8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 22, 2012

FAIRMOUNT BANCORP, INC.

(Exact name of Registrant as Specified in Charter)

Maryland	000-53996	27-1783911
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

8216 Philadelphia Road, Baltimore, MD 21237

(Address of Principal Executive Offices)

(410) 866-4500

Registrant’s telephone number, including area code

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Upon the recommendation of the Compensation Committee, on February 22, 2012, the Board of Directors extended the term of the employment agreement with Joseph M. Solomon, President and Chief Executive Officer of each of Fairmount Bancorp, Inc. and Fairmount Bank, for an additional year, to a term of three years, and, effective March 12, 2012, increased his base annual salary under the agreement to $141,230.

Effective February 23, 2012, the Compensation Committee granted restricted stock awards to the named executive officers as follows:

Name	Number of Shares		Grant Date Fair Value  of Awards
Joseph M. Solomon		4,440	$	14.10
Jodi L. Beal		3,200	$	14.10

The shares of restricted stock vest over five years in equal increments on the anniversary of the date of the awards.

Effective February 23, 2012, he Compensation Committee granted stock options to the named executive officers as follows:

Name	Number of Shares Underlying Options		Exercise Price of Option Awards
Joseph M. Solomon		11,100	$	14.10
Jodi L. Beal		8,000	$	14.10

The stock options vest over five years in equal increments on the anniversary of the date of the grants.

Effective February 23, 2012, the Compensation Committee granted restricted stock awards and stock options to non-employee directors as follows:

	Restricted Stock				Stock Options
Name	Number of Shares		Grant Date Fair Value of Awards		Number of Shares Underlying Options		Exercise Price of Option Awards
William G. Yanke		888	$	14.10		2,220	$	14.10
Mary R. Craig		888	$	14.10		2,220	$	14.10
Jay T. French		600	$	14.10		1,500	$	14.10
Edward J. Lally		888	$	14.10		2,220	$	14.10
Edgar F. Lassahn, Jr.		500	$	14.10		1,250	$	14.10

The shares of restricted stock and the stock options vest over five years in equal increments on the anniversary of the date of the awards and grants.

The restricted stock awards and the stock option grants are subject to other terms and conditions of the 2010 Recognition and Retention Plan and Trust Agreement and the 2010 Stock Option Plan, respectively, and to the agreements with the recipients filed as Exhibits 10.1, 10.2 and 10.3 to this Report.

Item 5.07 Submission of Matters to a Vote of Security Holders

The Annual Meeting of Stockholders of the Company was held on February 22, 2012. At the Annual Meeting, the persons listed below were elected to serve as directors of the Company, each for a term of three years, and the appointment by the Audit Committee of Smith Elliott Kearns & Company, LLC as the Company’s independent registered public accounting firm for fiscal 2012 was ratified.

The Inspector of Election reported the vote of stockholders at the Annual Meeting as follows:

PROPOSAL 1: Election of Directors

Name	FOR		WITHHELD
Edward J. Lally		268,769		—
Mary R. Craig		268,269		500

In addition, there were 151,831 broker non-votes.

PROPOSAL 2: Ratify Appointment of Smith Elliott Kearns & Company, LLC

FOR	AGAINST		ABSTAIN
420,098		2		500

There were no broker non-votes.

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Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit 10.1	Form of Restricted Stock Award Agreement.
Exhibit 10.2	Form of Incentive Stock Option Agreement.
Exhibit 10.3	Form of Non-Incentive Stock Option Agreement.

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	FAIRMOUNT BANCORP, INC.
DATE: February 28, 2012	By:	/s/ Joseph M. Solomon
		Joseph M. Solomon
		President and Chief Executive Officer

EX-10.1

Exhibit 10.1

RESTRICTED STOCK AGREEMENT

UNDER THE

FAIRMOUNT BANCORP

2010 RECOGNITION AND RETENTION PLAN

AND TRUST AGREEMENT

THIS AGREEMENT is entered into as of             , 2012 by and between Fairmount Bancorp, Inc. (the “Company”) and                     (the “Award Recipient”).

WHEREAS, the Company maintains the Fairmount Bancorp, Inc. 2010 Recognition and Retention Plan and Trust Agreement (the “Plan”), under which the Compensation Committee of the Board of Directors of the Company (the “Committee”) may award restricted shares of the Company’s common stock, $.01 par value per share (the “Restricted Stock”), to officers, other employees and non-employee directors of the Company or its subsidiaries as the Committee may determine, subject to terms, conditions, or restrictions as it may deem appropriate;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed as follows:

I.

AWARD OF SHARES

Under the terms of the Plan, the Company has awarded to the Award Recipient a restricted stock award effective             , 2012 of             shares of Restricted Stock subject to the terms, conditions, and restrictions set forth in the Plan and in this Agreement. The definition of all capitalized terms used herein and not otherwise defined herein shall be as provided in the Plan.

II.

AWARD RESTRICTIONS

2.1 The period during which the restrictions imposed on Restricted Stock by this Agreement are in effect is referred to herein as the “Restricted Period.” During the Restricted Period, the Award Recipient shall not be entitled to vote the shares. Whenever Restricted Stock shall become vested, the Award Recipient shall also be entitled to receive, with respect to each share of vested Restricted Stock, an amount equal to any cash dividends and number of shares equal to any stock dividends declared and paid to holders of the Company’s common stock during the Restricted Period. Cash and stock dividends declared and paid during the Restricted Period shall be held by the Trust in an account with Fairmount Bank. The Restricted Stock may not be sold, assigned, transferred, exchanged, pledged, hypothecated or otherwise encumbered during the Restricted Period.

2.2 The Restricted Period for the Restricted Stock shall end and the shares of Restricted Stock shall become vested and freely transferable as set forth below:

With respect to 20% of the shares of Restricted Stock on             , 2013;

With respect to an additional 20% of the shares of Restricted Stock on             , 2014; and

With respect to an additional 20% of the shares of Restricted Stock on             , 2015.

With respect to an additional 20% of the shares of Restricted Stock on             , 2016.

With respect to an additional 20% of the shares of Restricted Stock on             , 2017.

2.3 To the extent Restricted Stock has not otherwise become vested and freely transferable in accordance with Section 2.2, the Restricted Period shall end and the Restricted Stock will become fully vested and freely transferable by the Award Recipient or his or her estate (1) upon the death of the Award Recipient (other than by suicide), (2) upon a determination by the Committee that the Award Recipient has become disabled, (3) upon a termination of the Award Recipient without cause, or (4) upon a Change in Control, subject to the terms, conditions and restrictions set forth in the Plan.

2.4 The Restricted Stock shall not be issued until the Company has had an opportunity to file a Registration Statement on Form S-8 with the Securities and Exchange Commission (the “SEC”) to register the Restricted Stock, which registration the Company will make reasonable efforts to complete and file as soon as administratively practicable.

III.

RIGHT TO CONTINUED EMPLOYMENT

Nothing in the Plan or in this Agreement shall confer upon an Award Recipient any right to continue in the employ of the Company or a subsidiary or in any way affect the Company’s or a subsidiary’s right to terminate the Award Recipient’s employment.

IV.

BINDING EFFECT

This Agreement shall be binding upon and inure to the benefit of the successors, executors, administrators, and heirs of the respective parties.

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V.

FORFEITURE OF AWARD

5.1 If (a) the Company’s financial statements are required to be restated at any time during the Restricted Period, and the Committee determines that the Award Recipient is responsible, in whole or in part, for the restatement, or (b) the Committee determines that the Restricted Stock granted hereunder is subject to any clawback policies the Company may adopt in order to conform to the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any resulting applicable rules issued by the SEC or national securities exchanges thereunder, then the award of Restricted Stock shall automatically terminate and be forfeited effective on the date on which the Committee makes such determination and (i) all shares of Restricted Stock acquired by the Award Recipient pursuant to this Agreement (or other securities into which such shares have been converted or exchanged) shall be returned to the Company or, if no longer held by the Award Recipient, the Award Recipient shall pay to the Company, without interest, all cash, securities or other assets received by the Award Recipient upon the sale or transfer of such stock or securities, and (ii) all unvested shares of Restricted Stock shall be forfeited.

5.2 If the Award Recipient owes any amount to the Company under Section 5.1 above, the Award Recipient acknowledges that the Company may, to the fullest extent permitted by applicable law, deduct such amount from any amounts the Company owes the Award Recipient from time to time for any reason (including without limitation amounts owed to the Award Recipient as salary, wages, reimbursements or other compensation, fringe benefits, retirement benefits or vacation pay). Whether or not the Company elects to make any such set-off in whole or in part, if the Company does not recover by means of set-off the full amount the Award Recipient owes it, the Award Recipient hereby agrees to pay immediately the unpaid balance to the Company.

5.3 The Award Recipient may be released from the Award Recipient’s obligations under Sections 5.1 and 5.2 above only if the Committee determines, in its sole discretion, that such action is in the best interests of the Company.

VI.

ADDITIONAL CONDITIONS

Anything in this Agreement to the contrary notwithstanding, if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification (or any updating of any such document) of the shares of Restricted Stock issuable pursuant hereto is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of shares of Restricted Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such shares of Restricted Stock shall not be issued, in whole or in part, or the restrictions thereon removed, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company. The Company agrees to use commercially reasonable efforts to issue all shares of Restricted Stock issuable hereunder on the terms provided herein.

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VII.

BINDING EFFECT

This Agreement may not be transferred, assigned pledged or hypothecated in any manner or law or otherwise, other than by will or by the laws of descent and distribution or pursuant to a domestic relations order as defined in the Internal Revenue Code of 1986, as amended,, and shall not be subject to execution, attachment or similar process. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, legal representatives and permitted successors. Without limiting the generality of the foregoing, whenever the term “Award Recipient” is used in any provision of this Agreement under circumstances where the provision appropriately applies to the heirs, executors, administrators or legal representatives to whom this award may be transferred by will or by the laws of descent and distribution, the term “Award Recipient” shall be deemed to include such person or persons.

VIII.

INCONSISTENT PROVISIONS

The shares of Restricted Stock granted hereby are subject to the terms, conditions, restrictions and other provisions of the Plan as fully as if all such provisions were set forth in their entirety in this Agreement. If any provision of this Agreement conflicts with a provision of the Plan, the Plan provision shall control. The Award Recipient acknowledges that a copy of the Plan and a prospectus summarizing the Plan was distributed or made available to the Award Recipient and that the Award Recipient was advised to review such materials prior to entering into this Agreement. The Award Recipient waives the right to claim that the provisions of the Plan are not binding upon the Award Recipient and the Award Recipient’s heirs, executors, administrators, legal representatives and successors.

XI.

GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland.

X.

SEVERABILITY

If any term or provision of this Agreement, or the application thereof to any person or circumstance, shall at any time or to any extent be invalid, illegal or unenforceable in any respect as written, the Award Recipient and the Company intend for any court construing this Agreement to modify or limit such provision so as to render it valid and enforceable to the fullest extent allowed by law. Any such provision that is not susceptible of such reformation shall be ignored so as to not affect any other term or provision hereof, and the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not be affected thereby and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law.

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XI.

ENTIRE AGREEMENT; MODIFICATION

The Plan and this Agreement contain the entire agreement between the parties with respect to the subject matter contained herein and may not be modified, except as provided in the Plan, as it may be amended from time to time in the manner provided therein, or in this Agreement, as it may be amended from time to time by a written document signed by each of the parties hereto. Any oral or written agreements, representations, warranties, written inducements, or other communications with respect to the subject matter contained herein made prior to the execution of the Agreement shall be void and ineffective for all purposes.

IN WITNESS WHEREOF, the parties have signed this Agreement as of the date hereof.

FAIRMOUNT BANCORP, INC.
By:
	Name:
	Title:
AWARD RECIPIENT

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EX-10.2

Exhibit 10.2

INCENTIVE STOCK OPTION AGREEMENT

UNDER THE

FAIRMOUNT BANCORP, INC.

2010 STOCK OPTION PLAN

THIS AGREEMENT is entered into as of             , 201    , between FAIRMOUNT BANCORP, INC. (the “Company”) and                     (“Optionee”) (the “Agreement”), in accordance with the terms of the FAIRMOUNT BANCORP, INC. 2010 Stock Option Plan (the “Plan”). Capitalized terms shall have the same meaning as set forth in the Plan, unless the context clearly indicates otherwise.

1. Grant of Option

1.1 The Company hereby grants to Optionee effective                     (the “Date of Grant”), the option to purchase up to             shares of Common Stock (the “Option”) at an exercise price of $        per share (the “Exercise Price”). ⁽¹⁾ The Option shall vest, become exercisable and expire as provided in Section 2 below.

1.2 The Option is intended to be treated as an incentive stock option (an “ISO”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), unless designated herein as a non-qualified stock option (a “Non-ISO”). If the Option is designated as an ISO and is not eligible for such treatment, the ineligible portion shall be treated as a Non-ISO.

2. Time of Exercise

2.1 Subject to the provisions of the Plan and this Agreement, Optionee shall be entitled to exercise the Option as follows:

Years of Continuous Employment After Date of Grant of Option	Percentage of Total Shares Of Common Stock Subject to Option Which May be Exercised
Upon grant		0	%(2)
After 1 year		20	%
After 2 years		40	%
After 3 years		60	%
After 4 years		80	%
After 5 years		100	%

⁽¹⁾  The exercise price must be at least 100% of the Fair Market Value (as defined in the Plan).

⁽²⁾  Option can be exercised to receive stock beginning one year from grant; however, Optionee must hold the stock for two years from the date of the grant of an ISO and for one year after exercise of the ISO in order to receive most favorable tax treatment. Optionee should consult his or her own tax advisor in determining individual tax consequences.

2.2 The Option shall expire and may not be exercised later than 10 years following the Date of Grant.

2.3 Notwithstanding the foregoing, the Option shall become accelerated and immediately exercisable in the event of Optionee’s termination of employment as a result of death or Disability and in the event of a Change in Control, as provided in the Plan.

2.4 The Option shall be exercised in the manner set forth in the Plan, using the exercise form attached hereto as Exhibit A. The exercise price may be paid in cash, check, Shares or through a cashless exercise program through a broker, all on the terms provided in the Plan.

3. Conditions for Exercise of Option

3.1 During Optionee’s lifetime, the Option may be exercised only by the Optionee or by Optionee’s guardian or legal representative. The Option must be exercised while Optionee is employed by the Company, or in the event of a termination of employment, for such period following termination and under certain circumstances, as may be provided in the Plan. Notwithstanding the foregoing, no Option may be exercised more than 10 years following the Date of Grant.

3.2 In the event Optionee is discharged from the employ of the Company or a subsidiary company for misconduct under Section 4.3 of the Plan, Optionee shall forfeit the right to exercise any portion of this Option, which shall be immediately null and void.

4. Additional Conditions

Anything in this Agreement to the contrary notwithstanding, if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification (or any updating of any such document) of the shares of Common Stock issuable pursuant to the exercise of an Option is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the issuance of shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such shares of Common Stock shall not be issued, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company.

5. Taxes

The Company may make such provisions as it may deem appropriate for the withholding of any federal, state and local taxes that it determines are required to be withheld on the exercise of the Option. By signing this Option, the Optionee agrees that he or she is solely responsible for the satisfaction of any taxes that may arise (including taxes arising under Sections 409A or 4999 of the Code) and that the Company shall not have any obligation whatsoever to pay such taxes.

6. Binding Effect

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators and successors.

7. Inconsistent Provisions

The Option granted hereby is subject to the provisions of the Plan. If any provision of this Agreement conflicts with a provision of the Plan, the Plan provision shall control.

8. Adjustments to Option

Appropriate adjustments shall be made to the number and class of shares of Common Stock subject to the Option and to the exercise price in accordance with the Plan.

9. Termination of Option

The Committee, in its sole discretion, may terminate the Option. However, no termination may adversely affect the rights of Optionee to the extent that the Option is currently vested on the date of such termination.

10. Designation of Beneficiary

Optionee may expressly designate beneficiary to his or her interest (the “Beneficiary”), if any, to this Option by completing and executing a designation of beneficiary agreement substantially in the form attached to this Agreement as Exhibit B (the “Designation of Beneficiary”) and delivering an executed copy of the Designation of Beneficiary to the Company.

11. Notices

Any notice or communication required or permitted by any provision of this Agreement to be given to Optionee shall be in writing and shall be delivered personally or sent by certified mail, return receipt requested, addressed to Optionee at the last address that the Company had for Optionee on its records. Each party may, from time to time, by notice to the other party hereto, specify a new address for delivery of notices relating to this Option. Any such notice shall be deemed to be given as of the date such notice is personally delivered or properly mailed.

12. Modifications

This Agreement may be modified or amended at any time, provided that Optionee must consent in writing to any modification that adversely alters or impairs any vested rights or obligations under this Option.

13. Headings

Section and other headings contained in this Option Agreement are for reference purposes only and are not intended to describe, interpret, define or limit the scope or intent of this Option or any provision hereof.

14. Severability

Every provision of this Option and of the Plan is intended to be severable. If any term hereof is illegal or invalid for any reason, such illegality or invalidity shall not affect the validity or legality of the remaining terms of this Award Agreement.

15. Governing Law

The laws of the State of Maryland shall govern the validity of this Award Agreement, the construction of its terms, and the interpretation of the rights and duties of the parties hereto.

16. Counterparts

This Option may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF the parties hereto have caused this Option to be executed as of the day and year first above written.

FAIRMOUNT BANCORP, INC.
By:
	A duly designated representative of the Company
	Optionee

Attest:

Exhibit A

FAIRMOUNT BANCORP, INC.

Form for Exercise of Stock Option for 2010 Stock Option Plan

Fairmount Bancorp, Inc.

8216 Philadelphia Road

Baltimore, Maryland 21237

Dear Sir or Madam:

The undersigned elects to exercise his/her Stock Option to purchase             shares of Common Stock of Fairmount Bancorp, Inc. (the “Company”) under and pursuant to a Stock Option Agreement dated as of                     and the terms and conditions of the 2010 Stock Option Plan.

1. ¨ Delivered herewith is a check and/or shares of Common Stock, valued at the closing sale price of the stock on the business day prior to the date of exercise, as follows:

$		in cash or check
$		in the form of              shares of Common Stock, valued at $             per share (subject to the discretion of the Board of Directors or Compensation Committee)*
$	Total

2. ¨ Delivered herewith are irrevocable instructions to a broker approved by the Company to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price.

If method 1 is chosen, the name or names to be on the stock certificate or certificates and the address and Social Security Number of such person(s) is as follows:

Name:

Address:

Social Security Number

	Very truly yours,
Date	Optionee

* Shares of Common Stock delivered to pay the purchase price must have been purchased in open market transaction or issued by the Company pursuant to a plan thereof more than six months prior to the exercise date of the Option.

Exhibit B

FAIRMOUNT BANCORP, INC.

Designation of Beneficiary

In the event of my death or “Disability” within the meaning of the FAIRMOUNT BANCORP, INC. 2010 Stock Incentive Plan (the “Plan”), I hereby designate the following person to be my beneficiary for the Award(s) (within the meaning of the Plan) identified below:

Name of Beneficiary:

Address:

Social Security No.:

This beneficiary designation of mine relates to any and all of my rights under the following Award or Awards:

¨ the Award that I received pursuant to an Option dated                  ,         between me and FAIRMOUNT BANCORP, INC. (the “Company”).

I understand that this beneficiary designation operates to entitle the above-named beneficiary to succeed, in the event of my death, to any and all of my rights under the Award(s) designated above, and shall be effective from the date this form is delivered to the Company until such date as I revoke this designation. A revocation shall occur only if I deliver to an executive officer of the Company either (i) a written revocation of this designation that is signed by me and notarized, or (ii) a designation of death beneficiary, in the form set forth herein, that is executed and notarized on a later date.

Date:

Your Signature:

Your Name (printed):

Sworn to before me this      day of             , 2012

Notary Public

County of

State of

EX-10.3

Exhibit 10.3

NON-INCENTIVE STOCK OPTION AGREEMENT

UNDER THE

FAIRMOUNT BANCORP, INC.

2010 STOCK OPTION PLAN

THIS AGREEMENT is entered into as of             , 2012, between FAIRMOUNT BANCORP, INC. (the “Company”) and                      (“Optionee”) (the “Agreement”), in accordance with the terms of the FAIRMOUNT BANCORP, INC. 2010 Stock Option Plan (the “Plan”). Capitalized terms shall have the same meaning as set forth in the Plan, unless the context clearly indicates otherwise.

1. Grant of Option

1.1 The Company hereby grants to Optionee effective                      (the “Date of Grant”), the option to purchase up to              shares of Common Stock (the “Option”) at an exercise price of $         per share (the “Exercise Price”). ⁽¹⁾ The Option shall vest, become exercisable and expire as provided in Section 2 below.

1.2 The Option is designated as a non-qualified stock option (a “Non-ISO”) and, therefore, is not intended to be treated as an incentive stock option (an “ISO”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Time of Exercise

2.1 Subject to the provisions of the Plan and this Agreement, Optionee shall be entitled to exercise the Option as follows:

Years of Continuous Service After Date of Grant of Option	Percentage of Total Shares Of Common Stock Subject to Option  Which May be Exercised
Upon grant		0	%(2)
After 1 year		20	%
After 2 years		40	%
After 3 years		60	%
After 4 years		80	%
After 5 years		100	%

⁽¹⁾  The exercise price must be at least 100% of the Fair Market Value (as defined in the Plan).

⁽²⁾  Option can be exercised to receive stock beginning one year from grant. Optionee should consult his or her own tax advisor in determining individual tax consequences.

2.2 The Option shall expire and may not be exercised later than 10 years following the Date of Grant.

2.3 Notwithstanding the foregoing, the Option shall become accelerated and immediately exercisable in the event of Optionee’s termination of employment as a result of death or Disability and in the event of a Change in Control, as provided in the Plan.

2.4 The Option shall be exercised in the manner set forth in the Plan, using the exercise form attached hereto as Exhibit A. The exercise price may be paid in cash, check, Shares or through a cashless exercise program through a broker, all on the terms provided in the Plan.

3. Conditions for Exercise of Option

3.1 During Optionee’s lifetime, the Option may be exercised only by the Optionee or by Optionee’s guardian or legal representative. The Option must be exercised while Optionee is employed by the Company, or in the event of a termination of employment, for such period following termination and under certain circumstances, as may be provided in the Plan. Notwithstanding the foregoing, no Option may be exercised more than 10 years following the Date of Grant.

3.2 In the event Optionee is discharged from the employ of the Company or a subsidiary company for cause under Section 4.3 of the Plan, Optionee shall forfeit the right to exercise any portion of this Option, which shall be immediately null and void.

4. Additional Conditions

Anything in this Agreement to the contrary notwithstanding, if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification (or any updating of any such document) of the shares of Common Stock issuable pursuant to the exercise of an Option is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the issuance of shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such shares of Common Stock shall not be issued, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company.

5. Taxes

The Company may make such provisions as it may deem appropriate for the withholding of any federal, state and local taxes that it determines are required to be withheld on the exercise of the Option. By signing this Option, the Optionee agrees that he or she is solely responsible for the satisfaction of any taxes that may arise (including taxes arising under Sections 409A or 4999 of the Code) and that the Company shall not have any obligation whatsoever to pay such taxes.

6. Binding Effect

This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators and successors.

7. Inconsistent Provisions

The Option granted hereby is subject to the provisions of the Plan. If any provision of this Agreement conflicts with a provision of the Plan, the Plan provision shall control.

8. Adjustments to Option

Appropriate adjustments shall be made to the number and class of shares of Common Stock subject to the Option and to the exercise price in accordance with the Plan.

9. Termination of Option

The Committee, in its sole discretion, may terminate the Option. However, no termination may adversely affect the rights of Optionee to the extent that the Option is currently vested on the date of such termination.

10. Designation of Beneficiary

Optionee may expressly designate beneficiary to his or her interest (the “Beneficiary”), if any, to this Option by completing and executing a designation of beneficiary agreement substantially in the form attached to this Agreement as Exhibit B (the “Designation of Beneficiary”) and delivering an executed copy of the Designation of Beneficiary to the Company.

11. Notices

Any notice or communication required or permitted by any provision of this Agreement to be given to Optionee shall be in writing and shall be delivered personally or sent by certified mail, return receipt requested, addressed to Optionee at the last address that the Company had for Optionee on its records. Each party may, from time to time, by notice to the other party hereto, specify a new address for delivery of notices relating to this Option. Any such notice shall be deemed to be given as of the date such notice is personally delivered or properly mailed.

12. Modifications

This Agreement may be modified or amended at any time, provided that Optionee must consent in writing to any modification that adversely alters or impairs any vested rights or obligations under this Option.

13. Headings

Section and other headings contained in this Option Agreement are for reference purposes only and are not intended to describe, interpret, define or limit the scope or intent of this Option or any provision hereof.

14. Severability

Every provision of this Option and of the Plan is intended to be severable. If any term hereof is illegal or invalid for any reason, such illegality or invalidity shall not affect the validity or legality of the remaining terms of this Award Agreement.

15. Governing Law

The laws of the State of Maryland shall govern the validity of this Award Agreement, the construction of its terms, and the interpretation of the rights and duties of the parties hereto.

16. Counterparts

This Option may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

[Signature Page Follows]

IN WITNESS WHEREOF the parties hereto have caused this Option to be executed as of the day and year first above written.

FAIRMOUNT BANCORP, INC.
By:
	A duly designated representative of the Company
	Optionee

Attest:

Exhibit A

FAIRMOUNT BANCORP, INC.

Form for Exercise of Stock Option for 2010 Stock Option Plan

Fairmount Bancorp, Inc.

8216 Philadelphia Road

Baltimore, Maryland 21237

Dear Sir or Madam:

The undersigned elects to exercise his/her Stock Option to purchase             shares of Common Stock of Fairmount Bancorp, Inc. (the “Company”) under and pursuant to a Stock Option Agreement dated as of                      and the terms and conditions of the 2010 Stock Option Plan.

1. ¨ Delivered herewith is a check and/or shares of Common Stock, valued at the closing sale price of the stock on the business day prior to the date of exercise, as follows:

$		in cash or check
$		in the form of              shares of Common Stock, valued at $             per share (subject to the discretion of the Board of Directors or Compensation Committee)*
$	Total

2. ¨ Delivered herewith are irrevocable instructions to a broker approved by the Company to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price.

If method 1 is chosen, the name or names to be on the stock certificate or certificates and the address and Social Security Number of such person(s) is as follows:

Name:

Address:

Social Security Number

	Very truly yours,
Date	Optionee

* Shares of Common Stock delivered to pay the purchase price must have been purchased in open market transaction or issued by the Company pursuant to a plan thereof more than six months prior to the exercise date of the Option.

Exhibit B

FAIRMOUNT BANCORP, INC.

Designation of Beneficiary

In the event of my death or “Disability” within the meaning of the FAIRMOUNT BANCORP, INC. 2010 Stock Incentive Plan (the “Plan”), I hereby designate the following person to be my beneficiary for the Award(s) (within the meaning of the Plan) identified below:

Name of Beneficiary:

Address:

Social Security No.:

This beneficiary designation of mine relates to any and all of my rights under the following Award or Awards:

¨ the Award that I received pursuant to an Option dated                  ,          between me and FAIRMOUNT BANCORP, INC. (the “Company”).

I understand that this beneficiary designation operates to entitle the above-named beneficiary to succeed, in the event of my death, to any and all of my rights under the Award(s) designated above, and shall be effective from the date this form is delivered to the Company until such date as I revoke this designation. A revocation shall occur only if I deliver to an executive officer of the Company either (i) a written revocation of this designation that is signed by me and notarized, or (ii) a designation of death beneficiary, in the form set forth herein, that is executed and notarized on a later date.

Date:

Your Signature:

Your Name (printed):

Sworn to before me this      day of             , 2012

Notary Public

County of

State of