Document:

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COMPASS BANCSHARES, INC.                                                   10(n)
SPECIAL SUPPLEMENTAL RETIREMENT PLAN

                                    ARTICLE I
                          Purpose and Adoption of Plan
                          ----------------------------

     1.1 ADOPTION: Compass Bancshares, Inc. (the "Company") hereby adopts and
establishes the Compass Bancshares, Inc. Special Supplemental Retirement Plan
(the "Plan") effective as of May 1, 1997. The Plan shall be an unfunded top hat
deferred compensation arrangement with benefits payable solely from the general
assets of the Company.

     1.2 PURPOSE: The general purposes of this Plan are (a) to provide for a
select group of management an amount equal to the benefit which would otherwise
be paid under the Compass Bancshares, Inc. Retirement Plan ("Retirement Plan")
but for limitations imposed by the Internal Revenue Code of 1986, as amended,
and (b) to provide an amount equal to the benefit which would otherwise be paid
under the Retirement Plan if bonuses and other incentive compensation were
included in the definition of "compensation" used to determine retirement
benefits. The Company intends to limit participation in the Plan to a select
group of management or highly compensated employees so that the Plan is an
unfunded top hat plan exempt from the requirements of Parts 2, 3 and 4 of Title
I of ERISA.

                                   ARTICLE II
                                   Definitions
                                   -----------

     For purposes of the Plan the following terms shall have the following
meanings unless a different meaning is plainly required by the context:

     2.1 "Administrative Committee" shall mean the Compensation Committee of the
Board of Directors.

     2.2 "Board of Directors" shall mean the Board of Directors of the Company.

     2.3 "Code" shall mean the Internal Revenue Code of 1986, as amended,
including any successor statute.

     2.4 "Company" shall mean Compass Bancshares, Inc.

     2.5 "Employee" shall mean any person who is currently employed by an
Employing Company.

     2.6 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.

<PAGE>   2

     2.7 "Employing Company" shall mean the Company or any affiliate or
subsidiary (direct or indirect) of the Company.

     2.8 "Participant" shall mean an Employee or former Employee of the Company
who is eligible to receive benefits under the Plan.

     2.9 "Plan" shall mean Compass Bancshares, Inc. Special Supplemental
Retirement Plan as amended from time to time.

     2.10 "Plan Year" shall mean the twelve (12) month period commencing January
1st and ending on the last day of December next following, except the first Plan
Year shall be May 1, 1997 through December 31, 1997.

     2.11 "Retirement Plan" shall mean the Compass Bancshares, Inc. Retirement
Plan, as amended from time to time.

     The words in the masculine gender shall include the feminine and neuter
genders and words in the singular shall include the plural and words in the
plural shall include the singular. Other terms used in this Plan shall have the
same meaning as they have in the Retirement Plan.

                                   ARTICLE III
                             Administration of Plan
                             ----------------------

     3.1 The Administrative Committee shall be responsible for the general
administration of the Plan. The Administrative Committee may select a chairman
and may select a secretary (who may, but need not, be a member of the
Administrative Committee) to keep its records or to assist it in the discharge
of its duties. A majority of the members of the Administrative Committee shall
constitute a quorum for the transaction of business at any meeting. Any
determination or action of the Administrative Committee may be made or taken by
a majority of the members present at any meeting thereof, or without a meeting
by resolution or written memorandum concurred in by a majority of the members.

     3.2 No member of the Administrative Committee shall receive any
compensation from the Plan for his service.

     3.3 The Administrative Committee shall administer the Plan in accordance
with its terms and shall have all powers necessary to carry out the provisions
of the Plan more particularly set forth herein. It shall interpret the Plan and
shall determine all questions arising in the administration, interpretation and
application of the Plan. Any such determination by it shall be conclusive and
binding on all persons. It may adopt such regulations as it deems desirable for
the conduct of its affairs. It may appoint such accountants, counsel, actuaries,
specialists and other persons as it deems necessary or desirable in connection
with the administration of this Plan, and shall be the agent for the service of
process.

     3.4 The Administrative Committee shall be reimbursed by the Company for all
reasonable expenses incurred by it in the fulfillment of its duties. Such
expenses shall include any expenses incident to its functioning, including, but
not limited to, fees of accountants, counsel, actuaries, and other specialists,
and other costs of administering the Plan.

     3.5 (a) The Administrative Committee is responsible for the daily
administration of the Plan. It may appoint other persons or entities to perform
any of its fiduciary functions. The Administrative Committee and any such
appointee may employ advisors and other persons necessary or convenient to help
it carry out its duties, including its fiduciary duties. The Administrative
Committee shall review the work and performance of each such appointee, and
shall have the right to remove any such appointee from his position. Any person,
group of persons or entity may serve in more than one fiduciary capacity.

<PAGE>   3

         (b) The Administrative Committee shall maintain accurate and detailed
records and accounts of Participants and of their rights under the Plan and of
all receipts, disbursements, transfers and other transactions concerning the
Plan. Such accounts, books and records relating thereto shall be open at all
reasonable times to inspection and audit by the Board of Directors and by
persons designated thereby.

         (c) The Administrative Committee shall take all steps necessary to
ensure that the Plan complies with the law at all times. These steps shall
include such items as the preparation and filing of all documents and forms
required by any governmental agency; maintaining of adequate Participants'
records; withholding of applicable taxes and filing of all required tax forms
and returns; recording and transmission of all notices required to be given to
Participants and their Beneficiaries; the receipt and dissemination, if
required, of all reports and information received from an Employing Company; and
doing such other acts necessary for the proper administration of the Plan. The
Administrative Committee shall keep a record of all of its proceedings and acts,
and shall keep all such books of account, records and other data as may be
necessary for proper administration of the Plan. The Administrative Committee
shall notify the Company upon its request of any action taken by it, and when
required, shall notify any other interested person or persons.

     3.6 In the event that the claim of any person to all or any part of any
payment or benefit under this Plan shall be denied, the Administrative Committee
shall notify the applicant in writing of such decision with respect to his claim
within ninety (90) days after the applicant's submission of such claim. The
notice shall be written in a manner calculated to be understood by the applicant
and shall include:

         (a) The specific reasons for the denial;

         (b) Specific references to the pertinent Plan provisions on which the
denial is based;

         (c) A description of any additional material or information necessary
for the applicant to perfect the claim and an explanation of why such material
or information is necessary; and

         (d) An explanation of the Plan's claim review procedures.

         If specific circumstances require an extension of time for processing
the initial claim, a written notice of the extension and the reason therefor
shall be furnished to the claimant before the end of the ninety (90)-day period.
In no event shall such extension exceed ninety (90) days.

         In the event a claim for benefits is denied or if the applicant has
received no response to such claim within ninety (90) days of its submission (in
which case the claim for benefits shall be deemed to have been denied), the
applicant or his duly authorized representative, at the applicant's sole
expense, may appeal the denial to the Administrative Committee within sixty (60)
days of the receipt of written notice of the denial or sixty (60) days from the
date such claim is deemed to be denied. In pursuing such appeal the applicant or
his duly authorized representative:

         (a) may request in writing that the Administrative Committee review the
denial;

         (b) may review pertinent documents; or

         (c) may submit issues and comments in writing.

         The decision on review shall be made within sixty (60) days of receipt
of the request to review, unless special circumstances require an extension of
time for processing, in which case a decision shall be rendered as soon as
possible, but not later than one hundred twenty (120) days after receipt of the
request for review. If such an extension of time is required, written notice of
the extension shall be furnished to the claimant before the end of the original
sixty (60) day period. The decision on review shall be made in writing, shall be
written in a manner calculated to be understood by the claimant, and shall
include specific references to the provisions of the Plan on which the denial is
based. If the

<PAGE>   4

decision on review is not furnished within the time specified above, the claim
shall be deemed denied on review.

                                   ARTICLE IV
                                   Arbitration
                                   -----------

     4.1 Any controversy relating to a claim arising out of or relating to this
Plan, including, but not limited to claims for benefits due under this Plan,
claims for the enforcement of ERISA, claims based on the federal common law of
ERISA, claims alleging discriminatory discharge under ERISA, claims based on
state law, and assigned claims relating to this Plan shall be settled by
arbitration in accordance with the then current Employee Benefit Claims
Arbitration Rules of the American Arbitration Association (AAA) or any successor
rules which are hereby incorporated into the Plan by this reference; provided,
however, both the Company and the Participant shall have the right at any time
to seek equitable relief in court without submitting the issue to arbitration.

     4.2 Neither the Participant (or his beneficiary) nor the Plan may be
required to submit any such claim or controversy to arbitration until the
Participant (or his beneficiary) has first exhausted the Plan's internal appeals
procedures set forth in Section 3.6. However, if the Participant (or his
beneficiary) and the Company agree to do so, they may submit the claim or
controversy to arbitration at any point during the processing of the dispute.

     4.3 The Company will bear all costs of an arbitration, except that the
Participant will pay the filing fee set by the AAA and the arbitrator shall have
the power to apportion among the parties expenses such as pre-hearing discovery,
travel, experts' fees, accountants' fees, and attorney's fees and except as
otherwise provided herein. The decision of the arbitrator shall be final and
binding on all parties, and judgment on the arbitrator's award may be entered in
any court of competent jurisdiction.

     4.4 If there is a dispute as to whether a claim is subject to arbitration,
the arbitrator shall decide that issue. The claim must be filed with the AAA
within the applicable statute of limitations period. The arbitrator shall issue
a written determination sufficient to ensure consistent application of the Plan
in the future.

     4.5 Any arbitration will be conducted in accordance with the following
provisions, not withstanding the Rules of the AAA. The arbitration will take
place in a neutral location within the metropolitan area in which the
Participant was or is employed by an Employing Company. The arbitrator will be
selected from the attorney members of the Commercial Panel of the AAA who reside
in the metropolitan area where the arbitration will take place and have at least
5 years of ERISA experience. If an arbitrator meeting such qualifications is
unavailable, the arbitrator will be selected from the attorney members of the
National Panel of Employee Benefit Claims Arbitrators established by the AAA.

     4.6 In any such arbitration, each party shall be entitled to discovery of
any other party as provided by the Federal Rules of Civil Procedure then in
effect; provided, however, that discovery shall be limited to a period of 60
days. The arbitrator may make orders and issue subpoenas as necessary. The
arbitrator shall apply ERISA, as construed in the federal Circuit in which the
arbitration takes place, to the interpretation of the Plan and the Federal
Arbitration Act to the interpretation of this arbitration provision. To the
extent that state law is not preempted by ERISA, then the law of Alabama
applies.

     4.7 Any party has the right to arrange for a stenographic record to be made
of the proceedings, which stenographic record shall be the official record.
Either party may make an offer of judgment at any time in accordance with the
procedures of Rule 68 (or its successor) of the Federal Rules of Civil
Procedure. The existence of such an offer is not admissible in any proceeding.
If the monetary award of the arbitrator to a party is less than any monetary
offer to that party plus 20 percent of such offer, then that party receiving
such award shall pay the other party his reasonable attorneys' fees, experts'
fees, accountants' fees and other costs incurred with respect to the arbitration
following the date of the offer of judgment. Such amount is to be deducted from
the award prior to payment.

<PAGE>   5

Arbitration is the exclusive remedy for any dispute between the parties other
than equitable relief which either party may seek through the court system.

                                    ARTICLE V
                                   Eligibility
                                   -----------

     5.1 Any Employee who is a member of a select group of management or highly
compensated Employees, is eligible to participate in the Retirement Plan, and is
selected for participation in the Plan by the Administrative Committee in its
sole discretion, shall be eligible to participate in the Plan. An Employee who
is selected to participate shall be designated on Exhibit A attached hereto. An
Employee shall become a Participant by agreeing to be bound by the terms of the
Plan, including the non-competition provisions of Article VII.

     5.2 Notwithstanding the above, the Administrative Committee shall be
authorized to modify the eligibility requirements and rescind the eligibility of
any Participant if necessary to insure that the Plan is maintained primarily for
the purpose of providing deferred compensation to a select group of management
or highly compensated employees under ERISA.

                                   ARTICLE VI
                                    Benefits
                                    --------

     6.1 Subject to compliance with the provisions of Article VII, the benefits
(hereinafter referred to as "Supplemental Benefits") payable to or on behalf of
a Participant under this Plan shall be determined based on the formula (A) minus
(B) where:

         (A) is the amount of such Participant's benefits payable pursuant to
the Retirement Plan calculated in accordance with the terms and conditions
thereof, but prior to application of (i) the limitations imposed by the
Retirement Plan to meet the requirements of Section 415 of the Code, (ii) any
maximum dollar limitation imposed by Section 417 of the Code on the amount of
such Participant's compensation that may be taken into account in determining
the amount of the Participant's benefits under the Retirement Plan, (iii) the
exclusion from compensation recognized for computing benefits under the
Retirement Plan for amounts deferred under the non-qualified deferred
compensation plans of the Company, but (iv) after including the average annual
bonuses paid to the Participant for the five years prior to the Participant's
retirement, or termination of employment during which the Participant's
compensation that would be recognized under the Retirement Plan if there were no
tax law limitations, plus his bonuses, produce the highest five years of such
compensation plus bonuses.

         (B) is the amount of such Participant's benefits actually payable under
the Retirement Plan calculated after application of (i) the limitations imposed
by the Retirement Plan to meet the requirements of Section 415 of the Code, (ii)
any maximum dollar limitation imposed by the Code on the amount of such
Participant's compensation that may be taken into account in determining the
amount of the Participant's benefits under the Retirement Plan, and (iii) the
exclusion from compensation recognized for computing benefits under the
Retirement Plan for amounts deferred under the non-qualified deferred
compensation plans of the Company and for amounts received as bonuses and other
incentive pay.

     6.2 A Participant may elect to have his Supplemental Benefits paid under
any of the options under the Retirement Plan provided that the Participant must
make his election at least one year prior to his retirement or termination of
employment. In the absence of any election otherwise prior to retirement, the
Participant's Supplemental Benefits shall be paid at the same time, in the same
manner, and to the same person to whom the Retirement benefit payable to or on
behalf of the Participant under the Retirement Plan is paid. However, if the
lump sum actuarial equivalent of the Supplemental Benefits are $10,000 or less,
in its sole discretion, the Administrative Committee may direct the payment of
such benefits due a participant, spouse, or beneficiary under this Plan in the
form of such lump sum amount. The actual assumptions for computing the lump sum
amount or a form of

<PAGE>   6

payment other than a life annuity for the Participant's life only shall be such
factors as the Administrative Committee in its sole discretion shall determine.
The payment of the lump sum shall be in full discharge of the Company's
obligations under the Plan to the Participant, his spouse, or beneficiaries.

     6.3 Subject to compliance with the provisions of Article VII, benefits
payable under this Plan shall commence on or about the same date that benefits
commence under the Retirement Plan.

     6.4 Subject to compliance with the provisions of Article VII, a Participant
shall become vested in the benefit payable under Section 6.1 at the same time
that he becomes vested under the Retirement Plan.

     6.5 Subject to compliance with the provisions of Article VII, a death
benefit shall be payable to a surviving spouse or other designated beneficiary
of the Participant if a death benefit is payable under the terms of the
Retirement Plan. Such death benefit shall be computed using the same factors and
assumptions used to compute the applicable death benefit under the Retirement
Plan and shall be paid in the same form as such death benefit, except that the
amount of the death benefit shall be computed with respect to the amount of the
benefit the Participant accrues under this Plan.

                                   ARTICLE VII
                   Covenant Not to Compete, Non-Solicitation,
                   ------------------------------------------
                          Non-Disclosure and Forfeiture
                          -----------------------------

     7.1 As a condition of participation in the Plan, Employee agrees with the
Company and his Employing Company as follows:

         (a) While Employee is employed by any Employing Company, Employee will
devote his or her entire time, energy and skills to the service of the Employing
Company. Such employment shall be at the will and the pleasure of the board of
directors of each Employing Company.

         (b) Employee will not, during the term of his or her employment with an
Employing Company, and after termination for any reason of his or her employment
with an Employing 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 like or similar to any
business engaged in by the Employing Company in any territory in which the
Employing Company has been or is conducting business;

              (ii) Solicit or do business with any customer of the Employing
Company; or

              (iii) Solicit, directly or indirectly, any employee of any
Employing Company to leave their employment with the Employing Company for any
reason. For purposes of this Agreement, the Employing Company and Employee agree
that Employee shall be deemed 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 any Employing Company.

         (c) During the term of his or her employment with an Employing Company
and thereafter, Employee shall not 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, or other confidential information concerning any Employing
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.
<PAGE>   7

         7.2 In the event of a breach by Employee of all or any part of the
provisions of subdivisions (b) or (c) of Section 7.1, the Employee shall
immediately forfeit all rights to all benefits under this Plan and the Company
shall be entitled to receive from the Employee an amount equal to all benefits
previously paid to Employee.

         7.3 In the event of a breach or threatened breach by Employee of all or
any part of the provisions of subdivisions (b) of Section 7.1 within the
two-year period following his termination of employment or (c) of this Section
7.1 at any time, the Company shall in addition to any remedies that may be
applicable under Section 7.2, be entitled to a preliminary and permanent
injunction restraining Employee from such breach without limiting any other
rights or remedies available to the Company for such breach or threatened
breach. The two-year period during which the Company shall be entitled to an
injunction for breach or threatened breach of subdivisions (b) of Section 7.1
shall be extended by any period of time during which Employee is in default of
the covenants contained in this Article VII.

         7.4 Employee specifically recognizes and affirms that each of the
covenants contained in subdivisions (b) and (c) of this Section 7.1 is a
material and important term of this Plan which has induced the Company to permit
Employee to participate in this Plan, and Employee further agrees that should
all or any part or application of subdivisions (b) or (c) of Section 7.1 of this
Plan be held or found invalid or unenforceable for any reasons whatsoever by a
court of competent jurisdiction in an action between Employee and the Company,
such invalidity or unenforceability shall not affect any other provisions of the
Plan, and the Company shall be entitled to rescind (but not obligated to do so)
all benefits under Article VI granted to Employee under this Plan. If Employee
has been paid benefits under this Plan, the Company shall be entitled to receive
from Employee an amount equal to all benefits paid to Employee.

         7.5 Notwithstanding any provision to the contrary herein contained,
Section 7.1(b) shall not apply:

              (a) Upon the involuntary termination of the Employee's employment
by an Employing Company other than for Cause within one (1) year following a
Sale of the Company; or

              (b) 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 Company.

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 an Employing Company or its affiliates,
or (ix) willful dereliction of duties or disregard of lawful instructions or
directions of the officers of directors of an Employing Company or its
affiliates relating to a material matter.

For purposes of this Article, "Sale of the Company" shall mean, for this
purpose, (i) 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 "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 Company (the
"Outstanding Common Stock") or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Voting Securities"), or (ii) consummation by the
Company of a reorganization, merger or consolidation, or sale or other
disposition of all or substantially all of the assets of the Company, 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 and entities who were the beneficial
owners, respectively, of

<PAGE>   8

Outstanding Common Stock and Outstanding Voting Securities immediately prior to
such acquisition or transaction, in substantially the same proportions as their
ownership of Outstanding Common Stock and Outstanding Voting Securities prior to
such event.

                                  ARTICLE VIII
             Nature of Employer Obligation and Participant Interest
             ------------------------------------------------------

         8.1 A Participant, his beneficiary, and any other person or persons
having or claiming a right to payments under this Plan shall rely solely on the
unsecured promise of the Company set forth herein, and nothing in this Plan
shall be construed to give a Participant, beneficiary, or any other person or
persons any right, title, interest, or claim in or to any specific assets, fund,
reserve, account, or property of any kind whatsoever owned by the Company or in
which it may have any right, title, or interest now or in the future; but a
Participant shall have the right to enforce his or her claim against the Company
in the same manner as any unsecured creditor.

         8.2 All amounts paid under this Plan shall be paid in cash from the
general assets of the Company. Benefits shall be reflected on the accounting
records of the Company but shall not be construed to create, or require the
creation of, a trust, custodial or escrow account. Nothing contained in this
Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust or a fiduciary relationship of any kind between the
Company and an employee or any other person. Neither the employee or a
beneficiary of an employee shall acquire any interest greater than that of an
unsecured creditor.

         8.3 Any Supplemental Benefits payable under this Plan shall be
independent of, and in addition to, any other benefits or compensation of any
sort, payable to or on behalf of the Participant under or pursuant to any other
arrangement sponsored by the Company or any other agreement between the Company
and the Participant.

                                   ARTICLE IX
                            Miscellaneous Provisions
                            ------------------------

         9.1 Neither the Participant, his beneficiary, nor his legal
representative shall have any rights to commute, sell, assign, transfer or
otherwise convey the right to receive any payments hereunder, which payments and
the rights thereto are expressly declared to be nonassignable and
nontransferable. Any attempt to assign or transfer the right to payments of this
Plan shall be void and have no effect.

         9.2 This Plan may be amended, modified, or terminated by the Board of
Directors in its sole discretion at any time and from time to time; provided,
however, that no such amendment, modification, or termination shall impair any
rights to benefits under the Plan prior to such amendment, modification, or
termination. The Plan may also be amended or modified by the Administrative
Committee if such amendment or modification does not involve a substantial
increase in cost to the Company.

         9.3 It is expressly understood and agreed that the payments made in
accordance with the Plan are in addition to any other benefits or compensation
to which a Participant may be entitled or for which he may be eligible, whether
funded or unfunded, by reason of his employment by an Employing Company.

         9.4 The Company shall deduct from each payment under the Plan the
amount of any tax (whether federal, state or local income taxes, Social Security
taxes or Medicare taxes) required by any governmental authority to be withheld
and paid over by the Company to such governmental authority for the account of
the person entitled to such distribution.

<PAGE>   9

         9.5 No provision of this Plan shall be construed to affect in any
manner the existing rights of an Employing Company to suspend, terminate, alter,
modify, whether or not for cause, the employment relationship of the Participant
and an Employing Company.

         9.6 In making any distribution to or for the benefit of any minor or
incompetent person, the Administrative Committee in its sole discretion, may,
but need not, direct such distribution to be made to a legal or natural guardian
or other relative of such minor or court appointed committee of such
incompetent, or to any adult with whom such minor or incompetent temporarily or
permanently resides, and any such guardian, committee, relative or other person
shall have full authority and discretion to expend such distribution for the use
and benefit of such minor or incompetent. The receipt of such guardian,
committee, relative or other person shall be a complete discharge of the Company
without any responsibility on its part or on the part of the Administrative
Committee to see to the application thereof.

         9.7 In the event that any provision of this Plan shall be held illegal
or invalid for any reason, such illegality or invalidity shall not affect the
remaining provisions hereof, and this Plan shall be construed and enforced as if
such illegal and invalid provisions had never been set forth herein.

         9.8 This Plan, and all its rights under it, shall be governed by and
construed in accordance with the laws of the State of Alabama except to the
extent preempted by federal law pursuant to ERISA.

         9.9 This Plan shall be binding upon the Company, its assigns, and any
successor which shall succeed to substantially all of its assets and business
through merger, consolidation or acquisition.

         IN WITNESS WHEREOF, the Plan has been executed as of this 1st day of
May, 1997.

ATTEST:                                        COMPASS BANCSHARES, INC.

By:___________________________                 By:___________________________
Its:__________________________                 Its:__________________________

<PAGE>   10

                              AMENDMENT NUMBER ONE
                           TO THE SPECIAL SUPPLEMENTAL
                                 RETIREMENT PLAN

         WHEREAS, Compass Bancshares, Inc. ("Compass") established the Compass
Bancshares, Inc. Special Supplemental Retirement Plan (the "Plan") as of May 1,
1997, to provide an enhanced retirement benefit for select group of management
employees;

         WHEREAS, the Plan may be amended or modified by the Board of Directors
pursuant to Section 9.2 of the Plan;

         WHEREAS, Compass desires to amend the Plan to modify the provisions
applicable to D. Paul Jones, Jr. in the event he shall elect to retire on or
after attaining the age of sixty (60);

         NOW, THEREFORE, Compass hereby amends the Plan effective as of February
27, 2000, as follow:

         1. Amend Section 6.1 by adding the following sentence as the last
sentence of Section 6.1:

         Notwithstanding the preceding provisions of this Section 6.1, in the
         event that D. Paul Jones, Jr. shall retire from service at the Company
         on or after the date on which he attains sixty (60) years of age, then
         the amount of benefit determined above in (A) of this Section 6.1 shall
         be computed without applying any reduction to the normal retirement
         benefit that would otherwise be applicable when calculating benefits
         under the Retirement Plan for a participant who elects to retire on an
         early retirement date.

         2. All of the other terms and provisions of the Plan shall remain in
full force and effect.

IN WITNESS WHEREOF, Compass Bancshares, Inc. has caused this Amendment Number
One to the Plan to be executed in its corporate name by its CHIEF FINANCIAL
OFFICER- on this the 26 th day of APRIL, 2000.

                                  COMPASS BANCSHARES, INC.

                                  By: ________________________________
                                  Its:  Chief Financial Officer
                                      --------------------------------<PAGE>   1
                                                                 Exhibit 10.1.39

                              SETTLEMENT AGREEMENT
                              --------------------

                               ------------------

                                January 18, 2000

                               ------------------

NEOPROBE CORPORATION, a Delaware corporation ("Neoprobe");

THE ARIES MASTER FUND, a Cayman Island exempted Company ("Master Fund");

THE ARIES DOMESTIC FUND, L.P., a New York Limited Partnership ("Domestic Fund");

PARAMOUNT CAPITAL, INC., a Delaware corporation ("Capital"); and

PARAMOUNT CAPITAL ASSET MANAGEMENT, INC., a Delaware corporation ("Adviser");

hereby agree as follows:

                                    PREAMBLE:

         1. Master Fund and Domestic Fund (who may be referred to as the
"Investors" herein) purchased Preferred Shares (as such term is defined in
Section 7.1 below)] and Class L Warrants from Neoprobe under the Purchase
Agreement.

         2. At the time of the purchase by the Investors, Neoprobe entered into
the Financial Advisory Agreement with Capital and issued a Unit Purchase Option
to it (the "Unit Purchase Option"), and certain directors and officers of
Neoprobe executed and delivered lock-up agreements to Neoprobe and Adviser (the
"Lock-up Agreements").

         3. Disagreements have arisen between Neoprobe, on one hand, and the
Investors, Capital and Adviser, on the other hand, as to the interpretation of
the terms of the Purchase Agreement and the certificate of designations that
sets forth the terms of the Preferred Shares and the feasability of compliance
therewith.

         4. The parties hereto believe that it is in their respective best
interests to restructure the investment of the Investors and their continuing
relationship.

         5. Neoprobe, Master Fund, Domestic Fund, Capital and Adviser entered
into a letter agreement dated November 12, 1999 setting forth the basic terms of
this Agreement.

                                     TERMS:

Article 1. Transaction.

         Section 1.1. Basic Transaction. On the terms, and subject to the
conditions set forth in this Agreement, the parties will complete the following
transactions at the Closing:

         (a) Neoprobe will pay $1,750,000 to Master Fund and $750,000 to
Domestic Fund by wire transfer of immediately available funds to bank accounts
designated by the payees at least 2 days before the Closing Date.

         (b) Neoprobe will issue 2,100,000 shares of Common Stock to Master Fund
and 900,000 shares to Domestic Fund. The certificates representing such shares
will bear the following legend in larger or other contrasting type or color:
<PAGE>   2
These shares of Common Stock have not been registered under the Securities Act
of 1933, are restricted securities (as defined in Rule 144 under the Securities
Act of 1933) and may not be offered for sale, sold or otherwise transferred
except pursuant to registration under the Securities Act of 1933 or an exemption
from the registration requirements of the Securities Act of 1933. These shares
of Common Stock may not be offered for sale, sold or otherwise transferred
pursuant to an exemption from the registration requirements of the Securities
Act of 1933 until the Company has received an opinion of counsel, in form and
substance satisfactory to the Company, to the effect that such offer, sale or
other transfer is exempt.

         (c) Neoprobe will issue a Class N Warrant to purchase 2,100,000 shares
of Common Stock to Master Fund and a Class N Warrant to purchase 900,000 shares
of Common Stock to Domestic Fund. The per share exercise price of the Class N
Warrants shall be equal to the average of the closing price of the Common Stock
on the OTC Bulletin Board service operated by The Nasdaq Stock Market on each of
the five trading days immediately preceding the Closing Date.

         (d) The Investors will deliver all of the certificates representing the
Preferred Shares and the Class L Warrants to Neoprobe.

         (e) Capital will deliver the Unit Purchase Option to Neoprobe.

         (f) Adviser will deliver the Lock-up Agreements to Neoprobe.

         (g) Neoprobe will execute and deliver to each of the Investors, Capital
and Adviser, a general release in the form of Exhibit B hereto.

         (h) Each of the Investors, Capital and Adviser will execute and deliver
to Neoprobe a general release in the form of Exhibit C hereto.

         Section 1.2. The Closing. The Closing shall take place at 10:00 a.m.,
Eastern Standard Time, at the offices of Benesch, Friedlander, Coplan & Aronoff,
88 East Broad Street, Columbus, Ohio, on the Closing Date and all of the events
and transactions which occur thereat shall be deemed to be simultaneous.

         Section 1.3. Certificate. Upon receipt of the Preferred Shares at the
Closing they shall be cancelled and retired and Neoprobe shall file a
certificate with the Delaware Secretary of State under paragraph (g) of Section
152 of the Delaware General Corporation Law to the effect that no Preferred
Shares are outstanding and none will be issued.

         Section 1.4. Effect of Closing. Upon due completion of the Closing, the
Purchase Agreement, the Financial Advisory Agreement, the Lock-up Agreements,
the Class L Warrants and the Unit Purchase Option shall be terminated and all of
the rights and obligations of the parties thereto shall be discharged.

Article 2. Representations and Warranties Concerning the Company. Neoprobe
hereby represents and warrants to the Investors that:

         Section 2.1. Organization. Neoprobe is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Neoprobe has all requisite corporate power and authority to conduct its business
as it is now being conducted or is proposed to be conducted and to own or lease
the properties and assets that it now owns or leases.

         Section 2.2 Valid Issuance, Etc. The Common Shares to be issued on the
Closing Date have been duly authorized and, when issued in accordance with this
Agreement, will be validly issued, fully paid and nonassessable and will be free
and clear of all liens imposed by or through the Company. The Class N Warrants
to be issued on the Closing Date have been duly authorized and, when issued in
accordance with this Agreement upon such Closing Date, will be validly issued
and free and clear of all liens imposed by or through the Company. The Common
Stock issuable upon the exercise of the Class N Warrants have been and will, at
all times until their issuance, be duly authorized and reserved, and upon the
exercise of the Class N Warrants in accordance with the terms and conditions
thereof and this Agreement, will be validly issued, fully paid and nonassessable
and will be free and clear of all liens
<PAGE>   3
imposed by or through the Company. The issuance of the Common Shares, the Class
N Warrants, and the Common Shares issuable upon the exercise of the Class N
Warrants will not be subject to any preemptive right of stockholders of the
Company or to any right of first refusal or other right in favor of any Person.

         Section 2.3. Authorization. Neoprobe has the full corporate power and
authority to execute, deliver and enter into this Agreement, the Class N
Warrants and the general releases and to perform its obligations hereunder and
thereunder, and the execution, delivery and performance of each of these
instruments and all other transactions contemplated by each of them have been
duly authorized by Neoprobe. Each of the Agreement, the Class N Warrants and the
general releases constitutes a legal, valid and binding obligation of Neoprobe,
enforceable in accordance with its terms.

         Section 2.4. No Conflict The execution and delivery by Neoprobe of the
Agreement, the Class N Warrants and the general releases, the offering and
issuance of the Common Shares and the Warrants, and the performance and
fulfillment of Neoprobe of its obligations thereunder, do not and will not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, or event which, with notice or lapse of time or
both, would constitute a breach of or default under, (iii) result in the
creation of any lien, security interest, adverse claim, charge or encumbrance
upon the capital stock or assets of Neoprobe pursuant to, (iv) give any third
party the right to accelerate any obligation under or terminate, (v) result in a
violation of, (vi) result in the loss of any license, certificate, legal
privilege or legal right enjoyed or possessed by Neoprobe under, or (vii)
require any authorization, consent, approval, exemption or other action by or
notice to any court or administrative or governmental body pursuant to or
require the consent of any other Person under, the Certificate of Incorporation
or By-Laws of Neoprobe or any law, statute, rule or regulation to which Neoprobe
is subject or by which any of its properties are bound, or any material
agreement, instrument, order, judgment or decree to which Neoprobe is subject or
by which its properties are bound.

         Section 2.5. SEC Documents. Neoprobe has made available to the
Investors a true and complete copy of each report, schedule, registration
statement and definitive proxy statement filed by Neoprobe with the SEC since
January 1, 1995 (as such documents have since the time of their filing been
amended, the "SEC Documents") which are all the documents (other than
preliminary material) that Neoprobe was required to file with the SEC since such
date. As of their respective dates, the SEC Documents complied in all respects
with the requirements of the Securities Act or the Securities Exchange Act as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such SEC Documents and none of the SEC Documents contained any untrue
statement of a material fact or omitted to statement of material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of Neoprobe included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Form 10-Q
of the SEC) and fairly present the financial position of Neoprobe as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended.

         Section 2.6. Compliance with Securities Laws. Assuming the accuracy and
truth of each of representations set forth in Article 3 below, the shares of
Common Stock and the Class N Warrants were offered and will be sold and issued,
in compliance with all applicable federal and state securities laws.

Article 3. Representations and Warranties of the Investors, Capital and Adviser.

         Section 3.1. Investors. Each of the Investors severally, and on its own
behalf represents and warrants to Neoprobe as follows:

         (a) Such Investor is an "accredited investor" within the meaning of
Regulation D under the Securities Act.

         (b) Such Investor has experience in making investments in development
stage biotechnology companies and is acquiring the Common Shares and the
Warrants for its own account and not with a present view to, or for sale in
connection with, any distribution thereof in violation of the registration
<PAGE>   4
requirements of the Securities Act.

         (c) Such Investor understands that the shares of Common Stock and the
Class N Warrants are not, and any shares of Common Stock acquired on exercise
thereof at the time of issuance may not, be registered under the Securities Act
on the ground that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and that Neoprobe's reliance on such exemption
is predicated on such Investor's representations set forth herein.

         (d) Such Investor has consented to the placing of a legend on the
certificates representing its respective Common Shares and Warrants to the
effect that the shares of Common Stock issuable hereunder or upon the exercise,
as the case may be, of the Warrants have not been registered under the
Securities Act and may not be transferred except in accordance with applicable
securities laws or an exemption therefrom.

         (e) Such Investor has had an opportunity to ask questions and receive
answers from Neoprobe regarding the terms and conditions of the offering of the
Common Stock and Class N Warrants and the business, properties, prospects, and
financial condition of Neoprobe and to obtain additional information (to the
extent Neoprobe possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to it or to which it had access. The foregoing, however,
does not limit or modify the representations and warranties of Neoprobe in
Article 2 of this Agreement or the right of such Investor to rely thereon.

         (h) Such Investor has the power and authority to execute and deliver
this Agreement and to perform its obligations hereunder, having obtained all
required consents, if any, and this Agreement constitutes and the general
releases, when executed and delivered, will constitute the legal valid and
binding obligations of such Investor.

         Section 3.2. Capital. Capital represents and warrants to Neoprobe that
it has the corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder, having obtained all required consents,
if any, and this Agreement constitutes and the general releases, when executed
and delivered, will constitute its legal valid and binding obligations.

         Section 3.3. Adviser. Adviser represents and warrants to Neoprobe that
it has the corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder, having obtained all required consents,
if any, and this Agreement constitutes and the general releases, when executed
and delivered, will constitute its legal valid and binding obligations.

Article 4. Conditions Precedent.

         Section 4.1. Conditions Precedent to Obligations of the Investors,
Capital and Adviser. The obligations of the Investors, Capital and Adviser to
attend the Closing and enter into the transactions and make the deliveries set
forth in Section 1.1 above are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions:

         (a) Accuracy of Representations and Warranties. The representations and
warranties of Neoprobe contained in this Agreement shall be true on and as of
the Closing Date with the same effect as if they were made on and as of the
Closing Date, except as affected by transactions contemplated hereby and except
that any such representation and warranty made as of a specified date other than
the date of this Agreement shall have been true as of such date.

         (b) Performance of Agreements. Neoprobe shall have performed all
obligations and agreements and complied with all covenants contained in this
Agreement which are to be performed and complied with by it on or before the
Closing Date.

         (c) Litigation. No litigation shall be pending or overtly threatened
seeking an order of any court against the transactions contemplated by this
Agreement. No order of any court against the transactions contemplated by this
Agreement shall exist.
<PAGE>   5
         Section 4.2. Conditions Precedent to the Closing Obligations of
Neoprobe. The obligations of Neoprobe to attend the Closing and enter into the
transactions and make the deliveries set forth in Section 1.1 above are subject
to the satisfaction, on or before the Closing Date, of each of the following
conditions:

         (a) Accuracy of Representations and Warranties. The representations and
warranties of the Investors, Capital and Adviser contained in this Agreement
shall be true on the Closing Date with the same effect as if they were made on
the Closing Date, except as affected by transactions contemplated hereby and
except that any such representation and warranty made as of a specified date
other than the date of this Agreement shall have been true on and as of such
date.

         (b) Performance of Agreements. The Investors, Capital and Adviser shall
have performed all obligations and agreements and complied with all covenants
contained in this Agreement or in any document delivered in connection herewith
to be performed and complied with by it on or before the Closing Date.

         (c) Litigation. No litigation shall be pending or overtly threatened
seeking an order of any court against the transactions contemplated by this
Agreement. No order of any court against the transactions contemplated by this
Agreement shall exist.

Article 5. Covenants.

         Section 5.1. Public Announcements. Neoprobe and Capital will consult
with each other before issuing any press release or otherwise making a public
statement or announcement concerning the transactions contemplated by this
Agreement and Neoprobe shall not use the names of the Investors, Capital or
Advisers without the prior written consent of each.

         Section 5.2. Further Assurances. On and after the Closing Date, the
parties hereto shall execute and deliver all such further assignments,
endorsements, and other documents as any of them may reasonably request in order
to consummate the transactions contemplated by this Agreement.

         Section 5.3 Transactions in Common Stock. From the date hereof until
the Closing Date and the completion of the Closing, no party hereto may purchase
or sell any shares of Common Stock or submit any bids to purchase or ask prices
to sell shares of Common Stock. Investors, Capital and Adviser will not,
directly or indirectly, purchase any shares of Common Stock until 180 days after
the Closing Date.

         Section 5.4 Status Quo. From the date hereof until the Closing Date and
the completion of the Closing, the parties hereto shall maintain the status quo
among them and shall not take any action to disturb it, including, but not
limited to, commencing any legal actions concerning matters which will be
released pursuant to this Agreement, converting any Preferred Shares, exercising
any Class L Warrants or giving any notices under the Purchase Agreement or the
certificate of designations that sets forth the terms of the Preferred Shares.

         Section 5.5 Voting Agreement. The Investors will, in person or by
proxy, vote all of their shares of Common Stock, whether such shares are now
owned or hereafter acquired, in accordance with the recommendations of the
management of Neoprobe on any and all issues submitted to a vote of the
stockholders of Neoprobe for a period of two (2) years after the Closing Date.
The Investors will be present, in person or by proxy, at every meeting of the
stockholders of the Company held during the two (2) year period following the
Closing Date. The Investors will execute and deliver to the designee of the
board of directors of Neoprobe any proxies requested by Neoprobe in order to
effectively carry out the provisions of this Section 5.6. If the investors
transfer any shares of Common Stock issued hereunder or upon the exercise of the
Class N Warrants to any Affiliate of Capital or Advisors at any time during the
two (2) year period after the Closing Date, Capital and Advisors shall cause
such Affiliates to comply with the provisions of this Section 5.6 to the same
extent that the Investors would be required to, if they then held such shares.

Article 6. Registration of Common Stock.
<PAGE>   6
         Section 6.1. Registration. (a) Not more than 45 days after the Closing
Date, Neoprobe will file with the SEC a shelf registration statement (the "Shelf
Registration Statement") with respect to the resale of the Common Stock
beneficially owned by the Investors following the Closing. Not later than 45
days following the exercise of the Class N Warrants, Neoprobe will amend the
Shelf Registration Statement to include the shares of Common Stock issued to the
Investors as a consequence of such exercise. Neoprobe will use its best efforts
to effect the registration of such securities (including, without limitation,
the execution of any required undertaking to file post-effective amendments,
appropriate qualifications under applicable blue sky or other state securities
laws and appropriate compliance with applicable securities laws, requirements or
regulations) as may be reasonably requested and as would permit or facilitate
the sale and distribution of all of the Common Stock entitled to be registered
under this Article 6 ("Registrable Securities") until the distribution thereof
is complete.

         (b) Neoprobe shall not be obligated to maintain the effectiveness of
the Shelf Registration Statement (and any related qualifications and compliance)
after the earlier of (i) the third anniversary of the Closing Date or (ii) at
such time as Neoprobe shall deliver an opinion of counsel reasonably
satisfactory to the holders of Registrable Securities (such holders, including,
without limitation, the holders of the Class N Warrants, are referred to as the
"Holders') in form and substance reasonably satisfactory to each Holder that (A)
such Holders may sell in a single transaction all Registrable Securities then
held by such Holder under an applicable exemption from the registration
requirements of the Securities Act and all other applicable securities laws and
(B) all transfer restrictions and restrictive legends with respect to such
Registrable Securities may be removed upon the consummation of such sale.

         Section 6.2. Registration Procedures. In connection with the
registration of any Registrable Securities under the Securities Act as provided
in this Article 6, Neoprobe will use its reasonable best commercial efforts, to:

         (a) Prepare and file with the SEC the Shelf Registration Statement with
respect to such Registrable Securities and cause such Shelf Registration
Statement to become effective as expeditiously as possible but in any event by
the Targeted Effective Date (as such term is defined in Section 6.5(b));

         (b) Prepare and file with the SEC such amendments and supplements to
such Shelf Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Shelf Registration Statement
effective until the disposition of all securities in accordance with the
intended methods of disposition by the seller thereof set forth in such Shelf
Registration Statement shall be completed, and to comply with the provisions of
the Securities Act (to the extent applicable to Neoprobe) with respect to such
dispositions;

         (c) Furnish to each seller of such Registrable Securities such number
of copies of such Shelf Registration Statement and of each such amendment and
supplement thereto (in each case including all exhibits), such number of copies
of the prospectus included in such Shelf Registration Statement (including each
preliminary prospectus), in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably request, in order
to facilitate the disposition of the Registrable Securities owned by such
seller;

         (d) Register or qualify such Registrable Securities covered by such
Shelf Registration Statement under such other securities or blue sky laws of
such jurisdictions as any seller reasonably requests, and do any and all other
acts and things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller, except that Neoprobe will not for any such
purpose be required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it would not, but for the requirements of this
Section 6.2(d) be obligated to be qualified, to subject itself to taxation in
any such jurisdiction, or to consent to general service of process in any such
jurisdiction;

         (e) Provide a transfer agent and registrar for all such Registrable
Securities covered by such Shelf Registration Statement not later than the
effective date of such Shelf Registration Statement;

         (f) Notify each seller of such Registrable Securities at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such Shelf Registration Statement contains an untrue statement of a
<PAGE>   7
material fact or omits any fact necessary to make the statements therein not
misleading, and, at the request of any such seller, Neoprobe will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading;

         (g) Cause all such Registrable Securities to be listed on each
securities exchange or automated over-the-counter trading system on which
similar securities issued by Neoprobe are then listed;

         (h) Enter into such customary agreements (including, in the event that
the Investors elect to engage an underwriter in connection with the Shelf
Registration Statement, an underwriting agreement containing customary terms and
conditions) and take all such other actions as reasonably required in order to
expedite or facilitate the disposition of such Registrable Securities; and

         (i) Make available for inspection by any seller of Registrable
Securities, all financial and other records, pertinent corporation documents and
properties of Neoprobe, and cause Neoprobe's officers, directors and employees
to supply all information reasonably requested by any such seller in connection
with the Shelf Registration Statement pursuant to Section 6.1.

         Section 6.3 Registration and Selling Expenses.

         (a) All expenses incurred by Neoprobe in connection with Neoprobe's
performance of or compliance with this Article 6, including, without limitation
(i) all registration and filing fees (including all expenses incident to filing
with the National Association of Securities Dealers, Inc.), (ii) blue sky fees
and expenses, (iii) all necessary printing and duplicating expenses, and (iv)
all fees and disbursements of counsel and accountants retained by Neoprobe
(including the expenses of any audit of financial statements) (all such expenses
being called "Registration Expenses"), will be paid by Neoprobe except as
otherwise expressly provided in this Section 6.3.

         (b) Neoprobe will, in any event, in connection with any registration
statement, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal, accounting
or other duties in connection therewith and expenses of audits of year-end
financial statements), the expense of liability insurance and the expenses and
fees for listing the securities to be registered on one or more securities
exchanges or automated over-the-counter trading systems on which similar
securities issued by Neoprobe are then listed.

         (c) Nothing in this Agreement shall be construed to prevent any Holder
of Registrable Securities from retaining such counsel as they shall choose at
their own expense.

         Section 6.4. Indemnification. (a) Neoprobe shall indemnify, to the
extent permitted by law, each Holder of Registrable Securities, its officers and
directors, if any, and each person, if any, who controls such Holder within the
meaning of the Securities Act, against all losses, claims, damages, liabilities
and expenses (under the Securities Act or common law or otherwise) caused by any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus (and as amended or supplemented if Neoprobe
has furnished any amendments or supplements thereto) or any preliminary
prospectus, which registration statement, prospectus or preliminary prospectus
shall be prepared in connection with the registration contemplated by this
Article 6, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any untrue statement or alleged untrue
statement contained in, or by any omission or alleged omission from information
furnished in writing by such Holder to Neoprobe in connection with the
registration contemplated by this Article 6, provided Neoprobe will not be
liable pursuant to this Section 6.4 if such losses, claims, damages, liabilities
or expenses have been caused by any selling security holder's failure to deliver
a copy of the registration statement or prospectus, or any amendments or
supplements thereto, after Neoprobe has furnished such holder with the number of
copies required by Section 6.2(c).

         (b) In connection with any registration statement in which a Holder of
Registrable Securities is participating, each such Holder shall furnish to
Neoprobe in writing such information as is reasonably
<PAGE>   8
requested by Neoprobe for use in any such registration statement or prospectus
and shall severally, but not jointly, indemnify, to the extent permitted by law,
Neoprobe, its directors and officers and each person, if any, who controls
Neoprobe within the meaning of the Securities Act, against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, but only to the extent such losses, claims,
damages, liabilities or expenses are caused by an untrue statement or alleged
untrue statement contained in or by an omission or alleged omission from
information so furnished in writing by such Holder in connection with the
registration contemplated by this Article 6. If the offering pursuant to any
such registration is made through underwriters, each such Holder agrees to enter
into an underwriting agreement in customary form with such underwriters and to
indemnify such underwriters, their officers and directors, if any, and each
person who controls such underwriters within the meaning of the Securities Act
to the same extent as hereinabove provided with respect to indemnification by
such Holder of Neoprobe.

         (c) Promptly after receipt by an indemnified party under Section 6.4
(a) or (b) of notice of the commencement of any action or proceeding, such
indemnified party will, if a claim in respect thereof is made against the
indemnifying party under such Section, notify the indemnifying party in writing
of the commencement thereof; but the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party otherwise than under such Section. In case any such action or
proceeding is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and, to the extent that it wishes, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel approved by such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under such Section for any legal or any other expenses subsequently
incurred by such indemnified party in connection with the defense thereof (other
than reasonable costs of investigation) unless incurred at the written request
of the indemnifying party. Notwithstanding the above, the indemnified party will
have the right to employ counsel of its own choice in any such action or
proceeding if the indemnified party has reasonably concluded that there may be
defenses available to it which are different from or additional to those of the
indemnifying party, or counsel to the indemnified party is of the opinion that
it would not be desirable for the same counsel to represent both the
indemnifying party and the indemnified party because such representation might
result in a conflict of interest (in either of which cases the indemnifying
party will not have the right to assume the defense of any such action or
proceeding on behalf of the indemnified party or parties and such legal and
other expenses will be borne by the indemnifying party). An indemnifying party
will not be liable to any indemnified party for any settlement of any such
action or proceeding effected without the consent of such indemnifying party.

         (d) If the indemnification provided for in Section 6.4(a) or (b) is
unavailable under applicable law to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of Neoprobe on the one hand and of the
Holders on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, or liabilities, as well as any other
relevant equitable considerations. The relative fault of Neoprobe on the one
hand and of the Holders on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by
Neoprobe or by the Holders and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims, damages
and liabilities referred to above shall be deemed to include, subject to the
limitations set forth in Section 6.4(c), any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.

                  (1) Arbitration
<PAGE>   9
                           a. Any and all claims, disputes or controversies
("Disputes") arising under, out of, in connection with or in relation to the
assignment of the fault under this section 6.4(d) shall be arbitrated in
accordance wit the terms and conditions of this subsection 6.4(d)(1)

                           b. Notwithstanding the foregoing subsection
6.4(d)(1)(a), either party may apply to a court of competent jurisdiction for a
temporary restraining order, a preliminary injunction, or other equitable relief
to preserve the status quo or prevent irreparable harm.

                           c. As a condition precedent to a party's right to
commence arbitration pursuant to this section 6.4(d), if a party, in its sole
discretion, determines in good faith that a Dispute is unlikely to be resolved
amicably in good faith negotiations between the parties, that party shall send
written notice of the issue(s) in the dispute, clearly marked "Dispute Notice"
to the other party, demanding that the Dispute be settled by binding arbitration
in accordance with this provision. The parties shall have 30 days from the date
of receipt of the Dispute Notice to attempt resolution of the Dispute by
negotiations between their senior officials or representative authorized to bind
such parties.

                           d. If within 30 days of receipt of the Dispute Notice
the Dispute has not been resolved, either party may require the matter to be
settled by final and binding arbitration by sending written notice of such
election to the other party clearly marked "Arbitration Demand."

                           e. The arbitration shall be filed with the office of
the American Arbitration Association ("AAA") located in New York, NY or such
other AAA office as the parties may agree upon (without any obligation to so
agree). The arbitration shall be conducted pursuant to the Commercial
Arbitration Rules of the AAA. Each party shall pay the compensation and all
other costs and expenses ("The Costs") of the arbitrator appointed on its
behalf, and the Costs of additional arbitrator(s) shall be paid in equal shares
by the parties. The administrative fee of the AAA will also be paid in equal
shares by the parties.

                                  A. The arbitrators shall have the sole
authority to decide whether or not any Dispute between the parties is
arbitrable.

                                  B. The decision of the arbitrators, which
shall be in writing and state the findings of facts and conclusions of law upon
which the decision is based, shall be final and binding upon the parties who
shall forthwith comply after receipt thereof.

         (e) Promptly after receipt by Neoprobe or any Holder of Registrable
Securities of notice of the commencement of any action or proceeding, such party
will, if a claim for contribution in respect thereof is to be made against
another party (the "contributing party"), notify the contributing party of the
commencement thereof; but the omission so to notify the contributing party will
not relieve it from any liability which it may have to any other party other
than for contribution under this Agreement. In case any such action, suit, or
proceeding is brought against any party, and such party notifies a contributing
party of the commencement thereof, the contributing party will be entitled to
participate therein with the notifying party and any other contributing party
similarly notified.

         Section 6.5. Additional Common Stock Issuable Upon Delay of
Registration and Other Events.

         (a) Except to the extent any delay is due to the failure of a Holder to
reasonably cooperate in providing to Neoprobe such information as shall be
reasonably requested by Neoprobe for use in the Shelf Registration Statement, if
the Shelf Registration Statement is not filed with the SEC within 45 days
following the Closing Date (the "Outside Target Date"), Neoprobe shall
immediately issue, for no additional consideration, to each Holder additional
shares of Common stock equal to one half percent (0.5%) of the number of shares
of Common Stock that were Registrable Securities held by such Holder on the
Outside Target Date, for each day after the Outside Target Date on which the
offices of the SEC are open for business and the Registration Statement remains
unfiled.

         (b) Except to the extent any delay is due to the failure of a Holder to
reasonably cooperate in providing to Neoprobe such information as shall be
reasonably requested by Neoprobe for use in the Shelf Registration Statement, if
the Shelf Registration Statement is not declared effective by the SEC by the
Targeted Effective Date, Neoprobe shall immediately issue, for no additional
consideration, to each
<PAGE>   10
Holder, additional shares of Common stock equal to one half percent (0.5%) of
the number of shares of Common Stock that were Registrable Securities held by
such Holder on the Targeted Effective Date, for each day after the occurrence of
the Targeted Effective Date on which the offices of the SEC are open for
business and the Shelf Registration Statement is not declared effective by the
SEC. As used herein, "Targeted Effective Date" shall mean the 90th day after the
filing of the Shelf Registration Statement with the SEC, provided that in the
event the SEC does not provide comments to Neoprobe (or declare the Shelf
Registration Statement Effective) within (i) 30 days after the initial filing of
the Shelf Registration Statement or (ii) seven days after the filing of any
pre-effective amendment to the Shelf Registration Statement, so long as Neoprobe
has used reasonable efforts to respond promptly to any comments pending at the
time a pre-effective amendment to the Shelf Registration Statement is filed, the
Targeted Effective Date shall be deferred for a number of days equal to the
number of days by which the SEC's response time exceeded 30 days or seven days,
as applicable. The Targeted Effective Date shall also be deferred during any
time that Neoprobe has filed with the SEC a proxy statement for a sale of
substantially all of its assets or a merger until the completion or abandonment
of the transaction described in such proxy statement.

         (c) All shares of Common Stock issuable pursuant to this Section 6.5
shall be duly authorized, fully paid and non-assessable shares of Common Stock
and shall be included in the Shelf Registration Statement contemplated by
Section 6.1. Such shares shall be registered in Investors' names or the name of
the nominee(s) of Investors in such denominations as Investors shall request
pursuant to instructions delivered to Neoprobe.

         Section 6.6. Regulation M. Any Holder who owns any shares of Common
Stock included in a Shelf Registration Statement under this Article 6, covenants
and agrees with the Company by the inclusion of his shares in the Shelf
Registration Statement that, for so long as any of the Common Stock is salable
thereunder, such Holder shall not purchase any shares of Common Stock in a
transaction that would violate SEC Regulation M.

         Section 6.7. Rule 144. Until all of the Registrable Securities, have
been sold under a registration statement declared effective by the Securities
and Exchange Commission or pursuant to Rule 144 promulgated under the Securities
Act of 1933, the Company shall use its reasonable best efforts to file with the
Securities and Exchange Commission all current reports and the information as
may be necessary to enable the Holders to effect sales of their shares in
reliance upon Rule 144.

Article 7. General.

         Section 7.1. Definitions. Certain words and phrases used in this
Agreement shall have the meanings given to them below in this Section:

         "Class L Warrants" means the Class L Warrants to purchase shares of
Common Stock issued by Neoprobe under the Purchase Agreement.

         "Class N Warrants" means the Class N Warrants to purchase shares of
Common Stock in the form attached as Exhibit A (the "Warrants").

         "Closing" means the meeting of the parties hereto on the Closing Date
for the purposes of consummating the transactions contemplated by this
Agreement.

         "Closing Date" means December [ ], 1999, or such other date as the
parties hereto may mutually agree upon.

         "Common Stock" means the common stock, par value $.001 per share, of
Neoprobe.

         "Generally Accepted Accounting Principles" means generally accepted
accounting principles consistently applied.

         "Person" shall mean any natural person and any corporation,
partnership, joint venture, limited liability company or other legal person, but
shall not include any governmental entity.
<PAGE>   11
         "Preferred Shares" means the shares of 5% Series B Convertible
Preferred Stock, par value $.001 per share, stated value $100 per share, of
Neoprobe

         "Purchase Agreement" means the Preferred Stock and Warrant Purchase
Agreement Dated as of February 16, 1999 among Neoprobe and the Investors.

         "Securities Act" means, as of any given time, the Securities Act of
1933 or any similar federal law then in force.

         "Securities Exchange Act" means, as of any given time, the Securities
Exchange Act of 1934 or any similar federal law then in force.

         "SEC" means the United States Securities and Exchange Commission and
includes any governmental body or agency succeeding to its functions.

         Section 7.2. Survival of Representations, Warranties and Covenants.
Except as otherwise provided for in this Agreement all representations,
warranties, covenants and agreements contained in this Agreement, or in any
document, exhibit, schedule or certificate by any party delivered in connection
herewith shall survive the execution and delivery of this Agreement and the
Closing and the consummation of the transactions contemplated hereby.

         Section 7.3. Expenses. Except as otherwise provided in Section 6.3
above each of the parties to this Agreement shall pay all its own expenses in
connection with this Agreement and the transactions contemplated herein.

         Section 7.4. Entire Agreement. This Agreement, the Class N Warrants and
the general releases executed and delivered pursuant to this Agreement are all
of the agreements among the parties hereto and are a complete and exclusive
statement of the terms of the agreements among them and, such agreements
supersede and discharge all prior written agreements among the parties hereto
and all prior and contemporaneous oral agreements among them. There are no oral
conditions precedent to the effectiveness of this Agreement.

         Section 7.5. Amendments and Waivers. No amendment, modification or
termination of this Agreement shall be binding on any party hereto unless it is
in writing and is signed by the party to be charged. No course of dealing
between or among any persons having any interest in this Agreement will be
deemed effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any person under or by reason of this Agreement. No
waiver of any right or remedy under this Agreement shall be binding on any party
unless it is in writing and is signed by the party to be charged. No such waiver
of any right or remedy under any term of this Agreement shall in any event be
deemed to apply to any subsequent default under the same or any other term
contained herein.

         Section 7.6. Successors and Assigns. The terms of this Agreement shall
be binding upon and inure to the benefit of the parties, their respective heirs,
personal representatives or corporate or partnership successors. Nothing herein
expressed or implied is intended or shall be construed to give any person other
than the parties hereto any rights or remedies under this Agreement.

         Section 7.7. Notices. Any notice, request or other communication
required or permitted to be given under this Agreement shall be in writing and
deemed to have been properly given when delivered in person, or when sent by
telecopy or other electronic means and confirmation of receipt is received or
two (2) days after being sent by certified or registered United States mail,
return receipt requested, postage prepaid, addressed to the party at the address
set forth below and with such copies delivered, transmitted or mailed to such
persons as are specified below. Any party may change his address for notices in
the manner set forth above.

         If to Neoprobe:

                Neoprobe Corporation
                425 Metro Place North, Suite 300
                Dublin, OH 43017-1367
<PAGE>   12
                Attn: David C. Bupp

         With a Copy to:

                Benesch, Friedlander, Coplan & Aronoff LLP
                Suite 900
                88 East Broad Street
                Columbus, OH  43215
                Attention:  Robert S. Schwartz

         If to the Investors:

                The Aries Master Fund
                The Aries Domestic Fund
                in care of Paramount Capital Asset Management, Inc.
                787 Seventh Avenue, 48th Floor
                New York, NY 10019
                Attn: David M. Tanen

                With a Copy to:
                Roberts, Sheridan & Kotel,
                     A Professional Corporation
                Tower Forty-Nine
                12 East 49th Street, 30th Floor
                New York, NY 10017
                Attention: Ira L. Kotel

         If to Adviser:

                Paramount Capital Asset Management, Inc.
                787 Seventh Avenue, 48th Floor
                New York, NY 10019
                Attn: David M. Tanen

                With a Copy to:
                Roberts, Sheridan & Kotel,
                     A Professional Corporation
                Tower Forty-Nine
                12 East 49th Street, 30th Floor
                New York, NY 10017
                Attention: Ira L. Kotel

         If to Capital:

                Paramount Capital, Inc.
                787 Seventh Avenue, 48th Floor
                New York, NY 10019
                Attn: David M. Tanen

                With a Copy to:
                Roberts, Sheridan & Kotel,
                     A Professional Corporation
                Tower Forty-Nine
                12 East 49th Street, 30th Floor
                New York, NY 10017
                Attention: Ira L. Kotel

         Section 7.8. Counterparts. This Agreement may be executed in any number
of counterparts and,
<PAGE>   13
notwithstanding that any of the parties did not execute the same counterpart,
each of such counterparts shall, for all purposes, be deemed an original, and
all such counterparts shall constitute one and the same instrument binding on
all of the parties thereto.

         Section 7.9. Headings. The headings of the Sections are inserted as a
matter of convenience and for reference only and in no way define, limit or
describe the scope of this Agreement or the meaning of any provision hereof.

         Section 7.10. Saturdays, Sundays and Holidays. Where this Agreement
authorizes or requires a payment or performance on a Saturday, Sunday or public
holiday, such payment or performance shall be deemed to be timely if made on the
next succeeding business day.

         Section 7.11. Joint Preparation. This Agreement shall be deemed to have
been prepared jointly by the parties hereto. Any ambiguity herein shall not be
interpreted against any party hereto and shall be interpreted as if each of the
parties hereto had prepared this Agreement.

         Section 7.12. Rules of Construction. In this Agreement, words in the
singular number include the plural, and in the plural include the singular; and
words of the masculine gender include the feminine and the neuter, and words of
the neuter gender may refer to any gender.

         Section 7.13. Severability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal,
invalid or otherwise unenforceable by a court of competent jurisdiction, the
remainder of this Agreement shall not be affected except to the extent necessary
to delete such illegal, invalid or unenforceable provision unless the provision
held invalid shall substantially impair the benefit of the remaining portion of
this Agreement.

         Section 7.14. Governing Law; Consent to Jurisdiction. The validity,
performance, construction and effect of this Agreement shall be governed by
those laws of the State of New York which are applicable to agreements that are
negotiated, executed, delivered and performed solely in the State of New York.
The parties hereto irrevocably consent to the jurisdiction of the courts of the
State of New York and of any federal court located in such State in connection
with any action or proceeding arising out of or relating to this Agreement, any
document or instrument delivered pursuant to, in connection with or
simultaneously with this Agreement, or a breach of this Agreement or any such
document or instrument. In any such action or proceeding, each party hereto
waives personal service of any summons, complaint or other process and agrees
that service thereof may be made in accordance with the notice provisions of
Section 7.7. above. Within 30 days after such service, or such other time as may
be mutually agreed upon in writing by the attorneys for the parties to such
action or proceeding, the party so served shall appear or answer such summons,
complaint or other process.
<PAGE>   14
         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

NEOPROBE CORPORATION

By:/s/ David C. Bupp
   ------------------------------------------
Name:  David C. Bupp
Title:  President and Chief Executive Officer

THE ARIES MASTER FUND,
a Cayman Island exempted Company

By:/s/ Lindsay A. Rosenwald, M.D.
   ------------------------------------------
Name: Lindsay A. Rosenwald, M.D.
Title: Chairman of the General Partner

THE ARIES DOMESTIC FUND, L.P.

By:/s/ Lindsay A. Rosenwald, M.D.
   ------------------------------------------
Name: Lindsay A. Rosenwald, M.D.
Title: Chairman of the General Partner

PARAMOUNT CAPITAL, INC.

By:/s/ Lindsay A. Rosenwald, M.D.
   ------------------------------------------
Name: Lindsay A. Rosenwald, M.D.
Title: Chairman

PARAMOUNT CAPITAL ASSET MANAGEMENT, INC.

By:/s/ Lindsay A. Rosenwald, M.D.
   ------------------------------------------
Name: Lindsay A. Rosenwald, M.D.
Title: Chairman

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