Document:

Form of 1.375% Convertible Senior Note due 2019

 Exhibit 4.31 
 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN. 
 TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF
DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND EXCHANGES OF THIS GLOBAL SECURITY MAY ONLY BE MADE UNDER THE CONDITIONS SET FORTH IN THE NOTES OFFICERS’ CERTIFICATE REFERRED TO HEREIN. 

  
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 KB HOME 
 1.375% Convertible Senior Notes due 2019 
 No. 1 

$200,000,000 
 CUSIP
No. 48666K AS8 
 KB Home, a corporation duly organized and validly existing under the laws of the State of Delaware (the
“Company,” which term includes any successor corporation or other entity under the Indenture referred to on the reverse hereof (as amended and/or supplemented by the Notes Officers’ Certificate referred to on the reverse
hereof), for value received hereby promises to pay to CEDE & CO., or registered assigns, the principal sum as set forth in the “Schedule of Exchanges of Notes” attached hereto, in accordance with the rules and procedures of the
Depository, on February 1, 2019, and interest thereon as set forth below. 
 The outstanding principal of this Note shall
bear interest at the rate of 1.375% per year from January 29, 2013, or from the most recent date to which interest has been paid or provided for, to, but excluding, the next scheduled Interest Payment Date with the last such Interest
Payment Date being February 1, 2019. Accrued interest on this Note shall be computed on the basis of a 360-day year composed of twelve 30-day months. Subject to the Indenture provisions regarding Defaulted Interest, interest is payable
semi-annually in arrears on each February 1 and August 1 (or, if such date is not a Business Day, on the immediately following Business Day), commencing on August 1, 2013, to Holders of record of the Notes at the close of business on
the preceding January 15 and July 15 (whether or not such day is a Business Day), respectively. Interest is also payable on November 1, 2018, to Holders of record at the close of business on October 15, 2018. Additional Interest
may be payable as set forth in Section 6.02 of the Notes Officers’ Certificate, and any reference to interest on, or in respect of, any Note therein shall be deemed to include Additional Interest if, in such context, Additional Interest
is, was or would be payable pursuant to such Section 6.02. 
 The Company shall pay the principal of and interest on this
Note, so long as such Note is a Global Security, in immediately available funds to the Depository or its nominee, as the case may be, as the registered Holder of such Note. As provided in and subject to the provisions of the Indenture and the Notes
Officers’ Certificate, the Company shall pay the principal of any Notes (other than Notes that are Global Securities) at the office or agency designated by the Company for that purpose. The Company has initially designated the Trustee as its
Paying Agent and Security Registrar in respect of the Notes and its agency at its Corporate Trust Office designated pursuant to Section 5.01 of the Notes Officers’ Certificate as a place where Notes may be presented for payment or for
registration of transfer. 
 Reference is made to the further provisions of this Note set forth on the reverse hereof,
including, without limitation, provisions giving the Holder of this Note the right to convert this Note into shares of Common Stock on the terms and subject to the limitations set forth in the Notes Officers’ Certificate. Such further
provisions shall for all purposes have the same effect as though fully set forth at this place. 
 This Note shall be
governed by and construed in accordance with the laws of the State of New York. 
 In the case of any conflict between this
Note and the Indenture or the Notes Officers’ Certificate, the provisions of the Indenture or the Notes Officers’ Certificate shall control and govern. In case of any conflict between the Indenture and the Notes Officers’ Certificate,
the Notes Officers’ Certificate shall govern and control. 
 This Note shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture. 
 [Remainder of page intentionally left blank] 

  
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 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by the manual
or facsimile signatures of its duly authorized officers. 
 Dated: January 29, 2013 

 

							
	KB HOME	 		 	
				
	By:	 	 /s/ William R. Hollinger
	 	By:	 	 /s/ Thad Johnson

		 	Name:   William R. Hollinger	 		 	Name:   Thad Johnson
		 	Title:     Senior Vice President and Chief Accounting Officer	 		 	Title:     Vice President and Treasurer

  

			
	 TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 
 This is one of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
  
 U.S. BANK NATIONAL ASSOCIATION,

as Trustee
  

	By:	 	 /s/ Muriel Shaw

	Authorized Signatory

 REVERSE OF NOTE 
 KB HOME 
 1.375% Convertible Senior Notes due 2019 

This Note is one of a duly authorized series of Securities of the Company, designated as its 1.375% Convertible Senior Notes due 2019
(the “Notes”), such series of Securities being limited, subject to the following sentence, to the aggregate principal amount of $200,000,000 (as increased by an amount equal to the aggregate principal amount of any additional Notes
purchased by the Underwriters pursuant to the exercise of their over-allotment option as set forth in the Underwriting Agreement) all issued or to be issued under and pursuant to an Indenture dated as of January 28, 2004 (the “Base
Indenture”; the Base Indenture, as amended or supplemented from time to time, the “Indenture”), by and between the Company, the Guarantors party thereto from time to time and U.S. Bank National Association, as successor to
SunTrust Bank, as trustee (the “Trustee”) as amended and supplemented by the Officers’ Certificate and Guarantors’ Officers’ Certificate, dated as of January 29, 2013 (herein called the “Notes
Officers’ Certificate”), to which Indenture, Notes Officers’ Certificate and all indentures supplemental thereto reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the Holders of the Notes. Additional Notes may be issued in an unlimited aggregate principal amount, subject to the conditions specified in the Notes Officers’ Certificate. 

Subject to the terms and conditions of the Indenture and the Notes Officers’ Certificate, the Company will make all payments and
deliveries in respect of any Redemption Price, the Fundamental Change Purchase Price and the principal amount on the Maturity Date, as the case may be, to the Holder who surrenders a Note to a Paying Agent to collect such payments in respect of the
Note. The Company shall pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. 
 No reference herein to the Indenture or the Notes Officers’ Certificate and no provision of this Note or of the Indenture or the Notes Officers’ Certificate shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal (including the Fundamental Change Purchase Price, if applicable) of, the Redemption Price, if applicable, of, and accrued and unpaid interest on, and the consideration due
upon conversion of, this Note at the place, at the respective times, in the amounts and, if applicable, in the lawful money herein and in the Notes Officers’ Certificate prescribed. 

The Notes are issuable in registered form without Coupons in denominations of $1,000 principal amount and multiples thereof. At the
Office or Agency of the Company referred to on the face hereof, and in the manner and subject to the limitations provided in the Indenture and the Notes Officers’ Certificate, Notes may be exchanged for a like aggregate principal amount of
Notes of other authorized denominations, without payment of any service charge but, if required by the Company or Trustee, with payment of a sum sufficient to cover any transfer tax or similar governmental charge required by law or that may be
imposed in connection therewith as a result of the name of the Holder of the new Notes issued upon such exchange of Notes being different from the name of the Holder of the old Notes surrendered for such exchange. 

The Notes shall be redeemable at the Company’s option in accordance with the terms and conditions specified in the Notes
Officers’ Certificate. 
 Upon the occurrence of a Fundamental Change, the Holder has the right, at such Holder’s
option, to require the Company to purchase for cash all of such Holder’s Notes or any portion thereof (in principal amounts of $1,000 or integral multiples thereof) on the Fundamental Change Purchase Date at a price equal to the Fundamental
Change Purchase Price. 
 Subject to the provisions of the Notes Officers’ Certificate, the Holder hereof has the right, at
its option, prior to the close of business on the Business Day immediately preceding the Maturity Date, to irrevocably convert any Notes or portion thereof that is $1,000 or an integral multiple thereof into shares of Common Stock at the Conversion
Rate specified in the Notes Officers’ Certificate, as adjusted from time to time as provided in the Notes 

  
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Officers’ Certificate, unless the Company has called Notes for redemption, in which case the Holder may convert such Notes until the close of business on the Business Day immediately
preceding the applicable Redemption Date. 
 Terms used in this Note and defined in the Indenture or the Notes Officers’
Certificate are used herein as therein defined. 

  
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 ABBREVIATIONS 
 The following abbreviations, when used in the inscription of the face of this Note, shall be construed as though they were written out in full according to applicable laws or regulations: 

TEN COM = as tenants in common 
 UNIF GIFT MIN
ACT = Uniform Gifts to Minors Act 
 CUST = Custodian 
 TEN ENT = as tenants by the entireties 
 JT TEN = joint tenants with right of survivorship and not
as tenants in common 
 Additional abbreviations may also be used though not in the above list. 

  
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 SCHEDULE A 
 SCHEDULE OF EXCHANGES OF NOTES 
 KB HOME 

1.375% Convertible Senior Notes due 2019 
 The initial principal amount of this Global Security is TWO HUNDRED MILLION DOLLARS ($200,000,000). The following increases or decreases in this Global Security have been made: 

 

									
	 Date of Exchange
	  	Amount of
decrease in
Principal Amount
of this Global
Security	  	Amount of
increase in
Principal Amount
of this Global
Security	  	Principal Amount
of this Global
Security following
such decrease or
increase	  	Signature of
authorized
signatory of
Trustee or
Custodian
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	
		  		  		  		  	

  
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 ATTACHMENT 1 
 [FORM OF NOTICE OF CONVERSION] 
 To: KB Home 

The undersigned registered Holder of this Note hereby exercises the option to convert this Note, or the portion hereof (that is $1,000
principal amount or a multiple thereof) below designated into shares of Common Stock in accordance with the terms of the Notes Officers’ Certificate referred to in this Note, and directs that the shares of Common Stock issuable and deliverable
upon such conversion, together with any cash for any fractional share of Common Stock, and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder of the Notes hereof unless a different name
has been indicated below. If any shares of Common Stock or any portion of this Note not converted are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes or similar governmental charges in
accordance with Section 7.02(d) of the Notes Officers’ Certificate. Any amount required to be paid to the undersigned on account of interest accompanies this Note. 

 

			
	Dated:	 	

  

                   
                                         
                                         
                             

Signature(s) 
  

	
	  
 Signature Guarantee

  

					
	 Signature(s) must be guaranteed by an eligible Guarantor Institution (banks, stock brokers, savings and loan associations and credit
unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15 if shares of Common Stock are to be issued, or Notes are to be delivered, other than to and in the name of the
registered Holder.
  
 Fill in for registration of shares if to be issued,
and Notes if to be delivered, other than to and in the name of the registered Holder:
	  		  	
			
	  
 (Name)
	  		  	
			
	  
 (Street Address)
	  		  	
			
	  
 (City, State and Zip Code)
 Please print name and address
	  		  	

  
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		  	 Principal amount to be converted (if less than all):
$            ,000
  
 NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change
whatever.

		
		  	
                         
                                         
                                         
       
 Social Security or Other Taxpayer
 Identification Number

  
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 ATTACHMENT 2 
 [FORM OF FUNDAMENTAL CHANGE PURCHASE NOTICE] 
 To: KB Home 

The undersigned registered Holder of this Note hereby acknowledges receipt of a notice from KB Home (the “Company”) as
to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change Purchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with the applicable provisions of
the Notes Officers’ Certificate referred to in this Note (1) the entire principal amount of this Note, or the portion thereof (that is $1,000 principal amount or a multiple thereof) below designated, and (2) if such Fundamental Change
Purchase Date does not fall during the period after a Regular Record Date and on or prior to the corresponding Interest Payment Date, accrued and unpaid interest, if any, thereon to, but excluding, such Fundamental Change Purchase Date. 

In the case of certificated Notes, the certificate numbers of the Notes to be purchased are as set forth below: 

 

			
	Dated:	 	

  

                   
                                         
                                         
                            

Signature(s) 
  

                   
                                         
                                         
                            

Social Security or Other Taxpayer 

Identification Number 
 Principal amount to be purchased (if less than all): $            ,000 
 NOTICE: The above signature(s) of the Holder(s) hereof must correspond with the name as written upon the face of the Note in every particular without alteration or enlargement or any change whatever.

  
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 ATTACHMENT 3 
 [FORM OF ASSIGNMENT AND TRANSFER] 
 For value received
                    hereby sell(s), assign(s) and transfer(s) unto
                    (Please insert Social Security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes
and appoints                     attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises.

  

	
	  

	  
 Signature(s)

	
	Signature(s) must be guaranteed by an institution which is a member of one of the following recognized signature Guarantee Programs:
	
	(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program (SEMP)
or (iv) another guarantee program acceptable to the Trustee.
	  

	  
 Signature Guarantee

  
 2Exhibit 4.3

 Exhibit 4.3 
 Carroll Bancorp, Inc. 2011 Stock Option Plan 
 Stock Option Grant
Agreement 
 This Stock Option Grant Agreement (the “Agreement”) is entered into on [INSERT DATE], by and between
Carroll Bancorp, Inc., a Maryland corporation (the “Corporation”), and [INSERT OPTIONEE NAME] (the “Optionee”), effective as of [INSERT GRANT DATE] (the “Grant Date”). 

In consideration of the premises, mutual covenants and agreements herein, the Corporation and the Optionee agree as follows: 

1. Grant of Options. The Corporation hereby grants to the Optionee, pursuant to the Carroll Bancorp, Inc. 2011 Stock Option
Plan (the “Plan”), a stock option to purchase from the Corporation, at a price of $[INSERT PRICE] per share (the “Exercise Price”), up to [INSERT GRANT AMOUNT] shares of Common Stock of the Corporation, $0.01 par value, subject
to the provisions of this Agreement and the Plan (the “Options”). The Options shall expire at 5:00 p.m. Eastern Time on the last business day preceding the tenth anniversary of the Grant Date (the “Expiration Date”), unless fully
exercised or terminated earlier. 
 2. Terminology. Unless stated otherwise in this Agreement, capitalized terms in
this Agreement shall have the meaning set forth in the Plan. 
 3. Exercise of Options. 

(a) Vesting. Subject to the terms of the Plan with respect to vesting, the Options granted shall vest in whole or in part, in
accordance with the schedule attached hereto as Exhibit A, provided that the Optionee is in the continuous employ of, or in a service relationship with, the Corporation from the date the option is granted through the applicable date upon
which such Options become vested. The extent to which the Options are vested as of a particular vesting date shall be rounded down to the nearest whole share. However, vesting is rounded up to the nearest whole share on the last vesting date.

 (b) Right to Exercise. The Optionee shall have the right to exercise the Options from and after the date upon which
they vest and on or before the Expiration Date or earlier termination of the Options. To the extent not exercised, the number of shares as to which the Options are exercisable shall accumulate and remain exercisable, in whole or in part, at any time
after becoming exercisable, but not later than the Expiration Date or other termination of the Options. In the event of the Optionee’s termination of employment, the exercisability is governed by Section 4. 

(c) Exercise Procedure. Subject to the conditions set forth in this Agreement, the Options shall be exercised (to the extent
then exercisable) by delivery of written notice of exercise on any business day to the Secretary of the Corporation in such form as the Committee may require from time to time. Such notice shall specify the number of shares in respect to which the
Options are being exercised and shall be accompanied by full payment of the Exercise Price for such shares in accordance with 

 
Section 3(e) of this Agreement. The exercise shall be effective upon receipt by the Secretary of the Corporation of such written notice accompanied by the required payment. The Options may
be exercised only in multiples of whole shares and may not be exercised at any one time as to fewer than one hundred shares (or such lesser number of shares as to which the Options are then exercisable). No fractional shares shall be issued pursuant
to the Options. 
 (d) Effect. The exercise, in whole or in part, of the Options shall cause a reduction in the
number of shares of Common Stock subject to the remaining Options equal to the number of shares of Common Stock with respect to which the Options are exercised. 
 (e) Method of Payment. Payment of the Exercise Price shall be by any of the following, or a combination thereof: 
 (i) by delivery of cash, certified or cashier’s check, or money order or other cash equivalent acceptable to Committee in its sole discretion; or 

(ii) by a broker-assisted cashless exercise in accordance with Regulation T of the Board of Governors of the Federal Reserve
System and the following provisions. Subject to such limitations as the Committee may determine, at any time during which the Common Stock is publicly traded on a national securities exchange, the Exercise Price shall be deemed to be paid, in whole
or in part, if the Optionee delivers a properly executed exercise notice, together with irrevocable instructions: (i) to a brokerage firm approved by the Corporation to deliver promptly to the Corporation the aggregate amount of sale or loan
proceeds to pay the Exercise Price and any withholding tax obligations that may arise in connection with the exercise; and (ii) to the Corporation to deliver the certificates for such purchased shares directly to such brokerage firm; or

 (iii) as determined by the Committee or the Board in its discretion at the time of exercise, by delivering shares of Common
Stock (including shares acquired pursuant to the previous exercise of an option granted under the Plan) equal in fair market value to the purchase price of the shares to be acquired pursuant to the Option(s), by withholding some of the shares of
Common Stock which are being purchased upon exercise of an Option. The shares of Common Stock delivered to pay the purchase price must have either been (x) purchased in open market transactions or (y) issued by the Corporation pursuant to
a plan thereof more than six months prior to the exercise date of the Option. 
 (f) Issuance of Shares Upon
Exercise. Upon due exercise of the Options, in whole or in part, in accordance with the terms of this Agreement, the Corporation shall issue to the Optionee, the brokerage firm specified in the Optionee’s delivery instructions pursuant to a
broker-assisted cashless exercise, or such other person exercising the Options, as the case may be, the number of shares of Common Stock so paid for, in the form of fully paid and non-assessable stock and shall deliver certificates therefore or
issue such shares in certificateless form as soon as practicable thereafter. 

  
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 (g) Restrictions on Exercise and Upon Shares Issued upon Exercise.
Notwithstanding any other provision of the Agreement, the Options may not be exercised at any time that the Corporation does not have in effect a registration statement under the Securities Act of 1933, as amended, relating to the offer of Common
Stock to the Optionee under the Plan, unless the Corporation agrees to permit such exercise. Upon the issuance of any shares of Common Stock pursuant to the exercise of the Options, the Optionee will, upon the request of the Corporation, agree in
writing that the Optionee is acquiring such shares for investment only and not with a view to resale, and that the Optionee will not sell, pledge or otherwise dispose of such shares so issued unless: (i) the Corporation is furnished with an
opinion of counsel to the effect that registration of such shares pursuant to the Securities Act of 1933, as amended, is not required by that Act or by the rules and regulations thereunder; (ii) the staff of the Securities and Exchange
Commission has issued a “no-action” letter with respect to such disposition; or (iii) such registration or notification as is, in the opinion of counsel for the Corporation, required for the lawful disposition of such shares has been
filed by the Corporation and has become effective; provided, however, that the Corporation is not obligated hereby to file any such registration or notification. The Corporation may place a legend embodying such restrictions on the certificates
evidencing such shares. 
 4. Termination of Employment or Service. 

(a) Exercise Period Following Cessation of Employment or Other Service Relationship, In General. If the Optionee ceases to be
employed by, or in a service relationship with, the Bank for any reason other than death, Disability, Retirement, discharge for misconduct or cause or in connection with a Change in Control, (i) the unvested Options shall terminate immediately
upon such cessation, and (ii) any vested Options shall remain exercisable during the six-month period following such cessation, but in no event after ten years from the date it was granted. Unless sooner terminated, any unexercised vested
Options shall terminate upon the expiration of such six-month period. 
 (b) Death of Optionee. The Options shall become
vested and exercisable in full on the date the Optionee’s employment or service as a Non-Employee Director or Advisory Director terminates because of Optionee’s death. If the Optionee dies while in the employ or service of the Corporation
or a Subsidiary Company or terminates employment or service with the Corporation or a Subsidiary Company as a result of Disability or Retirement and dies without having fully exercised his/her Options, the executors, administrators, legatees or
distributees of his/her estate shall have the right, during the one-year period following the Optionee’s death, to exercise such Options, but in no event after the Expiration Date. 

(c) Disability of Optionee; Retirement. The Options shall become vested and exercisable in full on the date the Optionee
terminates his/her employment with the Corporation or a Subsidiary Company or service as a Non-Employee Director (including for purposes hereof service as an Advisory Director) because of his/her Disability (provided, however, no such accelerated
vesting shall occur if a Recipient remains employed by or continues to serve as a Director (including for purposes hereof service as an Advisory Director) of at least one member of the Employer Group). 

  
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 If the Optionee is an Employee and terminates his/her employment with the Corporation or a
Subsidiary Company as a result of Disability or Retirement without having fully exercised the Options, the Optionee shall have the right, during the three-year period following such termination due to Disability or Retirement, to exercise the
Options. If the Optionee is a Non-Employee Director and terminates his/her service as a director (including service as an Advisory Director) with the Corporation or a Subsidiary Company as a result of Disability or Retirement without having fully
exercised the Options, the Optionee shall have the right, during the three-year period following such termination due to Disability or Retirement, to exercise the Options. In no event, however, shall any Options be exercisable beyond ten years from
the date it was granted. 
 (d) Misconduct; Removal for Cause. Notwithstanding anything to the contrary in this
Agreement: (i) if the Optionee is an Employee and is discharged for cause as set forth in Section 4.03 of the Plan, any Options not vested on the date of discharge shall terminate as of the date of discharge unless otherwise determined by
the Committee; and (ii) if the Optionee is a Non-Employee Director and is removed for cause as set forth in Section 4.03 of the Plan, any unexercised Options shall terminate as of the effective date of such removal. 

(e) Change in Control. The Options shall become vested and exercisable in full as of the effective date of a Change in Control.
If the Optionee terminates his/her employment or service with the Corporation or a Subsidiary Company following a Change in Control of the Corporation without having fully exercised the Options the Optionee shall have the right to exercise the
Options during the remainder of the original ten-year term of the Option from the date of grant. 
 5. Adjustments and
Business Combinations. 
 (a) General. The number of shares to which the Options relate shall be
proportionately adjusted for any increase or decrease in the total number of outstanding shares of Common Stock issued subsequent to the effective date of the Plan resulting from a split, subdivision or consolidation of shares or any other capital
adjustment, the payment of a stock dividend, or other increase or decrease in such shares effected without receipt or payment of consideration by the Corporation. 
 (b) Adjustment for Mergers and Other Corporate Transactions. If, upon a merger, consolidation, reorganization, liquidation, recapitalization or the like of the Corporation, the shares of the
Corporation’s Common Stock shall be exchanged for other securities of the Corporation or of another corporation, each Option shall be converted, subject to the conditions stated herein and in the Plan, into the right to purchase or acquire such
number of shares of Common Stock or amount of other securities of the Corporation or such other corporation as were exchangeable for the number of shares of Common Stock of the Corporation which Optionee would have been entitled to purchase or
acquire except for such action, and appropriate adjustments shall be made to the per 

  
 4 

 
share exercise price of outstanding Options, provided that in each case the number of shares or other securities subject to the substituted or assumed stock option and the exercise price
thereof shall be determined in a manner that satisfies the requirements of Treasury Regulation §1.424-1 and the regulations issued under Section 409A of the Code so that the substituted or assumed option is not deemed to be a modification
of the outstanding Options. Notwithstanding any provision to the contrary herein, the term of any Option granted hereunder and the property which Optionee shall receive upon the exercise or termination thereof shall be subject to and be governed by
the provisions regarding the treatment of any such Options set forth in a definitive agreement with respect to any of the aforementioned transactions entered into by the Corporation to the extent any such Option remains outstanding and unexercised
upon consummation of the transactions contemplated by such definitive agreement. 
 (d) Binding Nature of
Adjustments. Adjustments under this Section 5 will be made by the Committee, whose determination as to what adjustments, if any, will be made and the extent thereof will be final, binding and conclusive. No fractional shares will be issued
pursuant to the Options on account of any such adjustments. 
 6. Non-Guarantee of Employment. Nothing in the Plan
or in this Agreement shall confer on an individual any legal or equitable right against the Corporation or the Committee, except as expressly provided in the Plan or this Agreement. Nothing in the Plan or in this Agreement shall: (a) constitute
an inducement, consideration, or a contract for employment or service between an individual and the Corporation or the Bank; (b) confer any right on an individual to continue in the service of the Corporation or the Bank; or (c) interfere
in any way with the right of the Corporation or the Bank to terminate such service at any time with or without cause or notice, or to increase or decrease compensation for such service. 

7. No Rights as Stockholder. The Optionee shall not have any of the rights of a stockholder with respect to the shares of
Common Stock that may be issued upon the exercise of the Options (including, without limitation, any rights to receive dividends or noncash distributions with respect to such shares) until such shares of Common Stock have been issued to him or her
upon the due exercise of the Options. No adjustment shall be made for dividends or distributions or other rights for which the record date is prior to the date such certificate or certificates are issued. 

8. Nonqualified Nature of the Options. The Options are not intended to qualify as incentive stock options within the
meaning of Code section 422, and this Agreement shall be so construed. Optionee acknowledges that, upon exercise of the Options, Optionee will recognize taxable income in an amount equal to the excess of the then Fair Market Value of the shares
received upon exercise of the Options over the Exercise Price and must comply with the provisions of Section 9 of this Agreement with respect to any tax withholding obligations that arise as a result of such exercise. Optionee further
acknowledges that if it is determined that the Exercise Price is less than the fair market value of a share of Common Stock on the date the Options are granted, the Optionee may be required to recognize taxable income under Section 409A of the
Code prior to the exercise of the options. Optionee should consult his or her own tax advisor concerning the tax consequences of the grant of the Options. 

  
 5 

 9. Withholding of Taxes. 

(a) In General. At the time the Options are exercised in whole or in part, or at any time thereafter as requested by the
Corporation, the Optionee hereby authorizes withholding from payroll or any other payment of any kind due the Optionee and otherwise agrees to make adequate provision for foreign, federal, state and local taxes required by law to be withheld, if
any, which arise in connection with the Options (including, without limitation, upon a disqualifying disposition with the meaning of Code section 421(b)). The Corporation may require the Optionee to make a cash payment to cover any withholding tax
obligation as a condition of exercise of the Options. If the Optionee does not make such payment when requested, the Corporation may refuse to issue any stock certificate under the Plan until arrangements satisfactory to the Administrator for such
payment have been made. 
 (b) Means of Payment. The Committee may, in its sole discretion, permit the Optionee to
satisfy, in whole or in part, any withholding tax obligation which may arise in connection with the Options by any of the following means or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Corporation to
deduct any such tax obligations from any payment of any kind otherwise due to the Optionee; (iii) authorizing the Corporation to withhold shares of Common Stock otherwise issuable to the Optionee pursuant to the exercise of the Options; or
(iv) delivering to the Corporation unencumbered shares of Common Stock already owned by the Optionee. 
 10. Regulatory
Compliance; Forfeiture. Subject to the terms of the Plan, the grant of Options made hereby are subject to applicable rules, policies and regulations promulgated by regulatory bodies (“Regulators”) with jurisdiction over the Corporation
and its Subsidiary Companies. In accordance with such policies and regulations, the Options granted hereby may be required by Regulators to be exercised or forfeited in the event the Corporation or its Subsidiary Companies, including the Bank, does
not maintain certain capital levels or as otherwise ordered or directed by the Regulators. 
 11. The Corporation’s
Rights. The existence of the Options shall not affect in any way the right or power of the Corporation or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Corporation’s
capital structure or its business, or any merger or consolidation of the Corporation, or any issue of bonds, debentures, preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or any part of the Corporation’s assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 12. Optionee. Whenever the word “Optionee” is used in any provision of this Agreement under
circumstances where the provision should logically be construed, as determined by the Committee, to apply to the estate, personal representative or beneficiary to whom the Options may be transferred by will, by the laws of descent and distribution,
or pursuant to a transfer under Section 8.05 of the Plan as set forth in Section 13 hereof, the word “Optionee” shall be deemed to include such person. 

  
 6 

 13. Transferability of Options. The Options are not transferable other than by
will or the laws of descent and distribution. During the lifetime of the Optionee, the Options may be exercised only by the Optionee, by such permitted transferees or, during the period the Optionee is under a legal disability, by the
Optionee’s guardian or legal representative. Notwithstanding the foregoing, however, the Optionee may transfer the Options to his/her immediate family or to a duly established trust for the benefit of one or more of these individuals in
accordance with Section 8.05 of the Plan. Options so transferred may thereafter be transferred only to the Optionee or to an individual or trust to whom the Optionee could have initially transferred the Option pursuant to Section 8.05 of
the Plan; Options which are so transferred shall be exercisable by the transferee according to the same terms and conditions as applied to the Optionee. Except as provided above, the Options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process. 
 14. Notices. All notices and other communications made or given pursuant to this Agreement shall be in writing and shall be sufficiently made or given if hand delivered or mailed by certified
mail, addressed to the Optionee at the address contained in the records of the Corporation, or addressed to the Compensation Committee, care of the Corporation for the attention of its Chief Financial Officer at its principal office or, if the
receiving party consents in advance, transmitted and received via telecopy or via such other electronic transmission mechanism as may be available to the parties. 
 15. Entire Agreement. This Agreement and the Plan contain the entire agreement between the parties with respect to the Options granted hereunder. Any oral or written agreements,
representations, warranties, written inducements, or other communications made prior to the execution of this Agreement with respect to the Options granted hereunder shall be void and ineffective for all purposes. 

16. Amendment. This Agreement may not be modified, except as provided in the Plan or in a written document signed by each of
the parties hereto. 
 17. Conformity with Plan. This Agreement is intended to conform in all respects with, and is
subject to all applicable provisions of, the Plan, which is incorporated herein by reference. Inconsistencies between this Agreement and the Plan shall be resolved in accordance with the terms of the Plan. In the event of any ambiguity in this
Agreement or any matters as to which this Agreement is silent, the Plan shall govern. A copy of the Plan is available upon request to the Administrator. 
 18. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, other than the conflict of laws principles thereof. 

19. Headings. The headings in this Agreement are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. 
 [SIGNATURES APPEAR ON THE
FOLLOWING PAGE.] 

  
 7 

 IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed by its duly
authorized officer as of the date first above written. 
  

			
	Carroll Bancorp, Inc.
		
	By:	 	  

	Print Name:	 	  

	Title:	 	  

 The undersigned hereby acknowledges that he/she has carefully read this Agreement and the Plan and agrees to be
bound by all of the provisions set forth in such documents. 
  

									
		 		 		 	OPTIONEE:	 	
				
	DATE:	 	  
	 		 	  

		 		 		 	Print Name:	 	  

  
 8 

 EXERCISE FORM 
 Carroll Bancorp, Inc. 
 1321 Liberty Road 
 Sykesville, MD 21784 
 Gentlemen: 

I hereby exercise, to the extent indicated below, the Options granted to me on
            , by Carroll Bancorp, Inc. (the “Company”), subject to all the terms and provisions thereof and of the Carroll Bancorp, Inc. 2011 Stock Option Plan (the
“Plan”), and notify you of my desire to purchase      incentive shares and      non-qualified shares of Common Stock of the Corporation at a price of $        
per share pursuant to the exercise of said Options. 
  

									
	Payment Amount: $	 	  
	 		 	
				
	Date:	 	  
	 		 	  

		 		 		 		 	Optionee Signature
					
		 		 		 		 	Received by Carroll Bancorp, Inc. on
					
		 		 		 		 	  

			
	 Broker Information:

	 Firm Name

	Contact Person	 	
	  

	Broker Address	 	
	  

	City, State, Zip Code	 	Phone Number
	  

	Broker Account Number	 	
	  

	Electronic Transfer Number:

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