SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 22, 2015

 

 

NATIONAL COMMERCE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   000-55336   20-8627710

(State or other jurisdiction

of incorporation)

 

(Commission

File No.)

 

(I.R.S. Employer

ID No.)

813 Shades Creek Parkway, Suite 100

Birmingham, Alabama 35209

(Address of principal executive offices)

Registrant’s telephone number, including area code: (205) 313-8100

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Establishment of 2015 Incentive Program

On January 22, 2015, the Board of Directors (the “Board”) of National Commerce Corporation (the “Company”), upon recommendation of the Compensation Committee of the Board (the “Compensation Committee”), established an annual incentive program for the Company’s fiscal year ended December 31, 2015 for certain executive officers and key employees of the Company and its subsidiaries, including the Company’s named executive officers – the Chairman of the Board and Chief Executive Officer, John H. Holcomb, III; the President and Chief Operating Officer, Richard Murray, IV; and the Vice Chairman of the Board and Chief Financial Officer, William E. Matthews, V (the “2015 Incentive Program”). Under the 2015 Incentive Program, certain executive officers and key employees of the Company and its subsidiaries have a short-term incentive cash bonus opportunity based on certain corporate and individual performance objectives established by the Compensation Committee. With respect to the Company’s named executive officers, the cash bonus opportunity is based on the achievement of a specified level of financial performance, specifically the Company’s net income in 2015 compared to the Company’s budgeted net income for 2015. The individual target bonus opportunity for each of the three named executive officers participating in the 2015 Incentive Program is as follows: $110,000 for Mr. Holcomb, $100,000 for Mr. Murray, and $100,000 for Mr. Matthews.

Participants in the 2015 Incentive Program will receive 100% of their target award if the Company’s net income in 2015 is 100% of budgeted net income for 2015, 50% of their target award if the Company achieves a minimum, threshold level of performance (net income in 2015 reaching 75% of budgeted net income for 2015), and a maximum of 150% of their target award for a maximum level of performance (net income in 2015 equaling or exceeding 125% of budgeted net income for 2015). No payments will be made for performance below the specified threshold amount. Payouts between the threshold and maximum will be calculated by the Compensation Committee using straight-line interpolation, as described in the 2015 Incentive Program. The Compensation Committee may make adjustments to the terms and conditions of, and the criteria included in, awards under the 2015 Incentive Program in recognition of unusual or nonrecurring events affecting a participant or the Company, or the financial statements of the Company, or in certain other instances specified in the 2015 Incentive Program.

A copy of the 2015 Incentive Program is attached as Exhibit 10.1 to this Current Report on Form 8-K and is hereby incorporated by reference herein. The foregoing description of the 2015 Incentive Program is qualified in its entirety by reference to Exhibit 10.1.

Entry into Indemnification Agreements Approved

On January 22, 2015, the Board also approved the entry by the Company into an indemnification agreement (the “Indemnification Agreement”) with each director and executive officer of the Company, effective immediately. The Indemnification Agreement requires the Company to indemnify its directors and executive officers to the fullest extent permitted by Delaware law and is in addition to protections provided in the Company’s certificate of incorporation and bylaws. Under the Indemnification Agreement, directors and executive officers will be indemnified for certain liabilities and will be advanced certain expenses that have been incurred as a result of actions brought, or threatened to be brought, against such directors and executive officers in connection with their duties. The Indemnification Agreement also contains various covenants by the Company as to the maintenance of directors’ and officers’ liability insurance.

A copy of the Form of Indemnification Agreement is attached as Exhibit 10.2 to this Current Report on Form 8-K and is hereby incorporated by reference herein. The foregoing description of the Indemnification Agreement is qualified in its entirety by reference to Exhibit 10.2.

 

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Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit
No.

  

Description of Exhibit

10.1    2015 Incentive Program
10.2    Form of Indemnification Agreement

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

      NATIONAL COMMERCE CORPORATION
January 26, 2015      

/s/ John H. Holcomb, III

      John H. Holcomb, III
      Chairman and Chief Executive Officer

 

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Exhibit Index

 

Exhibit
No.

  

Description of Exhibit

10.1    2015 Incentive Program
10.2    Form of Indemnification Agreement

 

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Exhibit 10.1

NATIONAL COMMERCE CORPORATION

2015 INCENTIVE PROGRAM

1. Purpose and Administration of the 2015 Incentive Program . The 2015 Incentive Program (the “2015 Incentive Program”) has been established by National Commerce Corporation (together with its subsidiaries, the “Corporation”) to encourage outstanding performance from its executive officers and certain other key employees. Subject to applicable law, all designations, determinations, interpretations and other decisions under or with respect to the 2015 Incentive Program or any bonus award hereunder shall be within the sole discretion of the Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of the Corporation, may be made at any time and shall be final, conclusive and binding upon all persons. Designations, determinations, interpretations and other decisions made by the Compensation Committee with respect to the 2015 Incentive Program or any bonus award hereunder, including, but not limited to, the application of the Recoupment Policy described herein, need not be uniform and may be made selectively among Eligible Participants, whether or not such Eligible Participants are similarly situated.

2. Participation . All executive officers and certain other key employees of the Corporation are eligible to receive a bonus award pursuant to the 2015 Incentive Program (each, an “Eligible Participant”). Each Eligible Participant selected by the Board to receive a bonus award under the 2015 Incentive Program is referred to herein as a “Participant.”

3. Calculation and Payment of Awards . Bonus awards shall be calculated based on the financial results of the Corporation for the 2015 fiscal year. The bonus awards to be paid pursuant to the 2015 Incentive Program (each, an “Award”) shall be on such terms as the Board may prescribe, at the Compensation Committee’s recommendation, based on the performance criteria set forth on Schedule A hereto. The target(s) for the performance criteria shall be determined by the Board, in its discretion, at the recommendation of the Compensation Committee, as set forth on Schedule A hereto. As soon as practicable following the 2015 fiscal year, the Compensation Committee shall determine and certify whether and to what extent the performance goal has been met, as well as the amount of the Award that each Participant has earned under the 2015 Incentive Program. A Participant is required to remain employed with the Corporation through the end of the 2015 fiscal year in order to have a legally binding right to the Award.

Awards pursuant to the 2015 Incentive Program will be paid solely in cash. All amounts due to Participants under the 2015 Incentive Program shall be paid as soon as administratively feasible after the end of the 2015 fiscal year, and, in any event, no later than March 15, 2016. Notwithstanding the foregoing, Awards may be deferred under the Corporation’s Deferral of Compensation Plan for Key Employees and Non-Employee Directors (the “Deferral Plan”), to the extent permitted by the terms of the Awards and the Deferral Plan. Except as the Compensation Committee may otherwise determine in its sole and absolute discretion, termination of a Participant’s employment prior to the end of the 2015 fiscal year will result in the forfeiture of the Award by the Participant, and no payments shall be made with respect thereto. This 2015 Incentive Program is not a “qualified” plan for federal income tax purposes, and any payments are subject to applicable tax withholding requirements.

4. Adjustments for Unusual or Nonrecurring Events . The Compensation Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, bonus awards under the 2015 Incentive Program in recognition of unusual or nonrecurring events affecting any Participant, the Corporation or the financial statements of the Corporation; in the event of changes in applicable laws, regulations or accounting principles; or in the event the Compensation Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the 2015 Incentive Program. The


Compensation Committee is also authorized to adjust performance targets or bonus awards downward to avoid unwarranted windfalls. Notwithstanding the foregoing, the Compensation Committee shall not have the discretion to increase any Award payable to a Participant in excess of that provided by the application of the terms and conditions set forth in Schedule A hereto.

5. Recoupment Policy . The Corporation may recover from any Participant any incentive compensation awarded or paid pursuant to this 2015 Incentive Program based on (i) achievement of financial results that were subsequently the subject of a restatement due to material noncompliance with any financial reporting requirement under either GAAP or the federal securities laws, other than as a result of changes to accounting rules and regulations, or (ii) a subsequent finding that the financial information or performance metrics used by the Compensation Committee to determine the amount of the incentive compensation were materially inaccurate, in each case regardless of individual fault. In addition, the Corporation may recover any incentive compensation awarded or paid pursuant to this 2015 Incentive Program based on a Participant’s conduct which is not in good faith and which materially disrupts, damages, impairs or interferes with the business of the Corporation. This Recoupment Policy applies to any incentive compensation earned or paid to a Participant pursuant to this 2015 Incentive Program. Subsequent changes in status, including retirement or termination of employment, do not affect the Corporation’s rights to recover compensation under this policy. The Compensation Committee will administer this policy and exercise its discretion and business judgment in the fair application of this policy based on the facts and circumstances as it deems relevant in its sole discretion. More specifically, the Compensation Committee shall determine in its discretion any appropriate amounts to recoup, the officers from whom such amounts shall be recouped (which need not be all officers who received the bonus compensation at issue) and the timing and form of recoupment; provided, that only compensation paid or settled within three years prior to the Compensation Committee taking action under this Recoupment Policy shall be subject to recoupment; provided further, that any recoupment pursuant to clause (i) or (ii) of the first sentence of this paragraph shall not exceed the portion of any applicable bonus paid hereunder that is in excess of the amount of performance-based or incentive compensation that would have been paid or granted based on the actual, restated financial statements or actual level of the applicable financial or performance metrics as determined by the Compensation Committee in its sole discretion.

For avoidance of doubt, the Corporation may set off the amounts of any such required recoupment against any amounts otherwise owed by the Corporation to a Participant as determined by the Compensation Committee in its sole discretion, solely to the extent any such offset complies with the requirements of Section 409A of the Internal Revenue Code, as amended (the “Code”), and the guidance issued thereunder.

If any restatement of the Corporation’s financial results indicates that the Corporation should have made higher performance-based payments than those actually made under the 2015 Incentive Program for the period affected by the restatement, then the Compensation Committee shall have the discretion, but not the obligation, to cause the Corporation to make appropriate incremental payments to affected Participants then-currently employed by the Corporation. The Compensation Committee will determine, in its sole discretion, the amount, form and timing of any such incremental payments, which shall be no more than the difference between the amount of performance-based compensation that was paid or awarded and the amount that would have been paid or granted based on the actual, restated financial statements.

6. No Right to Employment . The grant of an Award under the 2015 Incentive Program shall not be construed as giving a Participant the right to be retained in the employ of the Corporation.

 

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7. No Trust or Fund Created . Neither the 2015 Incentive Program nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Corporation pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Corporation.

8. No Rights to Awards . No person shall have any claim to be granted any Award and there is no obligation for uniformity of treatment among Participants. The terms and conditions of Awards, if any, need not be the same with respect to each Participant. The Corporation reserves the right to terminate the 2015 Incentive Program at any time in the Corporation’s sole discretion.

9. Section 409A of the Internal Revenue Code . This 2015 Incentive Program is intended to be exempt from Section 409A of the Code.

10. Interpretation and Governing Law . This 2015 Incentive Program shall be governed by and interpreted and construed in accordance with the internal laws of the State of Alabama, without reference to principles of conflicts or choices of laws. In the event the terms of this 2015 Incentive Program are inconsistent with the terms of any written agreement between a Participant and the Corporation, the terms of such written agreement shall govern the Participant’s participation in the 2015 Incentive Program.

 

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Schedule A

to 2015 Incentive Program

Performance Metric; Determination of Percentage of Target Bonus Amount Earned

The performance metric selected by the Board is the Corporation’s net income. The percentage of the target award (“Target Bonus Amount”) that is earned by a Participant is based on the Corporation’s net income in 2015 (“2015 Net Income”) compared to the Corporation’s budgeted net income for 2015 (“Budgeted Net Income”), as follows:

 

    Threshold : 50% of the Participant’s Target Bonus Amount is earned if 2015 Net Income is 75% of Budgeted Net Income. No bonus is earned if 2015 Net Income is less than 75% of Budgeted Net Income.

 

    Target : 100% of the Participant’s Target Bonus Amount is earned if 2015 Net Income is 100% of Budgeted Net Income.

 

    Maximum : 150% of the Participant’s Target Bonus Amount is earned if 2015 Net Income equals or exceeds 125% of Budgeted Net Income.

 

    Interpolation : The Corporation will interpolate between the threshold, target and maximum goals in the manner set forth in the following table:

 

2015 Net Income

  

Percentage of Target Bonus Amount

Earned by Participant

Less than 75% of Budgeted Net Income

   No bonus earned

75% of Budgeted Net Income

   50% of Target Bonus Amount

87.5% of Budgeted Net Income

   75% of Target Bonus Amount

100% of Budgeted Net Income

   100% of Target Bonus Amount

112.5% of Budgeted Net Income

   125% of Target Bonus Amount

125% or more of Budgeted Net Income

   150% of Target Bonus Amount

The Corporation will linearly interpolate between the amounts set forth above.

 

A-1

Exhibit 10.2

NATIONAL COMMERCE CORPORATION

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made effective as of the      day of         , 2015, by and between National Commerce Corporation, a Delaware corporation (the “Company”), and                              (“Indemnitee”).

Recitals

WHEREAS, the Company has adopted Bylaws (the “Bylaws”) which provide for the indemnification of the directors, officers, agents, and employees of the Company in accordance with Section 145 of the General Corporation Law of Delaware (the “Indemnification Statute”);

WHEREAS, the Indemnification Statute provides that it is not exclusive, and thus contemplates that contracts may be entered into between the Company and its directors, officers, employees and agents with respect to the indemnification of such individuals;

WHEREAS, the terms, cost and availability of directors’ and officers’ liability insurance (“Liability Insurance”) have raised questions regarding the adequacy and reliability of the protection afforded to directors and officers thereby; and

WHEREAS, in order to induce Indemnitee to perform or continue to perform services on behalf of the Company, the Company has determined and agreed to enter into this Agreement with Indemnitee.

Agreement

NOW, THEREFORE, in consideration of and for Indemnitee’s agreement to serve as a director, officer, employee or agent of the Company and to render service on behalf of the Company, the parties agree as follows:

1. Liability Insurance . The Company shall use reasonable efforts to maintain Liability Insurance at its own expense for the benefit of Indemnitee during the term of this Agreement; provided, however , that the Company shall not be required to maintain any policy of Liability Insurance if, in the sole business judgment of a majority of the directors then in office, (i) the premium cost for such Liability Insurance is excessive; (ii) the premium cost for such Liability Insurance is not reasonably related to the amount of coverage provided; or (iii) the coverage provided by such Liability Insurance is so limited by its terms and exclusions or otherwise that sufficient benefit is not derived therefrom. Any policy of Liability Insurance provided hereunder shall be of a type and coverage amount selected by the Company in its sole discretion and may provide for compensation or reimbursement to Indemnitee for liabilities asserted against, or expenses incurred by, Indemnitee in his or her capacity as an officer, director, employee or agent of the Company, whether or not the Company would have the power to indemnify Indemnitee against such liabilities or expenses under this Agreement or the Indemnification Statute.


2. Indemnity . The Company agrees to indemnify and reimburse Indemnitee to the full extent authorized and permitted by the provisions of the Bylaws of the Company and the laws of the State of Delaware, and by any amendment thereof, authorizing or permitting such indemnification which is adopted after the date hereof.

3. Additional Indemnity .

(a) Subject only to the exclusions set forth in Section 4 hereof, the Company shall indemnify and reimburse Indemnitee under any circumstances where Indemnitee was or is a party or is threatened to be made a party to or is otherwise involved in a threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal, including an action by or in the right of the Company (a “Proceeding”), by reason of the fact that he or she is or was a director, officer, employee or agent of the Company, or, while a director, officer, employee or agent of the Company, is or was serving at the request of the Company as a director, officer, partner, trustee, employee or agent of, or in any other position or capacity for, another foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise, whether for profit or not, against expenses (including without limitation attorneys’ fees, judgments, penalties, fines and amounts paid in settlement) actually and reasonably incurred by Indemnitee in connection with the Proceeding, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, and with respect to a criminal Proceeding, if Indemnitee had no reasonable cause to believe his or her conduct was unlawful. The termination of a Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal Proceeding, had reasonable cause to believe that his or her conduct was unlawful.

(b) The term “Company” shall for purposes of this Agreement include National Commerce Corporation and its direct and indirect majority-owned subsidiaries, as well as any resulting or surviving corporation from a merger or consolidation to which the Company is a constituent corporation.

4. Limitations on Indemnity . No indemnity pursuant to Section 3 hereof shall be paid by the Company:

(a) except to the extent that the aggregate amount to be indemnified hereunder exceeds the amount for which Indemnitee is indemnified (i) pursuant to Section 2 hereof; (ii) pursuant to an indemnification agreement with any parent, subsidiary or affiliate of the Company; or (iii) under any policy of Liability Insurance purchased and maintained by the Company pursuant to Section 1 hereof;

(b) with respect to remuneration paid to Indemnitee if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law;

 

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(c) on account of any suit in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state, or local statutory law;

(d) on account of Indemnitee conduct which is finally adjudged to have been knowingly fraudulent, deliberately dishonest or willful misconduct;

(e) if, in the opinion of the Company’s counsel, indemnification is prohibited by applicable law of the State of Delaware;

(f) for a claim, issue, or matter in which Indemnitee has been found liable to the Company unless and only to the extent that the Court of Chancery in Delaware or the court in which the action or suit was brought has determined upon application that, despite the adjudication of liability but in view of all circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for the expenses which the court considers proper;

(g) if a final decision by a court having jurisdiction in the matter shall determine that such indemnification is not lawful; or

(h) in connection with a Proceeding (or part thereof) commenced by Indemnitee, unless and to the extent that (i) the commencement of such Proceeding (or part thereof) by Indemnitee was specifically authorized by the board of directors of the Company, or (ii) Indemnitee is successful in whole or in part in any suit filed against the Company to recover the unpaid amount of any expenses for which a written claim for indemnification has been submitted to the Company by Indemnitee.

5. Term of Agreement . The original term of this Agreement shall be the twelve month period commencing on the date of this Agreement. This Agreement shall automatically renew for successive one-year terms, unless sooner terminated upon the termination of Indemnitee’s position as an officer, director, employee or agent of the Company or upon delivery of written notice of termination by the Company to Indemnitee not less than 60 days prior to the date of termination stated in the notice. Notwithstanding anything in this Agreement to the contrary, the indemnification and advancement of expenses provided pursuant to this Agreement shall survive the termination of this Agreement with respect to all activities, actions or inactions occurring or alleged to have occurred prior to or during the term of this Agreement, and this Agreement shall remain binding upon the Company following the termination hereof with respect to the covered activities, actions or inactions of Indemnitee occurring or alleged to have occurred prior to or during the term of this Agreement.

6. Notification and Defense of Claim . Promptly after receipt by Indemnitee of notice of the commencement or threatened commencement of any Proceeding, Indemnitee will, if a claim for indemnification in respect thereof is to be made by Indemnitee against the Company under this Agreement, notify the Company in writing of the commencement and nature thereof; provided, however , that a failure by Indemnitee to so notify the Company will not relieve the Company from any obligation that it may have to Indemnitee otherwise than under this Agreement. With respect to any such Proceeding as to which Indemnitee notifies the Company of the commencement thereof:

(a) The Company will be entitled to participate therein at its own expense; and

 

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(b) Except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel selected by the Company and consented to by Indemnitee, which consent shall not be unreasonably withheld. After written notice from the Company to Indemnitee of its election so to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any legal or other expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ his or her own counsel in such Proceeding, but the fees and expenses of such counsel incurred by Indemnitee after the notice from the Company of its assumption of the defense of such Proceeding shall be at the expense of Indemnitee unless (i) the employment of counsel by Indemnitee has been authorized in writing by the Company; (ii) in the opinion of counsel for the Company, a conflict of interest between the Company and Indemnitee exists in the conduct of the defense of such Proceeding; or (iii) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases the reasonable fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which a conflict of interest exists between the Company and Indemnitee.

(c) The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid or agreed upon by Indemnitee in settlement of any Proceeding without the written consent of the Company. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. Neither the Company nor Indemnitee will unreasonably withhold its consent to any proposed settlement.

7. Payment of Indemnity . Any indemnification under this Agreement shall be made promptly, and in any event within sixty (60) days, upon the written request of Indemnitee to the Company, unless a determination is reasonably and promptly made that Indemnitee failed to meet the applicable standard of conduct set forth in Section 3 hereof or is otherwise not entitled to indemnification hereunder. Such determination shall be made (i) by the board of directors of the Company by a majority vote of a quorum consisting of disinterested directors; (ii) by a committee of disinterested directors designated by majority vote of such directors, even though less than a quorum; (iii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel (selected by a majority of such directors) in a written opinion; or (iv) by the stockholders of the Company. If the request for indemnification involves a Proceeding that arises from the merger, consolidation, reorganization, liquidation, sale of all or substantially all of the assets, or other extraordinary transaction of the Company, the inquiry and resolution thereof required by this Section 7, at the option of Indemnitee, shall be made by a neutral person mutually acceptable to the Company and Indemnitee. If no disposition of such claim for indemnification is made within sixty (60) days, a favorable determination of entitlement to indemnification shall be deemed to have been made.

 

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The expenses (including attorneys’ fees) incurred by Indemnitee in connection with successfully establishing his or her right to indemnification, in whole or in part, or to collect monies due hereunder, shall also be indemnified by the Company.

8. Expense Advances .

(a) To the fullest extent permitted by applicable law and except as set forth in Section 8(b), the Company will, if requested by Indemnitee, advance to Indemnitee (hereinafter an “Expense Advance”) any and all Expenses (as defined in Section 8(d)) actually and reasonably paid or incurred by Indemnitee in connection with any Proceeding (whether prior to or after its final disposition). Indemnitee’s right to each Expense Advance will be made without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement, or under provisions of the Certificate of Incorporation or Bylaws or otherwise. Each Expense Advance will be unsecured and interest-free and will be made by the Company without regard to Indemnitee’s ability to repay the Expense Advance; provided, however , that an Expense Advance requested by Indemnitee in connection with and prior to the disposition of a Proceeding arising from Indemnitee’s status as an officer or director of the Company (but not in any other capacity in which Indemnitee may have rendered services to the Company) will be made only upon delivery to the Company of (i) a written affirmation by Indemnitee of such Indemnitee’s good faith belief that Indemnitee has met the standard of conduct necessary for indemnification under the Delaware General Corporation Law, and (ii) a written undertaking (hereinafter an “Undertaking”) by Indemnitee to repay such Expense Advance if it is ultimately determined by a final decision by a court or arbitrator, as applicable, from which there is no further right to appeal, that Indemnitee has not met the standard of conduct necessary for indemnification under the Delaware General Corporation Law, or is not entitled to be indemnified for such Expenses under the Certificate of Incorporation, Bylaws, the Delaware General Corporation Law, this Agreement or otherwise.

(b) Indemnitee will not be entitled to any Expense Advance in connection with any of the matters for which indemnity is excluded pursuant to Section 4.

(c) An Expense Advance pursuant to Section 8(a) hereof will be made within ten business days after the receipt by the Company of a written statement or statements from Indemnitee requesting such Expense Advance (which statement or statements will include, if requested by the Company, reasonable detail underlying the Expenses for which the Expense Advance is requested), whether such request is made prior to or after final disposition of such Proceeding. Such request must be accompanied by all information required by Section 8(a), including but not limited to the Undertaking.

(d) For purposes of this Section 8, “Expenses” means all attorneys’ fees, disbursements and retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, fax transmission charges, secretarial services, delivery service fees and all other disbursements or expenses paid or incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding, or in connection with seeking indemnification or enforcing a right to an Expense Advance under this Agreement, as well as any expenses paid or incurred in connection with any

 

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appeal resulting from any Proceeding, including the premium, security for and other costs relating to any appeal bond or its equivalent. “Expenses,” however, will not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

9. Reliance . The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on the Company hereby in order to induce Indemnitee to serve and/or continue to serve the Company, and acknowledges that Indemnitee is relying upon this Agreement in continuing to serve in such capacity.

10. Severability . Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable under applicable federal or state law or for any other reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof.

11. Governing Law; Binding Effect; Amendment; Notice .

(a) This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware without effect to its conflict of law provisions, except to the extent that the provisions of the Sarbanes-Oxley Act of 2002 and other federal laws preempt the applicable state law to the enforceability or interpretation of this Agreement.

(b) This Agreement shall be binding upon Indemnitee and upon the Company, its successors and assigns, and shall inure to the benefit of Indemnitee, his or her heirs, personal representatives and assigns and to the benefit of the Company, its successors and assigns.

(c) No amendment or modification of this Agreement (including any retroactive or prospective amendment) shall be effective unless in writing signed by both parties hereto. The termination or cancellation of this Agreement shall not be effective unless terminated in accordance with Section 5 hereof or terminated or cancelled in a writing signed by both parties hereto.

(d) Any notice required to be given hereunder shall be deemed given when deposited with the United States Postal Service, postage prepaid, addressed to the person to receive notice at its address below, or such other address as may have theretofore been specified by such person in a notice pursuant hereto, or delivered in person to that person (or an executive officer thereof in the case of the Company).

12. Arbitration . Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration, in Birmingham, Alabama, in accordance with the Commercial Arbitration rules of the American Arbitration Association, except that the arbitrator(s) shall be required to be familiar with the laws of the State of Delaware as they relate to this Agreement. Judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof.

[ Signature page follows. ]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written.

 

NATIONAL COMMERCE CORPORATION
(the “Company”)
By:

 

Name

 

Its:

 

Address for Notice :
National Commerce Corporation
813 Shades Creek Parkway, Suite 100
Birmingham, Alabama 35209
Attn: Corporate Secretary
INDEMNITEE

 

Signature

 

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