COMPASS BANCSHARES, INC. _______ INCENTIVE COMPENSATION PLAN INCENTIVE STOCK OPTION AGREEMENT
Exhibit 10.6
COMPASS BANCSHARES, INC.
_______ INCENTIVE COMPENSATION PLAN
INCENTIVE STOCK OPTION AGREEMENT
_______ INCENTIVE COMPENSATION PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into as of ___, 200___, 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 ___, 200___, upon the request of Compass Bank, approved the grant to
Employee of awards under the Corporation’s ___ 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 ___, 200___, 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 ___,
20___ (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 | |
(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 Expiration Date.
(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 Expiration Date. 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 Retirement. In the event that Employee ceases to be employed by the
Corporation or its subsidiaries by reason of Normal Retirement or Early Retirement (as defined
below), 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
Expiration Date, provided the Employee shall have given the Corporation at least twelve (12) months
written notice of his intention to take such retirement. If Employee fails to give such notice of
retirement then the option shall be governed by Section 2(g) hereof related to termination for
other reasons. For the purposes of this section 2(f) “Early Retirement” shall mean the Employee’s
retirement on a date prior to the Employee’s 65th birthday and “Normal Retirement” shall
mean the Employee’s retirement on or following the Employee’s 65th birthday.
(g) Exercise Upon Termination of Employment by Reason Other than Death, Disability, or
Retirement. The option or any unexercised portions thereof shall
expire upon termination of Employee’s employment with the Corporation or its subsidiaries for any
reason, except as provided in Section 2(d), Section 2(e), Section 2(f), and this Section 2(g). 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 until the Expiration Date in the event of the Employee’s termination of employment 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. 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) To the extent this option is an “incentive stock option” under the
Code, it 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. A transfer to an entity in which more than fifty (50) percent of the voting
interests are owned by family members, or the Participant, in exchange for an interest in that
entity is also permitted pursuant to this Section 7. 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. | ||||||||
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| COMPASS BANK | ||||||||
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| WITNESS: | EMPLOYEE: | |||||||
| Signature | Signature | |||||||
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