EXHIBIT 99.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, originally made and entered into as of December 1, 1989
with Union Planters Corporation, amended and restated on April 17, 1997, and
further amended on September 26, 2000 and January 22, 2004, is further amended
and restated in its entirety as of June 29, 2005, by and between Regions
Financial Corporation (the "Company"), a Delaware corporation and successor in
interest to Union Planters Corporation, and Xxxxxxx X. Xxxxx ("Officer").
WITNESSETH:
WHEREAS, it is the intention and desire of the parties to enter into a
formal agreement whereby two principal purposes will be served, to wit:
A. The Company will have the benefit of the employment of Officer
during the period covered by this Agreement; and
B. Officer will be an executive of the Company during the Period
hereinafter defined.
NOW, THEREFORE, in consideration of the employment of Officer by the
Company, of the mutual promises, covenants, representations and warranties
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto, intending to be legally bound, agree as follows:
SECTION 1
EMPLOYMENT AND TERM
1.1 Employment. The Company hereby employs Officer, and Officer hereby
accepts such employment to perform the duties described in Section 2 of this
Agreement.
1.2 Term.
(a) Base Term. The current term of employment is scheduled to expire
on December 31, 2005, unless such term of employment is extended or terminated
by agreement of the parties or as provided herein.
(b) Extended Term in the Event of a Change in Control.
Notwithstanding any other provision hereof to the contrary, this Agreement shall
be renewable for one (1) additional three (3) year term, at Officer's option,
exercisable by him immediately prior to, upon or at any time following the
occurrence of any one of the following events (a "Change in Control"):
(i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934,
as amended) of 25% or more of either (A) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change in
Control: (w) any acquisition directly from the Company, (x) any acquisition by
the Company, (y) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company, or (z) any acquisition by any Person pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of this Section
1.2(b); or
(ii) Individuals who, as of the date hereof, constitute the Board
of Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination,
(A) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly,
more than 65% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
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immediately prior to such Business Combination of the Outstanding
Company Common Stock and Outstanding Company Voting Securities, as
the case may be, and
(B) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 25%
or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or
the combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership existed
prior to the Business Combination, and
(C) at least a majority of the members of the board of
directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination.
The renewal term shall commence on the later of (i) the date of
notice of said three-year renewal, or (ii) the date of the Change in Control,
and any remaining period of the current employment term, and any extension
thereof, shall be canceled.
The parties hereto agree and acknowledge that, solely for purposes
of this Agreement, and except as otherwise specifically set forth in herein, a
Change in Control shall be deemed not to have occurred as a result of the merger
as of July 1, 2004 of Union Planters Corporation and Regions Financial
Corporation (the "UPC Merger") (the parties hereto agree that this shall have no
effect on any other plans and agreements of Union Planters, and/or on the stock
options, restricted stock and other equity holdings of Officer, pursuant to
which a change in control as defined under the relevant plans and agreements
will have occurred as of the effective date of the UPC Merger). Notwithstanding
this paragraph, and in recognition that a change in the ownership or effective
control of Union Planters Corporation as defined in Section 280G of the Internal
Revenue Code of 1986, as amended, occurred by reason of the UPC Merger, the
provisions of Sections 1.2(f) and 1.2(g) of this Agreement were immediately
applicable to Officer as of the effective date of the UPC Merger.
(c) Self-Termination after Change in Control. Notwithstanding any
other provision herein to the contrary other than the following paragraph, upon
a Change in Control and exercise of the option to renew for three (3) years,
Officer may at any time thereafter during the extended term of this Agreement,
at his sole discretion, resign from employment hereunder without penalty upon 90
days written notice setting forth the effective date of said resignation. Upon
resignation of Officer, Officer shall be entitled to receive a lump sum payment
equal to (i) three (3) times Officer's Final Average Earnings (as defined in the
following sentence), plus (ii) any Excise Tax Gross-Up Payment
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payable under Section 1.2(f). For purposes of this Agreement, Officer's Final
Average Earnings shall be the sum of (i) his highest base salary in effect
during any calendar year preceding his termination of employment, including the
year in which such termination occurs, and (ii) his highest annual bonus payable
with respect to any calendar year preceding his termination of employment,
including the year in which such termination occurs. Said lump sum payment shall
be payable in cash on the effective date of Officer's resignation. If for any
reason the lump sum payment is not paid on the date specified, then, in addition
to the lump sum payment, the Company shall pay interest thereon at the maximum
rate permissible by law and shall continue to pay Officer monthly compensation,
which shall not be a credit against the lump sum payment, in an amount equal to
one-twelfth (1/12) of Officer's Final Average Earnings until such lump sum is
paid.
After the effective date of the UPC Merger, this Section 1.2(c)
shall apply to Officer, and Officer shall become entitled to receive payments
and benefits hereunder, only in the following circumstances: (i) if there occurs
a Change in Control of the Company other than the UPC Merger, or (ii) if, other
than as a result of termination of Officer's employment by the Company for Cause
as defined under Section 4.1 or due to Officer's death or Disability as defined
under Section 4.2(c) or Officer's termination of his employment as contemplated
by Section 4.4, (A) the Company fails to appoint Officer to the position of
Chief Executive Officer of the Company upon the expiration of the Initial Period
(as defined in Section 2.1 hereof), (B) the Company removes Officer from the
position of Chief Executive Officer before commencement of the Third Period (as
defined in Section 2.1 hereof), or (C) Officer fails to become the Chairman of
the Board of Directors and Chief Executive Officer upon the expiration of the
Second Period (as defined in Section 2.1 hereof). With respect to clause (ii) of
the foregoing sentence, the date of the "Change in Control" hereunder shall be
deemed to be the date Officer receives notice of either such failure or removal.
(d) Annual Extension. On December 31 of each year, unless the
Company notifies Officer that his employment under this Agreement will not be
extended, his employment under this Agreement shall automatically be extended
for a one (1) year period from such term set forth in Section 1.2(a) on the same
terms and conditions as are set forth herein; provided, however, that the term
of this Agreement may be extended only to such time as will provide for a term
ending at age sixty-five (65) years. If the Company elects not to extend
Officer's employment under this Agreement, as provided in the preceding
sentence, it shall do so by notifying Officer in writing within sixty (60) days
prior to the applicable December 31 date. If the Company so elects not to extend
Officer's employment under this Agreement, Officer shall have the right to
either remain as an employee for the remaining term of this Agreement (subject
to Officer's right to extend this Agreement under Section 1.2(b) at any time
during the remaining term if a Change in Control other than the UPC Merger has
occurred or shall occur) or terminate this Agreement at any time during said
term and receive in a lump sum on the date of termination an amount equal to
three (3) times his Final Average Earnings (as defined in Section 1.2(c)), plus
any Excise Tax Gross-Up Payments required by Section 1.2(f). If for any reason
the lump payment is not paid on the date specified, then, in
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addition to the lump sum payment, the Company shall pay interest thereon at the
maximum rate permissible by law and shall continue to pay Officer monthly
compensation, which shall not be a credit against the lump sum payment, in an
amount equal to one-twelfth (1/12) of Officer's Final Average Earnings until
such lump sum payment is paid. The Company shall also pay to Officer such
termination bonus as the Company's Board of Directors may, in its discretion,
determine. Officer's date of termination shall be the December 31 following his
election to terminate this Agreement. Additionally, in the event this Agreement
is not extended, all options, stock appreciation rights, and other awards in the
nature of rights that may be exercised, and all awards of restricted stock, if
any, issued to Officer under all stock incentive plans of the Company shall
immediately vest and be exercisable by Officer and all restrictions thereon
shall lapse.
The parties hereto acknowledge and agree that any termination by the
Company of Officer's employment hereunder, and/or any removal by the Company of
Officer from the position of Chief Executive Officer of the Company after
commencement of the Third Period (as defined in Section 2.1 hereof) (in each
case, other than as a result of termination of Officer's employment by the
Company for Cause, Officer's death or Disability or Officer's termination of his
employment as contemplated by Section 4.4), shall be deemed to be an immediate
election by the Company not to extend Officer's employment hereunder pursuant to
this Section 1.2(d) and, in the case of any such termination shall be deemed an
immediate election by Officer, and in the case of such removal, shall, at the
sole option of Officer, be deemed an immediate election by Officer, to terminate
this agreement and receive the payments and benefits provided for in this
Section 1.2(d), in each case as of the date Officer receives notice of either
such termination or removal (for purposes of clarity, this sentence shall have
no impact on the ability of Officer (or his estate or beneficiaries, as the case
may be) to receive the payments and benefits set forth in Section 4.2(c) in the
event of Officer's death or Disability).
(e) Elimination of Gross-Up for Income and Employment Taxes.
Pursuant to that certain letter of understanding between Officer and the
Company, dated as of May 16, 2005 attached hereto as Exhibit A (the "Letter of
Understanding"), Officer shall have no rights to any gross-up payment for income
or employment taxes on compensation Officer receives from the Company from and
after May 16, 2005 (whether related to past or future services for Union
Planters Corporation or Regions Financial Corporation), including without
limitation the income tax gross-up provisions formerly described in Section
1.2(e) of this Agreement and any formal or informal policy that may have applied
as a matter of past practice to gross-up for income or employment taxes in
connection with the vesting or exercise of equity awards or the distribution of
any deferred compensation or retirement benefits; provided, however, that
nothing herein is intended to or shall eliminate or impact in any way the
provisions of Section 1.2(f) of this Agreement, including any gross-up for
income and employment taxes incurred with respect to any Excise Tax Gross-Up
Payment (as defined in Section 1.2(f)).
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(f) Excise Tax Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall be
determined that any payment or distribution by the Company to or for the benefit
of Officer (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 1.2(f)) (a "Parachute Payment")
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are
incurred by Officer with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then Officer shall be entitled to receive an additional
payment (an "Excise Tax Gross-Up Payment") in an amount such that after payment
by Officer of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Excise Tax Gross-Up Payment, Officer retains an amount of the Excise Tax
Gross-Up Payment equal to the Excise Tax imposed upon the Parachute Payments.
(g) Calculation and Adjustment of Excise Tax Gross-Up Payments.
(i) Subject to the provisions of Section 1.2(g)(ii), all
determinations required to be made under Section 1.2(f), including whether and
when an Excise Tax Gross-Up Payment is required and the amount of such Excise
Tax Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by Ernst & Young LLP or such other nationally
recognized public accounting firm as may be designated by Officer (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and Officer within 15 business days of the receipt of notice from
Officer that there has been a Change in Control Payment or a Parachute Payment,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting a Change in Control, Officer shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Excise Tax Gross-Up Payment, as determined pursuant to Section 1.2(f), shall
be paid by the Company to Officer within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and Officer. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Excise Tax Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 1.2(g)(ii) and Officer thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of Officer.
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(ii) Officer shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Excise Tax Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten business days after Officer
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. Officer
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies Officer in writing prior to the expiration of such
period that it desires to contest such claim, Officer shall:
(A) give the Company any information reasonably requested by
the Company relating to such claim,
(B) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the Company,
(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Officer harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation of the foregoing provisions of this Section
1.2(g)(ii), the Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
Officer to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and Officer agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Officer to pay such
claim and xxx for a refund, the Company shall advance the amount of such payment
to Officer, on an interest-free basis and shall indemnify and hold Officer
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Officer with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
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issues with respect to which an Excise Tax Gross-Up Payment would be payable
hereunder and Officer shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(iii) If, after the receipt by Officer of an amount advanced
by the Company pursuant to Section 1.2(g)(ii), Officer becomes entitled to
receive any refund with respect to such claim, Officer shall (subject to the
Company's complying with the requirements of Section 1.2(g)(ii)) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Officer of an amount advanced by the Company pursuant to Section 1.2(g)(ii), a
determination is made that Officer shall not be entitled to any refund with
respect to such claim and the Company does not notify Officer in writing of its
intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Excise Tax Gross-Up Payment required to be paid.
SECTION 2
DUTIES
2.1 General Duties. Officer's employment under this Agreement after the
effective date of the UPC Merger shall be divided into three periods, the
"Initial Period," the "Second Period" and the "Third Period." The Initial Period
shall commence on the effective date of the UPC Merger and end on the date on
which the Chief Executive Officer of the Company as of the effective date of the
UPC Merger (the "Initial CEO") ceases for any reason to serve as Chief Executive
Officer of the Company, but in no event later than June 30, 2005. The Second
Period shall begin at the end of the Initial Period and end on the date on which
the Chairman of the Board of Directors as of the end of the Initial Period
ceases for any reason to serve as Chairman of the Board of Directors, but in no
event later than June 30, 2006. The Third Period shall begin at the end of the
Second Period. During the Initial Period, Officer shall serve as the President
of the Company; during the Second Period, Officer shall serve as the Chief
Executive Officer and President of the Company; and during the Third Period,
Officer shall serve as the Chairman of the Board of Directors, and Chief
Executive Officer of the Company, in each case, with such duties and
responsibilities as are customary with respect to such positions. During the
Initial Period, Officer shall report directly to the Initial CEO. The Board of
Directors shall appoint Officer to the positions specified above at the times
specified above. Officer shall be appointed to the Board of Directors and shall
serve on the Board of Directors throughout the period of Officer's employment
with the Company, subject to election by the shareholders of the Company,
without additional consideration.
2.2 Extent of Services. During Officer's employment under this
Agreement, and excluding any periods of vacation and sick leave to which Officer
is entitled, Officer agrees to devote substantially all of his business
attention and time to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to Officer hereunder, to
use Officer's reasonable best efforts to perform
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faithfully and efficiently such responsibilities. The Company recognizes that
Officer serves on several civic and corporate boards and that such service, as
well as the management of Officer's personal investments, does not conflict with
the duties outlined above.
2.3 Best Efforts. Officer agrees that he will, at all times, faithfully,
industriously, and to the best of his ability, experience and talents, perform
all of the duties that may be required of and from him by the Board of Directors
as described above.
2.4 Location. The duties of Officer under this Agreement shall be
required to be performed in the reasonable vicinity of either Memphis, Tennessee
or Birmingham, Alabama. The permanent location of the duties Officer is to
perform shall not be moved without Officer's consent. Officer shall also on a
temporary basis perform such duties at such other place or places as the Board
of Directors of the Company shall reasonably designate or as the interests or
opportunities of the Board of Directors of the Company shall reasonably require.
SECTION 3
COMPENSATION
3.1 Annual Base Salary. the Company shall pay Officer, and Officer shall
accept from the Company, in full payment for Officer's services hereunder, an
annual base salary in the minimum amount of Six Hundred and Fifty Thousand
Dollars ($650,000.00), payable twice monthly in periodic equal installments
during the year, which annual base salary shall be reviewed at least annually
and may be increased from time to time as determined by the Board of Directors
of the Company.
3.2 Stock Options. Officer shall be entitled to participate in all of
the Company's stock option programs. Based upon satisfactory performance, it is
anticipated that Officer will be granted additional stock options from time to
time, such additional grants to be considered on an annual basis. Officer shall
be granted full protection against dilution of such options as is provided under
the terms of the Stock Option Plans. In the event of a Change in Control as
defined in Section 1.2(b), or if the Company elects not to extend Officer's
employment under Section 1.2(d), then all options, stock appreciation rights,
and other awards in the nature of rights that may be exercised, and all awards
of restricted stock, if any, issued to Officer under all stock incentive plans
of the Company shall immediately vest and be exercisable by Officer and all
restrictions thereon shall lapse. Also, in the event of a Change in Control, any
stock or stock equivalents held in a deferred account on behalf of Officer shall
become immediately payable.
The Company shall take such action as may be necessary from time to
time to allow Officer to sell all stock issuable upon exercise of Officer's
options free of resale restrictions, including but not limited to the grant to
Officer of piggyback
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registration rights with respect to such stock. Such sales may only be made
under all existing securities laws.
3.3 Reimbursement of Expenses. The Company shall reimburse Officer for
such reasonable out-of-pocket expenses necessarily incurred by Officer while
rendering the services contemplated hereunder, and shall provide an appropriate
automobile to be used by Officer in the conduct of the business of the Company.
As provided in Section 3.8(b), Officer shall bear the cost of his use of such
automobile for personal travel from and after May 16, 2005, which would include
travel by Officer's family members.
3.4 Tax Withholdinqs. The Company shall deduct from the regular monthly
compensation payable to Officer all federal, state and local income tax, social
security, FICA, FUTA, and other withholdings as required by law.
3.5 Annual Incentive Bonus, Executive Stock and Deferred Compensation
Plans. During the term hereof, and any renewal, Officer shall be eligible for
participation in any of the Company's incentive bonus programs, executive stock
and deferred compensation plans. Bonuses for less than a full year of service
may be granted at the discretion of the Board. Any such bonuses shall be paid
within 90 days of the close of the fiscal year.
3.6 Annual Vacation. Officer shall be entitled to an annual vacation
period in accordance with the Company's personnel policies, as amended from time
to time.
3.7 Other Fringe Benefits. Officer shall have the following fringe
benefit programs made available to him: hospital and major medical coverage,
including dependent coverage; short term and long term disability and life
insurance. Officer shall also be entitled to participate in such other fringe
benefit programs as the Company shall have or shall make available from time to
time to senior executives, subject to Section 3.8 hereof. Further, the Company
agrees to pay for or reimburse Officer for expenses, including dues, for clubs
of which Officer is a member, the facilities of which Officer shall use from
time to time in holding various company functions or entertaining company
employees, customers or guests.
3.8 Level of Benefits after the Effective Date of UPC Merger.
(a) Except as set forth in Section 3.8(b) below and without limiting
any other provision of this Agreement, after the effective date of the UPC
Merger, Officer and/or Officer's family, as the case may be, shall be eligible
for participation in, and shall receive, pension and welfare benefits (including
without limitation supplemental and deferred benefits), and fringe benefits and
perquisites and all other benefits, on a basis, at a level and in an amount
that, on a benefit-for-benefit basis, is no less favorable than the pension and
welfare (including supplemental and deferred benefits), and fringe, perquisite
and other benefits that were provided or made available to Officer and/or
Officer's family on January 22, 2004, whether pursuant to this Agreement or
otherwise. For purposes of all benefit plans, programs and policies of the
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Company, all service credited to Officer by Union Planters Corporation up to the
effective date of the UPC Merger shall be credited by the Company for purposes
of each such corresponding plan, program and policy, provided, however, that
such credit shall not result in a duplication of benefits with respect to the
same period of service.
(b) Notwithstanding Section 3.8(a), in accordance with the Letter
of Understanding (except as provided below), Officer and the Company agree as
follows:
(i) Elimination of option reloads. From and after May 16,
2005, Officer shall have no right to receive "reload" grants of stock options
upon his exercise of stock options that he currently holds or may acquire in the
future. All of Officer's outstanding stock options are hereby amended as of May
16, 2005, with Officer's consent as indicated by his signature to this
Agreement, to delete any rights associated with such options to a "reload"
option grant upon his exercise of such stock options.
(ii) Elimination of option gain deferrals. Officer shall have
no right to defer the gains on any stock options he may exercise at any time
after May 16, 2005, and any stock option gain deferral program applicable to
Officer is hereby terminated; provided, however, that this termination shall not
affect deferrals in effect as of May 16, 2005. All of Officer's outstanding
stock options are hereby amended as of May 16, 2005, with Officer's consent as
indicated by his signature to this Agreement, to delete any rights associated
with such options to defer the gain upon his exercise of such stock options.
(iii) Limitation of benefits under deferred compensation plan.
Officer hereby acknowledges that the Company has amended or will amend the Union
Planters Corporation Amended and Restated Deferred Compensation Plan for
Executives, to provide that the applicable company matching contribution will be
limited to the first 25% of deferrable compensation in any given deferral
period, and Officer hereby agrees to such amendment, with the understanding that
it will result in the substantial limitation of benefits he currently has under
that plan.
(iv) Personal use of company-provided transportation. Officer
hereby acknowledges that the Company has amended or will amend any applicable
agreements or policies to provide that, subject to compliance with applicable
laws and regulations, Officer will reimburse the Company a monthly amount
representing his and his family's estimated personal use of Company automobiles
from and after May 16, 2005, and that Officer will not be entitled to a gross-up
payment to cover taxes attributable to imputed income from his and his family's
use of Company automobiles and aircraft for personal travel from and after May
16, 2005. Officer's personal use of such forms of transportation will not be
limited, subject to compliance with the above. For purposes of this paragraph,
(i) the Company will provide Officer with one or more leased automobiles the
cost of which will be reflected as W-2 income, subject to reduction by (A) the
amount of $700 per month (or such other appropriate amount that Officer and the
Company shall mutually agree to from time to time), which shall be
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deducted from Officer's compensation by payroll to cover the assumed minimum
personal use of such automobiles, and (B) the amount, if any, by which Officer
shall verify from time to time as mileage for bona fide business travel, and
(ii) Officer and the Company will work in good faith to establish an arrangement
whereby Officer will bear the cost of his personal use of Company aircraft,
subject to compliance with applicable FAA regulations.
SECTION 4
TERMINATION
4.1 Termination by the Company. The Company may at any time terminate
this Agreement and the employment of Officer for Cause. For the purposes of this
Agreement, "Cause" shall mean:
(i) the willful and continued failure by Officer to substantially
perform his duties with the Company or one of its affiliates (other than any
such failure resulting from incapacity due to physical or mental illness), after
a written demand for substantial performance is delivered to Officer by the
Board of Directors of the Company, which demand specifically identifies the
manner in which Officer has not substantially performed his duties, and Officer
fails to comply with such demand within a reasonable time, or
(ii) the willful engaging by Officer in gross misconduct which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of
Officer, shall be considered "willful" or "gross misconduct" unless it is done,
or omitted to be done, by Officer in bad faith or without reasonable belief that
Officer's action or omission was in the best interests of the Company. Any act,
or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
be conclusively presumed to be done, or omitted to be done, by Officer in good
faith and in the best interests of the Company. The cessation of employment of
Officer shall not be deemed to be for Cause unless and until there shall have
been delivered to him a copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the entire membership of the Board of
Directors of the Company at a meeting of the Board called and held for that
purpose (after reasonable notice to Officer, and an opportunity for Officer,
together with counsel of his choice, to be heard before the Board), finding
that, in good faith opinion of the Board, Officer is guilty of the conduct set
forth above in clauses (i) or (ii) of this Section 4.1, and specifying the
particulars thereof in reasonable detail.
4.2 Effect on Parties.
(a) Termination for Cause. If the Company terminates this Agreement
as specified in 4.1 above then the rights of Officer after such termination
shall be as follows:
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(i) Officer's salary which may have accrued through
termination and annual incentive bonus if such has been approved but
not paid shall be paid;
(ii) Officer shall be entitled to the option cash-out or
acceleration rights selected by the Company under Section 4.3(a)
below.
(b) Termination by Non-Renewal. If the Company notifies Officer of
its election, under Section 1.2(d), not to extend Officer's employment, then
Officer shall have the option cash-out or acceleration rights specified in
Section 4.3(b) below together with the rights specified under Section 1.2(d).
(c) Death or Disability. Upon Officer's death or Disability (as
defined below), then Officer's rights shall be as follows:
(i) Officer's salary which may have accrued through
termination and annual incentive bonus if such has been approved but
not paid shall be paid; and
(ii) Officer shall have the option cash-out or acceleration
rights specified in Section 4.3(b) below; and
(iii) Officer shall be titled to receive a lump sum equal to
three times his Final Average Earnings, payable within 30 days of
the date of death or termination of employment by reason of
Disability.
For purposes of this Agreement, "Disability" means a mental or
physical disability as determined by the Board in accordance with
standards and procedures similar to those under the Company's
employee long-term disability plan, if any. At any time that the
Company does not maintain such a long-term disability plan,
Disability shall mean the inability of Officer, as determined by the
Board, to substantially perform his regular duties and
responsibility due to a medically determinable physical or mental
illness which has lasted (or can reasonably be expected to last) for
a period of six consecutive months.
(d) Survival of Certain Obligations. Any termination by the
Company pursuant to Section 4.1 above shall not terminate the Company's rights
and Officer's obligations under the Confidential Information, Assistance in
Litigation or Arbitration Sections in this Agreement.
4.3 Option Cash-Out or Acceleration Rights.
(a) If the Company terminates Officer's employment pursuant to
Section 4.1, the Company shall have the option to, within 90 days after the
effective date
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of such termination, or such longer period as may be necessary under applicable
laws including Section 16(b) of the Exchange Act relating to short swing
profits, either (i) effect a cash lump sum settlement equal to the "spread"
between the exercise price of the Company stock options (vested or unvested)
held by Officer as of the date of notice of termination and the closing trade
price on NYSE (or the fair market value of the Company's stock, as determined by
the Board, if no longer traded on the NYSE) as of the date of such termination,
or (ii) declare all the Company stock options issued to Officer fully vested and
exercisable by Officer within a one-year period from the date of notice of
termination.
(b) If the Company terminates Officer's employment pursuant to
Section 4.2(b) or 4.2(c), or if Officer self-terminates under Section 1.2(c) or
1.2(d), Officer or his Estate shall have the right to elect in writing within 90
days after the effective date of such termination, either (i) a cash lump sum
from the Company equal to the "spread" between the exercise price of the Company
stock options (vested or unvested) held by Officer as of the date of notice of
termination and the closing trade price on NYSE (or the fair market value of the
Company's stock, as determined by the Board, if no longer traded on the NYSE) as
of the date of such termination, or (ii) full vesting of all the Company stock
options issued to Officer and the right to exercise each such option from the
date of termination through the remaining term of the option.
4.4 Resignation by Officer Absent a Change in Control or Non-Renewal.
Aside from Officer's rights under Sections 1.2(c) and 1.2(d), Officer may
terminate his employment hereunder, upon 90 days written notice, and such
termination shall terminate all of Officer's rights hereunder, and such
termination shall not affect the Company's rights hereunder. It is understood
that a resignation by Officer under Sections 1.2(c) or (d) shall not be
construed as a termination under this Section.
SECTION 5
CONFIDENTIAL INFORMATION
5.1 Officer recognizes that the Company's business interests require a
fiduciary relationship between the Company and Officer and the fullest practical
protection and confidential treatment of the confidential information relating
to the Company. Officer acknowledges the reasonableness, in the context of the
Company's business, of the promises herein made and recognizes a just purpose in
the Company's protecting its confidential information. Officer acknowledges that
in the course of his association with the Company he may have in the past or may
in the future receive certain lists of the Company's prospective acquisition and
management agreements and other confidential information and knowledge
concerning the business of the Company (hereinafter collectively referred to as
"information") which the Company desires to protect. Officer understands that
such information is confidential and agrees not to reveal such information to
anyone outside the Company so long as the confidential or secret nature of the
information shall continue.
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SECTION 6
ASSISTANCE IN LITIGATION
6.1 Officer shall, upon reasonable notice, furnish such information and
assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which the Company or any of its subsidiaries
or affiliates is, or may become, a party.
SECTION 7
ARBITRATION
7.1 Methods. Any difference, claims or matters in dispute arising among
the parties out of this Agreement or connected herewith shall be submitted by
them to arbitration before a panel of three arbitrators selected as follows:
each party shall select an arbitrator from the American Arbitration
Association's Approved List of Arbitrators. The arbitrators so selected by the
parties shall agree upon a third arbitrator and the three so selected shall
resolve the dispute under the duly promulgated rules and regulations of the
American Arbitration Association or its successor, and the pertinent provisions
of the laws of the State of Alabama, relating to arbitration. The decision of
the arbitrators may be entered as a judgment in any Court in the State of
Alabama or elsewhere. Any arbitrator selected who does not have experience
relating to the banking and financial services industry shall avail himself of
the counsel of an individual who has such experience. Costs of such arbitration
shall be borne as specified by the arbitrators.
7.2 Specific Performance. Notwithstanding Section 7.1 above, all
Provisions hereof are for the protection and are intended to be for the benefit
of the parties hereto and enforceable directly by and binding upon each party.
Each party hereto agrees that the remedy through arbitration or at law of the
other for any actual or threatened breach of this agreement would be inadequate
and that the other party shall be entitled to specific performance hereof or
injunctive relief or both, by temporary or permanent injunction or such other
appropriate judicial remedy, writ or order as may be decided by a court of
competent jurisdiction in addition to any damages which the complaining party
may be legally entitled to recover together with reasonable expenses of
arbitration, litigation, including attorney's fees incurred in connection
therewith as may be approved by such arbitrators or court.
SECTION 8
MISCELLANEOUS
8.1 Assignment by the Company. This Agreement shall inure to the benefit
of and be binding upon the Company and its successors and assigns. The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this Agreement,
"the Company" shall mean the Company as
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hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
8.2 Assignment by Officer. This is a personal agreement on the part of
Officer and may not be sold, assigned, transferred or conveyed by Officer
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Officer's legal
representatives.
8.3 Entire Agreement. This Agreement supercedes the Letter of
Understanding and contains the entire agreement among the parties hereto and
there are no representations, inducements, promises, agreements, arrangements or
undertakings, oral or written, among the parties as to the subject matter
covered.
8.4 Severability. Should any part of this Agreement be declared invalid
for any reason, such invalidity shall not affect the validity of any remaining
portion hereof and such remaining portion shall continue in full force and
effect as if this Agreement had been originally executed without including the
invalid part.
8.5 Governing Law. This Agreement and its performance shall be
interpreted and construed in accordance with the laws of the State of Alabama.
8.6 Titles. Titles and captions in no way define, limit, extend or
describe the scope of this Agreement nor the intent of any provision hereof.
8.7 Amendments. No changes, alterations, modifications, additions or
qualifications to the terms of this Agreement shall be made or be binding unless
made in writing and executed by the parties in the same manner as this
Agreement.
8.8 No Waiver. Failure by either party to enforce any right granted by
this Agreement shall not constitute a waiver of such right and waiver of any
provision of this Agreement shall not constitute a waiver of any other
provision.
8.9 Notices. Any notice, instrument or communication required or
permitted under this Agreement shall be deemed to have been effectively given
and made if in writing and if served whether by personal delivery to the party
for whom it is intended, or by being deposited, postage prepaid, registered or
certified mail, return receipt requested, in the United States mail, addressed
to the party for whom it is intended at the following addresses:
Officer: Xxxxxxx X. Xxxxx
[home address omitted]
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The Company: Regions Financial Corporation
c/o Office of the General Counsel
X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Chair, Compensation Committee
Whenever this Agreement requires that an action be taken or approved
by the Company, the Compensation Committee of the Board of Directors is
authorized to approve such action or to give such approval on behalf of the
Company.
8.10 Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Officer or others. In no event shall Officer be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Officer under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not Officer obtains other employment. The Company
agrees to pay as incurred, to the full extent permitted by law, all legal fees
and expenses, including arbitration fees, which Officer may reasonably incur as
a result of any contest (regardless of the outcome thereof) by the Company,
Officer or others of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance thereof (including
as a result of any contest by Officer about the amount of any payment pursuant
to this Agreement), plus in each case interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(signatures on following page)
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IN WITNESS WHEREOF, the undersigned have executed this Amended and
Restated Agreement, this 29th day of June, 2005.
REGIONS FINANCIAL CORPORATION
By:/s/ Xxxx X. Xxxxx, Xx.
----------------------------------------
Xxxx X. Xxxxx, Xx.
Title: Chairman and Chief Executive Officer
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx
Approved and Acknowledged:
REGIONS FINANCIAL CORPORATION
COMPENSATION COMMITTEE
By: /s/ Xxxxx X. X. French
-----------------------------
Xxxxx X. X. French, Chairman
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EXHIBIT A
Letter of Understanding
May 16, 2005
The Board of Directors
Regions Financial Corporation
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
RE: MODIFICATION OF MY COMPENSATION ARRANGEMENTS
Dear Fellow Board Members:
In contemplation of my assuming the role of Chief Executive Officer of
Regions Financial Corporation as of July 1, 2005, the Compensation Committee and
I have discussed and agreed to certain amendments to my current compensation
arrangements, which I and the Compensation Committee believe to be consistent
with Regions' aspirations of best governance practices in today's environment.
Specifically, this will confirm that we have agreed to amend my relevant
agreements, and any plans or policies of which I am a participant or
beneficiary, to accomplish the following changes no later than June 30, 2005:
1. Elimination of gross-up for income and employment taxes. We agree to
specifically delete any rights I may have to a gross-up for income and
employment taxes on compensation I receive from Regions in the future (whether
related to past or future services for Union Planters Corporation and/or Regions
Financial), including without limitation the income tax gross-up provisions
described in Section 1.2(e) of my current Employment Agreement and any formal or
informal policy that may have applied as a matter of past practice to gross-up
for income or employment taxes in connection with the vesting or exercise of
equity awards or the distribution of any deferred compensation or retirement
benefits. Notwithstanding the foregoing, we do not propose to eliminate or
impact in any way the provisions of Section 1.2(f) of my current Employment
Agreement, which provides for a gross-up payment for excise taxes imposed under
Section 4999 of the Internal Revenue Code in the case of a future change in
control, including any gross-up for income and employment taxes incurred with
respect to such excise tax gross-up payment.
2. Elimination of option reloads and option gain deferrals. We agree to
eliminate any rights I may have to receive "reload" grants of stock options upon
my exercise of stock options that I currently hold or may acquire in the future.
We also agree to terminate any programs or rights I may have to defer the gains
on any stock options I may exercise in the future.
3. Limitation of benefits under deferred compensation plan. The
Compensation Committee has proposed to amend the Union Planters Corporation
Amended and Restated
Deferred Compensation Plan for Executives, to provide that the applicable
company matching contribution will be limited to the first 25% of deferrable
compensation in any given deferral period. I will agree to such an amendment,
with the understanding that it will result in the substantial limitation of
benefits I currently have under that plan.
4. Reimbursement for personal use of company-provided transportation. We
agree to amend any applicable agreements or policies to provide that I will be
required to reimburse Regions for my use of Company aircraft or automobiles for
personal travel in the future, which would include travel by my family members.
We agree that my personal use of such forms of transportation will not be
limited, provided that I reimburse the Company in full for such use.
Please indicate your agreement with the foregoing by signing as indicated
below.
Sincerely,
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
------------------------------------
ACCEPTED AND AGREED:
REGIONS FINANCIAL CORPORATION
/s/ Xxxxx X. X. French
------------------------------------
By: Xxxxx X. X. French
Title: Chair, Compensation Committee
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