<PAGE>

                                                                     EXHIBIT 4.1

                         THE COLONIAL BANCGROUP, INC.

                         2001 LONG-TERM INCENTIVE PLAN

                                   ARTICLE 1

                                    PURPOSE

     1.1.  General.  The Colonial BancGroup, Inc. 2001 Long-Term Incentive Plan
(the "Plan") has been established by The Colonial BancGroup, Inc. (the
"Company") to: (i) attract and retain persons eligible to participate in the
Plan; (ii) motivate Participants by means of appropriate equity-based incentives
to achieve long-range goals; (iii) provide incentive compensation opportunities
that are competitive with those of similar companies; and (iv) further identify
Participants' interests with those of the Company's other shareholders through
compensation that is based on the Company's common stock; and thereby promote
the long-term financial interest of the Company and its Subsidiaries, including
the growth in value of the Company's equity and enhancement of long-term
shareholder return.

                                   ARTICLE 2

                                EFFECTIVE DATE

     2.1.  Effective Date. The Plan shall be effective on July 1, 2001 (the
"Effective Date") provided that it shall have been approved by the Board on or
before such date, and provided further, that the Plan shall be submitted to the
stockholders of the Company for approval within 12 months of the Board's
approval thereof. No Incentive Stock Options granted under the Plan may be
exercised prior to approval of the Plan by the stockholders and if the
stockholders fail to approve the Plan within 12 months of the Board's approval
thereof, any Incentive Stock Options previously granted hereunder shall be
automatically converted to Non-Qualified Stock Options without any further act.
In the discretion of the Committee, Awards may be made to Covered Employees
which are intended to constitute qualified performance-based compensation under
Code Section 162(m). Any such Awards shall be contingent upon the stockholders
having approved the Plan.

                                   ARTICLE 3

                                  DEFINITIONS

     3.1.  Definitions. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section unless a clearly different meaning is required by the context. The
following words and phrases shall have the following meanings:

           (a) "Award" means any Option, Stock Appreciation Right, Restricted
     Stock Award, Performance Unit Award, or Other Stock-Based Award, or any
     other right or interest relating to Stock or cash, granted to a Participant
     under the Plan.


           (b) "Award Agreement" means any written agreement, contract, or other
     instrument or
<PAGE>

document evidencing an Award.

     (c)  "Board" means the Board of Directors of the Company.

     (d)  "Change in Control" means (i) the occurrence of a transaction with
respect to which either a notice or application must be filed with the Federal
Reserve Board under the provisions of 12 C.F.R. (S)225.41, Code of Federal
Regulations, or any successor thereto (concerning the acquisition of control of
a bank or bank holding company), or approval must be obtained under 12 C.F.R.
(S)225.11, Code of Federal Regulations, or any successor thereto (concerning
acquisition by a bank holding company of a bank or bank holding company), and as
a result of which more than 50% of the outstanding shares of the Company, or any
successor thereof, are owned or controlled by any person or entity, or group
acting in concert, which, prior to such transaction, owned or controlled less
than 50% of the shares of the Company, (ii) individuals who were directors of
the Company immediately prior to a Control Transaction (as defined below) shall
cease within one year of such Control Transaction, to constitute a majority of
the Board of Directors of the Company, or (iii) the Company is merged or
consolidated with another corporation and the Company is not the surviving
corporation or survives as a subsidiary of another corporation, or the Company
sells or otherwise disposes of substantially all its assets. "Control
Transaction" shall be (i) any tender offer for or acquisition of shares of the
Company, (ii) any merger, consolidation, or sale of substantially all the assets
of the Company, (iii) any contested election of directors of the Company, or
(iv) any combination of the foregoing which results in a change in voting power
sufficient to elect a majority of the Board of Directors of the Company.

     (e)  "Code" means the Internal Revenue Code of 1986, as amended from time
to time.

     (f)  "Committee" means the committee of the Board described in Article 4.

     (g)  "Company" means The Colonial BancGroup, Inc., a Delaware corporation.

     (h)  "Covered Employee" means a covered employee as defined in Code Section
162(m)(3) or the regulations thereunder.

     (i)  "Date of Grant" means the date of the decision of the Committee to
grant the Award, provided, however, that the Committee may specify that an Award
shall be issued and its effective date determined at some later date, which
shall be the Date of Grant.

     (j)  "Disability" shall mean any illness or other physical or mental
condition of a Participant that renders the Participant incapable of performing
his customary and usual duties for the Company, or any medically determinable
illness or other physical or mental condition resulting from a bodily injury,
disease or mental disorder which, in the judgment of the Committee, is permanent
and continuous in nature. The Committee may require such medical or other
evidence as it deems necessary to judge the nature and permanency of the
Participant's condition. Notwithstanding the above, with respect to an Incentive
Stock Option, Disability shall mean Permanent and Total Disability as defined in
Section 22(e)(3) of the Code.

     (k)  "Effective Date" has the meaning assigned such term in Section 2.1.

                                       2
<PAGE>

     (l)  "Fair Market Value", on any date, means (i) if the Stock is listed on
a securities exchange or is traded over the NASDAQ National Market, the mean
between the highest and lowest selling prices at which the Stock was traded on
such exchange on such date or, if the Stock was not traded on such date, upon
the mean of such prices on the date nearest preceding such date, or (ii) if the
Stock is not listed on a securities exchange or traded over the NASDAQ National
Market, the mean between the bid and offered prices as quoted by NASDAQ for such
date, provided that if it is determined that the fair market value is not
properly reflected by such NASDAQ quotations, Fair Market Value will be
determined by such other method as the Committee determines in good faith to be
reasonable.

     (m)  "Incentive Stock Option" means an Option that is intended to meet the
requirements of Section 422 of the Code or any successor provision thereto.

     (n)  "Non-Qualified Stock Option" means an Option that is not an Incentive
Stock Option.

     (o)  "Option" means a right granted to a Participant under Article 7 of the
Plan to purchase Stock at a specified price during specified time periods. An
Option may be either an Incentive Stock Option or a Non-Qualified Stock Option.

     (p)  "Other Stock-Based Award" means a right, granted to a Participant
under Article 11, that relates to or is valued by reference to Stock or other
Awards relating to Stock.

     (q)  "Participant" means a person who, as an employee, officer or director,
including any regional or advisory director, of the Company or any Subsidiary,
has been granted an Award under the Plan.

     (r)  "Performance Unit" means a right granted to a Participant under
Article 9, to receive cash, Stock, or other Awards, the payment of which is
contingent upon achieving certain performance goals established by the
Committee.

     (s)  "Plan" means The Colonial BancGroup, Inc. 2001 Long-Term Incentive
Plan, as amended from time to time.

     (t)  "Restricted Stock" means Stock that the Committee is authorized to
grant under Article 10 that is subject to certain restrictions and to risk of
forfeiture.

     (u)  "Restricted Stock Award" means an Award of Restricted Stock.

     (v)  "Stock" means the $2.50 par value Common Stock of the Company, and
such other securities of the Company as may be substituted for Stock pursuant to
Article 13.

     (w)  "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference between
the Fair Market Value of a share of Stock as of the date of exercise of the SAR
over the grant price of the SAR, all as determined pursuant to Article 8.

     (x)  "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting stock
or voting power is beneficially owned

                                       3
<PAGE>

directly or indirectly by the Company. For Incentive Stock Options, the term
shall have the meaning set forth in Code Section 424(f).

          (y)  "1933 Act" means the Securities Act of 1933, as amended from
time to time.

          (z)  "1934 Act" means the Securities Exchange Act of 1934, as
amended from time to time.

                                   ARTICLE 4

                                ADMINISTRATION

     4.1. Committee. The Plan shall be administered and interpreted by a
subcommittee (the "Committee") of the Personnel and Compensation Committee of
the Board, such other committee as the Board may designate, or, at the
discretion of the Board from time to time, by the Board. The Committee shall
consist of two or more members of the Board. It is intended that the directors
appointed to serve on the Committee shall be "non-employee directors" (within
the meaning of Rule 16b-3 promulgated under the 1934 Act) and "outside
directors" (within the meaning of Code Section 162(m) and the regulations
thereunder) to the extent that Rule 16b-3 and, if necessary for relief from the
limitation under Code Section 162(m) and such relief is sought by the Company,
Code Section 162(m), respectively, are applicable. However, the mere fact that a
Committee member shall fail to qualify under either of the foregoing
requirements shall not invalidate any Award made by the Committee which Award is
otherwise validly made under the Plan. The members of the Committee shall be
appointed by, and may be changed at any time and from time to time in the
discretion of, the Board. During any time that the Board is acting as
administrator of the Plan, it shall have all the powers of the Committee
hereunder, and any reference herein to the Committee (other than in this Section
4.1) shall include the Board.

     4.2. Action by the Committee. For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Company or any
Subsidiary, the Company's independent certified public accountants, or any
executive compensation consultant or other professional retained by the Company
to assist in the administration of the Plan.

     4.3. Authority of Committee. The Committee has the power, authority and
discretion to:

          (a)  Designate Participants;

          (b)  Determine the type or types of Awards to be granted to each
     Participant;

          (c)  Determine the number of Awards to be granted and the number of
     shares of Stock to which an Award will relate;

          (d)  Determine the terms and conditions of any Award granted under the
     Plan, including but not limited to, the Date of Grant, the exercise price,
     grant price, or purchase price, any

                                       4
<PAGE>

     restrictions or limitations on the Award, any schedule for lapse of
     forfeiture restrictions or restrictions on the exercisability of an Award,
     and accelerations or waivers thereof, based in each case on such
     considerations as the Committee in its sole discretion determines;

          (e)  Accelerate the vesting or lapse of restrictions of any
     outstanding Award, based in each case on such considerations as the
     Committee in its sole discretion determines;

          (f)  Determine whether, to what extent, and under what circumstances
     an Award may be settled in, or the exercise price of an Award may be paid
     in, cash, Stock, other Awards, or other property, or an Award may be
     canceled, forfeited, or surrendered;

          (g)  Prescribe the form of each Award Agreement, which need not be
     identical for each Participant; and

          (h)  Decide all other matters that must be determined in connection
     with an Award.

     4.4. Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement, and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

                                   ARTICLE 5

                          SHARES SUBJECT TO THE PLAN

     5.1. Number of Shares. Subject to adjustment as provided in Section 13.1,
the aggregate number of shares of Stock reserved and available for Awards or
which may be used to provide a basis of measurement for or to determine the
value of an Award (such as with a Stock Appreciation Right or Performance Unit
Award) shall be ten million (10,000,000) shares. Not more than 10% of the total
shares authorized hereunder may be granted as Awards of Restricted Stock or
unrestricted Stock Awards.

     5.2. Lapsed Awards. To the extent that an Award is canceled, terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.

     5.3. Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

     5.4. Limitation on Awards. Notwithstanding any provision in the Plan to the
contrary (but subject to adjustment as provided in Section 13.1), the maximum
number of shares of Stock with respect to one or more Options and/or SARs that
may be granted during any one calendar year under the Plan to any one Covered
Employee shall be 200,000, and the maximum number of shares of Restricted Stock
that may be granted during any one calendar year under the Plan to any one
Covered Employee shall be 200,000. The maximum fair market value (measured as of
the Date of Grant) of any Awards other than Options, SARs, and Restricted Stock
that may be received by a Covered Employee (less any consideration paid by the
Participant for such Award) during any one calendar year under the Plan shall be
$4,000,000.

                                       5
<PAGE>

                                   ARTICLE 6

                                  ELIGIBILITY

     6.1. General. Awards may be granted only to individuals who are key
employees, officers or directors, including any regional or advisory directors,
of the Company or a Subsidiary.

                                   ARTICLE 7

                                 STOCK OPTIONS

     7.1. General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:

          (a)  Exercise Price. The exercise price per share of Stock under an
     Option shall be determined by the Committee, provided that the exercise
     price for any Non-Qualified Stock Option shall not be less than 85% of the
     Fair Market Value as of the Date of Grant and the exercise price for any
     Incentive Stock Option shall not be less than the Fair Market Value as of
     the Date of Grant.

          (b)  Time and Conditions of Exercise. The Committee shall determine
     the time or times at which an Option may be exercised in whole or in part;
     provided, however, that in no event may any Non-Qualified Stock Option be
     exercisable for more than ten years from the Date of Grant. The Committee
     also shall determine the performance or other conditions, if any, that must
     be satisfied before all or part of an Option may be exercised. The
     Committee may waive any exercise provisions at any time in whole or in part
     based upon factors as the Committee may determine in its sole discretion so
     that the Option becomes exercisable at an earlier date.

          (c)  Payment. The Committee shall determine the methods by which the
     exercise price of an Option may be paid, the form of payment, including,
     without limitation, cash, shares of Stock, or other property (including
     "cashless exercise" arrangements), and the methods by which shares of Stock
     shall be delivered or deemed to be delivered to Participants; provided that
     if shares of Stock surrendered in payment of the exercise price were
     themselves acquired otherwise than on the open market, such shares shall
     have been held by the Participant for at least six months.

          (d)  Evidence of Grant. All Options shall be evidenced by a written
     Award Agreement between the Company and the Participant. The Award
     Agreement shall include such provisions, not inconsistent with the Plan, as
     may be specified by the Committee.

     7.2. Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:

          (a)  Exercise. In no event may any Incentive Stock Option be
     exercisable for more than ten years from the Date of Grant.

          (b)  Lapse of Option. An Incentive Stock Option shall lapse under the
     earliest of the following circumstances; provided, however, that the
     Committee may, prior to the lapse of the Incentive Stock Option under the
     circumstances described in paragraphs (2), (3) and (4) below, provide in
     writing that the Incentive Stock Option will extend until a later date, but
     if the

                                       6
<PAGE>

     Incentive Stock Option is exercised after the dates specified in paragraphs
     (2), (3) and (4) below, it will automatically become a Non-Qualified Stock
     Option:

          (1)  The Incentive Stock Option shall lapse ten years after it is
     granted, unless an earlier time is set in the Award Agreement.

          (2)  If the Participant terminates employment for any reason other
     than as provided in paragraph (3) or (4) below, the Incentive Stock Option
     shall lapse, unless it is previously exercised, three months after the
     Participant's termination of employment; provided, however, that if the
     employment is terminated as a result of deliberate, willful, or gross
     misconduct as determined by the Board of Directors or the Committee, all
     rights under the Incentive Stock Option shall terminate and expire upon
     such termination.

          (3)  If the Participant terminates employment by reason of his
     Disability, the Incentive Stock Option shall lapse, unless it is previously
     exercised, one year after the Participant's termination of employment.

          (4)  If the Participant dies while employed, or during the three-month
     period described in paragraph (2) or during the one-year period described
     in paragraph (3) and before the Incentive Stock Option otherwise lapses,
     the Incentive Stock Option shall lapse one year after the date of the
     appointment of a personal representative for such deceased Participant's
     estate. Upon the Participant's death, any exercisable Incentive Stock
     Options may be exercised by the Participant's beneficiary, determined in
     accordance with Section 12.6.

          Unless the exercisability of the Incentive Stock Option is accelerated
     as provided in Article 12, if a Participant exercises an Incentive Stock
     Option after termination of employment, the Incentive Stock Option may be
     exercised only with respect to the shares that were otherwise vested on the
     Participant's termination of employment.

          (c)  Individual Dollar Limitation. The aggregate Fair Market Value
     (determined as of the Date of Grant) of all shares of Stock with respect to
     which Incentive Stock Options are first exercisable by a Participant in any
     calendar year may not exceed $100,000.00; provided, however, that the
     Committee may provide, at or after the Date of Grant of any Incentive Stock
     Option, that to the extent that the exercisability of the Incentive Stock
     Option in accordance with its terms (without regard to any limitation
     reflecting this Section 7.2(c)) would exceed the limitations of Section
     422(d) of the Code, then such Incentive Stock Option may be exercised as a
     Non-Qualified Stock Option and not an Incentive Stock Option.

          (d)  Ten Percent Owners. No Incentive Stock Option shall be granted to
     any individual who, at the Date of Grant, owns stock possessing more than
     ten percent of the total combined voting power of all classes of stock of
     the Company or any Subsidiary unless the exercise price per share of such
     Incentive Stock Option is at least 110% of the Fair Market Value per share
     of Stock at the Date of Grant and the Incentive Stock Option expires no
     later than five years after the Date of Grant.

          (e)  Expiration of Incentive Stock Options. No Award of an Incentive
     Stock Option may be made pursuant to the Plan after the day immediately
     prior to the tenth anniversary of the Plan's adoption by the Board.

                                       7
<PAGE>

          (f)  Right To Exercise. During a Participant's lifetime, an Incentive
     Stock Option may be exercised only by the Participant or, in the case of
     the Participant's Disability, by the Participant's guardian or legal
     representative.

          (g)  Directors. The Committee may not grant an Incentive Stock Option
     to a non-employee director. The Committee may grant an Incentive Stock
     Option to a director who is also an employee of the Company or Subsidiary
     but only in that individual's position as an employee and not as a
     director.

                                   ARTICLE 8

                           STOCK APPRECIATION RIGHTS

     8.1. Grant of SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:

          (a)  Right to Payment. Upon the exercise of a Stock Appreciation
     Right, the Participant to whom it is granted has the right to receive the
     excess, if any, of:

               (1)  The Fair Market Value of one share of Stock on the date of
     exercise; over


               (2)  The grant price of the Stock Appreciation Right as
     determined by the Committee, which shall not be less than the Fair Market
     Value of one share of Stock on the Date of Grant.

          (b)  Other Terms. All awards of Stock Appreciation Rights shall be
     evidenced by an Award Agreement. The term, methods of exercise, methods of
     settlement, form of consideration payable in settlement, and any other
     terms and conditions of any Stock Appreciation Right shall be determined by
     the Committee at the time of the grant of the Award and shall be reflected
     in the Award Agreement; provided, however, that in no event may any Stock
     Appreciation Right be exercisable for more than ten years from the Date of
     Grant.

                                   ARTICLE 9

                               PERFORMANCE UNITS

     9.1. Grant of Performance Units. The Committee is authorized to grant
Performance Units to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Units granted to each Participant. All
Awards of Performance Units shall be evidenced by an Award Agreement.

     9.2. Right To Payment. A grant of Performance Units gives the Participant
rights, valued as determined by the Committee, and payable to, or exercisable
by, the Participant to whom the Performance Units are granted, in whole or in
part, as the Committee shall establish at grant. The Committee shall set
performance goals that satisfy the requirements of ss. 162(m) of the Code and
regulations issued thereunder and other terms or conditions to payment of the
Performance Units in its discretion which, depending on the extent to which they
are met, will determine the number and value of Performance Units that will be
paid to the Participant.

                                       8
<PAGE>

     9.3.  Other Terms. Performance Units may be payable in cash, Stock, or
other property, and have such other terms and conditions as determined by the
Committee and reflected in the Award Agreement.

                                  ARTICLE 10

                            RESTRICTED STOCK AWARDS

     10.1. Grant of Restricted Stock. Subject to Section 5.4, the Committee is
authorized to make Awards of Restricted Stock to Participants in such amounts
and subject to such terms and conditions as may be selected by the Committee.
Unless otherwise provided by the Committee, all Awards of Restricted Stock shall
vest at a rate of 20% per year commencing on the first anniversary of the Award.
All Awards of Restricted Stock shall be evidenced by a Restricted Stock Award
Agreement.

     10.2. Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.

     10.3. Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Company; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.

     10.4. Certificates for Restricted Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock.

                                  ARTICLE 11

                           OTHER STOCK-BASED AWARDS

     11.1. Grant of Other Stock-Based Awards. The Committee is authorized,
subject to limitations under applicable law, to grant to Participants such other
Awards that are payable in, valued in whole or in part by reference to, or
otherwise based on or related to shares of Stock, as deemed by the Committee to
be consistent with the purposes of the Plan, including without limitation shares
of Stock awarded purely as a "bonus" and not subject to any restrictions or
conditions, convertible or exchangeable debt securities, other rights
convertible or exchangeable into shares of Stock, and Awards valued by reference
to book value of shares of Stock or the value of securities of or the
performance of specified Subsidiaries. The Committee shall determine the terms
and conditions of such Awards.

                                       9
<PAGE>

                                  ARTICLE 12

                        PROVISIONS APPLICABLE TO AWARDS

     12.1. Stand-Alone and Tandem Awards. Awards granted under the Plan may, in
the discretion of the Committee, be granted either alone, in addition to, or in
tandem with any other Award granted under the Plan. Awards granted in addition
to or in tandem with other Awards may be granted either at the same time as or
at a different time from the grant of such other Awards.

     12.2. Exchange Provisions. The Committee may at any time offer to exchange
or buy out any previously granted Award for a payment in cash, Stock, or another
Award (subject to Section 13.1), based on the terms and conditions the Committee
determines and communicates to the Participant at the time the offer is made,
and after taking into account the tax, securities and accounting effects of such
an exchange.

     12.3. Term of Award. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option, any Stock Appreciation Right granted in tandem with an
Incentive Stock Option (or, if Section 7.2(d) applies, five years from the Date
of Grant), any Non-Qualified Stock Option, or any Stock Appreciation Right
exceed a period of ten years from the Date of Grant

     12.4. Form of Payment for Awards. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Award may be made in such
form as the Committee determines at or after the time of grant, including
without limitation, cash, Stock, other Awards, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules adopted
by, and at the discretion of, the Committee.

     12.5. Limitations on Transfer. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Company or a Subsidiary, or shall be
subject to any lien, obligation, or liability of such Participant to any other
party other than the Company or a Subsidiary. No unexercised or restricted Award
shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution or, except in the case of an Incentive Stock
Option, pursuant to a domestic relations order that would satisfy Section
414(p)(1)(A) of the Code if such Section applied to an Award under the Plan;
provided, however, that the Committee may (but need not) permit other transfers
where the Committee concludes that such transferability (i) does not result in
accelerated taxation, (ii) does not cause any Option intended to be an incentive
stock option to fail to be described in Code Section 422(b), and (iii) is
otherwise appropriate and desirable, taking into account any factors deemed
relevant, including without limitation, any state or federal tax or securities
laws or regulations applicable to transferable Awards.

     12.6. Beneficiaries. Notwithstanding Section 12.5, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and

                                       10
<PAGE>

conditions of the Plan and any Award Agreement applicable to the Participant,
except to the extent the Plan and Award Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the Committee. If no
beneficiary has been designated or survives the Participant, payment shall be
made to the Participant's estate. Subject to the foregoing, a beneficiary
designation may be changed or revoked by a Participant at any time provided the
change or revocation is filed with the Committee.

     12.7.  Stock Certificates. All Stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock.

     12.8.  Acceleration Upon A Change in Control. If, at any time after a
Change in Control of the Company (i) an employee is involuntarily terminated
other than for deliberate, willful, or gross misconduct, or (ii) the employee
terminates his or her employment subsequent to a reduction in the employee's
salary, or a transfer by the Company of the employee to a location more than
fifty (50) miles from the prior location of employment, then notwithstanding any
Award Agreement, all outstanding Options, Stock Appreciation Rights, and other
Awards in the nature of rights that may be exercised shall become fully
exercisable and all restrictions on outstanding Awards shall lapse; provided,
however, that such acceleration will not occur if, in the opinion of the
Company's accountants, such acceleration would preclude the use of "pooling of
interest" accounting treatment for a Change in Control transaction that (a)
would otherwise qualify for such accounting treatment, and (b) is contingent
upon qualifying for such accounting treatment. To the extent that this provision
causes Incentive Stock Options to exceed the dollar limitation set forth in
Section 7.2(c), the excess Options shall be deemed to be Non-Qualified Stock
Options.

     12.9.  Acceleration For any Other Reason. Except as to any Award granted
subject to performance goals under Section 12.10, regardless of whether an event
has occurred as described in Section 12.8 above, the Committee may in its sole
discretion at any time determine that all or a portion of a Participant's
Options, Stock Appreciation Rights, and other Awards in the nature of rights
that may be exercised shall become fully or partially exercisable, and/or that
all or a part of the restrictions on all or a portion of the outstanding Awards
shall lapse, in each case, as of such date as the Committee may, in its sole
discretion, declare. The Committee may discriminate among Participants and among
Awards granted to a Participant in exercising its discretion pursuant to this
Section 12.9.

     12.10. Performance Goals. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Company, Subsidiary, or business unit of the
Company of a specified target return, or target growth in return on equity or
assets, (b) the Company's level of earnings per share, (c) the Company's stock
price, (d) the Company's level of nonperforming assets, (e) the achievement by
an individual, the Company, or a business unit of the Company or Subsidiary of a
specified target, or target growth in, revenues, net income or earnings per
share or decrease in expense, (f) the achievement of objectively determinable
goals with respect to service or product delivery, service or product quality,
customer satisfaction, meeting budgets and/or retention of employees or (g) any
combination of the goals set forth in (a)

                                       11
<PAGE>

through (f) above. If an Award is made on such basis, the Committee shall
establish goals prior to the beginning of the period for which such performance
goal relates (or such later date as may be permitted under Code Section 162(m)
or the regulations thereunder) and the Committee may for any reason reduce (but
not increase) any Award, notwithstanding the achievement of a specified goal.
Any payment of an Award granted with performance goals shall be conditioned on
the written certification of the Committee in each case that the performance
goals and any other material conditions were satisfied.

     12.11. Termination of Employment. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Company to one of its Subsidiaries, transfers from a Subsidiary to the
Company, or transfers from one Subsidiary to another Subsidiary.

                                  ARTICLE 13

                         CHANGES IN CAPITAL STRUCTURE

     13.1.  General. In the event a stock dividend is declared upon the Stock,
the authorization limits under Section 5.1 and 5.4 shall be increased
proportionately, and the shares of Stock then subject to each Award shall be
increased proportionately without any change in the aggregate purchase price
therefor. In the event the Stock shall be changed into or exchanged for a
different number or class of shares of stock or securities of the Company or of
another corporation, whether through reorganization, recapitalization,
reclassification, share exchange, stock split-up, combination of shares, merger
or consolidation, the authorization limits under Section 5.1 and 5.4 shall be
adjusted proportionately, and there shall be substituted for each such share of
Stock then subject to each Award the number and class of shares into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award, or, subject
to Section 14.2, there shall be made such other equitable adjustment as the
Committee shall approve.

                                  ARTICLE 14

                    AMENDMENT, MODIFICATION AND TERMINATION

     14.1.  Amendment, Modification and Termination. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without stockholder approval; provided, however, that the Board or Committee
shall condition any amendment or modification on the approval of stockholders of
the Company if such approval is necessary to comply with the requirements of
Sections 422 or 162(m) of the Code, or other applicable law, or if such approval
is deemed advisable with respect to tax, securities or other applicable laws,
policies or regulations.

     14.2.  Term of Plan. Unless earlier terminated pursuant to Section 14.1,
the Plan shall terminate on the tenth anniversary of its adoption by the Board.

                                       12
<PAGE>

                                  ARTICLE 15

                              GENERAL PROVISIONS

     15.1.  No Rights to Awards. No Participant or eligible participant shall
have any claim to be granted any Award under the Plan, and neither the Company
nor the Committee is obligated to treat Participants or eligible participants
uniformly.

     15.2.  No Stockholder Rights. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.

     15.3.  Withholding. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of the Plan. With respect
to withholding required upon any taxable event under the Plan, the Committee
may, at the time the Award is granted or thereafter, require that any such
withholding requirement be satisfied, in whole or in part, by withholding shares
of Stock having a Fair Market Value on the date of withholding equal to the
amount required to be withheld for tax purposes, all in accordance with such
procedures as the Committee establishes.

     15.4.  No Right to Continued Service. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment or status as an officer
or director at any time, nor confer upon any Participant any right to continue
as an employee, officer or director of the Company or any Subsidiary.

     15.5.  Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.

     15.6.  Indemnification. To the extent allowable under applicable law, each
member of the Committee, and any officer or employee authorized by the Committee
to undertake any action hereunder, shall be indemnified and held harmless by the
Company from any loss, cost, liability, or expense that may be imposed upon or
reasonably incurred by such member in connection with or resulting from any
claim, action, suit, or proceeding to which such member may be a party or in
which he may be involved by reason of any action or failure to act under the
Plan and against and from any and all amounts paid by such member in
satisfaction of judgment in such action, suit, or proceeding against him
provided he gives the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf.
The foregoing right of indemnification shall not be exclusive of any other
rights of indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them harmless.

     15.7.  Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance,

                                       13
<PAGE>

welfare or benefit plan of the Company or any Subsidiary unless provided
otherwise in such other plan.

     15.8.   Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.

     15.9.   Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

     15.10.  Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.

     15.11.  Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.

     15.12.  Government and Other Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register under the
1933 Act, or any state securities act, any of the shares of Stock paid under the
Plan. The shares paid under the Plan may in certain circumstances be exempt from
registration under the 1933 Act, and the Company may restrict the transfer of
such shares in such manner as it deems advisable to ensure the availability of
any such exemption.

     15.13.  Governing Law. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Delaware.

     15.14.  Additional Provisions. Each Award Agreement may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of this Plan.


     IN WITNESS WHEREOF, The Colonial BancGroup, Inc. has caused this Long-Term
Incentive Plan to be adopted as of this the 17th day of January 2001.

                                          THE COLONIAL BANCGROUP, INC.


                                          By:     /s/ ROBERT E. LOWDER
                                                  --------------------

                                             Robert E. Lowder
                                             Chairman & Chief Executive Officer

                                       14