Exhibit 10.31

ALABAMA NATIONAL BANCORPORATION

PERFORMANCE SHARE PLAN FOR CERTAIN MEMBERS
OF THE MADISON COUNTY ADVISORY BOARD OF DIRECTORS
OF FIRST AMERICAN BANK

1.                 Purpose. The purpose of the Alabama National BanCorporation
Performance Share Plan for Certain Members of the Madison County Advisory Board
of Directors of First American Bank (the “Plan”) is to further the long-term
profitability of Alabama National BanCorporation, a Delaware corporation (the
“Company”), through the long term growth of the Madison County Branches by
offering long-term incentives to certain of the initial members of the Madison
County Advisory Board, who are expected to contribute substantially to such
growth.

2.                 Certain Definitions.

(a)                “Cause” shall mean (i) abuse of or addiction to intoxicating
drugs (including alcohol); (ii) any act which constitutes fraud, malfeasance of
duty or conduct grossly inappropriate to service on the Madison County Advisory
Board; (iii) indictment for a felony offense; (iv) directly or indirectly
competing with the Company or any of its affiliates; (v) voluntary or
involuntary filing of a petition in bankruptcy with a court of competent
jurisdiction; or (vi) suspension or removal by federal or state banking
regulatory authorities.   

(b)               “Committee” means the committee of the Board of Directors of
the Company which shall administer the Plan in accordance with Section 3.

(c)                “Common Stock” means the common stock, par value $1.00 per
share, of the Company.

(d)               “Company” shall have the meaning assigned in Section 1.

(e)                “Madison County Advisory Board” means the advisory board of
directors of the Madison County Branches.

(f)                “Madison County Advisory Board Director” means a member of
the Madison County Advisory Board who is not a director of the Company and whose
name is included on Exhibit A hereto.

(g)               “Madison County Branches” means the branches of First American
Bank, an Alabama banking corporation and wholly-owned subsidiary of the Company,
that are physically located in Madison County, Alabama, as such branches may
exist from time to time during the term of this Plan.

(h)               “Open Market Shares” shall have the meaning assigned in
Section 4(a).

 

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(i)                “Performance Share Award” means the award of Performance
Shares to a Madison County Advisory Board Director pursuant to the terms of the
Plan.

(j)                “Performance Share” means the equivalent of one share of
Common Stock.

(k)               “Plan” shall have the meaning assigned in Section 1.

3.                 Administration of the Plan. The Plan shall be administered by
a Committee which shall be composed of the Compensation Committee of the Board
of Directors of the Company. The Committee shall have full power to administer
and interpret the Plan and to adopt such rules and regulations consistent with
the terms of the Plan as the Committee deems necessary or advisable in order to
carry out the provisions of the Plan. Except as otherwise provided in the Plan,
the Committee’s interpretation and construction of the Plan and its
determination of any conditions applicable to Performance Share Awards shall be
conclusive and binding on all Madison County Advisory Board Directors.

4.                 Performance Share Awards.

(a)                After appropriate approval of the Plan, Performance Share
Awards shall be made by the Committee to the Madison County Advisory Board
Directors. Such Awards shall be made during the period beginning on the 90th day
following the effective date of this Plan and ending on the 120th day following
such effective date; provided, however, that a Performance Share Award shall be
granted to a Madison County Advisory Board Director only if such Director has
purchased the minimum number of shares of Common Stock referenced by his name in
Column 1 of Exhibit A hereto pursuant to one or more purchases made in the open
market within 90 days of the effective date of this Plan (the “Open Market
Shares”). In order to satisfy the condition stipulated in the preceding clause
regarding the purchase of Open Market Shares, a Madison County Advisory Board
Director must deliver to the Company, on or before the 90th day after the
effective date of this Plan, the broker confirmation slip(s) evidencing the
purchase of his Open Market Shares.

(b)               No Madison County Advisory Board Director shall: (i) be
entitled to receive any dividends or dividend equivalents on Performance Shares
Awards or Performance Shares (until such Shares have been paid to the Director
in accordance with Section 5 below); (ii) have any voting or any other rights of
a Company stockholder with respect to any Performance Shares Awards or
Performance Shares (until such Shares have been paid to the Director in
accordance with Section 5 below); and (iii) have any interest in or right to
receive any shares of Common Stock prior to the time when the Committee
determines the amount of payment of Performance Shares pursuant to Section 5.

(c)                Payment of a Performance Share Award (if any) to a Madison
County Advisory Board Director shall be made in accordance with Section 5 below.

 

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(d)               Each Performance Share Award shall be made in writing and
shall set forth the terms and conditions set by the Committee for payment of
such Award.

(e)                A Performance Share Award shall not be made unless such
Performance Share Award is in compliance with all applicable laws.

5.                 Payment of Performance Shares.

(a)                (i)            Each Madison County Advisory Board Director
granted a Performance Share Award shall be entitled to payment of the number of
shares of Common Stock due in accordance with subsection (b) below (if any) if
such Director (A) has retained a minimum number of shares of Common Stock equal
to the number of Open Market Shares described in Column 1of Exhibit A hereto for
such Director during the entire period beginning with the date of purchase of
such Open Market Shares in accordance with Section 4(a) above and ending on
December 31, 2005 (as adjusted for stock splits or other recapitalization as
described in Paragraph 9 herein), and (B) continues to serve as a member of the
Madison County Advisory Board during the entire period beginning on the
effective date of this Plan and ending on December 31, 2005. In order to satisfy
the condition stipulated in Section 5(a) above, each Madison County Advisory
Board Director must deliver to the Company evidence of continuing ownership of
the Open Market Shares through December 31, 2005, as may be reasonably required
by the Company.

       (ii)            If at any time either of the two conditions set forth at
Section 5(a)(i)(A) and (B) above are not met for a Madison County Advisory Board
Director, such Director shall immediately forfeit his Performance Share Award,
his Performance Shares and all rights to receive shares of Common Stock
hereunder. However, if (A) such Director continues to hold the minimum number of
Open Market Shares attributable to such Director through the date that he ceases
to serve as a member of the Madison County Advisory Board, and (B) such Director
ceases to serve as a member of the Madison County Advisory Board (1) as a result
of such Director’s death or (2) because he is terminated from such position
without Cause, then the Director may be eligible for a payment of a percentage
of the shares of Common Stock that he otherwise would have received pursuant to
subsection (b) below (if any) in accordance with the following schedule:

 

Date on Which Director Ceases to Serve as a
Member of the Madison County Advisory
Board of Directors

 

Percentage of Shares of Common Stock to
be Paid to Director

 

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Prior to January 1, 2003

 

 0%

 

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January 1, 2003 to December 31, 2003

 

40%

 

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January 1, 2004 to December 31, 2004

 

60%

 

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January 1, 2005 to December 30, 2005

 

80%

 

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(b)               The number of shares of Common Stock to be paid to a Madison
County Advisory Board Director shall be based on the net income of the Madison
County Branches for the fiscal year ended December 31, 2005, before provision
for income taxes, as reflected on the books of the

 

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Company as determined by the Company’s certified public accountants in
accordance with generally accepted accounting principles (the “Determination
Year Net Income”), pursuant to the following parameters:

(i)     If the Determination Year Net Income is less than $3,100,000, no shares
of Common Stock will be paid or payable to any of the Madison County Advisory
Board Directors under any circumstances.

(ii)    If the Determination Year Net Income is equal to or greater than
$3,100,00, but less than $3,500,000, the Performance Share Award payment for a
Madison County Advisory Board Director shall be the number of shares of Common
Stock equal to 75% of the Target Performance Shares listed in Column 2 of
Exhibit A for such Director.

(iii)   If the Determination Year Net Income is equal to or greater than
$3,500,000, but less than $4,000,000, the Performance Share Award payment for a
Madison County Advisory Board Director shall be the number of shares of Common
Stock equal to 100% of the Target Performance Shares listed in Column 2 of
Exhibit A for such Director.

(iv)   If the Determination Year Net Income is equal to or greater than
$4,000,000, the Performance Share Award payment for a Madison County Advisory
Board Director shall be the number of shares of Common Stock equal to 125% of
the Target Performance Shares listed in Column 2 of Exhibit A for such Director.

(c)                For example:

(i)     If a Madison County Advisory Board Director were to continue serving on
the Madison County Board to continued to hold his Open Market Shares through
December 31, 2005, then he would be entitled to receive all of the shares of
Common Stock (if any) payable pursuant to subsection (b) above. If such
Director’s Target Performance Shares listed on Exhibit A hereto were 2,000 and
the Determination Year Net Income were $3,300,000, then, as soon as practicable
after December 31, 2005, such Director would be paid 1,500 shares of Common
Stock, calculated as follows: 75% x 2,000 = 1,500.

(ii)    If a Madison County Advisory Board Director were to cease serving on the
Madison County Board on June 30, 2003, because of death or termination without
Cause, and he continued to hold his Open Market Shares at least until such date,
then he would be entitled to receive 40% of the shares of Common Stock that he
would have received (if any) if he had continued to serve on the Advisory Board
and had held his Open Market Shares through December 31, 2005. If such
Director’s Target Performance Shares listed on Exhibit A hereto were 2,000 and
the Determination Year Net Income were $4,100,000, then, as soon as practicable
after December 31, 2005, such Director would be paid 1,000 shares of Common
Stock, calculated as follows:

(1)             125% x 2,000 = 2,500

(2)             2,500 x 40% = 1,000.

 

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(iii)   If a Madison County Advisory Board Director were to continue serving on
the Madison County Board through December 31, 2005, but he ceased holding his
minimum number of required Open Market Shares at any time prior to December 31,
2005, then he would not be entitled to receive any shares of Common Stock under
the Plan. Likewise, if a Director were to resign from the Madison County
Advisory Board or were to be removed for Cause at any time prior to December 31,
2005, then he would not be entitled to receive any shares of Common Stock under
the Plan.

(iv)   In the examples in (c)(i) and (c)(ii) above, if the Determination Year
Net Income were $3,000,000, then no Madison County Advisory Board Director would
be entitled to payment of any shares of Common Stock because the minimum
performance target in subsection (b)(i) above would not have been met.

(d)                 Payment of Performance Share Awards shall be made by the
Company after December 31, 2005, as promptly as possible after the determination
by the Committee of the number of Performance Shares that have been earned. All
payments of Performance Share Awards shall be made at the same time, regardless
of whether the recipient is fully or partially vested. All payments shall be
made in shares of Common Stock and partly in cash, if necessary, with the cash
portion being equal to any fractional share amount, based on the average sales
price of the Common Stock on December 31, 2005, or if such date is not a
business day, the first preceding business day thereto.

(e)                To the extent that shares of Common Stock are available in
the treasury of the Company on the date payment is to be made, such shares may
be issued in payment of Performance Share Awards. Performance Share Award
payments may also be made by the Company from its authorized but unissued shares
of Common Stock.

6.                Limitation on Awards and Payments. Notwithstanding anything to
the contrary herein, the maximum number of shares of Common Stock which may be
awarded under the Plan as Performance Share Awards shall not exceed an aggregate
of 25,000 shares (125% x 20,000 shares).

7.                No Assignment of Interest. The interest of any Madison County
Advisory Board Director in the Plan shall not be assignable, either by voluntary
assignment or by operation of law, and any assignment of such interest, whether
voluntary or by operation of law, shall render the Performance Share Award void;
provided, however, that cash or shares of Common Stock payable under the Plan
shall be transferable by testamentary will or by the laws of descent and
distribution. All shares of Common Stock paid pursuant to this Plan are to be
paid subject to an investment representation by each Madison County Advisory
Board Director or other recipient that any such shares are acquired for
investment and not with a view to distribution and that such shares shall not be
transferred or sold until registered in compliance with the Securities Act of
1933 or unless an exemption therefrom is available in the opinion of the counsel
for the Company.

8.                Expenses. The expenses of administering the Plan shall be
borne by the Company.

 

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9.                Dilution, Recapitalization and Other Adjustments. If the
Company shall at any time issue any shares of Common Stock (a) in a stock split
or other similar increase of outstanding shares of Common Stock, by
reclassification or otherwise, whereby the par value of shares is reduced, or
(b) in payment of a stock dividend, then the number of Performance Shares that
have been awarded but not paid, and the maximum number of Performance Shares
which may be issued in payment of the Performance Share Awards (see Section 6),
shall be increased proportionately; and in like manner, in case of any
combination of shares of Common Stock, by a reverse stock split,
reclassification or otherwise, the number of Performance Shares that have been
awarded but not paid, and the maximum number of Performance Shares that may be
issued in payment of the Performance Share Awards shall be reduced
proportionately.

10.               Change in Control.

(a)                Plan termination (“Plan Termination”) shall occur
automatically and without requirement of any action by the Company’s Board of
Directors upon a Change in Control. “Change in Control” means (a) the
acquisition by any person (within the meaning of Section 13(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”)) of beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the Common Stock
then outstanding; or (b) the consummation of (i) any consolidation or merger of
the Company in which the Company is not the continuing or surviving corporation
or pursuant to which shares of the Common Stock are converted into cash,
securities or other property, other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of common stock of the surviving corporation immediately
after the merger as they had in Common Stock immediately prior to the merger, or
(ii) any 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, including, without limitation, any 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.

(b)               Subject to the terms and conditions of this Plan, payment of
all Performance Share Awards outstanding at the date of Plan Termination shall
be made as promptly as possible after such date. Payment of each such Award
shall be computed in the same manner as set forth in Section 5, with the
following exceptions:

 

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(i)     For purposes of calculating the Determination Year Net Income and the
corresponding percentage multiplier pursuant to Section 5(b)(i), (ii), (iii) or
(iv), as the case may be, the December 31st immediately prior to the effective
date of Plan Termination shall be used in place of December 31, 2005; provided,
however that such percentage multiplier shall not be less than 100%; and

(ii)    In determining the final number of shares of Common Stock to be paid to
each Madison County Advisory Board Director, the number of shares determined in
accordance with subsection (b)(i) above shall be multiplied by a percentage, as
set forth in the following schedule:

 

Date of Plan Termination

 

Percentage of Shares of Common Stock to
be Paid to Director

 

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Prior to January 1, 2003

 

20%

 

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January 1, 2003 to December 31, 2003

 

40%

 

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January 1, 2004 to December 31, 2004

 

60%

 

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January 1, 2005 to December 30, 2005

 

80%

 

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(iii)   For example, if a Change in Control were to occur in June 2003 and the
Determination Year Net Income were $3,600,000 (calculated as of December 31,
2002, pursuant to subsection (b)(i) above), then a Madison County Advisory Board
Director whose Target Performance Shares in Column 2 of Exhibit 1 is 2,000
shares would be paid 800 shares of Common Stock, calculated as follows:

(1)             100% x 2,000 = 2,000

(2)             2,000 x 40% = 800

11.               Construction. The use of the masculine gender herein shall be
deemed to refer to the feminine as well. All headings are included for
convenience of reference and shall not be deemed a part of this Plan.

12.               Taxes. Each of the Madison County Advisory Board Directors,
individually, and not the Company, shall be solely responsible for any and all
income and other taxes payable in connection with the Performance Share Awards
and the payment of Performance Shares.

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