Exhibit 10.3

NON-INCENTIVE STOCK OPTION AGREEMENT

UNDER THE

FAIRMOUNT BANCORP, INC.

2010 STOCK OPTION PLAN

THIS AGREEMENT is entered into as of             , 2012, between FAIRMOUNT
BANCORP, INC. (the “Company”) and                      (“Optionee”) (the
“Agreement”), in accordance with the terms of the FAIRMOUNT BANCORP, INC. 2010
Stock Option Plan (the “Plan”). Capitalized terms shall have the same meaning as
set forth in the Plan, unless the context clearly indicates otherwise.

1. Grant of Option

1.1 The Company hereby grants to Optionee effective                      (the
“Date of Grant”), the option to purchase up to              shares of Common
Stock (the “Option”) at an exercise price of $         per share (the “Exercise
Price”). (1) The Option shall vest, become exercisable and expire as provided in
Section 2 below.

1.2 The Option is designated as a non-qualified stock option (a “Non-ISO”) and,
therefore, is not intended to be treated as an incentive stock option (an “ISO”)
under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Time of Exercise

2.1 Subject to the provisions of the Plan and this Agreement, Optionee shall be
entitled to exercise the Option as follows:

 

Years of Continuous Service After Date of Grant of Option

   Percentage of Total
Shares Of Common Stock
Subject to Option  Which
May be Exercised  

Upon grant

     0 %(2) 

After 1 year

     20 % 

After 2 years

     40 % 

After 3 years

     60 % 

After 4 years

     80 % 

After 5 years

     100 % 

 

(1) 

The exercise price must be at least 100% of the Fair Market Value (as defined in
the Plan).

(2) 

Option can be exercised to receive stock beginning one year from grant. Optionee
should consult his or her own tax advisor in determining individual tax
consequences.

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2.2 The Option shall expire and may not be exercised later than 10 years
following the Date of Grant.

2.3 Notwithstanding the foregoing, the Option shall become accelerated and
immediately exercisable in the event of Optionee’s termination of employment as
a result of death or Disability and in the event of a Change in Control, as
provided in the Plan.

2.4 The Option shall be exercised in the manner set forth in the Plan, using the
exercise form attached hereto as Exhibit A. The exercise price may be paid in
cash, check, Shares or through a cashless exercise program through a broker, all
on the terms provided in the Plan.

3. Conditions for Exercise of Option

3.1 During Optionee’s lifetime, the Option may be exercised only by the Optionee
or by Optionee’s guardian or legal representative. The Option must be exercised
while Optionee is employed by the Company, or in the event of a termination of
employment, for such period following termination and under certain
circumstances, as may be provided in the Plan. Notwithstanding the foregoing, no
Option may be exercised more than 10 years following the Date of Grant.

3.2 In the event Optionee is discharged from the employ of the Company or a
subsidiary company for cause under Section 4.3 of the Plan, Optionee shall
forfeit the right to exercise any portion of this Option, which shall be
immediately null and void.

4. Additional Conditions

Anything in this Agreement to the contrary notwithstanding, if at any time the
Company further determines, in its sole discretion, that the listing,
registration or qualification (or any updating of any such document) of the
shares of Common Stock issuable pursuant to the exercise of an Option is
necessary on any securities exchange or under any federal or state securities or
blue sky law, or that the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with the
issuance of shares of Common Stock pursuant thereto, or the removal of any
restrictions imposed on such shares, such shares of Common Stock shall not be
issued, in whole or in part, unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Company.

5. Taxes

The Company may make such provisions as it may deem appropriate for the
withholding of any federal, state and local taxes that it determines are
required to be withheld on the exercise of the Option. By signing this Option,
the Optionee agrees that he or she is solely responsible for the satisfaction of
any taxes that may arise (including taxes arising under Sections 409A or 4999 of
the Code) and that the Company shall not have any obligation whatsoever to pay
such taxes.

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6. Binding Effect

This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators and successors.

7. Inconsistent Provisions

The Option granted hereby is subject to the provisions of the Plan. If any
provision of this Agreement conflicts with a provision of the Plan, the Plan
provision shall control.

8. Adjustments to Option

Appropriate adjustments shall be made to the number and class of shares of
Common Stock subject to the Option and to the exercise price in accordance with
the Plan.

9. Termination of Option

The Committee, in its sole discretion, may terminate the Option. However, no
termination may adversely affect the rights of Optionee to the extent that the
Option is currently vested on the date of such termination.

10. Designation of Beneficiary

Optionee may expressly designate beneficiary to his or her interest (the
“Beneficiary”), if any, to this Option by completing and executing a designation
of beneficiary agreement substantially in the form attached to this Agreement as
Exhibit B (the “Designation of Beneficiary”) and delivering an executed copy of
the Designation of Beneficiary to the Company.

11. Notices

Any notice or communication required or permitted by any provision of this
Agreement to be given to Optionee shall be in writing and shall be delivered
personally or sent by certified mail, return receipt requested, addressed to
Optionee at the last address that the Company had for Optionee on its records.
Each party may, from time to time, by notice to the other party hereto, specify
a new address for delivery of notices relating to this Option. Any such notice
shall be deemed to be given as of the date such notice is personally delivered
or properly mailed.

12. Modifications

This Agreement may be modified or amended at any time, provided that Optionee
must consent in writing to any modification that adversely alters or impairs any
vested rights or obligations under this Option.

13. Headings

Section and other headings contained in this Option Agreement are for reference
purposes only and are not intended to describe, interpret, define or limit the
scope or intent of this Option or any provision hereof.

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14. Severability

Every provision of this Option and of the Plan is intended to be severable. If
any term hereof is illegal or invalid for any reason, such illegality or
invalidity shall not affect the validity or legality of the remaining terms of
this Award Agreement.

15. Governing Law

The laws of the State of Maryland shall govern the validity of this Award
Agreement, the construction of its terms, and the interpretation of the rights
and duties of the parties hereto.

16. Counterparts

This Option may be executed by the parties hereto in separate counterparts, each
of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.

[Signature Page Follows]

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IN WITNESS WHEREOF the parties hereto have caused this Option to be executed as
of the day and year first above written.

 

FAIRMOUNT BANCORP, INC. By:  

 

  A duly designated representative of the Company

 

  Optionee

 

Attest:  

 

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Exhibit A

FAIRMOUNT BANCORP, INC.

 

 

Form for Exercise of Stock Option for 2010 Stock Option Plan

 

 

Fairmount Bancorp, Inc.

8216 Philadelphia Road

Baltimore, Maryland 21237

Dear Sir or Madam:

The undersigned elects to exercise his/her Stock Option to purchase
            shares of Common Stock of Fairmount Bancorp, Inc. (the “Company”)
under and pursuant to a Stock Option Agreement dated as of                     
and the terms and conditions of the 2010 Stock Option Plan.

1. ¨ Delivered herewith is a check and/or shares of Common Stock, valued at the
closing sale price of the stock on the business day prior to the date of
exercise, as follows:

 

$       in cash or check  

 

    $       in the form of              shares of Common Stock, valued at
$             per share (subject to the discretion of the Board of Directors or
Compensation Committee)*  

 

    $    

Total

   

 

   

2. ¨ Delivered herewith are irrevocable instructions to a broker approved by the
Company to deliver promptly to the Company the amount of sale or loan proceeds
to pay the exercise price.

If method 1 is chosen, the name or names to be on the stock certificate or
certificates and the address and Social Security Number of such person(s) is as
follows:

 

Name:  

 

Address:  

 

Social Security Number  

 

 

    Very truly yours,

 

   

 

Date     Optionee

 

* Shares of Common Stock delivered to pay the purchase price must have been
purchased in open market transaction or issued by the Company pursuant to a plan
thereof more than six months prior to the exercise date of the Option.

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Exhibit B

FAIRMOUNT BANCORP, INC.

 

 

Designation of Beneficiary

 

 

In the event of my death or “Disability” within the meaning of the FAIRMOUNT
BANCORP, INC. 2010 Stock Incentive Plan (the “Plan”), I hereby designate the
following person to be my beneficiary for the Award(s) (within the meaning of
the Plan) identified below:

 

  Name of Beneficiary:  

 

  Address:  

 

   

 

   

 

  Social Security No.:  

 

This beneficiary designation of mine relates to any and all of my rights under
the following Award or Awards:

 

  ¨ the Award that I received pursuant to an Option dated                  ,
         between me and FAIRMOUNT BANCORP, INC. (the “Company”).

I understand that this beneficiary designation operates to entitle the
above-named beneficiary to succeed, in the event of my death, to any and all of
my rights under the Award(s) designated above, and shall be effective from the
date this form is delivered to the Company until such date as I revoke this
designation. A revocation shall occur only if I deliver to an executive officer
of the Company either (i) a written revocation of this designation that is
signed by me and notarized, or (ii) a designation of death beneficiary, in the
form set forth herein, that is executed and notarized on a later date.

 

Date:  

 

Your Signature:  

 

Your Name (printed):  

 

 

Sworn to before me this      day of             , 2012

 

Notary Public  

County of  

 

State of