Exhibit 10(j)

 

FREDERICK COUNTY BANCORP, INC.

2011 STOCK INCENTIVE PLAN

 

1.             Purpose of the Plan. The purpose of this Frederick County
Bancorp, Inc. 2011 Stock Incentive Plan (the “Plan”) is to advance the interests
of the Company by providing directors and selected key employees of the Company,
the Bank and their Affiliates with the opportunity to acquire Shares.  By
encouraging stock ownership, the Company seeks to attract, retain and motivate
the best available personnel for positions of substantial responsibility; to
provide additional incentive to directors and key employees of the Company and
its Affiliates to promote the success of the business as measured by the value
of its Shares; and generally to increase the commonality of interests among
directors, key employees, and other shareholders.

 

Upon approval of this Plan by shareholders of the Company, the Plan shall
replace the Company’s 2001 Stock Option Plan (the “2001 Plan”), which shall be
terminated as of that time.  Following such termination, Options granted under
the 2001 Plan shall continue in effect, and shall be subject to the provisions
of the 2001 Plan, but no new options may be granted under the 2001 Plan.

 

Definitions. In this Plan:

 

(a)         “Affiliate” means any “parent corporation” or “subsidiary
corporation” of the Company as such terms are defined in Section 424(e) and (f),
respectively, of the Code.

 

(b)         “Agreement” means a written agreement entered into in accordance
with Section 5(c).

 

(c)         “Awards” means, collectively Options, Restricted Stock and
Restricted Stock Units, unless the context clearly indicates a different
meaning.

 

(d)         “Bank” means Frederick County Bank.

 

(e)         “Bank Board” means the Board of Directors of the Bank.

 

(f)          “Board” means the Board of Directors of the Company.

 

(g)         “Change in Control” means any one of the following events occurring
after the Effective Date: (1) any consolidation, merger, share exchange, or
similar transaction relating to the Company, or pursuant to which shares of the
Company’s capital stock are converted into cash, securities of another entity
and/or other property, other than a transaction in which the holders of the
Company’s voting stock immediately before such transaction shall, upon
consummation of such transaction, own at least fifty percent (50%) of the voting
power of the surviving entity, (2) any sale of all or substantially all of the
assets of the Company, other than a transfer of assets to a related person which
is not treated as a change in control event under §1.409A-3(i)(5)(vii)(B) of the
US Treasury Regulations, (3) the exercise of a controlling influence over the
management or policies of the Company by any person or by persons acting as a
“group” (within the meaning of Section 13(d) of the Securities Exchange Act of
1934), or (4) where over a twelve month period, a majority of the members of the
Board are replaced by directors whose appointment or election was not endorsed
by a majority of the members of the Board in office prior to such appointment or
election. For purposes of this subsection only, the term “person” refers to an
individual or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form of entity not specifically listed herein.  The decision of the Committee as
to whether a Change in Control has occurred shall be conclusive and binding. A
change in control does not include acquisition of ownership or control of voting
securities of the Company by an employee benefit plan sponsored by the Company
or; acquisition of voting securities by the Company through share repurchase or
otherwise; or acquisition by an exchange of voting securities with a successor
to the Company in a reorganization, such as a reincorporation, that does not
have the purpose or effect of significantly changing voting power or control.
The decision of the Committee as to whether a change in control has occurred is
conclusive and binding, subject to the terms of the Plan.

 

(h)         “Code” means the Internal Revenue Code of 1986, as amended to date
or hereafter.

 

(i)          “Committee” means the Stock Option Committee appointed by the Board
in accordance with Section 5(a) hereof.

 

(j)          “Common Stock” means the common stock, par value $0.01 per share,
of the Company.

 

(k)         “Company” means Frederick County Bancorp, Inc.

 

(l)          “Continuous Service” means the absence of any interruption or
termination of service as an Employee or director of the Company or an
Affiliate.  Continuous Service shall not be considered interrupted in the case
of sick leave, military leave or any other leave of absence approved by the
Company or in the case of transfers between payroll locations of the Company or
between the Company, an Affiliate or a successor.

 

(m)        “Director” means a member of the Board.

 

(n)         “Effective Date” means the date specified in Section 14 hereof.

 

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(o)         “Employee” means any person employed by the Company or by an
Affiliate.

 

(p)         “Exercise Price” means the price per Optioned Share at which an
Option may be exercised.

 

(q)         “Independent Director” means a Director who is an independent
director as defined for purposes other than audit committee service in the
listing standards and regulations of The Nasdaq Stock Market, or if the
Company’s Common Stock is primarily traded on a national securities exchange
other than The Nasdaq Stock Market (including any level or submarket thereof),
then the listing standards and regulations of such other national securities
exchange.  Not in limitation of the foregoing, all Independent Directors must be
Non-Employee Directors.

 

(r)          “ISO” means an option to purchase Common Stock that meets the
requirements set forth in the Plan, and which is intended to be and is
identified as an “incentive stock option” within the meaning of Section 422 of
the Code.

 

(s)         “Just Cause” has the meaning set forth for “cause,” “just cause” or
similar phrase, in any unexpired employment or severance agreement between the
Participant and the Company and/or any Affiliate, or, in the absence of any such
agreement, means termination (in the Board’s sole discretion) because of the
Participant’s personal dishonesty, moral turpitude, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than misdemeanor traffic violations or similar offenses) or
final cease-and-desist order.

 

(t)          “Market Value” means the fair market value of the Common Stock, as
determined under Section 7(b) hereof.

 

(u)         “Non-Employee Director” means any member of the Board who, at the
time discretion under the Plan is exercised, is a “Non-Employee Director” within
the meaning of Rule 16b-3.

 

(v)         “Non-ISO” means an option to purchase Common Stock that meets the
requirements set forth in the Plan but which is not intended to be, and is not
identified as, an ISO.

 

(w)        “Option” means an ISO or Non-ISO.

 

(x)          “Optioned Shares” means Shares subject to an Option or Award of
Restricted Stock granted pursuant to this Plan.

 

(y)         “Outstanding Shares” means the total shares of Common Stock which
have been issued and which (a) are not held as treasury shares, and (b) have not
been cancelled or retired by the Company.

 

(z)          “Participant” means any person who receives an Award pursuant to
the Plan.

 

(aa)       “Performance Based Award” means an Award, the vesting, exercise or
retention of which is subject to or based upon Performance Based Conditions.

 

(bb)       “Performance Based Conditions” means the specific corporate,
divisional, or individual performance or achievement standards or goals set
forth in an Agreement.

 

(cc)       “Permanent and Total Disability” mean “permanent and total
disability” as defined in Section 22(e)(3) of the Code.

 

(dd)       “Plan” means the Frederick County Bancorp, Inc. 2011 Stock Incentive
Plan.

 

(ee)       “Restricted Stock” means Common Stock that is subject to forfeiture,
restrictions against transfer, specific Performance Based Conditions, or other
conditions or restrictions set forth in an Agreement.

 

(ff)         “Restricted Stock Unit” means an Award of the right to receive
Shares of Common Stock, the grant issuance or vesting of which is subject to
such conditions or restrictions, as set forth in an Agreement.

 

(gg)       “Rule 16b-3” means Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.

 

(hh)       “Share” means one share of Common Stock.

 

(ii)         “Transaction” means (i) the liquidation or dissolution of the
Company, (ii) a merger, consolidation, share exchange or similar transaction in
which the Company is not the surviving entity, or (iii) the sale or disposition
of all or substantially all of the Company’s assets.

 

2.             Term of the Plan and Awards.

 

(a)           Term of the Plan.  The Plan shall continue in effect for a term of
ten years from the Effective Date unless sooner terminated pursuant to
Section 17.  No Award may be granted under the Plan after ten years from the
Effective Date.

 

(b)           Term of Options.  The Committee shall establish the term of each
Option granted under the Plan. No Option may have a term that exceeds 10 years.
No ISO granted to an Employee who owns Shares representing more than 10% of the
outstanding shares of Common Stock at the time an ISO is granted may have a term
that exceeds five years.

 

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3.             Shares Subject to the Plan.  Except as otherwise required by the
provisions of Section 11, the aggregate number of Shares deliverable upon the
exercise or vesting of Awards shall be 250,000.  Optioned Shares may either be
authorized but unissued Shares or Shares held in treasury to the extent allowed
by Maryland law.  If Awards should expire, become unexercisable or be forfeited
for any reason without having been exercised or become vested in full, the
Optioned Shares shall be available for the grant of additional Awards under the
Plan, unless the Plan shall have been terminated.

 

4.             Administration of the Plan.

 

(a)           Composition of the Committee.  The Plan shall be administered by
the Committee, which shall consist of not less than three (3) members of the
Board who are Independent Directors.  Members of the Committee shall serve at
the pleasure of the Board.  In the absence at any time of a duly appointed
Committee, the Plan shall be administered by the Corporate Governance and
Compensation Committee of the Board.

 

(b)           Powers of the Committee. Except as limited by the express
provisions of the Plan or by resolutions adopted by the Board, the Committee
shall have sole and complete authority and discretion: (i) to select
Participants and grant Awards; (ii) to determine the form and content of Awards
to be issued in the form of Agreements under the Plan, including but not limited
to Performance Based Conditions of Performance Based Awards, which need not be
identical among Participants granted Awards at the same time; (iii) to interpret
the Plan, (iv) to prescribe, amend and rescind rules and regulations relating to
the Plan, and (v) to make other determinations necessary or advisable for the
administration of the Plan.  The Committee shall have and may exercise such
other power and authority as may be delegated to it by the Board from time to
time.  A majority of the entire Committee shall constitute a quorum and the
action of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the Committee without a
meeting, shall be deemed the action of the Committee.

 

(c)           Agreement.  Each Award shall be evidenced by a written agreement
containing such provisions as may be approved by the Committee.  Each such
Agreement shall constitute a binding contract between the Company and the
Participant, and every Participant, upon acceptance of such Agreement, shall be
bound by the terms and restrictions of the Plan and of such Agreement. The terms
of each such Agreement shall be in accordance with the Plan, but each Agreement
may include such additional provisions and restrictions determined by the
Committee, in its discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan.  In particular,
the Committee shall set forth in each Agreement: (i) the Exercise Price of an
Option, (ii) the number of Shares subject to, and the expiration date of, the
Option, (iii) the manner, time and rate (cumulative or otherwise) of exercise or
vesting of such Award, and (iv) the restrictions, if any, to be placed upon such
Award, or upon Shares which may be issued upon exercise of such Award. The
Chairman of the Committee and such other officers as shall be designated by the
Committee are hereby authorized to execute Agreements on behalf of the Company
and to cause them to be delivered to the recipients of Awards.

 

(d)           Effect of the Committee’s Decisions.  All decisions,
determinations, and interpretations of the Committee shall be final and
conclusive on all persons affected thereby. The Committee’s determination
whether a Participant’s Continuous Service has ceased, the effective date
thereof, and whether a Performance Based Condition shall have been met in the
event of the death or Permanent and Total Disability shall be final and
conclusive on all persons affected thereby.

 

(e)           Indemnification.  In addition to such other rights of
indemnification as they may have, the members of the Committee shall be
indemnified by the Company in connection with any claim, action, suit or
proceeding relating to any action taken or failure to act under or in connection
with the Plan or any Option, granted hereunder to the full extent provided for
under the Company’s Articles of Incorporation or Bylaws with respect to the
indemnification of Directors.

 

6.             Grant of Options.

 

(a)           General Rule.  The Committee, in its sole discretion, may grant
ISO’s or Non-ISOs to Employees of the Company or its Affiliates and may grant
Non-ISOs to Directors or directors of Affiliates.

 

(b)           Special Rules for ISOs.  The aggregate Market Value, as of the
date the Option is granted, of the Shares with respect to which ISOs are
exercisable for the first time by an Employee during any calendar year (under
all incentive stock option plans, as defined in Section 422 of the Code, of the
Company or any present or future Affiliate) shall not exceed $100,000. 
Notwithstanding the prior provisions of this Section, the Committee may grant
Options in excess of the foregoing limitations, in which case such Options
granted in excess of such limitation shall be Options which are Non-ISOs.

 

7.             Exercise Price for Options.

 

(a)           Limits on Committee Discretion.  The Exercise Price as to any
particular Option granted under the Plan shall not be less than the Market Value
of the Optioned Shares on the date of grant. In the case of an Employee who owns
Shares representing more than 10% of the Company’s Outstanding Shares of Common
Stock at the time an ISO is granted, the Exercise Price shall not be less than
110% of the Market Value of the Optioned Shares at the time the ISO is granted.

 

(b)           Standards for Determining Exercise Price.  If the Common Stock is
listed on a national securities exchange (including The NASDAQ National Market)
on the date in question (or if the date in question is not a trading day, then
the first trading day thereafter), then the Market Value per Share shall be not
less than the last reported selling price on such exchange on such date, or if
there were no sales on such date, then the Exercise Price shall be not less than
the mean between the closing bid and asked prices on such date. If the Common
Stock is traded otherwise than on a national securities exchange on the date in
question, then the Market Value per Share shall be not less than the mean
between the closing bid and asked price on such date, or, if there is no bid and
asked price on such date,

 

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then on the next prior business day on which there was a bid and asked price. 
If no such bid and asked price is available, then the Market Value per Share
shall be its fair market value as determined by the Committee, in its sole and
absolute discretion, in a manner consistent with the Code and the regulations
promulgated thereunder.

 

8.             Exercise of Options.

 

(a)           Generally.  Any Option shall be exercisable at such times and
under such conditions as shall be permissible under the terms of the Plan and of
the Agreement.  An Option may not be exercised for a fractional Share.  In the
event that any adjustment of an Option pursuant to Section 11 or otherwise would
result in an Optionee being entitled to exercise for a fractional Share, then
upon such adjustment, the number of Shares which may be acquired upon exercise
of such Option shall be rounded down to the next whole share, and the Optionee
shall not be entitled to any payment, compensation or alternative Award in lieu
thereof.

 

(b)           Procedure for Exercise.  A Participant may exercise Options,
subject to provisions relative to its termination and limitations on its
exercise, only by (1) written notice of intent to exercise the Option with
respect to a specified number of Shares, and (2) payment to the Company
(contemporaneously with delivery of such notice) in cash, of the amount of the
Exercise Price for the number of Shares with respect to which the Option is then
being exercised.  Each such notice (and payment where required) shall be
delivered, or mailed by prepaid registered or certified mail, addressed to the
Treasurer of the Company at the Company’s executive offices.  In connection with
the exercise of Options, a Participant shall also deliver to the Company, in
accordance with the provisions of Section 19 hereof, an amount sufficient to
satisfy all applicable federal, state and local income and employment tax
withholding obligations.

 

(c)           Period of Exercisability-ISOs. An ISO may be exercised by a
Participant only while the Participant is an Employee and has maintained
Continuous Service from the date of the grant of the ISO, or within three months
after termination of such Continuous Service (but not later than the date on
which the Option would otherwise expire), except if the Employee’s Continuous
Service terminates by reason of —

 

(1)           Just Cause, in which case the Participant’s rights to exercise
such ISO shall expire on the date of such termination;

 

(2)           Death, in which case, to the extent that the Participant would
have been entitled to exercise the ISO immediately prior to his death, such ISO
of the deceased Participant may be exercised within two years from the date of
his death (but not later than the date on which the Option would otherwise
expire) by the personal representatives of his estate or person or persons to
whom his rights under such ISO shall have passed by will or by laws of descent
and distribution;

 

(3)           Permanent and Total Disability, in which case, to the extent that
the Participant would have been entitled to exercise the ISO immediately prior
to his termination of service as a result of Permanent and Total Disability,
such ISO may be exercised within one year from the date of such termination of
service as a result of Permanent and Total Disability (but not later than the
date on which the ISO would otherwise expire).

 

(d)           Period of Exercisability-Non-ISOs. A Non-ISO may be exercised by a
Participant only while the Participant is an Employee, Director or a director of
an Affiliate and has maintained Continuous Service from the date of the grant of
the Non-ISO, or within three months after termination of such Continuous Service
in the case of an Employee who is not a Director, or one year after termination
of Continuous Service in the case of a Director or a director of an Affiliate
(and in any case not later than the date on which the Option would otherwise
expire), except if the Continuous Service terminates by reason of —

 

(1)           Just Cause, in which case the Participant’s rights to exercise
such Non-ISO shall expire on the date of such termination;

 

(2)           Death, in which case, to the extent that the Participant would
have been entitled to exercise the Non-ISO immediately prior to his death, such
Non-ISO of the deceased Participant may be exercised within two years from the
date of his death (but not later than the date on which the Option would
otherwise expire) by the personal representatives of his estate or person or
persons to whom his rights under such Non-ISO shall have passed by will or by
laws of descent and distribution;

 

(3)           Permanent and Total Disability, in which case, to the extent that
the Participant would have been entitled to exercise the Non-ISO immediately
prior to his termination of service as a result of Permanent and Total
Disability, such Non-ISO may be exercised within two years from the date of
termination of service as a result of such Permanent and Total Disability (but
not later than the date on which the Non-ISO would otherwise expire).

 

(e)           Exercisability at Death or Permanent and Total Disability. 
Notwithstanding the provisions of any Option that provides for its exercise in
installments as designated by the Committee, such Option shall become
immediately exercisable upon the Participant’s death or termination of service
as a result of Permanent and Total Disability.

 

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(f)            Effect of the Committee’s Decisions.  The Committee’s
determination whether a Participant’s Continuous Service has ceased, and the
effective date thereof shall be final and conclusive on all persons affected
thereby.

 

9.             Restricted Stock and Restricted Stock Units.

 

Any Share of Restricted Stock or Restricted Stock Unit which is the subject of
an Award shall be subject to the following terms and conditions, and otherwise
to such other terms and conditions as are either applicable generally to Awards,
or prescribed by the Committee in the applicable Agreement.

 

(a)           Restriction Period. At the time of each Award of Restricted Stock
or a Restricted Stock Unit, there shall be established a restriction period (the
“Restriction Period”). Such Restriction Period may differ among Participants and
may have different expiration dates with respect to portions of the Shares
covered by the same Award. In no event (i) may the Performance Based Condition
measurement date for a Performance Based Award be less than one year from the
date of grant; or (ii) may the Restriction Period for any other Award of
Restricted Stock or Restricted Stock Unit be less than three years, provided
that restrictions may terminate ratably over the vesting period.

 

(b)           Vesting Restrictions. The Committee shall determine the conditions
and restrictions applicable to the Award, including, but not limited to,
requirements of Continuous Service for a specified term, or, for Performance
Based Awards of Restricted Stock or Restricted Stock Units, the attainment of
Performance Based Conditions, which condition and restrictions may differ with
respect to each Participant granted an Award at the same time. The Agreement
shall provide for forfeiture of Shares covered thereby if the specified
conditions and restrictions are not met during the Restriction Period. Awards of
Restricted Stock may provide for the issue of Shares upon grant, subject to
forfeiture if the specified conditions and restrictions are not met.  Restricted
Stock Units shall provide for the issuance of Shares only upon the achievement
of the conditions and restrictions at the end of the Restricted Period or upon
the achievement of the Performance Based Conditions, subject to earlier vesting
as provided herein.

 

(c)           Vesting upon Death or Permanent and Total Disability. The
Committee shall set forth in the Agreement the percentage of an Award, if any,
which shall vest in the Participant in the event of death, or Permanent and
Total Disability prior to the expiration of the Restriction Period or the
satisfaction of the conditions and restrictions applicable to an Award.

 

(d)           Acceleration of Vesting. Notwithstanding the Restriction Period
and the conditions or restrictions imposed on an Award of Restricted Stock or
Restricted Stock Units, as set forth in any Agreement, the Committee may shorten
the Restriction Period or waive any conditions or restrictions, if the Committee
concludes that it is in the best interests of the Company to do so, provided
that any such actions not done in connection with a Change in Control or the
death, Permanent and Total Disability, or termination of employment of a
Participant shall not be effective unless specifically approved or ratified by
the affirmative votes of the holders of a majority of the Common Stock present
or represented and entitled to vote at a meeting duly held on date no later than
the next annual meeting of shareholders.

 

(e) Ownership; Voting. Where stock certificates are issued in respect of Awards
of Restricted Stock, which are subject to forfeiture if the conditions or
restrictions are not satisfied, such certificates shall be registered in the
name of the Participant, whereupon the Participant shall become a shareholder of
the Company with respect to such Restricted Stock and shall, to the extent not
inconsistent with express provisions of the Plan, have all the rights of a
shareholder, including but not limited to the right to vote and to receive all
dividends paid on such Shares, and the certificates shall be deposited with the
Company or its designee, together with a stock power endorsed in blank, and the
following legend shall be placed upon such certificates reflecting that the
shares represented thereby are subject to restrictions against transfer and
forfeiture:

 

“The transferability of this certificate and the shares of stock represented
thereby are subject to the terms and conditions (including forfeiture) contained
in the Frederick County Bancorp, Inc. 2011 Stock Incentive Plan, and an
agreement entered into between the registered owner and Frederick County
Bancorp, Inc. Copies of such Plan and Agreement are on file in the offices of
the Secretary of Frederick County Bancorp, Inc.”

 

Where an Award of Restricted Stock is subject to issuance upon the achievement
of Performance Based Award standards or goals or other conditions, no
certificates shall be issued until satisfaction of such conditions.

 

(f)            Lapse of Restrictions. At the expiration of the Restricted Period
applicable to the Restricted Stock, or upon the satisfaction of conditions to
receipt of the Shares subject to Restricted Stock Units, as applicable, the
Company shall deliver to the Participant, or the legal representative of the
Participant’s estate, or if the personal representative of the Participant’s
estate shall have assigned the estate’s interest in the Restricted Stock, to the
person or persons to whom his rights under such Restricted Stock shall have
passed by assignment pursuant to his will or to the laws of descent and
distribution, the stock certificates deposited with it or its designee and as to
which the Restricted Period has expired and the requirements of the restrictions
have been met. If a legend has been placed on such certificates, the Company
shall cause such certificates to be reissued without the legend.

 

(g)           Forfeiture of Restricted Stock. The Agreement shall provide for
forfeiture of any Restricted Stock which is not vested in the Participant or for
which the restrictions have not been satisfied during the Restriction Period.

 

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10.          Conditions Upon Issuance of Shares.

 

(a)           Compliance with Securities Laws.  Shares of Common Stock shall not
be issued with respect to any Option unless the issuance and delivery of such
Shares shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the rules and regulations
promulgated thereunder, any applicable state securities law, and the
requirements of any stock exchange upon which the Shares may then be listed. The
Plan is intended to comply with Rule 16b-3, and any provision of the Plan that
the Committee determines in its sole and absolute discretion to be inconsistent
with said Rule shall, to the extent of such inconsistency, be inoperative and
null and void, and shall not affect the validity of the remaining provisions of
the Plan.

 

(b)           Special Circumstances.  The inability of the Company to obtain
approval from any regulatory body or authority deemed by the Company’s counsel
to be necessary to the lawful issuance and sale of any Shares hereunder shall
relieve the Company of any liability in respect of the non-issuance or sale of
such Shares.  As a condition to the exercise of an Option, the Company may
require the person exercising the Option to make such representations and
warranties as the Committee determines may be necessary to assure the
availability of an exemption from the registration requirements of federal or
state securities law.

 

(c)           Committee Discretion.  The Committee shall have the discretionary
authority to impose in Agreements such restrictions on Shares as it may deem
appropriate or desirable, including but not limited to the authority to impose a
right of first refusal, to establish repurchase rights or both of these
restrictions, or to provide for the mandatory exercise or forfeiture of any
outstanding Options in the event that the Company’s primary federal regulator
directs the Company to so require if the Company does not meet minimum
regulatory capital requirements.

 

11.          Effect of Changes in Control, Transactions and Changes in Common
Stock Subject to the Plan.

 

(a)          Effects of Change in Control and Transactions.

 

(1)   Notwithstanding the provisions of any Award that provides for its exercise
or vesting in installments, all Awards shall be immediately exercisable and
fully vested upon a Change in Control.

 

(2)   At the time of a Change in Control which does not constitute a
Transaction, any or all outstanding Options may be cancelled, in exchange for
which cancellation the Participant shall receive a cash payment in an amount
equal to the excess of the Market Value at the time of the Change in Control of
the Shares subject to such Option over the Exercise Price of such Options
provided that in no event may an Option be cancelled in exchange for cash within
the six-month period following the date of its grant.

 

(3)   In the event there is a Transaction, all outstanding Awards shall be
surrendered.  With respect to each Award so surrendered, the Committee shall in
its sole and absolute discretion determine whether the holder of each Award so
surrendered shall receive—

 

(A)          for each Share then subject to an outstanding Award, an Award for
the number and kind of shares (or amount of cash or other property, or
combination thereof) into which each Outstanding Share (other than Shares held
by dissenting shareholders) is changed or exchanged, together with an
appropriate adjustment to the Exercise Price in the case of an Option, or other
amount, if any, payable in the event of an Award of Restricted Stock or Shares
subject to a Restricted Stock Unit; or

 

(B)           the number and kind of shares (or amount of cash or other
property, or combination thereof) into which each Outstanding Share (other than
Shares held by dissenting shareholders) is changed or exchanged in the
Transaction that are equal in market value to the excess of the Market Value on
the date of the Transaction of the Shares subject to the Award over the Exercise
Price of the Option, or other amount, if any, payable in the event of an Award
of Restricted Stock or Shares subject to a Restricted Stock Unit; or

 

(C)           a cash payment (from the Company or the successor corporation), in
an amount equal to the excess of the Market Value on the date of the Transaction
of the Shares subject to the Option, over the Exercise Price of the Option.

 

(b)           Recapitalizations; Stock Splits, Etc.  The number and kind of
shares reserved for issuance under the Plan, and the number and kind of shares
subject to outstanding Awards and the Exercise Price thereof, shall be
proportionately adjusted for any increase, decrease, change or exchange of
Shares for a different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapitalization,
reorganization, reclassification, stock dividend, split-up, combination of
shares, or similar event in which the number or kind of shares is changed
without the receipt or payment of consideration by the Company.

 

(c)           Special Rule for ISOs.  Any adjustment made pursuant to
subsections (a)(3)(A) or (b) of this Section shall be made in such a manner as
not to constitute a modification, within the meaning of Section 424(h) of the
Code, of outstanding ISOs.

 

(d)           Conditions and Restrictions on New, Additional, or Different
Shares or Securities.  If, by reason of any adjustment made pursuant to this
Section, a Participant becomes entitled to new, additional, or different shares
of stock or securities, such new, additional, or different shares of stock or
securities shall thereupon be subject to all of the conditions and restrictions
which were applicable to the Shares pursuant to the Option before the adjustment
was made.

 

(e)           Other Issuances.  Except as expressly provided in this Section,
the issuance by the Company or an Affiliate of shares of stock of any class, or
of securities convertible into Shares or stock of another class, for cash or
property or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect, and no adjustment
shall be made with respect to, the number, class, or Exercise Price of Shares
then subject to Options or reserved for issuance under the Plan.

 

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12.          Non-Transferability of Awards.

 

(a)           ISOs, Restricted Stock and Restricted Stock Units may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution.

 

(b)           Non-ISO’s may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of
descent and distribution, pursuant to the terms of a “qualified domestic
relations order” (within the meaning of Section 414(p) of the Code and the
regulations and rulings thereunder), or, in the sole discretion of the
Committee, in connection with a transfer for estate or retirement planning
purposes to a trust established for such purposes.

 

13.          Time of Granting Awards. The date of grant of an Award shall, for
all purposes, be the later of the date on which the Committee makes the
determination of granting such Award and the Effective Date. Notice of the
determination shall be given to each Participant to whom an Option is so granted
within a reasonably prompt period after the date of such grant.

 

14.          Effective Date. The Plan shall be effective as of the date on which
the Plan is approved by the requisite vote of Shareholders.

 

15.          Approval by Stockholders.  The Plan shall be approved by
shareholders of the Company within twelve (12) months of the date on which this
Plan is approved by the Board.

 

16.          Modification of Options.  At any time, and from time to time, the
Board may authorize the Committee to direct execution of an instrument providing
for the modification of any outstanding award, provided no such modification
shall confer on the holder of said Award any right or benefit which could not be
conferred on him by the grant of a new Award at such time, or impair the Award
without the consent of the holder. Regardless of any other provision of this
Plan or an Agreement, neither the Board nor the Committee may reprice (as
defined under rules of the New York Stock Exchange or The Nasdaq Stock Market)
any Award unless the repricing is approved in advance by the shareholders of the
Company.

 

17.          Amendment and Termination of the Plan.      The Board may from time
to time amend the terms of the Plan and, with respect to any Shares at the time
not subject to Awards, suspend or terminate the Plan; provided that shareholder
approval shall be required to increase the number of Shares subject to the Plan
provided in Section 4 or to extend the terms of the Plan. No amendment,
suspension, or termination of the Plan shall, without the consent of any
affected holders of an Award, alter or impair any rights or obligations under
any Award theretofore granted.

 

18.          Reservation of Shares. The Company, during the term of the Plan,
will reserve and keep available a number of Shares sufficient to satisfy the
requirements of the Plan.

 

19.          Withholding Tax. The Company’s obligation to deliver Shares upon
exercise of Awards (or such earlier time that the Participant makes an election
under Section 83(b) of the Code) shall be subject to the Participant’s
satisfaction of all applicable federal, state and local income and employment
tax withholding obligations.  The Committee, in its discretion, may permit the
Participant to satisfy the obligation, in whole or in part, by irrevocably
electing to have the Company withhold Shares, or to deliver to the Company
Shares that he already owns, having a value equal to the amount required to be
withheld.  The value of Shares to be withheld, or delivered to the Company,
shall be based on the Market Value of the Shares on the date the amount of tax
to be withheld is to be determined.  As an alternative, the Company may retain,
or sell without notice, a number of such Shares sufficient to cover the amount
required to be withheld.

 

20.          No Employment or Other Rights. In no event shall a Director’s or
Employee’s or other Award recipient’s eligibility to participate or
participation in the Plan create or be deemed to create any legal or equitable
right of such person to continue service with the Company or any Affiliate.  No
person shall have a right to be granted an Award or, having received an Award,
the right to be granted an additional Award.

 

21.          Governing Law. The Plan shall be governed by and construed in
accordance with the laws of the State of Maryland, except to the extent that
federal law shall be deemed to apply.

 

22.          Construction; Compliance with 409A, Delay in Payment. It is
intended and this Plan and Awards hereunder shall not be subject to, or shall be
in accordance with, 409A of the Code and the regulations and administrative
guidance promulgated thereunder (“Section 409A”), and thus avoid the imposition
of any excise tax and interest on Participants pursuant to
Section 409A(a)(1)(B) of the Code, as a result of the grant, award, exercise,
vesting or lapse of restrictions of any Award, and this Plan shall be
interpreted and construed consistent with this intent. Notwithstanding anything
to the contrary contained herein, any Award or vesting, issuance or payment of
an Award hereunder or any Agreement that is considered “nonqualified deferred
compensation” that is to be made to a Participant while such Participant is a
“specified employee,” in each case as defined and determined for purposes of
Section 409A, within six months following such Participant’s “separation from
service” (as determined in accordance with Section 409A), then to the extent
that such Award, vesting, issuance or payment of an Award is not otherwise
permitted under Section 409A such that it would be exempt from the excise tax
thereunder, such Award, vesting, issuance or payment of an Award shall be
delayed and shall be effected on the first business day of the seventh calendar
month following the Participant’s separation from service, or, if earlier upon
Participant’s death. Notwithstanding anything to the contrary contained herein,
the Company shall have no liability whatsoever to any Participant or any other
person in the event that any Award vesting, issuance or payment of an Award is
determined to be subject to, and is not in compliance with, Section 409A.

 

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