EXHIBIT 10.1

EMPLOYMENT CONTINUATION AGREEMENT

THIS AGREEMENT between ALABAMA NATIONAL BANCORPORATION, a Delaware corporation
(the “Company”), and James R. Thompson, III (the “Executive”), is dated as of
this 20th day of February, 2007.

W I T N E S S E T H :

WHEREAS, the Company has employed the Executive in a key executive officer
position at First American Bank, a wholly-owned subsidiary of the Company, 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 NASDAQ Stock
Market, or, if the common stock is not listed on the NASDAQ Stock Market, on the
principal United States securities exchange (an “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 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 over-the-counter stock market on which the
common stock is quoted.

(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.

 

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(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 Third
Amendment and Restatement of the Alabama National BanCorporation Performance
Share Plan, as such Plan has been and may be further 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);

(iv) any Person files soliciting materials intended to result in a change in the
composition of the Board of Directors of the Company; or

 

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(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 payable in accordance with Section 21 of
the Performance Share Plan. 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 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.

 

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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 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.

 

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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).

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

 

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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 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

 

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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) 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.

 

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(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 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

 

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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 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

 

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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 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.

[signature page follows]

 

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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 Chief Executive Officer

 

EXECUTIVE Signature:  

/s/ James R. Thompson, III

Name:   James R. Thompson, III Title:   Chief Executive Officer of   First
American Bank

 

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