PERFORMANCE CONTINGENT RESTRICTED STOCK AWARD AGREEMENT
Exhibit 10.4
PERFORMANCE CONTINGENT
RESTRICTED STOCK AWARD AGREEMENT
THIS PERFORMANCE CONTINGENT RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”) is made and
entered into as of
, 200___ by and between Compass Bancshares, Inc., a Delaware
corporation (the “Corporation”), Compass Bank as employer (“Compass”), and (the
“Participant”).
Pursuant to the terms of the Corporation’s Incentive Compensation Plan (the “Plan”),
the Participant has been awarded shares of Restricted Stock (hereinafter defined), conditioned upon
the execution and delivery by the Corporation and the Participant of this Agreement setting forth
the terms and conditions applicable to such award.
In consideration of the mutual covenants and obligations of the parties contained herein and
in the Plan, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. The following definitions have the following meanings:
“Award Date” shall mean , 200___.
“Board” shall mean the Board of Directors of the Corporation or any committee delegated
authority by the Board of Directors.
“Cause” shall mean (i) commission of a felony or a crime involving moral turpitude, that is
materially and demonstrably injurious to the Corporation, (ii) substantial dependence or addiction
to any drug illegally taken or to alcohol, or (iii) willful dereliction of duties or gross
misconduct that is materially and demonstrably injurious to the Corporation.
“Committee” shall mean the Compensation Committee of the Board of Directors of the
Corporation.
“Common Stock” shall mean shares of the Corporation’s common stock, par value $2.00 per share.
“Disability” shall have the meaning set forth in the Corporation’s Employee Stock Ownership
Plan, or any successor plan, as such plan may be amended from time to time, or according to such
other reasonable standard that the Corporation may apply, in its sole discretion.
“Dividends” shall mean any dividends received by Participant with respect to the Restricted
Stock whether in the form of cash, stock or other securities and whether obtained by virtue of any
distribution, recapitalization, merger, consolidation, split-up, combination, exchange of shares or
other transaction.
“Early Retirement” shall mean the Participant’s retirement on a date prior to the
Participant’s 65th birthday.
“Maximum Shares” shall mean the maximum number of shares of Common Stock that could be awarded
to the Participant under this Agreement.
“Measurement Period” shall mean the period set forth on Appendices A, B and C.
“Normal Retirement” shall mean the Participant’s retirement on a date not sooner than the
Participant’s 65th birthday.
“Return on Average Tangible Equity (“▇▇▇”)” shall mean net income, excluding the after tax
effect of intangible amortization, divided by average common shareholders’ equity, excluding
intangible assets, consistent with the calculation of such measure in accordance with United States
generally accepted accounting principles, reported in the Corporations’ quarterly earnings
releases. Intangible assets for purposes of the calculation of ▇▇▇ will include goodwill, core
deposit intangibles and other intangible assets.
“Sale of the Corporation” shall mean: (i) 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) of beneficial ownership (within the meaning of Rule 13d-3) of more than fifty percent of
either the then outstanding shares of 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, 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.
All other capitalized terms not defined herein or on Appendix A, B, or C shall have the meanings
set forth in the Plan.
2. Award of Restricted Stock. Pursuant to the terms of the Plan, the Corporation hereby
awards to the Participant, effective as of the Award Date, a maximum of shares of
Common Stock, subject to the terms, conditions and restrictions described in this Agreement and in
the Plan (the “Restricted Stock”). Except as provided in this Agreement, the Participant shall
have, with respect to the Restricted Stock, all of the rights of a stockholder of the Corporation,
including the right to vote and to receive any Dividends. All Dividends shall be subject to the
same restrictions as are applicable to such Restricted Stock.
3. Restrictions and Conditions. The following conditions and restrictions shall apply to the
Restricted Stock:
(a) Except as otherwise provided in this Agreement, the Restricted Stock and any Dividends
shall be held by the Corporation until released to the Participant in accordance with the terms of
the Plan and this Agreement. The Restricted Stock and any Dividends shall be released to
Participant following the conclusion of the Measurement Period, to the extent that the following
performance measures have been met or exceeded:
(i) as set forth on Appendix A (the “Internal Performance Measures”),
(ii) as set forth in Appendix B (the “Index Banks Performance Measures”), or
(iii) as set forth in Appendix C (the “Return on Equity Performance Measure”).
In applying the above, the Appendix providing the highest award shall be used.
(b) The Participant shall not sell, transfer, pledge or assign any portion of the Restricted
Stock except as specifically permitted by the Plan and this Agreement.
(c) Any certificates evidencing shares of Restricted Stock issued in the name of the
Participant or any evidence of such share ownership entered upon the stock records of the
Corporation maintained by its transfer agent shall bear a legend or other appropriate restriction
substantially of the following substance:
“The transferability of this certificate and the shares of stock represented hereby
are subject to the terms and conditions (including forfeiture) of the Compass
Bancshares, Inc., Incentive Compensation Plan and a Restricted Stock Award
Agreement, dated , 200___, entered into between the registered
owner and the Corporation. Copies of such Plan and Agreement are on file in the
offices of the Corporation, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇.”
Certificates evidencing the shares of Restricted Stock shall be held in custody by the Corporation
until the shares have been released, and the Participant shall deliver a stock power, endorsed in
blank, relating to the Restricted Stock simultaneously with the execution of this Agreement or as
requested hereafter.
(d) If Participant’s employment terminates prior to the conclusion of the Measurement Period
(other than through Death or Disability or Sale of the Corporation), the Restricted Stock shall be
forfeited.
4. Release of Restrictions.
(a) In the event of Participant’s Death or Disability, an amount of Restricted Stock equal to
Maximum Shares shall be released by the Corporation as and when determined by the Committee.
(b) In the event of a Sale of the Corporation an amount of Restricted Stock equal to Maximum
Shares shall be released by the Corporation as and when determined by the Committee.
5. 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 (c) below,
after the date hereof, the award of Restricted Stock, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Participant and the Company agree as
follows:
(a) While Participant is employed by the Company, Participant 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.
(b) Participant 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 or engage in a business that competes with the business of the Company within
100 miles of any city where Participant engaged in business, Participant had responsibility,
other employees that were supervised by Participant worked, or Participant otherwise
conducted business for the Company;
(ii) With respect to any product or service offered by or available from the Company,
solicit, directly or indirectly, or do business with any customer of the Company called on,
serviced by, or contacted by the Participant in any capacity, or otherwise known to the
Participant by virtue of the Participant’s employment with the Company in any state in which
the Participant 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
Participant agree that Participant shall be presumed to have solicited an employee in
violation of this Agreement if such employee is hired by Participant or his or her Firm
within six (6) months of Participant’s last employment date with the Company.
(c) The Company shall provide confidential information to Participant and, Participant 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. Participant warrants and agrees that every customer which
Participant services in any way while employed at the Company is a customer of the Company and not
a customer of Participant, individually. Participant agrees that such information remains
confidential even if committed to Participant’s memory.
(d) Participant agrees that the restrictions contained in this Section 5 are necessary and
reasonable for the protection of the legitimate business interests and goodwill of the Company
described above, and Participant agrees that any breach of this Section 5 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. Participant agrees that the period during which the
covenant contained in this Section 5 shall be effective shall be computed by excluding from
such computation any time during which Participant is in violation of any provision of Section 5.
Participant agrees that if any covenant contained in Section 5 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) Participant specifically recognizes and affirms that each of the covenants contained in
subdivisions (b) and (c) of this Section 5 is a material and important term of this Agreement which
has induced the Company to provide for the award of Restricted Stock hereunder, the disclosure of
confidential information referenced herein, and the other promises made by the Company herein, and
Participant further agrees that should all or any part or application of subdivisions (b) or (c) of
Section 5 of this Agreement be held or found invalid or unenforceable for any reason whatsoever by
a court of competent jurisdiction in an action between Participant and the Corporation, Compass, or
an affiliate of either, the Corporation shall be entitled to receive (but not obligated to acquire)
from Participant all Common Stock held by Participant which was obtained by Participant 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 the Corporation each share of Common
Stock received by the Participant in respect of such Restricted Stock (as adjusted for stock
dividends). If Participant has sold, transferred, or otherwise disposed of any shares of Common
Stock obtained under this Agreement (including all shares obtained by virtue of any stock
dividends), the Corporation shall be entitled to receive from Participant 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 5(b) shall not
apply:
(i) Upon the termination of the Participant’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 Participant for any reason
within the thirty (30) day period immediately after the one (1) year period following a Sale
of the Corporation.
(g) This Section 5 replaces Section 5 in all restricted stock award agreements between the
Corporation and the Participant entered into as of a date prior to the date of this Agreement. All
such prior agreements are hereby amended to include this Section 5 in place of Section 5 in any
such prior agreements.
6. Adjustments. In the event of any change in the outstanding Common Stock of the Corporation
by reason of a stock dividend or distribution, recapitalization, merger, consolidation, split-up,
combination, exchange of shares or otherwise, the Committee shall adjust
the number of shares of Common Stock which may be issued under the Plan and the Committee shall
provide for an equitable adjustment of any shares issuable pursuant to awards outstanding under the
Plan.
7. Assignment and Transfer. Participant may assign or transfer his rights under this
Agreement under the following circumstances: (i) by will or the laws of descent and distribution,
in which case the Restricted Stock may be received in accordance with the provisions of this
Agreement 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 Participant 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
Participant) control the management of assets, and any other entity in which these persons (or the
Participant) 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.
8. Disposition of Shares. Participant agrees to notify the Corporation promptly of the sale,
gift or other disposition of any shares of Common Stock awarded pursuant to this Agreement.
9. No Right to Continued Employment. Nothing contained in this Agreement shall confer upon
Participant any right with respect to continuance of employment by the Corporation, or any
affiliate, nor shall it interfere in any way with the right of Participant’s employer to terminate
Participant’s employment at any time.
10. Compliance with Laws and Regulations. The obligation of the Corporation to deliver shares
of Restricted Stock hereunder shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any government or regulatory agency as may be required.
11. Payment of Taxes. Participant shall, no later than the date as of which the value of any
portion of the Restricted Stock first becomes includable in the Participant’s gross income for
federal income tax purposes, pay to the Corporation, or make other arrangements satisfactory to the
Committee regarding payment of, any federal, state or local income, FICA, or other taxes of any
kind required by law to be withheld with respect to the Restricted Stock. The obligations of the
Corporation under this Agreement shall be conditioned on such payment or arrangements, and the
Corporation and its affiliates shall, to the extent permitted by law, have the right to deduct such
taxes from any payment of any kind otherwise due to Participant.
12. Participant Bound by Plan. Participant hereby acknowledges receipt of a copy of the Plan
and agrees to be bound by all the terms and provisions thereof, including the terms and provisions
adopted after the award of the Restricted Stock but prior to the vesting thereof.
13. Notices. Any notice hereunder to the Corporation shall be in writing and addressed to the
Secretary of the Corporation, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, subject
to the right of the Corporation to designate at any time hereafter in writing some other address.
14. Miscellaneous. This Agreement shall be governed by the laws of the State of Alabama.
This Agreement together with the Plan, contains the entire agreement and understanding of the
parties hereto with respect to the matters covered hereby and may not be amended except in writing,
signed by the parties hereto.
15. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| COMPASS BANCSHARES, INC. | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| COMPASS BANK | ||||||||
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
| WITNESS: | PARTICIPANT | |||||||
|
|
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Printed Name |
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Appendix A
To Performance Contingent Restricted Stock Award to
To Performance Contingent Restricted Stock Award to
Internal Performance Measures
| § | The maximum number of shares is granted at the beginning of the three-year measurement period | |
| Threshold, Target and Maximum Awards |
| Maximum | ||||||
| Threshold | Target | ____% EPS | ||||
| EPS Growth | _________% EPS Growth | _________% EPS Growth | Growth | |||
| # of Shares |
| Return on Average | ____% ▇▇▇ or | |||
| Tangible Equity | Less than ____% ▇▇▇ | Greater | ||
| # of Shares |
| § | Actual shares released are based on Compass’ three-year performance on two key measures – Earnings Per Share Growth and Return on Average Tangible Equity (measurement period is ). | |
| § | Actual shares released can range from zero shares to the maximum number of shares. | |
| § | Dividends will be accrued and paid in cash based on the actual number of shares earned, if any, at the end of the measurement period. | |
| § | Results between stated levels will be interpolated. |
| Measurement | ||||||
| Components | Weight | Measurement Type | Period | |||
| EPS Growth | ___% | Compound Annual Growth Rate | ||||
| Return on Average Tangible Equity | ___% | Average |
| § | Entire payout made at end of three-year measurement period (no partial or interim payouts) |
| PARTICIPANT | ||||
Appendix B
To Performance Contingent Restricted Stock Award to
To Performance Contingent Restricted Stock Award to
Index Banks Performance Measures
| § | The maximum number of shares is granted at the beginning of the three-year measurement period | |
| Threshold, Target and Maximum Awards |
| Threshold | Target | Maximum | ||||
| (____th Percentile of | (____th Percentile of | (____th Percentile | ||||
| EPS Growth | Index Banks) | Index Banks) | of Index Banks) | |||
| # of Shares |
| Return on | Threshold | Target | Maximum | |||
| Average Tangible | (____th Percentile of | (____th Percentile of | (____th Percentile | |||
| Equity | Index Banks) | Index Banks) | of Index Banks) | |||
| # of Shares |
| § | Index Banks are the banks in the Standard & Poors 500 Index. | |
| § | Actual shares released are based on Compass’ three-year performance relative to peers on two key measures – Earnings Per Share Growth and Return on Average Tangible Equity (measurement period is ). | |
| § | Actual shares released can range from zero shares to the maximum number of shares. | |
| § | Dividends will be accrued and paid in cash based on the actual number of shares earned, if any, at the end of the measurement period. | |
| § | Results between stated levels will be interpolated. |
| Components | Weight | Measurement Type | Measurement Period | |||
| EPS Growth | ___% | Compound Annual Growth Rate | ||||
| Return on Average Tangible Equity | ___% | Average |
| § | Entire payout made at end of three-year measurement period (no partial or interim payouts) |
| PARTICIPANT | ||||
Appendix C
To Performance Contingent Restricted Stock Award to
To Performance Contingent Restricted Stock Award to
Return on Equity Measure
| § | The maximum number of shares is granted at the beginning of the three-year measurement period | |
| Maximum Award |
| Return on | ||
| Average Tangible | ||
| Equity | _________% ▇▇▇ or Greater | |
| # of Shares |
| § | Actual shares released are based on Compass’ three-year performance on Average Return on Average Tangible Equity (measurement period is ). | |
| § | Actual shares released range from zero shares to ___% of the maximum number of shares. | |
| § | Dividends will be accrued and paid in cash based on the actual number of shares earned, if any, at the end of the measurement period. | |
| § | Entire payout made at end of three-year measurement period (no partial or interim payouts) |
| PARTICIPANT | ||||