TRI-COUNTY FINANCIAL CORPORATION
                   1995 STOCK OPTION AND INCENTIVE PLAN, AS AMENDED


     1. PURPOSE OF THE PLAN.

     The  purpose of this  Tri-County  Financial  Corporation  Stock  Option and
Incentive  Plan (the "Plan") is to advance the interests of the Company  through
providing  select key Employees of the Bank, the Company,  and their  Affiliates
with the opportunity to acquire Shares. By encouraging such stock ownership, the
Company seeks to attract,  retain and motivate the best available  personnel for
positions of substantial  responsibility and to provide additional  incentive to
key  Employees  of the  Company or any  Affiliate  to promote the success of the
business.

     2. DEFINITIONS.

     As used herein, the following definitions shall apply.

     (a)  "Affiliate"  shall  mean  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"  shall mean a written  agreement entered into in accordance
with Paragraph 5(c).

     (c) "Awards" shall mean, collectively, Options and SARs, unless the context
clearly indicates a different meaning.

     (d) "Bank" shall mean Tri-County Federal Savings Bank of Waldorf.

     (e) "Board" shall mean the Board of Directors of the Company.

     (f) "Change in Control"  shall mean:  (i) the execution of an agreement for
the sale of all, or a material portion,  of the assets of the Company;  (ii) the
execution of an agreement for a merger or recapitalization of the Company or any
merger or  recapitalization  whereby  the Company is not the  surviving  entity;
(iii) a change of control of the Company,  as otherwise defined or determined by
the Office of Thrift  Supervision or regulations  promulgated by it; or (iv) the
acquisition,  directly or indirectly,  of the beneficial  ownership  (within the
meaning of that term as it is used in Section 13(d) of the  Securities  Exchange
Act of 1934 and the rules promulgated  thereunder) of twenty-five  percent (25%)
or more of the  outstanding  voting  securities  of the  Company by any  person,
trust, entity or group. "Imminent Change in Control" shall refer to any offer or
announcement,  oral or written,  by any person or persons acting as a group,  to
acquire control of the Company.

     (g) "Code" shall mean the Internal Revenue Code of 1986, as amended.

     (h)  "Committee"  shall mean the Stock  Option  Committee  appointed by the
Board in accordance with Paragraph 5(a) hereof.

     (i) "Common Stock" shall mean the common stock,  par value $$.01 per share,
of the Company.

     (j) "Company" shall mean Tri-County Financial Corporation

     (k)  "Continuous  Service"  shall mean the absence of any  interruption  or
termination of service as an Employee 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.

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     (l) "Disability"  shall mean a physical or mental  condition,  which in the
sole and absolute  discretion of the Committee,  is reasonably expected to be of
indefinite  duration and to substantially  prevent a Participant from fulfilling
his or her duties or responsibilities to the Company or an Affiliate.

     (m)  "Disinterested  Person" shall mean any member of the Board who, at the
time discretion under the Plan is exercised,  is a "disinterested person" within
the meaning of Rule 16b-3.

     (n) "Effective Date" shall mean the date specified in Paragraph 14 hereof.

     (o) "Employee" shall mean any person employed by the Company,  the Bank, or
an Affiliate.

     (p)  "Exercise  Price" shall mean the price per Optioned  Share at which an
Option or SAR may be exercised.

     (q)  "ISO"  means an  option  to  purchase  Common  Stock  which  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.

     (r) "Market Value" shall mean the fair market value of the Common Stock, as
determined under Paragraph 7(b) hereof.

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

     (t) "Option" means an ISO and/or a Non-ISO.

     (u)  "Optioned  Shares"  shall  mean  Shares  subject  to an Award  granted
pursuant to this Plan.

     (v)  "Participant"  shall mean any person who receives an Award pursuant to
the Plan.

     (w) "Plan"  shall mean this  Tri-County  Financial  Corporation  1995 Stock
Option and Incentive Plan.

     (x) "Rule 16b-3" shall mean Rule 16b-3 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended.

     (y) "Share" shall mean one share of Common Stock.

     (z) "SAR" (or "Stock  Appreciation  Right")  means a right to  receive  the
appreciation in value, or a portion of the appreciation in value, of a specified
number of shares of Common Stock.

     (aa) "Year of Service" shall mean a full twelve-month period, measured from
the date of an Award and each annual  anniversary  of that date,  during which a
Participant has continuously been an Employee of the Company or an Affiliate.

     3. 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 Paragraph 17
hereof.  No Award  shall be  granted  under the Plan  after  ten years  from the
Effective Date.

     (b) Term of Awards.  The term of each Award granted under the Plan shall be
established by the Committee, but shall not exceed 10 years; provided,  however,
that in the case of an Employee  who owns Shares  representing  more than 10% of
the outstanding Common Stock at the time an ISO is granted, the term of such ISO
shall not exceed five years.

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     4. SHARES SUBJECT TO THE PLAN.

     (a)  General  Rule.  Except as  otherwise  required  by the  provisions  of
Paragraph 11 hereof,  the  aggregate  number of Shares  deliverable  pursuant to
Awards shall not exceed 32,375 Shares.  The number of shares  reserved under the
Plan shall be increased by 79,400  Shares.  Such Shares may either be authorized
but unissued  Shares or Shares held in treasury.  If any Awards  should  expire,
become  unexercisable,  or be  forfeited  for any  reason  without  having  been
exercised or without  having become vested in full,  the Optioned  Shares shall,
unless  the Plan  shall  have been  terminated,  be  available  for the grant of
additional Awards under the Plan.

     (b) Special  Rule for SARs.  The number of Shares with  respect to which an
SAR is granted, but not the number of Shares which the Company delivers or could
deliver to an Employee or individual  upon exercise of an SAR,  shall be charged
against  the  aggregate  number of Shares  remaining  available  under the Plan;
provided,  however,  that in the case of an SAR granted in  conjunction  with an
Option,  under  circumstances  in  which  the  exercise  of the SAR  results  in
termination  of the Option and vice versa,  only the number of Shares subject to
the Option shall be charged  against the  aggregate  number of Shares  remaining
available  under the Plan.  The Shares  involved in an Option as to which option
rights have  terminated  by reason of the exercise of a related SAR, as provided
in Paragraph 9 hereof,  shall not be available for the grant of further  Options
under the Plan.

     5. 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  Disinterested  Persons.  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  those  members  of  the  Board  who  are
Disinterested Persons.

     (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,  (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
or SAR, (ii) the number of Shares  subject to, and the  expiration  date of, the
Award, (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  directors  and 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.

     (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

<PAGE>

proceeding relating to any action taken or failure to act under or in connection
with the Plan or any Award,  granted  hereunder to the full extent  provided for
under the Company's governing instruments with respect to the indemnification of
directors.

     6. GRANT OF OPTIONS.

     (a) General Rule. Only Employees  shall be eligible to receive  Awards.  In
selecting  those  Employees  to whom  Awards  will be granted  and the number of
shares covered by such Awards, the Committee shall consider the position, duties
and  responsibilities of the eligible Employees,  the value of their services to
the Company and its  Affiliates,  and any other  factors the  Committee may deem
relevant.

     (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  of  the  Company)  shall  not  exceed  $100,000.
Notwithstanding the foregoing,  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 100% of 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 System)
on the date in question,  then the Market Value per Share shall be not less than
the  average of the highest and lowest  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 bid and asked  price 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 bid and asked  price on such date,  or, if there is no bid and
asked price on such date, 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.  Notwithstanding the foregoing,
in the event that either (i) the Committee  exercises  its  discretion to impose
transfer (or other) restrictions on the Shares subject to an Option, or (ii) the
Plan requires  specified  transfer  restrictions,  the  Committee  shall make an
appropriate  adjustment in determining the Market Value of the Shares subject to
such an Option (in order to take into  account  that their fair market value may
be less than the fair market value of unrestricted Shares).

     (c) Reissuance of Options and SARs.  Notwithstanding anything herein to the
contrary,  the Committee shall have the authority to cancel outstanding  Options
and/or  SARs with the  consent of the  Participant  and to reissue  new  Options
and/or SARs at a lower  Exercise  Price equal to the then Market Value per share
of Common  Stock in the event that the Market Value per share of Common Stock at
any time prior to the date of exercise of outstanding  Options and/or SARs falls
below the Exercise Price.

     8. EXERCISE OF OPTIONS.

     (a) Generally.  Any Option granted  hereunder  shall be exercisable at such
times and under such  conditions as shall be permissible  under the terms of the
Plan  and of the  Agreement  granted  to a  Participant.  An  Option  may not be
exercised for a fractional Share.

     (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

<PAGE>

cash, in Common Stock owned for more than six months,  or a combination  of cash
and Common  Stock owned for more than six months,  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. Common Stock owned for more than
six months utilized in full or partial payment of the Exercise Price for Options
shall be valued at its Market Value at the date of exercise.

     (c) Period of  Exercisability.  Except to the extent otherwise  provided in
the terms of an  Agreement,  an Option may be  exercised by a  Participant  only
while he is an Employee and has maintained  Continuous  Service from the date of
the grant of the  Option,  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"  which for  purposes  hereof  shall have the
         meaning set forth in any unexpired  employment  or severance  agreement
         between the  Participant  and the Bank and/or the Company  (and, in the
         absence of any such agreement,  shall mean  termination  because of the
         Employee's  personal  dishonesty,   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 traffic violations or similar offenses) or final
         cease-and-desist order), then the Participant's rights to exercise such
         Option shall expire on the date of such termination;

                  (2) death,  then to the extent that the Participant would have
         been  entitled to exercise the Option  immediately  prior to his death,
         such Option 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  Option
         shall have passed by will or by laws of descent and distribution;

                  (3) Disability,  then to the extent that the Participant would
         have been entitled to exercise the Option  immediately  prior to his or
         her Disability,  such Option may be exercised  within one year from the
         date of termination of employment due to Disability, but not later than
         the date on which the Option would otherwise expire.

     Notwithstanding  the  provisions  of any  Option  which  provides  for  its
exercise  in  installments  or  based  on the  Participant's  future  Continuous
Service,  such Option shall become  immediately and fully  exercisable  upon the
Participant's death or Disability.

     (d) 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. SARS (STOCK APPRECIATION RIGHTS)

     (a) Granting of SARs. In its sole  discretion,  the Committee may from time
to time grant SARs to Employees either in conjunction with, or independently of,
any Options granted under the Plan. An SAR granted in conjunction with an Option
may be an  alternative  right wherein the exercise of the Option  terminates the
SAR to the extent of the number of shares  purchased upon exercise of the Option
and,  correspondingly,  the  exercise  of the SAR  terminates  the Option to the
extent of the  number  of Shares  with  respect  to which the SAR is  exercised.
Alternatively, an SAR granted in conjunction with an Option may be an additional
right  wherein both the SAR and the Option may be  exercised.  An SAR may not be
granted in conjunction with an ISO under  circumstances in which the exercise of
the SAR affects the right to exercise the ISO or vice versa,  unless the SAR, by
its terms, meets all of the following requirements:

         (1)    The SAR will expire no later than the ISO;

         (2)    The  SAR  may  be  for no more  than the  difference between the
         Exercise  Price of the ISO and the Market Value of the Shares  subject
         to the ISO at the time the SAR is exercised;
<PAGE>

         (3)    The  SAR  is transferable only when the ISO is transferable, and
         under the same conditions;

         (4)    The SAR may be exercised only when the ISO may be exercised; and

         (5) The SAR may be  exercised  only when the Market Value of the Shares
         subject to the ISO exceeds the Exercise Price of the ISO.

     (b) Exercise  Price.  The Exercise Price as to any particular SAR shall not
be less than the Market Value of the Optioned Shares on the date of grant.

     (c) Timing of Exercise.  Any  election by a  Participant  to exercise  SARs
shall be made during the period  beginning on the 3rd business day following the
release for publication of quarterly or annual financial  information and ending
on the 12th business day following such date.  This condition shall be deemed to
be satisfied when the specified financial data is first made publicly available.
In no event,  however,  may an SAR be  exercised  within  the  six-month  period
following the date of its grant.

     The provisions of Paragraph 8(c) regarding the period of  exercisability of
Options are incorporated by reference herein,  and shall determine the period of
exercisability of SARs.

     (d) Exercise of SARs. An SAR granted hereunder shall be exercisable at such
times and under such  conditions as shall be permissible  under the terms of the
Plan and of the Agreement granted to a Participant, provided that an SAR may not
be exercised for a fractional  Share.  Upon exercise of an SAR, the  Participant
shall be  entitled  to  receive,  without  payment  to the  Company  except  for
applicable  withholding  taxes,  an amount  equal to the  excess of (or,  in the
discretion  of the  Committee  if provided in the  Agreement,  a portion of) the
excess of the then aggregate  Market Value of the number of Optioned Shares with
respect to which the Participant  exercises the SAR, over the aggregate Exercise
Price of such number of  Optioned  Shares.  This amount  shall be payable by the
Company, in the discretion of the Committee,  in cash or in Shares valued at the
then Market Value thereof, or any combination thereof.

     (e) Procedure for Exercising SARs. To the extent not inconsistent herewith,
the provisions of Paragraph 8(b) as to the procedure for exercising  Options are
incorporated  by reference,  and shall  determine  the procedure for  exercising
SARs.


     10. CHANGE IN CONTROL; OTHER ACCELERATION OF VESTING

     (a)  General  Rule.  Notwithstanding  the  provisions  of any  Award  which
provides  for its exercise or vesting in  installments,  for a period of 60 days
beginning  on the date of a Change in Control or an Imminent  Change in Control,
all Options and SARs shall be  immediately  exercisable  and fully vested.  With
respect to Options,  at the time of a Change in Control or an Imminent Change in
Control, the Participant shall, at the discretion of the Committee,  be entitled
to receive  cash in an amount  equal to the  excess of the  Market  Value of the
Common Stock subject to such Option over the Exercise  Price of such Shares,  in
exchange for the cancellation of such Options by the Participant.

     (b)  Acceleration  of Vesting.  The  Committee  shall at all times have the
power to accelerate the exercise date of Options and SARs.

     11. EFFECT OF CHANGES IN COMMON STOCK SUBJECT TO THE PLAN.

     (a)  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.

<PAGE>

     (b) Transactions in which the Company is Not the Surviving  Entity.  In the
event of (i) the  liquidation or  dissolution  of the Company,  (ii) a merger or
consolidation  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 (any of
the  foregoing  to be referred to herein as a  "Transaction"),  all  outstanding
Awards,  together with the Exercise Prices thereof,  shall be equitably adjusted
for any change or exchange of Shares for a different number or kind of shares or
other securities which results from the Transaction.

     (c) Special Rule for ISOs.  Any adjustment  made pursuant to  subparagraphs
(a) or  (b)(1)  hereof  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 Paragraph,  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 Award before the adjustment was made.

     (e) Other Issuances.  Except as expressly  provided in this Paragraph,  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 Awards or reserved for issuance under the Plan.

     12. NON-TRANSFERABILITY OF AWARDS.

     Awards 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, or 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).

     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, or
the  Effective  Date.  Notice  of the  determination  shall  be  given  to  each
Participant  to whom an Award is so granted  within a reasonable  time after the
date of such grant.

     14. EFFECTIVE DATE.

     The Plan shall become  effective  on January 31,  1995.  Awards may be made
prior to approval of the Plan by the stockholders of the Company if the exercise
of Awards in the form of Options and/or SARs, are conditioned  upon  stockholder
approval of the Plan.

     15. APPROVAL BY STOCKHOLDERS.

     The Plan shall be approved by stockholders of the Corporation within twelve
(12) months before or after the Effective Date.

     16. MODIFICATION OF AWARDS.

     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 of the Award.
<PAGE>

     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 amendment of the Plan shall be approved by stockholders
to the  extent  that such  stockholder  approval  is  necessary  to comply  with
applicable  provisions of the Code, rules promulgated  pursuant to Section 16 of
the Securities  Exchange Act of 1934,  applicable state law, or NASD or exchange
listing requirements.

     No amendment,  suspension  or  termination  of the Plan shall,  without the
consent  of any  affected  holder of an Award,  alter or  impair  any  rights or
obligations under any Award theretofore granted.

     18. CONDITIONS UPON ISSUANCE OF SHARES.

     (a) Compliance  with Securities  Laws.  Shares of Common Stock shall not be
issued with respect to any Award 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  which 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 or SAR,  the Company may
require the person exercising the Option or SAR to make such representations and
warranties as 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  or to  establish  repurchase  rights  or both of these
restrictions.

     19. 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.

     20. WITHHOLDING TAX.

     The Company's  obligation to deliver Shares upon exercise of Options and/or
SARs (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
Corporation  withhold  Shares,  or to deliver to the Corporation  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 Corporation,  shall be based
on the Market  Value of the Shares on the date the amount of tax to be  withheld
is to be  determined.  The amount of the  withholding  requirement  shall be the
applicable statutory minimum federal,  state or local income tax with respect to
the  award  on  the  date  that  the  amount  of tax  is to be  withheld.  As an
alternative,  the  Corporation may retain,  or sell without notice,  a number of
such Shares sufficient to cover the amount required to be withheld.

<PAGE>

     21. NO EMPLOYMENT OR OTHER RIGHTS.

     In no event shall an Employee's eligibility to participate or participation
in the Plan  create or be deemed to create any legal or  equitable  right of the
Employee,  or any other party to continue service with the Company, the Bank, or
any Affiliate of such corporations. No Employee shall have a right to be granted
an Award or, having  received an Award,  the right to again be granted an Award.
However,  an Employee who has been granted an Award may, if otherwise  eligible,
be granted an additional Award or Awards.

     22. 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.