Document:

COLONIAL BANKSHARES, INC.
                         2006 STOCK-BASED INCENTIVE PLAN

                                     FORM OF
                             STOCK OPTION AGREEMENT
                                   (EMPLOYEES)

     A. STOCK OPTIONS ("Options") for a total of _______ shares of Common Stock,
par value $.10 per share,  of Colonial  Bankshares,  Inc.  (the  "Company")  are
hereby granted to ________________________  (the "Participant").  Participant is
an employee of the Company,  Colonial Bank, FSB (the "Bank"), or an affiliate of
the Company or the Bank.  Stock  Appreciation  Rights with respect to a total of
____________  shares  are also  granted  to the  Participant  and  relate to the
Options  granted  hereunder.  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"). The terms of this
Stock Option Agreement are subject to the terms and conditions of the Plan.

     B. The Option  exercise  price of the Common Stock is $________  per share,
the  Fair  Market  Value  (as  defined  in the  Plan)  of the  Common  Stock  on
____________, 200__, 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  _______________  __, 200_, 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 E below.

     D. All Options granted to Participant shall be deemed to be Incentive Stock
Options to the extent permitted under the Internal Revenue Code and regulations.

     E. If  Participant  ceases to maintain  employment  with the Company or its
affiliates,  including Colonial Bank, FSB (the "Bank") for any reason other than
Disability (as defined in the Plan), death,  Retirement (as defined in the Plan)
or termination  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 three (3) months  following such  cessation of employment.  If Participant
ceases employment with the Bank or 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 Participant  (or his/her
legal  representative  or beneficiary)  for one (1) year following  cessation of
employment;  provided,  however, except in the case of death or Disability, such
Options  shall not be eligible for  treatment as Incentive  Stock Options in the
event such Option is exercised more than three (3) months following termination.
In order to obtain  Incentive Stock Option  treatment for an Option exercised by
the heirs or devisees of the Participant, the death of the Participant must have
occurred while the  Participant  is employed by the Company or an affiliate,  or
within  three (3) months of the  Participant's  cessation of  employment.  In no
event will the period of exercise  extend  beyond the  expiration  of the Option
term.  Options awarded to an employee who also serves as a director shall not be
deemed to vest due to Retirement so long as such person continues as a member of
the board of directors,  provided that nothing  herein shall increase the period
that such options can be considered  Incentive  Stock  Options.  Notwithstanding
anything  herein to the  contrary,  if an  employee  who is also a member of the
board of directors terminates  employment prior to Retirement (for reasons other
than death, Disability or due to a Change in Control), all unvested Options will
be forfeited at such time.
<PAGE>
     F. Stock  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).

                 --------------------------------------------------
                 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. The related 300 options will be cancelled.

                   $18    Common Stock
                 - $12    exercise price
                   ---------------------
                    $6    SAR value
                 x 300    SARs exercised
                   ---------------------
                 $1,800/18 Common Stock=100 shares
                 ---------------------------------------------------

     G.  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/she  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.

     H. All Options  granted to the  Participant as Incentive  Stock Options may
not be transferred in any manner otherwise than by will or the laws of intestate
succession,  and may be exercised during the lifetime of the Participant only by
such Participant.

     I. A copy of the Plan has been provided to Participant.  Participant is 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 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  Agreement and the Plan,  the terms of the Plan
will control.

     J. 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 B.

     K.  This  Agreement  shall  not be  deemed  to  constitute  a  contract  of
employment  between the parties hereto,  nor shall any provision hereof restrict
the right of the Company or the Bank to discharge  the  Participant  or restrict
the right of the Participant to terminate his employment.

                                       2
<PAGE>
     L.  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:
      -------------------------

ATTEST:                                     COLONIAL BANKSHARES, INC.

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

WITNESS:                                    PARTICIPANT

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

      This Stock Option Agreement must be executed in duplicate originals,
                   with one original retained by the Company
                  and one original retained by the Participant

                                       3
<PAGE>
                                   EXHIBIT A
                       NOTICE OF EXERCISE OF STOCK OPTIONS
                                  (BY EMPLOYEE)

     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  exchanging  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.
<PAGE>
                                    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:
      -----------------------------

                                              -------------------------------
                                              Participant's signatureCOLONIAL BANKSHARES, INC.

                         2006 STOCK-BASED INCENTIVE PLAN

                           RESTRICTED STOCK AGREEMENT
                               (OUTSIDE DIRECTORS)

     A. An AWARD for a total of ____________  shares of common stock,  par value
$0.10 per share,  of Colonial  Bankshares,  Inc.  (the  "Company"),  the holding
company of Colonial Bank (the "Bank") is hereby  granted to  ___________________
(the  "Recipient"),  subject in all respects to the terms and  provisions of the
Colonial Bankshares,  Inc. 2006 Stock-Based  Incentive Plan (the "Plan"),  which
has been approved by the board of directors of the Company and the  stockholders
of the Company,  which is  incorporated  herein by reference.  The terms of this
Restricted  Stock Agreement are subject to the terms and conditions of the Plan,
except where otherwise indicated.

     B. The shares of common stock  awarded  hereunder  may be  certificated  or
issued  in  electronic  form,  in  the  sole  discretion  of  the  Company.   If
certificated,  the shares shall bear a legend restricting the transferability of
such common  stock  (hereinafter  referred to as the  "Restricted  Stock").  The
Restricted  Stock  awarded  to  the  Recipient  shall  not  be  sold,  assigned,
transferred,  pledged,  or  otherwise  encumbered  by the  Recipient,  except as
hereinafter  provided,  until such Restricted  Stock has vested (the "Restricted
Period").  Restricted Stock shall vest in ___________ equal annual installments,
with the first  installment  vesting on  ___________  __, 2007,  and  succeeding
installments on each anniversary thereafter through ___________ __, 20__.

     C.  If  the  shares  are  certificated,   the  Recipient  shall  receive  a
certificate or  certificates  representing  the shares of Restricted  Stock that
have been awarded to him.  Upon  receipt of the  Restricted  Stock  certificates
representing  the shares  awarded  hereunder,  the  Recipient  shall execute and
return to the Company a stock power or powers  endorsed  in blank  covering  all
such shares of Restricted Stock.  Pursuant to the terms of the Plan, the Company
shall deposit the  certificate  or  certificates  representing  the  Recipient's
Restricted Stock Award,  together with the stock power(s),  with an escrow agent
specified  by the Company  (the  "Escrow  Agent").  Restricted  Stock  issued in
electronic  form  shall be held by the  transfer  agent  until any  restrictions
appurtenant thereto have lapsed and the shares are fully vested.

     D. The Recipient shall have the right to vote the shares awarded hereunder.
The Recipient will also receive dividends declared with respect to the shares.

     E. If the  Recipient  ceases to  maintain  service  with the Company or the
Bank, FSB 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),  all shares of Restricted  Stock awarded to such Recipient
which have not vested  shall be forfeited  by such  Recipient.  In the event the
Recipient's  service  with  the  Company  or  an  affiliate  terminates  due  to
Disability,  death,  Retirement or following a Change in Control, the Restricted
Stock  allocated to the Recipient  which,  as of the date of termination has not
yet vested,  shall be deemed to vest as of the  Recipient's  last day of service
with the Company or an affiliate.

     F. At the time the Restricted Stock vests under the Plan, the Company shall
deliver to the  Recipient (or if the  Restricted  Stock is deemed to vest due to
the Recipient's death, to the Recipient's beneficiary) shares of common stock of
the Company  representing the amount earned,  absent any  restrictions  that may
have been imposed  under the Plan.  Delivery of such shares upon vesting will be
made in  certificate or electronic  form at the election of the Recipient.  Upon
delivery of the shares of common  stock to the  Recipient or  beneficiary,  such
person shall execute and return to the Company an  Acknowledgment  of Receipt of
Earned Shares, in the form attached hereto.
<PAGE>
     G. A copy of the Plan  governing  this  Restricted  Stock Award is attached
hereto.  The  Recipient  is  invited to review  all the  provisions  of the Plan
governing this Award.

     H. The  Recipient  acknowledges  receipt  of a copy of the Plan,  a copy of
which is annexed  hereto,  and represents that he is familiar with the terms and
provisions thereof.  The Recipient hereby accepts this Award, subject to all the
terms and  provisions  of the Plan.  The  Recipient  hereby  agrees to accept as
binding,  conclusive,  and  final,  all  decisions  and  interpretations  of the
Committee  upon any  questions  arising  under the Plan.  As a condition  to the
issuance  of  shares  of common  stock of the  Company  under  this  Award,  the
Recipient  authorizes  the Company to deduct from the settlement of an Award any
taxes required to be withheld by the Company under federal,  state, or local law
as a result of his receipt of this Award.

Dated:
      -------------------------

ATTEST:                                     COLONIAL BANKSHARES, INC.

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

WITNESS:                                    PARTICIPANT

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

    This Restricted Stock Agreement must be executed in duplicate originals,
                with one original retained by the Company and one
                      original retained by the Recipient.

<PAGE>
                   ACKNOWLEDGMENT OF RECEIPT OF EARNED SHARES

     I hereby acknowledge the delivery to me by Colonial  Bankshares,  Inc. (the
"Company")    on    _____________________,    of    stock    certificates    for
____________shares  of common stock of the Company  earned by me pursuant to the
terms  and  conditions  of  the  Colonial  Bankshares,   Inc.  Restricted  Stock
Agreement,  and the Colonial Bankshares,  Inc. 2006 Stock-Based  Incentive Plan,
which  shares were  transferred  to me on the  Company's  stock  record books on
_______________________.

Dated:
      ----------------------

                                               ---------------------------------
                                               Recipient's name (Print)

                                               ---------------------------------
                                               Recipient's signature

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