First Amendment to Employment Agreement


Exhibit 10(i)


      This First Amendment to Employment Agreement, dated April 14, 1997, is made and entered intoby and between Compass Bancshares, Inc. a Delaware corporation (the “Company”) and Garrett R. Hegel(the “Executive”).

      WHEREAS, the Company and the Executive have entered into that certain Employment Agreementdated as of December 14, 1994 (the “Employment Agreement”);

      WHEREAS, the parties agree that the Employment Agreement should be amended to modify themethod of calculating the Executive’s Bonus Amount following the Company’s termination ofemployment, other than for Cause; or the Executive’s termination of employment for Good Reason; orthe Executive’s termination of employment during the Window Period; or termination due to death orDisability; and

      NOW, THEREFORE, it is hereby agreed as follows:

      1. Section 6(a)(i)(B) of the Employment Agreement is deleted in its entirety and the followingis substituted in lieu thereof:

     B.two hundred, fifty percent (250%) of (x) the Executive’s Annual Base Salaryas of the Date of Termination and (y) the Executive’s Bonus Amount, determined inaccordance with this provision (the “Severance Amount”). The Executive’s “BonusAmount” shall mean the average of the annual bonus paid or payable for the twocalendar years ended prior to the Effective Date (or such lesser number of years,if any, in which the Executive was eligible to receive an annual bonus) and themaximum potential annual bonus the Executive is eligible to earn during thecalendar year in which the Effective Date occurs.

      2. Section 9 of the Employment Agreement is deleted in its entirety and the following Section9 is substituted in lieu thereof:

Section 9. Certain Additional Payments by the Company.

(a) Anything in this Agreement to the contrary notwithstanding, in the event itshall be determined that any payment or distribution by the Company to or for thebenefit of the Executive (whether paid or payable or distributed or distributablepursuant to the terms of this Agreement or otherwise, but determined without regardto any additional payments required under this Section 9) (a “Payment”) would besubject to the excise tax imposed by Section 4999 of the Code or if any interest orpenalties are incurred by the Executive with respect to such excise tax (suchexcise tax, together with any such interest and penalties, are hereinaftercollectively referred to as the “Excise Tax”), then the Executive shall be entitledto receive an additional payment (a “Gross-Up Payment”) in an amount such thatafter payment by the Executive of all taxes (including any interest or penaltiesimposed with respect to such taxes), including, without limitation, any incometaxes (any interest and penalties imposed with respect thereto) and Excise Taximposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-UpPayment equal to the Excise Tax imposed upon the Payments.

(b) Subject to the provisions of Section 9(c), all determinations required to bemade under this Section 9, including whether and when a Gross-Up Payment isrequired and the amount of such Gross-Up Payment and the assumptions to be utilizedin arriving at such determination, shall be made by an accounting firm selected bythe Company (the



“Accounting Firm”) which shall provide detailed supporting calculations both to theCompany and the Executive within 15 business days of the receipt of notice form theExecutive that there has been a Payment, or such earlier time as is requested bythe Company. In the event that the Accounting Firm is serving as accountant orauditor for the individual, entity or group effecting the Change of Control, theExecutive shall appoint another nationally recognized accounting firm to make thedeterminations required hereunder (which accounting firm shall then be referred toas the Accounting Firm hereunder). All fees and expenses of the Accounting Firmshall be borne solely by the Company. Any Gross-Up Payment, as determined pursuantto this Section 9, shall be paid by the Company to the Executive within five daysof the receipt of the Accounting Firm’s determination. If the Accounting Firmdetermines that no Excise Tax is payable by the Executive, it shall furnish theExecutive with a written opinion that failure to report the Excise Tax on theExecutive’s applicable federal income tax return would not result in the impositionof a negligence or similar penalty. Any determination by the Accounting Firm shallbe binding upon the Company and the Executive. As a result of the uncertainty inthe application of Section 4999 of the Code at the time of the initialdetermination by the Accounting Firm hereunder, it is possible that Gross-UpPayments 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 even that the Company exhausts its remedies pursuant to Section 9(c) and theExecutive thereafter is required to make a payment of any Excise Tax, theAccounting Firm shall determine the amount of the Underpayment that has occurredand any such Underpayment shall be promptly paid the Company to or for the benefitof the Executive.

(c) The Executive shall notify the Company in writing of any claim by the InternalRevenue Service that, if successful, would require the payment by the Company ofthe Gross-Up Payment. Such notification shall be given as soon as practicable butno later than ten business days after the Executive is informed in writing of suchclaim and shall apprise the Company of the nature of such claim and the date onwhich such claim is requested to be paid. The Executive shall not pay such claimprior to the expiration of the 30-day period following the date on which it givessuch notice to the Company (or such shorter period ending on the date that anypayment of taxes with respect to such claim is due). If the Company notifies theExecutive in writing prior to the expiration of such period that it desires tocontest such claim, the Executive shall:

(i) give the Company any information reasonably requested bythe Company relating to such claim,

(ii) take such action in connection with contesting suchclaim as the Company shall reasonably request in writing fromtime to time, including, without limitation, accepting legalrepresentation with respect to such claim by an attorneyreasonably selected by the Company,

(iii) cooperate with the Company in good faith in ordereffectively to contest such claim, and

(iv) permit the Company to participate in any proceedingsrelating to such claim;

provided, however, that the Company shall bear and pay directly all costs andexpenses (including additional interest and penalties) incurred in connection withsuch contest and shall indemnify and hold the Executive harmless, on an after-taxbasis, for any Excise Tax or income tax (including interest and penalties withrespect thereto) imposed as a result of such representation and payment of costsand expenses. Without limitation on the foregoing provision 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 forgoany and all administrative appeals, proceedings, hearings and conferences with thetaxing authority in respect of such claim and may, at its sole option, eitherdirect the Executive to pay the tax claimed and sue for a refund or contest theclaim in any permissible manner, and the Executive agrees to prosecute such contestto a determination before any administrative tribunal, in a court of initialjurisdiction 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 andsue for a refund, the Company shall advance the amount of such payment to theExecutive, on an interest-free basis, and shall indemnify and hold the Executiveharmless, on an after-tax basis, from any Excise Tax or income tax (includinginterest or penalties with respect thereto) imposed with respect to such advance orwith respect to any imputed income with respect to such advance; and furtherprovided that any extension of the statute of limitations relating to payment oftaxes for the taxable year of the Executive with respect to which such contestedamount is claimed to be due is limited solely to such contested amount.Furthermore, the Company’s control of the contest shall entitled to settle orcontest, as the case may be, any other issue raised by the Internal Revenue Serviceor any other taxing authority.

(d) If, after the receipt by the Executive of an amount advanced by the Companypursuant to Section 9(c), the Executive becomes entitled to receive any refund withrespect to such claims, the Executive shall (subject to the Company’s complyingwith the requirements of Section 9(c)) promptly pay to the Company the amount ofsuch refund (together with any interest paid or credited thereon after taxesapplicable thereto). If, after the receipt by the Executive of an amount advancedby the Company pursuant to Section 9(c), a determination is made that the Executiveis not entitled to any refund with respect to such claim and the Company does notnotify the Executive in writing of its intent to contest such denial of refundprior to the expiration of 30 days after such determination, then such advanceshall be forgiven and shall not be required to be repaid and the amount of suchadvance shall offset, to the extent thereof, the amount of Gross-Up Payment requireto be paid.

      3. All of the remaining terms and conditions of the Employment Agreement shall remain in fullforce and effect.

      IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to theauthorization from its Board of Directors, the Company has caused these presents to be executed inits name on its behalf, all as of the 14th day of April, 1997.

/s/ Glenda H. Dyer
  /s/ Garrett R. Hegel
  /s/ Daniel B. Graves   By:   /s/ Jerry W. Powell
  Assistant Secretary   Its:   General Counsel & Secretary