-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FC1YKwEAs98PvhjunNCXogv7WbOdI74S66NOmOf07Wh2B1eWaOXiW6lWHK+yeXGO rBnEgUE7HGwreMirCq1+fg== 0000931763-99-001691.txt : 19990518 0000931763-99-001691.hdr.sgml : 19990518 ACCESSION NUMBER: 0000931763-99-001691 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALABAMA NATIONAL BANCORPORATION CENTRAL INDEX KEY: 0000926966 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 631114426 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25160 FILM NUMBER: 99625867 BUSINESS ADDRESS: STREET 1: 1927 FIRST AVENUE NORTH CITY: BIRMINGHAM STATE: AL ZIP: 35209 BUSINESS PHONE: 2055833600 MAIL ADDRESS: STREET 1: 1927 FIRST AVENUE NORTH STREET 2: 1927 FIRST AVENUE NORTH CITY: BIRMINGHAM STATE: AL ZIP: 35209 10-Q 1 FIRST QUARTER 1999 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-25160 ALABAMA NATIONAL BANCORPORATION ------------------------------- (Exact Name of Registrant as Specified in Its Charter) DELAWARE 63-1114426 -------- ---------- (State of Incorporation) (I.R.S. Employer Identification No.) 1927 FIRST AVENUE NORTH, BIRMINGHAM, ALABAMA 35203-4009 ------------------------------------------------------- (Address of principal executive office) Registrant's telephone number, including area code: (205) 583-3654 ------------- --------------------------------------------------- (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ---- Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class Outstanding at May 10, 1999 ----- --------------------------- Common Stock, $1.00 Par Value 11,052,948 INDEX ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION PAGE - ------------------------------- ---- Item 1. Financial Statements (Unaudited) Consolidated statements of condition March 31, 1999 and December 31, 1998............................. 3 Consolidated statements of income Three month periods ended March 31, 1999 and 1998................ 4 Consolidated statements of other comprehensive income Three month periods ended March 31, 1999 and 1998................ 6 Consolidated statements of cash flows Three month periods ended March 31, 1999 and 1998................ 7 Notes to the unaudited consolidated financial statements March 31, 1999................................................... 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............................................ 10 PART II. OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K................................. 24 SIGNATURES................................................................. 26 FORWARD-LOOKING INFORMATION - --------------------------- Statements contained in this Quarterly Report on Form 10-Q which are not historical facts are forward-looking statements. In addition, Alabama National, through its senior management, from time to time makes forward-looking public statements concerning its expected future operations and performance and other developments. Such forward-looking statements are necessarily estimates reflecting Alabama National's best judgement based upon current information and involve a number of risks and uncertainties, and various factors could cause results to differ materially from those contemplated by such forward-looking statements. Such factors could include those identified from time to time in Alabama National's Securities and Exchange Commission filings and other public announcements. With respect to the adequacy of the allowance for loan losses for Alabama National, these factors include the rate of growth in the economy, especially in the Southeast, the relative strength and weakness in the consumer and commercial credit sectors and in the real estate markets and the performance of the stock and bond markets. 2 Part I - Financial Information - ------------------------------ Item 1 - Financial Statements Alabama National BanCorporation and Subsidiaries Consolidated Statements of Condition ------------------------------------------------
March 31, 1999 (Unaudited) December 31, 1998 -------------- ----------------- (In thousands) Assets Cash and due from banks........................ $ 62,298 $ 70,813 Interest-bearing deposits in other banks....... 1,490 225 Investment securities (estimated market values of $30,275 and $35,214)............... 29,708 34,655 Securities available for sale.................. 285,023 289,558 Trading securities............................. 14,863 5,534 Federal funds sold and securities purchased under resell agreements...................... 68,109 57,076 Loans.......................................... 1,131,128 1,107,472 Unearned income................................ (1,182) (1,398) ---------- ---------- Loans, net of unearned income.................. 1,129,946 1,106,074 Allowance for loan losses...................... (17,167) (16,540) ---------- ---------- Net loans...................................... 1,112,779 1,089,534 Property, equipment and leasehold improvements, net.......................................... 39,535 38,875 Intangible assets.............................. 8,101 8,226 Cash surrender value of life insurance......... 29,839 29,669 Receivable from investment division customers.. 15,429 22,776 Other assets................................... 26,776 25,108 ---------- ---------- Totals......................................... $1,693,950 $1,672,049 ========== ========== Liabilities and Stockholders' Equity Deposits: Noninterest bearing.......................... $ 236,373 $ 232,450 Interest bearing............................. 1,071,010 1,042,725 ---------- ---------- Total deposits................................. 1,307,383 1,275,175 Federal funds purchased and securities sold under repurchase agreements.................. 138,761 162,633 Treasury, tax and loan account................. 1,933 1,506 Short-term borrowings.......................... 31,700 21,700 Accrued expenses and other liabilities......... 47,853 47,714 Long-term debt................................. 32,313 32,328 ---------- ---------- Total liabilities.............................. 1,559,943 1,541,056 Common stock, $1 par, authorized 17,500,000 shares; issued 11,032,042 and 10,971,686 shares at March 31, 1999 and December 31, 1998, respectively........................... 11,032 10,972 Additional paid-in capital..................... 78,870 78,570 Retained earnings.............................. 43,629 40,584 Unearned ESOP shares........................... (75) (75) Accumulated other comprehensive income, net of tax.......................................... 551 942 ---------- ---------- Total stockholders' equity..................... 134,007 130,993 ---------- ---------- Totals......................................... $1,693,950 $1,672,049 ========== ==========
See accompanying notes to unaudited consolidated financial statements 3 Alabama National BanCorporation and Subsidiaries Consolidated Statements of Income (Unaudited) --------------------------------------------- (In thousands, except per share data) For the three months ended March 31, ---------------------- 1999 1998 ------- ------- Interest income: Interest and fees on loans........................... $23,159 $23,361 Interest on securities............................... 4,819 4,172 Interest on deposits in other banks.................. 4 29 Interest on trading securities....................... 85 52 Interest on Federal funds sold and securities purchased under resell agreements.................. 744 1,226 ------- ------- Total interest income.................................. 28,811 27,840 Interest expense Interest on deposits................................. 10,787 11,141 Interest on Federal funds purchased and securities sold under repurchase agreements................... 1,796 1,688 Interest on long and short-term borrowings........... 852 889 ------- ------- Total interest expense................................. 13,435 13,718 ------- ------- Net interest income.................................... 15,376 14,122 Provision for loan losses.............................. 562 345 ------- ------- Net interest income after provision for loan losses.... 14,814 13,777 Noninterest income: Securities gains..................................... 166 28 Gain (loss) on disposition of assets................. (14) 133 Service charges on deposit accounts.................. 1,838 1,714 Investment services.................................. 3,064 3,089 Trust department income.............................. 525 420 Origination and sale of mortgage loans............... 1,238 874 Bank owned life insurance............................ 363 332 Other................................................ 727 619 ------- ------- Total noninterest income............................... 7,907 7,209 4 Alabama National BanCorporation and Subsidiaries Consolidated Statements of Income (Unaudited) (Continued) --------------------------------------------------------- (In thousands, except per share data) For the three months ended March 31, ---------------------- 1999 1998 ------- ------- Noninterest expense: Salaries and employee benefits........................ 9,353 8,572 Occupancy and equipment expenses..................... 1,665 1,680 Other................................................ 4,365 4,144 ------- ------- Total noninterest expense.............................. 15,383 14,396 ------- ------- Income before provision for income taxes............... 7,338 6,590 Provision for income taxes............................. 2,319 2,040 ------- ------- Net income............................................. $ 5,019 $ 4,550 ======= ======= Net income per common share (basic).................... $ .46 $ .43 ======= ======= Weighted average common shares outstanding (basic)..... 11,022 10,611 ======= ======= Net income per common share (diluted).................. $ .45 $ .41 ======= ======= Weighted average common and common equivalent shares outstanding (diluted)................................ 11,188 11,080 ======= ======= See accompanying notes to unaudited consolidated financial statements 5 Alabama National BanCorporation and Subsidiaries Consolidated Statements of Other Comprehensive Income (Unaudited) ----------------------------------------------------------------- (In thousands, except per share data) For the three months ended March 31, ---------------------- 1999 1998 ------- ------- Net income............................................. $5,019 $4,550 Other comprehensive income (loss): Unrealized gains (loss) on securities available for sale............................................... (426) 298 Less: Reclassification adjustment for net gains (losses) included in net income...................... 166 28 ------ ------ Other comprehensive income (loss), before tax.......... (592) 270 Provision for (benefit of) income taxes related to items of other comprehensive income.................. (201) 92 ------ ------ Other comprehensive income (loss), net of tax.......... (391) 178 ------ ------ Comprehensive income................................... $4,628 $4,568 ====== ====== 6 Alabama National BanCorporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) -------------------------------------------------
For the three months ended March 31, ---------------------- 1999 1998 -------- -------- (In thousands) Net cash flows provided by (used by) operating activities.. $ 3,271 $ (536) Cash flows from investing activities: Proceeds from maturities of investment securities.......... 4,925 4,228 Purchases of securities available for sale................. (27,718) (40,220) Proceeds from sale of securities available for sale........ 256 - Proceeds from maturities of securities available for sale.. 31,247 19,458 Net increase in interest bearing deposits in other banks... (1,265) (4,463) Net increase in Federal funds sold and securities purchased under resell agreements.................................. (11,033) (5,956) Net increase in loans...................................... (24,154) (14,544) Purchases of property, equipment and leasehold improvements............................................. (1,371) (1,645) Proceeds from sale of other real estate.................... 193 - -------- -------- Net cash used in investing activities...................... (28,920) (43,142) -------- -------- Cash flows from financing activities: Net increase in deposits................................... 32,208 62,644 Decrease in Federal funds purchased and securities sold under agreements to repurchase........................... (23,872) (18,919) Net increase in short and long-term borrowings and capital leases........................................... 10,412 1,066 Exercise of stock options and conversion of debentures..... 360 266 Dividends on common stock.................................. (1,974) (1,287) -------- -------- Net cash provided by financing activities.................. 17,134 43,770 -------- -------- Increase (decrease) in cash and cash equivalents........... (8,515) 92 Cash and cash equivalents, beginning of period............. 70,813 53,216 -------- -------- Cash and cash equivalents, end of period................... $ 62,298 $ 53,308 ======== ======== Supplemental schedule of noncash investing and financing Acquisition of collateral in satisfaction of loans......... $ 347 $ - ======== ======== Adjustment to market value of securities available for sale, net of deferred income taxes............................. $ (612) $ - ======== ========
See accompanying notes to unaudited consolidated financial statements 7 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1999 NOTE A - BASIS OF PRESENTATION - ------------------------------ The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1999 are not necessarily indicative of the results of the full year or any other interim period. These interim financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in Alabama National's Form 10-K for the year ended December 31, 1998. NOTE B - COMMITMENT AND CONTINGENCIES - ------------------------------------- Alabama National's subsidiary banks make loan commitments and incur contingent liabilities in the normal course of business which are not reflected in the consolidated statements of condition. NOTE C - RECENTLY ISSUED PRONOUNCEMENTS - --------------------------------------- Derivative Investments and Hedging Activities In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, ("Statement 133"), effective for all fiscal quarters of all fiscal years beginning after June 30, 1999. Statement 133 standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, by requiring that an entity recognize those items as assets or liabilities in the statement of financial position and measure them at fair value. If certain conditions are met, an entity may elect to designate a derivative instrument as a hedging instrument. Statement 133 generally provides for matching the timing of gain or loss recognition on the hedging instrument with the recognition of (a) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (b) the earnings effect of the hedged forecasted transaction. Management of Alabama National does not expect the adoption of Statement 133 to have a material impact on its financial statements since it does not invest in derivative instruments. Mortgage-Backed Securities In October 1998, the FASB issued Statement of Financial Accounting Standards No. 134, Accounting for Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise, an amendment of FASB Statement No. 65, ("Statement 134"). Statement 134 amends Statement 65 to require that after the securitization of mortgage loans held for sale, an entity engaged in mortgage banking activities classify the resulting mortgage-backed securities or other retained interests based on its ability and intent to sell or hold those investments. This statement became effective for the first quarter of 1999. Since Alabama National does not securitize mortgage loans, no financial statement impact has resulted from adopting this statement. 8 NOTE D - EARNINGS PER SHARE - --------------------------- The following table reflects the reconciliation of the numerator and denominator of the basic earnings per share computation to the diluted earnings per share computation for the quarters ended March 31, 1999 and 1998.
Per Share Income Shares Amount THREE MONTHS ENDED MARCH 31, 1999 Basic EPS net income................................ $ 5,019 11,022 $ 0.46 Effect of dilutive securities options............... - 166 ======== ------- ------ Diluted EPS......................................... $ 5,019 11,188 $ 0.45 ======= ====== ======== THREE MONTHS ENDED MARCH 31, 1998 Basic EPS net income................................ $ 4,550 10,611 $ 0.43 ======== Effect of dilutive securities options............... - 469 ------- ------ Diluted EPS......................................... $ 4,550 11,080 $ 0.41 ------- ------ --------
NOTE E - SEGMENT REPORTING - -------------------------- Alabama National's reportable segments represent the distinct major product lines it offers and are viewed separately for strategic planning purposes by management. The following table is a reconciliation of the reportable segment revenues, expenses, and profit to Alabama National's consolidated totals (in thousands).
Investment Mortgage Retail and Services Trust Lending Commercial Corporate Elimination Division Division Division Banking Overhead Entries Total ---------- -------- -------- ---------- --------- ----------- ------- Three months ended March 31, 1999: Interest income $ 529 $ 125 $28,436 $(279) $28,811 Interest expense 177 102 13,435 (279) 13,435 ------ ---- ------ ------- ----- ----- ------- Net interest income 352 23 15,001 15,376 Provision for loan losses 562 562 Noninterest income 3,134 $525 1,238 3,010 7,907 Noninterest expense 2,798 261 568 11,217 $ 539 15,383 ------ ---- ------ ------- ----- ----- ------- Net income before tax $ 688 $264 $ 693 $ 6,232 $(539) $ - $ 7,338 ====== ==== ====== ======= ===== ===== ======= Three months ended March 31, 1998: Interest income $ 179 $ 59 $27,688 $ (86) $27,840 Interest expenses 33 53 13,718 (86) 13,718 ------ ---- ------ ------- ----- ----- ------- Net interest income 146 6 13,970 14,122 Provision for loan losses 345 345 Noninterest income 2,855 $420 874 3,060 7,209 Noninterest expense 2,702 305 414 10,704 $ 271 14,396 ------ ---- ------ ------- ----- ----- ------- Net income before tax $ 299 $115 $ 466 $ 5,981 $(271) $ - $ 6,590 ====== ==== ====== ======= ===== ===== =======
Corporate overhead is comprised of compensation and benefits for certain members of management and merger-related costs. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Basis of Presentation - --------------------- The following is a discussion and analysis of the consolidated financial condition of Alabama National and results of operations as of the dates and for the periods indicated. On December 31, 1998, Community Bank of Naples, National Association ("Naples"), a bank headquartered in Naples, Florida, was merged with and into a subsidiary of Alabama National, pursuant to which each share of Naples common stock was converted into 0.53271 shares of Alabama National's common stock for a total of 532,608 shares of Alabama National common stock issued to Naples shareholders. On October 2, 1998, Community Financial Corporation ("CFC"), a one bank holding company headquartered in Mableton, Georgia, was merged with and into Alabama National, pursuant to which each share of CFC common stock was converted into 0.351807 shares of Alabama National's common stock for a total of 1,076,032 shares of Alabama National common stock issued to CFC shareholders. On May 29, 1998, Public Bank Corporation ("PBC"), a one bank holding company headquartered in St. Cloud, Florida, was merged with and into Alabama National, pursuant to which each share of PBC common stock was converted into 0.2353134 shares of Alabama National's common stock for a total of 549,913 shares of Alabama National common stock issued to CFC shareholders. The Naples, CFC, and PBC mergers were accounted for as poolings of interest and accordingly, financial statements for all periods have been restated to reflect the results of operations of the companies on a combined basis from the earliest period presented, except for dividends per share. This information should be read in conjunction with Alabama National's unaudited consolidated financial statements and related notes appearing elsewhere in this report and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing in Alabama National's Annual Report on Form 10-K for the year ended December 31, 1998. Performance Overview - -------------------- Alabama National's net income for the three month period ended March 31, 1999 (the "1999 three months") was $5.02 million compared to $4.55 million for the three months ended March 31, 1998 (the "1998 three months"). Net income per diluted common share for the 1999 three months and the 1998 three months was $.45 and $.41, respectively. The annualized return on average assets for Alabama National was 1.21% for both the 1999 three months and the 1998 three months. The annualized return on average stockholders' equity decreased for the 1999 three months to 15.22%, as compared to 15.51% for the 1998 three months. Book value per share at March 31, 1999 was $12.15, an increase of $.21 from year-end 1998. Tangible book value per share at March 31, 1999 was $11.41, an increase of $.22 from year-end 1998. Alabama National paid an $.18 cash dividend per common share during the 1999 three months, compared to $.15 per common share paid during the 1998 three months. Net Income - ---------- The principal reasons for the increase in net income for the 1999 three months, compared to the 1998 three months, was the growth in net interest income and noninterest income which exceeded the growth in the provision for loan losses and noninterest expense. Net interest income in the 1999 three months totaled $15.4 million compared to $14.1 million in the 1998 three months, an increase of $1.3 million, or 8.9%. Total noninterest income increased by $698,000, or 9.7%, to $7.9 million during the 1999 three months from $7.2 million during the 1998 three months. Total noninterest expense increased to $15.4 million during the 1999 three months from $14.4 million during the 1998 three months, an increase of $1.0 million, or 6.9%. Alabama National's provision for loan losses was $562,000 for the 1999 three months as compared with $345,000 for the 1998 three months. The provision for loan losses was higher in the 1999 three months due to a number of factors, but primarily attributable to the growth in outstanding loans. The largest component of Alabama National's net income is its net interest income, which is the difference between the income earned on interest bearing assets and the interest paid on deposits and borrowings used to support such assets. Alabama National's net interest income totaled $15.4 million during the 1999 three months, an increase of $1.3 million 10 compared to the 1998 three months. Alabama National's net interest income increased primarily as a result of the increase in average loans during the 1999 three months to $1.1 billion from $976.6 million during the 1998 three months, an increase of $128.4 million, or 13.1%. Average earning assets for the 1999 three months increased by approximately $141.4 million as compared to the 1998 three months and exceeded the growth in average interest-bearing liabilities of $87.5 million. The average taxable equivalent rate earned on assets was 7.89% for the 1999 three months compared to 8.42% for the 1998 three months. The average rate paid on interest-bearing liabilities was 4.30% for the 1999 three months compared to 4.72% for the 1998 three months. As a result of compression resulting from a faster reduction in the yield on earning assets compared to the cost of interest-bearing liabilities, the net interest margin for the 1999 three months was 4.17% compared to 4.23% for the 1998 three months. The following table depicts, on a taxable equivalent basis for the 1999 and 1998 three months, certain information related to Alabama National's average balance sheet and its average yields on assets and average costs of liabilities. Such yields or costs are derived by dividing income or expense by the average daily balance of the associated assets or liabilities. 11 AVERAGE BALANCES, INCOME AND EXPENSES AND RATES (Amounts in thousands, except yields and rates)
Three months ended March 31, ------------------------------------------------------------------ 1999 1998 ------------------------------- ------------------------------- Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate ---------- ------- ------ ---------- ------- ------ Assets: Earning assets: Loans(1)(3)......................................... $1,105,021 $23,209 8.52% $ 976,626 $22,399 9.30% Securities: Taxable........................................... 287,648 4,405 6.21 235,767 3,727 6.41 Tax exempt........................................ 33,533 628 7.60 33,917 661 7.90 Cash balances in other banks...................... 184 4 8.82 1,994 29 5.90 Funds sold........................................ 60,927 744 4.95 100,637 1,226 4.94 Trading account securities........................ 6,501 85 5.30 3,452 52 6.11 ---------- ------- ---------- ------- Total earning assets(2)......................... 1,493,814 29,075 7.89 1,352,393 28,094 8.42 ---------- ------- ---------- ------- Cash and due from banks............................... 62,158 46,441 Premises and equipment................................ 39,216 33,262 Other assets.......................................... 106,184 112,388 Allowance for loan losses............................. (16,723) (14,954) ---------- ---------- Total assets.................................... $1,684,649 $1,529,530 ========== ========== Liabilities: Interest-bearing liabilities: Interest-bearing transaction accounts............... $ 181,644 979 2.19 $ 158,255 1,055 2.70 Savings deposits.................................... 312,000 2,538 3.30 312,343 2,911 3.78 Time deposits....................................... 550,980 7,270 5.35 512,301 7,175 5.68 Funds purchased..................................... 156,859 1,796 4.64 138,043 1,688 4.96 Other short-term borrowings......................... 33,158 438 5.36 41,925 654 6.33 Long-term debt...................................... 32,319 414 5.20 16,632 235 5.73 ---------- ------- ---------- ------- Total interest-bearing liabilities.............. 1,266,960 13,435 4.30 1,179,499 13,718 4.72 ---------- ------- ---------- ------- Demand deposits....................................... 213,967 178,181 Accrued interest and other liabilities................ 69,944 52,880 Stockholders' equity.................................. 133,778 118,970 ---------- ---------- Total liabilities and stockholders' equity...... $1,684,649 $1,529,530 ========== ========== Net interest spread................................... 3.59% 3.70% ==== ==== Net interest income/margin on a taxable equivalent basis.................................... 15,640 4.25% 14,376 4.31% ==== ==== Tax equivalent adjustment(2).......................... 264 254 ------- ------- Net interest income/margin............................ $15,376 4.17% $14,122 4.23% ======= ==== ======= ====
- ----------------- (1) Average loans include nonaccrual loans. All loans and deposits are domestic. (2) Tax equivalent adjustments are based upon assumed tax rate of 34%, and do not reflect the disallowance for Federal income tax purposes of interest expense related to certain tax exempt assets. (3) Fees in the amount of $1,107,000 and $1,121,000 are included in interest and fees on loans for the three months ended March 31, 1999 and 1998, respectively. 12 The following table sets forth, on a taxable equivalent basis, the effect which varying levels of earning assets and interest-bearing liabilities and the applicable rates had on changes in net interest income for the 1999 three months compared to the 1998 three months. For the purposes of this table, changes which are not solely attributable to volume or rate are allocated to volume and rate on a pro rata basis. ANALYSIS OF CHANGES IN NET INTEREST INCOME (Amounts in thousands)
March 31, ------------------------------- 1999 Compared to 1998 Variance Due to ------------------------------- Volume Yield/Rate Total ------------------------------- Earning assets: Loans..................................................................... $2,772 $(1,962) $ 810 Securities: Taxable................................................................. 800 (122) 678 Tax exempt.............................................................. (7) (26) (33) Cash balances in other banks.............................................. (34) 9 (25) Funds sold................................................................ (482) - (482) Trading account securities................................................ 41 (8) 33 ------ ------- ------ Total interest income................................................. 3,090 (2,109) 981 Interest-bearing liabilities: Interest-bearing transaction accounts..................................... 145 (221) (76) Savings and money market deposits......................................... (3) (370) (373) Time deposits............................................................. 521 (426) 95 Funds purchased........................................................... 222 (114) 108 Other short-term borrowings............................................... (124) (92) (216) Long-term debt............................................................ 203 (24) 179 ------ ------- ------ Total interest expense................................................ 964 (1,247) (283) ------ ------- ------ Net interest income on a taxable equivalent basis..................... $2,126 $ (862) 1,264 ====== ======= Taxable equivalent adjustment............................................. (10) ------ Net interest income....................................................... $1,254 ======
The provision for loan losses represents a charge to current earnings necessary to maintain the allowance for loan losses at an appropriate level based on management's analysis of the potential risk in the loan portfolio. The amount of the provision is a function of the level of loans outstanding, the level of non-performing loans, historical loan loss experience, the amount of loan losses actually charged against the allowance during a given period and current and anticipated economic conditions. The provision for loan losses was $562,000 for the 1999 three months, compared with $345,000 in the 1998 three months. Despite net loan recoveries of $65,000 during the 1999 three months, a higher loan loss provision in the 1999 three months resulted primarily from loan growth. The allowance for loan losses as a percentage of outstanding loans, net of unearned income, was 1.52% at March 31, 1999, compared to 1.50% at December 31, 1998. 13 Because of the inherent uncertainty of assumptions made during the assessment process, there can be no assurance that loan losses in future periods will not exceed the allowance for loan losses or that additional allocations to the allowance will not be required. See Asset Quality. ------------- Total noninterest income for the 1999 three months was $7.9 million, compared to $7.2 million for the 1998 three months. Noninterest income includes securities gains and losses, service charges on deposits, investment services revenues, trust department revenues, fees relating to the sale and origination of mortgage loans, and earnings on the cash surrender value of bank owned life insurance. All sources of noninterest income increased with the exception of loss on the disposition of assets and investment services revenues, which remained substantially unchanged. Noninterest expense was $15.4 million for the 1999 three months compared to $14.4 million for the 1998 three months. Noninterest expense includes salaries and employee benefits, occupancy and equipment expenses and other expenses. Salaries and employee benefits were $9.4 million for the 1999 three months compared to $8.6 million for the 1998 three months. The increase in salaries and employee benefits is primarily attributable to bonus accruals and additional volume in the mortgage origination division of Alabama National, as much of the compensation in this division is commission-based. Occupancy and equipment expense changed little in the 1999 three months. Other noninterest expense increased to $4.4 million in the 1999 three months, compared with $4.1 million in the 1998 three months. Income tax expense was $2.3 million for the 1999 three months compared to $2.0 million for the 1998 three months, reflecting an increase in taxable income during the 1999 three months. The effective tax rates for the 1999 three months and the 1998 three months were 31.6% and 31.0%, respectively. Earning Assets - -------------- Loans comprised the largest single category of Alabama National's earning assets on March 31, 1999. Loans, net of unearned income, were $1.13 billion or 66.7% of total assets at March 31, 1999, compared to $1.11 billion or 66.2% at December 31, 1998. Loans grew $23.9 million, or 2.2%, during the 1999 three months. The following table details the composition of the loan portfolio by category at the dates indicated: COMPOSITION OF LOAN PORTFOLIO (Amount in thousands, except percentages) March 31, 1999 December 31, 1998 ---------------------- --------------------- Percent Percent Amount of Total Amount of Total ---------- -------- ---------- -------- Commercial, financial and agricultural............. $ 255,237 22.56% $ 257,409 23.24% Real estate: Construction............. 89,539 7.92 74,024 6.68 Mortgage - residential... 310,281 27.43 310,691 28.06 Mortgage - commercial.... 312,007 27.58 291,437 26.32 Mortgage - other......... 2,058 .18 2,215 .20 Consumer................... 75,867 6.71 77,187 6.97 Other...................... 86,139 7.62 94,509 8.53 ---------- ------ ---------- ------ Total gross loans........ 1,131,128 100.00% 1,107,472 100.00% ====== ====== Unearned income............ (1,182) (1,398) ---------- ---------- Total loans, net of unearned income......... 1,129,946 1,106,074 Allowance for loan losses.. (17,167) (16,540) ---------- ---------- Total net loans.......... $1,112,779 $1,089,534 ========== ========== 14 Investment securities decreased $4.9 million in the 1999 three months, substantially all of which is attributable to paydowns of mortgage backed securities. Securities available for sale decreased $4.5 million in the 1999 three months. Purchases of available for sale securities totaled $27.7 million and maturities, calls, and sales of available for sale securities totaled $31.5 million. Write down to estimated market value of available for sale securities totaled $391,000 net of income taxes, during the 1999 three months. Trading account securities, which had a balance of $14.9 million at March 31, 1999, are securities owned by Alabama National prior to sale and delivery to Alabama National's customers. It is the policy of Alabama National to limit positions in such securities to reduce its exposure to market and interest rate changes. Federal funds sold and securities purchased under agreements to resell totaled $68.1 million at March 31, 1999 and $57.1 at December 31, 1998. Deposits and Other Funding Sources - ---------------------------------- Deposits increased $32.2 million from year-end 1998, to $1.3 billion at March 31, 1999. Primarily all of the growth in deposits are related to consumer certificates of deposit. Federal funds purchased and securities sold under agreements to repurchase totaled $138.8 million at March 31, 1999, a decrease of $23.9 million from December 31, 1998. The treasury, tax and loan account increased to $1.9 million at March 31, 1999, compared with $1.5 million at December 31, 1998. Short-term borrowings at March 31, 1999 totaled $31.7 million, including a note payable to an independent bank of $11.5 million and three advances from the Federal Home Loan Bank ("FHLB") totaling $20.2 million. Alabama National's short-term debt at March 31, 1999 and December 31, 1998 is summarized as follows: SHORT-TERM BORROWINGS (Amounts in thousands)
March 31, December 31, 1999 1998 ---- ---- Note payable to independent bank under secured master note agreement; rate varies with LIBOR and was 6,6875% and 6.3191% at March 31, 1999 and December 31, 1998, respectively; collateralized by the Company's stock in subsidiary banks. $11,500 $11,500 FHLB debt due May 24, 1999; rate varies with LIBOR and was 5.04% at March 31, 1999; collateralized by FHLB stock and certain first mortgage loans. 9,200 9,200 FHLB debt due January 31, 1999; collateralized by FHLB stock and certain first mortgage loans. 1,000 FHLB open ended notes payable, rate was 5.30% as determined daily by the FHLB; collateralized by FHLB stock and certain first mortgage loans. 11,000 -------------------------- Total short-term borrowings. $31,700 $21,700 --------------------------
15 Alabama National's long-term debt at March 31, 1999 and December 31, 1998 is summarized as follows:
LONG-TERM BORROWINGS (Amounts in thousands) March 31, December 31, 1999 1998 --------- ------------ FHLB debt due July 11, 2002; interest at fixed rate of 5.78%; convertible at the option of the FHLB on July 12, 1999 to a three month LIBOR advance; collateralized by FHLB stock and certain first mortgage loans. $ 5,000 $ 5,000 FHLB debt due October 21, 2003; interest at fixed rate of 4.30%; convertible at the option of the FHLB on October 21, 2000 to a three month LIBOR advance; collateralized by FHLB stock and certain first mortgage loans. 10,000 10,000 FHLB debt due March 26, 2008; interest at fixed rate of 5.51%; convertible at the option of the FHLB on March 26, 2003 to a three month LIBOR advance; collateralized by FHLB stock and certain first mortgage loans. 5,000 5,000 FHLB debt due July 25, 2001; interest at fixed rate of 6.40%; collateralized by FHLB stock and certain first pledged available for sale securities. 2,000 2,000 FHLB debt due June 18, 2003; interest at fixed rate of 5.40%; convertible at the option of the FHLB on June 18, 2000 to a three month LIBOR advance; collateralized by FHLB stock and certain first mortgage loans. 5,000 5,000 FHLB debt due November 5, 2003; interest at fixed rate of 4.74%; convertible at the option of the FHLB on November 5, 2001 to a three month LIBOR advance; collateralized by FHLB stock and certain first mortgage loans. 5,000 5,000 Capital leases payable 313 328 --------------------- Total long-term borrowings $32,313 $32,328 =====================
Asset Quality - ------------- Nonperforming loans are comprised of loans past due 90 days or more and still accruing interest, loans accounted for on a nonaccrual basis and loans in which the terms have been restructured to provide a reduction or deferral of interest or principal because of a deterioration in the financial position of the borrower. Accrual of interest is discontinued on a 16 loan when management believes, after considering economic and business conditions and collection efforts, that the borrower's financial condition is such that the collection of interest is doubtful. It is Alabama National's policy to place a delinquent loan on nonaccrual status when it becomes 90 days or more past due. When a loan is placed on nonaccrual status, all interest which has been accrued on the loan but remains unpaid is reversed and deducted from earnings as a reduction of reported interest income. No additional interest is accrued on the loan balance until the collection of both principal and interest becomes reasonably certain. When a problem loan is finally resolved, there may ultimately be an actual writedown or charge-off of the principal balance of the loan which could necessitate additional charges to earnings. At March 31, 1999, nonperforming assets totaled $5.2 million, a decrease of $902,000 from December 31, 1998. Nonperforming assets as a percentage of loans plus other real estate were 0.46% at March 31, 1999 compared to 0.55% at December 31,1998. The reduction in the level of nonperforming assets is consistent with the elimination of the sub-prime mortgage lending portfolio and the reduction in the indirect automobile portfolio. The indirect automobile portfolio is reduced due to termination of new originations of these loans and amortization of pre-existing loans in this portfolio. NONPERFORMING ASSETS (Amounts in thousands, except percentages)
March 31, December 31, 1999 1998 --------- ------------ Nonaccrual loans.............................................................................. $ 3,565 $ 4,357 Restructured loans............................................................................ 492 499 Loans past due 90 days or more and still accruing............................................. - - -------- -------- Total nonperforming loans................................................................... 4,057 4,856 Other real estate owned....................................................................... 1,131 1,234 -------- -------- Total nonperforming assets.................................................................. $ 5,188 $ 6,090 ======== ======== Allowance for loan losses to period-end loans................................................. 1.52% 1.50% Allowance for loan losses to period-end nonperforming assets.................................. 330.90 271.59 Net charge-offs (recoveries) to average loans................................................. (0.01) 0.01 Nonperforming assets to period-end loans and other real estate owned.......................... 0.46 0.55 Nonperforming loans to period-end loans....................................................... 0.36 0.44
Net loan recoveries for the 1999 three months totaled $65,000, or .01% (annualized) of average loans for the period. The allowance for loan losses as a percentage of total loans, net of unearned income, was 1.52% at March 31, 1999, 17 compared to 1.50% at December 31, 1998. The following table analyzes activity in the allowance for loan losses for the 1999 three months. ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES For the Three Months Ended March 31, 1999 (Amounts in thousands, except percentages) Allowance for loan losses at beginning of period....................................... $16,540 Charge-offs: Commercial, financial and agricultural.................... 14 Real estate - mortgage.................................... 11 Consumer.................................................. 188 ------- Total charge-offs....................................... 213 ------- Recoveries: Commercial, financial and agricultural.................... 75 Real estate - mortgage.................................... 130 Consumer.................................................. 73 ------- Total recoveries....................................... 278 ------- Net recoveries......................................... (65) Provision for loan losses................................... 562 ------- Allowance for loan losses at period-end............................................... $17,167 ======= The loan portfolio is periodically reviewed to evaluate the outstanding loans and to measure both the performance of the portfolio and the adequacy of the allowance for loan losses. This analysis includes a review of delinquency trends, actual losses and internal credit ratings. Based on this analysis, management considers the allowance for loan losses at March 31, 1999 to be adequate to cover possible loan losses in the portfolio as of that date. However, because of the inherent uncertainty of assumptions made during the evaluation process, there can be no assurance that loan losses in future periods will not exceed the allowance for loan losses or that additional allocations to the allowance will not be required. Interest Rate Sensitivity - ------------------------- Alabama National monitors and manages the pricing and maturity of its assets and liabilities in order to diminish the potential adverse impact that changes in interest rates could have on its net interest income. The principal monitoring technique employed by Alabama National is the measurement of the interest sensitivity "gap," which is the positive or negative dollar difference between assets and liabilities that are subject to interest rate repricing within a given period of time. Interest rate sensitivity can be managed by repricing assets and liabilities, selling securities available for sale, replacing an asset or liability at maturity, or by adjusting the interest rate during the life of an asset or liability. Managing the amount of assets and liabilities repricing in the same time interval helps to hedge the risk and minimize the impact of rising or falling interest rates on net interest income. Alabama National evaluates interest sensitivity risk and then formulates guidelines regarding asset generation and repricing, funding sources and pricing, and off-balance sheet commitments in order to decrease interest sensitivity risk. 18 Alabama National uses computer simulations to measure the net income effect of various interest rate scenarios. The modeling reflects interest rate changes and the related impact on net income over specified periods of time. The following table illustrates Alabama National's interest rate sensitivity at March 31, 1999, assuming relevant assets and liabilities are collected and paid, respectively, based upon historical experience rather than their stated maturities.
INTEREST SENSITIVITY ANALYSIS (Amounts in thousands, except ratios) March 31, 1999 ----------------------------------------------------------------------------------- After One After Three Through Through Within One Three Twelve Within One Greater Than Month Months Months Year One Year Total ---------- -------- ---------- ---------- ------------ ----- Assets: Earnings assets: Loans (1)................................ $454,110 $ 94,154 $203,937 $752,201 $374,180 $1,126,381 Securities (2)........................... 29,338 34,566 91,376 155,280 169,073 324,353 Interest-bearing deposits in other banks............................ 1,490 -- -- 1,490 -- 1,490 Funds sold............................... 68,109 -- -- 68,109 -- 68,109 -------- -------- -------- -------- -------- ---------- Total interest-earning assets....... $553,047 $128,720 $295,313 $977,080 $543,253 $1,520,333 Liabilities: Interest-bearing liabilities: Interest-bearing deposits: Demand deposits.......................... $ -- $ -- $ 190,432 $190,432 $ -- $ 190,432 Savings deposits......................... 322,380 -- -- 322,380 -- 322,380 Time deposits (3)........................ 79,000 101,361 281,775 462,136 96,062 558,198 Funds purchased............................. 138,761 -- -- 138,761 -- 138,761 Short-term borrowings (4)................... 24,433 9,200 -- 33,633 -- 33,633 Long-term debt.............................. 2 4 18 24 32,289 32,313 -------- -------- --------- ---------- -------- ---------- Total interest-bearing liabilities.. $564,576 $110,565 $ 472,225 $1,147,366 $128,351 $1,275,717 -------- -------- --------- ---------- -------- ---------- Period gap.................................. $(11,529) $ 18,155 $(176,912) $ (170,286) $414,902 ======== ======== ========= ========== ======== Cumulative gap.............................. $(11,529) $ 6,626 $(170,286) $ (170,286) $244,616 $ 244,616 ======== ======== ========= ========== ======== ========== Ratio of cumulative gap to total earning assets........................... (0.76)% 0.44% (11.20)% (11.20)% 16.09%
- ------------------- (1) Excludes nonaccural loans of $3,565,000. (2) Excludes investment equity securities of $5,241,000. (3) Excludes matured certificates which have not been redeemed by the customer and on which no interest is accuring. (4) Includes treasury, tax and loan account of $1,933,000. 19 Alabama National generally would benefit from increasing market rates of interest when it has an asset-sensitive gap and generally would benefit from decreasing market rates of interest when it is liability sensitive. Alabama National is liability sensitive through the one year time frame, except for the one through three month period. However, Alabama National's gap analysis is not a precise indicator of its interest sensitivity position. The analysis presents only a static view of the timing of maturities and repricing opportunities, without taking into consideration that changes in interest rates do not affect all assets and liabilities equally. For example, rates paid on a substantial portion of core deposits may change contractually within a relatively short time frame, but those rates are viewed by management as significantly less interest-sensitive than market-based rates, such as those paid on non-core deposits. Accordingly, management believes that a liability-sensitive gap position is not as indicative of Alabama National's true interest sensitivity as it would be for an organization which depends to a greater extent on purchased funds to support earning assets. Net interest income may be affected by other significant factors in a given interest rate environment, including changes in the volume and mix of earning assets and interest-bearing liabilities. Market Risk - ----------- Alabama National's earnings are dependent on its net interest income which is the difference between interest income earned on all earning assets, primarily loans and securities, and interest paid on all interest bearing liabilities, primarily deposits. Market risk is the risk of loss from adverse changes in market prices and rates. Alabama National's market risk arises primarily from inherent interest rate risk in its lending, investing and deposit gathering activities. Alabama National seeks to reduce its exposure to market risk through actively monitoring and managing its interest rate risk. Management relies upon static "gap" analysis to determine the degree of mismatch in the maturity and repricing distribution of interest earning assets and interest bearing liabilities which quantifies, to a large extent, the degree of market risk inherent in Alabama National's balance sheet. Gap analysis is further augmented by simulation analysis to evaluate the impact of varying levels of prevailing interest rates and the sensitivity of specific earning assets and interest bearing liabilities to changes in those prevailing rates. Simulation analysis consists of evaluating the impact on net interest income given changes from 200 basis points below to 200 basis points above the current prevailing rates. Management makes certain assumptions as to the effect varying levels of interest rates have on certain earning assets and interest bearing liabilities, which assumptions consider both historical experience and consensus estimates of outside sources. With respect to the primary earning assets, loans and securities, certain features of individual types of loans and specific securities introduce uncertainty as to their expected performance at varying levels of interest rates. In some cases, imbedded options exist whereby the borrower may elect to repay the obligation at any time. These imbedded prepayment options make anticipating the performance of those instruments difficult given changes in prevailing rates. At March 31, 1999, mortgage backed securities totaling $176.3 million, or 10.4% of total assets and essentially every loan, net of unearned income, (totaling $1.13 billion, or 66.7% of total assets), carry such imbedded options. Management believes that assumptions used in its simulation analysis about the performance of financial instruments with such imbedded options are appropriate. However, the actual performance of these financial instruments may differ from management's estimates due to several factors, including the diversity and financial sophistication of the customer base, the general level of prevailing interest rates and the relationship to their historical levels, and general economic conditions. The difference between those assumptions and actual results, if significant, could cause the actual results to differ from those indicated by the simulation analysis. Deposits totaled $1.31 billion, or 77.2%, of total assets at March 31, 1999. Since deposits are the primary funding source for earning assets, the associated market risk is considered by management in its simulation analysis. Generally, it is anticipated that deposits will be sufficient to support funding requirements. However, the rates paid for deposits at varying levels of prevailing interest rates have a significant impact on net interest income and therefore, must be quantified by Alabama National in its simulation analysis. Specifically, Alabama National's spread, the difference between the rates earned on earning assets and rates paid on interest bearing liabilities, is generally higher when prevailing rates are higher. As prevailing rates reduce, the spread tends to compress, with severe compression at very low prevailing interest rates. This characteristic is called "spread compression" and adversely effects net interest income in the simulation analysis when anticipated prevailing rates are reduced from current rates. Management relies upon historical experience to estimate the degree of spread compression in its simulation analysis. Management believes that such estimates of possible spread compression are reasonable. However, if the degree of spread compression varies from that expected, the actual results could differ from those indicated by the simulation analysis. 20 The following table illustrates the results of simulation analysis used by Alabama National to determine the extent to which market risk would have effected the net interest margin if prevailing interest rates differed from actual rates during the 1999 three months. Because of the inherent use of estimates and assumptions in the simulation model used to derive this information, the actual results for the 1999 three months and the future impact of market risk on Alabama National's net interest margin may differ from that found in the table. MARKET RISK (Amounts in thousands)
Three months ended March 31, 1999 Three months ended March 31, 1998 Change in --------------------------------- --------------------------------- Prevailing Interest Net Interest Change from Net Interest Change from Rates Income Amount Income Amount Income Amount Income Amount - ------------------- ------------- -------------- ------------- ------------- +200 basis points $16,042 4.33% $15,048 6.56% +100 basis points 15,709 2.17 14,585 3.28 0 basis points 15,376 - 14,122 - - -100 basis points 14,835 (3.52) 13,623 (3.53) - -200 basis points 14,293 (7.04) 13,124 (7.07)
Liquidity and Capital Adequacy - ------------------------------ Alabama National's net loan to deposit ratio was 86.4% at March 31, 1999, compared to 86.7% at year end 1998. Alabama National's liquid assets as a percentage of total deposits were 10.1% at March 31, 1999, compared to 10.0% at year-end 1998. At March 31, 1999, Alabama National had unused federal funds lines of approximately $151.1 million, unused lines at the Federal Home Loan Bank of $41.6 million and an unused credit line at an independent bank of $8.5 million. Management analyzes the level of off-balance sheet assets such as unfunded loan commitments and outstanding letters of credit as they relate to the levels of cash, cash equivalents, liquid investments, and available funds lines in an attempt to minimize the possibility that a potential liquidity shortfall will exist. Based on this analysis, management believes that Alabama National has adequate liquidity to meet short-term operating requirements. However, no assurances can be given in this regard. Alabama National's stockholders' equity increased by $3.0 million from December 31, 1998 to $134.0 million at March 31, 1999. This increase was attributable to: Net income...................................... $ 5,019,000 Exercise of options............................. 360,000 Dividends....................................... (1,974,000) Decrease in unrealized gain on securities available for sale, net of deferred taxes..... (391,000) ----------- Net increase.................................... $ 3,014,000 =========== A strong capital position is vital to the continued profitability of Alabama National because it promotes depositor and investor confidence and provides a solid foundation for future growth of the organization. The capital of Alabama National and its subsidiary banks (the "Banks") exceeded all prescribed regulatory capital guidelines at March 31, 1999. Under the capital guidelines of their regulators, Alabama National and the Banks are currently required to maintain a minimum risk- 21 based total capital ratio of 8%, with at least 4% being Tier 1 capital. Tier 1 capital consists of common stockholders' equity, qualifying perpetual preferred stock, and minority interests in equity accounts of consolidated subsidiaries, less goodwill. In addition, Alabama National and the Banks must maintain a minimum Tier 1 leverage ratio (Tier 1 capital to total assets) of at least 3%, but this minimum ratio is increased by 100 to 200 basis points for other than the highest rated institutions. The following table sets forth the risk-based and leverage ratios of Alabama National and each subsidiary bank at March 31, 1999: Tier 1 Risk Total Risk Tier 1 Based Based Leverage ----- ----- -------- Alabama National BanCorporation.......... 9.92% 11.17% 7.52% National Bank of Commerce of Birmingham.. 9.57 10.82 7.52 Alabama Exchange Bank.................... 13.47 14.72 8.34 Bank of Dadeville........................ 12.83 13.84 9.27 Citizens & Peoples Bank, N.A............. 15.49 16.56 10.30 First American Bank...................... 10.51 11.76 8.93 First Citizens Bank, N.A................. 14.80 16.05 8.77 First Gulf Bank.......................... 8.64 9.89 7.15 Public Bank.............................. 14.62 15.87 9.53 Georgia State Bank....................... 11.38 12.63 7.81 Community Bank of Naples, N.A............ 12.56 13.81 7.37 Required minimums........................ 4.00 8.00 4.00 Year 2000 - Technology Considerations Alabama National is aware of the many areas affected by the Year 2000 computer issue as addressed by the Federal Financial Institutions Examination Council ("FFIEC") in its interagency statement which provided an outline for institutions to effectively manage the Year 2000 challenges. The board of directors has approved a Year 2000 plan, which includes multiple phases, tasks to be completed, and target dates for completion. Issues addressed therein include awareness, assessment, validation, implementation, testing and contingency planning. Progress under this plan is reported to the board of directors on a regular basis. Alabama National's core bank operating software has been certified by the vendor to be Year 2000 compliant. To verify this compliance, the Company loaded the software along with general ledger data onto a separate test system. Dates on the test system were advanced into 2000, and results from this test have been validated by Alabama National personnel. Alabama National's testing and validation of results indicate that the core bank operating software is 100% Year 2000 compliant and Alabama National's mission critical systems are more than 99% compliant. The Company also has a number of non-mission critical systems, and any Year 2000 compliance testing that Alabama National itself can perform on these systems is complete. There are also systems provided by third party vendors for which Alabama National is reliant upon the vendors to provide testing data to validate. All such outside vendors indicate that they will provide all remaining test data to Alabama National prior to June 30, 1999. At the present time, Alabama National is over 98% compliant on its non-mission critical systems and plans to have validated compliance on the remaining systems by June 30, 1999. In addition to the systems outlined above, Alabama National is tracking the Year 2000 readiness of its utility companies and is finalizing contingency plans for these services to critical operations. Since it routinely upgrades and purchases technologically advanced software and hardware, Alabama National has determined that the costs of making modifications to correct any Year 2000 issues will not materially affect reported operating results. Alabama National estimates that its remaining capital expenditures to prepare for Year 2000 and correct for any Year 2000 issues should not exceed $100,000, and its remaining operating expenditures (including personnel expenses for Company employees) should not exceed $100,000. 22 Alabama National also recognizes the importance of determining that its borrowers are addressing the Year 2000 problem to avoid deterioration of the loan portfolio solely due to this issue. All material relationships have been identified to assess the inherent risks and Year 2000 questionnaires have been obtained from such borrowers where considered appropriate. Deposit customers have received statement stuffers and informational material in this regard. Alabama National is working on a one-on-one basis with any borrower that has been identified as having high Year 2000 risk exposure. Management does not believe that Alabama National will incur significant additional costs associated with the Year 2000 issue. However, management cannot predict the amount of financial difficulties it may incur due to customer and vendor inability to perform according to their agreements with Alabama National or the effects that other third parties may bring as a result of this issue. Alabama National also anticipates that deposit customers may perceive a need for increased cash in the latter part of 1999 and management has made liquidity contingency plans to address this potential additional need for currency. Management has held discussions with the Federal Reserve and the Federal Home Loan Bank with regard to such potential increased currency and funding needs. Although the Federal Reserve has announced plans to increase the amount of currency in circulation in preparing for Year 2000, a lack of liquidity in the financial system could have a significant negative impact on Alabama National. Accordingly, there can be no assurance that the failure or delay of others to address the issue or that the costs involved in such process will not have a material adverse impact on Alabama National's business, financial condition and results of operations. Alabama National's contingency plans are being tested and may be modified as testing progresses. The Securities and Exchange Commission has asked reporting companies to address a reasonable "worst case" scenario with respect to the Year 2000 issue. Management's estimate of the "worst case" scenario is a loss of electrical power and telecommunications service. Alabama National is preparing to have a backup electrical power generator to run its mainframe computer system in case of difficulties with its electricity vendor, but is unable to ascertain how such a loss of electrical power would impact its operations and those of its customers if such power loss was sustained for a material length of time. 23 Part II Other Information Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 3.1 - Certificate of Incorporation (filed as an Exhibit to Alabama National's Registration Statement on Form S-1 (Commission File no. 33-83800) and incorporated herein by reference). Exhibit 3.1A - Certificate of Amendment of Certificate of Incorporation (filed as an Exhibit to Alabama National's Annual Report of Form 10-K for the year ended December 31, 1996 and incorporated herein by reference). Exhibit 3.1B - Certificate of Merger (filed as an Exhibit to Alabama National's Annual Report of Form 10-K for the year ended December 31, 1997 and incorporated herein by reference). Exhibit 3.1C - Certificate of Amendment of Certificate of Incorporation dated April 23, 1998 (filed as an Exhibit to Alabama National's Report of Form 10-Q for the quarter ended March 31, 1998 and incorporated herein by reference). Exhibit 3.2 - Bylaws (filed as an Exhibit to Alabama National's Registration Statement on Form S-1 (Commission File No. 33-83800) and incorporated herein by reference). Exhibit 10.1. - Promissory Note dated April 15, 1999 executed by John R. Bragg in favor of Alabama National BanCorporation in the principal amount of $107,871.00. Exhibit 10.2. - Promissory Note dated April 15, 1999 executed by John R. Bragg in favor of Alabama National BanCorporation in the principal amount of $19,800.00. Exhibit 10.3. - Pledge Agreement dated April 15, 1999 between John R. Bragg and Alabama National BanCorporation. Exhibit 10.4. - Promissory Note dated April 15, 1999 executed by John H. Holcomb, III in favor of Alabama National BanCorporation in the principal amount of $93,747.00. Exhibit 10.5. - Promissory Note dated April 15, 1999 executed by John H. Holcomb, III in favor of Alabama National BanCorporation in the principal amount of $83,400.00. Exhibit 10.6. - Pledge Agreement dated April 15, 1999 between John H. Holcomb III and Alabama National BanCorporation. Exhibit 10.7. - Promissory Note dated April 15, 1999 executed by William E. Matthews, V in favor of Alabama National BanCorporation in the principal amount of $109,570.00. Exhibit 10.8. - Promissory Note dated April 15, 1999 executed by William E. Matthews, V in favor of Alabama National BanCorporation in the principal amount of $28,000.00. Exhibit 10.9. - Pledge Agreement dated April 15, 1999 between William E. Matthews, V and Alabama National BanCorporation. Exhibit 10.10. - Promissory Note dated April 15, 1999 executed by Richard Murray, IV in favor of Alabama National BanCorporation in the principal amount of $111,739.00. 24 Exhibit 10.11. - Promissory Note dated April 15, 1999 executed by Richard Murray, IV in favor of Alabama National BanCorporation in the principal amount of $29,400.00. Exhibit 10.12. - Pledge Agreement dated April 15, 1999 between Richard Murray, IV and Alabama National BanCorporation. Exhibit 10.13. - Promissory Note dated April 15, 1999 executed by Victor E. Nichol, Jr. in favor of Alabama National BanCorporation in the principal amount of $99,558.00. Exhibit 10.14. - Promissory Note dated April 15, 1999 executed by Victor E. Nichol, Jr. in favor of Alabama National BanCorporation in the principal amount of $23,360.00. Exhibit 10.15. - Pledge Agreement dated April 15, 1999 between Victor E. Nichol, Jr. and Alabama National BanCorporation. Exhibit 10.16. - Promissory Note dated April 15, 1999 executed by William G. Sanders, Jr. in favor of Alabama National BanCorporation in the principal amount of $109,833.00. Exhibit 10.17. - Promissory Note dated April 15, 1999 executed by William G. Sanders, Jr. in favor of Alabama National BanCorporation in the principal amount of $16,000.00. Exhibit 10.18. - Pledge Agreement dated April 15, 1999 between William G. Sanders, Jr. and Alabama National BanCorporation. Exhibit 11 - Computation of Earnings Per Share Exhibit 27 - Financial Data Schedules (for SEC use only) (b) Reports on Form 8-K None. 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALABAMA NATIONAL BANCORPORATION Date: May 12, 1999 /s/ John H. Holcomb, III ------------ ------------------------ John H. Holcomb, III, its Chairman and Chief Executive Officer Date: May 12, 1999 /s/ William E. Matthews, V. ------------ -------------------------- William E. Matthews, V., its Executive Vice President and Chief Financial Officer 26 EX-10.1 2 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.1 $107,871.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace JOHN R. BRAGG, (the "Borrower"), promises to pay to the order of ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of One Hundred Seven Thousand Eight Hundred Seventy-One and 00/100 Dollars ($107,871.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full or complete forgiveness, whichever occurs first, at the rate per annum equal to the LIBOR-Based Rate (as defined below) adjusted on each Interest Rate Determination Date (as defined below). If in the Lender's opinion it is impossible or impractical to determine the LIBOR-Based Rate for a certain year, this Note shall bear interest at the Prime Rate until the next Interest Rate Determination Date. Interest payable hereunder shall be payable on each Interest Rate Determination Date, commencing April 15, 2000. Notwithstanding anything to the contrary contained herein, if the Borrower remains continually employed by the Lender or one of its subsidiaries or affiliates (hereinafter referred to as a "Qualifying Employer") as of the first ten (10) anniversaries of this Note, ten percent (10%) of the original principal balance ($10,787.10) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2000. In addition, as long as the Borrower remains continually employed by a Qualifying Employer, upon the occurrence of (x) a Change in Control (as hereinafter defined), (y) the Borrower's death or (z) the Total Disability (as hereinafter defined) of the Borrower, the entire principal balance then remaining unpaid hereunder, shall be immediately forgiven in full. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and -------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Change in Control of the Lender means (i) any transaction, whether ------------------------------- by merger, consolidation, asset sale, tender offer, reverse stock split, or otherwise, which results in the acquisition or beneficial ownership (as such term is defined under rules and regulations promulgated under the Securities Exchange Act of 1934, as amended) by any person or entity or any group of persons or entities acting in concert, of fifty percent (50%) or more of the outstanding shares of Common Stock of the Lender; or (ii) the sale of all or substantially all of the assets of the Lender; or (iii) the liquidation of the Lender. (d) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (e) Default Rate means a rate of interest equal to four percentage ------------ points(400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (f) Event of Default is defined in Section 6. An Event of Default --------------- "exists" if an Event of Default has occurred and is continuing. (g) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (h) LIBOR-Based Rate means a fixed rate of one percent (100 basis ---------------- points) in excess of the per annum rate of interest most recently published in The Wall Street Journal as of the close of business on the date hereof and on and after the most recent Interest Rate Determination Date (being the rate quoted for the immediately preceding business day) as the London Interbank Offered Rate for U.S. dollar deposits having a term of ninety (90) days. The Lender shall determine the LIBOR-Based Rate on the date hereof and on each Interest Rate Determination Date. (i) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (j) Prime Rate means a floating interest rate equal to the rate of ---------- interest designated by the Lender from time to time as its "prime rate." (k) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. (l) Total Disability means the Borrower's inability, as a result of ---------------- illness or injury, to perform the normal duties of the Borrower's employment for a period of ninety (90) consecutive days. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) The amount payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note ------------ shall bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). -2- SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. Notwithstanding anything in this Note or any other Security Document to the contrary, the entire unpaid principal balance of the indebtedness evidenced by this Note shall be immediately due and payable without written notice or demand, upon the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Note shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Holder my exercise its remedies on default against all of the persons comprising the Borrower. SECTION 10 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 11 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 12 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 13 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 14 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. -3- SECTION 15 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 16 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 16 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. SECTION 17 Time of Essence. Time is of the essence of this Note. --------------- SECTION 18 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 18(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 18 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 19 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. -4- SECTION 20 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ John R. Bragg ------------------------------------ Signature of Borrower John R. Bragg ------------------------------------ Please Print Name Send Correspondence and Billings to: John R. Bragg --------------------------------- 3339 E Briarcliff Road --------------------------------- Birmingham, Alabama 35223 --------------------------------- -6- EX-10.2 3 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.2 $19,800.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace, JOHN R. BRAGG (the "Borrower"), promises to pay to the order of Alabama National BanCorporation, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of Nineteen Thousand Eight Hundred and 00/100 Dollars ($19,800.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full, at a fixed interest rate equal to six percent (6.0%) per annum. Principal and interest shall be payable under this Note on April 15, 2000. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and -------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (d) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (e) Event of Default is defined in Section 8. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (f) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (g) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) All amounts payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. All amounts payable by the Borrower to the Holder under this Note or the other Credit Documents for which no payment date is expressly set forth herein or therein shall be payable ten days after written demand by the Holder to the Borrower. The Holder may, at its option, send written notice or demand to the Borrower of amounts payable on a specified due date pursuant to this Note or the other Credit Documents, but the failure to send such notice shall not affect or excuse the Borrower's obligation to make payment of the amounts due on the specified due date. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, whether or not described herein, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. -2- (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 10 Heirs, Successors and Assigns. Whenever in this Note any ----------------------------- party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 11 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 12 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 13 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 14 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 15 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 18 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. -3- SECTION 16 Time of Essence. Time is of the essence of this Note. --------------- SECTION 17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower'saddress designated at the end of this Note; (f) agrees that service inaccordance with Section 20(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 20 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 18 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. SECTION 19 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies. - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, -4- present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ JOHN R. BRAGG ------------------------------------ Signature of Borrower JOHN R. BRAGG ------------------------------------ Please Print Name Send Correspondence and Billings to: John R. Bragg --------------------------------- 3339 E Briarcliff Road --------------------------------- Birmingham, Alabama 35223 --------------------------------- -6- EX-10.3 4 PLEDGE AGREEMENT DATED APRIL 15, 1999 EXHIBIT 10.3 PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT (this "Agreement") dated April 15, 1999 is between JOHN R. BRAGG, as pledgor and debtor (the "Borrower"), and ALABAMA NATIONAL BANCORPORATION, a Delaware corporation, as pledgee and secured party (the "Lender"). Recitals -------- The Borrower is the holder, beneficially and of record, of certain shares of the outstanding capital stock of the Lender, more particularly described on Exhibit A attached hereto and made a part hereof (the "Stock"). - --------- Capitalized terms used in these Recitals have the meanings defined for them above or in Section 1.2. The Borrower has requested that the Lender extend Credit to the Borrower under the Credit Documents. To secure the Obligations, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower has agreed to execute and deliver this Agreement to the Lender. Agreement --------- NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower agrees with the Lender as follows: ARTICLLE 1 Rules of Construction and Definitions ------------------------------------- SECTION 1.1 Rules of Construction. For the purposes of this Agreement, ---------------------- except as otherwise expressly provided or unless the context otherwise requires: (a) Words of masculine, feminine or neuter gender include the correlative words of other genders. Singular terms include the plural as well as the singular, and vice versa. (b) All references herein to designated "Articles," "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and subdivisions hereof and the Exhibits annexed hereto unless expressly otherwise designated in context. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and do not limit or describe the scope or intent of, or in any way affect, this Agreement. (c) The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to." (d) The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, other subdivision or Exhibit. (e) All Recitals set forth in, and all Exhibits to, this Agreement are hereby incorporated in this Agreement byreference. (f) No inference in favor of or against any party shall be drawn from the fact that such party or such party's counsel has drafted any portion hereof. (g) All references in this Agreement to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. SECTION 1.2 Definitions. As used in this Agreement, the following terms ----------- are defined as follows: (a) Unless otherwise defined herein, terms used in this Agreement that are defined in Article 9 of the Alabama Uniform Commercial Code have the meanings defined for them therein. (b) Additional Stock is defined in Section 2.2. ---------------- (c) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (d) Credit means, individually and collectively, all loans, ------ forbearances, renewals, extensions, advances, disbursements and other extensions of credit now or hereafter made by the Lender to or for the account of the Borrower under the Credit Documents. (e) Credit Documents means the documents described in Exhibit B and ---------------- all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (f) Debt of any person means (1) all indebtedness, whether or not ---- represented by bonds, debentures, notes or other securities, for the repayment of borrowed money, (2) all deferred indebtedness for the payment of the purchase price of property or assets purchased, (3) all capitalized lease obligations, (4) all indebtedness secured by any Lien on any property of such person, whether or not indebtedness secured thereby has been assumed, (5) all obligations with respect to any conditional sale contract or title retention agreement, (6) all indebtedness and obligations arising under acceptance facilities or in connection with surety or similar bonds, and the outstanding amount of all letters of credit issued for the account of such person, and (7) all obligations with respect to interest rate swap agreements. (g) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal amount of the Credit under the Credit Documents from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (h) Event of Default is defined in Section 4.1. An Event of Default --------------- "exists" if the same has occurred and is continuing. (i) Governmental Authority means any national, state, county, ---------------------- municipal or other government, domestic or foreign, and any agency, authority, department, commission, bureau, board, court or other instrumentality thereof. (j) Lien means any mortgage, pledge, assignment, charge, encumbrance, ---- lien, security title, security interest or other preferential arrangement. (k) Obligations means (1) the payment of all amounts now or hereafter ----------- becoming due and payable under the Credit Documents, including the principal amount of the Credit, all interest thereon (including interest that, but for the filing of a petition in bankruptcy, would accrue on any such principal) and all other fees, charges and costs (including attorneys' fees and disbursements) payable in connection therewith; (2) the observance and performance the Borrower of all of the provisions of the Credit Documents; (3) the payment of all sums advanced or paid by the Lender in exercising any of its rights, powers or remedies under the Credit Documents, and all interest (including post-bankruptcy petition interest, as aforesaid) on such sums provided for herein or therein; and (4) all renewals, extensions, modifications and amendments of any of the foregoing, whether or not any renewal, extension, modification or amendment agreement is executed in connection therewith. (l) Obligors means the Borrower each other person, if any, executing -------- any Security Document as a grantor, (if the Borrower is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the Obligations. (m) Permitted Encumbrances means the Liens granted to the Lender under ---------------------- this Agreement and any other Liens of the Lender. (n) Person (whether or not capitalized) includes natural persons, sole ------ proprietorships, corporations, trusts, unincorporated organizations, associations, companies, institutions, entities, joint ventures, partnerships, limited liability companies and Governmental Authorities. (o) Pledged Stock is defined in Section 2.2. ------------- (p) Property is defined in Section 2.2. -------- -2- (q) Security Documents means all Credit Documents that now or hereafter ------------------ grant or purport to grant to the Lender any guaranty, collateral or other security for any of the Obligations. ARTICLE 2 Security Agreement ------------------ SECTION 2.1 Pledge of Stock. As security for the Obligations, the --------------- Borrower hereby grants to the Lender security title to and a continuing security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Stock and all proceeds thereof, and the Borrower hereby delivers to the Lender the stock certificates evidencing the Stock, as described in Exhibit A, together with --------- separate assignments thereof, to be held by the Lender upon the terms and conditions set forth in this Agreement. SECTION 2.2 Pledge of Additional Stock. If the Borrower shall acquire by --------------------------- exchange or replacement any additional shares of the capital stock of the Company, of whatever class or description ("Additional Stock") at any time after the date hereof, the Borrower hereby grants to the Lender a security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Additional Stock and such certificates, and immediately upon receipt thereof the Borrower shall pledge and deposit the Additional Stock with the Lender and shall deliver to the Lender certificates therefor registered in the name of the Borrower, together with executed separate assignments thereof, to be held by the Lender under this Agreement. The Stock, the Additional Stock, and any stock or other securities issued in exchange therefor or replacement thereof, are hereinafter together called the "Pledged Stock," and the Pledged Stock and all proceeds thereof and all other securities and moneys received and at the time held by the Lender hereunder are hereinafter together called the "Property," all of which shall be subject to the Liens granted to the Lender under this Agreement. SECTION 2.3 Dividends and Other Distributions. Unless an Event of Default --------------------------------- exists, all cash dividends paid on the Pledged Stock shall be paid to the Borrower, except that all cash dividends payable on the Pledged Stock that are determined by the Lender in its sole discretion to represent in whole or in part an extraordinary, liquidating or other distribution in return of capital shall be paid to the Lender and retained by it as Property. The Lender shall also be entitled to receive directly and to retain as Property: (a) all stock and other securities or property (other than cash) paid or distributed with respect to the Pledged Stock by way of dividend; (b) all stock and other securities or property (including cash) paid or distributed with respect to the Pledged Stock by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar or other corporate rearrangement; and (c) all stock and other securities or property (including cash) that may be paid or distributed with respect to the Pledged Stock by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate reorganization. SECTION 2.4 Voting While No Event of Default. Unless an Event of Default -------------------------------- exists, the Borrower shall have the right to vote any and all shares of the Pledged Stock and to give consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto. All such rights of the Borrower to vote and to give consents, waivers and ratifications shall cease if an Event of Default exists. ARTICLE 3 Representations, Warranties and Covenants ----------------------------------------- SECTION 3.1 Representations and Warranties. The Borrower represents and ------------------------------ warrants to the Lender that (a) subject to Permitted Encumbrances, the Borrower is the holder of record and sole beneficial owner of the Stock (which is fully issued and non-assessable), free of Liens and adverse claims of any kind, except Permitted Encumbrances; (b) the Borrower has a good right to grant to the Lender the Liens in the Stock purported to be granted under this Agreement; (c) there are no outstanding subscriptions, options, rights, warrants, calls, commitments or agreements of any kind to acquire or transfer any of the Stock; and (d) to the best of the Borrower's knowledge, no consent, authorization or other action by, and no notice to or filing with, any other person (including any stockholder, partner or creditor of the Borrower and any Governmental Authority) is required for (1) the execution and delivery of this Agreement by the Borrower, (2) the granting to the Lender of the Lienson the Property under this Agreement, or (3) the exercise by the Lender of the rights, powers and remedies granted to it under - 3 - this Agreement, except as may be required in connection with any disposition by the Lender of the Property under laws affecting the offering and sale of securities generally. SECTION 3.2 Encumbrances and Dispositions. The Borrower shall not (a) ----------------------------- encumber any of the Property, or permit any of the Property to be encumbered, with any kind of Lien, other than Permitted Encumbrances, or (b) sell, transfer or otherwise dispose of, or grant any option or warrant with respect to, any of the Property. SECTION 3.3 Taxes and Assessments. The Borrower shall pay when due all ---------------------- taxes, assessments and other charges levied or assessed against any of the Property, and all other claims that are or may become Liens against any of the Property, except any that are Permitted Encumbrances; and should default be made in the payment of same, the Lender, at its option, may pay them. SECTION 3.4 Filing Fees and Taxes. The Borrower agrees, to the extent ---------------------- permitted by law, to pay all recording and filing fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution and delivery of the Credit Documents, and the recording, filing, satisfaction, continuation and release thereof. SECTION 3.5 Further Assurances. At the Borrower's cost and expense, upon ------------------- request of the Lender, the Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of the Lender or its counsel to perfect, preserve and protect the validity of the Liens of the Lender in the Property and to carry out more effectively the provisions and purposes of this Agreement. SECTION 3.6 Attorney-in-Fact. The Borrower hereby constitutes and ----------------- appoints the Lender, or any other person whom the Lender may designate, as the Borrower's attorney-in-fact, at the Borrower's sole cost and expense, effective upon the existence of any Event of Default, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, from time to time in the Lender's discretion to take any action (a) that the Borrower has agreed, but has failed, to take under this Agreement, (b) that the Lender in its sole discretion deems necessary or advisable to maintain, preserve or protect the security intended to be afforded by this Agreement, or (c) that the Lender may deem necessary or advisable to accomplish the purposes of this Agreement and the other Credit Documents. ARTICLE 4 Events of Default ----------------- SECTION 4.1 Events of Default. The occurrence of any of the ----------------- following events shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in this Agreement or in any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with the Credit, this Agreement or any of the other Credit Documents, shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the Obligations; or (d) default shall be made in the due observance or performance of any covenant, condition or agreement on the part of the Borrower to be observed or performedpursuant to the terms of this Agreement (other than any covenant, condition oragreement, default in the observance or performance of which is elsewhere inthis Section 4.1 specifically dealt with) and such default shall continue unremedied for a period of thirty (30) days; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein); or (f) (1) default shall be made with respect to any Debt (other than the Obligations) of any Obligor, if the effect of such default is to accelerate the maturity of such Debt or to permit the holder thereof to cause such Debt to become due prior - 4 - to its stated maturity, or (2) any such Debt shall not be paid when due (after giving effect to any applicable notice, grace or cure periods); or (g) any Obligor shall (1) apply for or consent to the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or any of such Obligor's properties or assets (including the Property), (2) fail or admit in writing such Obligor's inability to pay such Obligor's debts generally as they become due, (3) make a general assignment for the benefit of creditors, (4) suffer or permit an order for relief to be entered against such Obligor in any proceeding under the federal Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition or an answer seeking an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against such Obligor in any proceeding under any such law or statute, or if corporate action shall be taken by any Obligor for the purpose of effecting any of the foregoing; or (h) a petition shall be filed, without the application, approval or consent of any Obligor in any court of competent jurisdiction, seeking bankruptcy, reorganization, rearrangement, dissolution or liquidation of such Obligor or of all or a substantial part of the properties or assets of such Obligor, or seeking any other relief under any law or statute of the type referred to in Section 4.1(l)(5) against such Obligor, or the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or of all or a substantial part of the properties or assets of such Obligor, and such petition shall not have been stayed or dismissed within 30 days after the filing thereof; or (i) any writ of execution, attachment or garnishment shall be issued against the assets of any Obligor and such writ of execution, attachment or garnishment shall not be dismissed, discharged or quashed within 30 days of issuance; or (j) any final judgment for the payment of money shall be rendered against any Obligor and the same shall remain undischarged for a period of 30 daysduring which execution shall not be effectively stayed; or (k) any guarantor of any of the Obligations shall default in the due observance or performance of any covenant, condition or agreement on such guarantor's part to be observed or performed under such guarantor's guaranty agreement (after giving effect to any applicable notice, grace or cure period specified therein) or shall terminate or attempt to terminate such guarantor's guaranty agreement. ARTICLE 5 Remedies -------- SECTION 5.1 Acceleration of Obligations. If an Event of Default exists --------------------------- under Section 4.1(l), 4.1(m) or 4.1(l), all of the Obligations shall automatically become immediately due and payable. If any other Event of Default exists that does not already result in the automatic acceleration of the Obligations under another Credit Document, the Lender shall have the right without further notice to the Borrower (except any such notice as may be specifically required under the other Credit Documents) to declare all of the Obligations immediately due and payable. SECTION 5.2 Remedies. If an Event of Default exists, the Lender shall be -------- entitled to exercise all of the rights, powers and remedies vested in it by this Agreement and applicable law (including all rights of a secured party under Article 9 of the Alabama Uniform Commercial Code) for the protection and enforcement of its rights with respect to the Property, including the rights: (a) to receive all amounts payable with respect to the Property otherwise payable to the Borrower under Section 2.3; (b) to transfer all or any part of the Pledged Stock into the Lender's name or the name of its nominee and to cause new certificates to be issued in the name of such transferee; (c) to vote all or any part of the Pledged Stock, whether or not transferred into the name of the Lender or its nominee, and to give all consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto as though the Lender were the outright owner thereof (the Borrower hereby irrevocably constituting and appointing the Lender the proxy and attorney-in-fact of the Borrower, with full power of substitution, to do so); (d) to settle, adjust, compromise and arrange all accounts, controversies, claims and demands in relation to any Property; - 5 - (e) to execute all contracts, agreements, documents and instruments, to bring, defend and abandon all actions and proceedings, and to take all other actions, in relation to any Property as the Lender in its sole discretion may determine; and (f) at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Property, or any interest therein, at any public or private sale, at any exchange, broker's board or at any of the Lender's offices, in one or more parcels, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived by the Borrower), for cash, on credit, or for other property, for immediate or future delivery without any assumption of credit risk, and for such prices and on such terms as the Lender in its sole discretion may deem to be commercially reasonable. The Lender shall not be obligated to make any sale of Property regardless of notice having been given. The Lender may adjourn any sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was adjourned. The Lender shall not be liable for any failure to collect or realize upon any Property or for any delay in so doing, or shall it be obligated to take any action whatsoever with respect thereto. SECTION 5.3 Non-Public Sale. If at any time when the Lender shall --------------- determine to exercise its right to sell all or any of the Pledged Stock and other securities pursuant to Section 5.2, such Pledged Stock and other securities or the part thereof to be sold shall not for any reason be effectively registered under the Securities Act of 1933, as then in effect, the Lender may, in its sole discretion, sell such Pledged Stock and other securities or part thereof by private sale in such manner and under such circumstances as the Lender may deem necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Lender, in its sole discretion (a) may proceed to make such private sale notwithstanding that a registration statement registering any such Pledged Stock shall have been filed under such Securities Act, (b) may approach and negotiate with as few as one possible purchaser to effect such sale, and (c) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of any such Pledged Stock and who will satisfy such other conditions as at such time may be required for lawful non-public sale. In the event of any such sale, the Lender shall incur no responsibility or liability for selling all or any part of the Pledged Stock at a price which the Lender, in its sole discretion, may deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration. SECTION 5.4 Reasonable Care. The Lender shall be deemed to have exercised --------------- reasonable care in the custody and preservation of any Property in its possession if it takes such reasonable actions for that purpose as the Borrower shall request in writing, but the Lender shall have sole power to determine whether such actions are reasonable. Any omission to do any act not requested by the Borrower shall not be deemed a failure to exercise reasonable care. SECTION 5.5 Waiver of Redemption, Marshalling, etc. The Borrower hereby -------------------------------------- waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Property, whether before or after sale hereunder, and all rights, if any, of marshalling the Property and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Lender may bid for and purchase all or any part of the Property so sold free from any such right or equity of redemption. SECTION 5.6 Application of Proceeds. The net cash proceeds resulting from ----------------------- the exercise of any of the rights and remedies of the Lender under this Agreement, after deducting all charges, expenses, costs and attorneys' fees relating thereto, including any and all costs and expenses referred to in Section 6.2, shall be applied by the Lender to the payment of the Obligations, whether due or to become due, in such order and in such proportions as the Lender may elect; and the Borrower shall remain liable to the Lender for any deficiency. SECTION 5.7 Additional Security, etc. Without notice to or consent of the ------------------------- Borrower, and without impairment of the Liens and rights created by this Agreement, the Lender may accept from the Borrower, any other Obligor or any other person, additional security for the Obligations. Neither the giving of this Agreement nor the acceptance of any such additional security shall prevent the Lender from resorting first to any such additional security, or first to the Liens created by this Agreement, without affecting the Liens and rights of the Lender under this Agreement. SECTION 5.8 Default Rate. If an Event of Default exists, the Obligations ------------- shall bear interest at the Default Rate, until the earlier of (a) such time as all of the Obligations are paid in full or (b) no such Event of Default exists. SECTION 5.9 Remedies Cumulative. The rights and remedies of the Lender ------------------- under this Agreement are cumulative and not exclusive of any other rights or remedies now or hereafter existing at law or in equity. - 6 - ARTICLE 6 Miscellaneous ------------- SECTION 6.1 Notices. -------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, the Borrower or the Lender must (except as otherwise expressly provided in this Agreement) be in writing and be delivered by one of the following methods: (1) by personal delivery at the hand delivery address specified below, (2) by first-class, registered or certified mail, postage prepaid, addressed as specified below, or (3) if facsimile transmission facilities for such party are identified below or pursuant to a separate written notice from such party, sent by facsimile transmission to the number specified below or in such notice. (b) The hand delivery address, mailing address and (if applicable) facsimile transmission number for receipt of notice or other documents by such parties are as follows: (1) Borrower: -------- By hand or mail: John R. Bragg 3339 E Briarcliff Road Birmingham, Alabama 35223 (2) Lender: ------ By hand or mail: Alabama National Bancorporation 1927 First Avenue North Birmingham, Alabama 35203 Attention: Chief Executive Officer By facsimile: (205) 583-3275 Any of such parties may change the address or number for receiving any such notice or other document by giving notice of the change to the other parties named in this Section 6.1. (c) Any such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not an individual, to an officer, director, partner or other legal representative of the party) at the address or number specified pursuant to this Section 6.1, or, if sent by mail, three Business Days after such notice or document is deposited in the United States mail, addressed as provided above. (d) Five Business Days' written notice to the Borrower as provided above shall constitute reasonable notification to the Borrower when notification is required by law; provided, however, that nothing contained in the foregoing shall be construed as requiring five Business Days' notice if, under applicable law and the circumstances then existing, a shorter period of time would constitute reasonable notice. SECTION 6.2 Expenses. The Borrower shall promptly on demand pay all costs -------- and expenses, including the fees and disbursements of counsel to the Lender, incurred by the Lender in connection with (a) the negotiation, preparation and review of this Agreement (whether or not the transactions contemplated by this Agreement shall be consummated), (b) the enforcement of this Agreement, (c) the custody and preservation of the Property, (d) the protection or perfection of the Lender's rights and interests under this Agreement in the Property, (e) the exercise by or on behalf of the Lender of any of its rights, powers or remedies under this Agreement and (f) the prosecution or defense of any action or proceeding by or against the Lender, the Borrower, any other Obligor, or any one or more of them, concerning any matter related to this Agreement, any of the Property or any of the Obligations. All such amounts shall bear interest from the date demand is made at the Default Rate and shall be included in the Obligations secured hereby. The Borrower's obligations under this Section 6.2 shall survive the payment in full of the Obligations and the termination of this Agreement. - 7 - SECTION 6.3 Heirs, Successors and Assigns. Whenever in this Agreement any ----------------------------- party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer this Agreement without the prior written consent of the Lender; and all covenants and agreements of the Borrower contained in this Agreement shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Lender. SECTION 6.4 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Agreement shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Lender my exercise its remedies on default against all of the person comprising the Borrower. SECTION 6.5 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Lender under this Agreement may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 6.6 Governing Law. This Agreement shall be construed in ------------- accordance with and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law and except to the extent that the validity and perfection of the Liens on the Property are governed by the laws of any jurisdiction other than the State of Alabama. SECTION 6.7 Date of Agreement. The date of this Agreement is intended as ----------------- a date for the convenient identification of this Agreement and is not intended to indicate that this Agreement was executed and delivered on that date. SECTION 6.8 Separability Clause. If any provision of the Credit Documents ------------------- shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6.9 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same agreement. SECTION 6.10 No Oral Agreements. This Agreement is the final expression ------------------ of the agreement between the parties hereto, and this Agreement may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Agreement and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 6.11 Waiver and Election. The exercise by the Lender of any ------------------- option given under this Agreement shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Lender in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of the Credit Documents, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 6.12 No Obligations of Lender; Indemnification. The Lender does ----------------------------------------- not by virtue of this Agreement or any of the transactions contemplated by the Credit Documents assume any duties, liabilities or obligations with respect to any of the Property unless expressly assumed by the Lender under a separate agreement in writing, and this Agreement shall not be deemed to confer on the Lender any duties or obligations that would make the Lender directly or derivatively liable for any person's negligent, reckless or wilful conduct. The Borrower agrees to indemnify and hold the Lender harmless against and with respect to any damage, claim, action, loss, cost, expense, liability, penalty or interest (including attorney's fees) and all costs and expenses of all actions, suits, proceedings, demands, assessments, claims and judgments directly or indirectly resulting from, occurring in connection with, or arising out of: (a) any inaccurate representation made by the Borrower or any Obligor in this Agreement or any other Credit Document; (b) any breach of any of the warranties or obligations of the Borrower or any Obligor under this Agreement or any other Credit Document; and (c) the Property, or the Liens of the Lender thereon. The provisions of this Section 6.12 shall survive the payment of the Obligations in full and the termination, satisfaction, release (in whole or in part) and foreclosure of this Agreement. - 8 - SECTION 6.13 Advances by the Lender. If the Borrower shall fail to comply ---------------------- with any of the provisions of this Agreement, the Lender may (but shall not be required to) make advances to perform the same, and where necessary enter any premises where any Property is located for the purpose of performing the Borrower's obligations under any such provision. The Borrower agrees to repay all such sums advanced upon demand, with interest from the date such advances are made at the Default Rate, and all sums so advanced with interest shall be a part of the Obligations. The making of any such advances shall not be construed as a waiver by the Lender of any Event of Default resulting from the Borrower's failure to pay such amounts. SECTION 6.14 Rights, Liens and Obligations Absolute. All rights of the --------------------------------------- Lender hereunder, all Liens granted to the Lender hereunder, and all obligations of the Borrower hereunder, shall be absolute and unconditional and shall not be affected by (a) any lack of validity or enforceability as to any other person of any of the Credit Documents, (b) any change in the time, manner or place of payment of, or any other term of the Obligations, (c) any amendment or waiver of any of the provisions of the Credit Documents as to any other person, and (d) any exchange, release or non-perfection of any other collateral or any release, termination or waiver of any guaranty, for any of the Obligations. SECTION 6.15 Termination. This Agreement and the Lender's Liens in the ----------- Property hereunder will not be terminated until one of the Lender's officers signs a written termination agreement. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement shall in any way affect or impair the representations, warranties, agreements or other obligations of the Borrower or the rights, powers and remedies of the Lender under this Agreement with respect to any transaction or event occurring prior to such termination, all of which shall survive such termination. SECTION 6.16 Reinstatement. This Agreement, the obligations of the ------------- Borrower hereunder, and the Liens, rights, powers and remedies of the Lender hereunder, shall continue to be effective, or be automatically reinstated, as the case may be, if at any time any amount applied to the payment of any of the Obligations is rescinded or must otherwise be restored or returned to the Borrower, any Obligor, or any other person (or paid to the creditors of any of them, or to any custodian, receiver, trustee or other officer with similar powers with respect to any of them, or with respect to any part of their property) upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, any Obligor or any such person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with respect to any of them, or with respect to any part of their property, or otherwise, all as though such payment had not been made. SECTION 6.17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Agreement will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Agreement (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Agreement) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated in or pursuant to Section 6.1; (f) agrees that service in accordance with Section 6.17(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS AGREEMENT MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 6.17 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 6.18 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of the Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration - 9 - as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with the Note, any extension of or commitment to extend Credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including the Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Agreement shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. IN WITNESS WHEREOF, the undersigned has executed this Agreement dated April 15, 1999. /s/ John R. Bragg -------------------------- (Signature of the Borrower) John R. Bragg -------------------------- (Printed Name) - 10 - EXHIBIT A --------- Certificate No. No. of Shares Issued To Date - --------------- ------------- --------- ---- ANB 2830 7,043 John R. Bragg A-1 EXHIBIT B --------- (Credit Documents) The "Credit Documents" referred to in this Agreement include the following: (a) Promissory Note dated of even date herewith in the principal amount of $107,871.00 executed by the Borrower in favor of the Lender, which evidences a loan made by the Lender to the Borrower. (b) Promissory Note dated of even date herewith in the principal amount of $19,800.00 executed by the Borrower in favor of the Lender, which evidences a loan made available by the Lender to the Borrower and has a final maturity date of April 15, 2000. B-1 EX-10.4 5 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.4 $93,747.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace JOHN H. HOLCOMB, III, (the "Borrower"), promises to pay to the order of ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of Ninety-Three Thousand Seven Hundred Forty-Seven and 00/100 Dollars ($93,747.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full or complete forgiveness, whichever occurs first, at the rate per annum equal to the LIBOR-Based Rate (as defined below) adjusted on each Interest Rate Determination Date (as defined below). If in the Lender's opinion it is impossible or impractical to determine the LIBOR-Based Rate for a certain year, this Note shall bear interest at the Prime Rate until the next Interest Rate Determination Date. Interest payable hereunder shall be payable on each Interest Rate Determination Date, commencing April 15, 2000. Notwithstanding anything to the contrary contained herein, if the Borrower remains continually employed by the Lender or one of its subsidiaries or affiliates (hereinafter referred to as a "Qualifying Employer") as of the first ten (10) anniversaries of this Note, ten percent (10%) of the original principal balance ($9,374.70) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2000. In addition, as long as the Borrower remains continually employed by a Qualifying Employer, upon the occurrence of (x) a Change in Control (as hereinafter defined), (y) the Borrower's death or (z) the Total Disability (as hereinafter defined) of the Borrower, the entire principal balance then remaining unpaid hereunder, shall be immediately forgiven in full. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and -------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Change in Control of the Lender means (i) any transaction, whether ------------------------------------- by merger, consolidation, asset sale, tender offer, reverse stock split, or otherwise, which results in the acquisition or beneficial ownership (as such term is defined under rules and regulations promulgated under the Securities Exchange Act of 1934, as amended) by any person or entity or any group of persons or entities acting in concert, of fifty percent (50%) or more of the outstanding shares of Common Stock of the Lender; or (ii) the sale of all or substantially all of the assets of the Lender; or (iii) the liquidation of the Lender. (d) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (e) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (f) Event of Default is defined in Section 6. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (g) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (h) LIBOR-Based Rate means a fixed rate of one percent (100 basis ---------------- points) in excess of the per annum rate of interest most recently published in The Wall Street Journal as of the close of business on the date hereof and on and after the most recent Interest Rate Determination Date (being the rate quoted for the immediately preceding business day) as the London Interbank Offered Rate for U.S. dollar deposits having a term of ninety (90) days. The Lender shall determine the LIBOR-Based Rate on the date hereof and on each Interest Rate Determination Date. (i) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (j) Prime Rate means a floating interest rate equal to the rate of ---------- interest designated by the Lender from time to time as its "prime rate." (k) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. (l) Total Disability means the Borrower's inability, as a result of ---------------- illness or injury, to perform the normal duties of the Borrower's employment for a period of ninety (90) consecutive days. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) The amount payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). -2- SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. Notwithstanding anything in this Note or any other Security Document to the contrary, the entire unpaid principal balance of the indebtedness evidenced by this Note shall be immediately due and payable without written notice or demand, upon the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Note shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Holder my exercise its remedies on default against all of the persons comprising the Borrower. SECTION 10 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 11 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 12 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 13 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 14 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. -3- SECTION 15 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 16 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 16 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. SECTION 17 Time of Essence. Time is of the essence of this Note. --------------- SECTION 18 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 18(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 18 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 19 Usury Laws. Any provision of this Note or any of the other ----------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. -4- SECTION 20 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ John H. Holcomb, III ------------------------ Signature of Borrower John H. Holcomb, III -------------------- Please Print Name Send Correspondence and Billings to: John H. Holcomb, III -------------------------- 56 Country Club Blvd -------------------------- Birmingham, Alabama 35213 -------------------------- -6- EX-10.5 6 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.5 Birmingham, Alabama $83,400.00 April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace, JOHN H. HOLCOMB, III (the "Borrower"), promises to pay to the order of Alabama National BanCorporation, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of Eighty-Three Thousand Four Hundred and 00/100 Dollars ($83,400.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full, at a fixed interest rate equal to six percent (6.0%) per annum. Principal and interest shall be payable under this Note on April 15, 2000. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and -------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (d) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (e) Event of Default is defined in Section 8. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (f) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (g) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) All amounts payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. All amounts payable by the Borrower to the Holder under this Note or the other Credit Documents for which no payment date is expressly set forth herein or therein shall be payable ten days after written demand by the Holder to the Borrower. The Holder may, at its option, send written notice or demand to the Borrower of amounts payable on a specified due date pursuant to this Note or the other Credit Documents, but the failure to send such notice shall not affect or excuse the Borrower's obligation to make payment of the amounts due on the specified due date. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, whether or not described herein, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. -2- (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 10 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 11 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 12 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 13 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 14 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 15 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 18 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. -3- SECTION 16 Time of Essence. Time is of the essence of this Note. --------------- SECTION 17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 20(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 20 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 18 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. SECTION 19 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies. - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, -4- present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute.] -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ JOHN H. HOLCOMB, III ------------------------ Signature of Borrower JOHN H. HOLCOMB, III ------------------------ Please Print Name Send Correspondence and Billings to: John H. Holcomb, III -------------------------- 56 Country Club Blvd -------------------------- Birmingham, Alabama 35213 -6- EX-10.6 7 PLEDGE AGREEMENT DATED APRIL 15, 1999 EXHIBIT 10.6 PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT (this "Agreement") dated April 15, 1999 is between JOHN H. HOLCOMB, III, as pledgor and debtor (the "Borrower"), and ALABAMA NATIONAL BANCORPORATION, a Delaware corporation, as pledgee and secured party (the "Lender"). Recitals -------- The Borrower is the holder, beneficially and of record, of certain shares of the outstanding capital stock of the Lender, more particularly described on Exhibit A attached hereto and made a part hereof (the "Stock"). - --------- Capitalized terms used in these Recitals have the meanings defined for them above or in Section 1.2. The Borrower has requested that the Lender extend Credit to the Borrower under the Credit Documents. To secure the Obligations, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower has agreed to execute and deliver this Agreement to the Lender. Agreement --------- NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower agrees with the Lender as follows: ARTICLE 1 Rules of Construction and Definitions ------------------------------------- SECTION 1.1 Rules of Construction. For the purposes of this Agreement, --------------------- except as otherwise expressly provided or unless the context otherwise requires: (a) Words of masculine, feminine or neuter gender include the correlative words of other genders. Singular terms include the plural as well as the singular, and vice versa. (b) All references herein to designated "Articles," "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and subdivisions hereof and the Exhibits annexed hereto unless expressly otherwise designated in context. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and do not limit or describe the scope or intent of, or in any way affect, this Agreement. (c) The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to." (d) The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, other subdivision or Exhibit. (e) All Recitals set forth in, and all Exhibits to, this Agreement are hereby incorporated in this Agreement by reference. (f) No inference in favor of or against any party shall be drawn from the fact that such party or such party's counsel has drafted any portion hereof. (g) All references in this Agreement to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. SECTION 1.2 Definitions. As used in this Agreement, the following terms ----------- are defined as follows: (a) Unless otherwise defined herein, terms used in this Agreement that are defined in Article 9 of the Alabama Uniform Commercial Code have the meanings defined for them therein. (b) Additional Stock is defined in Section 2.2. ---------------- (c) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (d) Credit means, individually and collectively, all loans, ----- forbearances, renewals, extensions, advances, disbursements and other extensions of credit now or hereafter made by the Lender to or for the account of the Borrower under the Credit Documents. (e) Credit Documents means the documents described in Exhibit B and ---------------- all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (f) Debt of any person means (1) all indebtedness, whether or not ---- represented by bonds, debentures, notes or other securities, for the repayment of borrowed money, (2) all deferred indebtedness for the payment of the purchase price of property or assets purchased, (3) all capitalized lease obligations, (4) all indebtedness secured by any Lien on any property of such person, whether or not indebtedness secured thereby has been assumed, (5) all obligations with respect to any conditional sale contract or title retention agreement, (6) all indebtedness and obligations arising under acceptance facilities or in connection with surety or similar bonds, and the outstanding amount of all letters of credit issued for the account of such person, and (7) all obligations with respect to interest rate swap agreements. (g) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal amount of the Credit under the Credit Documents from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (h) Event of Default is defined in Section 4.1. An Event of Default ---------------- "exists" if the same has occurred and is continuing. (i) Governmental Authority means any national, state, county, ---------------------- municipal or other government, domestic or foreign, and any agency, authority, department, commission, bureau, board, court or other instrumentality thereof. (j) Lien means any mortgage, pledge, assignment, charge, encumbrance, ---- lien, security title, security interest or other preferential arrangement. (k) Obligations means (1) the payment of all amounts now or hereafter ----------- becoming due and payable under the Credit Documents, including the principal amount of the Credit, all interest thereon (including interest that, but for the filing of a petition in bankruptcy, would accrue on any such principal) and all other fees, charges and costs (including attorneys' fees and disbursements) payable in connection therewith; (2) the observance and performance the Borrower of all of the provisions of the Credit Documents; (3) the payment of all sums advanced or paid by the Lender in exercising any of its rights, powers or remedies under the Credit Documents, and all interest (including post-bankruptcy petition interest, as aforesaid) on such sums provided for herein or therein; and (4) all renewals, extensions, modifications and amendments of any of the foregoing, whether or not any renewal, extension, modification or amendment agreement is executed in connection therewith. (l) Obligors means the Borrower each other person, if any, executing -------- any Security Document as a grantor, (if the Borrower is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the Obligations. (m) Permitted Encumbrances means the Liens granted to the Lender under ---------------------- this Agreement and any other Liens of the Lender. (n) Person (whether or not capitalized) includes natural persons, sole ------ proprietorships, corporations, trusts, unincorporated organizations, associations, companies, institutions, entities, joint ventures, partnerships, limited liability companies and Governmental Authorities. (o) Pledged Stock is defined in Section 2.2. ------------- (p) Property is defined in Section 2.2. -------- -2- (q) Security Documents means all Credit Documents that now or ------------------ hereafter grant or purport to grant to the Lender any guaranty, collateral or other security for any of the Obligations. ARTICLE 2 Security Agreement ------------------ SECTION 2.1 Pledge of Stock. As security for the Obligations, the --------------- Borrower hereby grants to the Lender security title to and a continuing security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Stock and all proceeds thereof, and the Borrower hereby delivers to the Lender the stock certificates evidencing the Stock, as described in Exhibit A, together with separate assignments thereof, to be held by the Lender upon the terms and conditions set forth in this Agreement. SECTION 2.2 Pledge of Additional Stock. If the Borrower shall acquire by -------------------------- exchange or replacement any additional shares of the capital stock of the Company, of whatever class or description ("Additional Stock") at any time after the date hereof, the Borrower hereby grants to the Lender a security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Additional Stock and such certificates, and immediately upon receipt thereof the Borrower shall pledge and deposit the Additional Stock with the Lender and shall deliver to the Lender certificates therefor registered in the name of the Borrower, together with executed separate assignments thereof, to be held by the Lender under this Agreement. The Stock, the Additional Stock, and any stock or other securities issued in exchange therefor or replacement thereof, are hereinafter together called the "Pledged Stock," and the Pledged Stock and all proceeds thereof and all other securities and moneys received and at the time held by the Lender hereunder are hereinafter together called the "Property," all of which shall be subject to the Liens granted to the Lender under this Agreement. SECTION 2.3 Dividends and Other Distributions. Unless an Event of Default --------------------------------- exists, all cash dividends paid on the Pledged Stock shall be paid to the Borrower, except that all cash dividends payable on the Pledged Stock that are determined by the Lender in its sole discretion to represent in whole or in part an extraordinary, liquidating or other distribution in return of capital shall be paid to the Lender and retained by it as Property. The Lender shall also be entitled to receive directly and to retain as Property: (a) all stock and other securities or property (other than cash) paid or distributed with respect to the Pledged Stock by way of dividend; (b) all stock and other securities or property (including cash) paid or distributed with respect to the Pledged Stock by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar or other corporate rearrangement; and (c) all stock and other securities or property (including cash) that may be paid or distributed with respect to the Pledged Stock by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate reorganization. SECTION 2.4 Voting While No Event of Default. Unless an Event of Default -------------------------------- exists, the Borrower shall have the right to vote any and all shares of the Pledged Stock and to give consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto. All such rights of the Borrower to vote and to give consents, waivers and ratifications shall cease if an Event of Default exists. ARTICLE 3 Representations, Warranties and Covenants ----------------------------------------- SECTION 3.1 Representations and Warranties. The Borrower represents and ------------------------------ warrants to the Lender that (a) subject to Permitted Encumbrances, the Borrower is the holder of record and sole beneficial owner of the Stock (which is fully issued and non-assessable), free of Liens and adverse claims of any kind, except Permitted Encumbrances; (b) the Borrower has a good right to grant to the Lender the Liens in the Stock purported to be granted under this Agreement; (c) there are no outstanding subscriptions, options, rights, warrants, calls, commitments or agreements of any kind to acquire or transfer any of the Stock; and (d) to the best of the Borrower's knowledge, no consent, authorization or other action by, and no notice to or filing with, any other person (including any stockholder, partner or creditor of the Borrower and any Governmental Authority) is required for (1) the execution and delivery of this Agreement by the Borrower, (2) the granting to the Lender of the Liens on the Property under this Agreement, or (3) the exercise by the Lender of the rights, powers and remedies granted to it under -3- this Agreement, except as may be required in connection with any disposition by the Lender of the Property under laws affecting the offering and sale of securities generally. SECTION 3.2 Encumbrances and Dispositions. The Borrower shall not (a) ----------------------------- encumber any of the Property, or permit any of the Property to be encumbered, with any kind of Lien, other than Permitted Encumbrances, or (b) sell, transfer or otherwise dispose of, or grant any option or warrant with respect to, any of the Property. SECTION 3.3 Taxes and Assessments. The Borrower shall pay when due all --------------------- taxes, assessments and other charges levied or assessed against any of the Property, and all other claims that are or may become Liens against any of the Property, except any that are Permitted Encumbrances; and should default be made in the payment of same, the Lender, at its option, may pay them. SECTION 3.4 Filing Fees and Taxes. The Borrower agrees, to the extent --------------------- permitted by law, to pay all recording and filing fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution and delivery of the Credit Documents, and the recording, filing, satisfaction, continuation and release thereof. SECTION 3.5 Further Assurances. At the Borrower's cost and expense, upon ------------------ request of the Lender, the Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of the Lender or its counsel to perfect, preserve and protect the validity of the Liens of the Lender in the Property and to carry out more effectively the provisions and purposes of this Agreement. SECTION 3.6 Attorney-in-Fact. The Borrower hereby constitutes and ---------------- appoints the Lender, or any other person whom the Lender may designate, as the Borrower's attorney-in-fact, at the Borrower's sole cost and expense, effective upon the existence of any Event of Default, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, from time to time in the Lender's discretion to take any action (a) that the Borrower has agreed, but has failed, to take under this Agreement, (b) that the Lender in its sole discretion deems necessary or advisable to maintain, preserve or protect the security intended to be afforded by this Agreement, or (c) that the Lender may deem necessary or advisable to accomplish the purposes of this Agreement and the other Credit Documents. ARTICLE 4 Events of Default ----------------- SECTION 4.1 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in this Agreement or in any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with the Credit, this Agreement or any of the other Credit Documents, shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the Obligations; or (d) default shall be made in the due observance or performance of any covenant, condition or agreement on the part of the Borrower to be observed or performed pursuant to the terms of this Agreement (other than any covenant, condition or agreement, default in the observance or performance of which is elsewhere in this Section 4.1 specifically dealt with) and such default shall continue unremedied for a period of thirty (30) days; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein); or (f) (1) default shall be made with respect to any Debt (other than the Obligations) of any Obligor, if the effect of such default is to accelerate the maturity of such Debt or to permit the holder thereof to cause such Debt to become due prior -4- to its stated maturity, or (2) any such Debt shall not be paid when due (after giving effect to any applicable notice, grace or cure periods); or (g) any Obligor shall (1) apply for or consent to the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or any of such Obligor's properties or assets (including the Property), (2) fail or admit in writing such Obligor's inability to pay such Obligor's debts generally as they become due, (3) make a general assignment for the benefit of creditors, (4) suffer or permit an order for relief to be entered against such Obligor in any proceeding under the federal Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition or an answer seeking an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against such Obligor in any proceeding under any such law or statute, or if corporate action shall be taken by any Obligor for the purpose of effecting any of the foregoing; or (h) a petition shall be filed, without the application, approval or consent of any Obligor in any court of competent jurisdiction, seeking bankruptcy, reorganization, rearrangement, dissolution or liquidation of such Obligor or of all or a substantial part of the properties or assets of such Obligor, or seeking any other relief under any law or statute of the type referred to in Section 4.1(l)(5) against such Obligor, or the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or of all or a substantial part of the properties or assets of such Obligor, and such petition shall not have been stayed or dismissed within 30 days after the filing thereof; or (i) any writ of execution, attachment or garnishment shall be issued against the assets of any Obligor and such writ of execution, attachment or garnishment shall not be dismissed, discharged or quashed within 30 days of issuance; or (j) any final judgment for the payment of money shall be rendered against any Obligor and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed; or (k) any guarantor of any of the Obligations shall default in the due observance or performance of any covenant, condition or agreement on such guarantor's part to be observed or performed under such guarantor's guaranty agreement (after giving effect to any applicable notice, grace or cure period specified therein) or shall terminate or attempt to terminate such guarantor's guaranty agreement. ARTICLE 5 Remedies -------- SECTION 5.1 Acceleration of Obligations. If an Event of Default exists --------------------------- under Section 4.1(l), 4.1(m) or 4.1(l), all of the Obligations shall automatically become immediately due and payable. If any other Event of Default exists that does not already result in the automatic acceleration of the Obligations under another Credit Document, the Lender shall have the right without further notice to the Borrower (except any such notice as may be specifically required under the other Credit Documents) to declare all of the Obligations immediately due and payable. SECTION 5.2 Remedies. If an Event of Default exists, the Lender shall be -------- entitled to exercise all of the rights, powers and remedies vested in it by this Agreement and applicable law (including all rights of a secured party under Article 9 of the Alabama Uniform Commercial Code) for the protection and enforcement of its rights with respect to the Property, including the rights: (a) to receive all amounts payable with respect to the Property otherwise payable to the Borrower under Section 2.3; (b) to transfer all or any part of the Pledged Stock into the Lender's name or the name of its nominee and to cause new certificates to be issued in the name of such transferee; (c) to vote all or any part of the Pledged Stock, whether or not transferred into the name of the Lender or its nominee, and to give all consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto as though the Lender were the outright owner thereof (the Borrower hereby irrevocably constituting and appointing the Lender the proxy and attorney-in-fact of the Borrower, with full power of substitution, to do so); (d) to settle, adjust, compromise and arrange all accounts, controversies, claims and demands in relation to any Property; -5- (e) to execute all contracts, agreements, documents and instruments, to bring, defend and abandon all actions and proceedings, and to take all other actions, in relation to any Property as the Lender in its sole discretion may determine; and (f) at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Property, or any interest therein, at any public or private sale, at any exchange, broker's board or at any of the Lender's offices, in one or more parcels, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived by the Borrower), for cash, on credit, or for other property, for immediate or future delivery without any assumption of credit risk, and for such prices and on such terms as the Lender in its sole discretion may deem to be commercially reasonable. The Lender shall not be obligated to make any sale of Property regardless of notice having been given. The Lender may adjourn any sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was adjourned. The Lender shall not be liable for any failure to collect or realize upon any Property or for any delay in so doing, or shall it be obligated to take any action whatsoever with respect thereto. SECTION 5.3 Non-Public Sale. If at any time when the Lender shall --------------- determine to exercise its right to sell all or any of the Pledged Stock and other securities pursuant to Section 5.2, such Pledged Stock and other securities or the part thereof to be sold shall not for any reason be effectively registered under the Securities Act of 1933, as then in effect, the Lender may, in its sole discretion, sell such Pledged Stock and other securities or part thereof by private sale in such manner and under such circumstances as the Lender may deem necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Lender, in its sole discretion (a) may proceed to make such private sale notwithstanding that a registration statement registering any such Pledged Stock shall have been filed under such Securities Act, (b) may approach and negotiate with as few as one possible purchaser to effect such sale, and (c) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of any such Pledged Stock and who will satisfy such other conditions as at such time may be required for lawful non-public sale. In the event of any such sale, the Lender shall incur no responsibility or liability for selling all or any part of the Pledged Stock at a price which the Lender, in its sole discretion, may deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration. SECTION 5.4 Reasonable Care. The Lender shall be deemed to have exercised --------------- reasonable care in the custody and preservation of any Property in its possession if it takes such reasonable actions for that purpose as the Borrower shall request in writing, but the Lender shall have sole power to determine whether such actions are reasonable. Any omission to do any act not requested by the Borrower shall not be deemed a failure to exercise reasonable care. SECTION 5.5 Waiver of Redemption, Marshalling, etc. The Borrower hereby -------------------------------------- waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Property, whether before or after sale hereunder, and all rights, if any, of marshalling the Property and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Lender may bid for and purchase all or any part of the Property so sold free from any such right or equity of redemption. SECTION 5.6 Application of Proceeds. The net cash proceeds resulting from ----------------------- the exercise of any of the rights and remedies of the Lender under this Agreement, after deducting all charges, expenses, costs and attorneys' fees relating thereto, including any and all costs and expenses referred to in Section 6.2, shall be applied by the Lender to the payment of the Obligations, whether due or to become due, in such order and in such proportions as the Lender may elect; and the Borrower shall remain liable to the Lender for any deficiency. SECTION 5.7 Additional Security, etc. Without notice to or consent of the ------------------------ Borrower, and without impairment of the Liens and rights created by this Agreement, the Lender may accept from the Borrower, any other Obligor or any other person, additional security for the Obligations. Neither the giving of this Agreement nor the acceptance of any such additional security shall prevent the Lender from resorting first to any such additional security, or first to the Liens created by this Agreement, without affecting the Liens and rights of the Lender under this Agreement. SECTION 5.8 Default Rate. If an Event of Default exists, the Obligations ------------ shall bear interest at the Default Rate, until the earlier of (a) such time as all of the Obligations are paid in full or (b) no such Event of Default exists. SECTION 5.9 Remedies Cumulative. The rights and remedies of the Lender ------------------- under this Agreement are cumulative and not exclusive of any other rights or remedies now or hereafter existing at law or in equity. -6- ARTICLE 6 Miscellaneous ------------- SECTION 6.1 Notices. ------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, the Borrower or the Lender must (except as otherwise expressly provided in this Agreement) be in writing and be delivered by one of the following methods: (1) by personal delivery at the hand delivery address specified below, (2) by first-class, registered or certified mail, postage prepaid, addressed as specified below, or (3) if facsimile transmission facilities for such party are identified below or pursuant to a separate written notice from such party, sent by facsimile transmission to the number specified below or in such notice. (b) The hand delivery address, mailing address and (if applicable) facsimile transmission number for receipt of notice or other documents by such parties are as follows: (1) Borrower: -------- By hand or mail: John H. Holcomb, III 56 Country Club Blvd Birmingham, Alabama 35213 (2) Lender: ------ By hand or mail: Alabama National Bancorporation 1927 First Avenue North Birmingham, Alabama 35203 Attention: Chief Executive Officer By facsimile: (205) 583-3275 Any of such parties may change the address or number for receiving any such notice or other document by giving notice of the change to the other parties named in this Section 6.1. (c) Any such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not an individual, to an officer, director, partner or other legal representative of the party) at the address or number specified pursuant to this Section 6.1, or, if sent by mail, three Business Days after such notice or document is deposited in the United States mail, addressed as provided above. (d) Five Business Days' written notice to the Borrower as provided above shall constitute reasonable notification to the Borrower when notification is required by law; provided, however, that nothing contained in the foregoing shall be construed as requiring five Business Days' notice if, under applicable law and the circumstances then existing, a shorter period of time would constitute reasonable notice. SECTION 6.2 Expenses. The Borrower shall promptly on demand pay all costs -------- and expenses, including the fees and disbursements of counsel to the Lender, incurred by the Lender in connection with (a) the negotiation, preparation and review of this Agreement (whether or not the transactions contemplated by this Agreement shall be consummated), (b) the enforcement of this Agreement, (c) the custody and preservation of the Property, (d) the protection or perfection of the Lender's rights and interests under this Agreement in the Property, (e) the exercise by or on behalf of the Lender of any of its rights, powers or remedies under this Agreement and (f) the prosecution or defense of any action or proceeding by or against the Lender, the Borrower, any other Obligor, or any one or more of them, concerning any matter related to this Agreement, any of the Property or any of the Obligations. All such amounts shall bear interest from the date demand is made at the Default Rate and shall be included in the Obligations secured hereby. The Borrower's obligations under this Section 6.2 shall survive the payment in full of the Obligations and the termination of this Agreement. -7- SECTION 6.3 Heirs, Successors and Assigns. Whenever in this Agreement any ----------------------------- party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer this Agreement without the prior written consent of the Lender; and all covenants and agreements of the Borrower contained in this Agreement shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Lender. SECTION 6.4 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Agreement shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Lender my exercise its remedies on default against all of the person comprising the Borrower. SECTION 6.5 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Lender under this Agreement may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 6.6 Governing Law. This Agreement shall be construed in ------------- accordance with and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law and except to the extent that the validity and perfection of the Liens on the Property are governed by the laws of any jurisdiction other than the State of Alabama. SECTION 6.7 Date of Agreement. The date of this Agreement is intended as ----------------- a date for the convenient identification of this Agreement and is not intended to indicate that this Agreement was executed and delivered on that date. SECTION 6.8 Separability Clause. If any provision of the Credit Documents ------------------- shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6.9 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same agreement. SECTION 6.10 No Oral Agreements. This Agreement is the final expression ------------------ of the agreement between the parties hereto, and this Agreement may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Agreement and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 6.11 Waiver and Election. The exercise by the Lender of any ------------------- option given under this Agreement shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Lender in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of the Credit Documents, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 6.12 No Obligations of Lender; Indemnification. The Lender does ----------------------------------------- not by virtue of this Agreement or any of the transactions contemplated by the Credit Documents assume any duties, liabilities or obligations with respect to any of the Property unless expressly assumed by the Lender under a separate agreement in writing, and this Agreement shall not be deemed to confer on the Lender any duties or obligations that would make the Lender directly or derivatively liable for any person's negligent, reckless or wilful conduct. The Borrower agrees to indemnify and hold the Lender harmless against and with respect to any damage, claim, action, loss, cost, expense, liability, penalty or interest (including attorney's fees) and all costs and expenses of all actions, suits, proceedings, demands, assessments, claims and judgments directly or indirectly resulting from, occurring in connection with, or arising out of: (a) any inaccurate representation made by the Borrower or any Obligor in this Agreement or any other Credit Document; (b) any breach of any of the warranties or obligations of the Borrower or any Obligor under this Agreement or any other Credit Document; and (c) the Property, or the Liens of the Lender thereon. The provisions of this Section 6.12 shall survive the payment of the Obligations in full and the termination, satisfaction, release (in whole or in part) and foreclosure of this Agreement. -8- SECTION 6.13 Advances by the Lender. If the Borrower shall fail to comply ---------------------- with any of the provisions of this Agreement, the Lender may (but shall not be required to) make advances to perform the same, and where necessary enter any premises where any Property is located for the purpose of performing the Borrower's obligations under any such provision. The Borrower agrees to repay all such sums advanced upon demand, with interest from the date such advances are made at the Default Rate, and all sums so advanced with interest shall be a part of the Obligations. The making of any such advances shall not be construed as a waiver by the Lender of any Event of Default resulting from the Borrower's failure to pay such amounts. SECTION 6.14 Rights, Liens and Obligations Absolute. All rights of the -------------------------------------- Lender hereunder, all Liens granted to the Lender hereunder, and all obligations of the Borrower hereunder, shall be absolute and unconditional and shall not be affected by (a) any lack of validity or enforceability as to any other person of any of the Credit Documents, (b) any change in the time, manner or place of payment of, or any other term of the Obligations, (c) any amendment or waiver of any of the provisions of the Credit Documents as to any other person, and (d) any exchange, release or non-perfection of any other collateral or any release, termination or waiver of any guaranty, for any of the Obligations. SECTION 6.15 Termination. This Agreement and the Lender's Liens in the ----------- Property hereunder will not be terminated until one of the Lender's officers signs a written termination agreement. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement shall in any way affect or impair the representations, warranties, agreements or other obligations of the Borrower or the rights, powers and remedies of the Lender under this Agreement with respect to any transaction or event occurring prior to such termination, all of which shall survive such termination. SECTION 6.16 Reinstatement. This Agreement, the obligations of the ------------- Borrower hereunder, and the Liens, rights, powers and remedies of the Lender hereunder, shall continue to be effective, or be automatically reinstated, as the case may be, if at any time any amount applied to the payment of any of the Obligations is rescinded or must otherwise be restored or returned to the Borrower, any Obligor, or any other person (or paid to the creditors of any of them, or to any custodian, receiver, trustee or other officer with similar powers with respect to any of them, or with respect to any part of their property) upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, any Obligor or any such person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with respect to any of them, or with respect to any part of their property, or otherwise, all as though such payment had not been made. SECTION 6.17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Agreement will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Agreement (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Agreement) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated in or pursuant to Section 6.1; (f) agrees that service in accordance with Section 6.17(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS AGREEMENT MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 6.17 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 6.18 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of the Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration -9- as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with the Note, any extension of or commitment to extend Credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including the Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Agreement shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. IN WITNESS WHEREOF, the undersigned has executed this Agreement dated April 15, 1999. /s/ John H. Holcomb, III --------------------------- (Signature of the Borrower) John H. Holcomb, III --------------------------- (Printed Name) -10- EXHIBIT A --------- Certificate No. No. of Shares Issued To Date - --------------- ------------- --------- ---- ANB 2831 7,043 John H. Holcomb, III January 2, 1996 A-1 EXHIBIT B --------- (Credit Documents) The "Credit Documents" referred to in this Agreement include the following: (a) Promissory Note dated of even date herewith in the principal amount of $93,747.00 executed by the Borrower in favor of the Lender, which evidences a loan made by the Lender to the Borrower. (b) Promissory Note dated of even date herewith in the principal amount of $83,400.00 executed by the Borrower in favor of the Lender, which evidences a loan made available by the Lender to the Borrower and has a final maturity date of April 15, 2000. B-1 EX-10.7 8 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.7 $109,570.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace WILLIAM E. MATTHEWS, V, (the "Borrower"), promises to pay to the order of ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of One Hundred Nine Thousand Five Hundred Seventy and 00/100 Dollars ($109,570.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full or complete forgiveness, whichever occurs first, at the rate per annum equal to the LIBOR-Based Rate (as defined below) adjusted on each Interest Rate Determination Date (as defined below). If in the Lender's opinion it is impossible or impractical to determine the LIBOR-Based Rate for a certain year, this Note shall bear interest at the Prime Rate until the next Interest Rate Determination Date. Interest payable hereunder shall be payable on each Interest Rate Determination Date, commencing April 15, 2000. Notwithstanding anything to the contrary contained herein, if the Borrower remains continually employed by the Lender or one of its subsidiaries or affiliates (hereinafter referred to as a "Qualifying Employer") as of the first ten (10) anniversaries of this Note, ten percent (10%) of the original principal balance ($10,957.00) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2000. In addition, as long as the Borrower remains continually employed by a Qualifying Employer, upon the occurrence of (x) a Change in Control (as hereinafter defined), (y) the Borrower's death or (z) the Total Disability (as hereinafter defined) of the Borrower, the entire principal balance then remaining unpaid hereunder, shall be immediately forgiven in full. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and --------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------- which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Change in Control of the Lender means (i) any transaction, whether ------------------------------- by merger, consolidation, asset sale, tender offer, reverse stock split, or otherwise, which results in the acquisition or beneficial ownership (as such term is defined under rules and regulations promulgated under the Securities Exchange Act of 1934, as amended) by any person or entity or any group of persons or entities acting in concert, of fifty percent (50%) or more of the outstanding shares of Common Stock of the Lender; or (ii) the sale of all or substantially all of the assets of the Lender; or (iii) the liquidation of the Lender. (d) Credit Documents means this Note, the Security Documents and all ----------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (e) Default Rate means a rate of interest equal to four percentage ------------- points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (f) Event of Default is defined in Section 6. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (g) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (h) LIBOR-Based Rate means a fixed rate of one percent (100 basis ----------------- points) in excess of the per annum rate of interest most recently published in The Wall Street Journal as of the close of business on the date hereof and on and after the most recent Interest Rate Determination Date (being the rate quoted for the immediately preceding business day) as the London Interbank Offered Rate for U.S. dollar deposits having a term of ninety (90) days. The Lender shall determine the LIBOR-Based Rate on the date hereof and on each Interest Rate Determination Date. (i) Obligors means the Borrower, each other person executing any Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (j) Prime Rate means a floating interest rate equal to the rate of ----------- interest designated by the Lender from time to time as its "prime rate." (k) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. (l) Total Disability means the Borrower's inability, as a result of ---------------- illness or injury, to perform the normal duties of the Borrower's employment for a period of ninety (90) consecutive days. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) The amount payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). -2- SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. Notwithstanding anything in this Note or any other Security Document to the contrary, the entire unpaid principal balance of the indebtedness evidenced by this Note shall be immediately due and payable without written notice or demand, upon the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Note shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Holder my exercise its remedies on default against all of the persons comprising the Borrower. SECTION 10 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 11 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 12 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 13 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 14 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. - 3 - SECTION 15 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 16 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 16 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. SECTION 17 Time of Essence. Time is of the essence of this Note. -------------- SECTION 18 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 18(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 18 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 19 Usury Laws. Any provision of this Note or any of the ---------- other Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. -4- SECTION 20 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. - 5 - IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ William E. Matthews, V ----------------------------------------------------- Signature of Borrower William E. Matthews, V ----------------------------------------------------- Please Print Name Send Correspondence and Billings to: William E. Matthews, V -------------------------------------------- 3505 Park Lane South -------------------------------------------- Birmingham, Alabama 35213 -------------------------------------------- - 6 - EX-10.8 9 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.8 $28,000.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace, WILLIAM E. MATTHEWS, V (the "Borrower"), promises to pay to the order of Alabama National BanCorporation, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of Twenty- Eight Thousand and 00/100 Dollars ($28,000.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full, at a fixed interest rate equal to six percent (6.0%) per annum. Principal and interest shall be payable under this Note on April 15, 2000. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Credit Documents means this Note, the Security Documents and all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (d) Default Rate means a rate of interest equal to four percentage points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (e) Event of Default is defined in Section 8. An Event of Default "exists" if an Event of Default has occurred and is continuing. (f) Obligors means the Borrower, each other person executing any Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (g) Security Documents means the Pledge Agreement dated of even date herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) All amounts payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. All amounts payable by the Borrower to the Holder under this Note or the other Credit Documents for which no payment date is expressly set forth herein or therein shall be payable ten days after written demand by the Holder to the Borrower. The Holder may, at its option, send written notice or demand to the Borrower of amounts payable on a specified due date pursuant to this Note or the other Credit Documents, but the failure to send such notice shall not affect or excuse the Borrower's obligation to make payment of the amounts due on the specified due date. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, whether or not described herein, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. -2- (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 10 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 11 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 12 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 13 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 14 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 15 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 18 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. -3- SECTION 16 Time of Essence. Time is of the essence of this Note. --------------- SECTION 17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 20(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 20 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 18 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. SECTION 19 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies. - --------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, -4- present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute.] -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ WILLIAM E. MATTHEWS, V ----------------------------------------------------- Signature of Borrower WILLIAM E. MATTHEWS, V ----------------------------------------------------- Please Print Name Send Correspondence and Billings to: William E. Matthews, V ----------------------------------------------- 3505 Park Lane South ----------------------------------------------- Birmingham, Alabama 35213 -6- EX-10.9 10 PLEDGE AGREEMENT DATED APRIL 15, 1999 EXHIBIT 10.9 PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT (this "Agreement") dated April 15, 1999 is between WILLIAM E. MATTHEWS, V, as pledgor and debtor (the "Borrower"), and ALABAMA NATIONAL BANCORPORATION, a Delaware corporation, as pledgee and secured party (the "Lender"). Recitals -------- The Borrower is the holder, beneficially and of record, of certain shares of the outstanding capital stock of the Lender, more particularly described on Exhibit A attached hereto and made a part hereof (the "Stock"). - --------- Capitalized terms used in these Recitals have the meanings defined for them above or in Section 1.2. The Borrower has requested that the Lender extend Credit to the Borrower under the Credit Documents. To secure the Obligations, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower has agreed to execute and deliver this Agreement to the Lender. Agreement --------- NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower agrees with the Lender as follows: ARTICLE 1 Rules of Construction and Definitions ------------------------------------- SECTION 1.1 Rules of Construction. For the purposes of this Agreement, --------------------- except as otherwise expressly provided or unless the context otherwise requires: (a) Words of masculine, feminine or neuter gender include the correlative words of other genders. Singular terms include the plural as well as the singular, and vice versa. (b) All references herein to designated "Articles," "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and subdivisions hereof and the Exhibits annexed hereto unless expressly otherwise designated in context. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and do not limit or describe the scope or intent of, or in any way affect, this Agreement. (c) The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to." (d) The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, other subdivision or Exhibit. (e) All Recitals set forth in, and all Exhibits to, this Agreement are hereby incorporated in this Agreement by reference. (f) No inference in favor of or against any party shall be drawn from the fact that such party or such party's counsel has drafted any portion hereof. (g) All references in this Agreement to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. SECTION 1.2 Definitions. As used in this Agreement, the following terms ----------- are defined as follows: (a) Unless otherwise defined herein, terms used in this Agreement that are defined in Article 9 of the Alabama Uniform Commercial Code have the meanings defined for them therein. (b) Additional Stock is defined in Section 2.2. ---------------- (c) Business Day means any day, excluding Saturday and Sunday, on ----------- which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (d) Credit means, individually and collectively, all loans, ------ forbearances, renewals, extensions, advances, disbursements and other extensions of credit now or hereafter made by the Lender to or for the account of the Borrower under the Credit Documents. (e) Credit Documents means the documents described in Exhibit B and ---------------- all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (f) Debt of any person means (1) all indebtedness, whether or not ---- represented by bonds, debentures, notes or other securities, for the repayment of borrowed money, (2) all deferred indebtedness for the payment of the purchase price of property or assets purchased, (3) all capitalized lease obligations, (4) all indebtedness secured by any Lien on any property of such person, whether or not indebtedness secured thereby has been assumed, (5) all obligations with respect to any conditional sale contract or title retention agreement, (6) all indebtedness and obligations arising under acceptance facilities or in connection with surety or similar bonds, and the outstanding amount of all letters of credit issued for the account of such person, and (7) all obligations with respect to interest rate swap agreements. (g) Default Rate means a rate of interest equal to four percentage ------------- points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal amount of the Credit under the Credit Documents from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (h) Event of Default is defined in Section 4.1. An Event of Default ---------------- "exists" if the same has occurred and is continuing. (i) Governmental Authority means any national, state, county, ---------------------- municipal or other government, domestic or foreign, and any agency, authority, department, commission, bureau, board, court or other instrumentality thereof. (j) Lien means any mortgage, pledge, assignment, charge, encumbrance, ---- lien, security title, security interest or other preferential arrangement. (k) Obligations means (1) the payment of all amounts now or hereafter ----------- becoming due and payable under the Credit Documents, including the principal amount of the Credit, all interest thereon (including interest that, but for the filing of a petition in bankruptcy, would accrue on any such principal) and all other fees, charges and costs (including attorneys' fees and disbursements) payable in connection therewith; (2) the observance and performance the Borrower of all of the provisions of the Credit Documents; (3) the payment of all sums advanced or paid by the Lender in exercising any of its rights, powers or remedies under the Credit Documents, and all interest (including post-bankruptcy petition interest, as aforesaid) on such sums provided for herein or therein; and (4) all renewals, extensions, modifications and amendments of any of the foregoing, whether or not any renewal, extension, modification or amendment agreement is executed in connection therewith. (l) Obligors means the Borrower each other person, if any, executing -------- any Security Document as a grantor, (if the Borrower is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the Obligations. (m) Permitted Encumbrances means the Liens granted to the Lender under ---------------------- this Agreement and any other Liens of the Lender. (n) Person (whether or not capitalized) includes natural persons, sole ------ proprietorships, corporations, trusts, unincorporated organizations, associations, companies, institutions, entities, joint ventures, partnerships, limited liability companies and Governmental Authorities. (o) Pledged Stock is defined in Section 2.2. ------------- (p) Property is defined in Section 2.2. -------- -2- (q) Security Documents means all Credit Documents that now or ------------------ hereafter grant or purport to grant to the Lender any guaranty, collateral or other security for any of the Obligations. ARTICLE 2 Security Agreement ------------------ SECTION 2.1 Pledge of Stock. As security for the Obligations, the --------------- Borrower hereby grants to the Lender security title to and a continuing security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Stock and all proceeds thereof, and the Borrower hereby delivers to the Lender the stock certificates evidencing the Stock, as described in Exhibit A, together with separate assignments thereof, to be held by the Lender upon the terms and conditions set forth in this Agreement. SECTION 2.2 Pledge of Additional Stock. If the Borrower shall acquire by -------------------------- exchange or replacement any additional shares of the capital stock of the Company, of whatever class or description ("Additional Stock") at any time after the date hereof, the Borrower hereby grants to the Lender a security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Additional Stock and such certificates, and immediately upon receipt thereof the Borrower shall pledge and deposit the Additional Stock with the Lender and shall deliver to the Lender certificates therefor registered in the name of the Borrower, together with executed separate assignments thereof, to be held by the Lender under this Agreement. The Stock, the Additional Stock, and any stock or other securities issued in exchange therefor or replacement thereof, are hereinafter together called the "Pledged Stock," and the Pledged Stock and all proceeds thereof and all other securities and moneys received and at the time held by the Lender hereunder are hereinafter together called the "Property," all of which shall be subject to the Liens granted to the Lender under this Agreement. SECTION 2.3 Dividends and Other Distributions. Unless an Event of Default --------------------------------- exists, all cash dividends paid on the Pledged Stock shall be paid to the Borrower, except that all cash dividends payable on the Pledged Stock that are determined by the Lender in its sole discretion to represent in whole or in part an extraordinary, liquidating or other distribution in return of capital shall be paid to the Lender and retained by it as Property. The Lender shall also be entitled to receive directly and to retain as Property: (a) all stock and other securities or property (other than cash) paid or distributed with respect to the Pledged Stock by way of dividend; (b) all stock and other securities or property (including cash) paid or distributed with respect to the Pledged Stock by way of stock-split, spin- off, split-up, reclassification, combination of shares or similar or other corporate rearrangement; and (c) all stock and other securities or property (including cash) that may be paid or distributed with respect to the Pledged Stock by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate reorganization. SECTION 2.4 Voting While No Event of Default. Unless an Event of Default -------------------------------- exists, the Borrower shall have the right to vote any and all shares of the Pledged Stock and to give consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto. All such rights of the Borrower to vote and to give consents, waivers and ratifications shall cease if an Event of Default exists. ARTICLE 3 Representations, Warranties and Covenants ----------------------------------------- SECTION 3.1 Representations and Warranties. The Borrower represents and ------------------------------ warrants to the Lender that (a) subject to Permitted Encumbrances, the Borrower is the holder of record and sole beneficial owner of the Stock (which is fully issued and non-assessable), free of Liens and adverse claims of any kind, except Permitted Encumbrances; (b) the Borrower has a good right to grant to the Lender the Liens in the Stock purported to be granted under this Agreement; (c) there are no outstanding subscriptions, options, rights, warrants, calls, commitments or agreements of any kind to acquire or transfer any of the Stock; and (d) to the best of the Borrower's knowledge, no consent, authorization or other action by, and no notice to or filing with, any other person (including any stockholder, partner or creditor of the Borrower and any Governmental Authority) is required for (1) the execution and delivery of this Agreement by the Borrower, (2) the granting to the Lender of the Liens on the Property under this Agreement, or (3) the exercise by the Lender of the rights, powers and remedies granted to it under -3- this Agreement, except as may be required in connection with any disposition by the Lender of the Property under laws affecting the offering and sale of securities generally. SECTION 3.2 Encumbrances and Dispositions. The Borrower shall not (a) ----------------------------- encumber any of the Property, or permit any of the Property to be encumbered, with any kind of Lien, other than Permitted Encumbrances, or (b) sell, transfer or otherwise dispose of, or grant any option or warrant with respect to, any of the Property. SECTION 3.3 Taxes and Assessments. The Borrower shall pay when due all --------------------- taxes, assessments and other charges levied or assessed against any of the Property, and all other claims that are or may become Liens against any of the Property, except any that are Permitted Encumbrances; and should default be made in the payment of same, the Lender, at its option, may pay them. SECTION 3.4 Filing Fees and Taxes. The Borrower agrees, to the extent --------------------- permitted by law, to pay all recording and filing fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution and delivery of the Credit Documents, and the recording, filing, satisfaction, continuation and release thereof. SECTION 3.5 Further Assurances. At the Borrower's cost and expense, upon ------------------ request of the Lender, the Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of the Lender or its counsel to perfect, preserve and protect the validity of the Liens of the Lender in the Property and to carry out more effectively the provisions and purposes of this Agreement. SECTION 3.6 Attorney-in-Fact. The Borrower hereby constitutes and ---------------- appoints the Lender, or any other person whom the Lender may designate, as the Borrower's attorney-in-fact, at the Borrower's sole cost and expense, effective upon the existence of any Event of Default, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, from time to time in the Lender's discretion to take any action (a) that the Borrower has agreed, but has failed, to take under this Agreement, (b) that the Lender in its sole discretion deems necessary or advisable to maintain, preserve or protect the security intended to be afforded by this Agreement, or (c) that the Lender may deem necessary or advisable to accomplish the purposes of this Agreement and the other Credit Documents. ARTICLE 4 Events of Default ----------------- SECTION 4.1 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in this Agreement or in any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with the Credit, this Agreement or any of the other Credit Documents, shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the Obligations; or (d) default shall be made in the due observance or performance of any covenant, condition or agreement on the part of the Borrower to be observed or performed pursuant to the terms of this Agreement (other than any covenant, condition or agreement, default in the observance or performance of which is elsewhere in this Section 4.1 specifically dealt with) and such default shall continue unremedied for a period of thirty (30) days; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein); or (f) (1) default shall be made with respect to any Debt (other than the Obligations) of any Obligor, if the effect of such default is to accelerate the maturity of such Debt or to permit the holder thereof to cause such Debt to become due prior -4- to its stated maturity, or (2) any such Debt shall not be paid when due (after giving effect to any applicable notice, grace or cure periods); or (g) any Obligor shall (1) apply for or consent to the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or any of such Obligor's properties or assets (including the Property), (2) fail or admit in writing such Obligor's inability to pay such Obligor's debts generally as they become due, (3) make a general assignment for the benefit of creditors, (4) suffer or permit an order for relief to be entered against such Obligor in any proceeding under the federal Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition or an answer seeking an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against such Obligor in any proceeding under any such law or statute, or if corporate action shall be taken by any Obligor for the purpose of effecting any of the foregoing; or (h) a petition shall be filed, without the application, approval or consent of any Obligor in any court of competent jurisdiction, seeking bankruptcy, reorganization, rearrangement, dissolution or liquidation of such Obligor or of all or a substantial part of the properties or assets of such Obligor, or seeking any other relief under any law or statute of the type referred to in Section 4.1(l)(5) against such Obligor, or the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or of all or a substantial part of the properties or assets of such Obligor, and such petition shall not have been stayed or dismissed within 30 days after the filing thereof; or (i) any writ of execution, attachment or garnishment shall be issued against the assets of any Obligor and such writ of execution, attachment or garnishment shall not be dismissed, discharged or quashed within 30 days of issuance; or (j) any final judgment for the payment of money shall be rendered against any Obligor and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed; or (k) any guarantor of any of the Obligations shall default in the due observance or performance of any covenant, condition or agreement on such guarantor's part to be observed or performed under such guarantor's guaranty agreement (after giving effect to any applicable notice, grace or cure period specified therein) or shall terminate or attempt to terminate such guarantor's guaranty agreement. ARTICLE 5 Remedies -------- SECTION 5.1 Acceleration of Obligations. If an Event of Default exists --------------------------- under Section 4.1(l), 4.1(m) or 4.1(l), all of the Obligations shall automatically become immediately due and payable. If any other Event of Default exists that does not already result in the automatic acceleration of the Obligations under another Credit Document, the Lender shall have the right without further notice to the Borrower (except any such notice as may be specifically required under the other Credit Documents) to declare all of the Obligations immediately due and payable. SECTION 5.2 Remedies. If an Event of Default exists, the Lender shall be -------- entitled to exercise all of the rights, powers and remedies vested in it by this Agreement and applicable law (including all rights of a secured party under Article 9 of the Alabama Uniform Commercial Code) for the protection and enforcement of its rights with respect to the Property, including the rights: (a) to receive all amounts payable with respect to the Property otherwise payable to the Borrower under Section 2.3; (b) to transfer all or any part of the Pledged Stock into the Lender's name or the name of its nominee and to cause new certificates to be issued in the name of such transferee; (c) to vote all or any part of the Pledged Stock, whether or not transferred into the name of the Lender or its nominee, and to give all consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto as though the Lender were the outright owner thereof (the Borrower hereby irrevocably constituting and appointing the Lender the proxy and attorney-in-fact of the Borrower, with full power of substitution, to do so); (d) to settle, adjust, compromise and arrange all accounts, controversies, claims and demands in relation to any Property; -5- (e) to execute all contracts, agreements, documents and instruments, to bring, defend and abandon all actions and proceedings, and to take all other actions, in relation to any Property as the Lender in its sole discretion may determine; and (f) at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Property, or any interest therein, at any public or private sale, at any exchange, broker's board or at any of the Lender's offices, in one or more parcels, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived by the Borrower), for cash, on credit, or for other property, for immediate or future delivery without any assumption of credit risk, and for such prices and on such terms as the Lender in its sole discretion may deem to be commercially reasonable. The Lender shall not be obligated to make any sale of Property regardless of notice having been given. The Lender may adjourn any sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was adjourned. The Lender shall not be liable for any failure to collect or realize upon any Property or for any delay in so doing, or shall it be obligated to take any action whatsoever with respect thereto. SECTION 5.3 Non-Public Sale. If at any time when the Lender shall --------------- determine to exercise its right to sell all or any of the Pledged Stock and other securities pursuant to Section 5.2, such Pledged Stock and other securities or the part thereof to be sold shall not for any reason be effectively registered under the Securities Act of 1933, as then in effect, the Lender may, in its sole discretion, sell such Pledged Stock and other securities or part thereof by private sale in such manner and under such circumstances as the Lender may deem necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Lender, in its sole discretion (a) may proceed to make such private sale notwithstanding that a registration statement registering any such Pledged Stock shall have been filed under such Securities Act, (b) may approach and negotiate with as few as one possible purchaser to effect such sale, and (c) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of any such Pledged Stock and who will satisfy such other conditions as at such time may be required for lawful non-public sale. In the event of any such sale, the Lender shall incur no responsibility or liability for selling all or any part of the Pledged Stock at a price which the Lender, in its sole discretion, may deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration. SECTION 5.4 Reasonable Care. The Lender shall be deemed to have exercised --------------- reasonable care in the custody and preservation of any Property in its possession if it takes such reasonable actions for that purpose as the Borrower shall request in writing, but the Lender shall have sole power to determine whether such actions are reasonable. Any omission to do any act not requested by the Borrower shall not be deemed a failure to exercise reasonable care. SECTION 5.5 Waiver of Redemption, Marshalling, etc. The Borrower hereby -------------------------------------- waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Property, whether before or after sale hereunder, and all rights, if any, of marshalling the Property and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Lender may bid for and purchase all or any part of the Property so sold free from any such right or equity of redemption. SECTION 5.6 Application of Proceeds. The net cash proceeds resulting from ----------------------- the exercise of any of the rights and remedies of the Lender under this Agreement, after deducting all charges, expenses, costs and attorneys' fees relating thereto, including any and all costs and expenses referred to in Section 6.2, shall be applied by the Lender to the payment of the Obligations, whether due or to become due, in such order and in such proportions as the Lender may elect; and the Borrower shall remain liable to the Lender for any deficiency. SECTION 5.7 Additional Security, etc. Without notice to or consent of the ------------------------ Borrower, and without impairment of the Liens and rights created by this Agreement, the Lender may accept from the Borrower, any other Obligor or any other person, additional security for the Obligations. Neither the giving of this Agreement nor the acceptance of any such additional security shall prevent the Lender from resorting first to any such additional security, or first to the Liens created by this Agreement, without affecting the Liens and rights of the Lender under this Agreement. SECTION 5.8 Default Rate. If an Event of Default exists, the Obligations ------------ shall bear interest at the Default Rate, until the earlier of (a) such time as all of the Obligations are paid in full or (b) no such Event of Default exists. SECTION 5.9 Remedies Cumulative. The rights and remedies of the Lender ------------------- under this Agreement are cumulative and not exclusive of any other rights or remedies now or hereafter existing at law or in equity. -6- ARTICLE 6 Miscellaneous ------------- SECTION 6.1 Notices. ------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, the Borrower or the Lender must (except as otherwise expressly provided in this Agreement) be in writing and be delivered by one of the following methods: (1) by personal delivery at the hand delivery address specified below, (2) by first-class, registered or certified mail, postage prepaid, addressed as specified below, or (3) if facsimile transmission facilities for such party are identified below or pursuant to a separate written notice from such party, sent by facsimile transmission to the number specified below or in such notice. (b) The hand delivery address, mailing address and (if applicable) facsimile transmission number for receipt of notice or other documents by such parties are as follows: (1) Borrower: -------- By hand or mail: William E. Matthews, V 3505 Park Lane South Birmingham, Alabama 35213 (2) Lender: ------ By hand or mail: Alabama National Bancorporation 1927 First Avenue North Birmingham, Alabama 35203 Attention: Chief Executive Officer By facsimile: (205) 583-3275 Any of such parties may change the address or number for receiving any such notice or other document by giving notice of the change to the other parties named in this Section 6.1. (c) Any such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not an individual, to an officer, director, partner or other legal representative of the party) at the address or number specified pursuant to this Section 6.1, or, if sent by mail, three Business Days after such notice or document is deposited in the United States mail, addressed as provided above. (d) Five Business Days' written notice to the Borrower as provided above shall constitute reasonable notification to the Borrower when notification is required by law; provided, however, that nothing contained in the foregoing shall be construed as requiring five Business Days' notice if, under applicable law and the circumstances then existing, a shorter period of time would constitute reasonable notice. SECTION 6.2 Expenses. The Borrower shall promptly on demand pay all costs -------- and expenses, including the fees and disbursements of counsel to the Lender, incurred by the Lender in connection with (a) the negotiation, preparation and review of this Agreement (whether or not the transactions contemplated by this Agreement shall be consummated), (b) the enforcement of this Agreement, (c) the custody and preservation of the Property, (d) the protection or perfection of the Lender's rights and interests under this Agreement in the Property, (e) the exercise by or on behalf of the Lender of any of its rights, powers or remedies under this Agreement and (f) the prosecution or defense of any action or proceeding by or against the Lender, the Borrower, any other Obligor, or any one or more of them, concerning any matter related to this Agreement, any of the Property or any of the Obligations. All such amounts shall bear interest from the date demand is made at the Default Rate and shall be included in the Obligations secured hereby. The Borrower's obligations under this Section 6.2 shall survive the payment in full of the Obligations and the termination of this Agreement. -7- SECTION 6.3 Heirs, Successors and Assigns. Whenever in this Agreement any ----------------------------- party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer this Agreement without the prior written consent of the Lender; and all covenants and agreements of the Borrower contained in this Agreement shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Lender. SECTION 6.4 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Agreement shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Lender my exercise its remedies on default against all of the person comprising the Borrower. SECTION 6.5 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Lender under this Agreement may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 6.6 Governing Law. This Agreement shall be construed in ------------- accordance with and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law and except to the extent that the validity and perfection of the Liens on the Property are governed by the laws of any jurisdiction other than the State of Alabama. SECTION 6.7 Date of Agreement. The date of this Agreement is intended as ----------------- a date for the convenient identification of this Agreement and is not intended to indicate that this Agreement was executed and delivered on that date. SECTION 6.8 Separability Clause. If any provision of the Credit Documents ------------------- shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6.9 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same agreement. SECTION 6.10 No Oral Agreements. This Agreement is the final expression ------------------ of the agreement between the parties hereto, and this Agreement may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Agreement and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 6.11 Waiver and Election. The exercise by the Lender of any ------------------- option given under this Agreement shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Lender in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of the Credit Documents, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 6.12 No Obligations of Lender; Indemnification. The Lender does ----------------------------------------- not by virtue of this Agreement or any of the transactions contemplated by the Credit Documents assume any duties, liabilities or obligations with respect to any of the Property unless expressly assumed by the Lender under a separate agreement in writing, and this Agreement shall not be deemed to confer on the Lender any duties or obligations that would make the Lender directly or derivatively liable for any person's negligent, reckless or wilful conduct. The Borrower agrees to indemnify and hold the Lender harmless against and with respect to any damage, claim, action, loss, cost, expense, liability, penalty or interest (including attorney's fees) and all costs and expenses of all actions, suits, proceedings, demands, assessments, claims and judgments directly or indirectly resulting from, occurring in connection with, or arising out of: (a) any inaccurate representation made by the Borrower or any Obligor in this Agreement or any other Credit Document; (b) any breach of any of the warranties or obligations of the Borrower or any Obligor under this Agreement or any other Credit Document; and (c) the Property, or the Liens of the Lender thereon. The provisions of this Section 6.12 shall survive the payment of the Obligations in full and the termination, satisfaction, release (in whole or in part) and foreclosure of this Agreement. -8- SECTION 6.13 Advances by the Lender. If the Borrower shall fail to comply ---------------------- with any of the provisions of this Agreement, the Lender may (but shall not be required to) make advances to perform the same, and where necessary enter any premises where any Property is located for the purpose of performing the Borrower's obligations under any such provision. The Borrower agrees to repay all such sums advanced upon demand, with interest from the date such advances are made at the Default Rate, and all sums so advanced with interest shall be a part of the Obligations. The making of any such advances shall not be construed as a waiver by the Lender of any Event of Default resulting from the Borrower's failure to pay such amounts. SECTION 6.14 Rights, Liens and Obligations Absolute. All rights of the -------------------------------------- Lender hereunder, all Liens granted to the Lender hereunder, and all obligations of the Borrower hereunder, shall be absolute and unconditional and shall not be affected by (a) any lack of validity or enforceability as to any other person of any of the Credit Documents, (b) any change in the time, manner or place of payment of, or any other term of the Obligations, (c) any amendment or waiver of any of the provisions of the Credit Documents as to any other person, and (d) any exchange, release or non-perfection of any other collateral or any release, termination or waiver of any guaranty, for any of the Obligations. SECTION 6.15 Termination. This Agreement and the Lender's Liens in the ----------- Property hereunder will not be terminated until one of the Lender's officers signs a written termination agreement. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement shall in any way affect or impair the representations, warranties, agreements or other obligations of the Borrower or the rights, powers and remedies of the Lender under this Agreement with respect to any transaction or event occurring prior to such termination, all of which shall survive such termination. SECTION 6.16 Reinstatement. This Agreement, the obligations of the ------------- Borrower hereunder, and the Liens, rights, powers and remedies of the Lender hereunder, shall continue to be effective, or be automatically reinstated, as the case may be, if at any time any amount applied to the payment of any of the Obligations is rescinded or must otherwise be restored or returned to the Borrower, any Obligor, or any other person (or paid to the creditors of any of them, or to any custodian, receiver, trustee or other officer with similar powers with respect to any of them, or with respect to any part of their property) upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, any Obligor or any such person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with respect to any of them, or with respect to any part of their property, or otherwise, all as though such payment had not been made. SECTION 6.17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Agreement will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Agreement (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Agreement) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated in or pursuant to Section 6.1; (f) agrees that service in accordance with Section 6.17(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS AGREEMENT MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 6.17 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 6.18 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of the Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration -9- as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with the Note, any extension of or commitment to extend Credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including the Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Agreement shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. IN WITNESS WHEREOF, the undersigned has executed this Agreement dated April 15, 1999. /s/ William E. Matthews, V ----------------------------------------------------- (Signature of the Borrower) William E. Matthews, V ----------------------------------------------------- (Printed Name) -10- EXHIBIT A --------- Certificate No. No. of Shares Issued To Date - -------------- ------------- --------- ---- ANB 2832 7,043 William E. Matthews, V January 2, 1996 A-1 EXHIBIT B --------- (Credit Documents) The "Credit Documents" referred to in this Agreement include the following: (a) Promissory Note dated of even date herewith in the principal amount of $109,570.00 executed by the Borrower in favor of the Lender, which evidences a loan made by the Lender to the Borrower. (b) Promissory Note dated of even date herewith in the principal amount of $28,000.00 executed by the Borrower in favor of the Lender, which evidences a loan made available by the Lender to the Borrower and has a final maturity date of April 15, 2000. B-1 EX-10.10 11 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.10 $111,739.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace RICHARD MURRAY, IV, (the "Borrower"), promises to pay to the order of ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of One Hundred Eleven Thousand Seven Hundred Thirty-Nine and 00/100 Dollars ($111,739.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full or complete forgiveness, whichever occurs first, at the rate per annum equal to the LIBOR-Based Rate (as defined below) adjusted on each Interest Rate Determination Date (as defined below). If in the Lender's opinion it is impossible or impractical to determine the LIBOR-Based Rate for a certain year, this Note shall bear interest at the Prime Rate until the next Interest Rate Determination Date. Interest payable hereunder shall be payable on each Interest Rate Determination Date, commencing April 15, 2000. Notwithstanding anything to the contrary contained herein, if the Borrower remains continually employed by the Lender or one of its subsidiaries or affiliates (hereinafter referred to as a "Qualifying Employer") as of the first ten (10) anniversaries of this Note, ten percent (10%) of the original principal balance ($11,173.90) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2000. In addition, as long as the Borrower remains continually employed by a Qualifying Employer, upon the occurrence of (x) a Change in Control (as hereinafter defined), (y) the Borrower's death or (z) the Total Disability (as hereinafter defined) of the Borrower, the entire principal balance then remaining unpaid hereunder, shall be immediately forgiven in full. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and --------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------- which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Change in Control of the Lender means (i) any transaction, whether ------------------------------- by merger, consolidation, asset sale, tender offer, reverse stock split, or otherwise, which results in the acquisition or beneficial ownership (as such term is defined under rules and regulations promulgated under the Securities Exchange Act of 1934, as amended) by any person or entity or any group of persons or entities acting in concert, of fifty percent (50%) or more of the outstanding shares of Common Stock of the Lender; or (ii) the sale of all or substantially all of the assets of the Lender; or (iii) the liquidation of the Lender. (d) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (e) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (f) Event of Default is defined in Section 6. An Event of Default ----------------- "exists" if an Event of Default has occurred and is continuing. (g) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (h) LIBOR-Based Rate means a fixed rate of one percent (100 basis ---------------- points) in excess of the per annum rate of interest most recently published in The Wall Street Journal as of the close of business on the date hereof and on and after the most recent Interest Rate Determination Date (being the rate quoted for the immediately preceding business day) as the London Interbank Offered Rate for U.S. dollar deposits having a term of ninety (90) days. The Lender shall determine the LIBOR-Based Rate on the date hereof and on each Interest Rate Determination Date. (i) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (j) Prime Rate means a floating interest rate equal to the rate of ---------- interest designated by the Lender from time to time as its "prime rate." (k) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. (l) Total Disability means the Borrower's inability, as a result of ---------------- illness or injury, to perform the normal duties of the Borrower's employment for a period of ninety (90) consecutive days. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) The amount payable by the Borrower to the Holder under this Note Or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). -2- SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. Notwithstanding anything in this Note or any other Security Document to the contrary, the entire unpaid principal balance of the indebtedness evidenced by this Note shall be immediately due and payable without written notice or demand, upon the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability. SECTION 8 Certain Waivers and Agreements by Obligors. ----------------------------------------------- (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Joint and Several Liability. If the Borrower is comprised of ---------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Note shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Holder my exercise its remedies on default against all of the persons comprising the Borrower. SECTION 10 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 11 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 12 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 13 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 14 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. -3- SECTION 15 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 16 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 16 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. SECTION 17 Time of Essence. Time is of the essence of this Note. --------------- SECTION 18 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 18(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 18 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 19 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. -4- SECTION 20 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ Richard Murray, IV ------------------------------------------- Signature of Borrower Richard Murray, IV ------------------------------------------- Please Print Name Send Correspondence and Billings to: Richard Murray, IV ----------------------------------- 14 Honeysuckle Lane ----------------------------------- Birmingham, Alabama 35213 ----------------------------------- -6- EX-10.11 12 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.11 $29,400.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace, RICHARD MURRAY, IV (the "Borrower"), promises to pay to the order of Alabama National BanCorporation, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of Twenty-Nine Thousand Four Hundred and 00/100 Dollars ($29,400.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full, at a fixed interest rate equal to six percent (6.0%) per annum. Principal and interest shall be payable under this Note on April 15, 2000. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and --------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (d) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (e) Event of Default is defined in Section 8. An Event of --------------- Default "exists" if an Event of Default has occurred and is continuing. (f) Obligors means the Borrower, each other person executing -------- any Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (g) Security Documents means the Pledge Agreement dated of even ------------------ date herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) All amounts payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. All amounts payable by the Borrower to the Holder under this Note or the other Credit Documents for which no payment date is expressly set forth herein or therein shall be payable ten days after written demand by the Holder to the Borrower. The Holder may, at its option, send written notice or demand to the Borrower of amounts payable on a specified due date pursuant to this Note or the other Credit Documents, but the failure to send such notice shall not affect or excuse the Borrower's obligation to make payment of the amounts due on the specified due date. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, whether or not described herein, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. -2- (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 10 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 11 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 12 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 13 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 14 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 15 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 18 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. -3- SECTION 16 Time of Essence. Time is of the essence of this Note. --------------- SECTION 17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 20(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 20 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 18 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. SECTION 19 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies. -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, -4- present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute.] -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ RICHARD MURRAY, IV ------------------------------------- Signature of Borrower RICHARD MURRAY, IV ------------------------------------- Please Print Name Send Correspondence and Billings to: Richard Murray, IV ----------------------------- 14 Honeysuckle Lane ----------------------------- Birmingham, Alabama 35213 ----------------------------- -6- EX-10.12 13 PLEDGE AGREEMENT DATED APRIL 15, 1999 EXHIBIT 10.12 PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT (this "Agreement") dated April 15, 1999 is between RICHARD MURRAY, IV, as pledgor and debtor (the "Borrower"), and ALABAMA NATIONAL BANCORPORATION, a Delaware corporation, as pledgee and secured party (the "Lender"). Recitals -------- The Borrower is the holder, beneficially and of record, of certain shares of the outstanding capital stock of the Lender, more particularly described on Exhibit A attached hereto and made a part hereof (the "Stock"). - --------- Capitalized terms used in these Recitals have the meanings defined for them above or in Section 1.2. The Borrower has requested that the Lender extend Credit to the Borrower under the Credit Documents. To secure the Obligations, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower has agreed to execute and deliver this Agreement to the Lender. Agreement --------- NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower agrees with the Lender as follows: ARTICLE 1 --------- Rules of Construction and Definitions ------------------------------------- SECTION 1.1 Rules of Construction. For the purposes of this Agreement, --------------------- except as otherwise expressly provided or unless the context otherwise requires: (a) Words of masculine, feminine or neuter gender include the correlative words of other genders. Singular terms include the plural as well as the singular, and vice versa. (b) All references herein to designated "Articles," "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and subdivisions hereof and the Exhibits annexed hereto unless expressly otherwise designated in context. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and do not limit or describe the scope or intent of, or in any way affect, this Agreement. (c) The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to." (d) The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, other subdivision or Exhibit. (e) All Recitals set forth in, and all Exhibits to, this Agreement are hereby incorporated in this Agreement by reference. (f) No inference in favor of or against any party shall be drawn from the fact that such party or such party's counsel has drafted any portion hereof. (g) All references in this Agreement to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. SECTION 1.2 Definitions. As used in this Agreement, the following terms ----------- are defined as follows: (a) Unless otherwise defined herein, terms used in this Agreement that are defined in Article 9 of the Alabama Uniform Commercial Code have the meanings defined for them therein. (b) Additional Stock is defined in Section 2.2. ---------------- (c) Business Day means any day, excluding Saturday and Sunday, on ----------- which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (d) Credit means, individually and collectively, all loans, ------ forbearances, renewals, extensions, advances, disbursements and other extensions of credit now or hereafter made by the Lender to or for the account of the Borrower under the Credit Documents. (e) Credit Documents means the Promissory Note dated of even date ---------------- herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (f) Debt of any person means (1) all indebtedness, whether or not ---- represented by bonds, debentures, notes or other securities, for the repayment of borrowed money, (2) all deferred indebtedness for the payment of the purchase price of property or assets purchased, (3) all capitalized lease obligations, (4) all indebtedness secured by any Lien on any property of such person, whether or not indebtedness secured thereby has been assumed, (5) all obligations with respect to any conditional sale contract or title retention agreement, (6) all indebtedness and obligations arising under acceptance facilities or in connection with surety or similar bonds, and the outstanding amount of all letters of credit issued for the account of such person, and (7) all obligations with respect to interest rate swap agreements. (g) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal amount of the Credit under the Credit Documents from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (h) Event of Default is defined in Section 4.1. An Event of Default ---------------- "exists" if the same has occurred and is continuing. (i) Governmental Authority means any national, state, county, ---------------------- municipal or other government, domestic or foreign, and any agency, authority, department, commission, bureau, board, court or other instrumentality thereof. (j) Lien means any mortgage, pledge, assignment, charge, encumbrance, ---- lien, security title, security interest or other preferential arrangement. (k) Obligations means (1) the payment of all amounts now or hereafter ----------- becoming due and payable under the Credit Documents, including the principal amount of the Credit, all interest thereon (including interest that, but for the filing of a petition in bankruptcy, would accrue on any such principal) and all other fees, charges and costs (including attorneys' fees and disbursements) payable in connection therewith; (2) the observance and performance the Borrower of all of the provisions of the Credit Documents; (3) the payment of all sums advanced or paid by the Lender in exercising any of its rights, powers or remedies under the Credit Documents, and all interest (including post-bankruptcy petition interest, as aforesaid) on such sums provided for herein or therein; and (4) all renewals, extensions, modifications and amendments of any of the foregoing, whether or not any renewal, extension, modification or amendment agreement is executed in connection therewith. (l) Obligors means the Borrower each other person, if any, executing -------- any Security Document as a grantor, (if the Borrower is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the Obligations. (m) Permitted Encumbrances means the Liens granted to the Lender under ---------------------- this Agreement and any other Liens of the Lender. (n) Person (whether or not capitalized) includes natural persons, sole ------ proprietorships, corporations, trusts, unincorporated organizations, associations, companies, institutions, entities, joint ventures, partnerships, limited liability companies and Governmental Authorities. (o) Pledged Stock is defined in Section 2.2. ------------ (p) Property is defined in Section 2.2. -------- -2- (q) Security Documents means all Credit Documents that now or ------------------ hereafter grant or purport to grant to the Lender any guaranty, collateral or other security for any of the Obligations. ARTICLE 2 Security Agreement ------------------ SECTION 2.1 Pledge of Stock. As security for the Obligations, the --------------- Borrower hereby grants to the Lender security title to and a continuing security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Stock and all proceeds thereof, and the Borrower hereby delivers to the Lender the stock certificates evidencing the Stock, as described in Exhibit A, together with --------- separate assignments thereof, to be held by the Lender upon the terms and conditions set forth in this Agreement. SECTION 2.2 Pledge of Additional Stock. If the Borrower shall acquire by -------------------------- exchange or replacement any additional shares of the capital stock of the Company, of whatever class or description ("Additional Stock") at any time after the date hereof, the Borrower hereby grants to the Lender a security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Additional Stock and such certificates, and immediately upon receipt thereof the Borrower shall pledge and deposit the Additional Stock with the Lender and shall deliver to the Lender certificates therefor registered in the name of the Borrower, together with executed separate assignments thereof, to be held by the Lender under this Agreement. The Stock, the Additional Stock, and any stock or other securities issued in exchange therefor or replacement thereof, are hereinafter together called the "Pledged Stock," and the Pledged Stock and all proceeds thereof and all other securities and moneys received and at the time held by the Lender hereunder are hereinafter together called the "Property," all of which shall be subject to the Liens granted to the Lender under this Agreement. SECTION 2.3 Dividends and Other Distributions. Unless an Event of Default --------------------------------- exists, all cash dividends paid on the Pledged Stock shall be paid to the Borrower, except that all cash dividends payable on the Pledged Stock that are determined by the Lender in its sole discretion to represent in whole or in part an extraordinary, liquidating or other distribution in return of capital shall be paid to the Lender and retained by it as Property. The Lender shall also be entitled to receive directly and to retain as Property: (a) all stock and other securities or property (other than cash) paid or distributed with respect to the Pledged Stock by way of dividend; (b) all stock and other securities or property (including cash) paid or distributed with respect to the Pledged Stock by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar or other corporate rearrangement; and (c) all stock and other securities or property (including cash) that may be paid or distributed with respect to the Pledged Stock by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate reorganization. SECTION 2.4 Voting While No Event of Default. Unless an Event of Default -------------------------------- exists, the Borrower shall have the right to vote any and all shares of the Pledged Stock and to give consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto. All such rights of the Borrower to vote and to give consents, waivers and ratifications shall cease if an Event of Default exists. ARTICLE 3 Representations, Warranties and Covenants ----------------------------------------- SECTION 3.1 Representations and Warranties. The Borrower represents and ------------------------------ warrants to the Lender that (a) subject to Permitted Encumbrances, the Borrower is the holder of record and sole beneficial owner of the Stock (which is fully issued and non-assessable), free of Liens and adverse claims of any kind, except Permitted Encumbrances; (b) the Borrower has a good right to grant to the Lender the Liens in the Stock purported to be granted under this Agreement; (c) there are no outstanding subscriptions, options, rights, warrants, calls, commitments or agreements of any kind to acquire or transfer any of the Stock; and (d) to the best of the Borrower's knowledge, no consent, authorization or other action by, and no notice to or filing with, any other person (including any stockholder, partner or creditor of the Borrower and any Governmental Authority) is required for (1) the execution and delivery of this Agreement by the Borrower, (2) the granting to the Lender of the Liens on the Property under this Agreement, or (3) the exercise by the Lender of the rights, powers and remedies granted to it under -3- this Agreement, except as may be required in connection with any disposition by the Lender of the Property under laws affecting the offering and sale of securities generally. SECTION 3.2 Encumbrances and Dispositions. The Borrower shall not (a) ----------------------------- encumber any of the Property, or permit any of the Property to be encumbered, with any kind of Lien, other than Permitted Encumbrances, or (b) sell, transfer or otherwise dispose of, or grant any option or warrant with respect to, any of the Property. SECTION 3.3 Taxes and Assessments. The Borrower shall pay when due all --------------------- taxes, assessments and other charges levied or assessed against any of the Property, and all other claims that are or may become Liens against any of the Property, except any that are Permitted Encumbrances; and should default be made in the payment of same, the Lender, at its option, may pay them. SECTION 3.4 Filing Fees and Taxes. The Borrower agrees, to the extent --------------------- permitted by law, to pay all recording and filing fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution and delivery of the Credit Documents, and the recording, filing, satisfaction, continuation and release thereof. SECTION 3.5 Further Assurances. At the Borrower's cost and expense, upon ------------------ request of the Lender, the Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of the Lender or its counsel to perfect, preserve and protect the validity of the Liens of the Lender in the Property and to carry out more effectively the provisions and purposes of this Agreement. SECTION 3.6 Attorney-in-Fact. The Borrower hereby constitutes and ---------------- appoints the Lender, or any other person whom the Lender may designate, as the Borrower's attorney-in-fact, at the Borrower's sole cost and expense, effective upon the existence of any Event of Default, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, from time to time in the Lender's discretion to take any action (a) that the Borrower has agreed, but has failed, to take under this Agreement, (b) that the Lender in its sole discretion deems necessary or advisable to maintain, preserve or protect the security intended to be afforded by this Agreement, or (c) that the Lender may deem necessary or advisable to accomplish the purposes of this Agreement and the other Credit Documents. ARTICLE 4 Events of Default ----------------- SECTION 4.1 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in this Agreement or in any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with the Credit, this Agreement or any of the other Credit Documents, shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the Obligations; or (d) default shall be made in the due observance or performance of any covenant, condition or agreement on the part of the Borrower to be observed or performed pursuant to the terms of this Agreement (other than any covenant, condition or agreement, default in the observance or performance of which is elsewhere in this Section 4.1 specifically dealt with) and such default shall continue unremedied for a period of thirty (30) days; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein); or (f) (1) default shall be made with respect to any Debt (other than the Obligations) of any Obligor, if the effect of such default is to accelerate the maturity of such Debt or to permit the holder thereof to cause such Debt to become due prior -4- to its stated maturity, or (2) any such Debt shall not be paid when due (after giving effect to any applicable notice, grace or cure periods); or (g) any Obligor shall (1) apply for or consent to the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or any of such Obligor's properties or assets (including the Property), (2) fail or admit in writing such Obligor's inability to pay such Obligor's debts generally as they become due, (3) make a general assignment for the benefit of creditors, (4) suffer or permit an order for relief to be entered against such Obligor in any proceeding under the federal Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition or an answer seeking an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against such Obligor in any proceeding under any such law or statute, or if corporate action shall be taken by any Obligor for the purpose of effecting any of the foregoing; or (h) a petition shall be filed, without the application, approval or consent of any Obligor in any court of competent jurisdiction, seeking bankruptcy, reorganization, rearrangement, dissolution or liquidation of such Obligor or of all or a substantial part of the properties or assets of such Obligor, or seeking any other relief under any law or statute of the type referred to in Section 4.1(l)(5) against such Obligor, or the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or of all or a substantial part of the properties or assets of such Obligor, and such petition shall not have been stayed or dismissed within 30 days after the filing thereof; or (i) any writ of execution, attachment or garnishment shall be issued against the assets of any Obligor and such writ of execution, attachment or garnishment shall not be dismissed, discharged or quashed within 30 days of issuance; or (j) any final judgment for the payment of money shall be rendered against any Obligor and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed; or (k) any guarantor of any of the Obligations shall default in the due observance or performance of any covenant, condition or agreement on such guarantor's part to be observed or performed under such guarantor's guaranty agreement (after giving effect to any applicable notice, grace or cure period specified therein) or shall terminate or attempt to terminate such guarantor's guaranty agreement. ARTICLE 5 Remedies -------- SECTION 5.1 Acceleration of Obligations. If an Event of Default exists --------------------------- under Section 4.1(l), 4.1(m) or 4.1(l), all of the Obligations shall automatically become immediately due and payable. If any other Event of Default exists that does not already result in the automatic acceleration of the Obligations under another Credit Document, the Lender shall have the right without further notice to the Borrower (except any such notice as may be specifically required under the other Credit Documents) to declare all of the Obligations immediately due and payable. SECTION 5.2 Remedies. If an Event of Default exists, the Lender shall be -------- entitled to exercise all of the rights, powers and remedies vested in it by this Agreement and applicable law (including all rights of a secured party under Article 9 of the Alabama Uniform Commercial Code) for the protection and enforcement of its rights with respect to the Property, including the rights: (a) to receive all amounts payable with respect to the Property otherwise payable to the Borrower under Section 2.3; (b) to transfer all or any part of the Pledged Stock into the Lender's name or the name of its nominee and to cause new certificates to be issued in the name of such transferee; (c) to vote all or any part of the Pledged Stock, whether or not transferred into the name of the Lender or its nominee, and to give all consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto as though the Lender were the outright owner thereof (the Borrower hereby irrevocably constituting and appointing the Lender the proxy and attorney-in-fact of the Borrower, with full power of substitution, to do so); (d) to settle, adjust, compromise and arrange all accounts, controversies, claims and demands in relation to any Property; -5- (e) to execute all contracts, agreements, documents and instruments, to bring, defend and abandon all actions and proceedings, and to take all other actions, in relation to any Property as the Lender in its sole discretion may determine; and (f) at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Property, or any interest therein, at any public or private sale, at any exchange, broker's board or at any of the Lender's offices, in one or more parcels, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived by the Borrower), for cash, on credit, or for other property, for immediate or future delivery without any assumption of credit risk, and for such prices and on such terms as the Lender in its sole discretion may deem to be commercially reasonable. The Lender shall not be obligated to make any sale of Property regardless of notice having been given. The Lender may adjourn any sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was adjourned. The Lender shall not be liable for any failure to collect or realize upon any Property or for any delay in so doing, or shall it be obligated to take any action whatsoever with respect thereto. SECTION 5.3 Non-Public Sale. If at any time when the Lender shall --------------- determine to exercise its right to sell all or any of the Pledged Stock and other securities pursuant to Section 5.2, such Pledged Stock and other securities or the part thereof to be sold shall not for any reason be effectively registered under the Securities Act of 1933, as then in effect, the Lender may, in its sole discretion, sell such Pledged Stock and other securities or part thereof by private sale in such manner and under such circumstances as the Lender may deem necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Lender, in its sole discretion (a) may proceed to make such private sale notwithstanding that a registration statement registering any such Pledged Stock shall have been filed under such Securities Act, (b) may approach and negotiate with as few as one possible purchaser to effect such sale, and (c) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of any such Pledged Stock and who will satisfy such other conditions as at such time may be required for lawful non-public sale. In the event of any such sale, the Lender shall incur no responsibility or liability for selling all or any part of the Pledged Stock at a price which the Lender, in its sole discretion, may deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration. SECTION 5.4 Reasonable Care. The Lender shall be deemed to have exercised --------------- reasonable care in the custody and preservation of any Property in its possession if it takes such reasonable actions for that purpose as the Borrower shall request in writing, but the Lender shall have sole power to determine whether such actions are reasonable. Any omission to do any act not requested by the Borrower shall not be deemed a failure to exercise reasonable care. SECTION 5.5 Waiver of Redemption, Marshalling, etc. The Borrower hereby -------------------------------------- waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Property, whether before or after sale hereunder, and all rights, if any, of marshalling the Property and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Lender may bid for and purchase all or any part of the Property so sold free from any such right or equity of redemption. SECTION 5.6 Application of Proceeds. The net cash proceeds resulting from ----------------------- the exercise of any of the rights and remedies of the Lender under this Agreement, after deducting all charges, expenses, costs and attorneys' fees relating thereto, including any and all costs and expenses referred to in Section 6.2, shall be applied by the Lender to the payment of the Obligations, whether due or to become due, in such order and in such proportions as the Lender may elect; and the Borrower shall remain liable to the Lender for any deficiency. SECTION 5.7 Additional Security, etc. Without notice to or consent of the ------------------------ Borrower, and without impairment of the Liens and rights created by this Agreement, the Lender may accept from the Borrower, any other Obligor or any other person, additional security for the Obligations. Neither the giving of this Agreement nor the acceptance of any such additional security shall prevent the Lender from resorting first to any such additional security, or first to the Liens created by this Agreement, without affecting the Liens and rights of the Lender under this Agreement. SECTION 5.8 Default Rate. If an Event of Default exists, the Obligations ------------ shall bear interest at the Default Rate, until the earlier of (a) such time as all of the Obligations are paid in full or (b) no such Event of Default exists. SECTION 5.9 Remedies Cumulative. The rights and remedies of the Lender ------------------- under this Agreement are cumulative and not exclusive of any other rights or remedies now or hereafter existing at law or in equity. -6- ARTICLE 6 Miscellaneous ------------- SECTION 6.1 Notices. ------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, the Borrower or the Lender must (except as otherwise expressly provided in this Agreement) be in writing and be delivered by one of the following methods: (1) by personal delivery at the hand delivery address specified below, (2) by first-class, registered or certified mail, postage prepaid, addressed as specified below, or (3) if facsimile transmission facilities for such party are identified below or pursuant to a separate written notice from such party, sent by facsimile transmission to the number specified below or in such notice. (b) The hand delivery address, mailing address and (if applicable) facsimile transmission number for receipt of notice or other documents by such parties are as follows: (1) Borrower: -------- By hand or mail: Richard Murray, IV 14 Honeysuckle Lane Birmingham, Alabama 35213 (2) Lender: ------ By hand or mail: Alabama National Bancorporation 1927 First Avenue North Birmingham, Alabama 35203 Attention: Chief Executive Officer By facsimile: (205) 583-3275 Any of such parties may change the address or number for receiving any such notice or other document by giving notice of the change to the other parties named in this Section 6.1. (c) Any such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not an individual, to an officer, director, partner or other legal representative of the party) at the address or number specified pursuant to this Section 6.1, or, if sent by mail, three Business Days after such notice or document is deposited in the United States mail, addressed as provided above. (d) Five Business Days' written notice to the Borrower as provided above shall constitute reasonable notification to the Borrower when notification is required by law; provided, however, that nothing contained in the foregoing shall be construed as requiring five Business Days' notice if, under applicable law and the circumstances then existing, a shorter period of time would constitute reasonable notice. SECTION 6.2 Expenses. The Borrower shall promptly on demand pay all costs -------- and expenses, including the fees and disbursements of counsel to the Lender, incurred by the Lender in connection with (a) the negotiation, preparation and review of this Agreement (whether or not the transactions contemplated by this Agreement shall be consummated), (b) the enforcement of this Agreement, (c) the custody and preservation of the Property, (d) the protection or perfection of the Lender's rights and interests under this Agreement in the Property, (e) the exercise by or on behalf of the Lender of any of its rights, powers or remedies under this Agreement and (f) the prosecution or defense of any action or proceeding by or against the Lender, the Borrower, any other Obligor, or any one or more of them, concerning any matter related to this Agreement, any of the Property or any of the Obligations. All such amounts shall bear interest from the date demand is made at the Default Rate and shall be included in the Obligations secured hereby. The Borrower's obligations under this Section 6.2 shall survive the payment in full of the Obligations and the termination of this Agreement. -7- SECTION 6.3 Heirs, Successors and Assigns. Whenever in this Agreement any ----------------------------- party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer this Agreement without the prior written consent of the Lender; and all covenants and agreements of the Borrower contained in this Agreement shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Lender. SECTION 6.4 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Agreement shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Lender my exercise its remedies on default against all of the person comprising the Borrower. SECTION 6.5 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Lender under this Agreement may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 6.6 Governing Law. This Agreement shall be construed in ------------- accordance with and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law and except to the extent that the validity and perfection of the Liens on the Property are governed by the laws of any jurisdiction other than the State of Alabama. SECTION 6.7 Date of Agreement. The date of this Agreement is intended as ----------------- a date for the convenient identification of this Agreement and is not intended to indicate that this Agreement was executed and delivered on that date. SECTION 6.8 Separability Clause. If any provision of the Credit Documents ------------------- shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6.9 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same agreement. SECTION 6.10 No Oral Agreements. This Agreement is the final expression ------------------ of the agreement between the parties hereto, and this Agreement may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Agreement and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 6.11 Waiver and Election. The exercise by the Lender of any ------------------- option given under this Agreement shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Lender in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of the Credit Documents, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 6.12 No Obligations of Lender; Indemnification. The Lender does ----------------------------------------- not by virtue of this Agreement or any of the transactions contemplated by the Credit Documents assume any duties, liabilities or obligations with respect to any of the Property unless expressly assumed by the Lender under a separate agreement in writing, and this Agreement shall not be deemed to confer on the Lender any duties or obligations that would make the Lender directly or derivatively liable for any person's negligent, reckless or wilful conduct. The Borrower agrees to indemnify and hold the Lender harmless against and with respect to any damage, claim, action, loss, cost, expense, liability, penalty or interest (including attorney's fees) and all costs and expenses of all actions, suits, proceedings, demands, assessments, claims and judgments directly or indirectly resulting from, occurring in connection with, or arising out of: (a) any inaccurate representation made by the Borrower or any Obligor in this Agreement or any other Credit Document; (b) any breach of any of the warranties or obligations of the Borrower or any Obligor under this Agreement or any other Credit Document; and (c) the Property, or the Liens of the Lender thereon. The provisions of this Section 6.12 shall survive the payment of the Obligations in full and the termination, satisfaction, release (in whole or in part) and foreclosure of this Agreement. -8- SECTION 6.13 Advances by the Lender. If the Borrower shall fail to comply ---------------------- with any of the provisions of this Agreement, the Lender may (but shall not be required to) make advances to perform the same, and where necessary enter any premises where any Property is located for the purpose of performing the Borrower's obligations under any such provision. The Borrower agrees to repay all such sums advanced upon demand, with interest from the date such advances are made at the Default Rate, and all sums so advanced with interest shall be a part of the Obligations. The making of any such advances shall not be construed as a waiver by the Lender of any Event of Default resulting from the Borrower's failure to pay such amounts. SECTION 6.14 Rights, Liens and Obligations Absolute. All rights of the -------------------------------------- Lender hereunder, all Liens granted to the Lender hereunder, and all obligations of the Borrower hereunder, shall be absolute and unconditional and shall not be affected by (a) any lack of validity or enforceability as to any other person of any of the Credit Documents, (b) any change in the time, manner or place of payment of, or any other term of the Obligations, (c) any amendment or waiver of any of the provisions of the Credit Documents as to any other person, and (d) any exchange, release or non-perfection of any other collateral or any release, termination or waiver of any guaranty, for any of the Obligations. SECTION 6.15 Termination. This Agreement and the Lender's Liens in the ----------- Property hereunder will not be terminated until one of the Lender's officers signs a written termination agreement. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement shall in any way affect or impair the representations, warranties, agreements or other obligations of the Borrower or the rights, powers and remedies of the Lender under this Agreement with respect to any transaction or event occurring prior to such termination, all of which shall survive such termination. SECTION 6.16 Reinstatement. This Agreement, the obligations of the ------------- Borrower hereunder, and the Liens, rights, powers and remedies of the Lender hereunder, shall continue to be effective, or be automatically reinstated, as the case may be, if at any time any amount applied to the payment of any of the Obligations is rescinded or must otherwise be restored or returned to the Borrower, any Obligor, or any other person (or paid to the creditors of any of them, or to any custodian, receiver, trustee or other officer with similar powers with respect to any of them, or with respect to any part of their property) upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, any Obligor or any such person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with respect to any of them, or with respect to any part of their property, or otherwise, all as though such payment had not been made. SECTION 6.17 Submission to Jurisdiction. The Borrower irrevocably (a) --------------------------- acknowledges that this Agreement will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Agreement (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Agreement) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated in or pursuant to Section 6.1; (f) agrees that service in accordance with Section 6.17(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS AGREEMENT MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 6.17 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 6.18 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of the Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration -9- as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with the Note, any extension of or commitment to extend Credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including the Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Agreement shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. IN WITNESS WHEREOF, the undersigned has executed this Agreement dated April 15, 1999. /s/ Richard Murray, IV --------------------------- (Signature of the Borrower) Richard Murray, IV --------------------------- (Printed Name) -10- EXHIBIT A --------- Certificate No. No. of Shares Issued To Date - --------------- ------------- --------- ---- ANB 2833 7,043 Richard Murray, IV January 2, 1996 A-1 EXHIBIT B --------- (Credit Documents) The "Credit Documents" referred to in this Agreement include the following: (a) Promissory Note dated of even date herewith in the principal amount of $111,739.00 executed by the Borrower in favor of the Lender, which evidences a loan made by the Lender to the Borrower. (b) Promissory Note dated of even date herewith in the principal amount of $29,400.00 executed by the Borrower in favor of the Lender, which evidences a loan made available by the Lender to the Borrower and has a final maturity date of April 15, 2000. A-2 EX-10.13 14 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.13 $99,558.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace VICTOR E. NICHOL, JR., (the "Borrower"), promises to pay to the order of ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of Ninety-Nine Thousand Fife Hundred Fifty-Eight and 00/100 Dollars ($99,558.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full or complete forgiveness, whichever occurs first, at the rate per annum equal to the LIBOR-Based Rate (as defined below) adjusted on each Interest Rate Determination Date (as defined below). If in the Lender's opinion it is impossible or impractical to determine the LIBOR-Based Rate for a certain year, this Note shall bear interest at the Prime Rate until the next Interest Rate Determination Date. Interest payable hereunder shall be payable on each Interest Rate Determination Date, commencing April 15, 2000. Notwithstanding anything to the contrary contained herein, if the Borrower remains continually employed by the Lender or one of its subsidiaries or affiliates (hereinafter referred to as a "Qualifying Employer") as of the first ten (10) anniversaries of this Note, ten percent (10%) of the original principal balance ($9,955.80) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2000. In addition, as long as the Borrower remains continually employed by a Qualifying Employer, upon the occurrence of (x) a Change in Control (as hereinafter defined), (y) the Borrower's death or (z) the Total Disability (as hereinafter defined) of the Borrower, the entire principal balance then remaining unpaid hereunder, shall be immediately forgiven in full. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and -------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ----------- which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Change in Control of the Lender means (i) any transaction, whether ------------------------------- by merger, consolidation, asset sale, tender offer, reverse stock split, or otherwise, which results in the acquisition or beneficial ownership (as such term is defined under rules and regulations promulgated under the Securities Exchange Act of 1934, as amended) by any person or entity or any group of persons or entities acting in concert, of fifty percent (50%) or more of the outstanding shares of Common Stock of the Lender; or (ii) the sale of all or substantially all of the assets of the Lender; or (iii) the liquidation of the Lender. (d) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (e) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (f) Event of Default is defined in Section 6. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (g) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (h) LIBOR-Based Rate means a fixed rate of one percent (100 basis ---------------- points) in excess of the per annum rate of interest most recently published in The Wall Street Journal as of the close of business on the date hereof and on and after the most recent Interest Rate Determination Date (being the rate quoted for the immediately preceding business day) as the London Interbank Offered Rate for U.S. dollar deposits having a term of ninety (90) days. The Lender shall determine the LIBOR-Based Rate on the date hereof and on each Interest Rate Determination Date. (i) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (j) Prime Rate means a floating interest rate equal to the rate of ---------- interest designated by the Lender from time to time as its "prime rate." (k) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. (l) Total Disability means the Borrower's inability, as a result of ---------------- illness or injury, to perform the normal duties of the Borrower's employment for a period of ninety (90) consecutive days. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) The amount payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). -2- SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. Notwithstanding anything in this Note or any other Security Document to the contrary, the entire unpaid principal balance of the indebtedness evidenced by this Note shall be immediately due and payable without written notice or demand, upon the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Joint and Several Liability. If the Borrower is comprised of -------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Note shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Holder my exercise its remedies on default against all of the persons comprising the Borrower. SECTION 10 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 11 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 12 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 13 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 14 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. -3- SECTION 15 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 16 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 16 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. SECTION 17 Time of Essence. Time is of the essence of this Note. --------------- SECTION 18 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 18(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 18 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 19 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. -4- SECTION 20 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ Victor E. Nichol, Jr. ------------------------------------- Signature of Borrower Victor E. Nichol, Jr. ------------------------------------- Please Print Name Send Correspondence and Billings to: Victor E. Nichol, Jr. ----------------------------- 1763 Indian Creek Drive ----------------------------- Vestavia Hills, Alabama 35243 ----------------------------- -6- EX-10.14 15 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.14 $23,360.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace, VICTOR E. NICHOL, JR. (the "Borrower"), promises to pay to the order of Alabama National BanCorporation, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of Twenty- Three Thousand Three Hundred Sixty and 00/100 Dollars ($23,360.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full, at a fixed interest rate equal to six percent (6.0%) per annum. Principal and interest shall be payable under this Note on April 15, 2000. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and -------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (d) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (e) Event of Default is defined in Section 8. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (f) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (g) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) All amounts payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. All amounts payable by the Borrower to the Holder under this Note or the other Credit Documents for which no payment date is expressly set forth herein or therein shall be payable ten days after written demand by the Holder to the Borrower. The Holder may, at its option, send written notice or demand to the Borrower of amounts payable on a specified due date pursuant to this Note or the other Credit Documents, but the failure to send such notice shall not affect or excuse the Borrower's obligation to make payment of the amounts due on the specified due date. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, whether or not described herein, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. -2- (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 10 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 11 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 12 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 13 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 14 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 15 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 18 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. -3- SECTION 16 Time of Essence. Time is of the essence of this Note. --------------- SECTION 17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 20(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 20 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 18 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. SECTION 19 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies. -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, -4- present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute.] -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ VICTOR E. NICHOL, JR. ------------------------------------ Signature of Borrower VICTOR E. NICHOL, JR. ------------------------------------ Please Print Name Send Correspondence and Billings to: Victor E. Nichol, Jr. ------------------------------- 1763 Indian Creek Drive ------------------------------- Vestavia Hills, Alabama 35243 ------------------------------- -6- EX-10.15 16 PLEDGE AGREEMENT DATED APRIL 15, 1999 EXHIBIT 10.15 PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT (this "Agreement") dated April 15, 1999 is between VICTOR E. NICHOL, JR., as pledgor and debtor (the "Borrower"), and ALABAMA NATIONAL BANCORPORATION, a Delaware corporation, as pledgee and secured party (the "Lender"). Recitals -------- The Borrower is the holder, beneficially and of record, of certain shares of the outstanding capital stock of the Lender, more particularly described on Exhibit A attached hereto and made a part hereof (the "Stock"). Capitalized terms used in these Recitals have the meanings defined for them above or in Section 1.2. The Borrower has requested that the Lender extend Credit to the Borrower under the Credit Documents. To secure the Obligations, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower has agreed to execute and deliver this Agreement to the Lender. Agreement --------- NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower agrees with the Lender as follows: ARTICLE 1 Rules of Construction and Definitions ------------------------------------- SECTION 1.1 Rules of Construction. For the purposes of this Agreement, --------------------- except as otherwise expressly provided or unless the context otherwise requires: (a) Words of masculine, feminine or neuter gender include the correlative words of other genders. Singular terms include the plural as well as the singular, and vice versa. (b) All references herein to designated "Articles," "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and subdivisions hereof and the Exhibits annexed hereto unless expressly otherwise designated in context. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and do not limit or describe the scope or intent of, or in any way affect, this Agreement. (c) The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to." (d) The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, other subdivision or Exhibit. (e) All Recitals set forth in, and all Exhibits to, this Agreement are hereby incorporated in this Agreement by reference. (f) No inference in favor of or against any party shall be drawn from the fact that such party or such party's counsel has drafted any portion hereof. (g) All references in this Agreement to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. SECTION 1.2 Definitions. As used in this Agreement, the following terms ----------- are defined as follows: (a) Unless otherwise defined herein, terms used in this Agreement that are defined in Article 9 of the Alabama Uniform Commercial Code have the meanings defined for them therein. (b) Additional Stock is defined in Section 2.2. ---------------- (c) Business Day means any day, excluding Saturday and Sunday, on ----------- which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (d) Credit means, individually and collectively, all loans, ------ forbearances, renewals, extensions, advances, disbursements and other extensions of credit now or hereafter made by the Lender to or for the account of the Borrower under the Credit Documents. (e) Credit Documents means the documents described in Exhibit B and ---------------- all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (f) Debt of any person means (1) all indebtedness, whether or not ---- represented by bonds, debentures, notes or other securities, for the repayment of borrowed money, (2) all deferred indebtedness for the payment of the purchase price of property or assets purchased, (3) all capitalized lease obligations, (4) all indebtedness secured by any Lien on any property of such person, whether or not indebtedness secured thereby has been assumed, (5) all obligations with respect to any conditional sale contract or title retention agreement, (6) all indebtedness and obligations arising under acceptance facilities or in connection with surety or similar bonds, and the outstanding amount of all letters of credit issued for the account of such person, and (7) all obligations with respect to interest rate swap agreements. (g) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal amount of the Credit under the Credit Documents from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (h) Event of Default is defined in Section 4.1. An Event of Default ---------------- "exists" if the same has occurred and is continuing. (i) Governmental Authority means any national, state, county, ---------------------- municipal or other government, domestic or foreign, and any agency, authority, department, commission, bureau, board, court or other instrumentality thereof. (j) Lien means any mortgage, pledge, assignment, charge, encumbrance, ---- lien, security title, security interest or other preferential arrangement. (k) Obligations means (1) the payment of all amounts now or hereafter ----------- becoming due and payable under the Credit Documents, including the principal amount of the Credit, all interest thereon (including interest that, but for the filing of a petition in bankruptcy, would accrue on any such principal) and all other fees, charges and costs (including attorneys' fees and disbursements) payable in connection therewith; (2) the observance and performance the Borrower of all of the provisions of the Credit Documents; (3) the payment of all sums advanced or paid by the Lender in exercising any of its rights, powers or remedies under the Credit Documents, and all interest (including post-bankruptcy petition interest, as aforesaid) on such sums provided for herein or therein; and (4) all renewals, extensions, modifications and amendments of any of the foregoing, whether or not any renewal, extension, modification or amendment agreement is executed in connection therewith. (l) Obligors means the Borrower each other person, if any, executing -------- any Security Document as a grantor, (if the Borrower is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the Obligations. (m) Permitted Encumbrances means the Liens granted to the Lender under ---------------------- this Agreement and any other Liens of the Lender. (n) Person (whether or not capitalized) includes natural persons, sole ------ proprietorships, corporations, trusts, unincorporated organizations, associations, companies, institutions, entities, joint ventures, partnerships, limited liability companies and Governmental Authorities. (o) Pledged Stock is defined in Section 2.2. ------------- (p) Property is defined in Section 2.2. -------- -2- (q) Security Documents means all Credit Documents that now or ------------------ hereafter grant or purport to grant to the Lender any guaranty, collateral or other security for any of the Obligations. ARTICLE 2 Security Agreement ------------------ SECTION 2.1 Pledge of Stock. As security for the Obligations, the --------------- Borrower hereby grants to the Lender security title to and a continuing security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Stock and all proceeds thereof, and the Borrower hereby delivers to the Lender the stock certificates evidencing the Stock, as described in Exhibit A, together with --------- separate assignments thereof, to be held by the Lender upon the terms and conditions set forth in this Agreement. SECTION 2.2 Pledge of Additional Stock. If the Borrower shall acquire by -------------------------- exchange or replacement any additional shares of the capital stock of the Company, of whatever class or description ("Additional Stock") at any time after the date hereof, the Borrower hereby grants to the Lender a security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Additional Stock and such certificates, and immediately upon receipt thereof the Borrower shall pledge and deposit the Additional Stock with the Lender and shall deliver to the Lender certificates therefor registered in the name of the Borrower, together with executed separate assignments thereof, to be held by the Lender under this Agreement. The Stock, the Additional Stock, and any stock or other securities issued in exchange therefor or replacement thereof, are hereinafter together called the "Pledged Stock," and the Pledged Stock and all proceeds thereof and all other securities and moneys received and at the time held by the Lender hereunder are hereinafter together called the "Property," all of which shall be subject to the Liens granted to the Lender under this Agreement. SECTION 2.3 Dividends and Other Distributions. Unless an Event of Default --------------------------------- exists, all cash dividends paid on the Pledged Stock shall be paid to the Borrower, except that all cash dividends payable on the Pledged Stock that are determined by the Lender in its sole discretion to represent in whole or in part an extraordinary, liquidating or other distribution in return of capital shall be paid to the Lender and retained by it as Property. The Lender shall also be entitled to receive directly and to retain as Property: (a) all stock and other securities or property (other than cash) paid or distributed with respect to the Pledged Stock by way of dividend; (b) all stock and other securities or property (including cash) paid or distributed with respect to the Pledged Stock by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar or other corporate rearrangement; and (c) all stock and other securities or property (including cash) that may be paid or distributed with respect to the Pledged Stock by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate reorganization. SECTION 2.4 Voting While No Event of Default. Unless an Event of Default -------------------------------- exists, the Borrower shall have the right to vote any and all shares of the Pledged Stock and to give consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto. All such rights of the Borrower to vote and to give consents, waivers and ratifications shall cease if an Event of Default exists. ARTICLE 3 Representations, Warranties and Covenants ----------------------------------------- SECTION 3.1 Representations and Warranties. The Borrower represents and ------------------------------ warrants to the Lender that (a) subject to Permitted Encumbrances, the Borrower is the holder of record and sole beneficial owner of the Stock (which is fully issued and non-assessable), free of Liens and adverse claims of any kind, except Permitted Encumbrances; (b) the Borrower has a good right to grant to the Lender the Liens in the Stock purported to be granted under this Agreement; (c) there are no outstanding subscriptions, options, rights, warrants, calls, commitments or agreements of any kind to acquire or transfer any of the Stock; and (d) to the best of the Borrower's knowledge, no consent, authorization or other action by, and no notice to or filing with, any other person (including any stockholder, partner or creditor of the Borrower and any Governmental Authority) is required for (1) the execution and delivery of this Agreement by the Borrower, (2) the granting to the Lender of the Liens on the Property under this Agreement, or (3) the exercise by the Lender of the rights, powers and remedies granted to it under -3- this Agreement, except as may be required in connection with any disposition by the Lender of the Property under laws affecting the offering and sale of securities generally. SECTION 3.2 Encumbrances and Dispositions. The Borrower shall not (a) ----------------------------- encumber any of the Property, or permit any of the Property to be encumbered, with any kind of Lien, other than Permitted Encumbrances, or (b) sell, transfer or otherwise dispose of, or grant any option or warrant with respect to, any of the Property. SECTION 3.3 Taxes and Assessments. The Borrower shall pay when due all ---------------------- taxes, assessments and other charges levied or assessed against any of the Property, and all other claims that are or may become Liens against any of the Property, except any that are Permitted Encumbrances; and should default be made in the payment of same, the Lender, at its option, may pay them. SECTION 3.4 Filing Fees and Taxes. The Borrower agrees, to the extent --------------------- permitted by law, to pay all recording and filing fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution and delivery of the Credit Documents, and the recording, filing, satisfaction, continuation and release thereof. SECTION 3.5 Further Assurances. At the Borrower's cost and expense, upon ------------------ request of the Lender, the Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of the Lender or its counsel to perfect, preserve and protect the validity of the Liens of the Lender in the Property and to carry out more effectively the provisions and purposes of this Agreement. SECTION 3.6 Attorney-in-Fact. The Borrower hereby constitutes and ---------------- appoints the Lender, or any other person whom the Lender may designate, as the Borrower's attorney-in-fact, at the Borrower's sole cost and expense, effective upon the existence of any Event of Default, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, from time to time in the Lender's discretion to take any action (a) that the Borrower has agreed, but has failed, to take under this Agreement, (b) that the Lender in its sole discretion deems necessary or advisable to maintain, preserve or protect the security intended to be afforded by this Agreement, or (c) that the Lender may deem necessary or advisable to accomplish the purposes of this Agreement and the other Credit Documents. ARTICLE 4 Events of Default ----------------- SECTION 4.1 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in this Agreement or in any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with the Credit, this Agreement or any of the other Credit Documents, shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the Obligations; or (d) default shall be made in the due observance or performance of any covenant, condition or agreement on the part of the Borrower to be observed or performed pursuant to the terms of this Agreement (other than any covenant, condition or agreement, default in the observance or performance of which is elsewhere in this Section 4.1 specifically dealt with) and such default shall continue unremedied for a period of thirty (30) days; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein); or (f) (1) default shall be made with respect to any Debt (other than the Obligations) of any Obligor, if the effect of such default is to accelerate the maturity of such Debt or to permit the holder thereof to cause such Debt to become due prior -4- to its stated maturity, or (2) any such Debt shall not be paid when due (after giving effect to any applicable notice, grace or cure periods); or (g) any Obligor shall (1) apply for or consent to the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or any of such Obligor's properties or assets (including the Property), (2) fail or admit in writing such Obligor's inability to pay such Obligor's debts generally as they become due, (3) make a general assignment for the benefit of creditors, (4) suffer or permit an order for relief to be entered against such Obligor in any proceeding under the federal Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition or an answer seeking an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against such Obligor in any proceeding under any such law or statute, or if corporate action shall be taken by any Obligor for the purpose of effecting any of the foregoing; or (h) a petition shall be filed, without the application, approval or consent of any Obligor in any court of competent jurisdiction, seeking bankruptcy, reorganization, rearrangement, dissolution or liquidation of such Obligor or of all or a substantial part of the properties or assets of such Obligor, or seeking any other relief under any law or statute of the type referred to in Section 4.1(l)(5) against such Obligor, or the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or of all or a substantial part of the properties or assets of such Obligor, and such petition shall not have been stayed or dismissed within 30 days after the filing thereof; or (i) any writ of execution, attachment or garnishment shall be issued against the assets of any Obligor and such writ of execution, attachment or garnishment shall not be dismissed, discharged or quashed within 30 days of issuance; or (j) any final judgment for the payment of money shall be rendered against any Obligor and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed; or (k) any guarantor of any of the Obligations shall default in the due observance or performance of any covenant, condition or agreement on such guarantor's part to be observed or performed under such guarantor's guaranty agreement (after giving effect to any applicable notice, grace or cure period specified therein) or shall terminate or attempt to terminate such guarantor's guaranty agreement. ARTICLE 5 Remedies -------- SECTION 5.1 Acceleration of Obligations. If an Event of Default exists --------------------------- under Section 4.1(l), 4.1(m) or 4.1(l), all of the Obligations shall automatically become immediately due and payable. If any other Event of Default exists that does not already result in the automatic acceleration of the Obligations under another Credit Document, the Lender shall have the right without further notice to the Borrower (except any such notice as may be specifically required under the other Credit Documents) to declare all of the Obligations immediately due and payable. SECTION 5.2 Remedies. If an Event of Default exists, the Lender shall be -------- entitled to exercise all of the rights, powers and remedies vested in it by this Agreement and applicable law (including all rights of a secured party under Article 9 of the Alabama Uniform Commercial Code) for the protection and enforcement of its rights with respect to the Property, including the rights: (a) to receive all amounts payable with respect to the Property otherwise payable to the Borrower under Section 2.3; (b) to transfer all or any part of the Pledged Stock into the Lender's name or the name of its nominee and to cause new certificates to be issued in the name of such transferee; (c) to vote all or any part of the Pledged Stock, whether or not transferred into the name of the Lender or its nominee, and to give all consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto as though the Lender were the outright owner thereof (the Borrower hereby irrevocably constituting and appointing the Lender the proxy and attorney-in-fact of the Borrower, with full power of substitution, to do so); (d) to settle, adjust, compromise and arrange all accounts, controversies, claims and demands in relation to any Property; -5- (e) to execute all contracts, agreements, documents and instruments, to bring, defend and abandon all actions and proceedings, and to take all other actions, in relation to any Property as the Lender in its sole discretion may determine; and (f) at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Property, or any interest therein, at any public or private sale, at any exchange, broker's board or at any of the Lender's offices, in one or more parcels, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived by the Borrower), for cash, on credit, or for other property, for immediate or future delivery without any assumption of credit risk, and for such prices and on such terms as the Lender in its sole discretion may deem to be commercially reasonable. The Lender shall not be obligated to make any sale of Property regardless of notice having been given. The Lender may adjourn any sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was adjourned. The Lender shall not be liable for any failure to collect or realize upon any Property or for any delay in so doing, or shall it be obligated to take any action whatsoever with respect thereto. SECTION 5.3 Non-Public Sale. If at any time when the Lender shall --------------- determine to exercise its right to sell all or any of the Pledged Stock and other securities pursuant to Section 5.2, such Pledged Stock and other securities or the part thereof to be sold shall not for any reason be effectively registered under the Securities Act of 1933, as then in effect, the Lender may, in its sole discretion, sell such Pledged Stock and other securities or part thereof by private sale in such manner and under such circumstances as the Lender may deem necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Lender, in its sole discretion (a) may proceed to make such private sale notwithstanding that a registration statement registering any such Pledged Stock shall have been filed under such Securities Act, (b) may approach and negotiate with as few as one possible purchaser to effect such sale, and (c) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of any such Pledged Stock and who will satisfy such other conditions as at such time may be required for lawful non-public sale. In the event of any such sale, the Lender shall incur no responsibility or liability for selling all or any part of the Pledged Stock at a price which the Lender, in its sole discretion, may deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration. SECTION 5.4 Reasonable Care. The Lender shall be deemed to have exercised --------------- reasonable care in the custody and preservation of any Property in its possession if it takes such reasonable actions for that purpose as the Borrower shall request in writing, but the Lender shall have sole power to determine whether such actions are reasonable. Any omission to do any act not requested by the Borrower shall not be deemed a failure to exercise reasonable care. SECTION 5.5 Waiver of Redemption, Marshalling, etc. The Borrower hereby -------------------------------------- waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Property, whether before or after sale hereunder, and all rights, if any, of marshalling the Property and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Lender may bid for and purchase all or any part of the Property so sold free from any such right or equity of redemption. SECTION 5.6 Application of Proceeds. The net cash proceeds resulting from ----------------------- the exercise of any of the rights and remedies of the Lender under this Agreement, after deducting all charges, expenses, costs and attorneys' fees relating thereto, including any and all costs and expenses referred to in Section 6.2, shall be applied by the Lender to the payment of the Obligations, whether due or to become due, in such order and in such proportions as the Lender may elect; and the Borrower shall remain liable to the Lender for any deficiency. SECTION 5.7 Additional Security, etc. Without notice to or consent of the ------------------------- Borrower, and without impairment of the Liens and rights created by this Agreement, the Lender may accept from the Borrower, any other Obligor or any other person, additional security for the Obligations. Neither the giving of this Agreement nor the acceptance of any such additional security shall prevent the Lender from resorting first to any such additional security, or first to the Liens created by this Agreement, without affecting the Liens and rights of the Lender under this Agreement. SECTION 5.8 Default Rate. If an Event of Default exists, the Obligations ------------ shall bear interest at the Default Rate, until the earlier of (a) such time as all of the Obligations are paid in full or (b) no such Event of Default exists. SECTION 5.9 Remedies Cumulative. The rights and remedies of the Lender ------------------- under this Agreement are cumulative and not exclusive of any other rights or remedies now or hereafter existing at law or in equity. -6- ARTICLE 6 Miscellaneous ------------- SECTION 6.1 Notices. ------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, the Borrower or the Lender must (except as otherwise expressly provided in this Agreement) be in writing and be delivered by one of the following methods: (1) by personal delivery at the hand delivery address specified below, (2) by first-class, registered or certified mail, postage prepaid, addressed as specified below, or (3) if facsimile transmission facilities for such party are identified below or pursuant to a separate written notice from such party, sent by facsimile transmission to the number specified below or in such notice. (b) The hand delivery address, mailing address and (if applicable) facsimile transmission number for receipt of notice or other documents by such parties are as follows: (1) Borrower: --------- By hand or mail: Victor E. Nichol, Jr. 1763 Indian Creek Drive Vestavia Hills, Alabama 35243 (2) Lender: ------- By hand or mail: Alabama National Bancorporation 1927 First Avenue North Birmingham, Alabama 35203 Attention: Chief Executive Officer By facsimile: (205) 583-3275 Any of such parties may change the address or number for receiving any such notice or other document by giving notice of the change to the other parties named in this Section 6.1. (c) Any such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not an individual, to an officer, director, partner or other legal representative of the party) at the address or number specified pursuant to this Section 6.1, or, if sent by mail, three Business Days after such notice or document is deposited in the United States mail, addressed as provided above. (d) Five Business Days' written notice to the Borrower as provided above shall constitute reasonable notification to the Borrower when notification is required by law; provided, however, that nothing contained in the foregoing shall be construed as requiring five Business Days' notice if, under applicable law and the circumstances then existing, a shorter period of time would constitute reasonable notice. SECTION 6.2 Expenses. The Borrower shall promptly on demand pay all costs -------- and expenses, including the fees and disbursements of counsel to the Lender, incurred by the Lender in connection with (a) the negotiation, preparation and review of this Agreement (whether or not the transactions contemplated by this Agreement shall be consummated), (b) the enforcement of this Agreement, (c) the custody and preservation of the Property, (d) the protection or perfection of the Lender's rights and interests under this Agreement in the Property, (e) the exercise by or on behalf of the Lender of any of its rights, powers or remedies under this Agreement and (f) the prosecution or defense of any action or proceeding by or against the Lender, the Borrower, any other Obligor, or any one or more of them, concerning any matter related to this Agreement, any of the Property or any of the Obligations. All such amounts shall bear interest from the date demand is made at the Default Rate and shall be included in the Obligations secured hereby. The Borrower's obligations under this Section 6.2 shall survive the payment in full of the Obligations and the termination of this Agreement. -7- SECTION 6.3 Heirs, Successors and Assigns. Whenever in this Agreement any ------------------------------ party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer this Agreement without the prior written consent of the Lender; and all covenants and agreements of the Borrower contained in this Agreement shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Lender. SECTION 6.4 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Agreement shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Lender my exercise its remedies on default against all of the person comprising the Borrower. SECTION 6.5 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Lender under this Agreement may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 6.6 Governing Law. This Agreement shall be construed in -------------- accordance with and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law and except to the extent that the validity and perfection of the Liens on the Property are governed by the laws of any jurisdiction other than the State of Alabama. SECTION 6.7 Date of Agreement. The date of this Agreement is intended as ----------------- a date for the convenient identification of this Agreement and is not intended to indicate that this Agreement was executed and delivered on that date. SECTION 6.8 Separability Clause. If any provision of the Credit Documents ------------------- shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6.9 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same agreement. SECTION 6.10 No Oral Agreements. This Agreement is the final expression ------------------ of the agreement between the parties hereto, and this Agreement may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Agreement and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 6.11 Waiver and Election. The exercise by the Lender of any ------------------- option given under this Agreement shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Lender in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of the Credit Documents, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 6.12 No Obligations of Lender; Indemnification. The Lender does ------------------------------------------ not by virtue of this Agreement or any of the transactions contemplated by the Credit Documents assume any duties, liabilities or obligations with respect to any of the Property unless expressly assumed by the Lender under a separate agreement in writing, and this Agreement shall not be deemed to confer on the Lender any duties or obligations that would make the Lender directly or derivatively liable for any person's negligent, reckless or wilful conduct. The Borrower agrees to indemnify and hold the Lender harmless against and with respect to any damage, claim, action, loss, cost, expense, liability, penalty or interest (including attorney's fees) and all costs and expenses of all actions, suits, proceedings, demands, assessments, claims and judgments directly or indirectly resulting from, occurring in connection with, or arising out of: (a) any inaccurate representation made by the Borrower or any Obligor in this Agreement or any other Credit Document; (b) any breach of any of the warranties or obligations of the Borrower or any Obligor under this Agreement or any other Credit Document; and (c) the Property, or the Liens of the Lender thereon. The provisions of this Section 6.12 shall survive the payment of the Obligations in full and the termination, satisfaction, release (in whole or in part) and foreclosure of this Agreement. -8- SECTION 6.13 Advances by the Lender. If the Borrower shall fail to comply ---------------------- with any of the provisions of this Agreement, the Lender may (but shall not be required to) make advances to perform the same, and where necessary enter any premises where any Property is located for the purpose of performing the Borrower's obligations under any such provision. The Borrower agrees to repay all such sums advanced upon demand, with interest from the date such advances are made at the Default Rate, and all sums so advanced with interest shall be a part of the Obligations. The making of any such advances shall not be construed as a waiver by the Lender of any Event of Default resulting from the Borrower's failure to pay such amounts. SECTION 6.14 Rights, Liens and Obligations Absolute. All rights of the -------------------------------------- Lender hereunder, all Liens granted to the Lender hereunder, and all obligations of the Borrower hereunder, shall be absolute and unconditional and shall not be affected by (a) any lack of validity or enforceability as to any other person of any of the Credit Documents, (b) any change in the time, manner or place of payment of, or any other term of the Obligations, (c) any amendment or waiver of any of the provisions of the Credit Documents as to any other person, and (d) any exchange, release or non-perfection of any other collateral or any release, termination or waiver of any guaranty, for any of the Obligations. SECTION 6.15 Termination. This Agreement and the Lender's Liens in the ----------- Property hereunder will not be terminated until one of the Lender's officers signs a written termination agreement. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement shall in any way affect or impair the representations, warranties, agreements or other obligations of the Borrower or the rights, powers and remedies of the Lender under this Agreement with respect to any transaction or event occurring prior to such termination, all of which shall survive such termination. SECTION 6.16 Reinstatement. This Agreement, the obligations of the ------------- Borrower hereunder, and the Liens, rights, powers and remedies of the Lender hereunder, shall continue to be effective, or be automatically reinstated, as the case may be, if at any time any amount applied to the payment of any of the Obligations is rescinded or must otherwise be restored or returned to the Borrower, any Obligor, or any other person (or paid to the creditors of any of them, or to any custodian, receiver, trustee or other officer with similar powers with respect to any of them, or with respect to any part of their property) upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, any Obligor or any such person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with respect to any of them, or with respect to any part of their property, or otherwise, all as though such payment had not been made. SECTION 6.17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Agreement will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Agreement (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Agreement) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated in or pursuant to Section 6.1; (f) agrees that service in accordance with Section 6.17(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS AGREEMENT MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 6.17 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 6.18 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of the Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration -9- as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with the Note, any extension of or commitment to extend Credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including the Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Agreement shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. IN WITNESS WHEREOF, the undersigned has executed this Agreement dated April 15, 1999. /s/ Victor E. Nichol, Jr. --------------------------- (Signature of the Borrower) Victor E. Nichol, Jr. --------------------------- (Printed Name) -10- EXHIBIT A --------- Certificate No. No. of Shares Issued To Date - --------------- ------------- --------- ---- ANB 2834 7,043 Victor E. Nichol Jr. January 2, 1996 A-1 EXHIBIT B --------- (Credit Documents) The "Credit Documents" referred to in this Agreement include the following: (a) Promissory Note dated of even date herewith in the principal amount of $99,558.00 executed by the Borrower in favor of the Lender, which evidences a loan made by the Lender to the Borrower. (b) Promissory Note dated of even date herewith in the principal amount of $23,360.00 executed by the Borrower in favor of the Lender, which evidences a loan made available by the Lender to the Borrower and has a final maturity date of April 15, 2000. B-1 EX-10.16 17 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.16 $109,833.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace WILLIAM G. SANDERS, JR., (the "Borrower"), promises to pay to the order of ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of One Hundred Nine Thousand Eight Hundred Thirty-Three and 00/100 Dollars ($109,833.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full or complete forgiveness, whichever occurs first, at the rate per annum equal to the LIBOR-Based Rate (as defined below) adjusted on each Interest Rate Determination Date (as defined below). If in the Lender's opinion it is impossible or impractical to determine the LIBOR-Based Rate for a certain year, this Note shall bear interest at the Prime Rate until the next Interest Rate Determination Date. Interest payable hereunder shall be payable on each Interest Rate Determination Date, commencing April 15, 2000. Notwithstanding anything to the contrary contained herein, if the Borrower remains continually employed by the Lender or one of its subsidiaries or affiliates (hereinafter referred to as a "Qualifying Employer") as of the first ten (10) anniversaries of this Note, ten percent (10%) of the original principal balance ($10,983.00) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2000. In addition, as long as the Borrower remains continually employed by a Qualifying Employer, upon the occurrence of (x) a Change in Control (as hereinafter defined), (y) the Borrower's death or (z) the Total Disability (as hereinafter defined) of the Borrower, the entire principal balance then remaining unpaid hereunder, shall be immediately forgiven in full. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ----------- not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and -------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Change in Control of the Lender means (i) any transaction, whether ------------------------------- by merger, consolidation, asset sale, tender offer, reverse stock split, or otherwise, which results in the acquisition or beneficial ownership (as such term is defined under rules and regulations promulgated under the Securities Exchange Act of 1934, as amended) by any person or entity or any group of persons or entities acting in concert, of fifty percent (50%) or more of the outstanding shares of Common Stock of the Lender; or (ii) the sale of all or substantially all of the assets of the Lender; or (iii) the liquidation of the Lender. (d) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (e) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (f) Event of Default is defined in Section 6. An Event of Default --------------- "exists" if an Event of Default has occurred and is continuing. (g) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (h) LIBOR-Based Rate means a fixed rate of one percent (100 basis ---------------- points) in excess of the per annum rate of interest most recently published in The Wall Street Journal as of the close of business on the date hereof and on and after the most recent Interest Rate Determination Date (being the rate quoted for the immediately preceding business day) as the London Interbank Offered Rate for U.S. dollar deposits having a term of ninety (90) days. The Lender shall determine the LIBOR-Based Rate on the date hereof and on each Interest Rate Determination Date. (i) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (j) Prime Rate means a floating interest rate equal to the rate of ---------- interest designated by the Lender from time to time as its "prime rate." (k) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. (l) Total Disability means the Borrower's inability, as a result of ---------------- illness or injury, to perform the normal duties of the Borrower's employment for a period of ninety (90) consecutive days. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) The amount payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). -2- SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. Notwithstanding anything in this Note or any other Security Document to the contrary, the entire unpaid principal balance of the indebtedness evidenced by this Note shall be immediately due and payable without written notice or demand, upon the termination of the Borrower's employment with a Qualifying Employer for any reason with or without cause, whether voluntary or involuntary, other than the Borrower's death or Total Disability. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Note shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Holder my exercise its remedies on default against all of the persons comprising the Borrower. SECTION 10 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 11 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 12 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 13 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 14 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. -3- SECTION 15 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 16 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 16 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. SECTION 17 Time of Essence. Time is of the essence of this Note. --------------- SECTION 18 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 18(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 18 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 19 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. -4- SECTION 20 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ William G. Sanders, Jr. ------------------------------------ Signature of Borrower William G. Sanders, Jr. ------------------------------------ Please Print Name Send Correspondence and Billings to: William G. Sanders, Jr. ---------------------------- 8 Clarendon Road ---------------------------- Birmingham, Alabama 35213 ---------------------------- -6- EX-10.17 18 PROMISSORY NOTE DATED APRIL 15, 1999 EXHIBIT 10.17 $16,000.00 Birmingham, Alabama April 15, 1999 PROMISSORY NOTE --------------- FOR VALUE RECEIVED, without grace, WILLIAM G. SANDERS, JR. (the "Borrower"), promises to pay to the order of Alabama National BanCorporation, a Delaware corporation (herein called the "Lender," and together with any subsequent holder of this note called the "Holder"), in the manner set forth below, the principal sum of Sixteen Thousand and 00/100 Dollars ($16,000.00), plus interest at the rate set forth below. This Note shall bear interest (computed on an Actual/360 Day Basis) on the unpaid principal balance hereof, from the date of disbursement until payment in full, at a fixed interest rate equal to six percent (6.0%) per annum. Principal and interest shall be payable under this Note on April 15, 2000. The Borrower further agrees with the Holder as follows: SECTION 1 Rules of Construction. This Note is subject to the rules of --------------------- construction set forth in the Security Documents. SECTION 2 Definitions. As used in this Note, capitalized terms that are ------------ not otherwise defined herein have the meanings defined for them in the Security Documents and the following terms are defined as follows: (a) Actual/360 Day Basis means a method of computing interest and -------------------- other charges on the basis of an assumed year of 360 days for the actual number of days elapsed, meaning that the interest accrued for each day will be computed by multiplying the interest rate applicable on that day by the unpaid principal balance on that day and dividing the result by 360. (b) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (c) Credit Documents means this Note, the Security Documents and all ---------------- other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (d) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal indebtedness evidenced by this Note from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (e) Event of Default is defined in Section 8. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (f) Obligors means the Borrower, each other person executing any -------- Security Document as a grantor, (if the Borrower or any such grantor is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the obligations evidenced by this Note. (g) Security Documents means the Pledge Agreement dated of even date ------------------ herewith executed by the Borrower in favor of the Lender and all other documents now or hereafter securing or guaranteeing the obligations evidenced by this Note, or any part thereof. SECTION 3 Place and Time of Payments. -------------------------- (a) All payments by the Borrower to the Holder under this Note shall be made in lawful currency of the United States and in immediately available funds to the Lender at its Main Office in Birmingham, Alabama or at such other address within the continental United States as shall be specified by the Holder by notice to the Borrower. Any payment received by the Holder after 2:00 p.m. (Birmingham, Alabama time) on a Business Day (or at any time on a day that is not a Business Day) shall be deemed made by the Borrower and received by the Holder on the following Business Day. (b) All amounts payable by the Borrower to the Holder under this Note or any of the other Credit Documents for which a payment date is expressly set forth herein or therein shall be payable on the specified due date without notice or demand by the Holder. All amounts payable by the Borrower to the Holder under this Note or the other Credit Documents for which no payment date is expressly set forth herein or therein shall be payable ten days after written demand by the Holder to the Borrower. The Holder may, at its option, send written notice or demand to the Borrower of amounts payable on a specified due date pursuant to this Note or the other Credit Documents, but the failure to send such notice shall not affect or excuse the Borrower's obligation to make payment of the amounts due on the specified due date. (c) Payments that are due on a day that is not a Business Day shall be payable on the next succeeding Business Day, and any interest payable thereon shall be payable for such extended time at the specified rate. SECTION 4 Default Rate. If an Event of Default exists, this Note shall ------------ bear interest at the Default Rate, until the earlier of (a) such time as all amounts due hereunder are paid in full or (b) no such Event of Default exists. SECTION 5 Security Documents. This Note with interest is secured by and ------------------ entitled to the benefits of the Security Documents. Reference to the Security Documents is hereby made for all of the provisions thereof. This Note shall be secured by all security documents that by their terms secure this Note, whether or not described herein, and all such documents shall constitute Security Documents. SECTION 6 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default ("Event of Default") under this Note (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in any of the Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with this Note or any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (d) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein). SECTION 7 Acceleration. If an Event of Default exists that does not ------------ already result in the automatic acceleration of this Note under another Credit Document, the Holder shall have the right without further notice to the Borrower to declare the entire unpaid principal balance of the indebtedness evidenced by this Note, with accrued interest, to be immediately due and payable. SECTION 8 Certain Waivers and Agreements by Obligors. ------------------------------------------ (a) As to the obligations evidenced by this Note, each Obligor severally (1) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (2) waives all exemptions of personal property secured to any Obligor under the Constitution and laws of the State of Alabama or any other state; and (3) agrees to pay all costs of collection, including a reasonable attorney's fee, in the event default should be made in the payment of any of the obligations evidenced by this Note. -2- (b) Each Obligor severally (1) acknowledges that the Lender has not made any representations or entered into any agreements with such Obligor to induce such Obligor to enter into the transactions contemplated by this Note except as set forth in writing in the Credit Documents; (2) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (3) agrees that any obligations of any Obligor may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, discharged or released by the Holder, and any collateral, lien, right of set-off or other security for the obligations evidenced by this Note or any other obligations of any Obligor to the Holder may, from time to time, in whole or in part, be exchanged, sold, released, satisfied, or terminated, all without notice to, or in any way affecting or releasing any of the obligations of any other Obligor; and (4) agrees that the Holder will not be required first to resort to any Security Document, any guaranty or any other security pledged or granted to the Holder, but upon a default under this Note or any of the Security Documents, the Holder may forthwith look to any Obligor for payment hereunder or may look to and realize upon any other security held by the Holder, in any order the Holder chooses, until the entire debt evidenced by this Note is paid. SECTION 9 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Holder under this Note may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 10 Heirs, Successors and Assigns. Whenever in this Note any party ----------------------------- hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer its obligations under this Note without the prior written consent of the Holder; and all obligations of the Borrower under this Note shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Holder. SECTION 11 Governing Law. This Note shall be construed in accordance with ------------- and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama except as required by mandatory provisions of law (without regard to conflict of law principles). SECTION 12 Separability Clause. If any provision of the this Note shall ------------------- be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 13 No Oral Agreements. This Note is the final expression of the ------------------ agreement between the parties hereto, and this Note may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Note and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 14 Waiver and Election. The exercise by the Holder of any option ------------------- given under this Note or the Security Documents shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Holder in exercising any right, power or remedy under this Note or the Security Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of this Note, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Holder, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 15 Set-off. While any Event of Default exists, the Lender is ------- authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower), to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the obligations evidenced by this Note, irrespective of whether or not the Lender shall have made any demand under this Note and although such obligations may be unmatured. The rights of the Lender under this Section 18 are in addition to all other rights and remedies (including other rights of set-off or pursuant to any banker's lien) that the Lender may have. -3- SECTION 16 Time of Essence. Time is of the essence of this Note. --------------- SECTION 17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Note (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Note) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated at the end of this Note; (f) agrees that service in accordance with Section 20(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS NOTE MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 20 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 18 Usury Laws. Any provision of this Note or any of the other ---------- Credit Documents to the contrary notwithstanding, the Borrower and the Lender agree that they do not intend for the interest or other consideration provided for in this Note and the other Credit Documents to be greater than the maximum amount permitted by applicable law. Regardless of any provision in this Note or any of the other Credit Documents, the Lender shall not be entitled to receive, collect or apply, as interest on the Obligations, any amount in excess of the maximum rate of interest permitted to be charged under applicable law until such time, if any, as that interest, together with all other interest then payable, falls within the then applicable maximum lawful rate of interest. If the Lender shall receive, collect or apply any amount in excess of the then maximum rate of interest, the amount that would be excessive interest shall be applied first to the reduction of the principal amount of the Obligations then outstanding in the inverse order of maturity, and second, if such principal amount is paid in full, any excess shall forthwith be returned to the Borrower. In determining whether the interest paid or payable under any specific contingency exceeds the highest lawful rate, the Borrower and the Lender shall, to the maximum extent permitted under applicable law, (a) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (b) exclude voluntary prepayments and the effects thereof, (c) consider all the Obligations as one general obligation of the Borrower, and (d) "spread" the total amount of the interest throughout the entire term of this Note so that the interest rate is uniform throughout the entire term of this Note. SECTION 19 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies. - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of this Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with this Note, any extension of or commitment to extend credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, -4- present and future agreement between or among the Lender, the Borrower or any other Obligor (including this Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Note shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute.] -5- IN WITNESS WHEREOF, the undersigned has executed and delivered this Note dated the date first written above. /s/ WILLIAM G. SANDERS, JR. ------------------------------------ Signature of Borrower WILLIAM G. SANDERS, JR. ------------------------------------ Please Print Name Send Correspondence and Billings to: William G. Sanders, Jr. ------------------------------ 8 Clarendon Road ------------------------------ Birmingham, Alabama 35213 ------------------------------ -6- EX-10.18 19 PLEDGE AGREEMENT DATED APRIL 15, 1999 EXHIBIT 10.18 PLEDGE AGREEMENT ---------------- THIS PLEDGE AGREEMENT (this "Agreement") dated April 15, 1999 is between WILLIAM G. SANDERS, JR., as pledgor and debtor (the "Borrower"), and ALABAMA NATIONAL BANCORPORATION, a Delaware corporation, as pledgee and secured party (the "Lender"). Recitals -------- The Borrower is the holder, beneficially and of record, of certain shares of the outstanding capital stock of the Lender, more particularly described on Exhibit A attached hereto and made a part hereof (the "Stock"). Capitalized terms used in these Recitals have the meanings defined for them above or in Section 1.2. The Borrower has requested that the Lender extend Credit to the Borrower under the Credit Documents. To secure the Obligations, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower has agreed to execute and deliver this Agreement to the Lender. Agreement --------- NOW, THEREFORE, in consideration of the foregoing Recitals, and to induce the Lender to extend Credit to the Borrower under the Credit Documents, the Borrower agrees with the Lender as follows: ARTICLE 1 Rules of Construction and Definitions ------------------------------------- SECTION 1.1 Rules of Construction. For the purposes of this Agreement, --------------------- except as otherwise expressly provided or unless the context otherwise requires: (a) Words of masculine, feminine or neuter gender include the correlative words of other genders. Singular terms include the plural as well as the singular, and vice versa. (b) All references herein to designated "Articles," "Sections" and other subdivisions or to lettered Exhibits are to the designated Articles, Sections and subdivisions hereof and the Exhibits annexed hereto unless expressly otherwise designated in context. All Article, Section, other subdivision and Exhibit captions herein are used for reference only and do not limit or describe the scope or intent of, or in any way affect, this Agreement. (c) The terms "include," "including," and similar terms shall be construed as if followed by the phrase "without being limited to." (d) The terms "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section, other subdivision or Exhibit. (e) All Recitals set forth in, and all Exhibits to, this Agreement are hereby incorporated in this Agreement by reference. (f) No inference in favor of or against any party shall be drawn from the fact that such party or such party's counsel has drafted any portion hereof. (g) All references in this Agreement to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof. SECTION 1.2 Definitions. As used in this Agreement, the following terms ----------- are defined as follows: (a) Unless otherwise defined herein, terms used in this Agreement that are defined in Article 9 of the Alabama Uniform Commercial Code have the meanings defined for them therein. (b) Additional Stock is defined in Section 2.2. ---------------- (c) Business Day means any day, excluding Saturday and Sunday, on ------------ which the Lender's main office in Birmingham, Alabama, is open to the public for carrying on substantially all of its banking business. (d) Credit means, individually and collectively, all loans, ------ forbearances, renewals, extensions, advances, disbursements and other extensions of credit now or hereafter made by the Lender to or for the account of the Borrower under the Credit Documents. (e) Credit Documents means the documents described in Exhibit B and ---------------- all other documents now or hereafter executed or delivered in connection with the transactions contemplated thereby. (f) Debt of any person means (1) all indebtedness, whether or not ---- represented by bonds, debentures, notes or other securities, for the repayment of borrowed money, (2) all deferred indebtedness for the payment of the purchase price of property or assets purchased, (3) all capitalized lease obligations, (4) all indebtedness secured by any Lien on any property of such person, whether or not indebtedness secured thereby has been assumed, (5) all obligations with respect to any conditional sale contract or title retention agreement, (6) all indebtedness and obligations arising under acceptance facilities or in connection with surety or similar bonds, and the outstanding amount of all letters of credit issued for the account of such person, and (7) all obligations with respect to interest rate swap agreements. (g) Default Rate means a rate of interest equal to four percentage ------------ points (400 basis points) in excess of the highest interest rate that would otherwise be payable on the principal amount of the Credit under the Credit Documents from time to time in the absence of the existence of a default, or the maximum rate permitted by law, whichever is less. (h) Event of Default is defined in Section 4.1. An Event of Default ---------------- "exists" if the same has occurred and is continuing. (i) Governmental Authority means any national, state, county, ---------------------- municipal or other government, domestic or foreign, and any agency, authority, department, commission, bureau, board, court or other instrumentality thereof. (j) Lien means any mortgage, pledge, assignment, charge, encumbrance, ---- lien, security title, security interest or other preferential arrangement. (k) Obligations means (1) the payment of all amounts now or hereafter ----------- becoming due and payable under the Credit Documents, including the principal amount of the Credit, all interest thereon (including interest that, but for the filing of a petition in bankruptcy, would accrue on any such principal) and all other fees, charges and costs (including attorneys' fees and disbursements) payable in connection therewith; (2) the observance and performance the Borrower of all of the provisions of the Credit Documents; (3) the payment of all sums advanced or paid by the Lender in exercising any of its rights, powers or remedies under the Credit Documents, and all interest (including post-bankruptcy petition interest, as aforesaid) on such sums provided for herein or therein; and (4) all renewals, extensions, modifications and amendments of any of the foregoing, whether or not any renewal, extension, modification or amendment agreement is executed in connection therewith. (l) Obligors means the Borrower each other person, if any, executing -------- any Security Document as a grantor, (if the Borrower is a partnership) any general partner thereof, and any other maker, endorser, surety, guarantor or other person now or hereafter liable for the payment or performance, in whole or in part, of any of the Obligations. (m) Permitted Encumbrances means the Liens granted to the Lender under ---------------------- this Agreement and any other Liens of the Lender. (n) Person (whether or not capitalized) includes natural persons, sole ------ proprietorships, corporations, trusts, unincorporated organizations, associations, companies, institutions, entities, joint ventures, partnerships, limited liability companies and Governmental Authorities. (o) Pledged Stock is defined in Section 2.2. ------------- (p) Property is defined in Section 2.2. -------- -2- (q) Security Documents means all Credit Documents that now or ------------------ hereafter grant or purport to grant to the Lender any guaranty, collateral or other security for any of the Obligations. ARTICLE 2 Security Agreement ------------------ SECTION 2.1 Pledge of Stock. As security for the Obligations, the --------------- Borrower hereby grants to the Lender security title to and a continuing security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Stock and all proceeds thereof, and the Borrower hereby delivers to the Lender the stock certificates evidencing the Stock, as described in Exhibit A, together with separate assignments thereof, to be held by the Lender upon the terms and conditions set forth in this Agreement. SECTION 2.2 Pledge of Additional Stock. If the Borrower shall acquire by -------------------------- exchange or replacement any additional shares of the capital stock of the Company, of whatever class or description ("Additional Stock") at any time after the date hereof, the Borrower hereby grants to the Lender a security interest in, and assigns, transfers, conveys, pledges and hypothecates to the Lender, all of the Borrower's right, title and interest in and to the Additional Stock and such certificates, and immediately upon receipt thereof the Borrower shall pledge and deposit the Additional Stock with the Lender and shall deliver to the Lender certificates therefor registered in the name of the Borrower, together with executed separate assignments thereof, to be held by the Lender under this Agreement. The Stock, the Additional Stock, and any stock or other securities issued in exchange therefor or replacement thereof, are hereinafter together called the "Pledged Stock," and the Pledged Stock and all proceeds thereof and all other securities and moneys received and at the time held by the Lender hereunder are hereinafter together called the "Property," all of which shall be subject to the Liens granted to the Lender under this Agreement. SECTION 2.3 Dividends and Other Distributions. Unless an Event of Default --------------------------------- exists, all cash dividends paid on the Pledged Stock shall be paid to the Borrower, except that all cash dividends payable on the Pledged Stock that are determined by the Lender in its sole discretion to represent in whole or in part an extraordinary, liquidating or other distribution in return of capital shall be paid to the Lender and retained by it as Property. The Lender shall also be entitled to receive directly and to retain as Property: (a) all stock and other securities or property (other than cash) paid or distributed with respect to the Pledged Stock by way of dividend; (b) all stock and other securities or property (including cash) paid or distributed with respect to the Pledged Stock by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar or other corporate rearrangement; and (c) all stock and other securities or property (including cash) that may be paid or distributed with respect to the Pledged Stock by reason of any consolidation, merger, exchange of stock, conveyance of assets, liquidation or similar corporate reorganization. SECTION 2.4 Voting While No Event of Default. Unless an Event of Default -------------------------------- exists, the Borrower shall have the right to vote any and all shares of the Pledged Stock and to give consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto. All such rights of the Borrower to vote and to give consents, waivers and ratifications shall cease if an Event of Default exists. ARTICLE 3 Representations, Warranties and Covenants ----------------------------------------- SECTION 3.1 Representations and Warranties. The Borrower represents and ------------------------------- warrants to the Lender that (a) subject to Permitted Encumbrances, the Borrower is the holder of record and sole beneficial owner of the Stock (which is fully issued and non-assessable), free of Liens and adverse claims of any kind, except Permitted Encumbrances; (b) the Borrower has a good right to grant to the Lender the Liens in the Stock purported to be granted under this Agreement; (c) there are no outstanding subscriptions, options, rights, warrants, calls, commitments or agreements of any kind to acquire or transfer any of the Stock; and (d) to the best of the Borrower's knowledge, no consent, authorization or other action by, and no notice to or filing with, any other person (including any stockholder, partner or creditor of the Borrower and any Governmental Authority) is required for (1) the execution and delivery of this Agreement by the Borrower, (2) the granting to the Lender of the Liens on the Property under this Agreement, or (3) the exercise by the Lender of the rights, powers and remedies granted to it under -3- this Agreement, except as may be required in connection with any disposition by the Lender of the Property under laws affecting the offering and sale of securities generally. SECTION 3.2 Encumbrances and Dispositions. The Borrower shall not (a) ----------------------------- encumber any of the Property, or permit any of the Property to be encumbered, with any kind of Lien, other than Permitted Encumbrances, or (b) sell, transfer or otherwise dispose of, or grant any option or warrant with respect to, any of the Property. SECTION 3.3 Taxes and Assessments. The Borrower shall pay when due all --------------------- taxes, assessments and other charges levied or assessed against any of the Property, and all other claims that are or may become Liens against any of the Property, except any that are Permitted Encumbrances; and should default be made in the payment of same, the Lender, at its option, may pay them. SECTION 3.4 Filing Fees and Taxes. The Borrower agrees, to the extent --------------------- permitted by law, to pay all recording and filing fees, revenue stamps, taxes and other expenses and charges payable in connection with the execution and delivery of the Credit Documents, and the recording, filing, satisfaction, continuation and release thereof. SECTION 3.5 Further Assurances. At the Borrower's cost and expense, upon ------------------ request of the Lender, the Borrower shall duly execute and deliver, or cause to be duly executed and delivered, to the Lender such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the opinion of the Lender or its counsel to perfect, preserve and protect the validity of the Liens of the Lender in the Property and to carry out more effectively the provisions and purposes of this Agreement. SECTION 3.6 Attorney-in-Fact. The Borrower hereby constitutes and ---------------- appoints the Lender, or any other person whom the Lender may designate, as the Borrower's attorney-in-fact, at the Borrower's sole cost and expense, effective upon the existence of any Event of Default, with full authority in the place and stead of the Borrower and in the name of the Borrower or otherwise, from time to time in the Lender's discretion to take any action (a) that the Borrower has agreed, but has failed, to take under this Agreement, (b) that the Lender in its sole discretion deems necessary or advisable to maintain, preserve or protect the security intended to be afforded by this Agreement, or (c) that the Lender may deem necessary or advisable to accomplish the purposes of this Agreement and the other Credit Documents. ARTICLE 4 Events of Default ----------------- SECTION 4.1 Events of Default. The occurrence of any of the following ----------------- events shall constitute an event of default (an "Event of Default") under this Agreement (whatever the reason for such event and whether or not it shall be voluntary or involuntary or be effected by operation of law or pursuant to any Governmental Requirement): (a) any representation or warranty made in this Agreement or in any of the other Credit Documents shall prove to be false or misleading in any material respect as of the time made; or (b) any report, certificate, financial statement or other instrument furnished in connection with the Credit, this Agreement or any of the other Credit Documents, shall prove to be false or misleading in any material respect as of the time furnished; or (c) default shall be made in the payment when due of any of the Obligations; or (d) default shall be made in the due observance or performance of any covenant, condition or agreement on the part of the Borrower to be observed or performed pursuant to the terms of this Agreement (other than any covenant, condition or agreement, default in the observance or performance of which is elsewhere in this Section 4.1 specifically dealt with) and such default shall continue unremedied for a period of thirty (30) days; or (e) any default or event of default, as therein defined, shall occur under any of the other Credit Documents (after giving effect to any applicable notice, grace or cure period specified therein); or (f) (1) default shall be made with respect to any Debt (other than the Obligations) of any Obligor, if the effect of such default is to accelerate the maturity of such Debt or to permit the holder thereof to cause such Debt to become due prior -4- to its stated maturity, or (2) any such Debt shall not be paid when due (after giving effect to any applicable notice, grace or cure periods); or (g) any Obligor shall (1) apply for or consent to the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or any of such Obligor's properties or assets (including the Property), (2) fail or admit in writing such Obligor's inability to pay such Obligor's debts generally as they become due, (3) make a general assignment for the benefit of creditors, (4) suffer or permit an order for relief to be entered against such Obligor in any proceeding under the federal Bankruptcy Code, or (5) file a voluntary petition in bankruptcy, or a petition or an answer seeking an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against such Obligor in any proceeding under any such law or statute, or if corporate action shall be taken by any Obligor for the purpose of effecting any of the foregoing; or (h) a petition shall be filed, without the application, approval or consent of any Obligor in any court of competent jurisdiction, seeking bankruptcy, reorganization, rearrangement, dissolution or liquidation of such Obligor or of all or a substantial part of the properties or assets of such Obligor, or seeking any other relief under any law or statute of the type referred to in Section 4.1(l)(5) against such Obligor, or the appointment of a receiver, trustee, liquidator or other custodian of such Obligor or of all or a substantial part of the properties or assets of such Obligor, and such petition shall not have been stayed or dismissed within 30 days after the filing thereof; or (i) any writ of execution, attachment or garnishment shall be issued against the assets of any Obligor and such writ of execution, attachment or garnishment shall not be dismissed, discharged or quashed within 30 days of issuance; or (j) any final judgment for the payment of money shall be rendered against any Obligor and the same shall remain undischarged for a period of 30 days during which execution shall not be effectively stayed; or (k) any guarantor of any of the Obligations shall default in the due observance or performance of any covenant, condition or agreement on such guarantor's part to be observed or performed under such guarantor's guaranty agreement (after giving effect to any applicable notice, grace or cure period specified therein) or shall terminate or attempt to terminate such guarantor's guaranty agreement. ARTICLE 5 Remedies -------- SECTION 5.1 Acceleration of Obligations. If an Event of Default exists --------------------------- under Section 4.1(l), 4.1(m) or 4.1(l), all of the Obligations shall automatically become immediately due and payable. If any other Event of Default exists that does not already result in the automatic acceleration of the Obligations under another Credit Document, the Lender shall have the right without further notice to the Borrower (except any such notice as may be specifically required under the other Credit Documents) to declare all of the Obligations immediately due and payable. SECTION 5.2 Remedies. If an Event of Default exists, the Lender shall be -------- entitled to exercise all of the rights, powers and remedies vested in it by this Agreement and applicable law (including all rights of a secured party under Article 9 of the Alabama Uniform Commercial Code) for the protection and enforcement of its rights with respect to the Property, including the rights: (a) to receive all amounts payable with respect to the Property otherwise payable to the Borrower under Section 2.3; (b) to transfer all or any part of the Pledged Stock into the Lender's name or the name of its nominee and to cause new certificates to be issued in the name of such transferee; (c) to vote all or any part of the Pledged Stock, whether or not transferred into the name of the Lender or its nominee, and to give all consents, waivers and ratifications with respect to the Property and otherwise act with respect thereto as though the Lender were the outright owner thereof (the Borrower hereby irrevocably constituting and appointing the Lender the proxy and attorney-in-fact of the Borrower, with full power of substitution, to do so); (d) to settle, adjust, compromise and arrange all accounts, controversies, claims and demands in relation to any Property; -5- (e) to execute all contracts, agreements, documents and instruments, to bring, defend and abandon all actions and proceedings, and to take all other actions, in relation to any Property as the Lender in its sole discretion may determine; and (f) at any time or from time to time to sell, assign and deliver, or grant options to purchase, all or any part of the Property, or any interest therein, at any public or private sale, at any exchange, broker's board or at any of the Lender's offices, in one or more parcels, without demand of performance, advertisement or notice of intention to sell or of the time or place of sale or adjournment thereof or otherwise (all of which are hereby waived by the Borrower), for cash, on credit, or for other property, for immediate or future delivery without any assumption of credit risk, and for such prices and on such terms as the Lender in its sole discretion may deem to be commercially reasonable. The Lender shall not be obligated to make any sale of Property regardless of notice having been given. The Lender may adjourn any sale from time to time by announcement at the time and place fixed therefor, and any such sale may, without further notice, be made at the time and place to which it was adjourned. The Lender shall not be liable for any failure to collect or realize upon any Property or for any delay in so doing, or shall it be obligated to take any action whatsoever with respect thereto. SECTION 5.3 Non-Public Sale. If at any time when the Lender shall --------------- determine to exercise its right to sell all or any of the Pledged Stock and other securities pursuant to Section 5.2, such Pledged Stock and other securities or the part thereof to be sold shall not for any reason be effectively registered under the Securities Act of 1933, as then in effect, the Lender may, in its sole discretion, sell such Pledged Stock and other securities or part thereof by private sale in such manner and under such circumstances as the Lender may deem necessary or advisable in order that such sale may legally be effected without such registration. Without limiting the generality of the foregoing, in any such event the Lender, in its sole discretion (a) may proceed to make such private sale notwithstanding that a registration statement registering any such Pledged Stock shall have been filed under such Securities Act, (b) may approach and negotiate with as few as one possible purchaser to effect such sale, and (c) may restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of any such Pledged Stock and who will satisfy such other conditions as at such time may be required for lawful non-public sale. In the event of any such sale, the Lender shall incur no responsibility or liability for selling all or any part of the Pledged Stock at a price which the Lender, in its sole discretion, may deem reasonable under the circumstances, notwithstanding the possibility that a substantially higher price might be realized if the sale were deferred until after registration. SECTION 5.4 Reasonable Care. The Lender shall be deemed to have exercised --------------- reasonable care in the custody and preservation of any Property in its possession if it takes such reasonable actions for that purpose as the Borrower shall request in writing, but the Lender shall have sole power to determine whether such actions are reasonable. Any omission to do any act not requested by the Borrower shall not be deemed a failure to exercise reasonable care. SECTION 5.5 Waiver of Redemption, Marshalling, etc. The Borrower hereby -------------------------------------- waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Property, whether before or after sale hereunder, and all rights, if any, of marshalling the Property and any other security for the Obligations or otherwise. At any such sale, unless prohibited by applicable law, the Lender may bid for and purchase all or any part of the Property so sold free from any such right or equity of redemption. SECTION 5.6 Application of Proceeds. The net cash proceeds resulting from ----------------------- the exercise of any of the rights and remedies of the Lender under this Agreement, after deducting all charges, expenses, costs and attorneys' fees relating thereto, including any and all costs and expenses referred to in Section 6.2, shall be applied by the Lender to the payment of the Obligations, whether due or to become due, in such order and in such proportions as the Lender may elect; and the Borrower shall remain liable to the Lender for any deficiency. SECTION 5.7 Additional Security, etc. Without notice to or consent of the ------------------------ Borrower, and without impairment of the Liens and rights created by this Agreement, the Lender may accept from the Borrower, any other Obligor or any other person, additional security for the Obligations. Neither the giving of this Agreement nor the acceptance of any such additional security shall prevent the Lender from resorting first to any such additional security, or first to the Liens created by this Agreement, without affecting the Liens and rights of the Lender under this Agreement. SECTION 5.8 Default Rate. If an Event of Default exists, the Obligations ------------ shall bear interest at the Default Rate, until the earlier of (a) such time as all of the Obligations are paid in full or (b) no such Event of Default exists. SECTION 5.9 Remedies Cumulative. The rights and remedies of the Lender ------------------- under this Agreement are cumulative and not exclusive of any other rights or remedies now or hereafter existing at law or in equity. -6- ARTICLE 6 Miscellaneous ------------- SECTION 6.1 Notices. ------- (a) Any request, demand, authorization, direction, notice, consent, waiver or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with, the Borrower or the Lender must (except as otherwise expressly provided in this Agreement) be in writing and be delivered by one of the following methods: (1) by personal delivery at the hand delivery address specified below, (2) by first-class, registered or certified mail, postage prepaid, addressed as specified below, or (3) if facsimile transmission facilities for such party are identified below or pursuant to a separate written notice from such party, sent by facsimile transmission to the number specified below or in such notice. (b) The hand delivery address, mailing address and (if applicable) facsimile transmission number for receipt of notice or other documents by such parties are as follows: (1) Borrower: -------- By hand or mail: William G. Sanders, Jr. 8 Clarendon Road Birmingham, Alabama 35213 (2) Lender ------ By hand or mail: Alabama National Bancorporation 1927 First Avenue North Birmingham, Alabama 35203 Attention: Chief Executive Officer By facsimile: (205) 583-3275 Any of such parties may change the address or number for receiving any such notice or other document by giving notice of the change to the other parties named in this Section 6.1. (c) Any such notice or other document shall be deemed delivered when actually received by the party to whom directed (or, if such party is not an individual, to an officer, director, partner or other legal representative of the party) at the address or number specified pursuant to this Section 6.1, or, if sent by mail, three Business Days after such notice or document is deposited in the United States mail, addressed as provided above. (d) Five Business Days' written notice to the Borrower as provided above shall constitute reasonable notification to the Borrower when notification is required by law; provided, however, that nothing contained in the foregoing shall be construed as requiring five Business Days' notice if, under applicable law and the circumstances then existing, a shorter period of time would constitute reasonable notice. SECTION 6.2 Expenses. The Borrower shall promptly on demand pay all costs -------- and expenses, including the fees and disbursements of counsel to the Lender, incurred by the Lender in connection with (a) the negotiation, preparation and review of this Agreement (whether or not the transactions contemplated by this Agreement shall be consummated), (b) the enforcement of this Agreement, (c) the custody and preservation of the Property, (d) the protection or perfection of the Lender's rights and interests under this Agreement in the Property, (e) the exercise by or on behalf of the Lender of any of its rights, powers or remedies under this Agreement and (f) the prosecution or defense of any action or proceeding by or against the Lender, the Borrower, any other Obligor, or any one or more of them, concerning any matter related to this Agreement, any of the Property or any of the Obligations. All such amounts shall bear interest from the date demand is made at the Default Rate and shall be included in the Obligations secured hereby. The Borrower's obligations under this Section 6.2 shall survive the payment in full of the Obligations and the termination of this Agreement. -7- SECTION 6.3 Heirs, Successors and Assigns. Whenever in this Agreement any ----------------------------- party hereto is referred to, such reference shall be deemed to include the heirs, successors and assigns of such party, except that the Borrower may not assign or transfer this Agreement without the prior written consent of the Lender; and all covenants and agreements of the Borrower contained in this Agreement shall bind the Borrower's heirs, successors and assigns and shall inure to the benefit of the successors and assigns of the Lender. SECTION 6.4 Joint and Several Liability. If the Borrower is comprised of --------------------------- more than one person, all of the Borrower's representations, warranties, covenants and agreements under this Agreement shall be joint and several and shall be binding on and enforceable against either, any or all of the persons comprising the Borrower. If any one or more of the persons comprising the Borrower is in default, the Lender my exercise its remedies on default against all of the person comprising the Borrower. SECTION 6.5 Independent Obligations. The Borrower agrees that each of the ----------------------- obligations of the Borrower to the Lender under this Agreement may be enforced against the Borrower without the necessity of joining any other Obligor, any other holders of Liens in any Property or any other person, as a party. SECTION 6.6 Governing Law. This Agreement shall be construed in ------------- accordance with and governed by Title 9 of the U.S. Code and the internal laws of the State of Alabama (without regard to conflict of law principles) except as required by mandatory provisions of law and except to the extent that the validity and perfection of the Liens on the Property are governed by the laws of any jurisdiction other than the State of Alabama. SECTION 6.7 Date of Agreement. The date of this Agreement is intended as ----------------- a date for the convenient identification of this Agreement and is not intended to indicate that this Agreement was executed and delivered on that date. SECTION 6.8 Separability Clause. If any provision of the Credit Documents ------------------- shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 6.9 Counterparts. This Agreement may be executed in any number of ------------ counterparts, each of which so executed shall be deemed an original, but all such counterparts shall together constitute but one and the same agreement. SECTION 6.10 No Oral Agreements. This Agreement is the final expression ------------------ of the agreement between the parties hereto, and this Agreement may not be contradicted by evidence of any prior oral agreement between such parties. All previous oral agreements between the parties hereto have been incorporated into this Agreement and the other Credit Documents, and there is no unwritten oral agreement between the parties hereto in existence. SECTION 6.11 Waiver and Election. The exercise by the Lender of any ------------------- option given under this Agreement shall not constitute a waiver of the right to exercise any other option. No failure or delay on the part of the Lender in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any further exercise thereof or the exercise of any other right, power or remedy. No modification, termination or waiver of any provisions of the Credit Documents, nor consent to any departure by the Borrower therefrom, shall be effective unless in writing and signed by an authorized officer of the Lender, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. SECTION 6.12 No Obligations of Lender; Indemnification. The Lender does ----------------------------------------- not by virtue of this Agreement or any of the transactions contemplated by the Credit Documents assume any duties, liabilities or obligations with respect to any of the Property unless expressly assumed by the Lender under a separate agreement in writing, and this Agreement shall not be deemed to confer on the Lender any duties or obligations that would make the Lender directly or derivatively liable for any person's negligent, reckless or wilful conduct. The Borrower agrees to indemnify and hold the Lender harmless against and with respect to any damage, claim, action, loss, cost, expense, liability, penalty or interest (including attorney's fees) and all costs and expenses of all actions, suits, proceedings, demands, assessments, claims and judgments directly or indirectly resulting from, occurring in connection with, or arising out of: (a) any inaccurate representation made by the Borrower or any Obligor in this Agreement or any other Credit Document; (b) any breach of any of the warranties or obligations of the Borrower or any Obligor under this Agreement or any other Credit Document; and (c) the Property, or the Liens of the Lender thereon. The provisions of this Section 6.12 shall survive the payment of the Obligations in full and the termination, satisfaction, release (in whole or in part) and foreclosure of this Agreement. -8- SECTION 6.13 Advances by the Lender. If the Borrower shall fail to comply ---------------------- with any of the provisions of this Agreement, the Lender may (but shall not be required to) make advances to perform the same, and where necessary enter any premises where any Property is located for the purpose of performing the Borrower's obligations under any such provision. The Borrower agrees to repay all such sums advanced upon demand, with interest from the date such advances are made at the Default Rate, and all sums so advanced with interest shall be a part of the Obligations. The making of any such advances shall not be construed as a waiver by the Lender of any Event of Default resulting from the Borrower's failure to pay such amounts. SECTION 6.14 Rights, Liens and Obligations Absolute. All rights of the -------------------------------------- Lender hereunder, all Liens granted to the Lender hereunder, and all obligations of the Borrower hereunder, shall be absolute and unconditional and shall not be affected by (a) any lack of validity or enforceability as to any other person of any of the Credit Documents, (b) any change in the time, manner or place of payment of, or any other term of the Obligations, (c) any amendment or waiver of any of the provisions of the Credit Documents as to any other person, and (d) any exchange, release or non-perfection of any other collateral or any release, termination or waiver of any guaranty, for any of the Obligations. SECTION 6.15 Termination. This Agreement and the Lender's Liens in the ----------- Property hereunder will not be terminated until one of the Lender's officers signs a written termination agreement. Except as otherwise expressly provided for in this Agreement, no termination of this Agreement shall in any way affect or impair the representations, warranties, agreements or other obligations of the Borrower or the rights, powers and remedies of the Lender under this Agreement with respect to any transaction or event occurring prior to such termination, all of which shall survive such termination. SECTION 6.16 Reinstatement. This Agreement, the obligations of the ------------- Borrower hereunder, and the Liens, rights, powers and remedies of the Lender hereunder, shall continue to be effective, or be automatically reinstated, as the case may be, if at any time any amount applied to the payment of any of the Obligations is rescinded or must otherwise be restored or returned to the Borrower, any Obligor, or any other person (or paid to the creditors of any of them, or to any custodian, receiver, trustee or other officer with similar powers with respect to any of them, or with respect to any part of their property) upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower, any Obligor or any such person, or upon or as a result of the appointment of a custodian, receiver, trustee or other officer with respect to any of them, or with respect to any part of their property, or otherwise, all as though such payment had not been made. SECTION 6.17 Submission to Jurisdiction. The Borrower irrevocably (a) -------------------------- acknowledges that this Agreement will be accepted by the Lender and performed by the Borrower in the State of Alabama; (b) submits to the jurisdiction of each state or federal court sitting in Jefferson County, Alabama (collectively, the "Courts") over any suit, action or proceeding arising out of or relating to this Agreement (to enforce the arbitration provisions hereof or, if the arbitration provisions are found to be unenforceable, to determine any issues arising out of or relating to this Agreement) or any of the other Credit Documents (individually, an "Agreement Action"); (c) waives, to the fullest extent permitted by law, any objection or defense that the Borrower may now or hereafter have based on improper venue, lack of personal jurisdiction, inconvenience of forum or any similar matter in any Agreement Action brought in any of the Courts; (d) agrees that final judgment in any Agreement Action brought in any of the Courts shall be conclusive and binding upon the Borrower and may be enforced in any other court to the jurisdiction of which the Borrower is subject, by a suit upon such judgment; (e) consents to the service of process on the Borrower in any Agreement Action by the mailing of a copy thereof by registered or certified mail, postage prepaid, to the Borrower at the Borrower's address designated in or pursuant to Section 6.1; (f) agrees that service in accordance with Section 6.17(e) shall in every respect be effective and binding on the Borrower to the same extent as though served on the Borrower in person by a person duly authorized to serve such process; and (g) AGREES THAT THE PROVISIONS OF THIS SECTION, EVEN IF FOUND NOT TO BE STRICTLY ENFORCEABLE BY ANY COURT, SHALL CONSTITUTE "FAIR WARNING" TO THE BORROWER THAT THE EXECUTION OF THIS AGREEMENT MAY SUBJECT THE BORROWER TO THE JURISDICTION OF EACH STATE OR FEDERAL COURT SITTING IN JEFFERSON COUNTY, ALABAMA WITH RESPECT TO ANY AGREEMENT ACTIONS, AND THAT IT IS FORESEEABLE BY THE BORROWER THAT THE BORROWER MAY BE SUBJECTED TO THE JURISDICTION OF SUCH COURTS AND MAY BE SUED IN THE STATE OF ALABAMA IN ANY AGREEMENT ACTIONS. Nothing in this Section 6.17 shall limit or restrict the Lender's right to serve process or bring Agreement Actions in manners and in courts otherwise than as herein provided. SECTION 6.18 Arbitration; Dispute Resolution; Preservation of Foreclosure ------------------------------------------------------------ Remedies - -------- (a) The Borrower represents to the Lender that its business and affairs constitute substantial interstate commerce and that it contemplates using the proceeds of the Note in substantial interstate commerce. Except as otherwise specifically set forth below, any action, dispute, claim, counterclaim or controversy ("Dispute" or "Disputes"), between or among the Lender, the Borrower or any other Obligor, including any claim based on or arising from an alleged tort, shall be resolved by arbitration -9- as set forth below. As used herein, Disputes shall include all actions, disputes, claims, counterclaims or controversies arising in connection with the Note, any extension of or commitment to extend Credit by the Lender, any collection of any indebtedness owed to the Lender, any security or collateral given to the Lender, any action taken (or any omission to take any action) in connection with any of the foregoing, any past, present and future agreement between or among the Lender, the Borrower or any other Obligor (including the Note and any Credit Document), and any past, present or future transactions between or among the Lender, the Borrower or any other Obligor. Without limiting the generality of the foregoing, Disputes shall include actions commonly referred to as lender liability actions. (b) All Disputes shall be resolved by binding arbitration in accordance with Title 9 of the U.S. Code and the Commercial Arbitration Rules of the American Arbitration Association (the "AAA"). Defenses based on statutes of limitation, estoppel, waiver, laches and similar doctrines, that would otherwise be applicable to an action brought by a party, shall be applicable in any such arbitration proceeding, and the commencement of an arbitration proceeding with respect to this Agreement shall be deemed the commencement of an action for such purposes. (c) Notwithstanding the foregoing, the Borrower and each other Obligor agrees that the Lender shall have the option, but not the obligation, to submit to and pursue in a court of law any claim against the Borrower or any other Obligor for a debt due. The Borrower and each other Obligor agrees that, if the Lender pursues such a claim in a court of law, (1) failure of the Lender to assert any additional claim in such proceeding shall not be deemed a waiver of, or estoppel to pursue, such claim as a claim or counterclaim in arbitration as set forth above, and (2) the institution or maintenance of a judicial action hereunder shall not constitute a waiver of the right of any party to submit any other action, dispute, claim or controversy as described above, even though arising out of the same transaction or occurrence, to binding arbitration as set forth herein. If the Borrower asserts a claim against the Lender in arbitration or otherwise during the pendency of a claim brought by the Lender in a court of law, the court action shall be stayed and the parties shall submit to arbitration all claims. (d) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (1) to foreclose against any real or personal property collateral by exercise of a power of sale under any Credit Document, or by exercise of any rights of foreclosure or of sale under applicable law, (2) to exercise self-help remedies such as set-off, or (3) to obtain provisional or ancillary remedies such as injunctive relief, attachment or the appointment of a receiver from a court having jurisdiction before, during or after the pendency of any arbitration or referral. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of self-help remedies shall not constitute a waiver of the right of any party, including the plaintiff in such an action, to submit the Dispute to arbitration or, in the case of actions on a debt, to judicial resolution. (e) Whenever an arbitration is required hereunder, the arbitrator shall be selected in accordance with the Commercial Arbitration Rules of the AAA. The AAA shall designate a panel of 10 potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the Lender and the Obligor shall designate, within 30 days of the receipt of the list of potential arbitrators, one of the potential arbitrators to serve, and the two arbitrators so designated shall select a third arbitrator from the eight remaining potential arbitrators. The panel of three arbitrators shall determine the resolution of the Dispute. IN WITNESS WHEREOF, the undersigned has executed this Agreement dated April 15, 1999. /s/ William G. Sanders, Jr. --------------------------- (Signature of the Borrower) William G. Sanders, Jr. --------------------------- (Printed Name) -10- EXHIBIT A Certificate No. No. of Shares Issued To Date - --------------- ------------- --------- ---- ANB 2837 7,043 William G. Sanders, Jr. January 2, 1996 A-1 EXHIBIT B --------- (Credit Documents) The "Credit Documents" referred to in this Agreement include the following: (a) Promissory Note dated of even date herewith in the principal amount of $109,833.00 executed by the Borrower in favor of the Lender, which evidences a loan made by the Lender to the Borrower. (b) Promissory Note dated of even date herewith in the principal amount of $16,000.00 executed by the Borrower in favor of the Lender, which evidences a loan made available by the Lender to the Borrower and has a final maturity date of April 15, 2000. B-1 EX-11 20 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 COMPUTATION OF EARNINGS PER SHARE Per Share Income Shares Amount THREE MONTHS ENDED MARCH 31, 1999 Basic EPS net income........................ $5,019 11,022 $0.46 ===== Effect of dilutive securities options....... - 166 ------ ------ Diluted EPS................................. $5,019 11,188 $0.45 ====== ====== ===== THREE MONTHS ENDED MARCH 31, 1998 Basic EPS net income........................ $4,550 10,611 $0.43 ===== Effect of dilutive securities options....... - 469 ------ ------ Diluted EPS................................. $4,550 11,080 $0.41 ====== ====== ===== EX-27 21 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 62,298 1,490 68,109 14,863 285,023 29,708 30,275 1,129,946 17,167 1,693,950 1,307,383 31,700 47,853 32,313 0 0 11,032 122,975 1,693,950 23,159 4,819 833 29,811 10,787 13,435 15,376 562 166 15,383 7,338 7,338 0 0 5,019 .46 .45 7.89 3,565 0 492 0 16,540 213 278 17,167 17,167 0 17,167
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