Exhibit 10 (g)
EMPLOYMENT AGREEMENT
AGREEMENT by and between COMPASS BANCSHARES, INC., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxxxx (the "Executive"), dated
March 1, 1998.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall mean the first date during the
Change of Control Period (as defined in Section 1(b)) on which a Change
of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's
employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by
the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to
effect the Change of Control or (ii) otherwise arose in connection with
or anticipation of the Change of Control, then for all purposes of this
Agreement the "Effective Date" shall mean the date immediately prior to
the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the third anniversary of
such date; provided, however, that commencing on the date one year
after the date hereof, and on each annual anniversary of such date
(such date and each annual anniversary thereof shall be hereinafter
referred to as the "Renewal Date"), the Change of Control Period shall
be automatically extended so as to terminate three years from such
Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of Control
Period shall not be so extended.
2. CHANGE OF CONTROL. For the purpose of this Agreement, a
"Change of Control" shall mean:
(a) 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
1
"Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) 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 the
following acquisitions shall not constitute a Change of Control: (i)
any acquisition directly from the Company (excluding an acquisition by
virtue of the exercise of a conversion privilege), (ii) any acquisition
by the Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (iv) any acquisition by any
corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions
described in clauses (i), (ii) and (iii) of subsection (c) of this
Section 2 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the
Board (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 either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i) more than
60% of, respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or
indirectly, by 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 reorganization, merger or consolidation in
substantially the same proportions as their ownership, immediately
prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding the Company,
any employee benefit plan (or related trust) of the Company or such
corporation resulting from such reorganization, merger or consolidation
and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 20% or
more of the Outstanding Company Common Stock or Outstanding Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares
of common stock of the corporation resulting from such reorganization,
2
merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (iii) at least a majority of
the members of the board of directors of the corporation resulting from
such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation; or
(d) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following
such sale or other disposition, (A) more than 60% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by 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 sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the Company
and any employee benefit plan (or related trust) of the Company or such
corporation and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or indirectly, 20% or more of
the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares
of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (C) at least a majority
of the members of the board of directors of such corporation were
members of the Incumbent Board at the time of the execution of the
initial agreement or action of the Board providing for such sale or
other disposition of assets of the Company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company, in accordance with the terms and provisions of this Agreement,
for the period commencing on the Effective Date and ending on the third
anniversary of such date (the "Employment Period"). Nothing contained herein
shall be construed as conferring upon the Executive any right to continue to be
employed by the Company prior to the Effective Date, as defined in Section 1(a),
unless this agreement is modified in writing as provided for in Section 11(a).
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day period
immediately preceding the Effective Date and (B) the Executive's
services shall be performed at the location where the Executive was
employed immediately preceding the Effective Date.
3
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled,
the Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company and,
to the extent necessary to discharge the responsibilities assigned to
the Executive hereunder, to use the Executive's reasonable best efforts
to perform faithfully and efficiently such responsibilities. To the
extent permitted by the Code of Conduct of the Company then applicable
during the Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as
an employee of the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any such
activities were permitted by the Code of Conduct prior to the Effective
Date and have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"),
which shall be paid in equal installments on a bi-monthly basis, at
least equal to twenty-four times the highest bi-monthly base salary
paid or payable to the Executive by the Company or its affiliated
companies in respect of the twelve-month period immediately preceding
the month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually and
shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally
awarded in the ordinary course of business to other peer executives of
the Company and its affiliated companies. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" shall include
any company controlled by, controlling or under common control with the
Company.
(ii) ANNUAL BONUS. In addition to Annual Base Salary,
the Executive shall be awarded, for each calendar year ending during
the Employment Period, an annual bonus (the "Annual Bonus") in cash at
least equal to the greater of (A) the annualized bonus payable to the
Executive for the year in which the Effective Date occurs or (B) the
average annualized (for any year with respect to which the Executive
has been employed by the Company for less than twelve full months)
bonus paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the
three calendar years immediately preceding the calendar year in which
the Effective Date occurs (the
4
"Recent Average Bonus"). Each such Annual Bonus shall be paid no later
than the end of February of the year next following the year for which
the Annual Bonus is awarded, unless the Executive shall elect to defer
the receipt of such Annual Bonus.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During
the Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies and
programs applicable generally to other peer executives of the Company
and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction
is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than the
most favorable of those provided by the Company and its affiliated
companies for the Executive under such plans, practices, policies and
programs as in effect at any time during the 90-day period immediately
preceding the Effective Date or if more favorable to the Executive,
those provided generally at any time after the Effective Date to other
peer executives of the Company and its affiliated companies.
(iv) LEAVE PROGRAMS. During the Employment Period,
the Executive shall be eligible for participation in and shall receive
all benefits under leave programs provided by the Company and its
affiliated companies (including, without limitation, sick leave,
short-term disability, emergency leave, jury duty, military leave, and
family and medical leave) to the extent applicable generally to other
peer executives of the Company and its affiliated companies, but in no
event shall such programs provide the Executive with benefits which are
less favorable, in the aggregate, than the most favorable of such
programs in effect for the Executive at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable
to the Executive, those provided generally at any time after the
Effective Date to other peer executives of the Company and its
affiliated companies.
(v) WELFARE BENEFIT PLANS. During the Employment
Period, the Executive and/or the Executive's family, as the case may
be, shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and programs
provided by the Company and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable
generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Executive with benefits which are less favorable,
in the aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally at any time after
the Effective Date to other peer executives of the Company and its
affiliated companies.
(vi) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable employment expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at any
time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
5
(vii) FRINGE BENEFITS. During the Employment Period,
the Executive shall be entitled to fringe benefits in accordance with
the most favorable plans, practices, programs and policies of the
Company and its affiliated companies in effect for the Executive at any
time during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(viii) OFFICE AND SUPPORT STAFF. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least equal to
the most favorable of the foregoing provided to the Executive by the
Company and its affiliated companies at any time during the 90-day
period immediately preceding the Effective Date or, if more favorable
to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(ix) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation and other vacation
benefits in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the
Disability of the Executive has occurred and has continued for a period
of 180 consecutive days during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day
after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of the
Executive's duties. For purposes of this Agreement, a "Disability"
shall occur when a physician confirms, because of sickness or injury,
that the Executive cannot perform each of the material duties of his or
her regular
6
occupation.
(b) CAUSE. The Company may terminate the Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall include (i) a willful and material violation
of applicable banking laws and regulations, (ii) dishonesty, (iii)
theft, (iv) fraud, (v) embezzlement, (vi) commission of a felony or a
crime involving moral turpitude, (vii) substantial dependence or
addiction to alcohol or any drug, (viii) conduct disloyal to the
Company or its affiliates or (ix) willful disregard of lawful
instructions or directions of the officers or directors of the Company
or its affiliates relating to a material matter.
(c) GOOD REASON; WINDOW PERIOD. The Executive's employment may
be terminated (i) during the Employment Period by the Executive for
Good Reason or (ii) during the Window Period by the Executive without
any reason. For purposes of this Agreement, the "Window Period" shall
mean the 30-day period immediately following the first anniversary of
the Effective Date. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 4(a) or any other action by the
Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b), other than an isolated,
insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than that described in Section
4(a)(i)(B);
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted
by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10(c).
For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive without any reason during the Window Period
or for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 11(b). For
purposes of this Agreement, a "Notice of Termination" means a
7
written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the
termination date (which date shall not be more than 15 days after the
giving of such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if
the Executive's employment is terminated by the Company for Cause, or
by the Executive during the Window Period or for Good Reason, the date
of receipt of the Notice of Termination or any later date specified
therein, as the case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date
of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment
is terminated by reason of death or Disability, the Date of Termination
shall be the date of death of the Executive or the Disability Effective
Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON OR DURING THE WINDOW PERIOD; OTHER THAN FOR
CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause
or Disability or the Executive shall terminate employment either for
Good Reason or without any reason during the Window Period:
(i) the Company shall pay to the Executive in a lump sum
in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. the sum of (1) the amount of any Compensation for
services rendered previously earned through the Date of
Termination to the extent not theretofore paid and (2) any
compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon)
and any accrued vacation pay, in each case to the extent
not theretofore paid (the sum of the amounts described in
clauses (1) and (2) shall be hereinafter referred to as
the "Accrued Obligations" and are hereby agreed to
constitute reasonable compensation for services rendered);
and
B. two hundred percent (200%) of (x) the Executive's
Annual Base Salary as of the Date of Termination and (y)
the Executive's Bonus Amount, determined in accordance
with this provision (the "Severance Amount"). The
Executive's "Bonus Amount" shall mean the average of the
annual bonus paid or payable for the two calendar years
ended prior to
8
the Effective Date (or such lesser number of years, if
any, in which the Executive was eligible to receive an
annual bonus) and the maximum potential annual bonus the
Executive is eligible to earn during the calendar year in
which the Effective Date occurs.
(ii) for the remainder of the Employment Period, or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which
would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 4(b)(v)
if the Executive's employment had not been terminated in
accordance with the most favorable plans, practices, programs
or policies of the Company and its affiliated companies as in
effect and applicable generally to other peer executives and
their families during the 90-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as
in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is
eligible to receive medical and other welfare benefits under
another employer provided plan, the medical and other welfare
benefits described herein shall be secondary to those provided
under such other plan during such applicable period of
eligibility (such continuation of such benefits for the
applicable period herein set forth shall be hereinafter
referred to as "Welfare Benefit Continuation"). For purposes
of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained
employed until the end of the Employment Period and to have
retired on the last day of such period; and
(iii) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive and/or
the Executive's family any other amounts or benefits required
to be paid or provided or which the Executive and/or the
Executive's family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated
companies as in effect and applicable generally to other peer
executives and their families during the 90-day period
immediately preceding the Effective Date or, if more favorable
to the Executive, as in effect generally thereafter with
respect to other peer executives of the Company and its
affiliated companies and their families (such other amounts
and benefits shall be hereinafter referred to as the "Other
Benefits"); and
(iv) any stock options held by the Executive pursuant to
the 1989 Long Term Incentive Stock Option Agreement or any
other stock option agreement with Company (the "Option
Agreements") shall remain exercisable following the Effective
Date and during the Employment Period notwithstanding any
provision in the Option Agreements to the contrary. Further,
any covenant not to compete in an Option Agreement shall
become null and void as of the Effective Date. Notwithstanding
any provision herein deemed to be to the contrary, nothing
herein shall extend the maximum period of time in which the
Executive shall have the right to exercise such options.
9
(b) DEATH. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than for
(i) payment of Accrued Obligations (which shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation and Other Benefits
(excluding, in each case, Death Benefits (as defined below)) and (ii)
payment to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the Date of Termination of an amount
equal to the Severance Amount.
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period, this
Agreement shall terminate without further obligations to the Executive,
other than for (i) payment of Accrued Obligations (which shall be paid
to the Executive in a lump sum in cash within 30 days of the Date of
Termination) and the timely payment or provision of the Welfare Benefit
Continuation and Other Benefits (excluding, in each case, Disability
Benefits (as defined below)) and (ii) payment to the Executive in a
lump sum in cash within 30 days of the Date of Termination of an amount
equal to the greater of (A) the Severance Amount and (B) the present
value (determined as provided in Section 280G(d)(4) of the Code) of any
cash amount to be received by the Executive as a disability benefit
pursuant to the terms of any plan, policy or arrangement of the Company
and its affiliated companies, but not including any proceeds of
disability insurance covering the Executive to the extent paid for
directly or on a contributory basis by the Executive (which shall be
paid in any event as an Other Benefit) (the benefits included in this
clause (B) shall be hereinafter referred to as the "Disability
Benefits").
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment Period,
this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual Base
Salary through the Date of Termination plus the amount of any
compensation previously deferred by the Executive, in each case to the
extent theretofore unpaid. If the Executive terminates employment
during the Employment Period, excluding a termination either for Good
Reason or without any reason during the Window Period, this Agreement
shall terminate without further obligations to the Executive, other
than for Accrued Obligations and the timely payment or provision of
Other Benefits. In such case, all Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Except as provided in Sections 6(a)(ii),
6(b) and 6(c), nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or
10
contract or agreement except as explicitly modified by this Agreement.
8. FULL SETTLEMENT; RESOLUTION OF DISPUTES.
(a) The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder
shall not be affected by any set-off, counterclaim, recoupment, defense
or other claim, right or action which the Company may have against the
Executive or others, except as provided in Section 8(b) of this
Agreement. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement
and, except as provided in Section 6(a)(ii), such amounts shall not be
reduced whether or not the Executive obtains other employment. The
Company agrees to pay promptly as incurred, to the full extent
permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement
or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to
this Agreement), plus in each case interest on any delayed payment at
the applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Code.
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause, or
(ii) in the event of any termination of employment by the Executive,
whether Good Reason existed, then, unless and until there is a final,
nonappealable judgment by a court of competent jurisdiction declaring
that such termination was for Cause or that the determination by the
Executive of the existence of Good Reason was not made in good faith,
the Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the
case may be, that the Company would be required to pay or provide
pursuant to Section 6(a) as though such termination were by the Company
without Cause or by the Executive with Good Reason; provided, however,
that the Company shall not be required to pay any disputed amounts
pursuant to this paragraph except upon receipt of an undertaking by or
on behalf of the Executive to repay all such amounts to which the
Executive is ultimately adjudged by such court not to be entitled.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard
to any additional payments required under this Section 9) (a "Payment")
would be subject to the excise tax imposed by Section 4999 of the Code
or if any interest or
11
penalties are incurred by the Executive with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by an accounting firm selected by the
Company (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the
event that the Accounting Firm is serving as accountant or auditor for
the individual, entity or group effecting the Change of Control, the
Executive 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 Gross-Up Payment, as determined pursuant to this Section
9, shall be paid by the Company to the Executive within five days of
the receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion that failure to
report the Excise Tax on the Executive's applicable federal income tax
return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should
have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts
its remedies pursuant to Section 9(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than
ten business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
12
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Executive is not entitled to any refund
with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
13
10. SUCCESSORS.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) 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.
11. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors
and legal representatives.
14
(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive: 0000 Xxxxxxx Xxxxx
----------------------------
Xxxxxxxx Xxxxx, XX 00000
----------------------------
----------------------------
----------------------------
If to the Company: Compass Bancshares, Inc.
00 Xxxxx 00xx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: D. Xxxx Xxxxx, Xx.
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of
the Executive to terminate employment for Good Reason pursuant to
Section 5(c)(i)-(v), shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the
Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time.
Moreover, if prior to the Effective Date, the Executive's employment
with the Company terminates, then the Executive shall have no further
rights under this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
15
WITNESS: EXECUTIVE:
/s/ Xxxxxxx Xxxxxxx /s/ Xxxxxxx X. Xxxxxxx
--------------------------- --------------------------------------
Xxxxxxx X. Xxxxxxx
ATTEST: COMPASS BANCSHARES, INC.
By: /s/ Xxxxxx X. Xxxxxx By: /S/ Xxxxx X. Xxxxxx
----------------------- --------------------------------------
Its: /s/ Assistant Secretary Title: General Counsel and Secretary
----------------------- --------------------------------------
16
