Exhibit 10.1.1
ALLIANCE BANKSHARES CORPORATION
FORM OF STOCK OPTION AGREEMENT
     THIS STOCK OPTION AGREEMENT (the “Agreement”), is entered into on [DATE OF
GRANT], by and between Alliance Bankshares Corporation, a Virginia corporation
(“Alliance”) and [GRANTEE] the (“Grantee”), who is a key employee, consultant,
or director of Alliance.
     WHEREAS, the Board of Directors of Alliance Bank Corporation (the “Bank”)
adopted and ratified the Alliance Bank Corporation Stock Option Plan (the
“Plan”) effective as of March 24, 1999;
     WHEREAS, effective July 26, 2002, Alliance assumed both the Plan (which
then became the “Alliance Bankshares Corporation Stock Option Plan”) and the
outstanding options issued under the Plan in connection with the reorganization
by which Alliance became the holding company for the Bank pursuant to an
Agreement Plan of Reorganization dated as of May 22, 2002 and a related Plan of
Share Exchange;
     WHEREAS, the Plan was amended and restated and further amended, effective
March 25, 2003 and April 27, 2005, respectively, by the Alliance Board of
Directors (the “Board”), which amendment and restatement and further amendment
were both approved by Alliance’s shareholders;
     WHEREAS, the Plan provides for the granting of stock options by a committee
to be appointed by the Board (the “Committee”), subject to the approval by the
Board, to directors, consultants and key employees of Alliance to purchase, or
to exercise certain rights with respect to, shares of the Common Stock of
Alliance, par value $4.00 per share (the “Stock”), in accordance with the terms
and provisions thereof; and
     WHEREAS, the Committee considers the Grantee to be a person who is eligible
for a grant of stock options under the Plan, and has determined that it would be
in the best interest of Alliance to grant the stock options documented herein,
and the Board has approved.
     NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
     1. Grant of Option.
     Subject to the terms and conditions hereinafter set forth, Alliance, with
the approval and at the direction of the Committee and the Board, hereby grants
to the Grantee, as of the Date of Grant shown on Schedule I, a stock option of
the type shown on Schedule I, to purchase up to the number of shares of Stock
listed on Schedule I, at the price per share stated on Schedule I, which is the
fair market value of a share of the Stock as of the Date of Grant as determined
in good faith by the Board, upon the recommendation of the Committee, pursuant
to the provisions of the Plan. Such option shall vest and become exercisable in
accordance with the vesting schedule set forth on Schedule I provided the
Grantee remains in the service of Alliance on any such vesting date. Such option
is hereinafter referred to as the “Option” and the shares of stock purchasable
upon exercise of the Option are hereinafter sometimes referred to as the “Option
Shares”.

 

--------------------------------------------------------------------------------

 

     2. Termination of Option
     (a) Unless terminated earlier pursuant to the other provisions of this
Agreement, the Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall expire and become null
and void on the Expiration Date stated on Schedule I or, if earlier, after the
expiration of ten (10) years from the Date of Grant (the “Option Term”).
     (b) Upon the occurrence of the Grantee’s ceasing for any reason to be
employed by or in the continued service (i.e., as a director or consultant) of
Alliance, the Option, to the extent not previously exercised, shall terminate
and become null and void 1) immediately if such termination of the Grantee’s
employment or service was for Cause; 2) twelve (12) months after the termination
of employment or service due to death or incapacity of the Grantee; or 3) three
(3) months following the Grantee’s termination of employment or service with
Alliance for any other reason.
     (c) In no event shall the date the Option is terminated extend beyond the
Option Term.
     (d) In the event of the death of the Grantee, the Option may be exercised
by the Grantee’s legal representative (s), but only to the extent that the
Option would otherwise have been exercisable by the Grantee as of the date of
his or her death.
     (e) For purposes of this Agreement, the term “Cause” shall mean (i) any act
of malfeasance or wrongdoing committed by the Grantee affecting Alliance,
(ii) any breach by Grantee of a covenant not to compete, consulting contract or
employment contract, with Alliance, (iii) any act of disloyalty against
Alliance, (iv) any conduct, including but not limited to conviction of a
misdemeanor or felony, clearly tending to bring discredit upon Alliance or
(v) the refusal or manifest inability of the Grantee to perform his or her
duties and obligations with Alliance. Whether “Cause” exists shall be determined
by the Committee subject to approval by the Board and such determination shall
be final and binding on the Grantee.
     3. Exercise of Option.
     (a) The Grantee may exercise the Option on the exercise date, upon tender
of full payment of the exercise price, with respect to all or any part of the
number of Option Shares (then) exercisable in accordance with the vesting
schedule set forth in Schedule I by giving the Secretary of Alliance written
notice of intent to exercise. The notice of exercise shall specify the number of
Option Shares as to which the Option is to be exercised and the date of exercise
thereof, which date shall be at least five days after Alliance’s receipt of such
notice unless an earlier time shall have been mutually agreed upon.
     (b) Full payment (in U.S. dollars) by the Grantee of the option price for
the Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise in cash, or, with the prior written consent
of the Committee subject to approval by the Board, in whole or in part through
the surrender of previously acquired shares of Stock, or shares that would
otherwise be acquired upon Option exercise, at their fair market value on the
exercise date.
     On the exercise date specified in the Grantee’s notice or as soon
thereafter as is practicable, Alliance shall cause to be delivered to the
Grantee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Stock or reacquired Stock, as Alliance
may elect) upon full payment for such Option Shares. If at any time the Board
shall determine in its discretion, acting upon recommendation of the Committee,
that the listing, registration or qualification of the Option or the Option
Shares upon any securities exchange or

 

--------------------------------------------------------------------------------

 

under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the Option or the issuance or purchase of Stock thereunder, the Option may
not be exercised in whole or in part nor may stock be delivered, unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
     (c) If the Grantee fails to pay for any of the Option Shares specified in
such notice or fails to accept delivery thereof, the Grantee’s right to purchase
such Option Shares may be terminated by Alliance.
     4. Adjustment of and Changes in Stock of Alliance.
     In the event of a reorganization, recapitalization, change of shares, stock
split, spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of Alliance, the Committee,
subject to approval by the Board, shall make such adjustments or take such
actions with respect to the Option as is permitted under the Plan.
     5. Fair Market Value.
     As used herein, the “fair market value” of a share of Stock shall be
determined by the Board, acting upon recommendation of the Committee, in the
same manner as is provided in the Plan.
     6. No Stockholders Rights.
     Neither the Grantee nor any personal representative shall be, or shall have
any of the rights and privileges of, a stockholder of Alliance with respect to
any shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
     7. Non-Transferability of Option.
     During the Grantee’s lifetime, the Option hereunder shall be exercisable
only by the Grantee or any guardian or legal representative of the Grantee, and
the Option shall not be transferable except, in case of the death of the
Grantee, by will or the laws of descent and distribution, nor shall the Option
be subject to attachment, execution or other similar process. In the event of
(a) any attempt by the Grantee to alienate, assign, pledge, hypothecate,
transfer, or otherwise dispose of the Option, except as provided for herein, or
(b) the levy of any attachment, execution or similar process upon the rights or
interest hereby conferred, the Option is terminated and it shall thereupon
become null and void. The Board may, at its option, reinstate the Option at any
time.
     8. Employment Not Affected.
     Neither granting the Option nor its exercise shall be construed as granting
to the Grantee any right with respect to continued association with, or
employment by, Alliance. Except as may otherwise be limited by a written
agreement, the right of Alliance to terminate at will at any time Grantee’s
employment or service (whether by dismissal, discharge, retirement or otherwise)
is specifically reserved by Alliance and acknowledged by the Grantee.

 

--------------------------------------------------------------------------------

 

     9. Amendment of Option.
     The Option may be amended by the Board at any time (i) if the Board or the
Committee determines, in its sole discretion, that amendment is necessary or
advisable to bring the Plan and/or the Option into compliance with, or in light
of, any addition to or change in the Internal Revenue Code of 1986 or in the
regulations issued thereunder, or any federal or state securities law or other
law or regulation, which addition or change occurs after the Date of Grant and
by its terms applies to the Option; or (ii) other than in the circumstances
described in clause (i), with the consent of the Grantee.
     10. Notice
     Any notice to Alliance provided for in this instrument shall be addressed
to it in care of its Secretary at its executive offices at 12735 Shops Lane,
Fairfax, Virginia 22033, and any notice to the Grantee shall be addressed to the
Grantee at the current address shown either on the payroll records or other
files of Alliance. Any notice shall be deemed to be duly given if and when
properly addressed and posted by registered or certified mail, postage prepaid.
     11. Tax Withholding.
     Alliance or any affiliate shall have the right to deduct from any
compensation or any other payment of any kind (including withholding the
issuance of shares of Stock) due Grantee the amount of any federal, state or
local taxes required by law to be withheld as the result of the exercise of the
Option or the disposition (as that term is defined in Section 424(c) of the
Code) of shares of Stock acquired pursuant to the exercise of the Option. In
lieu of such deduction, the Board may require Grantee to make a cash payment to
Alliance or an affiliate equal to the amount required to be withheld. If Grantee
does not make such payment when requested, Alliance may refuse to issue any
Stock certificate under the Plan until arrangements satisfactory to the Board
for such payment have been made.
     12. Notice of Disqualifying Disposition.
     If Grantee makes a disposition (as that term is defined in §424(c) of the
Code) of any shares of Stock acquired pursuant to the exercise of an incentive
stock option within two (2) years of the Date of Grant or within one (1) year
after the shares of Stock are transferred to Grantee, Grantee shall notify the
Committee of such disposition in writing.
     13. Gender.
     As used herein the masculine shall include the feminine as the
circumstances may require.
     14. Headings.
     The headings in the Agreement are for reference purposes only and shall not
affect the meaning or interpretation of the Agreement.
     15. Incorporation of Plan by Reference.
     The Option is granted pursuant to the terms of the Plan, the terms of which
are incorporated herein by reference, and the Option shall in all respects be
interpreted in accordance with the Plan. The Board, acting upon recommendation
of the Committee, shall interpret and

 

--------------------------------------------------------------------------------

 

construe the Plan and this instrument, and its interpretations and
determinations shall be conclusive and binding on the parties hereto and any
other person claiming an interest hereunder, with respect to any issue arising
hereunder or thereunder. Defined terms in this Agreement shall have the same
meaning as provided under the Plan, unless a different meaning is provided in
this Agreement.
     16. Governing Law.
     The validity, construction, interpretation and effect of this instrument
shall exclusively be governed by and determined in accordance with the law of
the Commonwealth of Virginia, except to the extent preempted by federal law,
which shall to the extent govern.
     IN WITNESS WHEREOF, ALLIANCE has caused its duly authorized officers to
execute and attest this Grant of Stock Option, and to apply the corporate seal
hereto, and the Grantee has placed his or her signature hereon, effective as of
the Date of Grant.

          ALLIANCE BANKSHARES CORPORATION   Attest:
 
       
By:
                 
 
      Secretary
 
        {Corporate Seal}    
 
        ACCEPTED AND AGREED TO:    
 
       
By:
       
 
          Grantee    

 

--------------------------------------------------------------------------------

 

SCHEDULE I
ALLIANCE BANKSHARES CORPORATION STOCK OPTION AGREEMENT

     
Grantee:
   
 
   
 
   
Type of Option:
   
 
   
 
  [Insert Incentive Stock Option (“ISO”) or Nonqualified Stock Option]
 
   
Date of Grant:
   
 
   
 
   
Number and Class
   
of Shares:
   
 
   
 
   
Exercise Price Per Share:
   
 
   
 
  [If an ISO, insert a price which is at least 100% of the Fair Market Value, or
for a 10% owner, at least 110%]
 
   
Expiration Date:
   
 
   
 
  [Insert a date that is no later than the 10th anniversary of the Grant Date
or, for an ISO granted to a 10% owner, the 5th such anniversary]

Vesting Schedule:
As long as Alliance Bank continues to be well-capitalized as that term is
defined at Section 208.43(b) of the Rules and Regulations of the Board of
Governors of the Federal Reserve System, 12 CFR Section 208.43(b) or any
successor regulation thereto, the following will be the vesting schedule for
options granted.
After the first year from the date of grant, 15% of the shares of stock subject
to the Option will be exercisable.
After the second year from the date of grant, an additional 20% of the shares of
stock subject to the Option will be exercisable.
After the third year from the date of grant, an additional 25% of the shares of
stock subject to the Option will be exercisable.
After the fourth year from the date of grant, the remaining 40% of the shares of
stock subject to the Option will be exercisable.
One hundred (100) percent of the shares of Stock subject to the Option are
exercisable on a Change of Control, as defined in the Plan, where the holders of
the shares of Stock immediately prior to the transaction do not hold directly or
indirectly a majority of the shares of the acquiring entity after the
transaction.

 

--------------------------------------------------------------------------------

 

SCHEDULE II
EXERCISE FORM
FOR THE
ALLIANCE BANKSHARES CORPORATION STOCK OPTION AGREEMENT
Corporate Secretary
Alliance Bankshares Corporation
12735 Shops Lane
Fairfax, Virginia 22033
Gentlemen:
          Effective                                         , 20     , (which is
at least 5 days subsequent to the date of this notice), I hereby exercise the
[Insert Type]                                          Stock Option granted to
me on                                         ,                     , by
Alliance Bankshares Corporation (the “Corporation”), subject to all the terms
and provisions thereof and of the Alliance Bankshares Corporation Stock Option
Plan (the “Plan”), and notify you of my desire to purchase
                                 shares (the “Shares”) of Common Stock of the
Corporation at a price of $                     per share pursuant to the
exercise of said Option.
Total Amount Enclosed: $                    

                 
Date:
                                          (Grantee)
 
                            Received by Alliance Bankshares Corporation
 
               
 
          On:                                                                ,
20     
 
               
 
          By: