GROUND LEASE

GROUND LEASE

THIS LEASE (the “Lease” ), dated January 13, 2006 (the “Effective Date”), is made and entered into by and between SCOTTS CORNER LLLP , a Maryland limited liability limited partnership, f/k/a Scotts Corner Limited Partnership (the “Landlord” ), having an office at 3457 Sweet Air Road, Phoenix, Maryland 21131, and CARROLLTON BANK , a Maryland state chartered commercial bank (the “Tenant” ) having an office at 344 N. Charles Street, Baltimore, Maryland 21201, Attn: Robert A. Altieri, President.

INTRODUCTORY STATEMENT

Landlord is the owner of two (2) adjacent parcels of land (the “Land”) containing approximately 0.6650 acres and a triangular parcel containing approximately 460 square feet, located at the northeast corner of Scott Adam Road at its intersection with York Road (Tax Account Nos 08-19-011392 and 21-00-011592), Cockeysville, Maryland, as more particularly described on Exhibit A.  Landlord desires to lease the Land to Tenant and Tenant desires to rent the Land from Landlord, subject to and in accordance with the terms and conditions hereinafter set forth.

NOW, THEREFORE, for good and valuable consideration, Landlord leases to Tenant and Tenant rents from Landlord the Land during the Term (as hereinafter defined) of this Lease, and any renewal or extension thereof.  This Lease is made upon the following terms and conditions:

1. Definitions.  As used in this Lease, the following terms are defined as follows:

1.1 Additional Rent – see Section 7.2.

1.2. Annual Rent –

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1.3 Commencement Date – the date of execution of this Lease by Landlord and Tenant.

1.4 Construction Period – the period during which Tenant shall have exclusive possession of the Land and shall commence erection of the Tenant Improvements

1.5 Environmental Laws – all applicable federal, state, or local law, ordinance, or regulation, including, but not limited to the Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Air Act, and the Clean Water Act that regulate any hazardous or toxic substance, material, or waste and amendments thereto.

1.6 Hazardous Materials – any hazardous or toxic substance, material, or waste, including, but not limited to, those substances, materials, and wastes listed in the United States Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as hazardous substances (40 CFR Part 302) and amendments thereto, or such substances, materials and wastes regulated under any Environmental Laws.

1.7. Initial Term – See Section 3.1.

1.8. Land – as defined in the Introductory Statement.

1.9. Landlord’s Delivery Date – the date on which Landlord delivers the Land to Tenant with the Landlord’s Improvements removed in accordance with this Lease.

1.10. Landlord Improvements – those improvements, consisting of gas pumps, underground fuel tanks, gas station building, car wash building and other permanent improvements situate on the Land, which are to be removed by Landlord prior to commencement of the Construction Period.

1.11. Landlord’s Notice Address – the following address for notices or such other address as Landlord may designate in writing from time to time:

c/o DJF, Inc.
P.O. Box 264
Phoenix, Maryland 21131

With a copy to:

Eugene W. Cunningham, Jr., Esquire
Royston, Mueller, McLean & Reid, LLP
102 West Pennsylvania Avenue, Suite 600
Towson, Maryland 21204-4575

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1.12. Landlord’s Payment Address – the following address for rent payments or such other address as Landlord may designate in writing from time to time:

c/o DJF, Inc.
P.O. Box 264
Phoenix, Maryland 21131

1.13. Permitted Use – commercial banking and any business permitted by the Regulatory Authorities.

1.14. Permitting Period – the period during which Tenant shall obtain the permits necessary to construct the Tenant Improvements.

1.15. Premises – the Land and the Tenant Improvements.

1.16. Regulatory Approval Period – the period during which Tenant shall obtain the necessary approvals from applicable governmental regulatory bodies in order to operate a branch bank office at the Premises.

1.17. Regulatory Authorities – those governmental authorities having jurisdiction and regulatory power over Tenant’s operations.

1.18. Rent Commencement Date – the earlier to occur of

1)     the end of the Construction Period; or

2)     the date Tenant opens for business with the public at the Premises.

1.19. Renewal Term – See Section 3.2.

1.20. Rent – the payment of the Annual Rent, Interim Rent and Additional Rent specified in this Lease.

1.21. Tenant Improvements – the one-story masonry building, building sidewalks and curbs, building lighting fixtures and conduits, utility connections, paving and all improvements to be contracted by Tenant on the Land for the Permitted Use, in accordance with plans and specifications therefor approved in writing by Landlord (which approval shall not be unreasonably withheld or delayed) and in accordance with the other terms and conditions of this Lease.

1.22. Tenant’s Notice Address – the following address for notices or such other address as Landlord may designate in writing from time to time:

Carrollton Bank
344 N. Charles Street
Baltimore, Maryland 21201
Attn: Robert A. Altieri, President

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With a copy to:

Rogers, Moore & Rogers
6 S. Calvert Street
Baltimore, Maryland 21202
Attn:  William C. Rogers, Jr., Esquire

1.23. Term – the Initial Term or the applicable Renewal Term, whichever is then in effect.

2A. Flood Plan and Site Plan Submission; Regulatory Approval.

2.1 The parties acknowledge that Baltimore County, Maryland (the “County”) requires that Tenant submit a flood plain study of the Land in connection with submittal of Tenant’s site plan to begin the County plan review process.  Tenant shall promptly commission the preparation of the flood plain study (the “Flood Study”) and its site plan with Frederick Ward Associates, Inc.  (“FWA”) and provide both to County within sixty (60) days after the Effective Date.  In the event that the County fails to approval Tenant’s site plan as a result of any Flood Study issues and, as a result thereof, Tenant elects to terminate this Lease, then Landlord shall reimburse Tenant the cost of the Flood Study (not exceeding $12,500.00), provided FWA issues Landlord a letter confirming that Landlord has sole ownership rights to and use of the Flood Study.  In any event, if the County fails to approve Tenant’s site plan and Tenant does not, in its exercise of its sole discretion, modify the site plan to obtain County approval, this Lease shall terminate promptly upon the issuance of the County’s disapproval.

2.2 Additionally, as part of Tenant’s submission of its site plan, Tenant will cause an ALTA or boundary survey of the Land to be prepared (the “Land Survey”).  Upon the filing of Tenant’s site plan and Flood Study with the County and provision of a copy of the final Land Survey to Landlord, Landlord shall reimburse Tenant the cost of the Land Survey (not exceeding $15,000.00), provided FWA issues Landlord a letter confirming that Landlord has co-ownership rights to and use of the Land Survey.

2.3 If the County does not approve Tenant’s site plan on or before December 1, 2006, then either party may terminate this Lease prior to Issuance of County approval upon written notice to the other.

2.4 Upon County approval of Tenant’s site plan, Tenant, at its sole cost and expense, shall file for and thereafter diligently pursue Regulatory Approval.  Tenant shall notify Landlord in writing ( the “Regulatory Approval Notice” ) promptly after Tenant receives Regulatory Approval.  If Regulatory Approval is denied, this Lease shall be of no further force and effect, and neither party shall have any further rights or obligations hereunder.  Furthermore, If Tenant has not received Regulatory Approval within ninety (90) days after Tenant’s request is submitted, then either party may terminate this Lease prior to receipt of Regulatory Approval upon written notice to the other.

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2.5 Tenant shall provide Landlord with regular progress reports regarding Tenant’s pursuant of the matters described in Sections 2.1, 2.2, 2.3 and 2.4 including providing the dates of filing of documents with the County and of the request for Regulatory Approval, together with copies of all filing documents.  Tenant shall also provide copies of all correspondence from the County and Regulatory Authorities, promptly upon receipt.  Tenant shall use its good faith, diligent efforts to file for, seek and obtain the various approvals required for its construction and use of the Tenant Improvements.

2.6 If the Land is subject to any mortgage, deed of trust, ground lease, or other encumbrance superior to this Lease, Tenant shall receive a non-disturbance and attornment agreement from the mortgage, ground lessor, or other party holding an interest in the Premises superior to Tenant, which agreement must be in form reasonably accepted to Tenant.  If Tenant does not receive the non-disturbance and attornment agreement under this Section 2.6 within sixty (60) days after the Effective Date, Tenant may terminate this Lease upon written notice to Landlord within thirty (30) days thereafter.

2B.  Site, Environmental and Soil Studies.  Within sixty (60) days after the Effective Date, Tenant shall conduct its site review (including availability of utilities), environmental and soil studies to determine acceptability of the Land for the Permitted Use.  The Land is to be provided in its “as is “condition, without warranty or responsibility on Landlord’s part except (i) that Landlord shall deliver the Closure Letter in accordance with Section 4.1, and (ii) for Landlord’s indemnification obligations under Section 24 hereof.

3. Lease Term .

3.1 Initial Lease Term. The initial term (the “ Initial Term ”) of this Lease shall commence on the Commencement Date and shall expire at the end of the month that is twenty (20) years after the Rent Commencement Date unless sooner terminated in accordance with the provisions hereof.  After the Rent Commencement Date and upon Landlord’s request, Tenant shall promptly enter into a written agreement with Landlord, mutually acceptable and in recordable form, stipulating the Commencement Date, the Rent Commencement Date, and expiration date of the Initial Term.

3.2 Renewals; Annual Rent During Renewals. As long as (i) Tenant is not then in monetary default of this Lease nor in non-monetary default of this Lease beyond any applicable cure period and (ii) Tenant is occupying a portion of the entire Premises at the time of such election, Tenant may extend this Lease for four (4) additional periods of five (5) years each (each a “ Renewal Term ”) on the same term and conditions as provided in this Lease (except as set forth below), by delivering written notice of the exercise thereof to Landlord not later than nine (9) months before the expiration of the then current Term.

(a)   After the last scheduled Renewal Term hereunder, Tenant shall have no further extension options unless expressly granted by Landlord in writing; and

(b)   Landlord shall lease to Tenant the Premises in its then-current condition at the beginning of each Renewal Term.

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Tenant’s rights under this Section 3.2 shall terminate if (i) this Lease or Tenant’s right to possession of the Premises is terminated, or (ii) Tenant fails to timely exercise its option under this Section 3.2, time being of the essence with respect to Tenant’s exercise thereof.

4. Landlord’s Construction Obligations.

4.1 Removal of Tanks and Improvements. Before the Effective Date, Landlord removed the existing gas pumps, underground fuel tanks and various other improvements existing on the Land.  The removal of the gas pumps and underground fuel tanks were undertaken in compliance with Maryland Department of the Environment (MDE) procedures including with the presence of an MDE official.  Landlord has been advised that a “closure and no further action required letter” (the “Closure Letter”) will be issued.  Landlord shall be responsible for obtaining the Closure Letter.  If the Closure Letter is not obtained within ninety (90) days after the Effective Date, then Tenant may terminate this Lease prior to issuance of the Closure Letter upon written notice to Landlord.  Landlord shall not be liable to Tenant for failure of MDE to timely issue the Closure Letter.

4.2 Otherwise  “AS IS” delivery. Except as provided in Section 4.1 with respect to Landlord’s delivery of the Closure Letter, the Land shall be delivered to Tenant in absolutely “AS IS” condition, without representation or warranty by Landlord as to the physical features thereof in any manner whatsoever.  Tenant acknowledges that it accepts delivery of the Land in the condition specified in this Section 4.2.

5. Tenant’s Construction Obligations.

5.1 General. Tenant shall construct or cause to be constructed the Tenant Improvements in a good and workmanlike manner.  All construction by Tenant shall be done pursuant to plans and specifications therefor prepared by a licensed architect or engineer.  All such plans and specifications for the Tenant Improvements and the contractor or contractors engaged by Tenant to perform such work shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld or delayed.  Tenant shall bear all risk of theft, loss or damage to its personal property, including building materials stored on the Land or incorporated into Tenant Improvements, from whatsoever cause, unless such loss or damage is due to the negligence or willful misconduct of Landlord.

5.2 Permitting Period . Tenant shall prepare, or cause to be prepared, complete plans and specifications for the Tenant Improvements (the “ Plans ”) and shall submit the same to Landlord for Landlord’s approval, which approval shall not be unreasonably withheld or delayed.  If Landlord does not respond within fifteen (15) days after Tenant’s submission of the Plans, the Plans will be deemed approved.  After Landlord and Tenant have agreed to final plans and specifications for the building portion of Tenant Improvements and  Tenant has received the necessary County site plan approvals pursuant to Section 2.3 and the necessary Regulatory Approval pursuant to Section 2.4, Tenant shall make application to the County for a building permit and to all other appropriate governmental agencies, quasi-governmental agencies and utility companies for all permits and approvals necessary to construct the Tenant Improvements (collectively, “ Tenant’s Permits ”).  Tenant shall use diligent efforts

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to obtain the Tenant’s Permits on or before August 1, 2007 (this is the “Permitting Period”).  If Tenant is unable to obtain Tenant’s Permits by the conclusion of the Permitting Period, either party may terminate this Lease upon written notice to the other.

5.3 Construction Period. Promptly upon issuance of Tenant’s Permits, Tenant shall commence construction of the Tenant Improvements and use its best efforts to complete the same within one hundred twenty (120) days after issuance of Tenant’s Permits (this 120 day period is the “Construction Period”).  Whether or not Tenant has complete Tenant Improvements by the conclusion of the Construction Period, the Rent Commencement Date shall begin not later than the end thereof.

5.4 Interim Payments to Landlord. During the Construction Period, Tenant shall pay interim rent to Landlord of $2,500.00 per month.

6. Use of Premises.

6.1 Throughout the Term, Tenant shall use the Premises solely for the Permitted Use or in the event of assignment or sublease of the Premises (so long as Tenant remains liable under this Lease), for any legally permitted use.

6.2 Upon substantial completion of the Tenant Improvements and the obtaining of all necessary use and occupancy permits, Tenant shall occupy the Premises and promptly open for business.

6.3 Tenant shall promptly comply with all laws, rules, regulations, requirements, notices of governmental bodies and public authorities and the reasonable recommendations of the local board of fire underwriters rating bureau or other fire insurance rating organization for Baltimore County, Maryland and of the Landlord’s insurers, pertaining to the Premises, the improvements thereon or their use, occupancy or maintenance.

6.4 Tenant will comply with all provisions of the Americans With Disabilities Act (the “ ADA ”) with respect to the Premises.

7. Rent

7.1 Commencing on the Rent Commencement Date and continuing throughout the Initial Term, Tenant shall pay Annual Rent in equal monthly installments, in advance, on the first day of each calendar month.  If the Rent Commencement Date falls on a day other than the first day of a calendar month, then the Annual Rent for any fractional month during the Term shall be apportioned on a daily basis based upon a thirty (30) day month.

7.2 Whenever under the terms of this Lease any sum of money is required to be paid by Tenant in addition to the Annual Rent herein reserved, said sum shall be deemed to be additional rent (“ Additional Rent ”) and collectible as rent whether or not so designated.  All Annual Rent and Additional Rent shall be paid without prior demand, except as provided otherwise by the terms of this Lease, and without any setoff, abatement or deduction of any

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nature whatsoever.  Any payment by Tenant of a lesser amount of Annual Rent or Additional Rent than is then due shall be applied to such category of arrearage as Landlord may designate irrespective of any contrary designation by Tenant and to the oldest, most recent or other portion of the sum due as the Landlord may determine; and Landlord’s acceptance of any such partial payment shall not be deemed an accord and satisfaction, and shall be without prejudice to Landlord’s right to pursue any other remedies.

7.3 All rent under this Lease shall be paid to Landlord at Landlord’s Payment Address.

8. Repair and Maintenance Obligations.

8.1 Except for matters pertaining to hazardous materials addressed elsewhere in this Lease, Landlord shall have no obligation to repair, maintain or address any condition with the Land.  Except as set forth in the preceding sentence, Tenant shall be solely responsible for the repair, maintenance and upkeep of the Land and, with respect to the Tenant Improvements, the repair and maintenance thereof, in good condition and repair and in compliance with all applicable governmental regulations, for the entire Term of the Lease.

8.2 Without limiting the provisions of Section 8.1, Tenant shall perform all grass cutting, landscaping, upgrades to or replacements of the Tenant’s Improvements as may be necessary in connection with the use and occupancy thereof and/or as may be required to comply with all applicable governmental regulations.

9. Taxes and Assessments.

9.1 During the Term, Tenant shall bear, pay and discharge all real estate taxes, special and benefit assessments, minor privilege charges, metropolitan district charges and other public charges levied or imposed by any governmental agency upon or with respect to ownership, use or occupancy of the Premises, including taxes on rents (whether imposed on Landlord or Tenant), but excluding taxes identified as income taxes.

9.2 All sums payable by Tenant under this Section 9 shall be paid prior to accrual of interest or penalty for nonpayment.  With respect to real estate taxes and/or special and benefit assessments and other charges assessed separately and directly to Tenant, Tenant shall furnish Landlord with evidence of payment in the form of copies of the paid receipts promptly after payment.  In any case in which Tenant contests in good faith any such imposition Tenant may defer payment to the extent that it is necessary and legally possible to defer the same in order to make such contest and diligently pursue the same, but in such event it shall be a condition of Tenant’s privilege to defer any payment, that Tenant shall, if so requested by Landlord, furnish Landlord, with a bond, reasonably satisfactory to Landlord as to surety, in an amount and upon such conditions as shall reasonably be necessary to protect the interest of Landlord against any loss or impairment resulting from such delay.

9.3 Upon the Rent Commencement Date, the parties shall take such action as may be necessary or appropriate in order that proposed assessment notices and separate tax bills

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for the Premises are sent by taxing authorities directly to Tenant, including, if necessary, a designation of Tenant’s address as address of record for the owner for tax assessment and billing purposes. Tenant shall promptly furnish to Landlord copies of all such proposed assessment notices and separate tax bills that Tenant receives from the taxing authorities. Tenant shall have the right to contest the validity and/or seek a reduction of said assessment at Tenant’s sole cost and expense. Tenant shall indemnify Landlord, for the amount of any interest, penalty and additional cost payable by Landlord as a result of Tenant’s contest of the validity of or attempt to reduce such assessment. Tenant shall have the right to institute such proceedings in the name of the Landlord as Tenant may deem necessary to contest the validity or seek a reduction of said assessment; provided that , if it is necessary to institute said proceedings in the name of the Landlord, the Landlord shall be given prior written notice of said proceedings. Landlord will, at Tenant’s sole cost and expense, execute and deliver to Tenant such documents and/or information as Tenant may reasonably require in connection with Tenant’s contest of the validity of or attempt to reduce said assessment.

9.4 Nothing contained in this Lease shall be deemed to include within the definition of the term “real estate taxes” any tax such as inheritance, estate, succession, gift and/or federal or state income taxes that are or may be imposed upon Landlord.

10. Utilities.

10.1 Beginning on the date that Tenant enters the Land for construction of the Tenant Improvements, Tenant shall pay, when due, all consumption charges for all utility services furnished to the Premises.

10.2 Landlord shall not be liable to Tenant for damages because of interruptions in utility services unless such interruption is due to the negligent or willful act of Landlord, its employees, agents, contractors, or subcontractors. No interruption in utility service shall cause any abatement in Tenant’s obligation to pay Rent.

11. Alterations.

                After the Tenant Improvements have been completed in accordance with the Plans, Tenant shall not thereafter make any alterations, additions, or improvements affecting structural or support elements of or in the building or affecting any utility systems servicing the Premises without Landlord’s prior written approval, which approval shall not be unreasonably withheld or delayed. Any alterations, additions, or improvements by Tenant that are permitted hereunder or thereafter approved by Landlord shall, at the end of the Term or sooner expiration of this Lease, become the property of Landlord and remain upon the Premises.

12. Trade Fixtures.

                All furniture, counters, business machinery, banking equipment, computers (regardless of the manner of installation), and interior removable partitions placed upon the Premises during the Term of this Lease, shall be considered as chattels (for subsequent removal purposes) and shall not become part or parcel of the real property, thereby permitting the same to

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be removable by the Tenant at the termination of this Lease. Any damage caused by any such removals shall be repaired by Tenant. Upon any termination of this Lease all Tenant Improvements, other than the above (which shall be the property of the Tenant and shall be timely removed by Tenant) shall become the property of Landlord.

13. Signs.

                Subject to Landlord’s prior approval as to design, location, height and color (which approval shall not be unreasonably withheld or delayed), Tenant shall be entitled to install and maintain on the Premises, at its cost and expense, permanent professionally prepared signs containing Tenant’s trade name or logo (and/or those of its subsidiaries and affiliates conducting business from the Premises) so long as such signs comply with applicable law. Subject to Landlord’s prior written approval (which approval shall not be unreasonably withheld or delayed) as to design, location, height and color, Tenant may, if permissible under applicable governmental sign regulations, construct a free standing pylon sign on the Premises as well. Tenant may also, if permissible under applicable governmental regulations, install a corporate-standard environmental surround and/or shield for each of Tenant’s automatic teller machines (“ATM”).

14. Landlord’s Access.

                Landlord and its duly authorized representatives may enter the Premises only upon reasonable advance notice to Tenant and subject to Tenant’s security requirements (including the requirement for Landlord’s representative to be escorted at all times by Tenant’s representative), to inspect the Premises and to rectify defaults of Tenant pursuant to the rights granted to Landlord under Section 25.2 (but only after Tenant has failed to commence and diligently pursue a cure of the default within any applicable cure period granted elsewhere in this Lease); provided, however , that any such entry by Landlord and its representatives shall be done in such a manner so as to not unreasonably interfere with the conduct of Tenant’s business operations on the Premises or compromise security of the Premises and provided further that Tenant consents to Landlord’s immediate entry (without prior notice and escort) if an emergency occurs as reasonably determined by Landlord. Landlord shall promptly restor