-----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, UxNqEIaYrV6ovCRZiWY1C6p4dUxr+I/e9Bpc2jXL6uisZ8eIJ5iImZrE40PA13ON bjJ55YWVGU3ZH1r7fFfZDg== 0000931763-01-000485.txt : 20010323 0000931763-01-000485.hdr.sgml : 20010323 ACCESSION NUMBER: 0000931763-01-000485 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 25 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010322 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-K SEC ACT: SEC FILE NUMBER: 000-25160 FILM NUMBER: 1576439 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-K 1 0001.txt FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- FORM 10-K [X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000, OR [_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM TO . Commission File Number: 0-25160 ---------------- ALABAMA NATIONAL BANCORPORATION (Exact name of registrant as specified in its charter) Delaware 63-1114426 (State of incorporation (I.R.S. Employer or organization) Identification No.)
1927 First Avenue North, Birmingham, AL 35203-4009 (Address of principal executive offices) (Zip Code) (205) 583-3600 (Registrant's telephone number, including area code) ---------------- Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $1.00 par value ---------------- 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [_] The aggregate market value of voting stock held by non-affiliates of the registrant at March 12, 2001 was $237,022,296. As of March 12, 2001 the registrant had outstanding 11,793,160 shares of its common stock. DOCUMENTS INCORPORATED BY REFERENCE IN THIS FORM 10-K: (i) The definitive Proxy Statement for the 2001 Annual Meeting of Alabama National BanCorporation's Stockholders is incorporated by reference into Part III of this report. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- TABLE OF CONTENTS
Item No. Page No. -------- -------- SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS................... 2 PART I 1. Business.................................................. 3 Executive Officers........................................ 10 2. Properties................................................ 11 3. Legal Proceedings......................................... 11 4. Submission of Matters to a Vote of Security Holders....... 11 PART II 5. Market for Registrant's Common Equity and Related 12 Stockholder Matters...................................... 6. Selected Financial Data................................... 13 7. Management's Discussion and Analysis of Financial 14 Condition and Results of Operations...................... 7A. Quantitative and Qualitative Disclosures about Market 43 Risk..................................................... 8. Financial Statements and Supplementary Data............... 44 9. Changes in and Disagreements with Accountants on 45 Accounting and Financial Disclosure...................... PART III 10. Directors and Executive Officers of the Registrant........ 45* 11. Compensation of Executive Officers and Directors.......... 45* 12. Security Ownership of Certain Beneficial Owners and 45* Management............................................... 13. Certain Relationships and Related Transactions............ 45* PART IV 14. Exhibits, Financial Statement Schedules and Reports on 46 Form 8-K................................................. SIGNATURES.......................................................... 47
- -------- * Portions of the Proxy Statement for the Registrant's Annual Meeting of Stockholders to be held on May 3, 2001 are incorporated by reference in Part III of this Form 10-K. 1 SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K, other periodic reports filed by Alabama National BanCorporation (the "Company" or "Alabama National") under the Securities Exchange Act of 1934, as amended, and any other written or oral statements made by or on behalf of Alabama National may include "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 which reflect Alabama National's current views with respect to future events and financial performance. Such forward looking statements are based on general assumptions and are subject to various risks, uncertainties, and other factors that may cause actual results to differ materially from the views, beliefs and projections expressed in such statements. These risks, uncertainties and other factors include, but are not limited to: (1) Possible changes in economic and business conditions that may affect the prevailing interest rates, the prevailing rates of inflation, or the amount of growth, stagnation, or recession in the global, U.S., and southeastern U.S. economies, the value of investments, collectibility of loans and the profitability of business entities; (2) Possible changes in monetary and fiscal policies, laws and regulations, and other activities of governments, agencies and similar organizations; (3) The effects of easing of restrictions on participants in the financial services industry, such as banks, securities brokers and dealers, investment companies and finance companies, and changes evolving from the enactment of the Gramm-Leach-Bliley Act of 1999, and attendant changes in patterns and effects of competition in the financial services industry; (4) The cost and other effects of legal and administrative cases and proceedings, claims, settlements and judgments; and (5) The ability of Alabama National to achieve the expected operating results related to the acquired operations of recently-completed and future acquisitions (if any), which depends on a variety of factors, including (i) the ability of Alabama National to achieve the anticipated cost savings and revenue enhancements with respect to the acquired operations, (ii) the assimilation of the acquired operations to Alabama National's corporate culture, including the ability to instill Alabama National's credit practices and efficient approach to the acquired operations, (iii) the continued growth of the markets in which Alabama National operates consistent with recent historical experience, (iv) the absence of material contingencies related to the acquired operations, including asset quality and litigation contingencies, and (v) Alabama National's ability to expand into new markets and to maintain profit margins in the face of pricing pressures. The words "believe," "expect," "anticipate," "project" and similar expressions signify forward looking statements. Readers are cautioned not to place undue reliance on any forward looking statements made by or on behalf of Alabama National. Any such statement speaks only as of the date the statement was made. Alabama National undertakes no obligation to update or revise any forward looking statements. 2 PART I ITEM 1. BUSINESS Alabama National BanCorporation ("Alabama National" or "ANB") is a Delaware bank holding company with its principal place of business in Birmingham, Alabama, and its main office located at 1927 First Avenue North, Birmingham, Alabama 35203 (Telephone Number: (205) 583-3600). Alabama National is currently the parent of three national banks, National Bank of Commerce of Birmingham ("NBC") (Birmingham, Alabama and the Birmingham metropolitan area), Citizens & Peoples Bank, National Association (Escambia County, Florida), and Community Bank of Naples, National Association (Naples, Florida); three state member banks, Alabama Exchange Bank (Tuskegee, Alabama), Bank of Dadeville (Dadeville, Alabama) and First Gulf Bank (Baldwin County, Alabama); and five state nonmember banks, First American Bank (Decatur/Huntsville, Alabama), Public Bank (St. Cloud, Florida), Georgia State Bank (Mableton, Georgia), First Citizens Bank, (Talladega, Alabama) and, effective January 31, 2001, Peoples State Bank of Groveland (Lake County, Florida) (collectively the "Banks"). In addition, Alabama National is currently the ultimate parent of one securities brokerage firm, NBC Securities, Inc. (Birmingham, Alabama); one receivables factoring company, Corporate Billing, Inc. (Decatur, Alabama); and one insurance agency, Rankin Insurance, Inc. (Decatur, Alabama). Recent Developments Peoples State Bank of Groveland Merger Effective January 31, 2001, Peoples State Bank of Groveland ("Peoples State Bank"), a Florida state bank headquartered in Groveland, Florida, with approximately $123 million in total assets as of December 31, 2000, merged with a newly formed subsidiary of Alabama National (the "Peoples State Bank Merger"). The terms of the Peoples State Bank Merger are described in that certain Agreement and Plan of Merger dated as of October 10, 2000 (the "Peoples State Bank Merger Agreement"). Pursuant to the Peoples State Bank Merger, (i) the stockholders of Peoples State Bank became stockholders of Alabama National, and (ii) Alabama National became the parent stockholder of Peoples State Bank. The Peoples State Bank Merger was accounted for as a pooling of interests. Because the Peoples State Bank Merger was completed after December 31, 2000, the financial information of Peoples State Bank is not included in Alabama National's financial information for the period ending December 31, 2000. The Peoples State Bank Merger Agreement generally provided, among other things, that each of the 631,464 outstanding shares of Peoples State Bank common stock were converted into the right to receive 1.16396 shares of Alabama National common stock, for a total of 735,000 shares of Alabama National common stock (excluding fractional shares) issued to former Peoples State Bank shareholders. Subsidiary Banks Alabama National operates through eleven subsidiary Banks which have a total of 52 banking offices and one insurance office (where no banking is conducted) in the states of Alabama, Georgia and Florida. The Banks focus on traditional consumer, residential mortgage, commercial and real estate construction lending, and equipment leasing to customers in their market areas. The Banks also offer a variety of deposit programs to individuals and small businesses and other organizations at interest rates generally consistent with local market conditions. NBC offers trust services, investment services and securities brokerage services. In addition, the Banks offer individual retirement and KEOGH accounts, safe deposit and night depository facilities and additional services such as the sale of traveler's checks, money orders and cashier's checks. Lending Activities General Through the Banks, Alabama National offers a range of lending services, including real estate, consumer and commercial loans, to individuals and small businesses and other organizations that are located in or conduct a substantial portion of their business in the Banks' market areas. Alabama National's total loans, net of unearned 3 interest, at December 31, 2000, were approximately $1.61 billion, or approximately 79.4% of total earning assets. The interest rates charged on loans vary with the degree of risk, maturity and amount of the loan and are further subject to competitive pressures, money market rates, availability of funds and government regulations. Alabama National has no "foreign loans" or loans for "highly leveraged transactions," as such terms are defined by applicable banking regulations. Loan Portfolio Real Estate Loans. Loans secured by real estate are the primary component of Alabama National's loan portfolio, constituting approximately $1.1 billion, or 68.2% of total loans, net of unearned interest, at December 31, 2000. The Banks often take real estate as an additional source of collateral to secure commercial and industrial loans. Such loans are classified as real estate loans rather than commercial and industrial loans if the real estate collateral is considered significant as a secondary source of repayment for the loan. The Banks' real estate loan portfolio is comprised of commercial and residential mortgages. Residential mortgages held in the Banks' loan portfolio, both fixed and variable, are made based upon amortization schedules of up to 30 years but generally have maturity dates of five years or less. The Banks' commercial mortgages accrue at either variable or fixed rates. The variable rates approximate current market rates. Construction loans are made on a variable rate basis. Origination fees are normally charged for most loans secured by real estate. The Banks' primary type of residential mortgage loan is the single-family first mortgage, typically structured with fixed or adjustable interest rates, based on market conditions. These loans usually have terms of five years, with payments through the date of maturity generally based on a 15 or 30 year amortization schedule. The Banks originate residential loans for sale into the secondary market. Such loans are made in accordance with underwriting standards set by the purchaser of the loan, normally as to loan-to-value ratio, interest rate and documentation. Such loans are generally made under a commitment to purchase from a loan purchaser. The Banks generally collect from the borrower or purchaser a combination of the origination fee, discount points and/or service release fee. During 2000, the Banks sold approximately $230 million in loans to such purchasers. The Banks' nonresidential mortgage loans include commercial, industrial and unimproved real estate loans. The Banks generally require nonresidential mortgage loans to have an 80% loan-to-value ratio and usually underwrite their commercial loans on the basis of the borrower's cash flow and ability to service the debt from earnings, rather than on the basis of the value of the collateral. Terms on construction loans are usually less than twelve months, and the Banks typically require real estate mortgages and personal guarantees supported by financial statements and a review of the guarantor's personal finances. Consumer Loans. Consumer lending includes installment lending to individuals in the Banks' market areas and generally consists of loans to purchase automobiles and other consumer durable goods. Consumer loans constituted $76.0 million, or 4.7% of Alabama National's loan portfolio at December 31, 2000. Consumer loans are underwritten based on the borrower's income, current debt level, past credit history and collateral. Consumer rates are both variable and fixed, with terms negotiable. Terms generally range from one to five years depending on the nature and condition of the collateral. Periodic amortization, generally monthly, is typically required. Commercial and Financial Loans. The Banks make loans for commercial purposes in various lines of business. These loans are typically made on terms up to five years at fixed or variable rates. The loans are secured by various types of collateral including accounts receivable, inventory or, in the case of equipment loans, the financed equipment. The Banks attempt to reduce their credit risk on commercial loans by underwriting the loan based on the borrower's cash flow and its ability to service the debt from earnings, and by limiting the loan to value ratio. Historically, the Banks have typically loaned up to 80% on loans secured by accounts receivable, up to 65% on loans secured by inventory, and up to 80% on loans secured by equipment. The Banks also make some unsecured commercial loans and offer equipment leasing. Commercial and financial loans constituted $259.8 million, or 16.1% of Alabama National's loan portfolio at December 31, 2000. Interest rates are negotiable based upon the borrower's financial condition, credit history, management stability and collateral. 4 Credit Procedures and Review Loan Approval. Certain credit risks are inherent in making loans. These include prepayment risks, risks resulting from uncertainties in the future value of collateral, risks resulting from changes in economic and industry conditions and risks inherent in dealing with individual borrowers. In particular, longer maturities increase the risk that economic conditions will change and adversely affect collectibility. Alabama National attempts to minimize loan losses through various means and uses standardized underwriting criteria. Alabama National has established a standardized loan policy for all of the Banks that may be modified based on local market conditions. In particular, on larger credits, Alabama National generally relies on the cash flow of a debtor as the source of repayment and secondarily on the value of the underlying collateral. In addition, Alabama National attempts to utilize shorter loan terms in order to reduce the risk of a decline in the value of such collateral. Alabama National addresses repayment risks by adhering to internal credit policies and procedures which all of the Banks have adopted. These policies and procedures include officer and customer lending limits, a multi-layered loan approval process for larger loans, documentation examination and follow- up procedures for any exceptions to credit policies. The point in each Bank's loan approval process at which a loan is approved depends on the size of the borrower's credit relationship with such Bank. Each of the lending officers at each of the Banks has the authority to approve loans up to an approved loan authority amount as approved by each Bank's Board of Directors. Loans in excess of the highest loan authority amount at each Bank must be approved by the Alabama National Executive Vice President in charge of credit administration. In addition, loans in excess of a particular loan officer's approval authority must be approved by a more senior officer at the particular Bank, the loan committee at such Bank, or both. Loan Review. Alabama National maintains a continuous loan review system for each of NBC and First American Bank and a scheduled review system for the other Banks. Under this system, each loan officer is directly responsible for monitoring the risk in his portfolio and is required to maintain risk ratings for each credit assigned. The risk rating system incorporates the basic regulatory rating system as set forth in the applicable regulatory asset quality examination procedures. Alabama National's Loan Review Department ("LRD"), which is wholly independent of the lending function, serves as a validation of each loan officer's risk monitoring and rating system. LRD's primary function is to provide the Board of Directors of each Bank with a thorough understanding of the credit quality of such Bank's loan portfolio. Other review requirements are in place to provide management with early warning systems for problem credits as well as compliance with stated lending policies. LRD's findings are reported, along with an asset quality review, to the Alabama National Board of Directors at each bi-monthly meeting. Deposits The principal sources of funds for the Banks are core deposits, consisting of demand deposits, interest-bearing transaction accounts, money market accounts, savings deposits and certificates of deposit. Transaction accounts include checking and negotiable order of withdrawal (NOW) accounts which customers use for cash management and which provide the Banks with a source of fee income and cross-marketing opportunities, as well as a low-cost source of funds. Time and savings accounts also provide a relatively stable and low-cost source of funding. The largest source of funds for the Banks are certificates of deposit. Certificates of deposit in excess of $100,000 are held primarily by customers in the Banks' market areas. Deposit rates are reviewed weekly by senior management of each of the Banks. Management believes that the rates the Banks offer are competitive with those offered by other institutions in the Banks' market areas. Alabama National focuses on customer service to attract and retain deposits. Investment Services NBC operates an investment department devoted primarily to handling correspondent banks' investment needs. Services provided by the investment department include the sale of securities, asset/liability consulting, safekeeping and bond accounting. 5 Securities Brokerage Division NBC also has a wholly owned subsidiary, NBC Securities, Inc. ("NBC Securities"), that is licensed as a broker-dealer. Started in 1995, NBC Securities provides investment services to individuals and institutions. These services include the sale of stocks, bonds, mutual funds, annuities, margin loans, other insurance products and financial planning. NBC Securities has investment advisers in Birmingham, Decatur and Gulf Shores, Alabama; Naples and Pensacola, Florida; and Mableton, Georgia. Trust Division NBC operates a trust division that manages the assets of both corporate and individual customers located primarily in the Birmingham, Alabama market. The division's corporate trust services include managing and servicing retirement plan accounts such as pension, profit sharing and 401(k) plans. Mortgage Lending Division NBC's mortgage lending division makes home loans to individuals throughout the State of Alabama. The majority of these loans are sold to corporate investors, who also service the loans. Insurance Services Division Alabama National's First American Bank subsidiary purchased an existing insurance company, Rankin Insurance, Inc., in 1999. Rankin Insurance is a full service independent property and casualty insurance agency located in Decatur, Alabama. Competition The Banks encounter strong competition in making loans, acquiring deposits and attracting customers for investment and trust services. Competition among financial institutions is based upon interest rates offered on deposit accounts, interest rates charged on loans, other credit and service charges relating to loans, the quality and scope of the services rendered, the convenience of banking facilities and, in the case of loans to commercial borrowers, relative lending limits. The Banks compete with other commercial banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking companies, and other financial intermediaries operating in the markets served by the Banks. Many of these competitors, some of which are affiliated with large bank holding companies, have substantially greater resources and lending limits, and may offer certain services that the Banks do not currently provide. In addition, many of Alabama National's non-bank competitors are not subject to the same extensive federal regulations that govern bank or thrift holding companies and federally insured banks or thrifts. The Gramm-Leach-Bliley Act, effective March 11, 2000, permits bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature. See "Supervision and Regulation." Under the Act, securities firms and insurance companies that elect to become financial holding companies may acquire banks and other financial institutions. The Gramm-Leach-Bliley Act, which represents the most sweeping reform of financial services regulation in over sixty years, may significantly change the competitive environment in which Alabama National and the Banks conduct business. At this time, however, it is not possible to predict the full effect that the Act will have on Alabama National. One consequence may be increased competition from large financial services companies that will be permitted to provide many types of financial services, including bank products, to their customers. The financial services industry is also likely to become more competitive as further technological advances enable more companies to provide financial services. These technological advances may diminish the importance of depository institutions and other financial intermediaries in the transfer of funds between parties. 6 The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the "IBBEA") authorized bank holding companies to acquire banks and other bank holding companies without geographic limitations beginning September 30, 1995. In addition, beginning on June 1, 1997, the IBBEA authorized interstate mergers and consolidations of existing banks, provided that neither bank's home state had opted out of interstate branching by May 31, 1997. The States of Alabama, Georgia and Florida have opted in to interstate branching. Interstate branching provides that once a bank has established branches in a state through an interstate merger, the bank may establish and acquire additional branches at any location in the state where any bank involved in the interstate merger could have established or acquired branches under applicable federal or state law. Size gives the larger banks certain advantages in competing for business from large corporations. These advantages include higher lending limits and the ability to offer services in other areas of Alabama and the southeast region. Some of Alabama National's competitors still maintain substantially greater resources and lending limits than Alabama National. As a result, Alabama National has not generally attempted to compete for the banking relationships of large corporations, and generally concentrates its efforts on small to medium-sized businesses and individuals to which Alabama National believes it can compete effectively by offering quality, personal service. However, management believes it may be able to compete more effectively for the business of some large corporations, given its current growth pattern. Management believes that the Banks' commitment to their respective primary market areas, as well as their commitment to quality and personalized banking services, are factors that contribute to the Banks' competitiveness. Management believes that Alabama National's decentralized community banking strategy positions the Banks to compete successfully in their market areas. Market Areas and Growth Strategy Through NBC, Alabama National serves the metropolitan Birmingham market, which includes portions of Jefferson, Shelby and St. Clair Counties. Alabama National's First American Bank subsidiary serves Morgan, Limestone and Madison Counties in north Alabama. First American's largest market presence is in Decatur, Alabama, which has demonstrated a growing economic base in recent years. First American also acquired two branches in Huntsville, Alabama from another bank holding company during 2000. Through First Gulf Bank, Alabama National serves Baldwin County, Alabama. Located between Mobile, Alabama and Pensacola, Florida, Baldwin County has a broad base of economic activity in the retail and service, agriculture, seafood, tourism and manufacturing industries. Baldwin County includes the popular tourism and retirement resort communities of Gulf Shores and Fairhope. Shelby, Baldwin and St. Clair Counties have been named in statistical surveys as three of the fastest growing counties in Alabama. In 1997, Alabama National expanded outside of Alabama with the opening of Citizens & Peoples Bank, N.A. in Escambia County, Florida. In 1998, Alabama National further expanded its presence in markets outside of Alabama with two acquisitions in Florida and one in Georgia. Public Bank is located in the fast-growing greater Orlando area, with offices in Altamonte Springs, Kissimmee and St. Cloud, Florida. Community Bank of Naples, N.A., located in Collier County, Florida, and Georgia State Bank, located in Cobb County and Paulding County, Georgia, are located in markets that are among the fastest growing in their respective states. Effective January 31, 2001, Alabama National expanded its presence in the greater-Orlando area with the acquisition of Peoples State Bank of Groveland ("Peoples State Bank"). Peoples State Bank serves customers in the communities of Groveland, Leesburg, and Clermont, Florida. The other Banks, First Citizens, Alabama Exchange Bank and Bank of Dadeville, are located in non-metropolitan areas. Each of these three Banks, while experiencing minimal growth due to market growth that has not been significant, typically operates at a high level of profitability. As a result, these Banks tend to produce capital for growth in many of the high growth markets served by the other Banks. Alabama National's strategy is to focus on growth in profitability for these non-metropolitan banks, since market growth has not been as significant. Due to continuing consolidation within the banking industry, as well as in the Southeastern United States, Alabama National may in the future seek to combine with other banks or thrifts (or their holding companies) that may be of smaller, equal or greater size than Alabama National. Alabama National currently intends to concentrate on acquisitions of additional banks or thrifts (or their holding companies) which operate in attractive 7 market areas in Alabama, Florida and Georgia. In addition to price and terms, the factors considered by Alabama National in determining the desirability of a business acquisition or combination are financial condition, asset quality, earnings potential, quality of management, market area and competitive environment. In addition to expansion through combinations with other banks or thrifts, Alabama National intends to continue to expand where possible through growth of its existing banks in their respective market areas. During 1998, NBC formed a commercial leasing division which currently focuses on machinery and equipment leases to business customers. Also, Alabama National is exploring expansion into lines of business closely related to banking and will pursue such expansion if it believes such lines could be profitable without causing undue risk to Alabama National. During 1999, First American Bank acquired Rankin Insurance, Inc., a full service independent property and casualty insurance agency located in Decatur, Alabama. While Alabama National plans to continue its growth as described above, there is no assurance that its efforts will be successful. Employees As of December 31, 2000, Alabama National and the Banks together had approximately 835 full-time equivalent employees. None of these employees is a party to a collective bargaining agreement. Alabama National considers its relations with its employees to be good. Supervision and Regulation Alabama National and the Banks are subject to state and federal banking laws and regulations which impose specific requirements and restrictions on, and provide for general regulatory oversight with respect to, virtually all aspects of operations. These laws and regulations are generally intended to protect depositors, not stockholders. To the extent that the following summary describes statutory or regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions. Any change in applicable laws or regulations may have a material effect on the business and prospects of Alabama National. Beginning with the enactment of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA") and following in December 1991 with the Federal Deposit Insurance Corporation Act ("FDICIA"), numerous additional regulatory requirements have been placed on the banking industry in the past ten years, and additional changes have been proposed. The operations of Alabama National and the Banks may be affected by legislative changes and the policies of various regulatory authorities. Alabama National is unable to predict the nature or the extent of the effect on its business and earnings that fiscal or monetary policies, economic control, or new federal or state legislation may have in the future. As a bank holding company, Alabama National is subject to the regulation and supervision of the Federal Reserve. The Banks are subject to supervision and regulation by applicable state and federal banking agencies, including the Federal Reserve, the Office of the Comptroller of the Currency (the "OCC") and the Federal Deposit Insurance Corporation (the "FDIC"). The Banks are also subject to various requirements and restrictions under federal and state law, including requirements to maintain allowances against deposits, restrictions on the types and amounts of loans that may be granted and the interest that may be charged thereon, and limitations on the types of investments that may be made and the types of services that may be offered. Various consumer laws and regulations also affect the operations of the Banks. In addition to the impact of regulation, commercial banks are affected significantly by the actions of the Federal Reserve as it attempts to control the money supply and credit availability in order to influence the economy. Pursuant to the IBBEA, bank holding companies from any state may now acquire banks located in any other state, subject to certain conditions, including concentration limits. As of June 1, 1997, a bank may establish branches across state lines by merging with a bank in another state (unless applicable state law prohibits such interstate mergers), provided certain conditions are met. A bank may also establish a de novo branch in a state in which the bank does not maintain a branch if that state expressly permits such interstate de novo branching and certain other conditions are met. 8 There are a number of obligations and restrictions imposed on bank holding companies and their depository institution subsidiaries by federal law and regulatory policy that are designed to reduce potential loss exposure to the depositors of such depository institutions and to the FDIC insurance fund in the event the depository institution becomes in danger of default or is in default. For example, under a policy of the Federal Reserve with respect to bank holding company operations, a bank holding company is required to serve as a source of financial strength to its subsidiary depository institutions and commit resources to support such institutions in circumstances where it might not do so absent such policy. In addition, the "cross-guarantee" provisions of federal law require insured depository institutions under common control to reimburse the FDIC for any loss suffered or reasonably anticipated as a result of the default of a commonly controlled insured depository institution or for any assistance provided by the FDIC to a commonly controlled insured depository institution in danger of default. The federal banking agencies have broad powers under current federal law to take prompt corrective action to resolve problems of insured depository institutions. The extent of these powers depends upon whether the institutions in question are "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" or "critically undercapitalized" as such terms are defined under regulations issued by each of the federal banking agencies. In general, the agencies measure capital adequacy within a framework that makes capital requirements sensitive to the risk profiles of individual banking companies. The guidelines define capital as either Tier 1 (primarily common shareholders' equity) or Tier 2 (certain debt instruments and a portion of the allowance for loan losses). Alabama National and the Banks are subject to a minimum Tier 1 capital ratio (Tier 1 capital to risk-weighted assets) of 4%, a total capital ratio (Tier 1 plus Tier 2 to risk-weighted assets) of 8% and a Tier 1 leverage ratio (Tier 1 to average quarterly assets) of 3%. To be considered a "well capitalized" institution, the Tier 1 capital ratio, the total capital ratio, and the Tier 1 leverage ratio must equal or exceed 6%, 10% and 5%, respectively. The Banks are subject to the provisions of Section 23A of the Federal Reserve Act, which place limits on the amount of loans or extensions of credit to, investments in or certain other transactions with affiliates, and on the amount of advances to third parties collateralized by the securities or obligations of affiliates. In general, the Banks' "affiliates" are Alabama National and Alabama National's non-bank subsidiaries. The Banks are also subject to the provisions of Section 23B of the Federal Reserve Act that, among other things, prohibit a bank from engaging in certain transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the bank, as those prevailing at the time for comparable transactions with non-affiliated companies. The Banks are also subject to certain restrictions on extensions of credit to executive officers, directors, certain principal stockholders and their related interests. Such extensions of credit (i) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (ii) must not involve more than the normal risk of repayment or present other unfavorable features. The Community Reinvestment Act ("CRA") requires that, in connection with examinations of financial institutions within their respective jurisdictions, the Federal Reserve, the FDIC or the OCC shall evaluate the record of the financial institutions in meeting the credit needs of their local communities, including low and moderate income neighborhoods, consistent with the safe and sound operation of those institutions. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. These factors are considered in evaluating mergers, acquisitions and applications to open a branch or facility. The CRA also requires all institutions to make public disclosure of their CRA ratings. Each of the Banks received outstanding or satisfactory ratings in its most recent evaluation. There are various legal and regulatory limits on the extent to which the Banks may pay dividends or otherwise supply funds to Alabama National. In addition, federal and state regulatory agencies also have the authority to prevent a bank or bank holding company from paying a dividend or engaging in any other activity that, in the opinion of the agency, would constitute an unsafe or unsound practice. 9 FDIC regulations require that management report on its responsibility for preparing its institution's financial statements and for establishing and maintaining an internal control structure and procedures for financial reporting and compliance with designated laws and regulations concerning safety and soundness. The Gramm-Leach-Bliley Act, effective March 11, 2000, permits bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature. A bank holding company may become a financial holding company by filing a declaration if each of its subsidiary banks is well capitalized under the FDICIA prompt corrective action provisions, is well managed, and has at least a satisfactory rating under the CRA. No regulatory approval will be required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve. The Gramm-Leach-Bliley Act broadly defines "financial in nature" to include securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking; and activities that the Federal Reserve has determined to be closely related to banking. The Act also permits the Federal Reserve, in consultation with the Department of Treasury, to determine that other activities are "financial in nature" and therefore permissible for financial holding companies. A national bank also may engage, subject to limitations on investment, in activities that are financial in nature (other than insurance underwriting, insurance company portfolio investment, merchant banking, real estate development and real estate investment) through a financial subsidiary of the bank, if the bank is well capitalized, well managed and has at least a satisfactory CRA rating. Subsidiary banks of a financial holding company or national banks with financial subsidiaries must continue to be well capitalized and well managed in order to continue to engage in activities that are financial in nature without regulatory actions or restrictions, which could include divestiture of the financial subsidiary or subsidiaries. In addition, a financial holding company or a bank may not acquire a company that is engaged in activities that are financial in nature unless each of the subsidiary banks of the financial holding company or the bank at issue has a CRA rating of satisfactory or better. The Act preserves the role of the Federal Reserve as the umbrella supervisor for holding companies while at the same time incorporating a system of functional regulation designed to take advantage of the strengths of the various federal and state regulators. In particular, the Act replaces the broad exemption from Securities and Exchange Commission regulation that banks previously enjoyed with more limited exemptions, and it reaffirms that states are the regulators for the insurance activities of all persons, including federally-chartered banks. The Gramm-Leach-Bliley Act also establishes a minimum federal standard of financial privacy. In general, the applicable regulations issued by the various federal regulatory agencies prohibit affected financial institutions (including banks, insurance agencies and broker/dealers) from sharing information about their customers with non-affiliated third parties unless (1) the financial institution has first provided a privacy notice to the customer; (2) the financial institution has given the customer an opportunity to opt out of the disclosure; and (3) the customer has not opted out after being given a reasonable opportunity to do so. Compliance with the notice and other requirements under the regulations is required by July 1, 2001. NBC Securities is a broker-dealer registered with the Securities and Exchange Commission and is a member of the National Association of Securities Dealers, Inc. Executive Officers of the Registrant The Executive Officers of Alabama National serve at the pleasure of the Board of Directors. Set forth below are the current Executive Officers of Alabama National and a brief explanation of their principal employment during the last five (5) years. John H. Holcomb, III--Age 49--Chairman and Chief Executive Officer. Mr. Holcomb has served as Chairman and Chief Executive Officer of Alabama National since 1996. Mr. Holcomb has been Chief Executive Officer of NBC since 1990. 10 Victor E. Nichol, Jr.--Age 54--Vice Chairman. Mr. Nichol has served as Vice Chairman of Alabama National since December 2000. Prior to such time, Mr. Nichol served as President and Chief Operating Officer of Alabama National beginning in 1996. Mr. Nichol has been Executive Vice President of NBC since 1994. Dan M. David--Age 55--Vice Chairman. Mr. David has served as Vice Chairman of Alabama National since November 30, 1997 when First American Bancorp merged with and into Alabama National. Mr. David serves as Chairman of First American Bank, a position he has held since 1995. Mr. David served as Chairman and Chief Executive Officer of First American Bank from 1995 through 1997. John R. Bragg--Age 39--Executive Vice President. Mr. Bragg has served as Executive Vice President of Alabama National since April 1998 and Executive Vice President of NBC since 1997. Mr. Bragg served as Senior Vice President of NBC from 1992 until 1997. Richard Murray, IV--Age 38--President and Chief Operating Officer. Mr. Murray has served as President and Chief Operating Officer of Alabama National since December 2000. Prior to such time, Mr. Murray served as Executive Vice President of Alabama National beginning April 1998 and Executive Vice President of NBC beginning 1997. Mr. Murray served as Senior Vice President of NBC from 1990 until 1997. William G. Sanders, Jr.--Age 37--President and Chief Operating Officer of NBC. Mr. Sanders has served as President and Chief Operating Officer of NBC since December 2000. Prior to such time, Mr. Sanders served as Executive Vice President of Alabama National beginning April 1998 and Executive Vice President of NBC beginning 1997. Mr. Sanders served as Senior Vice President of NBC from 1993 until 1997. William E. Matthews, V--Age 36--Executive Vice President and Chief Financial Officer. Mr. Matthews has served as Executive Vice President and Chief Financial Officer of Alabama National and NBC since April 1998. Prior to that date, Mr. Matthews served as Senior Vice President of NBC beginning in 1996. Shelly S. Williams--Age 38--Senior Vice President and Controller. Ms. Williams has served as Senior Vice President and Controller of Alabama National and NBC since 2000. Prior to such time, Ms. Williams served as Vice President and Controller of NBC from 1997 through 2000, and as Assistant Vice President and Assistant Controller of NBC from 1996 to 1997. ITEM 2. PROPERTIES Alabama National, through the Banks, currently operates 52 banking offices and one insurance office. Of these offices, Alabama National, through the Banks, owns 42 banking offices without encumbrance and leases an additional 10 banking offices and its one insurance office. Alabama National, through NBC, leases its principal administrative offices, which are located at 1927 First Avenue North, Birmingham, Alabama. See Notes 6 and 9 to the Consolidated Financial Statements of Alabama National and Subsidiaries included in this Annual Report on Form 10-K for additional information regarding Alabama National's premises and equipment. ITEM 3. LEGAL PROCEEDINGS Alabama National, in the normal course of business, is subject to various pending and threatened litigation. Although it is not possible to determine at this point in time, based on consultation with legal counsel, management does not anticipate that the ultimate liability, if any, resulting from such litigation will have a material effect on Alabama National's financial condition and results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS None. 11 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS At March 12, 2001 Alabama National had 1,198 stockholders of record (including shares held in "street" names by nominees who are record holders) and 11,793,160 shares of Alabama National Common Stock outstanding. Alabama National Common Stock is traded in the over-the-counter market and prices are quoted on the NASDAQ/NMS under the symbol "ALAB." The reported sales price range for Alabama National Common Stock and the dividends declared during each calendar quarter of 1999 and 2000 are shown below:
Dividends High Low Declared ------- --- --------- 1999 First Quarter.................................... $26 29/32 21 3/4 $.18 Second Quarter................................... 25 3/8 22 1/2 .18 Third Quarter.................................... 27 1/2 22 5/8 .18 Fourth Quarter................................... 24 5/8 17 3/4 .18 2000 First Quarter.................................... 21 3/4 14 1/8 .21 Second Quarter................................... 20 1/2 17 1/8 .21 Third Quarter.................................... 24 3/4 17 1/8 .21 Fourth Quarter................................... 23 5/8 18 3/4 .21
As a bank holding company, Alabama National, except under extraordinary circumstances, will not generate earnings of its own, but will rely solely on dividends paid to it by the Banks as the source of income to meet its expenses and pay dividends. Under normal circumstances, Alabama Nationals' ability to pay dividends will depend entirely on the ability of the Banks to pay dividends to Alabama National. The Banks are subject to state and federal banking regulations, and the payment of dividends by the Banks is governed by such regulations. The last reported sales price of Alabama National Common Stock as reported on the NASDAQ/NMS on March 12, 2001 was $28.00. The prices shown do not reflect retail mark-ups and mark-downs. All share prices have been rounded to the nearest 1/64 of one dollar. The market makers for Alabama National Common Stock as of December 31, 2000, were Raymond James & Associates, Inc., Legg Mason Wood Walker Inc., The Robinson Humphrey Company, LLC, ABN AMRO Securities (USA), Inc., Speer, Leeds & Kellogg, Mayer & Schweitzer, Inc., Keefe, Bruyette & Woods, Inc., Trident Securities, Inc., First Tennessee Securities Corporation, Schwab Capital Markets and Sherwood Securities Corp. 12 ITEM 6. SELECTED FINANCIAL DATA FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA (Amounts in thousands, except ratios and per share data)
Year Ended December 31, ---------------------------------------------------------- 2000 1999 1998(1) 1997(1) 1996(1) ---------- ---------- ---------- ---------- ---------- Income Statement Data: Interest income......... $ 161,404 $ 125,668 $ 115,704 $ 104,508 $ 93,178 Interest expense........ 86,438 59,283 56,555 48,379 42,174 ---------- ---------- ---------- ---------- ---------- Net interest income..... 74,966 66,385 59,149 56,129 51,004 Provision for loan losses................. 2,003 1,954 1,796 3,421 1,035 ---------- ---------- ---------- ---------- ---------- Net interest income after provision for loan losses............ 72,963 64,431 57,353 52,708 49,969 Net securities gains (losses)............... 1 190 174 (2) (84) Noninterest income...... 32,679 30,367 29,176 20,296 19,214 Noninterest expense..... 70,374 62,455 61,154 52,788 50,175 ---------- ---------- ---------- ---------- ---------- Income before income taxes.................. 35,269 32,533 25,549 20,214 18,924 Provision for income taxes.................. 10,851 10,237 8,154 6,086 5,279 ---------- ---------- ---------- ---------- ---------- Income before minority interest in earnings of consolidated subsidiary............. 24,418 22,296 17,395 14,128 13,645 Minority interest in earnings of consolidated subsidiary............. 26 25 23 12 14 ---------- ---------- ---------- ---------- ---------- Net income.............. $ 24,392 $ 22,271 $ 17,372 $ 14,116 $ 13,631 ========== ========== ========== ========== ========== Balance Sheet Data: Total assets............ $2,235,698 $1,921,884 $1,672,049 $1,495,814 $1,260,635 Earning assets.......... 2,026,028 1,716,935 1,493,122 1,313,097 1,149,038 Securities.............. 375,312 345,123 324,213 265,102 224,939 Loans held for sale .... 5,226 8,615 19,047 5,291 4,339 Loans, net of unearned income................. 1,609,465 1,320,160 1,087,027 961,079 863,968 Allowance for loan losses................. 20,867 18,068 16,540 14,844 12,633 Deposits................ 1,703,949 1,442,155 1,275,175 1,125,479 988,876 Short-term debt......... 83,439 18,389 21,700 29,087 42,205 Long-term debt.......... 83,926 124,005 32,328 16,587 12,939 Stockholders' equity.... 162,464 138,255 130,993 116,888 105,204 Weighted Average Shares Outstanding-- Diluted(2)............. 11,238 11,273 11,173 10,999 10,490 Per Common Share Data: Net income--diluted .... $ 2.17 $ 1.98 $ 1.55 $ 1.28 $ 1.30 Book value (period end)................... 14.70 12.49 11.94 11.02 10.43 Tangible book value (period end) .......... 13.40 11.52 11.19 10.20 9.66 Dividends declared ..... 0.84 0.72 0.60 0.46 0.28 Performance Ratios: Return on average assets ....................... 1.18% 1.26% 1.10% 1.05% 1.17% Return on average equity ....................... 16.47 16.28 13.81 12.73 14.22 Net interest margin(3).. 3.98 4.18 4.24 4.62 4.75 Net interest margin (taxable equivalent)(3)......... 4.03 4.25 4.31 4.71 4.83 Asset Quality Ratios: Allowance for loan losses to period end loans(4)............... 1.30% 1.37% 1.52% 1.54% 1.46% Allowance for loan losses to period end nonperforming loans(5)............... 647.84 435.79 340.61 281.14 377.22 Net charge-offs to average loans(4) ...... 0.04 0.04 0.01 0.13 0.00 Nonperforming assets to period end loans and foreclosed property(4)(5)......... 0.29 0.37 0.56 0.73 0.48 Capital and Liquidity Ratios: Average equity to average assets......... 7.15% 7.77% 7.95% 8.27% 8.21% Leverage (4.00% required minimum)(6)............ 6.80 7.18 7.41 7.75 8.64 Risk-based capital Tier 1 (4.00% required minimum)(6)........... 8.82 9.38 10.03 9.89 10.91 Total (8.00% required minimum)(6)........... 10.04 10.62 11.28 11.14 12.16 Average loans to average deposits............... 93.88 88.96 83.02 85.44 84.08
13 - -------- (1) On December 31, 1998, Community Bank of Naples, N.A. ("Naples") merged with and into a subsidiary of Alabama National (the "Naples Merger"). Pursuant to the terms of the Naples Merger, each share of Naples common stock was converted into 0.53271 shares of Alabama National's common stock. On October 2, 1998, Community Financial Corporation ("CFC") merged with and into Alabama National (the "CFC Merger"). Pursuant to the terms of the CFC Merger, each share of CFC common stock was converted into 0.351807 shares of Alabama National's common stock. On May 29, 1998, Public Bank Corporation ("PBC") merged with and into Alabama National (the "PBC Merger"). Pursuant to the terms of the PBC Merger, each share of PBC common stock was converted into 0.2353134 shares of Alabama National's common stock. On November 30, 1997, First American Bancorp ("FAB") merged with and into Alabama National (the "FAB Merger"). Pursuant to the terms of the FAB Merger, each share of FAB common stock was converted into 0.7199 shares of Alabama National's common stock. On September 30, 1996, FIRSTBANC Holding Company, Inc. ("FIRSTBANC") was merged with and into Alabama National, with each share of common stock of FIRSTBANC being converted into 7.12917 shares of Alabama National's common stock. Each of the aforementioned mergers was accounted for as pooling of interests. The historical Five-Year Summary of Selected Financial Data for all periods have been restated to include the results of operations of Naples, CFC, PBC, FAB, and FIRSTBANC from the earliest period presented, except for dividends per common share. (See Note 2 to Alabama National's consolidated financial statements included in this Annual Report). (2) The weighted average common share and common equivalent shares outstanding are those of Naples, CFC, PBC, FAB, and FIRSTBANC converted into Alabama National common stock and common stock equivalents at the applicable exchange ratios. (3) Net interest income divided by average earning assets. (4) Does not include loans held for sale. (5) Nonperforming loans and nonperforming assets includes loans past due 90 days or more that are still accruing interest. It is Alabama National's policy to place all loans on nonaccrual status when over ninety days past due. (6) Based upon fully phased-in requirements. ITEM 7. 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. All significant intercompany accounts and transactions have been eliminated. The accounting and reporting policies of Alabama National conform with generally accepted accounting principles and with general financial service industry practices. The historical consolidated financial statements of Alabama National and the "FIVE-YEAR SUMMARY OF SELECTED FINANCIAL DATA" derived from the historical consolidated financial statements of Alabama National are set forth elsewhere herein. This discussion should be read in conjunction with those consolidated financial statements and selected consolidated financial data and the other financial information included in this Annual Report. 14 Selected Bank Financial Data Alabama National's success is dependent upon the financial performance of its subsidiary banks (the "Banks"). Alabama National, with input from the management of each Bank, establishes operating goals for each Bank. The following tables summarize selected financial information for 2000 and 1999 for each of the Banks. SELECTED BANK FINANCIAL DATA (Amounts in thousands, except ratios) (Unaudited)
December 31, 2000 ------------------------------------------------------------------------------------------------------ National Alabama Citizens & First First First Georgia Community Bank of Exchange Bank of Peoples American Citizens Gulf Public State Bank of Commerce Bank Dadeville Bank, N.A. Bank Bank Bank Bank Bank Naples, N.A. -------- -------- --------- ---------- -------- -------- -------- ------- -------- ------------ Summary of Operations: Interest income....... $ 71,622 $ 5,593 $ 5,639 $ 3,400 $ 31,322 $ 6,907 $ 11,706 $ 6,192 $ 13,252 $ 8,777 Interest expense...... 42,725 1,936 2,706 2,211 15,802 3,467 5,788 2,634 6,407 4,180 Net interest income... 28,897 3,657 2,933 1,189 15,520 3,440 5,918 3,558 6,845 4,597 Provision for loan losses............... 425 160 35 110 618 -- 95 178 20 362 Securities gains (losses)............. -- -- -- -- -- -- -- -- -- -- Noninterest income.... 19,159 680 597 355 6,142 760 1,711 1,127 1,715 749 Noninterest expense... 32,775 1,992 1,596 1,291 13,545 1,963 4,568 2,642 4,963 2,367 Net income............ 10,441 1,438 1,321 107 5,223 1,703 1,950 1,165 2,357 1,690 Balance Sheet Highlights: At Period-End: Total assets........ $952,623 $73,719 $71,472 $53,122 $443,982 $92,666 $165,784 $89,664 $179,860 $130,883 Securities.......... 130,204 19,526 14,752 12,407 54,353 36,825 18,075 13,260 51,455 24,375 Loans, net of unearned income.............. 710,094 40,223 47,637 33,563 338,270 44,934 130,516 62,659 110,624 94,174 Allowance for loan losses............. 9,010 593 556 467 4,799 588 1,519 719 1,313 1,303 Deposits............ 642,227 61,617 56,021 48,862 368,989 78,996 142,667 77,466 137,315 93,593 Short-term debt..... 16,900 5,000 5,000 -- 5,000 4,000 5,000 5,000 5,000 6,000 Long-term debt...... 45,176 -- 3,700 -- 18,050 2,000 5,000 -- 10,000 -- Stockholders' equity............. 74,343 6,303 5,590 4,062 41,184 6,885 11,362 6,546 13,020 8,821 Performance Ratios: Return on average assets............... 1.12% 1.92% 1.81% 0.23% 1.42% 1.83% 1.31% 1.45% 1.38% 1.42% Return on average equity............... 15.50 23.59 24.33 2.92 15.76 26.41 19.27 19.63 20.56 22.02 Net interest margin... 3.35 5.36 4.38 2.83 4.67 4.02 4.37 4.88 4.47 4.49 Capital and Liquidity Ratios: Average equity to average assets....... 7.25 8.13 7.45 7.72 9.02 6.92 6.78 7.41 6.73 6.46 Leverage (4.00% required minimum).... 7.78 7.45 7.89 8.09 7.89 7.39 7.00 7.57 7.16 6.96 Risk-based capital.... Tier 1 (4.00% required minimum).. 9.79 13.08 11.73 11.42 9.52 13.56 8.88 9.68 10.93 10.16 Total (8.00% required minimum).. 10.97 14.33 12.87 12.67 10.77 14.74 10.07 10.73 12.02 11.41 Average loans to average deposits..... 112.63 65.68 78.30 68.54 93.36 55.38 91.92 80.23 70.88 88.49
15 SELECTED BANK FINANCIAL DATA (continued) (Amounts in thousands, except ratios) (Unaudited)
December 31, 1999 ------------------------------------------------------------------------------------------------------ National Alabama Citizens & First First First Georgia Community Bank of Exchange Bank of Peoples American Citizens Gulf Public State Bank of Commerce Bank Dadeville Bank, N.A. Bank Bank Bank Bank Bank Naples, N.A. -------- -------- --------- ---------- -------- -------- -------- ------- -------- ------------ Summary of Operations: Interest income....... $ 55,306 $ 4,813 $ 5,039 $ 2,772 $ 22,386 $ 6,389 $ 9,058 $ 4,475 $ 10,823 $ 6,014 Interest expense...... 28,747 1,590 2,155 1,776 9,781 2,891 3,780 1,500 4,760 2,801 Net interest income... 26,559 3,223 2,884 996 12,605 3,498 5,278 2,975 6,063 3,213 Provision for loan losses............... 25 150 117 166 680 27 353 65 15 356 Securities gains...... -- -- -- 6 -- 7 6 -- 23 -- Noninterest income.... 18,674 683 644 298 4,518 806 1,624 1,082 1,660 590 Noninterest expense... 30,287 1,895 1,615 1,100 10,418 2,052 4,080 2,332 4,507 1,739 Net income............ 10,269 1,249 1,267 40 4,232 1,634 1,636 1,021 2,103 1,061 Balance Sheet Highlights: At Period-End: Total assets........ $893,076 $72,162 $70,702 $44,857 $301,440 $92,442 $131,229 $71,444 $160,135 $106,619 Securities.......... 120,638 21,310 16,382 13,892 41,489 39,354 11,988 14,499 40,468 25,006 Loans, net of unearned income.... 639,859 41,643 42,636 24,932 226,161 43,489 103,577 45,218 90,039 69,069 Allowance for loan losses............. 8,517 623 500 359 3,318 580 1,448 547 1,213 963 Deposits............ 583,739 60,794 55,914 36,697 240,606 78,967 109,328 60,563 136,702 84,790 Short-term debt..... 6,199 -- -- -- -- -- 2,000 -- -- -- Long-term debt...... 56,000 5,000 8,700 -- 23,039 6,000 10,000 5,000 5,000 5,000 Stockholders' equity............. 61,855 5,780 5,196 3,598 27,667 6,198 9,088 5,597 10,693 6,703 Performance Ratios: Return on average assets............... 1.29% 1.84% 1.86% 0.09% 1.50% 1.83% 1.33% 1.63% 1.46% 1.16% Return on average equity............... 17.25 19.90 21.26 1.03 16.46 20.66 19.35 18.22 19.88 16.39 Net interest margin... 3.64 5.28 4.64 2.65 4.94 4.29 4.74 5.30 4.65 4.17 Capital and Liquidiy Ratios: Average equity to average assets....... 7.45 9.26 8.77 9.26 9.09 8.87 6.86 8.97 7.33 7.09 Leverage (4.00% required minimum).... 7.26 7.81 8.25 9.37 8.43 7.16 7.19 8.75 7.37 7.29 Risk-based capital.... Tier 1 (4.00% required minimum).. 8.84 12.18 12.60 13.58 10.51 13.87 9.30 12.66 11.65 10.73 Total (8.00% required minimum).. 10.01 13.43 13.72 14.77 11.76 15.08 10.55 13.82 12.85 11.98 Average loans to average deposits..... 108.95 62.85 77.01 56.75 90.97 54.38 90.51 67.04 67.92 70.52
16 Results of Operations Year ended December 31, 2000, compared with year ended December 31, 1999 Alabama National's net income increased by $2.1 million, or 9.5%, to $24.4 million in the year ended December 31, 2000, from $22.3 million for the year ended December 31, 1999. Return on average assets during 2000 was 1.18%, compared with 1.26% during 1999, and return on average equity was 16.47% during 2000, compared with 16.28% during 1999. Net interest income increased $8.6 million, or 12.9%, to $75.0 million in 2000 from $66.4 million in 1999, as interest income increased by $35.7 million and interest expense increased $27.2 million. The increase in net interest income is primarily attributable to a $284.6 million increase in average loans to $1.5 billion during 2000, from $1.2 billion in 1999, as a result of management emphasis on loan growth. In general, loans are Alabama National's highest yielding earning asset. The increased interest expense is primarily attributable to an increase in average time deposits of $195.1 million to $807.3 million in 2000, from $612.3 million in 1999 and an increase in the interest rate paid on time deposits of 77 basis points, to 6.01% in 2000, from 5.24% in 1999. Also, average long-term and short-term debt increased a combined $70.5 million to $154.5 million during 2000, from $84.0 million in 1999. The increases in the above liability categories are due to Alabama National's need to fund loan growth. These funding sources generally bear higher interest rates than interest-bearing transaction accounts, resulting in higher interest expense. Alabama National's net interest spread and net interest margin were 3.43% and 3.98%, respectively, in 2000, each decreasing by 20 basis points from 1999. These decreases resulted because the rate paid on interest-bearing liabilities increased more rapidly than the yield earned on average loans due to a shift in Alabama National's funding mix. During 2000, loans grew more rapidly than lower cost deposits, causing Alabama National to rely upon more costly funding sources such as Federal Home Loan Bank Advances and brokered certificate of deposits. Alabama National recorded a provision for loan losses of $2.0 million during each of 2000 and 1999. Management believes that both loan loss experience and asset quality indicate that the allowance for loan losses is maintained at an adequate level. Alabama National's allowance for loan losses as a percentage of period-end loans (excluding loans held for sale) was 1.30% at December 31, 2000, compared with 1.37% at December 31, 1999. The allowance for loan losses as a percentage of period-end nonperforming assets was 446.74% at December 31, 2000, compared with 373.85% at December 31, 1999. Alabama National experienced net charge-offs of $604,000 in 2000, equating to a ratio of net charge-offs to average loans of 0.04% compared with net charge-offs of $426,000 in 1999, equating to a ratio of net charge-offs to average loans of 0.04%. See "Provision and Allowance for Loan Losses." Noninterest income, including net securities gains and losses, increased $2.1 million, or 6.9%, to $32.7 million in 2000, compared with $30.6 million in 1999. Alabama National experienced revenue decreases in its investment services and mortgage lending divisions of $1.2 million, or 11.5%, to $9.4 million in 2000 from $10.6 million in 1999. The securities brokerage division experienced a revenue increase of $1.7 million, or 46.0%, to $5.4 million in 2000, from $3.7 million in 1999. The commissions generated by the insurance division totaled $2.1 million in 2000 compared to $1.1 million in 1999. The 1999 commission revenue only includes seven months of activity as the division was acquired in May 1999. Fees generated by the trust division increased by $89,000 in 2000, or 4.1%, to $2.3 million. Service charges on deposit accounts increased by $256,000, or 3.4%, to $7.7 million in 2000 from $7.5 million in 1999. Earnings on bank owned life insurance totaled $2.0 million in 2000 compared with $1.5 million in 1999. The increase reflects earnings on a larger bank owned life insurance asset base due to reinvestment of policy earnings and additional investments in bank owned life insurance policies during 2000. Noninterest income for 1999 includes a gain of $819,000 from the curtailment of Alabama National's defined benefit pension plan, a gain of $249,000 from non-recurring sales of assets and a securities gain of $190,000. Excluding these non-recurring items, Alabama National's noninterest income increased $3.4 million, or 11.6%, in 2000 versus 1999. Noninterest expense increased $7.9 million, or 12.7%, to $70.4 million in 2000, compared with $62.5 million during 1999. See "Noninterest Income and Expense." 17 Income before the provision for income taxes increased $2.7 million, or 8.4%, to $35.3 million in 2000, from $32.5 million in 1999. Net income totaled $24.4 million in 2000, an increase of $2.1 million, or 9.5%, compared to $22.3 million during 1999. Year ended December 31, 1999, compared with year ended December 31, 1998 Alabama National's net income increased by $4.9 million, or 28.2%, to $22.3 million in the year ended December 31, 1999, from $17.4 million in the year ended December 31, 1998. Return on average assets during 1999 was 1.26%, compared with 1.10% during 1998, and return on average equity was 16.28% during 1999, compared with 13.81% during 1998. Net interest income increased $7.3 million, or 12.2%, to $66.4 million in 1999 from $59.1 million in 1998, as interest income increased by $10.0 million and interest expense increased $2.7 million. The increase in net interest income is primarily attributable to a $193.3 million increase in average loans to $1.2 billion during 1999, from $1.0 billion in 1998, as a result of management emphasis on loan growth. In general, loans are Alabama National's highest yielding earning asset. The increased interest expense is primarily attributable to an increase in average time deposits of $71.1 million to $612.3 million in 1999, from $541.1 million in 1998 and an increase in average long-term debt to $58.4 million in 1999, from $30.5 million in 1998, an increase of $27.9 million. The increases are due to Alabama National's need to fund loan growth and these funding sources generally bear higher interest rates than interest-bearing transaction accounts. Alabama National's net interest spread and net interest margin were 3.63% and 4.18%, respectively, in 1999, decreasing by 4 and 6 basis points, respectively, from 1998. These slight decreases reflect declining yields on average loans that exceeded the decline in cost of interest-bearing liabilities, attributable to increased competition from banks and other financial institutions. Alabama National recorded a provision for loan losses of $2.0 million during 1999 compared with $1.8 million one year ago. Management believes that both loan loss experience and asset quality indicate that the allowance for loan losses is maintained at an adequate level. Alabama National's allowance for loan losses as a percentage of period-end loans (excluding loans held for sale) was 1.37% at December 31, 1999, compared with 1.52% at December 31, 1998, and the allowance for loan losses as a percentage of period-end nonperforming assets was 373.85% at December 31, 1999, compared with 271.6% at December 31, 1998. Alabama National experienced net charge-offs of $426,000 in 1999 equating to a ratio of net charge-offs to average loans of 0.04% compared with net charge-offs of $100,000 in 1998 equating to a ratio of net charge- offs to average loans of 0.01%. See "Provision and Allowance for Loan Losses." Noninterest income, including net securities gains and losses, increased $1.2 million, or 4.1%, to $30.6 million in 1999, compared with $29.4 million in 1998. Alabama National experienced revenue decreases in its investment services and mortgage lending divisions of $2.9 million, or 21.5%, to $10.6 million in 1999 from $13.5 million in 1998. During 1999, the securities brokerage division experienced an increase in revenue of $1.4 million, or 60.7%, to $3.7 million. Service charges on deposit accounts increased by $220,000, or 3.0%, to $7.5 million in 1999 from $7.3 million in 1998. Earnings on bank owned life insurance policies totaled $1.5 million in 1999 compared with $1.2 million, representing an increase of 28.9%. Alabama National's newly acquired insurance division recorded revenue of $1.1 million during 1999. During 1999, Alabama National also recognized a gain of $819,000 on the curtailment of its defined benefit pension plan. Non-recurring sales of assets resulted in gains of $249,000 in 1999 compared to $247,000 in 1998. Noninterest expense increased $1.3 million, or 2.1%, to $62.5 million during 1999, compared with $61.2 million during 1998. See "Noninterest Income and Expense." Income before the provision for income taxes increased $7.0 million, or 27.3%, to $32.5 million in 1999, from $25.5 million in 1998. Net income increased $4.9 million during 1999. 18 Net Interest Income The largest component of Alabama National's net income is its net interest income--the difference between the income earned on assets and interest paid on deposits and borrowed funds used to support its assets. Net interest income is determined by the yield earned on Alabama National's earning assets and rates paid on its interest-bearing liabilities, the relative amounts of earning assets and interest-bearing liabilities and the maturity and repricing characteristics of its earning assets and interest-bearing liabilities. Net interest income divided by average earning assets represents the Alabama National's net interest margin. Average Balances, Income, Expenses and Rates The following table depicts, on a taxable equivalent basis for the periods indicated, 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 balances of the associated assets or liabilities. 19 AVERAGE BALANCES, INCOME AND EXPENSES AND RATES (Amounts in thousands, except yields and rates)
Year ended December 31, ---------------------------------------------------------------------------------- 2000 1999 1998 --------------------------- --------------------------- -------------------------- Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Balance Expense Rate ---------- -------- ------ ---------- -------- ------ ---------- ------- ------ ASSETS: ------- Earning assets: Loans(1)(3)............ $1,485,628 $134,974 9.09% $1,201,041 $102,549 8.54% $1,007,695 $92,343 9.16% Securities: Taxable................ 324,319 22,306 6.88 297,843 18,834 6.32 273,782 17,213 6.29 Tax exempt............. 29,911 2,245 7.51 33,173 2,458 7.41 33,182 2,510 7.56 Cash balances in other banks................. 3,781 214 5.66 1,830 110 6.01 2,019 106 5.25 Funds sold............. 39,613 2,522 6.37 46,647 2,406 5.16 75,039 4,256 5.67 Trading account securities............ 1,795 124 6.91 6,669 356 5.34 4,352 264 6.07 ---------- -------- ---------- -------- ---------- ------- Total earning assets(2)........... 1,885,047 162,385 8.61 1,587,203 126,713 7.98 1,396,069 116,692 8.36 ---------- -------- ---------- -------- ---------- ------- Cash and due from banks.................. 69,992 65,474 56,529 Premises and equipment.. 46,955 42,041 37,404 Other assets............ 89,568 84,244 108,715 Allowance for loan losses................. (19,577) (17,323) (15,608) ---------- ---------- ---------- Total assets......... $2,071,985 $1,761,639 $1,583,109 ========== ========== ========== LIABILITIES: ------------ Interest-bearing liabilities: Interest-bearing transaction accounts.. $ 250,594 8,270 3.30 $ 197,811 4,860 2.46 $ 167,034 4,271 2.56 Savings and money market deposits....... 301,003 10,814 3.59 321,791 10,668 3.32 313,254 11,678 3.73 Time deposits.......... 807,324 48,510 6.01 612,263 32,061 5.24 541,142 30,466 5.63 Funds purchased........ 153,950 9,226 5.99 146,111 7,258 4.97 127,856 6,807 5.32 Other short-term borrowings............ 57,354 4,024 7.02 25,539 1,407 5.51 26,323 1,613 6.13 Long-term debt......... 97,162 5,594 5.76 58,445 3,029 5.18 30,548 1,720 5.63 ---------- -------- ---------- -------- ---------- ------- Total interest- bearing liabilities......... 1,667,387 86,438 5.18 1,361,960 59,283 4.35 1,206,157 56,555 4.69 ---------- -------- ---------- -------- ---------- ------- Demand deposits........ 223,620 218,263 192,427 Accrued interest and other liabilities..... 32,886 44,609 58,696 Stockholders' equity... 148,092 136,807 125,829 ---------- ---------- ---------- Total liabilities and stockholders' equity... $2,071,985 $1,761,639 $1,583,109 ========== ========== ========== Net interest spread..... 3.43% 3.63% 3.67% ==== ==== ==== Net interest income/margin on a taxable equivalent basis.................. 75,947 4.03% 67,430 4.25% 60,137 4.31% ==== ==== ==== Tax equivalent adjustment(2).......... 981 1,045 988 -------- -------- ------- Net interest income/margin.......... $ 74,966 3.98% $ 66,385 4.18% $59,149 4.24% ======== ==== ======== ==== ======= ====
- -------- (1) Average loans include nonaccrual loans. All loans and deposits are domestic. (2) Tax equivalent adjustments are based on the assumed rate of 34%, and do not give effect to the disallowance for Federal income tax purposes of interest expense related to certain tax-exempt assets. (3) Fees in the amount of $3,247,000, $3,002,000, and $3,273,000 are included in interest and fees on loans for 2000, 1999, and 1998, respectively. 20 During 2000, Alabama National experienced an increase in net interest income of $8.6 million, or 12.9%, to $75.0 million, compared with $66.4 million in 1999. Net interest income increased despite a decrease in the net interest spread of 20 basis points to 3.43% in 2000 from 3.63% in 1999, and a decrease in the net interest margin of 20 basis points to 3.98% in 2000, compared with 4.18% in 1999. Because the relative yield on loans exceeds that of all other earnings assets, the primary reason for the increased net interest income was a 23.7% increase in average loan volume. The decline in net interest spread and net interest margin resulted because the rate paid on interest-bearing liabilities increased more rapidly than the yield earned on average loans, due to Alabama National's reliance on more costly funding sources. Alabama National's average liabilities in 2000 included more interest bearing liabilities than in 1999. During 2000, net average earning assets increased by $297.8 million, or 18.8%, to $1.89 billion from $1.59 billion in 1999. The major components of this increase included average loans, which increased $284.6 million, or 23.7%, to $1.49 billion in 2000 from $1.20 billion in 1999, and securities, which increased $23.2 million, or 7.0%, to $354.2 million in 2000 from $331.0 million in 1999. Analysis of Changes in Net Interest Income 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 2000 and 1999. For 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)
December 31, -------------------------------------------------------- 2000 Compared to 1999 1999 Compared to 1998 Variance Due to Variance Due to --------------------------- --------------------------- Volume Yield/Rate Total Volume Yield/Rate Total ------- ---------- ------- ------- ---------- ------- Earning assets: Loans................... $25,495 $ 6,930 $32,425 $16,782 $(6,576) $10,206 Securities: Taxable............... 1,739 1,733 3,472 1,538 83 1,621 Tax exempt............ (246) 33 (213) (1) (51) (52) Cash balances in other banks.................. 111 (7) 104 (10) 14 4 Funds sold.............. (396) 512 116 (1,494) (356) (1,850) Trading account securities............. (315) 83 (232) 127 (35) 92 ------- ------- ------- ------- ------- ------- Total interest income.............. 26,388 9,284 35,672 16,942 (6,921) 10,021 Interest-bearing liabilities: Interest-bearing transaction accounts... 1,496 1,914 3,410 762 (173) 589 Savings and money market deposits............... (705) 851 146 309 (1,319) (1,010) Time deposits........... 11,257 5,192 16,449 3,808 (2,213) 1,595 Funds purchased......... 408 1,560 1,968 921 (470) 451 Other short-term borrowings............. 2,145 472 2,617 (47) (159) (206) Long-term debt.......... 2,194 371 2,565 1,456 (147) 1,309 ------- ------- ------- ------- ------- ------- Total interest expense............. 16,795 10,360 27,155 7,209 (4,481) 2,728 ------- ------- ------- ------- ------- ------- Net interest income on a taxable equivalent basis.... $ 9,593 $(1,076) 8,517 $ 9,733 $(2,440) 7,293 ======= ======= ======= ======= Taxable equivalent adjustment............. 64 (57) ------- ------- Net interest income..... $ 8,581 $ 7,236 ======= =======
21 Interest Sensitivity and Market Risk Interest 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 net interest income. The principal monitoring technique employed by Alabama National is simulation analysis, which technique is augmented by "gap" analysis. In simulation analysis, Alabama National reviews each individual asset and liability category and their projected behavior in various different interest rate environments. These projected behaviors are based upon management's past experiences and upon current competitive environments, including the various environments in the different markets in which Alabama National competes. Using this projected behavior and differing rate scenarios as inputs, the simulation analysis generates as output a projection of net interest income. Alabama National also periodically verifies the validity of this approach by comparing actual results with those that were projected in previous models. See "--Market Risk." Another technique used by Alabama National in interest rate management 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. Alabama National evaluates interest sensitivity risk and then formulates guidelines regarding asset generation and repricing, and sources and prices of off-balance sheet commitments in order to decrease interest sensitivity risk. 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. 22 The following table illustrates Alabama National's interest rate sensitivity at December 31, 2000, assuming the 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)
December 31, 2000 ------------------------------------------------------------------- After One After Three Within Through Through Greater One Three Twelve Within One Than One Month Months Months Year Year Total -------- --------- ----------- ---------- -------- ---------- ASSETS: ------- Earning assets: Loans(1).............. $605,320 $128,988 $ 247,982 $ 982,290 $629,180 $1,611,470 Securities(2)......... 20,289 18,524 53,276 92,089 272,965 365,054 Trading securities.... 577 -- -- 577 -- 577 Interest-bearing deposits in other banks................ 7,630 -- -- 7,630 -- 7,630 Funds sold............ 27,818 -- -- 27,818 -- 27,818 -------- -------- --------- ---------- -------- ---------- Total interest- earning assets..... $661,634 $147,512 $ 301,258 $1,110,404 $902,145 $2,012,549 LIABILITIES: ------------ Interest-bearing liabilities: Interest-bearing deposits: Demand deposits..... $ 81,404 $ -- $ 10,770 $ 92,174 $193,301 $ 285,475 Savings and money market deposits.... 83,156 -- 3,718 86,874 203,476 290,350 Time deposits(3).... 124,493 150,431 520,806 795,730 105,501 901,231 Funds purchased....... 143,663 10,121 11,333 165,117 -- 165,117 Short-term borrowings(4)........ 75,439 6,000 2,000 83,439 -- 83,439 Long-term debt........ 35,001 3,703 25,064 63,768 20,158 83,926 -------- -------- --------- ---------- -------- ---------- Total interest- bearing liabilities........ $543,156 $170,255 $ 573,691 $1,287,102 $522,436 $1,809,538 -------- -------- --------- ---------- -------- ---------- Period gap.............. $118,478 $(22,743) $(272,433) $ (176,698) $379,709 ======== ======== ========= ========== ======== Cumulative gap.......... $118,478 $ 95,735 $(176,698) $ (176,698) $203,011 $ 203,011 ======== ======== ========= ========== ======== ========== Ratio of cumulative gap to total earning assets................. 5.89% 4.76% (8.78)% (8.78)% 10.09%
- -------- (1) Excludes nonaccrual loans of $3,221,000. (2) Excludes investment equity securities with a market value of $10,258,000. (3) Excludes matured certificates which have not been redeemed by the customer and on which no interest is accruing. (4) Includes treasury, tax and loan account of $900,000. Alabama National generally benefits from increasing market rates of interest when it has an asset-sensitive gap and generally benefits from decreasing market interest rates when it is liability sensitive. Alabama National is liability sensitive throughout one year after three months. The analysis presents only a static view of the timing 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 are viewed by management as significantly less interest sensitive than market-based rates such as those paid on non-core deposits. For this and other reasons, management relies more upon the simulation analysis (as noted above) in managing interest rate risk. Accordingly, management believes that a liability-sensitive gap position is not as indicative of Alabama National's true interest sensitivity 23 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 impacted 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 December 31, 2000, mortgage backed securities with a carrying value totaling $219.9 million, or 9.8% of total assets and essentially every underlying loan, net of unearned income, (totaling $1.61 billion, or 72.0% 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 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 $1.70 billion, or 76.2% of total assets, at December 31, 2000. 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. 24 The following table illustrates the results of simulation analysis used by Alabama National to determine the extent to which market risk would affect net interest margin for the next twelve months if prevailing interest rates increased or decreased the specified amounts from current rates. Because of the inherent use of estimates and assumptions in the simulation model used to derive this information, the actual results of 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)
Year ended December 31, 2000 Year ended December 31, 1999 Change in --------------------------------- --------------------------------- Prevailing Net Interest Change from Net Interest Change from Interest Rates Income Amount Income Amount Income Amount Income Amount - -------------- --------------- -------------- --------------- -------------- +200 basis points....... $85,314 4.41% $74,125 1.49% +100 basis points....... 83,862 2.63 73,490 0.62 0 basis points.......... 81,709 -- 73,037 -- - -100 basis points....... 79,131 (3.15) 71,591 (1.98) - -200 basis points....... 77,348 (5.34) 69,424 (4.95)
Provision and Allowance for Loan Losses Alabama National has policies and procedures for evaluating the overall credit quality of its loan portfolio including timely identification of potential problem credits. On a monthly basis, management reviews the appropriate level for the allowance for loan losses. This review and analysis is based on the results of the internal monitoring and reporting system, analysis of economic conditions in its markets and a review of historical statistical data, current trends regarding the volume and severity of past due and problem loans and leases, the existence and effect of concentrations of credit, and changes in national and local economic conditions for both Alabama National and other financial institutions. Management also considers in its evaluation of the adequacy of the allowance for loan losses the results of regulatory examinations conducted for each Bank, including evaluation of Alabama National's policies and procedures and findings from Alabama National's independent loan review department. The provision for loan losses increased by $49,000, or 2.5%, to $2.0 million in 2000 from $1.95 million in 1999. The growth in loans exceeded the growth in loan loss provision, primarily due to Alabama National's assessment of allowance for loan losses adequacy, low charge-off experience and low nonperforming asset levels. Management believes the allowance for loan losses, at its current level, adequately covers Alabama National's exposure to loan losses. Management's periodic evaluation of the adequacy of the allowance for loan losses is based on Alabama National's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay, estimated value of any underlying collateral, and an analysis of current economic conditions. While management believes that it has established the allowance in accordance with generally accepted accounting principles and has taken into account the views of its regulators and the current economic environment, there can be no assurance that in the future Alabama National's regulators or its economic environment will not require further increases in the allowance. Additions to the allowance for loan losses, which are expensed as the provision for loan losses on Alabama National's income statement, are made periodically to maintain the allowance for loan losses at an appropriate level as determined by management. Loan losses and recoveries are charged or credited directly to the allowance for loan losses. 25 The following table presents the information associated with Alabama National's allowance and provision for loan losses for the dates indicated. ALLOWANCE FOR LOAN LOSSES (Amounts in thousands, except percentages)
Year ended December 31, ------------------------------------------------------ 2000 1999 1998 1997 1996 ---------- ---------- ---------- -------- -------- Total loans outstanding at end of period, net of unearned income(1).. $1,609,465 $1,320,160 $1,087,027 $961,079 $863,968 ========== ========== ========== ======== ======== Average amount of loans outstanding, net of unearned income(1)..... $1,478,448 $1,190,111 $1,003,366 $900,644 $794,105 ========== ========== ========== ======== ======== Allowance for loan losses at beginning of period................. $ 18,068 $ 16,540 $ 14,844 $ 12,633 $ 11,621 Charge-offs: Commercial, financial and agricultural..... 374 211 418 516 809 Real estate-- mortgage............. 137 392 200 531 160 Consumer.............. 850 674 1,246 1,880 1,027 ---------- ---------- ---------- -------- -------- Total charge-offs... 1,361 1,277 1,864 2,927 1,996 ---------- ---------- ---------- -------- -------- Recoveries: Commercial, financial and agricultural..... 161 188 1,012 1,068 1,525 Real estate-- mortgage............. 218 348 296 200 152 Consumer.............. 378 315 456 449 296 ---------- ---------- ---------- -------- -------- Total recoveries.... 757 851 1,764 1,717 1,973 ---------- ---------- ---------- -------- -------- Net charge-offs..... 604 426 100 1,210 23 Provision for loan losses................. 2,003 1,954 1,796 3,421 1,035 Changes incidental to acquisitions........... 1,400 -- -- -- -- ---------- ---------- ---------- -------- -------- Allowance for loan losses at period-end... $ 20,867 $ 18,068 $ 16,540 $ 14,844 $ 12,633 ========== ========== ========== ======== ======== Allowance for loan losses to period-end loans(1)............... 1.30% 1.37% 1.52% 1.54% 1.46% Net charge-offs to average loans(1)....... 0.04 0.04 0.01 0.13 0.00
- -------- (1) Does not include loans held for sale. Allocation of Allowance There is no formal allocation of the allowance for loan losses by loan category. 26 Nonperforming Assets The following table presents Alabama National's nonperforming assets for the dates indicated. NONPERFORMING ASSET (Amounts in thousands, except percentages)
At December 31, ------------------------------------------- 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- Nonaccrual loans................. $ 3,221 $ 4,141 $ 4,357 $ 4,228 $ 2,735 Restructured loans............... -- 5 499 1,052 605 Loans past due 90 days or more and still accruing.............. -- -- -- -- 9 ------- ------- ------- ------- ------- Total nonperforming loans...... 3,221 4,146 4,856 5,280 3,349 Other real estate owned.......... 1,450 687 1,234 1,756 842 ------- ------- ------- ------- ------- Total nonperforming assets..... $ 4,671 $ 4,833 $ 6,090 $ 7,036 $ 4,191 ======= ======= ======= ======= ======= Allowance for loan losses to period-end loans(1)............. 1.30% 1.37% 1.52% 1.54% 1.46% Allowance for loan losses to period-end nonperforming loans.. 647.84 435.79 340.61 281.14 377.22 Allowance for loan losses to period-end nonperforming assets.......................... 446.74 373.85 271.59 210.97 301.43 Net charge-offs to average loans (1) ............................ 0.04 0.04 0.01 0.13 0.00 Nonperforming assets to period- end loans and foreclosed property(1)..................... 0.29 0.37 0.56 0.73 0.48 Nonperforming loans to period-end loans(1)........................ 0.20 0.31 0.45 0.55 0.39
- -------- (1) Does not include loans held for sale. Accrual of interest is discontinued on a loan when management believes, after considering economic and business conditions and collection efforts, that the borrower's financial condition is such that 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 is accrued on the loan is reversed and deducted from earnings as a reduction of reported interest. No additional interest is accrued on the loan balance until 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 would necessitate additional charges to the allowance for loan losses. During the years ending December 31, 2000, 1999 and 1998, approximately $451,000, $392,000, and $384,000, respectively, in additional interest income would have been recognized in earnings if Alabama National's nonaccrual loans had been current in accordance with their original terms. Total nonperforming assets decreased $162,000 to $4.7 million at December 3l, 2000, from $4.8 million at December 31, 1999. The allowance for loan losses to period-end nonperforming assets was 446.74% at December 31, 2000, compared with 373.85% at December 31, 1999. This ratio will generally fluctuate from period to period depending upon nonperforming asset levels at period end. Total nonperforming loans decreased $925,000 during 2000, to $3.2 million and other real estate owned increased $763,000, to $1.5 million at December 31, 2000. Potential Problem Loans A potential problem loan is one that management has concerns as to the borrower's future performance under terms of the loan contract. These loans are current as to principal and interest, and accordingly, they are not included in the nonperforming asset categories. Management monitors these loans closely in order to ensure that Alabama National's interests are protected. At December 31, 2000, Alabama National had certain loans considered by management to be potential problem loans totaling $24.8 million as compared with $21.2 million at December 31, 1999. Alabama National believes early identification of potential problem loans is an important factor in its ability to successfully collect such loans. As such, it encourages early identification of potential problems loans both with its loan officers and loan review staff. The level of potential problem loans is factored into the determination of the adequacy of the allowance for loan losses. 27 Noninterest Income and Expense Noninterest income The Company relies on six distinct product lines for the production of recurring noninterest income: traditional retail and commercial banking, mortgage banking, trust services, investment services, securities brokerage services and insurance services. Combined fees associated with these product lines totaled $26.9 million in 2000, compared with $25.1 million in 1999, an increase of $1.9 million, or 7.4%. The following table sets forth, for the periods indicated, the principal components of noninterest income. NONINTEREST INCOME (Amounts in thousands)
Year ended December 31, ------------------------ 2000 1999 1998 ------- ------- ------- Service charges on deposit accounts................... $ 7,735 $ 7,479 $ 7,259 Investment services income............................ 5,867 6,624 9,230 Securities brokerage income........................... 5,413 3,707 2,307 Trust fees............................................ 2,279 2,190 2,101 Origination and sale of mortgage loans................ 3,531 3,993 4,303 Gain (loss) on disposal of assets and deposits........ (19) 249 247 Securities gains...................................... 1 190 174 Bank owned life insurance............................. 2,034 1,504 1,167 Insurance commissions................................. 2,099 1,068 -- Gain on pension curtailment........................... -- 819 -- Other................................................. 3,740 2,734 2,562 ------- ------- ------- Total noninterest income............................ $32,680 $30,557 $29,350 ======= ======= =======
Noninterest Expense The following table sets forth, for the periods indicated, the principal components of noninterest expense. NONINTEREST EXPENSE (Amounts in thousands)
Year ended December 31, ----------------------- 2000 1999 1998 ------- ------- ------- Salaries and employee benefits......................... $42,531 $37,452 $36,021 Net occupancy expense.................................. 8,232 7,265 6,724 Amortization of goodwill............................... 501 387 302 Advertising............................................ 1,004 1,028 976 Banking assessments.................................... 616 482 473 Data processing expenses............................... 1,291 1,442 2,435 Legal and professional fees............................ 2,286 2,911 3,609 Net non-credit losses.................................. 130 206 129 Other.................................................. 13,783 11,282 10,485 ------- ------- ------- Total noninterest expense............................ $70,374 $62,455 $61,154 ======= ======= =======
Noninterest expense increased $7.9 million, or 12.7%, to $70.4 million in 2000, from $62.5 million in 1999. Salaries and employee benefits increased $5.1 million, or 13.6%, in 2000. This increase reflects Alabama National's general growth in employment concurrent with its expansion of offices and business lines, its asset and revenue growth as well as salary increases reflecting employee performance, job duties, and competitive 28 employment market conditions. Net occupancy expense increased $967,000, or 13.3%, in 2000. This increase is attributable the opening of three banking branches and the acquisition of two banking branches during 2000 and a full year of occupancy expenses associated with the insurance division. Investment Services The following table sets forth, for the periods indicated, the summary of operations for the investment services division of Alabama National: INVESTMENT SERVICES DIVISION (Amounts in thousands)
Year ended December 31, ----------------------- 2000 1999 1998 ------- ------- ------- Investment services revenue............................ $ 5,867 $ 6,624 $ 9,230 Expenses and allocated charges......................... 5,377 5,957 7,557 ------- ------- ------- Net investment services revenue...................... $ 490 $ 667 $ 1,673 ======= ======= =======
National Bank of Commerce of Birmingham operates an investment department devoted primarily to handling correspondent banks' investment needs. Investment services revenue consists primarily of commission income from the sale of fixed income securities to correspondent banks. A small portion of investment services revenue is generated from fee based services including asset/liability consulting, bond accounting and security safekeeping. Investment services revenue decreased $757,000, or 11.4%, to $5.9 million in 2000 from $6.6 million in 1999. The rising interest rate environment in early 2000 combined with strong loan demand in the economy reduced investors' demand for fixed income securities. Investment services revenue decreased $2.6 million, or 28.2%, to $6.6 million in 1999 from $9.2 million in 1998. The rising interest rate environment in 1999 combined with high loan demand and the need for greater liquidity associated with Year 2000 resulted in reduced demand for fixed income securities. These results include certain income and expense items that are allocated by management to the investment services areas of Alabama National. These results are not necessarily the same as would be expected if these activities were conducted by a stand-alone entity because certain corporate overhead expenses are not allocated directly to this division. Securities Brokerage Division The following table sets forth, for the periods indicated, the summary of operations for the securities brokerage division of Alabama National: SECURITIES BROKERAGE DIVISION (Amounts in thousands)
Year ended December 31, ----------------------- 2000 1999 1998 ------- ------- ------- Securities brokerage revenue........................... $ 5,413 $ 3,707 $ 2,307 Interest income........................................ 3,700 2,053 1,497 ------- ------- ------- Total securities brokerage revenue................... 9,113 5,760 3,804 Interest expense....................................... 1,805 955 401 Expenses and allocated charges......................... 6,271 4,281 2,943 ------- ------- ------- Net securities brokerage revenue..................... $ 1,037 $ 524 $ 460 ======= ======= =======
29 National Bank of Commerce of Birmingham has a wholly owned subsidiary, NBC Securities, Inc. (NBC Securities), that is a full service licensed broker- dealer. Securities brokerage revenue consists primarily of commission income generated from the sale of equity securities to individual and corporate customers and from fees paid for investment management consulting work performed for clients. NBC Securities also recognizes interest income from margin loans. Securities brokerage revenue increased $1.7 million, or 46.0%, to $5.4 million in 2000 from $3.7 million in 1999. The increase is due to favorable market conditions in early 2000, additional investment advisors and customer assets in custody or under management, and general expansion of securities brokerage services to other subsidiaries of Alabama National. Interest income increased to $3.7 million in 2000, from $2.1 million in 1999 due to increased volume of margin loans. During 1999, total securities brokerage revenue increased $2.0 million, or 51.4%, to $5.8 million, from $3.8 million in 1998, primarily as a result of favorable market conditions. These results include certain income and expense items allocated by management to NBC Securities. These results are not necessarily the same as would be expected if these activities were conducted by a stand-alone entity because certain corporate overhead expenses are not allocated directly to this division. Trust Division The following table sets forth, for the periods indicated, the summary of operations for the trust division of Alabama National: TRUST DIVISION (Amounts in thousands)
Year ended December 31, ----------------------- 2000 1999 1998 ------- ------- ------- Trust division income.................................. $ 2,279 $ 2,190 $ 2,101 Expenses and allocated charges......................... 1,308 1,149 1,169 ------- ------- ------- Net trust division revenue........................... $ 971 $ 1,041 $ 932 ======= ======= =======
Trust division income increased $89,000, or 4.1%, to $2.3 million in 2000 from $2.2 million in 1999 due to new customer relationships and growth of existing assets managed. Because most fees in trust are based upon assets under management or custody, conditions in equity and fixed income markets have an impact on trust revenues. Trust asset values, and thus trust revenues, were negatively impacted in 2000 by the negative effect of interest rate movements on fixed income portfolios throughout much of the year and by equity market declines. Similar conditions resulted in a 4.2% increase in trust department fees to $2.2 million in 1999 from $2.1 million in 1998. Trust division expenses and allocated charges increased $159,000, or 13.8%, in 2000 versus 1999, from $1.1 million to $1.3 million. These results include certain income and expense items that are allocated by management to the trust services area of Alabama National. These results are not necessarily the same as would be expected if these activities were conducted by a stand-alone entity because certain corporate overhead expenses are not allocated directly to this division. 30 Mortgage Lending Division The following table sets forth, for the periods indicated, the summary of operations for the mortgage lending division of Alabama National: MORTGAGE LENDING DIVISION (Amounts in thousands)
Year ended December 31, ----------------------- 2000 1999 1998 ------- ------- ------- Origination and sale of mortgage loans(1).............. $ 3,866 $ 4,240 $ 4,405 Interest income........................................ 424 527 649 ------- ------- ------- Total revenue........................................ 4,290 4,767 5,054 Expenses and allocated charges......................... 3,061 3,391 3,061 ------- ------- ------- Net mortgage lending division revenue................ $ 1,229 $ 1,376 $ 1,993 ======= ======= =======
- -------- (1) Includes intercompany income allocated to mortgage lending division totaling $335,000, $247,000 and $102,000 at December 31, 2000, 1999 and 1998, respectively. Fees charged in connection with the origination and resale of mortgage loans decreased $374,000, or 8.8%, to $3.9 million in 2000 from $4.2 million in 1999, due primarily to changing market conditions. As interest rates remained high in early 2000, mortgage origination volume declined. The expenses and allocated charges decreased by $330,000 to $3.1 million in 2000 from $3.4 million in 1999. The decrease was due to less mortgage origination volume. Fees charged in connection with the origination and resale of mortgage loans totaled $4.2 million in 1999 and $4.4 million in 1998, a decrease of $165,000, resulting from a rising interest rate environment during 1999. The expenses and allocated charges increased by $330,000 to $3.4 million in 1999 from $3.1 million in 1998. The rise in expenses was largely due to expansion of the mortgage lending business into four new markets and the increased level of expenses associated with such expansion. These results include certain income and expense items that are allocated by management to the mortgage lending area of Alabama National. These results are not necessarily the same as would be expected if these activities were conducted by a stand-alone entity because certain corporate overhead expenses are not allocated directly to this division. Insurance Services Division The following table sets forth, for the periods indicated, a summary of operations for the insurance services division of Alabama National: INSURANCE SERVICES DIVISION (Amounts in thousands)
Year ended December 31, --------------------------- 2000 1999(1) 1998(1) -------- -------- -------- Commission income................................... $ 2,099 $ 1,068 $ -- Other income........................................ 23 16 -- -------- -------- ------ Total revenue..................................... 2,122 1,084 -- Expenses and allocated charges...................... 1,851 884 -- -------- -------- ------ Net insurance division revenue.................... $ 271 $ 200 $ -- ======== ======== ======
- -------- (1) The insurance division was acquired in May 1999. 31 Alabama National purchased an existing insurance company in May of 1999, thus the operating results for 2000 are the first full year of activity for this division. These results include certain income and expense items that are allocated by management to the insurance services division of Alabama National. These results are not necessarily the same as would be expected if these activities were conducted by a stand-alone entity because certain corporate overhead expenses are not allocated directly to this division. Earning Assets Loans Loans are the largest category of earning assets and typically provide higher yields than the other types of earning assets. Associated with the higher loan yields are the inherent credit and liquidity risks which management attempts to control and counterbalance. Total loans averaged $1.49 billion in 2000 compared to $1.20 billion in 1999, an increase of $284.6 million, or 23.7%. At December 31, 2000, total loans, net of unearned income, were $1.61 billion compared to $1.32 billion at the end of 1999, an increase of $289.3 million, or 21.9%. The growth in Alabama National's loan portfolio is attributable to Alabama National's ability to attract new customers while maintaining consistent underwriting standards and general economic conditions that resulted in increased loan demand from existing customers. The following table details the composition of the loan portfolio by category at the dates indicated. COMPOSITION OF LOAN PORTFOLIO (Amounts in thousands, except percentages)
December 31, --------------------------------------------------------------------------------------------------- 2000 1999 1998 1997 1996 ------------------- ------------------- ------------------- ----------------- ----------------- Percent Percent Percent Percent Percent of of of of of Amount Total Amount Total Amount Total Amount Total Amount Total ---------- ------- ---------- ------- ---------- ------- -------- ------- -------- ------- Commercial and financial.............. $ 259,821 16.13% $ 257,047 19.45% $ 257,409 23.65% $208,666 21.66% $203,616 23.45% Real estate: Construction........... 178,454 11.08 148,228 11.22 74,024 6.80 72,166 7.49 62,628 7.21 Mortgage--residential.. 451,673 28.05 358,400 27.13 291,644 26.80 289,395 30.05 262,320 30.20 Mortgage--commercial... 464,994 28.87 369,158 27.94 291,437 26.78 253,338 26.30 206,393 23.76 Mortgage--other........ 3,360 .21 3,111 .24 2,215 .20 2,299 .24 3,627 .42 Consumer................ 75,970 4.72 73,388 5.55 77,187 7.09 89,971 9.34 94,888 10.93 Lease financing receivables............ 58,668 3.64 22,046 1.67 9,109 .84 -- -- -- -- Securities brokerage margin loans........... 29,901 1.86 22,551 1.71 30,025 2.76 -- -- -- -- Other................... 87,599 5.44 67,316 5.09 55,375 5.08 47,346 4.92 35,005 4.03 ---------- ------ ---------- ------ ---------- ------ -------- ------ -------- ------ Total gross loans...... 1,610,440 100.00% 1,321,245 100.00% 1,088,425 100.00% 963,181 100.00% 868,477 100.00% ====== ====== ====== ====== ====== Unearned income......... (975) (1,085) (1,398) (2,102) (4,509) ---------- ---------- ---------- -------- -------- Total loans, net of unearned income(1).... 1,609,465 1,320,160 1,087,027 961,079 863,968 Allowance for loan losses................. (20,867) (18,068) (16,540) (14,844) (12,633) ---------- ---------- ---------- -------- -------- Total net loans(1)..... $1,588,598 $1,302,092 $1,070,487 $946,235 $851,335 ========== ========== ========== ======== ========
- -------- (1) Does not include loans held for sale. 32 In the context of this discussion, a "real estate mortgage loan" is defined as any loan, other than loans for construction purposes, secured by real estate, regardless of the purpose of the loan. It is common practice for financial institutions in Alabama National's market areas, and for Alabama National in particular, to obtain a security interest or lien in real estate whenever possible, in addition to any other available collateral. This collateral is taken to reinforce the likelihood of the ultimate repayment of the loan and tends to increase the magnitude of the real estate loan portfolio component. The principal component of Alabama National's loan portfolio is real estate mortgage loans. At year-end 2000, this category totaled $1.1 billion and represented 68.2% of the total loan portfolio, compared to $878.9 million, or 66.5%, of the total loan portfolio, at year-end 1999. Residential mortgage loans increased $93.3 million, or 26.0%, to $451.7 million at December 31, 2000, compared with $358.4 million at December 31, 1999. Commercial mortgage loans increased $95.8 million, or 26.0%, to $465.0 million at December 31, 2000. Increases in both of these categories of loans are primarily the result of Alabama National's expertise in and appetite for these commercial and residential real estate loans. In addition, the general economic conditions in Alabama National's markets, which generate such lending opportunities, are partially responsible for this growth. Real estate construction loans increased $30.2 million, or 20.4%, to $178.5 million at December 31, 2000, compared with $148.2 million at December 31, 1999. Alabama National's focus on the home construction market and strong construction activity in markets it serves caused this increase. Consumer loans increased $2.6 million, or 3.5%, during 2000 to $76.0 million from $73.4 million in 1999. Lease financing receivables increased $36.6 million, or 166.1%, during 2000 to $58.7 million from $22.0 million as a result of a successful marketing efforts and business development efforts of individuals in this area. Alabama National engages in no foreign lending operations. The repayment of loans is a source of additional liquidity for Alabama National. The following table sets forth Alabama National's loans maturing within specific intervals at December 31, 2000. LOAN MATURITY AND SENSITIVITY TO CHANGES IN INTEREST RATES (Amounts in thousands)
December 31, 2000 ------------------------------------------ Over one year One year through five Over five or less years years Total -------- ------------- --------- --------- Commercial, financial and agricultural...................... $165,249 $ 83,064 $ 11,508 $ 259,821 Real estate--construction.......... 132,317 24,871 21,266 178,454 Real estate--residential........... 62,974 134,048 254,651 451,673 Real estate--commercial............ 93,992 237,100 133,902 464,994 Consumer........................... 25,191 44,203 6,576 75,970
Predetermined Floating Rates Rates ------------- -------- Maturing after one year but within five years....... $433,374 $ 89,914 Maturing after five years........................... 107,231 320,670 -------- -------- $540,605 $410,584 ======== ========
The information presented in the above table is based upon the contractual maturities of the individual loans, including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject to review and credit approval, as well as modification of terms upon their maturity. Consequently, management believes this treatment presents fairly the maturity and repricing structure of the loan portfolio. 33 Securities Securities, including securities classified as held to maturity (or investment securities) and available for sale, represent a significant portion of Alabama National's earning assets. Securities averaged $354.2 million during 2000, compared with $331.0 million during 1999, an increase of $23.2 million, or 7.0%. Growth in the securities portfolio is generally a function of growth in funding sources net of lending opportunities. At December 31, 2000, the securities portfolio totaled $375.3 million, including securities held to maturity with an amortized cost of $60.8 million and securities available for sale with a market value of $314.6 million. The following tables set forth the carrying value of securities held by Alabama National at the dates indicated. INVESTMENT SECURITIES (Amounts in thousands)
December 31, ------------------------------- 2000 1999 --------------- --------------- Cost Market Cost Market ------- ------- ------- ------- U.S. Treasury securities....................... $ -- $ -- $ -- $ -- U.S. Government Agencies....................... 3,263 3,263 279 279 State and political subdivisions............... 7,652 7,791 8,942 9,064 Mortgage backed securities..................... 49,847 50,431 10,395 10,395 ------- ------- ------- ------- Total ..................................... $60,762 $61,485 $19,616 $19,738 ======= ======= ======= =======
AVAILABLE FOR SALE SECURITIES (Amounts in thousands)
December 31, ----------------------------------- 2000 1999 ----------------- ----------------- Cost Market Cost Market -------- -------- -------- -------- U.S. Treasury securities................... $ 4,578 $ 4,586 $ 4,574 $ 4,561 U.S. Government Agencies................... 106,960 106,869 94,593 91,159 State and political subdivisions........... 22,583 22,808 24,909 24,543 Mortgage backed securities................. 171,490 170,029 202,646 196,575 Other...................................... 10,334 10,258 8,675 8,669 -------- -------- -------- -------- Total ................................. $315,945 $314,550 $335,397 $325,507 ======== ======== ======== ========
34 The following tables show the scheduled maturity and average yields of securities owned by Alabama National at December 31, 2000. INVESTMENT SECURITIES MATURITY DISTRIBUTION AND YIELDS (Amounts in thousands, except yields)
December 31, 2000 ------------------------------------------------------------------------------- After one but After five but Within one Within Within ten After ten Other year five years years years securities -------------- -------------- -------------- -------------- --------------- Amount Yield(1) Amount Yield(1) Amount Yield(1) Amount Yield(1) Amount Yield(1) ------ ------- ------ ------- ------ ------- ------ ------- ------- ------- U.S. Treasury securities............. $-- $ -- $ -- $-- $ -- U.S. Government Agencies............... 2,263 6.57% $1,000 7.05% State and political subdivisions........... 160 4.30% 6,251 5.26 1,140 5.43 101 5.00% Mortgage backed securities............. -- -- -- -- $49,847 7.35% ---- ------ ------ ---- ------- ---- Total ............... $160 4.30% $8,514 5.61% $2,140 6.19% $101 5.00% $49,847 7.35% ==== ==== ====== ==== ====== ==== ==== ==== ======= ====
- -------- (1) Computed on a tax-equivalent basis utilizing a 34% tax rate, without giving effect to the disallowance for Federal income tax purposes of interest related to certain tax-exempt assets. SECURITIES AVAILABLE FOR SALE MATURITY DISTRIBUTION AND YIELDS (Amounts in thousands, except yields)
December 31, 2000 ---------------------------------------------------------------------------------- After one but After five but Within one Within Within ten After ten year five years years years Other securities -------------- --------------- --------------- -------------- ---------------- Amount Yield(1) Amount Yield(1) Amount Yield(1) Amount Yield(1) Amount Yield(1) ------ ------- ------- ------- ------- ------- ------ ------- -------- ------- U.S. Treasury securities............. $3,980 6.14% $ 606 6.17% $ -- $ -- $ -- U.S. Government Agencies............... 1,668 5.99 80,204 6.31 24,997 6.90% State and political subdivisions........... 1,990 5.00 9,954 4.75 9,149 4.99 1,715 5.14% Mortgage backed securities............. 170,029 6.07% Equity securities....... -- -- -- -- 10,258 7.43 ------ ------- ------- ------ -------- Total ............... $7,638 5.81% $90,764 6.14% $34,146 6.39% $1,715 5.14% $180,287 6.15% ====== ==== ======= ==== ======= ==== ====== ==== ======== ====
- -------- (1) Computed on a tax-equivalent basis utilizing a 34% tax rate, without giving effect to the disallowance for Federal income tax purposes of interest related to certain tax-exempt assets. At December 31, 2000, mortgage-backed securities consisting of collateralized mortgage obligations and pass-through mortgage obligations had a carrying value totaling $219.9 million. These mortgage-backed securities include $49.8 million classified as investment securities and $170.0 million classified as securities available for sale. Management expects the annual repayment of the underlying mortgages to vary as a result of monthly repayment of principal and/or interest required under terms of the underlying promissory notes. Further, the actual rate of repayment is subject to changes depending upon both terms of the underlying mortgages and the relative level of mortgage interest rates. When relative interest rates decline to levels below that of the underlying mortgages, acceleration of principal repayment is expected as some borrowers on the underlying mortgages refinance to lower rates. When the underlying rates on mortgage loans are comparable to, or in excess of, market rates, repayment more closely conforms to scheduled amortization in accordance with terms of the promissory note. Accordingly, management generally expects repayment of the collateralized mortgage obligations over a three to five year period and repayment of the pass-through mortgage obligations over a five to seven year period. 35 Other attributes of securities are discussed in "Interest Sensitivity and Market Risk." Short-Term Investments Alabama National utilizes overnight investment of funds in Federal funds sold and securities purchased under agreements to resell to ensure that adequate liquidity will be maintained, while at the same time minimizing the level of uninvested cash reserves. Short-term investments are also utilized by Alabama National when the level of funds committed to lending and investment portfolio programs changes or the level of deposit generation changes. During 2000, Federal funds sold and securities purchased under agreements to resell averaged $39.6 million, compared to $46.6 million during 1999, representing a $7.0 million, or 15.1%, decrease as Alabama National experienced growth in both loans and investment securities. Trading Account Securities An important aspect of investment department operations, but less so to Alabama National in total, are trading account securities, which represent securities owned by Alabama National prior to sale and delivery to Alabama National's customers. Trading account securities averaged $1.8 million in 2000 and were $577,000 at December 31, 2000, compared with an average of $6.7 million in 1999 and $2.7 million at December 31, 1999. This small dollar amount reflects management's policy of limiting positions in such securities to reduce its exposure to market and interest rate changes. Deposits and Other Interest-Bearing Liabilities Average interest-bearing liabilities increased $305.4 million, or 22.4%, to $1.67 billion in 2000, from $1.36 billion in 1999. Average interest-bearing deposits increased $227.1 million, or 20.1%, to $1.36 billion in 2000, from $1.13 billion in 1999. This increase is attributable to competitive rate and product offerings by Alabama National and successful marketing efforts as well as to the purchase of $54 million in deposits through the acquisition of two branches during 2000. Average Federal funds purchased and securities sold under agreements to repurchase increased $7.8 million, or 5.4%, to $154.0 million in 2000, from $146.1 million in 1999 due, in part, to additional liquidity provided by downstream correspondent banks. Average short-term borrowings increased by $31.8 million, or 124.6%, to $57.4 million in 2000, compared to $25.5 million in 1999. Average long-term borrowings increased $38.7 million, to $97.2 million in 2000, from $58.4 million in 1999. The increase in short and long-term debt is due to utilizing more borrowing programs offered to Alabama National's Federal Home Loan Bank member subsidiaries. Deposits Average total deposits increased $232.4 million, or 17.2%, to $1.58 billion during 2000, from $1.35 billion during 1999. At December 31, 2000, total deposits were $1.70 billion, compared with $1.44 billion at December 31, 1999, an increase of $261.8 million, or 18.2%. 36 The following table sets forth the deposits of Alabama National by category at the dates indicated. DEPOSITS (Amounts in thousands, except percentages)
December 31, ------------------------------------------------------------------------------------------------ 2000 1999 1998 1997 1996 ------------------ ------------------ ------------------ ------------------ ---------------- Percent Percent Percent Percent Percent of of of of of Amount Total Amount Total Amount Total Amount Total Amount Total ---------- ------- ---------- ------- ---------- ------- ---------- ------- -------- ------- Demand.................. $ 226,893 13.32% $ 210,185 14.57% $ 232,450 18.23% $ 180,341 16.02% $155,695 15.74% NOW .................... 285,475 16.75 217,883 15.11 187,481 14.70 155,147 13.78 133,762 13.52 Savings and money market................. 290,350 17.04 296,723 20.58 298,817 23.43 294,072 26.13 254,570 25.74 Time less than $100,000............... 616,249 36.17 492,328 34.14 403,156 31.63 369,363 32.83 332,278 33.59 Time greater than $100,000............... 284,982 16.72 225,036 15.60 153,271 12.01 126,556 11.24 112,877 11.41 ---------- ------ ---------- ------ ---------- ------ ---------- ------ -------- ------ Total deposits.......... $1,703,949 100.00% $1,442,155 100.00% $1,275,175 100.00% $1,125,479 100.00% $989,182 100.00% ========== ====== ========== ====== ========== ====== ========== ====== ======== ======
Core deposits, which exclude time deposits of $100,000 or more, provide for a relatively stable funding source that supports earning assets. Alabama National's core deposits totaled $1.42 billion, or 83.3%, of total deposits at December 31, 2000 and totaled $1.22 billion, or 84.4%, of total deposits at December 31, 1999. Deposits, in particular core deposits, have historically been Alabama National's primary source of funding and have enabled Alabama National to meet successfully both short-term and long-term liquidity needs. Management anticipates that such deposits will continue to be Alabama National's primary source of funding in the future. Alabama National's loan-to-deposit ratio was 94.5% at December 31, 2000, and 91.5% at the end of 1999, and the ratio averaged 93.9% during 2000 and 89.0% during 1999. These increases in Alabama National's loan-to-deposit ratio are due to loan growth exceeding deposit growth in 2000. The maturity distribution of Alabama National's time deposits in excess of $100,000 at December 31, 2000, is shown in the following table. MATURITIES OF CERTIFICATES OF DEPOSIT AND OTHER TIME DEPOSITS OF $100,000 OR MORE (Amounts in thousands)
December 31, 2000 ------------------------------------------------ After After After One Three Six Within Through Through Through After One Three Six Twelve Twelve Month Months Months Months Months Total ------- ------- ------- ------- ------- -------- Certificates of deposit of $100,000 or more............ $19,312 $26,300 $27,873 $81,155 $20,328 $174,968 Other time deposits of $100,000 or more............ 28,888 44,594 16,508 18,073 1,951 110,014 ------- ------- ------- ------- ------- -------- Total .................... $48,200 $70,894 $44,381 $99,228 $22,279 $284,982 ======= ======= ======= ======= ======= ========
Approximately 41.8% of Alabama National's time deposits over $100,000 had scheduled maturities within three months. Large certificate of deposit customers tend to be extremely sensitive to interest rate levels, making these deposits less reliable sources of funding for liquidity planning purposes than core deposits. Many financial institutions partially fund their balance sheets with large certificates of deposit obtained through brokers, and Alabama National had $78.1 million in brokered deposits outstanding at December 31, 2000, compared to $47.5 million at December 31, 1999. 37 Borrowed Funds Borrowed funds include four broad categories; (i) Federal funds purchased and securities sold under agreements to repurchase, (ii) treasury, tax and loan balances, (iii) Federal Home Loan Bank ("FHLB") borrowings, and (iv) borrowings from a third party bank. Because of a relatively high loan-to- deposit ratio, the existence and stability of these funding sources are critical to Alabama National's maintenance of short-term and long-term liquidity. Federal funds purchased and securities sold under agreements to repurchase represent both an input of excess funds from correspondent bank customers of Alabama National as well as a cash management tool offered to corporate customers. At December 31, 2000, these funds totaled $165.1 million, compared with $131.9 million at December 31, 1999. At December 31, 2000, treasury, tax and loan balances totaled $900,000, compared to $6.2 million at December 31, 1999. Alabama National collects tax deposits from customers and is permitted to retain these balances until established collateral limits are exceeded or until the U.S. Treasury withdraws its balances. Alabama National's average borrowing from a third party bank under a $32 million credit facility ("the Credit Facility") was $20.8 million during 2000, compared with $13.4 million during 1999. As of December 31, 2000, the outstanding balance under the Credit Facility was $27.4 million, leaving a remaining availability under the Credit Facility of $4.6 million. The increased borrowings under this facility are primarily attributable to the acquisition of two branches during 2000. The branch acquisition by one of Alabama National's subsidiary banks required cash payments to the seller as well as an increased capital contribution into the subsidiary bank to fund the asset growth resulting from the acquisition. The Credit Facility bears interest at a rate that varies with LIBOR and is secured by a pledge of stock in the Banks. The Credit Facility is typically renewed on an annual basis and has a current maturity date of May 31, 2001. Alabama National has historically renewed the Credit Facility prior to its due date and anticipates doing so again in 2001. All of the Banks are members of the FHLB. At December 31, 2000, these Banks had available FHLB lines of $284.0 million, under which $139.7 million was outstanding, including advances classified as short-term of $56.0 million and advances classified as long-term of $83.7 million. This compares to borrowings of $125.7 million at December 31, 1999, of which $2.0 million was short-term and $123.7 million was long-term. 38 The following table sets forth, for the periods indicated, the principal components of borrowed funds. BORROWED FUNDS (Amounts in thousands, except percentages)
December 31, ---------------------------- 2000 1999 1998 -------- -------- -------- Federal funds purchased and securities sold under agreements to repurchase: Balance at end of period....................... $165,117 $131,878 $162,633 Average balance outstanding.................... 153,950 146,111 127,856 Maximum outstanding at any month's end......... 181,878 178,166 162,633 Weighted average interest rate at period-end... 5.87% 5.07% 4.70% Weighted average interest rate during the period........................................ 5.99 4.97 5.32 Treasury, tax and loan: Balance at end of period....................... $ 900 $ 6,199 $ 1,506 Average balance outstanding.................... 1,882 2,414 3,626 Maximum outstanding at any month's end......... 4,932 6,199 6,944 Weighted average interest rate at period-end... 5.63% 5.00% 4.45% Weighted average interest rate during the period........................................ 6.16 4.18 4.30 Notes Payable: Balance at end of period....................... $ 27,439 $ 16,389 $ 11,500 Average balance outstanding.................... 20,842 13,410 13,516 Maximum outstanding at any month's end......... 27,439 16,389 15,250 Weighted average interest rate at period-end... 7.41% 7.21% 6.32% Weighted average interest rate during the period........................................ 7.33 6.09 6.44 Short-term advances from the Federal Home Loan Bank: Balance at end of period....................... $ 56,000 $ 2,000 $ 10,200 Average balance outstanding.................... 36,430 9,715 9,181 Maximum outstanding at any month's end......... 69,000 32,000 10,200 Weighted average interest rate at period-end... 6.92% 4.55% 5.54% Weighted average interest rate during the period........................................ 6.88 5.04 6.40 Long-term advances from the Federal Home Loan Bank: Balance at end of period....................... $ 83,700 $123,700 $ 32,000 Average balance outstanding.................... 96,898 58,150 30,192 Maximum outstanding at any month's end......... 123,700 123,700 32,000 Weighted average interest rate at period-end... 5.99% 5.30% 5.09% Weighted average interest rate during the period........................................ 5.75 5.18 5.59 Capital leases: Balance at end of period....................... $ 197 $ 266 $ 328 Average balance outstanding.................... 264 295 356 Maximum outstanding at any month's end......... 266 324 387 Weighted average interest rate at period-end... 9.34% 9.20% 9.04% Weighted average interest rate during the period........................................ 9.34 9.15 8.98
39 Capital Resources and Liquidity Management Capital Resources Alabama National's stockholder's equity increased by $24.2 million from December 31, 1999, to $162.5 million at December 31, 2000. This increase was attributable to the following (in thousands): Net income........................................................ $24,392 Dividends......................................................... (9,289) Purchase of treasury stock........................................ (588) Issuance of stock from treasury................................... 35 Decrease in unrealized loss on securities available for sale, net of deferred taxes................................................ 5,604 Additional paid in capital related to stock based compensation.... 4,055 ------- Net increase...................................................... $24,209 =======
Under the capital guidelines of their regulators, Alabama National and the Banks are currently required to maintain a minimum risk-based total capital ratio of 8%, with at least 4% being Tier I capital. Tier I capital consists of common stockholders' equity, qualifying perpetual preferred stock and minority interests in equity accounts of consolidated subsidiaries, less goodwill. In addition, under the guidelines, Alabama National and the Banks must maintain a minimum Tier I leverage ratio of Tier I capital to total assets of at least 3%, but this minimum ratio is typically increased by 100 to 200 basis points for other than the highest rated institutions. Alabama National exceeded its fully phased-in regulatory capital ratios at December 31, 2000, 1999 and 1998, as set forth in the following table. ANALYSIS OF CAPITAL (Amounts in thousands, except percentages)
December 31, ---------------------------------- 2000 1999 1998 ---------- ---------- ---------- Tier 1 Capital............................ $ 149,765 $ 134,922 $ 122,732 Tier 2 Capital............................ 20,867 17,985 15,296 ---------- ---------- ---------- Total qualifying capital(1)(2).......... $ 170,632 $ 152,790 $ 138,028 ========== ========== ========== Risk-adjusted total assets (including off- balance sheet exposures)................. $1,698,924 $1,438,689 $1,223,641 Tier 1 risk-based capital ratio (4.00% required minimum)........................ 8.82% 9.38% 10.03% Total risk-based capital ratio (8.00% required minimum)........................ 10.04 10.62 11.28 Tier 1 leverage ratio (4.00% required minimum)................................. 6.80 7.18 7.41
- -------- (1) Does not include $83,000 and $1,244,000 of the Company's allowance for loan losses at December 31, 1999 and 1998, respectively, in excess of 1.25% of risk-adjusted total assets. (2) Does not include capital of an unconsolidated subsidiary at December 31, 1999. 40 Each of the Banks is required to maintain risk-based and leverage ratios similar to those required for Alabama National. Each of the Banks exceeded these regulatory capital ratios at December 31, 2000, as set forth in the following table: BANK CAPITAL RATIOS
Tier 1 Risk Total Risk Tier 1 Based Based Leverage ----------- ---------- -------- Alabama National BanCorporation............... 8.82% 10.04% 6.80% National Bank of Commerce of Birmingham....... 9.79 10.97 7.78 Alabama Exchange Bank......................... 13.08 14.33 7.45 Bank of Dadeville............................. 11.73 12.87 7.89 Citizens & Peoples Bank, N.A. ................ 11.42 12.67 8.09 Community Bank of Naples, National Association.................................. 10.16 11.41 6.96 First American Bank........................... 9.52 10.77 7.89 First Citizens Bank........................... 13.56 14.74 7.39 First Gulf Bank............................... 8.88 10.07 7.00 Georgia State Bank............................ 10.93 12.02 7.16 Public Bank................................... 9.68 10.73 7.57 Required minimums............................. 4.00 8.00 4.00
Liquidity Management Liquidity management involves monitoring Alabama National's sources and uses of funds in order to meet its day-to-day cash flow requirements while maximizing profits. Liquidity represents the ability of an entity to convert assets into cash or cash equivalents without significant loss and to raise additional funds by increasing liabilities. Without proper liquidity management, Alabama National will not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the needs of the communities it serves. Increased liquidity in typical interest rate environments often involves decreasing profits by investing in earning assets with shorter maturities. Liquidity management is made more complex because different balance sheet components are subject to varying degrees of management control. For example, the timing of maturities of the investment portfolio is very predictable and subject to a high degree of control at the time investment decisions are made. However, net deposit inflows and outflows are far less predictable and are not subject to nearly the same degree of control. Assets included in Alabama National's Consolidated Statements of Condition contribute to liquidity management. Federal funds sold and securities purchased under agreements to resell, Alabama National's primary source of liquidity, averaged $39.6 million during 2000 and was $27.8 million at December 31, 2000, and averaged $46.6 million during 1999 and was $33.6 million at December 31, 1999. If required in short-term liquidity management, these assets could be converted to cash immediately. Cash received from the repayment of investment securities and loans provides a constant source of cash that contributes to liquidity management. Unpledged securities, with a carrying value of approximately $133.7 million at December 31, 2000, provide Alabama National an opportunity to generate cash by, 1) providing additional collateral by selling securities under agreements to repurchase, 2) providing collateral to obtain public funds or 3) providing collateral to borrow directly from the Federal Reserve Bank or the Federal Home Loan Bank. See "Earning Assets--Loans" and "Earning Assets--Securities." Liquidity can also be managed using liabilities included in Alabama National's Consolidated Statement of Condition, such as Federal funds purchased and securities sold under agreements to repurchase and short-term borrowing. Combined Federal funds purchased and securities sold under agreements to repurchase, treasury, tax 41 and loan, and short-term borrowings averaged $211.3 million during 2000 and were $249.5 million at December 31, 2000, and averaged $171.7 million during 1999 and were $156.5 million at December 31, 1999. Overnight borrowing lines with upstream correspondent banks, $157.7 million at December 31, 2000, of which $139.7 million was unused, provide additional sources of liquidity to Alabama National on an unsecured basis. The Federal Home Loan Bank provides secured and unsecured credit lines to all of Alabama National's Banks totaling approximately $284.0 million. At December 31, 2000, advances under these lines totaled $139.7 million, including $56.0 million classified as short-term and $83.7 million classified as long-term. Long-term liquidity needs are met through Alabama National's deposit base (approximately 83.3% of Alabama National's deposits at December 31, 2000, are considered core deposits), and the repayment of loans and other investments as they mature. Alabama National is able to manage its long-term liquidity needs by adjusting the rates it pays on longer-term deposits and the amount and mix of longer-term investments in its portfolio. One of the Banks has pledged approximately $170.5 million in loans to the Federal Reserve Bank of Atlanta as collateral for a discount window credit facility, which management views as a backup liquidity facility. At December 31, 2000, the Bank had access to approximately $136.4 million under this facility, with no outstanding borrowings. Alabama National, as a stand-alone corporation, has more limited access to liquidity sources than its Banks and depends on dividends from its subsidiaries as its primary source of liquidity. Alabama National's liquidity is diminished by required payments on its outstanding short-term debt. The ability of its subsidiaries to pay dividends is subject to general regulatory restrictions which may, but are not expected to, have a material negative impact on the liquidity available to Alabama National. (See Note 17 to the Alabama National's Consolidated Financial Statements included in this Annual Report.) If circumstances warrant, Alabama National's short-term liquidity needs can also be met by additional borrowings of approximately $4.6 million representing the unused portion of Alabama National's credit facility with an unrelated bank. See "Deposits and Other Interest-Bearing Liabilities--Borrowed Funds." Accounting Rule Changes Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-- A Replacement of FASB Statement No. 125 In September 2000, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities--A Replacement of FASB Statement No. 125 ("Statement 140"). Statement 140 is effective for transfers occurring after March 31, 2001 and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. Management of Alabama National does not expect the adoption of Statement 140 to have a material impact on its financial statements since the company has not entered into any securitization or asset transfer transactions. Derivative Investments and Hedging Activities In June 1998, the FASB issued Statement of Financial Standard No. 133, Accounting for Derivative Instruments and Hedging Activities, ("Statement 133"). 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. Statement 133, as amended by Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of SFAS No. 133, and by Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities--An 42 Amendment of SFAS No. 133, is effective for fiscal years beginning after June 15, 2000, and is effective for interim periods in the initial year of adoption. The Company's derivative activities at December 31, 2000 relate solely to the interest rate lock commitments (IRLCs) which the Company has entered into with certain customers for specific short-term periods of time. These IRLCs relate to prospective mortgage loans which the Company originates and then immediately transfers to secondary mortgage servicers. The transfer of these IRLCs allows the Company to pass financial risk associated with potential changes in interest rates on to secondary mortgage servicers. Management has evaluated these activities and determined that the Company does not have any material derivative exposures and that the adoption of Statement 133, on January 1, 2001, will not have a material impact on the financial statements. 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 Effective January 1, 1999, Alabama National adopted 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 No.65 to require that after 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 of hold those investments. Since Alabama National has not securitized mortgage loans, there has been no financial statement impact since the adoption of this statement. Impact of Inflation Unlike most industrial companies, the assets and liabilities of financial institutions such as Alabama National and its subsidiaries are primarily monetary in nature. Therefore, interest rates have a more significant effect on Alabama National's performance than do the effects of changes in the general rate of inflation and change in prices. In addition, interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. Management seeks to manage the relationships between interest-sensitive assets and liabilities in order to protect against wide interest rate fluctuations, including those resulting from inflation. See "Interest Sensitivity and Market Risk." Industry Developments Certain recently enacted and proposed legislation could have an effect on both the costs of doing business and the competitive factors facing the financial institutions industry. Alabama National is unable at this time to assess the impact of this legislation on its financial condition or results of operations. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this item is contained in Item 7 herein under the heading "Interest Sensitivity and Market Risk." 43 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements and Financial Statement Schedules of Alabama National BanCorporation and subsidiaries listed in ITEM 14(a) have been included in this Annual Report and should be referred to in their entirety. The Supplementary Financial Information required by Item 302 of Regulation S-K is set forth below. SELECTED QUARTERLY FINANCIAL DATA (Amounts in thousands, except per share data) (Unaudited)
2000 Quarters 1999 Quarters ------------------------------------------- ------------------------------------------- First Second Third Fourth First Second Third Fourth ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Summary of Operations: Interest income......... $ 36,094 $ 39,024 $ 42,063 $ 44,223 $ 28,811 $ 29,668 $ 32,332 $ 34,857 Interest expense........ 18,186 20,330 22,977 24,945 13,435 13,706 15,300 16,842 Net interest income..... 17,908 18,694 19,086 19,278 15,376 15,962 17,032 18,015 Provision for loan losses................. 526 627 400 450 562 368 408 616 Securities gains (losses)............... -- -- 1 -- 166 23 -- 1 Noninterest income...... 7,615 7,635 8,149 9,280 7,741 7,523 6,939 8,164 Noninterest expense..... 16,862 17,168 17,870 18,500 15,383 15,236 15,234 16,627 Net income.............. 5,658 5,903 6,206 6,625 5,019 5,380 5,720 6,152 Dividends on common stock.................. 2,324 2,324 2,320 2,321 1,974 2,002 1,991 1,991 Per Common Share Data: Book Value.............. $ 12.76 $ 13.00 $ 13.87 $ 14.70 $ 12.15 $ 12.03 $ 12.44 $ 12.36 Tangible book value..... 11.81 12.06 12.55 13.40 11.41 11.30 11.46 11.40 Net income.............. 0.51 0.53 0.55 0.59 0.45 0.48 0.51 0.55 Dividends declared...... 0.21 0.21 0.21 0.21 0.18 0.18 0.18 0.18 Balance Sheet Highlights At Period-End: Total assets........... $1,982,595 $2,062,669 $2,187,324 $2,235,698 $1,693,950 $1,776,413 $1,863,368 $1,921,884 Securities(1)........... 357,954 347,385 339,641 375,312 314,731 322,756 348,181 345,123 Loans held for sale..... 7,478 7,126 8,761 5,226 13,784 10,638 8,162 8,615 Loans, net of unearned income................. 1,374,721 1,474,586 1,586,220 1,609,465 1,116,162 1,196,073 1,252,806 1,320,160 Allowance for loan losses................. 18,554 19,159 20,840 20,867 17,167 17,335 17,553 18,068 Deposits................ 1,533,392 1,545,682 1,704,810 1,703,949 1,307,383 1,414,078 1,408,965 1,442,155 Short-term debt......... 18,389 84,389 72,589 83,439 31,700 14,339 48,389 18,389 Long-term debt.......... 123,986 80,968 78,948 83,926 32,313 46,079 71,025 124,005 Stockholders' equity.... 141,210 143,503 153,228 162,464 134,007 134,509 137,641 138,255
- ------- (1) Does not include trading securities. 44 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item regarding Executive Officers is included in Part I of this Form 10-K under the caption "Executive Officers of the Registrant" in accordance with Instruction 3 of the Instructions to Paragraph (b) of Item 401 of Regulation S-K. The information required by this Item regarding directors is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National's definitive Proxy Statement for the 2001 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A on or before April 3, 2001. ITEM 11. COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National's definitive Proxy Statement for the 2001 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A on or before April 3, 2001. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National's definitive Proxy Statement for the 2001 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A on or before April 3, 2001. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item is incorporated by reference pursuant to General Instruction G(3) of Form 10-K from Alabama National's definitive Proxy Statement for the 2001 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A or before April 3, 2001. 45 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a)(1) and (2) and (d)--Financial Statements and Financial Statement Schedules. Financial Statements: The Consolidated Financial Statements of Alabama National and its subsidiaries, included herein (beginning on page F-1), are as follows: Report of Independent Auditors--PricewaterhouseCoopers LLP Consolidated Statements of Financial Condition--December 31, 2000 and 1999 Consolidated Statements of Income--Years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Changes in Stockholders' Equity--Years ended December 31, 2000, 1999 and 1998 Consolidated Statements of Cash Flows--Years ended December 31, 2000, 1999 and 1998 Notes to Consolidated Financial Statements Financial Statement Schedules: All schedules to the consolidated financial statements required by Article 9 of Regulation S-X are inapplicable and therefore have been omitted. (b) Reports on Form 8-K. None. (c) Exhibits. The exhibits listed on the exhibit index on page 49 of this Form 10-K are filed herewith or are incorporated herein by reference. 46 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on this the 19th day of March, 2001. ALABAMA NATIONAL BANCORPORATION /s/ John H. Holcomb, III By: _________________________________ John H. Holcomb, III, Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Name Title Date ---- ----- ---- /s/ John H. Holcomb, III Chairman and Chief Executive March 19, 2001 ____________________________________ Officer (principal John H. Holcomb, III executive officer) /s/ Victor E. Nichol, Jr. Vice Chairman and Director March 19, 2001 ____________________________________ Victor E. Nichol, Jr. /s/ Richard Murray, IV President, Chief Operating March 19, 2001 ____________________________________ Officer and Director Richard Murray, IV /s/ William E. Matthews, V Executive Vice President and March 19, 2001 ____________________________________ Chief Financial Officer William E. Matthews, V /s/ Shelly S. Williams Senior Vice President and March 19, 2001 ____________________________________ Controller (principal Shelly S. Williams accounting officer) /s/ W. Ray Barnes Director March 19, 2001 ____________________________________ W. Ray Barnes /s/ T. Morris Hackney Director March 19, 2001 ____________________________________ T. Morris Hackney /s/ John D. Johns Director March 19, 2001 ____________________________________ John D. Johns /s/ John J. McMahon, Jr. Director March 20, 2001 ____________________________________ John J. McMahon, Jr. /s/ C. Phillip McWane Director March 20, 2001 ____________________________________ C. Phillip McWane /s/ Drayton Nabers, Jr. Director March 20, 2001 ____________________________________ Drayton Nabers, Jr. /s/ G. Ruffner Page, Jr. Director March 20, 2001 ____________________________________ G. Ruffner Page, Jr.
47
Name Title Date ---- ----- ---- /s/ W. Stancil Starnes Director March 19, 2001 ____________________________________ W. Stancil Starnes /s/ William D. Montgomery Director March 19, 2001 ____________________________________ William D. Montgomery /s/ Dan M. David Vice Chairman and Director March 19, 2001 ____________________________________ Dan M. David /s/ C. Lloyd Nix Director March 19, 2001 ____________________________________ C. Lloyd Nix /s/ William E. Sexton Director March 20, 2001 ____________________________________ William E. Sexton
48 EXHIBIT INDEX
Exhibit Number Description Reference ------- ----------- --------- 3.1 Certificate of Incorporation.............................. (1) 3.1A Certificate of Amendment of Certificate of Incorporation.. (2) 3.1B Certificate of Merger filed with the Secretary of State of the State of Delaware on December 29, 1995............... (4) 3.1C Certificate of Amendment of Certificate of Incorporation.. (8) 3.2 Bylaws.................................................... (1) 4.1 Provisions of the Certificate of Incorporation and the Bylaws of Alabama National BanCorporation which Define the Rights of Security holders........................... (1) 10.1 Alabama National BanCorporation 1994 Stock Option Plan.... (1) 10.2 Form of Stock Option Agreement utilized in connection with the 1994 Stock Option Plan............................... (2) 10.3 Agreement dated September 18, 1995, by and among James A. Taylor and Frank W. Whitehead, Alabama National BanCorporation, National Commerce Corporation and Commerce Bankshares, Inc. ............................... (3) 10.3A Amendment to Agreement dated September 18, 1995 executed by James A. Taylor, Alabama National BanCorporation, National Commerce Corporation and Commerce Bankshares, Inc. on November 17, 1995................................ (3) 10.4 Commerce Bankshares, Inc. Long Term Incentive Compensation Plan..................................................... (3) 10.4A Form of Incentive Stock Option Agreement.................. (3) 10.4B Form of Restricted Stock Agreement........................ (3) 10.5 Lease Agreement dated June 1, 2000 between Woodward Properties, LLP and NBC.................................. (15) 10.6 NBC Pension Plan (amended and restated effective January 1, 1997)................................................. (12) 10.7 Credit Agreement between Alabama National BanCorporation and AmSouth Bank of Alabama dated as of December 29, 1995 relating to a $23,000,000 Revolving Loan................. (4) 10.7A Promissory Note between Alabama National BanCorporation and AmSouth Bank of Alabama dated as of December 29, 1995 relating to a $23,000,000 Revolving Loan................. (4) 10.7B Pledge Agreement between Alabama National BanCorporation and AmSouth Bank of Alabama dated as of December 29, 1995 relating to a $23,000,000 Revolving Loan................. (4) 10.7C First Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated February 10, 1997................................................. (6) 10.7D Second Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated January 19, 1998................................................. (7) 10.7E Third Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated June 23, 1999..................................................... (11) 10.7F Fourth Amendment to Credit Agreement between Alabama National BanCorporation and AmSouth Bank dated June 20, 2000..................................................... (14) 10.8 Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan.................... (13)
49
Exhibit Number Description Reference ------- ----------- --------- 10.9 Alabama National BanCorporation Deferred Compensation Plan for Directors Who Are Not Employees of the Company........ (5) 10.10 First American Bancorp Stock Option Plan dated October 20, 1992...................................................... (7) 10.11 First American Bancorp 1994 Stock Option Plan.............. (7) 10.12 First American Bancorp Non-Qualified Stock Option Agreement with Dan M. David dated March 7, 1997..................... (7) 10.13 Alabama National BanCorporation 1999 Long-Term Incentive Plan...................................................... (12) 10.14 Agreement and Plan of Merger dated as of October 10, 2000 between Alabama National BanCorporation and Peoples State Bank of Groveland......................................... (9) 10.15 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........................... (10) 10.16 Promissory Note dated April 15, 2000 executed by John R. Bragg in favor of Alabama National BanCorporation in the principal amount of $19,800.00............................ (16) 10.17 Pledge Agreement dated April 15, 1999 between John R. Bragg and Alabama National BanCorporation....................... (10) 10.18 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..................... (10) 10.19 Promissory Note dated April 15, 2000 executed by John H. Holcomb, III in favor of Alabama National BanCorporation in the principal amount of $83,400.00..................... (16) 10.20 Pledge Agreement dated April 15, 1999 between John H. Holcomb, III and Alabama National BanCorporation.......... (10) 10.21 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....................... (10) 10.22 Promissory Note dated April 15, 2000 executed by William E. Matthews, V in favor of Alabama National BanCorporation in the principal amount of $28,000.00........................ (16) 10.23 Pledge Agreement dated April 15, 1999 between William E. Matthews, V and Alabama National BanCorporation........... (10) 10.24 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....................... (10) 10.25 Promissory Note dated April 15, 2000 executed by Richard Murray, IV in favor of Alabama National BanCorporation in the principal amount of $29,400.00........................ (16) 10.26 Pledge Agreement dated April 15, 1999 between Richard Murray, IV and Alabama National BanCorporation............ (10) 10.27 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........................ (10) 10.28 Promissory Note dated April 15, 2000 executed by Victor E. Nichol, Jr. in favor of Alabama National BanCorporation in the principal amount of $23,360.00........................ (16) 10.29 Pledge Agreement dated April 15, 1999 between Victor E. Nichol, Jr. and Alabama National BanCorporation........... (10)
50
Exhibit Number Description Reference ------- ----------- --------- 10.30 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.... (10) 10.31 Promissory Note dated April 15, 2000 executed by William G. Sanders, Jr. in favor of Alabama National BanCorporation in the principal amount of $18,283.30..... (16) 10.32 Pledge Agreement dated April 15, 1999 between William G. Sanders, Jr. and Alabama National BanCorporation......... (10) 10.33 Alabama National BanCorporation Employee Capital Accumulation Plan (amended and restated effective January 1, 2000)................................................. (12) 10.34 Non-Qualified Option Agreement dated as of January 1, 2000 between John R. Bragg and Alabama National BanCorporation........................................... (16) 10.35 Non-Qualified Option Agreement dated as of January 1, 2000 between John H. Holcomb, III and Alabama National BanCorporation........................................... (16) 10.36 Non-Qualified Option Agreement dated as of January 1, 2000 between William E. Matthews, V and Alabama National BanCorporation........................................... (16) 10.37 Non-Qualified Option Agreement dated as of January 1, 2000 between Richard Murray, IV and Alabama National BanCorporation........................................... (16) 10.38 Non-Qualified Option Agreement dated as of January 1, 2000 between Dan M. David and Alabama National BanCorporation........................................... (16) 10.39 Non-Qualified Option Agreement dated as of January 1, 2000 between Victor E. Nichol, Jr. and Alabama National BanCorporation........................................... (16) 10.40 Non-Qualified Option Agreement dated as of January 1, 2000 between William G. Sanders, Jr. and Alabama National BanCorporation........................................... (16) 10.41 Non-Qualified Option Agreement dated as of January 1, 2000 between Shelly S. Williams and Alabama National BanCorporation........................................... (16) 10.42 Employment Continuation Agreement dated as of September 21, 2000 between John R. Bragg and Alabama National BanCorporation........................................... (16) 10.43 Employment Continuation Agreement dated as of September 21, 2000 between John H. Holcomb, III and Alabama National BanCorporation.................................. (16) 10.44 Employment Continuation Agreement dated as of September 21, 2000 between William E. Matthews, V and Alabama National BanCorporation.................................. (16) 10.45 Employment Continuation Agreement dated as of September 21, 2000 between Richard Murray, IV and Alabama National BanCorporation........................................... (16) 10.46 Employment Continuation Agreement dated as of September 21, 2000 between Victor E. Nichol, Jr. and Alabama National BanCorporation.................................. (16) 10.47 Employment Continuation Agreement dated as of September 21, 2000 between William G. Sanders, Jr. and Alabama National BanCorporation.................................. (16) 10.48 Employment Continuation Agreement dated as of September 21, 2000 between Dan M. David and Alabama National BanCorporation........................................... (16)
51
Exhibit Number Description Reference ------- ----------- --------- 11.1 Statement regarding Computation of Per Share Earnings...... (16) 21.1 Subsidiaries of Alabama National BanCorporation............ (16) 23.1 Consent of PricewaterhouseCoopers L.L.P. .................. (16)
- -------- (1) Filed as an Exhibit to Alabama National's Annual Report on Registration Statement on Form S-1 (Registration No. 33-83800) and incorporated herein by reference. (2) Filed as an Exhibit to Alabama National's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference. (3) Filed as an Exhibit to Alabama National's Registration Statement on Form S-4 (Registration No. 33-97152) and incorporated herein by reference. (4) Filed as an Exhibit to Alabama National's Annual Report on Form 10-K for the year ended December 31, 1995 and incorporated herein by reference. (5) Filed as an Exhibit to Alabama National's Annual Report on Form 10-K for the year ended December 31, 1996 and incorporated herein by reference. (6) Filed as an Exhibit to Alabama National's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and incorporated herein by reference. (7) Filed as an Exhibit to Alabama National's Annual Report on Form 10-K for the year ended December 31, 1997 and incorporated herein by reference. (8) Filed as an Exhibit to Alabama National's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 and incorporated herein by reference. (9) Filed as Appendix A to Alabama National's Registration Statement on Form S-4 (Registration No. 333-51448) and incorporated herein by reference. (10) Filed as an Exhibit to Alabama National's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 and incorporated herein by reference. (11) Filed as an Exhibit to Alabama National's Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 and incorporated herein by reference. (12) Filed as an Exhibit to Alabama National's Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference. (13) Filed as an Exhibit to Alabama National's Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 and incorporated herein by reference. (14) Filed as an Exhibit to Alabama National's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 and incorporated herein by reference. (15) Filed as an Exhibit to Alabama National's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 and incorporated herein by reference. (16) Filed as an Exhibit to Alabama National's Annual Report on Form 10-K for the year ended December 31, 2000. 52 Alabama National BanCorporation and Subsidiaries Consolidated Financial Statements December 31, 2000 and 1999 and the Three Years Ended December 31, 2000 REPORT OF INDEPENDENT ACCOUNTANTS To the Stockholders and Board of Directors Alabama National BanCorporation In our opinion, the accompanying consolidated statements of financial condition and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows present fairly, in all material respects, the financial position of Alabama National BanCorporation and its subsidiaries at December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP January 18, 2001, except for Note 21, as to which the date is January 31, 2001 F-1 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION December 31, 2000 and 1999 (in thousands, except share data)
2000 1999 ---------- ---------- ASSETS ------ Cash and due from banks................................ $ 76,558 $ 73,125 Interest-bearing deposits in other banks............... 7,630 6,768 Investment securities (market value $61,485 and $19,738 for 2000 and 1999, respectively)...................... 60,762 19,616 Securities available for sale.......................... 314,550 325,507 Trading securities..................................... 577 2,701 Federal funds sold and securities purchased under agreements to resell.................................. 27,818 33,568 Loans held for sale.................................... 5,226 8,615 Loans.................................................. 1,610,440 1,321,245 Unearned income........................................ (975) (1,085) ---------- ---------- Loans, net of unearned income.......................... 1,609,465 1,320,160 Allowance for loan losses.............................. (20,867) (18,068) ---------- ---------- Net loans.......................................... 1,588,598 1,302,092 Property, equipment, and leasehold improvements, net... 49,377 43,855 Intangible assets, net................................. 14,347 10,730 Cash surrender value of life insurance................. 42,595 31,642 Receivables from investment division customers......... 7,745 24,573 Other assets........................................... 39,915 39,092 ---------- ---------- $2,235,698 $1,921,884 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Deposits: Noninterest bearing.................................. $ 226,893 $ 210,185 Interest bearing..................................... 1,477,056 1,231,970 ---------- ---------- Total deposits..................................... 1,703,949 1,442,155 Federal funds purchased and securities sold under agreements to repurchase............................. 165,117 131,878 Treasury, tax and loan accounts....................... 900 6,199 Accrued expenses and other liabilities................ 35,903 61,003 Short-term borrowings................................. 83,439 18,389 Long-term debt........................................ 83,926 124,005 ---------- ---------- Total liabilities.................................. 2,073,234 1,783,629 Commitments and contingencies (see Notes 9 and 10) Stockholders' equity: Common stock, $1 par; 17,500,000 shares authorized; 11,187,019 shares issued at December 31, 2000 and December 31, 1999................................... 11,187 11,187 Additional paid-in capital........................... 85,998 81,939 Retained earnings.................................... 69,648 54,897 Treasury stock at cost, 136,099 and 121,129 shares at December 31, 2000 and 1999, respectively............ (3,431) (3,226) Accumulated other comprehensive loss, net of tax..... (938) (6,542) ---------- ---------- Total stockholders' equity......................... 162,464 138,255 ---------- ---------- $2,235,698 $1,921,884 ========== ==========
The accompanying notes are an integral part of these financial statements. F-2 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME For the years ended December 31, 2000, 1999 and 1998 (in thousands, except share data)
2000 1999 1998 -------- -------- -------- Interest income: Interest and fees on loans....................... $134,756 $102,340 $ 92,208 Interest on securities........................... 23,788 20,456 18,870 Interest on deposits in other banks.............. 214 110 106 Interest on trading securities................... 124 356 264 Interest on federal funds sold................... 2,522 2,406 4,256 -------- -------- -------- Total interest income.......................... 161,404 125,668 115,704 -------- -------- -------- Interest expense: Interest on deposits............................. 67,594 47,589 46,415 Interest on federal funds purchased.............. 9,226 7,258 6,807 Interest on short and long-term borrowings....... 9,618 4,436 3,333 -------- -------- -------- Total interest expense......................... 86,438 59,283 56,555 -------- -------- -------- Net interest income............................ 74,966 66,385 59,149 Provision for loan losses.......................... 2,003 1,954 1,796 -------- -------- -------- Net interest income after provision for loan losses........................................ 72,963 64,431 57,353 -------- -------- -------- Noninterest income: Securities gains................................. 1 190 174 (Loss) gain on disposition of assets............. (19) 249 247 Service charges on deposit accounts.............. 7,735 7,479 7,259 Investment services income....................... 5,867 6,624 9,230 Securities brokerage income...................... 5,413 3,707 2,307 Trust department income.......................... 2,279 2,190 2,101 Gain on origination and sale of mortgages........ 3,531 3,993 4,303 Insurance commissions............................ 2,099 1,068 Bank owned life insurance........................ 2,034 1,504 1,167 Gain on pension curtailment...................... 819 Other............................................ 3,740 2,734 2,562 -------- -------- -------- Total noninterest income....................... 32,680 30,557 29,350 -------- -------- -------- Noninterest expense: Salaries and employee benefits................... 42,531 37,452 36,021 Occupancy and equipment expense.................. 8,232 7,265 6,724 Other............................................ 19,611 17,738 18,409 -------- -------- -------- Total noninterest expense...................... 70,374 62,455 61,154 -------- -------- -------- Income before provision for income taxes and minority interest in earnings of consolidated subsidiaries...................................... 35,269 32,533 25,549 Provision for income taxes......................... 10,851 10,237 8,154 -------- -------- -------- Income before minority interest in earnings of consolidated subsidiaries......................... 24,418 22,296 17,395 Minority interest in earnings of consolidated subsidiaries...................................... 26 25 23 -------- -------- -------- Net income available for common shares......... $ 24,392 $ 22,271 $ 17,372 ======== ======== ======== Net income per common share (basic)................ $ 2.21 $ 2.01 $ 1.61 ======== ======== ======== Weighted average common shares outstanding (basic)........................................... 11,057 11,079 10,804 ======== ======== ======== Net income per common share (diluted).............. $ 2.17 $ 1.98 $ 1.55 ======== ======== ======== Weighted average common and common equivalent shares outstanding (diluted)...................... 11,238 11,273 11,173 ======== ======== ========
The accompanying notes are an integral part of these financial statements. F-3 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2000, 1999 and 1998 (in thousands, except share data)
2000 1999 1998 ------- -------- ------- Net income............................................ $24,392 $ 22,271 $17,372 Other comprehensive income (loss): Unrealized gains (losses) on securities available for sale arising during the period...................... 8,496 (11,166) 773 Less: Reclassification adjustment for net gains included in net income............................... 1 190 174 ------- -------- ------- Other comprehensive income (loss), before taxes....... 8,495 (11,356) 599 Provision for (benefit from) income taxes related to items of other comprehensive income (expense)........ 2,891 (3,872) 202 ------- -------- ------- Other comprehensive income (loss)..................... 5,604 (7,484) 397 ------- -------- ------- Comprehensive income.................................. $29,996 $ 14,787 $17,769 ======= ======== =======
The accompanying notes are an integral part of these financial statements. F-4 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY For the years ended December 31, 2000, 1999 and 1998 (in thousands, except share data)
Accumulated Other Additional Unearned Comprehensive Common Paid-In Retained Restricted Unearned Treasury Income (Loss) Total Shares Stock Capital Earnings Stock ESOP Stock Net of Tax Equity ---------- ------- ---------- -------- ---------- -------- -------- ------------- -------- Balance, December 31, 1997.................... 10,602,982 $10,603 $77,081 $28,838 $(92) $(87) $ 545 $116,888 Net income.............. 17,372 17,372 Common stock dividends declared ($0.60 per share).................. (5,626) (5,626) Exercise of stock options................. 368,704 369 1,489 1,858 Shares released by ESOP.................... 12 12 Amortization of unearned restricted stock........ 92 92 Change in other comprehensive income, net of taxes............ 397 397 ---------- ------- ------- ------- ---- ---- ------- ------- -------- Balance, December 31, 1998.................... 10,971,686 10,972 78,570 40,584 (75) 942 130,993 Net income.............. 22,271 22,271 Common stock dividends declared ($0.72 per share).................. (7,958) (7,958) Exercise of stock options................. 94,204 94 643 737 Shares released by ESOP.................... 75 75 Issuance of stock in purchase business combination............. 121,129 121 2,726 2,847 Purchase of treasury stock at cost........... $(3,226) (3,226) Change in other comprehensive income (loss), net of taxes.... (7,484) (7,484) ---------- ------- ------- ------- ---- ---- ------- ------- -------- Balance, December 31, 1999.................... 11,187,019 11,187 81,939 54,897 (3,226) (6,542) 138,255 Net income.............. 24,392 24,392 Common stock dividends declared ($0.84 per share).................. (9,289) (9,289) Exercise of stock options................. (348) 383 35 Stock based compensation............ 4,059 (4) 4,055 Purchase of treasury stock at cost........... (588) (588) Change in other comprehensive income (loss), net of taxes.... 5,604 5,604 ---------- ------- ------- ------- ---- ---- ------- ------- -------- Balance, December 31, 2000.................... 11,187,019 $11,187 $85,998 $69,648 $ $ $(3,431) $ (938) $162,464 ========== ======= ======= ======= ==== ==== ======= ======= ========
The accompanying notes are an integral part of these financial statements. F-5 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2000, 1999 and 1998 (in thousands, except share data)
2000 1999 1998 ------- ------- ------- Cash flows from operating activities: Net income........................................ $24,392 $22,271 $17,372 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses....................... 2,003 1,954 1,796 Deferred tax benefit (provision)................ 2,657 (1,570) (595) Depreciation and amortization................... 4,439 3,794 3,255 Loss (gain) on disposal of property and equipment...................................... 3 9 (142) Securities gain................................. (1) (190) (174) Gain on other real estate....................... 18 (68) (15) Income earned on bank owned life insurance...... (2,034) (1,504) (1,167) Stock based compensation........................ 1,425 Net amortization of securities.................. (75) 326 254 Net increase (decrease) in trading securities... 2,124 2,833 (5,135) Minority interest in earnings of consolidated subsidiaries................................... 26 25 23 (Increase) decrease in other assets............. 12,153 (12,649) 22,692 Increase (decrease) in other liabilities........ (22,837) 14,399 (12,809) Other........................................... (31) 75 73 ------- ------- ------- Net cash provided by operating activities..... 24,262 29,705 25,428 ------- ------- -------
Cash flows from investing activities: Purchases of investment securities.......... (50,028) Proceeds from calls and maturities of investment securities...................... 8,887 14,998 31,214 Purchases of securities available for sale.. (111,725) (251,607) (248,716) Proceeds from sales of securities available for sale................................... 126 6,139 1,236 Proceeds from calls and maturities of securities available for sale.............. 131,121 198,070 157,779 Net decrease (increase) in interest-bearing deposits in other banks.................... (862) (6,543) 2,166 Net decrease in federal funds sold and securities purchased under agreements to resell....................... 5,750 23,508 21,759 Net increase in loans....................... (218,811) (224,248) (141,575) Purchases of property, equipment, and leasehold improvements..................... (8,369) (7,973) (5,172) Proceeds from sale of property, equipment, and leasehold improvements................. 5 117 299 Proceeds from sale of other real estate owned...................................... 550 1,824 2,523 Costs capitalized on other real estate owned...................................... (48) (115) (118) Cash paid for bank owned life insurance..... (9,258) (1,000) Purchase acquisitions, net of cash acquired................................... (19,042) (114) --------- --------- --------- Net cash used in investing activities..... (271,704) (245,944) (179,605) --------- --------- ---------
The accompanying notes are an integral part of these financial statements. F-6 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued) For the years ended December 31, 2000, 1999 and 1998 (in thousands, except share data)
2000 1999 1998 ------- ------- ------- Cash flows from financing activities: Net increase in deposits.......................... 207,778 166,980 149,696 Increase (decrease) in federal funds purchased and securities sold under agreements to repurchase... 33,239 (30,755) 21,196 Net increase in short and long-term borrowings and capital leases................................... 19,672 92,773 4,650 Exercise of stock options......................... 63 737 1,858 Treasury stock acquired for purchase business combination...................................... (3,226) Dividends on common stock......................... (9,289) (7,958) (5,626) Purchase of treasury stock........................ (588) ------- ------- ------- Net cash provided by financing activities....... 250,875 218,551 171,774 ------- ------- ------- Increase in cash and cash equivalents........... 3,433 2,312 17,597 Cash and cash equivalents, beginning of year........ 73,125 70,813 53,216 ------- ------- ------- Cash and cash equivalents, end of year.............. $76,558 $73,125 $70,813 ======= ======= =======
Supplemental disclosures of cash flow information: Cash paid for interest............................... $85,236 $58,292 $54,886 ======= ======= ======= Cash paid for income taxes........................... $10,595 $12,988 $ 4,810 ======= ======= =======
Supplemental schedule of noncash investing activities: Foreclosure of other real estate owned............... $ 1,235 $1,121 $1,771 ======= ====== ====== Transfer of property to other real estate owned...... $ 97 ====== (Increase) decrease in unrealized holding (gain) loss on securities available for sale.................... $(5,604) $7,484 $ (397) ======= ====== ====== Unearned restricted stock and performance plan awards.............................................. $ 93 ====== Assets acquired and liabilities assumed in merger transactions (Note 2): Assets acquired in business combination............ $73,659 $3,704 ======= ====== Liabilities assumed in business combination........ $54,361 $ 721 ======= ======
The accompanying notes are an integral part of these financial statements. F-7 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS 1. Nature of Business and Summary of Significant Accounting Policies Alabama National Bancorporation and Subsidiaries (the Company) provides a full range of banking and bank-related services to individual and corporate customers through its ten subsidiary banks located in Alabama, Georgia, and Florida. Basis of Presentation and Principles of Consolidation--The accounting and reporting policies of the Company conform with accounting principles generally accepted in the United States of America and with general financial service industry practices. The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates--In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the statement of condition dates and revenues and expenses for the periods shown. Actual results could differ from those estimates. Cash and Cash Equivalents--For purposes of reporting cash flows, cash and cash equivalents include cash on hand and due from banks. Securities--Investment securities are stated at amortized cost as a result of management's ability and intent to hold the securities until maturity. Related premiums are amortized and discounts are accreted on these investments using the effective interest method. Securities available for sale are those securities intended to be held for an indefinite period of time. The Company may sell these securities as part of its asset/liability strategy in response to changes in interest rates, changes in prepayment risk, or similar factors. Securities available for sale are recorded at market value. Unrealized holding gains and losses on securities classified as available for sale are carried as a separate component of stockholders' equity. Trading securities, principally obligations of U.S. government agencies, are securities held for sale and are stated at market. Bond purchases and sales are recorded on the trade date. Accounts receivable from and accounts payable to bond customers and dealers are included in other assets and liabilities and represent security transactions entered into for which the securities have not been delivered as of the statement of condition dates. Unrealized holding gains and losses on securities classified as trading are reported in earnings of the period in which they occur. Gains and losses on the sale of securities are computed using the specific identification method. Loans and Allowance for Loan Losses--Interest income with respect to loans is accrued on the principal amount outstanding, except for interest on certain consumer loans which is recognized over the term of the loan using a method which approximates level yields. Certain impaired loans are reported at the present value of expected future cash flows using the loan's effective interest rate, or as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes the collection of principal is unlikely. The allowance is the amount that management believes will be adequate to absorb possible losses on existing loans which may become uncollectible, based on evaluations of the collectibility of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the F-8 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) loan portfolio, overall portfolio quality, review of specific loan problems, and current economic conditions which may affect the borrower's ability to pay. Accrual of interest is discontinued on a 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. Payments received on such loans are applied first to principal until the recoverability of the obligation is assured. Any remaining payments are then allocated as additional reductions of principal and interest income. Property, Equipment, and Leasehold Improvements--Property, equipment, and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation is principally computed using the straight-line method over the estimated useful life of each type of asset. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful lives of the improvements or the terms of the related leases. Maintenance and repairs are expensed as incurred; improvements and betterments are capitalized. When items are retired or otherwise disposed of, the related costs and accumulated depreciation are removed from the accounts and any resulting gains or losses are credited or charged to income. Estimated useful lives generally are as follows: Buildings..................................................... 5-45 years Leasehold improvements........................................ 10-30 years Furniture, equipment, and vault............................... 3-30 years
Other Real Estate--Other real estate, primarily property acquired by foreclosure, is capitalized at the lower of fair value less estimated selling costs or cost of the property or loan immediately prior to its classification as other real estate. Other real estate is not depreciated. Losses, representing the difference between the sales price and the carrying value of the property, are recorded immediately, while gains on sales financed by the Company are deferred until the initial and continuing investment by the borrower equals or exceeds specified equity percentages. Gains on all other sales are recorded immediately. Intangible Assets--Intangible assets consist of the excess of cost over the fair value of net assets of acquired businesses and core deposit assets. The excess of cost over the fair value of net assets of acquired businesses, which totaled approximately $13,430,000 and $11,095,000, and had related accumulated amortization of approximately $2,588,000 and $2,087,000 at December 31, 2000 and 1999, respectively, is being amortized over periods ranging from 15 to 25 years, principally using the straight-line method of amortization. Core deposit intangibles, which totaled approximately $5,786,000 and $3,625,000 at December 31, 2000 and 1999, respectively, and had related accumulated amortization of approximately $2,281,000 and $1,903,000 at December 31, 2000 and 1999, respectively, are being amortized over 10 years using either the straight-line or double-declining balance methods of amortization. The carrying value of the excess of cost over net assets of subsidiaries acquired is reviewed if facts and circumstances suggest that it may be impaired. If warranted, analysis, including undiscounted income projections, are made to determine if adjustments to the carrying value or amortization periods are necessary. No such adjustments were required or made during the years ended December 31, 2000, 1999 or 1998. Software costs--Software costs with a recorded cost of approximately $3,122,000 and $2,453,000 and related accumulated amortization of approximately $2,170,000 and $1,933,000 are included in other assets at December 31, 2000 and 1999, respectively. Amortization expense related to these costs of approximately $219,000, $202,000, and $140,000 was recorded in 2000, 1999, and 1998, respectively. Income Taxes--Deferred income taxes are provided on all temporary differences between the financial reporting basis and the income tax basis of assets and liabilities. F-9 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) Stock-Based Employee Compensation--The Company uses a value-based method of accounting for compensation costs. Compensation cost for stock-based employee compensation arrangements is measured at the grant date based on the value of the award and is recognized over the service period. The Company has fully adopted and implemented Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation and has recorded compensation costs in accordance with these provisions. As such, no additional pro forma expenses or disclosure requirements exist for the years ended December 31, 2000, 1999 and 1998. Advertising Costs--The Company expenses the costs of advertising when those costs are incurred. Collateral Requirements--The Company requires collateral for certain transactions with retail and commercial customers. Specifically, margin loans made for the purpose of borrowing against marketable investment securities generally do not exceed 50% of the total market value of a customer's marginable securities portfolio at the time of the transaction or any time thereafter. Repurchase agreements, limited to commercial customers, generally do not exceed the market value of securities used to secure such transactions at the time of the transaction or thereafter. Federal funds sold are made to correspondent banks on an unsecured basis and generally do not exceed limits established for each bank resulting from evaluation of the bank's financial position. Reclassifications--Certain reclassifications have been made to the prior year financial statements to conform with the 2000 presentation. Recently Issued Accounting Standards--In September 2000, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities--A Replacement of FASB Statement No. 125 (Statement 140). Statement 140 is effective for transfers occurring after March 31, 2001 and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. Management of the Company does not expect the adoption of Statement 140 to have a material impact on its financial statements since the Company has not entered into any securitization or asset transfer transactions. In 1999, the Federal Financial Institutions Examination Council (FFIEC) issued The Uniform Classification and Account Management Policy (the Policy) which provides guidance for and promotes consistency among banks on the treatment of delinquent and bankruptcy-related consumer loans. The Company has implemented the Policy effective December 31, 2000 and is in full compliance. In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (Statement 133). 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. Statement 133, as amended by Statement of Financial Accounting Standards No. 137, Accounting for Derivative Instruments and Hedging Activities--Deferral of the Effective Date of SFAS No. 133, and by Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities- An Amendment of SFAS No 133, is effective for fiscal years beginning after June 15, 2000, and is effective for interim periods in the initial year of adoption. The Company's derivative activities at December 31, 2000 relate solely to the interest rate lock commitments (IRLCs) which the Company has entered into with certain customers for specific short-term periods of time. These IRLCs relate to prospective mortgage loans which the Company F-10 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) originates and then immediately transfers to secondary mortgage servicers. The transfer of these IRLCs allows the Company to pass financial risk associated with potential changes in interest rates on to secondary mortgage servicers. Management has evaluated these activities and determined that the Company does not have any material derivative exposures and that the adoption of Statement 133, on January 1, 2001, will not have a material impact on the financial statements. Effective January 1, 1999, the Company adopted 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. Since the Company has not securitized mortgage loans, there has been no financial statement impact since the adoption of this statement. 2. Business Combinations On August 4, 2000, First American Bank, a subsidiary of the Company, completed the acquisition of two banking branches in Madison and Huntsville, Alabama. The acquisition increased loans and deposits by approximately $68.9 million and $54.0 million, respectively. The acquisition was accounted for as a purchase transaction. On December 31, 1998, Community Bank of Naples, N.A. (Naples), headquartered in Naples, Florida, was merged (the Naples Merger) into the Company. On October 2, 1998, Community Financial Corporation (CFC), a one bank holding company headquartered in Mableton, Georgia, was merged (the CFC Merger) into the Company. Public Bank Corporation (Public), a one bank holding company headquartered in St. Cloud, Florida, was merged (the Public Merger) into the Company on May 29, 1998. Additional information related to these mergers is presented in the following table:
Shares of Total Company Assets at Common Stock Date of Merger Merger Issued (Approximately) ------ ------------ --------------- Naples....................................... 532,608 $ 92,600,000 CFC.......................................... 1,076,032 $138,900,000 Public....................................... 549,913 $ 53,300,000
The consolidated financial statements of the Company give effect to these mergers, all of which were accounted for as poolings of interests and, accordingly, financial statements for all periods have previously 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. In the third quarter of 1999, the Board of Directors of the Company authorized the repurchase of 121,129 shares of common stock. This repurchase, which was completed during the third quarter at a cost of approximately $3,226,000, was specifically related to the Company's issuance of an identical number of shares to acquire Rankin Insurance Agency during May 1999 in a purchase business combination. The pro forma impact of this purchase business combination on the Company's financial statements for the periods prior to acquisition is not significant and, thus, is not presented herein. F-11 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) 3. Securities The amortized costs and estimated market values of investment securities (carried at amortized cost) and securities available for sale (carried at market value) are as follows (in thousands):
December 31, 2000 ---------------------------------------- Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ---------- -------- Investment securities: U.S. treasury securities and obligations of U.S. government corporations and agencies.......... $ 3,263 $ 3,263 Obligations of states and political subdivisions....................... 7,652 $139 7,791 Mortgage backed securities issued or guaranteed by U.S. government agencies........................... 49,847 585 $ 1 50,431 -------- ---- ------ -------- Totals............................ $ 60,762 $724 $ 1 $ 61,485 ======== ==== ====== ======== Securities available for sale: U.S. treasury securities and obligations of U.S. government corporations and agencies.......... $111,538 $245 $ 328 111,455 Obligations of states and political subdivisions....................... 22,583 261 36 22,808 Mortgage backed securities issued or guaranteed by U.S. government agencies........................... 171,490 53 1,514 170,029 Equity securities................... 10,334 76 10,258 -------- ---- ------ -------- Totals............................ $315,945 $559 $1,954 $314,550 ======== ==== ====== ======== December 31, 1999 ---------------------------------------- Gross Gross Amortized Unrealized Unrealized Market Cost Gains Losses Value --------- ---------- ---------- -------- Investment securities: U.S. treasury securities and obligations of U.S. government corporations and agencies.......... $ 279 $ 279 Obligations of states and political subdivisions....................... 8,942 $122 9,064 Mortgage backed securities issued or guaranteed by U.S. government agencies........................... 10,395 13 $ 13 10,395 -------- ---- ------ -------- Totals............................ $ 19,616 $135 $ 13 $ 19,738 ======== ==== ====== ======== Securities available for sale: U.S. treasury securities and obligations of U.S. government corporations and agencies.......... $ 99,167 $3,447 $ 95,720 Obligations of states and political subdivisions....................... 24,909 $ 4 370 24,543 Mortgage backed securities issued or guaranteed by U.S. government agencies........................... 202,646 6,071 196,575 Equity securities................... 8,675 6 8,669 -------- ---- ------ -------- Totals............................ $335,397 $ 4 $9,894 $325,507 ======== ==== ====== ========
F-12 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) Maturities of securities at December 31, 2000 are summarized as follows (in thousands):
Investment Securities Available for Sale ------------------- ------------------- Estimated Estimated Amortized Market Amortized Market Cost Value Cost Value --------- --------- --------- --------- Due in one year or less.............. $ 160 $ 160 $ 7,638 $ 7,638 Due after one year through five years............................... 8,514 8,618 90,664 90,764 Due after five years through ten years............................... 2,140 2,178 34,119 34,146 Due after ten years.................. 101 98 1,700 1,715 Mortgage-backed securities........... 49,847 50,431 171,490 170,029 Equity securities.................... 10,334 10,258 ------- ------- -------- -------- Totals............................. $60,762 $61,485 $315,945 $314,550 ======= ======= ======== ========
Gross gains of $1,000, $190,000 and $174,000 were realized on the sale of securities during 2000, 1999 and 1998, respectively, and there were no gross realized losses during any of these periods. Equity securities are comprised primarily of Federal Home Loan Bank and Federal Reserve Bank stock. These holdings are required under regulatory guidelines. 4. Loans and Other Real Estate Major classification of loans at December 31, 2000 and 1999 are summarized as follows (in thousands):
2000 1999 ---------- ---------- Commercial, financial, and agricultural............... $ 259,821 $ 257,047 Real estate........................................... 1,098,481 878,897 Consumer.............................................. 75,970 73,388 Lease financing receivables........................... 58,668 22,046 Securities brokerage margin loans..................... 29,901 22,551 Other................................................. 87,599 67,316 ---------- ---------- Gross loans........................................... 1,610,440 1,321,245 Less unearned income.................................. (975) (1,085) ---------- ---------- Loans, net of unearned income......................... 1,609,465 1,320,160 Less allowance for loan losses........................ (20,867) (18,068) ---------- ---------- Net loans............................................. $1,588,598 $1,302,092 ========== ==========
In the normal course of business, loans are made to directors, officers, and their affiliates. Such loans are made on substantially the same terms as to other customers of the banks. The aggregate of such loans was $55,541,000 and $50,992,000 at December 31, 2000 and 1999, respectively. During 2000 and 1999, new loans of $42,492,000 and $32,517,000 were funded and repayments totaled $37,943,000 and $25,197,000, respectively. Loans on which the accrual of interest has been discontinued or reduced amounted to approximately $3,221,000 and $4,141,000 at December 31, 2000 and 1999, respectively. If the loans of the Company had been current throughout their terms, gross interest income for the years ended December 31, 2000 and 1999, respectively, would have increased by approximately $451,000 and $392,000. F-13 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) Other real estate at December 31, 2000 and 1999 totaled $1,450,000 and $687,000, respectively. At December 31, 2000 and 1999, the recorded investment in loans for which impairment has been recognized totaled $3,221,000 and $4,146,000, respectively, and these loans had a corresponding valuation allowance of $0 and $202,000. Management of the Company believes that the value of these impaired loans on the Company's books is less than the recoverable value of the loans. The Company recognized no interest on impaired loans during the portion of the year that they were impaired. The impaired loans at December 31, 2000 and 1999 were measured for impairment primarily using the fair value of the collateral. The Company grants real estate, commercial, and consumer loans to customers primarily in Alabama, Georgia, and Florida. Although the Company has a diversified loan portfolio, significant concentrations include loans collateralized by improved and undeveloped commercial and residential real estate. 5. Allowance for Loan Losses A summary of the allowance for loan losses for the years ended December 31, 2000, 1999, and 1998 is as follows (in thousands):
2000 1999 1998 ------- ------- ------- Balance, beginning of year......................... $18,068 $16,540 $14,844 Provision charged to operations.................... 2,003 1,954 1,796 Additions to allowance through acquisition......... 1,400 ------- ------- ------- 21,471 18,494 16,640 ------- ------- ------- Loans charged off.................................. (1,361) (1,277) (1,864) Recoveries......................................... 757 851 1,764 ------- ------- ------- Net charge-offs.................................... (604) (426) (100) ------- ------- ------- Balance, end of year............................... $20,867 $18,068 $16,540 ======= ======= =======
6. Property, Equipment, and Leasehold Improvements Major classifications of property, equipment, and leasehold improvements at December 31, 2000 and 1999 are summarized as follows (in thousands):
2000 1999 ------- ------- Land......................................................... $12,931 $10,493 Buildings and improvements................................... 29,760 28,166 Leasehold improvements....................................... 6,371 6,066 Furniture, equipment, and vault.............................. 24,901 22,054 Construction in progress..................................... 3,178 2,117 ------- ------- 77,141 68,896 Less accumulated depreciation and amortization............... 27,764 25,041 ------- ------- Property, equipment, and leasehold improvements, net......... $49,377 $43,855 ======= =======
F-14 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) 7. Deposits Deposits at December 31, 2000 and 1999 are summarized as follows (in thousands):
2000 1999 ---------- ---------- Demand deposit accounts................................ $ 226,893 $ 210,185 NOW accounts........................................... 285,475 217,883 Savings and money market accounts...................... 290,350 296,723 Time deposits less than $100,000....................... 616,249 492,328 Time deposits of $100,000 or more...................... 284,982 225,036 ---------- ---------- Total deposits......................................... $1,703,949 $1,442,155 ========== ==========
Certain directors of the Company, including their families and affiliated companies, are deposit customers. Total deposits of these persons at December 31, 2000 and 1999 were approximately $27,901,000 and $26,696,000, respectively. 8. Short and Long-Term Borrowings Short-term debt is summarized as follows (in thousands):
2000 1999 ------- ------- Note payable to third-party bank under secured master note agreement; rate varies with LIBOR and was 7.4318% and 7.2113% at December 31, 2000 and 1999, respectively; collateralized by the Company's stock in subsidiary banks.................................................... $27,439 $16,389 FHLB debt due at various maturities ranging from June 4, 2001 through October 12, 2001; bearing interest at fixed and variable rates ranging from 6.40% to 6.7575% at December 31, 2000; collateralized by FHLB stock and certain first mortgages.................................. 56,000 FHLB open ended notes payable, rate varies daily based on the FHLB Daily Rate Credit interest price and was 4.55% at December 31, 1999; collateralized by FHLB stock and certain first mortgage loans............................. 2,000 ------- ------- Total short-term borrowings............................... $83,439 $18,389 ======= ======= Long-term debt is summarized as follows (in thousands): 2000 1999 ------- ------- FHLB debt due April 23, 2004; rate varies with LIBOR and was 6.48% and 5.9425% at December 31, 2000 and 1999, respectively; rate changes to 5.02% from April 23, 2001 to April 23, 2004; convertible at the option of the FHLB on April 23, 2001 to the three month LIBOR advance; collateralized by FHLB stock and certain first mortgage loans.................................................... $13,700 $13,700 FHLB debt due at various maturities ranging from June 18, 2003 through November 10, 2010; bearing interest at fixed rates ranging from 4.47% to 6.00% and 4.30% to 5.715% at December 31, 2000 and 1999, respectively; convertible at the option of the FHLB at dates ranging from February 7, 2000 to March 26, 2003; collateralized by FHLB stock, certain first mortgage loans and pledged available for sale securities with a carrying value of $3,851,000 at December 31, 1999. Various of these notes were called by the FHLB during the year ended December 31, 2000......... 45,000 98,000
F-15 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2000 1999 ------- -------- FHLB debt due at various maturities ranging from July 25, 2001 through February 11, 2003; bearing interest at a variable rate of 6.5275% at December 31, 2000 and at fixed and variable rates ranging from 6.05125% to 6.40% at December 31, 1999; collateralized by FHLB stock, certain first mortgage loans and pledged available for sale securities; various of these notes have been classified as short-term at December 31, 2000............ 25,000 12,000 Various notes payable..................................... 29 39 Capital leases payable.................................... 197 266 ------- -------- Total long-term debt...................................... $83,926 $124,005 ======= ========
Certain of these amounts are callable at the option of the FHLB at dates earlier than the stated maturities. Aggregate maturities of long-term debt are as follows for fiscal years (in thousands): $ 71 2002............................................................... 54 2003............................................................... 30,054 2004............................................................... 18,738 2005............................................................... 10,009 Thereafter......................................................... 25,000 ------- $83,926 =======
The note payable to a third-party bank at December 31, 2000 is payable in full on May 31, 2001. Maximum borrowing under the secured master note agreement is $32,000,000 and interest is payable quarterly. Total interest expense paid on the note was approximately $1,527,000 in 2000, $817,000 in 1999, and $870,000 in 1998. At December 31, 2000, the Company has approximately $144,270,000 of available credit with the FHLB in addition to the approximately $139,700,000 above, approximately $4,561,000 of available credit with a regional financial institution, and federal funds lines of approximately $157,700,000 with various correspondent banks, of which approximately $139,700,000 remains available. The Company has also pledged approximately $171,000,000 in loans to the Federal Reserve Bank of Atlanta as collateral for a discount window credit facility. At December 31, 2000, the Company had access to approximately $136,000,000 under this facility, and had no outstanding borrowings. The FHLB has a blanket lien on the Company's 1-4 family mortgage loans in the amount of the outstanding debt. Additional details regarding short-term debt are shown below (in thousands):
2000 1999 1998 ------- ------- ------- Average amount outstanding during the year......... $55,472 $23,125 $22,697 Maximum amount outstanding at any month end........ $86,389 $58,922 $48,147 Weighted average interest rate: During year...................................... 7.04% 5.65% 6.42% End of year...................................... 6.92% 6.92% 5.83%
F-16 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) 9. Leases One of the Company's subsidiary banks leases its main office building from a partnership, which includes a director and a stockholder of the Company, under a noncancelable operating lease expiring in 2020. Leases classified as capital leases include branch offices with a net book value of approximately $115,000 at December 31, 2000. Additionally, several subsidiary banks lease branch offices and equipment under operating leases. Minimum future rental payments for the capital and operating leases are as follows (in thousands):
Capital Operating Leases Leases ------- --------- 2001....................................................... $ 75 $ 1,695 2002....................................................... 54 1,698 2003....................................................... 54 1,703 2004....................................................... 41 1,666 2005....................................................... 10 1,634 Thereafter................................................. 26,104 ---- ------- Total minimum payments..................................... 234 $34,500 ---- ======= Less amount representing interest.......................... 37 ---- Net capital lease obligation............................... $197 ====
Rent expense charged to operations under operating lease agreements for the years ended December 31, 2000, 1999, and 1998 was approximately $1,522,000, $1,268,000, and $1,342,000, respectively, of which approximately $999,000, $958,000, and $968,000, respectively, during 2000, 1999, and 1998 relate to leases with related parties. 10. Commitments and Contingencies In the normal course of business, the Company makes commitments to meet the financing needs of its customers. These commitments include commitments to extend credit and standby letters of credit. These instruments include, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated statements of condition. The Company's exposure to credit risk is the extent of nonperformance by the counterparty to the financial instrument for commitments to extend credit and standby letters of credit and is represented by the contractual amount of those instruments. The Company uses the same credit policies and procedures in making commitments and conditional obligations as it does for loans. At December 31, 2000 and 1999, unused commitments under lines of credit aggregated approximately $439,866,000 and $426,779,000, of which approximately $19,022,000 and $20,912,000 pertained to related parties, respectively. The Company evaluates each customer's credit worthiness on an individual basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant, and equipment, residential real estate and income- producing commercial properties. The Company had approximately $17,750,000 and $14,431,000 in irrevocable standby letters of credit outstanding at December 31, 2000 and 1999, of which approximately $319,000 and $121,000 at December 31, 2000 and 1999, respectively, pertained to related parties. The credit risk involved in issuing letters of credit F-17 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) is essentially the same as that involved in extending loan facilities to customers. The collateral varies but may include accounts receivable, inventory, property, plant, and equipment, and residential real estate for those commitments for which collateral is deemed necessary. The Company, in the normal course of business, is subject to various pending and threatened litigation. Based on legal counsel's opinion, management does not anticipate that the ultimate liability, if any, resulting from such litigation will have a material adverse effect on the Company's financial condition or results of operations. 11. Employee Benefit Plans Prior to December 31, 1999, one of the subsidiary banks, National Bank of Commerce (NBC), maintained a defined benefit pension plan covering substantially all employees of NBC. Effective December 31, 1999, the Company ceased further benefit accruals under the plan, resulting in a curtailment of the plan. The effect of the curtailment was a $1,522,000 reduction in the projected benefit obligation, which was offset by the recognition of a previously unrecognized prior service cost of $13,000 and a portion of the unrecognized net loss of $690,000. The net result of the curtailment was a recorded curtailment gain of $819,000 during the year ended December 31, 1999. Benefits are based on years of service and the average monthly earnings for the last sixty months of employment. The Company's policy is to use the "projected unit credit" actuarial method for financial reporting purposes and the "frozen entry age" actuarial method for funding purposes. The components of net pension expense (income) for the years ended December 31, 2000, 1999, and 1998 are as follows (in thousands):
2000 1999 1998 ----- ----- ----- Service cost............................................... $ 659 $ 505 Interest cost.............................................. $ 255 334 261 Expected return on assets.................................. (331) (360) (297) Amortization of transition asset........................... (2) (2) (2) Amortization of prior service cost......................... 2 2 Recognized net actuarial loss.............................. 54 23 ----- ----- ----- Net periodic pension cost.................................. (78) 687 492 ----- ----- ----- Gain on curtailment........................................ (819) ----- ----- ----- Pension (income) expense................................... $ (78) $(132) $ 492 ===== ===== =====
F-18 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) The reconciliation of the beginning and ending balances of the projected benefit obligation and plan assets, as well as disclosure of the plan's funded status for the years ended December 31, 2000 and 1999, is as follows (in thousands):
2000 1999 ------ ------ Change in benefit obligation Projected benefit obligation at end of prior year.............. $3,517 $4,975 Service cost................................................. 659 Interest cost................................................ 255 334 Actuarial (gain) loss........................................ 232 (829) Benefits paid................................................ (178) (100) Curtailment.................................................. (1,522) ------ ------ Projected benefit obligation at end of year.................... $3,826 $3,517 ====== ====== Change in plan assets Fair value of plan assets at end of prior year................. $3,705 $3,737 Actual return on plan assets................................. 627 (342) Employer contributions....................................... 410 Benefits paid................................................ (178) (100) ------ ------ Fair value of plan assets at end of year....................... $4,154 $3,705 ====== ====== Funded status Plan assets in excess of projected benefit obligation.......... $ (327) $ (188) Unrecognized net loss.......................................... (260) (324) Unrecognized net asset at date of initial application.......... 7 9 ------ ------ Accrued pension asset.......................................... $ (580) $ (503) ====== ======
Primary assumptions used to actuarially determine net pension expense are as follows:
2000 1999 1998 ---- ---- ---- Discount rate................................................. 7.00% 7.50% 7.00% Expected long-term rate of return on plan assets.............. 9.00% 9.00% 9.00% Salary increase rate.......................................... 4.25% 4.25% 4.25%
The Company has a qualified employee benefit plan under Section 401(k) of the Internal Revenue Code covering substantially all employees. Employees can contribute up to 15% of their salary to the plan on a pre-tax basis and the Company matches participants' contributions up to the first 5% of each participant's salary. The Company's matching contribution charged to operations related to this plan, as well as other plans of merged banks, was approximately $935,000, $507,000, and $431,000 for the years ended December 31, 2000, 1999, and 1998, respectively. The Company and certain subsidiary banks have deferred compensation plans for the benefit of the Company's former chief executive officer. Payments under the plans commence March 15, 1997 and March 15, 2002, or at his death, if earlier, and continue for a period of 15 years. In connection with the plans, the banks purchased single premium life insurance policies on the life of the officer. At December 31, 2000 and 1999, the cash surrender value of the policies was $2,403,000 and $2,285,000, respectively. Additionally, the Company and several of its subsidiary banks own life insurance policies to provide for the payment of death benefits related F-19 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) to existing deferred compensation and supplemental income plans maintained for the benefit of certain presidents, employees and directors of such banks. The total cash surrender value of such policies at December 31, 2000 and 1999 was $5,524,000 and $2,355,000, respectively. The Company sponsors a Performance Share Plan (the PSP) to offer long-term incentives in addition to current compensation to key executives. The criteria for payment of performance share awards is based upon a comparison of the Company's average return on average equity for an award period to that of a comparison group of bank holding companies. If the Company's results are below the median of the comparison group, no portion of the award is earned. If the Company's results are at or above the 90th percentile, the maximum award is earned. The vesting period for awards is four years. Under the plan, 400,000 shares have been reserved for issuances. In accordance with the terms of the PSP, a base grant of 22,500, 14,150, and 14,150 was made in each of the years ended December 31, 2000, 1999, and 1998, respectively. The market value per share was $18.88, $26.75 and $26.38 at each grant date for the years ended December 31, 2000, 1999, and 1998, respectively. During the year ended December 31, 2000, 21,082 shares were awarded to participants. At December 31, 2000, outstanding awards of expected and maximum payouts were 102,181 and 110,415 shares, respectively. Expenses recorded for the PSP was $653,000, $541,000 and $482,000 for the years ended December 31, 2000, 1999 and 1998, respectively. During 1997, the Company adopted a separate Performance Share Plan to provide long-term incentives to non-employee directors of a subsidiary bank (the 1997 Subsidiary PSP) and granted approximately 20,000 shares, with a market value per share of $25.13, in 1997 to vest over a sixty-three month period. The actual number of shares to be distributed in fiscal 2002 will depend on the subsidiary bank's performance as well as certain conditions to be met by the directors. At December 31, 2000, the expected and maximum payout was 18,261 shares, net of forfeitures. Expense recorded for the Subsidiary PSP was $84,000, $77,000, and $96,000 for the years ended December 31, 2000, 1999 and 1998, respectively. During 2000, the Company adopted a separate performance share plan to provide long-term incentives to non-employee directors of a subsidiary bank (the 2000 Subsidiary PSP) and granted approximately 20,000 shares, with a market value per share of $19.22 to vest over a sixty-four month period. The actual number of shares to be distributed in fiscal 2005 will depend on the subsidiary bank's performance as well as certain conditions to be met by directors. At December 31, 2000, the expected and maximum payout was 25,000 shares. Expense recorded for the Subsidiary PSP was $30,000 for the year ended December 31, 2000. During 1999, the Company adopted the 1999 Long Term Incentive Plan (the LTI Plan) which provides for the award of incentive and non-qualified stock options, stock appreciation rights, restricted stock and performance awards to eligible employees of the Company. The total number of shares of common stock reserved and available for distribution under the LTI Plan is 300,000 shares. Any awards under the LTI Plan will be in addition to awards made under the PSP. During 2000, the Company granted 160,500 non-qualified stock options under the LTI Plan, which vest over a sixty-month period. Expense recorded for the LTI Plan was $199,000 for the year ended December 31, 2000. In connection with the 1998 business combinations, the Company assumed fixed stock option plans of the merged banks. Additionally, the Company had fixed stock option plans with outstanding options granted prior to F-20 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) 1997. A summary of the status of the Company's fixed stock options as of December 31, 2000, 1999 and 1998 and changes during each of the three years then ended is presented below:
2000 1999 1998 ----------------- ----------------- ------------------ Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ------- -------- ------- -------- -------- -------- Outstanding, beginning of year................ 239,371 $10.31 330,057 $ 9.43 487,146 $ 7.98 Granted................. 164,018 18.88 3,518 26.78 11,258 23.54 Exercised............... (23,983) 8.60 (94,204) 7.83 (168,347) 6.19 ------- ------ ------- ------ -------- ------ Outstanding, end of year................... 379,406 $14.12 239,371 $10.31 330,057 $ 9.43 ======= ====== ======= ====== ======== ====== Options exercisable, end of year................ 218,906 231,913 258,785 ======= ======= ========
The following table summarizes information about fixed stock options outstanding at December 31, 2000:
Options Outstanding -------------------------- Remaining Exercise Number Contractual Options Price Outstanding Life Exercisable -------- ----------- -------------- ----------- $ 5.03.............................. 5,631 March 2004 5,631 $ 5.97.............................. 3,518 March 2005 3,518 $ 6.39.............................. 71,865 October 2002 71,865 $ 9.39.............................. 29,290 August 2006 29,290 $10.00.............................. 36,833 November 2004 36,833 $10.10.............................. 4,848 October 2004 4,848 $11.37.............................. 3,518 March 2006 3,518 $13.00.............................. 6,833 November 2005 6,833 $14.64.............................. 4,949 February 2006 4,949 $14.92.............................. 3,518 September 2006 3,518 $15.29.............................. 3,518 March 2007 3,518 $15.56.............................. 26,995 March 2007 26,995 $17.42.............................. 3,518 September 2006 3,518 $18.88.............................. 160,500 December 2010 $18.95.............................. 3,518 September 2006 3,518 $20.60.............................. 3,518 March 2008 3,518 $26.78.............................. 3,518 September 2006 3,518 $30.02.............................. 3,518 September 2006 3,518 ------- ------- 379,406 218,906 ======= =======
The per share weighted-average fair value of stock options granted during 2000, 1999, and 1998 was $5.18, $6.17 and $5.91, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: 2000--expected volatility 25.6%, expected dividend yield 3.5%, risk-free interest rate of 5.9%, and an expected life of 7.0 years; 1999--expected volatility 25.0%, expected dividend yield 3.0%, risk-free interest rate of 6.0%, and an expected life of 7.0 years; and 1998--expected volatility .05%, expected dividend yield 1.0%, risk-free interest rate of 5.0%, and an expected life of 7.0 years. Total compensation expense recorded for the fixed stock option plans was $253,000, $53,000 and $90,000 for the years ended December 31, 2000, 1999 and 1998, respectively. F-21 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) Additionally, the Company and two of its subsidiary banks maintain deferral of compensation plans for certain directors who are not employees of the Company. Under the plans, a non-employee director may choose to have all or part of the cash and/or stock equivalents he would normally receive as compensation deferred for future payment, at such time and in such manner as the director specifies at the time of the election, so long as any annuity payment period does not exceed ten years. The cash portion of the deferral of compensation account earns interest at a rate which approximates the Company's short-term borrowing rate. Dividends earned on stock equivalent portions are credited to the deferral or compensation account in the form of additional stock equivalents. At December 31, 2000 and 1999, the amount deferred under the terms of these plans totaled $1,285,000 and $875,000, respectively. For the years ending December 31, 2000, 1999 and 1998, approximately $410,000, $418,000 and $300,000, respectively, was expensed under these plans. One of the Company's subsidiary banks has a deferred compensation plan whereby directors may elect to have all or a portion of their compensation deferred. Expense recognized under the plan was $18,000, $18,000 and $23,000 in 2000, 1999 and 1998, respectively. At December 31, 2000, amounts payable under the plan totaled $98,000. During 1999, the Company completed the termination of a merged bank's leveraged employee stock ownership plan as a portion of the ESOP's unallocated shares were sold on the open market in order to satisfy the ESOP's debt with the remaining shares allocated to the participants. Compensation expense related to the ESOP was not material to the Company for 2000, 1999, or 1998. 12. Income Taxes The components of the provision for income taxes consist of the following for the years ended December 31, 2000, 1999 and 1998 (in thousands):
2000 1999 1998 ------- ------- ------ Current: Federal.............................................. $ 7,995 $10,722 $7,989 State................................................ 199 1,085 760 ------- ------- ------ Total current expense.................................. 8,194 11,807 8,749 Deferred: Federal.............................................. 2,270 (1,485) (655) State................................................ 387 (85) 119 ------- ------- ------ Total deferred expense (benefit)....................... 2,657 (1,570) (536) Change in valuation allowance.......................... (59) ------- ------- ------ Total provision for income taxes....................... $10,851 $10,237 $8,154 ======= ======= ======
F-22 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) Temporary differences and carryforwards which give rise to a significant portion of the Company's deferred tax assets and liabilities for the years ended December 31, 2000 and 1999 are as follows (in thousands):
2000 1999 ------- ------- Deferred tax assets: Loan loss reserve............................................ $ 6,207 $ 5,762 Other real estate owned basis difference..................... 7 7 Net operating loss........................................... 146 40 Deferred compensation........................................ 2,314 1,630 Loan fees.................................................... 510 527 Unrealized loss on securities................................ 457 3,424 Other........................................................ 493 138 ------- ------- Total deferred tax assets...................................... 10,134 11,528 Deferred tax liabilities: Depreciation and basis difference............................ 7,214 2,908 Other........................................................ 225 251 Core deposits................................................ 178 193 ------- ------- Total deferred tax liabilities................................. 7,617 3,352 ------- ------- Net deferred tax assets........................................ $ 2,517 $ 8,176 ======= =======
The Company did not establish a valuation allowance related to the deferred tax asset recorded at December 31, 2000 and 1999 due to taxes paid within the carryback period being sufficient to offset future deductions resulting from the reversal of these temporary differences. Total provision for income taxes differs from the amount which would be provided by applying the statutory federal income tax rate to pretax earnings as illustrated below for the years ended December 31, 2000, 1999 and 1998 (in thousands):
2000 1999 1998 ------- ------- ------ Provision for income taxes at statutory federal income tax rate.................................... $12,340 $11,396 $8,687 Increase (decrease) resulting from: State income taxes, net of federal income tax benefit.......................................... 363 645 541 Change in valuation allowance..................... (59) Tax free interest income.......................... (1,383) (1,283) (677) Nondeductible meals and entertainment............. 96 78 92 Disallowed interest expense deduction............. 60 97 87 Goodwill and core deposit amortization............ 153 134 103 General business and other credits................ (861) (830) (706) Net operating losses.............................. (55) Other, net........................................ 83 141 ------- ------- ------ Total provision for income taxes.................... $10,851 $10,237 $8,154 ======= ======= ======
For Federal income tax purposes, one of the Company's subsidiaries has net operating loss carryforwards totaling $310,000 and $488,000 at December 31, 2000 and 1999, respectively, which will expire beginning in 2006. For state income tax purposes, two of the Company's subsidiaries have net operating loss carryforwards and tax credits totaling $464,000 and $817,000 at December 31, 2000 and 1999, respectively. F-23 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) 13. Noninterest Expense The following table sets forth, for the years ended December 31, 2000, 1999 and 1998, the principal components of noninterest expense (in thousands):
2000 1999 1998 ------- ------- ------- Salaries and employee benefits......................... $42,531 $37,452 $36,021 Net occupancy expense.................................. 8,232 7,265 6,724 Amortization of goodwill............................... 501 387 302 Advertising............................................ 1,004 1,028 976 Banking assessments.................................... 616 482 473 Data processing expenses............................... 1,291 1,442 2,435 Legal and professional fees............................ 2,286 2,911 3,609 Noncredit losses, net of recoveries.................... 130 206 129 Other.................................................. 13,783 11,282 10,485 ------- ------- ------- Total noninterest expense.............................. $70,374 $62,455 $61,154 ======= ======= =======
14. Earnings Per Share The following table reflects the reconciliation, after adjusting for stock splits, of the basic EPS computation to the diluted EPS computation (in thousands, except per share data):
Per Share Income Shares Amount ------- ------ --------- 2000 Basic EPS net income................................... $24,392 11,057 $2.21 ===== Effect of dilutive securities options.................. 181 ------- ------ Diluted EPS............................................ $24,392 11,238 $2.17 ======= ====== ===== 1999 Basic EPS net income................................... $22,271 11,079 $2.01 ===== Effect of dilutive securities options.................. 194 ------- ------ Diluted EPS............................................ $22,271 11,273 $1.98 ======= ====== ===== 1998 Basic EPS net income................................... $17,372 10,804 $1.61 ===== Effect of dilutive securities options.................. 369 ------- ------ Diluted EPS............................................ $17,372 11,173 $1.55 ======= ====== =====
F-24 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 15. Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value. Cash, Due From Banks, Interest-Bearing Cash Balances, and Federal Funds Sold--The carrying amount is a reasonable estimate of fair value. Investment, Available for Sale, and Trading Securities--Fair value is based on quoted market prices or dealer quotes. Loans--The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Deposits--The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities. Federal Funds Purchased, Short-Term Borrowings, and Long-Term Debt--The carrying amount is a reasonable estimate of fair value. Commitments to Extend Credit and Standby Letters of Credit--All commitments to extend credit and standby letters of credit have original terms, at their issuance, of one year or less; therefore, the fair value of these instruments does not materially differ from their stated value. The estimated fair values of financial instruments at December 31, 2000 and 1999 are as follows (in thousands):
2000 1999 --------------------- --------------------- Carrying Carrying Amount Fair Value Amount Fair Value ---------- ---------- ---------- ---------- Financial assets: Cash and due from banks.......... $ 76,558 $ 76,558 $ 73,125 $ 73,125 Interest-bearing deposits in other banks..................... 7,630 7,630 6,768 6,768 Federal funds sold and securities purchased under agreements to resell.......................... 27,818 27,818 33,568 33,568 Investment securities and securities available for sale... 375,312 376,035 345,123 345,245 Trading securities............... 577 577 2,701 2,701 Loans............................ 1,614,691 1,647,701 1,328,775 1,326,628 Financial liabilities: Deposits......................... 1,703,949 1,641,736 1,442,155 1,440,919 Federal funds purchased; securities sold under agreements to resell; and treasury, tax, and loan account................ 166,017 166,017 138,077 138,077 Short-term borrowings............ 83,439 83,439 18,389 18,389 Long-term debt................... 83,926 84,077 124,005 113,697
F-25 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 16. Parent Company The condensed financial information of the parent company only as of December 31, 2000 and 1999, and for the years ended December 31, 2000, 1999 and 1998 is presented as follows (in thousands):
2000 1999 -------- -------- Balance Sheets Assets: Cash...................................................... $ 2,908 $ 3,964 Securities available for sale............................. 80 81 Investments in subsidiaries............................... 182,602 147,994 Intangibles............................................... 6,124 6,466 Other assets.............................................. 3,190 1,251 -------- -------- Total assets................................................ $194,904 $159,756 ======== ======== Liabilities and stockholders' equity: Accounts payable.......................................... $ 4,590 $ 4,899 Accrued interest payable.................................. 411 213 Short and long-term debt.................................. 27,439 16,389 -------- -------- Total liabilities........................................... 32,440 21,501 Stockholders' equity: Common stock.............................................. 11,187 11,187 Additional paid-in capital................................ 85,998 81,939 Retained earnings......................................... 69,648 54,897 Treasury stock............................................ (3,431) (3,226) Accumulated other comprehensive loss, net of taxes........ (938) (6,542) -------- -------- Total stockholders' equity.................................. 162,464 138,255 -------- -------- Total liabilities and stockholders' equity.................. $194,904 $159,756 ======== ========
2000 1999 1998 ------- ------- ------- Statements of Income Income: Dividends from subsidiaries......................... $ 8,566 $11,909 $ 7,496 Securities gains.................................... 1 148 139 Other............................................... 40 36 41 ------- ------- ------- 8,607 12,093 7,676 ======= ======= ======= Expenses: Interest expense.................................... 1,527 816 870 Other expenses...................................... 3,089 2,771 3,797 ------- ------- ------- Total expenses........................................ 4,616 3,587 4,667 ------- ------- ------- Income before equity in undistributed earnings of subsidiaries and taxes............................... 3,991 8,506 3,009 Equity in undistributed earnings of subsidiaries...... 18,803 12,578 13,059 ------- ------- ------- Income before income taxes............................ 22,794 21,084 16,068 Income tax benefit.................................... 1,598 1,187 1,304 ------- ------- ------- Net income............................................ $24,392 $22,271 $17,372 ======= ======= =======
F-26 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued)
2000 1999 1998 -------- -------- -------- Statements of Cash Flows Cash flows from operating activities: Net income....................................... $ 24,392 $ 22,271 $ 17,372 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of investment in consolidated subsidiaries in excess of net assets acquired and core deposits............................ 342 338 334 Equity in undistributed earnings of subsidiaries................................. (18,777) (12,578) (13,059) Deferred tax benefit.......................... (1,014) (87) (474) Other......................................... 601 285 222 Increase (decrease) in other assets and liabilities.................................. 2,355 (2,620) 4,147 -------- -------- -------- Net cash provided by operating activities.... 7,899 7,609 8,542 -------- -------- -------- Cash flows from investing activities: Additional investment in subsidiaries............ (10,200) (1,500) Decrease in securities available for sale........ 256 62 -------- -------- -------- Net cash (used in) provided by investing activities.................................. (10,200) 256 (1,438) -------- -------- -------- Cash flows from financing activities: Dividends on common stock........................ (9,289) (7,958) (5,626) Change in other liabilities...................... 9 (303) Exercise of stock options........................ 63 215 1,858 Net (decrease) increase in borrowings............ 11,050 4,889 (3,837) Purchase of treasury stock....................... (588) Treasury stock acquired for purchase business combination..................................... (3,226) -------- -------- -------- Net cash provided by (used in) financing activities.................................. 1,245 (6,383) (7,605) -------- -------- -------- Net (decrease) increase in cash.............. (1,056) 1,482 (501) Cash, beginning of year.......................... 3,964 2,482 2,983 -------- -------- -------- Cash, end of year................................ $ 2,908 $ 3,964 $ 2,482 ======== ======== ========
17. Regulatory The subsidiary banks are required by law to maintain reserves in cash or deposits with the Federal Reserve Bank or other banks. At December 31, 2000, the required reserves totaled $22,983,000. At December 31, 2000 and 1999, securities with carrying values of $241,577,000 and $178,398,000, respectively, were pledged to secure U.S. government deposits and other public funds for purposes as required or permitted by law. The Company has a policy of collecting amounts from its subsidiaries sufficient to cover expenses of the Company and to service Company debt. Such amounts have been received in the form of dividends declared by the subsidiaries. Payment of dividends is subject to the financial condition of the subsidiaries and the Company's judgment as to the desirability of utilizing alternative sources of funds. The payment of dividends by the subsidiary banks is also subject to various regulatory requirements. At December 31, 2000, $41,214,000 of the retained earnings of the subsidiary banks are available for payment of dividends to the Company under the various regulatory requirements, without special approval from the applicable regulators. The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory--and possibly additional F-27 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) discretionary--actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company maintain minimum amounts and ratios (set forth in the table below) of total qualifying capital and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2000, that the Company meets all capital adequacy requirements to which it is subject. As of December 31, 2000, the most recent notification from the Federal Reserve Bank categorized the Company as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized the Company must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institution's category. The actual capital amounts and ratios of the Company are presented in the table below (in thousands):
To Be Well For Capital Capitalized Under Adequacy Prompt Corrective Actual Purposes Action Provisions -------------- -------------- ------------------- Amount Ratio Amount Ratio Amount Ratio -------- ----- -------- ----- ---------- -------- As of December 31, 2000: Total qualifying capital (to risk-weighted assets).................. $170,632 10.04% $135,962 8.00% $ 169,952 10.00% Tier I capital (to risk- weighted assets)......... $149,765 8.82% $ 67,921 4.00% $ 101,851 6.00% Tier I capital (to average assets).................. $149,765 6.80% $ 88,097 4.00% $ 110,121 5.00% As of December 31, 1999: Total qualifying capital (to risk-weighted assets)................ $152,790 10.62% $115,096 8.00% $ 143,870 10.00% Tier I capital (to risk- weighted assets)....... $134,922 9.38% $ 57,536 4.00% $ 86,304 6.00% Tier I capital (to average assets)........ $134,922 7.18% $ 75,165 4.00% $ 93,957 5.00%
The actual capital amounts and ratios of National Bank of Commerce, the Company's most significant subsidiary, are presented in the table below (in thousands):
To Be Well For Capital Capitalized Under Adequacy Prompt Corrective Actual Purposes Action Provisions ------------- ------------- ------------------ Amount Ratio Amount Ratio Amount Ratio ------- ----- ------- ----- --------- -------- As of December 31, 2000: Total qualifying capital (to risk-weighted assets)....... $83,688 10.97% $61,030 8.00% $ 76,288 10.00% Tier I capital (to risk- weighted assets)............ $74,678 9.79% $30,512 4.00% $ 45,768 6.00% Tier I capital (to average assets)..................... $74,678 7.78% $38,395 4.00% $ 47,994 5.00% As of December 31, 1999: Total qualifying capital (to risk-weighted assets)....... $71,854 10.01% $57,426 8.00% $ 71,782 10.00% Tier I capital (to risk- weighted assets)............ $63,454 8.84% $28,712 4.00% $ 43,068 6.00% Tier I capital (to average assets)..................... $63,454 7.26% $34,961 4.00% $ 43,701 5.00%
F-28 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) 18. Segment Reporting In addition to traditional commercial and consumer retail banking products, the Company offers trust services, mortgage lending services, investment services, securities brokerage services and insurance services to its customers. The trust division manages the assets of both corporate and individual customers located primarily in the markets served by the Company. The mortgage lending division makes home loans to individuals throughout the state of Alabama. The majority of the loans made are sold to corporate investors, who also service the loans. The investment services division sells fixed income securities and provides trading services to both individual and corporate customers. The securities brokerage division is a full service broker-dealer operation. The insurance division offers a full line of insurance products including life, property and casualty insurance to individual and corporate customers primarily in the state of Alabama. These five divisions, along with the commercial and retail banking division, are considered the Company's reportable segments for financial disclosure purposes. The accounting policies of the segments are the same as those described in the summary of significant accounting policies except that certain overhead expenses are not allocated among the segments. Additionally, the fixed assets utilized by the various divisions are not separately identified by management. Accordingly, the results of operations for the trust, mortgage lending, investment services, securities brokerage, and insurance segments are not indicative of the results which would be achieved if each of the segments were a separate company. Intersegment transactions are accounted for at fair market value. F-29 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) The Company's reportable segments represent the distinct major product lines the Company 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 the Company's consolidated totals (in thousands):
Investment Securities Mortgage Retail and Services Brokerage Trust Lending Insurance Commercial Corporate Elimination Division Division Division Division(2) Division Banking Overhead((1) Entries Total ---------- ---------- -------- ----------- --------- ---------- ------------ ----------- -------- Year ended December 31, 2000: Interest income....... $ $3,700 $ $ 424 $ 23 $159,133 $ (61) $(1,815) $161,404 Interest expense...... 1,805 315 14 84,592 1,527 (1,815) 86,438 ------ ------ ------ ------ ------ -------- ------- ------- -------- Net interest income... 1,895 109 9 74,541 (1,588) 74,966 Provision for loan losses............... 2,003 2,003 Noninterest income.... 5,867 5,413 2,279 3,866 2,099 13,115 41 32,680 Noninterest expense... 5,377 6,271 1,308 2,746 1,837 49,807 3,028 70,374 ------ ------ ------ ------ ------ -------- ------- ------- -------- Net income before provision for income taxes and minority interest............. $ 490 $1,037 $ 971 $1,229 $ 271 $ 35,846 $(4,575) $ $ 35,269 ====== ====== ====== ====== ====== ======== ======= ======= ======== Year ended December 31, 1999: Interest income....... $ $2,053 $ $ 527 $ 16 $123,904 $ (93) $ (739) $125,668 Interest expense...... 955 348 9 57,894 816 (739) 59,283 ------ ------ ------ ------ ------ -------- ------- ------- -------- Net interest income... 1,098 179 7 66,010 (909) 66,385 Provision for loan losses............... 1,954 1,954 Noninterest income.... 6,624 3,707 2,190 4,240 1,068 12,544 184 30,557 Noninterest expense... 5,957 4,281 1,149 3,043 875 44,472 2,678 62,455 ------ ------ ------ ------ ------ -------- ------- ------- -------- Net income before provision for income taxes and minority interest............. $ 667 $ 524 $1,041 $1,376 $ 200 $ 32,128 $(3,403) $ $ 32,533 ====== ====== ====== ====== ====== ======== ======= ======= ======== Year ended December 31, 1998: Interest income....... $ $1,497 $ $ 649 $114,448 $ (94) $ (796) $115,704 Interest expense...... 401 395 55,685 870 (796) 56,555 ------ ------ ------ ------ -------- ------- ------- -------- Net interest income... 1,096 254 58,763 (964) 59,149 Provision for loan losses............... 1,796 1,796 Noninterest income.... 9,230 2,307 2,101 4,405 11,128 179 29,350 Noninterest expense... 7,557 2,943 1,169 2,666 43,117 3,702 61,154 ------ ------ ------ ------ -------- ------- ------- -------- Net income before provision for income taxes and minority interest............. $1,673 $ 460 $ 932 $1,993 $ 24,978 $(4,487) $ $ 25,549 ====== ====== ====== ====== ======== ======= ======= ========
- -------- (1) Corporate overhead is comprised primarily of compensation and benefits for certain members of management, merger related costs, interest expense on parent company debt, amortization of intangibles and other expenses. (2) Mortgage lending includes allocated intercompany income totaling $335,000, $247,000 and $102,000 at December 31, 2000, 1999 and 1998, respectively. F-30 ALABAMA NATIONAL BANCORPORATION AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS--(Continued) 19. Related Party Transactions In addition to the previously disclosed related party transactions, the Company received trust fees from related parties of approximately $631,000 in 2000, $629,000 in 1999, and $700,000 in 1998. 20. Treasury Stock Repurchase Plan In the second quarter of 2000, the Board of Directors of the Company authorized the repurchase of up to 250,000 shares of the Company's common stock. On October 10, 2000, this stock repurchase program was rescinded by the Board of Directors. A total of 30,000 shares were repurchased prior to the rescission of this plan. 21. Subsequent Event On October 10, 2000, the Company entered into a merger agreement with Peoples State Bank, located in Groveland, Florida. Under the terms of the merger agreement, Peoples State Bank merged with a newly formed subsidiary of the Company, whereby Peoples State Bank became a wholly owned subsidiary of the Company. The Company issued approximately 735,000 shares of its common stock to existing Peoples State Bank shareholders at an exchange ratio of 1.164 shares of the Company's common stock for each share of Peoples State Bank common stock. The merger was completed on January 31, 2001. As of December 31, 2000, Peoples State Bank had assets of approximately $122.6 million (unaudited) and net income of $1.1 million (unaudited) for the year ended December 31, 2000. The merger is expected to be accounted for as a pooling of interests. F-31 EX-10.16 2 0002.txt PROMISSORY NOTE Exhibit 10.16 ------------- $19,800.00 Birmingham, Alabama April 15, 2000 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 no/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 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, 2001. 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 ($1,980.00) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2001. 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 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 -2- 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). 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 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-10.19 3 0003.txt PROMISSORY NOTE Exhibit 10.19 ------------- $83,400.00 Birmingham, Alabama April 15, 2000 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 no/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 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, 2001. 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 ($8,340.00) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2001. 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: (1) 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. (2) 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. (3) 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. (4) 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. (5) 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. (6) Event of Default is defined in Section 6. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (7) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (8) 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. (9) 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. (10) 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." (11) 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. (12) 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. -------------------------- (1) 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. (2) 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. (3) 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 (1) such time as all amounts due hereunder are paid in full or (2) 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): (1) 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 (2) 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 (3) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (4) 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 -2- Borrower's death or Total Disability; or (5) 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. 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. ------------------------------------------ (1) As to the obligations evidenced by this Note, each Obligor severally (a) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (b) 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 (c) 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) Each Obligor severally (a) 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; (b) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (c) 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 (d) 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 (1) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (2) 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"); (3) 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; (4) 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; (5) 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; (6) agrees that service in accordance with Section 18 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 (7) 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, (1) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (2) exclude voluntary prepayments and the effects thereof, (3) consider all the Obligations as one general obligation of the Borrower, and (4) "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 - -------- (1) 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. (2) 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. (3) 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, (a) 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 (b) 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. (4) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (a) 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, (b) to exercise self-help remedies such as set-off, or (c) 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. (5) 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-10.22 4 0004.txt PROMISSORY NOTE Exhibit 10.22 ------------- $28,000.00 Birmingham, Alabama April 15, 2000 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 no/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 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, 2001. 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 ($2,800.00) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2001. 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: (1) 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. (2) 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. (3) 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. (4) 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. (5) 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. (6) Event of Default is defined in Section 6. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (7) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (8) 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. (9) 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. (10) 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." (11) 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. (12) 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. -------------------------- (1) 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. (2) 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. (3) 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 (1) such time as all amounts due hereunder are paid in full or (2) 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): (1) 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 (2) 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 (3) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (4) 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 -2- Borrower's death or Total Disability; or (5) 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. 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. ------------------------------------------ (1) As to the obligations evidenced by this Note, each Obligor severally (a) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (b) 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 (c) 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) Each Obligor severally (a) 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; (b) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (c) 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 (d) 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 (1) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (2) 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"); (3) 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; (4) 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; (5) 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; (6) agrees that service in accordance with Section 18 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 (7) 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, (1) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (2) exclude voluntary prepayments and the effects thereof, (3) consider all the Obligations as one general obligation of the Borrower, and (4) "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 - -------- (1) 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. (2) 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. (3) 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, (a) 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 (b) 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. (4) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (a) 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, (b) to exercise self-help remedies such as set-off, or (c) 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. (5) 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-10.25 5 0005.txt PROMISSORY NOTE Exhibit 10.25 ------------- $29,400.00 Birmingham, Alabama April 15, 2000 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 no/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 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, 2001. 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 ($2,940.00) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2001. 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: (1) 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. (2) 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. (3) 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. (4) 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. (5) 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. (6) Event of Default is defined in Section 6. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (7) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (8) 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. (9) 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. (10) 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." (11) 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. (12) 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. -------------------------- (1) 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. (2) 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. (3) 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 (1) such time as all amounts due hereunder are paid in full or (2) 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): (1) 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 (2) 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 (3) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (4) 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 -2- Borrower's death or Total Disability; or (5) 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. 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. ------------------------------------------ (1) As to the obligations evidenced by this Note, each Obligor severally (a) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (b) 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 (c) 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) Each Obligor severally (a) 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; (b) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (c) 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 (d) 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 (1) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (2) 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"); (3) 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; (4) 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; (5) 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; (6) agrees that service in accordance with Section 18 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 (7) 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, (1) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (2) exclude voluntary prepayments and the effects thereof, (3) consider all the Obligations as one general obligation of the Borrower, and (4) "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 - -------- (1) 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. (2) 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. (3) 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, (a) 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 (b) 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. (4) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (a) 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, (b) to exercise self-help remedies such as set-off, or (c) 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. (5) 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-10.28 6 0006.txt PROMISSORY NOTE Exhibit 10.28 ------------- $23,360.00 Birmingham, Alabama April 15, 2000 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 no/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 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, 2001. 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 ($2,336.00) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2001. 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: (1) 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. (2) 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. (3) 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. (4) 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. (5) 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. (6) Event of Default is defined in Section 6. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (7) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (8) 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. (9) 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. (10) 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." (11) 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. (12) 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. -------------------------- (1) 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. (2) 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. (3) 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 (1) such time as all amounts due hereunder are paid in full or (2) 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): (1) 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 (2) 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 (3) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (4) 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 -2- Borrower's death or Total Disability; or (5) 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. 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. ------------------------------------------ (1) As to the obligations evidenced by this Note, each Obligor severally (a) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (b) 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 (c) 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) Each Obligor severally (a) 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; (b) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (c) 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 (d) 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 (1) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (2) 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"); (3) 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; (4) 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; (5) 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; (6) agrees that service in accordance with Section 18 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 (7) 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, (1) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (2) exclude voluntary prepayments and the effects thereof, (3) consider all the Obligations as one general obligation of the Borrower, and (4) "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 - -------- (1) 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. (2) 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. (3) 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, (a) 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 (b) 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. (4) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (a) 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, (b) to exercise self-help remedies such as set-off, or (c) 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. (5) 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-10.31 7 0007.txt PROMISSORY NOTE Exhibit 10.31 ------------- $18,283.00 Birmingham, Alabama April 15, 2000 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 eighteen thousand two hundred eighty-three and no/100 Dollars ($18,283.00), 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, 2001. 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 ($1,828.30) of this Note shall be forgiven as of each such anniversary, commencing April 15, 2001. 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: (1) 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. (2) 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. (3) 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. (4) 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. (5) 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. (6) Event of Default is defined in Section 6. An Event of Default ---------------- "exists" if an Event of Default has occurred and is continuing. (7) Interest Rate Determination Date means the fifteenth (15) day of -------------------------------- April of each year during the term hereof. (8) 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. (9) 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. (10) 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." (11) 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. (12) 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. -------------------------- (1) 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. (2) 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. (3) 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 (1) such time as all amounts due hereunder are paid in full or (2) 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): (1) 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 (2) 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 (3) default shall be made in the payment when due of any of the obligations evidenced by this Note or any part thereof; or (4) 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 -2- Borrower's death or Total Disability; or (5) 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. 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. ------------------------------------------ (1) As to the obligations evidenced by this Note, each Obligor severally (a) waives demand, presentment, protest, notice of protest, suit and all other requirements necessary to hold liable such Obligor or any of the other Obligors; (b) 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 (c) 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) Each Obligor severally (a) 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; (b) agrees upon request such Obligor will furnish financial statements to the Holder and grant the Holder access to such Obligor's books and records; (c) 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 (d) 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 (1) -------------------------- acknowledges that this Note will be accepted by the Lender and performed by the Borrower in the State of Alabama; (2) 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"); (3) 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; (4) 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; (5) 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; (6) agrees that service in accordance with Section 18 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 (7) 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, (1) characterize any nonprincipal payment as an expense, fee or premium rather than as interest, (2) exclude voluntary prepayments and the effects thereof, (3) consider all the Obligations as one general obligation of the Borrower, and (4) "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 - -------- (1) 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. (2) 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. (3) 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, (a) 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 (b) 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. (4) No provision of, nor the exercise of any rights under this Section, shall limit the right of any party (a) 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, (b) to exercise self-help remedies such as set-off, or (c) 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. (5) 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-10.34 8 0008.txt NON-QUALIFIED OPTION AGREEMENT Exhibit 10.34 ------------- ALABAMA NATIONAL BANCORPORATION 1999 LONG TERM INCENTIVE PLAN ----------------------------- Non-Qualified Stock Option Agreement Date of Grant: January 1, 2000 This Non-Qualified Stock Option Agreement (this "Agreement") is entered into as of December 31, 1999, between JOHN R. BRAGG ("Optionee") and Alabama National BanCorporation, a Delaware corporation (the "Company"). Recitals -------- Whereas, the Company has previously adopted the 1999 Long Term Incentive Plan ("Plan"); Whereas, the Committee (as defined in the Plan) desires to grant a non- qualified stock option to Optionee pursuant to the Plan; and Whereas, Optionee desires to accept such option. Agreement --------- NOW, THEREFORE, in consideration of the foregoing facts and the mutual promises set forth herein, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set --------------- forth, the Company, with the approval and at the direction of the Committee, hereby grants to the Optionee, as of the date first written above (the "Date of Grant"), an option to purchase up to Five Thousand (5,000) shares of Stock (the "Granted Shares") at a price of $18.875 per share, the Fair Market Value of the Stock on the Date of Grant. Such option is hereinafter referred to as the "Option," and the shares of Stock purchased upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is not --- intended by the parties to be, and shall not be treated as, an incentive stock --- option (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended). 2. Vesting of Option. Subject to such further limitations as are ----------------- provided herein, the Option shall become exercisable during the term of Optionee's employment in three (3) equal annual installments of one-third (1/3) of the Granted Shares, the first installment to be exercisable on the January 1, 2003, with an additional one-third of such Granted Shares becoming exercisable on each of January 1, 2004 and January 1, 2005. The installments shall be cumulative (i.e. this Option may be exercised, as to any or all Granted Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration of the Option Term (as hereinafter defined) or other termination of this Option). 3. Option Term. The Option shall not be exercisable more than ten (10) ----------- years after the Date of Grant (the "Option Term"). 4. Method of Exercise. Subject to Section 2 above and the other terms ------------------ and conditions of this Agreement, the Option may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, payment in full or in part may also be made in the form of (a) unrestricted Stock owned by the Optionee or (b) Restricted Stock owned by the Optionee awarded under the Plan, based, in either case, on the Fair Market Value of such Stock on the date the Option is exercised, as determined by the Committee. If payment of the Option exercise price is made in whole or in part with shares of Restricted Stock, the Option Shares received upon the exercise of such Option shall be restricted or deferred, as the case may be, in accordance with the original term of the Restricted Stock award in question, except that the Committee may direct that such restrictions or deferral provisions shall apply only to the number of such Option Shares equal to the number of shares of Restricted Stock surrendered upon the exercise of such Option. No Option Shares shall be issued until full payment therefor has been made. Optionee shall have the rights to dividends or other rights of a stockholder with respect to Option Shares subject to the Option when Optionee has given written notice of exercise and has paid in full for such Option Shares. 5. Transferability of Options. The Option shall not be transferable by -------------------------- Optionee other than by will or by the laws of descent and distribution and shall be exercisable, during Optionee's lifetime, only by Optionee; provided, however, that the Option shall be transferable to members of Optionee's immediate family (which shall include Optionee's spouse, children and grandchildren, whether natural or adopted) and to trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement, a transferred Option may be exercised by the transferee only to the extent that Optionee would have been entitled had the Option not been transferred. 6. Termination of Employment by Reason of Death. If Optionee's -------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of death, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, by the legal representative of the estate or by the legatee of Optionee under the will of Optionee, for a period of three (3) years from the date of death or until the expiration of the Option Term, whichever period is the shorter. 7. Termination of Employment by Reason of Disability. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Disability, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. 8. Termination of Employment by Reason of Retirement. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Retirement (with Committee consent) under a formal plan or policy of the Company, then the Option may thereafter be exercised for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that Optionee could have exercised the Option as of the date of Retirement; and if Optionee dies within such period, any unexercised Option that was exercisable at the time of death shall thereafter be exercisable for the remainder of such period. Notwithstanding anything to the contrary herein, the Committee may, in connection with such Retirement, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. 9. Other Termination of Employment. If Optionee's employment with the ------------------------------- Company and/or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than (a) death, (b) Disability or (c) Retirement, the Option may thereafter be exercised , in whole or in part, for a period of three (3) months following such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that the Option was exercisable as of the date of termination of employment and had not previously been exercised. -2- 10. Change in Control. ----------------- (a) In the case of a merger or consolidation in which the Company is not the surviving corporation, or a sale or other transfer of all or substantially all of the business or property of the Company (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets), or liquidation or dissolution of the Company, or in the event of a tender offer or any other change involving a threatened change in control of the Company which, in the opinion of the Committee, could deprive Optionee of the benefits intended to be conferred by the award granted hereunder, the Committee may, in anticipation of any such transaction event, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. Upon the Committee's determination to make any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. (b) In addition, and not as a limitation, to rights conferred in Section 10(a) above, in the event of a Change in Control (as defined below), the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such Change in Control or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. (c) For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied: (i) Any Person (other than those Persons in control of the Company as of the Date of Grant, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) Individuals, who as of the Date of Grant, constitute the Board of Directors of the Company (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two- thirds (2/3) of the Directors then in office who either were Directors as of the Date of Grant or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or (iii) Consummation of: (A) a complete liquidation of the Company; or (B) a sale or disposition of all or substantially all the Company's business or assets (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets); or (C) a merger, consolidation or reorganization of the Company with or involving any other corporation or entity, other than a merger, consolidation or reorganization that -3- would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization. For purposes of this Section 10(c), the following terms have the following meanings: "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ("Exchange Act"). "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). 11. Stock Certificates. All certificates for Option Shares delivered ------------------ under this Agreement shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed, any applicable Federal or state securities law, and the terms and conditions of this Agreement, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12. Withholding Taxes. ----------------- (a) Optionee shall, no later than the date as of which the value of Option Shares first becomes includable in the gross income of Optionee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under this Agreement and the Plan shall be conditioned on such payment or arrangements, and the Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee. (b) Subject to applicable laws and regulations regarding transactions in Stock by persons who are deemed insiders, Optionee may elect to have the withholding tax obligations or, if the Committee so determines, any additional tax obligation with respect to any Option Shares acquired hereunder satisfied by (i) having the Company withhold Option Shares otherwise deliverable to the participant with respect to the Option or (ii) delivering to the Company shares of unrestricted Stock. 13. Adjustment of and Changes in Common Stock of the Company. In the -------------------------------------------------------- event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. Upon the Committee's determination of any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. 14. Employment Not Affected. Neither the granting of the Option nor its ----------------------- exercise shall be construed as granting Optionee any right with respect to continuance of employment by the Company or a Subsidiary. The right -4- of the Company and Subsidiaries to terminate at will the Optionee's employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by the Company and acknowledged by Optionee. 15. Notice. Any notice to the Company provided for in this Agreement ------ shall be addressed to it in care of its Secretary at its executive offices at 1927 First Avenue North, Birmingham, Alabama 35203, and any notice to Optionee shall be addressed to Optionee at the current address shown on the payroll records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 16. Incorporation of Plan by Reference. The Option is granted pursuant to ---------------------------------- the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. Terms used herein not otherwise defined shall have the meaning assigned to them in the Plan. 17. Governing Law. The validity, construction, interpretation and effect ------------- of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Alabama without regard to principles of conflict of laws, except to the extent preempted by federal law, which shall to such extent govern, and Title 9 of the U.S. Code. 18. Dispute Resolution; Arbitration. ------------------------------- (a) Basis for Arbitration. The parties hereto agree that the subject --------------------- matter of this Agreement and any agreement that may be entered in connection therewith both involve and affect interstate commerce within the meaning of the commerce clause of the United States Constitution and Title 9 of the U. S. Code. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced. The parties hereto understand and acknowledge that each party is waiving his or its right to a jury trial of Disputes (as defined below) by entering into this Agreement. (b) Mandatory Arbitration of Disputes. Any action, dispute, claim, --------------------------------- counterclaim or controversy ("Dispute" or "Disputes"), between or among the parties, including, without limitation, any claim based on, or arising from, an alleged tort or contract, 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 any commitment or provision set forth in this Agreement or any of its exhibits or in any other agreement entered by the parties in connection with this Agreement; any action taken (or any omission to take any action) in connection with any of the foregoing; any past, present and future agreements, whether written or oral, between or among the parties, including, without limitation, this Agreement; or any agreement entered in connection with this Agreement. 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 ("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) Selection of Arbitrator. Whenever an arbitration is required ----------------------- under this Section 18, the arbitrator shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The AAA shall designate a panel of ten (10) potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the parties shall designate, within thirty (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 (3) arbitrators shall determine the resolution of the Dispute. (d) Place of Arbitration. Whenever an arbitration is required, such -------------------- arbitration shall be conducted in Birmingham, Alabama. -5- (e) Miscellaneous. Any arbitration questions arising under this ------------- Agreement shall be governed in accordance with Title 9 of the U. S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrator, shall pay an equal share of the arbitrators' fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrators' fees and court costs) to the prevailing party. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Non-Qualified Stock Option Agreement, and Optionee has placed his or her signature hereon, effective as of the Date of Grant. Alabama National BanCorporation By: /s/ John H. Holcomb, III -------------------------------------------- Its: Chairman and CEO ---------------------------------------- AGREED TO AND ACCEPTED: By: /s/ John R. Bragg -------------------------------------------- Optionee John R. Bragg ------------------------------------------------ (Print Name) 3339 E. Briarcliff Road ------------------------------------------------ (Address) Birmingham, Alabama 35223 ------------------------------------------------ (City) (State) (Zip) -6- EX-10.35 9 0009.txt NON-QUALIFIED OPTION AGREEMENT Exhibit 10.35 ------------- ALABAMA NATIONAL BANCORPORATION 1999 LONG TERM INCENTIVE PLAN ----------------------------- Non-Qualified Stock Option Agreement Date of Grant: January 1, 2000 This Non-Qualified Stock Option Agreement (this "Agreement") is entered into as of December 31, 1999, between JOHN H. HOLCOMB, III ("Optionee") and Alabama National BanCorporation, a Delaware corporation (the "Company"). Recitals -------- Whereas, the Company has previously adopted the 1999 Long Term Incentive Plan ("Plan"); Whereas, the Committee (as defined in the Plan) desires to grant a non- qualified stock option to Optionee pursuant to the Plan; and Whereas, Optionee desires to accept such option. Agreement --------- NOW, THEREFORE, in consideration of the foregoing facts and the mutual promises set forth herein, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set --------------- forth, the Company, with the approval and at the direction of the Committee, hereby grants to the Optionee, as of the date first written above (the "Date of Grant"), an option to purchase up to Fourty Thousand (40,000) shares of Stock (the "Granted Shares") at a price of $18.875 per share, the Fair Market Value of the Stock on the Date of Grant. Such option is hereinafter referred to as the "Option," and the shares of Stock purchased upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is not --- intended by the parties to be, and shall not be treated as, an incentive stock --- option (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended). 2. Vesting of Option. Subject to such further limitations as are ----------------- provided herein, the Option shall become exercisable during the term of Optionee's employment in three (3) equal annual installments of one-third (1/3) of the Granted Shares, the first installment to be exercisable on the January 1, 2003, with an additional one-third of such Granted Shares becoming exercisable on each of January 1, 2004 and January 1, 2005. The installments shall be cumulative (i.e. this Option may be exercised, as to any or all Granted Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration of the Option Term (as hereinafter defined) or other termination of this Option). 3. Option Term. The Option shall not be exercisable more than ten (10) ----------- years after the Date of Grant (the "Option Term"). 4. Method of Exercise. Subject to Section 2 above and the other terms ------------------ and conditions of this Agreement, the Option may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, payment in full or in part may also be made in the form of (a) unrestricted Stock owned by the Optionee or (b) Restricted Stock owned by the Optionee awarded under the Plan, based, in either case, on the Fair Market Value of such Stock on the date the Option is exercised, as determined by the Committee. If payment of the Option exercise price is made in whole or in part with shares of Restricted Stock, the Option Shares received upon the exercise of such Option shall be restricted or deferred, as the case may be, in accordance with the original term of the Restricted Stock award in question, except that the Committee may direct that such restrictions or deferral provisions shall apply only to the number of such Option Shares equal to the number of shares of Restricted Stock surrendered upon the exercise of such Option. No Option Shares shall be issued until full payment therefor has been made. Optionee shall have the rights to dividends or other rights of a stockholder with respect to Option Shares subject to the Option when Optionee has given written notice of exercise and has paid in full for such Option Shares. 5. Transferability of Options. The Option shall not be transferable by -------------------------- Optionee other than by will or by the laws of descent and distribution and shall be exercisable, during Optionee's lifetime, only by Optionee; provided, however, that the Option shall be transferable to members of Optionee's immediate family (which shall include Optionee's spouse, children and grandchildren, whether natural or adopted) and to trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement, a transferred Option may be exercised by the transferee only to the extent that Optionee would have been entitled had the Option not been transferred. 6. Termination of Employment by Reason of Death. If Optionee's -------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of death, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, by the legal representative of the estate or by the legatee of Optionee under the will of Optionee, for a period of three (3) years from the date of death or until the expiration of the Option Term, whichever period is the shorter. 7. Termination of Employment by Reason of Disability. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Disability, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. 8. Termination of Employment by Reason of Retirement. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Retirement (with Committee consent) under a formal plan or policy of the Company, then the Option may thereafter be exercised for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that Optionee could have exercised the Option as of the date of Retirement; and if Optionee dies within such period, any unexercised Option that was exercisable at the time of death shall thereafter be exercisable for the remainder of such period. Notwithstanding anything to the contrary herein, the Committee may, in connection with such Retirement, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. 9. Other Termination of Employment. If Optionee's employment with the ------------------------------- Company and/or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than (a) death, (b) Disability or (c) Retirement, the Option may thereafter be exercised , in whole or in part, for a period of three (3) months following such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that the Option was exercisable as of the date of termination of employment and had not previously been exercised. -2- 10. Change in Control. ----------------- (a) In the case of a merger or consolidation in which the Company is not the surviving corporation, or a sale or other transfer of all or substantially all of the business or property of the Company (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets), or liquidation or dissolution of the Company, or in the event of a tender offer or any other change involving a threatened change in control of the Company which, in the opinion of the Committee, could deprive Optionee of the benefits intended to be conferred by the award granted hereunder, the Committee may, in anticipation of any such transaction event, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. Upon the Committee's determination to make any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. (b) In addition, and not as a limitation, to rights conferred in Section 10(a) above, in the event of a Change in Control (as defined below), the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such Change in Control or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. (c) For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied: (i) Any Person (other than those Persons in control of the Company as of the Date of Grant, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) Individuals, who as of the Date of Grant, constitute the Board of Directors of the Company (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two- thirds (2/3) of the Directors then in office who either were Directors as of the Date of Grant or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or (iii) Consummation of: (A) a complete liquidation of the Company; or (B) a sale or disposition of all or substantially all the Company's business or assets (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets); or (C) a merger, consolidation or reorganization of the Company with or involving any other corporation or entity, other than a merger, consolidation or reorganization that -3- would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization. For purposes of this Section 10(c), the following terms have the following meanings: "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ("Exchange Act"). "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). 11. Stock Certificates. All certificates for Option Shares delivered ------------------ under this Agreement shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed, any applicable Federal or state securities law, and the terms and conditions of this Agreement, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12. Withholding Taxes. ----------------- (a) Optionee shall, no later than the date as of which the value of Option Shares first becomes includable in the gross income of Optionee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under this Agreement and the Plan shall be conditioned on such payment or arrangements, and the Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee. (b) Subject to applicable laws and regulations regarding transactions in Stock by persons who are deemed insiders, Optionee may elect to have the withholding tax obligations or, if the Committee so determines, any additional tax obligation with respect to any Option Shares acquired hereunder satisfied by (i) having the Company withhold Option Shares otherwise deliverable to the participant with respect to the Option or (ii) delivering to the Company shares of unrestricted Stock. 13. Adjustment of and Changes in Common Stock of the Company. In the -------------------------------------------------------- event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. Upon the Committee's determination of any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. 14. Employment Not Affected. Neither the granting of the Option nor its ----------------------- exercise shall be construed as granting Optionee any right with respect to continuance of employment by the Company or a Subsidiary. The right -4- of the Company and Subsidiaries to terminate at will the Optionee's employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by the Company and acknowledged by Optionee. 15. Notice. Any notice to the Company provided for in this Agreement ------ shall be addressed to it in care of its Secretary at its executive offices at 1927 First Avenue North, Birmingham, Alabama 35203, and any notice to Optionee shall be addressed to Optionee at the current address shown on the payroll records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 16. Incorporation of Plan by Reference. The Option is granted pursuant to ---------------------------------- the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. Terms used herein not otherwise defined shall have the meaning assigned to them in the Plan. 17. Governing Law. The validity, construction, interpretation and effect ------------- of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Alabama without regard to principles of conflict of laws, except to the extent preempted by federal law, which shall to such extent govern, and Title 9 of the U.S. Code. 18. Dispute Resolution; Arbitration. ------------------------------- (a) Basis for Arbitration. The parties hereto agree that the subject --------------------- matter of this Agreement and any agreement that may be entered in connection therewith both involve and affect interstate commerce within the meaning of the commerce clause of the United States Constitution and Title 9 of the U. S. Code. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced. The parties hereto understand and acknowledge that each party is waiving his or its right to a jury trial of Disputes (as defined below) by entering into this Agreement. (b) Mandatory Arbitration of Disputes. Any action, dispute, claim, --------------------------------- counterclaim or controversy ("Dispute" or "Disputes"), between or among the parties, including, without limitation, any claim based on, or arising from, an alleged tort or contract, 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 any commitment or provision set forth in this Agreement or any of its exhibits or in any other agreement entered by the parties in connection with this Agreement; any action taken (or any omission to take any action) in connection with any of the foregoing; any past, present and future agreements, whether written or oral, between or among the parties, including, without limitation, this Agreement; or any agreement entered in connection with this Agreement. 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 ("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) Selection of Arbitrator. Whenever an arbitration is required ----------------------- under this Section 18, the arbitrator shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The AAA shall designate a panel of ten (10) potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the parties shall designate, within thirty (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 (3) arbitrators shall determine the resolution of the Dispute. (d) Place of Arbitration. Whenever an arbitration is required, such -------------------- arbitration shall be conducted in Birmingham, Alabama. -5- (e) Miscellaneous. Any arbitration questions arising under this ------------- Agreement shall be governed in accordance with Title 9 of the U. S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrator, shall pay an equal share of the arbitrators' fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrators' fees and court costs) to the prevailing party. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Non-Qualified Stock Option Agreement, and Optionee has placed his or her signature hereon, effective as of the Date of Grant. Alabama National BanCorporation By: /s/ Victor E. Nichol, Jr. --------------------------------------------- Its: President and COO ----------------------------------------- AGREED TO AND ACCEPTED: By: /s/ John H. Holcomb, III --------------------------------------------- Optionee John H. Holcomb, III ------------------------------------------------- (Print Name) 56 Country Club Blvd -------------------------------------------------- (Address) Birmingham, Alabama 35213 -------------------------------------------------- (City) (State) (Zip) -6- EX-10.36 10 0010.txt NON-QUALIFIED OPTION AGREEMENT Exhibit 10.36 ------------- ALABAMA NATIONAL BANCORPORATION 1999 LONG TERM INCENTIVE PLAN ----------------------------- Non-Qualified Stock Option Agreement Date of Grant: January 1, 2000 This Non-Qualified Stock Option Agreement (this "Agreement") is entered into as of December 31, 1999, between WILLIAM E. MATTHEWS, V ("Optionee") and Alabama National BanCorporation, a Delaware corporation (the "Company"). Recitals -------- Whereas, the Company has previously adopted the 1999 Long Term Incentive Plan ("Plan"); Whereas, the Committee (as defined in the Plan) desires to grant a non- qualified stock option to Optionee pursuant to the Plan; and Whereas, Optionee desires to accept such option. Agreement --------- NOW, THEREFORE, in consideration of the foregoing facts and the mutual promises set forth herein, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set --------------- forth, the Company, with the approval and at the direction of the Committee, hereby grants to the Optionee, as of the date first written above (the "Date of Grant"), an option to purchase up to Ten Thousand (10,000) shares of Stock (the "Granted Shares") at a price of $18.875 per share, the Fair Market Value of the Stock on the Date of Grant. Such option is hereinafter referred to as the "Option," and the shares of Stock purchased upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is not --- intended by the parties to be, and shall not be treated as, an incentive stock --- option (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended). 2. Vesting of Option. Subject to such further limitations as are ----------------- provided herein, the Option shall become exercisable during the term of Optionee's employment in three (3) equal annual installments of one-third (1/3) of the Granted Shares, the first installment to be exercisable on the January 1, 2003, with an additional one-third of such Granted Shares becoming exercisable on each of January 1, 2004 and January 1, 2005. The installments shall be cumulative (i.e. this Option may be exercised, as to any or all Granted Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration of the Option Term (as hereinafter defined) or other termination of this Option). 3. Option Term. The Option shall not be exercisable more than ten (10) ----------- years after the Date of Grant (the "Option Term"). 4. Method of Exercise. Subject to Section 2 above and the other terms ------------------ and conditions of this Agreement, the Option may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, payment in full or in part may also be made in the form of (a) unrestricted Stock owned by the Optionee or (b) Restricted Stock owned by the Optionee awarded under the Plan, based, in either case, on the Fair Market Value of such Stock on the date the Option is exercised, as determined by the Committee. If payment of the Option exercise price is made in whole or in part with shares of Restricted Stock, the Option Shares received upon the exercise of such Option shall be restricted or deferred, as the case may be, in accordance with the original term of the Restricted Stock award in question, except that the Committee may direct that such restrictions or deferral provisions shall apply only to the number of such Option Shares equal to the number of shares of Restricted Stock surrendered upon the exercise of such Option. No Option Shares shall be issued until full payment therefor has been made. Optionee shall have the rights to dividends or other rights of a stockholder with respect to Option Shares subject to the Option when Optionee has given written notice of exercise and has paid in full for such Option Shares. 5. Transferability of Options. The Option shall not be transferable by -------------------------- Optionee other than by will or by the laws of descent and distribution and shall be exercisable, during Optionee's lifetime, only by Optionee; provided, however, that the Option shall be transferable to members of Optionee's immediate family (which shall include Optionee's spouse, children and grandchildren, whether natural or adopted) and to trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement, a transferred Option may be exercised by the transferee only to the extent that Optionee would have been entitled had the Option not been transferred. 6. Termination of Employment by Reason of Death. If Optionee's -------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of death, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, by the legal representative of the estate or by the legatee of Optionee under the will of Optionee, for a period of three (3) years from the date of death or until the expiration of the Option Term, whichever period is the shorter. 7. Termination of Employment by Reason of Disability. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Disability, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. 8. Termination of Employment by Reason of Retirement. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Retirement (with Committee consent) under a formal plan or policy of the Company, then the Option may thereafter be exercised for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that Optionee could have exercised the Option as of the date of Retirement; and if Optionee dies within such period, any unexercised Option that was exercisable at the time of death shall thereafter be exercisable for the remainder of such period. Notwithstanding anything to the contrary herein, the Committee may, in connection with such Retirement, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. 9. Other Termination of Employment. If Optionee's employment with the ------------------------------- Company and/or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than (a) death, (b) Disability or (c) Retirement, the Option may thereafter be exercised , in whole or in part, for a period of three (3) months following such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that the Option was exercisable as of the date of termination of employment and had not previously been exercised. -2- 10. Change in Control. ----------------- (a) In the case of a merger or consolidation in which the Company is not the surviving corporation, or a sale or other transfer of all or substantially all of the business or property of the Company (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets), or liquidation or dissolution of the Company, or in the event of a tender offer or any other change involving a threatened change in control of the Company which, in the opinion of the Committee, could deprive Optionee of the benefits intended to be conferred by the award granted hereunder, the Committee may, in anticipation of any such transaction event, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. Upon the Committee's determination to make any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. (b) In addition, and not as a limitation, to rights conferred in Section 10(a) above, in the event of a Change in Control (as defined below), the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such Change in Control or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. (c) For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied: (i) Any Person (other than those Persons in control of the Company as of the Date of Grant, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) Individuals, who as of the Date of Grant, constitute the Board of Directors of the Company (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two- thirds (2/3) of the Directors then in office who either were Directors as of the Date of Grant or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or (iii) Consummation of: (A) a complete liquidation of the Company; or (B) a sale or disposition of all or substantially all the Company's business or assets (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets); or (C) a merger, consolidation or reorganization of the Company with or involving any other corporation or entity, other than a merger, consolidation or reorganization that -3- would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization. For purposes of this Section 10(c), the following terms have the following meanings: "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ("Exchange Act"). "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). 11. Stock Certificates. All certificates for Option Shares delivered ------------------ under this Agreement shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed, any applicable Federal or state securities law, and the terms and conditions of this Agreement, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12. Withholding Taxes. ----------------- (a) Optionee shall, no later than the date as of which the value of Option Shares first becomes includable in the gross income of Optionee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under this Agreement and the Plan shall be conditioned on such payment or arrangements, and the Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee. (b) Subject to applicable laws and regulations regarding transactions in Stock by persons who are deemed insiders, Optionee may elect to have the withholding tax obligations or, if the Committee so determines, any additional tax obligation with respect to any Option Shares acquired hereunder satisfied by (i) having the Company withhold Option Shares otherwise deliverable to the participant with respect to the Option or (ii) delivering to the Company shares of unrestricted Stock. 13. Adjustment of and Changes in Common Stock of the Company. In the -------------------------------------------------------- event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. Upon the Committee's determination of any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. 14. Employment Not Affected. Neither the granting of the Option nor its ----------------------- exercise shall be construed as granting Optionee any right with respect to continuance of employment by the Company or a Subsidiary. The right -4- of the Company and Subsidiaries to terminate at will the Optionee's employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by the Company and acknowledged by Optionee. 15. Notice. Any notice to the Company provided for in this Agreement ------ shall be addressed to it in care of its Secretary at its executive offices at 1927 First Avenue North, Birmingham, Alabama 35203, and any notice to Optionee shall be addressed to Optionee at the current address shown on the payroll records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 16. Incorporation of Plan by Reference. The Option is granted pursuant to ---------------------------------- the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. Terms used herein not otherwise defined shall have the meaning assigned to them in the Plan. 17. Governing Law. The validity, construction, interpretation and effect ------------- of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Alabama without regard to principles of conflict of laws, except to the extent preempted by federal law, which shall to such extent govern, and Title 9 of the U.S. Code. 18. Dispute Resolution; Arbitration. ------------------------------- (a) Basis for Arbitration. The parties hereto agree that the subject --------------------- matter of this Agreement and any agreement that may be entered in connection therewith both involve and affect interstate commerce within the meaning of the commerce clause of the United States Constitution and Title 9 of the U. S. Code. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced. The parties hereto understand and acknowledge that each party is waiving his or its right to a jury trial of Disputes (as defined below) by entering into this Agreement. (b) Mandatory Arbitration of Disputes. Any action, dispute, claim, --------------------------------- counterclaim or controversy ("Dispute" or "Disputes"), between or among the parties, including, without limitation, any claim based on, or arising from, an alleged tort or contract, 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 any commitment or provision set forth in this Agreement or any of its exhibits or in any other agreement entered by the parties in connection with this Agreement; any action taken (or any omission to take any action) in connection with any of the foregoing; any past, present and future agreements, whether written or oral, between or among the parties, including, without limitation, this Agreement; or any agreement entered in connection with this Agreement. 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 ("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) Selection of Arbitrator. Whenever an arbitration is required ----------------------- under this Section 18, the arbitrator shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The AAA shall designate a panel of ten (10) potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the parties shall designate, within thirty (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 (3) arbitrators shall determine the resolution of the Dispute. (d) Place of Arbitration. Whenever an arbitration is required, such -------------------- arbitration shall be conducted in Birmingham, Alabama. -5- (e) Miscellaneous. Any arbitration questions arising under this ------------- Agreement shall be governed in accordance with Title 9 of the U. S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrator, shall pay an equal share of the arbitrators' fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrators' fees and court costs) to the prevailing party. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Non-Qualified Stock Option Agreement, and Optionee has placed his or her signature hereon, effective as of the Date of Grant. Alabama National BanCorporation By: /s/ John H. Holcomb, III --------------------------------------------- Its: Chairman and CEO ----------------------------------------- AGREED TO AND ACCEPTED: By: /s/ William E. Matthews, V --------------------------------------------- Optionee William E. Matthews, V ------------------------------------------------- (Print Name) 3505 Park Lane South ------------------------------------------------- (Address) Birmingham, Alabama 35213 ------------------------------------------------- (City) (State) (Zip) -6- EX-10.37 11 0011.txt NON-QUALIFIED OPTION AGREEMENT Exhibit 10.37 ------------- ALABAMA NATIONAL BANCORPORATION 1999 LONG TERM INCENTIVE PLAN ----------------------------- Non-Qualified Stock Option Agreement Date of Grant: January 1, 2000 This Non-Qualified Stock Option Agreement (this "Agreement") is entered into as of December 31, 1999, between RICHARD MURRAY, IV ("Optionee") and Alabama National BanCorporation, a Delaware corporation (the "Company"). Recitals -------- Whereas, the Company has previously adopted the 1999 Long Term Incentive Plan ("Plan"); Whereas, the Committee (as defined in the Plan) desires to grant a non- qualified stock option to Optionee pursuant to the Plan; and Whereas, Optionee desires to accept such option. Agreement --------- NOW, THEREFORE, in consideration of the foregoing facts and the mutual promises set forth herein, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set --------------- forth, the Company, with the approval and at the direction of the Committee, hereby grants to the Optionee, as of the date first written above (the "Date of Grant"), an option to purchase up to Fifteen Thousand (15,000) shares of Stock (the "Granted Shares") at a price of $18.875 per share, the Fair Market Value of the Stock on the Date of Grant. Such option is hereinafter referred to as the "Option," and the shares of Stock purchased upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is not --- intended by the parties to be, and shall not be treated as, an incentive stock --- option (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended). 2. Vesting of Option. Subject to such further limitations as are provided ----------------- herein, the Option shall become exercisable during the term of Optionee's employment in three (3) equal annual installments of one-third (1/3) of the Granted Shares, the first installment to be exercisable on the January 1, 2003, with an additional one-third of such Granted Shares becoming exercisable on each of January 1, 2004 and January 1, 2005. The installments shall be cumulative (i.e. this Option may be exercised, as to any or all Granted Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration of the Option Term (as hereinafter defined) or other termination of this Option). 3. Option Term. The Option shall not be exercisable more than ten (10) ----------- years after the Date of Grant (the "Option Term"). 4. Method of Exercise. Subject to Section 2 above and the other terms and ------------------ conditions of this Agreement, the Option may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, payment in full or in part may also be made in the form of (a) unrestricted Stock owned by the Optionee or (b) Restricted Stock owned by the Optionee awarded under the Plan, based, in either case, on the Fair Market Value of such Stock on the date the Option is exercised, as determined by the Committee. If payment of the Option exercise price is made in whole or in part with shares of Restricted Stock, the Option Shares received upon the exercise of such Option shall be restricted or deferred, as the case may be, in accordance with the original term of the Restricted Stock award in question, except that the Committee may direct that such restrictions or deferral provisions shall apply only to the number of such Option Shares equal to the number of shares of Restricted Stock surrendered upon the exercise of such Option. No Option Shares shall be issued until full payment therefor has been made. Optionee shall have the rights to dividends or other rights of a stockholder with respect to Option Shares subject to the Option when Optionee has given written notice of exercise and has paid in full for such Option Shares. 5. Transferability of Options. The Option shall not be transferable by -------------------------- Optionee other than by will or by the laws of descent and distribution and shall be exercisable, during Optionee's lifetime, only by Optionee; provided, however, that the Option shall be transferable to members of Optionee's immediate family (which shall include Optionee's spouse, children and grandchildren, whether natural or adopted) and to trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement, a transferred Option may be exercised by the transferee only to the extent that Optionee would have been entitled had the Option not been transferred. 6. Termination of Employment by Reason of Death. If Optionee's employment -------------------------------------------- with the Company and/or any Subsidiary terminates by reason of death, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, by the legal representative of the estate or by the legatee of Optionee under the will of Optionee, for a period of three (3) years from the date of death or until the expiration of the Option Term, whichever period is the shorter. 7. Termination of Employment by Reason of Disability. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Disability, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. 8. Termination of Employment by Reason of Retirement. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Retirement (with Committee consent) under a formal plan or policy of the Company, then the Option may thereafter be exercised for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that Optionee could have exercised the Option as of the date of Retirement; and if Optionee dies within such period, any unexercised Option that was exercisable at the time of death shall thereafter be exercisable for the remainder of such period. Notwithstanding anything to the contrary herein, the Committee may, in connection with such Retirement, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. 9. Other Termination of Employment. If Optionee's employment with the ------------------------------- Company and/or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than (a) death, (b) Disability or (c) Retirement, the Option may thereafter be exercised, in whole or in part, for a period of three (3) months following such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that the Option was exercisable as of the date of termination of employment and had not previously been exercised. -2- 10. Change in Control. ----------------- (a) In the case of a merger or consolidation in which the Company is not the surviving corporation, or a sale or other transfer of all or substantially all of the business or property of the Company (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets), or liquidation or dissolution of the Company, or in the event of a tender offer or any other change involving a threatened change in control of the Company which, in the opinion of the Committee, could deprive Optionee of the benefits intended to be conferred by the award granted hereunder, the Committee may, in anticipation of any such transaction event, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. Upon the Committee's determination to make any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. (b) In addition, and not as a limitation, to rights conferred in Section 10(a) above, in the event of a Change in Control (as defined below), the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such Change in Control or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. (c) For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied: (i) Any Person (other than those Persons in control of the Company as of the Date of Grant, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) Individuals, who as of the Date of Grant, constitute the Board of Directors of the Company (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then in office who either were Directors as of the Date of Grant or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or (iii) Consummation of: (A) a complete liquidation of the Company; or (B) a sale or disposition of all or substantially all the Company's business or assets (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets); or (C) a merger, consolidation or reorganization of the Company with or involving any other corporation or entity, other than a merger, consolidation or reorganization that -3- would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization. For purposes of this Section 10(c), the following terms have the following meanings: "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ("Exchange Act"). "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). 11. Stock Certificates. All certificates for Option Shares delivered under ------------------ this Agreement shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed, any applicable Federal or state securities law, and the terms and conditions of this Agreement, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12. Withholding Taxes. ----------------- (a) Optionee shall, no later than the date as of which the value of Option Shares first becomes includable in the gross income of Optionee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under this Agreement and the Plan shall be conditioned on such payment or arrangements, and the Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee. (b) Subject to applicable laws and regulations regarding transactions in Stock by persons who are deemed insiders, Optionee may elect to have the withholding tax obligations or, if the Committee so determines, any additional tax obligation with respect to any Option Shares acquired hereunder satisfied by (i) having the Company withhold Option Shares otherwise deliverable to the participant with respect to the Option or (ii) delivering to the Company shares of unrestricted Stock. 13. Adjustment of and Changes in Common Stock of the Company. In the event -------------------------------------------------------- of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. Upon the Committee's determination of any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. 14. Employment Not Affected. Neither the granting of the Option nor its ----------------------- exercise shall be construed as granting Optionee any right with respect to continuance of employment by the Company or a Subsidiary. The right -4- of the Company and Subsidiaries to terminate at will the Optionee's employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by the Company and acknowledged by Optionee. 15. Notice. Any notice to the Company provided for in this Agreement shall ------ be addressed to it in care of its Secretary at its executive offices at 1927 First Avenue North, Birmingham, Alabama 35203, and any notice to Optionee shall be addressed to Optionee at the current address shown on the payroll records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 16. Incorporation of Plan by Reference. The Option is granted pursuant to ---------------------------------- the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. Terms used herein not otherwise defined shall have the meaning assigned to them in the Plan. 17. Governing Law. The validity, construction, interpretation and effect ------------- of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Alabama without regard to principles of conflict of laws, except to the extent preempted by federal law, which shall to such extent govern, and Title 9 of the U.S. Code. 18. Dispute Resolution; Arbitration. ------------------------------- (a) Basis for Arbitration. The parties hereto agree that the subject --------------------- matter of this Agreement and any agreement that may be entered in connection therewith both involve and affect interstate commerce within the meaning of the commerce clause of the United States Constitution and Title 9 of the U. S. Code. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced. The parties hereto understand and acknowledge that each party is waiving his or its right to a jury trial of Disputes (as defined below) by entering into this Agreement. (b) Mandatory Arbitration of Disputes. Any action, dispute, claim, --------------------------------- counterclaim or controversy ("Dispute" or "Disputes"), between or among the parties, including, without limitation, any claim based on, or arising from, an alleged tort or contract, 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 any commitment or provision set forth in this Agreement or any of its exhibits or in any other agreement entered by the parties in connection with this Agreement; any action taken (or any omission to take any action) in connection with any of the foregoing; any past, present and future agreements, whether written or oral, between or among the parties, including, without limitation, this Agreement; or any agreement entered in connection with this Agreement. 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 ("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) Selection of Arbitrator. Whenever an arbitration is required under ----------------------- this Section 18, the arbitrator shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The AAA shall designate a panel of ten (10) potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the parties shall designate, within thirty (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 (3) arbitrators shall determine the resolution of the Dispute. (d) Place of Arbitration. Whenever an arbitration is required, such -------------------- arbitration shall be conducted in Birmingham, Alabama. -5- (e) Miscellaneous. Any arbitration questions arising under this ------------- Agreement shall be governed in accordance with Title 9 of the U. S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrator, shall pay an equal share of the arbitrators' fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrators' fees and court costs) to the prevailing party. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Non-Qualified Stock Option Agreement, and Optionee has placed his or her signature hereon, effective as of the Date of Grant. Alabama National BanCorporation By: /s/ John H. Holcomb, III -------------------------------------------- Its: Chairman and CEO ---------------------------------------- AGREED TO AND ACCEPTED: By: /s/ Richard Murray, IV -------------------------------------------- Optionee Richard Murray, IV ------------------------------------------------ (Print Name) 14 Honeysuckle Lane ------------------------------------------------ (Address) Birmingham, Alabama 35213 ------------------------------------------------ (City) (State) (Zip) -6- EX-10.38 12 0012.txt NON-QUALIFIED OPTION AGREEMENT Exhibit 10.38 ------------- ALABAMA NATIONAL BANCORPORATION 1999 LONG TERM INCENTIVE PLAN ----------------------------- Non-Qualified Stock Option Agreement Date of Grant: January 1, 2000 This Non-Qualified Stock Option Agreement (this "Agreement") is entered into as of December 31, 1999, between DAN M. DAVID ("Optionee") and Alabama National BanCorporation, a Delaware corporation (the "Company"). Recitals -------- Whereas, the Company has previously adopted the 1999 Long Term Incentive Plan ("Plan"); Whereas, the Committee (as defined in the Plan) desires to grant a non- qualified stock option to Optionee pursuant to the Plan; and Whereas, Optionee desires to accept such option. Agreement --------- NOW, THEREFORE, in consideration of the foregoing facts and the mutual promises set forth herein, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set --------------- forth, the Company, with the approval and at the direction of the Committee, hereby grants to the Optionee, as of the date first written above (the "Date of Grant"), an option to purchase up to Five Thousand (5,000) shares of Stock (the "Granted Shares") at a price of $18.875 per share, the Fair Market Value of the Stock on the Date of Grant. Such option is hereinafter referred to as the "Option," and the shares of Stock purchased upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is not --- intended by the parties to be, and shall not be treated as, an incentive stock --- option (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended). 2. Vesting of Option. Subject to such further limitations as are ----------------- provided herein, the Option shall become exercisable during the term of Optionee's employment in three (3) equal annual installments of one-third (1/3) of the Granted Shares, the first installment to be exercisable on the January 1, 2003, with an additional one-third of such Granted Shares becoming exercisable on each of January 1, 2004 and January 1, 2005. The installments shall be cumulative (i.e. this Option may be exercised, as to any or all Granted Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration of the Option Term (as hereinafter defined) or other termination of this Option). 3. Option Term. The Option shall not be exercisable more than ten (10) ----------- years after the Date of Grant (the "Option Term"). 4. Method of Exercise. Subject to Section 2 above and the other terms ------------------ and conditions of this Agreement, the Option may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, payment in full or in part may also be made in the form of (a) unrestricted Stock owned by the Optionee or (b) Restricted Stock owned by the Optionee awarded under the Plan, based, in either case, on the Fair Market Value of such Stock on the date the Option is exercised, as determined by the Committee. If payment of the Option exercise price is made in whole or in part with shares of Restricted Stock, the Option Shares received upon the exercise of such Option shall be restricted or deferred, as the case may be, in accordance with the original term of the Restricted Stock award in question, except that the Committee may direct that such restrictions or deferral provisions shall apply only to the number of such Option Shares equal to the number of shares of Restricted Stock surrendered upon the exercise of such Option. No Option Shares shall be issued until full payment therefor has been made. Optionee shall have the rights to dividends or other rights of a stockholder with respect to Option Shares subject to the Option when Optionee has given written notice of exercise and has paid in full for such Option Shares. 5. Transferability of Options. The Option shall not be transferable by -------------------------- Optionee other than by will or by the laws of descent and distribution and shall be exercisable, during Optionee's lifetime, only by Optionee; provided, however, that the Option shall be transferable to members of Optionee's immediate family (which shall include Optionee's spouse, children and grandchildren, whether natural or adopted) and to trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement, a transferred Option may be exercised by the transferee only to the extent that Optionee would have been entitled had the Option not been transferred. 6. Termination of Employment by Reason of Death. If Optionee's -------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of death, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, by the legal representative of the estate or by the legatee of Optionee under the will of Optionee, for a period of three (3) years from the date of death or until the expiration of the Option Term, whichever period is the shorter. 7. Termination of Employment by Reason of Disability. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Disability, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. 8. Termination of Employment by Reason of Retirement. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Retirement (with Committee consent) under a formal plan or policy of the Company, then the Option may thereafter be exercised for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that Optionee could have exercised the Option as of the date of Retirement; and if Optionee dies within such period, any unexercised Option that was exercisable at the time of death shall thereafter be exercisable for the remainder of such period. Notwithstanding anything to the contrary herein, the Committee may, in connection with such Retirement, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. 9. Other Termination of Employment. If Optionee's employment with the ------------------------------- Company and/or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than (a) death, (b) Disability or (c) Retirement, the Option may thereafter be exercised , in whole or in part, for a period of three (3) months following such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that the Option was exercisable as of the date of termination of employment and had not previously been exercised. -2- 10. Change in Control. ----------------- (a) In the case of a merger or consolidation in which the Company is not the surviving corporation, or a sale or other transfer of all or substantially all of the business or property of the Company (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets), or liquidation or dissolution of the Company, or in the event of a tender offer or any other change involving a threatened change in control of the Company which, in the opinion of the Committee, could deprive Optionee of the benefits intended to be conferred by the award granted hereunder, the Committee may, in anticipation of any such transaction event, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. Upon the Committee's determination to make any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. (b) In addition, and not as a limitation, to rights conferred in Section 10(a) above, in the event of a Change in Control (as defined below), the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such Change in Control or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. (c) For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied: (i) Any Person (other than those Persons in control of the Company as of the Date of Grant, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) Individuals, who as of the Date of Grant, constitute the Board of Directors of the Company (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two- thirds (2/3) of the Directors then in office who either were Directors as of the Date of Grant or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or (iii) Consummation of: (A) a complete liquidation of the Company; or (B) a sale or disposition of all or substantially all the Company's business or assets (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets); or (C) a merger, consolidation or reorganization of the Company with or involving any other corporation or entity, other than a merger, consolidation or reorganization that -3- would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization. For purposes of this Section 10(c), the following terms have the following meanings: "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ("Exchange Act"). "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). 11. Stock Certificates. All certificates for Option Shares delivered ------------------ under this Agreement shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed, any applicable Federal or state securities law, and the terms and conditions of this Agreement, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12. Withholding Taxes. ----------------- (a) Optionee shall, no later than the date as of which the value of Option Shares first becomes includable in the gross income of Optionee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under this Agreement and the Plan shall be conditioned on such payment or arrangements, and the Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee. (b) Subject to applicable laws and regulations regarding transactions in Stock by persons who are deemed insiders, Optionee may elect to have the withholding tax obligations or, if the Committee so determines, any additional tax obligation with respect to any Option Shares acquired hereunder satisfied by (i) having the Company withhold Option Shares otherwise deliverable to the participant with respect to the Option or (ii) delivering to the Company shares of unrestricted Stock. 13. Adjustment of and Changes in Common Stock of the Company. In the -------------------------------------------------------- event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. Upon the Committee's determination of any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. 14. Employment Not Affected. Neither the granting of the Option nor its ----------------------- exercise shall be construed as granting Optionee any right with respect to continuance of employment by the Company or a Subsidiary. The right -4- of the Company and Subsidiaries to terminate at will the Optionee's employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by the Company and acknowledged by Optionee. 15. Notice. Any notice to the Company provided for in this Agreement ------ shall be addressed to it in care of its Secretary at its executive offices at 1927 First Avenue North, Birmingham, Alabama 35203, and any notice to Optionee shall be addressed to Optionee at the current address shown on the payroll records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 16. Incorporation of Plan by Reference. The Option is granted pursuant to ---------------------------------- the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. Terms used herein not otherwise defined shall have the meaning assigned to them in the Plan. 17. Governing Law. The validity, construction, interpretation and effect ------------- of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Alabama without regard to principles of conflict of laws, except to the extent preempted by federal law, which shall to such extent govern, and Title 9 of the U.S. Code. 18. Dispute Resolution; Arbitration. ------------------------------- (a) Basis for Arbitration. The parties hereto agree that the subject --------------------- matter of this Agreement and any agreement that may be entered in connection therewith both involve and affect interstate commerce within the meaning of the commerce clause of the United States Constitution and Title 9 of the U. S. Code. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced. The parties hereto understand and acknowledge that each party is waiving his or its right to a jury trial of Disputes (as defined below) by entering into this Agreement. (b) Mandatory Arbitration of Disputes. Any action, dispute, claim, --------------------------------- counterclaim or controversy ("Dispute" or "Disputes"), between or among the parties, including, without limitation, any claim based on, or arising from, an alleged tort or contract, 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 any commitment or provision set forth in this Agreement or any of its exhibits or in any other agreement entered by the parties in connection with this Agreement; any action taken (or any omission to take any action) in connection with any of the foregoing; any past, present and future agreements, whether written or oral, between or among the parties, including, without limitation, this Agreement; or any agreement entered in connection with this Agreement. 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 ("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) Selection of Arbitrator. Whenever an arbitration is required ----------------------- under this Section 18, the arbitrator shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The AAA shall designate a panel of ten (10) potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the parties shall designate, within thirty (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 (3) arbitrators shall determine the resolution of the Dispute. (d) Place of Arbitration. Whenever an arbitration is required, such -------------------- arbitration shall be conducted in Birmingham, Alabama. -5- (e) Miscellaneous. Any arbitration questions arising under this ------------- Agreement shall be governed in accordance with Title 9 of the U. S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrator, shall pay an equal share of the arbitrators' fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrators' fees and court costs) to the prevailing party. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Non-Qualified Stock Option Agreement, and Optionee has placed his or her signature hereon, effective as of the Date of Grant. Alabama National BanCorporation By: /s/ John H. Holcomb, III ------------------------------------------- Its: Chairman and CEO --------------------------------------- AGREED TO AND ACCEPTED: By: /s/ Dan M. David ------------------------------------------- Optionee Dan M. David ----------------------------------------------- (Print Name) 4115 Bennich Road SE ----------------------------------------------- (Address) Decatur, Alabama 35603 ----------------------------------------------- (City) (State) (Zip) -6- EX-10.39 13 0013.txt NON-QUALIFIED OPTION AGREEMENT Exhibit 10.39 ------------- ALABAMA NATIONAL BANCORPORATION 1999 LONG TERM INCENTIVE PLAN ----------------------------- Non-Qualified Stock Option Agreement Date of Grant: January 1, 2000 This Non-Qualified Stock Option Agreement (this "Agreement") is entered into as of December 31, 1999, between VICTOR E. NICHOL, JR. ("Optionee") and Alabama National BanCorporation, a Delaware corporation (the "Company"). Recitals -------- Whereas, the Company has previously adopted the 1999 Long Term Incentive Plan ("Plan"); Whereas, the Committee (as defined in the Plan) desires to grant a non- qualified stock option to Optionee pursuant to the Plan; and Whereas, Optionee desires to accept such option. Agreement --------- NOW, THEREFORE, in consideration of the foregoing facts and the mutual promises set forth herein, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set --------------- forth, the Company, with the approval and at the direction of the Committee, hereby grants to the Optionee, as of the date first written above (the "Date of Grant"), an option to purchase up to Five Thousand (5,000) shares of Stock (the "Granted Shares") at a price of $18.875 per share, the Fair Market Value of the Stock on the Date of Grant. Such option is hereinafter referred to as the "Option," and the shares of Stock purchased upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is not --- intended by the parties to be, and shall not be treated as, an incentive stock --- option (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended). 2. Vesting of Option. Subject to such further limitations as are provided ----------------- herein, the Option shall become exercisable during the term of Optionee's employment in three (3) equal annual installments of one-third (1/3) of the Granted Shares, the first installment to be exercisable on the January 1, 2003, with an additional one-third of such Granted Shares becoming exercisable on each of January 1, 2004 and January 1, 2005. The installments shall be cumulative (i.e. this Option may be exercised, as to any or all Granted Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration of the Option Term (as hereinafter defined) or other termination of this Option). 3. Option Term. The Option shall not be exercisable more than ten (10) ----------- years after the Date of Grant (the "Option Term"). 4. Method of Exercise. Subject to Section 2 above and the other terms and ------------------ conditions of this Agreement, the Option may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, payment in full or in part may also be made in the form of (a) unrestricted Stock owned by the Optionee or (b) Restricted Stock owned by the Optionee awarded under the Plan, based, in either case, on the Fair Market Value of such Stock on the date the Option is exercised, as determined by the Committee. If payment of the Option exercise price is made in whole or in part with shares of Restricted Stock, the Option Shares received upon the exercise of such Option shall be restricted or deferred, as the case may be, in accordance with the original term of the Restricted Stock award in question, except that the Committee may direct that such restrictions or deferral provisions shall apply only to the number of such Option Shares equal to the number of shares of Restricted Stock surrendered upon the exercise of such Option. No Option Shares shall be issued until full payment therefor has been made. Optionee shall have the rights to dividends or other rights of a stockholder with respect to Option Shares subject to the Option when Optionee has given written notice of exercise and has paid in full for such Option Shares. 5. Transferability of Options. The Option shall not be transferable by -------------------------- Optionee other than by will or by the laws of descent and distribution and shall be exercisable, during Optionee's lifetime, only by Optionee; provided, however, that the Option shall be transferable to members of Optionee's immediate family (which shall include Optionee's spouse, children and grandchildren, whether natural or adopted) and to trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement, a transferred Option may be exercised by the transferee only to the extent that Optionee would have been entitled had the Option not been transferred. 6. Termination of Employment by Reason of Death. If Optionee's -------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of death, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, by the legal representative of the estate or by the legatee of Optionee under the will of Optionee, for a period of three (3) years from the date of death or until the expiration of the Option Term, whichever period is the shorter. 7. Termination of Employment by Reason of Disability. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Disability, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. 8. Termination of Employment by Reason of Retirement. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Retirement (with Committee consent) under a formal plan or policy of the Company, then the Option may thereafter be exercised for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that Optionee could have exercised the Option as of the date of Retirement; and if Optionee dies within such period, any unexercised Option that was exercisable at the time of death shall thereafter be exercisable for the remainder of such period. Notwithstanding anything to the contrary herein, the Committee may, in connection with such Retirement, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. 9. Other Termination of Employment. If Optionee's employment with the ------------------------------- Company and/or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than (a) death, (b) Disability or (c) Retirement, the Option may thereafter be exercised , in whole or in part, for a period of three (3) months following such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that the Option was exercisable as of the date of termination of employment and had not previously been exercised. -2- 10. Change in Control. ----------------- (a) In the case of a merger or consolidation in which the Company is not the surviving corporation, or a sale or other transfer of all or substantially all of the business or property of the Company (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets), or liquidation or dissolution of the Company, or in the event of a tender offer or any other change involving a threatened change in control of the Company which, in the opinion of the Committee, could deprive Optionee of the benefits intended to be conferred by the award granted hereunder, the Committee may, in anticipation of any such transaction event, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. Upon the Committee's determination to make any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. (b) In addition, and not as a limitation, to rights conferred in Section 10(a) above, in the event of a Change in Control (as defined below), the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such Change in Control or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. (c) For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied: (i) Any Person (other than those Persons in control of the Company as of the Date of Grant, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) Individuals, who as of the Date of Grant, constitute the Board of Directors of the Company (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the Directors then in office who either were Directors as of the Date of Grant or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or (iii) Consummation of: (A) a complete liquidation of the Company; or (B) a sale or disposition of all or substantially all the Company's business or assets (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets); or (C) a merger, consolidation or reorganization of the Company with or involving any other corporation or entity, other than a merger, consolidation or reorganization that -3- would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization. For purposes of this Section 10(c), the following terms have the following meanings: "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ("Exchange Act"). "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). 11. Stock Certificates. All certificates for Option Shares delivered under ------------------ this Agreement shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed, any applicable Federal or state securities law, and the terms and conditions of this Agreement, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12. Withholding Taxes. ----------------- (a) Optionee shall, no later than the date as of which the value of Option Shares first becomes includable in the gross income of Optionee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under this Agreement and the Plan shall be conditioned on such payment or arrangements, and the Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee. (b) Subject to applicable laws and regulations regarding transactions in Stock by persons who are deemed insiders, Optionee may elect to have the withholding tax obligations or, if the Committee so determines, any additional tax obligation with respect to any Option Shares acquired hereunder satisfied by (i) having the Company withhold Option Shares otherwise deliverable to the participant with respect to the Option or (ii) delivering to the Company shares of unrestricted Stock. 13. Adjustment of and Changes in Common Stock of the Company. In the event -------------------------------------------------------- of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. Upon the Committee's determination of any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. 14. Employment Not Affected. Neither the granting of the Option nor its ----------------------- exercise shall be construed as granting Optionee any right with respect to continuance of employment by the Company or a Subsidiary. The right -4- of the Company and Subsidiaries to terminate at will the Optionee's employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by the Company and acknowledged by Optionee. 15. Notice. Any notice to the Company provided for in this Agreement shall ------ be addressed to it in care of its Secretary at its executive offices at 1927 First Avenue North, Birmingham, Alabama 35203, and any notice to Optionee shall be addressed to Optionee at the current address shown on the payroll records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 16. Incorporation of Plan by Reference. The Option is granted pursuant to ---------------------------------- the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. Terms used herein not otherwise defined shall have the meaning assigned to them in the Plan. 17. Governing Law. The validity, construction, interpretation and effect ------------- of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Alabama without regard to principles of conflict of laws, except to the extent preempted by federal law, which shall to such extent govern, and Title 9 of the U.S. Code. 18. Dispute Resolution; Arbitration. ------------------------------- (a) Basis for Arbitration. The parties hereto agree that the subject --------------------- matter of this Agreement and any agreement that may be entered in connection therewith both involve and affect interstate commerce within the meaning of the commerce clause of the United States Constitution and Title 9 of the U. S. Code. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced. The parties hereto understand and acknowledge that each party is waiving his or its right to a jury trial of Disputes (as defined below) by entering into this Agreement. (b) Mandatory Arbitration of Disputes. Any action, dispute, claim, --------------------------------- counterclaim or controversy ("Dispute" or "Disputes"), between or among the parties, including, without limitation, any claim based on, or arising from, an alleged tort or contract, 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 any commitment or provision set forth in this Agreement or any of its exhibits or in any other agreement entered by the parties in connection with this Agreement; any action taken (or any omission to take any action) in connection with any of the foregoing; any past, present and future agreements, whether written or oral, between or among the parties, including, without limitation, this Agreement; or any agreement entered in connection with this Agreement. 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 ("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) Selection of Arbitrator. Whenever an arbitration is required under ----------------------- this Section 18, the arbitrator shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The AAA shall designate a panel of ten (10) potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the parties shall designate, within thirty (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 (3) arbitrators shall determine the resolution of the Dispute. (d) Place of Arbitration. Whenever an arbitration is required, such -------------------- arbitration shall be conducted in Birmingham, Alabama. -5- (e) Miscellaneous. Any arbitration questions arising under this ------------- Agreement shall be governed in accordance with Title 9 of the U. S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrator, shall pay an equal share of the arbitrators' fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrators' fees and court costs) to the prevailing party. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Non-Qualified Stock Option Agreement, and Optionee has placed his or her signature hereon, effective as of the Date of Grant. Alabama National BanCorporation By: /s/ John H. Holcomb, III ------------------------------------------ Its: Chairman and CEO -------------------------------------- AGREED TO AND ACCEPTED: By: /s/ Victor E. Nichol, Jr. ------------------------------------------ Optionee Victor E. Nichol, Jr. ---------------------------------------------- (Print Name) 1763 Indiana Creek Drive ---------------------------------------------- (Address) Vestavia Hills, Alabama 35243 ---------------------------------------------- (City) (State) (Zip) -6- EX-10.40 14 0014.txt NON-QUALIFIED OPTION AGREEMENT Exhibit 10.40 ------------- ALABAMA NATIONAL BANCORPORATION 1999 LONG TERM INCENTIVE PLAN ----------------------------- Non-Qualified Stock Option Agreement Date of Grant: January 1, 2000 This Non-Qualified Stock Option Agreement (this "Agreement") is entered into as of December 31, 1999, between WILLIAM G. SANDERS, JR. ("Optionee") and Alabama National BanCorporation, a Delaware corporation (the "Company"). Recitals -------- Whereas, the Company has previously adopted the 1999 Long Term Incentive Plan ("Plan"); Whereas, the Committee (as defined in the Plan) desires to grant a non- qualified stock option to Optionee pursuant to the Plan; and Whereas, Optionee desires to accept such option. Agreement --------- NOW, THEREFORE, in consideration of the foregoing facts and the mutual promises set forth herein, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set --------------- forth, the Company, with the approval and at the direction of the Committee, hereby grants to the Optionee, as of the date first written above (the "Date of Grant"), an option to purchase up to Fifteen Thousand (15,000) shares of Stock (the "Granted Shares") at a price of $18.875 per share, the Fair Market Value of the Stock on the Date of Grant. Such option is hereinafter referred to as the "Option," and the shares of Stock purchased upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is not --- intended by the parties to be, and shall not be treated as, an incentive stock --- option (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended). 2. Vesting of Option. Subject to such further limitations as are ----------------- provided herein, the Option shall become exercisable during the term of Optionee's employment in three (3) equal annual installments of one-third (1/3) of the Granted Shares, the first installment to be exercisable on the January 1, 2003, with an additional one-third of such Granted Shares becoming exercisable on each of January 1, 2004 and January 1, 2005. The installments shall be cumulative (i.e. this Option may be exercised, as to any or all Granted Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration of the Option Term (as hereinafter defined) or other termination of this Option). 3. Option Term. The Option shall not be exercisable more than ten (10) ----------- years after the Date of Grant (the "Option Term"). 4. Method of Exercise. Subject to Section 2 above and the other terms ------------------ and conditions of this Agreement, the Option may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, payment in full or in part may also be made in the form of (a) unrestricted Stock owned by the Optionee or (b) Restricted Stock owned by the Optionee awarded under the Plan, based, in either case, on the Fair Market Value of such Stock on the date the Option is exercised, as determined by the Committee. If payment of the Option exercise price is made in whole or in part with shares of Restricted Stock, the Option Shares received upon the exercise of such Option shall be restricted or deferred, as the case may be, in accordance with the original term of the Restricted Stock award in question, except that the Committee may direct that such restrictions or deferral provisions shall apply only to the number of such Option Shares equal to the number of shares of Restricted Stock surrendered upon the exercise of such Option. No Option Shares shall be issued until full payment therefor has been made. Optionee shall have the rights to dividends or other rights of a stockholder with respect to Option Shares subject to the Option when Optionee has given written notice of exercise and has paid in full for such Option Shares. 5. Transferability of Options. The Option shall not be transferable by -------------------------- Optionee other than by will or by the laws of descent and distribution and shall be exercisable, during Optionee's lifetime, only by Optionee; provided, however, that the Option shall be transferable to members of Optionee's immediate family (which shall include Optionee's spouse, children and grandchildren, whether natural or adopted) and to trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement, a transferred Option may be exercised by the transferee only to the extent that Optionee would have been entitled had the Option not been transferred. 6. Termination of Employment by Reason of Death. If Optionee's -------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of death, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, by the legal representative of the estate or by the legatee of Optionee under the will of Optionee, for a period of three (3) years from the date of death or until the expiration of the Option Term, whichever period is the shorter. 7. Termination of Employment by Reason of Disability. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Disability, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. 8. Termination of Employment by Reason of Retirement. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Retirement (with Committee consent) under a formal plan or policy of the Company, then the Option may thereafter be exercised for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that Optionee could have exercised the Option as of the date of Retirement; and if Optionee dies within such period, any unexercised Option that was exercisable at the time of death shall thereafter be exercisable for the remainder of such period. Notwithstanding anything to the contrary herein, the Committee may, in connection with such Retirement, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. 9. Other Termination of Employment. If Optionee's employment with the ------------------------------- Company and/or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than (a) death, (b) Disability or (c) Retirement, the Option may thereafter be exercised , in whole or in part, for a period of three (3) months following such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that the Option was exercisable as of the date of termination of employment and had not previously been exercised. -2- 10. Change in Control. ----------------- (a) In the case of a merger or consolidation in which the Company is not the surviving corporation, or a sale or other transfer of all or substantially all of the business or property of the Company (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets), or liquidation or dissolution of the Company, or in the event of a tender offer or any other change involving a threatened change in control of the Company which, in the opinion of the Committee, could deprive Optionee of the benefits intended to be conferred by the award granted hereunder, the Committee may, in anticipation of any such transaction event, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. Upon the Committee's determination to make any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. (b) In addition, and not as a limitation, to rights conferred in Section 10(a) above, in the event of a Change in Control (as defined below), the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such Change in Control or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. (c) For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied: (i) Any Person (other than those Persons in control of the Company as of the Date of Grant, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) Individuals, who as of the Date of Grant, constitute the Board of Directors of the Company (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two- thirds (2/3) of the Directors then in office who either were Directors as of the Date of Grant or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or (iii) Consummation of: (A) a complete liquidation of the Company; or (B) a sale or disposition of all or substantially all the Company's business or assets (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets); or (C) a merger, consolidation or reorganization of the Company with or involving any other corporation or entity, other than a merger, consolidation or reorganization that -3- would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization. For purposes of this Section 10(c), the following terms have the following meanings: "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ("Exchange Act"). "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). 11. Stock Certificates. All certificates for Option Shares delivered ------------------ under this Agreement shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed, any applicable Federal or state securities law, and the terms and conditions of this Agreement, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12. Withholding Taxes. ----------------- (a) Optionee shall, no later than the date as of which the value of Option Shares first becomes includable in the gross income of Optionee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under this Agreement and the Plan shall be conditioned on such payment or arrangements, and the Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee. (b) Subject to applicable laws and regulations regarding transactions in Stock by persons who are deemed insiders, Optionee may elect to have the withholding tax obligations or, if the Committee so determines, any additional tax obligation with respect to any Option Shares acquired hereunder satisfied by (i) having the Company withhold Option Shares otherwise deliverable to the participant with respect to the Option or (ii) delivering to the Company shares of unrestricted Stock. 13. Adjustment of and Changes in Common Stock of the Company. In the -------------------------------------------------------- event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. Upon the Committee's determination of any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. 14. Employment Not Affected. Neither the granting of the Option nor its ----------------------- exercise shall be construed as granting Optionee any right with respect to continuance of employment by the Company or a Subsidiary. The right -4- of the Company and Subsidiaries to terminate at will the Optionee's employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by the Company and acknowledged by Optionee. 15. Notice. Any notice to the Company provided for in this Agreement ------ shall be addressed to it in care of its Secretary at its executive offices at 1927 First Avenue North, Birmingham, Alabama 35203, and any notice to Optionee shall be addressed to Optionee at the current address shown on the payroll records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 16. Incorporation of Plan by Reference. The Option is granted pursuant to ---------------------------------- the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. Terms used herein not otherwise defined shall have the meaning assigned to them in the Plan. 17. Governing Law. The validity, construction, interpretation and effect ------------- of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Alabama without regard to principles of conflict of laws, except to the extent preempted by federal law, which shall to such extent govern, and Title 9 of the U.S. Code. 18. Dispute Resolution; Arbitration. ------------------------------- (a) Basis for Arbitration. The parties hereto agree that the subject --------------------- matter of this Agreement and any agreement that may be entered in connection therewith both involve and affect interstate commerce within the meaning of the commerce clause of the United States Constitution and Title 9 of the U. S. Code. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced. The parties hereto understand and acknowledge that each party is waiving his or its right to a jury trial of Disputes (as defined below) by entering into this Agreement. (b) Mandatory Arbitration of Disputes. Any action, dispute, claim, --------------------------------- counterclaim or controversy ("Dispute" or "Disputes"), between or among the parties, including, without limitation, any claim based on, or arising from, an alleged tort or contract, 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 any commitment or provision set forth in this Agreement or any of its exhibits or in any other agreement entered by the parties in connection with this Agreement; any action taken (or any omission to take any action) in connection with any of the foregoing; any past, present and future agreements, whether written or oral, between or among the parties, including, without limitation, this Agreement; or any agreement entered in connection with this Agreement. 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 ("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) Selection of Arbitrator. Whenever an arbitration is required ----------------------- under this Section 18, the arbitrator shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The AAA shall designate a panel of ten (10) potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the parties shall designate, within thirty (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 (3) arbitrators shall determine the resolution of the Dispute. (d) Place of Arbitration. Whenever an arbitration is required, such -------------------- arbitration shall be conducted in Birmingham, Alabama. -5- (e) Miscellaneous. Any arbitration questions arising under this ------------- Agreement shall be governed in accordance with Title 9 of the U. S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrator, shall pay an equal share of the arbitrators' fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrators' fees and court costs) to the prevailing party. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Non-Qualified Stock Option Agreement, and Optionee has placed his or her signature hereon, effective as of the Date of Grant. Alabama National BanCorporation By: /s/ John H. Holcomb, III ------------------------------------------ Its: Chairman and CEO -------------------------------------- AGREED TO AND ACCEPTED: By: /s/ William G. Sanders, Jr. ------------------------------------------ Optionee William G. Sanders, Jr. ---------------------------------------------- (Print Name) 8 Clarendon Road ---------------------------------------------- (Address) Birmingham, Alabama 35213 ---------------------------------------------- (City) (State) (Zip) -6- EX-10.41 15 0015.txt NON-QUALIFIED OPTION AGREEMENT Exhibit 10.41 ------------- ALABAMA NATIONAL BANCORPORATION 1999 LONG TERM INCENTIVE PLAN ----------------------------- Non-Qualified Stock Option Agreement Date of Grant: January 1, 2000 This Non-Qualified Stock Option Agreement (this "Agreement") is entered into as of December 31, 1999, between SHELLY S. WILLIAMS ("Optionee") and Alabama National BanCorporation, a Delaware corporation (the "Company"). Recitals -------- Whereas, the Company has previously adopted the 1999 Long Term Incentive Plan ("Plan"); Whereas, the Committee (as defined in the Plan) desires to grant a non- qualified stock option to Optionee pursuant to the Plan; and Whereas, Optionee desires to accept such option. Agreement --------- NOW, THEREFORE, in consideration of the foregoing facts and the mutual promises set forth herein, the parties agree as follows: 1. Grant of Option. Subject to the terms and conditions hereinafter set --------------- forth, the Company, with the approval and at the direction of the Committee, hereby grants to the Optionee, as of the date first written above (the "Date of Grant"), an option to purchase up to One Thousand Two Hundred Fifth (1,250) shares of Stock (the "Granted Shares") at a price of $18.875 per share, the Fair Market Value of the Stock on the Date of Grant. Such option is hereinafter referred to as the "Option," and the shares of Stock purchased upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option is not intended by the parties to be, and shall not be treated as, an --- --- incentive stock option (as such term is defined under Section 422 of the Internal Revenue Code of 1986, as amended). 2. Vesting of Option. Subject to such further limitations as are ----------------- provided herein, the Option shall become exercisable during the term of Optionee's employment in three (3) equal annual installments of one-third (1/3) of the Granted Shares, the first installment to be exercisable on the January 1, 2003, with an additional one-third of such Granted Shares becoming exercisable on each of January 1, 2004 and January 1, 2005. The installments shall be cumulative (i.e. this Option may be exercised, as to any or all Granted Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration of the Option Term (as hereinafter defined) or other termination of this Option). 3. Option Term. The Option shall not be exercisable more than ten (10) ----------- years after the Date of Grant (the "Option Term"). 4. Method of Exercise. Subject to Section 2 above and the other terms ------------------ and conditions of this Agreement, the Option may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Option Shares to be purchased, accompanied by payment in full of the purchase price, in cash, by check or such other instrument as may be acceptable to the Committee. As determined by the Committee, in its sole discretion, payment in full or in part may also be made in the form of (a) unrestricted Stock owned by the Optionee or (b) Restricted Stock owned by the Optionee awarded under the Plan, based, in either case, on the Fair Market Value of such Stock on the date the Option is exercised, as determined by the Committee. If payment of the Option exercise price is made in whole or in part with shares of Restricted Stock, the Option Shares received upon the exercise of such Option shall be restricted or deferred, as the case may be, in accordance with the original term of the Restricted Stock award in question, except that the Committee may direct that such restrictions or deferral provisions shall apply only to the number of such Option Shares equal to the number of shares of Restricted Stock surrendered upon the exercise of such Option. No Option Shares shall be issued until full payment therefor has been made. Optionee shall have the rights to dividends or other rights of a stockholder with respect to Option Shares subject to the Option when Optionee has given written notice of exercise and has paid in full for such Option Shares. 5. Transferability of Options. The Option shall not be transferable by -------------------------- Optionee other than by will or by the laws of descent and distribution and shall be exercisable, during Optionee's lifetime, only by Optionee; provided, however, that the Option shall be transferable to members of Optionee's immediate family (which shall include Optionee's spouse, children and grandchildren, whether natural or adopted) and to trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only partners or members. For purposes of Sections 6, 7 and 8 of this Agreement, a transferred Option may be exercised by the transferee only to the extent that Optionee would have been entitled had the Option not been transferred. 6. Termination of Employment by Reason of Death. If Optionee's -------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of death, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, by the legal representative of the estate or by the legatee of Optionee under the will of Optionee, for a period of three (3) years from the date of death or until the expiration of the Option Term, whichever period is the shorter. 7. Termination of Employment by Reason of Disability. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Disability, then the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. 8. Termination of Employment by Reason of Retirement. If Optionee's ------------------------------------------------- employment with the Company and/or any Subsidiary terminates by reason of Retirement (with Committee consent) under a formal plan or policy of the Company, then the Option may thereafter be exercised for a period of three (3) years from the date of such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that Optionee could have exercised the Option as of the date of Retirement; and if Optionee dies within such period, any unexercised Option that was exercisable at the time of death shall thereafter be exercisable for the remainder of such period. Notwithstanding anything to the contrary herein, the Committee may, in connection with such Retirement, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. 9. Other Termination of Employment. If Optionee's employment with the ------------------------------- Company and/or any Subsidiary terminates for any reason, whether voluntarily or involuntarily, other than (a) death, (b) Disability or (c) Retirement, the Option may thereafter be exercised , in whole or in part, for a period of three (3) months following such termination of employment or until the expiration of the Option Term, whichever period is the shorter, to the extent, but only to the extent, that the Option was exercisable as of the date of termination of employment and had not previously been exercised. -2- 10. Change in Control. ----------------- (a) In the case of a merger or consolidation in which the Company is not the surviving corporation, or a sale or other transfer of all or substantially all of the business or property of the Company (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets), or liquidation or dissolution of the Company, or in the event of a tender offer or any other change involving a threatened change in control of the Company which, in the opinion of the Committee, could deprive Optionee of the benefits intended to be conferred by the award granted hereunder, the Committee may, in anticipation of any such transaction event, make such adjustments in the terms and conditions of the Option as the Committee in its sole discretion determines are equitably warranted under the circumstances, including, without limitation, acceleration of exercise terms. Upon the Committee's determination to make any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. (b) In addition, and not as a limitation, to rights conferred in Section 10(a) above, in the event of a Change in Control (as defined below), the Option shall immediately become exercisable in full (notwithstanding Section 2 above), and the Option may thereafter be exercised, in whole or in part, for a period of three (3) years from the date of such Change in Control or until the expiration of the Option Term, whichever period is the shorter; and if Optionee dies within such period, any unexercised Option held by Optionee shall thereafter be exercisable, in whole or in part, for the remainder of such period. (c) For purposes of this Agreement, a "Change in Control" of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied: (i) Any Person (other than those Persons in control of the Company as of the Date of Grant, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) Individuals, who as of the Date of Grant, constitute the Board of Directors of the Company (and any new Director, whose election by the Company's stockholders was approved by a vote of at least two- thirds (2/3) of the Directors then in office who either were Directors as of the Date of Grant or whose election or nomination for election was so approved, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board) cease for any reason to constitute at least sixty percent (60%) thereof; or (iii) Consummation of: (A) a complete liquidation of the Company; or (B) a sale or disposition of all or substantially all the Company's business or assets (including, but not limited to, the sale or other transfer of one or more of the Company's principal Subsidiary banks if such sale or transfer could constitute a substantial majority of the Company's business or assets); or (C) a merger, consolidation or reorganization of the Company with or involving any other corporation or entity, other than a merger, consolidation or reorganization that -3- would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty-one percent (51%) of the combined voting power of the voting securities of the Company (or the surviving entity, or an entity which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) outstanding immediately after such merger, consolidation or reorganization. For purposes of this Section 10(c), the following terms have the following meanings: "Beneficial Owner" shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ("Exchange Act"). "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). 11. Stock Certificates. All certificates for Option Shares delivered ------------------ under this Agreement shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed, any applicable Federal or state securities law, and the terms and conditions of this Agreement, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 12. Withholding Taxes. ----------------- (a) Optionee shall, no later than the date as of which the value of Option Shares first becomes includable in the gross income of Optionee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of, any Federal, state or local taxes of any kind required by law to be withheld with respect to the award. The obligations of the Company under this Agreement and the Plan shall be conditioned on such payment or arrangements, and the Company (and, where applicable, its Subsidiaries), shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Optionee. (b) Subject to applicable laws and regulations regarding transactions in Stock by persons who are deemed insiders, Optionee may elect to have the withholding tax obligations or, if the Committee so determines, any additional tax obligation with respect to any Option Shares acquired hereunder satisfied by (i) having the Company withhold Option Shares otherwise deliverable to the participant with respect to the Option or (ii) delivering to the Company shares of unrestricted Stock. 13. Adjustment of and Changes in Common Stock of the Company. In the -------------------------------------------------------- event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Committee shall make such adjustment as it deems appropriate in the number and kind of shares of Stock subject to the Option or in the option price; provided, however, that no such adjustment shall give the Optionee any additional benefits under the Option. Upon the Committee's determination of any such adjustments, the terms and conditions of the Option and of this Agreement shall automatically, without any further action on the part of any party, be deemed to have been amended to incorporate such adjustments. 14. Employment Not Affected. Neither the granting of the Option nor its ----------------------- exercise shall be construed as granting Optionee any right with respect to continuance of employment by the Company or a Subsidiary. The right -4- of the Company and Subsidiaries to terminate at will the Optionee's employment with it at any time (whether by dismissal, discharge, retirement or otherwise) is specifically reserved by the Company and acknowledged by Optionee. 15. Notice. Any notice to the Company provided for in this Agreement ------ shall be addressed to it in care of its Secretary at its executive offices at 1927 First Avenue North, Birmingham, Alabama 35203, and any notice to Optionee shall be addressed to Optionee at the current address shown on the payroll records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid. 16. Incorporation of Plan by Reference. The Option is granted pursuant to ---------------------------------- the terms of the Plan, the terms of which are incorporated herein by reference, and the Option shall in all respects be interpreted in accordance with the Plan. The Committee shall interpret and construe the Plan and this instrument, and its interpretations and determinations shall be conclusive and binding on the parties hereto and any other person claiming an interest hereunder, with respect to any issue arising hereunder or thereunder. Terms used herein not otherwise defined shall have the meaning assigned to them in the Plan. 17. Governing Law. The validity, construction, interpretation and effect ------------- of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Alabama without regard to principles of conflict of laws, except to the extent preempted by federal law, which shall to such extent govern, and Title 9 of the U.S. Code. 18. Dispute Resolution; Arbitration. ------------------------------- (a) Basis for Arbitration. The parties hereto agree that the subject --------------------- matter of this Agreement and any agreement that may be entered in connection therewith both involve and affect interstate commerce within the meaning of the commerce clause of the United States Constitution and Title 9 of the U. S. Code. This Agreement shall be irrevocable and is binding upon the parties and is subject to being specifically enforced. The parties hereto understand and acknowledge that each party is waiving his or its right to a jury trial of Disputes (as defined below) by entering into this Agreement. (b) Mandatory Arbitration of Disputes. Any action, dispute, claim, --------------------------------- counterclaim or controversy ("Dispute" or "Disputes"), between or among the parties, including, without limitation, any claim based on, or arising from, an alleged tort or contract, 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 any commitment or provision set forth in this Agreement or any of its exhibits or in any other agreement entered by the parties in connection with this Agreement; any action taken (or any omission to take any action) in connection with any of the foregoing; any past, present and future agreements, whether written or oral, between or among the parties, including, without limitation, this Agreement; or any agreement entered in connection with this Agreement. 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 ("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) Selection of Arbitrator. Whenever an arbitration is required ----------------------- under this Section 18, the arbitrator shall be selected, except as otherwise provided, in accordance with the Commercial Arbitration rules of the AAA. The AAA shall designate a panel of ten (10) potential arbitrators knowledgeable in the subject matter of the Dispute. Each of the parties shall designate, within thirty (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 (3) arbitrators shall determine the resolution of the Dispute. (d) Place of Arbitration. Whenever an arbitration is required, such -------------------- arbitration shall be conducted in Birmingham, Alabama. -5- (e) Miscellaneous. Any arbitration questions arising under this ------------- Agreement shall be governed in accordance with Title 9 of the U. S. Code. This Section constitutes the entire agreement of the parties with respect to its subject matter and supersedes all prior discussions, arrangements, negotiations and other communications on dispute resolutions. The provisions of this Section shall survive any termination, amendment or expiration of the Agreement in which this Section is contained, unless the parties otherwise expressly agree in writing. In the event of any Dispute governed by this Section, each of the parties shall pay all of its own expenses, and, subject to the award of the arbitrator, shall pay an equal share of the arbitrators' fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrators' fees and court costs) to the prevailing party. This Section may be amended, changed or modified only by the express provisions of a writing which specifically refers to this Section and which is signed by all the parties hereto. IN WITNESS WHEREOF, the Company has caused its duly authorized officer to execute this Non-Qualified Stock Option Agreement, and Optionee has placed his or her signature hereon, effective as of the Date of Grant. Alabama National BanCorporation By: /s/ John H. Holcomb, III ------------------------------------ Its: Chairman and CEO -------------------------------- AGREED TO AND ACCEPTED: By: /s/ Shelly S. Williams ------------------------------------ Optionee Shelly S. Williams ---------------------------------------- (Print Name) 2737 Altadena Lake Drive ---------------------------------------- (Address) Birmingham, Alabama 35243 ---------------------------------------- (City) (State) (Zip) -6- EX-10.42 16 0016.txt EMPLOYMENT CONTINUATION AGREEMENT Exhibit 10.42 ------------- EMPLOYMENT CONTINUATION AGREEMENT --------------------------------- THIS AGREEMENT between ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (the "Company"), and JOHN R. BRAGG (the "Executive"), is dated as of this 21/st/ day of September, 2000. W I T N E S S E T H : WHEREAS, the Company has employed the Executive in a key executive officer position and has determined that the Executive holds a position which is of critical importance to the Company; WHEREAS, the Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of stockholders; WHEREAS, the Company understands that any such situation will present significant concerns for the Executive with respect to his financial and job security; WHEREAS, the Company desires to assure itself of the Executive's services during any period in which it is confronting such a situation and to provide the Executive with certain financial assurances to enable the Executive to perform the responsibilities of his position without undue distraction and to exercise his judgment without bias due to his personal circumstances; WHEREAS, to achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and the Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2 below); NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Company and the Executive as follows: SECTION 1. Operation of Agreement. ---------------------- (a) Effective Date. The effective date of this Agreement shall be the date -------------- on which a Change of Control occurs (the "Change of Control Date"); provided, however, that if the Executive is not employed by the Company on the Change of Control Date, this Agreement shall be void and without effect. SECTION 2. Definitions. ----------- (a) Average Closing Price. "Average Closing Price" shall mean the average --------------------- of the daily closing prices for a share of the Company's common stock, for the twenty (20) trading days preceding the Change of Control Date, on the Composite Tape for the New York Stock Exchange -- Listed Stocks, or, if the common stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the common stock is listed, or, if the common stock is not listed on any such Exchange, the average of the daily closing bid quotations with respect to a share of the common stock for such twenty (20) trading days on the National Association of Securities Dealers, Inc. Automated Quotations Systems or any system then in use. (b) Award. "Award" shall have the meaning ascribed to such term in the ----- Performance Share Plan. (c) Award Period. "Award Period" shall have the meaning ascribed to such ------------ term in the Performance Share Plan. (d) Beneficial Owner. For purposes of this Agreement, "Beneficial Owner" ---------------- shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) Change of Control. For the purposes of this Agreement, a "Change of ----------------- Control" shall mean: (i) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) upon the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (x) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (y) the stockholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. (f) Change of Control Price. "Change of Control Price" shall have the ----------------------- meaning ascribed to such term in the Performance Share Plan. (g) Performance Share. "Performance Share" shall have the meaning ascribed ----------------- to such term in the Performance Share Plan. (h) Performance Share Plan. "Performance Share Plan " means that certain ---------------------- Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan, effective as of April 20, 2000, as such Plan may be amended from time to time. (i) Person. "Person" shall have the meaning ascribed to such term in ------ Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (j) Potential Change of Control. For the purposes of this Agreement, a --------------------------- Potential Change of Control shall be deemed to have occurred if: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control; (ii) any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; (iii) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) hereafter becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing greater than 10% of the combined voting power of the Company's then outstanding securities (determined by taking into account as though converted or exercised any securities convertible into voting securities or any options exercisable for voting securities, but only to the extent such convertible securities or options are beneficially owned or held by such Person); -2- (iv) any Person files soliciting materials intended to result in a change in the composition of the Board of Directors of the Company; or (v) the Board of Directors of the Company adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change of Control has occurred. SECTION 3. Events upon Change of Control. ----------------------------- (a) Employment Period. Subject to Section 6 of this Agreement, the Company ----------------- agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Company, for the period (the "Employment Period") commencing on the Change of Control Date and ending on the second anniversary of the Change of Control Date. (b) Vesting and Related Rights. Notwithstanding anything to the contrary -------------------------- in this Agreement, in any other agreement between the Executive and the Company or in any Company plan or elsewhere: (i) upon the Change of Control Date, all of the Executive's options to purchase common stock or other securities of the Company shall immediately become exercisable in full, and such options may thereafter be exercised, in whole or in part, until the expiration of the applicable option term; if the Executive dies within such period, any unexercised option held by the Executive shall thereafter be exercisable, in whole or in part, for the remainder of such period. All other terms and conditions with respect to such options, including the price, term and treatment upon termination of employment, shall continue to be governed by the applicable Company plan(s) and stock option agreement(s) between the Executive and the Company, as such may be amended from time to time; and (ii) the Executive shall be deemed to have earned Performance Shares with respect to each of his Awards outstanding at the Change of Control Date. The number of Performance Shares so earned shall be computed by determining (based on the conditions set by the Compensation Committee of the Company's Board for payment of Awards for the subject Award Period) the number of Performance Shares that would have been paid if each subject Award Period had ended on the December 31st immediately preceding the Change of Control Date; provided that in no event shall the number of Performance Shares earned be less than the aggregate number of Performance Shares at the target performance level (as identified in the applicable award letter) with respect to all such Awards. Thus, in the event of a Change of Control, the minimum Performance Shares to be awarded shall be equal to the aggregate number of Performance Shares that would have been awarded at the end of the Award Period(s) if the target performance level(s) applicable thereto had been met. Performance Share Awards granted in the year of the Change of Control shall be earned at the same percentage as Awards granted in the year preceding the year of the Change of Control. Each Performance Share so earned shall be canceled in exchange for an immediate payment in cash of an amount equal to the Change of Control Price. In addition, upon the cash payment provided for in the preceding sentence, the Company agrees to pay a cash bonus to the Executive in an amount equal to the aggregate amount of the federal and state income taxes that will be incurred by the Executive, based on the highest marginal income tax rates, as a result of (A) the cash payment provided for in the preceding sentence and (B) the cash bonus made pursuant to this sentence. SECTION 4. Position and Duties. ------------------- (a) No Reduction in Position. During the Employment Period, the ------------------------ Executive's position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately prior to the public announcement of the transaction constituting the Change of Control. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the public announcement of the transaction constituting the Change of Control. (b) Business Time. From and after the Change of Control Date, the ------------- Executive agrees to devote his full attention during normal business hours to the business and affairs of the Company and to perform faithfully and -3- efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing service on any boards and committees on which he is serving or with which he is otherwise associated immediately preceding the Change of Control Date shall not be deemed to interfere with the performance of the Executive's services to the Company. SECTION 5. Compensation. ------------ (a) Base Salary. During the Employment Period, the Executive shall receive ----------- a base salary at a monthly rate at least equal to the monthly salary paid to the Executive by the Company immediately prior to the Change of Control Date. The base salary shall be reviewed at least once each year after the Change of Control Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company's regular practices. The Executive's base salary, as it may be increased from time to time, shall hereafter be referred to as "Base Salary". Neither the Base Salary nor any increase in Base Salary after the Change of Control Date shall serve to limit or reduce any other obligation of the Company hereunder. (b) Annual Bonus and Incentive Compensation. During the Employment Period, --------------------------------------- in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, the Executive shall be entitled to receive: (i) an annual bonus which is at least equal to the greater of (A) the highest annual bonus, including without limitation any bonus provided under the Company's Annual Incentive Plan, that had been payable to the Executive in respect of either of the last two fiscal years ended immediately prior to the Change of Control Date or (B) the amount that would have been payable to the Executive as a target bonus for the year in which the Change of Control occurs under the Company's Annual Incentive Plan; and (ii) long-term incentive compensation opportunities (including but not limited to Performance Share Awards) on terms and conditions no less favorable to the Executive than those applicable to the Executive prior to the Change of Control Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Company may make available to the Executive. (c) Benefit Plans. During the Employment Period, the Executive (and, to ------------- the extent applicable, his dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with the Executive's participation in such plans immediately prior to the Change of Control Date, or, if more favorable to the Executive, at the level made available to the Executive or other similarly situated officers at any time thereafter. The Executive shall also be entitled to receive such perquisites as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. (d) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Company as in effect immediately prior to the Change of Control Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Change of Control Date to the Executive, if such policies and procedures are more favorable to the Executive than those in effect immediately prior to the Change of Control Date. (e) Indemnification. During and after the Employment Period, the Company --------------- shall indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other -4- capacity, including any fiduciary capacity, in which the Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company's Certificate of Incorporation and By-Laws (the "Governing Documents"); provided, however, that in no event shall the protection afforded to the Executive hereunder be less than that afforded under the Governing Documents as in effect immediately prior to the Change of Control Date. SECTION 6. Termination. ----------- (a) Death, Disability or Retirement. This Agreement shall terminate ------------------------------- automatically upon the Executive's death, termination due to "Disability" (as defined below) or voluntary retirement under any of the Company's retirement plans as in effect from time to time. For purposes of this Agreement, Disability shall mean the Executive's inability to perform the duties of his position, as determined in accordance with the policies and procedures applicable with respect to the Company's long-term disability plan, as in effect immediately prior to the Change of Control Date. (b) Voluntary Termination. Notwithstanding anything in this Agreement to --------------------- the contrary, following a Change of Control the Executive may, upon not less than 10 days' written notice to the Company, voluntarily terminate his employment for any reason (including early retirement under the terms of any of the Company's retirement plans as in effect from time to time); provided, however, that any termination by the Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Company may terminate the Executive's employment for Cause. ----- For purposes of this Agreement, "Cause" means: (i) the Executive's conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on the Executive's part which result or are intended to result in material damage to the Company's business or reputation; or (iii) repeated material violations by the Executive of his obligations under Section 4 of this Agreement, which violations are demonstrably willful and deliberate on the Executive's part and which result in material damage to the Company's business or reputation. (d) Good Reason. Following the occurrence of a Change of Control, the ----------- Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" means the occurrence of any of the following, without the express written consent of the Executive, after the occurrence of a Change of Control: (i) (A) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive's position, authority or responsibilities as contemplated by Section 4 of this Agreement, or (B) any other material adverse change in such position, including titles, authority or responsibilities; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based, or to perform a substantial potion of his duties with the Company, at any office or location more than 20 miles from that location at which he performed his services specified under the provisions of Section 4 immediately prior to the Change of Control Date, except for travel reasonably required in the performance of the Executive's responsibilities; or (iv) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b). -5- In no event shall the mere occurrence of a Change of Control, absent any further impact on the Executive, be deemed to constitute Good Reason. (e) Notice of Termination. Any termination by the Company for Cause or by --------------------- the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Company's having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For the purpose of this Agreement, the term "Date ------------------- of Termination" means (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. SECTION 7. Obligations of the Company upon Termination. ------------------------------------------- (a) Death or Disability. If the Executive's employment is terminated ------------------- during the Employment Period by reason of the Executive's death or Disability, this Agreement shall terminate without further obligations to the Executive or the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to the Executive (or his beneficiary or estate): (i) the Executive's full Base Salary through the Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits owing to the Executive under the Company's otherwise applicable employee benefit plans and programs, including any compensation previously deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the "Accrued Obligations"), and (iii) any other benefits payable due to the Executive's death or Disability under the Company's plans, policies or programs (the "Additional Benefits"). Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement. (b) Cause and Voluntary Termination. If, during the Employment Period, the ------------------------------- Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay the Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 days, following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, program or arrangement. (c) Termination by the Executive for Good reason and Termination by the ------------------------------------------------------------------- Company other than for Cause. - ---------------------------- (i) Lump Sum Payments. If (X) the Company terminates the ------------------ Executive's employment other than for Cause during the Employment Period or (Y) the Executive terminates his employment for Good -6- Reason at any time during the Employment Period, then the Company shall pay to the Executive the following amounts: (A) the Executive's Earned Salary; (B) a cash amount (the "Severance Amount") equal to three (3) times the sum of (1) the Executive's annual Base Salary; (2) the greater of (X) the average of the bonus amount payable (including any amounts payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company immediately preceding the Change of Control Date or (Y) the average of the bonus amount payable (including any amount payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company ending immediately prior to the Date of Termination; and (3) an amount determined by multiplying (i) the aggregate number of Performance Shares, as designated in the award letter issued in the calendar year in which the Change of Control occurs, to be awarded to the Executive at the target performance level, and (ii) the Average Closing Price; and (C) the Accrued Obligations. The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or arrangement. (ii) Supplemental Retirement Benefit. In the event the Executive is ------------------------------- entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled to receive a supplemental retirement benefit payable pursuant to a deferred annuity contract issued by a solvent insurer mutually acceptable to the Company and the Executive and purchased by the Company and delivered to the Executive within 60 days after the Date of Termination. Such annuity contract shall provide for monthly payments on and after the Executive's 65th birthday and 100% survivor benefits to the Executive's spouse for such individual's lifetime in the event of the Executive's death prior to or after age 65. The monthly benefits to be provided by the annuity shall be determined as follows: (A) three years shall be added to Executive's credited service as determined at Date of Termination under the terms of the NBC Pension Plan (the "Pension Plan") as in effect immediately prior to the Change of Control Date (subject to any applicable maximum on credited service); (B) using such adjusted credited service, a new monthly benefit for life commencing at age 65 shall be determined as of the Date of Termination under the terms of the Pension Plan; (C) from such monthly benefit as calculated in (B) above shall be subtracted the monthly vested deferred benefit of Executive due to be paid on and after attainment of age 65, if any, pursuant to the terms of all defined benefit pension plans, active or frozen, in which Executive is a participant at his Date of Termination if such plans are sponsored by the Company, its successors or affiliates thereof; and (D) in accordance with the terms of the Pension Plan, the difference described in (C) next above shall be converted from a monthly lifetime benefit after age 65 to the actuarial equivalent monthly benefit on and after attainment of age 65 which provides the 100% survivorship feature first above described in this Section 7(c)(ii). For purposes of making the foregoing determinations, at the request of Executive in the Notice of Termination given by Executive or in writing within 3 days of Executive's receipt of Notice of Termination, but in either event at Company expense, the independent pension consultants most recently used by Company in connection with its qualified pension plan prior to the Change of Control Date shall be engaged and shall -7- certify the benefits due Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under subparagraph (C) above shall not be determined by the end of a period of 30 days after the Date of Termination, no such offset shall be permitted. (iii) Continuation of Benefits. In the event the Executive is ------------------------ entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled, after the Date of Termination until the earlier of (1) the second anniversary of the Date of Termination (the "End Date") or (2) the date the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company's employee welfare benefit plans including, without limitation, the Company's hospital, medical, accident, disability and life insurance plans (the "Benefit Plans") as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company's general assets. The Executive's participation in the Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company through the End Date. (d) Discharge of the Company's Obligations. Except as expressly provided -------------------------------------- in the last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of his employment shall be in full and complete satisfaction of the Executive's rights under this Agreement and any other claims he may have in respect of his employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive's receipt of such amounts, the Company shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive's employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents. (e) Certain Further Payments by the Company. --------------------------------------- (i) In the event that any amount or benefit paid or distributed to the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to the Executive by the Company or any affiliated company including, without limitation, any distribution or payment made pursuant to the terms of the Company's compensation plans or arrangements (collectively, the "Covered Payments"), are or become subject to the tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax that may hereafter be imposed, the Company shall pay to the Executive at the time specified in Section 7(e)(v) below an additional amount (the "Tax Reimbursement Payment") such that the net amount retained by the Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments. (ii) For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company's independent certified public accountants appointed prior to the Change of Control Date or tax counsel selected by such Accountants (the "Accountants"), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for personal -8- services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code. (iii) For purposes of determining the amount of the Tax Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year. (iv) In the event that the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if the Executive's good faith claim for refund or credit is denied. In the event that the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. (v) The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) above shall be paid to the Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). SECTION 8. Non-Exclusivity of Rights. Except as expressly provided ------------------------- herein, nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor -9- shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. SECTION 9. Full Settlement. The Company's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. SECTION 10. Legal Fees and Expenses. If the Executive asserts any claim ----------------------- in any contest (whether initiated by the Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay the Executive's legal expenses (or cause such expenses to be paid) including, without limitation, his reasonable attorney's fees, on a quarterly basis, upon presentation of proof of such expenses; provided, however, that the Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement. SECTION 11. Successors. ---------- (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place. SECTION 12. Miscellaneous. ------------- (a) Applicable Law. This Agreement shall be governed by and construed and -------------- conferred in accordance with the laws of the State of Delaware (and, as applicable, Title 9 of the U.S. Code) applied without reference to principles of conflict of laws. (b) Arbitration. Any dispute or controversy arising under or in connection ----------- with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. (c) Amendments. This Agreement may be amended or modified by the Board of ---------- Directors at any time prior to a Change in Control; provided, however, that subsequent to the occurrence of a Potential Change in Control, this Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Notwithstanding the foregoing sentence, in the event that subsequent to the occurrence of a Potential Change in Control (i) the Board of Directors makes a good faith determination that the events giving rise to a Potential Change in Control will not result in the occurrence of a Change in Control or (ii) an actual Change in Control has not occurred after the first anniversary of the occurrence of a Potential Change in Control (or any Potential Change in Control events occurring after the initial Potential Change in Control), the foregoing limitation on the amendment or modification of this Agreement shall cease to apply unless -10- and until it thereafter again becomes effective by reason of the occurrence of another Potential Change in Control or any actual Change in Control. (d) Notices. All notices and other communications hereunder shall be in ------- writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the home address of the Executive noted on the records of the Company If to the Company: Alabama National BanCorporation 1927 First Avenue North Birmingham, Alabama 35203 Attn.: Chairman of the Board of Directors With a copy to: Mark L. Drew Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North 2400 AmSouth/Harbert Plaza Birmingham, Alabama 35203 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (e) Entire Agreement. Upon the Change of Control Date, unless otherwise ---------------- provided herein, this Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. In the event any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has read this Agreement and that he understands it and its legal consequences. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written. ALABAMA NATIONAL BANCORPORATION By: /s/ John H. Holcomb, III ------------------------ Name: John H. Holcomb, III -------------------- Title: Chairman and CEO ---------------- EXECUTIVE Signature: /s/ John R. Bragg ----------------- Name: John R. Bragg ------------- Title: Executive Vice President ------------------------ -11- EX-10.43 17 0017.txt EMPLOYMENT CONTINUATION AGREEMENT Exhibit 10.43 ------------- EMPLOYMENT CONTINUATION AGREEMENT --------------------------------- THIS AGREEMENT between ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (the "Company"), and JOHN H. HOLCOMB, III (the "Executive"), is dated as of this 21/st/ day of September, 2000. W I T N E S S E T H : WHEREAS, the Company has employed the Executive in a key executive officer position and has determined that the Executive holds a position which is of critical importance to the Company; WHEREAS, the Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of stockholders; WHEREAS, the Company understands that any such situation will present significant concerns for the Executive with respect to his financial and job security; WHEREAS, the Company desires to assure itself of the Executive's services during any period in which it is confronting such a situation and to provide the Executive with certain financial assurances to enable the Executive to perform the responsibilities of his position without undue distraction and to exercise his judgment without bias due to his personal circumstances; WHEREAS, to achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and the Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2 below); NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Company and the Executive as follows: SECTION 1. Operation of Agreement. ---------------------- (a) Effective Date. The effective date of this Agreement shall be the date -------------- on which a Change of Control occurs (the "Change of Control Date"); provided, however, that if the Executive is not employed by the Company on the Change of Control Date, this Agreement shall be void and without effect. SECTION 2. Definitions. ----------- (a) Average Closing Price. "Average Closing Price" shall mean the average --------------------- of the daily closing prices for a share of the Company's common stock, for the twenty (20) trading days preceding the Change of Control Date, on the Composite Tape for the New York Stock Exchange -- Listed Stocks, or, if the common stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the common stock is listed, or, if the common stock is not listed on any such Exchange, the average of the daily closing bid quotations with respect to a share of the common stock for such twenty (20) trading days on the National Association of Securities Dealers, Inc. Automated Quotations Systems or any system then in use. (b) Award. "Award" shall have the meaning ascribed to such term in the ----- Performance Share Plan. (c) Award Period. "Award Period" shall have the meaning ascribed to such ------------ term in the Performance Share Plan. (d) Beneficial Owner. For purposes of this Agreement, "Beneficial Owner" ---------------- shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) Change of Control. For the purposes of this Agreement, a "Change of ----------------- Control" shall mean: (i) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) upon the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (x) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (y) the stockholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. (f) Change of Control Price. "Change of Control Price" shall have the ----------------------- meaning ascribed to such term in the Performance Share Plan. (g) Performance Share. "Performance Share" shall have the meaning ascribed ----------------- to such term in the Performance Share Plan. (h) Performance Share Plan. "Performance Share Plan " means that certain ---------------------- Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan, effective as of April 20, 2000, as such Plan may be amended from time to time. (i) Person. "Person" shall have the meaning ascribed to such term in ------ Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (j) Potential Change of Control. For the purposes of this Agreement, a --------------------------- Potential Change of Control shall be deemed to have occurred if: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control; (ii) any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; (iii) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) hereafter becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing greater than 10% of the combined voting power of the Company's then outstanding securities (determined by taking into account as though converted or exercised any securities convertible into voting securities or any options exercisable for voting securities, but only to the extent such convertible securities or options are beneficially owned or held by such Person); -2- (iv) any Person files soliciting materials intended to result in a change in the composition of the Board of Directors of the Company; or (v) the Board of Directors of the Company adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change of Control has occurred. SECTION 3. Events upon Change of Control. ----------------------------- (a) Employment Period. Subject to Section 6 of this Agreement, the ----------------- Company agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Company, for the period (the "Employment Period") commencing on the Change of Control Date and ending on the second anniversary of the Change of Control Date. (b) Vesting and Related Rights. Notwithstanding anything to the contrary -------------------------- in this Agreement, in any other agreement between the Executive and the Company or in any Company plan or elsewhere: (i) upon the Change of Control Date, all of the Executive's options to purchase common stock or other securities of the Company shall immediately become exercisable in full, and such options may thereafter be exercised, in whole or in part, until the expiration of the applicable option term; if the Executive dies within such period, any unexercised option held by the Executive shall thereafter be exercisable, in whole or in part, for the remainder of such period. All other terms and conditions with respect to such options, including the price, term and treatment upon termination of employment, shall continue to be governed by the applicable Company plan(s) and stock option agreement(s) between the Executive and the Company, as such may be amended from time to time; and (ii) the Executive shall be deemed to have earned Performance Shares with respect to each of his Awards outstanding at the Change of Control Date. The number of Performance Shares so earned shall be computed by determining (based on the conditions set by the Compensation Committee of the Company's Board for payment of Awards for the subject Award Period) the number of Performance Shares that would have been paid if each subject Award Period had ended on the December 31st immediately preceding the Change of Control Date; provided that in no event shall the number of Performance Shares earned be less than the aggregate number of Performance Shares at the target performance level (as identified in the applicable award letter) with respect to all such Awards. Thus, in the event of a Change of Control, the minimum Performance Shares to be awarded shall be equal to the aggregate number of Performance Shares that would have been awarded at the end of the Award Period(s) if the target performance level(s) applicable thereto had been met. Performance Share Awards granted in the year of the Change of Control shall be earned at the same percentage as Awards granted in the year preceding the year of the Change of Control. Each Performance Share so earned shall be canceled in exchange for an immediate payment in cash of an amount equal to the Change of Control Price. In addition, upon the cash payment provided for in the preceding sentence, the Company agrees to pay a cash bonus to the Executive in an amount equal to the aggregate amount of the federal and state income taxes that will be incurred by the Executive, based on the highest marginal income tax rates, as a result of (A) the cash payment provided for in the preceding sentence and (B) the cash bonus made pursuant to this sentence. SECTION 4. Position and Duties. ------------------- (a) No Reduction in Position. During the Employment Period, the ------------------------ Executive's position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately prior to the public announcement of the transaction constituting the Change of Control. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the public announcement of the transaction constituting the Change of Control. (b) Business Time. From and after the Change of Control Date, the ------------- Executive agrees to devote his full attention during normal business hours to the business and affairs of the Company and to perform faithfully and -3- efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing service on any boards and committees on which he is serving or with which he is otherwise associated immediately preceding the Change of Control Date shall not be deemed to interfere with the performance of the Executive's services to the Company. SECTION 5. Compensation. ------------ (a) Base Salary. During the Employment Period, the Executive shall receive ----------- a base salary at a monthly rate at least equal to the monthly salary paid to the Executive by the Company immediately prior to the Change of Control Date. The base salary shall be reviewed at least once each year after the Change of Control Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company's regular practices. The Executive's base salary, as it may be increased from time to time, shall hereafter be referred to as "Base Salary". Neither the Base Salary nor any increase in Base Salary after the Change of Control Date shall serve to limit or reduce any other obligation of the Company hereunder. (b) Annual Bonus and Incentive Compensation. During the Employment Period, --------------------------------------- in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, the Executive shall be entitled to receive: (i) an annual bonus which is at least equal to the greater of (A) the highest annual bonus, including without limitation any bonus provided under the Company's Annual Incentive Plan, that had been payable to the Executive in respect of either of the last two fiscal years ended immediately prior to the Change of Control Date or (B) the amount that would have been payable to the Executive as a target bonus for the year in which the Change of Control occurs under the Company's Annual Incentive Plan; and (ii) long-term incentive compensation opportunities (including but not limited to Performance Share Awards) on terms and conditions no less favorable to the Executive than those applicable to the Executive prior to the Change of Control Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Company may make available to the Executive. (c) Benefit Plans. During the Employment Period, the Executive (and, to ------------- the extent applicable, his dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with the Executive's participation in such plans immediately prior to the Change of Control Date, or, if more favorable to the Executive, at the level made available to the Executive or other similarly situated officers at any time thereafter. The Executive shall also be entitled to receive such perquisites as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. (d) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Company as in effect immediately prior to the Change of Control Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Change of Control Date to the Executive, if such policies and procedures are more favorable to the Executive than those in effect immediately prior to the Change of Control Date. (e) Indemnification. During and after the Employment Period, the Company --------------- shall indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other -4- capacity, including any fiduciary capacity, in which the Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company's Certificate of Incorporation and By-Laws (the "Governing Documents"); provided, however, that in no event shall the protection afforded to the Executive hereunder be less than that afforded under the Governing Documents as in effect immediately prior to the Change of Control Date. SECTION 6. Termination. ----------- (a) Death, Disability or Retirement. This Agreement shall terminate ------------------------------- automatically upon the Executive's death, termination due to "Disability" (as defined below) or voluntary retirement under any of the Company's retirement plans as in effect from time to time. For purposes of this Agreement, Disability shall mean the Executive's inability to perform the duties of his position, as determined in accordance with the policies and procedures applicable with respect to the Company's long-term disability plan, as in effect immediately prior to the Change of Control Date. (b) Voluntary Termination. Notwithstanding anything in this Agreement to --------------------- the contrary, following a Change of Control the Executive may, upon not less than 10 days' written notice to the Company, voluntarily terminate his employment for any reason (including early retirement under the terms of any of the Company's retirement plans as in effect from time to time); provided, however, that any termination by the Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Company may terminate the Executive's employment for Cause. ----- For purposes of this Agreement, "Cause" means: (i) the Executive's conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on the Executive's part which result or are intended to result in material damage to the Company's business or reputation; or (iii) repeated material violations by the Executive of his obligations under Section 4 of this Agreement, which violations are demonstrably willful and deliberate on the Executive's part and which result in material damage to the Company's business or reputation. (d) Good Reason. Following the occurrence of a Change of Control, the ----------- Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" means the occurrence of any of the following, without the express written consent of the Executive, after the occurrence of a Change of Control: (i) (A) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive's position, authority or responsibilities as contemplated by Section 4 of this Agreement, or (B) any other material adverse change in such position, including titles, authority or responsibilities; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based, or to perform a substantial potion of his duties with the Company, at any office or location more than 20 miles from that location at which he performed his services specified under the provisions of Section 4 immediately prior to the Change of Control Date, except for travel reasonably required in the performance of the Executive's responsibilities; or (iv) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b). -5- In no event shall the mere occurrence of a Change of Control, absent any further impact on the Executive, be deemed to constitute Good Reason. (e) Notice of Termination. Any termination by the Company for Cause or by --------------------- the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Company's having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For the purpose of this Agreement, the term "Date ------------------- of Termination" means (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. SECTION 7. Obligations of the Company upon Termination. ------------------------------------------- (a) Death or Disability. If the Executive's employment is terminated ------------------- during the Employment Period by reason of the Executive's death or Disability, this Agreement shall terminate without further obligations to the Executive or the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to the Executive (or his beneficiary or estate): (i) the Executive's full Base Salary through the Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits owing to the Executive under the Company's otherwise applicable employee benefit plans and programs, including any compensation previously deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the "Accrued Obligations"), and (iii) any other benefits payable due to the Executive's death or Disability under the Company's plans, policies or programs (the "Additional Benefits"). Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement. (b) Cause and Voluntary Termination. If, during the Employment Period, the ------------------------------- Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay the Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 days, following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, program or arrangement. (c) Termination by the Executive for Good reason and Termination by the ------------------------------------------------------------------- Company other than for Cause. - ---------------------------- (i) Lump Sum Payments. If (X) the Company terminates the Executive's employment other than for Cause during the Employment Period or (Y) the Executive terminates his employment for Good -6- Reason at any time during the Employment Period, then the Company shall pay to the Executive the following amounts: (A) the Executive's Earned Salary; (B) a cash amount (the "Severance Amount") equal to three (3) times the sum of (1) the Executive's annual Base Salary; (2) the greater of (X) the average of the bonus amount payable (including any amounts payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company immediately preceding the Change of Control Date or (Y) the average of the bonus amount payable (including any amount payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company ending immediately prior to the Date of Termination; and (3) an amount determined by multiplying (i) the aggregate number of Performance Shares, as designated in the award letter issued in the calendar year in which the Change of Control occurs, to be awarded to the Executive at the target performance level, and (ii) the Average Closing Price; and (C) the Accrued Obligations. The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or arrangement. (ii) Supplemental Retirement Benefit. In the event the Executive is ------------------------------- entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled to receive a supplemental retirement benefit payable pursuant to a deferred annuity contract issued by a solvent insurer mutually acceptable to the Company and the Executive and purchased by the Company and delivered to the Executive within 60 days after the Date of Termination. Such annuity contract shall provide for monthly payments on and after the Executive's 65th birthday and 100% survivor benefits to the Executive's spouse for such individual's lifetime in the event of the Executive's death prior to or after age 65. The monthly benefits to be provided by the annuity shall be determined as follows: (A) three years shall be added to Executive's credited service as determined at Date of Termination under the terms of the NBC Pension Plan (the "Pension Plan") as in effect immediately prior to the Change of Control Date (subject to any applicable maximum on credited service); (B) using such adjusted credited service, a new monthly benefit for life commencing at age 65 shall be determined as of the Date of Termination under the terms of the Pension Plan; (C) from such monthly benefit as calculated in (B) above shall be subtracted the monthly vested deferred benefit of Executive due to be paid on and after attainment of age 65, if any, pursuant to the terms of all defined benefit pension plans, active or frozen, in which Executive is a participant at his Date of Termination if such plans are sponsored by the Company, its successors or affiliates thereof; and (D) in accordance with the terms of the Pension Plan, the difference described in (C) next above shall be converted from a monthly lifetime benefit after age 65 to the actuarial equivalent monthly benefit on and after attainment of age 65 which provides the 100% survivorship feature first above described in this Section 7(c)(ii). For purposes of making the foregoing determinations, at the request of Executive in the Notice of Termination given by Executive or in writing within 3 days of Executive's receipt of Notice of Termination, but in either event at Company expense, the independent pension consultants most recently used by Company in connection with its qualified pension plan prior to the Change of Control Date shall be engaged and shall -7- certify the benefits due Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under subparagraph (C) above shall not be determined by the end of a period of 30 days after the Date of Termination, no such offset shall be permitted. (iii) Continuation of Benefits. In the event the Executive is ------------------------ entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled, after the Date of Termination until the earlier of (1) the second anniversary of the Date of Termination (the "End Date") or (2) the date the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company's employee welfare benefit plans including, without limitation, the Company's hospital, medical, accident, disability and life insurance plans (the "Benefit Plans") as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company's general assets. The Executive's participation in the Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company through the End Date. (d) Discharge of the Company's Obligations. Except as expressly provided -------------------------------------- in the last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of his employment shall be in full and complete satisfaction of the Executive's rights under this Agreement and any other claims he may have in respect of his employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive's receipt of such amounts, the Company shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive's employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents. (e) Certain Further Payments by the Company. --------------------------------------- (i) In the event that any amount or benefit paid or distributed to the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to the Executive by the Company or any affiliated company including, without limitation, any distribution or payment made pursuant to the terms of the Company's compensation plans or arrangements (collectively, the "Covered Payments"), are or become subject to the tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax that may hereafter be imposed, the Company shall pay to the Executive at the time specified in Section 7(e)(v) below an additional amount (the "Tax Reimbursement Payment") such that the net amount retained by the Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments. (ii) For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company's independent certified public accountants appointed prior to the Change of Control Date or tax counsel selected by such Accountants (the "Accountants"), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for personal -8- services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code. (iii) For purposes of determining the amount of the Tax Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year. (iv) In the event that the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if the Executive's good faith claim for refund or credit is denied. In the event that the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. (v) The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) above shall be paid to the Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). SECTION 8. Non-Exclusivity of Rights. Except as expressly provided herein, ------------------------- nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which the Executive may -9- qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. SECTION 9. Full Settlement. The Company's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. SECTION 10. Legal Fees and Expenses. If the Executive asserts any claim ----------------------- in any contest (whether initiated by the Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay the Executive's legal expenses (or cause such expenses to be paid) including, without limitation, his reasonable attorney's fees, on a quarterly basis, upon presentation of proof of such expenses; provided, however, that the Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement. SECTION 11. Successors. ---------- (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place. SECTION 12. Miscellaneous. ------------- (a) Applicable Law. This Agreement shall be governed by and construed and -------------- conferred in accordance with the laws of the State of Delaware (and, as applicable, Title 9 of the U.S. Code) applied without reference to principles of conflict of laws. (b) Arbitration. Any dispute or controversy arising under or in ----------- connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. (c) Amendments. This Agreement may be amended or modified by the Board ---------- of Directors at any time prior to a Change in Control; provided, however, that subsequent to the occurrence of a Potential Change in Control, this Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Notwithstanding the foregoing sentence, in the event that subsequent to the occurrence of a Potential Change in Control (i) the Board of Directors makes a good faith determination that the events giving rise to a Potential Change in Control will not result in the occurrence of a Change in Control or (ii) an actual Change in Control has not occurred after the first anniversary of the occurrence of a Potential Change in Control (or any Potential Change in Control events occurring after the initial Potential Change in Control), the foregoing limitation on the amendment or modification of this Agreement shall cease to apply unless -10- and until it thereafter again becomes effective by reason of the occurrence of another Potential Change in Control or any actual Change in Control. (d) Notices. All notices and other communications hereunder shall be in ------- writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the home address of the Executive noted on the records of the Company If to the Company: Alabama National BanCorporation 1927 First Avenue North Birmingham, Alabama 35203 Attn.: Chairman of the Board of Directors With a copy to: Mark L. Drew Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North 2400 AmSouth/Harbert Plaza Birmingham, Alabama 35203 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (e) Entire Agreement. Upon the Change of Control Date, unless otherwise ---------------- provided herein, this Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. In the event any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has read this Agreement and that he understands it and its legal consequences. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written. ALABAMA NATIONAL BANCORPORATION By: /s/ Victor E. Nichol, Jr. ------------------------- Name: Victor E. Nichol, Jr. --------------------- Title: President and COO ----------------- EXECUTIVE Signature: /s/ John H. Holcomb, III ------------------------ Name: John H. Holcomb, III -------------------- Title: Chairman and Chief Executive Officer ------------------------------------ -11- EX-10.44 18 0018.txt EMPLOYMENT CONTINUATION AGREEMENT Exhibit 10.44 ------------- EMPLOYMENT CONTINUATION AGREEMENT --------------------------------- THIS AGREEMENT between ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (the "Company"), and WILLIAM E. MATTHEWS, V (the "Executive"), is dated as of this 21/st/ day of September, 2000. W I T N E S S E T H : WHEREAS, the Company has employed the Executive in a key executive officer position and has determined that the Executive holds a position which is of critical importance to the Company; WHEREAS, the Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of stockholders; WHEREAS, the Company understands that any such situation will present significant concerns for the Executive with respect to his financial and job security; WHEREAS, the Company desires to assure itself of the Executive's services during any period in which it is confronting such a situation and to provide the Executive with certain financial assurances to enable the Executive to perform the responsibilities of his position without undue distraction and to exercise his judgment without bias due to his personal circumstances; WHEREAS, to achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and the Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2 below); NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Company and the Executive as follows: SECTION 1. Operation of Agreement. ---------------------- (a) Effective Date. The effective date of this Agreement shall be the date -------------- on which a Change of Control occurs (the "Change of Control Date"); provided, however, that if the Executive is not employed by the Company on the Change of Control Date, this Agreement shall be void and without effect. SECTION 2. Definitions. ----------- (a) Average Closing Price. "Average Closing Price" shall mean the average --------------------- of the daily closing prices for a share of the Company's common stock, for the twenty (20) trading days preceding the Change of Control Date, on the Composite Tape for the New York Stock Exchange -- Listed Stocks, or, if the common stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the common stock is listed, or, if the common stock is not listed on any such Exchange, the average of the daily closing bid quotations with respect to a share of the common stock for such twenty (20) trading days on the National Association of Securities Dealers, Inc. Automated Quotations Systems or any system then in use. (b) Award. "Award" shall have the meaning ascribed to such term in the ----- Performance Share Plan. (c) Award Period. "Award Period" shall have the meaning ascribed to such ------------ term in the Performance Share Plan. (d) Beneficial Owner. For purposes of this Agreement, "Beneficial Owner" ---------------- shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) Change of Control. For the purposes of this Agreement, a "Change of ----------------- Control" shall mean: (i) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) upon the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (x) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (y) the stockholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. (f) Change of Control Price. "Change of Control Price" shall have the ----------------------- meaning ascribed to such term in the Performance Share Plan. (g) Performance Share. "Performance Share" shall have the meaning ascribed ----------------- to such term in the Performance Share Plan. (h) Performance Share Plan. "Performance Share Plan " means that certain ---------------------- Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan, effective as of April 20, 2000, as such Plan may be amended from time to time. (i) Person. "Person" shall have the meaning ascribed to such term in ------ Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (j) Potential Change of Control. For the purposes of this Agreement, a --------------------------- Potential Change of Control shall be deemed to have occurred if: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control; (ii) any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; (iii) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) hereafter becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing greater than 10% of the combined voting power of the Company's then outstanding securities (determined by taking into account as though converted -2- or exercised any securities convertible into voting securities or any options exercisable for voting securities, but only to the extent such convertible securities or options are beneficially owned or held by such Person); (iv) any Person files soliciting materials intended to result in a change in the composition of the Board of Directors of the Company; or (v) the Board of Directors of the Company adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change of Control has occurred. SECTION 3. Events upon Change of Control. ----------------------------- (a) Employment Period. Subject to Section 6 of this Agreement, the Company ----------------- agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Company, for the period (the "Employment Period") commencing on the Change of Control Date and ending on the second anniversary of the Change of Control Date. (b) Vesting and Related Rights. Notwithstanding anything to the contrary -------------------------- in this Agreement, in any other agreement between the Executive and the Company or in any Company plan or elsewhere: (i) upon the Change of Control Date, all of the Executive's options to purchase common stock or other securities of the Company shall immediately become exercisable in full, and such options may thereafter be exercised, in whole or in part, until the expiration of the applicable option term; if the Executive dies within such period, any unexercised option held by the Executive shall thereafter be exercisable, in whole or in part, for the remainder of such period. All other terms and conditions with respect to such options, including the price, term and treatment upon termination of employment, shall continue to be governed by the applicable Company plan(s) and stock option agreement(s) between the Executive and the Company, as such may be amended from time to time; and (ii) the Executive shall be deemed to have earned Performance Shares with respect to each of his Awards outstanding at the Change of Control Date. The number of Performance Shares so earned shall be computed by determining (based on the conditions set by the Compensation Committee of the Company's Board for payment of Awards for the subject Award Period) the number of Performance Shares that would have been paid if each subject Award Period had ended on the December 31st immediately preceding the Change of Control Date; provided that in no event shall the number of Performance Shares earned be less than the aggregate number of Performance Shares at the target performance level (as identified in the applicable award letter) with respect to all such Awards. Thus, in the event of a Change of Control, the minimum Performance Shares to be awarded shall be equal to the aggregate number of Performance Shares that would have been awarded at the end of the Award Period(s) if the target performance level(s) applicable thereto had been met. Performance Share Awards granted in the year of the Change of Control shall be earned at the same percentage as Awards granted in the year preceding the year of the Change of Control. Each Performance Share so earned shall be canceled in exchange for an immediate payment in cash of an amount equal to the Change of Control Price. In addition, upon the cash payment provided for in the preceding sentence, the Company agrees to pay a cash bonus to the Executive in an amount equal to the aggregate amount of the federal and state income taxes that will be incurred by the Executive, based on the highest marginal income tax rates, as a result of (A) the cash payment provided for in the preceding sentence and (B) the cash bonus made pursuant to this sentence. SECTION 4. Position and Duties. ------------------- (a) No Reduction in Position. During the Employment Period, the ------------------------ Executive's position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately prior to the public announcement of the transaction constituting the Change of Control. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the public announcement of the transaction constituting the Change of Control. -3- (b) Business Time. From and after the Change of Control Date, the ------------- Executive agrees to devote his full attention during normal business hours to the business and affairs of the Company and to perform faithfully and efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing service on any boards and committees on which he is serving or with which he is otherwise associated immediately preceding the Change of Control Date shall not be deemed to interfere with the performance of the Executive's services to the Company. SECTION 5. Compensation. ------------ (a) Base Salary. During the Employment Period, the Executive shall ----------- receive a base salary at a monthly rate at least equal to the monthly salary paid to the Executive by the Company immediately prior to the Change of Control Date. The base salary shall be reviewed at least once each year after the Change of Control Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company's regular practices. The Executive's base salary, as it may be increased from time to time, shall hereafter be referred to as "Base Salary". Neither the Base Salary nor any increase in Base Salary after the Change of Control Date shall serve to limit or reduce any other obligation of the Company hereunder. (b) Annual Bonus and Incentive Compensation. During the Employment --------------------------------------- Period,in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, the Executive shall be entitled to receive: (i) an annual bonus which is at least equal to the greater of (A) the highest annual bonus, including without limitation any bonus provided under the Company's Annual Incentive Plan, that had been payable to the Executive in respect of either of the last two fiscal years ended immediately prior to the Change of Control Date or (B) the amount that would have been payable to the Executive as a target bonus for the year in which the Change of Control occurs under the Company's Annual Incentive Plan; and (ii) long-term incentive compensation opportunities (including but not limited to Performance Share Awards) on terms and conditions no less favorable to the Executive than those applicable to the Executive prior to the Change of Control Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Company may make available to the Executive. (c) Benefit Plans. During the Employment Period, the Executive (and, to ------------- the extent applicable, his dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with the Executive's participation in such plans immediately prior to the Change of Control Date, or, if more favorable to the Executive, at the level made available to the Executive or other similarly situated officers at any time thereafter. The Executive shall also be entitled to receive such perquisites as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. (d) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Company as in effect immediately prior to the Change of Control Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Change of Control Date to the Executive, if such policies and procedures are more favorable to the Executive than those in effect immediately prior to the Change of Control Date. -4- (e) Indemnification. During and after the Employment Period, the Company --------------- shall indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company's Certificate of Incorporation and By-Laws (the "Governing Documents"); provided, however, that in no event shall the protection afforded to the Executive hereunder be less than that afforded under the Governing Documents as in effect immediately prior to the Change of Control Date. SECTION 6. Termination. ----------- (a) Death, Disability or Retirement. This Agreement shall terminate ------------------------------- automatically upon the Executive's death, termination due to "Disability" (as defined below) or voluntary retirement under any of the Company's retirement plans as in effect from time to time. For purposes of this Agreement, Disability shall mean the Executive's inability to perform the duties of his position, as determined in accordance with the policies and procedures applicable with respect to the Company's long-term disability plan, as in effect immediately prior to the Change of Control Date. (b) Voluntary Termination. Notwithstanding anything in this Agreement to --------------------- the contrary, following a Change of Control the Executive may, upon not less than 10 days' written notice to the Company, voluntarily terminate his employment for any reason (including early retirement under the terms of any of the Company's retirement plans as in effect from time to time); provided, however, that any termination by the Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Company may terminate the Executive's employment for ----- Cause. For purposes of this Agreement, "Cause" means: (i) the Executive's conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on the Executive's part which result or are intended to result in material damage to the Company's business or reputation; or (iii) repeated material violations by the Executive of his obligations under Section 4 of this Agreement, which violations are demonstrably willful and deliberate on the Executive's part and which result in material damage to the Company's business or reputation. (d) Good Reason. Following the occurrence of a Change of Control, the ----------- Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" means the occurrence of any of the following, without the express written consent of the Executive, after the occurrence of a Change of Control: (i) (A) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive's position, authority or responsibilities as contemplated by Section 4 of this Agreement, or (B) any other material adverse change in such position, including titles, authority or responsibilities; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based, or to perform a substantial potion of his duties with the Company, at any office or location more than 20 miles from that location at which he performed his services specified under the provisions of Section 4 immediately prior to the Change of Control Date, except for travel reasonably required in the performance of the Executive's responsibilities; or -5- (iv) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b). In no event shall the mere occurrence of a Change of Control, absent any further impact on the Executive, be deemed to constitute Good Reason. (e) Notice of Termination. Any termination by the Company for Cause or by --------------------- the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Company's having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For the purpose of this Agreement, the term ------------------- "Date of Termination" means (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. SECTION 7. Obligations of the Company upon Termination. ------------------------------------------- (a) Death or Disability. If the Executive's employment is terminated ------------------- during the Employment Period by reason of the Executive's death or Disability, this Agreement shall terminate without further obligations to the Executive or the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to the Executive (or his beneficiary or estate): (i) the Executive's full Base Salary through the Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits owing to the Executive under the Company's otherwise applicable employee benefit plans and programs, including any compensation previously deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the "Accrued Obligations"), and (iii) any other benefits payable due to the Executive's death or Disability under the Company's plans, policies or programs (the "Additional Benefits"). Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement. (b) Cause and Voluntary Termination. If, during the Employment Period, ------------------------------- the Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay the Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 days, following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, program or arrangement. (c) Termination by the Executive for Good reason and Termination by the ------------------------------------------------------------------- Company other than for Cause. - ---------------------------- -6- (i) Lump Sum Payments. If (X) the Company terminates the Executive's ----------------- employment other than for Cause during the Employment Period or (Y) the Executive terminates his employment for Good Reason at any time during the Employment Period, then the Company shall pay to the Executive the following amounts: (A) the Executive's Earned Salary; (B) a cash amount (the "Severance Amount") equal to three (3) times the sum of (1) the Executive's annual Base Salary; (2) the greater of (X) the average of the bonus amount payable (including any amounts payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company immediately preceding the Change of Control Date or (Y) the average of the bonus amount payable (including any amount payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company ending immediately prior to the Date of Termination; and (3) an amount determined by multiplying (i) the aggregate number of Performance Shares, as designated in the award letter issued in the calendar year in which the Change of Control occurs, to be awarded to the Executive at the target performance level, and (ii) the Average Closing Price; and (C) the Accrued Obligations. The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or arrangement. (ii) Supplemental Retirement Benefit. In the event the Executive is ------------------------------- entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled to receive a supplemental retirement benefit payable pursuant to a deferred annuity contract issued by a solvent insurer mutually acceptable to the Company and the Executive and purchased by the Company and delivered to the Executive within 60 days after the Date of Termination. Such annuity contract shall provide for monthly payments on and after the Executive's 65th birthday and 100% survivor benefits to the Executive's spouse for such individual's lifetime in the event of the Executive's death prior to or after age 65. The monthly benefits to be provided by the annuity shall be determined as follows: (A) three years shall be added to Executive's credited service as determined at Date of Termination under the terms of the NBC Pension Plan (the "Pension Plan") as in effect immediately prior to the Change of Control Date (subject to any applicable maximum on credited service); (B) using such adjusted credited service, a new monthly benefit for life commencing at age 65 shall be determined as of the Date of Termination under the terms of the Pension Plan; (C) from such monthly benefit as calculated in (B) above shall be subtracted the monthly vested deferred benefit of Executive due to be paid on and after attainment of age 65, if any, pursuant to the terms of all defined benefit pension plans, active or frozen, in which Executive is a participant at his Date of Termination if such plans are sponsored by the Company, its successors or affiliates thereof; and (D) in accordance with the terms of the Pension Plan, the difference described in (C) next above shall be converted from a monthly lifetime benefit after age 65 to the actuarial equivalent monthly benefit on and after attainment of age 65 which provides the 100% survivorship feature first above described in this Section 7(c)(ii). For purposes of making the foregoing determinations, at the request of Executive in the Notice of Termination given by Executive or in writing within 3 days of Executive's receipt of Notice of Termination, but in either -7- event at Company expense, the independent pension consultants most recently used by Company in connection with its qualified pension plan prior to the Change of Control Date shall be engaged and shall certify the benefits due Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under subparagraph (C) above shall not be determined by the end of a period of 30 days after the Date of Termination, no such offset shall be permitted. (iii) Continuation of Benefits. In the event the Executive is ------------------------ entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled, after the Date of Termination until the earlier of (1) the second anniversary of the Date of Termination (the "End Date") or (2) the date the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company's employee welfare benefit plans including, without limitation, the Company's hospital, medical, accident, disability and life insurance plans (the "Benefit Plans") as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company's general assets. The Executive's participation in the Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company through the End Date. (d) Discharge of the Company's Obligations. Except as expressly provided -------------------------------------- in the last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of his employment shall be in full and complete satisfaction of the Executive's rights under this Agreement and any other claims he may have in respect of his employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive's receipt of such amounts, the Company shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive's employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents. (e) Certain Further Payments by the Company. --------------------------------------- (i) In the event that any amount or benefit paid or distributed to the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to the Executive by the Company or any affiliated company including, without limitation, any distribution or payment made pursuant to the terms of the Company's compensation plans or arrangements (collectively, the "Covered Payments"), are or become subject to the tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax that may hereafter be imposed, the Company shall pay to the Executive at the time specified in Section 7(e)(v) below an additional amount (the "Tax Reimbursement Payment") such that the net amount retained by the Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments. (ii) For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company's independent certified public accountants appointed prior to the Change of Control Date or tax counsel selected by such Accountants (the -8- "Accountants"), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for personal services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax, and (B) the value of any non- cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code. (iii) For purposes of determining the amount of the Tax Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year. (iv) In the event that the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if the Executive's good faith claim for refund or credit is denied. In the event that the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. (v) The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) above shall be paid to the Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). -9- SECTION 8. Non-Exclusivity of Rights. Except as expressly provided herein, ------------------------- nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. SECTION 9. Full Settlement. The Company's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. SECTION 10. Legal Fees and Expenses. If the Executive asserts any claim ----------------------- in any contest (whether initiated by the Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay the Executive's legal expenses (or cause such expenses to be paid) including, without limitation, his reasonable attorney's fees, on a quarterly basis, upon presentation of proof of such expenses; provided, however, that the Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement. SECTION 11. Successors. ---------- (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place. SECTION 12. Miscellaneous. ------------- (a) Applicable Law. This Agreement shall be governed by and construed and -------------- conferred in accordance with the laws of the State of Delaware (and, as applicable, Title 9 of the U.S. Code) applied without reference to principles of conflict of laws. (b) Arbitration. Any dispute or controversy arising under or in connection ----------- with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. (c) Amendments. This Agreement may be amended or modified by the Board of ---------- Directors at any time prior to a Change in Control; provided, however, that subsequent to the occurrence of a Potential Change in Control, this Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Notwithstanding the foregoing sentence, in the event that subsequent to the occurrence of a Potential Change in Control (i) the Board of Directors makes a good faith determination that the events giving rise to a Potential Change in Control will not result in the occurrence of a Change -10- in Control or (ii) an actual Change in Control has not occurred after the first anniversary of the occurrence of a Potential Change in Control (or any Potential Change in Control events occurring after the initial Potential Change in Control), the foregoing limitation on the amendment or modification of this Agreement shall cease to apply unless and until it thereafter again becomes effective by reason of the occurrence of another Potential Change in Control or any actual Change in Control. (d) Notices. All notices and other communications hereunder shall be in ------- writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the home address of the Executive noted on the records of the Company If to the Company: Alabama National BanCorporation 1927 First Avenue North Birmingham, Alabama 35203 Attn.: Chairman of the Board of Directors With a copy to: Mark L. Drew Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North 2400 AmSouth/Harbert Plaza Birmingham, Alabama 35203 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (e) Entire Agreement. Upon the Change of Control Date, unless otherwise ---------------- provided herein, this Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. In the event any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has read this Agreement and that he understands it and its legal consequences. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written. ALABAMA NATIONAL BANCORPORATION By: /s/ John H. Holcomb, III ------------------------ Name: John H. Holcomb, III -------------------- Title: Chairman and CEO ---------------- EXECUTIVE Signature: /s/ William E. Matthews, V -------------------------- Name: William E. Matthews, V ---------------------- Title: Executive Vice President and Chief ---------------------------------- Financial Officer ----------------- -11- EX-10.45 19 0019.txt EMPLOYMENT CONTINUATION AGREEMENT Exhibit 10.45 ------------- EMPLOYMENT CONTINUATION AGREEMENT --------------------------------- THIS AGREEMENT between ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (the "Company"), and RICHARD MURRAY, IV (the "Executive"), is dated as of this 21/st/ day of September, 2000. W I T N E S S E T H : WHEREAS, the Company has employed the Executive in a key executive officer position and has determined that the Executive holds a position which is of critical importance to the Company; WHEREAS, the Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of stockholders; WHEREAS, the Company understands that any such situation will present significant concerns for the Executive with respect to his financial and job security; WHEREAS, the Company desires to assure itself of the Executive's services during any period in which it is confronting such a situation and to provide the Executive with certain financial assurances to enable the Executive to perform the responsibilities of his position without undue distraction and to exercise his judgment without bias due to his personal circumstances; WHEREAS, to achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and the Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2 below); NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Company and the Executive as follows: SECTION 1. Operation of Agreement. ---------------------- (a) Effective Date. The effective date of this Agreement shall be the date -------------- on which a Change of Control occurs (the "Change of Control Date"); provided, however, that if the Executive is not employed by the Company on the Change of Control Date, this Agreement shall be void and without effect. SECTION 2. Definitions. ----------- (a) Average Closing Price. "Average Closing Price" shall mean the average --------------------- of the daily closing prices for a share of the Company's common stock, for the twenty (20) trading days preceding the Change of Control Date, on the Composite Tape for the New York Stock Exchange -- Listed Stocks, or, if the common stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the common stock is listed, or, if the common stock is not listed on any such Exchange, the average of the daily closing bid quotations with respect to a share of the common stock for such twenty (20) trading days on the National Association of Securities Dealers, Inc. Automated Quotations Systems or any system then in use. (b) Award. "Award" shall have the meaning ascribed to such term in the ----- Performance Share Plan. (c) Award Period. "Award Period" shall have the meaning ascribed to such ------------ term in the Performance Share Plan. (d) Beneficial Owner. For purposes of this Agreement, "Beneficial Owner" ---------------- shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) Change of Control. For the purposes of this Agreement, a "Change of ----------------- Control" shall mean: (i) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) upon the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (x) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (y) the stockholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. (f) Change of Control Price. "Change of Control Price" shall have the ----------------------- meaning ascribed to such term in the Performance Share Plan. (g) Performance Share. "Performance Share" shall have the meaning ascribed ----------------- to such term in the Performance Share Plan. (h) Performance Share Plan. "Performance Share Plan " means that certain ---------------------- Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan, effective as of April 20, 2000, as such Plan may be amended from time to time. (i) Person. "Person" shall have the meaning ascribed to such term in ------ Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (j) Potential Change of Control. For the purposes of this Agreement, a --------------------------- Potential Change of Control shall be deemed to have occurred if: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control; (ii) any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; (iii) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) hereafter becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing greater than 10% of the combined voting power of the Company's then outstanding securities (determined by taking into account as though converted or exercised any securities convertible into voting securities or any options exercisable for voting securities, but only to the extent such convertible securities or options are beneficially owned or held by such Person); -2- (iv) any Person files soliciting materials intended to result in a change in the composition of the Board of Directors of the Company; or (v) the Board of Directors of the Company adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change of Control has occurred. SECTION 3. Events upon Change of Control. ----------------------------- (a) Employment Period. Subject to Section 6 of this Agreement, the Company ----------------- agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Company, for the period (the "Employment Period") commencing on the Change of Control Date and ending on the second anniversary of the Change of Control Date. (b) Vesting and Related Rights. Notwithstanding anything to the contrary -------------------------- in this Agreement, in any other agreement between the Executive and the Company or in any Company plan or elsewhere: (i) upon the Change of Control Date, all of the Executive's options to purchase common stock or other securities of the Company shall immediately become exercisable in full, and such options may thereafter be exercised, in whole or in part, until the expiration of the applicable option term; if the Executive dies within such period, any unexercised option held by the Executive shall thereafter be exercisable, in whole or in part, for the remainder of such period. All other terms and conditions with respect to such options, including the price, term and treatment upon termination of employment, shall continue to be governed by the applicable Company plan(s) and stock option agreement(s) between the Executive and the Company, as such may be amended from time to time; and (ii) the Executive shall be deemed to have earned Performance Shares with respect to each of his Awards outstanding at the Change of Control Date. The number of Performance Shares so earned shall be computed by determining (based on the conditions set by the Compensation Committee of the Company's Board for payment of Awards for the subject Award Period) the number of Performance Shares that would have been paid if each subject Award Period had ended on the December 31st immediately preceding the Change of Control Date; provided that in no event shall the number of Performance Shares earned be less than the aggregate number of Performance Shares at the target performance level (as identified in the applicable award letter) with respect to all such Awards. Thus, in the event of a Change of Control, the minimum Performance Shares to be awarded shall be equal to the aggregate number of Performance Shares that would have been awarded at the end of the Award Period(s) if the target performance level(s) applicable thereto had been met. Performance Share Awards granted in the year of the Change of Control shall be earned at the same percentage as Awards granted in the year preceding the year of the Change of Control. Each Performance Share so earned shall be canceled in exchange for an immediate payment in cash of an amount equal to the Change of Control Price. In addition, upon the cash payment provided for in the preceding sentence, the Company agrees to pay a cash bonus to the Executive in an amount equal to the aggregate amount of the federal and state income taxes that will be incurred by the Executive, based on the highest marginal income tax rates, as a result of (A) the cash payment provided for in the preceding sentence and (B) the cash bonus made pursuant to this sentence. SECTION 4. Position and Duties. ------------------- (a) No Reduction in Position. During the Employment Period, the ------------------------ Executive's position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately prior to the public announcement of the transaction constituting the Change of Control. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the public announcement of the transaction constituting the Change of Control. (b) Business Time. From and after the Change of Control Date, the ------------- Executive agrees to devote his full attention during normal business hours to the business and affairs of the Company and to perform faithfully and -3- efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing service on any boards and committees on which he is serving or with which he is otherwise associated immediately preceding the Change of Control Date shall not be deemed to interfere with the performance of the Executive's services to the Company. SECTION 5. Compensation. ------------ (a) Base Salary. During the Employment Period, the Executive shall ----------- receive a base salary at a monthly rate at least equal to the monthly salary paid to the Executive by the Company immediately prior to the Change of Control Date. The base salary shall be reviewed at least once each year after the Change of Control Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company's regular practices. The Executive's base salary, as it may be increased from time to time, shall hereafter be referred to as "Base Salary". Neither the Base Salary nor any increase in Base Salary after the Change of Control Date shall serve to limit or reduce any other obligation of the Company hereunder. (b) Annual Bonus and Incentive Compensation. During the Employment --------------------------------------- Period,in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, the Executive shall be entitled to receive: (i) an annual bonus which is at least equal to the greater of (A) the highest annual bonus, including without limitation any bonus provided under the Company's Annual Incentive Plan, that had been payable to the Executive in respect of either of the last two fiscal years ended immediately prior to the Change of Control Date or (B) the amount that would have been payable to the Executive as a target bonus for the year in which the Change of Control occurs under the Company's Annual Incentive Plan; and (ii) long-term incentive compensation opportunities (including but not limited to Performance Share Awards) on terms and conditions no less favorable to the Executive than those applicable to the Executive prior to the Change of Control Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Company may make available to the Executive. (c) Benefit Plans. During the Employment Period, the Executive (and, to ------------- the extent applicable, his dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with the Executive's participation in such plans immediately prior to the Change of Control Date, or, if more favorable to the Executive, at the level made available to the Executive or other similarly situated officers at any time thereafter. The Executive shall also be entitled to receive such perquisites as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. (d) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Company as in effect immediately prior to the Change of Control Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Change of Control Date to the Executive, if such policies and procedures are more favorable to the Executive than those in effect immediately prior to the Change of Control Date. (e) Indemnification. During and after the Employment Period, the Company --------------- shall indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other -4- capacity, including any fiduciary capacity, in which the Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company's Certificate of Incorporation and By-Laws (the "Governing Documents"); provided, however, that in no event shall the protection afforded to the Executive hereunder be less than that afforded under the Governing Documents as in effect immediately prior to the Change of Control Date. SECTION 6. Termination. ----------- (a) Death, Disability or Retirement. This Agreement shall terminate ------------------------------- automatically upon the Executive's death, termination due to "Disability" (as defined below) or voluntary retirement under any of the Company's retirement plans as in effect from time to time. For purposes of this Agreement, Disability shall mean the Executive's inability to perform the duties of his position, as determined in accordance with the policies and procedures applicable with respect to the Company's long-term disability plan, as in effect immediately prior to the Change of Control Date. (b) Voluntary Termination. Notwithstanding anything in this Agreement to --------------------- the contrary, following a Change of Control the Executive may, upon not less than 10 days' written notice to the Company, voluntarily terminate his employment for any reason (including early retirement under the terms of any of the Company's retirement plans as in effect from time to time); provided, however, that any termination by the Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Company may terminate the Executive's employment for ----- Cause. For purposes of this Agreement, "Cause" means: (i) the Executive's conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on the Executive's part which result or are intended to result in material damage to the Company's business or reputation; or (iii) repeated material violations by the Executive of his obligations under Section 4 of this Agreement, which violations are demonstrably willful and deliberate on the Executive's part and which result in material damage to the Company's business or reputation. (d) Good Reason. Following the occurrence of a Change of Control, the ----------- Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" means the occurrence of any of the following, without the express written consent of the Executive, after the occurrence of a Change of Control: (i) (A) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive's position, authority or responsibilities as contemplated by Section 4 of this Agreement, or (B) any other material adverse change in such position, including titles, authority or responsibilities; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based, or to perform a substantial potion of his duties with the Company, at any office or location more than 20 miles from that location at which he performed his services specified under the provisions of Section 4 immediately prior to the Change of Control Date, except for travel reasonably required in the performance of the Executive's responsibilities; or (iv) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b). -5- In no event shall the mere occurrence of a Change of Control, absent any further impact on the Executive, be deemed to constitute Good Reason. (e) Notice of Termination. Any termination by the Company for Cause or by --------------------- the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Company's having actual know ledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For the purpose of this Agreement, the term ------------------- "Date of Termination" means (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. SECTION 7. Obligations of the Company upon Termination. ------------------------------------------- (a) Death or Disability. If the Executive's employment is terminated ------------------- during the Employment Period by reason of the Executive's death or Disability, this Agreement shall terminate without further obligations to the Executive or the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to the Executive (or his beneficiary or estate): (i) the Executive's full Base Salary through the Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits owing to the Executive under the Company's otherwise applicable employee benefit plans and programs, including any compensation previously deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the "Accrued Obligations"), and (iii) any other benefits payable due to the Executive's death or Disability under the Company's plans, policies or programs (the "Additional Benefits"). Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement. (b) Cause and Voluntary Termination. If, during the Employment Period, ------------------------------- the Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay the Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 days, following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, program or arrangement. (c) Termination by the Executive for Good reason and Termination by the ------------------------------------------------------------------- Company other than for Cause. - ---------------------------- (i) Lump Sum Payments. If (X) the Company terminates the Executive's ----------------- employment other than for Cause during the Employment Period or (Y) the Executive terminates his employment for Good -6- Reason at any time during the Employment Period, then the Company shall pay to the Executive the following amounts: (A) the Executive's Earned Salary; (B) a cash amount (the "Severance Amount") equal to three (3) times the sum of (1) the Executive's annual Base Salary; (2) the greater of (X) the average of the bonus amount payable (including any amounts payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company immediately preceding the Change of Control Date or (Y) the average of the bonus amount payable (including any amount payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company ending immediately prior to the Date of Termination; and (3) an amount determined by multiplying (i) the aggregate number of Performance Shares, as designated in the award letter issued in the calendar year in which the Change of Control occurs, to be awarded to the Executive at the target performance level, and (ii) the Average Closing Price; and (C) the Accrued Obligations. The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or arrangement. (ii) Supplemental Retirement Benefit. In the event the Executive is ------------------------------- entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled to receive a supplemental retirement benefit payable pursuant to a deferred annuity contract issued by a solvent insurer mutually acceptable to the Company and the Executive and purchased by the Company and delivered to the Executive within 60 days after the Date of Termination. Such annuity contract shall provide for monthly payments on and after the Executive's 65th birthday and 100% survivor benefits to the Executive's spouse for such individual's lifetime in the event of the Executive's death prior to or after age 65. The monthly benefits to be provided by the annuity shall be determined as follows: (A) three years shall be added to Executive's credited service as determined at Date of Termination under the terms of the NBC Pension Plan (the "Pension Plan") as in effect immediately prior to the Change of Control Date (subject to any applicable maximum on credited service); (B) using such adjusted credited service, a new monthly benefit for life commencing at age 65 shall be determined as of the Date of Termination under the terms of the Pension Plan; (C) from such monthly benefit as calculated in (B) above shall be subtracted the monthly vested deferred benefit of Executive due to be paid on and after attainment of age 65, if any, pursuant to the terms of all defined benefit pension plans, active or frozen, in which Executive is a participant at his Date of Termination if such plans are sponsored by the Company, its successors or affiliates thereof; and (D) in accordance with the terms of the Pension Plan, the difference described in (C) next above shall be converted from a monthly lifetime benefit after age 65 to the actuarial equivalent monthly benefit on and after attainment of age 65 which provides the 100% survivorship feature first above described in this Section 7(c)(ii). For purposes of making the foregoing determinations, at the request of Executive in the Notice of Termination given by Executive or in writing within 3 days of Executive's receipt of Notice of Termination, but in either event at Company expense, the independent pension consultants most recently used by Company in connection with its qualified pension plan prior to the Change of Control Date shall be engaged and shall -7- certify the benefits due Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under subparagraph (C) above shall not be determined by the end of a period of 30 days after the Date of Termination, no such offset shall be permitted. (iii) Continuation of Benefits. In the event the Executive is ------------------------ entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled, after the Date of Termination until the earlier of (1) the second anniversary of the Date of Termination (the "End Date") or (2) the date the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company's employee welfare benefit plans including, without limitation, the Company's hospital, medical, accident, disability and life insurance plans (the "Benefit Plans") as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company's general assets. The Executive's participation in the Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company through the End Date. (d) Discharge of the Company's Obligations. Except as expressly provided -------------------------------------- in the last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of his employment shall be in full and complete satisfaction of the Executive's rights under this Agreement and any other claims he may have in respect of his employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive's receipt of such amounts, the Company shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive's employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents. (e) Certain Further Payments by the Company. --------------------------------------- (i) In the event that any amount or benefit paid or distributed to the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to the Executive by the Company or any affiliated company including, without limitation, any distribution or payment made pursuant to the terms of the Company's compensation plans or arrangements (collectively, the "Covered Payments"), are or become subject to the tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax that may hereafter be imposed, the Company shall pay to the Executive at the time specified in Section 7(e)(v) below an additional amount (the "Tax Reimbursement Payment") such that the net amount retained by the Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments. (ii) For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company's independent certified public accountants appointed prior to the Change of Control Date or tax counsel selected by such Accountants (the "Accountants"), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for personal -8- services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code. (iii) For purposes of determining the amount of the Tax Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year. (iv) In the event that the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if the Executive's good faith claim for refund or credit is denied. In the event that the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. (v) The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) above shall be paid to the Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been du e, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). SECTION 8. Non-Exclusivity of Rights. Except as expressly provided herein, ------------------------- nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which the Executive may -9- qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termi nation shall be payable in accordance with such plan or program. SECTION 9. Full Settlement. The Company's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. SECTION 10. Legal Fees and Expenses. If the Executive asserts any claim ----------------------- in any contest (whether initiated by the Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay the Executive's legal expenses (or cause such expenses to be paid) including, without limitation, his reasonable attorney's fees, on a quarterly basis, upon presentation of proof of such expenses; provided, however, that the Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement. SECTION 11. Successors. ---------- (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place. SECTION 12. Miscellaneous. ------------- (a) Applicable Law. This Agreement shall be governed by and construed and -------------- conferred in accordance with the laws of the State of Delaware (and, as applicable, Title 9 of the U.S. Code) applied without reference to principles of conflict of laws. (b) Arbitration. Any dispute or controversy arising under or in ----------- connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. (c) Amendments. This Agreement may be amended or modified by the Board of ---------- Directors at any time prior to a Change in Control; provided, however, that subsequent to the occurrence of a Potential Change in Control, this Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Notwithstanding the foregoing sentence, in the event that subsequent to the occurrence of a Potential Change in Control (i) the Board of Directors makes a good faith determination that the events giving rise to a Potential Change in Control will not result in the occurrence of a Change in Control or (ii) an actual Change in Control has not occurred after the first anniversary of the occurrence of a Potential Change in Control (or any Potential Change in Control events occurring after the initial Potential Change in Control), the foregoing limitation on the amendment or modification of this Agreement shall cease to apply unless -10- and until it thereafter again becomes effective by reason of the occurrence of another Potential Change in Control or any actual Change in Control. (d) Notices. All notices and other communications hereunder shall be in ------- writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the home address of the Executive noted on the records of the Company If to the Company: Alabama National BanCorporation 1927 First Avenue North Birmingham, Alabama 35203 Attn.: Chairman of the Board of Directors With a copy to: Mark L. Drew Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North 2400 AmSouth/Harbert Plaza Birmingham, Alabama 35203 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (e) Entire Agreement. Upon the Change of Control Date, unless otherwise ---------------- provided herein, this Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. In the event any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has read this Agreement and that he understands it and its legal consequences. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written. ALABAMA NATIONAL BANCORPORATION By: /s/ John H. Holcomb, III ------------------------ Name: John H. Holcomb, III -------------------- Title: Chairman and CEO ---------------- EXECUTIVE Signature: /s/ Richard Murray, IV ---------------------- Name: Richard Murray, IV ------------------ Title: Executive Vice President ------------------------ -11- EX-10.46 20 0020.txt EMPLOYMENT CONTINUATION AGREEMENT Exhibit 10.46 ------------- EMPLOYMENT CONTINUATION AGREEMENT --------------------------------- THIS AGREEMENT between ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (the "Company"), and VICTOR E. NICHOL, JR. (the "Executive"), is dated as of this 21/st/ day of September, 2000. W I T N E S S E T H : WHEREAS, the Company has employed the Executive in a key executive officer position and has determined that the Executive holds a position which is of critical importance to the Company; WHEREAS, the Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of stockholders; WHEREAS, the Company understands that any such situation will present significant concerns for the Executive with respect to his financial and job security; WHEREAS, the Company desires to assure itself of the Executive's services during any period in which it is confronting such a situation and to provide the Executive with certain financial assurances to enable the Executive to perform the responsibilities of his position without undue distraction and to exercise his judgment without bias due to his personal circumstances; WHEREAS, to achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and the Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2 below); NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Company and the Executive as follows: SECTION 1. Operation of Agreement. ---------------------- (a) Effective Date. The effective date of this Agreement shall be the date -------------- on which a Change of Control occurs (the "Change of Control Date"); provided, however, that if the Executive is not employed by the Company on the Change of Control Date, this Agreement shall be void and without effect. SECTION 2. Definitions. ----------- (a) Average Closing Price. "Average Closing Price" shall mean the average --------------------- of the daily closing prices for a share of the Company's common stock, for the twenty (20) trading days preceding the Change of Control Date, on the Composite Tape for the New York Stock Exchange -- Listed Stocks, or, if the common stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the common stock is listed, or, if the common stock is not listed on any such Exchange, the average of the daily closing bid quotations with respect to a share of the common stock for such twenty (20) trading days on the National Association of Securities Dealers, Inc. Automated Quotations Systems or any system then in use. (b) Award. "Award" shall have the meaning ascribed to such term in the ----- Performance Share Plan. (c) Award Period. "Award Period" shall have the meaning ascribed to such ------------ term in the Performance Share Plan. (d) Beneficial Owner. For purposes of this Agreement, "Beneficial Owner" ---------------- shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) Change of Control. For the purposes of this Agreement, a "Change of ----------------- Control" shall mean: (i) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) upon the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (x) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (y) the stockholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. (f) Change of Control Price. "Change of Control Price" shall have the ----------------------- meaning ascribed to such term in the Performance Share Plan. (g) Performance Share. "Performance Share" shall have the meaning ascribed ----------------- to such term in the Performance Share Plan. (h) Performance Share Plan. "Performance Share Plan " means that certain ---------------------- Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan, effective as of April 20, 2000, as such Plan may be amended from time to time. (i) Person. "Person" shall have the meaning ascribed to such term in ------ Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (j) Potential Change of Control. For the purposes of this Agreement, a --------------------------- Potential Change of Control shall be deemed to have occurred if: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control; (ii) any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; (iii) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) hereafter becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing greater than 10% of the combined voting power of the Company's then outstanding securities (determined by taking into account as though converted or exercised any securities convertible into voting securities or any options exercisable for voting securities, but only to the extent such convertible securities or options are beneficially owned or held by such Person); -2- (iv) any Person files soliciting materials intended to result in a change in the composition of the Board of Directors of the Company; or (v) the Board of Directors of the Company adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change of Control has occurred . SECTION 3. Events upon Change of Control. ----------------------------- (a) Employment Period. Subject to Section 6 of this Agreement, the Company ----------------- agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Company, for the period (the "Employment Period") commencing on the Change of Control Date and ending on the second anniversary of the Change of Control Date. (b) Vesting and Related Rights. Notwithstanding anything to the contrary -------------------------- in this Agreement, in any other agreement between the Executive and the Company or in any Company plan or elsewhere: (i) upon the Change of Control Date, all of the Executive's options to purchase common stock or other securities of the Company shall immediately become exercisable in full, and such options may thereafter be exercised, in whole or in part, until the expiration of the applicable option term; if the Executive dies within such period, any unexercised option held by the Executive shall thereafter be exercisable, in whole or in part, for the remainder of such period. All other terms and conditions with respect to such options, including the price, term and treatment upon termination of employment, shall continue to be governed by the applicable Company plan(s) and stock option agreement(s) between the Executive and the Company, as such may be amended from time to time; and (ii) the Executive shall be deemed to have earned Performance Shares with respect to each of his Awards outstanding at the Change of Control Date. The number of Performance Shares so earned shall be computed by determining (based on the conditions set by the Compensation Committee of the Company's Board for payment of Awards for the subject Award Period) the number of Performance Shares that would have been paid if each subject Award Period had ended on the December 31st immediately preceding the Change of Control Date; provided that in no event shall the number of Performance Shares earned be less than the aggregate number of Performance Shares at the target performance level (as identified in the applicable award letter) with respect to all such Awards. Thus, in the event of a Change of Control, the minimum Performance Shares to be awarded shall be equal to the aggregate number of Performance Shares that would have been awarded at the end of the Award Period(s) if the target performance level(s) applicable thereto had been met. Performance Share Awards granted in the year of the Change of Control shall be earned at the same percentage as Awards granted in the year preceding the year of the Change of Control. Each Performance Share so earned shall be canceled in exchange for an immediate payment in cash of an amount equal to the Change of Control Price. In addition, upon the cash payment provided for in the preceding sentence, the Company agrees to pay a cash bonus to the Executive in an amount equal to the aggregate amount of the federal and state income taxes that will be incurred by the Executive, based on the highest marginal income tax rates, as a result of (A) the cash payment provided for in the preceding sentence and (B) the cash bonus made pursuant to this sentence. SECTION 4. Position and Duties. ------------------- (a) No Reduction in Position. During the Employment Period, the ------------------------ Executive's position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately prior to the public announcement of the transaction constituting the Change of Control. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the public announcement of the transaction constituting the Change of Control. (b) Business Time. From and after the Change of Control Date, the ------------- Executive agrees to devote his full attention during normal business hours to the business and affairs of the Company and to perform faithfully and -3- efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing service on any boards and committees on which he is serving or with which he is otherwise associated immediately preceding the Change of Control Date shall not be deemed to interfere with the performance of the Executive's services to the Company. SECTION 5. Compensation. ------------ (a) Base Salary. During the Employment Period, the Executive shall ----------- receive a base salary at a monthly rate at least equal to the monthly salary paid to the Executive by the Company immediately prior to the Change of Control Date. The base salary shall be reviewed at least once each year after the Change of Control Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company's regular practices. The Executive's base salary, as it may be increased from time to time, shall hereafter be referred to as "Base Salary". Neither the Base Salary nor any increase in Base Salary after the Change of Control Date shall serve to limit or reduce any other obligation of the Company hereunder. (b) Annual Bonus and Incentive Compensation. During the Employment Period, --------------------------------------- in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, the Executive shall be entitled to receive: (i) an annual bonus which is at least equal to the greater of (A) the highest annual bonus, including without limitation any bonus provided under the Company's Annual Incentive Plan, that had been payable to the Executive in respect of either of the last two fiscal years ended immediately prior to the Change of Control Date or (B) the amount that would have been payable to the Executive as a target bonus for the year in which the Change of Control occurs under the Company's Annual Incentive Plan; and (ii) long-term incentive compensation opportunities (including but not limited to Performance Share Awards) on terms and conditions no less favorable to the Executive than those applicable to the Executive prior to the Change of Control Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Company may make available to the Executive. (c) Benefit Plans. During the Employment Period, the Executive (and, to ------------- the extent applicable, his dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with the Executive's participation in such plans immediately prior to the Change of Control Date, or, if more favorable to the Executive, at the level made available to the Executive or other similarly situated officers at any time thereafter. The Executive shall also be entitled to receive such perquisites as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. (d) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Company as in effect immediately prior to the Change of Control Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Change of Control Date to the Executive, if such policies and procedures are more favorable to the Executive than those in effect immediately prior to the Change of Control Date. (e) Indemnification. During and after the Employment Period, the Company --------------- shall indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other -4- capacity, including any fiduciary capacity, in which the Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company's Certificate of Incorporation and By-Laws (the "Governing Documents"); provided, however, that in no event shall the protection afforded to the Executive hereunder be less than that afforded under the Governing Documents as in effect immediately prior to the Change of Control Date. SECTION 6. Termination. ----------- (a) Death, Disability or Retirement. This Agreement shall terminate ------------------------------- automatically upon the Executive's death, termination due to "Disability" (as defined below) or voluntary retirement under any of the Company's retirement plans as in effect from time to time. For purposes of this Agreement, Disability shall mean the Executive's inability to perform the duties of his position, as determined in accordance with the policies and procedures applicable with respect to the Company's long-term disability plan, as in effect immediately prior to the Change of Control Date. (b) Voluntary Termination. Notwithstanding anything in this Agreement to --------------------- the contrary, following a Change of Control the Executive may, upon not less than 10 days' written notice to the Company, voluntarily terminate his employment for any reason (including early retirement under the terms of any of the Company's retirement plans as in effect from time to time); provided, however, that any termination by the Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Company may terminate the Executive's employment for ----- Cause. For purposes of this Agreement, "Cause" means: (i) the Executive's conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on the Executive's part which result or are intended to result in material damage to the Company's business or reputation; or (iii) repeated material violations by the Executive of his obligations under Section 4 of this Agreement, which violations are demonstrably willful and deliberate on the Executive's part and which result in material damage to the Company's business or reputation. (d) Good Reason. Following the occurrence of a Change of Control, the ----------- Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" means the occurrence of any of the following, without the express written consent of the Executive, after the occurrence of a Change of Control: (i) (A) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive's position, authority or responsibilities as contemplated by Section 4 of this Agreement, or (B) any other material adverse change in such position, including titles, authority or responsibilities; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based, or to perform a substantial potion of his duties with the Company, at any office or location more than 20 miles from that location at which he performed his services specified under the provisions of Section 4 immediately prior to the Change of Control Date, except for travel reasonably required in the performance of the Executive's responsibilities; or (iv) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b). -5- In no event shall the mere occurrence of a Change of Control, absent any further impact on the Executive, be deemed to constitute Good Reason. (e) Notice of Termination. Any termination by the Company for Cause or by --------------------- the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Company's having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For the purpose of this Agreement, the term ------------------- "Date of Termination" means (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. SECTION 7. Obligations of the Company upon Termination. ------------------------------------------- (a) Death or Disability. If the Executive's employment is terminated ------------------- during the Employment Period by reason of the Executive's death or Disability, this Agreement shall terminate without further obligations to the Executive or the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to the Executive (or his beneficiary or estate): (i) the Executive's full Base Salary through the Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits owing to the Executive under the Company's otherwise applicable employee benefit plans and programs, including any compensation previously deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the "Accrued Obligations"), and (iii) any other benefits payable due to the Executive's death or Disability under the Company's plans, policies or programs (the "Additional Benefits"). Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement. (b) Cause and Voluntary Termination. If, during the Employment Period, -------------------------------- the Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay the Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 days, following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, program or arrangement. (c) Termination by the Executive for Good reason and Termination by the ------------------------------------------------------------------- Company other than for Cause. - ---------------------------- (i) Lump Sum Payments. If (X) the Company terminates the ----------------- Executive's employment other than for Cause during the Employment Period or (Y) the Executive terminates his employment for Good -6- Reason at any time during the Employment Period, then the Company shall pay to the Executive the following amounts: (A) the Executive's Earned Salary; (B) a cash amount (the "Severance Amount") equal to three (3) times the sum of (1) the Executive's annual Base Salary; (2) the greater of (X) the average of the bonus amount payable (including any amounts payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company immediately preceding the Change of Control Date or (Y) the average of the bonus amount payable (including any amount payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company ending immediately prior to the Date of Termination; and (3) an amount determined by multiplying (i) the aggregate number of Performance Shares, as designated in the award letter issued in the calendar year in which the Change of Control occurs, to be awarded to the Executive at the target performance level, and (ii) the Average Closing Price; and (C) the Accrued Obligations. The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or arrangement. (ii) Supplemental Retirement Benefit. In the event the Executive is ------------------------------- entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled to receive a supplemental retirement benefit payable pursuant to a deferred annuity contract issued by a solvent insurer mutually acceptable to the Company and the Executive and purchased by the Company and delivered to the Executive within 60 days after the Date of Termination. Such annuity contract shall provide for monthly payments on and after the Executive's 65th birthday and 100% survivor benefits to the Executive's spouse for such individual's lifetime in the event of the Executive's death prior to or after age 65. The monthly benefits to be provided by the annuity shall be determined as follows: (A) three years shall be added to Executive's credited service as determined at Date of Termination under the terms of the NBC Pension Plan (the "Pension Plan") as in effect immediately prior to the Change of Control Date (subject to any applicable maximum on credited service); (B) using such adjusted credited service, a new monthly benefit for life commencing at age 65 shall be determined as of the Date of Termination under the terms of the Pension Plan; (C) from such monthly benefit as calculated in (B) above shall be subtracted the monthly vested deferred benefit of Executive due to be paid on and after attainment of age 65, if any, pursuant to the terms of all defined benefit pension plans, active or frozen, in which Executive is a participant at his Date of Termination if such plans are sponsored by the Company, its successors or affiliates thereof; and (D) in accordance with the terms of the Pension Plan, the difference described in (C) next above shall be converted from a monthly lifetime benefit after age 65 to the actuarial equivalent monthly benefit on and after attainment of age 65 which provides the 100% survivorship feature first above described in this Section 7(c)(ii). For purposes of making the foregoing determinations, at the request of Executive in the Notice of Termination given by Executive or in writing within 3 days of Executive's receipt of Notice of Termination, but in either event at Company expense, the independent pension consultants most recently used by Company in connection with its qualified pension plan prior to the Change of Control Date shall be engaged and shall -7- certify the benefits due Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under subparagraph (C) above shall not be determined by the end of a period of 30 days after the Date of Termination, no such offset shall be permitted. (iii) Continuation of Benefits. In the event the Executive is ------------------------ entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled, after the Date of Termination until the earlier of (1) the second anniversary of the Date of Termination (the "End Date") or (2) the date the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company's employee welfare benefit plans including, without limitation, the Company's hospital, medical, accident, disability and life insurance plans (the "Benefit Plans") as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company's general assets. The Executive's participation in the Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company through the End Date. (d) Discharge of the Company's Obligations. Except as expressly provided -------------------------------------- in the last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of his employment shall be in full and complete satisfaction of the Executive's rights under this Agreement and any other claims he may have in respect of his employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive's receipt of such amounts, the Company shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive's employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents. (e) Certain Further Payments by the Company. --------------------------------------- (i) In the event that any amount or benefit paid or distributed to the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to the Executive by the Company or any affiliated company including, without limitation, any distribution or payment made pursuant to the terms of the Company's compensation plans or arrangements (collectively, the "Covered Payments"), are or become subject to the tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax that may hereafter be imposed, the Company shall pay to the Executive at the time specified in Section 7(e)(v) below an additional amount (the "Tax Reimbursement Payment") such that the net amount retained by the Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments. (ii) For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company's independent certified public accountants appointed prior to the Change of Control Date or tax counsel selected by such Accountants (the "Accountants"), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for personal -8- services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code. (iii) For purposes of determining the amount of the Tax Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year. (iv) In the event that the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if the Executive's good faith claim for refund or credit is denied. In the event that the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. (v) The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) above shall be paid to the Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). SECTION 8. Non-Exclusivity of Rights. Except as expressly provided ------------------------- herein, nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which the Executive may -9- qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. SECTION 9. Full Settlement. The Company's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. SECTION 10. Legal Fees and Expenses. If the Executive asserts any claim ----------------------- in any contest (whether initiated by the Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay the Executive's legal expenses (or cause such expenses to be paid) including, without limitation, his reasonable attorney's fees, on a quarterly basis, upon presentation of proof of such expenses; provided, however, that the Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement. SECTION 11. Successors. ---------- (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place. SECTION 12. Miscellaneous. ------------- (a) Applicable Law. This Agreement shall be governed by and construed and -------------- conferred in accordance with the laws of the State of Delaware (and, as applicable, Title 9 of the U.S. Code) applied without reference to principles of conflict of laws. (b) Arbitration. Any dispute or controversy arising under or in ----------- connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. (c) Amendments. This Agreement may be amended or modified by the Board of ---------- Directors at any time prior to a Change in Control; provided, however, that subsequent to the occurrence of a Potential Change in Control, this Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Notwithstanding the foregoing sentence, in the event that subsequent to the occurrence of a Potential Change in Control (i) the Board of Directors makes a good faith determination that the events giving rise to a Potential Change in Control will not result in the occurrence of a Change in Control or (ii) an actual Change in Control has not occurred after the first anniversary of the occurrence of a Potential Change in Control (or any Potential Change in Control events occurring after the initial Potential Change in Control), the foregoing limitation on the amendment or modification of this Agreement shall cease to apply unless -10- and until it thereafter again becomes effective by reason of the occurrence of another Potential Change in Control or any actual Change in Control. (d) Notices. All notices and other communications hereunder shall be in ------- writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the home address of the Executive noted on the records of the Company If to the Company: Alabama National BanCorporation 1927 First Avenue North Birmingham, Alabama 35203 Attn.: Chairman of the Board of Directors With a copy to: Mark L. Drew Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North 2400 AmSouth/Harbert Plaza Birmingham, Alabama 35203 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (e) Entire Agreement. Upon the Change of Control Date, unless otherwise ---------------- provided herein, this Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. In the event any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has read this Agreement and that he understands it and its legal consequences. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written. ALABAMA NATIONAL BANCORPORATION By: /s/ John H. Holcomb, III ------------------------ Name: John H. Holcomb, III -------------------- Title: Chairman and CEO ---------------- EXECUTIVE Signature: /s/ Victor E. Nichol, Jr. ------------------------- Name: Victor E Nichol. Jr. -------------------- Title: President and Chief Operating Officer ------------------------------------- -11- EX-10.47 21 0021.txt EMPLOYMENT CONTINUATION AGREEMENT Exhibit 10.47 ------------- EMPLOYMENT CONTINUATION AGREEMENT --------------------------------- THIS AGREEMENT between ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (the "Company"), and WILLIAM G. SANDERS (the "Executive"), is dated as of this 21/st/ day of September, 2000. W I T N E S S E T H : WHEREAS, the Company has employed the Executive in a key executive officer position and has determined that the Executive holds a position which is of critical importance to the Company; WHEREAS, the Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of stockholders; WHEREAS, the Company understands that any such situation will present significant concerns for the Executive with respect to his financial and job security; WHEREAS, the Company desires to assure itself of the Executive's services during any period in which it is confronting such a situation and to provide the Executive with certain financial assurances to enable the Executive to perform the responsibilities of his position without undue distraction and to exercise his judgment without bias due to his personal circumstances; WHEREAS, to achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and the Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2 below); NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Company and the Executive as follows: SECTION 1. Operation of Agreement. ---------------------- (a) Effective Date. The effective date of this Agreement shall be the date -------------- on which a Change of Control occurs (the "Change of Control Date"); provided, however, that if the Executive is not employed by the Company on the Change of Control Date, this Agreement shall be void and without effect. SECTION 2. Definitions. ----------- (a) Average Closing Price. "Average Closing Price" shall mean the average --------------------- of the daily closing prices for a share of the Company's common stock, for the twenty (20) trading days preceding the Change of Control Date, on the Composite Tape for the New York Stock Exchange -- Listed Stocks, or, if the common stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the common stock is listed, or, if the common stock is not listed on any such Exchange, the average of the daily closing bid quotations with respect to a share of the common stock for such twenty (20) trading days on the National Association of Securities Dealers, Inc. Automated Quotations Systems or any system then in use. (b) Award. "Award" shall have the meaning ascribed to such term in the ----- Performance Share Plan. (c) Award Period. "Award Period" shall have the meaning ascribed to such ------------ term in the Performance Share Plan. (d) Beneficial Owner. For purposes of this Agreement, "Beneficial Owner" ---------------- shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) Change of Control. For the purposes of this Agreement, a "Change of ----------------- Control" shall mean: (i) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) upon the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (x) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (y) the stockholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. (f) Change of Control Price. "Change of Control Price" shall have the ----------------------- meaning ascribed to such term in the Performance Share Plan. (g) Performance Share. "Performance Share" shall have the meaning ascribed ----------------- to such term in the Performance Share Plan. (h) Performance Share Plan. "Performance Share Plan " means that certain ---------------------- Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan, effective as of April 20, 2000, as such Plan may be amended from time to time. (i) Person. "Person" shall have the meaning ascribed to such term in ------ Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (j) Potential Change of Control. For the purposes of this Agreement, a --------------------------- Potential Change of Control shall be deemed to have occurred if: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control; (ii) any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; (iii) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) hereafter becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing greater than 10% of the combined voting power of the Company's then outstanding securities (determined by taking into account as though converted or exercised any securities convertible into voting securities or any options exercisable for voting securities, but only to the extent such convertible securities or options are beneficially owned or held by such Person); -2- (iv) any Person files soliciting materials intended to result in a change in the composition of the Board of Directors of the Company; or (v) the Board of Directors of the Company adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change of Control has occurred . SECTION 3. Events upon Change of Control. ----------------------------- (a) Employment Period. Subject to Section 6 of this Agreement, the ----------------- Company agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Company, for the period (the "Employment Period") commencing on the Change of Control Date and ending on the second anniversary of the Change of Control Date. (b) Vesting and Related Rights. Notwithstanding anything to the contrary -------------------------- in this Agreement, in any other agreement between the Executive and the Company or in any Company plan or elsewhere: (i) upon the Change of Control Date, all of the Executive's options to purchase common stock or other securities of the Company shall immediately become exercisable in full, and such options may thereafter be exercised, in whole or in part, until the expiration of the applicable option term; if the Executive dies within such period, any unexercised option held by the Executive shall thereafter be exercisable, in whole or in part, for the remainder of such period. All other terms and conditions with respect to such options, including the price, term and treatment upon termination of employment, shall continue to be governed by the applicable Company plan(s) and stock option agreement(s) between the Executive and the Company, as such may be amended from time to time; and (ii) the Executive shall be deemed to have earned Performance Shares with respect to each of his Awards outstanding at the Change of Control Date. The number of Performance Shares so earned shall be computed by determining (based on the conditions set by the Compensation Committee of the Company's Board for payment of Awards for the subject Award Period) the number of Performance Shares that would have been paid if each subject Award Period had ended on the December 31st immediately preceding the Change of Control Date; provided that in no event shall the number of Performance Shares earned be less than the aggregate number of Performance Shares at the target performance level (as identified in the applicable award letter) with respect to all such Awards. Thus, in the event of a Change of Control, the minimum Performance Shares to be awarded shall be equal to the aggregate number of Performance Shares that would have been awarded at the end of the Award Period(s) if the target performance level(s) applicable thereto had been met. Performance Share Awards granted in the year of the Change of Control shall be earned at the same percentage as Awards granted in the year preceding the year of the Change of Control. Each Performance Share so earned shall be canceled in exchange for an immediate payment in cash of an amount equal to the Change of Control Price. In addition, upon the cash payment provided for in the preceding sentence, the Company agrees to pay a cash bonus to the Executive in an amount equal to the aggregate amount of the federal and state income taxes that will be incurred by the Executive, based on the highest marginal income tax rates, as a result of (A) the cash payment provided for in the preceding sentence and (B) the cash bonus made pursuant to this sentence. SECTION 4. Position and Duties. ------------------- (a) No Reduction in Position. During the Employment Period, the ------------------------ Executive's position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately prior to the public announcement of the transaction constituting the Change of Control. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the public announcement of the transaction constituting the Change of Control. (b) Business Time. From and after the Change of Control Date, the ------------- Executive agrees to devote his full attention during normal business hours to the business and affairs of the Company and to perform faithfully and -3- efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing service on any boards and committees on which he is serving or with which he is otherwise associated immediately preceding the Change of Control Date shall not be deemed to interfere with the performance of the Executive's services to the Company. SECTION 5. Compensation. ------------ (a) Base Salary. During the Employment Period, the Executive shall ----------- receive a base salary at a monthly rate at least equal to the monthly salary paid to the Executive by the Company immediately prior to the Change of Control Date. The base salary shall be reviewed at least once each year after the Change of Control Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company's regular practices. The Executive's base salary, as it may be increased from time to time, shall hereafter be referred to as "Base Salary". Neither the Base Salary nor any increase in Base Salary after the Change of Control Date shall serve to limit or reduce any other obligation of the Company hereunder. (b) Annual Bonus and Incentive Compensation. During the Employment --------------------------------------- Period, in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, the Executive shall be entitled to receive: (i) an annual bonus which is at least equal to the greater of (A) the highest annual bonus, including without limitation any bonus provided under the Company's Annual Incentive Plan, that had been payable to the Executive in respect of either of the last two fiscal years ended immediately prior to the Change of Control Date or (B) the amount that would have been payable to the Executive as a target bonus for the year in which the Change of Control occurs under the Company's Annual Incentive Plan; and (ii) long-term incentive compensation opportunities (including but not limited to Performance Share Awards) on terms and conditions no less favorable to the Executive than those applicable to the Executive prior to the Change of Control Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Company may make available to the Executive. (c) Benefit Plans. During the Employment Period, the Executive (and, to ------------- the extent applicable, his dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with the Executive's participation in such plans immediately prior to the Change of Control Date, or, if more favorable to the Executive, at the level made available to the Executive or other similarly situated officers at any time thereafter. The Executive shall also be entitled to receive such perquisites as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. (d) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Company as in effect immediately prior to the Change of Control Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Change of Control Date to the Executive, if such policies and procedures are more favorable to the Executive than those in effect immediately prior to the Change of Control Date. (e) Indemnification. During and after the Employment Period, the Company --------------- shall indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other -4- capacity, including any fiduciary capacity, in which the Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company's Certificate of Incorporation and By-Laws (the "Governing Documents"); provided, however, that in no event shall the protection afforded to the Executive hereunder be less than that afforded under the Governing Documents as in effect immediately prior to the Change of Control Date. SECTION 6. Termination. ----------- (a) Death, Disability or Retirement. This Agreement shall terminate ------------------------------- automatically upon the Executive's death, termination due to "Disability" (as defined below) or voluntary retirement under any of the Company's retirement plans as in effect from time to time. For purposes of this Agreement, Disability shall mean the Executive's inability to perform the duties of his position, as determined in accordance with the policies and procedures applicable with respect to the Company's long-term disability plan, as in effect immediately prior to the Change of Control Date. (b) Voluntary Termination. Notwithstanding anything in this Agreement to --------------------- the contrary, following a Change of Control the Executive may, upon not less than 10 days' written notice to the Company, voluntarily terminate his employment for any reason (including early retirement under the terms of any of the Company's retirement plans as in effect from time to time); provided, however, that any termination by the Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Company may terminate the Executive's employment for ----- Cause. For purposes of this Agreement, "Cause" means: (i) the Executive's conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on the Executive's part which result or are intended to result in material damage to the Company's business or reputation; or (iii) repeated material violations by the Executive of his obligations under Section 4 of this Agreement, which violations are demonstrably willful and deliberate on the Executive's part and which result in material damage to the Company's business or reputation. (d) Good Reason. Following the occurrence of a Change of Control, the ----------- Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" means the occurrence of any of the following, without the express written consent of the Executive, after the occurrence of a Change of Control: (i) (A) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive's position, authority or responsibilities as contemplated by Section 4 of this Agreement, or (B) any other material adverse change in such position, including titles, authority or responsibilities; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based, or to perform a substantial potion of his duties with the Company, at any office or location more than 20 miles from that location at which he performed his services specified under the provisions of Section 4 immediately prior to the Change of Control Date, except for travel reasonably required in the performance of the Executive's responsibilities; or (iv) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b). -5- In no event shall the mere occurrence of a Change of Control, absent any further impact on the Executive, be deemed to constitute Good Reason. (e) Notice of Termination. Any termination by the Company for Cause or by --------------------- the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Company's having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For the purpose of this Agreement, the term "Date ------------------- of Termination" means (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. SECTION 7. Obligations of the Company upon Termination. -------------------------------------------- (a) Death or Disability. If the Executive's employment is terminated ------------------- during the Employment Period by reason of the Executive's death or Disability, this Agreement shall terminate without further obligations to the Executive or the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to the Executive (or his beneficiary or estate): (i) the Executive's full Base Salary through the Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits owing to the Executive under the Company's otherwise applicable employee benefit plans and programs, including any compensation previously deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the "Accrued Obligations"), and (iii) any other benefits payable due to the Executive's death or Disability under the Company's plans, policies or programs (the "Additional Benefits"). Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement. (b) Cause and Voluntary Termination. If, during the Employment Period, the Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay the Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 days, following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, program or arrangement. (c) Termination by the Executive for Good reason and Termination by the ------------------------------------------------------------------- Company other than for Cause. - ---------------------------- (i) Lump Sum Payments. If (X) the Company terminates the Executive's employment other than for Cause during the Employment Period or (Y) the Executive terminates his employment for Good -6- Reason at any time during the Employment P Period, then the Company shall pay to the Executive the following amounts: (A) the Executive's Earned Salary; (B) a cash amount (the "Severance Amount") equal to three (3) times the sum of (1) the Executive's annual Base Salary; (2) the greater of (X) the average of the bonus amount payable (including any amounts payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company immediately preceding the Change of Control Date or (Y) the average of the bonus amount payable (including any amount payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company ending immediately prior to the Date of Termination; and (3) an amount determined by multiplying (i) the aggregate number of Performance Shares, as designated in the award letter issued in the calendar year in which the Change of Control occurs, to be awarded to the Executive at the target performance level, and (ii) the Average Closing Price; and (C) the Accrued Obligations. The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or arrangement. (ii) Supplemental Retirement Benefit. In the event the Executive is ------------------------------- entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled to receive a supplemental retirement benefit payable pursuant to a deferred annuity contract issued by a solvent insurer mutually acceptable to the Company and the Executive and purchased by the Company and delivered to the Executive within 60 days after the Date of Termination. Such annuity contract shall provide for monthly payments on and after the Executive's 65th birthday and 100% survivor benefits to the Executive's spouse for such individual's lifetime in the event of the Executive's death prior to or after age 65. The monthly benefits to be provided by the annuity shall be determined as follows: (A) three years shall be added to Executive's credited service as determined at Date of Termination under the terms of the NBC Pension Plan (the "Pension Plan") as in effect immediately prior to the Change of Control Date (subject to any applicable maximum on credited service); (B) using such adjusted credited service, a new monthly benefit for life commencing at age 65 shall be determined as of the Date of Termination under the terms of the Pension Plan; (C) from such monthly benefit as calculated in (B) above shall be subtracted the monthly vested deferred benefit of Executive due to be paid on and after attainment of age 65, if any, pursuant to the terms of all defined benefit pension plans, active or frozen, in which Executive is a participant at his Date of Termination if such plans are sponsored by the Company, its successors or affiliates thereof; and (D) in accordance with the terms of the Pension Plan, the difference described in (C) next above shall be converted from a monthly lifetime benefit after age 65 to the actuarial equivalent monthly benefit on and after attainment of age 65 which provides the 100% survivorship feature first above described in this Section 7(c)(ii). For purposes of making the foregoing determinations, at the request of Executive in the Notice of Termination given by Executive or in writing within 3 days of Executive's receipt of Notice of Termination, but in either event at Company expense, the independent pension consultants most recently used by Company in connection with its qualified pension plan prior to the Change of Control Date shall be engaged and shall -7- certify the benefits due Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under subparagraph (C) above shall not be determined by the end of a period of 30 days after the Date of Termination, no such offset shall be permitted. (iii) Continuation of Benefits. In the event the Executive is ------------------------ entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled, after the Date of Termination until the earlier of (1) the second anniversary of the Date of Termination (the "End Date") or (2) the date the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company's employee welfare benefit plans including, without limitation, the Company's hospital, medical, accident, disability and life insurance plans (the "Benefit Plans") as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company's general assets. The Executive's participation in the Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company through the End Date. (d) Discharge of the Company's Obligations. Except as expressly provided -------------------------------------- in the last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of his employment shall be in full and complete satisfaction of the Executive's rights under this Agreement and any other claims he may have in respect of his employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive's receipt of such amounts, the Company shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive's employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents. (e) Certain Further Payments by the Company. --------------------------------------- (i) In the event that any amount or benefit paid or distributed to the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to the Executive by the Company or any affiliated company including, without limitation, any distribution or payment made pursuant to the terms of the Company's compensation plans or arrangements (collectively, the "Covered Payments"), are or become subject to the tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax that may hereafter be imposed, the Company shall pay to the Executive at the time specified in Section 7(e)(v) below an additional amount (the "Tax Reimbursement Payment") such that the net amount retained by the Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments. (ii) For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company's independent certified public accountants appointed prior to the Change of Control Date or tax counsel selected by such Accountants (the "Accountants"), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for personal -8- services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code. (iii) For purposes of determining the amount of the Tax Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year. (iv) In the event that the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if the Executive's good faith claim for refund or credit is denied. In the event that the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. (v) The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) above shall be paid to the Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). SECTION 8. Non-Exclusivity of Rights. Except as expressly provided herein, ------------------------- nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which the Executive may -9- qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. SECTION 9. Full Settlement. The Company's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. SECTION 10. Legal Fees and Expenses. If the Executive asserts any claim ----------------------- in any contest (whether initiated by the Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay the Executive's legal expenses (or cause such expenses to be paid) including, without limitation, his reasonable attorney's fees, on a quarterly basis, upon presentation of proof of such expenses; provided, however, that the Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement. SECTION 11. Successors. ---------- (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place. SECTION 12. Miscellaneous. ------------- (a) Applicable Law. This Agreement shall be governed by and construed and -------------- conferred in accordance with the laws of the State of Delaware (and, as applicable, Title 9 of the U.S. Code) applied without reference to principles of conflict of laws. (b) Arbitration. Any dispute or controversy arising under or in ----------- connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. (c) Amendments. This Agreement may be amended or modified by the Board of ---------- Directors at any time prior to a Change in Control; provided, however, that subsequent to the occurrence of a Potential Change in Control, this Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Notwithstanding the foregoing sentence, in the event that subsequent to the occurrence of a Potential Change in Control (i) the Board of Directors makes a good faith determination that the events giving rise to a Potential Change in Control will not result in the occurrence of a Change in Control or (ii) an actual Change in Control has not occurred after the first anniversary of the occurrence of a Potential Change in Control (or any Potential Change in Control events occurring after the initial Potential Change in Control), the foregoing limitation on the amendment or modification of this Agreement shall cease to apply unless -10- and until it thereafter again becomes effective by reason of the occurrence of another Potential Change in Control or any actual Change in Control. (d) Notices. All notices and other communications hereunder shall be in ------- writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the home address of the Executive noted on the records of the Company If to the Company: Alabama National BanCorporation 1927 First Avenue North Birmingham, Alabama 35203 Attn.: Chairman of the Board of Directors With a copy to: Mark L. Drew Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North 2400 AmSouth/Harbert Plaza Birmingham, Alabama 35203 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (e) Entire Agreement. Upon the Change of Control Date, unless otherwise ---------------- provided herein, this Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. In the event any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has read this Agreement and that he understands it and its legal consequences. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written. ALABAMA NATIONAL BANCORPORATION By: /s/ John H. Holcomb, III ------------------------ Name: John H. Holcomb, III -------------------- Title: Chairman and CEO ---------------- EXECUTIVE Signature: /s/ William G. Sanders ---------------------- Name: William G. Sanders ------------------ Title: Executive Vice President ------------------------ -11- EX-10.48 22 0022.txt EMPLOYMENT CONTINUATION AGREEMENT Exhibit 10.48 ------------- EMPLOYMENT CONTINUATION AGREEMENT --------------------------------- THIS AGREEMENT between ALABAMA NATIONAL BANCORPORATION, a Delaware corporation (the "Company"), and DAN M. DAVID (the "Executive"), is dated as of this 21/st/ day of September, 2000. W I T N E S S E T H : WHEREAS, the Company has employed the Executive in a key executive officer position and has determined that the Executive holds a position which is of critical importance to the Company; WHEREAS, the Company believes that, in the event it is confronted with a situation that could result in a change in ownership or control of the Company, continuity of management will be essential to its ability to evaluate and respond to such situation in the best interests of stockholders; WHEREAS, the Company understands that any such situation will present significant concerns for the Executive with respect to his financial and job security; WHEREAS, the Company desires to assure itself of the Executive's services during any period in which it is confronting such a situation and to provide the Executive with certain financial assurances to enable the Executive to perform the responsibilities of his position without undue distraction and to exercise his judgment without bias due to his personal circumstances; WHEREAS, to achieve these objectives, the Company and the Executive desire to enter into an agreement providing the Company and the Executive with certain rights and obligations upon the occurrence of a Change of Control (as defined in Section 2 below); NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is hereby agreed by and between the Company and the Executive as follows: SECTION 1. Operation of Agreement. ---------------------- (a) Effective Date. The effective date of this Agreement shall be the date -------------- on which a Change of Control occurs (the "Change of Control Date"); provided, however, that if the Executive is not employed by the Company on the Change of Control Date, this Agreement shall be void and without effect. SECTION 2. Definitions. ----------- (a) Average Closing Price. "Average Closing Price" shall mean the average --------------------- of the daily closing prices for a share of the Company's common stock, for the twenty (20) trading days preceding the Change of Control Date, on the Composite Tape for the New York Stock Exchange -- Listed Stocks, or, if the common stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the common stock is listed, or, if the common stock is not listed on any such Exchange, the average of the daily closing bid quotations with respect to a share of the common stock for such twenty (20) trading days on the National Association of Securities Dealers, Inc. Automated Quotations Systems or any system then in use. (b) Award. "Award" shall have the meaning ascribed to such term in the ----- Performance Share Plan. (c) Award Period. "Award Period" shall have the meaning ascribed to such ------------ term in the Performance Share Plan. (d) Beneficial Owner. For purposes of this Agreement, "Beneficial Owner" ---------------- shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (e) Change of Control. For the purposes of this Agreement, a "Change of ----------------- Control" shall mean: (i) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities; or (ii) upon the consummation of any merger, consolidation, or similar transaction or a purchase of securities pursuant to which (x) the members of the Board of Directors of the Company immediately prior to such transaction do not, immediately after the transaction, constitute a majority of the Board of Directors of the surviving entity or (y) the stockholders of the Company immediately preceding the transaction do not, immediately after the transaction, own at least 50% of the combined voting power of the outstanding securities of the surviving entity; or (iii) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company. (f) Change of Control Price. "Change of Control Price" shall have the ----------------------- meaning ascribed to such term in the Performance Share Plan. (g) Performance Share. "Performance Share" shall have the meaning ascribed ----------------- to such term in the Performance Share Plan. (h) Performance Share Plan. "Performance Share Plan " means that certain ---------------------- Second Amendment and Restatement of the Alabama National BanCorporation Performance Share Plan, effective as of April 20, 2000, as such Plan may be amended from time to time. (i) Person. "Person" shall have the meaning ascribed to such term in ------ Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d). (j) Potential Change of Control. For the purposes of this Agreement, a --------------------------- Potential Change of Control shall be deemed to have occurred if: (i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change of Control; (ii) any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change of Control; (iii) any Person (other than those Persons in control of the Company as of the date of this Agreement, or other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company) hereafter becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing greater than 10% of the combined voting power of the Company's then outstanding securities (determined by taking into account as though converted or exercised any securities convertible into voting securities or any options exercisable for voting securities, but only to the extent such convertible securities or options are beneficially owned or held by such Person); -2- (iv) any Person files soliciting materials intended to result in a change in the composition of the Board of Directors of the Company; or (v) the Board of Directors of the Company adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change of Control has occurred. SECTION 3. Events upon Change of Control. ----------------------------- (a) Employment Period. Subject to Section 6 of this Agreement, the Company ----------------- agrees to continue the Executive in its employ, and the Executive agrees to remain in the employ of the Company, for the period (the "Employment Period") commencing on the Change of Control Date and ending on the second anniversary of the Change of Control Date. (b) Vesting and Related Rights. Notwithstanding anything to the contrary -------------------------- in this Agreement, in any other agreement between the Executive and the Company or in any Company plan or elsewhere: (i) upon the Change of Control Date, all of the Executive's options to purchase common stock or other securities of the Company shall immediately become exercisable in full, and such options may thereafter be exercised, in whole or in part, until the expiration of the applicable option term; if the Executive dies within such period, any unexercised option held by the Executive shall thereafter be exercisable, in whole or in part, for the remainder of such period. All other terms and conditions with respect to such options, including the price, term and treatment upon termination of employment, shall continue to be governed by the applicable Company plan(s) and stock option agreement(s) between the Executive and the Company, as such may be amended from time to time; and (ii) the Executive shall be deemed to have earned Performance Shares with respect to each of his Awards outstanding at the Change of Control Date. The number of Performance Shares so earned shall be computed by determining (based on the conditions set by the Compensation Committee of the Company's Board for payment of Awards for the subject Award Period) the number of Performance Shares that would have been paid if each subject Award Period had ended on the December 31st immediately preceding the Change of Control Date; provided that in no event shall the number of Performance Shares earned be less than the aggregate number of Performance Shares at the target performance level (as identified in the applicable award letter) with respect to all such Awards. Thus, in the event of a Change of Control, the minimum Performance Shares to be awarded shall be equal to the aggregate number of Performance Shares that would have been awarded at the end of the Award Period(s) if the target performance level(s) applicable thereto had been met. Performance Share Awards granted in the year of the Change of Control shall be earned at the same percentage as Awards granted in the year preceding the year of the Change of Control. Each Performance Share so earned shall be canceled in exchange for an immediate payment in cash of an amount equal to the Change of Control Price. In addition, upon the cash payment provided for in the preceding sentence, the Company agrees to pay a cash bonus to the Executive in an amount equal to the aggregate amount of the federal and state income taxes that will be incurred by the Executive, based on the highest marginal income tax rates, as a result of (A) the cash payment provided for in the preceding sentence and (B) the cash bonus made pursuant to this sentence. SECTION 4. Position and Duties. ------------------- (a) No Reduction in Position. During the Employment Period, the ------------------------ Executive's position (including titles), authority and responsibilities shall be at least commensurate with those held, exercised and assigned immediately prior to the public announcement of the transaction constituting the Change of Control. The Executive's services shall be performed at the location where the Executive was employed immediately preceding the public announcement of the transaction constituting the Change of Control. (b) Business Time. From and after the Change of Control Date, the ------------- Executive agrees to devote his full attention during normal business hours to the business and affairs of the Company and to perform faithfully and -3- efficiently the responsibilities assigned to him hereunder, to the extent necessary to discharge such responsibilities, except for periods of vacation, sick leave and other leave to which he is entitled. It is expressly understood and agreed that the Executive's continuing service on any boards and committees on which he is serving or with which he is otherwise associated immediately preceding the Change of Control Date shall not be deemed to interfere with the performance of the Executive's services to the Company. SECTION 5. Compensation. ------------ (a) Base Salary. During the Employment Period, the Executive shall receive ----------- a base salary at a monthly rate at least equal to the monthly salary paid to the Executive by the Company immediately prior to the Change of Control Date. The base salary shall be reviewed at least once each year after the Change of Control Date, and may be increased (but not decreased) at any time and from time to time by action of the Board of Directors or any committee thereof or any individual having authority to take such action in accordance with the Company's regular practices. The Executive's base salary, as it may be increased from time to time, shall hereafter be referred to as "Base Salary". Neither the Base Salary nor any increase in Base Salary after the Change of Control Date shall serve to limit or reduce any other obligation of the Company hereunder. (b) Annual Bonus and Incentive Compensation. During the Employment Period, --------------------------------------- in addition to the Base Salary, for each fiscal year of the Company ending during the Employment Period, the Executive shall be entitled to receive: (i) an annual bonus which is at least equal to the greater of (A) the highest annual bonus, including without limitation any bonus provided under the Company's Annual Incentive Plan, that had been payable to the Executive in respect of either of the last two fiscal years ended immediately prior to the Change of Control Date or (B) the amount that would have been payable to the Executive as a target bonus for the year in which the Change of Control occurs under the Company's Annual Incentive Plan; and (ii) long-term incentive compensation opportunities (including but not limited to Performance Share Awards) on terms and conditions no less favorable to the Executive than those applicable to the Executive prior to the Change of Control Date. Any amount payable hereunder as an annual bonus shall be paid as soon as practicable following the year for which the amount is payable, unless electively deferred by the Executive pursuant to any deferral programs or arrangements that the Company may make available to the Executive. (c) Benefit Plans. During the Employment Period, the Executive (and, to ------------- the extent applicable, his dependents) shall be entitled to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans at a level that is commensurate with the Executive's participation in such plans immediately prior to the Change of Control Date, or, if more favorable to the Executive, at the level made available to the Executive or other similarly situated officers at any time thereafter. The Executive shall also be entitled to receive such perquisites as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. (d) Expenses. During the Employment Period, the Executive shall be -------- entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the policies and procedures of the Company as in effect immediately prior to the Change of Control Date. Notwithstanding the foregoing, the Company may apply the policies and procedures in effect after the Change of Control Date to the Executive, if such policies and procedures are more favorable to the Executive than those in effect immediately prior to the Change of Control Date. (e) Indemnification. During and after the Employment Period, the Company --------------- shall indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other -4- capacity, including any fiduciary capacity, in which the Executive serves at the request of the Company to the maximum extent permitted by applicable law and the Company's Certificate of Incorporation and By-Laws (the "Governing Documents"); provided, however, that in no event shall the protection afforded to the Executive hereunder be less than that afforded under the Governing Documents as in effect immediately prior to the Change of Control Date. SECTION 6. Termination. ----------- (a) Death, Disability or Retirement. This Agreement shall terminate ------------------------------- automatically upon the Executive's death, termination due to "Disability" (as defined below) or voluntary retirement under any of the Company's retirement plans as in effect from time to time. For purposes of this Agreement, Disability shall mean the Executive's inability to perform the duties of his position, as determined in accordance with the policies and procedures applicable with respect to the Company's long-term disability plan, as in effect immediately prior to the Change of Control Date. (b) Voluntary Termination. Notwithstanding anything in this Agreement to --------------------- the contrary, following a Change of Control the Executive may, upon not less than 10 days' written notice to the Company, voluntarily terminate his employment for any reason (including early retirement under the terms of any of the Company's retirement plans as in effect from time to time); provided, however, that any termination by the Executive pursuant to Section 6(d) on account of Good Reason (as defined therein) shall not be treated as a voluntary termination under this Section 6(b). (c) Cause. The Company may terminate the Executive's employment for Cause. ----- For purposes of this Agreement, "Cause" means: (i) the Executive's conviction or plea of nolo contendere to a felony; (ii) an act or acts of extreme dishonesty or gross misconduct on the Executive's part which result or are intended to result in material damage to the Company's business or reputation; or (iii) repeated material violations by the Executive of his obligations under Section 4 of this Agreement, which violations are demonstrably willful and deliberate on the Executive's part and which result in material damage to the Company's business or reputation. (d) Good Reason. Following the occurrence of a Change of Control, the ----------- Executive may terminate his employment for Good Reason. For purposes of this Agreement, "Good Reason" means the occurrence of any of the following, without the express written consent of the Executive, after the occurrence of a Change of Control: (i) (A) the assignment to the Executive of any duties inconsistent in any material adverse respect with the Executive's position, authority or responsibilities as contemplated by Section 4 of this Agreement, or (B) any other material adverse change in such position, including titles, authority or responsibilities; (ii) any failure by the Company to comply with any of the provisions of Section 5 of this Agreement, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based, or to perform a substantial potion of his duties with the Company, at any office or location more than 20 miles from that location at which he performed his services specified under the provisions of Section 4 immediately prior to the Change of Control Date, except for travel reasonably required in the performance of the Executive's responsibilities; or (iv) any failure by the Company to obtain the assumption and agreement to perform this Agreement by a successor as contemplated by Section 11(b). -5- In no event shall the mere occurrence of a Change of Control, absent any further impact on the Executive, be deemed to constitute Good Reason. (e) Notice of Termination. Any termination by the Company for Cause or by --------------------- the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(e). For purposes of this Agreement, a "Notice of Termination" means a written notice given, in the case of a termination for Cause, within 10 business days of the Company's having actual knowledge of the events giving rise to such termination, and in the case of a termination for Good Reason, within 180 days of the Executive's having actual knowledge of the events giving rise to such termination, and which (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date of this Agreement (which date shall be not more than 15 days after the giving of such notice). The failure by the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason shall not waive any right of the Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. (f) Date of Termination. For the purpose of this Agreement, the term "Date ------------------- of Termination" means (i) in the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein, as the case may be, and (ii) in all other cases, the actual date on which the Executive's employment terminates during the Employment Period. SECTION 7. Obligations of the Company upon Termination. ------------------------------------------- (a) Death or Disability. If the Executive's employment is terminated ------------------- during the Employment Period by reason of the Executive's death or Disability, this Agreement shall terminate without further obligations to the Executive or the Executive's legal representatives under this Agreement other than those obligations accrued hereunder at the Date of Termination, and the Company shall pay to the Executive (or his beneficiary or estate): (i) the Executive's full Base Salary through the Date of Termination (the "Earned Salary"), (ii) any vested amounts or benefits owing to the Executive under the Company's otherwise applicable employee benefit plans and programs, including any compensation previously deferred by the Executive (together with any accrued earnings thereon) and not yet paid by the Company and any accrued vacation pay not yet paid by the Company (the "Accrued Obligations"), and (iii) any other benefits payable due to the Executive's death or Disability under the Company's plans, policies or programs (the "Additional Benefits"). Any Earned Salary shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations and Additional Benefits shall be paid in accordance with the terms of the applicable plan, program or arrangement. (b) Cause and Voluntary Termination. If, during the Employment Period, the ------------------------------- Executive's employment shall be terminated for Cause or voluntarily terminated by the Executive (other than on account of Good Reason following a Change of Control) in accordance with Section 6(b), the Company shall pay the Executive (i) the Earned Salary in cash in a single lump sum as soon as practicable, but in no event more than 10 days, following the Date of Termination, and (ii) the Accrued Obligations in accordance with the terms of the applicable plan, program or arrangement. (c) Termination by the Executive for Good reason and Termination by the ------------------------------------------------------------------- Company other than for Cause. - ---------------------------- (i) Lump Sum Payments. If (X) the Company terminates the Executive's ----------------- employment other than for Cause during the Employment Period or (Y) the Executive terminates his employment for Good -6- Reason at any time during the Employment Period, then the Company shall pay to the Executive the following amounts: (A) the Executive's Earned Salary; (B) a cash amount (the "Severance Amount") equal to three (3) times the sum of (1) the Executive's annual Base Salary; (2) the greater of (X) the average of the bonus amount payable (including any amounts payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company immediately preceding the Change of Control Date or (Y) the average of the bonus amount payable (including any amount payable under the Annual Incentive Plan) to the Executive for the three fiscal years of the Company ending immediately prior to the Date of Termination; and (3) an amount determined by multiplying (i) the aggregate number of Performance Shares, as designated in the award letter issued in the calendar year in which the Change of Control occurs, to be awarded to the Executive at the target performance level, and (ii) the Average Closing Price; and (C) the Accrued Obligations. The Earned Salary and Severance Amount shall be paid in cash in a single lump sum as soon as practicable, but in no event more than 10 business days (or at such earlier date required by law), following the Date of Termination. Accrued Obligations shall be paid in accordance with the terms of the applicable plan, program or arrangement. (ii) Supplemental Retirement Benefit. In the event the Executive is ------------------------------- entitled to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled to receive a supplemental retirement benefit payable pursuant to a deferred annuity contract issued by a solvent insurer mutually acceptable to the Company and the Executive and purchased by the Company and delivered to the Executive within 60 days after the Date of Termination. Such annuity contract shall provide for monthly payments on and after the Executive's 65th birthday and 100% survivor benefits to the Executive's spouse for such individual's lifetime in the event of the Executive's death prior to or after age 65. The monthly benefits to be provided by the annuity shall be determined as follows: (A) three years shall be added to Executive's credited service as determined at Date of Termination under the terms of the NBC Pension Plan (the "Pension Plan") as in effect immediately prior to the Change of Control Date (subject to any applicable maximum on credited service); (B) using such adjusted credited service, a new monthly benefit for life commencing at age 65 shall be determined as of the Date of Termination under the terms of the Pension Plan; (C) from such monthly benefit as calculated in (B) above shall be subtracted the monthly vested deferred benefit of Executive due to be paid on and after attainment of age 65, if any, pursuant to the terms of all defined benefit pension plans, active or frozen, in which Executive is a participant at his Date of Termination if such plans are sponsored by the Company, its successors or affiliates thereof; and (D) in accordance with the terms of the Pension Plan, the difference described in (C) next above shall be converted from a monthly lifetime benefit after age 65 to the actuarial equivalent monthly benefit on and after attainment of age 65 which provides the 100% survivorship feature first above described in this Section 7(c)(ii). For purposes of making the foregoing determinations, at the request of Executive in the Notice of Termination given by Executive or in writing within 3 days of Executive's receipt of Notice of Termination, but in either event at Company expense, the independent pension consultants most recently used by Company in connection with its qualified pension plan prior to the Change of Control Date shall be engaged and shall -7- certify the benefits due Executive under this Section 7(c)(ii) in writing within 30 days after the Date of Termination. If the amount to be offset under subparagraph (C) above shall not be determined by the end of a period of 30 days after the Date of Termination, no such offset shall be permitted. (iii) Continuation of Benefits. In the event the Executive is entitled ------------------------ to receive the Severance Amount described in Section 7(c)(i), the Executive (and, to the extent applicable, his dependents) shall be entitled, after the Date of Termination until the earlier of (1) the second anniversary of the Date of Termination (the "End Date") or (2) the date the Executive becomes eligible for comparable benefits under a similar plan, policy or program of a subsequent employer, to continue participation in all of the Company's employee welfare benefit plans including, without limitation, the Company's hospital, medical, accident, disability and life insurance plans (the "Benefit Plans") as were generally provided to the Executive in accordance with the Company's policies and practices immediately prior to the Change of Control Date. To the extent any such benefits cannot be provided under the terms of the applicable plan, policy or program, the Company shall provide a comparable benefit under another plan or from the Company's general assets. The Executive's participation in the Benefit Plans will be on the same terms and conditions that would have applied had the Executive continued to be employed by the Company through the End Date. (d) Discharge of the Company's Obligations. Except as expressly provided -------------------------------------- in the last sentence of this Section 7(d), the amounts payable to the Executive pursuant to this Section 7 (whether or not reduced pursuant to Section 7(e)) following termination of his employment shall be in full and complete satisfaction of the Executive's rights under this Agreement and any other claims he may have in respect of his employment by the Company or any of its subsidiaries. Such amounts shall constitute liquidated damages with respect to any and all such rights and claims and, upon the Executive's receipt of such amounts, the Company shall be released and discharged from any and all liability to the Executive in connection with this Agreement or otherwise in connection with the Executive's employment with the Company and its subsidiaries. Nothing in this Section 7(d) shall be construed to release the Company from its commitment to indemnify the Executive and hold the Executive harmless from and against any claim, loss or cause of action arising from or out of the Executive's performance as an officer, director or employee of the Company or any of its subsidiaries or in any other capacity, including any fiduciary capacity, in which the Executive served at the request of the Company to the maximum extent permitted by applicable law and the Governing Documents. (e) Certain Further Payments by the Company. --------------------------------------- (i) In the event that any amount or benefit paid or distributed to the Executive pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to the Executive by the Company or any affiliated company including, without limitation, any distribution or payment made pursuant to the terms of the Company's compensation plans or arrangements (collectively, the "Covered Payments"), are or become subject to the tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any similar tax that may hereafter be imposed, the Company shall pay to the Executive at the time specified in Section 7(e)(v) below an additional amount (the "Tax Reimbursement Payment") such that the net amount retained by the Executive with respect to such Covered Payments, after deduction of any Excise Tax on the Covered Payments and any Federal, state and local income or employment tax and Excise Tax on the Tax Reimbursement Payment provided for by this Section 7(e), but before deduction for any Federal, state or local income or employment tax withholding on such Covered Payments, shall be equal to the amount of the Covered Payments. (ii) For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and the amount of such Excise Tax, (A) such Covered Payments will be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of the Company's independent certified public accountants appointed prior to the Change of Control Date or tax counsel selected by such Accountants (the "Accountants"), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for personal -8- services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax, and (B) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code. (iii) For purposes of determining the amount of the Tax Reimbursement Payment, the Executive shall be deemed to pay: (A) Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Tax Reimbursement Payment is to be made, and (B) any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Tax Reimbursement Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year. (iv) In the event that the Excise Tax is subsequently determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to be less than the amount taken into account hereunder in calculating the Tax Reimbursement Payment made, the Executive shall repay to the Company, at the time that the amount of such reduction in the Excise Tax is finally determined, the portion of such prior Tax Reimbursement Payment that would not have been paid if such Excise Tax had been applied in initially calculating such Tax Reimbursement Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. Notwithstanding the foregoing, in the event any portion of the Tax Reimbursement Payment to be refunded to the Company has been paid to any Federal, state or local tax authority, repayment thereof shall not be required until actual refund or credit of such portion has been made to the Executive, and interest payable to the Company shall not exceed interest received or credited to the Executive by such tax authority for the period it held such portion. The Executive and the Company shall mutually agree upon the course of action to be pursued (and the method of allocating the expenses thereof) if the Executive's good faith claim for refund or credit is denied. In the event that the Excise Tax is later determined by the Accountants or pursuant to any proceeding or negotiations with the Internal Revenue Service to exceed the amount taken into account hereunder at the time the Tax Reimbursement Payment is made (including, but not limited to, by reason of any payment the existence or amount of which cannot be determined at the time of the Tax Reimbursement Payment), the Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus any interest or penalty payable with respect to such excess) at the time that the amount of such excess is finally determined. (v) The Tax Reimbursement Payment (or portion thereof) provided for in Section 7(e)(i) above shall be paid to the Executive not later than 10 business days following the payment of the Covered Payments; provided, however, that if the amount of such Tax Reimbursement Payment (or portion thereof) cannot be finally determined on or before the date on which payment is due, the Company shall pay to the Executive by such date an amount estimated in good faith by the Accountants to be the minimum amount of such Tax Reimbursement Payment and shall pay the remainder of such Tax Reimbursement Payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined, but in no event later than 45 calendar days after payment of the related Covered Payment. In the event that the amount of the estimated Tax Reimbursement Payment exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after written demand by the Company for payment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). SECTION 8. Non-Exclusivity of Rights. Except as expressly provided herein, ------------------------- nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company or any of its affiliated companies and for which the Executive may -9- qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan or program. SECTION 9. Full Settlement. The Company's obligation to make the payments --------------- provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others whether by reason of the subsequent employment of the Executive or otherwise. SECTION 10. Legal Fees and Expenses. If the Executive asserts any claim ----------------------- in any contest (whether initiated by the Executive or by the Company) as to the validity, enforceability or interpretation of any provision of this Agreement, the Company shall pay the Executive's legal expenses (or cause such expenses to be paid) including, without limitation, his reasonable attorney's fees, on a quarterly basis, upon presentation of proof of such expenses; provided, however, that the Executive shall reimburse the Company for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually, if the Executive shall not prevail, in whole or in part, as to any material issue as to the validity, enforceability or interpretation of any provision of this Agreement. SECTION 11. Successors. ---------- (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors. The Company shall require any successor to all or substantially all of the business and/or assets of the Company, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place. SECTION 12. Miscellaneous. ------------- (a) Applicable Law. This Agreement shall be governed by and construed and -------------- conferred in accordance with the laws of the State of Delaware (and, as applicable, Title 9 of the U.S. Code) applied without reference to principles of conflict of laws. (b) Arbitration. Any dispute or controversy arising under or in connection ----------- with this Agreement shall be resolved by binding arbitration. The arbitration shall be held at a site selected by the arbitrators and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both the Company and the Executive. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. (c) Amendments. This Agreement may be amended or modified by the Board of ---------- Directors at any time prior to a Change in Control; provided, however, that subsequent to the occurrence of a Potential Change in Control, this Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. Notwithstanding the foregoing sentence, in the event that subsequent to the occurrence of a Potential Change in Control (i) the Board of Directors makes a good faith determination that the events giving rise to a Potential Change in Control will not result in the occurrence of a Change in Control or (ii) an actual Change in Control has not occurred after the first anniversary of the occurrence of a Potential Change in Control (or any Potential Change in Control events occurring after the initial Potential Change in Control), the foregoing limitation on the amendment or modification of this Agreement shall cease to apply unless -10- and until it thereafter again becomes effective by reason of the occurrence of another Potential Change in Control or any actual Change in Control. (d) Notices. All notices and other communications hereunder shall be in ------- writing and shall be given by hand-delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: at the home address of the Executive noted on the records of the Company If to the Company: Alabama National BanCorporation 1927 First Avenue North Birmingham, Alabama 35203 Attn.: Chairman of the Board of Directors With a copy to: Mark L. Drew Maynard, Cooper & Gale, P.C. 1901 Sixth Avenue North 2400 AmSouth/Harbert Plaza Birmingham, Alabama 35203 or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. (e) Entire Agreement. Upon the Change of Control Date, unless otherwise ---------------- provided herein, this Agreement shall constitute the entire agreement between the parties hereto with respect to the matters referred to herein. There are no promises, representations, inducements or statements between the parties other than those that are expressly contained herein. In the event any provision of this Agreement is invalid or unenforceable, the validity and enforceability of the remaining provisions hereof shall not be affected. The Executive acknowledges that he is entering into this Agreement of his own free will and accord, and with no duress, that he has read this Agreement and that he understands it and its legal consequences. IN WITNESS WHEREOF, the Executive has hereunto set his hand and the Company has caused this Agreement to be executed in its name on its behalf, and its corporate seal to be hereunto affixed and attested by its Secretary, all as of the day and year first above written. ALABAMA NATIONAL BANCORPORATION By: /s/ John H. Holcomb, III ---------------------------- Name: John H. Holcomb, III -------------------------- Title: Chairman and CEO ------------------------- EXECUTIVE Signature: /s/ Dan M. David ---------------- Name: Dan M. David ------------ Title: Vice Chairman ------------- -11- EX-11.1 23 0023.txt COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11.1 Alabama National BanCorporation Computation of Earnings Per Share (In thousands, except per share amounts)
Per Share Income Shares Amount ------ ------ ------ Year ended December 31, 2000 Basic EPS net income............................. $ 24,392 11,057 $ 2.21 ============= Effect of dilutuve securities options............ 181 -------------- -------------- Diluted EPS...................................... $ 24,392 11,238 $ 2.17 ============== ============== ============= Year ended December 31, 1999 Basic EPS net income............................. $ 22,271 11,079 $ 2.01 ============= Effect of dilutuve securities options............ 194 -------------- -------------- Diluted EPS...................................... $ 22,271 11,273 $ 1.98 ============== ============== ============= Year ended December 31, 1998 Basic EPS net income............................. $ 17,372 10,804 $ 1.61 ============= Effect of dilutuve securities options............ 369 -------------- -------------- Diluted EPS...................................... $ 17,372 11,173 $ 1.55 ============== ============== =============
EX-21.1 24 0024.txt SUBSIDIARIES OF ANB Exhibit 21.1 ------------ SUBSIDIARIES OF ALABAMA NATIONAL Name of Subsidiary State of Organization National Bank of Commerce of Birmingham............... National Bank NBC Securities, Inc.............................. Alabama NBC Investments, Inc............................. Nevada Bank of Dadeville..................................... Alabama TBD Investments, Inc............................. Nevada Ashland Insurance, Inc........................... Alabama Alabama Exchange Bank................................. Alabama Tuskegee Loan Company, Inc....................... Alabama AEB Investments, Inc............................. Nevada First Gulf Bank . . . ................................ Alabama First Citizens Bank................................... Alabama Clay County Finance Company, Inc................. Alabama FCB Investments, Inc............................. Nevada First American Bank................................... Alabama Corporate Billing, Inc........................... Alabama FAB Investments, Inc............................. Nevada Rankin Insurance, Inc............................ Alabama Citizens & Peoples Bank, National Association......... National Bank Public Bank........................................... Florida Georgia State Bank.................................... Georgia Community Bank of Naples, National Association........ National Bank CBN Investments, Inc............................. Nevada Peoples State Bank of Groveland....................... Florida 2 EX-23.1 25 0025.txt CONSENT OF PRICEWATERHOUSECOOPERS L.L.P. Exhibit 23.1 Consent of Independent Accountants We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-07951), Form S-8 (File No. 333-27285), Form S-8 (File No. 333-47748), Form S-8 (File No. 333-70205), Form S-8 (File No. 333-70207), Form S-8 (File No. 333-70209), Form S-8 (File No. 333-76301), Form S-8 (File No. 333-76303), Form S-8 (File No. 333-76305), Form S-8 (File No. 333-76307), Form S-8 (File No. 333-76309), Form S-8 (File No. 333-76311), Form S-8 (File No. 333-76313), Form S-8 (File No. 333-76315), Form S-8 (File No. 333-76317) of Alabama National BanCorporation of our report dated January 18, 2001, except for Note 21, as to which the date is January 31, 2001 relating to the financial statements, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Birmingham, Alabama March 22, 2001 -----END PRIVACY-ENHANCED MESSAGE-----