COLONIAL BANKSHARES, INC.
2006 STOCK-BASED INCENTIVE PLAN
FORM OF
STOCK OPTION AGREEMENT
(OUTSIDE DIRECTORS)
A. STOCK OPTIONS ("Options") for a total of ____________ shares of Common
Stock, par value $0.10 per share, of Colonial Bankshares, Inc. (the "Company")
are hereby granted to ___________ (the "Participant"). [Stock Appreciation
Rights with respect to a total of _____________ shares are also granted to the
Participant and relate to the Options granted hereunder. Omit if none were
granted.] The grant and terms of the Options [and Stock Appreciation Rights]
shall be subject in all respects to the Colonial Bankshares, Inc. 2006
Stock-Based Incentive Plan (the "Plan"). Participant is a director of the
Company, Colonial Bank, FSB (the "Bank"), or an affiliate of the Company or the
Bank. The terms of this Stock Option Agreement are subject to the terms and
conditions of the Plan.
B. The Option exercise price of Common Stock is $______ per share, the Fair
Market Value (as defined in the Plan) of the Common Stock on __________ __,
2006, the date of grant.
C. The Options granted hereunder shall vest in _____________ equal annual
installments, with the first installment becoming exercisable on the first
anniversary of the date of grant, or ___________ __, 2007, and succeeding
installments on each anniversary thereafter through ___________ __, 20__. The
Options granted hereunder may be exercised for up to ten (10) years from the
date of grant, subject to sub-paragraph D below.
D. If Participant ceases to maintain service with the Company or its
affiliates, including the Bank, for any reason other than Disability (as defined
in the Plan), death, Retirement (as defined in the Plan) or following a Change
in Control (as defined in the Plan), unvested Options will be forfeited and
vested Options will be exercisable for a period of up to [one (1) year]
following such cessation of service. If Participant ceases to maintain service
with the Bank or the Company due to death, Disability, Retirement or following a
Change in Control, Options granted hereunder, whether or not exercisable at such
time, will become exercisable by the Participant (or his/her legal
representative or beneficiary) for [one (1) year] following the date of
termination of service. In no event will the period of exercise extend beyond
the expiration of the Option term.
X. Xxxxx Appreciation Rights ("SARs") are hereby granted with respect to
all Options granted hereunder. SARs are granted in tandem with the Options
granted hereunder and the exercise of one will cause the cancellation of the
other. If the Participant exercises SARs, the Participant will not be required
to pay the exercise price of the related Option and will be entitled to receive
Common Stock of the Company equal in value to the difference between the Fair
Market Value of the Common Stock on the date of exercise and the exercise price
of the related Options (which will be cancelled).
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Example: Participant receives 1,000 Options and related SARS.
The options have an exercise price of $12. When the Company
Stock is trading at $18, the Participant exercises 300 SARs.
Because the Participant has exercised SARs, the Participant
does not have to pay the exercise price. The Participant
receives 100 shares of the Company stock.
$18 Common Stock
- $12 exercise price
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$6 SAR value
x 300 SARs exercised
-------------------
$1,800/18 Common Stock = 100 shares
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F. Options may not be exercised if the issuance of shares of Common Stock
of the Company upon such exercise would constitute a violation of any applicable
federal or state securities or other law or regulation. The Participant, as a
condition to exercise of the Options, shall represent to the Company that the
shares of Common Stock of the Company that he acquires pursuant to such exercise
are being acquired by such Participant for investment and not with a present
view to distribution or resale, unless counsel for the Company is then of the
opinion that such a representation is not required under the Securities Act of
1933 or any other applicable law, regulation, or rule of any governmental
agency.
G. In the discretion of the Board of Directors, vested Options may be
transferred, subject to any limitations on transferability imposed by the Board
of Directors.
H. A copy of the Plan is enclosed and we encourage you to read carefully
all the provisions of the Plan. You are not required to exercise the Options as
to any particular number or shares at one time, but the Options must be
exercised, if at all and to the extent exercised, by no later than ten years and
one day from the date of grant. The Options may be exercised during such term
only in accordance with the terms of the Plan. In the event of any inconsistency
between this Stock Option Agreement and the Plan, the terms of the Plan will
control.
I. All exercises of the Options must be made by executing and returning the
Notice of Exercise of Stock Options attached hereto as Exhibit A, and upon
receipt of any shares of Common Stock upon the exercise of any Options, the
recipient shall complete and return to the Company the Acknowledgment of Receipt
of Stock Option Shares attached hereto as Exhibit X.
X. The Participant acknowledges receipt of a copy of the Colonial
Bankshares, Inc. 2006 Stock-Based Incentive Plan and represents that he is
familiar with the terms and provisions thereof. The Participant hereby accepts
the Options subject to all the terms and provisions of such Plan. The
Participant hereby agrees to accept as binding, conclusive, and final all
decisions and interpretations of the Committee established to administer such
Plan upon any questions arising under such plan.
Dated:
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ATTEST: COLONIAL BANKSHARES, INC.
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WITNESS: PARTICIPANT
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This Stock Option Agreement must be executed in duplicate originals,
with one original retained by the Company and one original
retained by the Participant
2
EXHIBIT A
NOTICE OF EXERCISE OF STOCK OPTIONS
(BY OUTSIDE DIRECTORS)
I hereby exercise the stock option (the "Option") granted to me by Colonial
Bankshares, Inc. (the "Company") or its affiliate, subject to all the terms and
provisions set forth in the Stock Option Agreement (the "Agreement") and the
Colonial Bankshares, Inc. 2006 Stock-Based Incentive Plan (the "Plan") referred
to therein, and notify you of my desire to purchase __________________ shares of
common stock of the Company ("Common Stock") for a purchase price of $_________
per share.
Enclosed please find (check one):
___ Cash, my check in the sum of $_______, or electronic funds
transfer (EFT) in the sum of $__________ in full payment
of the purchase price.
___ Stock of the Company with a fair market value of $______ in
full payment of the purchase price.*
___ My check in the sum of $_______ and stock of the Company with
a fair market value of $______, in full payment of the
purchase price.*
___ Please sell ______ Shares from my Option Shares through a
broker in full/partial payment of the purchase price.
I understand that after this exercise, ____________ shares of Common Stock
remain subject to the Option, subject to all terms and provisions set forth in
the Agreement and the Plan.
I hereby represent that it is my intention to acquire these shares for
the following purpose:
___ investment
___ resale or distribution
Please note: if your intention is to resell (or distribute within the
meaning of Section 2(11) of the Securities Act of 1933) the shares you acquire
through this Option exercise, the Company or transfer agent may require an
opinion of counsel that such resale or distribution would not violate the
Securities Act of 1933 prior to your exercise of such Option.
Dated: ____________, _____. _________________________________________
Participant's signature
* If I elect to exercise by xxxxxxxxxx shares I already own, I will
constructively return shares that I already own to purchase the new option
shares. If my shares are in certificate form, I must attach a separate statement
indicating the certificate number of the shares I am treating as having
exchanged. If the shares are held in "street name" by a registered broker, I
must provide the Company with a notarized statement attesting to the number of
shares owned that will be treated as having been exchanged. I will keep the
shares that I already own and treat them as if they are shares acquired by the
option exercise. In addition, I will receive additional shares equal to the
difference between the shares I constructively exchange and the total new option
shares that I acquire.
EXHIBIT B
ACKNOWLEDGMENT OF RECEIPT OF STOCK OPTION SHARES
I hereby acknowledge the delivery to me by Colonial Bankshares, Inc. (the
"Company") or its affiliate on __________________________________, of stock
certificates for ____________________shares of common stock of the Company
purchased by me pursuant to the terms and conditions of the Stock Option
Agreement and the Colonial Bankshares, Inc. 2006 Stock-Based Incentive Plan, as
applicable, which shares were transferred to me on the Company's stock record
books on ____________________.
Dated:
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Participant's signature
