EXHIBIT 10.4
COMPASS BANCSHARES, INC.
2002 INCENTIVE COMPENSATION PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into as of ___________ ___, 2005,
between grantor Compass Bancshares, Inc., a Delaware corporation (the
"Corporation"), Compass Bank ("Compass"), and grantee, ______________________
(the "Employee").
W I T N E S S E T H:
The Compensation Committee of the Board of Directors of the Corporation
(the "Compensation Committee") on ___________ ___, 2005, upon the request of
Compass Bank, approved the grant to Employee of awards under the Corporation's
2002 Incentive Compensation Plan (the "Plan") and established the terms and
conditions of such awards, as contained in this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTION. Employee shall have the right and option to purchase
on the terms and conditions set forth herein and in the Plan, all or any part of
an aggregate of _________ shares ("Option Shares") of the $2.00 par value common
stock of the Corporation (the "Common Stock") at the purchase price of $______
per share (the "Option Price"). The Option Price is 100% of the fair market
value of the Common Stock on ___________ ___, 2005, the date of the grant of the
option covered by this Agreement.
2. TERMS AND CONDITIONS. It is understood and agreed that the option
evidenced hereby is subject to the following terms and conditions:
(a) Expiration Date. The option shall expire on ____________ ___,
2015 (the "Expiration Date"). After the Expiration Date, Employee shall have no
further rights to exercise any option granted hereunder. Nothing contained in
this Agreement, including without limitation no part of this Section 2 or
Section 8, shall extend the time period during which the option can be exercised
beyond the Expiration Date.
(b) Exercise of Option. The option covered by this Agreement may be
exercised by Employee from time to time, in whole or in part, up to the amount
set forth in the following schedule during the period beginning on the date
indicated below and ending on the Expiration Date:
On or after Options exercisable
__________, 2006 50% of aggregate shares
__________, 2007 25% of aggregate shares
__________, 2008 25% of aggregate shares
(c) Method of Exercise and Payment of Purchase Price Upon Exercise.
The method of exercise of the option shall be by giving written notice to the
Corporation. Payments shall be made at the time of exercise and shall be in cash
or in shares of Common Stock. In the event payment is made in shares of Common
Stock, such shares shall be valued at their fair market value on the date of
exercise, as indicated by the closing stock price at the close of regular
trading hours of the primary stock exchange or market on which the Common Stock
is traded on that date. The option is not exercised until both the written
notice and the payment for the shares exercised are actually received by the
Corporation.
(d) Exercise Upon Death. In the event that Employee ceases to be
employed by Corporation or its subsidiaries by reason of death, the option shall
become immediately exercisable, notwithstanding the schedule in Section 2(b)
hereof, and may thereafter be exercised as to all shares subject to the option
by the legal representative of the estate, by the person or persons entitled to
the option under the Employee's will or the laws of descent and distribution, as
appropriate, or by Employee's transferee under Section 7(b) hereof, until the
earlier of (i) the Expiration Date or (ii) the first anniversary of the date of
the Employee's death.
(e) Exercise Upon Termination of Employment While Disabled. In the
event that Employee ceases to be employed by the Corporation or its subsidiaries
while Disabled, as defined below, except for Cause, as defined in Section 8, the
option shall become immediately exercisable, notwithstanding the schedule in
Section 2(b) hereof, and may thereafter be exercised as to all shares subject to
the option until the earlier of (i) the Expiration Date or (ii) the later of (A)
the first anniversary of the date that Employee is determined by the Corporation
to be Disabled or (B) the first anniversary of the end of Employee's employment
by the Corporation or its subsidiaries. As an express condition to the
applicability of this Section 2(e), Employee agrees to cooperate with the
Corporation in determining whether Employee is Disabled, including without
limitation providing documentation from health care providers and submitting to
medical examinations upon request by the Corporation. For purposes of this
Agreement, Employee shall be considered to be Disabled if Employee is totally
and permanently disabled according to the standards contained in the
Corporation's long-term disability plan, as applied by the Corporation, or
according to such other reasonable standard that the Corporation may apply, in
its sole discretion.
(f) Exercise Upon Termination of Employment by Reason Other than
Death or Disability. The option or any unexercised portions thereof shall expire
upon termination of Employee's employment with the Corporation and its
subsidiaries for any reason, except as provided in Section 2(d), Section 2(e),
and this Section 2(f). If Employee's employment with the Corporation or its
subsidiaries is terminated by either party prior to 15 days after the initial
vesting of any of the options as set forth in Section 2(b), then 5% of the
Option Shares shall be deemed vested, notwithstanding the schedule in Section
2(b), and available for exercise by the employee within 30 days after the
termination of Employee's employment with the Corporation or its subsidiaries.
The option may be exercised in whole or in part within twelve months after
Employee's
termination of employment (i) at any time after a "Sale of the Corporation" as
defined in Section 8 hereof, or (ii) within the meaning of the Compass
Bancshares, Inc. Severance Pay Plan, as such Plan may exist from time to time
(including any amendment to, modification of, addition to, deletion from, or
replacement of said Plan), that results in eligibility for benefits under such
Plan, provided that this provision is not intended to, and does not, constitute
a guarantee or promise that the Compass Bancshares, Inc. Severance Pay Plan (in
its current or any future form) will be continued and the Corporation expressly
reserves all rights to amend, modify, add to, delete from, and terminate such
Plan, or (iii) by retirement at age fifty-five or older with at least five years
of vested service under the Compass Bancshares, Inc. Retirement Plan or the
Compass Bancshares, Inc. SmartInvestor Retirement Plan. Upon the Employee's
termination in the event of (i) or (ii) above, any unexercised portion of the
option shall vest and become subject to exercise immediately and the schedule
set forth in Section 2(b) hereof shall become void. The exercise of the option
after termination of employment may cause the option to become a non-qualified
stock option. Nothing contained in this Agreement shall extend the time period
set forth in Section 2(a) during which the option can be exercised.
3. INCENTIVE STOCK OPTION. This option is intended to be an incentive
stock option within the meaning of Section 422(b) of the Internal Revenue Code
of 1986, as amended (the "Code") for all of the shares subject to the option
hereunder. To the extent that any option does not qualify as an incentive stock
option, it shall constitute a separate non-qualified stock option.
4. NO RIGHTS AS SHAREHOLDER. No option granted hereunder shall entitle the
holder thereof to any rights as a shareholder in the Corporation with respect to
any shares to which the option relates until such option has been exercised
properly and paid for in full and the corresponding shares issued.
5. RESTRICTIONS ON TRANSFER OF SHARES. Employee hereby agrees for himself
or herself and his or her legal representative, heirs and distributees, that if
a registration statement covering the shares issuable upon exercise of any
option hereunder is not effective under the Securities Act of 1933, as amended
(the "Act"), at the time of such exercise, or if some other exemption from the
provisions of the Act is not available, then all shares of Common Stock then
received or purchased upon such exercise shall be acquired for investment, and
that the notice of exercise delivered to the Corporation shall be accompanied by
a representation in writing acceptable in scope and form to counsel to the
Corporation and signed by Employee or Employee's legal representative, heirs or
distributees, as the case may be, to the effect that the shares are being
acquired in good faith for investment and not with a view to distribution
thereof. Any shares so acquired may be deemed restricted securities under Rule
144 as promulgated by the Securities and Exchange Commission under the Act, and
as the same may be amended or replaced and subject to restrictions upon sale or
other disposition and may bear any required legend, or other legend deemed
appropriate by the Corporation, to that effect.
6. REGISTRATION OF SHARES. If at any time the Board of Directors of the
Corporation or the Compensation Committee shall determine that the listing,
registration
or qualification of any shares subject to the option upon any securities
exchange, or under any state or federal law, or the consent or approval of any
governmental or regulatory body is necessary or desirable as a condition of or
in connection with the issuance or purchase of shares hereunder, the option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent, or approval has been effected or obtained free of any
conditions not acceptable to the Board of Directors or to the Compensation
Committee.
7. TRANSFER OF RIGHTS. (a) This option is not transferable except by will
or by the laws of descent and distribution and shall be exercisable during
Employee's lifetime only by Employee. After the death of Employee, this option
may be exercised only by Employee's estate or by the person or persons entitled
to the option under Employee's will or the laws of descent and distribution, as
appropriate. In the event the option is transferred by reason of the Employee's
death, the option may be exercised thereafter only to the extent that the
Employee would have been entitled to exercise the option had the option not been
transferred.
(b) To the extent the option evidenced hereby does not qualify as an
"incentive stock option" under the Code, it may be transferred only under the
following circumstances: (i) by will or the laws of descent and distribution, in
which case the option may be exercised in accordance with the provisions
applicable to incentive stock options set forth above or (ii) by gift or
pursuant to a domestic relations order to a family member (or a trust for their
benefit), in which case the Employee shall promptly report the transfer to the
Secretary of the Corporation so that the Corporation may deliver to his
transferee all requisite documents concerning the Plan (including the prospectus
meeting the requirements of Section 10(a) of the Securities Act of 1933, as
amended). For this purpose, "family member" includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, a trust in
which these persons have more than fifty (50) percent of the beneficial
interest, a foundation in which these persons (or the Employee) control the
management of assets, and any other entity in which these persons (or the
Employee) own more than fifty (50) percent of the voting interests. In the event
the option is transferred pursuant to Section 7(b)(ii), the transferee may
exercise the option only to the extent that the Employee (or the Employee's
estate) would have been entitled to exercise the option had the option not been
transferred.
(c) This Section 7 replaces any provision governing the Employee's
ability to transfer his rights in an option contained in any incentive stock
option agreement between the Corporation and the Employee entered into as of a
date prior to the date of this Agreement only to the extent the option evidenced
by such agreement does not qualify as an "incentive stock option" under the
Code.
8. COVENANTS. In consideration of the Corporation, Compass, or one or more
of the subsidiaries or affiliates of either (hereinafter collectively referred
to as "the Company") disclosing confidential and proprietary information, as
more fully described
in section 8(c) below, after the date hereof, the grant by the Corporation of
the option, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Employee, the Corporation, and
Compass, intending to be legally bound, hereby agree as follows:
(a) While Employee is employed by the Company, Employee will devote
his or her entire time, energy and skills to the service of the Company. Such
employment shall be at the pleasure of the board of directors of each employing
corporation. Except as provided in Section 2 hereof, no option granted under
this Agreement shall be exercised after the termination of Employee's employment
with the Company. Nothing contained in this Agreement shall extend the time
period set forth in Section 2(a) during which the option can be exercised.
(b) Employee will not, during the term of his or her employment with
the Company, or for a period of two years after termination for any reason of
his or her employment with the Company, directly or indirectly, either
individually or as a stockholder, director, officer, consultant, independent
contractor, employee, agent, member or otherwise of or through any corporation,
partnership, association, joint venture, firm, individual or otherwise
(hereinafter "Firm"), or in any other capacity:
(i) Carry on or engage in a business that competes with the
business of the Company within 100 miles of any city where Employee engaged in
business, Employee had responsibility, other employees that were supervised by
Employee worked, or Employee otherwise conducted business for the Company;
(ii) With respect to any type of product or service offered by
or available from the Company, solicit, directly or indirectly, or do any such
business with any customer of the Company called on, serviced by, or contacted
by the Employee in any capacity, or otherwise known to the Employee by virtue of
the Employee's employment with the Company in any state in which the Employee
was employed by the Company or any state in which the customer does business; or
(iii) Solicit, directly or indirectly, any employee of the
Company to leave their employment with the Company for any reason. For purposes
of this Agreement, the Company and Employee agree that Employee shall be
presumed to have solicited an employee in violation of this Agreement if such
employee is hired by Employee or his or her Firm within six (6) months of
Employee's last employment date with the Company.
(c) The Company shall provide confidential information to Employee
and, Employee agrees, during the term of his or her employment and thereafter,
not to use, divulge, or furnish or make accessible to any third party, company,
corporation or other organization (including, but not limited to, customers,
competitors, or governmental agencies), without the Company's prior written
consent, any trade secrets, customer lists, information regarding customers,
information regarding Compass' relationships with specific existing or
prospective customers, customer goodwill associated with Compass'
trade name, or other valuable confidential and proprietary information
concerning the Company or its business, including without limitation,
confidential methods of operation and organization, trade secrets, confidential
matters related to pricing, markups, commissions and customer lists. Employee
warrants and agrees that every customer whom Employee services in any way while
employed at the Company is a customer of the Company and not a customer of
Employee, individually. Employee agrees that such information remains
confidential even if committed to Employee's memory.
(d) Employee and the Corporation recognize that Compass and any
subsidiaries or affiliates of the Corporation or Compass which employ Employee
are third-party beneficiaries to this Agreement that are intended to be
protected by the covenants in this Agreement and that, except as otherwise
expressly provided in this Agreement, any successor or assign of the Corporation
or one of the third-party beneficiaries to this Agreement may enforce the
covenants in this Agreement as if it were a party to these covenants. Moreover,
Employee, the Corporation, and Compass acknowledge and agree that the Company
has legitimate business interests to protect relative to Employee, including
trade secrets, other valuable confidential and proprietary business information,
substantial relationships with specific prospective and existing customers,
substantial relationships with other employees of the Company, customer goodwill
associated with Compass' trade name, and the Company's servicing of specific
markets provided to Employee. Employee agrees that the restrictions contained in
this Section 8 are necessary and reasonable for the protection of the legitimate
business interests and goodwill of the Company described above, and Employee
agrees that any breach of this Section 8 will cause the Company substantial and
irrevocable damage and, therefore, the Company shall have the right, in addition
to any other remedies it may have, to seek specific performance and injunctive
relief, without the need to post a bond or other security. Employee agrees that
the period during which the covenant contained in this Section 8 shall be
effective shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of Section 8. Employee agrees
that if any covenant contained in Section 8 of this Agreement is found by a
court of competent jurisdiction to contain limitations as to time, geographical
area, or scope of activity that are not reasonable and impose a greater
restraint than is necessary to protect the goodwill or other business interest
of the Company, then the court shall reform the covenant to the extent necessary
to cause the limitations contained in the covenant as to time, geographical
area, and scope of activity to be restrained to be reasonable and to impose a
restraint that is not greater than necessary to protect the goodwill and other
business interests of the Company and to enforce the covenant as reformed.
(e) Employee specifically recognizes and affirms that each of the
covenants contained in subdivisions (b) and (c) of this Section 8 is a material
and important term of this Agreement which has induced the Company to provide
for the award of the option granted hereunder, the disclosure of confidential
information referenced herein, and the other promises made by the Company
herein, and Employee further agrees that should all or any part or application
of subdivisions (b) or (c) of Section 8 of this Agreement be held or found
invalid or unenforceable for any reason
whatsoever by a court of competent jurisdiction in an action between Employee
and the Corporation, Compass, or an affiliate of either, the Corporation shall
be entitled to receive (but not obligated to acquire) from Employee all Common
Stock held by Employee which was obtained by Employee under this Agreement
(including all shares obtained by virtue of any stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination, exchange of
shares, or other transaction, hereinafter "stock dividends") by returning to
Employee for each share received the Option Price paid by Employee (as adjusted
for stock dividends). If Employee has sold, transferred, or otherwise disposed
of Common Stock obtained under this Agreement (including all shares obtained by
virtue of any stock dividend), the Corporation shall be entitled to receive from
Employee the difference between the Option Price paid by Employee and the fair
market value of the Common Stock (including all shares obtained by virtue of any
stock dividends) on the date of sale, transfer, or other disposition.
(f) Notwithstanding any provision to the contrary herein contained,
Section 8(b) shall not apply:
(i) Upon the termination of the Employee's employment by the
Corporation other than for Cause within one (1) year following a Sale of the
Corporation; and
(ii) Upon the voluntary termination of employment by the
Employee for any reason within the thirty (30) day period immediately after the
one (1) year period following a Sale of the Corporation.
For purposes of this Agreement, "Cause" shall mean (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 Corporation or its affiliates, or
(ix) willful dereliction of duties or disregard of lawful instructions or
directions of the officers or directors of the Corporation or its affiliates
relating to a material matter.
For purposes of this Agreement, "Sale of the Corporation" shall mean (i) the
acquisition by any individual, entity or group (within the meaning of Sections
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 Exchange Act) of more than 50% of either the
then outstanding shares of common stock of the Corporation (the "Outstanding
Common Stock") or the combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in the election of
directors (the "Outstanding Voting Securities"), or (ii) consummation by the
Corporation of a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the Corporation;
unless, following such acquisition of beneficial ownership or transaction, (A)
more than 60% of the then outstanding shares of common stock of the Person
resulting from such reorganization, merger or consolidation, or (B) more than
60% of the then outstanding shares of common stock of
the Person acquiring such beneficial ownership or assets, and the combined
voting power of the then Outstanding Voting Securities of such Person entitled
to vote generally in the election of directors of such Person is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals or entities who were the beneficial owners, respectively, of
Outstanding Common Stock and Outstanding Voting Securities immediately prior to
such acquisition or transaction, in substantially the same proportion as their
ownership of Outstanding Common Stock and Outstanding Voting Securities prior to
such event.
(g) This Section 8 replaces section 8 in all stock option agreements
between the Corporation and the Employee entered into as of a date prior to the
date of this Agreement. All such prior agreements are hereby amended to include
this Section 8 in place of section 8 in any such prior agreements.
9. DISPOSITION OF SHARES. Employee agrees to notify the Corporation
promptly of the disposition of any shares of Common Stock purchased pursuant to
this option which are disposed of within one year after transfer of such shares
to Employee, or within two years of the date of the grant of such option. For
purposes of such notification, "disposition" shall have the meaning assigned to
it in Section 425(c) of the Code.
10. PLAN TO CONTROL. The Plan is incorporated in this Agreement by this
reference. Any question of interpretation or application of the Plan or this
Agreement shall be resolved by the Compensation Committee and its determination
shall be final and binding on the Corporation and Employee. In the event of any
conflict between the provisions of the Plan and of this Agreement, the Plan
shall control. Employee hereby acknowledges receipt of a copy of the Plan.
11. NOTICES. All notices hereunder shall be in writing and, if to the
Corporation, shall be delivered personally to the Chairman or Corporate
Secretary or mailed to the Corporation's principal office at 00 Xxxxx 00xx
Xxxxxx, Xxxxxxxxxx, Xxxxxxx 00000, addressed to the attention of the Chairman or
Corporate Secretary; and if to Employee, shall be delivered personally or mailed
to him at the address noted below. Such addresses may be changed at any time by
notice from one party to the other.
12. BINDING EFFECT. This Agreement shall bind and inure to the benefit of
the parties hereto, the successors and assigns of the Corporation and the person
to whom the rights of Employee are transferred by will or the laws of descent
and distribution.
13. HEADINGS. The section headings used herein are solely for reference
only and shall not affect in any way the meaning and interpretation of the terms
and conditions set forth herein.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
COMPASS BANCSHARES, INC.
By: _______________________________
Name: D. Xxxx Xxxxx, Xx.
Title: Chairman and Chief Executive
Officer
COMPASS BANK
By: ________________________________
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President
WITNESS: EMPLOYEE:
___________________________ ___________________________
Signature Signature
Date: _____________________
___________________________
Printed Name
___________________________
Address
___________________________
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