Exhibit
10(c)


 


 


FREDERICK COUNTY BANK


 


 


EXECUTIVE AND DIRECTOR DEFERRED


 


 


COMPENSATION PLAN


 


 


 


Effective as of January 1,
2002


 


 





















 


FREDERICK
COUNTY BANK


 


EXECUTIVE
AND DIRECTOR DEFERRED COMPENSATION PLAN


 


Effective as of January 1,
2002


 


TABLE OF CONTENTS


 


	
  ARTICLE 1

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  ACCOUNT

  	
   

  
	
  1.2

  	
  BENEFICIARY

  	
   

  
	
  1.3

  	
  CODE

  	
   

  
	
  1.4

  	
  COMPENSATION

  	
   

  
	
  1.5

  	
  COMPENSATION
  DEFERRAL ACCOUNT

  	
   

  
	
  1.6

  	
  COMPENSATION DEFERRALS

  	
   

  
	
  1.7

  	
  DESIGNATION
  DATE

  	
   

  
	
  1.8

  	
  EFFECTIVE
  DATE

  	
   

  
	
  1.9

  	
  ELIGIBLE
  INDIVIDUAL

  	
   

  
	
  1.10

  	
  EMPLOYER

  	
   

  
	
  1.11

  	
  EMPLOYER
  CONTRIBUTION CREDIT ACCOUNT

  	
   

  
	
  1.12

  	
  EMPLOYER
  CONTRIBUTION CREDITS

  	
   

  
	
  1.13

  	
  ENTRY DATE

  	
   

  
	
  1.14

  	
  PARTICIPANT

  	
   

  
	
  1.15

  	
  PARTICIPANT
  ENROLLMENT AND ELECTION FORM

  	
   

  
	
  1.16

  	
  PLAN

  	
   

  
	
  1.17

  	
  PLAN YEAR

  	
   

  
	
  1.18

  	
  TRUST

  	
   

  
	
  1.19

  	
  TRUSTEE

  	
   

  
	
  1.20

  	
  VALUATION
  DATE

  	
   

  
	
  1.21

  	
  YEARS OF
  SERVICE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ELIGIBILITY AND
  PARTICIPATION

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  REQUIREMENTS

  	
   

  
	
  2.2

  	
  RE-EMPLOYMENT,
  ETC

  	
   

  
	
  2.3

  	
  CHANGE
  OF EMPLOYMENT CATEGORY

  	
   

  



 


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  ARTICLE 3

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CONTRIBUTIONS AND CREDITS

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  EMPLOYER
  CONTRIBUTION CREDITS

  	
   

  
	
  3.2

  	
  PARTICIPANT
  COMPENSATION DEFERRALS

  	
   

  
	
  3.3

  	
  CONTRIBUTIONS
  TO THE TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ALLOCATION
  OF FUNDS

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  ALLOCATION
  OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS

  	
   

  
	
  4.2

  	
  ACCOUNTING
  FOR DISTRIBUTIONS

  	
   

  
	
  4.3

  	
  SEPARATE
  ACCOUNTS

  	
   

  
	
  4.4

  	
  INTERIM
  VALUATIONS

  	
   

  
	
  4.5

  	
  DEEMED
  INVESTMENT DIRECTIONS OF PARTICIPANTS

  	
   

  
	
  4.6

  	
  EXPENSES

  	
   

  
	
  4.7

  	
  TAXES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENTITLEMENT TO BENEFITS

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  FIXED
  PAYMENT DATES; TERMINATION OF EMPLOYMENT

  	
   

  
	
  5.2

  	
  HARDSHIP
  DISTRIBUTIONS

  	
   

  
	
  5.3

  	
  APPLICATION
  TO TRUSTEE

  	
   

  
	
  5.4

  	
  RE-EMPLOYMENT
  OF RECIPIENT, ETC

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DISTRIBUTION OF BENEFITS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  AMOUNT

  	
   

  
	
  6.2

  	
  METHOD OF PAYMENT

  	
   

  
	
  6.3

  	
  DEATH BENEFITS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BENEFICIARIES;
  PARTICIPANT DATA

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  DESIGNATION
  OF BENEFICIARIES

  	
   

  
	
  7.2

  	
  INFORMATION
  TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES; INABILITY TO LOCATE
  PARTICIPANTS OR BENEFICIARIES

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADMINISTRATION

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  ADMINISTRATIVE
  AUTHORITY

  	
   

  
	
  8.2

  	
  UNIFORMITY
  OF DISCRETIONARY ACTS

  	
   

  
	
  8.3

  	
  LITIGATION

  	
   

  
	
  8.4

  	
  CLAIMS
  PROCEDURE

  	
   

  



 


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  ARTICLE 9

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMENDMENT

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  RIGHT TO AMEND

  	
   

  
	
  9.2

  	
  AMENDMENTS TO ENSURE
  PROPER CHARACTERIZATION OF PLAN

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  EMPLOYER’S
  RIGHT TO TERMINATE OR SUSPEND PLAN

  	
   

  
	
  10.2

  	
  AUTOMATIC
  TERMINATION OF PLAN

  	
   

  
	
  10.3

  	
  SUSPENSION
  OF DEFERRALS

  	
   

  
	
  10.4

  	
  ALLOCATION
  AND DISTRIBUTION

  	
   

  
	
  10.5

  	
  SUCCESSOR
  TO EMPLOYER

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  ESTABLISHMENT
  OF TRUST

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  LIMITATIONS
  ON LIABILITY OF EMPLOYER

  	
   

  
	
  12.2

  	
  CONSTRUCTION

  	
   

  
	
  12.3

  	
  SPENDTHRIFT
  PROVISION

  	
   

  



 


4





















 


FREDERICK
COUNTY BANK


 


EXECUTIVE
AND DIRECTOR DEFERRED COMPENSATION PLAN


 


Effective as of January 1,
2002


 


RECITALS


 


This Frederick County
Bank Executive and Director Deferred Compensation Plan (the “Plan”), is adopted
by Frederick County Bank (the “Employer”), effective as of January 1,
2002, for certain of its executive employees and Directors.


 


The purpose of the Plan
is to offer participants an opportunity to elect to defer the receipt of
compensation in order to provide deferred compensation benefits taxable
pursuant to section 451 of the Internal Revenue Code of 1986, as amended
(the “Code”), and to provide a deferred compensation vehicle to which the Employer
may credit certain amounts on behalf of employee-participants.  The Plan is intended to be a “top-hat” plan
under sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”).


 


Accordingly, the
following Plan is adopted.


 


ARTICLE 1


 


DEFINITIONS


 


 


1.1           ACCOUNT
means the balance credited to a Participant’s or Beneficiary’s
Plan account, including contribution credits and deemed income, gains and
losses credited thereto.  A Participant’s
or Beneficiary’s Account shall be determined as of the date of reference.


 


1.2           BENEFICIARY
means any person or person so designated in accordance with
the provisions of Article 7.


 


1.3           CODE
means the Internal Revenue Code of 1986 and the regulations thereunder, as amended
from time to time.


 


1.4           COMPENSATION
means the total current cash remuneration paid by the Employer to an
Eligible Individual with respect to his or her service for the Employer, plus,
for purposes of allocating Employer Contribution Credits in accordance with Section 3.1,
an employee-Participant’s Compensation Deferrals hereunder and those amounts
that he or she has elected to defer under Code sections 125 and 401(k).


 


1.5           COMPENSATION DEFERRAL ACCOUNT is defined in Section 3.2.


 


1.6           COMPENSATION
DEFERRALS is defined in Section 3.2.


 


1.7           DESIGNATION
DATE means the date or dates as of which a designation of deemed investment
directions by an individual pursuant to Section 4.5, or any change in a
prior designation of deemed investment directions by an individual pursuant to Section 4.5,
shall become effective.  The Designation
Dates in any Plan Year shall be designated by the Employer.


 


1.8           EFFECTIVE
DATE means the effective date of the Plan, which
shall be January 1, 2002.


 


1.9           ELIGIBLE
INDIVIDUAL means, for any Plan Year (or applicable
portion thereof), any member of the Employer’s Board of Directors and any
employee of the Employer who is determined by the Employer, or its designee, to
be a member of a select group of management or highly compensated employees of
the Employer and who is designated by the Employer, or its designee, to be an
Eligible Individual under the Plan.  By
each December 31, the Employer, or its designee, shall notify those
individuals, if any, who will be Eligible Individuals for the next Plan
Year.  If the Employer, or its designee,
determines that an individual first becomes an Eligible Individual 


 


5





















 


during a Plan Year, the
Employer, or its designee, shall notify such individual of its determination
and of the date during the Plan Year on which the individual shall first become
an Eligible Individual.


 


1.10         EMPLOYER
means Frederick County Bank, and its successors and assigns unless otherwise
herein provided, or any other corporation or business organization which, with
the consent of Frederick County Bank, or its successors or assigns, assumes the
Employer’s obligations hereunder, or any other corporation or business
organization which agrees, with the consent of Frederick County Bank, to become
a party to the Plan.


 


1.11         EMPLOYER
CONTRIBUTION CREDIT ACCOUNT is defined Section 3.1.


 


1.12         EMPLOYER
CONTRIBUTION CREDITS is defined in Section 3.1.


 


1.13         ENTRY
DATE with respect to an individual means the first
day of the pay period following the date on which the individual first becomes
an Eligible Individual.


 


1.14         PARTICIPANT
means any person so designated in accordance with the provisions of Article 2,
including, where appropriate according to the context of the Plan, any former
employee or former member of the Board of Directors who is or may become (or
whose Beneficiaries may become) eligible to receive a benefit under the Plan.


 


1.15         PARTICIPANT
ENROLLMENT AND ELECTION FORM means the form or forms on which a Participant
elects to defer Compensation hereunder and/or on which the Participant makes
certain other designations as required thereon.


 


1.16         PLAN
means this Frederick County Bank Executive and Director Deferred Compensation
Plan, as amended from time to time.


 


1.17         PLAN
YEAR means the twelve (12) month period ending on
the December 31 of each year during which the Plan is in effect.


 


1.18         TRUST
means the Trust established pursuant to Article 11.


 


1.19         TRUSTEE
means the trustee of the Trust established pursuant to Article 11.


 


1.20         VALUATION
DATE means the last day of each Plan Year and any
other date that the Employer, in its sole discretion, designates as a Valuation
Date.


 


1.21         YEAR
OF SERVICE means each Plan Year during which an
employee-Participant has performed at least one thousand (1,000) hours of
service for the Employer (as reasonably determined by the Employer).


 


ARTICLE 2


 


ELIGIBILITY
AND PARTICIPATION


 


2.1           REQUIREMENTS.  Every Eligible Individual on the Effective
Date shall be eligible to become or continue as a Participant on the Effective
Date.  Every other Eligible Individual
shall be eligible to become a Participant on the first Entry Date occurring on
or after the date on which he or she becomes an Eligible Individual.  No individual shall become a Participant, however,
if he or she is not an Eligible Individual on the date his or her participation
is to begin.


 


Participation in the
Participant Compensation Deferral feature of the Plan is available to all
Eligible Individuals and is voluntary. 
In order to participate in the Participant Compensation Deferral feature
of the Plan, an otherwise Eligible Individual must make written application in
such manner as may be required by Section 3.2 and by the Employer and must
agree to make Compensation Deferrals as provided in Article 3.


 


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Participation in the
Employer Contribution Credit feature of the Plan is available solely to
Eligible Individuals who are employees of the Employer.  If Employer Contribution Credits are made in
accordance with Section 3.1, participation in the Employer Contribution
Credit feature of the Plan is automatic for such Eligible Individuals.


 


2.2           RE-EMPLOYMENT,
ETC.  If a Participant whose
employment or Director status with the Employer is terminated is subsequently
re-employed by or subsequently becomes a Director of the Employer, he or she
shall become a Participant in accordance with the provisions of Section 2.1.


 


2.3           CHANGE
OF EMPLOYMENT CATEGORY.  During any period in which a Participant
remains in the employ of the Employer, but ceases to be an Eligible Individual,
he or she shall not be eligible to make Compensation Deferrals hereunder.


 


ARTICLE 3


 


CONTRIBUTIONS
AND CREDITS


 


3.1           EMPLOYER
CONTRIBUTION CREDITS.  There shall be
established and maintained a separate Employer Contribution Credit Account in
the name of each Participant who is an employee of the Employer.  Such Account shall be credited or debited, as
applicable, with (a) amounts equal to the Employer’s Contribution Credits
credited to that Account, if any; (b) any deemed earnings and losses (to the
extent realized, based upon deemed fair market value of the Account’s deemed
assets) allocated to that Account; and (c) expenses and/or taxes charged to
that Account.


 


The Employer’s Contribution
Credits credited under the Plan for any particular Plan Year shall be an amount
(if any) determined by the Employer, in its discretion.  If Employer Contribution Credits are made for
any Plan Year, each employee-Participant shall be entitled to an allocation of
the aggregate Employer Contribution Credits for such Plan Year, provided he or
she (i) has performed a Year of Service with respect to that Plan Year and is
employed with the Employer on the last day of that Plan Year, or (ii) dies,
becomes totally and permanently disabled (as reasonably determined by the
Employer or attains age sixty five (65) during that Plan Year.


The Employer’s
Contribution Credits credited under the Plan for any particular Plan Year (if
any) shall be allocated to the Employer Contribution Credit Account of each
employee-Participant who is entitled to an allocation in the ratio that such
employee-Participant’s Compensation for that Plan Year bears to all
employee-Participants’ Compensation for that Plan Year.


 


An employee-Participant
shall be vested in amounts (if any) credited to his or her Employer
Contribution Credit Account pursuant to the following vesting schedule:


 


	
  Years of Service

  	
   

  	
  Vested
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less than 5

  	
   

  	
  0

  	
  %

  
	
  5 or more

  	
   

  	
  100

  	
  %

  



 


Notwithstanding the foregoing,
an employee- Participant will become immediately vested in amounts credited to
his or her Employer Contribution Account upon his or her death, his or her
total and permanent disability (as reasonably determined by the Employer), his
or her attainment of age sixty-five (65), his or her involuntary termination by
the Employer (whether express or constructive) other than for cause (as
reasonably determined by the Employer) or a change in control of the
Employer.  For this purpose, a change in
control shall occur upon any of the following:


 


(i)                                     the
acquisition by any person, other than the Employer or any employee benefit
plan(s) of the Employer, of beneficial ownership of twenty percent (20%) or
more of the combined voting power of the Employer’s then outstanding voting
securities;


 


7





















 


(ii)                                  the
first purchase under a tender offer or exchange offer, other than an offer by
the Employer or any employee benefit plan(s) of the Employer, pursuant to which
shares of common stock of the Employer have been purchased;


 


(iii)                               during
any period of two (2) consecutive years, individuals who, at the beginning of
such period constitute the Board of Directors of the Employer cease for any
reason to constitute at least a majority thereof, unless the election or the
nomination for the election by stockholders of the Employer of each new
Director was approved by a vote of at least two-thirds (2/3rds) of the
Directors then still in office who were Directors at the beginning of the
period; or


 


(iv)                              approval
by stockholders of the Employer of a merger, consolidation, liquidation or
dissolution of the Employer, or the sale of all or substantially all of the
assets of the Employer.


 


3.2           PARTICIPANT
COMPENSATION DEFERRALS.  In accordance
with rules established by the Employer, a Participant may elect to defer
Compensation which is not yet payable and which would otherwise be paid to the
Participant.  Amounts so deferred will be
considered a Participant’s “Compensation Deferrals”.  Ordinarily, a Participant shall make such an
election with respect to a coming twelve (12) month Plan Year during the period
beginning on the December 1 and ending on the December 31 of the
prior Plan Year, or during such other period established by the Employer.


 


Compensation Deferrals
shall be made through regular payroll or retainer/meeting fee deductions and/or
through an election by the Participant to defer a bonus payment not yet payable
to him or her at the time of the election. 
The Participant may reduce his or her regular payroll or
retainer/meeting fee deduction Compensation Deferral amount for a particular
year as of, and by written notice delivered to the Employer prior to, the
beginning of any regular payroll period, with such reduction being first effective
for Compensation to be earned in that payroll period.  In the case of bonus payment deferrals, the
Participant may reduce his or her bonus payment deferral percentage for a
particular year by giving notice to the Employer of the reduced bonus payment
Compensation Deferral amount prior to the date the applicable bonus is first
due to be paid.


 


Once made, a Compensation
Deferral regular payroll or retainer/meeting fee deduction election shall
continue in force indefinitely, until reduced by the Participant as aforesaid
or until changed by the Participant for a coming year on a subsequent
Participant Enrollment and Election Form provided by the Employer.  A bonus payment reduction election, or a
reduction thereof pursuant to the foregoing, shall continue in force only for
the Plan Year for which the election is first effective.


 


Compensation Deferrals
shall be deducted by the Employer from the pay of a deferring Participant.  There shall be established and maintained by
the Employer a separate Compensation Deferral Account in the name of each
Participant to which shall be credited or debited: (a) amounts equal to the
Participant’s Compensation Deferrals; (b) amounts equal to any deemed earnings
or losses (to the extent realized, based upon deemed fair market value of the
Account’s deemed assets) attributable or allocable thereto; and (c) expenses
and/or taxes charged to that Account.


 


A Participant shall at
all times be 100% vested in amounts credited to his or her Participant
Compensation Deferral Account.


 


3.3           CONTRIBUTIONS
TO THE TRUST.  Amounts shall be
contributed by the Employer to the Trust equal to the amounts required to be
credited to the Participant’s Account under Sections 3.1 and 3.2.  The Employer shall make a good faith effort
to contribute these amounts to the Trust as soon as is practicable after such
amounts are determined.  Employer
contributions to the Trust shall be made in cash.


 


8





















 


ARTICLE 4


 


ALLOCATION
OF FUNDS


 


4.1           ALLOCATION
OF DEEMED EARNINGS OR LOSSES ON ACCOUNTS.  Subject to Section 4.5, each Participant
shall have the right to direct the Employer as to how amounts in his or her
Plan Account shall be deemed to be invested. 
Subject to such limitations as may from time to time be required by law,
imposed by the Employer or the Trustee or contained elsewhere in the Plan, and
subject to such operating rules and procedures as may be imposed from time to
time by the Employer, prior to the date on which a direction will become
effective, the Participant shall have the right to direct the Employer as to
how amounts in his or her Account shall be deemed to be invested.


 


The Employer shall direct
the Trustee to invest the account maintained in the Trust on behalf of the
Participant pursuant to the deemed investment directions the Employer properly
has received from the Participant. The value of the Participant’s Account shall
be equal to the value of the account maintained under the Trust on behalf of
the Participant. As of each valuation date of the Trust, the Participant’s
Account will be credited or debited to reflect the Participant’s deemed
investments of the Trust.


 


The Participant’s Plan
Account will be credited or debited with the increase or decrease in the
realizable net asset value or credited interest, as applicable, of the
designated deemed investments, as follows. 
As of each Valuation Date, an amount equal to the net increase or
decrease in realizable net asset value or credited interest, as applicable (as
determined by the Employer or the Trustee, as applicable), of each deemed
investment option within the Account since the preceding Valuation Date shall
be allocated among all Participants’ Accounts deemed to be invested in that
investment option in accordance with the ratio which the portion of the Account
of each Participant which is deemed to be invested within that investment
option, determined as provided herein, bears to the aggregate of all amounts
deemed to be invested within that investment option.


 


4.2           ACCOUNTING
FOR DISTRIBUTIONS.  As of the date of
any distribution hereunder, the distribution made hereunder to the Participant
or his or her Beneficiary or Beneficiaries shall be charged to such Participant’s
Account.  Such amounts shall be charged
on a pro rata basis against the investments in which the Participant’s Account
is deemed to be invested.


 


4.3           SEPARATE
ACCOUNTS.  A
separate account under the Plan shall be established and maintained hereunder
to reflect the Account for each Participant with sub-accounts to show separately
the applicable deemed investments of the Account.


 


4.4           INTERIM
VALUATIONS. 
If it is determined by the Employer that the value of a Participant’s
Account as of any date on which distributions are to be made differs materially
from the value of the Participant’s Account on the prior Valuation Date upon
which the distribution is to be based, the Employer, in its discretion, shall
have the right to designate any date in the interim as a Valuation Date for the
purpose of revaluing the Participant’s Account so that the Account will, prior
to the distribution, reflect its share of such material difference in value.


 


4.5           DEEMED
INVESTMENT DIRECTIONS OF PARTICIPANTS.  Subject to such limitations as may from time
to time be required by law, imposed by the Employer or the Trustee or contained
elsewhere in the Plan, and subject to such operating rules and procedures as
may be imposed from time to time by the Employer, prior to and effective for
each Designation Date, each Participant may communicate to the Employer a
direction as to how his or her Plan Accounts should be deemed to be invested
among such categories of deemed investments as may be made available by the
Employer hereunder.  Such direction shall
designate the percentage (in any whole percent multiples) of the Participant’s
Plan Account which is requested to be deemed to be invested in such categories
of deemed investments.


 


An election concerning
deemed investment choices shall continue indefinitely until changed by the
Participant in a manner specified by the Employer.  If the Employer receives an initial or
revised deemed investment direction which it deems to be incomplete, unclear or
improper, the Participant’s investment direction then in effect shall remain in
effect (or, in the case of a deficiency in an initial deemed investment
direction, the Participant shall be deemed to have filed no deemed investment
direction) until the next Designation Date, unless the Employer provides for,
and permits the application of, corrective action prior thereto.


 


9





















 


If the Employer possesses
(or is deemed to possess as provided above) at any time directions as to the
deemed investment of less than all of a Participant’s Account, the Participant
shall be deemed to have directed that the undesignated portion of the Account
be deemed to be invested in a money market, fixed income, stable value or
similar fund made available under the Plan as determined by the Employer in its
discretion.


 


Each Participant
hereunder, as a condition to his or her participation hereunder, agrees to
indemnify and hold harmless the Employer and its agents and representatives
from any losses or damages of any kind relating to the deemed investment of the
Participant’s Account hereunder.


 


Each reference in this Section to
a Participant shall be deemed to include, where applicable, a reference to a
Beneficiary.


 


4.6           EXPENSES.  Expenses, including Trustee fees, allocable
to the administration or operation of an Account maintained under the Plan shall
be paid by the Employer unless, in the discretion of the Employer, the Employer
elects to charge such expenses, or any portion thereof, against the appropriate
Participant’s Account or Participants’ Accounts.  If an expense, or any portion thereof, is
charged against a Participant’s Account, at the discretion of the Employer,
such expense, or portion thereof, either (i) will reduce the contribution to
the Trust under Section 3.3 next due to be made by the Employer in respect
of the Account, or (ii) will be paid from the Trust to the Employer out of
assets of the Trust corresponding to the Participant’s Account.


 


4.7           TAXES.  Any taxes generated by earnings in an
Account, as determined by the Employer, shall be paid by the Employer unless,
in the discretion of the Employer, the Employer elects to charge such taxes
against the appropriate Participant’s Account or Participants’ Accounts.  If a tax amount is charged against a
Participant’s Account, at the discretion of the Employer, such expense either
(i) will reduce the contribution to the Trust under Section 3.3 next due
to be made by the Employer in respect of the Account, or (ii) will be paid from
the Trust to the Employer out of assets of the Trust corresponding to the
Participant’s Account.


 


ARTICLE 5


 


ENTITLEMENT
TO BENEFITS


 


5.1           FIXED
PAYMENT DATES; TERMINATION OF EMPLOYMENT.  On his or her Participant Enrollment and
Election Form, a Participant may select a fixed payment date for the payment or
commencement of payment of his or her vested Account (or elect to treat his or
her Account as two (2) or more sub-accounts and select a fixed payment date for
each sub-account), which will be valued and payable according to the provisions
of Article 6.  Each such payment
date may be extended to a later date so long as the election to so extend is
made by the Participant at least six (6) months prior to the then applicable
fixed date.  Such payment dates may not
be accelerated.


 


Alternatively, on his or
her Participant Enrollment and Election Form, a Participant may select payment
or commencement of payment of his or her Account (or a sub-account thereof) at
his or her termination of employment or Director status with the Employer.  A Participant who selects payment or commencement
of payment of his or her Account (or portions thereof) on a fixed date or dates
shall receive payment or commence to receive payment of his or her Account at
the earlier of such fixed payment date or dates (as extended, if applicable) or
his or her termination of employment or Director status with the Employer.


 


Any fixed payment date
elected by a Participant as provided above must be no earlier than the January 1
of the third calendar year after the calendar year in which the election is
made.  If a Participant does not select a
payment date or dates as aforesaid, his or her vested account shall be
distributed or commence to be distributed, as provided in Article 6, at
the termination of his or her employment of Director status with the Employer.


 


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5.2           HARDSHIP
DISTRIBUTIONS. 
In the event of financial hardship of the Participant, as hereinafter
defined, the Participant may apply to the Employer for the distribution of all
or any part of his or her vested Account. The Employer shall consider the
circumstances of each such case, and the best interests of the Participant and
his or her family, and shall have the right, in its sole discretion, if
applicable, to allow such distribution, or, if applicable, to direct a
distribution of part of the amount requested, or to refuse to allow any
distribution.  Upon a finding of
financial hardship, the Employer shall make the appropriate distribution to the
Participant from amounts held by the Employer in respect of the Participant’s
vested Account. In no event shall the aggregate amount of the distribution
exceed either the full value of the Participant’s vested Account or the amount
determined by the Employer to be necessary to alleviate the Participant’s
financial hardship (which financial hardship may be considered to include any
taxes due because of the distribution occurring because of this Section), and
which is not reasonably available from other resources of the Participant. For
purposes of this Section, the value of the Participant’s vested Account shall
be determined as of the date of the distribution.


 


“Financial hardship”
means (a) a severe financial hardship to the Participant resulting from a
sudden and unexpected illness or accident of the Participant or of a dependent
(as defined in Code section 152(a)) of the Participant, (b) loss of the
Participant’s property due to casualty, or (c) other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant, each as determined to exist by the Employer.  A distribution may be made under this Section only
with the consent of the Employer.


 


5.3           APPLICATION
TO TRUSTEE. 
On the date or dates on which a Participant or Beneficiary is entitled
to payment under Section 5.1, the Participant or Beneficiary need not make
application for payment to the Employer, but instead may make application for
payment directly to the Trustee who shall pay the Participant or Beneficiary
the appropriate amount directly from the Trust without the consent of the Employer.  The Trustee shall report the amount of each
such payment, and any withholding thereon, to the Employer.


 


5.4           RE-EMPLOYMENT
OF RECIPIENT, ETC..  If a Participant
receiving installment distributions pursuant to Section 6.2 is re-employed
by the Employer (or becomes a member of the Employer’s Board of Directors), the
remaining distributions due to the Participant shall be suspended until such
time as the Participant (or his or her Beneficiary) once again becomes eligible
for benefits under Section 5.1 or 5.2, at which time such distribution
shall commence, subject to the limitations and conditions contained in this
Plan.


 


ARTICLE 6


 


DISTRIBUTION
OF BENEFITS


 


6.1           AMOUNT.  A Participant (or his or her Beneficiary)
shall become entitled to receive, on or about the date or dates selected by the
Participant on his or her Participant Enrollment and Election Form or, if none,
on or about the date of the Participant’s termination of employment or Director
status with the Employer (or earlier as provided in Article 5), a
distribution in an aggregate amount equal to the Participant’s vested
Account.  Any payment due hereunder from
the Trust which is not paid by the Trust for any reason will be paid by the
Employer from its general assets.


 


6.2           METHOD
OF PAYMENT.


 


(a)           Cash Or In-Kind Payments.  Payments under the Plan shall be made in cash
or in-kind, as elected by the Participant, as permitted by the Employer and the
Trustee in their sole and absolute discretion and subject to applicable
restrictions on transfer as may be applicable legally or contractually.


 


(b)           Timing and Manner of Payment.  In the case of distributions to a Participant
or his or her Beneficiary by virtue of an entitlement pursuant to Sections 5.1,
an aggregate amount equal to the Participant’s vested Account will be paid by
the Trust or the Employer, as provided in Section 6.1, in a lump sum or in
five (5) or ten (10) substantially equal annual installments (adjusted for
gains and losses), as selected by the Participant as provided in Article 5.


 


If a Participant fails to
designate properly the manner of payment of the Participant’s benefit under the
Plan, such payment will be in a lump sum.


 


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If the whole or any part
of a payment hereunder is to be in installments, the total to be so paid shall
continue to be deemed to be invested pursuant to Sections 4.1 and 4.5 under
such procedures as the Employer may establish, in which case any deemed income,
gain, loss or expense or tax allocable thereto (as determined by the Trustee,
in its discretion) shall be reflected in the installment payments, in such
equitable manner as the Trustee shall determine.


 


6.3           DEATH
BENEFITS. 
If a Participant dies before terminating his or her employment or
Director status with the Employer and before the commencement of payments to
the Participant hereunder, the entire value of the Participant’s Account shall
be paid, at the time(s) selected by the Participant under Article 5 and in
the manner provided in Section 6.2, to the person or persons designated in
accordance with Section 7.1.


 


Upon the death of a
Participant after payments hereunder have begun but before he or she has
received all payments to which he or she is entitled under the Plan, the
remaining benefit payments shall be paid to the person or persons designated in
accordance with Section 7.1, in the manner in which such benefits were
payable to the Participant.


 


ARTICLE 7


 


BENEFICIARIES;
PARTICIPANT DATA


 


7.1           DESIGNATION
OF BENEFICIARIES. 
Each Participant from time to time may designate any person or persons
(who may be named contingently or successively) to receive such benefits as may
be payable under the Plan upon or after the Participant’s death, and such
designation may be changed from time to time by the Participant by filing a new
designation.  Each designation will
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Employer, and will be effective only when filed in writing
with the Employer during the Participant’s lifetime.


 


In the absence of a valid
Beneficiary designation, or if, at the time any benefit payment is due to a
Beneficiary, there is no living Beneficiary validly named by the Participant,
the Employer shall pay any such benefit payment to the Participant’s spouse, if
then living, but otherwise to the Participant’s then living descendants, if
any, per stirpes, but, if none, to the Participant’s estate.  In determining the existence or identity of
anyone entitled to a benefit payment, the Employer may rely conclusively upon
information supplied by the Participant’s personal representative, executor or
administrator.


 


If a question arises as
to the existence or identity of anyone entitled to receive a benefit payment as
aforesaid, or if a dispute arises with respect to any such payment, then,
notwithstanding the foregoing, the Employer, in its sole discretion, may
distribute such payment to the Participant’s estate without liability for any
tax or other consequences which might flow therefrom, or may take such other
action as the Employer deems to be appropriate.


 


7.2           INFORMATION
TO BE FURNISHED BY PARTICIPANTS AND BENEFICIARIES;
INABILITY TO LOCATE PARTICIPANTS OR BENEFICIARIES.  Any communication, statement or notice
addressed to a Participant or to a Beneficiary at his or her last post office
address as shown on the Employer’s records shall be binding on the Participant
or Beneficiary for all purposes of the Plan. 
The Employer shall not be obliged to search for any Participant or
Beneficiary beyond the sending of a registered letter to such last known
address.  If the Employer notifies any
Participant or Beneficiary that he or she is entitled to an amount under the
Plan and the Participant or Beneficiary fails to claim such amount or make his
or her location known to the Employer within three (3) years thereafter, then,
except as otherwise required by law, if the location of one or more of the next
of kin of the Participant is known to the Employer, the Employer may direct
distribution of such amount to any one or more or all of such next of kin, and
in such proportions as the Employer determines. 
If the location of none of the foregoing persons can be determined, the
Employer shall have the right to direct that the amount payable shall be deemed
to be a forfeiture, except that the dollar amount of the forfeiture, unadjusted
for deemed gains or losses in the interim, shall be paid by the Employer if a
claim for the benefit subsequently is made by the Participant or the
Beneficiary to whom it was payable.  If a
benefit payable to an unlocated Participant or Beneficiary is subject to
escheat pursuant to applicable state law, the Employer shall not be liable to
any person for any payment made in accordance with such law.


 


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ARTICLE 8


 


ADMINISTRATION


 


8.1           ADMINISTRATIVE
AUTHORITY. 
Except as otherwise specifically provided herein, the Employer, acting
through its Board of Directors or the designee or designees thereof, shall have
the sole responsibility for and the sole control of the operation and
administration of the Plan, and shall have the power and authority to take all
action and to make all decisions and interpretations which may be necessary or
appropriate in order to administer and operate the Plan, including, without
limiting the generality of the foregoing, the power, duty and responsibility
to:


 


(a)           Resolve and determine all disputes or
questions arising under the Plan, and to remedy any ambiguities,
inconsistencies or omissions in the Plan.


 


(b)           Adopt such rules of procedure and
regulations as in its opinion may be necessary for the proper and efficient
administration of the Plan and as are consistent with the Plan.


 


(c)           Implement the Plan in accordance with
its terms and the rules and regulations adopted as above.


 


(d)           Make determinations with respect to
the eligibility of any Eligible Individual as a Participant and make
determinations concerning the crediting of Plan Accounts.


 


(e)           Appoint any persons or firms, or
otherwise act to secure specialized advice or assistance, as it deems necessary
or desirable in connection with the administration and operation of the Plan,
and the Employer shall be entitled to rely conclusively upon, and shall be
fully protected in any action or omission taken by it in good faith reliance
upon, the advice or opinion of such firms or persons.  The Employer shall have the power and
authority to delegate from time to time by written instrument all or any part
of its duties, powers or responsibilities under the Plan, both ministerial and
discretionary, as it deems appropriate, to any person or committee, and in the
same manner to revoke any such delegation of duties, powers or
responsibilities.  Any action of such
person or committee in the exercise of such delegated duties, powers or responsibilities
shall have the same force and effect for all purposes hereunder as if such
action had been taken by the Employer. 
Further, the Employer may authorize one or more persons to execute any
certificate or document on behalf of the Employer, in which event any person
notified by the Employer of such authorization shall be entitled to accept and
conclusively rely upon any such certificate or document executed by such person
as representing action by the Employer until such notified person shall have
been notified of the revocation of such authority.


 


8.2           UNIFORMITY
OF DISCRETIONARY ACTS.  Whenever in the administration or operation
of the Plan discretionary actions by the Employer are required or permitted,
such actions shall be consistently and uniformly applied to all persons
similarly situated, and no such action shall be taken which shall discriminate
in favor of any particular person or group of persons.


 


8.3           LITIGATION.  Except as may be otherwise required by law,
in any action or judicial proceeding affecting the Plan, no Participant or
Beneficiary shall be entitled to any notice or service of process, and any
final judgment entered in such action shall be binding on all persons
interested in, or claiming under, the Plan.


 


8.4           CLAIMS
PROCEDURE. 
Any person claiming a benefit under the Plan (a “Claimant”) shall
present the claim, in writing, to the Employer or the Trustee, and the Employer
or the Trustee shall respond in writing. 
If the claim is denied, the written notice of denial shall state, in a
manner calculated to be understood by the Claimant:


 


(a)           The specific reason or reasons for
the denial, with specific references to the Plan provisions on which the denial
is based;


 


(b)           A description of any additional
material or information necessary for the Claimant to perfect his or her claim
and an explanation of why such material or information is necessary; and


 


(c)           An explanation of the Plan’s claims
review procedure.


 


The written notice
denying or granting the Claimant’s claim shall be provided to the Claimant
within ninety (90) days after the Employer’s or Trustee’s receipt of the claim,
unless special circumstances require an extension of time for processing the 


 


13





















 


claim.  If such an extension is required, written
notice of the extension shall be furnished by the Employer or Trustee to the
Claimant within the initial ninety (90) day period and in no event shall such
an extension exceed a period of ninety (90) days from the end of the initial ninety
(90) day period.  Any extension notice
shall indicate the special circumstances requiring the extension and the date
on which the Employer or Trustee expects to render a decision on the claim.  Any claim not granted or denied within the
period noted above shall be deemed to have been denied.


 


Any Claimant whose claim
is denied, or deemed to have been denied under the preceding sentence (or such
Claimant’s authorized representative), may, within sixty (60) days after the
Claimant’s receipt of notice of the denial, or after the date of the deemed
denial, request a review of the denial by notice given, in writing, to the
Employer or Trustee.  Upon such a request
for review, the claim shall be reviewed by the Employer or Trustee (or its
designated representative) which may, but shall not be required to, grant the
Claimant a hearing.  In connection with
the review, the Claimant may have representation, may examine pertinent
documents, and may submit issues and comments in writing.


 


The decision on review
normally shall be made within sixty (60) days of the Employer’s receipt of the
request for review.  If an extension of
time is required due to special circumstances, the Claimant shall be notified,
in writing, by the Employer or Trustee, and the time limit for the decision on
review shall be extended to one hundred twenty (120) days.  The decision on review shall be in writing
and shall state, in a manner calculated to be understood by the Claimant, the
specific reasons for the decision and shall include references to the relevant
Plan provisions on which the decision is based. 
The written decision on review shall be given to the Claimant within the
sixty (60) day (or, if applicable, the one hundred twenty (120) day) time limit
discussed above.  If the decision on
review is not communicated to the Claimant within the sixty (60) day (or, if
applicable, the one hundred twenty (120) day) period discussed above, the claim
shall be deemed to have been denied upon review.  All decisions on review shall be final and binding
with respect to all concerned parties.


 


ARTICLE 9


 


AMENDMENT


 


9.1           RIGHT
TO AMEND. 
The Employer, by written instrument executed by a duly authorized
representative of the Employer, shall have the right to amend the Plan, at any
time and with respect to any provisions hereof, and all parties hereto or
claiming any interest hereunder shall be bound by such amendment; provided,
however, that no such amendment shall deprive a Participant or a Beneficiary of
a right accrued hereunder prior to the date of the amendment.


 


9.2           AMENDMENTS
TO ENSURE PROPER CHARACTERIZATION OF PLAN. 
Notwithstanding the provisions of Section 9.1, the Plan may be
amended by the Employer at any time, retroactively if required in the opinion
of the Employer, in order to ensure that the Plan is characterized as “top-hat”
plan as described under ERISA sections 201(2), 301(a)(3), and 401(a)(1), and to
conform the Plan to the provisions and requirements of any applicable law
(including ERISA and the Code).  No such
amendment shall be considered prejudicial to any interest of a Participant or a
Beneficiary hereunder.


 


ARTICLE 10


 


TERMINATION


 


10.1         EMPLOYER’S
RIGHT TO TERMINATE OR SUSPEND PLAN.  The Employer reserves the right to terminate
the Plan and/or its obligation to make further credits to Plan Accounts.  The Employer also reserves the right to
suspend the operation of the Plan for a fixed or indeterminate period of time.


 


10.2         AUTOMATIC
TERMINATION OF PLAN.  The Plan automatically shall terminate upon
the dissolution of the Employer, or upon its merger into or consolidation with
any other corporation or business organization if there is a failure by the
surviving corporation or business organization to adopt specifically and agree
to continue the Plan.


 


10.3         SUSPENSION
OF DEFERRALS.  In the event of a suspension of the Plan, the
Employer shall continue all aspects of the Plan, other than Compensation
Deferrals and Employer Contribution Credits, during the period of the
suspension, in which event payments hereunder will continue to be made during
the period of the suspension in accordance with Articles 5 and 6.


 


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10.4         ALLOCATION
AND DISTRIBUTION.  This Section shall
become operative on a complete termination of the Plan.  The provisions of this Section also
shall become operative in the event of a partial termination of the Plan, as
determined by the Employer, but only with respect to that portion of the Plan
attributable to the Participants to whom the partial termination is applicable.  Upon the effective date of any such event,
notwithstanding any other provisions of the Plan, no persons who were not
theretofore Participants shall be eligible to become Participants, the value of
the interest of all Participants and Beneficiaries shall be determined and,
after deduction of estimated expenses in liquidating and, if applicable, paying
Plan benefits, paid to them as soon as is practicable after such termination.


 


10.5         SUCCESSOR
TO EMPLOYER. 
Any corporation or other business organization which is a successor to
the Employer by reason of a consolidation, merger or purchase of substantially
all of the assets of the Employer shall have the right to become a party to the
Plan by adopting the same by resolution of the entity’s board of directors or
other appropriate governing body.  If,
within ninety (90) days from the effective date of such consolidation, merger
or sale of assets, such new entity does not become a party hereto, as above
provided, the Plan automatically shall be terminated, and the provisions of Section 10.4
shall become operative.


 


ARTICLE 11


 


THE
TRUST


 


11.1         ESTABLISHMENT
OF TRUST. 
The Employer shall establish a Trust with the Trustee pursuant to such
terms and conditions as are set forth in the Trust agreement to be entered into
between the Employer and the Trustee. 
The Trust is be intended to be treated as a “grantor” trust under the
Code and the establishment of the Trust is not be intended to cause the
Participant to realize current income on amounts contributed thereto, and the
Trust shall be so interpreted.


 


ARTICLE 12


 


MISCELLANEOUS


 


12.1         LIMITATIONS
ON LIABILITY OF EMPLOYER.  Neither the establishment of the Plan nor any
modification thereof, nor the creation of any account under the Plan, nor the
payment of any benefits under the Plan shall be construed as giving to any
Participant or other person any legal or equitable right against the Employer,
or any officer or employer thereof except as provided by law or by any Plan
provision.  The Employer does not in any
way guarantee any Participant’s Account from loss or depreciation, whether
caused by poor investment performance of a deemed investment or the inability
to realize upon an investment due to an insolvency affecting an investment
vehicle or any other reason.  In no event
shall the Employer, or any successor, employee, officer, director or
stockholder of the Employer, be liable to any person on account of any claim
arising by reason of the provisions of the Plan or of any instrument or
instruments implementing its provisions, or for the failure of any Participant,
Beneficiary or other person to be entitled to any particular tax consequences
with respect to the Plan, or any credit or distribution hereunder.


 


12.2         CONSTRUCTION.  If any provision of the Plan is held to be illegal
or void, such illegality or invalidity shall not affect the remaining
provisions of the Plan, but shall be fully severable, and the Plan shall be
construed and enforced as if said illegal or invalid provision had never been
inserted herein.  For all purposes of the
Plan, where the context admits, the singular shall include the plural, and the
plural shall include the singular. 
Headings of Articles and Sections herein are inserted only for
convenience of reference and are not to be considered in the construction of
the Plan.  The laws of the State of
Maryland shall govern, control and determine all questions of law arising with
respect to the Plan and the interpretation and validity of its respective
provisions, except where those laws are preempted by the laws of the United
States.  Participation under the Plan
will not give any Participant the right to be retained in the service of the
Employer nor any right or claim to any benefit under the Plan unless such right
or claim has specifically accrued hereunder.


 


The Plan is intended to
be and at all times shall be interpreted and administered so as to qualify as a
top-hat plan (as aforesaid), and no provision of the Plan shall be interpreted
so as to give any individual any right in any assets of the Employer which
right is greater than the rights of a general unsecured creditor of the
Employer.


 


12.3         SPENDTHRIFT
PROVISION. 
No amount payable to a Participant or a Beneficiary under the Plan will,
except as otherwise specifically provided by law, be subject in any manner to
anticipation, alienation, attachment, garnishment, sale, transfer, assignment
(either at law or in equity), levy, execution, pledge, encumbrance, charge or
any other legal or equitable process, and any attempt to do so will be void; nor
will any benefit be in any manner liable for or subject to the debts,
contracts, liabilities, engagements 


 


15





















 


or torts of the person
entitled thereto. Further, (i) the withholding of taxes from Plan benefit
payments, (ii) the recovery under the Plan of overpayments of benefits
previously made to a Participant or Beneficiary, (iii) if applicable, the
transfer of benefit rights from the Plan to another plan, or (iv) the direct
deposit of benefit payments to an account in a banking institution (if not
actually part of an arrangement constituting an assignment or alienation) shall
not be construed as an assignment or alienation.


 


In the event that any
Participant’s or Beneficiary’s benefits hereunder are garnished or attached by
order of any court, the Employer or Trustee may bring an action or a
declaratory judgment in a court of competent jurisdiction to determine the
proper recipient of the benefits to be paid under the Plan.  During the pendency of said action, any
benefits that become payable shall be held as credits to the Participant’s or
Beneficiary’s Account or, if the Employer or Trustee prefers, paid into the
court as they become payable, to be distributed by the court to the recipient
as the court deems proper at the close of said action.


 


IN
WITNESS WHEREOF, the Employer has caused the Plan to be
executed and its seal to be affixed hereto, effective as of the 1st day of
January, 2002.


 


 


	
  ATTEST/WITNESS

  	
   

  	
  FREDERICK
  COUNTY BANK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Lisa M. Hamilton

  	
   

  	
  By: 

  	
  /s/ William R. Talley,
  Jr.

  	
  (SEAL)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Print: 

  	
  Lisa M. Hamilton

  	
   

  	
  Print Name:

  	
  William R. Talley, Jr.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date: 

  	
  January 30, 2002

  	
   

  
								



 


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