Section 6.3 of the Plan, upon the Participant’s Involuntary Termination, all
Discretionary Bonus Awards credited to the Participant’s Plan Account with all related earnings,
gains and losses thereon, shall become immediately vested and shall be distributed to the
Participant in a single lump sum distribution. All not vested Corporate Contributions credited to
the Participant’s Plan Account with all related earnings thereon shall be forfeited by the
Participant as of his or her last day of employment.

     7.7 Distributions Following Voluntary Termination or Discharge for Cause. Upon the
Participant’s Voluntary Termination or Discharge for Cause, all not vested Discretionary Bonus
Awards and Corporate Contributions credited to the Participant’s Plan Account with all earnings,
gains, and losses thereon shall be forfeited by the Participant as of his or her last day of
employment.

     7.8 Payment Limitation for Key Employees.  Notwithstanding any other provision of the
Plan to the contrary, including the provisions contained within this Article VII hereof, in the
event that the Participant constitutes a “key” employee of the Corporation (as that term is defined
in accordance with Section 416(i) of the Code without regard to paragraph (5) thereof),
distributions of the Participant’s Plan benefit may not commence before the date which is six
months after the Participant’s date of separation from service (or, if earlier, the date of death
of the Participant). The term “separation from service” shall be defined for Plan purposes in
accordance with the requirements of Section 409A of the Code and applicable regulations issued
thereunder.

     7.9 Harmful Activity. If a Participant engages in any “Harmful Activity” prior to or
within twelve months after the Participant’s Termination or Retirement of employment with an
Employer, (a) all not vested Discretionary Bonus Awards and not vested Corporate Contributions with
all earnings and gains thereon that are maintained in the Plan in conjunction with the continued
vesting provisions of Section 6.2 hereof shall be immediately forfeited, and (b) all distribution
of Discretionary Bonus Awards and Corporate Contributions with all earnings and gains thereon made
to the Participant within one year prior to the Participant’s Termination or Retirement date shall
be fully repaid by the Participant to the Corporation within 60 days following the Participant’s
receipt of the Corporation’s notice of such Harmful Activity.

     The foregoing restrictions shall not apply in the event that the Participant’s employment with
an Employer terminates within two years after a Change of Control if any of the following have
occurred: a relocation of the Participant’s principal place of employment more than 35 miles from
the Participant’s principal place of employment immediately prior to the Change of Control, a
reduction in the Participant’s base salary after a Change of Control, or termination of employment
under circumstances in

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which the Participant is entitled to severance benefits or salary continuation or similar
benefits under a change of control agreement, employment agreement, or severance or separation pay
plan.

     The determination by the Corporation as to whether a Participant has engaged in a “Harmful
Activity” prior to or within twelve months after the Participant’s Retirement or Termination with
an Employer shall be final and conclusive upon the Participant and upon all other Persons.

     7.10 Withholding. The withholding of taxes with respect to the Participant’s
Discretionary Bonus Awards, Corporate Contributions, and all earnings and gains thereon shall be
made at such time as it becomes required by any state, federal or local law; such taxes shall be
withheld from the Participant’s Discretionary Bonus Awards and Corporate Contributions in
accordance with applicable law to the maximum extent possible.

     7.11 Facility of Payment. If it is found that any individual to whom an amount is
payable hereunder is incapable of attending to his or her financial affairs because of any mental
or physical condition, including the infirmities of advanced age, such amount (unless prior claim
therefor shall have been made by a duly qualified guardian or other legal representative) may, in
the discretion of the Corporation, be paid to another person for the use or benefit of the
individual found incapable of attending to his or her financial affairs or in satisfaction of legal
obligations incurred by or on behalf of such individual. Any such payment shall be charged to the
Participant’s Plan Account from which any such payment would otherwise have been paid to the
individual found incapable of attending to his or her financial affairs, and shall be a complete
discharge of any liability therefor under the Plan.

ARTICLE VIII

BENEFICIARY DESIGNATION

     8.1 Beneficiary Designation. Subject to Section 8.3 hereof, each Participant shall
have the right, at any time, to designate one or more persons or an entity as Beneficiary (both
primary as well as secondary) to whom benefits under this Plan shall be paid in the event of
Participant’s death prior to complete distribution of the Participant’s vested Plan Account. Each
Beneficiary designation shall be in a written form prescribed by the Corporation and shall be
effective only when filed with the Corporation during the Participant’s lifetime.

     8.2 Changing Beneficiary. A Beneficiary designation may be changed by the Participant
without the consent of the previously named Beneficiary by the Participant’s filing of a new
designation with the Corporation. The filing of a new designation shall cancel all designations
previously filed by the Participant.

     8.3 No Beneficiary Designation. If a Participant fails to designate a Beneficiary in
the manner provided above, if the designation is void, or if the Beneficiary (including all
contingent Beneficiaries) designated by a deceased Participant dies before the Participant, the
Participant’s Beneficiary shall be the Participant’s estate.

11

 

ARTICLE IX

ADMINISTRATION

     9.1 Administration. The Corporation, as the Plan Administrator, shall be responsible
for the general administration of the Plan, for carrying out the provisions hereof, and for making
payments hereunder. The Corporation shall have the sole and absolute discretionary authority and
power to carry out the provisions of the Plan, including, but not limited to, the authority and
power (a) to determine all questions relating to the eligibility for and the amount of any benefit
to be paid under the Plan, (b) to determine all questions pertaining to claims for benefits and
procedures for claim review, (c) to resolve any and all questions arising under the Plan, including
any question of construction and/or interpretation, and (d) to take such further action as the
Corporation deems necessary or advisable in the administration of the Plan. All findings,
decisions, and determinations of any kind made by the Plan Administrator shall not be disturbed
unless the Plan Administrator has acted in an arbitrary and capricious manner. Subject to the
requirements of law, the Plan Administrator shall be the sole judge of the standard of proof
required in any claim for benefits and in any determination of eligibility for a benefit. All
decisions of the Plan Administrator shall be final and binding on all parties. The Corporation may
employ such attorneys, investment counsel, agents, and accountants as it may deem necessary or
advisable to assist it in carrying out its duties hereunder. The actions taken and the decisions
made by the Corporation hereunder shall be final and binding upon all interested parties subject,
however, to the provisions of Section 9.2. The Plan Year, for purposes of Plan administration,
shall be the calendar year.

     9.2 Claims Review Procedure. Whenever the Plan Administrator decides for whatever
reason to deny, whether in whole or in part, a claim for benefits under this Plan filed by any
person (herein referred to as the “Claimant”), the Plan Administrator shall transmit a written
notice of its decision to the Claimant, which notice shall be written in a manner calculated to be
understood by the Claimant and shall contain a statement of the specific reasons for the denial of
the claim and a statement advising the Claimant that, within 60 days of the date on which he or she
receives such notice, he or she may obtain review of the decision of the Plan Administrator in
accordance with the procedures hereinafter set forth. Within such 60-day period, the Claimant or
his or her authorized representative may request that the claim denial be reviewed by filing with
the Plan Administrator a written request therefor, which request shall contain the following
information:

	 	(a)	 	the date on which the request was filed with the Plan Administrator; provided,
however, that the date on which the request for review was in fact filed with the Plan
Administrator shall control in the event that the date of the actual filing is later
than the date stated by the Claimant pursuant to this paragraph (a);
	 
	 	(b)	 	the specific portions of the denial of his or her claim which the Claimant
requests the Plan Administrator to review;
	 
	 	(c)	 	a statement by the Claimant setting forth the basis upon which he or she
believes the Plan Administrator should reverse its previous denial of the claim and
accept the claim as made; and
	 
	 	(d)	 	any written material which the Claimant desires the Plan Administrator to
examine in its consideration of his or her position as stated pursuant to paragraph (b)
above.

     In accordance with this Section, if the Claimant requests a review of the Claim decision, such
review shall be made by the Plan Administrator who shall, within sixty (60) days after receipt of
the

12

 

request form, review and render a written decision on the claim containing the specific reasons
for the decision including reference to Plan provisions upon which the decision is based. All
findings, decisions, and determinations of any kind made by the Plan Administrator shall not be
modified unless the Plan Administrator has acted in an arbitrary and capricious manner. Subject to
the requirements of law, the Plan Administrator shall be the sole judge of the standard of proof
required in any claim for benefits, and any determination of eligibility for a benefit. All
decisions of the Plan Administrator shall be binding on the claimant and upon all other Persons.
If the Participant or Beneficiary shall not file written notice with the Plan Administrator at the
times set forth above, such individual shall have waived all benefits under the Plan other than as
already provided, if any, under the Plan.

ARTICLE X

AMENDMENT AND TERMINATION OF PLAN

     10.1 Reservation of Rights. The Corporation reserves the right to terminate the Plan
at any time by action of the Corporation, or any duly authorized committee thereof, and to modify
or amend the Plan, in whole or in part, at any time and for any reason, subject to the following:

	 	(a)	 	Preservation of Account Balance. No termination, amendment, or
modification of the Plan shall reduce (i) the amount of Discretionary Bonus Awards and
Corporate Contributions, and (ii) all earnings and gains on such Discretionary Bonus
Awards and Corporate Contributions that have accrued up to the effective date of the
termination, amendment, or modification.
	 
	 	(b)	 	Changes in Earnings Rate. No amendment or modification of the Plan
shall reduce the rate of earnings to be credited on all Discretionary Bonus Awards and
Corporate Contribution, and all earnings and gains accrued thereon under the Common
Stock Account until the close of the applicable Plan Year in which such amendment or
modification is made.

     10.2 Effect of Plan Termination. Upon the Plan’s termination, all Participant Plan
Account balances shall remain in the Plan and shall continue to vest in accordance with the
provisions of Article VI of the Plan and when vested shall be distributed to the Participant in
accordance with the provisions of Article VII hereof. Notwithstanding anything to the contrary
contained in the Plan, the termination of the Plan shall terminate the liability of the Corporation
and all Employers as of the Plan’s termination date or such other date designated by the
Corporation to make further Corporate Contributions to the Plan.

ARTICLE XI

CHANGE OF CONTROL

     11.1 Change of Control. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change of Control as defined in accordance with Section 2.1(c) of the
Plan, no amendment or modification of the 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 Common
Stock Accounts’ method of calculating earnings, gains, and/or losses on the Participant’s
Pre-Change of Control Account Balance, or (3) to reduce or modify the Participant’s Discretionary
Bonus Awards and/or Corporate Contributions to be credited to the Participant’s Plan Account for
the applicable Deferral

13

 

Period. For purposes of this Section 11.1, the term “Pre-Change of Control
Account Balance” shall mean, with regard to any Plan Participant, the aggregate amount of the
Participant’s Discretionary Bonus Awards and Corporate Contributions 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.

     11.2 Common Stock Conversion. In the event of a transaction or occurrence 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 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 Stock Account to reflect on a bookkeeping basis the
securities, cash and other property that would have been received in such reorganization,
reclassification, consolidation, merger or sale in an equivalent amount of Common Shares equal to
the balance in the Common Stock Account and, from and after such reorganization, reclassification,
consolidation, merger or sale, the Common Stock Account shall reflect on a bookkeeping basis all
dividends, interest, earnings and losses attributable to such securities, cash, and other property.

     11.3 Amendment in the Event of a Change of Control. On and after a Change of Control,
the provisions of Article II, Article III, Article IV, Article V, Article VI, Article VII, Article
VIII, Article IX, Article X, and this Article XI may not be amended or modified as such Sections
and Articles apply with regard to the Participants’ Pre-Change of Control Account Balances.

ARTICLE XII

MISCELLANEOUS PROVISIONS

     12.1 Unfunded Plan. This Plan is an unfunded plan maintained primarily to provide
deferred compensation benefits for a select group of “management or highly-compensated employees.”

     12.2 No Commitment as to Employment. Nothing herein contained shall be construed as a
commitment or agreement upon the part of any Employee hereunder to continue his or her employment
with an Employer, and nothing herein contained shall be construed as a commitment on the part of
any Employer to continue the employment, rate of compensation, or terms and conditions of
employment of any Employee hereunder for any period. All Participants shall remain subject to
discharge to the same extent as if the Plan had never been put into effect.

     12.3 Benefits. Nothing in the Plan shall be construed to confer any right or claim
upon any person, firm, or corporation other than the Participants, former Participants, and
Beneficiaries.

     12.4 Absence of Liability. No member of the Board of Directors of the Corporation or
a subsidiary or committee authorized by the Board of Directors, or any officer of the Corporation
or a subsidiary or officer of a subsidiary shall be liable for any act or action hereunder, whether
of commission or omission, taken by any other member, or by any officer, agent, or Employee, except
in circumstances involving bad faith or willful misconduct, for anything done or omitted to be
done.

     12.5 Expenses. The expenses of administration of the Plan shall be paid by the
Corporation.

14

 

     12.6 Precedent. Except as otherwise specifically agreed to by the Corporation in
writing, no action taken in accordance with the Plan by the Corporation shall be construed or
relied upon as a precedent for similar action under similar circumstances.

     12.7 Withholding. The Corporation shall withhold any tax which the Corporation in its
discretion deems necessary to be withheld from any payment to any Participant, former Participant,
or Beneficiary hereunder, by reason of any present or future law.

     12.8 Validity of Plan. The validity of the Plan shall be determined and the Plan
shall be construed and interpreted in accordance with the provisions of the laws of the State of
Ohio. The invalidity or illegality of any provision of the Plan shall not affect the validity or
legality of any other part thereof.

     12.9 Parties Bound. The Plan shall be binding upon the Employers, Participants,
former Participants, and Beneficiaries hereunder, and, as the case may be, the heirs, executors,
administrators, successors, and assigns of each of them.

     12.10 Headings. All headings used in the Plan are for convenience of reference only
and are not part of the substance of the Plan.

     12.11 Duty to Furnish Information. The Corporation shall furnish to each Participant,
former Participant, or Beneficiary any documents, reports, returns, statements, or other
information that it reasonably deems necessary to perform its duties imposed hereunder or otherwise
imposed by law.

     12.12 Validity. In case any provision of this Plan shall be held illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this
Plan shall be construed and enforced as if such illegal and invalid provision had never been
inserted herein.

     12.13 Notice. Any notice required or permitted under the Plan shall be deemed
sufficiently provided if such notice is in writing and hand delivered or sent by registered or
certified mail. Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark or on the receipt for registration or
certification. Mailed notice to the Corporation shall be directed to the Corporation’s address,
attention: KeyCorp Compensation and Benefits Department. Mailed notice to a Participant or
Beneficiary shall be directed to the individual’s last known address in the Employer’s records.

     12.14 Successors. The provisions of this Plan shall bind and inure to the benefit of
each Employer and its successors and assigns. The term successors as used herein shall include any
corporate or other business entity, which shall, whether by merger, consolidation, purchase or
otherwise, acquire all or substantially all of the business and assets of an Employer.

15

 

ARTICLE XIII

COMPLIANCE WITH

SECTION 409A CODE

     13.1 Compliance With Section 409A. 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.

     Notwithstanding any provision of the Plan to the contrary, Plan benefits shall not be
distributed to a Participant earlier than:

	 	•	 	the Participant’s separation from service as determined by the Secretary of the
Treasury (except as provided below with respect to a key employee of the Corporation);
	 
	 	•	 	a specified time (or pursuant to a fixed schedule) specified under the Plan;
	 
	 	•	 	the date of the Participant’s Disability, or
	 
	 	•	 	the death of the Participant.

     If it is determined that a Participant constitutes a “key” employee (as defined in Section
416(i) of the Code without regard to paragraph (5) thereof) of the Corporation, the Participant
shall not receive any distribution of his or her Plan benefits before the date which is six months
after the date of the Participant’s separation from service (or, if earlier, the date of death of
the Participant).

	 	 	 	 	 	 	 	 	 
	 	 	KEYCORP	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	/s/ Thomas E. Helfrich 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Title:
	 	 	 	Executive Vice President	 	 
	 

	 	 	 	 	 	 	 	 

16Exhibit 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

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