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

 

Exhibit 10.2
FORM OF EMPLOYEE OPTION AWARD

[Date]_____________, 20__

[Name]
[Address]

Dear ________:

I am pleased to inform you that on______, 20__, the Compensation Committee of
the Board of Directors of Severn Bancorp, Inc. granted you options to purchase
______ shares of Common Stock of the Company under the Company’s 2008 Equity
Incentive Plan (the “Plan”) at an exercise price of $______ per share.

Under the Plan, the Company may grant either incentive stock options or
non-qualified stock options.  The options granted to you are intended to be
[incentive/non-qualified stock] options.

These options will become exercisable as follows:

Date First Exercisable
Number of Shares
                   

The exercise price for your options shall be payable in cash or as otherwise
permitted under the Plan.

Once options become exercisable, they will remain exercisable until they are
exercised or until they terminate.  Unless earlier terminated pursuant to the
terms of the Plan, all options granted hereby shall terminate on____, 20___ (the
"Scheduled Expiration Date").  For the avoidance of doubt, all options
(including the options that first become exercisable on March 16, 2015) shall be
exercisable through 5:00 p.m. on March 16, 2015.  While the specific terms of
the Plan will govern, generally:

·  
If your employment is terminated due to your death or Disability (as defined in
the Plan), all of your options will become immediately exercisable in full and
may be exercised at any time prior to the earlier of (a) one year after the date
of termination of employment and (b) the Scheduled Expiration Date;

·  
If your employment is terminated due to your Retirement (as defined in the
Plan), all of your options will become immediately exercisable in full and may
be exercised at any time prior to the Scheduled Expiration Date;

·  
If your employment is terminated due to any other reason, any options that you
had that were not exercisable as of the date of the termination of your
employment will expire.  You may exercise options that were exercisable as of
the date of the termination of your employment at any time prior to the earlier
of (a) 90 days after the date of termination of employment and (b) the Scheduled
Expiration Date.

 
 

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

 

[Name]
Page 2

Please note that if you exercise an incentive stock option more than three
months after the termination of your employment, it may no longer qualify as an
incentive stock option.

Subject to the Plan, this option shall become exercisable in full upon the
occurrence of a Change in Control (as defined in the Plan).

This option is subject to cancellation in the event that your employment is
terminated for Cause (as defined in the Plan) and under other circumstances
described in the Plan.

Anything in this letter or the Plan to the contrary notwithstanding, by
acceptance of this letter, you agree as follows:

(i) in the event that the Company determines that any acceleration of the
vesting of the options represented by this letter as a result of your Retirement
or as a result of a Change of Control would violate any applicable law, rule or
regulation, including without limitation, those applicable to entities that have
received, and have not repaid, financial assistance under the Troubled Asset
Relief Program established pursuant to the Emergency Economic Stabilization Act
of 2008 (collectively, “Applicable Laws”), such acceleration shall not be
effective unless and until permitted by such Applicable Laws; and

(ii) in the event that the Company determines that any amount received by you
upon the exercise of this option and/or the sale of the Common Stock received
upon exercise is based on materially inaccurate financial statements (including,
without limitation, statements of earnings, revenues or gains) or any other
materially inaccurate performance metric criteria, and that Applicable Law
requires that such amount be recovered  by the Company, you agree to repay to
the Company such amount as the Board of Directors of the Company (or an
appropriate committee thereof) determines in good faith is required by
Applicable Law to be repaid by you based on such inaccurate information (but in
no event more than one-hundred percent (100%) of the amount received by you upon
the exercise of the option and/or the sale of the Common Stock received upon
exercise, net of the amount of exercise price paid by you).

Further terms governing the options granted to you are set forth in the Plan,
which is incorporated herein by reference.  A copy of the Plan is available from
[the Human Resources Department].

If you wish to accept the grant of the options as provided above and in the
Plan, please so indicate by signing and returning the enclosed copy of this
letter, whereupon you and the Company shall be legally bound hereby under
Maryland law.

Very truly yours,

SEVERN BANCORP, INC.

By:  ___________________________

 
 
 
 

Accepted and Agreed:

_______________________

 
 

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