CECIL BANCORP,
INC.
2009 EQUITY INCENTIVE
PLAN
The purpose of this 2009 Equity
Incentive Plan is to provide incentives and rewards to officers,
employees and directors who contribute to the long-term success and
growth of Cecil Bancorp, Inc., and its Affiliates, and to assist
these entities in attracting and retaining directors, officers and
other selected employees with necessary experience and ability
required to aid the Company in increasing the long-term value of
the Company for the benefit of its shareholders.
“Affiliate” means any “ parent
corporation” or
“ subsidiary corporation” of the Company, as such terms are defined in
Sections 424(e) and 424(f) of the Code. The term Affiliate shall
include the Bank.
“Award”
means Restricted Stock Awards
and/or Stock Options, as set forth in Section 6 of the
Plan.
“Bank”
means Cecil Bank, and any
successors thereto.
“Beneficiary”
means the person or persons
designated by the Participant to receive any benefits payable under
the Plan in the event of such Participant’s death. Such
person or persons shall be designated in writing by the Participant
and addressed to the Company or the Committee on forms provided for
this purpose by the Committee, and delivered to the Company or the
Committee. Such Beneficiary designation may be changed from time to
time by similar written notice to the Committee. A
Participant’s last will and testament or any codicil thereto
shall not constitute written designation of a Beneficiary. In the
absence of such written designation, the Beneficiary shall be the
Participant’s surviving spouse, if any, or if none, the
Participant’s estate.
“Board of
Directors” means
the board of directors of the Company.
“Cause”
means the personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty
involving personal profits, intentional failure to perform stated
duties, willful violation of a material provision of any law, rule
or regulation (other than traffic violations and similar offense),
or a material violation of a final cease-and-desist order or any
other action which results in a substantial financial loss to the
Company or its Affiliates.
“Change in
Control” shall
mean: (i) the sale of all, or a material portion, of the
assets of the Company or its Affiliates; (ii) the merger or
recapitalization of the Company whereby the Company is not the
surviving entity; (iii) a change in control of the Company, as
otherwise defined or determined by the Company’s applicable
banking regulatory agency or regulations promulgated by it; or
(iv) the acquisition after the effective date of the Plan,
directly or indirectly, of the beneficial ownership (within the
meaning of that term as it is used in Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) of
twenty-five percent (25%) or more of the outstanding voting
securities of the Company by any person, trust, entity or group.
This limitation shall not apply to the purchase of shares by
underwriters in connection with a public offering of Company stock
or the purchase of shares of up to 25% of any class of securities
of the Company by a tax-qualified employee stock benefit plan
sponsored by the Company. The term “person” refers to
an individual or a corporation, partnership, trust, association,
joint
venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of
entity not specifically listed herein.
“Code”
means the Internal Revenue Code of
1986, as amended.
“Committee” means the Board of Directors of the Company or
the administrative committee designated, pursuant to Section 3 of
the Plan, to administer the Plan.
“Common
Stock” or
“Shares” means shares of common stock of the
Company.
“Company”
means Cecil Bancorp, Inc., and any
successor entity or any future parent corporation of the
Bank.
“Director”
means a person serving as a member
of the Board of Directors of the Company from time to
time.
“Director
Emeritus” means a
person serving as a director emeritus, advisory director,
consulting director or other similar position as may be appointed
by the Board of Directors of the Company or the Bank from time to
time.
“Disability” means (a) with respect to Incentive Stock
Options, the “permanent and total disability” of the
Employee as such term is defined at Section 22(e)(3) of the Code;
and (b) with respect to other Awards, a condition of incapacity of
a Participant which renders that person unable to engage in the
performance of his or her duties by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for
a continuous period of not less than twelve (12) months.
“Effective
Date” shall mean
the date of stockholder approval of the Plan by the stockholders of
the Company.
“Eligible
Participant” means
an Employee or Outside Director who may receive an Award under the
Plan.
“Employee”
means any person employed by the
Company or an Affiliate. Directors who are also employed by the
Company or an Affiliate shall be considered Employees under the
Plan.
“Exchange
Act” means the
Securities Exchange Act of 1934, as amended.
“Exercise
Price” means the
price at which an individual may purchase a share of Common Stock
pursuant to an Option.
“Fair Market
Value” means a) for
a security traded on a national securities exchange, including the
Nasdaq Global market, the last reported sales price reported on
such date or, if the Common Stock was not traded on such date, on
the immediately preceding day on which the Common Stock was traded
thereon or the last previous date on which a sale is reported; b)
if the Shares are not traded on a national securities exchange, but
are traded on the over-the-counter market, if sales prices are not
regularly reported for the Shares for the trading day referred to
in clause (a), and if bid and asked prices for the Shares are
regularly reported, the mean between the bid and the asked price
for the Shares at the close of trading in the over-the-counter
market on the applicable date, or if the applicable date is not a
trading day, on the trading day immediately preceding the
applicable date; and (c) in the absence of such markets for the
Shares, the Fair Market Value shall be determined in good faith by
the Committee.
“Incentive Stock
Option” means a
Stock Option granted under the Plan, that is intended to meet the
requirements of Section 422 of the Code.
“Non-Statutory Stock
Option” means a
Stock Option granted to an individual under the Plan that is not
intended to be and is not identified as an Incentive Stock Option,
or an Option granted under the Plan that is intended to be and is
identified as an Incentive Stock Option, but that does not meet the
requirements of Section 422 of the Code.
“Option”
or “Stock
Option” means an
Incentive Stock Option or a Non-Statutory Stock Option, as
applicable.
“Outside
Director” means a
member of the Board of Directors of the Company who is not also an
Employee.
“Parent”
means any present or future
corporation which would be a “parent corporation” of
the Bank or the Company as defined in Sections 424(e) and (g) of
the Code.
“Participant”
means an individual who is granted
an Award pursuant to the terms of the Plan; provided, however, upon
the death of a Participant, the term “Participant”
shall also refer to a Beneficiary designated in accordance with the
Plan.
“Plan”
means this Cecil Bancorp, Inc. 2009
Equity Incentive Plan.
“Restricted Stock
Award” means an
Award of shares of restricted stock granted to a Participant
pursuant to Section 6.1(b) of the Plan.
“Trust”
shall mean any grantor trust
established by the Company for purposes of administration of the
Plan.
“Trustee” or
“Trustee Committee” means that person(s) or entity appointed by the
Committee to hold legal title to the Plan assets under any Trust
for the purposes set forth herein.
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(a)
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Committee.
The Committee shall administer the
Plan. The Committee shall consist of two or more disinterested
directors of the Company, who shall be appointed by the Board of
Directors. A member of the Board of Directors shall be deemed to be
disinterested only if he or she satisfies: (i) such requirements as
the Securities and Exchange Commission may establish for
non-employee directors administering plans intended to qualify for
exemption under Rule 16b-3 (or its successor) of the Exchange Act
and (ii) and to the extent deemed appropriate by the Board of
Directors, such requirements as the Internal Revenue Service may
establish for outside directors acting under plans intended to
qualify for exemption under Section 162(m)(4)(C) of the Code;
provided, however, a failure to comply with the requirements of
subparagraphs (i) and (ii) shall not disqualify any actions taken
by the Committee. A majority of the entire Committee shall
constitute a quorum and the action of a majority of the members
present at any meeting at which a quorum is present shall be deemed
the action of the Committee. In no event may the Committee revoke
outstanding Awards without the consent of the Participant. All
decisions, determinations and interpretations of the Committee
shall be final and conclusive on all persons affected
thereby.
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(b)
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Authority of
Committee. Subject to
paragraph (a) of this Section 3, the Committee shall:
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(i)
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select the individuals who are to
receive grants of Awards under the Plan;
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(ii)
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determine the type, number, vesting
requirements, acceleration of vesting and other features and
conditions of Awards made under the Plan;
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(iii)
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interpret the Plan and Award
Agreements (as defined below); and
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(iv)
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make all other decisions and
determinations that may be required or as the Committee deems
necessary or advisable related to the operation of the
Plan.
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(c)
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Awards. Each Award granted under the Plan shall be
evidenced by a written agreement ( i.e. , an “Award
Agreement”). Each Award Agreement shall constitute a binding
contract between the Company or an Affiliate and the Participant,
and every Participant, upon acceptance of an Award Agreement, shall
be bound by the terms and restrictions of the Plan and the Award
Agreement. The terms of each Award Agreement shall be set in
accordance with the Plan, but each Award Agreement may also include
any additional provisions and restrictions determined by the
Committee. In particular, and at a minimum, the Committee shall set
forth in each Award Agreement:
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(i)
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the type of Award
granted;
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(ii)
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the Exercise Price for any
Option;
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(iii)
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the number of shares or rights
subject to the Award;
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(iv)
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the expiration date of the
Award;
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(v)
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the manner, time and rate
(cumulative or otherwise) of exercise or vesting of the Award;
and
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(vi)
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the restrictions, if any, placed on
the Award, or upon shares which may be issued upon the exercise or
vesting of the Award.
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The Chairman of the Committee and/or
the President of the Company are hereby authorized to execute Award
Agreements on behalf of the Company or an Affiliate and to cause
them to be delivered to the Participants granted Awards under the
Plan.
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(d)
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Six-Month Holding
Period. Subject to
vesting requirements, if applicable, except in the event of death
or Disability of the Participant or a Change in Control of the
Company, a minimum of six months must elapse between the date of
the grant of an Option and the date of the sale of the Common Stock
received through the exercise of such Option.
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Subject to the terms of the Plan,
Employees and Outside Directors, as the Committee shall determine
from time to time, shall be eligible to receive Awards in
accordance with the Plan.
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5.
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SHARES OF COMMON STOCK SUBJECT TO
THE PLAN; SHARE LIMITS.
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5.1
Shares Available. Subject to the provisions of Section 7,
the Common Stock that may be delivered under this Plan shall be
shares of the Company’s authorized but unissued Common Stock,
shares of Common Stock purchased in the open-market by the Company
or any Trust established for purposes of administration of the Plan
and any shares of Common Stock held as treasury shares.
5.2
Share Limits. The maximum number of shares of Common Stock
that may be delivered pursuant to Awards granted under this Plan
(the “Share Limit”) equals 368,935 shares. The
following limits also apply with respect to Awards granted under
this Plan:
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(a)
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The maximum number of shares of
Common Stock that may be delivered pursuant to the exercise of
Stock Options granted under this Plan is 276,701 shares.
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(b)
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The maximum number of shares of
Common Stock that may be delivered pursuant to Restricted Stock
Awards granted under this Plan is 92,234 shares .
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5.3
Awards Settled in Cash, Reissue of Awards and Shares. To the
extent that an Award is settled in cash or a form other than shares
of Common Stock, or if shares of Common Stock are withheld from an
Award for tax purposes, then the shares that would have been
delivered had there been no such cash or other settlement shall be
counted against the shares available for issuance under this Plan.
Shares that are subject to or underlie Awards which expire or for
any reason are cancelled or terminated, are forfeited, fail to
vest, or for any other reason are not paid or delivered under this
Plan shall again be available for subsequent Awards under this
Plan.
5.4
Reservation of Shares; No Fractional Shares; Minimum Issue.
The Company shall at all times reserve a number of shares of Common
Stock sufficient to cover the Company’s obligations and
contingent obligations to deliver shares with respect to Awards
then outstanding under this Plan. No fractional shares shall be
delivered under this Plan. The Committee may pay cash in lieu of
any fractional shares in settlements of Awards under this Plan. No
fewer than 100 shares may be purchased on exercise of any Stock
Option unless the total number purchased or exercised is the total
number at the time available for purchase or exercise by the
Participant.
6.1 Except
as otherwise detailed herein, the Committee shall determine the
type or types of Award(s) to be made to each Eligible Participant
or Outside Director. Awards may be granted singularly, in
combination or in tandem. Awards also may be made in combination or
in tandem with, in replacement of, as alternatives to, or as the
payment form for grants or rights under any other employee or
compensation plan of the Company. The types of Awards that may be
granted under this Plan are Stock Options and Restricted Stock
Awards, as follows:
The Committee may, subject to the
limitations of this Plan and the availability of shares of Common
Stock reserved but not previously awarded under the Plan, grant
Stock Options to Employees and Outside Directors, subject to terms
and conditions as it may determine, to the extent that such terms
and conditions are consistent with the following
provisions:
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(i)
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Exercise Price.
The Exercise Price of Stock Options
shall not be less than one hundred percent (100%) of the Fair
Market Value of the Common Stock on the date of grant.
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(ii)
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Terms of Options.
In no event may an individual
exercise an Option, in whole or in part, more than ten (10) years
from the date of grant.
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(iii)
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Non-Transferability.
Unless otherwise determined by the
Committee, an individual may not transfer, assign, hypothecate, or
dispose of an Option in any manner, other than by will or the laws
of intestate succession. The Committee may, however, in its sole
discretion, permit the transfer or assignment of a Non-Statutory
Stock Option, if it determines that the transfer or assignment is
for valid estate planning purposes and is permitted under the Code
and Rule 16b-3 of the Exchange Act. For purposes of this Section
6.1(a), a transfer for valid estate planning purposes includes, but
is not limited to, transfers:
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(1)
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to a revocable inter
vivos trust, as to which
an individual is both settlor and trustee;
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(2)
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for no consideration to: (a) any
member of the individual’s Immediate Family; (b) a trust
solely for the benefit of members of the individual’s
Immediate Family; (c) any partnership whose only partners are
members of the individual’s Immediate Family; or (d) any
limited liability corporation or other corporate entity whose only
members or equity owners are members of the individual’s
Immediate Family.
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For purposes of this Section 6.1,
“Immediate Family” includes, but is not necessarily
limited to, a Participant’s parents, grandparents, spouse,
children, grandchildren, siblings (including half brothers and
sisters), and individuals who are family members by adoption.
Nothing contained in this Section 6.1 shall be construed to require
the Committee to give its approval to any transfer or assignment of
any Non-Statutory Stock Option or portion thereof, and approval to
transfer or assign any Non-Statutory Stock Option or portion
thereof does not mean that such approval will be given with respect
to any other Non-Statutory Stock Option or portion thereof. The
transferee or assignee of any Non-Statutory Stock Option shall be
subject to all of the terms and conditions applicable to such
Non-Statutory Stock Option immediately prior to the transfer or
assignment and shall be subject to any other conditions prescribed
by the Committee with respect to such Non-Statutory Stock
Option.
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(iv)
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Special Rules for Incentive Stock
Options. Notwithstanding
the foregoing provisions, the following rules shall further apply
to grants of Incentive Stock Options:
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(1)
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If an Employee owns or is treated as
owning, for purposes of Section 422 of the Code, Common Stock
representing more than ten percent (10%) of the total combined
voting securities of the Company at the time the Committee grants
the Incentive Stock Option (a “10% Owner”), the
Exercise Price shall not be less than one hundred and ten percent
(110%) of the Fair Market Value of the Common Stock on the date of
grant.
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(2)
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An Incentive Stock Option granted to
a 10% Owner shall not be exercisable more than five (5) years from
the date of grant.
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(3)
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To the extent the aggregate Fair
Market Value of shares of Common Stock with respect to which
Incentive Stock Options are exercisable for
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the first time by an Employee during
any calendar year, under the Plan or any other stock option plan of
the Company, exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, Incentive Stock Options in
excess of the $100,000 limit shall be treated as Non-Statutory
Stock Options. Fair Market Value shall be determined as of the date
of grant for each Incentive Stock Option.
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(4)
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Each Award Agreement for an
Incentive Stock Option shall require the individual to notify the
Committee within ten (10) days of any disposition of shares of
Common Stock under the circumstances described in
Section 421(b) of the Code (relating to certain disqualifying
dispositions).
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(5)
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Incentive Stock Options may only be
awarded to an Employee of the Company or its Affiliates.
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(v)
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Option Awards to Outside
Directors. Subject to the
limitations of Section 6.4(a), the Committee may award
Non-Statutory Stock Options to purchase shares of Common Stock to
each Outside Director of the Company at an Exercise Price equal to
the Fair Market Value of the Common Stock on such date of grant.
The Options will be first exercisable at the rate of 20% on the one
year anniversary of the date of grant of such Award and 20%
annually thereafter during periods of continuing service as a
Director or Director Emeritus. Upon the death or Disability of the
Director or Director Emeritus, such Option shall be deemed
immediately 100% exercisable. Such Options shall continue to be
exercisable for a period of ten years following the date of grant
without regard to the continued services of such Director as a
Director or Director Emeritus. In the event of the Director’s
death, such Options may be exercised by the Beneficiary or the
personal representative of his estate or person or persons to whom
his rights under such Option shall have passed by will or by the
laws of descent and distribution. Options may be granted to newly
appointed or elected Outside Directors within the sole discretion
of the Committee. The Exercise Price per share of such Options
granted shall be equal to the Fair Market Value of the Common Stock
at the time such Options are granted. All outstanding Awards shall
become immediately exercisable in the event of a Change in Control
of the Bank or the Company. Unless otherwise inapplicable, or
inconsistent with the provisions of this paragraph, the Options to
be granted to Outside Directors hereunder shall be subject to all
other provisions of this Plan.
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(b)
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Restricted Stock
Awards.
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The Committee may make grants of
Restricted Stock Awards, which shall consist of the grant of some
number of shares of Common Stock to an individual upon such terms
and conditions as it may determine, to the extent such terms and
conditions are consistent with the following provisions:
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(i)
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Grants of Stock.
Restricted Stock Awards may only be
granted in whole shares of Common Stock.
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(ii)
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Non-Transferability.
Except to the extent permitted by
the Code, the rules promulgated under Section 16(b) of the Exchange
Act or any successor statutes or rules:
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(1)
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The recipient of a Restricted Stock
Award grant shall not sell, transfer, assign, pledge, or otherwise
encumber shares subject to the grant until full vesting of such
shares has occurred. For purposes of this Section 6.1, the
separation of beneficial ownership and legal title through the use
of any “swap” transaction is deemed to be a prohibited
encumbrance.
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(2)
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Unless otherwise determined by the
Committee, and except in the event of the Participant’s death
or pursuant to a qualified domestic relations order, a Restricted
Stock Award grant is not transferable and may be earned only by the
individual to whom it is granted during his or her lifetime. Upon
the death of a Participant, a Restricted Stock Award shall be
transferred to the Beneficiary. The designation of a Beneficiary
shall not constitute a transfer.
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(3)
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If the recipient of a Restricted
Stock Award is subject to the provisions of Section 16 of the
Exchange Act, shares of Common Stock subject to the grant may not,
without the written consent of the Committee (which consent may be
given in the Award Agreement), be sold or otherwise disposed of
within six (6) months following the date of grant.
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(iii)
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Issuance of Certificates.
The Committee shall take such action
as is reasonably necessary for the prompt issuance of shares of
Common Stock to be issued pursuant to a Restricted Stock Award
prior to the time that such Award shall be deemed earned and
non-forfeitable, with such stock certificate evidencing such shares
registered in the name of the Participant to whom the Restricted
Stock Award was granted; provided, however, that the Company may
not cause a stock certificate to be issued unless it has received a
stock power duly endorsed in blank with respect to such shares.
Further, each such stock certificate shall bear the following
legend:
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THE TRANSFERABILITY OF THIS
CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT
TO THE RESTRICTIONS, TERMS AND CONDITIONS (INCLUDING FORFEITURE
PROVISIONS AND RESTRICTIONS AGAINST TRANSFER) CONTAINED IN THE
CECIL BANCORP, INC. 2009 EQUITY INCENTIVE PLAN AND THE RELATED
AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH
SHARES AND THE CECIL BANCORP, INC. THE PLAN AND AWARD AGREEMENT IS
ON FILE IN THE OFFICE OF THE CORPORATE SECRETARY OF CECIL BANCORP,
INC.
This legend shall not be removed
until the individual becomes vested in such Restricted Stock Award
pursuant to the terms of the Plan and respective Award Agreement.
Each certificate issued pursuant to this
Section 6.1(b) shall be held by the
Company or its Affiliates, unless the Committee determines
otherwise.
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(iv)
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Treatment of
Dividends. Participants
are entitled to all dividends and other distributions declared and
paid on all shares of Common Stock subject to a Restricted Stock
Award from and after the date of grant of such Restricted Stock
Award. Such dividends and other distributions shall be
distri
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