Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
the 28th day of September 2009, by and among
Frederick County Bancorp, Inc., a Maryland corporation (the “Company”), Frederick
County Bank, a Maryland corporation and the wholly owned subsidiary of the
Company (the “Bank”), and Martin S. Lapera (“Mr. Lapera”).

 

RECITAL

 

The Company and the Bank each desires to retain Mr. Lapera as President
and Chief Executive Officer.  Mr. Lapera
desires to accept such employment, all upon the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the recital, the mutual covenants
and agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement, intending to be legally bound, agree as follows:

 

1.                                       Certain Definitions. As used in this Agreement, the following
terms have the meanings set forth below:

 

1.1                                 “Commencement Date” means October 1, 2009.

 

1.2                                 “Bank Regulatory Agency” means any
governmental authority, regulatory agency, ministry, department, statutory
corporation, central bank or other body of the United States or of any other
country or of any state or other political subdivision of any of them having
jurisdiction over the Company or the Bank or any transaction contemplated,
undertaken or proposed to be undertaken by the Company or the Bank, including,
but not necessarily limited to:

 

(a) the Federal
Deposit Insurance Corporation or any other federal or state depository
insurance organization or fund;

 

(b) the Board of
Governors of the Federal Reserve System, the Federal Reserve Bank of Richmond,,
the Maryland Division of Financial Institutions, or any other federal or state
bank regulatory or commissioner’s office; or

 

(c) any
predecessor or successor of any of the foregoing, or any Bank Regulatory Agency
regulatory agency which the Company or Bank may become subject to supervision
by as a result of a change in chartering agency or membership status in the
Federal Reserve System.

 

1.3                                 “Bank Board” means the Board of Directors
of Frederick County Bank.

 

1.4                                 “Bank Bylaws” means the Bylaws of
Frederick County Bank as in effect from time to time.

 

1.5                                 “Bank Chairman” means the Chairman of the
Board of Frederick County Bank.

 

1.6                                 “Code” means the Internal Revenue Code of
1986, as amended.

 

1.7                                 “Company Board” means the Board of
Directors of Frederick County Bancorp, Inc.

 

1.8                                 “Company Bylaws” means the Bylaws of
Frederick County Bancorp, Inc. as in effect from time to time.

 

1.9                                 “Company Chairman” means the Chairman of
the Board of Frederick County Bancorp, Inc.

 

1.10                           “Compensation Committee” means the
Corporate Governance and Compensation Committee of the Company Board, or such
other or successor committee of the Board of the Directors of the Company

 

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delegated to
establish or approve executive officer compensation, and that meets the
requirements for independence for such committees established under applicable
law, regulation and the listing requirements of any exchange on which the
Company’s securities are traded (“Listing Requirement”).

 

1.11                           “Person” means any individual, firm,
association, partnership, corporation, limited liability company, group,
governmental agency or other authority, or other organization or entity.

 

2.                                       Employment; Term.

 

2.1 Position.
The Company and Bank each hereby employs Mr. Lapera to serve as its President
and Chief Executive Officer, and Mr. Lapera accepts such employment.

 

2.2 Term.
The term of this Agreement and Mr. Lapera’s employment hereunder shall commence
with the Commencement Date and continue until October 1, 2013  (the “Term”), unless sooner terminated in
accordance with the provisions of this Agreement.

 

3.                                       Duties of President.

 

3.1 Nature and
Substance.  Mr. Lapera shall report
directly to the Chairman of the Board of the Company and the Bank.  The specific powers and duties of the President
and Chief Executive Officer shall be established, determined and modified by
and within the discretion of the Company Board or Bank Board, as appropriate
including (but not necessarily limited to):

 

(a) the
coordination and leadership of the efforts of the Company and the Bank to
achieve and maintain any and all necessary and/or appropriate Bank Regulatory
Agency approvals and permissions prerequisite to its successful continued
operation, including coordination of the professional services of counsel,
accountants and bank consultants;

 

(b) the
preparation and presentation to the Company Board and Bank Board of budgets and
adherence of the Bank to those approved by the Company Board and Bank Board;

 

(c) the provision
of such reports, updates and other data and information as may be reasonably required
by the Company Board or Bank Board and Bank Regulatory Agencies;

 

(d) subject to
guidelines and/or criteria established by the Company Board and Bank Board, the
hiring, promotion, supervision, retention and discharge of all employees,
except at or above the level of Senior Vice President.

 

(e) the
formulation and implementation of the Company’s and Bank’s employee personnel
policies and benefits, subject to approval by the Company Board or Bank Board,
as appropriate;

 

(f) the promotion
of the reputation and business of the Company and Bank within the community;

 

(g) the
advancement of the business purposes of the Company and Bank, including, but
not limited to, business development and customer, depositor and public
relations;

 

(h) participation
in and service upon such committees and subcommittees as may be directed by the
Company Board or Bank Board without additional compensation to that set forth
herein below;

 

(i) supervision of
the maintenance of the books and accounts and the supervision and maintenance
of accounts payable and expenses of the Company and Bank and the reporting of
the status thereof at each scheduled or called meeting of the Company Board or Bank
Board or any committee thereof; provided, however, that all expenditures on
behalf of the Company or Bank shall be approved in accordance with the terms
and conditions of procedures established by the Company Board or Bank Board, as
appropriate;

 

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(j) such other
duties of the President and Chief Executive Officer of the Company and Bank as
may be enumerated in the Company Bylaws or Bank Bylaws;

 

(k) such other
duties and responsibilities as are normally incident to the subject position of
President, including assisting, directing and/or supervising the operations and
other employees of the Company or Bank upon such terms, conditions, rules,
policies and regulations as may be established by the Company Board or Bank
Board, as appropriate, from time to time.

 

3.2 Performance
of Services.  Mr. Lapera agrees to
devote his full business time and attention to the performance of his duties
and responsibilities under this Agreement, and shall use his best efforts and
discharge his duties to the best of his ability for and on behalf of the Company
and Bank and to their successful operation.  
Mr. Lapera shall comply with all laws, statutes, ordinances, rules and
regulations relating to his employment and duties. During the Term of this
Agreement, Mr. Lapera shall not at any time or place directly or indirectly
engage or agree to engage in any business or practice related to the banking
business with or for any other Person to any extent whatsoever, other than to
the extent required by the terms and conditions of this Agreement.  Mr. Lapera agrees that while employed by the Company
and Bank he will not, without the prior written consent of the Company Board,
engage, or obtain a financial or ownership interest, in any other business,
employment, consulting or similar arrangement, or other undertaking (an “Outside
Arrangement”) if such Outside Arrangement would interfere with the satisfactory
performance of his duties to the Company or Bank, present a conflict of
interest with the Company or Bank, breach his duty of loyalty or fiduciary
duties to the Company or Bank, or otherwise conflict with the provisions of
this Agreement; provided, however, that Mr. Lapera shall not be prevented from
investing his assets in such form or manner as would not require any services
on the part of Mr. Lapera in the operation or the affairs of the entities in
which such investments are made and provided such investments do not present a
conflict of interest with the Company or Bank. 
Mr. Lapera shall promptly notify the Company Board of any Outside
Arrangement and provide the Company Board with any written agreement in
connection therewith.

 

4.                                       Compensation and Benefits. As full compensation for all services
rendered pursuant to this Agreement and the covenants contained herein, the
Bank shall pay to Mr. Lapera the following:

 

4.1 Salary.
Beginning on the Commencement Date, Mr. Lapera shall be paid a salary (“Salary”)
of Two Hundred Seven Thousand Five Hundred Seventy-Three Dollars ($207,573) on
an annualized basis. The Bank shall pay Mr. Lapera’s Salary in equal
installments in accordance with the Bank’s regular payroll periods.  Mr. Lapera’s Salary shall be further
increased from time to time at the discretion of the Company Board based upon
the recommendation of the Compensation Committee (or other approval procedure
required by applicable law regulation or Listing Requirement).  Mr. Lapera shall not be entitled to any
separate compensation for service as an employee of the Company.

 

4.2 Bonus.  During the Term, Mr. Lapera shall be paid a
bonus (“CEO Bonus”) as approved by the Company Board based upon the
recommendation of the Compensation Committee (or other approval procedure
required by applicable law regulation or Listing Requirement).

 

4.3 Withholding.
Payments of Salary and CEO Bonus shall be subject to the customary withholding
of income and other employment taxes as is required with respect to
compensation paid by an employer to an employee.

 

4.4 Vacation
and Leave.  Mr. Lapera shall be
entitled to thirty (30) days vacation and leave annually, of which fifteen (15)
days may be carried over to the following year. 
Sick leave may be provided for under the current and future sick leave
policies of the Company and Bank for executive officers.

 

4.5 Automobile
Allowance.  The Bank shall provide Mr.
Lapera an automobile allowance of $10,000 annually, which shall be paid in
quarterly payments of $2,500, payable on the last day of each calendar quarter.  This allowance is in lieu of any automobile
expense reimbursement.

 

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4.5 Non-Life
Insurance.  The Bank will provide Mr.
Lapera with group health, disability and other insurance as the Company Board may
determine appropriate based upon the recommendation of the Compensation
Committee (or other approval procedure required by applicable law regulation or
Listing Requirement).

 

4.6 Life
Insurance.

 

4.6.1 The Bank
will obtain, and maintain at all times while this Agreement is in effect, a
term life insurance policy (the “Policy”) on Mr. Lapera in the amount of $800,000,
the particular product and carrier to be chosen by the Bank in its
discretion.  Mr. Lapera shall have the
right to designate the beneficiary of the Policy.  The Bank will pay the premium for the Policy
at the standard rate. In the event Mr. Lapera is rated and the premium exceeds
the standard rate, Mr. Lapera shall be responsible for paying the excess, which
shall be deducted from his Salary.

 

4.6.2 The Company
or Bank may, at its cost, obtain and maintain “key-man” life insurance on Mr. Lapera
in such amount as determined by the Company Board or Bank Board from time to
time.  Mr. Lapera agrees to cooperate
fully and to take all actions reasonably required by the Company or Bank in
connection with such insurance.

 

4.7 Expenses.  The Company and Bank shall promptly upon
presentation of proper expense reports therefor reimburse Mr. Lapera, in
accordance with the policies and procedures established from time to time by
the Company Board and/or Bank Board for its senior executive officers, for all
reasonable and customary travel and other out-of-pocket expenses incurred by Mr.
Lapera in the performance of his duties and responsibilities under this
Agreement and promoting the business of the Company or Bank, including
appropriate membership fees, dues and the cost of attending meetings and
conventions.

 

4.8 Retirement
Plans.  Mr. Lapera shall be entitled
to participate in any and all qualified pension or other retirement plans of
the Company or Bank which may be applicable to executive personnel of the Company
or Bank.

 

4.9 Options.  Mr. Lapera may be issued options to acquire
shares of Bank stock from time to time (or to participate in and receive grants
under any other equity based compensation program which the Company may at the
discretion of the Company Board may determine appropriate based upon the
recommendation of the Compensation Committee (or other approval procedure
required by applicable law regulation or Listing Requirement).Bank Board.

 

4.10 Other
Benefits. While this Agreement is in effect, Mr. Lapera shall be entitled
to all other benefits that the Company or Bank provides from time to time to
its senior executive officers, including, but not limited to, any equity
compensation, or other incentive plans.

 

4.11 Eligibility.
Participation in any health, life, accident, disability, medical expense or
similar insurance plan or any qualified pension or other retirement plan shall
be subject to the terms and conditions contained in such plan. All matters of
eligibility for benefits under any insurance plans shall be determined in accordance
with the provisions of the applicable insurance policy issued by the applicable
insurance company.

 

5.                                       Conditions Subsequent to Continued
Operation and Effect of  Agreement.

 

5.1 Continued
Approval by Bank Regulatory Agencies. This Agreement and all of its terms
and conditions, and the continued operation and effect of this Agreement, shall
at all times be subject to the continuing approval of any and all Bank
Regulatory Agencies whose approval is a necessary prerequisite to the continued
operation of the Company and Bank. 
Should any term or condition of this Agreement, upon review by any Bank
Regulatory Agency, be found to violate or not be in compliance with any
then-applicable statute or any rule, regulation, order or understanding
promulgated by any Bank Regulatory Agency, or should any term or 

 

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condition required
to be included herein by any such Bank Regulatory Agency be absent, this
Agreement may be rescinded and terminated by either party if the parties hereto
cannot in good faith agree upon such additions, deletions, or modifications as
may be deemed necessary or appropriate to bring this Agreement into compliance.

 

6.                                       Termination of Agreement. This Agreement may be terminated prior
to expiration of the Term as provided below.

 

6.1                                  Definition of Cause. For purposes of this Agreement, “Cause”
means:

 

(a) any act of
theft, fraud, intentional misrepresentation or similar conduct by Mr. Lapera in
connection with or associated with the services rendered by Mr. Lapera to the
Bank under this Agreement;

 

(b) any failure of
this Agreement to comply with any Bank Regulatory Agency requirement which is
not cured in accordance with Section 5.1 within a reasonable period of time
after written notice thereof;

 

(c) any Bank
Regulatory Agency action or proceeding against Mr. Lapera as a result of his
negligence, fraud, malfeasance or misconduct;

 

(d) material
failure of Mr. Lapera to achieve budget requirements, performance standards or
targets established annually by the Company Board or Bank Board, where such
failure is not the result of economic conditions or lack of appropriate effort
and/or due diligence by Mr. Lapera; or

 

(e) any of the
following conduct on the part of Mr. Lapera that has not been corrected or
cured within thirty (30) days after having received written notice from the Company
Board or Bank Board detailing and describing such conduct:

 

(i)                    the use of drugs, alcohol or other substances by Mr. Lapera
to an extent which materially interferes with or prevents Mr. Lapera from
performing his duties under this Agreement;

 

(ii)                 failure by or the inability of Mr. Lapera to devote
full time, attention and energy to the performance of his duties pursuant to
this Agreement (other than by reason of his death or disability);

 

(iii)              intentional material failure by Mr. Lapera to carry
out the explicit lawful and reasonable directions, instructions, policies,
rules, regulations or decisions of the Company Board or Bank Board, which are
consistent with his position as President and Chief Executive Officer; or

 

(iv)             willful or intentional misconduct on the part of Mr. Lapera
that results in substantial injury to the Company or Bank or any of its
subsidiaries or affiliates.

 

6.2         Termination by Company and Bank.

 

6.2.1                        For Cause.  The Company
and Bank shall have the right to cancel and terminate this Agreement and Mr. Lapera’s
employment for Cause immediately on written notice, with his compensation and
benefits ceasing as of his last day of employment, provided, however, that Mr. Lapera
shall be entitled to benefits through the last day of employment and accrued
compensation to that date.

 

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6.2.2                        Without Cause. 
The Company and Bank shall have the right to cancel and terminate this
Agreement and Mr. Lapera’s employment at any time on written notice without
Cause for any or no reason, with Mr. Lapera’s compensation and benefits ceasing
as of his last day of employment, subject to the provisions of Section 6.5. and
Article 8.

 

6.3 Termination
by Mr. Lapera.  Mr. Lapera shall have
the right to cancel and terminate this Agreement and his employment at any time
on sixty (60) days prior written notice to the Company Board and Bank Board,
with his compensation and benefits ceasing as of his last day of employment,
provided, however, that he shall be entitled to benefits through the last day
of employment and accrued compensation to that date.

 

6.4 Joint
Termination.  The right of the
Company and Bank to terminate Mr. Lapera may not be exercised separately, but
must be exercised by both the Company and Bank simultaneously.

 

6.5 Severance.
Except as set forth below, if Mr. Lapera’s employment with the Company and Bank
is terminated by the Company and Bank or its successors during the Term without
Cause, the Company and Bank or their successors shall, for the balance of the
Term, continue to pay Mr. Lapera, in the manner set forth below, Mr. Lapera’s
Salary at the rate being paid as of the date of termination plus the unpaid portion
of any CEO Bonus  previously approved as provided
in Section 4.2; and such other benefits as provided in Sections 4.4, 4.5, and
4.6; provided, however, that Mr. Lapera shall not be entitled to any such
payments of Salary if (i) his employment is terminated due to his death or
long-term disability or (ii) this Agreement is rendered null and void pursuant
to Section 5.1 or (iii) there is a Change in Control Termination (as defined in
Section 8.2). Any Salary and CEO Bonus due Mr. Lapera pursuant to this Section 6.5
shall be paid to Mr. Lapera in installments on the same schedule as he was paid
immediately prior to the date of termination, each installment to be the same
amount he would have been paid under this Agreement if he had not been
terminated. In the event Mr. Lapera breaches any provision of Article 7 of this
Agreement, Mr. Lapera’s entitlement to any Salary, any CEO Bonus, and any
benefits due pursuant to this Section 6.5, if and to the extent not yet paid,
shall thereupon immediately cease and terminate.

 

7.                                       Confidentiality; Non-Competition;
Non-Interference.

 

7.1 Confidential
Information. Mr. Lapera, during employment by the Company and Bank, will
have access to and become familiar with various confidential and proprietary
information of the Bank, its parent, subsidiaries and/or affiliates (“Confidential
Information”), including, but not limited to: business plans; operating
results; financial statements and financial information; contracts; mailing
lists; purchasing information; customer data (including lists, names and
requirements); feasibility studies; personnel related information (including
compensation, compensation plans, and staffing plans); internal working
documents and communications; and other materials related to the businesses or activities
of the Company and Bank, their subsidiaries and/or affiliates which is made
available only to employees with a need to know or which is not generally made
available to the public. Failure to mark any Confidential Information as
confidential, proprietary or protected information shall not affect its status
as part of the Confidential Information subject to the terms of this Agreement.

 

7.2 Nondisclosure.  Mr. Lapera hereby covenants and agrees that
he shall not at any time, directly or indirectly, disclose, divulge, reveal,
report, publish, or transfer any Confidential Information to any Person, or use
Confidential Information in any way or for any purpose, except as required in
the course of his employment by the Company and Bank. The covenant set forth in
this Section 7.2 shall not apply to information now known by the public or
which becomes known generally to the public (other than as a result of a breach
of this Article 7 by Mr. Lapera) or information that is customarily shown or
disclosed.

 

7.3 Documents.
All files, papers, records, documents, compilations, summaries, lists, reports,
notes, databases, tapes, sketches, drawings, memoranda, and similar items
(collectively, “Documents”), whether prepared by Mr. Lapera, or otherwise
provided to or coming into the possession of Mr. Lapera, that contain any
proprietary information about or pertaining or relating to the Company or Bank,
their respective parents, subsidiaries

 

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and/or affiliates
and/or their businesses (“Proprietary Information”) shall at all times remain
their exclusive property. Promptly after a request by the Company Board or Bank
Board or the termination of Mr. Lapera’s employment, Mr. Lapera shall take
reasonable efforts to (i) return to the Company and Bank all Documents in any
tangible form (whether originals, copies or reproductions) and all computer
disks containing or embodying any Document or Proprietary Information and (ii) purge
and destroy all Documents and Proprietary Information in any intangible form
(including computerized, digital or other electronic format) as may be
requested in writing by the Company Chairman or Bank Chairman , and Mr. Lapera
shall not retain in any tangible form any such Document or any summary, compilation,
synopsis or abstract of any Document or Proprietary Information.

 

7.4                                  Non-Competition.

 

7.4.1 Mr. Lapera
hereby acknowledges and agrees that, during the course of employment by the Company
and Bank, he will become familiar with and involved in all aspects of the
business and operations of the Bank and its parent, subsidiaries and
affiliates.  Mr. Lapera hereby covenants
and agrees that from the Commencement Date until the earlier to occur of (a) the
date one hundred eighty (180) days after his last day of employment with the
Bank or (b) October 1, 2013, Mr. Lapera will not at any time, directly or
indirectly, in any capacity (whether as a proprietor, owner, agent, officer,
director, shareholder, partner, principal, member, employee, contractor,
consultant or otherwise) render any services to a bank or savings and loan or a
holding company of a bank or savings and loan (in any case, a “financial
institution”) with respect to any financial institution office, branch or other
facility (in any case, a “Branch”) that is located within a thirty-five (35)
mile radius of the location of the Bank’s headquarters on the date hereof
(including, without limitation, being involved in any manner in the operations
of or having any responsibilities with respect to any Branch).

 

7.4.2 This Section
7.4 shall not apply if prior to October 1, 2013, there is a (i) merger or
consolidation of the Company with a third party in which the Company is not the
survivor, (ii) sale of a controlling interest in the Company to a third party
or (iii) a sale of all or substantially all of the business or assets of the Company
to a third party, and this Agreement is not assumed by such third party or Mr. Lapera’s
employment hereunder is otherwise terminated by the Company or such third party
in connection with such merger, consolidation or sale. Further, mere ownership
of less than two percent (2%) of the securities of any publicly held
corporation shall not constitute a violation of this Section.

 

7.5 Non-Interference.  Mr. Lapera hereby covenants and agrees that
from the Commencement Date until the earlier to occur of (a) the date one
hundred eighty (180) days after his last day of employment with the Company and
Bank or (b) October 1, 2013, he will not, directly or indirectly, for himself
or any other Person (whether as a proprietor, owner, agent, officer, director,
shareholder, partner, principal, member, employee, contractor, consultant or
any other capacity), induce or attempt to induce any customers, suppliers,
officers, employees, contractors, consultants, agents or representatives of, or
any other person that has a business relationship with, the Company or any of
its subsidiaries and affiliates to discontinue, terminate or reduce the extent
of their relationship with the Company and/or any such subsidiary or affiliate
or to take any action that would disrupt or otherwise be disadvantageous to any
such relationship.

 

7.6 Injunction.
In the event of any breach or threatened or attempted breach of any such
provision by Mr. Lapera, the Company and Bank shall, in addition to and not to
the exclusion of any other rights and remedies at law or in equity, be entitled
to seek and receive from any court of competent jurisdiction (i) full temporary
and permanent injunctive relief enjoining and restraining Mr. Lapera and each
and every other Person concerned therein from the continuation of such volatile
acts and (ii) a decree for specific performance of the applicable provisions of
this Agreement, without being required to furnish any bond or other security.

 

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7.7                                 Reasonableness.

 

7.7.1 Mr. Lapera
has carefully read and considered the provisions of this Article 7 and, having
done so, agrees that the restrictions and agreements set forth in this Article 7
are fair and reasonable and are reasonably required for the protection of the
interests of the Company and Bank and their business, shareholders, directors,
officers and employees.  Mr. Lapera
further agrees that the restrictions set forth in this Agreement will not
impair or unreasonably restrain his ability to earn a livelihood.

 

7.7.2 If any court
of competent jurisdiction should determine that the duration, geographical area
or scope of any provision or restriction set forth in this Article 7 exceeds
the maximum duration, geographic area or scope that is reasonable and
enforceable under applicable law, the parties agree that said provision shall
automatically be modified and shall be deemed to extend only over the maximum
duration, geographical area and/or scope as to which such provision or
restriction said court determines to be valid and enforceable under applicable
law, which determination the parties direct the court to make, and the parties
agree to be bound by such modified provision or restriction.

 

8.                                       Change in Control.

 

8.1                                 Definition.  “Change in
Control” means and shall be deemed to have occurred if:

 

(a)   there shall be consummated (1) any
consolidation, merger, share exchange, or similar transaction relating to the
Company, in which the Company is not the continuing or surviving entity or
pursuant to which shares of the Company’s capital stock are converted into
cash, securities of another entity and/or other property, other than a
transaction in which the holders of the Company’s voting stock immediately
before such transaction shall, upon consummation of such transaction, own at
least fifty percent (50%) of the voting power of the surviving entity, or (2) any
sale of all or substantially all of the assets of the Company, other than a
transfer of assets to a related person which is not treated as a change in
control event under §1.409A-3(i)(5)(vii)(B) of U.S. Treasury Regulations;

 

(b)  any person (within the meaning of Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) shall after the Commencement Date become the beneficial owner (within
the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifty-one percent (51%)
or more of the voting power of then all outstanding securities of the Company
entitled to vote generally in the election of directors of the Company
(including, without limitation, any securities of the Company that any such
person has the right to acquire pursuant to any agreement, or upon exercise of
conversion rights, warrants or options, or otherwise, which shall be deemed
beneficially owned by such person); or

 

(c)  where over a twelve month period, a majority
of the members of the Board of Directors of the Company (the “Board”) are
replaced by directors whose appointment or election was not endorsed by a
majority of the members of the Board in office prior to such appointment or
election.

 

(d)  Notwithstanding the foregoing, if the event
purportedly constituting a Change in Control under Section 8.1(a), Section 8.1(b)
or Section 8.1(c) does not also constitute a “change in ownership” of the
Company, a “change in effective control” of the Company, or a “change in the
ownership of a substantial portion of the assets” of the Company within the
meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
and the regulations and administrative guidance promulgated thereunder (“Section
409A”), then such event shall not constitute a “Change in Control” hereunder.”

 

8.2                                 Change in Control Termination. 
For purposes of this Agreement, a “Change in Control Termination” means
that while this Agreement is in effect:

 

(a)  Mr. Lapera’s employment with the Company or Bank
is terminated without Cause within one hundred twenty (120) days immediately (i)
prior to and in conjunction with a Change in Control or (ii) following
consummation of a Change in Control; or

 

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(b)  Within 120
days following consummation of a Change in Control, Mr. Lapera’s title, duties
and or position have been materially reduced such that Mr. Lapera is not in a
comparable position (with materially comparable compensation and benefits) with
the surviving corporation to the position he held immediately prior to the
Change in Control, and within fifteen (15) days after notification of such
reduction Mr. Lapera notifies the Company Board or its successors that he is
terminating his employment due to such change in his employment unless such
change is cured within thirty (30) days of such notice by providing him with a
comparable position (including materially comparable compensation and
benefits).  If Mr. Lapera’s employment is
terminated under this Section, his last day of employment shall be mutually
agreed to by Mr. Lapera and the Company Board or its successors, but shall be
not more than sixty (60) days after such notice is given by Mr. Lapera; or

 

(c)   If at the expiration of the one hundred
twenty (120) day period immediately following consummation of a Change in
Control (the “Action Period”) none of the events described in Sections 8.2(a) and
8.2(b) above have occurred, Mr. Lapera, within the thirty (30) day period
immediately following the last day of the Action Period, notifies the Company
Board that he is terminating his employment due to the Change in Control, with
his last day of employment to be mutually agreed to by Mr. Lapera, the Company or
its successors but which shall be not more than sixty (60) days after such
notice is given by Mr. Lapera.

 

8.3                                 Change in Control Payment.  If
there is a Change in Control Termination, Mr. Lapera shall be paid in
thirty-six (36) equal cash payments (the “Change Payment”) by the Bank where
the total of the Change Payment will be equal to 2.99 times his Salary at the
highest rate in effect during the twelve (12) month period immediately
preceding his last day of employment, such Change Payment to be made to Mr. Lapera
within forty-five (45) days after the later of (i) his last day of employment
or (ii) the date of the Change in Control, the exact date of payment to be
determined in the sole discretion of the Company. In addition, the Bank shall
make monthly payments for twenty-four (24) months following the Change in
Control Termination, for Mr. Lapera’s health insurance premiums.  The payments described in this Section 8.3
are “Change Payments.”  The payment of
health insurance premiums is conditioned on the terms of the Company’s or Bank’s
health insurance policy then in place and the Officer’s compliance with
applicable federal and state laws and regulations.

 

8.4                                 Adjustment.

 

(a)  Notwithstanding anything in this Agreement to
the contrary, if the Determining Firm (as defined in Section 8.4(b)) determines
that any portion of the Change Payment and/or the portions, if any, of other
payments or distributions in the nature of compensation by the Bank to or for
the benefit of Mr. Lapera (including, but not limited to, the value of the
acceleration in vesting of restricted stock, options or any other stock-based
compensation) whether or not paid or payable or distributed or distributable
pursuant to the terms of this Agreement (collectively with the Change Payment,
the “Aggregate Payment”), would cause any portion of the Aggregate Payment to
be subject to the excise tax imposed by Code Section 4999 or would be
nondeductible by the Company or Bank pursuant to Code Section 280G (such
portion subject to the excise tax or being nondeductible, the “Parachute
Payment”), the Aggregate Payment will be reduced, beginning with the Change
Payment, to an amount which will not cause any portion of the Aggregate Payment
to constitute a Parachute Payment.

 

(b)  All determinations required to be made under
this Section 8.4, will be made by a reputable law or accounting firm (the “Determining
Firm”) selected by the Company.  All fees
and expenses of the Determining Firm will be obligations solely of the Company.  The determination of the Determining Firm
will be binding upon Mr. Lapera and the Company.

 

“8.5                           Construction; Compliance with 409A, Delay
in Payment.

 

(a)  It is the intention of the parties hereto that
this Agreement and the payments provided for hereunder shall

 

9

 

be in accordance with Section
409A, and thus avoid the imposition of any excise tax and interest on Mr. Lapera
pursuant to Section 409A(a)(1)(B) of the Code, and this Agreement shall be
interpreted and construed consistent with this intent.  Mr. Lapera acknowledges and agrees that he
shall be solely responsible for the payment of any excise tax or penalty which
may be imposed or to which he may become subject as a result of the payment of
any amounts under this Agreement.

 

(b)  Notwithstanding anything to the contrary
contained herein, any payment hereunder that is considered “nonqualified
deferred compensation” that is to be made to Mr. Lapera while he is a “specified
employee”, in each case as defined and determined for purposes of Section 409A,
within six months following Mr. Lapera’s “separation from service” (as
determined in accordance with Section 409A), then to the extent that such
payment is not otherwise permitted under Section 409A such that it would be
exempt from the excise tax thereunder, such payment shall be delayed and shall
be paid on the first business day of the seventh calendar month following Mr. Lapera’s
separation from service, or, if earlier upon Mr. Lapera’s death.  To the extent that any payment to Mr. Lapera
which is payable in installments is required to be deferred pursuant to this Section
8.5(b), such deferred installments shall be paid on the first business day of
the seventh month following Mr. Lapera’s separation from service, or, if
earlier upon Mr. Lapera’s death, and any remaining installments shall be paid
as scheduled.  For purposes of this
Agreement, any payment to Mr. Lapera which is payable in installments represents
the right to a series of separate payments.

 

(c)  The parties hereto agree that they shall take
such actions as may be necessary and permissible under applicable law,
regulation and guidance to amend or revise this Agreement in order to fully
comply with Section 409A.”

 

9. Assignability.  Mr. Lapera shall have no right to assign this
Agreement or any of his rights or obligations hereunder to another party or
parties.

 

10. Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland applicable to contracts executed and to be
performed therein, without giving to the choice of law rules thereof.

 

11. Notices. All
notices, requests, demands and other communications required to be given or
permitted to be given under this Agreement shall be in writing and shall be
conclusively deemed to have been given (1) when hand delivered to the other
party, or (2) when received when by facsimile at the address a number set forth
below provided however, that notices given by facsimile shall not be
effective unless either a duplicate copy of such facsimile notice is promptly
given by depositing same in a United States post office first-class postage
prepaid and addressed to the parties as set forth below, or the receiving party
delivers a written confirmation of receipt for such notice either by facsimile
or any other method permitted under this sub additionally, any notice given by
facsimile shall be deemed received on the next business day if such notice is
received after 5:00 p.m. (recipient’s time) or on a non-business day); or three
(3) business days after the same have been deposited in a United States post
office with first-class certified mail, return receipt, postage prepaid and
addressed to the parties as set forth below; or (4) the next business day after
same have been deposited with a national overnight delivery service reasonably
approved by the parties (Federal Express and DHL WorldWide Express being deemed
approved by the parties), postage prepaid, addressed to the parties as set
forth below with next-business-day delivery guaranteed, provided that the
sending party received a confirmation of delivery from the delivery service
provider. The address of a party set forth below may be changed by that party
by written notice to the other from time to time pursuant to this Article.

 

	
  To:

  	
   

  	
  John N. Burdette

  	
   

  	
  cc:

  	
   

  	
  David Baris,
  Esquire

  
	
   

  	
   

  	
  Chairman of the
  Board

  	
   

  	
   

  	
   

  	
  Kennedy, Baris, &
  Lundy L.L.P.

  
	
   

  	
   

  	
  Frederick County
  Bank

  	
   

  	
   

  	
   

  	
  4701 Sangamore
  Road, Suite P-15

  
	
   

  	
   

  	
  P.O. Box 1100

  	
   

  	
   

  	
   

  	
  Bethesda, MD
  20816

  
	
   

  	
   

  	
  Frederick, MD
  21702

  	
   

  	
   

  	
   

  	
   

  

 

10

 

	
  To:

  	
   

  	
  Martin S. Lapera

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  228 Braeburn
  Drive

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Walkersville, MD
  21793

  	
   

  	
   

  	
   

  	
   

  

 

12. Entire
Agreement. This Agreement contains all of the agreements and understandings
between the parties hereto with respect to the employment of Mr. Lapera by the
Bank, and supersedes all prior agreements, arrangements and understandings
related to the subject matter hereof, including but not limited to the
Employment Agreement dated August 18, 2005 by and between Frederick County Bank
and Martin S. Lapera. No oral agreements or written correspondence shall be
held to affect the provisions hereof. No representation, promise, inducement or
statement of intention has been made by either party that is not set forth in
this Agreement, and neither party shall be bound by or liable for any alleged
representation, promise, inducement or statement of intention not so set forth.

 

13. Headings.
The Article and Section headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.

 

14. Severability.
Should any part of this Agreement for any reason be declared or held illegal,
invalid or unenforceable, such determination shall not affect the legality,
validity or enforceability of any remaining portion or provision of this
Agreement, which remaining portions and provisions shall remain in force and
effect as if this Agreement has been executed with the illegal, invalid or
unenforceable portion thereof eliminated.

 

15. Amendment:
Waiver. Neither this Agreement nor any provision hereof may be amended, modified,
changed, waived, discharged or terminated except by an instrument in writing
signed by the party against which enforcement of the amendment, modification,
change, waiver, discharge or termination is sought. The failure of either party
at any time or times to require performance of any provision hereof shall not
in any manner affect the right at a later time to enforce the same. No waiver
by either party of the breach of any term, provision or covenant contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term, provision or covenant
contained in this Agreement.

 

16. Gender and
Tense. As used in this Agreement, the masculine, feminine and neuter
gender, and the singular or plural number, shall each be deemed to include the
other or others whenever the context so indicates.

 

17. Binding
Effect. This Agreement is and shall be binding upon, and inures to the
benefit of, the Company and Bank, their respective successors and assigns, and Mr.
Lapera and his heirs, executors, administrators, and personal and legal
representatives.

 

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written
above.

 

FREDERICK COUNTY BANCORP, INC.

FREDERICK COUNTY BANK

 

 

	
  By:

  	
  /s/John N.
  Burdette

  	
   

  	
  By:

  	
  /s/Martin S.
  Lapera

  
	
   

  	
  John N. Burdette

  	
   

  	
   

  	
  Martin S. Lapera

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman of the
  Board

  	
   

  	
  Title:

  	
  President &
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  September 28,
  2009

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  

 

11Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
the 28th day of September 2009, by and among
Frederick County Bancorp, Inc., a Maryland corporation (the “Company”),
Frederick County Bank, a Maryland corporation and the wholly owned subsidiary
of the Company (the “Bank”), and William R. Talley, Jr.  (“Mr. Talley”).

 

RECITAL

 

The Company and the Bank each desires to retain Mr. Talley as Executive
Vice President and Chief Financial Officer. 
Mr. Talley desires to accept such employment, all upon the terms
and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the recital, the mutual covenants
and agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement, intending to be legally bound, agree as follows:

 

1.                                       Certain Definitions. As used in this Agreement, the following
terms have the meanings set forth below:

 

1.1                                 “Commencement Date” means October 1,
2009.

 

1.2                                 “Bank Regulatory Agency” means any
governmental authority, regulatory agency, ministry, department, statutory
corporation, central bank or other body of the United States or of any other
country or of any state or other political subdivision of any of them having
jurisdiction over the Company or the Bank or any transaction contemplated,
undertaken or proposed to be undertaken by the Company or the Bank, including,
but not necessarily limited to:

 

(a) the
Federal Deposit Insurance Corporation or any other federal or state depository
insurance organization or fund;

 

(b) the Board
of Governors of the Federal Reserve System, the Federal Reserve Bank of
Richmond,, the Maryland Division of Financial Institutions, or any other
federal or state bank regulatory or commissioner’s office; or

 

(c) any
predecessor or successor of any of the foregoing, or any Bank Regulatory Agency
regulatory agency which the Company or Bank may become subject to supervision
by as a result of a change in chartering agency or membership status in the
Federal Reserve System.

 

1.3                                 “Bank Board” means the Board of Directors
of Frederick County Bank.

 

1.4                                 “Bank Bylaws” means the Bylaws of
Frederick County Bank as in effect from time to time.

 

1.5                                 “Bank Chairman” means the Chairman of the
Board of Frederick County Bank.

 

1.6                                 “Code” means the Internal Revenue Code of
1986, as amended.

 

1.7                                 “Company Board” means the Board of
Directors of Frederick County Bancorp, Inc.

 

1.8                                 “Company Bylaws” means the Bylaws of
Frederick County Bancorp, Inc. as in effect from time to time.

 

1.9                                 “Company Chairman” means the Chairman of
the Board of Frederick County Bancorp, Inc.

 

1.10                           “Compensation Committee” means the
Corporate Governance and Compensation Committee of the Company Board, or such
other or successor committee of the Board of the Directors of the Company 

 

1

 

delegated to
establish or approve executive officer compensation, and that meets the
requirements for independence for such committees established under applicable
law, regulation and the listing requirements of any exchange on which the
Company’s securities are traded (“Listing Requirement”).

 

1.11                           “Person” means any individual, firm,
association, partnership, corporation, limited liability company, group,
governmental agency or other authority, or other organization or entity.

 

2.                                       Employment; Term.

 

2.1 Position.
The Company and Bank each hereby employs Mr. Talley to serve as its Executive
Vice President and Chief Financial Officer, and Mr. Talley accepts such
employment.

 

2.2 Term.
The term of this Agreement and Mr. Talley’s employment hereunder shall
commence with the Commencement Date and continue until October 1, 2013  (the “Term”), unless sooner terminated in
accordance with the provisions of this Agreement.

 

3.                                       Duties of Executive Vice President.

 

3.1 Nature and
Substance.  Mr. Talley shall
report directly to the President and Chief Executive Officer and shall be under
the direction of the President and Chief Executive Officer.  The specific powers and duties of the Executive
Vice President and Chief Financial Officer shall be established, determined and
modified by and within the discretion of the President and Chief Executive
Officer including (but not necessarily limited to):

 

(a) the
coordination of the efforts of the Company and the Bank to achieve and maintain
any and all necessary and/or appropriate Bank Regulatory Agency approvals and
permissions prerequisite to its successful continued operation, including
coordination of the professional services of counsel, accountants and bank
consultants;

 

(b) the
preparation and presentation to the Company Board and Bank Board of budgets and
adherence of the Bank to those approved by the Company Board and Bank Board;

 

(c) the
provision of such reports, updates and other data and information as may be
reasonably required by the Company Board or Bank Board and Bank Regulatory
Agencies;

 

(d) manage
the Company’s and Bank’s investment portfolios in accordance with the Company’s
and Bank’s investment policies approved by the Company Board and Bank Board;

 

(e) the
formulation and implementation of the Company’s and Bank’s employee personnel
policies and benefits in coordination with the President and Chief Executive
Officer, subject to approval by the Company Board or Bank Board, as appropriate;

 

(f) the
promotion of the reputation and business of the Company and Bank within the
community;

 

(g) participation
in and service upon such committees and subcommittees as may be directed by the
Company Board or Bank Board without additional compensation to that set forth
herein below;

 

(h) supervision
of the maintenance of the books and accounts and the supervision and
maintenance of accounts payable and expenses of the Company and Bank and the
reporting of the status thereof at each scheduled or called meeting of the Company
Board or Bank Board or any committee thereof; provided, however, that all
expenditures on behalf of the Company or Bank shall be approved in accordance
with the terms and conditions of procedures established by the Company Board or
Bank Board, as appropriate;

 

(i) such
other duties and responsibilities as are normally incident to the subject
position of Executive Vice President and Chief Financial Officer, including
assisting, directing and/or supervising the operations and other 

 

2

 

employees of the Company
or Bank upon such terms, conditions, rules, policies and regulations as may be
established by the Company Board or Bank Board, as appropriate, from time to
time.

 

3.2 Performance
of Services.  Mr. Talley agrees
to devote his full business time and attention to the performance of his duties
and responsibilities under this Agreement, and shall use his best efforts and
discharge his duties to the best of his ability for and on behalf of the Company
and Bank and to their successful operation.  
Mr. Talley shall comply with all laws, statutes, ordinances, rules and
regulations relating to his employment and duties. During the Term of this
Agreement, Mr. Talley shall not at any time or place directly or
indirectly engage or agree to engage in any business or practice related to the
banking business with or for any other Person to any extent whatsoever, other
than to the extent required by the terms and conditions of this Agreement.  Mr. Talley agrees that while employed by
the Company and Bank he will not, without the prior written consent of the Company
Board, engage, or obtain a financial or ownership interest, in any other
business, employment, consulting or similar arrangement, or other undertaking
(an “Outside Arrangement”) if such Outside Arrangement would interfere with the
satisfactory performance of his duties to the Company or Bank, present a conflict
of interest with the Company or Bank, breach his duty of loyalty or fiduciary
duties to the Company or Bank, or otherwise conflict with the provisions of
this Agreement; provided, however, that Mr. Talley shall not be prevented
from investing his assets in such form or manner as would not require any
services on the part of Mr. Talley in the operation or the affairs of the
entities in which such investments are made and provided such investments do
not present a conflict of interest with the Company or Bank.  Mr. Talley shall promptly notify the Company
Board of any Outside Arrangement and provide the Company Board with any written
agreement in connection therewith.

 

4.                                       Compensation and Benefits. As full compensation for all services
rendered pursuant to this Agreement and the covenants contained herein, the
Bank shall pay to Mr. Talley the following:

 

4.1 Salary.
Beginning on the Commencement Date, Mr. Talley shall be paid a salary (“Salary”)
of One Hundred Sixty-Five Thousand Four Hundred Thirty-Five Dollars ($165,435)
on an annualized basis. The Bank shall pay Mr. Talley’s Salary in equal
installments in accordance with the Bank’s regular payroll periods.  Mr. Talley’s Salary shall be further
increased from time to time at the discretion of the Company Board based upon
the recommendation of the Compensation Committee (or other approval procedure
required by applicable law regulation or Listing Requirement).  Mr. Talley shall not be entitled to any
separate compensation for service as an employee of the Company.

 

4.2 Bonus.  During the Term, Mr. Talley shall be
paid a bonus (“CFO Bonus”) as approved by the Company Board based upon the
recommendation of the Compensation Committee (or other approval procedure
required by applicable law regulation or Listing Requirement).

 

4.3 Withholding.
Payments of Salary and CFO Bonus shall be subject to the customary withholding
of income and other employment taxes as is required with respect to
compensation paid by an employer to an employee.

 

4.4 Vacation
and Leave.  Mr. Talley shall be
entitled to twenty-five (25) days vacation and leave annually, of which twelve
and one-half (12.5) days may be carried over to the following year.  Sick leave may be provided for under the
current and future sick leave policies of the Company and Bank for executive
officers.

 

4.5 Automobile
Allowance.  The Bank shall provide Mr. Talley
an automobile allowance of $5,000 annually, which shall be paid in quarterly
payments of $1,250, payable on the last day of each calendar quarter.  This allowance is in lieu of any automobile
expense reimbursement.

 

4.5 Non-Life
Insurance.  The Bank will provide Mr. Talley
with group health, disability and other insurance as the Company Board may
determine appropriate based upon the recommendation of the Compensation
Committee (or other approval procedure required by applicable law regulation or
Listing Requirement).

 

3

 

4.6 Life
Insurance.

 

4.6.1 The Bank
will obtain, and maintain at all times while this Agreement is in effect, a
term life insurance policy (the “Policy”) on Mr. Talley in the amount of $600,000,
the particular product and carrier to be chosen by the Bank in its
discretion.  Mr. Talley shall have
the right to designate the beneficiary of the Policy.  The Bank will pay the premium for the Policy
at the standard rate. In the event Mr. Talley is rated and the premium
exceeds the standard rate, Mr. Talley shall be responsible for paying the
excess, which shall be deducted from his Salary.

 

4.6.2 The Company
or Bank may, at its cost, obtain and maintain “key-man” life insurance on Mr. Talley
in such amount as determined by the Company Board or Bank Board from time to
time.  Mr. Talley agrees to
cooperate fully and to take all actions reasonably required by the Company or Bank
in connection with such insurance.

 

4.7 Expenses.  The Company and Bank shall promptly upon
presentation of proper expense reports therefor reimburse Mr. Talley, in
accordance with the policies and procedures established from time to time by
the Company Board and/or Bank Board for its senior executive officers, for all
reasonable and customary travel and other out-of-pocket expenses incurred by Mr. Talley
in the performance of his duties and responsibilities under this Agreement and
promoting the business of the Company or Bank, including appropriate membership
fees, dues and the cost of attending meetings and conventions.

 

4.8 Retirement
Plans.  Mr. Talley shall be
entitled to participate in any and all qualified pension or other retirement
plans of the Company or Bank which may be applicable to executive personnel of
the Company or Bank.

 

4.9 Options.  Mr. Talley may be issued options to
acquire shares of Bank stock from time to time (or to participate in and receive
grants under any other equity based compensation program which the Company may
at the discretion of the Company Board may determine appropriate based upon the
recommendation of the Compensation Committee (or other approval procedure
required by applicable law regulation or Listing Requirement).Bank Board.

 

4.10 Other
Benefits. While this Agreement is in effect, Mr. Talley shall be
entitled to all other benefits that the Company or Bank provides from time to
time to its senior executive officers, including, but not limited to, any equity
compensation, or other incentive plans.

 

4.11 Eligibility.
Participation in any health, life, accident, disability, medical expense or
similar insurance plan or any qualified pension or other retirement plan shall
be subject to the terms and conditions contained in such plan. All matters of
eligibility for benefits under any insurance plans shall be determined in
accordance with the provisions of the applicable insurance policy issued by the
applicable insurance company.

 

5.                                       Conditions Subsequent to Continued
Operation and Effect of  Agreement.

 

5.1 Continued
Approval by Bank Regulatory Agencies. This Agreement and all of its terms
and conditions, and the continued operation and effect of this Agreement, shall
at all times be subject to the continuing approval of any and all Bank
Regulatory Agencies whose approval is a necessary prerequisite to the continued
operation of the Company and Bank. 
Should any term or condition of this Agreement, upon review by any Bank
Regulatory Agency, be found to violate or not be in compliance with any
then-applicable statute or any rule, regulation, order or understanding
promulgated by any Bank Regulatory Agency, or should any term or condition
required to be included herein by any such Bank Regulatory Agency be absent,
this Agreement may be rescinded and terminated by either party if the parties
hereto cannot in good faith agree upon such additions, deletions, or
modifications as may be deemed necessary or appropriate to bring this Agreement
into compliance.

 

4

 

6.                                       Termination of Agreement. This Agreement may be terminated prior
to expiration of the Term as provided below.

 

6.1                                  Definition of Cause. For purposes of this Agreement, “Cause”
means:

 

(a) any act
of theft, fraud, intentional misrepresentation or similar conduct by Mr. Talley
in connection with or associated with the services rendered by Mr. Talley
to the Bank under this Agreement;

 

(b) any
failure of this Agreement to comply with any Bank Regulatory Agency requirement
which is not cured in accordance with Section 5.1 within a reasonable
period of time after written notice thereof;

 

(c) any Bank
Regulatory Agency action or proceeding against Mr. Talley as a result of
his negligence, fraud, malfeasance or misconduct;

 

(d) material
failure of Mr. Talley to achieve budget requirements, performance
standards or targets established annually by the Company Board or Bank Board,
where such failure is not the result of economic conditions or lack of
appropriate effort and/or due diligence by Mr. Talley; or

 

(e) any of
the following conduct on the part of Mr. Talley that has not been
corrected or cured within thirty (30) days after having received written notice
from the Company Board or Bank Board detailing and describing such conduct:

 

(i)                    the use of drugs, alcohol or other substances by Mr. Talley
to an extent which materially interferes with or prevents Mr. Talley from
performing his duties under this Agreement;

 

(ii)                 failure by or the inability of Mr. Talley to
devote full time, attention and energy to the performance of his duties
pursuant to this Agreement (other than by reason of his death or disability);

 

(iii)              intentional material failure by Mr. Talley to
carry out the explicit lawful and reasonable directions, instructions,
policies, rules, regulations or decisions of the Company Board or Bank Board,
which are consistent with his position as Executive Vice President and Chief Financial
Officer; or

 

(iv)             willful or intentional misconduct on the part of Mr. Talley
that results in substantial injury to the Company or Bank or any of its
subsidiaries or affiliates.

 

6.2         Termination by Company and Bank.

 

6.2.1                        For Cause.  The Company
and Bank shall have the right to cancel and terminate this Agreement and Mr. Talley’s
employment for Cause immediately on written notice, with his compensation and
benefits ceasing as of his last day of employment, provided, however, that Mr. Talley
shall be entitled to benefits through the last day of employment and accrued
compensation to that date.

 

6.2.2                        Without Cause. 
The Company and Bank shall have the right to cancel and terminate this
Agreement and Mr. Talley’s employment at any time on written notice
without Cause for any or no reason, with Mr. Talley’s compensation and
benefits ceasing as of his last day of employment, subject to the provisions of
Section 6.5. and Article 8.

 

5

 

6.3 Termination
by Mr. Talley.  Mr. Talley
shall have the right to cancel and terminate this Agreement and his employment
at any time on sixty (60) days prior written notice to the Company Board and Bank
Board, with his compensation and benefits ceasing as of his last day of
employment, provided, however, that he shall be entitled to benefits through
the last day of employment and accrued compensation to that date.

 

6.4 Joint
Termination.  The right of the
Company and Bank to terminate Mr. Talley may not be exercised separately,
but must be exercised by both the Company and Bank simultaneously.

 

6.5 Severance.
Except as set forth below, if Mr. Talley’s employment with the Company and
Bank is terminated by the Company and Bank or its successors during the Term
without Cause, the Company and Bank or their successors shall, for the balance
of the Term, continue to pay Mr. Talley, in the manner set forth below, Mr. Talley’s
Salary at the rate being paid as of the date of termination plus the unpaid
portion of any CFO Bonus  previously
approved as provided in Section 4.2; and such other benefits as provided
in Sections 4.4, 4.5, and 4.6; provided, however, that Mr. Talley shall
not be entitled to any such payments of Salary if (i) his employment is
terminated due to his death or long-term disability or (ii) this Agreement
is rendered null and void pursuant to Section 5.1 or (iii) there is a
Change in Control Termination (as defined in Section 8.2). Any Salary and
CFO Bonus due Mr. Talley pursuant to this Section 6.5 shall be paid
to Mr. Talley in installments on the same schedule as he was paid
immediately prior to the date of termination, each installment to be the same
amount he would have been paid under this Agreement if he had not been
terminated. In the event Mr. Talley breaches any provision of Article 7
of this Agreement, Mr. Talley’s entitlement to any Salary, any CFO Bonus,
and any benefits due pursuant to this Section 6.5, if and to the extent
not yet paid, shall thereupon immediately cease and terminate.

 

7.                                       Confidentiality; Non-Competition;
Non-Interference.

 

7.1 Confidential
Information. Mr. Talley, during employment by the Company and Bank,
will have access to and become familiar with various confidential and
proprietary information of the Bank, its parent, subsidiaries and/or affiliates
(“Confidential Information”), including, but not limited to: business plans;
operating results; financial statements and financial information; contracts;
mailing lists; purchasing information; customer data (including lists, names
and requirements); feasibility studies; personnel related information
(including compensation, compensation plans, and staffing plans); internal
working documents and communications; and other materials related to the
businesses or activities of the Company and Bank, their subsidiaries and/or
affiliates which is made available only to employees with a need to know or
which is not generally made available to the public. Failure to mark any
Confidential Information as confidential, proprietary or protected information
shall not affect its status as part of the Confidential Information subject to
the terms of this Agreement.

 

7.2 Nondisclosure.  Mr. Talley hereby covenants and agrees
that he shall not at any time, directly or indirectly, disclose, divulge,
reveal, report, publish, or transfer any Confidential Information to any
Person, or use Confidential Information in any way or for any purpose, except
as required in the course of his employment by the Company and Bank. The
covenant set forth in this Section 7.2 shall not apply to information now
known by the public or which becomes known generally to the public (other than
as a result of a breach of this Article 7 by Mr. Talley) or
information that is customarily shown or disclosed.

 

7.3 Documents.
All files, papers, records, documents, compilations, summaries, lists, reports,
notes, databases, tapes, sketches, drawings, memoranda, and similar items
(collectively, “Documents”), whether prepared by Mr. Talley, or otherwise
provided to or coming into the possession of Mr. Talley, that contain any
proprietary information about or pertaining or relating to the Company or Bank,
their respective parents, subsidiaries and/or affiliates and/or their
businesses (“Proprietary Information”) shall at all times remain their
exclusive property. Promptly after a request by the Company Board or Bank Board
or the termination of Mr. Talley’s employment, Mr. Talley shall take
reasonable efforts to (i) return to the Company and Bank all Documents in
any tangible form (whether originals, copies or reproductions) and all computer
disks containing or embodying any Document or Proprietary Information and (ii) purge
and destroy all Documents and Proprietary 

 

6

 

Information in any
intangible form (including computerized, digital or other electronic format) as
may be requested in writing by the Company Chairman or Bank Chairman , and Mr. Talley
shall not retain in any tangible form any such Document or any summary,
compilation, synopsis or abstract of any Document or Proprietary Information.

 

7.4                                  Non-Competition.

 

7.4.1 Mr. Talley
hereby acknowledges and agrees that, during the course of employment by the Company
and Bank, he will become familiar with and involved in all aspects of the
business and operations of the Bank and its parent, subsidiaries and
affiliates.  Mr. Talley hereby
covenants and agrees that from the Commencement Date until the earlier to occur
of (a) the date one hundred eighty (180) days after his last day of
employment with the Bank or (b) October 1, 2013, Mr. Talley will
not at any time, directly or indirectly, in any capacity (whether as a
proprietor, owner, agent, officer, director, shareholder, partner, principal,
member, employee, contractor, consultant or otherwise) render any services to a
bank or savings and loan or a holding company of a bank or savings and loan (in
any case, a “financial institution”) with respect to any financial institution office,
branch or other facility (in any case, a “Branch”) that is located within a
thirty-five (35) mile radius of the location of the Bank’s headquarters on the
date hereof (including, without limitation, being involved in any manner in the
operations of or having any responsibilities with respect to any Branch).

 

7.4.2 This Section 7.4
shall not apply if prior to October 1, 2013, there is a (i) merger or
consolidation of the Company with a third party in which the Company is not the
survivor, (ii) sale of a controlling interest in the Company to a third
party or (iii) a sale of all or substantially all of the business or
assets of the Company to a third party, and this Agreement is not assumed by
such third party or Mr. Talley’s employment hereunder is otherwise
terminated by the Company or such third party in connection with such merger,
consolidation or sale. Further, mere ownership of less than two percent (2%) of
the securities of any publicly held corporation shall not constitute a
violation of this Section.

 

7.5 Non-Interference.  Mr. Talley hereby covenants and agrees
that from the Commencement Date until the earlier to occur of (a) the date
one hundred eighty (180) days after his last day of employment with the Company
and Bank or (b) October 1, 2013, he will not, directly or indirectly,
for himself or any other Person (whether as a proprietor, owner, agent,
officer, director, shareholder, partner, principal, member, employee,
contractor, consultant or any other capacity), induce or attempt to induce any
customers, suppliers, officers, employees, contractors, consultants, agents or
representatives of, or any other person that has a business relationship with,
the Company or any of its subsidiaries and affiliates to discontinue, terminate
or reduce the extent of their relationship with the Company and/or any such
subsidiary or affiliate or to take any action that would disrupt or otherwise
be disadvantageous to any such relationship.

 

7.6 Injunction.
In the event of any breach or threatened or attempted breach of any such
provision by Mr. Talley, the Company and Bank shall, in addition to and
not to the exclusion of any other rights and remedies at law or in equity, be
entitled to seek and receive from any court of competent jurisdiction (i) full
temporary and permanent injunctive relief enjoining and restraining Mr. Talley
and each and every other Person concerned therein from the continuation of such
volatile acts and (ii) a decree for specific performance of the applicable
provisions of this Agreement, without being required to furnish any bond or
other security.

 

7.7                                 Reasonableness.

 

7.7.1 Mr. Talley
has carefully read and considered the provisions of this Article 7 and, having
done so, agrees that the restrictions and agreements set forth in this Article 7
are fair and reasonable and are reasonably required for the protection of the
interests of the Company and Bank and their business, shareholders, directors,
officers and employees.  Mr. Talley
further agrees that the restrictions set forth in this Agreement will not
impair or unreasonably restrain his ability to earn a livelihood.

 

7

 

7.7.2 If any court
of competent jurisdiction should determine that the duration, geographical area
or scope of any provision or restriction set forth in this Article 7
exceeds the maximum duration, geographic area or scope that is reasonable and
enforceable under applicable law, the parties agree that said provision shall
automatically be modified and shall be deemed to extend only over the maximum
duration, geographical area and/or scope as to which such provision or
restriction said court determines to be valid and enforceable under applicable law,
which determination the parties direct the court to make, and the parties agree
to be bound by such modified provision or restriction.

 

8.                                       Change in Control.

 

8.1                                 Definition.  “Change in
Control” means and shall be deemed to have occurred if:

 

(a)   there shall be consummated (1) any
consolidation, merger, share exchange, or similar transaction relating to the
Company, in which the Company is not the continuing or surviving entity or
pursuant to which shares of the Company’s capital stock are converted into
cash, securities of another entity and/or other property, other than a
transaction in which the holders of the Company’s voting stock immediately
before such transaction shall, upon consummation of such transaction, own at
least fifty percent (50%) of the voting power of the surviving entity, or (2) any
sale of all or substantially all of the assets of the Company, other than a
transfer of assets to a related person which is not treated as a change in
control event under §1.409A-3(i)(5)(vii)(B) of U.S. Treasury Regulations;

 

(b)  any
person (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) shall after
the Commencement Date become the beneficial owner (within the meaning of Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty-one percent (51%) or more of the voting power of
then all outstanding securities of the Company entitled to vote generally in
the election of directors of the Company (including, without limitation, any
securities of the Company that any such person has the right to acquire
pursuant to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, which shall be deemed beneficially owned by such
person); or

 

(c)  where
over a twelve month period, a majority of the members of the Board of Directors
of the Company (the “Board”) are replaced by directors whose appointment or
election was not endorsed by a majority of the members of the Board in office
prior to such appointment or election.

 

(d)  Notwithstanding
the foregoing, if the event purportedly constituting a Change in Control under Section 8.1(a),
Section 8.1(b) or Section 8.1(c) does not also constitute a
“change in ownership” of the Company, a “change in effective control” of the
Company, or a “change in the ownership of a substantial portion of the assets”
of the Company within the meaning of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and the regulations and administrative
guidance promulgated thereunder (“Section 409A”), then such event shall
not constitute a “Change in Control” hereunder.”

 

8.2                                 Change in Control Termination. 
For purposes of this Agreement, a “Change in Control Termination” means
that while this Agreement is in effect:

 

(a)  Mr. Talley’s
employment with the Company or Bank is terminated without Cause within one
hundred twenty (120) days immediately (i) prior to and in conjunction with
a Change in Control or (ii) following consummation of a Change in Control;
or

 

(b)  Within 120 days following consummation of a
Change in Control, Mr. Talley’s title, duties and or position have been
materially reduced such that Mr. Talley is not in a comparable position
(with materially comparable compensation and benefits) with the surviving
corporation to the position he held immediately prior to the Change in Control,
and within fifteen (15) days after notification of such reduction Mr. Talley
notifies the Company Board or its successors that he is terminating his
employment due to such change in his employment

 

8

 

unless such change is cured within thirty (30) days of
such notice by providing him with a comparable position (including materially
comparable compensation and benefits). 
If Mr. Talley’s employment is terminated under this Section, his
last day of employment shall be mutually agreed to by Mr. Talley and the Company
Board or its successors, but shall be not more than sixty (60) days after such
notice is given by Mr. Talley; or

 

(c)   If at the expiration of the one hundred
twenty (120) day period immediately following consummation of a Change in
Control (the “Action Period”) none of the events described in Sections 8.2(a) and
8.2(b) above have occurred, Mr. Talley, within the thirty (30) day
period immediately following the last day of the Action Period, notifies the Company
Board that he is terminating his employment due to the Change in Control, with
his last day of employment to be mutually agreed to by Mr. Talley, the Company
or its successors but which shall be not more than sixty (60) days after such
notice is given by Mr. Talley.

 

8.3                                 Change in Control Payment.  If
there is a Change in Control Termination, Mr. Talley shall be paid in
thirty-six (36) equal cash payments (the “Change Payment”) by the Bank where
the total of the Change Payment will be equal to 2.99 times his Salary at the
highest rate in effect during the twelve (12) month period immediately
preceding his last day of employment, such Change Payment to be made to Mr. Talley
within forty-five (45) days after the later of (i) his last day of
employment or (ii) the date of the Change in Control, the exact date of
payment to be determined in the sole discretion of the Company. In addition,
the Bank shall make monthly payments for twenty-four (24) months following the
Change in Control Termination, for Mr. Talley’s health insurance
premiums.  The payments described in this
Section 8.3 are “Change Payments.”  The
payment of health insurance premiums is conditioned on the terms of the Company’s
or Bank’s health insurance policy then in place and the Officer’s compliance
with applicable federal and state laws and regulations.

 

8.4                                 Adjustment.

 

(a) 
Notwithstanding anything in this Agreement to the contrary, if the Determining
Firm (as defined in Section 8.4(b)) determines that any portion of the
Change Payment and/or the portions, if any, of other payments or distributions
in the nature of compensation by the Bank to or for the benefit of Mr. Talley
(including, but not limited to, the value of the acceleration in vesting of
restricted stock, options or any other stock-based compensation) whether or not
paid or payable or distributed or distributable pursuant to the terms of this
Agreement (collectively with the Change Payment, the “Aggregate Payment”),
would cause any portion of the Aggregate Payment to be subject to the excise
tax imposed by Code Section 4999 or would be nondeductible by the Company
or Bank pursuant to Code Section 280G (such portion subject to the excise
tax or being nondeductible, the “Parachute Payment”), the Aggregate Payment
will be reduced, beginning with the Change Payment, to an amount which will not
cause any portion of the Aggregate Payment to constitute a Parachute Payment.

 

(b)  All
determinations required to be made under this Section 8.4, will be made by
a reputable law or accounting firm (the “Determining Firm”) selected by the
Company.  All fees and expenses of the
Determining Firm will be obligations solely of the Company.  The determination of the Determining Firm
will be binding upon Mr. Talley and the Company.

 

“8.5                           Construction; Compliance with 409A, Delay
in Payment.

 

(a)  It is the
intention of the parties hereto that this Agreement and the payments provided
for hereunder shall be in accordance with Section 409A, and thus avoid the
imposition of any excise tax and interest on Mr. Talley pursuant to Section 409A(a)(1)(B) of
the Code, and this Agreement shall be interpreted and construed consistent with
this intent.  Mr. Talley
acknowledges and agrees that he shall be solely responsible for the payment of
any excise tax or penalty which may be imposed or to which he may become
subject as a result of the payment of any amounts under this Agreement.

 

(b)  Notwithstanding
anything to the contrary contained herein, any payment hereunder that is
considered 

 

9

 

“nonqualified deferred
compensation” that is to be made to Mr. Talley while he is a “specified
employee”, in each case as defined and determined for purposes of Section 409A,
within six months following Mr. Talley’s “separation from service” (as
determined in accordance with Section 409A), then to the extent that such
payment is not otherwise permitted under Section 409A such that it would
be exempt from the excise tax thereunder, such payment shall be delayed and
shall be paid on the first business day of the seventh calendar month following
Mr. Talley’s separation from service, or, if earlier upon Mr. Talley’s
death.  To the extent that any payment to
Mr. Talley which is payable in installments is required to be deferred
pursuant to this Section 8.5(b), such deferred installments shall be paid
on the first business day of the seventh month following Mr. Talley’s
separation from service, or, if earlier upon Mr. Talley’s death, and any
remaining installments shall be paid as scheduled.  For purposes of this Agreement, any payment
to Mr. Talley which is payable in installments represents the right to a
series of separate payments.

 

(c)  The parties
hereto agree that they shall take such actions as may be necessary and
permissible under applicable law, regulation and guidance to amend or revise
this Agreement in order to fully comply with Section 409A.”

 

9. Assignability.  Mr. Talley shall have no right to assign
this Agreement or any of his rights or obligations hereunder to another party
or parties.

 

10. Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Maryland applicable to contracts executed and to be
performed therein, without giving to the choice of law rules thereof.

 

11. Notices. All
notices, requests, demands and other communications required to be given or
permitted to be given under this Agreement shall be in writing and shall be
conclusively deemed to have been given (1) when hand delivered to the
other party, or (2) when received when by facsimile at the address a
number set forth below provided however, that notices given by facsimile
shall not be effective unless either a duplicate copy of such facsimile notice
is promptly given by depositing same in a United States post office first-class
postage prepaid and addressed to the parties as set forth below, or the
receiving party delivers a written confirmation of receipt for such notice
either by facsimile or any other method permitted under this sub additionally,
any notice given by facsimile shall be deemed received on the next business day
if such notice is received after 5:00 p.m. (recipient’s time) or on a
non-business day); or three (3) business days after the same have been
deposited in a United States post office with first-class certified mail,
return receipt, postage prepaid and addressed to the parties as set forth
below; or (4) the next business day after same have been deposited with a
national overnight delivery service reasonably approved by the parties (Federal
Express and DHL WorldWide Express being deemed approved by the parties),
postage prepaid, addressed to the parties as set forth below with
next-business-day delivery guaranteed, provided that the sending party received
a confirmation of delivery from the delivery service provider. The address of a
party set forth below may be changed by that party by written notice to the
other from time to time pursuant to this Article.

 

	
  To:

  	
  John N. Burdette

  	
  cc:

  	
  David Baris,
  Esquire

  
	
   

  	
  Chairman of the
  Board

  	
   

  	
  Kennedy,
  Baris, & Lundy L.L.P.

  
	
   

  	
  Frederick County
  Bank

  	
   

  	
  4701 Sangamore
  Road, Suite P-15

  
	
   

  	
  P.O. Box
  1100

  	
   

  	
  Bethesda, MD
  20816

  
	
   

  	
  Frederick, MD
  21702

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  To:

  	
  William R.
  Talley, Jr.

  6227 Derby Drive

  Frederick, MD
  21703

  	
   

  	
   

  

 

12. Entire
Agreement. This Agreement contains all of the agreements and understandings
between the parties hereto with respect to the employment of Mr. Talley by
the Bank, and supersedes all prior agreements, arrangements and understandings
related to the subject matter hereof, including but not limited to the
Employment Agreement dated August 18, 2005 by and between Frederick County
Bank and Martin S. Talley. No oral agreements or written 

 

10

 

correspondence
shall be held to affect the provisions hereof. No representation, promise,
inducement or statement of intention has been made by either party that is not
set forth in this Agreement, and neither party shall be bound by or liable for
any alleged representation, promise, inducement or statement of intention not
so set forth.

 

13. Headings.
The Article and Section headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.

 

14. Severability.
Should any part of this Agreement for any reason be declared or held illegal,
invalid or unenforceable, such determination shall not affect the legality,
validity or enforceability of any remaining portion or provision of this
Agreement, which remaining portions and provisions shall remain in force and
effect as if this Agreement has been executed with the illegal, invalid or
unenforceable portion thereof eliminated.

 

15. Amendment:
Waiver. Neither this Agreement nor any provision hereof may be amended,
modified, changed, waived, discharged or terminated except by an instrument in
writing signed by the party against which enforcement of the amendment,
modification, change, waiver, discharge or termination is sought. The failure
of either party at any time or times to require performance of any provision
hereof shall not in any manner affect the right at a later time to enforce the
same. No waiver by either party of the breach of any term, provision or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term, provision or covenant contained in this Agreement.

 

16. Gender and
Tense. As used in this Agreement, the masculine, feminine and neuter
gender, and the singular or plural number, shall each be deemed to include the
other or others whenever the context so indicates.

 

17. Binding
Effect. This Agreement is and shall be binding upon, and inures to the
benefit of, the Company and Bank, their respective successors and assigns, and Mr. Talley
and his heirs, executors, administrators, and personal and legal
representatives.

 

 

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written
above.

 

FREDERICK COUNTY BANCORP, INC.

FREDERICK COUNTY BANK

 

 

	
  By:

  	
  /s/ John N.
  Burdette

  	
   

  	
  By:

  	
  /s/ William
  R. Talley, Jr.

  
	
   

  	
  John N. Burdette

  	
   

  	
   

  	
  William R.
  Talley, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chairman of the
  Board

  	
   

  	
  Title:

  	
  Executive Vice
  President & Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  September 28,
  2009

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  
						

 

11

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