EXHIBIT 10(b)
TRI-COUNTY FINANCIAL CORPORATION
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose of the Plan.
The purpose of this Tri-County Financial Corporation 1995 Stock Option
Plan for Non-Employee Directors (the "Plan") is to advance the interests of the
Company through providing Directors of the Company and its Affiliates with the
opportunity to acquire Shares. By encouraging such stock ownership, the Company
seeks to attract, retain, and motivate the best available personnel for
positions of substantial responsibility and to provide additional incentive to
Directors to promote the success of the business.
2. Definitions.
As used herein, the following definitions shall apply.
(a) "Affiliate" shall mean any "parent corporation" or "subsidiary
corporation" of the Company, as such terms are defined in Section 424(e) and
(f), respectively, of the Code.
(b) "Agreement" shall mean a written agreement entered into in
accordance with Paragraph 5(c).
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Change in Control" shall mean the acquisition of the beneficial
ownership (as that term is defined in Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended) of 25% or
more of the voting securities of the Company by any person or by persons acting
as a "group" (within the meaning of Section 13(d) of the Securities Exchange Act
of 1934). For purposes of this subparagraph only, 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. The decision of the Board as to
whether a change in control has occurred shall be conclusive and binding.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Common Stock" shall mean the common stock, par value $.01 per
share, of the Company.
(g) "Company" shall mean Tri-County Financial Corporation.
(h) "Continuous Service" shall mean the absence of any interruption
or termination of service as a Director of the Company or an Affiliate.
Continuous Service shall not be considered
interrupted in the case of sick leave, military leave or any other leave of
absence approved by the Company or in the case of transfers between payroll
locations of the Company or between the Company, an Affiliate or a successor.
(i) "Director" shall mean any member of the Board or of the Board of
Directors of an Affiliate, including advisory director Gough.
(j) "Effective Date" shall mean the date specified in Paragraph 13
hereof.
(k) "Employee" shall mean any person employed on a full-time basis by
the Company or an Affiliate.
(l) "Exercise Price" shall mean the price per Optioned Share at which
an Option may be exercised.
(m) "Market Value" shall mean the fair market value of the Common
Stock, as determined under Paragraph 7(b) hereof.
(n) "Option" means an option to purchase Common Stock which meets the
requirements set forth in the Plan. Such Options shall not constitute "incentive
stock options" within the meaning of Section 422 of the Code.
(o) "Optioned Shares" shall mean Shares subject to an Option granted
pursuant to this Plan.
(p) "Participant" shall mean any person who receives an Option
pursuant to the Plan.
(q) "Plan" shall mean this Tri-County Financial Corporation 1995
Stock Option Plan for Non-Employee Directors.
(r) "Share" shall mean one share of Common Stock.
3. Term of the Plan and Options.
(a) Term of the Plan. The Plan shall continue in effect for a term of
five years from the Effective Date, unless sooner terminated pursuant to
Paragraph 14 hereof. No Option shall be granted under the Plan after five years
from the Effective Date.
(b) Term of Options. The term of each Option granted under the Plan
shall be 10 years.
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4. Shares Subject to the Plan.
Except as otherwise required by the provisions of Paragraph 10 hereof,
the aggregate number of Shares deliverable pursuant to Options shall not exceed
7,000 Shares. Such Shares may either be authorized but unissued Shares or Shares
held in treasury. If Options should expire, become unexercisable or be forfeited
for any reason without having been exercised or become vested in full, the
Optioned Shares shall, unless the Plan shall have been terminated, be available
for the grant of additional Options under the Plan.
5. Administration of the Plan.
(a) General Rule. The Plan shall be administered by the Board,
provided that the Board may appoint a committee of Directors to make any
determinations required pursuant to the Plan.
(b) Powers. Except as limited by the express provisions of the Plan,
the Board shall have sole and complete authority and discretion (i) to determine
the form and content of Options to be issued in the form of Agreements under the
Plan, (ii) to interpret the Plan, (iii) to prescribe, amend and rescind rules
and regulations relating to the Plan, and (iv) to make other determinations
necessary or advisable for the administration of the Plan.
(c) Agreement. Each Option shall be evidenced by a written agreement
containing such provisions as may be approved by the Board. Each such Agreement
shall constitute a binding contract between the Company and the Participant, and
every Participant, upon acceptance of such Agreement, shall be bound by the
terms and restrictions of the Plan and of such Agreement. The terms of each such
Agreement shall be in accordance with the Plan. In particular, the Board shall
set forth in each Agreement (i) the Exercise Price of an Option, (ii) the number
of Shares subject to, and the expiration date of, the Option, (iii) the manner,
time, and rate (cumulative or otherwise) of exercise or vesting of such Option,
and (iv) the restrictions, if any, to be placed upon such Option, or upon Shares
which may be issued upon exercise of such Option.
The President of the Company and such Directors as shall be designated
by the Board are hereby authorized to execute Agreements on behalf of the
Company, and to cause them to be delivered to the recipients of Options.
(d) Effect of the Board's Decisions. All decisions, determinations
and interpretations of the Board shall be final and conclusive on all persons
affected thereby.
(e) Indemnification. In addition to such other rights of
indemnification as they may have, the members of the Board shall be indemnified
by the Company in connection with any claim, action, suit or proceeding relating
to any action taken or failure to act under or in connection with the Plan or
any Option, granted hereunder to the full extent provided for under the
Company's governing instruments with respect to the indemnification of
Directors.
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(f) Certain Mandatory Abstentions. Notwithstanding anything herein to
the contrary, no Director shall have any vote with regard to any Option
previously granted to himself or herself.
6. Grant of Options.
Each Director who is not an Employee but is a Director on the Effective
Date shall receive, on said date, an Option to purchase 1,400 Shares at an
Exercise Price per Share equal to its Market Value on the Effective Date.
7. Exercise Price for Options.
(a) General Rule. The Exercise Price as to any particular Option
shall be the Market Value of the Optioned Shares on the date of grant, as
determined by the Board.
(b) Standards for Determining Exercise Price. If the Common Stock is
listed on a national securities exchange (including the NASDAQ National Market
System) on the date in question, then the Market Value per Share shall be the
average of the highest and lowest selling price on such exchange on such date,
or if there were no sales on such date, then the Exercise Price shall be the
mean between the bid and asked price on such date. If the Common Stock is traded
otherwise than on a national securities exchange on the date in question, then
the Market Value per Share shall be the mean between the bid and asked price on
such date, or, if there is no bid and asked price on such date, then on the next
prior business day on which there was a bid and asked price. If no such bid and
asked price is available, then the Market Value per Share shall be its fair
market value as determined by the Board, in its sole and absolute discretion.
8. Exercise of Options.
(a) Generally. Each Option shall be fully (100%) exercisable
immediately upon the date of its grant.
(b) Procedure for Exercise. Options may be exercised from time to
time by (i) written notice of intent to exercise the Option with respect to all
or a specified number of the Optioned Shares, and (ii) payment to the Company
(contemporaneously with the delivery of such notice), in cash, in Common Stock,
or a combination of cash and Common Stock, of the amount of the Exercise Price
for the number of the Optioned Shares with respect to which the Option is then
being exercised. Each such notice and payment shall be delivered, or mailed by
prepaid registered or certified mail, addressed to the Treasurer of the Company
at the Company's executive offices. A Director who exercises Options may
satisfy all applicable federal, state and local income and employment tax
withholding obligations, in whole or in part, by irrevocably electing to have
the Company withhold shares of Common Stock, or to deliver to the Company shares
of Common Stock that he already owns, having a value equal to the amount
required to be withheld.
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(c) Exercisability. Options granted under this Paragraph may be
exercised only while the Participant is a Director of the Company, or within one
year after termination of the Participant's Continuous Service as a Director,
but in no event later than the date on which such Options would otherwise
expire. In the event of such Director's death during the term of his
directorship, Options granted under this Paragraph may be exercised within one
year from the date of his death by the personal representatives of his estate or
person or persons to whom his rights under such Option shall have passed by will
or by laws of descent and distribution, but in no event later than the date on
which such Options would otherwise expire.
9. Change in Control
At the time of a Change in Control, each holder of an Option shall be
entitled to receive cash from the Company in an amount equal to the excess of
the Market Value of the Common Stock subject to the Option over the Exercise
Price of the Optioned Shares, in exchange for the cancellation of such Option.
10. Effect of Changes in Common Stock Subject to the Plan.
(a) Recapitalizations; Stock Splits, Etc. The number and kind of
shares reserved for issuance under the Plan, and the number and kind of shares
subject to outstanding Options (and the Exercise Price thereof) shall be
proportionately adjusted for any increase, decrease, change or exchange of
Shares for a different number or kind of shares or other securities of the
Company which results from a merger, consolidation, recapitalization,
reorganization, reclassification, stock dividend, split-up, combination of
shares, or similar event in which the number or kind of shares is changed
without the receipt or payment of consideration by the Company.
(b) Transactions in which the Company is Not the Surviving Entity.
Subject to Paragraph 9 hereof, in the event of (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in which the Company
is not the surviving entity, or (iii) the sale or disposition of all or
substantially all of the Company's assets (any of the foregoing to be referred
to herein as a "Transaction"), all outstanding Options shall be surrendered.
With respect to each Option so surrendered, the holder of the surrendered Option
may elect to receive --
(1) for each Share then subject to an outstanding Option the
number and kind of shares into which each outstanding Share (other than
Shares held by dissenting stockholders) is changed or exchanged,
together with an appropriate adjustment to the Exercise Price; or
(2) a cash payment (from the Company or the successor
corporation), in an amount equal to the Market Value of the Shares
subject to the Option on the date of the Transaction, less the Exercise
Price of the Option.
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(c) Conditions and Restrictions on New, Additional, or Different
Shares or Securities. If, by reason of any adjustment made pursuant to this
Paragraph, a Participant becomes entitled to new, additional, or different
shares of stock or securities, such new, additional, or different shares of
stock or securities shall thereupon be subject to all of the conditions and
restrictions which were applicable to the Shares pursuant to the Option before
the adjustment was made.
(d) Other Issuances. Except as expressly provided in this Paragraph,
the issuance by the Company or an Affiliate of shares of stock of any class, or
of securities convertible into Shares or stock of another class, for cash or
property or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, shall not affect, and no adjustment
shall be made with respect to, the number, class, or Exercise Price of Shares
then subject to Options or reserved for issuance under the Plan.
11. Non-Transferability of Options.
Options may not be sold, pledged, assigned, hypothecated, transferred
or disposed of in any manner other than by will or by the laws of descent and
distribution.
12. Time of Granting Options.
The date of grant of an Option shall, for all purposes, be the date on
which the Board makes the determination granting such Option. Notice of the
determination shall be given to each Participant to whom an Option is so granted
within a reasonable time after the date of such grant.
13. Effective Date.
The Plan shall become effective immediately upon its approval by the
Board.
14. Amendment and Termination of the Plan.
The Board may from time to time amend the terms of the Plan and, with
respect to any Shares at the time not subject to Options, suspend or terminate
the Plan; provided that no provision hereof may be amended more than once every
six months (other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder). No
amendment, suspension or termination of the Plan shall, without the consent of
any affected holders of an Option, alter or impair any rights or obligations
under any Option theretofore granted.
15. Conditions Upon Issuance of Shares.
(a) Compliance with Securities Laws. Shares of Common Stock shall not
be issued with respect to any Option unless the issuance and delivery of such
Shares shall comply with all
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relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the rules and regulations promulgated thereunder, any
applicable state securities law, and the requirements of any stock exchange
upon which the Shares may then be listed.
(b) Special Circumstances. The inability of the Company to obtain
approval from any regulatory body or authority deemed by the Company's counsel
to be necessary to the lawful issuance and sale of any Shares hereunder shall
relieve the Company of any liability in respect of the non-issuance or sale of
such Shares. As a condition to the exercise of an Option, the Company may
require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of federal or state securities law.
16. Reservation of Shares.
The Company, during the term of the Plan, will reserve and keep
available a number of Shares sufficient to satisfy the requirements of the Plan.
17. Withholding Tax.
The Company's obligation to deliver Shares upon exercise of Options
shall be subject to the Participant's satisfaction of all applicable federal,
state and local income and employment tax withholding obligations. Each
Participant may satisfy the obligation, in whole or in part, by irrevocably
electing to have the Company withhold Shares, or to deliver to the Company
Shares that he already owns, having a value equal to the amount required to be
withheld. The value of Shares to be withheld, or delivered to the Company, shall
be based on the Market Value of the Shares on the date the amount of tax to be
withheld is to be determined. As an alternative, the Company may retain, or sell
without notice, a number of such Shares sufficient to cover the amount required
to be withheld.
18. No Employment or Other Rights.
In no event shall a Director's eligibility to participate or
participation in the Plan create or be deemed to create any legal or equitable
right of the Director, or any other party to continue service with the Company
or any Affiliate. No Director shall have a right to be granted an Option or,
having received an Option, the right to again be granted an Option. However, a
Director who has been granted an Option may, if otherwise eligible, be granted
an additional Option or Options.
19. Governing Law.
The Plan shall be governed by and construed in accordance with the laws
of the State of Maryland, except to the extent that federal law shall be deemed
to apply.
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TRI-COUNTY FINANCIAL CORPORATION
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
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1998 Amendment
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WHEREAS, Tri-County Financial Corporation (the "Company") maintains the
Tri-County Financial Corporation 1995 Stock Option Plan for Non-Employee
Directors (the "Plan"); and
WHEREAS, the Company has determined that said Plan should be amended to
increase the number of shares reserved for future awards.
NOW, THEREFORE, pursuant to Paragraph 14 of the Plan, the Plan is
hereby amended as follows, effective immediately:
1. Paragraph 4 of the Plan shall be amended by inserting the
following sentence immediately after its first sentence:
The number of shares reserved under the Plan shall be increased by
11,000 Shares.
2. Nothing contained herein shall be held to alter, vary or affect
any of the terms, provisions, or conditions of the Plan or any Option entered
into thereunder, other than as stated above.
WHEREFORE, on this 30th day of October, 1998, the Company hereby
executes this 1998 Amendment to the Plan.
TRI-COUNTY FINANCIAL CORPORATION
By
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Its
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Date Attest:______________________________(Seal)