Document:

Exhibit 10.21

 

Home Solutions of
America, Inc.

2001 Stock Plan

Stock Option Agreement

Unless otherwise defined in this Stock Option
Agreement (this "Stock Option Agreement"), the capitalized terms
herein shall have the same meaning as defined in the Plan (defined below). 
This Stock Option Agreement is executed to be effective as of July 31, 2003.

I.          NOTICE
OF STOCK OPTION GRANT

           The
undersigned Optionee (the "Optionee") has been granted an Option
to purchase Common Stock of Home Solutions of America, Inc., a Delaware corporation
(the "Company"), subject to the terms and conditions of the
Company's 2001 Stock Plan (the "Plan") and this Stock Option
Agreement, as follows:

	
   	
  Optionee

  	
  Rick
  J. O'Brien

  	
   

  
	
   	
   

  	
   

  	
   

  
	
   	
  Date
  of Grant

  	
  July 31, 2003

  	

  
	

   	

  	

  	

  
	
   	
  Vesting
  Commencement Date

  	
  July 31, 2003

  	

  
	

   	

  	

  	

  
	
   	
  Exercise
  Price per Share

  	
  $2.00

  	

  
	

   	

  	

  	

  
	
   	
  Total
  Number of Shares Granted

  	
  250,000

  	

  
	

   	

  	

  	

  
	
   	
  Total
  Exercise Price

  	
  $500,000

  	
   

  
	

   	

  	

  	

  
	
   	
  Type
  of Option:

  	
   
  X   Incentive Stock Option

  	

  
	
   	
   

  	
          Non-Qualified Stock Option

  	

  
	

   	

  	

  	

  
	
   	
  Term/Expiration
  Date:

  	
  Tenth
  Anniversary of Date of Grant

  	

  

            Vesting
Schedule:         The Option shall become exercisable as to 1/36th
of the Shares subject to the Option on the last day of each month following the
Date of the Grant, subject to Optionee's continued status as a Service Provider
on each such date.  The Shares shall vest immediately (i) if a Change of
Control of the Company shall occur, or (ii) if the Optionee's employment under
his Executive Employment Agreement of even date herewith is terminated without
"Cause" or with "Good Reason", as such terms are defined under the Executive
Employment Agreement.

 

Termination Period:  The vested portion of this Option shall be exercisable for 90 days
after Optionee ceases to be a Service Provider.  Upon Optionee's death or
disability, the vested portion of this Option shall be exercisable for the
duration of the time period provided for in the Plan.  In no event may Optionee
exercise this Option after the Term/Expiration Date as provided above.

 

II.               

AGREEMENT

            1.         Grant
of Option.

                        (a)        The
Administrator hereby grants to the Optionee an option (the "Option")
to purchase the number of Shares set forth herein, at the per Share exercise
price set forth herein (the "Exercise Price"), and subject to the
terms and conditions of the Plan, which is incorporated herein by reference. 
In the event of a conflict between the terms and conditions of the Plan and
this Stock Option Agreement, the terms and conditions of the Plan shall
prevail. 

                        (b)        If
designated as an Incentive Stock Option ("ISO"), the Option is intended
to qualify as an Incentive Stock Option as defined in Section 422 of the
Code.  Nevertheless, to the extent that it exceeds the $100,000 rule of Code
Section 422(d), the Option shall be treated as a Non-Qualified Stock Option ("NSO").

            2.         Exercise
of Option.

                        (a)        Right
to Exercise.  The Option shall be exercisable for the duration of its term
and in accordance with the Vesting Schedule set forth herein, subject to any
applicable provisions of the Plan and any other applicable provisions of this Stock
Option Agreement.

                        (b)        Method
of Exercise.  The Option shall be exercisable by delivery of an exercise
notice in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the Optionee's election to exercise the Option, the number of
Shares with respect to which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be
required by the Company. The Exercise Notice shall be accompanied by payment of
the aggregate Exercise Price as to all Exercised Shares.  The Option shall be
deemed exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by the aggregate Exercise Price.

            3.         Optionee's
Representations.  In the event the Shares have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), at
the time this Option is exercised, the Optionee shall, if required by the
Company, concurrently with the exercise of all or any portion of this Option,
deliver to the Company his or her Investment Representation Statement in the
form attached hereto as Exhibit B.

            4.         Lock-Up Period.  Optionee hereby
agrees that, if so requested by the Company or any representative of the
underwriters (the "Managing Underwriter") in connection with any
registration of the offering of any securities of the Company under the
Securities Act, Optionee shall not sell or otherwise transfer any Shares
or other securities of the Company during the 180-day period (or such other
shorter or longer period as may be requested in writing by the Managing
Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act (excluding a
registration of securities on Form S-8 or a successor form).  The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such Market Standoff Period.

2

            5.         Method
of Payment.  Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee

                        (a)        cash
or check;

                        (b)        Shares
surrendered to the Company in a Cashless Exercise; or

                        (c)        surrender
of other Shares that, (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six months on the date of
surrender, and (ii) have an aggregate Fair Market Value as of the date of
surrender equal to the aggregate Exercise Price of the Exercised Shares.

            6.         Restrictions
on Exercise.  The Option may not be exercised unless the issuance of such
Shares upon such exercise or the method of payment of consideration for such
shares would constitute a violation of any Applicable Law.

            7.         Non-Transferability
of Option.  The Option may not be transferred in any manner other than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by Optionee.  The terms of the Plan and this Stock
Option Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.

            8.         Term
of Option.  The Option may be exercised only within the term set forth
herein, and may be exercised during such term only in accordance with the Plan
and the terms of this Stock Option Agreement.

            9.         Entire
Agreement; Governing Law.  The Plan is incorporated herein by reference.
The Plan and this Stock Option Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof, and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by a writing signed by the Company and Optionee.  This
Stock Option Agreement is governed by the internal substantive laws but not the
choice of law rules of the State of Delaware.  Venue for all disputes arising hereunder shall be
proper exclusively in Harris County, Texas.

3

            10.       No
Guarantee of Continued Service.  OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS A SERVICE PROVIDER IN ACCORDANCE WITH THE OPTIONEE'S EMPLOYMENT
AGREEMENT, IF ANY, OR OTHERWISE (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR
THE VESTING PERIOD, FOR ANY PERIOD, OR AT  ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME IN ACCORDANCE WITH
THE OPTIONEE'S EMPLOYMENT AGREEMENT, IF ANY, OR OTHERWISE, AT ANY TIME, WITH OR
WITHOUT CAUSE.

            11.       Optionee
acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts the Option
and agrees to all of the terms and provisions hereof related thereto.  Optionee
has reviewed the Plan and this Stock Option Agreement in their entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Stock Option Agreement and fully understands all provisions of this Stock
Option Agreement.  Optionee hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Administrator upon any questions
arising under the Plan or this Stock Option Agreement.  Optionee further agrees
to notify the Company upon any change in the residence address indicated below.

            12.       The
Company hereby agrees that, on or before March 31, 2004, the Company will either (i) register
all shares available for issuance under the Plan, or (ii) enter into a
registration rights agreement with Optionee under the same terms as that
Registration Rights Agreement between the Company and Merritt Computer
Products, L.P. dated July
 31, 2003.  

  	"COMPANY"   	

"OPTIONEE"

      
	 	

 
	HOME
SOLUTIONS OF AMERICA, INC.   	

 

      
	 	

    

      
	By:                                           
      	

                                          

      
	Name:                                     
      	

Rick
J. O'Brien

      
	Title:                                        
      	

 

      
	 	

   

      
	 	

 Address:

      
	 	 
	 	

5565 Red Bird Center Drive

      
	 	

Suite 150

      
	 	

Dallas,
 TX
 75237

      

4

EXHIBIT A

 

2001 STOCK PLAN

EXERCISE NOTICE

 

Home
Solutions of America, Inc.

11850
  Jones Road

Houston, Texas 77070

ATTN:  Secretary

1.   Exercise of Option.  Effective as of
today, _______________, 20___, the undersigned ("Optionee")
hereby elects to exercise Optionee's option to purchase ________________ shares
(the "Shares") of the Common Stock of Home Solutions of America,
Inc. (the "Company") under and pursuant to the 2001 Stock Plan
(the "Plan") and the Stock Option Agreement dated _________, 2003
(the "Stock Option Agreement") with the execution of this
Exercise Notice (this "Exercise Notice").

2.   Delivery of Payment.  Optionee herewith
delivers to the Company the full purchase price of the Shares, as set forth in
the Stock Option Agreement.

3.   Representations of Optionee.  Optionee
acknowledges that Optionee has received, read and understood the Plan and the
Stock Option Agreement and agrees to abide by and be bound by their terms and
conditions.

4.   Rights as Stockholder.  Until the issuance
of the Shares (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option.  The Shares
shall be issued to the Optionee as soon as practicable after the Option is
exercised.  No adjustment shall be made for a dividend or other right for which
the record date is prior to the date of issuance except as provided in Section
12 of the Plan.

5.   Tax Consultation.  Optionee understands
that Optionee may suffer adverse tax consequences as a result of Optionee's
purchase or disposition of the Shares.  Optionee represents that Optionee has
consulted with any tax consultants Optionee deems advisable in connection with
the purchase or disposition of the Shares and that Optionee is not relying on
the Company for any tax advice.

A-1

6.   Restrictive Legends and Stop-Transfer Orders.

(a)  Legends.  Optionee understands and agrees
that the Company shall cause the legends set forth below or legends
substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.

 

(b)  Stop-Transfer Notices.  Optionee agrees
that, in order to ensure compliance with the restrictions referred to herein,
the Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.

7.   Successors and Assigns.  This Exercise
Notice shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.

8.   Interpretation.  Any dispute regarding the
interpretation of this Agreement shall be submitted by Optionee or by the
Company forthwith to the Administrator, which shall review such dispute at its
next regular meeting.  The resolution of such a dispute by the Administrator
shall be final and binding on all parties.

      

  	Submitted
by: 	

 Accepted
by:

      
	 	 
	OPTIONEE:	

 HOME
SOLUTIONS OF AMERICA, INC. 

      
	 	 
	_____________________________                         
      	

By:                                                       

      
	Rick
J. O'Brien	

Name:                                                  

      
	 	

Title:                                                     

      

A-2

EXHIBIT B

INVESTMENT REPRESENTATION
STATEMENT

 

	OPTIONEE:   	 Rick J. O'Brien   
	

COMPANY:   

    	

Home
Solutions of America, Inc.

    
	

SECURITY:   

    	

Common
Stock

    
	

AMOUNT:   

    	

$__________________________

    
	

DATE:   

    	

 __________________________ 

    

            In
connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

1.   Optionee is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
Securities.  Optionee is acquiring these Securities for investment for
Optionee's own account only and not with a view to, or for resale in connection
with, any "distribution" thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act").

2.   Optionee acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and have
not been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of Optionee's investment intent as expressed herein.  In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if Optionee's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future.  Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available.  Optionee further
acknowledges and understands that the Company is under no obligation to
register the Securities.  Optionee understands that the certificate evidencing
the Securities will be imprinted with a legend that prohibits the transfer of
the Securities unless they are registered or such registration is not required
in the opinion of counsel satisfactory to the Company and any other legend
required under applicable state securities laws.

B-1

3.   Optionee is familiar with the provisions of
Rule 144, promulgated under the Securities Act, which, in substance,
permits limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions.  The Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144, and the resale
must take place in a manner described in (1) below; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
following conditions: (1) the resale is made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as
said term is defined under the Securities Exchange Act of 1934), (2) the
availability of certain public information about the Company, (3) the amount of
Securities being sold during any three-month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144.

4.   Optionee further understands that in the event
all of the applicable requirements of Rule 144 are not satisfied,
registration under the Securities Act or some other registration exemption will
be required; and that the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that
such persons and their respective brokers who participate in such transactions
do so at their own risk.  Optionee understands that no assurances can be given
that any such other registration exemption will be available in such event.

  	 	

"Optionee"

      
	 	 
	 	

___________________________________

      
		Rick J. O'Brien
	 	 
	 	

Date:______________________________

      

B-2Exhibit 10.1

                               Cecil Federal Bank

             Form of Supplemental Executive Retirement Plan ("SERP")

Table of Contents

Section 1 -      STATEMENT OF PURPOSE                                      2

SECTION 2 -      Definitions                                               2

SECTION 3 -      PLAN ADMINISTRATION                                       3

Section 4 -      Eligibility AND PARTICIPATION                             4

Section 5 -      RETIREMENT BENEFIT                                        4

Section 6 -      PRE-RETIREMENT SURVIVOR BENEFIT                           5

SECTION 7 -      DISABILITY BENEFIT AND AUTHORIZED LEAVE OF ABSENCE        5

Section 8 -      BANK-Owned Life Insurance  ("BOLI")                       5

Section 9 -      ADMINISTRATOR                                             6

Section 10 -     The ADMINISTRATOR's Consultant                            6

Section 11 -     Amendment                                                 7

section 12 -     Miscellaneous                                             7

SECTION 13 -     CONSTRUCTION                                              8

<PAGE>

Section 1 - Statement of Purpose

This Plan is designed and implemented for the purpose of providing to a limited
group of key management or highly compensated employees of Cecil Federal Bank
("the Bank") who are largely responsible for the Bank's success the opportunity
to receive supplemental executive retirement benefits, thereby increasing the
incentive of such key employees to remain in the employ of the Bank and to make
the Bank more profitable. Special payments shall be made to Participants upon
retirement or death and are intended to provide Participants with additional
financial security.

Section 2 - Definitions

2.1 "Accrued Benefit" means a Participant's normal retirement benefit, as
described in Section 5.1 hereof, multiplied by a fraction, the numerator of
which is the Participant's total number of Years of Service with the Bank at the
time of determination, and the denominator of which is the aggregate number of
Years of Service with the Bank the Participant would have accumulated at his or
her Normal Retirement Date.

2.2 "Actuarial Equivalent" means, with respect to a given benefit, any other
benefit provided under the terms of the Plan which has the same present or
equivalent value on the date the given benefit payment commences, as determined
by the Bank.

2.3 "Administrator" means the person(s) or entity designated by the Board to
administer the Plan on behalf of the Bank.

2.4 "Bank" means Cecil Federal Bank, a federally chartered bank, including any
subsidiaries, successors and assigns thereto.

2.5 "Beneficiary" means any person or persons designated by a Participant in
writing on a form satisfactory to the Bank. In the absence of any living
designated beneficiary, a deceased Participant's Beneficiary shall be the
deceased Participant's then living spouse, if any, for his or her life; if none,
or from and after such spouse's death, then the living children of the deceased
Participant, if any, in equal shares, for their joint and survivor lives; and if
none, or after their respective joint and survivor lives, the estate of the
deceased Participant.

2.6 "Board" means the Board of Directors of the Bank, or any committee of such
Board that is authorized to oversee, administer and amend the Plan.

2.7 "Designated Retirement Age" means the retirement age set forth in a
Participant's Plan Participation Agreement.

2.8 "Disability" means a physical or mental condition of a Participant resulting
from bodily injury, disease or mental disorder, which renders him or her
incapable of continuing his or her usual and customary employment with the Bank.
The Disability of a Participant shall be determined by a licensed physician
selected by the Bank.

2.9 "Early Retirement Date" means the date on which a Participant attains age
fifty-five (55), with ten (10) years of Participation in the Plan.

2.10     "Effective Date" means July 1, 2003.

2.11      "Employee" means an employee of the Bank or subsidiary.

2.12 "Employer" means the Bank and any successors that shall maintain this Plan.
The Employer is a corporation, with principal offices in the State of Maryland.

2.13 "High Recognized Compensation" means the average of the Employee's highest
five consecutive years' Recognized Compensation.

2.14 "Normal Retirement Date" means the date on which a Participant attains his
or her Designated Retirement Age with at least ten (10) years of Participation
in the Plan.

2.15 "Participant" means an Employee selected by the Board for participation in
the Plan in accordance with Section 4 hereof, and who has not for any reason
become ineligible to participate further in this Plan. An individual shall be
deemed to continue as a Participant until all benefits payable to the
Participant under this Plan have been distributed.

2.16 "Plan" means the Cecil Federal Bank Supplemental Executive Retirement Plan
("SERP") as contained in this document, including all amendments thereto.

2.17 "Plan Participation Agreement" means a written agreement between a
Participant and the Bank in substantially the form attached hereto as Exhibit A.

2.18 "Plan Year" means the twelve month period commencing on January 1st of each
year and ending the following December 31st. The initial Plan Year shall be July
1 through December 31, 2003.

                                       2
<PAGE>

2.19 "Recognized Compensation" means the total compensation for the year to
which a Participant is entitled.

2.20 "Year of Service" means a period of twelve consecutive months during which
a Participant is employed by the Bank. Unless otherwise provided in his or her
Plan Participation Agreement, in determining a Participant's Years of Service,
he or she shall receive credit for service from and after his or her most recent
employment commencement date.

Section 3 - Plan Administration

3.1 Powers and duties of the Administrator. The Employer shall appoint the Plan
Administrator, who shall administer the Plan for the exclusive benefit of the
Participants and their Beneficiaries, subject to the specific terms of the Plan.
The Administrator shall administer the Plan in accordance with its terms and
shall have the power and discretion to construe the terms of the Plan and to
determine all questions arising in connection with the administration,
interpretation, and application of the Plan. The Administrator may establish
procedures, correct any defect, supply any information, or reconcile any
inconsistency in such manner and to such extent as shall be deemed necessary or
advisable to carry out the purpose of the Plan; provided, however, that any
procedure, discretionary act, interpretation or construction shall be done in a
nondiscriminatory manner based upon uniform principles consistently applied. The
Administrator shall have all powers necessary or appropriate to accomplish his
duties under this Plan.

The Administrator shall be charged with the duties of the general administration
of the Plan, including, but not limited to, the following:

         (a) The discretion to determine all questions relating to the
         eligibility of Employees to participate or remain a Participant
         hereunder and to receive benefits under the Plan;

         (b) To compute and make determinations with respect to the amount of
         benefits to which any Participant shall be entitled hereunder;

         (c) To authorize and make nondiscretionary or otherwise directed
         disbursements to Participants;

         (d) To maintain all necessary records for the administration of the
         Plan;

         (e) To interpret the provisions of the Plan and to make and publish
         such rules for the regulation of the Plan as are consistent with the
         terms hereof;

         (f) To prepare and implement a procedure to notify employees that they
         have been selected as eligible to participate in the Plan;

         (g) To assist any Participant regarding his rights, benefits, or
         elections available under the Plan.

3.2 Records and Reports. The Administrator shall keep a record of all actions
taken and shall keep all other books of account, records, and other data that
may be necessary for proper administration of the Plan and shall be responsible
for supplying all information and reports to the Employer, Participants and
Beneficiaries.

3.3 Participant Statement. The Administrator shall provide each Participant each
Plan Year a statement indicating that Participant's current and projected
retirement benefit under the Plan.

3.4 Information from Employer. To enable the Administrator to perform his
functions, the Employer shall supply full and timely information to the
Administrator on all matters relating to the compensation of all Participants,
their retirement, death, disability, or termination of employment, and such
other pertinent facts as the Administrator may require. The Administrator may
rely upon such information as is supplied by the Employer and shall have no duty
or responsibility to verify such information.

3.5 Claims Procedure. Claims for benefits under the Plan may be filed with the
Administrator on forms supplied by the Employer. Written or electronic notice of
the disposition of a claim shall be furnished to the claimant within 90 days
after the claim is filed. If additional time (up to 90 days) is required by the
Administrator to process the claim, written notice shall be provided to the
claimant within the initial 90 day period. The extension notice shall indicate
the special circumstances requiring an extension of time and the date by which
the Administrator expects to render a determination.

In the event the claim is denied in whole or in part, the notice shall set forth
in language calculated to be understood by the claimant (i) the specific reason
or reasons for the denial, (ii) specific reference to pertinent Plan provisions
on which the denial is based, (iii) a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary, and (iv) a description of the
Plan's review procedures and the time limits applicable to such procedures,
including a statement of the claimant's right, if any, to bring a civil action
under section

                                       3
<PAGE>

502(a) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), following an adverse benefit determination on review.

3.6 Claims Review Procedure. Any Employee, former Employee, or Beneficiary who
has been denied a benefit by a decision of the Administrator pursuant to Section
3.5 shall be entitled to request the Administrator to give further consideration
to his claim by filing with the Administrator a request for a hearing. Such
request, together with a written statement of the reasons why the claimant
believes his claim should be allowed, shall be filed with the Administrator no
later than 60 days after receipt of the written notification provided for in
Section 3.5. The claimant shall be provided, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claimant's claim for benefits. The Administrator
shall then conduct a hearing within the next 60 days, at which the claimant
shall have an opportunity to submit comments, documents, records and other
information relating to the claim without regard to whether such information was
submitted or considered in the initial benefit determination.

The Administrator shall make a final decision as to the allowance of the claim
within 60 days of receipt of the appeal (unless there has been an extension due
to special circumstances, provided the delay and the special circumstances
occasioning it are communicated to the claimant in writing within the 60 day
period), and a decision shall be rendered as soon as possible but not later than
120 days after receipt of the request for review; provided, however, in the
event the claimant fails to submit information necessary to make a benefit
determination on review, such period shall be tolled from the date on which the
extension notice is sent to the claimant until the date on which the claimant
responds to the request for additional information. The decision on review shall
be written or electronic and, in the case of an adverse determination, shall
include specific reasons for the decision, in a manner calculated to be
understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based. The decision on review shall also
include (i) a statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant to the claimant's claim for benefits, and (ii) a
statement describing any voluntary appeal procedures offered by the Plan, and a
statement of the claimant's right, if any, to bring an action under Section
502(a) of ERISA and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.

Section 4 - Eligibility and Participation

4.1   Eligibility. The Board, in its sole discretion, shall select the Employees
of the Bank who are eligible to become Participants.

4.2  Participation. The Board or its designee shall notify those Employees
selected for participation of the benefits available under the Plan. An eligible
Employee becomes a Participant in the Plan upon the execution and delivery by
him or her and the Bank of a Plan Participation Agreement.

Section 5 - Retirement Benefit

5.1 Normal Retirement Benefit. If a Participant is employed by the Bank until
his or her Normal Retirement Date and, if in the calendar year prior to
retirement, such Participant furnishes a not less than sixty days written notice
of the date of retirement, the Participant shall be entitled to receive as a
normal retirement benefit annual payments equal to 100 percent (100%) of his or
her High Recognized Compensation. This normal retirement benefit shall be
payable in equal monthly installments commencing on the first day of the month
following the Participant's actual retirement and continuing for the remainder
of the Participant's life.

5.2 Early Retirement Benefit. If a Participant is employed by the Bank until his
or her Early Retirement Date, and, if in the calendar year prior to the desired
commencement of retirement, said Participant has submitted to the Board a
written request to retire, which request has been approved by the Board, he or
she shall be entitled to receive as an Early Retirement Benefit an amount (1)
calculated as if Participant's Early Retirement Date was in fact Participant's
Normal Retirement Date, (2) multiplied by a fraction, with the numerator being
the actual Years of Service of Participant and the denominator being the Years
of Service Participant would have had if he or she had retired at his or her
Normal Retirement Date, and (3) actuarially reduced to reflect the Early
Retirement Date. This Early Retirement Benefit shall be payable in equal monthly
installments commencing on the first day of the month following the
Participant's actual retirement and continuing for the remainder of the
Participant's life.

5.3 Death After Commencement of Retirement Benefits. If a Participant should die
after the commencement of retirement benefits but prior to the completion of
one-hundred-twenty (120) monthly payments, such monthly payments shall be
continued to the Participant's Beneficiary until the completion of a combined
total of one hundred twenty (120) monthly payments.

                                       4
<PAGE>

5.4 Alternate Form of Payment. The Bank may, in its sole and absolute
discretion, approve a retiring Participant's request of an alternate form of
payment of the benefit, in which case such payment(s) shall be in the amount of
the Actuarial Equivalent of the benefit otherwise payable hereunder.

5.5 Forfeiture of Benefits. If a Participant terminates employment with the Bank
prior to attaining his or her Normal Retirement Date, other than by reason of
Early Retirement, death or Disability, such Participant shall not be entitled to
any benefits under this Plan.

5.6 Withholding Taxes Employer shall deduct from any payment of benefits the
amount of any federal, state or local income or employment taxes required to be
withheld or paid with respect to the distribution. 5.7 Death While Employed
After Normal Retirement Date. A Participant whose employment with the Bank
continues after his or her Normal Retirement Date and who dies while so employed
shall be deemed to have retired immediately prior to such Participant's death.

Section 6 - Pre-Retirement Survivor Benefit

6.1 Pre-Retirement Survivor Benefit. If a Participant dies while employed by the
Bank prior to reaching his or her Normal Retirement Date, the Bank shall pay to
the deceased Participant's Beneficiary, as a survivor benefit, an annual amount
equal to (1) one hundred percent (100%) of the Participant's Recognized
Compensation at date of death for one year, and (2) fifty percent (50%) of the
Participant's Recognized Compensation at date of death for each of the following
four (4) years. This Survivor Benefit shall be payable in monthly installments
commencing on the first day of the month following the Participant's death.

Section 7 - Disability Benefit and Authorized Leave of Absence

7.1 Disability Benefit. Notwithstanding anything to the contrary herein, if a
Participant's employment with the Bank is terminated prior to attaining his or
her Normal Retirement Date as a result of the Participant's Disability, then,
for purposes of this Plan, it shall be deemed that the Participant has remained
in the employ of the Bank until the earliest to occur of: (a) the Participant's
death; (b) the Participant's attaining his or her Normal Retirement Date; or (c)
the cessation of the Participant's Disability and the failure of the Participant
to return to active employment with the Bank within a reasonable time after
recovery from the Disability. The employment of a Participant described in the
preceding sentence also shall be deemed to continue in order to permit the
Participant to elect early retirement pursuant to Section 5.2

7.2 Authorized Leave of Absence. A Participant's employment with the Bank shall
not be deemed to have terminated for purposes of this Plan during any authorized
leave of absence.

Section 8 - Bank-Owned Life Insurance ("BOLI")

8.1 Bank Owns All Rights. In the event that, in its discretion, the Bank
purchases a life insurance policy or policies insuring the life of any
Participant to allow the Bank to informally finance and/or recover, in whole or
in part, the cost of providing the benefits hereunder, neither the Participant
nor any Beneficiary shall have any rights whatsoever therein. The Bank shall be
the sole owner and beneficiary of any such policy or policies and shall possess
and may exercise all incidents of ownership therein, except in the event of the
establishment of and transfer of said policy or policies to a trust by the Bank
as described in Section 12 hereof.

8.2 Participant Cooperation. If the Bank decides to purchase a life insurance
policy or policies on any Participant, the Bank will so notify such Participant.
Such Participant shall consent to being insured for the benefit of the Bank and
shall take whatever actions may be necessary to enable the Bank to timely apply
for and acquire such life insurance and to fulfill the requirements of the
insurance carrier relative to the issuance thereof as a condition of eligibility
to participate in the Plan.

8.3 Participant Misrepresentation. If: (a) any Participant is required by this
Plan to submit information to any insurance carrier; and (b) the Participant
makes a material misrepresentation in any application for such insurance; and
(c) as a result of that material misrepresentation the insurance carrier is not
required to pay all or any part of the proceeds provided under that insurance,
then the Participant's (or the Participant's Beneficiary's) rights to any
benefits under this Plan may be, at the sole discretion of the Board, reduced to
the extent of any reduction of proceeds that is paid by the insurance carrier
because of such material misrepresentation.

8.4 Suicide. Notwithstanding any other term or provision of the Plan or the SERP
Agreement, if a Participant dies by reason of suicide and if the Bank's receipt
of insurance proceeds is as a result reduced, then the Participant's (or the
Participant's

                                       5
<PAGE>

Beneficiary's) rights to any benefits under this Plan may be, at the sole
discretion of the Board, reduced to the extent of any reduction of proceeds that
is paid by the insurance carrier.

Section 9 - Administrator

9.1 Resignation. The Administrator may resign at any time by written notice to
the Board, which shall be effective thirty (30) days after receipt of such
notice unless the Administrator and the Board agree otherwise.

9.2 Removal. The Administrator may be removed by the Board on thirty (30) days
notice or upon shorter notice accepted by the Administrator.

9.3 Appointment of Successor. If the Administrator resigns or is removed, a
successor shall be appointed, in accordance with Section 9.4, by the effective
date of resignation or removal under this Section 9. If no such appointment has
been made, the Administrator may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of the
Administrator in connection with the proceeding shall be allowed as
administrative expenses of the Bank.

9.4 Successor Administrator. If the Administrator resigns or is removed in
accordance with Section 9.1 or 9.2, the Board may appoint any third party as
successor Administrator. The appointment shall be effective when accepted in
writing by the new Administrator. The new Administrator shall have all of the
rights and powers of the former Administrator.

Section 10 - The Administrator's Consultant

10.1 Consultant. The Bank agrees to the designation by the Administrator of
___________(hereinafter called "Advisor"),as the Administrator's Consultant
(hereinafter called "the Administrator's Consultant") under this Plan. The
Administrator shall have no responsibility for the performance of the duties of
the Administrator's Consultant.

10.2 Independent Consultant. It is recognized that Advisor also acts as an
independent consultant for the Administrator with respect to the Administrator's
obligations under the Plan.

10.3 Resignation of Consultant. The Administrator's Consultant may resign at any
time by delivery of written notice of resignation to the Administrator. The
Administrator's Consultant may be removed by the Administrator at any time by
delivery of written notice of such removal to the Administrator's Consultant.
Any such resignation or removal shall take effect as of a future date specified
in the notice, which date shall not be earlier than sixty (60) days after such
notice is delivered, or such earlier date as may be agreed to by the
Administrator's Consultant and the Administrator. As soon as practicable after
the Administrator's Consultant has resigned or has been removed hereunder, it
shall deliver to the successor Administrator's Consultant all reports, records,
documents, and other written information in its possession regarding the Plan,
the Participants and Beneficiaries, and thereupon shall be paid all unpaid fees,
compensation and reimbursements to which it is entitled under this Agreement and
shall be relieved of all responsibilities and duties under this Agreement.

10.4 Records to be Maintained. The Administrator's Consultant shall maintain or
cause to be maintained all of the records contemplated by the current actuarial
agreement between the Administrator and the Administrator's Consultant. The
Administrator's Consultant shall also perform such other duties and
responsibilities under this Plan Agreement as agreed in writing between the
Administrator's Consultant and the Administrator.

10.5 Furnishing of Information. The Administrator shall furnish to the
Administrator's Consultant all the information necessary to determine the
benefits payable to or with respect to each Participant and Beneficiary, and the
name, address and Social Security number of each Participant and Beneficiary.
The Administrator shall regularly, at least annually, or promptly at the request
of the Administrator's Consultant, furnish to the Administrator's Consultant
revised and updated information, including copies of any amendments or
supplements to the Plan or the Administrator's obligations. Based on the
foregoing information, the Administrator's Consultant shall prepare annual
statements for each Participant and Beneficiary and shall furnish a copy of same
to the Administrator. In the event the Administrator refuses or neglects to
provide updated information, as contemplated herein, the Administrator's
Consultant shall be entitled to rely upon the most recent information furnished
to it by the Administrator. The Administrator's Consultant has no responsibility
to verify information provided to it by the Administrator.

10.6 Annual Valuation. The Administrator's Consultant shall assist the
Administrator in providing all required Plan information to the Bank. The
Administrator's Consultant shall also perform an annual actuarial valuation of
the obligations under the Plan and the funding requirements therefore, based
solely on the most recent information furnished to it by the Administrator.

                                       6
<PAGE>

Section 11- Amendment

11.1 Amendment. The Employer shall have the right at any time to amend or
terminate this Plan. However, no amendment shall be effective so as to reduce
the amount of any Participant's Accrued Benefit, or to delay the payment of any
amount to a Participant beyond the time that such amount would be payable
without regard to such amendment.

11.2 Cessation of Accrual of Benefits. The Bank shall have the right at any time
to notify the Participants that benefits will no longer accrue under the Plan.
Upon any such notice, retirement benefits payable to a Participant at Normal
Retirement Date shall be based on the Participant's Accrued Benefit at the date
of the notice referred to in the preceding sentence.

Section 12 -Miscellaneous

12.1 Nonalienation of Benefits. No right or benefit under this Plan shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or
charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber,
or charge any right or benefit under this Plan or any SERP Agreement shall be
void. No such right or benefit shall in any manner be liable for or subject to
the debts, contracts, liabilities or torts of the person entitled thereto. If a
Participant or any Beneficiary hereunder shall become bankrupt, or attempt to
anticipate, alienate, sell assign, pledge, encumber, or charge any right
hereunder, then such right or benefit shall, in the discretion of the Board,
cease and terminate, and in such event, the Board may hold or apply the same or
any part thereof for the benefit of the Participant or his or her Beneficiary,
spouse, children, or other dependents, or any of them in such manner and in such
amounts and proportions as the Board may deem proper.

12.2 Unsecured Liability. The obligation of the Bank to make payments hereunder
to a Participant shall constitute an unsecured liability of the Bank. Such
payments shall be made from the general funds of the Bank and the Bank shall not
be required to establish or maintain any special or separate fund, to purchase
or acquire life insurance on a Participant's life, or otherwise to segregate
assets to assure that such payments shall be made. Neither a Participant nor any
other person shall have any interest in any particular asset of the Bank by
reason of its obligations hereunder and the right of any of them to receive
payments under this Plan shall be no greater than the right of any other
unsecured general creditor of the Bank. Nothing contained in the Plan shall
create or be construed as creating a trust of any kind or any other fiduciary
relationship between the Bank and a Participant or any other person.

12.3 No Contract of Employment This Plan shall not be deemed to constitute a
contract between the Bank and any Participant or to be a consideration or an
inducement for the employment of any Participant or Employee. Nothing contained
in this Plan shall be deemed to give any Participant or Employee the right to be
retained in the service of the Employer or to interfere with the right of the
Employer to discharge any Participant or Employee at any time regardless of the
effect which such discharge may have upon him or her as a Participant of this
Plan.

12.4 Designation of Beneficiary. Each Participant shall file with the Bank a
notice in writing, in a form acceptable to the Board, designating one or more
Beneficiaries to whom payments becoming due by reason of or after his or her
death shall be made. Participants shall have the right to change the Beneficiary
or Beneficiaries so designated from time to time; provided, however, that no
such change shall become effective until received in writing and acknowledged by
the Bank.

12.5 Payment to Incompetents. The Bank shall make the payments provided herein
directly to the Participant or Beneficiary entitled thereto or, if such
Participant or Beneficiary has been determined by a court of competent
jurisdiction to be mentally or physically incompetent, then payment shall be
made to the duly appointed guardian, committee or other authorized
representative of such Participant or Beneficiary. The Bank shall have the right
to make payment directly to a Participant or Beneficiary until it has received
actual notice of the physical or mental incapacity of such Participant or
Beneficiary and actual notice of the appointment of a duly authorized
representative of his or her estate. Any payment to or for the benefit of a
Participant or Beneficiary shall be a complete discharge of all liability of the
Bank therefore.

12.6 Interpretation. The interpretation and construction of the Plan by the
Administrator, and any action taken hereunder, shall be binding and conclusive
upon all parties in interest. The Administrator shall not be liable to any
person for any action taken or omitted to be taken in connection with the
interpretation, construction or administration of the Plan, so long as such
action or omission be made in good faith.

12.7 Authority to Appoint a Committee. The Board, within its discretion, shall
have the authority to appoint a committee of not less than three (3) of its
members, which shall have authority over the Plan in lieu of the entire Board.

12.8 Authority to Establish a Trust. The Board shall have the right at any time
to establish a trust to which the Bank may transfer from time to time certain
assets to be used by said trustee(s) to satisfy some or all of the Bank's
obligations and liabilities under the Plan. All assets held by such trust shall
be subject to the claims of the Bank's creditors in the event of the Bank's
Insolvency (as defined herein). The Bank shall be considered "Insolvent" for
purposes of said trust if: (a) the Bank is unable to

                                       7
<PAGE>

pay its debts as they become due; or (b) the Bank is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.

12.9 Prepayment. The Board may, in its sole and absolute discretion, prepay all
or any part of the monthly installments remaining to be paid to a Participant or
Beneficiary under this Plan. The amount of such prepayment shall equal the
Actuarial Equivalent of the remaining monthly installments being prepaid, as
determined by the Board in its discretion, and receipt thereof by the
Participant or Beneficiary shall be in full satisfaction of all remaining
obligations of the Bank under the Plan and applicable Plan Participation
Agreement.

12.10 Binding Effect. Obligations incurred by the Bank pursuant to this Plan
shall be binding upon and inure to the benefit of the Bank, its successors and
assigns, and the Participant, his or her Beneficiaries, personal
representatives, heirs, and legatees.

12.11 Entire Plan. This document and any amendments hereto contain all the terms
and provisions of the Plan and shall constitute the entire Plan, any other
alleged terms or provisions being of no effect.

12.12 Merger, Consolidation or Acquisition. In the event of a merger or
consolidation of the Bank with another corporation or entity, or the sale or
lease of all or substantially all of the Bank's assets to another corporation or
entity, or the acquiring by another corporation or entity of a right to elect at
least thirty percent (30%) of the Board, then and in such event the obligations
and responsibilities of the Bank under this Plan shall be assumed by any such
successor or acquiring corporation or entity, and all of the rights, privileges
and benefits of the Participants hereunder shall continue.

Section 13 - Construction

13.1 Construction of this Plan This Plan shall be construed and enforced
according to the laws of the State of Maryland, other than its laws respecting
choice of law.

13.2 Gender and Number. The masculine gender, where appearing in the Plan, shall
be deemed to include the feminine gender, and the singular shall include the
plural, unless the context clearly indicates to the contrary.

13.3 Headings. All headings used in this Plan are for convenience of reference
only and are not part of the substance of this Plan.

13.4 Enforceability. If any term or condition of this Plan shall be invalid or
unenforceable to any extent or in any application, then the remainder of the
Plan, and such term or condition except to such extent or in such application,
shall not be affected thereby, and each and every term and condition of the Plan
shall be valid and enforced to the fullest extent and in the broadest
application permitted by law.

13.5 Uniformity All provisions of this Plan shall be interpreted and applied in
a uniform, nondiscriminatory manner. In the event of any conflict between the
terms of this Plan and any summaries or other descriptions of this Plan, the
Plan provisions shall control.

IN WITNESS WHEREOF, this Plan, having been duly approved and adopted by the
Board of Directors of the Bank, is executed by the duly authorized officers of
the Bank as of the Effective Date.

                                           Cecil Federal Bank

                                           By:_________________________________
                                              Name and Title

Attest:

----------------------------------
Secretary

                                       8
<PAGE>

                                    Exhibit A

                               Cecil Federal Bank

                 Supplemental Executive Retirement Plan ("SERP")

                      Form of Plan Participation Agreement

THIS AGREEMENT, made the __________ day of ___________________, 2003, by and
between Cecil Federal Bank, a federally chartered bank, and other affiliated or
associated business entities (collectively referred to as "the Bank"), and
__________________, a key management employee of the Bank (the "Participant").

                                    RECITALS
                                    --------

The Board of Directors of the Bank has adopted the Cecil Federal Bank
Supplemental Executive Retirement Plan (the "Plan") and has selected the
Participant for participation in the Plan. This Plan Participation Agreement is
entered into to evidence the Participant's participation in the Plan and to set
forth the basis for determining the amount of his or her benefit under the Plan.

NOW, THEREFORE, the Bank and the Participant hereby agree as follows:

1. Incorporation of the Plan. The Plan (and all its provisions), as it now
exists and as it may be amended hereafter, is incorporated herein and made a
part of this Agreement.

2. Definitions. When used herein, terms that are defined in the Plan shall have
the meanings given them in the Plan unless a different meaning is clearly
required by the context.

3. No Interest Created. Neither the Participant nor his or her Beneficiary or
other persons claiming under him or her shall have any interest in any assets of
the Bank, including policies of insurance, conferred by the Participant's
participation in the Plan. The Participant and his or her Beneficiary shall have
only the right to receive benefits under and subject to the terms and provisions
of the Plan and this Plan Participation Agreement.

4. Retirement Benefit. If the Participant is employed by the Bank until his or
her Normal Retirement Date, upon his or her retirement the Participant shall be
entitled to receive an annual retirement benefit equal to one hundred percent
(100%) of his or her High Recognized Compensation. This annual retirement
benefit shall be payable in monthly installments commencing on the first day of
the month following the Participant's actual retirement and continuing for the
remainder of Participant's life.

5. Early Retirement Benefit If the Participant is employed by the Bank until his
or her Early Retirement Date, and, if in the calendar year prior to the desired
commencement of retirement, Participant has submitted to the Board a written
request to retire, which request has been approved by the Board, he or she shall
be entitled to receive an annual Early Retirement Benefit (1) calculated as if
Participant's Early Retirement Date was in fact Participant's Normal Retirement
Date, (2) multiplied by a fraction, with the numerator being the actual Years of
Service of Participant and the denominator being the Years of Service
Participant would have had if he or she had retired at his or her Normal
Retirement Date, and (3) actuarially reduced to reflect the Early Retirement
Date. This Early Retirement Benefit will be payable in equal monthly
installments commencing on the first day of the month following Participant's
actual retirement and continuing for the remainder of Participant's life.

6. Death after Commencement of Retirement Benefits. If Participant should die
after the commencement of retirement benefits but prior to the completion of
one-hundred-twenty (120) monthly payments, such monthly payments shall be
continued to the Participant's Beneficiary until the completion of a combined
total of one hundred twenty (120) monthly payments.

7. Forfeiture of Benefits. If a Participant terminates employment with the Bank
prior to attaining his or her Normal Retirement Date, other than by reason of
Early Retirement, death or Disability, such Participant shall not be entitled to
any benefits under this Plan.

8. Pre-Retirement Survivor Benefit. If Participant dies while employed by the
Bank, the Bank will pay to the deceased Participant's Beneficiary, as a survivor
benefit, an annual amount equal to (1) one hundred percent (100%) of the
Participant's annual Recognized Compensation at date of death for one year, and
(2) fifty percent (50%) of the Participant's Recognized Compensation at date of
death for each of the following four (4) years. This Survivor Benefit shall be
payable in monthly installments commencing on the first day of the month
following the Participant's death.

9. Participant Cooperation. If the Bank decides to purchase a life insurance
policy or policies on Participant, the Bank will so notify the Participant.
Participant shall consent to being insured for the benefit of the Bank and shall
take whatever actions may be necessary to enable the Bank to timely apply for
and acquire such life insurance and to fulfill the requirements of the insurance
carrier relative to the issuance thereof as a condition of eligibility to
participate in the Plan.

                                       9
<PAGE>

10. Participant Misrepresentation. If: (a) Participant is required by this Plan
to submit information to any insurance carrier; and (b) Participant makes a
material misrepresentation in any application for such insurance; and (c) as a
result of that material misrepresentation the insurance carrier is not required
to pay all or any part of the proceeds provided under that insurance, then
Participant's (or the Participant's Beneficiary's) rights to any benefits under
this Plan may be, at the sole discretion of the Board, reduced to the extent of
any reduction of proceeds that is paid by the insurance carrier because of such
material misrepresentation.

11. Suicide. Notwithstanding any other term or provision of the Plan or this
Agreement, if Participant dies by reason of suicide and if the Bank's receipt of
insurance proceeds is as a result reduced, then the Participant's (or the
Participant's Beneficiary's) rights to any benefits under this Plan may be, at
the sole discretion of the Board, reduced to the extent of any reduction of
proceeds that is paid by the insurance carrier.

12. Participant Acknowledgment Participant acknowledges that he or she is aware
of and familiar with the forfeiture restrictions in the Plan, that he or she has
read and understood the Plan and Plan Participation Agreement, that he or she
has had an opportunity to have the documents reviewed by legal counsel and that
the Plan Participation Agreement will constitute a legal, valid and binding
agreement of Participant.

13. Entire Agreement. The Plan and this Plan Participation Agreement contain the
entire agreement and understanding of the Bank and the Participant with respect
to supplemental retirement benefits and supersede and replace all prior
agreements and understandings between the parties, written or oral, with respect
thereto.

IN WITNESS WHEREOF, the parties have executed this Plan Participation Agreement
in duplicate originals on the day and year first above written.

                                                   Cecil Federal Bank

                                                   By:__________________________
                                                   Name and Title

                                                   (Participant)

                                                   -----------------------------
                                                   Signed

                                       10

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