Exhibit 10.13

FORM OF

COMMONWEALTH BANKSHARES, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

THIS AGREEMENT is between Commonwealth Bankshares, Inc. (the “Company”)
                     (the “Optionee”), and is dated as of                     
(the “Date of Grant”).

The Company hereby grants the Optionee an option to purchase shares of the
Common Stock of the Company (the “Company Stock”), subject to the terms and
conditions of this Agreement.

The grant of this option is made pursuant to the Commonwealth Bankshares, Inc.
2005 Stock Incentive Plan (the “Plan”), a copy of which is available from the
Company upon request. The terms of the Plan are incorporated into this Agreement
by reference. In the case of any inconsistency between the Plan and this
Agreement, the terms of the Plan shall control. Any term used in this Agreement
that is defined in the Plan shall have the same meaning given to that term in
the Plan.

1. Grant of Option. The Company grants the Optionee a Nonstatutory Stock Option
(the “Option”) to purchase from the Company              shares of Company Stock
at $             per share (the “Option Price”). The Option is not intended to
be an “incentive stock option” that receives special tax treatment under
Section 422 of the Internal Revenue Code (the “Code”).

2. Entitlement to Exercise Option.

(a) The Optionee will become vested in and entitled to exercise the Option as
follows:

 

Vesting Date

  

Number of Shares

  

Total Vested Shares

     

This vesting schedule shall accelerate and the Option shall become fully
exercisable upon a Change in Control, as defined in the Plan.

(b) If the Optionee retires or ceases to be employed by the Company for any
reason other than his death or disability and at a time when all or a portion of
this Option was vested and exercisable pursuant to paragraph (a) above, the
Optionee may exercise any or all of his vested Option within three months after
he terminates employment.

(c) If the Optionee terminates employment because of a Disability (as defined in
the Plan), he may exercise any or all of a portion of the vested Option
(determined as of the Optionee’s termination date) within one year after the
Disability termination date.

(d) If the Optionee dies while he is employed with the Company or within three
months after he terminates employment because of a Disability, the Optionee’s
beneficiary may exercise this Option within the tenth anniversary of the options
date of grant, but only to the extent the Option was vested and exercisable
immediately before the Optionee’s death.

(e) If the Optionee is terminated by the Company for Cause (as defined in the
Plan), this Option will expire immediately with respect to both vested and
unvested shares as of the date of misconduct, unless the Company agrees in
writing to waive this provision.

(f) In no event may this Option be exercised after                      [insert
date 10 years from agreement date].

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3. Method of Exercise and Payment.

(a) The Optionee may exercise his Option by delivering a written notice to the
Company. The exercise date will be (i) in the case of notice by mail, the date
of postmark; or (ii) if delivered in person, the date of delivery. The notice
must be signed and state the number of shares the Optionee has elected to
purchase. The Optionee may exercise the Option in whole or in part, but only
with respect to whole shares of Company Stock.

(b) The exercise notice must be accompanied by payment of the Option Price in
full by cash (which shall include payment by check, bank draft or money order
payable to the Company). Instead of paying cash, the Optionee may substitute
shares of the Company’s Common Stock that he or she previously acquired and has
owned for at least six months (or such longer or shorter period of time required
to avoid a charge to earnings for financial accounting purposes) for all or part
of the cash payment (shares will be valued at their Fair Market Value on the
date of exercise). In addition, the exercise price shall be payable to the
Company pursuant to any other method and approved and accepted by the Committee
in its sole discretion, including, without limitation, a cashless (broker
assisted) exercise.

4. Tax Obligations Upon Exercise. The difference between the Fair Market Value
of the shares purchased when this Option is exercised and the Option Price is
compensation taxable to the Optionee as ordinary income and is subject to
applicable federal and state taxes. By signing the Agreement, the Optionee
agrees to authorize payroll withholding or to make arrangements satisfactory to
the Company to comply with applicable tax withholding requirements.

5. Nontransferability. In general, this Option shall not be transferable by the
Optionee other than by will or by the laws of descent and distribution.
Notwithstanding the preceding sentence and subject to federal and state
securities laws, the Optionee may transfer all or a portion of this Option to
one or more immediate family members, to a trust for the benefit of immediate
family members, or to a partnership, limited liability company, or other entity
the only partners, members, or interest-holders of which are among the
Optionee’s immediate family members. Consideration may not be paid for the
transfer of this Option. The transferee of the Option shall be subject to all
conditions applicable to the Option prior to its transfer, as set forth in this
Agreement.

6. Adjustments. If the number of outstanding shares of Company Stock is
increased or decreased as a result of a subdivision or consolidation of shares,
the payment of a stock dividend, stock split, or any other change in the
capitalization effective without receipt of consideration by the Company, the
number of unexercised Option shares and the Option price shall be appropriately
adjusted by the Company, whose determination shall be binding. To the extent
required to avoid a charge to earnings for financial accounting purposes,
adjustments made to an outstanding Option by the Company pursuant to this
paragraph 6 to an outstanding Option shall be made so that both: (i) the
aggregate intrinsic value of an Option immediately after the adjustment is not
less than the Option’s aggregate intrinsic value before the adjustment, and
(ii) the ratio of the exercise price per share to the market value per share is
not reduced.

7. Forfeiture by Order of Regulatory Agency. If the Company’s capital falls
below the minimum requirements contained in 12 C.F.R. Part 325 or below a higher
requirement as determined by the Company’s primary bank regulatory agency, such
agency may direct the Company to require the Optionee to exercise or forfeit
some or all of his Options granted hereunder. All options granted under this
Agreement are subject to the terms of any such directive.

8. Employment Rights. Neither the Plan nor this Agreement confers upon the
Optionee any right to continue as an employee of the Company or limits in any
respect the right of the Company to terminate the Optionee’s employment.

9. Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Virginia.

 

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10. Acceptance of Option. This Agreement deals only with the Option the Optionee
has been granted and not its exercise. The Optionee’s acceptance of the Option
places no obligation or commitment on the Optionee to exercise the Option. By
signing below, the Optionee indicates acceptance of the Option and his or her
agreement to the terms and conditions set forth in this Agreement, which,
together with the terms of the Plan, shall become the Company’s Stock Option
Agreement with the Optionee. The Optionee also agrees to all of the terms and
conditions of the Plan.

11. Entire Agreement; Amendment. This Agreement constitutes the entire agreement
between the Optionee and the Company and shall be binding upon your legatees,
distributees, and personal representatives and the successors of the Company.
This Agreement may only be amended by a writing signed by both the Optionee and
the Company.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

Commonwealth Bankshares, Inc. By:  

 

Signature:  

 

  [Name]

 

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