Exhibit 10.12
ALLIANCE BANKSHARES CORPORATION
2007 INCENTIVE STOCK PLAN
FORM OF
STOCK OPTION AGREEMENT
     THIS STOCK OPTION AGREEMENT (the “Agreement”) evidences the grant of a
stock option (“Option”) under the Alliance Bankshares Corporation 2007 Incentive
Stock Plan (the “Plan”) on the Grant Date shown on Schedule I to {NAME} (the
“Grantee”), who is an Employee, Non-Employee Director or Non-Employee Service
Provider of Alliance Bankshares Corporation, a Virginia corporation (“Alliance”)
and/or its Subsidiaries. This Agreement also describes the terms and conditions
of the Option evidenced by this Agreement.
1. Grant of Option.
     In consideration of the services rendered to Alliance and/or its
Subsidiaries by the Grantee as an Employee, Non-Employee Director or
Non-Employee Service Provider, Alliance hereby grants to the Grantee as of the
Grant Date shown on Schedule I, an Option of the type shown on Schedule I, to
purchase all or any part of the number of shares of stock of Alliance, $4.00 par
value per share (“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
Grant Date as determined in good faith by the 2007 Incentive Stock Plan
Committee (“Committee”), pursuant to the provisions of the Plan. The Option
shall vest and become exercisable in accordance with the vesting schedule set
forth on Schedule I provided the Grantee remains in Company Service through any
such vesting date. The shares of Stock purchasable upon exercise of the Option
are hereinafter sometimes referred to as the “Option Shares”. This Option is
granted pursuant to the Plan and is subject to the terms thereof.
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 Grant Date (the “Option Term”); provided,
however, that the provisions of Section 6.4 of the Plan shall also apply if the
Option is a Non-Qualified Stock Option.
     (b) Upon the occurrence of the Grantee’s cessation of Company Service, the
Option, to the extent not previously exercised, shall terminate and become null
and void (i) immediately if such cessation of Company Service was for “Cause”
(as defined in paragraph 2(e) below); (ii) twelve (12) months after cessation of
Company Service due to the Grantee’s death or disability within the meaning of
Section 22(e)(3) of the Internal Revenue Code (“Disability”); or (ii) three
(3) months following the Grantee’s cessation of Company Service 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.

 

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     (e) For purposes of this Agreement, the term “Cause” shall mean (i) any act
of malfeasance or wrongdoing committed by the Grantee affecting Alliance and/or
its Subsidiaries, (ii) any breach by Grantee of a covenant not to compete,
consulting contract or employment contract, with Alliance and/or its
Subsidiaries, (iii) any act of disloyalty against Alliance and/or its
Subsidiaries, (iv) any conduct, including but not limited to conviction of a
misdemeanor or felony, clearly tending to bring discredit upon Alliance and/or
its Subsidiaries, or (v) the refusal or manifest inability of the Grantee to
perform his or her duties and obligations with Alliance and/or its Subsidiaries.
Whether “Cause” exists shall be determined by the Committee and such
determination shall be final and binding on the Grantee.
     (f) For purposes of this Agreement, “Company Service” means service as an
Employee, Non-Employee Director or Non-Employee Service Provider of Alliance
and/or its Subsidiaries. Notwithstanding any contrary provision or implication
herein, in determining cessation of Company Service for purposes hereof,
transfers between the Company and/or any Subsidiary shall be disregarded and
shall not be considered a cessation of Company Service, and changes in status
between that of an Employee, a Non-Employee Director and/or Non-Employee Service
Provider shall be disregarded and shall not be considered a cessation of Company
Service.
3. Exercise of Option.
     (a) The Grantee may exercise the Option upon tender to the Secretary of
Alliance of full payment of the Option 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, and a Notice of Exercise in the form of
Schedule II to this Agreement. 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 no earlier than the date of the
Secretary’s receipt of the Option Price and such Notice of Exercise.
     (b) Payment (in U.S. dollars) by the Grantee of the Option Price for the
Option Shares purchased shall be made in cash, or, with the prior written
consent of the Committee, in whole or in part through the surrender of
previously acquired shares of Stock or shares that would otherwise be acquired
upon exercise of the Option, at their fair market value on the exercise date.
Payment of the Option Price may also be made in accordance with any
broker-assisted cashless exercise procedures approved by Alliance and as in
effect from time to time.
     On the exercise date specified in the Grantee’s notice or as soon
thereafter as is practicable, Alliance shall cause the Option Shares then being
purchased to be issued and a certificate or certificates for the Option Shares
to be delivered to the Grantee. If at any time the Committee shall determine in
its discretion, 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.
4. Adjustment of and Changes in Stock of Alliance.
     The number and class of Option Shares covered by this Option, and the
Option Price thereof, shall be proportionately, equitably and appropriately
adjusted in such manner as the Committee shall determine in order to retain the
economic value or opportunity to reflect any stock dividend, stock split,
recapitalization, merger, consolidation, reorganization, reclassification,

 

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combination, exchange of shares or similar event in which the number or class of
Stock is changed without the receipt or payment of consideration by Alliance.
5. Fair Market Value.
     As used herein, the “fair market value” of a share of Stock shall be
determined by 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. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date of such exercise, except as provided in
paragraph 4 of this Agreement.
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.
8. Company Service.
     Nothing under the Plan or in this Agreement shall confer upon the Grantee
any right to continue Company Service or in any way affect any right of the
Company to terminate the Grantee’s Company Service without prior notice at any
time for any or no reason. If Grantee is an Employee, except as may otherwise be
limited by a written agreement, the right of Alliance and/or its Subsidiaries to
terminate at will at any time Grantee’s employment (whether by dismissal,
discharge, retirement or otherwise) is specifically reserved by Alliance and/or
its Subsidiaries and acknowledged by the Grantee.
9. Amendment of Option.
     The Option may be amended by the Committee at any time (i) if 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 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 Grant Date 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 14200 Park Meadow
Drive, Suite 200 South, Chantilly, Virginia 20151, 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 and/or its Subsidiaries. Any

 

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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 and/or its Subsidiaries 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
Internal Revenue Code) of shares of Stock acquired pursuant to the exercise of
the Option. In lieu of such deduction, the Committee may require Grantee to make
a cash payment to Alliance or a Subsidiary 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 Committee 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
Internal Revenue Code) of any shares of Stock acquired pursuant to the exercise
of an Incentive Stock Option within two (2) years of the Grant Date or within
one (1) year after the shares of Stock are transferred to Grantee upon exercise
of the Option, Grantee shall notify the Committee of such disposition in writing
within 10 days of disposition.
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 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 Agreement
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.

 

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     IN WITNESS WHEREOF, ALLIANCE has caused its duly authorized officers to
execute and attest this Agreement, and the Grantee has placed his or her
signature hereon.

          ALLIANCE BANKSHARES CORPORATION   Attest:
 
       
 
       
By:
 

 
 

 
 
                     Secretary
 
       
 
        ACCEPTED AND AGREED TO:    
 
       
 
       
By:
 

 
   
 
       Grantee    

 

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SCHEDULE I
ALLIANCE BANKSHARES CORPORATION
STOCK OPTION AGREEMENT
2007 INCENTIVE STOCK PLAN

     
Grantee:
  {NAME}
 
   
 
   
Type of Option:
   
 
   
 
  [Insert Incentive Stock Option (“ISO”) or Nonqualified Stock Option]
 
   
Grant Date:
   
 
   
 
   
Number and Class
of Shares:
   
 
   

     
Option 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, and subject to earlier vesting upon a Change in
Control (as defined in the Plan), the following will be the vesting schedule for
the Option granted.
On the first anniversary of the Grant Date, 15% of the shares of stock subject
to the Option (rounded down to the nearest whole share) will be first
exercisable.
On the second anniversary of the Grant Date, an additional 20% of the shares of
stock subject to the Option (rounded down to the nearest whole share) will be
first exercisable.
On the third anniversary of the Grant Date, an additional 25% of the shares of
stock subject to the Option (rounded down to the nearest whole share) will be
first exercisable.
On the fourth anniversary of the Grant Date, the balance of the shares of stock
subject to the Option will be first exercisable.
One hundred percent (100%) of the shares of Stock subject to the Option are
immediately exercisable upon a Change in Control prior to the termination of the
Option.

 

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SCHEDULE II
NOTICE OF EXERCISE
ALLIANCE BANKSHARES CORPORATION
2007 INCENTIVE STOCK PLAN
STOCK OPTION AGREEMENT
Corporate Secretary
Alliance Bankshares Corporation
14200 Park Meadow Drive, Suite 200 South
Chantilly, Virginia 20151
Gentlemen:
               Effective                                         , 20___, (which
is no earlier than the date this notice is delivered to the Secretary), 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 2007 Incentive
Stock 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: