SEVERN BANCORP, INC. COMMON STOCK OPTION AGREEMENT
Exhibit
99.1
SEVERN
BANCORP, INC.
This
Common Stock Option Agreement (this "Agreement") is entered into this ____
day
of ____________, 2006, by and between Severn Bancorp, Inc., a Maryland
corporation ("Bancorp") and ("Optionee") (all capitalized terms not defined
herein shall have the meanings ascribed to them in the Plan).
A. The
Board
of Directors of Bancorp has adopted a Stock Option and Incentive Plan (the
"Plan").
B. The
Board
of Directors of Bancorp considers it desirable and in the best interest of
Bancorp that the Optionee be given an opportunity to purchase shares of Bancorp
Common Stock in furtherance of the Plan to provide additional incentive for
the
Optionee to promote the success of Bancorp.
NOW,
THEREFORE, in consideration of the foregoing premises, it is agreed as
follows:
1. Grant
of Option. Bancorp
hereby grants to the Optionee the right, privilege, and Option to purchase
(___)
shares of Bancorp Common Stock, at a purchase price of ___ Dollars ($___) per
share in the manner and subject to the conditions hereinafter provided. Said
purchase price was not less than the fair market value of the shares of Bancorp
Common Stock from the Effective Date of the Plan.
2. Period
of Exercise of Option.
(a) The
Option granted to the Optionee hereunder (i) shall become vested and
exercisable, on a cumulative basis, with respect to 20% of the Optioned Shares
upon each of the first five anniversary dates of the date of the grant, which
was February 21, 2006, provided that vesting shall not occur on a particular
date if the Optionee’s Continuous Service has terminated on or before such date
and (ii) shall be exercisable for a period of five (5) years from the Effective
Date, which was February 21, 2006.
(b) The
Option may be exercised by Optionee only while the Optionee is an Employee
or a
Director that has maintained Continuous service from the Effective Date, or
within three (3) months after termination of such Continuous Service (but not
later than the date on which the Option would otherwise expire), except if
the
Optionee's continuous Service terminates by reason of:
(1) "Just
Cause" which for purposes hereof shall have the meaning set forth in any
unexpired employment agreement between the Optionee and Bancorp and/or the
Bank
(and in the absence of any such agreement, shall mean termination because of
the
Optionee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease and desist order, then the
Optionee's rights to exercise such Option shall expire on the date of such
termination;
(ii)
death, then all Options of the deceased Optionee shall become immediately
exercisable and may be exercised within two (2) years from the date of
Optionee's death (but not later than the date on which the Option would
otherwise expire) by the personal representative(s) of Optionee's estate, or
the
person(s) to whom the rights under such Option shall have passed by will or
by
laws of descent and distribution; and
(iii)
Permanent and Total Disability (as such term is defined in Section 22(e)(3)
of
the Code), then all Options of the disabled Optionee shall become immediately
exercisable and may be exercised within one (1) year from the date of such
Permanent and Total Disability, but not later than the date on which the Option
would otherwise expire.
(iv)
Change of control, then all outstanding options shall become immediately
exercisable, as determined by the Option Committee in its sole
discretion.
3. Method
of Exercise. The
Optionee may exercise Options, subject to provisions relative to its termination
and limitations on its exercise, only by (i) written notice of intent to
exercise the Option with respect to a specified number of Bancorp Common Stock
shares; and (ii) payment to Bancorp (contemporaneously with delivery of such
notice) in cash, Bancorp Common Stock, or a combination of cash and Bancorp
Common Stock, of the amount of the Exercise Price for the number of Bancorp
Common Stock shares with respect to which the Option is then being exercised.
Each such notice (and payment where required) shall be delivered, or mailed
by
prepaid registered or certified mail, addressed to the Treasurer of Bancorp
at
Bancorp's executive offices. Bancorp Common Stock utilized in full or partial
payment of the Exercise Price for Options shall be valued at its Market Value
at
the date of exercise. An Option may not be exercised for a fractional share
of
Bancorp Common Stock.
4. 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, or
pursuant to the terms of a "qualified domestic relations order" (within the
meaning of Section 414(p) of the Code and the regulations and rulings
thereunder). The Option may be exercised only by the Optionee, the Optionee's
personal representative(s), or a permitted transferee.
5. Stock
Adjustment. The
shares of Bancorp Common Stock for which Optionee is granted an Option to
purchase pursuant to this Agreement shall be proportionately adjusted for any
increase, decrease, change, or exchange of shares of Bancorp Common Stock for
a
different number or kind of shares or other securities of Bancorp 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 of Bancorp Common Stock is changed
without the receipt or payment of consideration by Bancorp.
6. Conditions
upon Issuance of Shares. Shares
of
Bancorp Common Stock shall not be issued with respect to any Option unless
the
issuance and delivery of such shares shall comply with all 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.
7. Terms
of Plan. By
entering into this Agreement, the Optionee understands and agrees that the
terms
of the Option shall be governed by the terms and restrictions of the Plan and
this Agreement.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and
year first above written.
WITNESS/ATTEST
SEVERN
BANCORP, INC.
________________________ By:_____________________________
Xxxx X. Xxxxx, President
________________________ ________________________________
«FirstName» «Middle» «LastName»
